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CORNERSTONE PROPANE GP, INC.,
SYN INC.
AND
CORNERSTONE PROPANE, L.P.
$60,000,000
$30,000,000 of 8.08% Senior Secured Notes due July 31, 2005
(Private Placement Number: 21923 # AB-8)
$30,000,000 of 8.27% Senior Secured Notes due July 31, 2009
(Private Placement Number: 21923 # AC-0)
_________________________
NOTE AGREEMENT
_________________________
Dated as of November 4, 1999
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TABLE OF CONTENTS
PAGE
SECTION 1. AUTHORIZATION OF NOTES.. . . . . . . . . . . . . . . . . . . . .1
SECTION 2. SALE AND PURCHASE OF NOTES.. . . . . . . . . . . . . . . . . . .2
SECTION 3. CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
SECTION 4. CONDITIONS TO CLOSING. . . . . . . . . . . . . . . . . . . . . .2
4.1. Representations and Warranties.. . . . . . . . . . . . . . . . .3
4.2. Performance; No Default. . . . . . . . . . . . . . . . . . . . .3
4.3. Compliance Certificates. . . . . . . . . . . . . . . . . . . . .3
4.4. Opinions of Counsel. . . . . . . . . . . . . . . . . . . . . . .3
4.5. Legal Investment.. . . . . . . . . . . . . . . . . . . . . . . .3
4.6. Trust Agreement. . . . . . . . . . . . . . . . . . . . . . . . .4
4.7. Security Documents.. . . . . . . . . . . . . . . . . . . . . . .4
4.8. Operative Agreements.. . . . . . . . . . . . . . . . . . . . . .4
4.9. Sale and Issuance of Other Notes.. . . . . . . . . . . . . . . .4
4.10. Proceedings and Documents. . . . . . . . . . . . . . . . . . . .4
4.11. Rating.. . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
4.12. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . .5
4.13. Payment of Closing Fees. . . . . . . . . . . . . . . . . . . . .5
4.14. Private Placement Number.. . . . . . . . . . . . . . . . . . . .5
4.15. Year 2000 Questionnaire. . . . . . . . . . . . . . . . . . . . .5
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE GENERAL PARTNERS AND THE
COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
5.1. Organization, Standing, etc. . . . . . . . . . . . . . . . . . .5
5.2. Partnership and Stock Interests. . . . . . . . . . . . . . . . .6
5.3. Qualification. . . . . . . . . . . . . . . . . . . . . . . . . .6
5.4. Financial Statements.. . . . . . . . . . . . . . . . . . . . . .6
5.5. Changes, etc.. . . . . . . . . . . . . . . . . . . . . . . . . .8
5.6. Tax Returns and Payments.. . . . . . . . . . . . . . . . . . . .8
5.7. Indebtedness.. . . . . . . . . . . . . . . . . . . . . . . . . .8
5.8. Ownership of Assets. . . . . . . . . . . . . . . . . . . . . . .9
TABLE OF CONTENTS
(Continued)
PAGE
5.9. Litigation, etc. . . . . . . . . . . . . . . . . . . . . . . . 10
5.10. Compliance with Other Instruments, etc.. . . . . . . . . . . . 10
5.11. Governmental Consent.. . . . . . . . . . . . . . . . . . . . . 10
5.12. Offer of Notes.. . . . . . . . . . . . . . . . . . . . . . . . 10
5.13. Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . 11
5.14. Federal Reserve Regulations. . . . . . . . . . . . . . . . . . 11
5.15. Investment Company Act.. . . . . . . . . . . . . . . . . . . . 11
5.16. Public Utility Holding Company Act; Federal Power Act. . . . . 11
5.17. ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.18. Environmental Matters. . . . . . . . . . . . . . . . . . . . . 13
5.19. Foreign Assets Control Regulations, etc. . . . . . . . . . . . 14
5.20. Disclosure.. . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.21. Chief Executive Office.. . . . . . . . . . . . . . . . . . . . 15
5.22. Solvency.. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.23. Year 2000. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 6. PURCHASER'S REPRESENTATIONS; SOURCE OF FUNDS.. . . . . . . . . 16
SECTION 7. ACCOUNTING; FINANCIAL STATEMENTS AND OTHER INFORMATION.. . . . 18
SECTION 8. INSPECTION.. . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 9. PREPAYMENT OF NOTES. . . . . . . . . . . . . . . . . . . . . . 24
9.1. Required Prepayments of the Notes. . . . . . . . . . . . . . . 24
9.2. Optional Prepayments of the Notes with Make Whole Amount.. . . 25
9.3. Prepayment on Change of Control. . . . . . . . . . . . . . . . 25
9.4. Contingent Prepayments on Disposition of Property, Taking or
Destruction. . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.5. Notice of Prepayments; Officers' Certificate.. . . . . . . . . 27
9.6. Allocation of Partial Prepayments. . . . . . . . . . . . . . . 28
9.7. Maturity; Surrender, etc.. . . . . . . . . . . . . . . . . . . 28
9.8. Acquisition of Notes.. . . . . . . . . . . . . . . . . . . . . 28
ii
TABLE OF CONTENTS
(Continued)
PAGE
SECTION 10. BUSINESS AND FINANCIAL COVENANTS OF THE COMPANY. . . . . . . . 29
10.1. Indebtedness.. . . . . . . . . . . . . . . . . . . . . . . . . 29
10.2. Liens, etc.. . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.3. Investments, Guaranties, etc.. . . . . . . . . . . . . . . . . 38
10.4. Restricted Payments. . . . . . . . . . . . . . . . . . . . . . 40
10.5. Transactions with Affiliates.. . . . . . . . . . . . . . . . . 41
10.6. Subsidiary Stock and Indebtedness. . . . . . . . . . . . . . . 41
10.7. Consolidation, Merger, Sale of Assets, etc.. . . . . . . . . . 42
10.8. Partnership or Corporate Existence, etc.; Business.. . . . . . 46
10.9. Payment of Taxes and Claims. . . . . . . . . . . . . . . . . . 47
10.10. Compliance with ERISA. . . . . . . . . . . . . . . . . . . . . 47
10.11. Maintenance of Properties; Insurance.. . . . . . . . . . . . . 48
10.12. Operative Agreements; Security Documents.. . . . . . . . . . . 49
10.13. Chief Executive Office.. . . . . . . . . . . . . . . . . . . . 50
10.14. Opinions.. . . . . . . . . . . . . . . . . . . . . . . . . . . 50
10.15. Information Required by Rule 144A. . . . . . . . . . . . . . . 50
10.16. Covenant to Secure Notes Equally.. . . . . . . . . . . . . . . 50
10.17. Compliance with Laws.. . . . . . . . . . . . . . . . . . . . . 51
10.18. Further Assurances.. . . . . . . . . . . . . . . . . . . . . . 51
10.19. Subsidiaries.. . . . . . . . . . . . . . . . . . . . . . . . . 51
10.20. Damage, Destruction, Taking, etc.. . . . . . . . . . . . . . . 53
10.21. Accounting Changes.. . . . . . . . . . . . . . . . . . . . . . 53
10.22. Acquisitions.. . . . . . . . . . . . . . . . . . . . . . . . . 53
10.23. Impairment of Security Interests.. . . . . . . . . . . . . . . 53
10.24. Limitation on Restrictions on Subsidiary Dividends, etc. . . . 54
10.25. No Other Negative Pledges. . . . . . . . . . . . . . . . . . . 54
10.26. Sales of Receivables.. . . . . . . . . . . . . . . . . . . . . 54
10.27. Fixed Price Supply Contracts; Certain Policies.. . . . . . . . 54
10.28. Independent Existence. . . . . . . . . . . . . . . . . . . . . 55
iii
TABLE OF CONTENTS
(Continued)
PAGE
10.29. Other Debt.. . . . . . . . . . . . . . . . . . . . . . . . . . 56
10.30. Restriction on General Partner.. . . . . . . . . . . . . . . . 56
SECTION 11. EVENTS OF DEFAULT; ACCELERATION. . . . . . . . . . . . . . . . 57
SECTION 12. REMEDIES ON DEFAULT; RECOURSE, ETC.. . . . . . . . . . . . . . 61
SECTION 13. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 14. REGISTRATION, TRANSFER AND SUBSTITUTION OF NOTES.. . . . . . . 80
14.1. Note Register; Ownership of Notes. . . . . . . . . . . . . . . 80
14.2. Transfer and Exchange of Notes.. . . . . . . . . . . . . . . . 80
14.3. Replacement of Notes.. . . . . . . . . . . . . . . . . . . . . 81
14.4. Notes Held by Company, etc. Deemed Not Outstanding.. . . . . . 81
SECTION 15. PAYMENTS ON NOTES. . . . . . . . . . . . . . . . . . . . . . . 81
15.1. Place of Payment.. . . . . . . . . . . . . . . . . . . . . . . 81
15.2. Home Office Payment. . . . . . . . . . . . . . . . . . . . . . 81
SECTION 16. EXPENSES, INDEMNIFICATION, ETC.. . . . . . . . . . . . . . . . 82
SECTION 17. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.. . . . . . . . . . 85
SECTION 18. AMENDMENTS AND WAIVERS.. . . . . . . . . . . . . . . . . . . . 85
SECTION 19. NOTICES, ETC.. . . . . . . . . . . . . . . . . . . . . . . . . 86
SECTION 20. REPRODUCTION OF DOCUMENTS. . . . . . . . . . . . . . . . . . . 86
SECTION 21. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . 87
SECTION 22. SUBMISSION TO JURISDICTION.. . . . . . . . . . . . . . . . . . 87
SECTION 23. WAIVER OF JURY TRIAL.. . . . . . . . . . . . . . . . . . . . . 88
SECTION 24. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . 88
SECTION 25. CONFIDENTIAL INFORMATION.. . . . . . . . . . . . . . . . . . . 88
iv
Schedule A -- Schedule of Purchasers
Schedule 5.3 -- Jurisdiction of Qualification
Schedule 5.4(b) -- Certain Changes
Schedule 5.7 -- Indebtedness
Schedule 5.8(b) -- List of Title Exceptions
Schedule 5.9 -- Litigation
Schedule 5.18 -- Environmental Notices
Schedule 10.2 -- Liens
Schedule 10.5 -- Transactions With Affiliates
Exhibit A-1 -- Form of Tranche A Note
Exhibit A-2 -- Form of Tranche B Note
Exhibit B1 -- Form of Opinion of Company Counsel
Exhibit B2 -- Form of Opinion of Debevoise & ▇▇▇▇▇▇▇▇
Exhibit C -- Form of Trust Agreement
Exhibit D -- Form of Subordination Provisions
Exhibit E -- Form of Company Security Agreement
Exhibit F -- Form of Intercompany Note
Exhibit G -- Form of Partnership Agreement
Exhibit H -- Form of Perfection Certificate
Exhibit I -- Form of Subsidiary Guarantee Agreement
Exhibit J -- Form of Supplemental Agreement
Exhibit K -- Form of Second Amendment to the Intercreditor and Trust
Agreement
v
CORNERSTONE PROPANE GP, INC.
CORNERSTONE PROPANE, L.P.
SYN INC.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
8.08% Senior Secured Notes due July 31, 2005
8.27% Senior Secured Notes due July 31, 2009
Dated as of November 4, 1999
TO EACH OF THE PURCHASERS LISTED
IN THE ATTACHED SCHEDULE A
Dear Purchaser:
Cornerstone Propane GP, Inc., a California corporation (the "Managing
General Partner"), SYN Inc., a Delaware corporation (the "Special General
Partner", and together with the Managing General Partner, each a "General
Partner" and together, the "General Partners") and Cornerstone Propane, L.P.,
a Delaware limited partnership (the "Company"), hereby agree with you as
follows:
SECTION 1. AUTHORIZATION OF NOTES.
The Company will authorize the issue and sale of $30,000,000 aggregate
principal amount of its 8.08% Senior Secured Notes due July 31, 2005 and
$30,000,000 aggregate principal amount of its 8.27% Senior Secured Notes due
July 31, 2009 (collectively, the "Notes", and individually the "Tranche A
Notes" and the "Tranche B Notes", respectively, such terms to include any
Notes issued in substitution therefor or replacement thereof pursuant to
Section 14). The Tranche A Notes shall be substantially in the form of
Exhibit A-1 and the Tranche B Notes shall be substantially in the form of
Exhibit A-2, each with such changes therefrom, if any, as may be approved by
you (to the extent that you are investing in such series of Notes) and the
Company. Certain capitalized terms used in this Note Agreement (the
"Agreement") are defined in Section 13; references to a "Section" or a
"Schedule" or an "Exhibit" are, unless otherwise specified, to a Section of
this Agreement or to a Schedule or an Exhibit attached to this Agreement.
SECTION 2. SALE AND PURCHASE OF NOTES
Subject to the terms and conditions of this Agreement, the Company
will issue and sell to you and you will purchase from the Company, at the
Closing provided for in Section 3, Notes in the principal amount specified
opposite your name in Schedule A for purchase by you at the Closing, at the
purchase price of 100% of the principal amount thereof.
Contemporaneously with entering into this Agreement, the General
Partners and the Company are entering into identical Note Agreements (the
"Other Agreements") with each of the other purchasers named in Schedule A
(the "Other Purchasers"), providing for the sale to each of the Other
Purchasers, at the Closing, of Notes in the principal amount specified
opposite its name in Schedule A. The sale of Notes to you and the Other
Purchasers are to be separate sales, and this Agreement and the Other
Agreements constitute separate agreements.
SECTION 3. CLOSING.
The sales of the Notes to you and the Other Purchasers shall take
place at the offices of Debevoise & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇, at 9:00 a.m., New York time, at a closing (the "Closing") on November
__, 1999, or such later date as may be agreed upon by Managing General
Partner, the Company, you and the Other Purchasers. At the Closing, the
Company will deliver to you Notes in the principal amount to be purchased by
you, in the form of a single Note (or such greater number of Notes as you may
request, provided that each such Note shall be in a denomination of at least
$500,000), each dated the date of the Closing and registered in your name (or
in the name of your nominee as indicated in Schedule A), against payment of
the purchase price therefor on the date of Closing by transfer of immediately
available funds to the Company, or as otherwise directed by the Company in
writing (at least two days prior to the date of the Closing). If at the
Closing the Company shall fail to tender such Notes to you as provided above
in this Section 3 or if any of the conditions specified in Section 4 shall
not have been fulfilled to your satisfaction, you shall, at your election, be
relieved of all further obligations under this Agreement, without thereby
waiving any other rights you may have by reason of such failure or such
nonfulfillment. At the Closing, the Company will designate (to the extent
not theretofore so designated) Flame, Inc., Coast Energy Global Services,
Inc., Coast Energy Canada, Inc., CHC and PCI as Restricted Subsidiaries under
this Agreement, the Other Agreements, the 1996 Note Agreements and the 1998
Note Agreements. At the Closing, you will become a party to the Trust
Agreement with respect to the Notes.
SECTION 4. CONDITIONS TO CLOSING.
Your obligation to purchase and pay for the Notes to be sold to you at
the Closing is subject to the fulfillment to your satisfaction, prior to or
at the Closing, of the following conditions:
2
4.1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company and its Affiliates contained in this Agreement, the
other Operative Agreements, and those otherwise made in writing by or on
behalf of the Company or any Affiliate of the Company in connection with the
transactions contemplated by this Agreement, shall be true and correct when
made and at the time of the Closing, except as affected by the consummation
of such transactions and except for any representation and warranty that is
expressly stated to relate to a specific date, in which case such
representation and warranty shall be true and correct as of such earlier date.
4.2. PERFORMANCE; NO DEFAULT. Each of the Company and its
Affiliates shall have performed and complied with all agreements and
conditions contained in this Agreement or any other Operative Agreement
required to be performed or complied with by it prior to or at the Closing,
and at the time of the Closing no Event of Default or Potential Event of
Default under this Agreement or default by any party under any other
Operative Agreement shall have occurred and be continuing.
4.3. COMPLIANCE CERTIFICATES. You shall have received Officer's
Certificates of the Company and each General Partner, dated the date of the
Closing and satisfactory in substance and form to you, certifying that the
conditions specified in Sections 4.1 and 4.2 have been fulfilled in all
material respects insofar as the relevant representation or warranty is made
by, or the relevant agreement or condition is required to be performed or
complied with by, or the relevant Event of Default, Potential Event of
Default or default has been caused by or relates to, each of such entities
and, with respect to the Officer's Certificate of the Company, its
Subsidiaries, and in the case of the Officer's Certificate of the Managing
General Partner and the Company, certifying that no material adverse change
has occurred in the financial condition of the Business subsequent to the
date of the financial statements delivered pursuant to Section 5.4(a).
4.4. OPINIONS OF COUNSEL. You shall have received favorable
opinions from (a) McCutchen, Doyle, ▇▇▇▇▇ & Enersen, L.L.P., counsel for the
Company and its Affiliates, substantially in the form of Exhibit B1 and (b)
Debevoise & ▇▇▇▇▇▇▇▇, your special counsel in connection with the
transactions contemplated by this Agreement, substantially in the form of
Exhibit B2, and in each case covering such other matters incident to such
transactions as you may reasonably request, each addressed to you, dated the
date of the Closing and otherwise reasonably satisfactory in substance and
form to you. The Company and the General Partners hereby direct their
counsel referred to in clause (a) of this Section 4.4 to deliver to you such
opinion.
4.5. LEGAL INVESTMENT. On the date of the Closing your purchase of
Notes shall be permitted by the laws and regulations of each jurisdiction to
which your investments are subject, but without recourse to provisions (such
as section 1404(b) or 1405(a)(8) of the New York Insurance Law) permitting
limited investments by insurance companies in securities not otherwise
legally eligible for investment. If requested by you by prior written
request to the Company or the General Partners, you shall have received, at
least
3
five Business Days prior to the Closing, an Officers' Certificate of the
Company or the General Partners, as the case may be, certifying as to such
matters of fact as you may reasonably specify to enable you to determine
whether such purchase is so permitted.
4.6. TRUST AGREEMENT. The Trust Agreement shall be in full force
and effect and shall constitute the valid, binding and enforceable obligation
of the Company, the Qualifying Restricted Subsidiaries, if any, and the
Trustee, except that such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws of
general application relating to or affecting the rights and remedies of
creditors, and no default on the part of the Company or the Qualifying
Restricted Subsidiaries shall exist thereunder.
4.7. SECURITY DOCUMENTS. Each of the Security Documents shall be in
full force and effect and shall constitute the valid, binding and enforceable
obligation of each such party, except that such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium and similar
laws of general application relating to or affecting the rights and remedies
of creditors and by general equitable principles, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
4.8. OPERATIVE AGREEMENTS. Each of the Operative Agreements shall
be in full force and effect, and shall constitute the legal, valid and
binding and enforceable obligations of the respective parties thereto, except
that such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws of general application relating
to or affecting the rights and remedies of creditors and by general equitable
principles, regardless of whether such enforceability is considered in a
proceeding in equity or law, and no default or accrued right of termination
on the part of any of the parties thereto shall exist thereunder as of the
date of the Closing, and you and the Trustee shall have received a fully
executed original, or a true and complete copy, of each such document.
4.9. SALE AND ISSUANCE OF OTHER NOTES. Contemporaneously with the
Closing, the Company shall sell to the Other Purchasers the Notes to be
purchased by them at the Closing under the Other Agreements as specified in
Schedule A.
4.10. PROCEEDINGS AND DOCUMENTS. All proceedings in connection with
the transactions contemplated by this Agreement and all documents and
instruments incident to such transactions shall be satisfactory to you and
your special counsel, and you and your special counsel shall have received
all such counterpart originals or certified or other copies of such documents
as you or they may reasonably request.
4.11. RATING. Prior to the Closing, each series of the Notes shall
have received a rating of at least BBB from Fitch Investors Service, Inc.,
which rating remains in effect as of the Closing.
4
4.12. INSURANCE. Insurance complying with the provisions of Section
10.11 hereof shall be in full force and effect.
4.13. PAYMENT OF CLOSING FEES. The Company shall have paid the fees
and disbursements required by Section 16 to be paid by the Company on the
date of the Closing.
4.14. PRIVATE PLACEMENT NUMBER. The Company shall have obtained for
each series of the Notes a Private Placement Number issued by Standard &
Poor's CUSIP Service Bureau (in cooperation with the Securities Valuation
Office of the National Association of Insurance Commissioners).
4.15. YEAR 2000 QUESTIONNAIRE. The Company will have delivered to
you a copy of the Company's response to the Year 2000 Due Diligence
Questionnaire supplied by the Securities Valuation Office of the National
Association of Insurance Commissioners.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE GENERAL PARTNERS AND THE
COMPANY.
Each of the General Partners and the Company represents and warrants
that:
5.1. ORGANIZATION, STANDING, ETC. (a) The Company is a limited
partnership duly organized, validly existing and in good standing under the
Delaware Revised Uniform Limited Partnership Act and has all requisite
partnership power and authority to own and operate its properties and assets,
to conduct its business as described in the Memorandum, to enter into this
Agreement and the other Operative Agreements to which it is a party, to issue
and deliver the Notes and to carry out the terms of this Agreement, such
other Operative Agreements and the Notes.
(b) Each General Partner is a corporation duly organized, validly
existing and in good standing (in the case of the Managing General Partner)
under the laws of the State of California or (in the case of the Special
General Partner) under the laws of the State of Delaware and has all
requisite corporate power and authority to own and operate its properties, to
conduct its business, to enter into and carry out the terms of this Agreement
and the other Operative Agreements to which it is a party, and, in the case
of the Managing General Partner, to execute and deliver as Managing General
Partner of the Company this Agreement, the Notes and the other Operative
Agreements to which the Company is a party.
(c) Each Restricted Subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of the state of its
formation and has validly issued its stock (all of which is fully paid and
non-assessable) and has all requisite corporate power and authority to own
and operate its properties and to conduct its business.
5
(d) The Public Partnership is a limited partnership duly organized,
validly existing and in good standing under the Delaware Revised Uniform
Limited Partnership Act and has all requisite partnership power and authority
to own and operate its properties, to conduct its business, and to execute,
deliver and carry out the terms of the Operative Agreements to which it is a
party.
5.2. PARTNERSHIP AND STOCK INTERESTS. The only general partners of
the Company are the General Partners, which own an aggregate 1.0101% general
partner interest in the Company. The only limited partner of the Company is
the Public Partnership, which owns a 98.9899% limited partner interest in the
Company. The Company does not have any other partners. Except for Flame,
Inc., an Arizona corporation, Coast Energy Global Services, Inc., a Delaware
corporation, Coast Energy Canada, Inc., a Delaware corporation, CHC and PCI
the Company does not have any Subsidiaries or any Investments in any Person
(other than Investments of the types described in Section 10.3(a)).
Cornerstone Sales & Service Corporation was formerly a Restricted Subsidiary
but it was merged into the Company on June 24, 1999.
5.3. QUALIFICATION. The Company is duly qualified or registered and
is in good standing as a foreign limited partnership for the transaction of
business, and each General Partner and Restricted Subsidiary is qualified or
registered and is in good standing as a foreign corporation for the
transaction of business, in the jurisdictions set forth in Schedule 5.3 which
are the only jurisdictions in which the nature of their respective activities
or the character of the properties they own, lease or use makes such
qualification or registration necessary and in which the failure so to
qualify or to be so registered would have a Material Adverse Effect. Each of
the General Partners, the Restricted Subsidiaries and the Company has taken
all necessary partnership or corporate action to authorize the execution,
delivery and performance by it of this Agreement, the Notes, as the case may
be, and each other Operative Agreement to which it is a party. Each of the
General Partners, the Restricted Subsidiaries and the Company has duly
executed and delivered each of this Agreement, the Notes and the other
Operative Agreements to which it is a party, and each of them constitutes its
legal, valid, binding and enforceable obligation in accordance with its
terms, except that such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws of
general application relating to or affecting the rights and remedies of
creditors and by general equitable principles, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
5.4. FINANCIAL STATEMENTS.
(a) The Company has delivered to you complete and correct copies of
(i) the memorandum prepared by the Company for use in connection with the
Company's private placement of the Notes (together with any supplements or
amendments, the "Memorandum") and (ii) the Public Partnership's Securities
Exchange Act of 1934, as amended, filings delivered in connection with the
offering of the Notes or incorporated by
6
reference into the Memorandum (the "SEC Filings"). The historical and pro
forma consolidated financial statements of the Public Partnership set forth
in or incorporated by reference into the SEC Filings comply in all material
respects with the applicable accounting requirements of the Securities Act of
1933, as amended, and the published rules and regulations thereunder and, in
the opinion of the Managing General Partner, the assumptions on which the pro
forma adjustments set forth in or incorporated by reference into the SEC
Filings to such historical consolidated financial statements of the Public
Partnership are based, provide a reasonable basis for presenting the
significant effects of the transactions contemplated by the pro forma
consolidated financial statements set forth in or incorporated by reference
into the SEC Filings and such pro forma adjustments give appropriate effect
to such assumptions and are properly applied in all material respects to the
historical amounts in the compilation of such pro forma consolidated
financial statements. The financial statements and schedules included in the
SEC Filings (other than with respect to pro forma matters) have been prepared
in accordance with GAAP applied on a consistent basis throughout the periods
specified, except to the extent disclosed therein, and present fairly the
consolidated financial position of the Public Partnership as of the
respective dates specified and the results of its consolidated operations and
cash flows for the respective periods specified (subject, as to interim
statements, to the omission of footnotes and year-end audit adjustments).
Since June 30, 1999, there has been no material adverse change in the
business, financial condition, or results of operations of the Public
Partnership and its consolidated subsidiaries taken as a whole. The
financial data included under the caption "Selected Historical and Pro Forma
Financial and Operating Data" in the SEC Filings present fairly, on the basis
stated in the SEC Filings, the information set forth therein and have been
compiled on a basis consistent with the audited and unaudited historical
financial statements included in the SEC Filings. The historical aspects of
the financial data included under the caption "Capitalization" in the SEC
Filings present fairly, on the basis stated in the SEC Filings, the
information set forth therein and have been compiled on a basis consistent
with that of the audited and unaudited historical financial statements
included in the SEC Filings; the pro forma aspects of such financial data
included under the caption "Capitalization" have been prepared in all
material respects in accordance with all applicable rules and guidelines of
the Securities and Exchange Commission with respect to pro forma financial
information; and the assumptions on which the pro forma adjustments to the
pro forma aspects of the financial data included under the caption
"Capitalization" are based provide a reasonable basis for presenting the
significant effects of the transactions contemplated by such pro forma
financial data and such pro forma adjustments give appropriate effect to such
assumptions and are properly applied in all material respects to the
historical amounts in the compilation of such pro forma financial data.
(b) Except as may be disclosed on Schedule 5.4(b), since June 30,
1999, there has been no change or event which could reasonably be expected to
have a Material Adverse Effect. The financial data for the Public
Partnership in the Memorandum present fairly in all material respects, on the
basis stated in the Memorandum, the information set forth therein and have
been compiled based on the audited financial statements included
7
in the Public Partnership's filings with the Securities and Exchange
Commission. Except as otherwise provided on SCHEDULE 5.4(b), the financial
data identified as historical included in the Memorandum present fairly, on
the basis stated in the Memorandum, the information set forth therein and
have been compiled on a basis consistent with that of the audited financial
statements included in the Memorandum; the pro forma financial data included
in the Memorandum represent, in all material respects and on the basis stated
in the Memorandum, the Managing General Partner's best estimate with respect
to pro forma financial information; and the assumptions on which the pro
forma adjustments to the pro forma aspects of the financial data included in
the Memorandum are based provide a reasonable basis for presenting all of the
significant effects of the transactions contemplated by such pro forma
financial data and such pro forma adjustments give appropriate effect to such
assumptions and are properly applied in all material respects to the
historical amounts in the compilation of such pro forma financial data.
5.5. CHANGES, ETC. Except as contemplated by this Agreement, the
other Operative Agreements or the Memorandum, subsequent to June 30, 1999,
the Company and its Affiliates have not incurred any material liabilities or
obligations, direct or contingent, or entered into any material transaction
not in the ordinary course of business, no events have occurred, which
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect, and there has not been any Restricted Payment of any
kind declared, paid or made by the Company or either General Partner or any
Subsidiary (other than the distribution of $0.54 per common unit of the
Public Partnership paid on August 13, 1999 plus the Managing General
Partner's interest in 2.0% of the total distribution).
5.6. TAX RETURNS AND PAYMENTS. On the Closing Date and after giving
effect to the transactions then to be consummated under the Operative
Agreements, each of the Company and its Affiliates has filed all federal,
state and other tax returns required by law to be filed by it or has properly
filed for an extension of time for the filing thereof and has paid all,
taxes, assessments and other governmental charges levied upon it or any of
its properties, assets, income or franchises which are due and payable,
except those (a) which are not past due or are presently being contested in
good faith by appropriate proceedings diligently conducted for which such
reserves or other appropriate provisions, if any, as shall be required by
GAAP have been made, or (b) for which the failure to file or extend would not
reasonably be expected to have a Material Adverse Effect. The Company is a
limited partnership that is treated as a pass-through entity for federal
income tax purposes.
5.7. INDEBTEDNESS. At the time of the Closing, other than the
Indebtedness represented by the Notes and the Indebtedness listed in Schedule
5.7, none of Company, either General Partner or any Restricted Subsidiary
will have any secured or unsecured Indebtedness outstanding. At the time of
the Closing, no instrument or agreement to which the Company or, other than
Section 7.6(a) of the MLP Agreement, either General Partner is a party or by
which the Company or either General Partner is bound or which is
8
applicable to the Company or either General Partner (other than this
Agreement, the 1996 Note Agreements, the 1998 Note Agreements and the Bank
Credit Facilities) contains any restrictions on the incurrence by the Company
or either General Partner of additional Indebtedness.
5.8. OWNERSHIP OF ASSETS. (a) The Company and each Restricted
Subsidiary are in possession of and operating in compliance in all respects
with all franchises, grants, authorizations, approvals, licenses, permits,
easements, rights-of-way, consents, certificates and orders required to own,
lease or use its properties and assets and (considering all such Permits (as
below defined) in the possession of, and being complied with by, the Company
and such Restricted Subsidiaries taken together) to permit the conduct of the
Business as now conducted and proposed to be conducted ("Permits"), except
for those Permits (collectively, "Permitted Exceptions") (i) which are not
required at such time and are routine or administrative in nature and are
expected in the reasonable judgment of the Managing General Partner to be
obtained or given in the ordinary course of business after the date of the
Closing, or (ii) which, if not obtained or given, would not, individually or
in the aggregate, have a Material Adverse Effect.
(b) Except as set forth in Schedule 5.8(b), the Company and each
Restricted Subsidiary has (i) good and marketable title to the portion of its
properties and assets constituting real property owned in fee simple, (ii)
good and valid leasehold interests in the portion of its properties and
assets constituting real property and leased, pursuant to which the Company
and its Restricted Subsidiaries shall enjoy undisturbed possession thereof,
except for defects in, or lack of recorded title and exceptions to, leasehold
interests as would not, in the aggregate, be reasonably expected to have a
Material Adverse Effect, and (iii) sufficient title to the portion of its
properties and assets constituting personal property reasonably necessary for
the use and operation of such personal property as it has been used in the
past and as it is proposed to be used in the Business, in each case subject
to no Liens except Permitted Encumbrances and Liens that will be discharged
prior to the Closing. Such properties and assets are all of the assets and
properties reasonably necessary to enable the Company and its Subsidiaries to
conduct the Business. Subject to exceptions as would not, individually or in
the aggregate, be reasonably expected to have a Material Adverse Effect, (a)
the Company and each Restricted Subsidiary enjoys peaceful and undisturbed
possession under all leases necessary for the operation of the Business,
other than certain immaterial leased property of which the Company and its
Restricted Subsidiaries shall enjoy undisturbed possession, and (b) all such
leases are valid and subsisting and are in full force and effect. Except to
perfect and to protect security interests permitted by Section 10.2, (x) at
the time of the Closing, no effective financing statement under the Uniform
Commercial Code which names the Company, any Restricted Subsidiary or either
General Partner as debtor, which individually or in the aggregate relates to
any part of the assets pledged pursuant to any Security Document, will be on
file in any jurisdiction and (y) at the time of the Closing, none of the
Company, any Restricted Subsidiary or either General Partner will have signed
any effective financing statement or any effective security agreement,
9
which relates to any part of the assets pledged pursuant to any Security
Document, authorizing any secured party thereunder to file any such financing
statement, except for financing statements to be executed and filed in
connection with the Closing.
5.9. LITIGATION, ETC. Except as set forth on Schedule 5.9, there is
no action, proceeding or investigation pending or, to the knowledge of the
Company and the General Partners upon reasonable inquiry, threatened (or any
basis therefor known to the Company or either General Partner) which
questions the validity of this Agreement, any other Operative Agreement or
the Notes or any action taken or to be taken pursuant to this Agreement, any
other Operative Agreement or the Notes, or which could reasonably be expected
to have, either in any case or in the aggregate, a Material Adverse Effect.
5.10. COMPLIANCE WITH OTHER INSTRUMENTS, ETC. Neither the Company,
any Restricted Subsidiary nor either General Partner (i) is in violation of
any term of the Partnership Agreement, the MLP Agreement or, in the case of
such Restricted Subsidiary and the General Partners, of their respective
articles or certificates of incorporation or by-laws, or (ii) is in violation
of any term of any other agreement or instrument to which the Company, such
Restricted Subsidiary or either General Partner is a party or by which any of
them or any of their properties is bound or any term of any applicable law,
ordinance, rule or regulation of any governmental authority or any term of
any applicable order, judgment or decree of any court, arbitrator or
governmental authority, in the case of clause (ii), the consequences of which
would have a Material Adverse Effect; the execution, delivery and performance
by each of the General Partners and the Company of this Agreement and the
other Operative Agreements to which it is a party and the Notes, as the case
may be, will not result in any violation of or be in conflict with or
constitute a default under any such term or result in the creation of (or
impose any obligation on the Company, any Restricted Subsidiary or either
General Partner to create) any Lien upon any of the properties or assets of
the Company or either General Partner or any Restricted Subsidiary prohibited
by any such term, except for Permitted Encumbrances and for any such term
relating to Indebtedness to be repaid in full at the time of the Closing; and
there is no such term the compliance with which would have, or in the future
may in the reasonable judgment of either General Partner or the Company be
likely to have, a Material Adverse Effect.
5.11. GOVERNMENTAL CONSENT. No consent, approval or authorization
of, or declaration or filing with, any governmental authority (which has not
been obtained) is required for the valid execution, delivery and performance
of this Agreement or the other Operative Agreements (other than Permitted
Exceptions), and no such consent, approval, authorization, declaration or
filing is required for the valid offer, issue, sale and delivery of the Notes
pursuant to this Agreement and the Other Agreements.
5.12. OFFER OF NOTES. Neither the Company nor any of its Affiliates
nor anyone acting on its or their behalf has directly or indirectly offered
the Notes or any part thereof or any similar securities for sale to, or
solicited any offer to buy any of the same from, or
10
otherwise approached or negotiated in respect thereof with, anyone other than
you, the Other Purchasers and not more than 25 other institutional investors.
Neither the General Partners nor the Company nor anyone authorized to act on
their behalf has taken or will take any action which would subject the
issuance and sale of the Notes to the registration and prospectus delivery
provisions of the Securities Act of 1933, as amended, or to the registration
or qualification provisions of any securities or Blue Sky law of any
applicable jurisdiction or require qualification of any Security Document
under the Trust Indenture Act of 1939, as amended; PROVIDED, HOWEVER, that it
is understood that any action taken by you or any Other Purchaser shall not
have been taken on behalf of the Company or the General Partners.
5.13. USE OF PROCEEDS. The proceeds of the sale of the Notes to you
and the Other Purchasers will be used to repay amounts outstanding under the
Bank Credit Facilities and to pay fees and expenses associated with the
offering.
5.14. FEDERAL RESERVE REGULATIONS. Neither the General Partners nor
the Company will, directly or indirectly, use any of the proceeds of the sale
of the Notes for the purpose, whether immediate, incidental or ultimate, of
buying a "margin stock" or of maintaining, reducing or retiring any
indebtedness originally incurred to purchase a stock that is currently a
"margin stock", or for any other purpose which might constitute this
transaction a "purpose credit", in each case within the meaning of Regulation
U of the Board of Governors of the Federal Reserve System (12 C.F.R. 221, as
amended), or otherwise take or permit to be taken any action which would
involve a violation of such Regulation U or of Regulations T or X (12 C.F.R.
220, as amended, and 12 C.F.R. 224, as amended, respectively) or any other
applicable regulation of such Board. No indebtedness being reduced or
retired, directly or indirectly, out of the proceeds of the sale of the Notes
was incurred for the purpose of buying or carrying any stock which is
currently a "margin stock", and neither General Partner nor the Company owns
or has any present intention of acquiring with the proceeds thereof any
amount of such "margin stock".
5.15. INVESTMENT COMPANY ACT. None of the General Partners or the
Company is an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of
1940, as amended.
5.16. PUBLIC UTILITY HOLDING COMPANY ACT; FEDERAL POWER ACT. None of
the General Partners or the Company is a "holding company", or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company" or
of a "subsidiary company" of a "holding company", as such terms are defined
in the Public Utility Holding Company Act of 1935, as amended; none of the
General Partners or the Company, or the issue and sale of the Notes by the
Company, is subject to regulation under such Act; and none of the General
Partners or the Company is a "public utility" as such term is defined in the
Federal Power Act, as amended.
11
5.17. ERISA. (a) None of the General Partners, the Company, any
Subsidiary of the Company or any Related Person of the General Partners or
the Company (other than Northwestern Growth Corporation, a Delaware
corporation, and any Subsidiaries of Northwestern Growth Corporation (except
for the General Partners and any Subsidiary of the General Partners that is a
Related Person of the Company)) is obligated to contribute to, and none of
the General Partners, the Company or any Related Person of the Company has
any liability or obligation with respect to, any Plan that is subject to
Section 302 or Title IV of ERISA or Section 412 of the Code (other than a
Multiemployer Plan). None of the Company, any Subsidiary of the Company or
any Related Person of the Company has any liability or obligation to provide
any amount or type of compensation or benefit in respect of any employee or
former employee of the Business which relates to periods, services performed
or benefits or amounts accrued prior to December 17, 1996 (other than
pursuant to a Multiemployer Plan, continuation coverage provided pursuant to
Section 4980B of the Code or Section 601, et seq., of ERISA, or any liability
or obligation for contributions pursuant to a Plan not yet required to be
paid). None of the General Partners, the Company, any Subsidiary of the
Company or any Related Person of the Company has incurred any material
liability under Title IV of ERISA with respect to any such Plan and no event
or condition exists or has occurred as a result of which such a liability
would reasonably be expected to be incurred. None of the General Partners,
the Company, any Subsidiary of the Company or any Related Person of the
Company has engaged in any transaction, including the transactions
contemplated hereunder which could subject the Company or any Related Person
of the Company to a material liability pursuant to Section 4069(a) or 4212(c)
of ERISA. There has been no reportable event (within the meaning of Section
4043(b) of ERISA other than one for which the applicable notice requirements
have been waived by PBGC regulation) or any other event or condition with
respect to any Plan which presents a risk of the termination of, or the
appointment of a trustee to administer, any such Plan (other than a
Multiemployer Plan) by the PBGC. No prohibited transaction (within the
meaning of Section 406(a) of ERISA or Section 4975 of the Code) exists or has
occurred with respect to any Plan which has subjected or could reasonably be
expected to subject either General Partner, the Company or any Subsidiary of
the Company to a material liability under Section 502(i) or 502(l) of ERISA
or Section 4975 of the Code. No material liability to the PBGC (other than
liability for premiums not yet due) has been or is expected to be incurred
with regard to any Plan by the General Partners, the Company, any Subsidiary
of the Company or any Related Person of the Company. None of the General
Partners, the Company, any Subsidiary of the Company or any Related Person of
the Company contributes or is obligated to contribute or has ever contributed
or been obligated to contribute to any single employer plan tht has at least
two contributing sponsors not under common control. Timely payment has been
made of all amounts which the General Partners, the Company, any Subsidiary
of the Company or any Related Person of the Company is required under
applicable law, the terms of each Plan or any collective bargaining agreement
to have paid as contributions to each such Plan except to the extent that
failure to do so would not have a Material Adverse Effect. To the knowledge
of the General Partners and the Company, no Multiemployer Plan has been
terminated or presents a
12
material risk of termination, is insolvent or is in reorganization within the
meaning of Section 4241 or 4245 of ERISA and the transactions contemplated
hereby will not result in a withdrawal from any Multiemployer Plan that would
have a Material Adverse Effect. None of the General Partners, the Company,
any Subsidiary or any Related Person of the Company has any obligation to
provide any material amount of post-employment welfare benefits or coverage
(other than continuation coverage provided pursuant to Section 4980B of the
Code or Section 601, et seq., of ERISA).
(b) The execution and delivery of this Agreement and the Other
Agreements and the issue and sale of the Notes and delivery of the Notes
hereunder and thereunder will not involve any non-exempt "prohibited
transaction" within the meaning of Section 406 of ERISA or Section 4975 of
the Code. The representations by the Company and the General Partners in the
immediately preceding sentence are made in reliance upon and subject to the
accuracy of your representation in Section 6.2 of this Agreement and the
representations of the Other Purchasers in Section 6.2 of the Other
Agreements as to the source of the funds to be used to pay the purchase price
of the Notes to be purchased by you and the Other Purchasers, respectively.
With respect to each employee benefit plan identified to the Company in
accordance with clause (c) of Section 6.2 of this Agreement or of any of the
Other Agreements, none of the General Partners, the Company or any
"affiliate" (as defined in Section V(c) of the QPAM Exemption) of either
General Partner or the Company has at this time, and has not exercised at any
time within the one year period preceding the date of the Closing, the
authority to appoint or terminate you or any Other Purchaser as manager of
any of the assets of any such plan or to negotiate the terms of any
management agreement with you or any Other Purchaser on behalf of any such
plan.
5.18. ENVIRONMENTAL MATTERS. (a) Except as disclosed in Schedule
5.18 each of the Company, each Restricted Subsidiary and either General
Partner is in compliance with all Environmental Laws applicable to it or to
the Business or its properties or assets except where such noncompliance
would not have a Material Adverse Effect. Each of the Company and each
Restricted Subsidiary has timely and properly applied for renewal of all
environmental permits or licenses that have expired or are about to expire
and are necessary for the conduct of the Business as now conducted and as
proposed to be conducted, except where the failure to timely and properly
reapply would not have a Material Adverse Effect. Schedule 5.18 lists (i) all
notices from Federal, state or local environmental agencies to the Company,
any Restricted Subsidiary or the General Partners citing environmental
violations that have not been finally resolved and disposed of, and no such
violation, whether or not notice regarding such violation is listed on
Schedule 5.18, if ultimately resolved against the Company, such Restricted
Subsidiary or either General Partner, as the case may be, individually or in
the aggregate, would have a Material Adverse Effect, and (ii) all current
reports filed by the Company, each Restricted Subsidiary or either General
Partner with any Federal, state or local environmental agency having
jurisdiction over the properties and assets of each, true and complete copies
of which reports have been made available to you and your special counsel.
13
Notwithstanding any such notice, the Company, each Restricted Subsidiary and
each General Partner are currently operating in all material respects within
the limits set forth in such environmental permits or licenses and any
current noncompliance with such permits or licenses will not result in any
material liability or penalty to the Company, any Restricted Subsidiary or
either General Partner or in the revocation, loss or termination of any such
environmental permits or licenses, the revocation, loss or termination of
which would have a Material Adverse Effect.
(b) Except as disclosed in Schedule 5.18, all facilities located on
the real property of the Company or any Restricted Subsidiary which are
subject to regulation by RCRA are and have been operated in compliance with
RCRA, except where such noncompliance would not have a Material Adverse
Effect and none of the Company, such Restricted Subsidiary or either General
Partner has received, or, to the knowledge of the Company and either General
Partner been threatened with, a notice of violation of RCRA regarding such
facilities.
(c) Except as disclosed in Schedule 5.18, no hazardous substance
(as defined in CERCLA) or hazardous waste (as defined in RCRA) is located or
present at any of the real property of the Company or any Restricted
Subsidiary in violation of any Environmental Law, which violation will have a
Material Adverse Effect, and with respect to such real property there has not
occurred (i) any release or threatened release of any such hazardous
substance, (ii) any discharge or threatened discharge of any substance into
ground, surface, or navigable waters which violates any Federal, state, local
or foreign laws, rules or regulations concerning water pollution, or (iii)
any assertion of any Lien pursuant to Environmental Laws resulting from any
use, spill, discharge or clean-up of any hazardous or toxic substance or
waste, which occurrence will have a Material Adverse Effect.
5.19. FOREIGN ASSETS CONTROL REGULATIONS, ETC. The issue and sale of
the Notes by the Company and its use of the proceeds thereof as contemplated
by this Agreement, will not violate any of the regulations (other than those
regulations, if any, that are implicated solely as a result of the actions of
the purchasers of the Notes) administered by the Office of Foreign Assets
Control, the United States Department of the Treasury, including, without
limitation, the Foreign Assets Control Regulations, the Transaction Control
Regulations, the Cuban Assets Control Regulations, the Foreign Funds Control
Regulations, the Iranian Assets Control Regulations, the Iranian Transactions
Regulations, the Iraqi Sanctions Regulations, the Libyan Sanctions
Regulations, the Federal Republic of Yugoslavia (Serbia and Montenegro) and
Bosnian Serb-Controlled Areas of the Republic of Bosnia and Herzegovina
Sanctions Regulations, the Unita (Angola) Sanctions Regulations, the
Terrorism Sanctions Regulations, and the Soviet Gold Coin Regulations of the
United States Treasury Department (31 C.F.R., Subtitle B, Chapter V, as
amended) or the restrictions set forth in Executive Orders No. 8389, 9193,
12543 (Libya), 12544 (Libya), 12801 (Libya), 12722 (Iraq), 12724 (Iraq),
12775 (Haiti), 12779 (Haiti), 12808 (Yugoslavia), 12810 (Yugoslavia) or 12831
(Yugoslavia), as
14
amended, of the President of the United States of America or of any rules or
regulations issued thereunder.
5.20. DISCLOSURE. This Agreement, the other Operative Agreements,
the Memorandum (as such may be updated by Schedule 5.4(b) hereto), and each
other historical financial statement, document, certificate or instrument
delivered to you by or on behalf of the Company, any Restricted Subsidiary,
or either General Partner or any of their Affiliates (as amended, updated or
revised by any subsequent delivery) in connection with the transactions
contemplated by this Agreement, taken together do not contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements contained therein, in light of the circumstances
under which they were made, not misleading (other than the statements made
regarding general economic conditions relating to national or local economies
(provided that this reference shall not affect the representation made in
Section 5.4(b)) and except for projections made and delivered in good faith
and on the basis of reasonable assumptions). There is no fact actually known
to the Company or either General Partner which has or in the future would (so
far as the Company or either General Partner can now reasonably foresee) have
a Material Adverse Effect which has not been set forth or referred to in this
Agreement, the Memorandum or another document, certificate or instrument
delivered to you.
5.21. CHIEF EXECUTIVE OFFICE. The chief executive office of the
Company and the Managing General Partner and the office where each maintains
its records relating to the transactions contemplated by the Operative
Agreements is located at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
5.22. SOLVENCY. Upon the sale of the Notes and the concurrent or
prior consummation of the transactions contemplated hereby, the Company and
each Restricted Subsidiary will be Solvent. "SOLVENT" means, with respect to
any Person, that (a) the sum of the assets of such Person, both at a fair
valuation and at present fair saleable value, will exceed the liabilities of
such Person, (b) such Person will have sufficient capital with which to
conduct its business as presently conducted and as proposed to be conducted
and (c) such Person has not incurred debts, and does not intend to incur
debts, beyond its ability to pay such debts as they mature. For purposes of
the foregoing definition, "DEBTS" means any liabilities or claims, and
"CLAIM" means (i) a right to payment, whether or not such right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured or unsecured or (ii) a right
to an equitable remedy for breach of performance if such breach gives rise to
a payment, whether or not such right to an equitable remedy is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured or unsecured. With respect
to any contingent liabilities, such liabilities shall be computed at the
amount which, in light of all the facts and circumstances existing at the
time, represents the amount which can reasonably be expected to become an
actual or matured liability.
15
5.23. YEAR 2000. The Company and its Subsidiaries have reviewed the
areas within their business and operations which could be adversely affected
by, and have developed or are developing a program to address on a timely
basis, the Year 2000 Problem. Based on such review and program, the Company
represents and warrants that (a) the Company's and its Subsidiaries' computer
based systems are Year 2000 Compliant or will be Year 2000 Compliant not
later than December 30, 1999 and (b) the Year 2000 Problem will not result in
an Event of Default or have a material adverse effect on the condition
(financial or otherwise), business, operations, assets or properties of the
Company and the Restricted Subsidiaries (taken as a whole). The Company and
its Subsidiaries, to the best of the Company's and its Subsidiaries'
knowledge, have worked or will work with their relevant customers, suppliers
and other service providers to seek to prevent any Year 2000 Problem in such
customers', suppliers' and other service providers' systems from having a
material adverse effect on the Company and its Subsidiaries (taken as a
whole).
SECTION 6. PURCHASER'S REPRESENTATIONS; SOURCE OF FUNDS.
6.1. You represent that you are purchasing the Notes for your own
account or for one or more separate accounts maintained by you or for the
account of one or more pension or trust funds, in each case not with a view
to or for sale in connection with any distribution thereof within the meaning
of the Securities Act of 1933, as amended, or with any present intention of
selling any of the Notes in connection with any distribution, PROVIDED that
the disposition of your property shall at all times be within your control.
If you are purchasing for the account of one or more pension or trust funds
(other than pension or trust funds included in the general account of an
insurance company), you represent that (except to the extent that you have
otherwise advised Debevoise & ▇▇▇▇▇▇▇▇ and the Company in writing) you have
sole investment discretion with respect to the acquisition of the Notes to be
issued to you pursuant to this Agreement and the authority to make the
representations herein contained on behalf of such pension or trust funds and
on your own behalf and that the determination and decision on your behalf to
purchase such Notes for such pension or trust funds is being made by the same
individual or group of individuals who customarily pass on such investments.
6.2 You represent that at least one of the following statements is
an accurate representation as to the source of funds to be used by you to pay
the purchase price of the Notes purchased by you hereunder:
(a) if you are an insurance company, no part of such funds
constitutes assets allocated to any separate account maintained by you in
which an employee benefit plan (or its related trust) has any interest
and, if the source of funds includes assets of an insurance company
general account, then the statements in Section 6.2(e) are accurate as to
such source; or
16
(b) if you are an insurance company, to the extent that any of such
funds constitutes assets allocated to any separate account maintained by
you, (i) such separate account is a "pooled separate account" within the
meaning of Prohibited Transaction Class Exemption 90-1, in which case you
have disclosed to the Company the names of each employee benefit plan
whose assets in such separate account exceed 10% of the total assets or
are expected to exceed 10% of the total assets of such account as of the
date of such purchase (and for the purposes of this subdivision (b), all
employee benefit plans maintained by the same employer or employee
organization are deemed to be a single plan), or (ii) such separate
account contains only the assets of a specific employee benefit plan, the
identity of which you have delivered to the Company in writing; or
(c) if you are a "qualified professional asset manager" or "QPAM"
(as defined in Part V of Prohibited Transaction Class Exemption 84-14,
issued March 13, 1984 (the "QPAM Exemption")), all of such funds
constitute assets of an "investment fund" (as defined in Part V of the
QPAM Exemption) managed by you, no employee benefit plan assets which are
included in such investment fund, when combined with the assets of all
other employee benefit plans (i) established or maintained by the same
employer or an affiliate (as defined in Part V of the QPAM Exemption) of
such employer or by the same employee organization and (ii) managed by
you, exceed 20% of the total client assets managed by you, the conditions
of the QPAM Exemption (other than Section I(a) thereof) are satisfied
and you have disclosed to the Company the names of all employee benefit
plans whose assets are included in such investment fund; or
(d) if you are other than an insurance company, all or a portion of
such funds consists of funds which do not constitute assets of any
employee benefit plan (other than a governmental plan exempt from the
coverage of ERISA) and the remaining portion, if any, of such funds
consists of funds which may be deemed to constitute assets of one or more
specific employee benefit plans, accurate information as to the identity
of which you have delivered to the Company in writing; or
(e) if you are an insurance company, the source of the funds is an
insurance company general account in respect of which the reserves and
liabilities for the general account contract(s) held by or on behalf of
any benefit plan (as defined by the annual statement for life insurance
companies approved by the National Association of Insurance Commissioners
(the "NAIC Annual Statement"), determined before reduction for credits on
account of any reinsurance ceded on a coinsurance basis) together with
the amount of the reserves and liabilities for the general account
contract(s) held by or on behalf of any other benefit plans (as defined
by the NAIC Annual Statement) maintained by the same employer (or
affiliate thereof as defined in Prohibited Transaction Class Exemption
95-60) or by the same employee organization (as defined by the NAIC
Annual Statement) in the general account do not exceed 10% of the total
reserves and liabilities of the general account (exclusive
17
of separate account liabilities) plus surplus as set forth in the NAIC
Annual Statement filed with the state of domicile of the insurance
company.
As used in this Section 6.2, the terms "employee benefit plan", "governmental
plan" and "separate account" shall have the respective meanings assigned to
such terms in Section 3 of ERISA.
SECTION 7. ACCOUNTING; FINANCIAL STATEMENTS AND OTHER INFORMATION.
The Company will maintain, and will cause each Restricted Subsidiary
to maintain, a system of accounting established and administered in
accordance with GAAP, and will accrue, and will cause each Restricted
Subsidiary to accrue, all such liabilities as shall be required by GAAP. The
Company will deliver (in duplicate, unless you have advised the Company
otherwise) to you (and, in the case of subsection (f) hereof, to the
Trustee), so long as you shall be entitled to purchase Notes under this
Agreement or you or your nominee shall be the holder of any Notes, and to
each other Institutional Investor (in duplicate, unless such Institutional
Investor shall have advised the Company otherwise) holding any Notes (other
than a Competitor of the Company):
(a) as soon as practicable, but in any event within 60 days after
the end of each of the first three quarterly fiscal periods in each
fiscal year of the Company beginning with the fiscal period ending
September 30, 1999, consolidated (and to the extent that such are being
prepared, consolidating) balance sheets of the Company and the Restricted
Subsidiaries as at the end of such period and the related consolidated
(and, as to statements of income and cash flows, if applicable and, to
the extent that such are being prepared, consolidating) statements of
income, surplus or partners' capital, cash flows and stockholders' equity
of the Company and the Restricted Subsidiaries (i) for such period and
(ii) (in the case of the second and third quarterly periods) for the
period from the beginning of the current fiscal year to the end of such
quarterly period, setting forth in each case in comparative form the
consolidated and, where applicable and as appropriate, consolidating
figures for the corresponding periods of the previous fiscal year, all in
reasonable detail and certified by an authorized financial officer of the
Managing General Partner as presenting fairly, in all material respects,
the information contained therein (subject to changes resulting from
normal year-end adjustments), in accordance with GAAP applied on a basis
consistent with prior fiscal periods, PROVIDED that delivery within the
time period specified above of copies of the Public Partnership's
Quarterly Report on Form 10-Q prepared in compliance with the
requirements therefor and filed with the Securities and Exchange
Commission shall be deemed to satisfy the requirements hereof to the
extent such reports otherwise satisfy the requirements of this Section
7(a);
(b) as soon as practicable, but in any event within 120 days after
the end of each fiscal year of the Company beginning with the fiscal year
ending June 30, 1999, consolidated (and to the extent that such are being
prepared, consolidating) balance
18
sheets of the Company and the Restricted Subsidiaries as at the end of
such year and the related consolidated (and, as to statements of income
and cash flows, if applicable and to the extent that such are being
prepared, consolidating) statements of income, partners' capital, cash
flows and stockholders' equity of the Company and the Restricted
Subsidiaries for such fiscal year, setting forth in each case in
comparative form the consolidated and, where applicable and, to the
extent that such are being prepared, consolidating figures for the
previous fiscal year, all in reasonable detail, PROVIDED that delivery
within the time periods specified above of copies of the Public
Partnership's Annual Report on Form 10-K prepared in compliance with the
requirements therefor and filed with the Securities and Exchange
Commission shall be deemed to satisfy the requirements hereof to the
extent such reports otherwise satisfy such requirements, and accompanied
by a report thereon of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP or other independent public
accountants of recognized national standing selected by the Company,
which report shall state that such consolidated financial statements
present fairly in all material respects the financial position of the
Company and the Restricted Subsidiaries as at the dates indicated and the
results of their operations and cash flows for the periods indicated in
conformity with GAAP applied on a basis consistent with prior years and
that the audit by such accountants in connection with such consolidated
financial statements has been made in accordance with generally accepted
auditing standards in effect in the United States from time to time, and
in the case of such consolidating financial statements of the Company, if
any, certified by an authorized financial officer of the Managing General
Partner of the Company, as presenting fairly in all material respects the
information contained therein, in accordance with GAAP applied on a basis
consistent with prior fiscal periods;
(c) together with each delivery of financial statements pursuant to
subdivisions (a) and (b) of this Section 7, a certificate by an
authorized financial officer of the Managing General Partner of the
Company (i) stating that the signer has reviewed the terms of this
Agreement and the other Operative Agreements and has made, or caused to
be made under his or her supervision, a review in reasonable detail of
the transactions and condition of the Company and the Restricted
Subsidiaries during the accounting period covered by such financial
statements and that the signer does not have knowledge of the existence
and continuance as at the date of such certificate of any condition or
event which constitutes an Event of Default or Potential Event of
Default, or, if any such condition or event exists, specifying the nature
and period of existence thereof and what action the Company has taken or
is taking or proposes to take with respect thereto, (ii) specifying the
amount available at the end of such accounting period for Restricted
Payments in compliance with Section 10.4 and showing in reasonable detail
all calculations required in arriving at such amount, (iii) demonstrating
in reasonable detail, if applicable, compliance during and at the end of
such accounting period with the restrictions contained in Sections
10.1(b), (d), (e), (f), (g), (h), (i), (j), (p), (q) and (r), 10.3(c),
10.7(a)(ii), 10.7(a)(iii), and 10.7(c)(ii), and (iv) if not specified in
the related financial statements being delivered pursuant to subdivisions
(a) and (b) above, specifying the aggregate amount of interest paid or
19
accrued by the Company and the Restricted Subsidiaries, and the aggregate
amount of depreciation, depletion and amortization charged on the books
of the Company and the Restricted Subsidiaries, during the fiscal period
covered by such financial statements;
(d) together with each delivery of consolidated financial
statements pursuant to subdivision (b) of this Section 7, a written
statement by the independent public accountants giving the report thereon
(i) stating that in connection with their audit examination, the terms of
this Agreement and the other Operative Agreements were reviewed to the
extent considered necessary for the purpose of expressing an opinion on
the consolidated financial statements and for making the statement
contained in clause (ii) hereof (it being understood that no special
audit procedures in addition to those required by generally accepted
auditing standards then in effect in the United States shall be required)
and (ii) stating whether, in the course of their audit examination, they
obtained knowledge (and whether, as of the date of such written
statement, they have knowledge) of the existence and continuance of any
condition or event which constitutes an Event of Default or Potential
Event of Default insofar as such Event of Default or Potential Event of
Default relates to accounting or financial matters, and, if so,
specifying the nature and period of existence thereof;
(e) promptly upon their becoming publicly available, copies of (i)
all financial statements, reports, notices and proxy statements sent or
made available by the Company, the Managing General Partner or the Public
Partnership to all of its security holders in compliance with the
Securities Exchange Act of 1934, as amended from time to time, or any
comparable Federal or state laws relating to the disclosure by any Person
of information to its security holders, (ii) all regular and periodic
reports and all registration statements and prospectuses filed by the
Company, the Managing General Partner or the Public Partnership with any
securities exchange or with the Securities and Exchange Commission or any
governmental authority succeeding to any of its functions (other than
Registration Statements on Form S-8), and (iii) all press releases and
other statements made available by the Company, the Managing General
Partner or the Public Partnership to the public concerning material
developments in the business of the Company, either General Partner of
the Company or the Public Partnership, as the case may be;
(f) promptly, but in any event within five days after any
Responsible Officer of the Company knows, that (x) any condition or event
which constitutes an Event of Default or Potential Event of Default has
occurred or exists, or is expected to occur or exist, (y) the holder of
any Note has given any notice or taken any other action with respect to a
claimed Event of Default or Potential Event of Default under this
Agreement or default under any other Operative Agreement or (z) any
Person has given any notice to the Company, either General Partner or any
Restricted Subsidiary or taken any other action with respect to a claimed
default or event or condition of the type referred to in Section 11(f),
an Officers' Certificate of the Company describing
20
the same and the period of existence thereof and what action the Company
has taken, is taking and proposes to take with respect thereto;
(g) promptly, and in any event within five Business Days after a
Responsible Officer of the Company obtains knowledge of (i) the
occurrence of an adverse development with respect to any litigation or
proceeding involving the Company, any of its Subsidiaries or either
General Partner which in the reasonable judgment of the Company presents
a reasonable likelihood of having a Material Adverse Effect or (ii) the
commencement of any litigation or proceeding involving the Company, any
of the Subsidiaries or either General Partner which in the reasonable
judgment of the Company presents a reasonable likelihood of having a
Material Adverse Effect, a written notice of a Responsible Officer
describing in reasonable detail such commencement of, or adverse
development with respect to, such litigation or proceeding;
(h) promptly, but in any event within five days after any
Responsible Officer of the Company knows, that any of the events or
conditions specified below with respect to any Plan has occurred or
exists, or is expected to occur or exist, a statement setting forth
details respecting such event or condition and the action, if any, that
the Company or any Related Person of the Company has taken, is taking and
proposes to take or cause to be taken with respect thereto (and a copy of
any notice or report filed with or given to or communication received
from the PBGC, the Internal Revenue Service or the Department of Labor
with respect to such event or condition):
(A) any reportable event, as defined in Section 4043(b) of
ERISA and the regulations issued thereunder (other than one for which
the applicable notice requirements have been waived by PBGC
regulation);
(B) the filing under Section 4041 of ERISA of a notice of
intent to terminate any Plan or the termination of any Plan;
(C) a substantial cessation of operations within the meaning
of Section 4062(e) of ERISA under circumstances which could result in
the treatment of the Company or any Related Person of the Company as a
substantial employer under a "multiple employer plan" or the
application of the provisions of Section 4062, 4063 or 4064 of ERISA
to the Company or any Related Person of the Company;
(D) the taking of any steps by the PBGC or the institution
by the PBGC of proceedings under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any
Plan, or the receipt by the Company or any Related Person of the
Company of a notice from a Multiemployer Plan that such action has
been taken by the PBGC with respect to such Multiemployer Plan;
21
(E) the complete or partial withdrawal by the Company or any
Related Person of the Company under Section 4063, 4203 or 4205 of
ERISA from a Plan which is a "multiple employer plan" or a
Multiemployer Plan, or the receipt by the Company or any Related
Person of the Company of notice from a Multiemployer Plan regarding
any alleged withdrawal or that it intends to impose withdrawal
liability on the Company or any Related Person of the Company or that
it is in reorganization or is insolvent within the meaning of Section
4241 or 4245 of ERISA or that it intends to terminate under Section
4041A of ERISA or from a "multiple employer plan" that it intends to
terminate;
(F) the taking of any steps concerning the threat or the
institution of a proceeding against the Company or any Related Person
of the Company to enforce Section 515 of ERISA;
(G) the occurrence or existence of any event or series of
events which could result in a material liability to the Company or
any Related Person of the Company pursuant to Section 4069(a) or
4212(c) of ERISA;
(H) the failure to make a contribution to any Plan, which
failure, either alone or when taken together with any other such
failure, is sufficient to result in the imposition of a lien on any
property of the Company or any Related Person of the Company pursuant
to Section 302(f) of ERISA or Section 412(n) of the Code or could
result in the imposition of a material tax or material penalty
pursuant to Section 4971 of the Code on the Company or any Related
Person of the Company;
(I) the amendment of any Plan in a manner which would be
treated as a termination of such Plan under Section 4041(e) of ERISA
or require the Company or any Related Person of the Company to provide
security to such Plan pursuant to Section 307 of ERISA or Section
401(a)(29) of the Code; or
(J) the incurrence of liability in connection with the
occurrence of a "prohibited transaction" (within the meaning of
Section 406 of ERISA or Section 4975 of the Code);
(i) promptly, but in any event within five days, after an officer
of any of the Company, any Subsidiary or either General Partner receives
any notice or request from any Person (other than any Affiliate or any
agent, attorney or similar party employed by the Company or either
General Partner) for information, or if the Company, any Subsidiary or
either General Partner provides any notice or information to any such
Person (other than any Affiliate or any agent, attorney or similar party
employed by the Company or either General Partner), concerning the
presence or release of any hazardous substance (as defined in CERCLA) or
hazardous waste (as defined in RCRA) or other contaminants (as defined by
any applicable federal, state, local or foreign laws) within, on, from,
relating to or affecting any property owned, leased, or subleased by the
Company, any Subsidiary or either General Partner (each
22
such notice, request or information, an "Environmental Notice"), copies
of such Environmental Notice, except (i) any Environmental Notice which
the Company reasonably determines will not result in any claim or
liability in excess of $250,000 (it being understood that to the extent
that all such Environmental Notices could reasonably be expected to
result in aggregate claims or liabilities in excess of $250,000, the
Company shall provide a summary of such Environmental Notices) and (ii)
any Environmental Notice made in the normal course of business which does
not pertain to the violation by the Company, any Subsidiary or either
General Partner of an Environmental Law;
(j) with reasonable promptness, such other financial reports and
information and data (including, without limitation, any management
letter issued or provided by independent public accountants of the
Company or any Restricted Subsidiary) with respect to the Company, any
Restricted Subsidiary, any other Subsidiary (to the extent such reports,
information and data relate to environmental matters or any material
litigation or proceeding) or either General Partner as from time to time
may be requested by you (so long as you hold a Note), or by any
Institutional Investor holder of any Note other than a Competitor of the
Company;
(k) promptly after a Responsible Officer of the Company or any
Restricted Subsidiary becomes aware of (i) any material violation of or
notice of potential liability under any Environmental Law or (ii) any
release or threatened release of any Hazardous Material at, on, into,
under or from any real property or any facility or equipment thereat in
excess of reportable or allowable standards or levels under any
Environmental Law, or in a manner and/or amount which could reasonably be
expected to result in liability under any Environmental Law, which
liability would result in a Material Adverse Effect, a statement setting
forth details respecting such event or condition and the action, if any,
that the Company or any Restricted Subsidiary of the Company has taken,
is taking and proposes to take or cause to be taken with respect thereto;
and
(l) promptly, and, in any event, within 30 days after such material
is provided to the governmental authority or third party, copies of any
notice, submission or documentation provided by the Company or any
Restricted Subsidiary to any governmental authority or third party under
any Environmental Law if the matter which is the subject of the notice,
submission or other documentation could reasonably be expected to have a
Material Adverse Effect.
SECTION 8. INSPECTION.
The Company will permit or cause the Managing General Partner to
permit (a) at any time when an Event of Default or Potential Event of Default
shall have occurred and be continuing, any authorized representatives
designated by you, so long as you shall be entitled to purchase the Notes
under this Agreement or you or your nominee shall be the holder of any Notes,
or by any other Institutional Investor that is a holder of any Notes
23
(other than a Competitor of the Company), and (b) at any other time, any
authorized representative designated by any Purchaser or Purchasers holding
at least 4.5% of the aggregate principal amount of the Notes, or by any other
holder or holders of at least 4.5% of the aggregate principal amount of the
Notes (other than a Competitor of the Company) then outstanding and an
authorized representative of all of the holders of the Notes, in each case,
upon prior written notice and as may be reasonably requested, to visit during
normal business hours and inspect any of the properties of the Company, any
Restricted Subsidiary and any other Subsidiary (to the extent relating to
environmental or litigation matters) and, to the extent relating to the
Business, any properties of either General Partner or of either General
Partner's Subsidiaries, including the books of account of the Company, the
Restricted Subsidiaries, such other Subsidiaries, either General Partner and
either General Partner's Subsidiaries, and to make copies and take extracts
therefrom, and to discuss its and their affairs, finances and accounts with
its and their senior officers and (with reasonable prior written notice)
independent public accountants (and by this provision each of the Company and
either General Partner authorizes such accountants to discuss with such
representatives the affairs, finances and accounts of the Company, any
Restricted Subsidiary, such other Subsidiaries, and, to the extent relating
to the Business, either General Partner or any of either General Partner's
Subsidiaries, as the case may be) all at such times and as often as may be
requested, PROVIDED that you and such other Institutional Investors shall
bear the expenses of your and such Institutional Investors' respective
authorized representative, except the Company will bear the expenses of such
authorized representatives if an Event of Default or Potential Event of
Default has occurred and is continuing; and the Company shall at all times
bear the expenses of its and its Affiliates' officers and independent public
accountants.
SECTION 9. PREPAYMENT OF NOTES.
9.1. REQUIRED PREPAYMENTS OF THE NOTES. On each of the dates set
forth in the following table, the Company will prepay the principal amount of
the Notes set forth opposite such date in such table (or such lesser
principal amount of the Notes as shall at the time be outstanding), at the
principal amount of the Notes so prepaid, without premium, together with
interest accrued thereon:
24
TRANCHE A NOTES
Principal Amount
Date of Prepayment of Prepayment
--------------------- --------------------
July 31, 2003 $10,000,000.00
July 31, 2004 $10,000,000.00
TRANCHE B NOTES
Principal Amount
Date of Prepayment of Prepayment
--------------------- --------------------
July 31, 2003 $4,285,714.29
July 31, 2004 $4,285,714.28
July 31, 2005 $4,285,714.29
July 31, 2006 $4,285,714.28
July 31, 2007 $4,285,714.29
July 31, 2008 $4,285,714.28
Any partial prepayment of the Notes pursuant to Section 9.2, 9.3 or
(to the extent not applied to satisfy a prepayment required under this
Section 9.1) 9.4 shall be applied to reduce each prepayment thereafter
required to be made pro rata, but otherwise no prepayment or acquisition of
the Notes by the Company or any of its Affiliates shall relieve the Company
from its obligation to make the required prepayments provided for in this
Section 9.1. The Company shall notify the holders of the Notes of any
application provided for in the immediately preceding sentence five days
prior to such application. On the maturity date for each series of Notes,
the Company will pay the then outstanding principal amount of the Notes of
such series together with interest accrued thereon.
9.2. OPTIONAL PREPAYMENTS OF THE NOTES WITH MAKE WHOLE AMOUNT. The
Notes shall be subject to prepayment, in whole at any time or from time to
time in part (in an amount of not less than $5,000,000), at the option of the
Company, upon notice as provided in Section 9.5 at 100% of the principal
amount of the Notes so prepaid plus interest accrued thereon to the
prepayment date and the Make Whole Amount.
9.3. PREPAYMENT ON CHANGE OF CONTROL. (a) The Company will, within
90 days after any Change of Control, give written notice of such Change of
Control to each holder of Notes. Such notice shall contain and constitute an
offer to prepay the Notes as described in subdivision (b) of this Section 9.3
and shall be accompanied by the certificate described in subdivision (e) of
this Section 9.3.
25
(b) The offer to prepay Notes contemplated by subdivision (a) of
this Section 9.3 shall be an offer to prepay, in accordance with and subject
to this Section 9.3, all, but not less than all, the Notes held by each
holder (in this case only, "holder" in respect of any Note registered in the
name of a nominee for a disclosed beneficial owner shall mean such beneficial
owner) on the Business Day specified in such offer (the "Proposed Prepayment
Date") that is not less than 20 days and not more than 30 days after the date
of such offer (if the Proposed Prepayment Date shall not be specified in such
offer, the Proposed Prepayment Date shall be the 20th day after the date of
such offer).
(c) A holder of Notes may accept the offer to prepay made pursuant
to this Section 9.3 by causing a notice of such acceptance to be delivered to
the Company at least 5 days prior to the Proposed Prepayment Date. A failure
by a holder of Notes to respond to an offer to prepay made pursuant to this
Section 9.3 shall be deemed to constitute a rejection of such offer by such
holder.
(d) Prepayment of the Notes to be prepaid pursuant to this Section
9.3 shall be at 100% of the principal amount of such Notes, plus a premium
equal to 1% of such principal amount (the "Premium Amount"), together with
interest on such Notes accrued to the date of prepayment. The principal
amount and accrued interest and the Premium Amount shall, with respect to all
Notes the holders of which accepted the offer to prepay pursuant to
subdivision (c), become due and payable on the Proposed Prepayment Date.
(e) Each offer to prepay the Notes pursuant to this Section 9.3
shall be accompanied by a certificate, executed by a senior financial officer
of the Managing General Partner and dated the date of such offer, specifying:
(i) the Proposed Prepayment Date; (ii) that such offer is made pursuant to
this Section 9.3; (iii) the principal amount of each Note offered to be
prepaid; (iv) the Premium Amount due on each Note in connection with such
prepayment; (v) the interest that would be due on each Note offered to be
prepaid, accrued to the Proposed Prepayment Date; (vi) that the conditions of
this Section 9.3 have been fulfilled; (vii) in reasonable detail, the nature
and date of the Change of Control; and (viii) that a failure to respond to
such notice shall be deemed a rejection of such offer to prepay the Notes.
9.4. CONTINGENT PREPAYMENTS ON DISPOSITION OF PROPERTY, TAKING OR
DESTRUCTION. (a) If at any time the Company or any of the Restricted
Subsidiaries disposes of property or such property shall be damaged,
destroyed or taken in eminent domain or there shall be insurance proceeds
with respect to such property, in any such case, with the result that there
are Excess Proceeds, and the Company does not apply such Excess Proceeds in
the manner described in Section 10.7(c)(ii)(B)(x), and if the next scheduled
date of prepayment of the Notes pursuant to Section 9.1 occurs within 365
days after receipt of such Excess Proceeds, such Excess Proceeds may be
applied to such prepayment required under Section 9.1 (unless such scheduled
prepayment has been paid by the Company). To the extent that there are such
Excess Proceeds remaining after
26
application in accordance with the first sentence of this Section 9.4(a), the
Company shall prepay, upon notice as provided in Section 9.5 (which notice
shall be given not later than 365 days after the date of such sale of
property), a principal amount of the outstanding Notes equal to the amount of
such remaining Excess Proceeds allocable to the Notes, determined by
allocating such remaining Excess Proceeds pro rata among the holders of all
Notes and Parity Debt, if any, outstanding on the date such prepayment is to
be made, according to the aggregate then unpaid principal amounts of the
Notes (and the Make Whole Amount on the principal amount of the Notes to be
prepaid) and Parity Debt, respectively. Each prepayment of Notes pursuant to
this Section 9.4(a) shall be made at 100% of the principal amount of the
Notes to be prepaid, plus interest thereon to the prepayment date plus, to
the extent the prepayment is not made in satisfaction of a required
prepayment in accordance with Section 9.1, the Make Whole Amount thereon.
(b) In the event that damage, destruction or a taking shall occur
in respect of all or a portion of the properties subject to any of the
Security Documents, all net insurance proceeds, self-insurance amounts or net
awards which, as of any date, shall not theretofore have been applied to the
cost of repairing or replacing any damaged or destroyed assets shall be
deemed to be proceeds of property disposed of voluntarily, shall be subject
to the provisions of Section 10.7(c) and, if subdivision (ii)(B)(y) of
Section 10.7(c) is applicable thereto, shall be subject to the prepayment
provisions of Section 9.4(a). Any amounts prepaid pursuant to this Section
9.4(b) on the date on which a prepayment is required under Section 9.1 may be
applied to satisfy such prepayment required under Section 9.1.
9.5. NOTICE OF PREPAYMENTS; OFFICERS' CERTIFICATE. The Company will
give each holder of any Notes and the Trustee irrevocable written notice of
each prepayment under Section 9.2 or 9.4 not less than 10 days and not more
than 30 days prior to the Business Day fixed for such prepayment, in each
case specifying such prepayment date, the aggregate principal amount of the
Notes and the principal amount of each Note held by such holder to be prepaid
and the Section under which such prepayment is to be made. Notice of
prepayment having been given as aforesaid, the principal amount of the Notes
specified in such notice, together with interest thereon to the prepayment
date and together with the Make Whole Amount, if any, with respect thereto,
shall become due and payable on such prepayment date. The Company shall, on
or before the Business Day next succeeding the date which the Company sends
such written notice, give telephonic notice (immediately followed by written
notice sent by facsimile transmission) of the principal amount of the Notes
to be prepaid and the prepayment date to each holder of any Notes which shall
have designated a recipient of such notices in the Schedule of Purchasers
attached hereto or by notice in writing to the Company. Each holder of a
Note and the Trustee shall receive, on the Business Day immediately preceding
the date scheduled for any such prepayment, an Officers' Certificate
certifying that the conditions of the Section under which such prepayment is
to be made have been fulfilled and specifying the particulars of such
fulfillment. In the event that there shall have been a partial prepayment of
the Notes under Section 9.2, 9.3 or 9.4, the Company shall
27
promptly give notice to the holders of the Notes, accompanied by an Officers'
Certificate setting forth the principal amount of each of the Notes that was
prepaid and specifying how each such amount was determined, setting forth the
reduced amount of each required prepayment thereafter becoming due with
respect to the Notes under Section 9.1, and certifying that such reduction
has been computed in accordance with such Section.
9.6. ALLOCATION OF PARTIAL PREPAYMENTS. Upon any partial prepayment
of the Notes pursuant to Section 9.1, 9.2 or 9.4 the principal amount so
prepaid shall be allocated (in integral multiples of $1,000 as nearly as
practicable) to all Notes at the time outstanding in proportion to the
respective outstanding principal amounts thereof not theretofore called for
prepayment, with adjustments, to the extent practicable, to compensate for
any prior prepayments not made exactly in such proportion.
9.7. MATURITY; SURRENDER, ETC. In the case of each prepayment, the
principal amount of each Note to be prepaid shall mature and become due and
payable on the date fixed for such prepayment, together with interest on such
principal amount accrued to such date and the applicable Make Whole Amount or
Premium Amount, if any. From and after such date, unless the Company shall
fail to pay such principal amount when so due and payable, together with the
interest and Make Whole Amount or Premium Amount, if any, as aforesaid,
interest on such principal amount shall cease to accrue. Any Note paid or
prepaid in full shall, after such payment or prepayment in full, be
surrendered to the Company and canceled and shall not be reissued, and no
Note shall be issued in lieu of any such paid or prepaid principal amount of
any Note.
9.8. ACQUISITION OF NOTES. None of the General Partners or the
Company shall, nor shall any permit any of their respective Subsidiaries or
any Restricted Affiliate to, prepay or otherwise retire in whole or in part
prior to their stated final maturity (other than by prepayment pursuant to
Section 9.1, 9.2, 9.3 or 9.4 or upon acceleration of such final maturity
pursuant to Section 11), or purchase or otherwise acquire, directly or
indirectly, Notes held by any holder, except, in the case of such purchase or
acquisition, pursuant to an offer to purchase made pro rata to the holders of
all of the Notes on the same terms and conditions, provided that different
terms and conditions may apply with respect to each series of the Notes. Any
Notes prepaid or otherwise retired or purchased or otherwise acquired by the
Company or any of its Subsidiaries or either General Partner shall not be
deemed to be outstanding for any purpose under this Agreement or any other
Operative Agreement. Any Notes prepaid or otherwise purchased or otherwise
acquired by any Affiliate of the Company (other than any of its Subsidiaries
or either General Partner) shall not be deemed outstanding for the purpose of
any vote of the holders of the Notes (including, without limitation, the
calculation of any percentage of principal amount of the Notes outstanding
with respect to any such vote) pursuant to this Agreement or any other
Operative Agreement but shall be deemed outstanding with respect to the
calculation of any future payment of principal, premium and interest on the
Notes.
28
SECTION 10. BUSINESS AND FINANCIAL COVENANTS OF THE COMPANY.
The Company covenants that from the date of this Agreement through the
Closing and thereafter so long as any of the Notes are outstanding:
10.1. INDEBTEDNESS. The Company will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, create, incur, assume or
suffer to exist (such condition to be satisfied only on the date of such
incurrence) with respect to, any Indebtedness, except that:
(a) the Company may become and remain liable with respect to the
Indebtedness evidenced by the Notes;
(b) the Company and the Restricted Subsidiaries may become and
remain liable with respect to Indebtedness, which may be secured equally
and ratably with the Notes, incurred by the Company and the Restricted
Subsidiaries to finance the making of expenditures for the improvement or
repair of or additions to their respective properties or assets, PROVIDED
that (i) the aggregate principal amount of Indebtedness incurred under
this Section 10.1(b) and outstanding at any time shall not exceed an
amount equal to the sum of (x) the net cash proceeds received by the
Company from the Managing General Partner or from the Public Partnership
as a capital contribution or as consideration for the issuance by the
Company of additional partnership interests, in each case for the sole
purpose of financing such expenditures, and (y) the fair market value of
the Units contributed to the Company by the Public Partnership or issued
directly to the Person selling such asset or making such repair or
improvement by the Public Partnership for the sole purpose of financing
such expenditures, only to the extent, however, that such Units are used
to pay, substantially concurrently with the date of contribution, at
least 50% of the purchase price or cost of such improvements, repairs or
additions, and (ii) if such Indebtedness is to be secured under the
Security Documents as provided in Section 10.2(i), the agreement or
instrument pursuant to which such Indebtedness is incurred (A) contains
no financial or business covenants that are more restrictive on the
Company or its Subsidiaries than, or that are in addition to, those
contained in this Section 10 (unless prior to or simultaneously with the
incurrence of such Indebtedness this Agreement and the Other Agreements
are amended to provide the benefits of such more restrictive or
additional covenants to the holders of the Notes) and (B) specifies no
events of default (other than with respect to the payment of principal
and interest on such Indebtedness or the accuracy of representations and
warranties made in connection with such agreement or instrument) which
are capable of occurring prior to the occurrence of the Events of Default
specified in Section 11 (unless prior to or simultaneously with the
incurrence of such Indebtedness this Agreement and the Other Agreements
are amended to provide the benefit of such events of default to the
holders of the Notes);
29
(c) any Restricted Subsidiary may become and remain liable with
respect to Indebtedness of such Restricted Subsidiary owing to the
Company or to another Restricted Subsidiary, PROVIDED that such
Indebtedness is created and is outstanding under an agreement or
instrument pursuant to which such Indebtedness is subordinated to the
Notes and to Indebtedness secured under the Security Documents at least
to the extent provided in the subordination provisions set forth in
Exhibit D and PROVIDED FURTHER that such Indebtedness is evidenced by an
Intercompany Note pledged to the Trustee;
(d) the Company and the Restricted Subsidiaries may become and
remain liable with respect to unsecured Indebtedness owing to either
General Partner or an Affiliate of either General Partner, PROVIDED that
(i) the aggregate principal amount of such Indebtedness of the Company
and the Restricted Subsidiaries outstanding at any time shall not be in
excess of $20,000,000 and (ii) such Indebtedness is created and is
outstanding under an agreement or instrument pursuant to which such
Indebtedness is subordinated to the Notes and to Indebtedness secured
under the Security Documents at least to the extent provided in the
subordination provisions set forth in Exhibit D;
(e) the Company may become and remain liable with respect to
Indebtedness incurred under the Bank Credit Facilities, PROVIDED that
(i) the aggregate principal amount outstanding under the
Initial Acquisition Facility, together with amounts outstanding
pursuant to Indebtedness permitted by subdivisions (h)(3)(i) and
(j)(x)(i)(A) of this Section 10.1, will be in an aggregate principal
amount not in excess of the greater of (i) $35,000,000, and (ii) 40%
of the Consolidated Net Worth of the Company as of the date of
incurrence of the Indebtedness outstanding at any time, and
(ii) in respect of the Working Capital Facility:
(1) there shall be a period of at least 30
consecutive days during each fiscal year of the Company on each
day of which there shall be no such Indebtedness outstanding
under the Working Capital Facility (the "Requisite Period"),
PROVIDED that, in the event that there shall not have been any
Requisite Period in any fiscal year, the lowest average balance
for a period of 30 consecutive days outstanding during such
fiscal year shall be treated as outstanding funded Indebtedness
for purposes of future incurrences of Indebtedness pursuant to
Section 10.1(f)(iii), and
(2) the aggregate principal amount of loans, exposure
under letters of credit in respect of the Working Capital
Facility and the unfunded commitments thereunder at any time
outstanding thereunder shall not be in excess of $75,000,000
plus the excess, if any, of (x) Consolidated Cash Flow over (y)
$53,000,000;
30
(f) the Company and the Restricted Subsidiaries may become and
remain liable with respect to Indebtedness, in addition to that otherwise
permitted by the other subdivisions of this Section 10.1, which may be
secured equally and ratably with the Notes, if on the date the Company or
any Restricted Subsidiary becomes liable with respect to any such
additional Indebtedness and immediately after giving effect thereto and
to the substantially concurrent repayment of any other Indebtedness (i)
the ratio of Consolidated Cash Flow to Consolidated Pro Forma Debt
Service is greater than (x) 2.25 to 1.0 for Incurrence Dates on or prior
to June 30, 2000 and (y) 2.50 for Incurrence Dates after June 30, 2000,
(ii) the ratio of Consolidated Cash Flow to Maximum Consolidated Pro
Forma Debt Service is greater than 1.25 to 1.0, and (iii) the ratio of
total funded Indebtedness (including the Indebtedness to be incurred) to
Consolidated Cash Flow is less than (x) 5.25 to 1.0 for Incurrence Dates
on or prior to June 30, 2000 and (y) 5.0 to 1.0 for Incurrence Dates
after June 30, 2000, PROVIDED that, in addition to the foregoing, if such
Indebtedness is to be secured under the Security Documents as provided in
Section 10.2(i), such Indebtedness shall be incurred pursuant to an
agreement or instrument which complies with the requirements set forth in
clause (ii) of the proviso to Section 10.1(b);
(g) the Company and the Restricted Subsidiaries may become and
remain liable with respect to the Indebtedness referred to in Schedule
5.7 to the 1996 Note Agreements or Schedule 5.7 of the 1998 Note
Agreements, PROVIDED that the aggregate principal amount of all such
Indebtedness at any time outstanding shall not exceed $32,000,000;
(h) the Company and any Restricted Subsidiary may become and remain
liable with respect to pre-existing Indebtedness relating to any Person,
business or assets acquired by the Company or such Restricted Subsidiary,
or both, as the case may be, PROVIDED that (1) no condition or event
shall exist which constitutes an Event of Default or Potential Event of
Default, (2) such Indebtedness was not incurred in anticipation of the
acquisition of such Person, business or assets and (3) after giving
effect to such Person becoming a Restricted Subsidiary, or the
acquisition of such business or assets, either (i) the sum of (A) such
Indebtedness, and (B) the then outstanding aggregate principal amount of
Indebtedness under the Initial Acquisition Facility, and under
subdivision (j)(x)(i)(A) of this Section 10.1, does not exceed the
greater of (A) $35,000,000 and (B) 40% of the Consolidated Net Worth of
the Company as of the date of the incurrence of the Indebtedness, or (ii)
the Company or such Restricted Subsidiary could incur at least $1 of
additional Indebtedness in compliance with the requirements set forth in
clauses (i), (ii) and (iii) of Section 10.1(f) (it being understood for
purposes of this Section 10(h) and Section 10.1(e)(i) that any
Indebtedness which on the date of acquisition of any Person, business or
assets could be incurred under the foregoing clause (i) or (ii) of this
Section 10.1(h) shall be deemed to have been incurred under clause (ii)
of this Section 10.1(h));
(i) so long as no Event of Default or Potential Event of Default has
occurred and is continuing, the Company and the Restricted Subsidiaries may
become and remain liable with respect to Indebtedness, which may be secured
equally and ratably with the Notes, incurred for any extension, renewal,
refunding or refinancing of Indebtedness permitted pursuant to subdivisions
(a), (b), (f) and (s) of this Section 10.1, PROVIDED that (i) the principal
amount (including any exposure under letters of credit and any unfunded
commitments) of such Indebtedness shall not exceed the principal amount
(including any exposure under letters of credit and any unfunded
commitments) of such Indebtedness being extended, renewed, refunded or
refinanced together with any accrued interest and Make Whole Amount, Premium
Amount or other premium with respect thereto and any costs and expenses
related to such extension, renewal, refunding or refinancing, (ii) the
maturity date of such Indebtedness shall not be sooner than the maturity
date of such Indebtedness being extended, renewed, refunded or refinanced,
(iii) the average life to maturity of such Indebtedness shall be equal to or
greater than the remaining average life to maturity of such Indebtedness
being extended, renewed, refunded or refinanced and (iv) if such
Indebtedness is incurred for any extension, renewal, refunding or
refinancing of Indebtedness permitted pursuant to subdivision (b), (f) or
(s) and it is secured, such Indebtedness satisfies the conditions specified
in clause (ii) of the proviso to subdivision (b) and such Indebtedness
specifies no events of default (other than with respect to the payment of
principal and interest on such Indebtedness or the accuracy of
representations and warranties made in connection with such agreement or
instrument) which are capable of occurring prior to the occurrence of the
events of default specified in the Bank Credit Facilities as of the date of
this Agreement (unless prior to or simultaneously with the incurrence of
such Indebtedness this Agreement and the Other Agreements are amended to
provide the benefit of such more restrictive covenants and events of default
to the holders of the Notes);
(j) so long as no Event of Default or Potential Event of Default has
occurred and is continuing, the Company and the Restricted Subsidiaries may
become and remain liable with respect to Indebtedness which may be secured
equally and ratably with the Notes, incurred for any extension, renewal,
refunding or refinancing of Indebtedness permitted pursuant to subdivision
(e) of this Section 10.1, PROVIDED that (x) after giving effect thereto
(i) the aggregate principal amount of (A) such Indebtedness incurred to
extend, refund, renew or refinance Indebtedness incurred pursuant to
subdivision (e)(i) in connection with the Initial Acquisition Facility,
(B) any such Indebtedness incurred pursuant to subdivision (e)(i) and
remaining outstanding, and (C) any outstanding Indebtedness incurred
pursuant to subdivision (h)(3)(i), shall not exceed the greater of
$35,000,000 and 40% of Consolidated Net Worth of the Company determined as
of the last day of the month immediately preceding the date of such
extension, renewal, refunding or refinancing, and (ii) the aggregate
principal amount of (A) such Indebtedness incurred to extend, refund, renew
or refinance Indebtedness incurred pursuant to subdivision (e)(ii) in
connection with the Working Capital Facility, (B) any such Indebtedness
incurred
32
pursuant to subdivision (e)(ii) and remaining outstanding (including any
exposure in respect of issued but undrawn letters of credit), and (C) any
remaining unfunded commitment under the Working Capital Facility, shall
not exceed $75,000,000 plus the excess, if any, of (X) Consolidated Cash
Flow over (Y) $53,000,000, and (y) such Indebtedness, any such letters of
credit and commitments shall be incurred pursuant to the Initial
Acquisition Facility or a working capital facility (A) which complies
with the requirements set forth in clause (ii)(1) of Section 10.1(e) and
(B) the financial and business covenants of such Indebtedness are no more
restrictive on the Company and its Subsidiaries and there are no
additional covenants than those contained in the Bank Credit Facilities
as of the date of this Agreement and such Indebtedness specifies no
events of default (other than with respect to the payment of principal
and interest on such Indebtedness or the accuracy of representations and
warranties made in connection with such agreement or instrument) which
are capable of occurring prior to the occurrence of the events of default
specified in the Bank Credit Facilities as of the date of this Agreement
(unless prior to or simultaneously with the incurrence of such
Indebtedness this Agreement and the Other Agreements are amended to
provide the benefit of such more restrictive and additional covenants and
events of default to the holders of the Notes);
(k) so long as no Event of Default or Potential Event of Default has
occurred and is continuing, the Company and the Restricted Subsidiaries may
become and remain liable with respect to unsecured Indebtedness incurred for
any extension, renewal, refunding or refinancing of Indebtedness otherwise
permitted by this Section 10.1, PROVIDED that (i) the principal amount of
such unsecured Indebtedness to be incurred shall not exceed the principal
amount of such Indebtedness being extended, renewed, refunded or refinanced
together with any accrued interest and Make Whole Amount, Premium Amount or
other premium with respect thereto and any costs and expenses related to
such extension, renewal, refunding or refinancing, (ii) the maturity date of
such unsecured Indebtedness shall not be sooner than the maturity date of
such Indebtedness being extended, renewed, refunded or refinanced and (iii)
the average life to maturity of such unsecured Indebtedness shall be equal
to or greater than the remaining average life to maturity of such
Indebtedness being extended, renewed, refunded or refinanced;
(l) so long as no Event of Default or Potential Event of Default has
occurred and is continuing, the Company and the Restricted Subsidiaries may
become and remain liable with respect to secured Indebtedness incurred for
any extension, renewal, refunding or refinancing of secured Indebtedness
(other than Indebtedness permitted by subdivisions (a), (b), (e) or (f))
otherwise permitted pursuant to this Section 10.1, PROVIDED that (i) the
principal amount of such Indebtedness to be incurred shall not exceed the
principal amount of such Indebtedness being extended, renewed, refunded or
refinanced together with any accrued interest and premium with respect
thereto and any and all costs and expenses related to such extension,
renewal, refunding or refinancing, (ii) the maturity date of such
Indebtedness shall not be
33
sooner than the maturity date of such Indebtedness being extended, renewed,
refunded or refinanced, and (iii) the average life to maturity of such
Indebtedness to be incurred shall be equal to or greater than the
remaining average life to maturity of such Indebtedness being extended,
renewed, refunded or refinanced;
(m) the Company and any Restricted Subsidiaries may become and remain
liable with respect to any Interest Rate Agreement;
(n) the Company and any Restricted Subsidiaries may become and remain
liable with respect to any Commodity Hedging Agreements;
(o) any Qualifying Restricted Subsidiary may become and remain liable
with respect to Indebtedness evidenced by the Subsidiary Guarantee Agreement
or Guarantees of Parity Debt;
(p) the Company may become and remain liable with respect to secured
Indebtedness incurred in connection with Capital Lease obligations, PROVIDED
that (1) the security for such Indebtedness shall extend only to such
property or asset, (2) the obligation incurred does not exceed the fair
market value of such property or asset (as determined in good faith by the
board of directors of the Managing General Partner) and (3) after incurring
such Indebtedness, and giving effect to the substantially concurrent
retirement of any other Indebtedness, the Company could incur at least $1 of
additional Indebtedness in compliance with the requirements set forth in
clauses (i), (ii) and (iii) of Section 10.1(f);
(q) the Company may become and remain liable with respect to secured
Indebtedness incurred in connection with purchase money obligations in
respect of any property or asset, PROVIDED that (1) the security for such
Indebtedness shall extend only to such property or asset, (2) the obligation
incurred does not exceed 85% of the fair market value of such property or
asset (as determined in good faith by the Board of Directors of the Managing
General Partner) and (3) after incurring such Indebtedness and giving effect
to the substantially concurrent retirement of any other Indebtedness the
Company could incur at least $1 of additional Indebtedness in compliance
with the requirements set forth in clauses (i), (ii) and (iii) of
Section 10.1(f);
(r) the Company may become and remain liable with respect to secured
Indebtedness incurred to pay all or a portion of the purchase price of
property acquired by the Company or to secure obligations incurred in
consideration of non-compete agreements, PROVIDED that (1) the security for
such Indebtedness shall extend only to the property or assets so acquired,
(2) such obligation does not exceed 85% of the fair market value of such
property or asset or 35% in the case of non-compete obligations (each as
determined in good faith by the board of directors of the Managing General
Partner of the Company) and (3) either (A) after incurring such
Indebtedness, and giving effect to the substantially concurrent retirement
of any other
34
Indebtedness, the Company could incur at least $1 of additional
Indebtedness in compliance with the requirements set forth in clauses (i),
(ii) and (iii) of Section 10.1(f) or (B) the amount of Indebtedness
permitted under subdivision (e)(i) of this Section 10.1 is permanently
reduced by the amount of such Indebtedness; and
(s) the Company may remain liable with respect to the Indebtedness
evidenced by the 1996 Notes and the 1998 Notes.
Notwithstanding the foregoing, the aggregate principal amount of all
Indebtedness of all Restricted Subsidiaries at any time outstanding (other than
(i) Indebtedness permitted by Section 10.1(o) (but only to the extent such
Guarantees are in favor of the holders of Parity Debt) and (ii) intercompany
Indebtedness of all Restricted Subsidiaries which is created in accordance with
the provisions of Section 10.1(c)) shall not exceed $10 million. For the
purpose of this Section 10.1, any Person becoming a Restricted Subsidiary after
the date of this Agreement shall be deemed to have become liable with respect to
all of its then outstanding Indebtedness at the time it becomes a Restricted
Subsidiary, and any Person extending, renewing or refunding any Indebtedness
shall be deemed to have become liable with respect to such Indebtedness at the
time of such extension, renewal or refunding. The Company or any Restricted
Subsidiary shall be deemed to have become liable with respect to any
Indebtedness secured by any real property acquired by the Company or such
Restricted Subsidiary, as the case may be, at the time of such acquisition. Any
amendment of the terms of this Agreement required by clause (ii) of the proviso
to Section 10.1(b) shall provide that such amendment shall only be effective
until the date the Indebtedness (the incurrence of which required the amendment
of this Agreement) is paid in full and all commitments to lend and letters of
credit outstanding under such facility are canceled or terminated. The Company
shall provide written notice to each holder of the repayment in full in cash of
such Indebtedness and the cancellation of all commitments and letters of credit
pursuant to any such facility, which notice shall provide that the amendments to
this Agreement required by clause (ii) of the proviso to Section 10.1(b) with
respect to such facility are no longer effective.
10.2. LIENS, ETC. The Company will not, and will not permit any
Restricted Subsidiary to, directly or indirectly create, incur, assume or permit
to exist any Lien on or with respect to any property or asset (including any
document or instrument in respect of goods or accounts receivable) of the
Company or any Restricted Subsidiary, whether now owned or held or hereafter
acquired, or any income or profits therefrom (whether or not provision is made
for the equal and ratable securing of the Notes in accordance with the
provisions of Section 10.16), except:
(a) Liens for taxes, assessments or other governmental charges the
payment of which is not at the time required by Section 10.9;
(b) Liens of landlords and carriers, vendors, warehousemen, mechanics,
materialmen, repairmen and other like Liens incurred in the ordinary course
of
35
business for sums not yet due or the payment of which is not at the time
required by Section 10.9, in each case not incurred or made in connection
with the borrowing of money, the obtaining of advances or credit or the
payment of the deferred purchase price of property;
(c) Liens (other than any Lien imposed by ERISA) incurred or deposits
made in the ordinary course of business (i) in connection with workers'
compensation, unemployment insurance, old age pension, retiree health
benefits and other types of social security, or (ii) to secure (or to obtain
letters of credit that secure) the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, performance bonds,
purchase, construction or sales contracts and other similar obligations, in
each case not incurred or made in connection with the borrowing of money,
the obtaining of advances or credit or the payment of the deferred purchase
price of property;
(d) any attachment or judgment Lien, unless the judgment it secures
shall not, within 60 days after the entry thereof, have been discharged or
execution thereof stayed pending appeal, or shall not have been discharged
within 60 days after expiration of any such stay;
(e) leases or subleases granted to others, zoning restrictions,
easements, licenses, reservations, rights-of-way, restrictions on the use of
property or irregularities of title (and with respect to leasehold
interests, mortgages, obligations, liens and other encumbrances incurred,
created, assumed or permitted to exist and arising by, through or under a
landlord or owner of the leased property with or without the consent of the
lessee) and other similar charges or encumbrances, which do not materially
interfere with the ordinary conduct of the business of the Company or any
Restricted Subsidiary;
(f) Liens on property or assets of any Restricted Subsidiary securing
Indebtedness of such Restricted Subsidiary owing to the Company or any other
Restricted Subsidiary;
(g) Liens described in Schedule 10.2 of the 1996 Note Agreements or
Schedule 10.2 of the 1998 Note Agreements as in effect on the date of this
Agreement;
(h) Liens created by any of the Security Documents securing
Indebtedness incurred in accordance with Section 10.1(a), Section 10.1(e) or
Section 10.1(s);
(i) Liens created by any of the Security Documents securing
Indebtedness incurred in accordance with Section 10.1(b), 10.1(f) or
10.1(m), PROVIDED that (1) such Liens are effected through an amendment to
the Security Documents to the extent necessary to provide the holders of
such Indebtedness equal and ratable security in the property and assets
subject to the Security Documents with the holders
36
of the Notes and of other Indebtedness secured under the Security
Documents as provided in Section 10.1(b), 10.1(f) or 10.1(m), (2) the
Security Documents are amended to the extent necessary to extend the Lien
thereof to any property or assets acquired or otherwise financed with the
proceeds of such Indebtedness, (3) the Company has delivered to the
Trustee an Officers' Certificate demonstrating that the principal amount
of such Indebtedness does not exceed the lesser of the cost to the
Company of such property or assets and the fair market value of such
property or assets (as determined in good faith by the Managing General
Partner of the Company), that such incurrence of Indebtedness pursuant to
Section 10.1(b), 10.1(f) or 10.1(m), as the case may be, complies in all
respects with the requirements of such Section and that the amendments to
the Security Documents required by this Section 10.2(i) and the filing
and recordation of such amendments and related supplements will not have
a Material Adverse Effect, and (4) the Company has delivered to the
Trustee an opinion of counsel reasonably satisfactory to the Trustee to
the effect that the Lien of the Security Documents has attached and is
perfected with respect to such additional property and assets;
(j) Liens existing on any property of any Person at the time it
becomes a Restricted Subsidiary, or existing prior to the time of
acquisition (and not created in anticipation of such acquisition) upon any
property acquired by the Company or any Restricted Subsidiary through
purchase, merger or consolidation or otherwise, whether or not assumed by
the Company or such Restricted Subsidiary, or created to secure Indebtedness
incurred under Section 10.1(f) to pay all or any part of the purchase price
("Purchase Money Lien") of property acquired by the Company or a Restricted
Subsidiary or to pay the cost of an improvement (other than improvements to
property subject to the Lien of the Security Documents), PROVIDED that
(i) any such Lien shall be confined solely to the item or items of property
so acquired and, if required by the terms of the instrument originally
creating such Lien, other property which is an improvement to or is acquired
for specific use in connection with such acquired property, (ii) such item
or items of property so acquired (other than property (which may include
stock or other equity interests) subject to Liens existing prior to the time
of acquisition and not created in anticipation of such acquisition) are not
required to become part of the Collateral under the terms of the Security
Documents, (iii) the principal amount of the Indebtedness secured by any
such Lien shall at no time exceed an amount equal to the lesser of (A) the
cost of such property to the Company or such Restricted Subsidiary, as the
case may be, and (B) the fair market value of such property (as determined
in good faith by the Managing General Partner) at the time such Person
owning such property becomes a Restricted Subsidiary or at the time of such
acquisition by the Company or such Restricted Subsidiary, as the case may
be, (iv) any such Purchase Money Lien shall be created not later than
90 days after, in the case of property, its acquisition, or, in the case of
improvements, their completion and (v) any such Lien (other than a Purchase
Money Lien) shall not have been created or assumed in contemplation of such
Person's becoming a
37
Restricted Subsidiary or such acquisition of property by the Company or any
Subsidiary;
(k) Liens in amounts not exceeding $500,000 incurred, required or
provided for under state law in connection with self-insurance arrangements;
(l) Liens arising from or constituting Permitted Encumbrances;
(m) any Lien securing Indebtedness referred to in Section 10.1(i), (j)
or (l) renewing or extending any Lien permitted by the foregoing
subdivisions of this Section 10.2, PROVIDED that (i) the Indebtedness
secured by any such Lien shall not exceed the principal amount of such
Indebtedness outstanding (including any exposure under letters of credit and
any unfunded commitments) immediately prior to the renewal or extension of
such Lien, (ii) no assets encumbered by any such Lien other than the assets
encumbered immediately prior to such renewal or extension shall be
encumbered thereby or with respect to any Indebtedness extending, renewing,
refunding or refinancing any Indebtedness secured pursuant to the Security
Documents, the assets specified therein and (iii) the maturity date of the
Indebtedness secured by any such Lien shall not be sooner than the maturity
date of such Indebtedness outstanding immediately prior to the renewal or
extension of such Lien;
(n) any Lien securing Indebtedness incurred in accordance with
Section 10.1(n), Section 10.1 (p), Section 10.1(q) or Section 10.1(r);
(o) any Lien arising from the action of collecting banks; and
(p) those Liens described on Schedule 10.2.
10.3. INVESTMENTS, GUARANTIES, ETC. The Company will not, and will not
permit any Restricted Subsidiary to, directly or indirectly (i) make or own any
Investment in any Person, or (ii) create or become liable with respect to any
Guaranty, except:
(a) the Company or any Restricted Subsidiary may make and own
Investments in
(1) marketable obligations issued or unconditionally
guaranteed by the United States of America, or issued by any
agency thereof and backed by the full faith and credit of the
United States of America in each case maturing within one year
from the date of acquisition thereof,
(2) marketable direct obligations issued by any state of
the United States of America or any political subdivision of any
such state or any public instrumentality thereof maturing within
one year from the date of acquisition thereof and having as at any
date of determination the
38
highest rating obtainable from either Standard & Poor's Ratings
Group or ▇▇▇▇▇'▇ Investors Service, Inc.,
(3) commercial paper maturing no more than 270 days from
the date of creation thereof and having as at any date of
determination one of the two highest ratings obtainable from
either Standard & Poor's Ratings Group or ▇▇▇▇▇'▇ Investors
Service, Inc.,
(4) certificates of deposit maturing one year or less
from the date of acquisition thereof issued by commercial banks
incorporated under the laws of the United States of America or any
state thereof or the District of Columbia or Canada, (A) the
commercial paper or other short-term unsecured debt obligations of
which are rated either A-1 or better (or comparably if the rating
system is changed) by Standard & Poor's Ratings Group or Prime-1
or better (or comparably if the rating system is changed) by
▇▇▇▇▇'▇ Investors Service, Inc. or (B) the long-term debt
obligations of which are rated either AA- or better (or comparably
if the rating system is changed) by Standard & Poor's Ratings
Group or Aa3 or better (or comparably if the rating system is
changed) by ▇▇▇▇▇'▇ Investors Service, Inc. ("Permitted Banks"),
or by any bank party to the Bank Credit Facilities the long-term
debt obligations of which are rated either A or better (or
comparably if the rating system is changed) by Standard and Poor's
Rating Group or A or better (or comparably if the rating system is
changed) by ▇▇▇▇▇'▇ Investor Service, Inc.,
(5) Eurodollar time deposits having a maturity of less
than 270 days from the date of acquisition thereof purchased
directly from any Permitted Bank,
(6) bankers' acceptances eligible for rediscount under
requirements of the Board of Governors of the Federal Reserve
System and accepted by Permitted Banks, and
(7) obligations of the type described in clause (1),
(2), (3) or (4) above purchased from a securities dealer
designated as a "primary dealer" by the Federal Reserve Bank of
New York or from a Permitted Bank as counterparty to a written
repurchase agreement obligating such counterparty to repurchase
such obligations not later than 14 days after the purchase thereof
and which provides that the obligations which are the subject
thereof are held for the benefit of the Company or a Restricted
Subsidiary by a custodian which is a Permitted Bank;
(b) the Company and any Restricted Subsidiary may make and own
Investments in any Restricted Subsidiary or Investments in capital stock
of, or other equity interests in, any Person which as a result of such
Investment becomes a
39
Restricted Subsidiary, and any Qualifying Restricted Subsidiary may make
and permit to be outstanding Investments in the Company and may create or
become liable with respect to the Subsidiary Guarantee Agreement in
respect of the Company's obligations under the Notes or under Parity Debt;
(c) the Company or any Restricted Subsidiary may make and own
Investments (other than those included in subdivision (b) above) in the
capital stock of, or joint venture, partnership or other equity interests
in, or the contributions to capital in the ordinary course of business of,
any Unrestricted Subsidiary if immediately after giving effect to the making
of any such Investment, (A) the aggregate amount of all such Investments
made and outstanding pursuant to this subdivision (c) shall not at any time
exceed 20% of the Consolidated Net Worth of the Company and (B) the
aggregate amount of all Investments made and outstanding pursuant to this
subdivision (c) as at the end of any fiscal quarter of the Company shall not
exceed by more than $15,000,000 the amount of such Investments outstanding
as at the end of the corresponding fiscal quarter of the immediately
preceding fiscal year of the Company, and in the case of both clauses (A)
and (B) of this subdivision (c), (i) the amounts specified therein may be
increased by an amount equal to the net cash proceeds received by the
Company from the Managing General Partner or from the Public Partnership as
a capital contribution or as consideration for the issuance by the Company
of additional partnership interests for the sole purpose of making an
Investment in an Unrestricted Subsidiary, and (ii) net of cash distributions
received from all Unrestricted Subsidiaries for such period;
(d) the Company or any Restricted Subsidiary may make and own
Investments (x) constituting trade credits or advances to any Person
incurred in the ordinary course of business, (y) arising out of loans and
advances to officers, directors and employees for travel, entertainment and
relocation expenses, in each case incurred in the ordinary course of
business or (z) acquired by reason of the exercise of customary creditors'
rights upon default or pursuant to the bankruptcy, insolvency or
reorganization of a debtor;
(e) the Company or any Restricted Subsidiary may create or become
liable with respect to any Guaranty constituting an obligation, warranty or
indemnity, not guaranteeing Indebtedness of any Person, which is undertaken
or made in the ordinary course of business;
(f) the Company or any Restricted Subsidiary may create and become
liable with respect to any Interest Rate Agreements; and
(g) the Company or any Restricted Subsidiary may create and become
liable with respect to Commodity Hedging Agreements.
10.4. RESTRICTED PAYMENTS. The Company will not, directly or
indirectly, nor will it permit any Subsidiary to declare, order, pay, make or
set apart any sum for any
40
Restricted Payment, except that (a) the Company may declare, order, pay, make
or set apart once during each calendar quarter a Restricted Payment in cash
if (i) such Restricted Payment is in an amount not exceeding Available Cash
for the immediately preceding calendar quarter, (ii) prior to any such
proposed action no condition or event shall exist which constitutes a
Potential Event of Default under Section 11(b) or an Event of Default and
immediately after giving effect to any such proposed Restricted Payment no
condition or event shall exist which constitutes a Potential Event of Default
or an Event of Default, (iii) the ratio of Consolidated Cash Flow to
Consolidated Interest Expense, as of the date of such action, is greater than
1.75 to 1.00 (the "Coverage Test") and (iv) the Company shall have given to
each holder of a Note written notice thereof on the date such Restricted
Payment is declared, which date shall be within 50 days of the date on which
the Coverage Test was satisfied and at least 10 days prior to the date such
Restricted Payment is made, (b) the Company may declare, order, pay, make or
set apart a Restricted Payment needed to pay pass-through taxes so long as
(1) prior to any such proposed action no condition or event shall exist which
constitutes an Event of Default and (2) immediately after giving effect to
any such proposed action no condition or event shall exist which constitutes
a Potential Event of Default or an Event of Default, and (c) any Subsidiary
may make, pay or set apart dividends and distributions so long as such
dividends or distributions are made, paid or set apart for each holder of
such Person's capital stock or other equity on a pro-rata basis. Upon
satisfaction of the Coverage Test by the Company, such Restricted Payment
shall be made within 60 days thereafter, and, notwithstanding any other
provision of this Section 10.4, if the payment would have been permitted as
of the date of such declaration, such payment shall be permitted if made
during such 60 day period. The Company will not, in any event, directly or
indirectly declare, order, pay or make any Restricted Payment except in cash.
10.5. TRANSACTIONS WITH AFFILIATES. Except for the transactions or
conduct effected pursuant to the Operative Agreements as in effect on the date
of the Closing or listed on Schedule 10.5, the Company will not, and will not
permit any Restricted Subsidiary to, directly or indirectly, engage in any
transaction with any Affiliate of the Company, including, without limitation,
the purchase, sale or exchange of assets or the rendering of any service to the
Company's or such Restricted Subsidiary's business except upon fair and
reasonable terms that are no less favorable to the Company or such Restricted
Subsidiary, as the case may be, than those which might be obtained in an
arm's-length transaction at the time such transaction is agreed upon from
Persons which are not such an Affiliate, PROVIDED that the foregoing limitations
and restrictions shall not apply to any transaction between the Company and any
Restricted Subsidiary or between Restricted Subsidiaries or to loans and
advances to officers, directors and employees made in the ordinary course of
business.
10.6. SUBSIDIARY STOCK AND INDEBTEDNESS. The Company will not:
(a) directly or indirectly sell, assign, pledge or otherwise dispose
of any Indebtedness of or any shares of stock or similar interests of (or
warrants, rights or
41
options to acquire stock or similar interests of) any Subsidiary, except to
a Restricted Subsidiary;
(b) permit any Restricted Subsidiary directly or indirectly to sell,
assign, pledge or otherwise dispose of any Indebtedness of (i) the Company
or (ii) any other Restricted Subsidiary, or any shares of stock or similar
interests of (or warrants, rights or options to acquire stock or similar
interests of) any other Subsidiary, except to, in the case of clause (i),
the Company or, in all other cases, the Company or a Restricted Subsidiary;
(c) permit any Restricted Subsidiary to have outstanding any shares of
stock or similar interests which are preferred over any other shares of
stock or similar interests owned by the Company unless such shares of
preferred stock or similar interests are owned by the Company; or
(d) permit any Restricted Subsidiary directly or indirectly to issue
or sell (including, without limitation, in connection with a merger or
consolidation of a Restricted Subsidiary otherwise permitted by
Section 10.7(a)) any shares of its stock or similar interests (or warrants,
rights or options to acquire its stock or similar interests) except to the
Company or a Restricted Subsidiary;
PROVIDED that, (i) any Restricted Subsidiary may sell, assign or otherwise
dispose of Indebtedness of the Company or a Restricted Subsidiary if, assuming
such Indebtedness were incurred immediately after such sale, assignment or
disposition, such Indebtedness would be permitted under Section 10.1 (and if
such Indebtedness is secured, such Lien would be permitted pursuant to Section
10.2) or (ii) subject to compliance with Section 10.7(c), all Indebtedness and
shares of stock or partnership interests of any Restricted Subsidiary owned by
the Company or by another Restricted Subsidiary may be simultaneously sold as an
entirety for consideration at least equal to the fair value thereof (as
determined in good faith by the Managing General Partner) at the time of such
sale if such Restricted Subsidiary does not at the time own (A) any Indebtedness
of the Company (other than Indebtedness which, if incurred immediately after
such transaction, would be permitted under Section 10.1) or (B) any
Indebtedness, stock or other interest in any other Restricted Subsidiary which
is not also being simultaneously sold as an entirety in compliance with this
proviso or Section 10.7(b)(ii).
10.7. CONSOLIDATION, MERGER, SALE OF ASSETS, ETC. The Company will not,
and will not permit any Restricted Subsidiary to, directly or indirectly,
(a) consolidate with or merge into any other Person or permit any
other Person to consolidate with or merge into it, except that:
(i) any Restricted Subsidiary may consolidate with or merge
into the Company or a Restricted Subsidiary if, in the case of a
consolidation with or merger into the Company, the Company shall be the
surviving Person and if,
42
immediately after giving effect to such transaction, no condition or
event shall exist which constitutes an Event of Default or Potential
Event of Default; and
(ii) any entity (other than a Restricted Subsidiary) may
consolidate with or merge into the Company or a Restricted Subsidiary if
the Company or a Restricted Subsidiary, as the case may be, shall be the
surviving Person and if, immediately after giving effect to such
transaction, (w) the Company (1) shall not have a Consolidated Net Worth
(but without giving effect to any write-up in assets or amounts
attributable to goodwill pursuant to purchase accounting methods) of less
than the Consolidated Net Worth of the Company immediately prior to the
effectiveness of such transaction, (2) and its Restricted Subsidiaries
shall not be liable with respect to any Indebtedness or allow its
property to be subject to any Lien which it could not become liable with
respect to or allow its property to become subject to under this
Agreement on the date of such transaction, and (3) could incur, if the
consolidating or merging entity has outstanding Indebtedness, at least $1
of additional Indebtedness in compliance with Section 10.1(f) after
giving effect to such transaction, (x) substantially all of the assets of
such entity shall be located and substantially all of its business shall
be conducted within the United States of America, and (y) no condition or
event shall exist which constitutes an Event of Default or Potential
Event of Default; and
(iii) the Company may consolidate with or merge into any other
entity if (v) the surviving entity is a corporation, limited partnership,
limited liability company or business trust organized and existing under
the laws of the United States of America or a state thereof or the
District of Columbia, with substantially all of its properties located
and its business conducted within the United States of America, (w) such
corporation, limited partnership, limited liability company or business
trust expressly and unconditionally assumes the obligations of the
Company under this Agreement and each of the other Operative Agreements
and delivers to each holder of a Note at the time outstanding in
connection with such assumption an opinion of counsel reasonably
satisfactory to the Required Holders with respect to such matters
incident to such assumption as may be reasonably requested by such
holders, including, without limitation, as to the due authorization and
execution of the related agreement of assumption and the enforceability
of such agreement against such corporation, limited partnership, limited
liability company or business trust, (x) immediately after giving effect
to such transaction, such corporation, limited partnership, limited
liability company or business trust (1) shall not have a Consolidated Net
Worth (but without giving effect to any write-up in assets or amounts
attributable to goodwill pursuant to purchase accounting methods) of less
than the Consolidated Net Worth of the Company immediately prior to the
effectiveness of such transaction, (2) shall not be liable with respect
to any Indebtedness or allow its property to be subject to
43
any Lien which it could not become liable with respect to or allow its
property to become subject to under this Agreement on the date of such
transaction and (3) could incur, if the consolidating or merging
entity had outstanding Indebtedness, at least $1 of additional
Indebtedness in compliance with Section 10.1(f) after giving effect to
such transaction, and (y) immediately after giving effect to such
transaction no condition or event shall exist which constitutes an
Event of Default or a Potential Event of Default; or
(b) sell, lease, abandon or otherwise dispose of all or substantially
all its assets, except that:
(i) any Restricted Subsidiary may sell, lease or otherwise
dispose of all or substantially all its assets to the Company or to a
Restricted Subsidiary; and
(ii) the Company may sell, lease or otherwise dispose of all or
substantially all its assets to any corporation, limited partnership,
limited liability company or business trust into which the Company could
be consolidated or merged in compliance with clause (a)(iii) of this
Section 10.7, PROVIDED that each of the conditions set forth in such
subdivision (a)(iii) shall have been fulfilled; or
(c) sell, lease, abandon or otherwise dispose of any property to any
Person other than the Company or any Restricted Subsidiary (except for
(x) sales, leases or other dispositions of property in transactions
permitted by the foregoing clauses (a) or (b) of this Section 10.7, and
(y) sales or leasing of inventory in the ordinary course of business) unless
immediately before and after giving effect to such transaction, no Event of
Default or Potential Event of Default shall exist or be continuing and:
(i) at least 70% or more of the consideration (or 25% or more
in the event such consideration is less than $1,000,000) therefor shall
be in the form of cash consideration or marketable securities, PROVIDED,
that the amount of (A) any liabilities (as shown on the Company's or such
Restricted Subsidiary's most recent balance sheet or in the notes
thereto) of the Company or any Restricted Subsidiary (other than
liabilities that are by their terms subordinated in right of payment to
the Notes) that are assumed by the transferee of any such assets and (B)
any notes or other obligations received by the Company or any such
Restricted Subsidiary from such transferee that are promptly converted
into cash (to the extent of the cash received), shall be deemed to be
cash for the purposes of this Section 10.7(c)(i), and
(ii) either
(A) the aggregate net after-tax proceeds of all such
dispositions by the Company and all Restricted Subsidiaries during
the current fiscal
44
year (including all proceeds under title insurance policies
with respect to real property and all net insurance proceeds,
self-insurance amounts and net awards with respect to property
lost as a result of damage, destruction or a taking which have
not been applied to the cost of repairing or replacing any
damaged or destroyed assets), less the amount of all such net
after-tax proceeds previously applied in accordance with
subdivision (ii)(B) of this Section 10.7(c) and the amount of
such net after-tax proceeds equal to the purchase price of any
assets acquired to the extent that (1) such assets were
acquired within 90 days prior to the date of such disposal of
property, (2) the purchase price of such assets was not
previously applied to reduce the amount of net after-tax
proceeds of property disposed of under this Section 10.7(c),
(3) such assets were acquired for subsequent replacement of the
property so disposed of or may be productively used in the
United States of America in the conduct of the Business, (4) if
the assets so disposed were or should have been, then such
newly acquired assets shall be subject to the Lien of the
Security Documents, and (5) to the extent such assets were
acquired (in whole or in part) with borrowed money, such
borrowing has been repaid in full, (x) shall not exceed
$7,500,000 during such fiscal year and (y) when aggregated with
such net after-tax proceeds of all prior transactions under
this Section 10.7(c), shall not exceed $30,000,000; or
(B) in the event that such net after-tax proceeds (less
the amount thereof previously applied in accordance with this
subdivision (ii)(B) and the amount thereof equal to the purchase
price of any assets acquired to the extent that (1) such assets
were acquired within 90 days prior to the date of such disposal of
property, (2) the purchase price of such assets was not previously
applied to reduce the amount of net after-tax proceeds of property
disposed of under this Section 10.7(c), (3) such assets were
acquired for subsequent replacement of the property so disposed of
or may be productively used in the United States of America in the
conduct of the Business, (4) if the assets so disposed were or
should have been, then such newly acquired assets shall be subject
to the Lien of the Security Documents, and (5) to the extent such
assets were acquired (in whole or in part) with borrowed money,
such borrowing has been repaid in full) during the current fiscal
year exceed $7,500,000 or, when aggregated with such net after-tax
proceeds of all prior transactions under this Section 10.7(c),
exceed $30,000,000 (the larger amount of such excess net after-tax
proceeds actually realized being herein called "Excess Proceeds"),
the Company shall promptly pay over to the Trustee under the Trust
Agreement such Excess Proceeds not at the time held by the Trustee
for application by the Trustee (x) within 365 days of the date of
the disposal or loss of property to the acquisition of assets in
replacement of the property so disposed of or lost or of assets
which may be used in the
45
United States of America in the conduct of the Business (and if
the assets so disposed were or should have been, then such
newly acquired assets shall be subjected to the Lien of the
Security Documents) or to the cost of repairing or replacing
any damaged or destroyed assets, or (y) to the extent of Excess
Proceeds not applied pursuant to the immediately preceding
clause (x), to the payment and/or prepayment of the Notes and
Parity Debt, if any, pursuant to Section 9.1 and/or 9.4(a), all
as provided in Section 4(d) of the Trust Agreement and such
Section 9.1 and/or 9.4(a), and the Trustee shall have received
an Officers' Certificate from the Managing General Partner of
the Company certifying that the consideration received for such
property is at least equal to its fair value (as determined in
good faith by the Managing General Partner of the Company) and
that such consideration has been applied in accordance with the
terms of this Agreement.
Notwithstanding the foregoing, the Company and any Restricted Subsidiary
may sell or dispose of (i) real property assets sold or disposed of within 12
months of the acquisition of such assets, and (ii) all other assets sold or
disposed of within 6 months of the acquisition of such assets, in each case
constituting a portion of an acquired business, if (y) such assets are
specifically designated to the holders of the Notes in writing at the time of
such acquisition or within 30 Business Days thereafter as assets to be disposed
of, and (z) the Trustee shall have received an Officers' Certificate from the
Managing General Partner of the Company certifying that the consideration
received for such property is at least equal to its fair value (as determined in
good faith by the Managing General Partner of the Company). Such sales under
this paragraph will not be applied towards the annual or cumulative limitations
in subdivision (c) of this Section 10.7. In addition, notwithstanding the
foregoing, the Company may, at any time, exchange assets for other like assets
which may be used in the conduct of the Business, PROVIDED (1) the fair value of
the assets so acquired is substantially equivalent to the fair value of the
assets so exchanged (as determined in good faith by the Managing General Partner
of the Company), (2) if the assets exchanged were or should have been, then such
newly acquired assets shall be subject to the Lien of the Security Documents and
(3) the total value of the assets so exchanged in any twelve month period shall
not in the aggregate exceed 15% of the total assets of the Company. The holders
of Notes agree to take all actions reasonably requested by the Company (and at
the expense of the Company) to cause dispositions of any Collateral made in
compliance with this Section 10.7 to be made free and clear of the Liens created
by the Security Documents.
10.8. PARTNERSHIP OR CORPORATE EXISTENCE, ETC.; BUSINESS. (a) (i) The
Company will at all times preserve and keep in full force and effect its
partnership existence and (subject to the provisions of subdivision (b) of this
Section 10.8) its status as a partnership not taxable as a corporation for
federal income tax purposes; (ii) the Company will cause each Restricted
Subsidiary to keep in full force and effect its partnership or corporate
existence; and (iii) the Company will, and will cause each Restricted Subsidiary
46
to, at all times preserve and keep in full force and effect all of its material
rights and franchises (in each case except as otherwise specifically permitted
in Sections 10.6 and 10.7; PROVIDED, HOWEVER, that notwithstanding the preceding
provisions of this Section 10.8 the partnership or corporate existence of any
Restricted Subsidiary, and any right or franchise of the Company or any
Restricted Subsidiary, may be terminated if, in the good faith judgment of the
Managing General Partner, such termination is in the best interest of the
Company, is not disadvantageous to the holders of the Notes in any material
respect and would not have a Material Adverse Effect).
(b) The Company shall not be obligated to preserve its status as a
partnership not taxable as a corporation for federal income tax purposes if
(i) the Company's failure to preserve such status shall be the result of an
amendment to the tax laws enacted by the Congress of the United States and
(ii) after giving effect to the loss of such status the ratio of Consolidated
Cash Flow to Maximum Consolidated Pro Forma Debt Service, determined as of the
date of the loss of such status, would be greater than 1.1 to 1.0, assuming, for
the purposes of the computation of Consolidated Cash Flow, that Consolidated
Cash Flow would be reduced by taxes at the applicable tax rate of the Company
for such period had the Company been taxable as a corporation.
(c) The Company will not, and will not permit any Restricted
Subsidiary to, engage in any material lines of business other than the Business
as described in the Memorandum and other activities incidental or related to the
Business; PROVIDED that the Company may own and operate the Service Assets (as
defined in the Contribution, Conveyance and Assumption Agreement dated as of
December 17, 1996 among the Company, the Public Partnership, the General
Partnership, the General Partners and Empire Energy SC Corporation, a Delaware
corporation) and other assets of that type.
10.9. PAYMENT OF TAXES AND CLAIMS. The Company will, and will cause
each Subsidiary to, pay all taxes, assessments and other governmental charges or
levies imposed upon it or any of its properties or assets or in respect of any
of its franchises, business, income or profits when the same become due and
payable, but in any event before any penalty or interest accrues thereon, and
all claims (including, without limitation, claims for labor, services, materials
and supplies) for sums which have become due and payable and which by law have
or might become a Lien upon any of its properties or assets, and promptly
reimburse the holders of the Notes for any such taxes, assessments, charges or
claims paid by them, PROVIDED that no such tax, assessment, charge or claim need
be paid or reimbursed if it is being contested in good faith by appropriate
proceedings promptly initiated and diligently conducted and if such reserves or
other appropriate provision, if any, as shall be required by GAAP shall have
been made therefor and be adequate in the good faith judgment of the Managing
General Partner.
10.10. COMPLIANCE WITH ERISA. The Company will not, and will not permit
any Subsidiary or Related Person of the Company to:
47
(a) (i) engage in any transaction in connection with which the Company
or any Subsidiary could be subject to either a civil penalty assessed
pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of the
Code, (ii) terminate (within the meaning of Title IV of ERISA) or withdraw
from any Plan in a manner, or take, or fail to take, any other action with
respect to any Plan (including, without limitation, a substantial cessation
of operations within the meaning of Section 4062(e) of ERISA),
(iii) establish, maintain, contribute to or become obligated to contribute
to any welfare benefit plan (as defined in Section 3(1) of ERISA) or other
welfare benefit arrangement which provides post-employment benefits, which
cannot be unilaterally terminated by the Company, (iv) fail to make full
payment when due of all amounts which, under the provisions of any Plan or
applicable law, the Company or any Subsidiary or Related Person of the
Company is required to pay as contributions or permit to exist any material
accumulated funding deficiency, whether or not waived, with respect to any
Plan or (v) engage in any transaction in connection with which the Company,
any Subsidiary or any Related Person of the Company could be subject to
liability pursuant to Section 4069(a) or 4212(c) of ERISA, if any such
event, condition or transaction described in clauses (i) through (v) above,
either individually or together with any other such event, condition or
transaction, could reasonably be expected to result in (x) the imposition of
a Lien in a material amount on any assets or property of the Company or any
Subsidiary of the Company pursuant to Section 302(f) of ERISA or
Section 412(n) of the Code or (y) any liability to the Company, any
Subsidiary of the Company or any Related Person of the Company, which
liability could have a Material Adverse Effect; or
(b) as of any date of determination (i) permit the amount of unfunded
benefit liabilities under any Plan (other than a Multiemployer Plan)
maintained at such time by the Company or any Subsidiary or Related Persons
of the Company to exceed the current value of the assets of any such Plan by
more than $1,000,000 or (ii) permit the aggregate liability incurred by the
Company and any Subsidiary of the Company and Related Persons of the Company
pursuant to Title IV of ERISA with respect to one or more terminations of,
or one or more complete or partial withdrawals from, any Plan to exceed
$1,000,000.
As used in this Section 10.10, the term "accumulated funding deficiency" has the
meaning specified in Section 302 of ERISA and Section 412 of the Code, the term
"current value" has the meaning specified in Section 3 of ERISA and the terms
"benefit liabilities" and "amount of unfunded benefit liabilities" have the
meanings specified in Section 4001 of ERISA.
10.11. MAINTENANCE OF PROPERTIES; INSURANCE. (a) The Company will
maintain or cause to be maintained in working order and condition, in accordance
with normal industry standards and as otherwise required by the Security
Documents, all material properties used or useful in the business of the Company
and the Restricted Subsidiaries
48
and from time to time will make or cause to be made all appropriate repairs,
renewals and replacements thereof.
(b) The Company will, and will cause each of the Restricted
Subsidiaries to, keep its insurable properties adequately insured at all
times by Permitted Insurers; maintain such other insurance, to such
extent and against such risks, including fire and other risks insured
against by extended coverage, as is customary with companies in the same
or similar businesses, including public liability insurance against
claims for personal injury or death or property damage occurring upon,
in, about or in connection with the use of any properties owned, occupied
or controlled by it; maintain such other insurance policy as may be
required by law or any Security Document; and cause each such insurance
policy to name the Trustee, as an additional insured or loss payee
thereunder. The Company may maintain a system of self-insurance in an
amount customary for companies with established reputations engaged in
the same or similar business and owning similar properties as the
Company. The Company will permit the holders of the Notes and an
insurance consultant retained by the Required Holders, at the expense of
the Company, to review the insurance policies maintained by the Company
on an annual basis and will implement any changes to such policies
reasonably recommended by such consultant if available on a commercially
reasonable basis.
10.12. OPERATIVE AGREEMENTS; SECURITY DOCUMENTS. The Company will, and
will cause each Restricted Subsidiary to, perform and comply with all of its
obligations under each of the Operative Agreements to which it is a party, will
enforce each such Operative Agreement against each other party thereto and will
not accept the termination of any such Operative Agreement, unless (but only
with respect to Operative Agreements other than this Agreement or the Other
Agreements) the taking of or omitting to take any such action would not have a
Material Adverse Effect and will not amend, modify or supplement any Operative
Agreement without the prior written consent of the Required Holders (or with
respect to this Agreement as specified in Section 18), PROVIDED that (i) the MLP
Agreement and the Partnership Agreement (other than Sections 4.5, 6.3, and
7.5(a) of the Partnership Agreement the amendment of which requires the consent
of the Required Holders) may be amended, modified or supplemented without the
prior written consent of the Required Holders if such amendment, modification or
supplement would not have a Material Adverse Effect and the Company shall have
delivered to each holder of any Notes a copy of such proposed amendment,
modification or supplement together with an Officers' Certificate describing
such proposed amendment, modification or supplement and stating that to the best
of the Company's knowledge (after due inquiry) such proposed amendment,
modification or supplement would not have a Material Adverse Effect and (ii) the
Bank Credit Facilities may be amended, modified or supplemented without the
prior written consent of the Required Holders if such amendment, modification or
supplement may be made without the written consent of any holders of the Notes
under the Trust Agreement.
49
10.13. CHIEF EXECUTIVE OFFICE. The Company will not move its chief
executive office and the office at which it maintains its records relating to
the transactions contemplated by this Agreement and the Security Documents
unless (a) not less than 45 days' prior written notice of its intention to do
so, clearly describing the new location, shall have been given to the Trustee
and each holder of a Note and (b) such action, reasonably satisfactory to the
Trustee and each holder of a Note, to maintain any security interest in the
property subject to the Security Documents at all times fully perfected and
in full force and effect shall have been taken.
10.14. OPINIONS. The Company, at its expense, will furnish to the
Trustee and each holder of a Note during the period commencing October 1 to
November 1 of the years 2001 and 2006 and at such other times as the Trustee
may reasonably request in connection with the perfection of Liens granted
pursuant to the Security Documents an opinion of counsel satisfactory to the
Trustee stating that in the opinion of such counsel such action has been
taken with respect to the recording, filing, re-recording and re-filing of
the Security Documents and any financing statements necessary to maintain the
Lien or security interest created thereby and reciting the details of such
action or stating that in the opinion of such counsel no such action is
necessary to maintain such lien or security interest; PROVIDED, HOWEVER, that
such opinion may be from counsel not located in such jurisdiction and
PROVIDED, FURTHER, that such opinion is not required to address filings with
respect to the perfection of any lien or security interest in fixtures.
10.15. INFORMATION REQUIRED BY RULE 144A. The Company covenants that
it will, upon the prior written request of the holder of any Note, provide
such holder, and any qualified institutional buyer designated by such holder,
such financial and other information as such holder may reasonably determine
to be necessary in order to permit compliance with the information
requirements of Rule 144A under the Securities Act of 1933, as amended, in
connection with the resale of Notes, except at such times as the Company is
subject to the reporting requirements of section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended. For the purpose of this Section
10.15, the term "qualified institutional buyer" shall have the meaning
specified in Rule 144A under the Securities Act of 1933, as amended.
10.16. COVENANT TO SECURE NOTES EQUALLY. The Company covenants that,
if it or any Restricted Subsidiary shall create or assume any Lien upon any
of its property or assets, whether now owned or hereafter acquired, other
than Liens permitted by the provisions of Section 10.2 (unless prior written
consent to the creation or assumption thereof shall have been obtained
pursuant to Section 18 and except any such Lien arising by operation of law),
it will make or cause to be made effective provision whereby the Notes will
be secured by such Lien equally and ratably with any and all other
Indebtedness thereby secured so long as any such other Indebtedness shall be
so secured, it being understood that the provision of such equal and ratable
security shall not constitute a cure or waiver of any related Event of
Default.
50
10.17. COMPLIANCE WITH LAWS. (a) The Company will, and will cause
each Subsidiary to, comply with all applicable statutes, rules, regulations,
and orders of, and all applicable restrictions imposed by, the United States
of America, foreign countries, states, provinces and municipalities, and of
or by any governmental department, commission, board, regulatory authority,
bureau, agency and instrumentality of the foregoing, and of or by any court,
arbitrator or grand jury, in respect of the conduct of their respective
businesses and the ownership of their respective properties or business
(including, without limitation, Environmental Laws), except (i) such as are
being contested in good faith by appropriate proceedings promptly initiated
and diligently conducted and if such reserve or other appropriate provision,
if any, as shall be required by GAAP shall have been made therefor or (ii)
for any failure to so comply which, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect.
(b) The Company will, and will cause each Restricted Subsidiary to,
comply with all Environmental Laws, other than noncompliance which could not
reasonably be expected to result in a Material Adverse Effect, individually
or in the aggregate, with any other liability under any Environmental Laws.
10.18. FURTHER ASSURANCES. At any time and from to time promptly, the
Company shall, at its expense, execute and deliver to each holder of a Note
and to the Trustee such further instruments and documents, and take such
further action, as the holders of the Notes may from time to time reasonably
request, in order to further carry out the intent and purpose of this
Agreement and to establish and protect the rights, interests and remedies
created, or intended to be created, in favor of the holders of the Notes,
including, without limitation, the execution, delivery and recordation and
filing of security agreements and financing statements and continuation
statements under the Uniform Commercial Code of any applicable jurisdiction.
10.19. SUBSIDIARIES. (a) The Company may designate any Restricted
Subsidiary or newly acquired or formed Subsidiary as an Unrestricted
Subsidiary or any Unrestricted Subsidiary or newly acquired or formed
Subsidiary as a Restricted Subsidiary, in each case subject to satisfaction
of the following conditions:
(i) immediately before and after giving effect to such
designation no condition or event shall exist which constitutes an
Event of Default or Potential Event of Default;
(ii) immediately after giving effect to such designation, (1)
(other than in the case of a designation of an Unrestricted Subsidiary
that does not have any Indebtedness as a Restricted Subsidiary), the
Company would be permitted to incur at least $1 of additional
Indebtedness in compliance with subdivisions (i), (ii) and (iii) of
Section 10.1(f), (2) the Company and the Restricted Subsidiaries would
not be liable with respect to Indebtedness or any Guaranty, would not
own any Investments and their property would not be subject to any
Lien which is not permitted by this Agreement and (3) substantially
all of the Company's and the
51
Restricted Subsidiaries' assets will be located, and substantially all
of the Company's and the Restricted Subsidiaries' business will be
conducted, in the United States of America;
(iii) in the case of a designation as an Unrestricted
Subsidiary, if such designation (and all other prior designations of
Restricted Subsidiaries or newly acquired or formed Subsidiaries as
Unrestricted Subsidiaries during the current fiscal year) were deemed
to constitute an Investment by the Company in respect of all the
assets of the Subsidiary so designated, such Investment would be in
compliance with Section 10.3(c), with the amount of such Investment
being deemed to equal the net book value of such assets (as determined
in good faith by the Managing General Partner) in the case of a
Restricted Subsidiary or the cost of acquisition or formation in the
case of a newly acquired or formed Subsidiary, PROVIDED, that this
subdivision (iii) of this Section 10.19(a) shall not apply to an
acquisition or formation by the Company or a Restricted Subsidiary of
a newly acquired or formed Unrestricted Subsidiary to the extent such
acquisition or formation (1) is funded solely by the net cash proceeds
received by the Company from either General Partner or from the Public
Partnership as a capital contribution or as consideration for the
issuance by the Company of additional partnership interests or (2) the
assets involved in such acquisition are acquired in exchange for
additional partnership interests of the Company or the Public
Partnership PROVIDED, FURTHER, the net book value of the Restricted
Subsidiary designated an Unrestricted Subsidiary and the cost (other
than the amount paid in cash) of the acquisition or formation of a
newly acquired or formed Subsidiary shall be deemed proceeds from the
sale of assets of the Company for purposes of Section 10.7 and Section
9.4;
(iv) in the case of a designation of a Restricted Subsidiary
as an Unrestricted Subsidiary, such Restricted Subsidiary shall not
have been an Unrestricted Subsidiary prior to being designated a
Restricted Subsidiary; and
(v) the Company shall deliver to each holder of Notes,
within 20 Business Days after any such designation, an Officers'
Certificate stating the effective date of such designation and
confirming compliance with the provisions of this Section 10.19.
In the case of the designation of any Unrestricted Subsidiary as a
Restricted Subsidiary, such new Restricted Subsidiary shall be deemed to have
(a) made or acquired all Investments owned by it, and (b) incurred all
Indebtedness owing by it and all Liens to which any of its properties are
subject, on the date of such designation.
(b) The Company will cause each Qualifying Restricted Subsidiary,
at the time it is or is deemed to be designated as a Restricted Subsidiary,
to (i) become a party to the Company Security Agreement, the Subsidiary
Guarantee Agreement and the Trust
52
Agreement by execution of a Supplemental Agreement and deliver a Perfection
Certificate and (ii) enter into such documents as may be necessary or as any
holder of Notes may request in form and substance satisfactory to the
Required Holders in order to secure such Restricted Subsidiary's obligations
under the Subsidiary Guarantee Agreement with all or substantially all of the
assets of such Restricted Subsidiary of any type which, if they were assets
of the Company, would be Collateral. Prior to the designation of a
Subsidiary as a Restricted Subsidiary, the Company shall deliver to the
holders of the Notes an opinion of counsel with respect to the due execution
and delivery of the Supplemental Agreement by such Subsidiary and as to the
enforceability of the Company Security Agreement, the Trust Agreement, the
Supplemental Agreement and the Subsidiary Guarantee Agreement with respect to
such Subsidiary, such opinion to be in form and substance satisfactory to the
Required Holders.
(c) The Company will not own any Unrestricted Subsidiaries other
than Wholly Owned Subsidiaries satisfying the requirements in clauses (a),
(b) and (c) of the definition of Restricted Subsidiary.
10.20. DAMAGE, DESTRUCTION, TAKING, ETC. In the event of any damage,
destruction or a taking in respect of all or a portion of the properties
subject to any of the Security Documents or in the event there shall be
proceeds under title insurance policies with respect to any real property,
the Company will not apply any net insurance proceeds, self-insurance amounts
or net awards, if such proceeds (whether resulting from one or a series of
events or circumstances) exceed $25,000,000 in the aggregate, to the cost of
repairing or replacing any damaged or destroyed assets without the prior
written consent of the Required Holders.
10.21. ACCOUNTING CHANGES. The Company will not, and will not suffer
or permit any Restricted Subsidiary to, make any significant change in
accounting treatment or reporting practices, except as required by GAAP or
consented to by the Company's independent public accountant. The Company
will, and will cause each Restricted Subsidiary to, cause its fiscal year to
end on June 30 in each year.
10.22. ACQUISITIONS. Except as otherwise permitted by Section 10.7,
the Company will not, and will not cause or permit any of the Restricted
Subsidiaries to, purchase, lease or otherwise acquire (in one transaction or
a series of transactions) all or any substantial part of the assets of any
other Person, except that (a) the Company and any of the Restricted
Subsidiaries may purchase Inventory in the ordinary course of business and
(b) the Company or any Restricted Subsidiary may engage in any such
acquisition if no Event of Default or Potential Event of Default has occurred
and is continuing at the time of any such acquisition or would occur
immediately after giving effect thereto.
10.23. IMPAIRMENT OF SECURITY INTERESTS. Other than with respect to
Permitted Encumbrances, the Company will not, and will not permit any of the
Restricted Subsidiaries to, take or omit to take any action, which action or
omission might or would
53
have the result of materially impairing the security interests in favor of
the Trustee with respect to the Collateral, and the Company will not, and
will not permit any of the Restricted Subsidiaries to, grant to any Person
(other than the Trustee) any interest whatsoever in the Collateral.
10.24. LIMITATION ON RESTRICTIONS ON SUBSIDIARY DIVIDENDS, ETC. The
Company will not, and will not cause or permit any of the Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer
to exist or become effective any consensual encumbrance or restriction on the
ability of any Restricted Subsidiary to (a) pay dividends or make any other
distributions on or in respect of its capital stock, or pay any Indebtedness
owed to the Company or any Restricted Subsidiary, (b) make loans or advances
to the Company or any Restricted Subsidiary or (c) transfer any of its
properties or assets to the Company or any Restricted Subsidiary, except for
such encumbrances or restrictions existing under or by reason of (i)
customary non-assignment provisions in any lease governing a leasehold
interest or other contract entered into in the ordinary course of business
consistent with past practices, (ii) restrictions on the payment of dividends
and distributions pursuant to the terms of Indebtedness incurred by such
Restricted Subsidiary in accordance with Section 10.1 or (iii) this Agreement
or any other Operative Agreement.
10.25. NO OTHER NEGATIVE PLEDGES. The Company will not, and will not
cause or permit any of the Restricted Subsidiaries to, directly or
indirectly, enter into any agreement prohibiting the creation or assumption
of any Lien upon the properties or assets of the Company or any Restricted
Subsidiary, whether now owned or hereafter acquired, or requiring an
obligation to be secured if some other obligation is secured, except for this
Agreement, the Other Agreements, the Bank Credit Facilities and the terms of
any other Indebtedness incurred in accordance with Section 10.1 (PROVIDED
that the terms of such agreement for such other Indebtedness are no more
onerous to the Company and its Subsidiaries than those terms set forth in
Section 10.2); PROVIDED that no such agreement shall prohibit the granting of
Liens on assets of the Company and its Restricted Subsidiaries as
contemplated by the terms of this Agreement, the Security Documents and any
documents evidencing or creating any other Parity Debt.
10.26. SALES OF RECEIVABLES. The Company will not, and will not cause
or permit any of the Restricted Subsidiaries to, sell with recourse, discount
or otherwise sell or dispose of its notes or accounts receivable, except for
(a) accounts receivable consisting of assets of an operating unit sold as a
going concern in accordance with all other provisions of this Agreement and
(b) sales of account receivables which have been written off as uncollectable
or collectable only after extended delays.
10.27. FIXED PRICE SUPPLY CONTRACTS; CERTAIN POLICIES. (a) The
Company will not, and will not permit any of the Restricted Subsidiaries to,
at any time be a party or subject to any contract for the purchase or supply
by such parties of propane or other product except where (i) the purchase
price is set with reference to a spot index or indices
54
substantially contemporaneously with the delivery of such product or (ii)
delivery of such propane or other product is to be made no more than one year
after the purchase price is agreed to.
(b) The Company will not amend, modify or waive the trading policy
or supply inventory position policy existing as of the date of Closing,
except that the Company may amend its supply inventory position policy such
that such policy provides that neither it nor any of the Restricted
Subsidiaries will hold on hand more than 90 days' of commodities inventory.
The Company will provide each holder of a Note with prompt written notice of
any such new commodity hedging agreement or any such change in such policy.
Subject to the foregoing exception, the Company and the Restricted
Subsidiaries will comply in all material respects with such policies at all
times.
10.28. INDEPENDENT EXISTENCE. (a) The Company shall maintain, and
shall cause each of its Subsidiaries to maintain, books, records and accounts
that are separate from the books, records and accounts of the General
Partners or any of their respective Subsidiaries (other than the Company and
its Subsidiaries) such that: (i) the revenues of the Company and its
Subsidiaries will be credited to the accounts of the Company and its
Subsidiaries only; (ii) all expenses incurred by the Company and its
Subsidiaries shall be paid only from the accounts of the Company and its
Subsidiaries (other than those paid by the Managing General Partner and
allocated to the Company or its Subsidiaries in the manner set forth in
subdivision (c) of this Section); (iii) only officers and employees of the
Managing General Partner, the Company and its Subsidiaries in their capacity
as such shall have the authority to make disbursements with respect to the
accounts of the Company and its Subsidiaries, as the case may be; (iv) there
shall occur no sharing of accounts or funds between the Company and its
Subsidiaries, on the one hand, and either General Partner or any of their
respective Subsidiaries (other than the Company and its Subsidiaries), on the
other hand; and (v) all cash and funds of the Company and its Subsidiaries
shall be managed separately from the cash and funds of either General Partner
or any of their respective Subsidiaries (other than the Company and its
Subsidiaries), and there shall not occur any commingling, including for
investment purposes, of funds or assets of the Company and its Subsidiaries
with the funds or assets of either General Partner or any of their respective
Subsidiaries (other than the Company and its Subsidiaries).
(b) All full-time employees, consultants and agents of the Company
and its Subsidiaries shall be compensated directly from the bank accounts of
the Managing General Partner, the Company and such Subsidiaries for services
provided by such employees, consultants and agents and, to the extent any
employee, consultant or agent is also an employee, consultant or agent of
either General Partner or any of their respective Subsidiaries (other than
the Company and its Subsidiaries), the compensation of such employee,
consultant or agent shall be allocated in accordance with subdivision (c) of
this Section among the Company and its Subsidiaries, on the one hand, and
either General Partner and any of their respective Subsidiaries (other than
the Company and its
55
Subsidiaries), on the other hand, on a basis which reasonably reflects the
services rendered to the Company and its Subsidiaries.
(c) All overhead expenses (including telephone and other utility
charges) for items shared by the Company and its Subsidiaries, on the one
hand, and either General Partner or any of their respective Subsidiaries
(other than the Company and its Subsidiaries), on the other hand, shall be
allocated on the basis of actual use to the extent practicable and, to the
extent such allocation is not practicable, on a basis reasonably related to
actual use.
(d) The Company shall not permit either General Partner or any of
their respective Subsidiaries (other than the Company and its Subsidiaries)
to be named as a loss payee or additional insured on the insurance policy
covering the property of the Company or any of its Subsidiaries, or enter
into an agreement with the holder of such policy whereby in the event of a
loss in connection with such property, proceeds are paid to either General
Partner and their respective Subsidiaries (other than the Company and its
Subsidiaries).
10.29. OTHER DEBT. (a) The Company shall ensure that the lenders from
time to time in respect of any Parity Debt or any other Indebtedness in the
aggregate principal amount of at least $3,750,000 outstanding as permitted by
paragraphs (b) through (f), (i) through (l) and (r) of Section 10.1, in the
documents governing the terms of such Indebtedness, (i) recognize the
existence and validity of the obligations represented by the Notes and (ii)
agree to refrain from making or asserting any claim that this Agreement or
the obligations represented by the Notes are invalid or not enforceable in
accordance with its and their terms as a result of the circumstances
surrounding the incurrence of such obligations.
(b) Each holder of Notes from time to time, as evidenced by its
acceptance of such Notes, (i) acknowledges the existence and validity of the
obligations of the Company under the Bank Credit Facilities, the 1996 Note
Agreements and the 1998 Note Agreements (and any extension, renewal,
refunding or refinancing of the Bank Credit Facilities, the 1996 Notes or the
1998 Notes permitted by Section 10.1) and (ii) agrees to refrain from making
or asserting any claim that such obligations or the instruments governing the
terms thereof are invalid or not enforceable in accordance with its and their
terms as a result of the circumstances surrounding the incurrence of such
obligations.
10.30. RESTRICTION ON GENERAL PARTNER. The Managing General Partner
shall not (i) exist for any purpose or engage in any business or business
activity except (a) to serve as the Managing General Partner of the Company
and the Public Partnership, in the circumstances provided in the Partnership
Agreement and MLP Agreement, and (b) to own other wholly-owned corporate
Subsidiaries, PROVIDED that, each General Partner shall have agreed (x) that
it will not guaranty or, except with respect to Indebtedness assumed by the
Company or the Public Partnership, otherwise agree to be liable with respect
to any Indebtedness incurred by such Subsidiary and at the time of formation
or acquisition
56
thereof and in connection therewith, the assets of either General Partner are
not and will not be subject to any Liens relating to any Indebtedness or
other obligations of such Subsidiaries and (y) to be bound by the provisions
of Section 10.28 (all references therein to the Company to be deemed
references to the General Partners and all references therein to Subsidiaries
to be deemed references to Subsidiaries of the General Partners) and (z) the
General Partners shall confirm with an Approved Rating Agency (as defined
below) that its rating on the Notes in effect at such time will not be
downgraded solely as a result thereof, or (ii) incur any Indebtedness or,
other than with respect to the activities described in subsection (i) (a)
above, other liabilities (other than tax liabilities). "Approved Rating
Agency" shall mean any of Fitch Investors Services, Inc., Standard & Poor's
Ratings Group, ▇▇▇▇▇'▇ Investor Service, Inc. or Duff and ▇▇▇▇▇▇ Credit
Rating Co.
SECTION 11. EVENTS OF DEFAULT; ACCELERATION.
If any of the following conditions or events ("Events of Default")
shall occur and be continuing:
(a) the Company shall default in the payment of any principal of or
Make Whole Amount or Premium Amount, if any, on any Note when the same
becomes due and payable, whether at maturity or at a date fixed for
prepayment or by declaration or otherwise; or
(b) the Company shall default in the payment of any interest on any
Note or any amount due and payable under any Operative Agreement for more
than 5 Business Days after the same becomes due and payable; or
(c) the Company or any Restricted Subsidiary shall default in the
performance of or compliance with any term contained in Section 7(f), any
of Sections 10.1 through 10.8 (other than Section 10.8(c)), inclusive, or
the Dedicated Funds are not used to repay Indebtedness as specified in
the pro forma calculations set forth in the definition of Consolidated
Pro Forma Debt Service or the definition of Maximum Consolidated Pro
Forma Debt Service, as the case may be; or
(d) the Company, either General Partner, the Public Partnership or
any Restricted Subsidiary shall default in the performance of or
compliance with any other term contained in this Agreement or any other
Operative Agreement and such default shall not have been remedied within
30 Business Days after the earlier of the date such default shall first
have become actually known to any Responsible Officer of such Person or
the date written notice thereof shall have been received by the Company
from the Trustee or from any Note holder; or
(e) any representation or warranty made in writing by or on behalf
of the Company or any of its Affiliates in this Agreement, any other
Operative Agreement or in any instrument furnished in connection with the
transactions contemplated by this
57
Agreement shall prove to have been false or incorrect in any material
respect on the date as of which made or deemed made; or
(f) (i) the Company or any Restricted Subsidiary (as principal or
guarantor or other surety) shall default (after receiving notice, if any,
and/or the expiration of any applicable grace period) in the payment of
any amount of principal of or premium or interest on the Parity Debt or
any event shall occur or condition shall exist in respect of the Parity
Debt the effect of which is to cause such Parity Debt to become due
before its stated maturity or before its regularly scheduled dates of
payment and such default, event or condition shall continue for more than
the period of grace, if any, specified therein and shall not have been
waived pursuant thereto;
(ii) the Company or any Restricted Subsidiary (as principal or
guarantor or other surety) shall default (after receiving notice, if any,
and/or the expiration of any applicable grace period) in the payment of
any amount of principal of or premium or interest on any Indebtedness in
an amount at least equal to $10,000,000; or any event shall occur or
condition shall exist in respect of such other Indebtedness which is
outstanding in a principal amount of at least $10,000,000 or under any
evidence of any such Indebtedness or of any mortgage, indenture or other
agreement relating to such other Indebtedness, the effect of which is to
cause such other Indebtedness to become due before its stated maturity or
before its regularly scheduled dates of payment; or
(g) filing by or on the behalf of the Company or the Managing
General Partner of a voluntary petition or an answer seeking
reorganization, arrangement, readjustment of its debts or for any other
relief under any bankruptcy, reorganization, compromise, arrangement,
insolvency, readjustment of debt, dissolution or liquidation or similar
act or law, state or federal, now or hereafter existing ("Bankruptcy
Law"), or any action by the Company or the Managing General Partner with
respect to, or consent or acquiescence to, the appointment of a receiver,
trustee or other custodian of the Company or the Managing General
Partner, or of all or a substantial part of its property; or the making
by the Company or the Managing General Partner of any assignment for the
benefit of creditors; or the admission by the Company or the Managing
General Partner of the Company in writing of its inability to pay its
debts as they become due; or
(h) filing of any involuntary petition against the Company or the
Managing General Partner in bankruptcy or seeking reorganization,
arrangement, readjustment of its debts or for any other relief under any
Bankruptcy Law and an order for relief by a court having jurisdiction in
the premises shall have been issued or entered therein; or any other
similar relief shall be granted under any applicable Federal or state
law; or a decree or order of a court having jurisdiction in the premises
for the appointment of a receiver, liquidator, sequestrator, trustee or
other officer having similar powers over the Company or the Managing
General Partner or over all or a part of its
58
property shall have been entered; or the involuntary appointment of an
interim receiver, trustee or other custodian of the Company or the
Managing General Partner or of all or a substantial part of its property;
or the issuance of a warrant of attachment, execution or similar process
against any substantial part of the property of the Company or the
Managing General Partner; and continuance of any such event for 60
consecutive days unless dismissed, bonded to the satisfaction of the
court having jurisdiction in the premises or discharged; or
(i) filing by or on the behalf of any Restricted Subsidiary of a
voluntary petition or an answer seeking reorganization, arrangement,
readjustment of its debts or for any other relief under any Bankruptcy
Law, or any action by any Restricted Subsidiary for, or consent or
acquiescence to, the appointment of a receiver, trustee or other
custodian of such Restricted Subsidiary or of all or a substantial part
of its property; or the making by any Restricted Subsidiary of any
assignment for the benefit of creditors; or the admission by any
Restricted Subsidiary in writing of its inability to pay its debts as
they become due; or
(j) filing of any involuntary petition against any Restricted
Subsidiary in bankruptcy or seeking reorganization, arrangement,
readjustment of its debts or for any other relief under any Bankruptcy
Law and an order for relief by a court having jurisdiction in the
premises shall have been issued or entered therein; or any other similar
relief shall be granted under any applicable Federal or state law; or a
decree or order of a court having jurisdiction in the premises for the
appointment of a receiver, liquidator, sequestrator, trustee or other
officer having similar powers over any Restricted Subsidiary or over all
or a part of its property shall have been entered; or the involuntary
appointment of an interim receiver, trustee or other custodian of any
Restricted Subsidiary or of all or a substantial part of its property; or
the issuance of a warrant of attachment, execution or similar process
against any substantial part of the property of any Restricted
Subsidiary; and continuance of any such event for 60 consecutive days
unless dismissed, bonded to the satisfaction of the court having
jurisdiction in the premises or discharged; or
(k) a final judgment or judgments (which is or are non-appealable
or which has or have not been stayed pending appeal or as to which all
rights to appeal have expired or been exhausted) shall be rendered
against the Company or any Restricted Subsidiary for the payment of money
in excess of $10,000,000 in the aggregate (net of any insurance coverage)
and any one of such judgments shall not be discharged or execution
thereon stayed pending appeal within 60 days after the date due, or, in
the event of such a stay, such judgment shall not be discharged within 60
days after such stay expires or any action shall be legally taken by a
judgment creditor to levy upon the assets or properties of the Company or
any Restricted Subsidiary to enforce any such judgment; or
59
(l) any of the Security Documents shall at any time, for any
reason, cease in any material respect to be in full force and effect or
shall be declared to be null and void in whole or in any material part by
the final judgment (which is non-appealable or has not been stayed
pending appeal or as to which all rights to appeal have expired or been
exhausted) of any court or other governmental or regulatory authority
having jurisdiction in respect thereof, or if the validity or the
enforceability of any of the Security Documents shall be contested by or
on behalf of the Company, either General Partner, the Public Partnership,
or any Restricted Subsidiary, or the Company, either General Partner, the
Public Partnership, or any Restricted Subsidiary shall renounce any of
the Security Documents or deny that it is bound by the terms of any of
the Security Documents; or
(m) any order, judgment or decree is entered in any proceedings
against the Company decreeing a split-up of the Company, and such order,
judgment or decree shall not be dismissed or execution thereon stayed
pending appeal or review within 60 days after entry thereof, or in the
event of such a stay, such order, judgment or decree shall not be
dismissed within 60 days after such stay expires;
then, (x) upon the occurrence of any Event of Default described in
subdivision (g) or (h) of this Section 11, the unpaid principal amount of and
accrued interest on the Notes shall automatically become due and payable
(without Make Whole Amount), or, (y) upon the occurrence and continuance of
any other Event of Default, any holder or holders of more than 50% in
principal amount of the Notes at the time outstanding, may at any time
(unless all defaults shall theretofore have been remedied in accordance with
the terms hereof) at its or their option, by written notice or notices to the
Company, declare all the Notes to be due and payable, whereupon the same
shall forthwith mature and become due and payable, together with interest
accrued thereon and, to the extent permitted by applicable law, the
applicable Make Whole Amount, if any, with respect to such Notes, all
without presentment, demand, protest or further notice, which are hereby
waived, PROVIDED that during the existence of an Event of Default described
in subdivision (a) or (b) (insofar as subdivision (b) relates to interest on
any Note) of this Section 11, any holder of the Notes at the time outstanding
may, at its option, by notice in writing to the Company, declare the Notes
then held by such holder to be due and payable, whereupon the Notes then held
by such holder shall forthwith mature and become due and payable, together
with interest accrued thereon and, to the extent permitted by applicable law,
the applicable Make Whole Amount with respect to such Notes.
At any time after the principal of, and interest accrued on, all the
Notes are declared due and payable, the Required Holders, by written notice
to the Company, may rescind and annul any such declaration and its
consequences (other than in respect of any Note which has been individually
accelerated pursuant to the proviso contained in the immediately preceding
paragraph) if (x) the Company has paid all overdue interest on the Notes, the
principal of and Make Whole Amount, if any, on any such Notes which have
become due otherwise than by reason of such declaration, and interest on such
overdue
60
principal and the applicable Make Whole Amount and (to the extent permitted
by applicable law) overdue interest, at a rate per annum equal to the rate of
interest stated on the face of the Notes plus 2.0%, (y) all Events of
Default, other than nonpayment of amounts which have become due solely by
reason of such declaration, and all conditions and events which constitute
Events of Default or Potential Events of Default have been cured or waived,
and (z) no judgment or decree has been entered for the payment of any monies
due pursuant to the Notes or this Agreement; but no such rescission and
annulment shall extend to or affect any subsequent Event of Default or
Potential Event of Default or impair any right consequent thereon.
SECTION 12. REMEDIES ON DEFAULT; RECOURSE, ETC.
In case any one or more Events of Default or Potential Events of
Default shall occur and be continuing, (i) the holder of any Note at the time
outstanding may proceed to protect and enforce the rights of such holder by
an action at law, suit in equity or other appropriate proceeding, whether for
the specific performance of any agreement contained herein or in such Note,
or for an injunction against a violation of any of the terms hereof or
thereof, or in aid of the exercise of any power granted hereby or thereby or
by law or otherwise, and (ii) the Trustee and the holders of the Notes may
exercise any rights or remedies in their respective capacities under the
Security Documents in accordance with the provisions thereof. In case of a
default in the payment or performance of any provision hereof or of the Notes
or of the Security Documents, the Company will pay to the holder of each Note
such further amount as shall be sufficient to cover the costs and expenses of
collection, including, without limitation, reasonable attorneys' fees,
expenses and disbursements, and any out-of-pocket costs and expenses of any
such holder incurred in connection with analyzing, evaluating, protecting,
ascertaining, defending or enforcing any of its rights as set forth herein or
in any of the Security Documents. No course of dealing and no delay on the
part of any holder of any Note in exercising any right, power or remedy
shall, to the extent permitted by law, operate as a waiver thereof or
otherwise prejudice such holder's rights, powers or remedies. No right,
power or remedy conferred by this Agreement or by any Note upon any holder
thereof shall be exclusive of any other right, power or remedy referred to
herein or therein or now or hereafter available at law, in equity, by statute
or otherwise.
SECTION 13. DEFINITIONS.
As used herein the following terms have the following respective
meanings:
1996 NOTE AGREEMENTS: the separate Note Agreements dated as of
December 11, 1996 among the Company, the General Partners and the Purchasers
listed in Schedule A attached thereto.
1996 NOTES: the 7.53% Senior Secured Notes due December 30, 2010, in
the aggregate original principal amount of $220,000,000, issued by the
Company pursuant to the 1996 Note Agreements.
61
1998 NOTE AGREEMENTS: the separate Note Agreements dated as of
December 11, 1998 among the Company, the General Partners and the Purchasers
listed in Schedule A attached thereto.
1998 NOTES: the 7.33% Senior Secured Notes due January 31, 2013, in
the aggregate original principal amount of $85,000,000, issued by the Company
pursuant to the 1998 Note Agreements.
ADMINISTRATIVE AGENT: Bank of America National Trust and Savings
Association, in its capacity as administrative agent for the Banks under the
Bank Credit Facilities, and its successors in such capacity.
AFFILIATE: as applied to any Person, any other Person directly or
indirectly controlling or controlled by or under common control with such
Person, PROVIDED that (i) for purposes of this definition, "control"
(including, with correlative meanings, the terms "controlled by" and "under
common control with") as used with respect to any Person shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether as a general
partner or through the ownership of voting securities or by contract or
otherwise, (ii) as applied to the Company, the term "Affiliate" shall include
each General Partner and the Public Partnership, and (iii) neither any
Purchaser nor any other Person which is an institution shall be deemed to be
an Affiliate of the Company solely by reason of ownership of the Notes or
other securities issued in exchange for the Notes or by reason of having the
benefits of any agreements or covenants contained in this Agreement or the
other Operative Agreements.
AGREEMENT: the meaning specified in Section 1.
AVAILABLE CASH: with respect to any fiscal quarter of the Company,
(a) the sum of (i) all cash and cash equivalents of the Company and the
Restricted Subsidiaries on hand at the end of such quarter and (ii) all
additional cash and cash equivalents of the Company and the Restricted
Subsidiaries on hand on the date of determination of Available Cash with
respect to such quarter obtained through available borrowings for working
capital purposes made after the end of such quarter, less (b) (i) the amount
of cash reserves necessary or appropriate in the reasonable discretion of the
Managing General Partner to (A) provide for the proper conduct of the
business of the Company subsequent to such quarter and the Restricted
Subsidiaries (including, without limitation, cash reserves for future capital
expenditures) subsequent to such quarter or (B) provide funds for
distributions under Section 6.4 or 6.5 of the MLP Agreement in respect of any
one or more of the next four fiscal quarters or (C) comply with applicable
law or any loan agreement (including this Agreement), mortgage, security
agreement, debt instrument or other agreement or obligation to which the
Company or any Restricted Subsidiary is a party or by which it or its assets
are subject (including the payment of principal, Make Whole Amount or Premium
Amount, if applicable, and interest in respect of the Notes), (ii) all
Dedicated Funds and (iii) all amounts which a Restricted Subsidiary is
prohibited
62
from dividending or distributing to the Company; PROVIDED that Available Cash
shall exclude without duplication (x) in each fiscal calendar quarter a
reserve equal to at least 50% of the aggregate amount of all interest
payments, except for interest payments to be made in respect of borrowings
for working capital purposes, in respect of all Indebtedness of the Company
and the Restricted Subsidiaries upon which interest is due semiannually or
less frequently to be made in the next fiscal quarter (assuming, in the case
of Indebtedness incurred under the Bank Credit Facilities and other
Indebtedness bearing interest at fluctuating interest rates which cannot be
determined in advance, that the interest rate in effect on the last Business
Day of the immediately preceding fiscal quarter will remain in effect until
such Indebtedness is due to be paid), (y) with respect to any Indebtedness
secured equally and ratably with the Notes of which principal is payable
annually, in the third calendar quarter immediately preceding each fiscal
quarter in which any scheduled principal payment is due with respect to such
Notes and other Indebtedness (a "principal payment quarter"), a reserve equal
to at least 25% of the aggregate amount of all principal to be paid in
respect of such Notes and other such Indebtedness secured equally and ratably
with the Notes in such principal payment quarter; in the second fiscal
quarter immediately preceding a principal payment quarter, a reserve equal to
at least 50% of the aggregate amount of all principal to be paid in respect
of such Notes and other such Indebtedness in such principal payment quarter;
and in the fiscal quarter immediately preceding a principal payment quarter,
a reserve equal to at least 75% of the aggregate amount of all principal to
be paid in respect of such Notes and other such Indebtedness in such
principal payment quarter, and (z) with respect to and any other Indebtedness
secured equally and ratably with the Notes of which principal is payable
semiannually, in each fiscal quarter which immediately precedes a fiscal
quarter in which principal is payable in respect of such Indebtedness a
reserve equal to at least 50% of the aggregate amount of all principal to be
paid in respect of such other such Indebtedness in the next fiscal quarter;
PROVIDED FURTHER that the amount of such reserve specified in clauses (y) and
(z) of this definition for principal amounts to be paid shall be reduced by
the aggregate principal amount of all binding, irrevocable letters of credit
established to refinance such principal amounts.
BANK CREDIT FACILITIES: that Credit Agreement, dated as of November
20, 1998, among the Company, Bank of America National Trust and Savings
Association, as agent, and the Banks, pursuant to which the Initial
Acquisition Facility and the Working Capital Facility will be made available
to the Company, and any extension, renewal, refunding or replacement thereof
otherwise permitted to be incurred and outstanding under Section 10.1.
BANKRUPTCY LAW: the meaning specified in Section 11(g).
BANKS: the financial institutions listed in the signature pages of
the Bank Credit Facilities, each assignee which becomes a lender under the
Bank Credit Facilities pursuant to the terms thereof and their respective
successors.
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BUSINESS: the operation by the Company and its Subsidiaries of the
wholesale and retail sale, distribution and storage of propane gas and
related petroleum derivative products, the leasing of propane storage tanks
and the related retail sale of supplies and equipment, including home
appliances, and such other businesses in which the Company and its Restricted
Subsidiaries were engaged on the date of Closing as may be described in the
Memorandum.
BUSINESS DAY: any day other than a Saturday, a Sunday or a day on
which commercial banks in New York City or San Francisco, California are
required or authorized by law to be closed.
CALLED PRINCIPAL: with respect to any Note, the principal of such
Note that is to be prepaid pursuant to Section 9.2 or 9.4 or becomes or is
declared to be immediately due and payable pursuant to Section 11, as the
context requires.
CAPITAL LEASE: as applied to any Person, any lease of any property
(whether real, personal or mixed) by such Person (as lessee or guarantor or
other surety) which would, in accordance with GAAP, be required to be
classified and accounted for as a capital lease on a balance sheet of such
Person.
CERCLA: the Federal Comprehensive Environmental Response,
Compensation and Liability Act, as amended.
CHANGE OF CONTROL: any of the following:
(a) the liquidation or dissolution of the Managing General Partner
of the Company;
(b) any merger or consolidation of the Managing General Partner
with or into any Person (other than a Permitted Holder) if the Managing
General Partner is not the surviving entity thereof, or any sale, whether
direct or indirect, of all or substantially all of the assets of the Managing
General Partner to any Person or "group" (as used in Section 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended), other than to a
Permitted Holder;
(c) any Person or "group" is or becomes, directly or indirectly,
the beneficial owner of more than 50% of the then outstanding total voting
power of all classes of stock (or other securities) of the Managing General
Partner, the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the directors (or Persons
performing similar functions) of the Managing General Partner;
(d) during any period of twelve consecutive months after the date
of Closing, individuals who at the beginning of such twelve month period (or
Persons nominated by such members of the Board of Directors of the Managing
General Partner to succeed them) constitute the Board of Directors of the
Managing General Partner cease, for any
64
reason, to constitute a majority of the Board of Directors of the Managing
General Partner of the Company then in office; or
(e) if the Permitted Holders cease to own, directly or indirectly,
in the aggregate, an amount of the general partnership interest in the
Company equal to at least fifty percent of the amount of the general
partnership interest in the Company owned, collectively, by the General
Partners on the date of Closing, PROVIDED it shall not be a Change of Control
pursuant to paragraph (b), (c), (d) or (e), if the Chief Executive Officer or
Chief Financial Officer of the Company, immediately prior to the events
specified therein, serves as Chief Executive Officer or Chief Financial
Officer, after the occurrence of such an event.
CHC: Cornerstone Holding Corp., a Delaware corporation.
CLOSING: the meaning specified in Section 3.
CODE: the Internal Revenue Code of 1986, as amended from time to time.
COLLATERAL: collectively, the properties referred to as the
"Collateral" under the Company Security Agreement and as the "Security" in
the Trust Agreement.
COMMODITY HEDGING AGREEMENT(S): any agreement or arrangement designed
solely to protect the Company against fluctuations in the price of propane or
natural gas with respect to quantities of propane or natural gas that the
Company reasonably expects to purchase from suppliers, sell to its customers
or need for its inventory during the period covered by such agreement or
arrangement.
COMPANY: the meaning specified in the Introduction.
COMPANY SECURITY AGREEMENT: the Security Agreement among the Company,
the Qualifying Restricted Subsidiaries and the Trustee substantially in the
form attached hereto as Exhibit E as amended from time to time.
COMPETITOR: any Person engaged primarily in the wholesale and retail
sale, distribution and storage of propane gas and related petroleum
derivative products.
CONSOLIDATED CASH FLOW: at any date of determination, for the period
of four consecutive fiscal quarters most recently completed at least 45 days
(except that, in connection with any calculation required pursuant to Section
10.4, for the period of four consecutive fiscal quarters most recently
completed) prior to such date of determination,
(a) the sum of, without duplication, the amounts for such
period, taken as a single accounting period, of (i) Consolidated Net
Income and (ii) all amounts deducted in the determination of such
Consolidated Net Income for such period in respect of (v) interest
charges (including amortization of debt discount and expense
65
and imputed interest on Capital Lease obligations), (x) provisions for
all income taxes and reserves (including reserves for deferred income
taxes), (y) all other non-cash items, and (z) all fees, cost and
expenses with respect to the retirement or repayment of Indebtedness
of either General Partner existing immediately prior to the Closing,
LESS
(b) without duplication, all amounts added in the
determination of such Consolidated Net Income for such period in
respect of non-cash items.
Consolidated Cash Flow shall be calculated after giving effect (without
duplication) on a pro forma basis for the four consecutive fiscal quarters
most recently completed prior to such date of determination to any asset
sales or asset acquisitions (including, without limitation, any asset
acquisition giving rise to the need to make such calculation as a result of
the Company or any Restricted Subsidiary (including any Person who becomes a
Restricted Subsidiary as a result of such asset acquisition) incurring,
assuming or otherwise being liable for acquired Indebtedness) occurring
during the period commencing on the first day of such four fiscal quarter
period to and including the date of determination (the "REFERENCE PERIOD"),
as if such asset sale or asset acquisition occurred on the first day of the
Reference Period; PROVIDED, that Consolidated Cash Flow generated by an
acquired business or asset shall be determined on the basis of, without
duplication, (a) the actual gross profit (revenues minus cost of goods sold)
of the acquired business or asset during the immediately preceding four full
fiscal quarters, minus (b) the pro forma expenses that would have been
incurred by the Company or such Restricted Subsidiary in the operation of
such acquired business or asset during such period computed on the basis of
personnel expenses for employees retained or to be retained by the Company or
such Restricted Subsidiary in the operation of such acquired business or
asset and non-personnel costs and expenses incurred by the Company or the
Managing General Partner in the operation of its business at similarly
situated Company facilities or Restricted Subsidiary facilities. If the
applicable Reference Period for any calculation of Consolidated Cash Flow
shall include a partial period occurring prior to the Closing, then such
Consolidated Cash Flow shall be calculated based upon the Consolidated Cash
Flow on a PRO FORMA basis for such portion of the Reference Period prior to
the Closing (giving effect to the transactions occurring on the date of
Closing) and the Consolidated Cash Flow for the remaining portion of the
Reference Period occurring on and after the Closing, giving PRO FORMA effect,
as described in the preceding sentences, to all applicable transactions
occurring on the date of Closing or otherwise.
CONSOLIDATED INTEREST EXPENSE: as of any date of determination, the
total amount payable by the Company and the Restricted Subsidiaries on a
consolidated basis, during the period of twelve consecutive months
immediately following such date of determination in respect of all interest
charges (including amortization of debt discount and expense and imputed
interest on payments under Capital Lease obligations) with respect to
Indebtedness of the Company and the Restricted Subsidiaries outstanding on
the date of determination, assuming for such purpose (a) the amount of such
Indebtedness
66
is not reduced or increased during such twelve month period, and (b) that
interest expense for such twelve month period with respect to Indebtedness of
a revolving nature shall equal the actual interest expense for Indebtedness
of a revolving nature during the most recently completed twelve month period.
CONSOLIDATED NET INCOME: with reference to any period, the net income
(or deficit) of the Company and the Restricted Subsidiaries for such period
(taken as a cumulative whole), after deducting all operating expenses,
provisions for all taxes and reserves (including reserves for deferred income
taxes) and all other proper deductions, all determined in accordance with
GAAP on a consolidated basis, after eliminating all intercompany
transactions, PROVIDED that there shall be excluded (a) the income (or
deficit) of any Person accrued prior to the date it becomes a Restricted
Subsidiary or is merged into or consolidated with the Company or a Restricted
Subsidiary, (b) the income (or deficit) of any Person (other than a
Restricted Subsidiary) in which the Company or any Restricted Subsidiary has
an ownership interest, except to the extent that any such income has been
actually received by the Company or such Restricted Subsidiary in the form of
dividends or similar distributions, (c) the undistributed earnings of any
Restricted Subsidiary to the extent that the declaration or payment of
dividends or similar distributions by such Restricted Subsidiary is not at
the time permitted by the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable
to such Restricted Subsidiary, (d) any restoration to income of any
contingency reserve, except to the extent that provision for such reserve was
made out of income accrued during such period, (e) any aggregate net
after-tax gain or net after-tax loss during such period arising from the
sale, exchange or other disposition of capital assets (such term to include
all fixed assets, whether tangible or intangible, all Inventory sold in
conjunction with the disposition of fixed assets, and all securities), (f)
any write-up of any asset, (g) any net gain from the collection of the
proceeds of life insurance policies, (h) any gain arising from the
acquisition of any securities, or the extinguishment, under GAAP, of any
Indebtedness, of the Company or any Restricted Subsidiary, (i) any after tax
gain or loss during such period from any change in accounting, from any
discontinued operations or the disposition thereof, from any extraordinary
events or from any prior period adjustments, (j) any deferred credit
representing the excess of equity in any Restricted Subsidiary at the date of
acquisition over the cost of the investment in such Restricted Subsidiary,
and (k) in the case of a successor to the Company by consolidation or merger
or as a transferee of its assets, any earnings of the successor corporation
prior to such consolidation, merger or transfer of assets.
CONSOLIDATED NET WORTH: as to the Company, the amount by which
(i) the total assets of the Company and the Restricted Subsidiaries
appearing on a consolidated balance sheet of the Company and the
Restricted Subsidiaries prepared in accordance with GAAP as of the date
of determination exceeds
67
(ii) total liabilities of the Company and the Restricted
Subsidiaries appearing on a consolidated balance sheet of the Company and
the Restricted Subsidiaries prepared in accordance with GAAP as of the
date of determination on a consolidated basis,
in each case after eliminating all intercompany transactions; and as to any
other Person, the amount by which
(i) the total assets of such Person and its Subsidiaries appearing
on a consolidated balance sheet of such Person and its Subsidiaries
prepared in accordance with GAAP as of the date of determination (after
eliminating all amounts properly attributable to minority interests in
the stock and surplus, if any, of its Subsidiaries) exceeds
(ii) total liabilities of such Person and its Subsidiaries appearing
on a consolidated balance sheet of such Person and its Subsidiaries
prepared in accordance with GAAP as of the date of determination on a
consolidated basis,
in each case after eliminating all intercompany transactions.
CONSOLIDATED PRO FORMA DEBT SERVICE: as of any date of determination,
the total amount payable by the Company and the Restricted Subsidiaries on a
consolidated basis, during the four consecutive calendar quarters next
succeeding the date of determination, in respect of scheduled principal
payments and all cash interest charges with respect to Indebtedness of the
Company and the Restricted Subsidiaries outstanding on such date of
determination, after giving effect to any Indebtedness proposed to be
incurred on such date (the "Incurrence Date") and to any Indebtedness
proposed to be repaid from funds of such newly incurred Indebtedness (X)
within 30 days of the Incurrence Date, or (y) within the twelve months
following such Incurrence Date as to which funds for such payments have been
within 30 days of the Incurrence Date irrevocably placed in escrow with the
Trustee with irrevocable instructions to the Trustee to make such repayments
(such funds pursuant to clauses (x) and (y) collectively, the "Dedicated
Funds") and (a) including actual payments under Capital Lease obligations,
(b) assuming, in the case of Indebtedness (other than Indebtedness incurred
under the Bank Credit Facilities) bearing interest at fluctuating interest
rates which cannot be determined in advance, that the rate in effect on such
date will remain in effect throughout such period, (c) assuming in the case
of Indebtedness incurred under the Bank Credit Facilities, that (1) the
interest payments payable during such four consecutive calendar quarters next
succeeding the date of determination will equal the actual interest payments
associated with the Bank Credit Facilities during the most recent four fiscal
quarters, (2) except for the twelve-month period immediately prior to the
termination or final maturity thereof (unless extended, renewed or
refinanced), no principal payments will be made under the Working Capital
Facility and (3) principal payments relating to the Initial Acquisition
Facility will (unless already converted to a fixed amortization schedule)
become due based on the assumption that the conversion to the fixed
amortization schedule pursuant to Section
68
3.1(f) of the Bank Credit Facilities is effected on the dates set forth
therein, (d) treating the principal amount of all Indebtedness outstanding as
of such date of determination under a revolving credit or similar agreement
(other than the Bank Credit Facilities) as maturing and becoming due and
payable on the scheduled maturity date or dates thereof (including the
maturity of any payment required by any commitment reduction or similar
amortization provision), without regard to any provision permitting such
maturity date to be extended and (e) including any other designated
repayments of Indebtedness due within twelve months from such date of
determination.
DEDICATED FUNDS: the meaning specified in the definition of
"Consolidated Pro Forma Debt Service."
DISCOUNTED VALUE: with respect to the Called Principal of any Note,
the amount obtained by discounting all Remaining Scheduled Payments with
respect to such Called Principal from their respective scheduled due dates to
the Settlement Date with respect to such Called Principal, in accordance with
accepted financial practice and at a discount factor (applied on a
semi-annual basis) equal to the Reinvestment Yield plus 50 basis points with
respect to such Called Principal.
DOLLAR AND SIGN "$": lawful money of the United States of America.
ENVIRONMENTAL LAWS: applicable federal, state, local and foreign
laws, rules or regulations relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or wastes into the environment (including,
without limitation, air, surface water, ground water or land), or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants, contaminants,
chemicals or industrial, toxic or hazardous substances or wastes.
ENVIRONMENTAL NOTICE: the meaning specified in Section 7(i).
ERISA: the Employee Retirement Income Security Act of 1974, as
amended from time to time.
EVENT OF DEFAULT: the meaning specified in Section 11.
EXCESS PROCEEDS: the meaning specified in Section 10.7(c).
GAAP: generally accepted accounting principles in effect in the
United States from time to time.
GENERAL PARTNER(S): the meaning specified in the Introduction.
GUARANTY: as applied to any Person, any direct or indirect liability,
contingent or otherwise, of such Person with respect to any indebtedness,
lease (other than operating
69
leases under which the Company or a Restricted Subsidiary is the lessee),
dividend or other obligation of another, including, without limitation, any
such obligation directly or indirectly guaranteed, endorsed (otherwise than
for collection or deposit in the ordinary course of business) or discounted
or sold with recourse by such Person, or in respect of which such Person is
otherwise directly or indirectly liable or any other obligation under any
contract which, in economic effect, is substantially equivalent to a
guaranty, including, without limitation, any such obligation of a partnership
in which such Person is a general partner or of a joint venture in which such
Person is a joint venturer, and any such obligation in effect guaranteed by
such Person through any agreement (contingent or otherwise) to purchase,
repurchase or otherwise acquire such obligation or any security therefor, or
to provide funds for the payment or discharge of such obligation (whether in
the form of loans, advances, stock purchases, capital contributions or
otherwise), or to maintain the solvency or any balance sheet or other
financial condition of the obligor of such obligation, or to make payment for
any products, materials or supplies or for any transportation or services
regardless of the non-delivery or nonfurnishing thereof, in any such case if
the purpose or intent of such agreement is to provide assurance that such
obligation will be paid or discharged, or that any agreements relating
thereto will be complied with, or that the holders of such obligation will be
protected against loss in respect thereof.
HAZARDOUS MATERIALS: any gasoline or petroleum (including crude oil
or any fraction thereof) or petroleum products, polychlorinated biphenyls,
urea-formaldehyde insulation, asbestos or asbestos-containing materials,
pollutants, contaminants, radioactivity, and any other materials or
substances of any kind, whether or not any such substance is defined as
hazardous under any Environmental Law, that is regulated pursuant to any
Environmental Law or that could give rise to liability under any
Environmental Law.
INCURRENCE DATE: the meaning specified in the definition of
"Consolidated Pro Forma Debt Service."
INDEBTEDNESS: as applied to any Person (without duplication):
(a) any indebtedness for borrowed money which such Person has
directly or indirectly created, incurred or assumed;
(b) any indebtedness, whether or not for borrowed money, with
respect to which such Person has become directly or indirectly liable and
which represents the deferred purchase price (or a portion thereof) or
has been incurred to finance the purchase price (or a portion thereof) of
any property or service or business acquired by such Person, whether by
purchase, consolidation, merger or otherwise;
(c) all obligations evidenced by notes, bonds, debentures or
similar instruments, including obligations so evidenced incurred in
connection with the acquisition or property, assets or businesses;
70
(d) all indebtedness created or arising under any conditional sale
or other title retention agreement, or incurred as financing, in either
case with respect to property acquired by the Person (even though the
rights and remedies of the seller or lender under such agreement in the
event of default are limited to repossession or sale of such property);
(e) any obligations under Capital Leases to the extent such
obligations would, in accordance with GAAP, appear on a balance sheet of
such Person;
(f) any indebtedness, whether or not for borrowed money, secured by
(or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien in respect of
property owned by such Person, whether or not such Person has assumed or
become liable for the payment of such indebtedness, PROVIDED that the
amount of such Indebtedness if not so assumed shall in no event be deemed
to be greater than the fair market value from time to time (as determined
in good faith by such Person) of the property subject to such Lien;
(g) all capital stock of such Person redeemable at the option of
the holder prior to the final maturity of the Notes, valued at the
greater of its voluntary or involuntary maximum fixed repurchase price or
any mandatory redemption payment obligations in respect thereof plus, in
either case, accrued dividends thereon;
(h) any preferred stock of any Restricted Subsidiary of such Person
redeemable at the option of the holder prior to the final maturity of the
Notes, valued at the sum of the liquidation preference thereof or any
mandatory redemption payment obligations in respect thereof PLUS, in
either case, accrued dividends thereon;
(i) all liabilities of such Person in respect of letters of credit
or instruments serving a similar function issued or accepted for its
account by banks and other financial institutions (whether or not
representing obligations for borrowed money);
(j) all obligations of such Person in respect of Commodity Hedging
Agreements;
(k) all obligations of such Person in respect of Interest Rate
Agreements;
(l) any indebtedness of the character referred to in clause (a)
through (k) of this definition deemed to be extinguished under GAAP but
for which such Person remains legally liable; and
(m) any indebtedness of any other Person of the character referred
to in clause (a) through (l) of this definition with respect to which the
Person whose Indebtedness is being determined has become liable by way of
a Guaranty.
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Notwithstanding the foregoing, in determining the Indebtedness of the Company
and the Restricted Subsidiaries, there shall be excluded all undrawn letters
of credit (not yet due and payable), all drawn letters of credit for which
the Company reimburses the issuer thereof in accordance with the terms of the
reimbursement agreement with respect thereto, trade accounts payable, accrued
interest and other accrued expenses and customer credit balances arising in
the ordinary course of business on ordinary terms.
INITIAL ACQUISITION FACILITY: that Initial Acquisition Facility under
the Bank Credit Facilities which shall permit borrowings thereunder in an
aggregate amount at any time no greater than as permitted by Section 10.1(e)
and which shall be secured by the Collateral pursuant to the Security
Documents, and any extension, renewal, refunding or replacement thereof
otherwise permitted to be incurred and outstanding under Section 10.1.
INSTITUTIONAL INVESTOR: means (a) any original purchaser of a Note,
(b) any holder of a Note holding $1,000,000 or more of the aggregate
principal amount of the Notes then outstanding, and (c) any bank, trust
company, savings and loan association or other financial institution, any
pension plan, any investment company, any insurance company, any broker or
dealer, or any other similar financial institution or entity, regardless of
legal form.
INTERCOMPANY NOTES: any and all promissory notes of a Restricted
Subsidiary issued to the Company or to another Restricted Subsidiary, in the
form attached hereto as Exhibit F or such other form as may be satisfactory
to the Required Holders, representing all Indebtedness of such Restricted
Subsidiary to the Company or such other Restricted Subsidiary, as the case
may be.
INTEREST RATE AGREEMENT: any interest rate swap agreement, interest
rate cap agreement, interest rate collar agreement or other similar agreement
or arrangement designed solely to protect the Company against fluctuations in
interest rates on Indebtedness outstanding under the Bank Credit Facilities
entered into with one or more of the banks party to the Bank Credit
Facilities (or their affiliates).
INVENTORY: goods held by a Person for sale or lease and accounted for
as inventory under GAAP.
INVESTMENT: as applied to any Person, any direct or indirect purchase
or other acquisition by such Person of stock or other securities of any other
Person, or any direct or indirect loan, advance or capital contribution by
such Person to any other Person, and any other item which would be classified
as an "investment" on a balance sheet of such Person prepared in accordance
with GAAP, including, without limitation, any direct or indirect contribution
by such Person of property or assets to a joint venture, partnership or other
business entity in which such Person retains an interest. For the purposes
of Section 10.3(c), the amount involved in Investments made during any period
shall be the aggregate cost to the Company of all such Investments made
during such period,
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determined in accordance with GAAP, but without regard to unrealized
increases or decreases in value, or write-ups, write-downs or write-offs, of
such investments and without regard to the existence of any undistributed
earnings or accrued interest with respect thereto accrued after the
respective dates on which such Investments were made, less any net return of
capital realized during such period upon the sale, repayment or other
liquidation of such Investment (determined in accordance with GAAP, but
without regard to any amounts received during such period as earnings (in the
form of dividends not constituting a return of capital, interest or
otherwise) on such Investment or as loans from any Person in whom such
Investments have been made).
LEGAL REQUIREMENT: any law, statute, ordinance, decree, requirement,
order, judgment, rule or regulation (or published official interpretation by
any governmental authority of any of the foregoing) of any governmental
authority.
LIEN: as to any Person, any mortgage, lien (statutory or otherwise),
pledge, reservation, right of entry, encroachment, easement, right of way,
restrictive covenant, license, charge, security interest or other encumbrance
in or on, or any interest or title of any vendor, lessor under any lease not
intended to be an operating lease, lender or other secured party to or of
such Person under any conditional sale or other title retention agreement or
Capital Lease with respect to, any property or asset owned or held by such
Person, or the signing or filing of a financing statement with respect to any
of the foregoing which names such Person as debtor, or the signing of any
security agreement with respect to any of the foregoing authorizing any other
party as the secured party thereunder to file any financing statement or any
other agreement to give or grant any of the foregoing. Negative pledge
agreements, however, shall not constitute Liens for purposes of this
Agreement or any other Operative Agreement. For the purposes of this
Agreement, a Person shall be deemed to be the owner of any asset which it has
placed in trust for the benefit of the holders of Indebtedness of such Person
and such trust shall be deemed to be a Lien if such Person remains legally
liable therefor, notwithstanding that such Indebtedness is or may be deemed
to be extinguished under GAAP.
MAKE WHOLE AMOUNT: with respect to any Note, an amount equal to the
excess, if any, of the Discounted Value of the Remaining Scheduled Payments
of the Called Principal of such Note over such Called Principal. The Make
Whole Amount shall in no event be less than zero.
MANAGING GENERAL PARTNER: Managing General Partner, so long as it
holds a general partner interest in the Company and shall be the managing
general partner as provided in the Partnership Agreement, and any successor
to such position as managing general partner, so long as such successor shall
hold such position.
MATERIAL ADVERSE EFFECT: a material adverse effect on (a) the
business, operations, property, condition (financial or otherwise) or
prospects (financial or otherwise) of the Company and the Restricted
Subsidiaries, taken a whole (after giving effect to the transactions
contemplated by the Operative Agreements) or the Business, (b) the ability of
73
the Company, either General Partner or any Restricted Subsidiary to perform
its obligations under this Agreement or any other Operative Agreement to
which it is a party, or (c) the validity, enforceability, perfection or
priority of this Agreement or any other Operative Agreement or of the rights
or remedies of the holder of any Notes or the Trustee.
MAXIMUM CONSOLIDATED PRO FORMA DEBT SERVICE: as of any date of
determination, the highest total amount payable by the Company and the
Restricted Subsidiaries on a consolidated basis, during any period of four
consecutive fiscal quarters, commencing with the fiscal quarter in which such
date of determination occurs and ending on the maturity date of the Notes, in
respect of scheduled principal payments and all cash interest charges with
respect to all Indebtedness of the Company and the Restricted Subsidiaries
outstanding or to be outstanding as a result of the transactions occurring on
such date of determination, after giving effect to any Indebtedness to be
incurred on the Incurrence Date and to any Indebtedness proposed to be repaid
from Dedicated Funds and (a) including actual payments under Capital Lease
obligations, (b) assuming, in the case of Indebtedness (other than
Indebtedness incurred under the Bank Credit Facilities) bearing interest at
fluctuating interest rates which cannot be determined in advance, that the
rate in effect on such date will remain in effect throughout such period, (c)
assuming in the case of Indebtedness incurred under the Bank Credit
Facilities, that (1) the interest payments payable during such four
consecutive calendar quarters will equal the actual interest payments
associated with the Bank Credit Facilities during the most recent four fiscal
quarters, (2) except for the twelve-month period immediately prior to the
termination or final maturity thereof (unless extended, renewed or
refinanced) no principal payments will be made under the Working Capital
Facility and (3) principal payments relating to the Initial Acquisition
Facility will (unless already converted to a fixed amortization schedule)
become due based on the assumption that the conversion to the fixed
amortization schedule pursuant to Section 3.1(f) of the Bank Credit
Facilities is effected on the dates set forth therein, (d) treating the
principal amount of all Indebtedness outstanding as of such date of
determination under a revolving credit or similar agreement (other than the
Bank Credit Facilities) as maturing and becoming due and payable on the
scheduled maturity date or dates thereof (including the maturity of any
payment required by any commitment reduction or similar amortization
provision), without regard to any provision permitting such maturity date to
be extended and (e) including any other designated repayments of Indebtedness.
MEMORANDUM: the meaning specified in Section 5.4(a).
MLP AGREEMENT: the Amended and Restated Agreement of Limited
Partnership of the Public Partnership.
MULTIEMPLOYER PLAN: a Plan which is a "multiemployer plan" within the
meaning of Section 4001(a)(3) of ERISA.
NOTES: the meaning specified in Section 1.
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OFFICERS' CERTIFICATE: as to any corporation, a certificate executed
on its behalf by the Chairman of the Board of Directors (if an officer) or
its President or one of its Vice Presidents and its Treasurer, or Controller,
or one of its Assistant Treasurers or Assistant Controllers, and, as to any
partnership, a certificate executed on behalf of such partnership by its
Managing General Partner in a manner which would qualify such certificate as
an Officers' Certificate of such Managing General Partner hereunder.
OPERATIVE AGREEMENTS: this Agreement, the Other Agreements, the
Notes, the Bank Credit Facilities, the Security Documents, the MLP Agreement
and the Partnership Agreement.
OTHER AGREEMENTS: the meaning specified in Section 2.
OTHER PURCHASERS: the meaning specified in Section 2.
PARITY DEBT: Indebtedness of the Company incurred in accordance with
Section 10.1(b), 10.1(e), 10.1(f), 10.1(i), 10.1(j), 10.1(m) or 10.1(s) and
secured by the lien of the Security Documents in accordance with Section
10.2(h), 10.2(i) or 10.2(m).
PARTNERSHIP AGREEMENT: the Amended and Restated Agreement of Limited
Partnership of the Company, as in effect on the date of the Closing, and as
the same may from time to time be amended, modified or supplemented in
accordance with the terms thereof and Section 10.12 hereof, in the form of
Exhibit G.
PBGC: the Pension Benefit Guaranty Corporation or any governmental
authority succeeding to any of its functions.
PCI: Propane Continental, Inc. a Delaware corporation.
PERFECTION CERTIFICATE: a certificate from the Company in
substantially the form attached hereto as Exhibit H.
PERMITTED BANKS: the meaning specified in Section 10.3(a).
PERMITTED ENCUMBRANCES: the encumbrances and exceptions to title to
properties or assets (a) described in the Security Documents or (b) existing
on the date of Closing as permitted by the applicable provisions hereof with
respect to real property owned or leased by the Company or otherwise
permitted hereunder pursuant to Section 10.2(j).
PERMITTED EXCEPTIONS: the meaning specified in Section 5.8(a).
PERMITTED HOLDERS: Northwestern Corporation, a Delaware corporation,
and any Person directly or indirectly controlling or controlled by
Northwestern Corporation, PROVIDED that for purposes of this definition
"control" shall have the same meaning assigned to such term in the definition
of Affiliate.
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PERMITTED INSURERS: insurers with ratings of A- or better according
to Best's Insurance Reports or a comparable rating agency for insurance
companies located outside of the United States of America and Canada and with
assets of no less than $500 million.
PERSON: a corporation, a limited liability company, a firm, a joint
venture, an association, a partnership, an organization, a business, a trust
or other entity or enterprise, an individual, a government or political
subdivision thereof or a governmental agency, department or instrumentality.
PLAN: an "employee pension benefit plan" (as defined in Section 3(2)
of ERISA) which is or has been established or maintained, or to which
contributions are or have been made, by either General Partner, the Company
or any Related Person of the Company or either General Partner or to which
either General Partner, the Company or any Related Person of the Company or
either General Partner is or has been obligated to contribute, or an employee
benefit plan as to which either General Partner, the Company or any Related
Person of the Company or either General Partner could be treated as a
contributory sponsor under Section 4069 or Section 4212 of ERISA if such plan
were terminated.
POTENTIAL EVENT OF DEFAULT: any condition or event which, with notice
or lapse of time or both, would become an Event of Default.
PREMIUM AMOUNT: the meaning specified in Section 9.3(d).
PUBLIC PARTNERSHIP: Cornerstone Propane Partners, L.P., a Delaware
limited partnership.
PURCHASE MONEY LIEN: the meaning specified in Section 10.2(j).
QPAM EXEMPTION: the meaning specified in Section 6.2(c).
QUALIFYING RESTRICTED SUBSIDIARIES: the Restricted Subsidiaries.
RCRA: the Federal Resource Conservation and Recovery Act, as amended.
REINVESTMENT YIELD: with respect to the Called Principal of any Note,
the yield to maturity implied by (i) the yields reported, as of 10:00 a.m.
(New York City time) on the Business Day next preceding the Settlement Date
with respect to such Called Principal, on the display designated as "USD" on
the Bloomberg Financial Markets (or such other display as may replace USD on
the Bloomberg Financial Markets) for actively traded U.S. Treasury securities
having a maturity equal to the Remaining Average Life of such Called
Principal as of such Settlement Date, or if such yields shall not be reported
as of such time or the yields reported as of such time shall not be
ascertainable, including by interpolation (ii) the Treasury constant maturity
series yields reported, for the latest day for which such yields shall have
been so reported as of the Business Date next preceding the Settlement Date
with respect to such Called Principal, in Federal Reserve Statistical
76
Release H.15 (519) (or any comparable successor publication) for actively
traded U.S. Treasury securities having a constant maturity equal to the
Remaining Average Life of such Called Principal as of such Settlement Date.
Such implied yield shall be determined, if necessary, by (a) converting U.S.
Treasury ▇▇▇▇ quotations to bond-equivalent yields in accordance with
accepted financial practice and (b) interpolating linearly between (1) the
actively traded U.S. Treasury security with the maturity closest to and
greater than the Remaining Average Life and (2) the actively traded U.S.
Treasury security with the maturity closest to and less than the Remaining
Average Life.
RELATED PERSON: with respect to a Person, any trade or business,
whether or not incorporated, which, as of any date of determination, would be
treated as a single employer together with such Person under Section 414 of
the Code.
REMAINING AVERAGE LIFE: with respect to the Called Principal of any
Note, the number of years (calculated to the nearest one-twelfth year)
obtained by dividing (i) such Called Principal into (ii) the sum of the
products obtained by multiplying (a) each Remaining Scheduled Payment of such
Called Principal (but not of interest thereon) by (b) the number of years
(calculated to the nearest one-twelfth year) which will elapse between the
Settlement Date with respect to such Called Principal and the scheduled due
date of such Remaining Scheduled Payment.
REMAINING SCHEDULED PAYMENTS: with respect to the Called Principal of
any Note, all payments of such Called Principal and interest thereon that
would be due on or after the Settlement Date with respect to such Called
Principal if no payment of such Called Principal were made prior to its
scheduled due date, PROVIDED that if such Settlement Date is not a date on
which interest payments are due to be made under the terms of the Notes, then
the amount of the next succeeding scheduled interest payment will be reduced
by the amount of interest accrued to such Settlement Date and required to be
paid on such Settlement Date pursuant to Sections 9 or 11.
REQUIRED HOLDERS: the holders of at least 66-2/3% in principal amount
of the Notes at the time outstanding.
REQUISITE PERIOD: the meaning specified in Section 10.1(e)(ii)(l).
RESPONSIBLE OFFICER: with respect to any Person, the President, any
Vice President, the Chief Financial Officer, the Treasurer and the Secretary
of such Person and any other officer of such Person who is responsible for
compliance with or performance of any obligation under this Agreement or the
other Operative Agreements, with respect to the Company, any such officer of
the Managing General Partner and, in any case, any employee of the Company
performing any of the above functions.
RESTRICTED AFFILIATE: Northwestern Growth Corporation, a Delaware
corporation, or any of its Subsidiaries as long as any such Person would
otherwise be an Affiliate of the Company.
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RESTRICTED PAYMENT: as to any Person, (a) any payment, dividend or
other distribution, direct or indirect, in respect of any partnership
interest (general or limited) in, or on account of any shares of any class of
stock of, such Person, except a distribution payable solely in additional
partnership interests in, or shares of stock of, such Person, and (b) any
payment, direct or indirect, on account of the redemption, retirement,
purchase or other acquisition of any partnership interest in, or any shares
of any class of stock of, such Person now or hereafter outstanding or of any
warrants, rights or options to acquire any such shares, except to the extent
that the consideration therefor consists of shares of stock or partnership
interests in or of such Person, PROVIDED payments by the Company or a
Restricted Subsidiary of the Company to either General Partner or any of its
Affiliates for services rendered to or on behalf of the Company or any
Restricted Subsidiary of the Company or expenses incurred in connection with
the operation of the business of the Company or any Restricted Subsidiary of
the Company (including, without limitation, reimbursement of expenses
incurred under any employee benefit plan including plans providing for the
issuance of Units or options to acquire Units in the Public Partnership)
shall not be deemed to be Restricted Payments.
RESTRICTED SUBSIDIARY: any Wholly Owned Subsidiary of the Company (a)
organized under the laws of the United States of America or any state thereof
or the District of Columbia, (b) none of the capital stock or ownership
interests of which is owned by Unrestricted Subsidiaries, (c) substantially
all of the operating assets of which are located in, and substantially all of
the business of which is conducted within, the United States of America and
the business of which consists principally of the wholesale and retail sale,
distribution and storage of propane gas and/or natural gas and related
petroleum derivative products and/or the related retail sale of supplies and
equipment, including home appliances, and the provision of related services
and (d) designated by the Company as a Restricted Subsidiary, PROVIDED that
(i) to the extent a newly formed or acquired Wholly Owned Subsidiary
satisfying the requirements of the foregoing clauses (a), (b) and (c) is not
declared either a Restricted Subsidiary or an Unrestricted Subsidiary within
90 days of its formation or acquisition, such Wholly Owned Subsidiary shall
be deemed a Restricted Subsidiary and (ii) a Restricted Subsidiary may be
designated as an Unrestricted Subsidiary in accordance with the provisions of
Section 10.19(a).
SECURITY DOCUMENTS: the Trust Agreement, the Company Security
Agreement, the Subsidiary Guarantee Agreement, the Perfection Certificate,
and all other security agreements and documents and instruments executed and
delivered in order to secure the Indebtedness and/or perfect the Liens
referred to in the Trust Agreement or to guarantee the Company's obligations
hereunder and under the Notes.
SETTLEMENT DATE: shall mean, with respect to the Called Principal of
any Note, the date on which such Called Principal is to be prepaid pursuant
to Section 9.2 or 9.4 or is declared to be or becomes immediately due and
payable pursuant to Section 11, as the context requires.
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SUBSIDIARY: of any Person, means any corporation, limited liability
company, business trust, association, partnership, joint venture or other
business entity at least a majority (by number of votes) of the stock of any
class or classes (or equivalent interests) of which is at the time owned by
such Person or by one or more Subsidiaries of such Person or by such Person
and one or more Subsidiaries of such Person, if the holders of the stock of
such class or classes (or equivalent interests) (a) are ordinarily, in the
absence of contingencies, entitled to vote for the election of a majority of
the directors (or Persons performing similar functions) of such business
entity, even though the right so to vote has been suspended by the happening
of such a contingency, or (b) are at the time entitled, as such holders, to
vote for the election of the majority of the directors (or Persons performing
similar functions) of such business entity, whether or not the right so to
vote exists by reason of the happening of a contingency. Unless the context
otherwise requires, any reference to a Subsidiary shall mean a Subsidiary of
the Company.
SUBSIDIARY GUARANTEE AGREEMENT: the Guarantee Agreement among the
Qualifying Restricted Subsidiaries and the Trustee substantially in the form
attached hereto as Exhibit I, as amended from time to time.
SUPPLEMENTAL AGREEMENT: an agreement between a Qualifying Restricted
Subsidiary and the Trustee substantially in the form attached hereto as
Exhibit J, as amended from time to time.
TRUST AGREEMENT: the Intercreditor and Trust Agreement, dated as of
December 11, 1996, together with all existing and any subsequent amendments,
among the Company, the Qualifying Restricted Subsidiaries, the Trustee, the
holders of the 1996 Notes, the holders of the 1998 Notes and the other
parties named therein, which the Administrative Agent and the Banks have
joined as additional parties, substantially in the form attached hereto as
Exhibit C, as amended from time to time.
TRUSTEE: U.S. Trust Company of Texas, N.A., as Trustee under the
Trust Agreement, and its successors and assigns thereunder.
UNIFORM COMMERCIAL CODE: the Uniform Commercial Code or similar
statute in effect from time to time in any jurisdiction.
UNITS: the units representing preference limited partnership
interests in the Public Partnership.
UNRESTRICTED SUBSIDIARY: any Subsidiary other than a Restricted
Subsidiary which is organized under the laws of the United States of America
or any state thereof or the District of Columbia and substantially all of the
operating assets of which are located in, and substantially all of the
business of which is conducted within, the United States of America and which
business consists principally of the distribution of propane gas or related
supplies and equipment.
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WHOLLY OWNED: as applied to any Subsidiary, a Subsidiary all of the
outstanding shares (other than directors' qualifying shares, if required by
law) of every class of stock or other equity interests of which are at the
time owned by the Company or by one or more Wholly Owned Restricted
Subsidiaries or by the Company and one or more Wholly Owned Restricted
Subsidiaries.
WORKING CAPITAL FACILITY: that Working Capital Facility under the
Bank Credit Facilities which shall permit borrowings and the issuance of
letters of credit for the Company thereunder in an aggregate amount
outstanding at any time no greater than as permitted by Section 10.1(e) and
which shall be secured by the Collateral pursuant to the Security Documents
and any extension, renewal, refunding or replacement thereof otherwise
permitted to be incurred and outstanding under Section 10.1.
YEAR 2000 COMPLIANT: shall mean that neither performance nor
functionality of any of the Company's or its Subsidiaries' computer hardware
or software is materially affected by dates prior to, on, or after December
31, 1999. In particular: (a) no value for any current date will cause any
material interruption in operation; and (b) date based functionality must
behave consistently for dates prior to, on and after December 31, 1999 in all
material respects.
YEAR 2000 PROBLEM: means the risk that computer applications used by
the Company and its Subsidiaries may be unable to recognize and perform
properly date-sensitive functions involving any date prior to, on or after
December 31, 1999.
SECTION 14. REGISTRATION, TRANSFER AND SUBSTITUTION OF NOTES.
14.1. NOTE REGISTER; OWNERSHIP OF NOTES. Any Notes issued in
substantially the form of Exhibits A-1 or A-2 are in "registered form". The
Company will keep at its principal office a register in which the Company
will provide for the registration of Notes in registered form and the
registration of transfers of Notes in registered form. The Company and the
Trustee may treat the Person in whose name any Note is registered on such
register as the owner thereof for the purpose of receiving payment of the
principal of and the Make Whole Amount or premium, if any, and interest on
such Note and for all other purposes, whether or not such Note shall be
overdue, and the Company shall not be affected by any notice to the contrary.
All references in this Agreement or in a Note to a "holder" of any Note
shall mean the Person in whose name such Note is at the time registered on
such register.
14.2. TRANSFER AND EXCHANGE OF NOTES. Upon surrender of any Note for
registration of transfer or for exchange to the Company at its principal
office, the Company at its expense will execute and deliver in exchange
therefor a new Note or Notes of the same series in denominations of at least
$500,000 (except one Note may be issued in a lesser principal amount if the
unpaid principal amount of the surrendered Note is not evenly divisible by,
or is less than, $500,000), as requested by the holder or
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transferee, which aggregate the unpaid principal amount of such surrendered
Note. Each such new Note shall be in registered form. Each such Note shall
be dated so that there will be no loss of interest on such surrendered Note
and otherwise of like tenor, and shall be registered in the name or names of
such Person as such holder or transferee may request. Any Note in lieu of
which any such new Note has been executed and delivered shall not be deemed
to be an outstanding Note for any purpose of this Agreement.
14.3. REPLACEMENT OF NOTES. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
any Note and, in the case of any such loss, theft or destruction of any Note,
upon delivery of an indemnity bond in such reasonable amount as the Company
may determine (or, in the case of any Note held by you or another
Institutional Investor holder or your or its nominee, of an unsecured
indemnity agreement from you or such other holder), or, in the case of any
such mutilation, upon the surrender of such Note for cancellation to the
Company at its principal office, the Company at its expense will execute and
deliver, in lieu thereof, a new Note of the same series in the unpaid
principal amount of such lost, stolen, destroyed or mutilated Note, dated so
that there will be no loss of interest on such Note and otherwise of like
tenor. Any Note in lieu of which any such new Note has been so executed and
delivered by the Company shall not be deemed to be an outstanding Note for
any purpose of this Agreement.
14.4. NOTES HELD BY COMPANY, ETC. DEEMED NOT OUTSTANDING. For the
purposes of determining whether the holders of the Notes of the requisite
principal amount at the time outstanding have taken any action authorized by
this Agreement or any other Operative Agreement with respect to the giving of
consents or approvals or with respect to the acceleration upon an Event of
Default, any Notes directly or indirectly owned by the Company, either
General Partner or any of their respective Affiliates shall be disregarded
and deemed not to be outstanding.
SECTION 15. PAYMENTS ON NOTES.
15.1. PLACE OF PAYMENT. Payments of principal, Make Whole Amount,
Premium Amount or premium, if any, and interest becoming due and payable on
the Notes shall be made at the principal office of the Trustee in the Borough
of Manhattan, the City and State of New York by 12:00 noon, New York time,
unless the Company, by written notice to each holder of any Notes, shall
designate the principal office of another bank or trust company in such
Borough as such place of payment, in which case the principal office of such
other bank or trust company shall thereafter be such place of payment.
15.2. HOME OFFICE PAYMENT. So long as you or your nominee shall be
the holder of any Note, and notwithstanding anything contained in Section
15.1 or in such Note to the contrary, the Company will pay all sums becoming
due on such Note for principal, Make Whole Amount and Premium Amount, if any,
and interest no later than 12:00 noon (New York City time) and by the method
and at the address specified for such purpose in Schedule A, or by such other
reasonable method or at such other address as you shall
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have from time to time specified to the Company in writing for such purpose,
without the presentation or surrender of such Note or the making of any
notation thereon, except that any Note paid or prepaid in full shall, after
such payment or prepayment in full, be surrendered to the Company at its
principal office or at the place of payment maintained by the Company
pursuant to Section 15.1 for cancellation. Prior to any sale or other
disposition of any Note held by you or your nominee you will, at your
election, either endorse thereon the amount of principal paid thereon and the
last date to which interest has been paid thereon or surrender such Note to
the Company in exchange for a new Note or Notes pursuant to Section 14.2.
The Company will afford the benefits of this Section 15.2 to any
Institutional Investor which is the direct or indirect transferee of any Note
purchased by you under this Agreement and which has made the same agreement
relating to such Note as you have made in this Section 15.2.
SECTION 16. EXPENSES, INDEMNIFICATION, ETC.
(a) Whether or not the transactions contemplated hereby shall be
consummated, the Company will pay all reasonable expenses in connection with
such transactions and in connection with any amendments or waivers (whether
or not the same become effective) under or in respect of this Agreement, the
other Operative Agreements or the Notes, including, without limitation: (i)
the cost and expenses of preparing and reproducing this Agreement, the other
Operative Agreements and the Notes, of furnishing all opinions by counsel for
the Company, the Restricted Subsidiaries or the General Partners (including
any opinions requested by your special counsel, Debevoise & ▇▇▇▇▇▇▇▇, as to
any legal matter arising hereunder) and all certificates on behalf of the
Company, either General Partner or any Restricted Subsidiary, and of the
Company's, either General Partner's or any Restricted Subsidiary's
performance of and compliance with all agreements and conditions contained
herein on its part to be performed or complied with; (ii) the cost of
delivering to your principal office, insured to your satisfaction, the Notes
issued to you hereunder and any Notes delivered to you upon any substitution
thereof pursuant to Section 14 and of your delivering any Notes, insured to
your satisfaction, upon any such substitution; (iii) the reasonable fees,
expenses and disbursements of your special counsel, Debevoise & ▇▇▇▇▇▇▇▇ (or
such other counsel as may be selected by the Note holders) and your local
counsel in connection with such transactions and any such amendments or
waivers; (iv) the costs and expenses, including attorneys' fees, incurred by
you or any subsequent holder of a Note in enforcing (or determining whether
or how to enforce) any rights under this Agreement, any other Operative
Agreement or the Notes or in responding to any subpoena or other legal
process in connection with this Agreement, any other Operative Agreement or
the Notes or the transactions contemplated hereby or by reason of you or any
subsequent holder of Notes having acquired any Note, including without
limitation costs and expenses incurred in any bankruptcy case; (v) the cost
and expenses of obtaining a Private Placement Number for each series of the
Notes; and (vi) the reasonable out-of-pocket expenses incurred by you in
connection with such transactions and any such amendments or waivers,
PROVIDED that the Company shall be required to pay the cost and expenses of
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only one firm (and any local counsel) retained by the Note holders in
connection with any waivers or amendments. The Company also will pay, and
will save you and each holder of any Notes harmless from, all claims in
respect of the fees, if any, of brokers and finders (unless engaged by you)
and any and all liabilities with respect to any taxes (including interest and
penalties) (other than income taxes) which may be payable in respect of the
execution and delivery hereof, the issue of the Notes hereunder and any
amendment or waiver under or in respect hereof or of the Notes. In
furtherance of the foregoing, on the date of the Closing the Company will pay
the reasonable fees and disbursements of your special counsel which are
reflected as unpaid in the statement of Debevoise & ▇▇▇▇▇▇▇▇, your special
counsel, delivered to the Company prior to the date of the Closing; and
thereafter the Company will pay, promptly upon receipt of supplemental
statements therefor from time to time, additional fees, if any, and
disbursements of your special counsel in connection with the transactions
hereby contemplated (including unposted disbursements as of the date of the
Closing).
(b) The Company will protect, indemnify and save harmless the
Trustee and each present, future and former holder of any Note and their
respective officers, directors, trustees, employees, agents and
representatives (individually, an "Indemnified Party" and collectively, the
"Indemnified Parties") from and against all losses, liabilities, obligations,
claims, damages, penalties, causes of action, costs and expenses (including,
without limitation, attorneys' fees and expenses) imposed upon or incurred by
or asserted against any Indemnified Party by reason of (a) ownership of the
Collateral, or any interest therein, or receipt of any rent or other sum
therefrom, (b) any accident or injury to or death of persons or loss of or
damage to property occurring on or about the Collateral or any part thereof,
(c) any use, non-use or condition of the Collateral or any part thereof, (d)
any failure on the part of the Company, either General Partner or any of
their respective Subsidiaries or Affiliates to perform or comply with any of
the terms of this Agreement or any other Operative Agreement, (e) the
performance of any labor or services or the furnishing of any materials or
other property in respect of the Collateral or any part thereof, (f) any
negligence or tortious act on the part of the Company, either General
Partner, any of their respective Subsidiaries or Affiliates or any of their
respective agents, contractors, sublessees, licensees or invitees, (g) any
work in connection with any alterations, changes or construction of the
Collateral, (h) any other relationship that has arisen or may arise between
the Company, either General Partner or any of their respective Subsidiaries
or Affiliates and the Indemnified Parties or the Collateral as a result of
the delivery or performance of this Agreement, any other Operative Agreement
or any action contemplated hereby or thereby or by any other document
executed in connection herewith or therewith, (i) the presence or removal, or
the discharge, spillage, leakage, emission, release, threat of release or
disposal, of any Hazardous Materials on, under, about or from the Collateral
or the noncompliance with any Legal Requirement relating thereto, whether
arising prior to the issuance of the Notes or at any time thereafter and
whether or not the Company, either General Partner or any of their respective
Subsidiaries or Affiliates is responsible therefor or (j) the holding of, or
any interest in, any sum deposited or paid under this Agreement, the Notes or
any other Operative
83
Agreement, PROVIDED that nothing contained herein shall be deemed to require
the Company to indemnify the Indemnified Parties for their respective gross
negligence or willful misconduct, or for their breach of their respective
obligations under this Agreement or the other Operative Agreements or for
conditions (other than matters covered by clause (f) above) first occurring
subsequent to the earlier of (y) the taking of exclusive possession and
control of the Collateral for operational purposes pursuant to Section 6.03
of the Company Security Agreement, or (z) the foreclosure of the Lien under
any Security Document and the transfer of title to the Trustee.
In case any action, claim, suit or proceeding is brought against an
Indemnified Party by reason of any such occurrence, the Company may, and upon
the request of such Indemnified Party will, at the Company's expense resist
and defend such action, suit or proceeding or cause the same to be resisted
and defended by counsel for the insurer of the liability or by counsel
designated by the Company and reasonably satisfactory to the Indemnified
Party, as the case may be, PROVIDED that any Indemnified Party shall be
entitled to participate in any such action, suit or proceeding with counsel
of its own choice but at its own expense, and PROVIDED FURTHER that if any
Indemnified Party reasonably determines that a conflict of interest exists
with respect to the representation by such counsel of such Indemnified Party,
the Company shall pay the fees and expenses of counsel selected by such
Indemnified Party. In any event, if the Company fails to assume the defense
within a reasonable time after any such request, the Indemnified Party may
assume such defense or other indemnification obligation and the fees and
expenses of its attorney will be paid by the Company. The obligations of the
Company under this Section 16 shall survive any termination or satisfaction
of this Agreement. Any amounts payable to any Indemnified Party under this
Section 16 which are not paid within 15 days after written demand therefor by
any Indemnified Party shall bear interest (i) in the case of Holders of
Tranche A Notes, at a rate per annum equal to the rate of interest stated on
the face of the Tranche A Notes plus 2.0% from the date of such demand; and
(ii) in the case of Holders of Tranche B Notes, at a rate per annum equal to
the rate of interest stated on the face of the Tranche B Notes plus 2.0% from
the date of such demand. In the event that the Company shall be required to
pay any indemnity under this Section 16, the Company shall pay the
Indemnified Party an amount which, after deduction of all taxes required to
be paid by such Indemnified Party in respect of the receipt or accrual
thereof (but not for any taxes payable with respect to amounts received for
the payment of income taxes), shall be equal to the amount of such indemnity.
(c) In connection with the Closing, the Managing General Partner
and the Company are requesting that you make available for funding an amount
equal to the principal amount specified opposite your name in Schedule A.
If, for any reason, on the date scheduled by the Managing General Partner and
the Company as the date for the Closing, you shall at their request have made
such amount available, and (i) the closing conditions are not satisfied by
11:00 a.m. on such scheduled date, (ii) the Managing General Partner and the
Company do not, by 11:00 a.m. on such scheduled date reschedule such Closing
for a subsequent date, and (iii) the Closing in fact does not occur
84
on such scheduled date, the General Partners and the Company will protect,
indemnify and hold you harmless from and against any and all losses resulting
from your failure or inability to invest on the scheduled date for the
Closing the purchase price of the Notes to be purchased by you, for the
period ending on the next following Business Day (i) in the case of Tranche A
Notes, at a rate of interest equal to or greater than the rate of interest on
the Tranche A Notes; and (ii) in the case of Tranche B Notes, at a rate of
interest equal to or greater than the rate of interest on the Tranche B Notes.
SECTION 17. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
All representations and warranties contained in this Agreement or the
other Operative Agreements, or made in writing by or on behalf of either
General Partner, the Company, any Restricted Subsidiary or any of their
Affiliates in connection with the transactions contemplated by this Agreement
or the other Operative Agreements, shall survive the execution and delivery
of this Agreement and the other Operative Agreements, any investigation at
any time made by you or on your behalf, the purchase of the Notes by you
under this Agreement and any disposition or payment of the Notes. All
statements contained in any certificate or other instrument delivered by or
on behalf of the General Partners, the Company or any Restricted Subsidiary
pursuant to this Agreement and/or the other Operative Agreements or in
connection with any amendment, waiver or modification of this Agreement or
any of the other Operative Agreements shall be deemed representations and
warranties of the Company under this Agreement.
SECTION 18. AMENDMENTS AND WAIVERS.
(a) Any term of this Agreement or of the Notes may be amended and
the observance of any term of this Agreement or of the Notes may be waived
(either generally or in a particular instance and either retroactively or
prospectively) only with the written consent of the Company and the Required
Holders, PROVIDED that, without the prior written consent of the holders of
all the Notes at the time outstanding, no such amendment or waiver shall (a)
change the maturity or the principal amount of, or change the rate of
interest or the time of payment of interest on, or change the amount or the
time of payment of any principal or Make Whole Amount or Premium Amount on
any prepayment of, any Note, (b), subject to other requirements set forth in
the Trust Agreement, release any Lien against the Collateral for the benefit
of the holders of the Notes, (c) reduce the aforesaid percentage of the
principal amount of the Notes the holders of which are required to consent to
any such amendment or waiver or change the rights of the holders of a Note
with respect thereto, (d) change the percentage of the principal amount of
the Notes the holders of which may declare the Notes to be due and payable as
provided in Section 11 or change the rights of the holders of a Note with
respect thereto, (e) change the percentage of the principal amount of the
Notes the holders of which may rescind and annul any such declaration as
provided in Section 11 or (f) modify the provisions of Section 9.6, Section
9.8 or this Section 18. Any amendment or
85
waiver effected in accordance with this Section 18 shall be binding upon each
holder of any Note at the time outstanding, each future holder of any Note,
either General Partner and the Company.
(b) Notwithstanding the provisions of Section 18(a), if the Second
Amendment to the Intercreditor and Trust Agreement attached hereto as Exhibit
K (the "Second Trust Agreement Amendment") is not adopted in the same or
substantially similar form as Exhibit K by the Requisite Percentage (as
defined in the Trust Agreement) within one year of the date of Closing then
the interest rate due under both series of Notes will increase by ten basis
points (0.10%) per annum. Any such increase shall be retroactive to the date
which occurs six months after the Closing and an amount equal to interest due
on each series of Notes at such increased rate for such six month period
shall be payable to the relevant Holder in a lump sum on the next interest
payment date following the determination that such increase is required.
Following such an increase, all other subsequent interest payments shall be
paid at such increased rate.
SECTION 19. NOTICES, ETC.
Except as otherwise provided in this Agreement, notices and other
communications under this Agreement shall be in writing and shall be
delivered by hand, by express courier service, by telecopy or by registered
or certified mail, return receipt requested, postage prepaid, addressed, (a)
if to you, at the address or telecopy number set forth in Schedule A or at
such other address or telecopy number as you shall have furnished to the
Company in writing, except as otherwise provided in Section 15.2 with respect
to payments on Notes held by you or your nominee, or (b) if to any other
holder of any Note, at such address or telecopy number as such other holder
shall have furnished to the Company in writing, or, until any such other
holder so furnishes to the Company an address or telecopy number, then to and
at the address or telecopy number of the last holder of such Note who has
furnished an address or telecopy number to the Company, or (c) if to the
Company or either General Partner, at the address or telecopy number set
forth at the beginning of this Agreement to the attention of Senior Vice
President and Chief Financial Officer, or at such other address or telecopy
number, or to the attention of such other officer, as the Company shall have
furnished to you and each such other holder in writing.
SECTION 20. REPRODUCTION OF DOCUMENTS.
This Agreement, each Operative Agreement and all documents relating
thereto, including, without limitation, (a) consents, waivers and
notifications which may hereafter be executed, (b) documents received by you
at the Closing (except the Notes themselves), and (c) financial statements,
certificates and other information previously or hereafter furnished to you,
may be reproduced by you by any photographic, photostatic, microfilm,
microcard, miniature photographic or other similar process and you may
destroy any original document so reproduced. Each General Partner and the
Company agrees and stipulates that, to the extent permitted by applicable
law, any such reproduction shall be
86
admissible in evidence as the original itself in any judicial or
administrative proceeding (whether or not the original is in existence and
whether or not such reproduction was made by you in the regular course of
business) and any enlargement, facsimile or further reproduction of such
reproduction shall likewise be admissible in evidence.
SECTION 21. MISCELLANEOUS.
This Agreement shall be binding upon and inure to the benefit of and
be enforceable by the respective successors and assigns of the parties
hereto, whether so expressed or not, and, in particular, shall inure to the
benefit of and be enforceable by any holder or holders at the time of the
Notes or any part thereof, PROVIDED that the benefits of Sections 7, 14.3 and
15.2 shall be limited as therein provided. Except as stated in Section 17,
this Agreement embodies the entire agreement and understanding among you, the
General Partners and the Company and supersedes all prior agreements and
understandings relating to the subject matter hereof. The headings in this
Agreement are for purposes of reference only and shall not limit or otherwise
affect the meaning hereof. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
SECTION 22. SUBMISSION TO JURISDICTION.
For the purpose of assuring that any holder of Notes may enforce its
rights under this Agreement, the Notes and the other Operative Agreements,
each General Partner and the Company, for itself and its successors and
assigns, hereby, to the fullest extent permitted by applicable law,
irrevocably (a) agrees that any legal or equitable action, suit or proceeding
brought against it arising out of or relating to this Agreement, any other
Operative Agreement and the Notes, or any transaction contemplated hereby or
the subject matter of any of the foregoing or for recognition or enforcement
of any judgment rendered in any such action, suit or proceeding may be
instituted in any state or federal court sitting in the Borough of Manhattan
in the State of New York, (b) waives any objection which it may now or
hereafter have to the laying of venue of any such action, suit or proceeding
brought in any such court, and hereby further irrevocably and unconditionally
waives and agrees not to plead or claim that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient
forum, or any right to require the proceeding to be conducted in any other
jurisdiction by reason of its present or future domicile, (c) irrevocably
submits itself to the non-exclusive jurisdiction of any state or federal
court of competent jurisdiction sitting in the Borough of Manhattan in the
State of New York for purposes of any such action, suit or proceeding, and
(d) irrevocably waives any immunity from jurisdiction to which it might
otherwise be entitled in any such action, suit or proceeding which may be
instituted in any state or federal court sitting in the Borough of Manhattan
in the State of New York, and irrevocably waives any immunity from, or
objection to, the maintaining of an action against it to enforce any judgment
for money obtained in any such action, suit or proceeding and any immunity
from execution.
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SECTION 23. WAIVER OF JURY TRIAL.
EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES THE
RIGHT TO TRIAL BY JURY IN ANY LEGAL OR EQUITABLE ACTION, SUIT OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES OR ANY OTHER
OPERATIVE AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY OR THE
SUBJECT MATTER OF ANY OF THE FOREGOING.
SECTION 24. GOVERNING LAW.
THIS AGREEMENT HAS BEEN EXECUTED AND DELIVERED IN ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ OF AMERICA. THIS AGREEMENT AND
(UNLESS OTHERWISE EXPRESSLY PROVIDED) ALL AMENDMENTS AND SUPPLEMENTS TO, AND
ALL CONSENTS AND WAIVERS PURSUANT TO, THIS AGREEMENT SHALL IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE.
SECTION 25. CONFIDENTIAL INFORMATION.
For the purposes of this Section 25, "Confidential Information" means
information delivered to you by or on behalf of the Company or any Restricted
Subsidiary in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in nature and that was clearly
marked or labeled or otherwise adequately identified when received by you as
being confidential information of the Company or such Restricted Subsidiary,
PROVIDED that such term does not include information that (a) was publicly
known or otherwise known to you prior to the time of such disclosure, (b)
subsequently becomes publicly known through no act or omission by you or any
person acting on your behalf, (c) otherwise becomes known to you other than
through disclosure by the Company or any Restricted Subsidiary or (d)
constitutes financial statements delivered to you under Section 7 that are
otherwise publicly available. You will maintain the confidentiality of such
Confidential Information in accordance with procedures adopted by you in good
faith to protect confidential information of third parties delivered to you,
PROVIDED that you may deliver or disclose Confidential Information to (i)
your directors, trustees, officers, employees, agents, attorneys and
affiliates (to the extent such disclosure reasonably relates to the
administration of the investment represented by your Notes), (ii) your
financial advisors and other professional advisors who agree to hold
confidential the Confidential Information substantially in accordance with
the terms of this Section 25, (iii) any other holder of any Note, (iv) any
Institutional Investor to which you sell or offer to sell such
88
Note or any part thereof or any participation therein (if such Person has
agreed in writing prior to its receipt of such Confidential Information to be
bound by the provisions of this Section 25), (v) any Person from which you
offer to purchase any security of the Company (if such Person has agreed in
writing prior to its receipt of such Confidential Information to be bound by
the provisions of this Section 25), (vi) any federal or state regulatory
authority having jurisdiction over you, (vii) the National Association of
Insurance Commissioners or any similar organization, or any nationally
recognized rating agency that requires access to information about your
investment portfolio or (viii) any other Person to which such delivery or
disclosure may be necessary or appropriate (w) to effect compliance with any
law, rule, regulation or order applicable to you, (x) in response to any
subpoena or other legal process, (y) in connection with any litigation to
which you are a party or (z) if an Event of Default has occurred and is
continuing, to the extent (in the case of subclauses (y) and (z) of this
clause (viii)) you reasonably determine such delivery and disclosure to be
necessary or appropriate in the enforcement or for the protection of the
rights and remedies under your Notes and this Agreement. Each holder of a
Note, by its acceptance of a Note, will be deemed to have agreed to be bound
by and to be entitled to the benefits of this Section 25 as though it were a
party to this Agreement. On reasonable request by the Company in connection
with the delivery to any holder of a Note of information required to be
delivered to such holder under this Agreement or requested by such holder
(other than a holder that is a party to this Agreement or its nominee), such
holder will enter into an agreement with the Company embodying the provisions
of this Section 25.
89
If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterpart of this Agreement and return the same
to the undersigned, whereupon this Agreement shall become a binding agreement
between you and the undersigned.
Very truly yours,
CORNERSTONE PROPANE, L.P.
By: CORNERSTONE PROPANE GP, INC.
as Managing General Partner
By __________________________________
Name:
Title:
CORNERSTONE PROPANE GP, INC.
By _______________________________________
Name:
Title:
SYN INC.
By _______________________________________
Name:
Title:
90
The foregoing Agreement is
hereby accepted and agreed
to as of the date first
above written.
ALLSTATE INSURANCE COMPANY
By ______________________
Name:
By ______________________
Name:
Authorized Signatories
ALLSTATE LIFE INSURANCE COMPANY
By ______________________
Name:
By ______________________
Name:
Authorized Signatories
METROPOLITAN LIFE INSURANCE COMPANY
By ______________________
Name:
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