Exhibit 10.24
________________________________________________________________________________
CREDIT AGREEMENT
Dated as of March 30, 2001
by and among
TOTAL GAS & ELECTRIC, INC.
and
THE CHASE MANHATTAN BANK
as Agent
and
THE LENDERS PARTY HERETO
_______________________________________________________________________________
TABLE OF CONTENTS
PAGE
ARTICLE I 1
DEFINITIONS AND ACCOUNTING TERMS 1
SECTION 1.1 Defined Terms 1
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SECTION 1.2 Use of Defined Terms 21
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SECTION 1.3 Other Interpretive Provisions 21
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SECTION 1.4 Accounting and Financial Determinations 22
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ARTICLE II 23
COMMITMENTS, BORROWING PROCEDURES AND NOTES 23
SECTION 2.1 Commitments 23
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SECTION 2.1.1 Facility A Commitment 23
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SECTION 2.1.2 Facility B Commitment 24
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SECTION 2.1.3 Restrictions on Loans 24
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SECTION 2.2 Reduction and Termination of Commitments 24
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SECTION 2.2.1 Optional Subject to Section 5.4 24
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SECTION 2.2.2 Mandatory 24
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SECTION 2.2.3 Termination 24
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SECTION 2.3 Borrowing Procedure 25
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SECTION 2.4 Continuation and Conversion Elections 25
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SECTION 2.5 Funding 25
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SECTION 2.6 Loan Accounts/Notes 26
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ARTICLE III 27
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES 27
SECTION 3.1 Repayment and Prepayments 27
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SECTION 3.1.1 Repayment 27
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SECTION 3.1.2 Voluntary Prepayments 27
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SECTION 3.1.3 Mandatory Prepayments 27
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SECTION 3.2 Interest Provisions 29
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SECTION 3.2.1 Rates 29
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SECTION 3.2.2 Post-Default Rate 29
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SECTION 3.2.3 Payment Dates 29
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SECTION 3.3 Fees 30
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SECTION 3.3.1 Commitment Fee 30
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SECTION 3.3.2 Arrangement and Agency Fees 30
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ARTICLE IV 30
INTENTIONALLY OMITTED NUMBERING RESERVED 30
ARTICLE V 30
CERTAIN LIBOR AND OTHER PROVISIONS 30
SECTION 5.1 LIBOR Lending Unlawfu1 30
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i
SECTION 5.2 Deposits Unavailable 30
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SECTION 5.3 Increased LIBOR Loan Costs, etc. 31
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SECTION 5.4 Funding Losses 32
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SECTION 5.5 Increased Capital Costs 32
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SECTION 5.6 Taxes 33
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SECTION 5.7 Payments, Computations, etc 34
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SECTION 5.8 Sharing of Payments 34
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SECTION 5.9 Setoff 35
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SECTION 5.10 Recourse 35
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SECTION 5.11 Replacement of Lenders 35
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ARTICLE VI 36
CONDITIONS TO EFFECTIVENESS AND TO BORROWING 36
SECTION 6.1 Conditions to Effectiveness 36
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SECTION 6.1.1 Credit Agreement and Loan Documents 36
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SECTION 6.1.2 Resolutions; Incumbency 36
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SECTION 6.1.3 Organization Documents; Good Standing 36
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SECTION 6.1.4 Closing Certificate 37
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SECTION 6.1.5 Security Agreements; Prior Liens Removed; Prior Indebtedness Paid 37
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SECTION 6.1.6 Permits 38
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SECTION 6.1.7 RESERVED 38
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SECTION 6.1.8 Opinion of Counsel 38
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SECTION 6.1.9 Closing Fees, Expenses, etc. 38
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SECTION 6.1.10 Insurance 39
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SECTION 6.1.11 Solvency Certificate 39
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SECTION 6.1.12 Borrowing Base Certificate 39
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SECTION 6.1.13 RESERVED 39
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SECTION 6.1.14 Material Contracts 39
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SECTION 6.1.15 Consent of Petro Lenders 39
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SECTION 6.1.16 Other Documents 39
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SECTION 6.2 All Borrowings 39
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SECTION 6.2.1 Compliance with Warranties, No Default, etc. 39
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SECTION 6.2.2 Borrowing Request 40
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SECTION 6.2.3 Lien Searches 40
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SECTION 6.2.4 Satisfactory Legal Form 40
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ARTICLE VII 40
REPRESENTATIONS AND WARRANTIES 40
SECTION 7.1 Organization etc 40
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SECTION 7.2 Material Subsidiaries 41
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SECTION 7.3 Qualification 41
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SECTION 7.4 Enforceability 41
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SECTION 7.5 Due Authorization; Non-contravention; etc 42
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SECTION 7.6 Government Approvals; Regulations, etc 42
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SECTION 7.7 Business; Financial Statements 42
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ii
SECTION 7.8 No Material Adverse Change 43
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SECTION 7.9 Litigation; Labor Controversies, etc 43
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SECTION 7.10 Ownership of Properties; Project Contracts; Liens 44
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SECTION 7.11 Taxes 44
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SECTION 7.12 ERISA Compliance 44
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SECTION 7.13 Environmental Warranties 45
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SECTION 7.14 Regulations U and X and Use of Proceeds 47
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SECTION 7.15 Accuracy of Information 47
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SECTION 7.16 Solvency 47
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SECTION 7.17 Compliance with Agreements and Laws 48
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ARTICLE VIII 48
COVENANTS 48
SECTION 8.1 Affirmative Covenants 48
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SECTION 8.1.1 Financial Information, Reports, Notices, etc 48
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SECTION 8.1.2 Maintenance of Properties 52
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SECTION 8.1.3 Insurance 52
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SECTION 8.1.4 Payment of Obligations 53
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SECTION 8.1.5 Compliance with Laws 53
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SECTION 8.1.6 Books and Records 53
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SECTION 8.1.7 Inspection 53
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SECTION 8.1.8 Environmental Covenant 54
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SECTION 8.1.9 Compliance with ERISA 54
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SECTION 8.1.10 Collateral 54
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SECTION 8.1.11 Update of Project Contracts 55
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SECTION 8.1.12 Agreements Regarding Receipts Account 55
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SECTION 8.1.13 Preservation of Corporate Existence 55
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SECTION 8.1.14 Use of Proceeds 56
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SECTION 8.1.15 Update of Customer Lists 56
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SECTION 8.1.16 Further Assurances 56
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SECTION 8.2 Negative Covenants 57
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SECTION 8.2.1 Business Activities 57
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SECTION 8.2.2 Indebtedness 57
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SECTION 8.2.3 Liens 57
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SECTION 8.2.4 Financial Covenants 58
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SECTION 8.2.5 Investments 59
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SECTION 8.2.6 Restricted Payments, etc 59
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SECTION 8.2.7 Consolidation, Merger, etc 60
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SECTION 8.2.8 Asset Dispositions, etc 60
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SECTION 8.2.9 RESERVED 61
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SECTION 8.2.10 Transactions with Affiliates 61
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SECTION 8.2.11 Negative Pledges, Restrictive Agreements, etc 61
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SECTION 8.2.12 RESERVED 61
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SECTION 8.2.13 Operating Leases 61
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SECTION 8.2.14 Prepayments 62
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SECTION 8.2.15 Organization Documents 62
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iii
SECTION 8.2.16 Capital Expenditures 62
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SECTION 8.2.17 Contingent Liabilities 62
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SECTION 8.2.18 ERISA 62
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SECTION 8.2.19 Accounting Changes 62
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SECTION 8.2.20 Bank Accounts 62
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ARTICLE IX 63
EVENTS OF DEFAULT 63
SECTION 9.1 Listing of Events of Default 63
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SECTION 9.1.1 Non-Payment of Obligations 63
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SECTION 9.1.2 Breach of Warranty 63
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SECTION 9.1.3 Non-Performance of Other Covenants and Obligations 63
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SECTION 9.1.4 Default on Other Indebtedness 63
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SECTION 9.1.5 Judgments 64
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SECTION 9.1.6 ERISA 64
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SECTION 9.1.7 Change in Control 64
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SECTION 9.1.8 Bankruptcy, Insolvency, etc 64
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SECTION 9.1.9 Impairment of Security, etc 65
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SECTION 9.1.10 Split-Up 65
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SECTION 9.1.11 Guarantor Defaults 66
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SECTION 9.2 Action if Bankruptcy 66
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SECTION 9.3 Action if Other Event of Default 66
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ARTICLE X 67
THE AGENT 67
SECTION 10.1 Appointment and Authorization 67
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SECTION 10.2 Delegation of Duties 67
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SECTION 10.3 Liability of Agent 67
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SECTION 10.4 Reliance by Agent 67
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SECTION 10.5 Notice of Default 68
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SECTION 10.6 Credit Decision 68
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SECTION 10.7 Indemnification of Agent 69
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SECTION 10.8 Agent in Individual Capacity 69
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SECTION 10.9 Successor Agent 70
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SECTION 10.10 Withholding Tax 70
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SECTION 10.11 Collateral Matters 71
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ARTICLE XI 72
MISCELLANEOUS PROVISIONS 72
SECTION 11.1 Waivers, Amendments, etc 72
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SECTION 11.2 Notices 73
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SECTION 11.3 Payment of Costs and Expenses 73
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SECTION 11.4 Indemnification 74
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SECTION 11.5 Survival 75
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SECTION 11.6 Severability 75
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iv
SECTION 11.7 Headings 75
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SECTION 11.8 Execution in Counterparts, Effectiveness, etc 75
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SECTION 11.9 Governing Law; Entire Agreement 75
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SECTION 11.10 Successors and Assigns 76
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SECTION 11.11 Sale and Transfer of Loans and Notes; Participations in its Loans and Notes 76
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SECTION 11.11.1 Assignments 76
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SECTION 11.11.2 Participations 77
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SECTION 11.12 Other Transactions 78
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SECTION 11.13 Forum Selection and Consent to Jurisdiction 78
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SECTION 11.14 Waiver of Jury Trial 79
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SCHEDULE 1.1 - Disclosure Schedule
SCHEDULE 2.1.1 - Facility Percentages and Commitments
SCHEDULE 6.2.3 - Lien Search Locations
SCHEDULE 7.2 - Subsidiaries of the Borrower
SCHEDULE 8.2.20 - Bank Accounts
EXHIBIT A-1 - Form of Facility A Note
EXHIBIT A-2 - Form of Facility B Note
EXHIBIT B - Form of Borrowing Base Certificate
EXHIBIT C - Form of Borrowing Request
EXHIBIT D - Form of Continuation/Conversion Notice
EXHIBIT E - Form of Assignment & Acceptance Agreement
EXHIBIT F - Form of Compliance Certificate
EXHIBIT G - Form of Opinion of Counsel
EXHIBIT H-1 - Form of Guarantee Agreement of Star Gas Partners
EXHIBIT H-2 - Form of Guarantee Agreement of the Material Subsidiaries
EXHIBIT I - Form of Solvency Certificate
EXHIBIT J-1 - Form of Company Security Agreement
EXHIBIT J-2 - Form of Material Subsidiaries Security Agreement
EXHIBIT K - Form of Accounts Security Deposit Agreement
EXHIBIT L - Form of Securities Account Control Agreement
EXHIBIT M - Form of Company Share Pledge Agreement
EXHIBIT N - Form of Irrevocable Letter of Instruction
EXHIBIT O - List of Project Contracts and Related Project Parties
EXHIBIT P - Form of Subordination Agreement
v
CREDIT AGREEMENT (as the same may be amended, supplemented or otherwise
modified from time to time, this "Agreement"), dated as of March 30, 2001,
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between TOTAL GAS & ELECTRIC, INC., a Florida corporation (the "Borrower"), the
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LENDERS which from time to time are parties to this Agreement (individually, a
"Lender" and collectively, the "Lenders") and THE CHASE MANHATTAN BANK
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("Chase") as agent for the Lenders (the "Agent").
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RECITALS
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A. The Borrower is a provider of certain energy and energy related
products and services for customers related to the deregulated natural gas and
electric industry (the "Business").
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B. The Borrower has requested the following credit facilities from the
Lenders: (i) a $15,350,000 revolving credit facility for working capital
purposes and (ii) a $3,000,000 revolving credit facility which converts to a
term loan facility for financing acquisitions for customer accounts and Capital
Expenditures (as defined herein).
C. The Lenders are willing, on the terms and subject to the conditions
set forth in this Agreement, to agree to the Borrower's requests.
Accordingly, in consideration of the mutual agreements, provisions and
covenants contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1 Defined Terms. The following terms (whether or not
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underscored) when used in this Agreement, including its preamble and recitals,
shall, except where the context otherwise requires, have the following meanings:
"Affiliate" of any Person means as applied to any Person, any other Person
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directly or indirectly controlling or controlled by or under common control with
such Person, provided that, for purposes, of this definition, "control" 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; and provided further that no member of
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the ▇▇▇▇▇ Group shall be an Affiliate for purposes of this Agreement.
"Agent" is defined in the preamble and includes each other Person as shall
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have subsequently been appointed as a successor agent pursuant to Section 10.9.
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"Agent-Related Person" means Chase in its capacity as agent and any
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successor agent arising under Section 10.9, and their respective Affiliates, and
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the officers, directors, employees, agents and attorneys-in-fact of such Persons
and Affiliates.
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"Agreement" is defined in the preamble.
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"Applicable Prime Rate Margin" means, with respect to any Prime Rate Loan,
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1.00 percent per annum.
"Applicable Lending Office" means, with respect to each Lender, with
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respect to each type of Loan, the lending office as designated for such type of
Loan below its name on the signature pages hereof or such other office of such
Lender or of an affiliate of such Lender as such Lender may from time to time
specify to the Agent and the Borrower as the office at which its Loans of such
type are to be made and maintained.
"Applicable LIBOR Margin" means, with respect any LIBOR Loan, 3.00 percent
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per annum.
"Asset Disposition" is defined in Section 8.2.8.
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"Assignee Lender" is defined in Section 11.11.1.
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"Assignment and Acceptance Agreement" means an Assignment and Acceptance
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Agreement substantially in the form of Exhibit E hereto.
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"Bankruptcy Code" means Title 11 of the United States Code, as amended from
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time to time, or any successor statute.
"Bankruptcy Law" is defined in Section 9.1.8.
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"Borrower" is defined in the preamble.
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"Borrowing" means the Loans of the same type and, in the case of LIBOR
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Loans, having the same Interest Period made by all Lenders on the same Business
Day and pursuant to the same Borrowing Request in accordance with Section 2.3.
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"Borrowing Base Certificate" means a certificate executed by a Responsible
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Officer of the Borrower substantially in the form of Exhibit B hereto.
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"Borrowing Request" means a Loan request and certificate duly executed by a
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Responsible Officer of the Borrower, substantially in the form of Exhibit C
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hereto.
"Business" is defined in the preamble.
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"Business Day" means:
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(a) any day which is neither a Saturday or Sunday nor a legal holiday
on which banks are authorized or required to be closed in New York, New
York; and
2
(b) relative to the making, continuing, prepaying or repaying of any
LIBOR Loans, any day on which dealings in Dollars are carried on in the
London interbank market.
"Capital Expenditures" means, for any period, the aggregate amount of all
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payments made during such period by any Person directly or indirectly for the
purpose of acquiring, constructing or maintaining fixed assets, real property or
equipment that, in accordance with GAAP, would be added as a debit to the fixed
asset account of such Person, including, without limitation, all amounts paid or
payable during such period with respect to Capitalized Lease Liabilities and
interest that are required to be capitalized in accordance with GAAP.
"Capital Stock" means, with respect to any Person, any capital stock
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(including preferred stock), shares, units, interests, participations or other
ownership interests (however designated, including without limitation such items
as they may apply to a partnership, limited liability company or similar Person)
of such Person and any rights, warrants or options to purchase any thereof.
"Capitalized Lease Liabilities" means all monetary obligations of the
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Borrower or any Material Subsidiary under any leasing or similar arrangement
which, in accordance with GAAP, would be classified as capitalized leases, and,
for purposes of this Agreement and each other Loan Document, the amount of such
obligations shall be the capitalized amount thereof, determined in accordance
with GAAP, and the stated maturity thereof shall be the date of the last payment
of rent or any other amount due under such lease prior to the first date upon
which such lease may be terminated by the lessee without payment of a penalty.
"Casualty Event" means, with respect to any Property of the Borrower or any
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of the Material Subsidiaries, any loss of or damage to, or any condemnation or
other taking of, such Property for which such Person receives insurance
proceeds, or proceeds of a condemnation award or other compensation.
"Casualty Proceeds" is defined in Section 3.1.3(g).
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"CERCLA" means the Comprehensive Environmental Response, Compensation and
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Liability Act of 1980, 42 U.S.C. (S) 9601 et seq., as amended.
"CERCLIS" means the Comprehensive Environmental Response Compensation
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Liability Information System List.
"Change in Control" means:
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(a) the ▇▇▇▇▇ Group shall fail to own directly at least a 51%
ownership interest in the Managing General Partner with voting power to
elect the board of directors or other governing body; or
3
(b) the Managing General Partner shall fail to own directly 100% of
the general partnership interests in Star Propane, or if Star Propane shall
have been converted to corporate form, at least 51 % of the voting shares
of Star Propane; or
(c) the Managing General Partner shall fail to own directly 100% of
the general partnership interests in Star Gas Partners, or if Star Gas
Partners shall have been converted to corporate form, at least 51 % of the
voting shares of Star Gas Partners; or
(d) (i) Star Gas Partners shall fail to own directly or indirectly
at least 72.7% of the voting shares of the Borrower, or (ii) Star Gas
Partners shall fail to own directly or indirectly at least an 72.7%
ownership interest in the Borrower provided that the 72.7% may be reduced
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by 11 % due to the exercise of certain stock options outstanding as of the
Effective Date; or
(e) Star Gas Partners shall fail to own directly at least 99% in Star
Propane; or
(f) Star Gas Partners shall fail to own, directly or indirectly, 51 %
of each of Petro Holdings Inc. and its Subsidiaries existing as of the
Effective Date; or
(g) (i) the Borrower shall fail to own directly 100% of the voting
shares of each Material Subsidiary, or (ii) the Borrower shall fail to own
directly at least a 100% ownership interest in each Material Subsidiary.
"Chase" means The Chase Manhattan Bank.
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"Code" means the Internal Revenue Code of 1986, as amended, reformed or
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otherwise modified from time to time.
"Collateral" is defined in the respective Security Documents.
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"Commitment" means, as the context may require, a Lender's Facility A
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Commitment, Facility B Commitment, or both thereof.
"Commitment Termination Date" means, as the context may require, the
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Facility A Commitment Termination Date or the Facility B Commitment Termination
Date.
"Commitment Termination Event" means:
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(a) the occurrence of any Default described in Section 9.1.8; or
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(b) the occurrence and continuance of any other Event of Default and
either:
(i) the declaration of the Loans to be due and payable pursuant
to Section 9.3; or
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(ii) in the absence of such declaration in clause (i) above, the
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giving of notice by the Agent, acting at the direction of the Required
Lenders, to the Borrower that the Commitments have been terminated.
"Compliance Certificate" means a certificate signed by a Responsible
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Officer of the Borrower substantially in the form of Exhibit F, demonstrating
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compliance with the covenants contained in Sections 8.2.2(a), 8.2.4, 8.2.5,
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8.2.6, 8.2.8, 8.2.13 and 8.2.16 and certifying that no Default or Event of
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Default exists, or, if any Default or Event of Default exists, stating the
nature and status thereof.
"Consolidated" or "consolidated" means, when used with reference to any
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accounting term, the amount described by such accounting term, determined on a
consolidated basis in accordance with GAAP, after elimination of intercompany
items.
"Consolidated EBITDA" shall mean for any period of four consecutive
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quarters, Consolidated Net Income (or consolidated net loss) of the Borrower and
the Material Subsidiaries for such period, plus the sum, without duplication, of
(a) gross interest expense, (b) depreciation and amortization expenses and
charges, (c) all income taxes to any government or governmental instrumentality
expensed on the Borrower and Material Subsidiaries' books (whether paid or
accrued), (d) the cost to acquire additional customers to the extent such costs
were deducted in computing Consolidated Net Income, and (e) all other non-cash
expenses to the extent deducted in computing Consolidated Net Income as
indicated on the income and expense statements of the Borrower and the Material
Subsidiaries, minus all extraordinary or unusual gains, in each case determined
on a consolidated basis for the Borrower and the Material Subsidiaries in
accordance with GAAP, applied on a consistent basis. All of the foregoing
categories shall be calculated (without duplication) over the four fiscal
quarters next preceding the date of calculation thereof.
"Consolidated Net Income" means, for any period, the net income (or
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deficit) of the Borrower and the Material Subsidiaries for such period (taken as
a cumulative whole) including, without limitation, 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 Material Subsidiary or is merged into or consolidated with the
Borrower or a Material Subsidiary, (b) the income (or deficit) of any Person
(other than a Material Subsidiary) in which the Borrower or any Material
Subsidiary has an ownership interest, except to the extent that any such income
has been actually received by the Borrower or such Material Subsidiary in the
form of dividends, or similar distributions, (c) the undistributed earnings of
the Borrower and any Material Subsidiary to the extent that the declaration or
payment of dividends or similar distributions by the Borrower and such Material
Subsidiary is not at the time permitted by the terms of its charter of any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to the Borrower and such Material 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
5
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 polices, (h) any gain arising from the acquisition of any
securities, or the extinguishment, under GAAP, of any Indebtedness, of the
Borrower or any Material 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
Material Subsidiary at the date of acquisition over the cost of the investment
in such Material Subsidiary, and (k) in the case of a successor to the Borrower
by consolidation or merger or as a transferee of its assets, any earnings of the
successor corporation prior to such consolidation, merger or transfer of assets.
"Consolidated Total Assets" means, as of any date of determination, the
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total assets of the Borrower and the Material Subsidiaries on a consolidated
basis, as determined in accordance with GAAP.
"Contingent Liability" means any agreement, undertaking or arrangement by
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which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to, or otherwise to invest in, a
debtor, or otherwise to assure a creditor against loss) the indebtedness,
obligation or any other liability of any other Person (other than by
endorsements of instruments in the course of collection), or guarantees the
payment of dividends or other distributions upon the shares of any other Person.
The amount of any Person's obligation under any Contingent Liability shall
(subject to any limitation set forth therein) be deemed to be the outstanding
principal amount of the debt, obligation or other liability guaranteed thereby.
"Continuation/Conversion Notice" means a notice of continuation or
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conversion of LIBOR Loans or Prime Rate Loans, as applicable, and certificate
duly executed by an Responsible Officer of the Borrower, substantially in the
form of Exhibit D hereto.
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"Customer List" means, at any time, the names and addresses of all
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customers of the Borrower and the Material Subsidiaries at such time, together
with all trade names and trademarks and all supporting documents, including but
not limited to computer discs, programs, tapes, trial balances and carrying
media.
"Default" means any event or occurrence which, with the giving of notice or
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the lapse of time or both, would constitute an Event of Default.
"Depositary" means Bank of America N.A.
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"Disclosure Schedule" means the Disclosure Schedule attached hereto as
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Schedule 1.1, as it may be amended, supplemented or otherwise modified from time
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to time by the Borrower with the written consent of the Agent and the Required
Lenders.
"Disqualified Stock" means, with respect to any Person, any Capital Stock
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of such Person which by its terms (or by the terms of any security into which it
is convertible or for which it is
6
exchangeable or exercisable), upon the happening of any event or otherwise (i)
matures or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, (ii) is convertible into or exchangeable or exercisable for
Indebtedness or Disqualified Stock, or (iii) is redeemable at the option of the
holder thereof, in whole or in part, in each case on or prior to the first
anniversary of the stated maturity of such Capital Stock.
"Dollar" and the sign "$" mean lawful money of the United States.
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"Effective Amount" means, with respect to any Loans on any date, the
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aggregate outstanding principal amount thereof after giving effect to any
Borrowings and prepayments or repayments of Loans occurring on such date. For
purposes of Section 3.1 the Effective Amount shall be determined without giving
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effect to any mandatory prepayments to be made under such Section 3.1.
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"Effective Date" means the date on which all conditions precedent set forth
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in Section 6.1, Section 6.2 and Section 11.8 are satisfied or waived by all
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Lenders, which date shall occur on or before March 30, 2001 or such later date
upon which the Borrower and the Lenders shall mutually agree.
"Eligible Accounts" means, as to any Person at a particular date, the total
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outstanding balance of Accounts (as defined in the Uniform Commercial Code in
effect in the State of New York) of such Person recorded on the books of such
Person in accordance with GAAP after giving effect to all normal reserves
(including, without limitation, bad debt reserves) in connection therewith (a)
which are bona fide, valid and legally enforceable obligations of the account
debtor in respect thereof and arise from the actual sale and delivery of goods
or rendition and acceptance of services in the ordinary course of business to
such account debtor (but, for clarification, do not include amounts in respect
of which no invoice has been rendered to such account debtor), (b) which are not
owed by an obligor which is an affiliate or Subsidiary of such Person, (c) which
are not owed by an obligor which has taken any of the actions or suffered any of
the events of the kind described in Section 9.1.8, (d) which are owed solely by
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such Person free and clear of all liens or other rights or claims of any other
Person (except in favor of the Agent for the ratable benefit of the Lenders),
(e) with respect to which no more than sixty (60) days have elapsed since the
date payment is due, and (f) in which the Agent has a perfected, first priority
security interest.
"Eligible Inventory" means natural gas inventory of the Borrower or any
------------------
Material Subsidiary to the extent that such inventory:
(a) is valued on any date of determination based on the then current
midpoint market price set forth in the "Gas Daily - Daily Price Survey", for the
closest delivery point of natural gas of similar physical and chemical
characteristics: (i) which is owned by the Borrower and in storage pursuant to a
gas storage contract and as to which there is a firm transportation contract
giving the Borrower the irrevocable unconditional right to cause such natural
gas to be transported to the Borrower's customers pursuant to utility
nominations and delivery schedules set forth in such contracts or (ii) as to
which irrevocable unconditional rights to receive natural gas have been prepaid
in full by the Borrower to a Person which has unconditional rights and is
7
unconditionally obligated to the Borrower, at any time the Borrower shall elect
pursuant to utility nomination and delivery schedules (set forth in a contract
approved by the Agent) to deliver such natural gas to customers of the Borrower;
(b) is owned by the Borrower or such Material Subsidiary, is subject to
the security interest in favor of the Agent for the benefit of the Lenders
pursuant to the Security Agreements, which security interest is (to the extent
required by the Agent) perfected as to such inventory, and is subject to no
other than Lien whatsoever;
(c) is of customary quality and meets all standards applicable to natural
gas, its use or sale imposed by any Governmental Authority having regulatory
authority over such matters;
(d) is of a quality and type sold in the ordinary course of the business
of the Borrower or such Material Subsidiary;
(e) is located within the United States (i) in a Federal Energy Regulatory
Commission ("FERC") regulated pipeline system in or (ii) in commercial storage
facilities;
(f) is stored in storage facilities of the Borrower or a Material
Subsidiary, a utility controlled storage facility or in a pipeline system
regulated by the FERC and if located in another facility leased by the Borrower
or such Material Subsidiary, the lessor has delivered to the Agent a waiver,
consent and agreement in form and substance satisfactory to the Agent;
(g) has not been delivered to a customer of the Borrower or any Material
Subsidiary (regardless of whether such delivery is on a consignment basis); and
(h) is not determined by the Agent, on behalf of the Lenders, to be
ineligible for any other reason, based upon credit, collateral or other
considerations customarily taken into account by the Agent in making such
determinations.
"Environmental Claim" means any written or oral notice, claim demand or
-------------------
other communication (collectively, a "claim") for investigatory costs, cleanup
costs, Government Authority response costs, damages to natural resources or
other property, personal injuries, fines or penalties arising out of, based on
or resulting from (a) the presence, or release into the environment, of any
Hazardous Material at any location, or (b) circumstances forming the basis of
any violation, or alleged violation, of any Environmental Law. The term
"Environmental Claim" shall include, without limitation, any claim by any
Government Authority for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental Law, and any
claim by any third party seeking damages, contribution, indemnification, cost
recovery, compensation or injunctive relief resulting from the presence of
Hazardous Materials or arising from alleged injury or threat of injury to
health, public safety or the environment.
"Environmental Law" means any law, regulation, statute, ordinance, code,
-----------------
rule, regulation, order or guideline (including consent decrees or
administrative orders) relating to human health, public safety or the
environment or to emissions, discharges, releases or
8
threatened releases of Hazardous Materials into the environment (including,
without limitation, ambient air, soil, surface water, ground water, wetlands,
land or subsurface strata), or otherwise relating to the presence, existence,
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended and regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not incorporated)
---------------
under common control with the Borrower within the meaning of Section 414(b) or
(c) of the Code (and Sections 414(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with respect to a Pension Plan;
-----------
(b) a withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan
subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations which is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is
in reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Section 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multiemployer Plan; (e) an event or condition which could constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Pension Plan; or (f) the imposition of any
liability under Title IV of ERISA, other than PBGC premiums due but not
delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA
Affiliate.
"Event of Default" is defined in Section 9.1.
---------------- -----------
"Excess Sale Proceeds" is defined in Section 8.2.8(b).
-------------------- ----------------
"Facility A Borrowing Base" means, on any date of determination thereof, an
-------------------------
amount equal to the sum of (a) 85% of the aggregate amount of Eligible Accounts
of the Borrower and its Material Subsidiaries, plus (b) the lesser of (x) seven
----
million dollars and (y) 85% of Eligible Inventory. The Facility A Borrowing
Base (including, without limitation, the aforesaid amounts) on any date shall be
determined by the Agent in accordance with the provisions of Section 2.1.1(c).
----------------
"Facility A Commitment" is defined in Section 2.1.1.
--------------------- -------------
"Facility A Commitment Termination Date" means the earliest of:
--------------------------------------
(a) the date 364 days after, but including, the Effective Date;
(b) the date on which the Facility A Commitments are terminated in
full or reduced to zero pursuant to Section 2.2; and
-----------
9
(c) the date on which any Commitment Termination Event occurs.
"Facility A Loan" is defined in Section 2.1.1(a).
--------------- ----------------
"Facility A Note" is defined in Section 2.6(b).
--------------- --------------
"Facility A Percentage" means, relative to any Lender, the Facility A
---------------------
Percentage set forth on Schedule 2.1.1, as such percentage may be adjusted from
--------------
time to time pursuant to Assignment and Acceptance Agreement(s) executed by such
Lender and its Assignee Lender(s) and delivered pursuant to Section 11.11.1.
---------------
"Facility B Commitment" means, as to any Lender, the Facility B Commitment
---------------------
set forth opposite such Lender's name on Schedule 2.1.1 under the caption
--------------
"Facility B Commitment" as such amount must be reduced from time to time as
provided herein.
"Facility B Commitment Termination Date" means the earliest of
--------------------------------------
(a) the date 364 days after, but including, the Effective Date;
(b) the date on which the Facility B Commitment is terminated in full
or reduced to zero pursuant to Section 2.2; and
-----------
(c) the date on which any Commitment Termination Event occurs.
"Facility B Loan" is defined in Section 2.1.2.
--------------- -------------
"Facility B Note" is defined in Section 2.6(c).
--------------- --------------
"Facility B Percentage" means, relative to any Lender, the Facility B
---------------------
Percentage set forth on Schedule 2.1.1, as such percentage may be adjusted from
--------------
time to time pursuant to Assignment and Acceptance Agreement(s) executed by such
Lender and its Assignee Lender(s) and delivered pursuant to Section 11.11.1.
---------------
The Facility B Percentage of each Lender shall equal the Facility A Percentage
of such Lender if any Facility A Loan shall be outstanding at the time of
determination.
"Facility B Loan Conversion Date" means the earliest of
-------------------------------
(a) the date 364 days after, but including, the Effective Date ;
(b) the date on which the Facility B Commitments are terminated in
full or reduced to zero pursuant to Section 2.2; and
-----------
(c) the date on which any Commitment Termination Event occurs.
10
"Fiscal Quarter" means, with respect to any Person, the three (3) month
--------------
period ending on March 31, June 30, September 30 and December 31.
"Fiscal Year" means with respect to Star Gas Partners, the Borrower and the
-----------
Material Subsidiaries, any period of twelve consecutive calendar months ending
on September 30 occurring during the referred to calendar year (e.g., the "2001
Fiscal Year" refers to a Fiscal Year ending on the September 30, 2001);
provided, however, that for years ended on or prior to December 31, 1999, Fiscal
-------- -------
Year for the Borrower and the Material Subsidiaries means calendar year."
"F.R.S. Board" means the Board of Governors of the Federal Reserve System
-------------
or any successor thereto.
"GAAP" is defined in Section 1.4.
---- -----------
"Government Authority" means any agency, authority, board, bureau,
--------------------
commission, department, office or instrumentality of any nature whatsoever of
any governmental or quasigovernmental unit, whether federal, state, county,
district, city or other political subdivision, foreign or otherwise and whether
now or hereafter in existence, or any officer or official of any thereof.
"Guarantee Agreements" means (i) the Guarantee Agreement, dated as of the
--------------------
date hereof among Star Gas Partners and the Agent substantially in the form of
Exhibit H-1 hereto, and (ii) the Guarantee Agreement, dated as of the date
-----------
hereof, among the Material Subsidiaries and the Agent substantially in the form
of Exhibit H-2 hereto.
-----------
"Hazardous Material" means:
------------------
(a) any "hazardous substance", as defined by CERCLA;
(b) any "hazardous waste", as defined by the Resource Conservation
and Recovery Act, as amended;
(c) any "pollutant" pursuant to the Clean Water Act, as amended;
(d) any petroleum product or related compound;
(e) any polychlorinated biphenyls or friable asbestos;
(f) any radioactive material or substance; or
(g) any pollutant or contaminant or hazardous, dangerous or toxic
chemical, material, substance or waste within the meaning of any other
Environmental Law, all as amended or hereafter amended.
"Indebtedness" of any Person means, without duplication:
------------
11
(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 of such Person evidenced by notes, bonds,
debentures or similar instruments, including obligations so evidenced
incurred in connection with the acquisition of property, assets or
businesses;
(d) all indebtedness of such Person 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) all Capitalized Lease Liabilities;
(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 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);
(h) any indebtedness of the character referred to in clauses (a)
-----------
through (g) of this definition deemed to be extinguished under GAAP but for
---
which such Person remains legally liable but only to the extent of such
legal liability; and
(i) any indebtedness of any other Person of the character referred to
in clauses (a) through (h) of this definition with respect to which the
------------ ---
Person whose Indebtedness is being determined has become liable by way of a
Contingent Liability.
"Indemnified Liabilities" is defined in Section 11.4.
----------------------- ------------
"Indemnified Parties" is defined in Section 11.4.
------------------- ------------
12
"Interest Period" means, relative to any LIBOR Loan, the period beginning
---------------
on (and including) the date on which such LIBOR Loan is made or continued as, or
converted into, a LIBOR Loan pursuant to Section 2.3 or 2.4 and ending on (but
----------- ---
excluding) the day which numerically corresponds to such date one, two, three or
six months thereafter (or, if such month has no numerically corresponding day,
on the last Business Day of such month) or any shorter period if acceptable to
all the Lenders, in each case as the Borrower may select in its relevant notice
pursuant to Section 2.3 or 2.4; provided, however, that:
------------ ---
(a) the Borrower shall not be permitted to select Interest Periods to
be in effect at any one time which have expiration dates occurring on more
than two (2) different dates;
(b) Interest Periods commencing on the same date for Loans comprising
part of the same Borrowing shall be of the same duration;
(c) if such Interest Period would otherwise end on a day which is not
a Business Day, such Interest Period shall end on the next following
Business Day (unless, if such Interest Period applied to LIBOR Loans, such
next following Business Day is the first Business Day of a calendar month,
in which case such Interest Period shall end on the Business Day next
preceding such numerically corresponding day); and
(d) no Interest Period may end later than the date set forth in
clause (a) of the definition "Facility A Commitment Termination Date", in
----------
the case of Interest Periods for Facility A Loans, or in the case of
Interest Periods for Facility B Loans any date on which a principal payment
is due if it would be necessary to repay Facility B Loans before the end of
the Interest Period applicable thereto.
"Investment" means, relative 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 in any such case; 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,
but excluding any Permitted Hedging Agreement investments in any company by
which such company becomes a Material Subsidiary. For the purposes of Section
-------
8.2.5, the amount involved in Investments made during any period shall be the
-----
aggregate cost during such period to the Borrower and the Material Subsidiaries
of all such Investments, 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 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 Investment has been made).
13
"Lender" has the meaning set forth in the preamble hereto.
------
"LIBOR" means, for each Interest Period for each LIBOR Loan, the interest
-----
per annum obtained by the Agent as offered quotations (rounded upwards, if
necessary, to the nearest 1/100 of 1%) that appear on the Telerate Screen which
displays an average British Bankers Association Interest Settlement Rate (such
page number 3740 or 3750, as applicable) for deposits (on the date two (2)
Business Days prior to the first day of such Interest Period) with a term
equivalent to such period in Dollars, determined as of approximately 11:00 a.m.,
London time; provided that if such rate does not appear on such page or service
or such service shall cease to be available, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) which the Agent has
determined to be the offered rate on such other page or other service which
displays an average British Bankers Association Interest Settlement Rate for
deposits on the date two (2) Business Days prior to the first day of such
Interest Period) with a term equivalent to such period in Dollars, determined as
of approximately 11:00 a.m., London time.
"LIBOR Loan" means any Loan bearing interest, at all times during an
----------
Interest Period applicable to such Loan, at a fixed rate of interest determined
by reference to the LIBOR (Reserve Adjusted).
"LIBOR (Reserve Adjusted)" means, relative to any Loan to be made,
------------------------
continued or maintained as, or converted into, a LIBOR Loan for any Interest
Period, a rate per annum (rounded upward, if necessary, to the nearest 1 / 100
of 1 %) determined pursuant to the following formula:
LIBOR LIBOR
-----
=
(Reserve Adjusted) 1.00 - LIBOR Reserve Percentage
The LIBOR (Reserve Adjusted) for any Interest Period for LIBOR Loans will be
determined by the Agent on the basis of the LIBOR Reserve Percentage in effect
on, and the applicable rates furnished to and received by the Agent from the
Reference Lender, two (2) Business Days before the first day of such Interest
Period.
"LIBOR Reserve Percentage" means, relative to any Interest Period for LIBOR
------------------------
Loans, the reserve percentage (expressed as a decimal) equal to the maximum
aggregate reserve requirements (including all basic, emergency, supplemental,
marginal and other reserves and taking into account any transitional adjustments
or other scheduled changes in reserve requirements) specified under regulations
issued from time to time by the F.R.S. Board and then applicable to assets or
liabilities consisting of and including "Eurocurrency Liabilities", as currently
defined in Regulation D of the F.R.S. Board, having a term approximately equal
or comparable to such Interest Period.
"Lien" means, as to any Person, any mortgage, lien (statutory or
----
otherwise), pledge, reservation, right of entry, encroachment, easement, right
of way, restrictive covenant, license, charge, security interest or other
encumbrance in or on, or any interest or title of any vendor, lessor, lender or
other secured party to or of such Person under any conditional sale or other
title
14
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, the
signing of any security agreement with respect to any of the foregoing
authorizing any other party as the secured party thereunder to file any
financing statement or any other agreement to give or grant any of the
foregoing. For the purposes of this Agreement, a Person shall be deemed to be
the owner of any asset which it has placed in trust for the benefit of the
holders of Indebtedness of such Person and such trust shall be deemed to be a
Lien if such Person remains legally liable therefor, notwithstanding that such
Indebtedness is or may be deemed to be extinguished under GAAP.
"Loan" means, as the context may require, a Facility A Loan or a Facility B
----
Loan.
"Loan Documents" means this Agreement, the Notes, the Guarantee Agreements,
--------------
the Security Documents, any pledge agreement, security agreement, guaranty, or
mortgage or subordination agreement delivered to the Agent pursuant to this
Agreement, as the same may be amended, supplemented, restated or otherwise
modified from time to time.
"Managing General Partner" means Star Gas LLC, a Delaware limited liability
------------------------
company.
"Material Adverse Effect" means, without limitation, a material adverse
-----------------------
effect on (i) the condition (financial or otherwise), business, prospects,
operations, assets or properties of Star Gas Partners and its Subsidiaries taken
as a whole, (ii) the condition (financial or otherwise), business, prospects,
operations, assets or properties of the Borrower and the Material Subsidiaries
(taken as a whole), (iii) any Obligor's ability to perform its obligations under
any Loan Document to which it is a party, (iv) the security interests (or the
value or priority thereof) granted under the Security Documents, or (v) the
validity of the Loan Documents.
"Material Subsidiary" means unless waived by the Agent all existing,
-------------------
future, direct or indirect Subsidiaries of the Borrower.
"Multiemployer Plan" means a "multiemployer plan", within the meaning of
------------------
Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes,
is making, or is obligated to make contributions or, during the preceding three
(3) calendar years, has made, or been obligated to make, contributions.
"Note" means, as the context may require, either a Facility A Note or a
----
Facility B Note, or both.
"Obligations" means the obligations of the Borrower to the Agent and the
-----------
Lenders under this Agreement, the Notes and each other Loan Document.
"Obligor" means Star Gas Partners, the Borrower, the Material Subsidiaries
-------
and any other Person (other than the Agent or any Lender) obligated under any
Loan Document.
"Other Facilities" is defined in Section 11.12.
---------------- -------------
15
"Organization Document" means, relative to any Obligor, its partnership
---------------------
agreement, certificate of incorporation, certificate of formation, its by-laws
or operating agreement and all shareholder agreements, voting trusts and similar
arrangements applicable to any of its authorized shares of Capital Stock or
other equity interests.
"Participant" is defined in Section 11.11.2.
----------- ---------------
"PBGC" means the Pension Benefit Guaranty Corporation or any Government
----
Authority succeeding to any of its principal functions under ERISA.
"Pension Plan" means a pension plan (as defined in Section 3(2) of ERISA)
------------
subject to Title IV of ERISA (other than a Multiemployer Plan) which the
Borrower and/or any ERISA Affiliate sponsors, maintains, or to which it makes,
is making, or is obligated to make contributions, or in the case of multiple
employer plan (as described in Section 4064(a) of ERISA) has made contributions
at any time during the immediately preceding five (5) plan years.
"Percentage" means the Facility A Percentage or the Facility B Percentage,
----------
or both, as applicable.
"Permitted Hedging Agreement" means natural gas or electricity hedging
---------------------------
agreements for the purpose of hedging (i) price fluctuations of inventory of the
Borrower and its Material Subsidiaries, and (ii) the Borrower's obligation to
deliver natural gas or electricity at capped or fixed prices (and not for
investment or speculative purposes).
"Person" means any natural person, corporation, partnership, firm,
------
association, trust, government, governmental agency or any other entity, whether
acting in an individual, fiduciary or other capacity.
"Petro Credit Facility" means that certain Amended and Restated Credit
---------------------
Agreement, dated as of December 8, 2000, by and among Petroleum Heat and Power
Co., Inc., Bank of America N.A. and certain other financial institutions, as
amended, modified or restated from time to time.
"Plan" means an employee benefit plan (as defined in Section 3(3) of
----
ERISA), subject to Part 4 of Title I (B) of ERISA which the Borrower sponsors or
maintains or to which the Borrower makes, is making, or is obligated to make
contributions and includes any Pension Plan.
"Post-Default Rate" means (a) in respect of any Loans a rate per annum
-----------------
equal to: (i) if such Loans are Prime Rate Loans, 2% above the Alternate Prime
Rate as in effect from time to time plus the Applicable Prime Rate Margin (but
in no event less than the interest rate in effect on the due date), or (ii) if
such Loans are LIBOR Loans, 2% above the rate of interest in effect thereon at
the time of the Event of Default that resulted in the Post-Default Rate being
instituted until the end of the then current Interest Period therefor and,
thereafter, 2% above the Alternate Prime Rate as in effect from time to time
plus the Applicable Prime Rate Margin (but in no event less than the interest
rate in effect on the due date); and (b) in respect of other amounts payable
16
by the Borrower hereunder (other than interest) not paid when due (whether at
stated maturity, by acceleration or otherwise), a rate per annum during the
period commencing on the due date until such other amounts are paid in full
equal to 2% above the Prime Rate as in effect from time to time plus the
Applicable Prime Rate Margin (but in no event less than the interest rate in
effect on the due date).
"Prior Lien" means all Liens of whatever nature against the Borrower or any
----------
of its Material Subsidiaries or any of their respective assets or properties
existing on the date hereof before giving effect to the transactions
contemplated by this Agreement.
"Prime Rate" means the rate per annum announced by the Reference Lender
----------
from time to time as its Prime Rate in effect at its principal office. The
Prime Rate is not necessarily intended to be the lowest rate of interest
determined by the Reference Lender in connection with extensions of credit.
Changes in the rate of interest on that portion of any Loans maintained as Prime
Rate Loans will take effect simultaneously with each change in the Prime Rate.
The Agent will give notice promptly to the Borrower and the Lenders of changes
in the Prime Rate.
"Prime Rate Loans" means loans at such times as they are being made and/or
----------------
maintained at a rate of interest based on the Prime Rate.
"Project Contract" means each agreement of the Borrower and the Material
----------------
Subsidiaries listed on Exhibit O (as the same may be amended or supplemented
---------
from time to time) hereto, together with each other agreement entered into by
the Borrower or the Material Subsidiaries pursuant to which the Borrower or the
Material Subsidiaries agrees to provide services and products anticipated by the
Borrower in its reasonable judgement to provide revenues to the Borrower or the
Material Subsidiaries in excess of $200,000 over any 12-month period.
"Project Party" means each Person listed on Exhibit O hereto, who is a
------------- ---------
party to the Project Contract listed thereon, and each other Person who is, in
the future, party to a Project Contract.
"Property" means any right or interest in or to property whatsoever,
--------
whether real, personal or mixed and whether tangible or intangible.
"Qualified Capital Stock" means Capital Stock not constituting Disqualified
-----------------------
Stock.
"Quarterly Payment Date" means the last day of each March, June, September,
----------------------
and December or, if any such day is not a Business Day, the next succeeding
Business Day.
"Receipts Account" shall mean account no. 375-1508531of the Borrower
----------------
maintained with the Depositary.
"Reference Lender" means, so long as Chase is the Agent, Chase, and
----------------
otherwise "Reference Lender" means the Lender serving for the time being as a
successor Agent to Chase pursuant to Section 10.9.
------------
17
"Regulatory Change" means, relative to the Agent or any Lender, any change
-----------------
after the date hereof in any (or the adoption after the date hereof of any new):
(a) United States Federal or state law or foreign law applicable to
the Agent or such Lender; or
(b) regulation, interpretation, directive, or request (whether or not
having the force of law) applicable to such Agent or such Lender or any
court or government authority charged with the interpretation or
administration of any law referred to in the immediately preceding clause
------
(a) or of any fiscal, monetary, or other authority having jurisdiction over
---
the Agent or such Lender.
"Release" means a "release", as such term is defined in CERCLA.
-------
"Reportable Event" means, any of the events set forth in Section 4043(c) of
----------------
ERISA or the regulations thereunder, other than any such event for which the 30-
day notice requirement under ERISA has been waived in regulations issued by the
PBGC.
"Required Lenders" means, Lenders holding 100 % of the Commitments (or, if
----------------
the Commitments have been terminated, Lenders holding 100% of the outstanding
Obligations).
"Resource Conservation and Recovery Act" means the Resource Conservation
--------------------------------------
and Recovery Act, 42 U.S.C. Section 6901, et seq., as amended.
"Responsible Officer" means 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 or matter referred to in
this Agreement with respect to the Borrower, and, in any case, any employee of
the Borrower performing any of the above functions.
"Restricted Payment" means any payment or other distribution made after the
------------------
Effective Date in respect of stock in the Borrower, and the Material
Subsidiaries, except a distribution payable solely in additional stock of such
Person, and any payment, by the Borrower or a Material Subsidiary on account of
the redemption, retirement, purchase or other acquisition of stock or a
distribution by a Material Subsidiary to the Borrower.
"Securities Act" means the Securities Act of 1933, as amended from time to
--------------
time.
"Security" is defined in Section 2(1) of the Securities Act.
--------
"Security Agreement" means (i) the Company Security Agreement dated as of
------------------
the date hereof, between the Borrower and the Agent, substantially in the form
of Exhibit J-1 hereto; and (ii) the Material Subsidiary Guarantor Security
-----------
Agreement dated as of the date hereof, among the Material Subsidiaries and the
Agent, substantially in the form of Exhibit J-2 hereto.
-----------
18
"Security Agreements" means (i) the Security Agreement, and (ii) the
-------------------
Accounts Security Deposit Agreement, dated as of the date hereof, between the
Borrower and the Agent, substantially in the form of Exhibit K hereto, and (iii)
---------
the Securities Account Control Agreement, dated the date hereof, between the
Borrower, as securities intermediary and the Agent, substantially in the form of
Exhibit L hereto, and (iv) the Company Share Pledge Agreement, dated the date
---------
hereof, among all of the shareholders of the Borrower and the Agent,
substantially in the form of Exhibit M hereto.
---------
"Security Documents" means any of the documents securing the Notes,
------------------
including without limitation, the Security Agreements.
"Senior Debt" means the Obligations.
-----------
"Senior Interest Expense" shall mean the gross interest expense incurred by
-----------------------
the Borrower in connection with the Obligations, calculated in accordance with
GAAP applied on a consistent basis and calculated over the four fiscal quarters
next preceding the date of calculation thereof.
"▇▇▇▇▇ Group" means ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and the estate of Irik
-----------
▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, so long as the survivor has the power to vote
membership interest in the Managing General Partner, and any testamentary trust,
all beneficiaries of which are members of the immediate family of ▇▇▇▇ ▇. ▇▇▇▇▇
or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, and all trustees which are members of the immediate family
of ▇▇▇▇ ▇. ▇▇▇▇▇ or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and, under the terms of the trust, have
the power to vote membership interests in the Managing General Partner.
"Star Gas Partners" means Star Gas Partners, L.P., a Delaware limited
-----------------
partnership.
"Star Propane" means Star Gas Propane, L.P., a Delaware limited
------------
partnership.
"Stated Maturity Date" means, with respect to the Facility A Loans the date
--------------------
that is 364 days after, but including, the Effective Date, and, with respect to
the Facility B Loans the date that is eighteen (18) months after, but including,
the Effective Date.
"Subordinated Indebtedness" shall mean Indebtedness of the Borrower to an
-------------------------
Affiliate of the Borrower subordinated to the Senior Debt upon terms and
conditions substantially as are set forth in the Subordination Agreement.
"Subordination Agreement" shall mean a Subordination Agreement in the form
-----------------------
of Exhibit P hereto.
"Subsidiary" means, with respect to any Person, 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 interest) 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
19
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 Borrower. Star Propane shall be deemed to be a Subsidiary of
Star Gas Partners so long as Star Gas Partners owns a majority of the limited
partnership interests in Star Propane and the Managing General Partner is the
sole general partner of Star Propane.
"Synthetic Lease" means each arrangement, however described, under which
---------------
the obligor: (a) accounts for its interest in the property covered thereby under
GAAP as if the obligor were the lessee of a lease which is not a capital lease;
and (b) accounts for its interest in the property covered thereby for Federal
income tax purposes as if the obligor were the owner.
"Synthetic Lease Interest Component" means, with respect to any Person for
------------------------------------
any period, the portion of rent paid or payable (without duplication) for such
period under Synthetic Leases of such Person that would be treated as interest
in accordance with Financial Accounting Standards Board Statement No. 13 if
such Synthetic Leases were treated as capital leases under GAAP.
"Synthetic Lease Obligation" means, as to any Person with respect to any
--------------------------
Synthetic Lease at any time of determination, the amount of the liability of
such Person in respect of such Synthetic Lease that would (if such lease was
required to be classified and accounted for as a capital lease on a balance
sheet of such Person in accordance with GAAP) be required to be capitalized on
the balance sheet of such Person at such time.
"Taxes" is defined in Section 5.6.
----- -----------
"type" means, relative to any Loan, the portion thereof, if any, being
----
maintained as a Prime Rate Loan or a LIBOR Loan.
"Unfunded Pension Liability" means the excess of a Pension Plan's benefit
--------------------------
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Plan's assets, determined in accordance with the assumptions used for funding
the Pension Plan pursuant to Section 412 of the Code for the applicable plan
year.
"United States" or "U.S." means the United States of America, its fifty
------------- ---
States and the District of Columbia.
"Wholly-Owned Subsidiary" means any corporation in which (other than
-----------------------
directors' qualifying shares required by law) 100% of the Capital Stock of each
class having ordinary voting power, and 100% of the Capital Stock of every other
class, in each case, at the time as of which any determination is being made, is
owned, beneficially and of record, by the Borrower, or by one or more of the
other Wholly-Owned Subsidiaries of the Borrower, or any of them.
20
SECTION 1.2 Use of Defined Terms. Unless otherwise defined or the context
--------------------
otherwise requires, terms for which meanings are provided in this Agreement
shall have such meanings when used in the Disclosure Schedule and in each Note,
Borrowing Request, Continuation/Conversion Notice, Loan Document, notice and
other communication delivered from time to time in connection with this
Agreement or any other Loan Document.
SECTION 1.3 Other Interpretive Provisions.
-----------------------------
(a) The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms.
(b) The words "hereof", "herein", "hereunder" and similar words refer
to this Agreement as a whole and not to any particular provision of this
Agreement; and subsection, Section, Schedule and Exhibit references are to
this Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other
writings, however evidenced.
(ii) The term "including" is not limiting and means "including
without limitation."
(iii) In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and
including"; the words "to" and "until" each mean "to but excluding",
and the word "through" means "to and including."
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments
shall be deemed to include all subsequent amendments and other
modifications thereto, but only to the extent such amendments and other
modifications are not prohibited by the terms of any Loan Document, and
(ii) references to any statute or regulation are to be construed as
including all statutory and regulatory provisions consolidating, amending,
replacing, supplementing or interpreting the statute or regulation.
(e) The captions and headings of this Agreement are for convenience
of reference only and shall not affect the interpretation of this
Agreement.
(f) This Agreement and other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar matters.
All such limitations, tests and measurements are cumulative and shall each
be performed in accordance with their terms.
21
(g) Unless otherwise expressly provided herein, financial
calculations applicable to the Borrower shall be made on a consolidated
basis among the Borrower and the Material Subsidiaries.
SECTION 1.4 Accounting and Financial Determinations. Unless otherwise
---------------------------------------
specified, all accounting terms used herein or in any other Loan Document shall
be interpreted, all accounting determinations and computations hereunder or
thereunder (including under Section 8.2.4) shall be made, and all financial
-------------
statements required to be delivered hereunder or thereunder shall be prepared in
accordance with, those generally accepted accounting principles in effect in the
United States of America from time to time ("GAAP"). Notwithstanding the
----
foregoing, if the Borrower, the Required Lenders or the Agent determines that a
change in GAAP from that in effect on the date hereof, has altered the treatment
of certain financial data to its detriment under this Agreement, such party may
seek of the others a renegotiation of any financial covenant affected thereby.
If the Borrower, the Required Lenders and Agent cannot agree on renegotiated
covenants, then, for the purposes of this Agreement, GAAP will refer to
generally accepted accounting principles on the date just prior to the date on
which the change that gave rise to the renegotiation occurred.
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES AND NOTES
SECTION 2.1 Commitments. On the terms and subject to the conditions of
-----------
this Agreement (including Article VI), each Lender severally agrees to make
----------
Loans pursuant to the Commitments described in this Section 2.1.
-----------
SECTION 2.1.1 Facility A Commitment.
---------------------
(a) On the terms and subject to the conditions of this Agreement
(including, without limitation, Section 2.1.3), from time to time on any
-------------
Business Day occurring prior to the Facility A Commitment Termination Date,
each Lender will make loans (relative to such Lender, its "Facility A
----------
Loans") to the Borrower in an aggregate principal amount not to exceed at
-----
anytime outstanding the lesser of (a) the amount set forth opposite such
Lender's name on Schedule 2.1.1 under the caption "Facility A Commitment"
--------------
(such amount as the same may be reduced hereunder or as reduced or
increased as a result of one or more assignments, under Section 11.11.1,
---------------
such Lender's "Facility A Commitment"), and (b) such Lender's pro rata
---------------------
portion of the Facility A Borrowing Base. On the terms and subject to the
conditions hereof, the Borrower may from time to time borrow, prepay and
reborrow Facility A Loans.
(b) The Borrower shall deliver a Borrowing Base Certificate to the
Agent prior to the Effective Date to permit the Agent to determine the
Facility A Borrowing Base to be in effect on the Effective Date and,
thereafter, shall deliver Borrowing Base Certificates and such other
materials to the Agent in accordance with the provisions of Section
-------
8.1.1(j). Each such Borrowing Base Certificate shall certify the Facility
--------
A Borrowing Base in effect on the last day of the applicable reporting
period. Promptly
22
following its receipt of each Borrowing Base Certificate, the Agent shall
confirm the then current Facility A Borrowing Base using the information
previously provided to the Agent by the Borrower and shall notify the
Borrower and each Lender of the Facility A Borrowing Base so determined.
Each determination of the Facility A Borrowing Base by the Agent shall
remain in effect until notice of a redetermined Facility A Borrowing Base
shall have been given by the Agent in accordance with the provisions of
this Section 2.1.1(b); provided, however, if the Borrower fails to deliver
----------------
a Borrowing Base Certificate, the Borrower will be unable to borrow
Facility A Loans until such time that a Borrowing Base Certificate is
delivered.
SECTION 2.1.2 Facility B Commitment. On the terms and subject to the
---------------------
conditions of this Agreement (including without limitation Section 2.1.3),
-------------
from time to time on any Business Day occurring prior to the Facility B
Loan Conversion Date, each Lender will make loans (relative to such
Lender, its "Facility B Loans") to the Borrower in an aggregate principal
----------------
amount not to exceed at any time outstanding the amount set forth opposite
such Lender's name on Schedule 2.1.1 under the caption "Facility B
--------------
Commitment" (such amount as the same may be reduced hereunder or as reduced
or increased as a result of one or more assignments under Section 11.11.1,
---------------
such Lender's "Facility B Commitment"). On the terms and subject to the
---------------------
conditions hereof, the Borrower may from time to time borrow, prepay and
reborrow Facility B Loans prior to the Facility B Loan Conversion Date.
SECTION 2.1.3 Restrictions on Loans. None of the Lenders shall be
---------------------
permitted or required to:
(a) make any Facility A Loan if, after giving effect thereto, the
Effective Amount of all Facility A Loans, would exceed the lesser of (x)
the combined Facility A Commitments and (y) the Facility A Borrowing Base;
or
(b) make any Facility A Loan or Facility B Loan, if after giving
effect thereto, Section 8.1.14(b) would be breached.
-----------------
SECTION 2.2 Reduction and Termination of Commitments. The Commitments
----------------------------------------
are subject to reduction and termination from time to time pursuant to this
Section 2.2.
-----------
SECTION 2.2.1 Optional Subject to Section 5.4. The Borrower may,
-------------------------------
from time to time on any Business Day occurring after the Effective Date,
voluntarily reduce the unused amount of any Commitment; provided, however,
that all such reductions shall require at least three (3) Business Days'
prior notice to the Agent and be permanent, and any partial reduction of
any Commitment shall be in an integral multiple of $1,000,000.
SECTION 2.2.2 Mandatory. The applicable Commitment shall be
---------
reduced by an amount equal to any amount required as a mandatory prepayment
of the Facility A Loans or Facility B Loans as applicable pursuant to
Section 3.1.1, 3.1.3(a), 3.1.3(d) or 3.1.3(g) (whether or not any Loans
------------- -------- -------- --------
shall then be outstanding under the applicable Commitment).
23
SECTION 2.2.3 Termination.
-----------
(a) Upon the occurrence of any event described in the definition of
Facility A Commitment Termination Date, the Facility A Commitment shall be
reduced to zero and shall terminate automatically and without further
action.
(b) Upon the occurrence of any event described in the definition of
Facility B Commitment Termination Date, the Facility B Commitment shall be
reduced to zero and shall terminate automatically and without further
action.
SECTION 2.3 Borrowing Procedure. By delivering a Borrowing Request to the
Agent on or before 11:00 a.m., New York City time, on a Business Day, the
Borrower may from time to time irrevocably request, on not less than three (3)
nor more than five (5) Business Days' notice in the case of LIBOR Loans, and on
the same day or no more than five (5) Business Days' notice in the case of Prime
Rate Loans, that a Borrowing be made in a minimum amount of $100,000 in the case
of LIBOR Loans, and in a minimum amount of $50,000 in the case of Prime Rate
Loans, and in both instances in any integral multiple of $50,000 in excess
thereof, or in the unused amount of the applicable Commitment. On the terms and
subject to the conditions of this Agreement, each Borrowing shall be comprised
of the type of Loans, and shall be made on the Business Day, specified in such
Borrowing Request. Each Borrowing Request must be signed by a Responsible
Officer of the Borrower. Upon receipt of any Borrowing Request, the Agent shall
promptly notify the Lenders of such Borrowing Request. On or before 1:00 p.m.,
New York City time, on such Business Day each Lender shall deposit with the
Agent same day funds in an amount equal to such Lender's Percentage of the
requested Borrowing. Such deposit will be made to an account which the Agent
shall specify from time to time by notice to the Lenders. To the extent funds
are received from the Lenders, the Agent shall make such funds available to the
Borrower by wire transfer to the accounts specified in the applicable Borrowing
Request. No Lender's obligation to make any Loan shall be affected by any other
Lender's failure to make any Loan.
SECTION 2.4 Continuation and Conversion Elections. By delivering a
-------------------------------------
Continuation/Conversion Notice to the Agent on or before 11:00 a.m., New York
City time, on a Business Day, the Borrower may from time to time irrevocably
elect, on not less than three (3) nor more than five (5) Business Days' notice
that all, or any portion in a minimum amount of $100,000, in the case of LIBOR
Loans, and in a minimum amount of $50,000 in the case of Prime Rate Loans, and
in both instances any integral multiple of $50,000 in excess thereof, of any
Loans be, in the case of Prime Rate Loans, converted into LIBOR Loans or, in the
case of LIBOR Loans, be converted into a Prime Rate Loan or a LIBOR Loan or
continued as a LIBOR Loan (in the absence of delivery of a
Continuation/Conversion Notice with respect to any LIBOR Loan at least three (3)
Business Days before the last day of the then current Interest Period with
respect thereto, such LIBOR Loan shall, on such last day, automatically convert
to a Prime Rate Loan); provided, however, that (i) each such conversion or
continuation shall be pro rated among the applicable outstanding Loans of all
Lenders, and (ii) no portion of the outstanding principal amount of any Loans
may be continued as, or be converted into, LIBOR Loans when any Default or Event
of Default has occurred and is continuing.
24
SECTION 2.5 Funding. Each Lender may, if it so elects, fulfill its
-------
obligation to make, continue or convert LIBOR Loans hereunder by causing one of
its foreign branches or Affiliates (or an international banking facility created
by such Lender) to make or maintain such LIBOR Loan; provided, however, that
such LIBOR Loan shall nonetheless be deemed to have been made and to be held by
such Lender, and the obligation of the Borrower to repay such LIBOR Loan shall
nevertheless be to such Lender for the account of such foreign branch, Affiliate
or international banking facility. In addition, the Borrower hereby consents
and agrees that, for purposes of any determination to be made for purposes of
Sections 5.1, 5.2, 5.3 or 5.4, it shall be conclusively assumed that each Lender
------------ --- --- ---
elected to fund all LIBOR Loans by purchasing, as the case may be, Dollar
certificates of deposit in the U.S. or Dollar deposits in its Applicable
Lending Office.
SECTION 2.6 Loan Accounts/Notes.
-------------------
(a) The Loans made by each Lender shall be evidenced by one or more
loan accounts or records maintained by such Lender in the ordinary course
of business. The loan accounts or records maintained by the Agent and each
Lender shall be conclusive absent manifest error of the amount of the Loans
made by the Lenders to the Borrower and the interest and payments thereon.
Any failure so to record or any error in doing so shall not, however, limit
or otherwise affect the obligation of the Borrower hereunder to pay any
amount owing with respect to the Loans. In case of a discrepancy between
the entries in the Agent's books and any Lender's books, the Agent's books
shall be conclusive absent manifest error.
(b) Upon the request of any Lender made through the Agent, the
Facility A Loans made by such Lender shall be evidenced by a single
promissory note of the Borrower in substantially the form of Exhibit A-1
-----------
hereto (each, a "Facility A Note" and collectively, the "Facility A
--------------- ----------
Notes"), instead of loan accounts. Each Facility A Note shall be dated the
-----
Effective Date, shall be payable to the order of such Lender in a principal
amount equal to such Lender's Facility A Commitment as originally in
effect, and shall otherwise be duly completed. The Notes shall be payable
as provided in Article III.
-----------
(c) Upon the request of any Lender made through the Agent, the
Facility B Loans made by such Lender shall be evidenced by a single
promissory note of the Borrower in substantially the form of Exhibit A-2
-----------
hereto (each, a "Facility B Note" and collectively, the "Facility B
--------------- ----------
Notes"), instead of loan accounts. Each Facility B Note shall be dated the
-----
Effective Date, shall be payable to the order of such Lender in a principal
amount equal to such Lender's Facility B Commitment as originally in
effect, and shall otherwise be duly completed. The Notes shall be payable
as provided in Article III.
-----------
(d) Each Lender shall enter on a schedule attached to its Notes a
notation with respect to each Loan made hereunder of: (i) the date and
principal amount thereof, (ii) each payment and prepayment of principal
thereof, (iii) whether the interest rate is initially to be determined in
accordance with Section 3.2.1(a) or Section 3.2.1(b), and (iv) the Interest
---------------- ----------------
Period, if applicable. Such notations shall be conclusive and binding on
25
the Borrower absent manifest error; provided, however, that the failure of
any Lender to make a notation on the schedule to its Note as aforesaid
shall not limit or otherwise affect the obligation of the Borrower to repay
the Loans in accordance with their respective terms as set forth herein.
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 3.1 Repayment and Prepayments.
-------------------------
SECTION 3.1.1 Repayment
---------
(a) Facility A Loans. The Borrower shall pay to the Agent, for the
----------------
account of each Lender, on the Facility A Commitment Termination Date the
aggregate principal amount of Facility A Loans outstanding on such date,
together with all accrued and unpaid interest thereon.
(b) Facility B Loans. The Borrower shall pay to the Agent, for the
----------------
account of each Lender, the principal of the Facility B Loans made by such
Lender outstanding at the close of business on the Facility B Loan
Conversion Date (together with all accrued and unpaid interest thereon) in
a single payment on the date eighteen (18) months after the Effective Date.
SECTION 3.1.2 Voluntary Prepayments. The Borrower may, from time to
---------------------
time on any Business Day, make a voluntary prepayment, in whole or in part,
of the outstanding principal amount of any Loans; provided, however, that:
(a) any such prepayment shall be made pro rata among Loans of the
same type and, if applicable, having the same Interest Period, of all
Lenders;
(b) all such voluntary prepayments of LIBOR Loans shall require at
least three (3) but no more than five (5) Business Days' prior written
notice to the Agent and all such voluntary prepayments of Prime Rate Loans
shall require prior written notice to the Agent at least by 1:00 p.m., New
York City time, at least one (1) Business Day prior to such repayment but
no more than five (5) Business Days prior to such repayment; and
(c) all such voluntary prepayments of LIBOR Loans or Prime Rate Loans
shall be made in a minimum amount of $100,000 and any integral multiple of
$50,000 in excess thereof, or in the whole outstanding principal amount of
such Loans;
Each prepayment of any Loans made pursuant to this Section shall be without
premium or penalty, except as required by Section 5.4.
------------
SECTION 3.1.3 Mandatory Prepayments.
---------------------
26
(a) The Borrower shall, on each date when any reduction in the
applicable Commitment shall become effective, including pursuant to Section
-------
2.2, make a mandatory prepayment of all applicable Loans equal to the
---
excess, if any, of the aggregate principal amount of all applicable Loans
over the applicable Commitment.
(b) If at any time the Effective Amount of the Facility A Loans
exceeds the lesser of (x) the combined Facility A Commitments then in
effect and (y) the Facility A Borrowing Base, the Borrower shall
immediately prepay such Facility A Loan in an aggregate principal amount
equal to such excess. Amounts prepaid pursuant to this Section may be
reborrowed; provided that the aggregate Facility A Commitment is not
exceeded thereby.
(c) If at any time the Effective Amount of the Facility B Loans
exceeds the combined Facility B Loan Commitments then in effect, the
Borrower shall immediately prepay such Facility B Loan in an aggregate
principal amount equal to such excess, together with commitment fees
accrued to the date of such payment.
(d) In the event any Asset Disposition results in Excess Sale
Proceeds which are (i) not reinvested within ninety (90) days of such
disposition in replacement assets or not deposited with the Agent within
ninety (90) days of such disposition to be reinvested in such replacement
assets, or (ii) deposited with the Agent within ninety (90) days of such
disposition but which are not reinvested within one-hundred eighty (180)
days of such disposition all as provided Section 8.2.8(b), such Excess Sale
----------------
Proceeds shall be applied first to the prepayment of the Facility B Loans
in inverse order of maturity and, second to prepayment of the Facility A
Loans. In the instance that Facility A Loans are so prepaid, the Facility
A Commitment shall be reduced permanently by the amount of such prepayment.
(e) The Borrower shall, immediately upon any acceleration of the
Stated Maturity Date of any Loans pursuant to Section 9.2 or Section 9.3,
------------ -----------
repay all such Loans.
(f) The Borrower shall prepay amounts in accordance with Section
-------
8.1.11.
------
(g) In the event any Casualty Event affecting any property of the
Borrower or any of the Material Subsidiaries which results in insurance,
condemnation award or other compensation in excess of $250,000 ("Casualty
--------
Proceeds") which Casualty Proceeds are (i) not reinvested within ninety
--------
(90) days of receipt of such Casualty Proceeds in replacement assets shall
be applied to the prepayment of the Senior Debt in accordance with the
procedures set forth in the foregoing clause (d) for Excess Proceeds.
Except as otherwise provided above, mandatory prepayments shall be applied first
to the Facility B Loans, then the Facility A Loans. Subsequent to the Facility
B Loan Conversion Date, each voluntary prepayment of Facility B Loans made
pursuant to Section 3.1.2 and each mandatory prepayment of Facility B Loans made
-------------
pursuant to Section 3.1.3 shall be applied, to the extent of such prepayment, to
-------------
the repayments of the Facility B Loans installments in inverse order of
maturity. Each prepayment of any Loans made pursuant to this Section shall be
without
27
premium or penalty, except as may be required by Section 5.4. No voluntary
-----------
prepayment of principal of any Facility A Loan or Facility B Loan prior to the
applicable Commitment Termination Date, shall cause a reduction in the Facility
A Commitment or Facility B Commitment, as applicable.
SECTION 3.2 Interest Provisions. Interest on the outstanding principal
-------------------
amount of Loans shall accrue and be payable in accordance with this Section 3.2.
-----------
SECTION 3.2.1 Rates. Pursuant to an appropriately delivered
-----
Borrowing Request or Continuation/Conversion Notice, the Borrower may elect
that Loans comprising a Borrowing accrue interest at a rate per annum:
(a) on that portion maintained from time to time as a Prime Rate
Loan, equal to the sum of the Prime Rate from time to time in effect plus
the Applicable Prime Rate Margin; and
(b) on that portion maintained as a LIBOR Loan, during each Interest
Period applicable thereto, equal to the sum of the LIBOR (Reserve Adjusted)
for such Interest Period plus the Applicable LIBOR Margin.
All LIBOR Loans shall bear interest from and including the first day
of the applicable Interest Period to (but not including) the last day of
such Interest Period at the rate determined as applicable to such LIBOR
Loan.
SECTION 3.2.2 Post-Default Rate. Notwithstanding Section 3.2.1,
----------------- -------------
whenever an Event of Default has occurred and is continuing, the Borrower
shall pay interest on any Loan, and on any other amount payable by the
Borrower hereunder (to the extent permitted by law) for the period
commencing on the occurrence of such Event of Default until such Event of
Default has been cured or waived as acknowledged in writing by the Agent at
the applicable Post-Default Rate.
SECTION 3.2.3 Payment Dates. Interest accrued on each Loan shall
-------------
be payable, without duplication:
(a) on the Stated Maturity Date applicable to such Loan;
(b) with respect to any prepayment of a Loan in connection with a
reduction in the applicable Commitment, on the date of any such prepayment;
(c) with respect to Base Rate Loans, on each Quarterly Payment Date
occurring after the date of the initial Borrowing hereunder;
(d) with respect to LIBOR Loans, on the last day of each applicable
Interest Period (and, if such Interest Period shall exceed three months, on
the three month anniversary of the first day of such Interest Period); and
28
(e) on that portion of any Loans the Stated Maturity Date of which is
accelerated pursuant to Section 9.2 or Section 9.3, immediately upon such
----------- -----------
acceleration.
Interest accruing on the Loans or other monetary Obligations arising under
this Agreement or any other Loan Document during the continuance of any
Event of Default shall be payable upon demand.
SECTION 3.3 Fees. The Borrower agrees to pay the fees set forth in this
----
Section 3.3. All such fees shall be non-refundable.
-----------
SECTION 3.3.1 Commitment Fee. The Borrower shall pay to the Agent
--------------
for the account of each Lender a commitment fee in an amount equal to 0.75%
times the daily actual unused amount of (a) such Lender's Facility A
-----
Commitment and (b) such Lender's Facility B Commitment from the date hereof
until the Facility B Loan Conversion Date. Accrued commitment fees shall
be payable in arrears on each Quarterly Payment Date and on the date on
which the Commitments terminate as provided herein, commencing on the first
of such dates to occur after the date hereof.
SECTION 3.3.2 Arrangement and Agency Fees. The Borrower agrees to
---------------------------
pay to Chase those fees specified in the letter agreement dated March 30,
2001, between the Borrower and Chase at the times specified in such letter
agreement.
ARTICLE IV
INTENTIONALLY OMITTED NUMBERING RESERVED
ARTICLE V
CERTAIN LIBOR AND OTHER PROVISIONS
SECTION 5.1 LIBOR Lending Unlawfu1. If any Lender shall determine (which
----------------------
determination shall, upon notice thereof to the Borrower, the Agent and the
Lenders, be conclusive and binding on the Borrower) that after the Effective
Date the introduction of, or any change in, or in the interpretation of, any law
makes it unlawful, or any central bank or other government authority asserts
that it is unlawful, for such Lender to make, continue or maintain any Loan as,
or to convert any Loan into, a LIBOR Loan of a certain type, the obligations of
such Lender to make, continue, maintain or convert any such Loans shall, upon
such determination, forthwith be suspended until such Lender shall notify the
Agent that the circumstances causing such suspension no longer exist, and all
LIBOR Loans of such type shall automatically convert into Prime Rate Loans at
the end of the then current Interest Periods with respect thereto or sooner, if
required by such law or assertion.
SECTION 5.2 Deposits Unavailable. If the Agent shall have determined that:
--------------------
29
(a) Dollar deposits in the relevant amount and for the relevant
Interest Period are not available to the Reference Lender in the London
interbank market; or
(b) by reason of circumstances affecting the London interbank market,
adequate means do not exist for ascertaining the interest rate applicable
hereunder to LIBOR Loans of such type;
then, upon notice from the Agent to the Borrower and the Lenders, the
obligations of all Lenders under Section 2.3 and Section 2.4 to make or continue
----------- -----------
any Loans as, or to convert any Loans into, LIBOR Loans of such type shall
forthwith be suspended until the Agent shall notify the Borrower and the Lenders
that the circumstances causing such suspension no longer exist.
SECTION 5.3 Increased LIBOR Loan Costs, etc. The Borrower agrees to
-------------------------------
reimburse each Lender for any increase in the cost to such Lender of, or any
reduction in the amount of any sum receivable by such Lender in respect of,
making, continuing or maintaining (or of its obligation to make, continue or
maintain) any Loans as, or of converting (or of its obligation to convert) any
Loans into, LIBOR Loans, in any case from time to time by reason of:
(a) to the extent not included in the calculation of the LIBOR
(Reserve Adjusted), any reserve, special deposit, or similar requirement
against assets of, deposits with or for the account of, or credit extended
by such Lender, under or pursuant to any change in any law, treaty, rule,
regulation (including any F.R.S. Board regulation), or requirement from
that in effect on the Effective Date, or as the result of any Regulatory
Change; or
(b) any Regulatory Change which shall subject such Lender to any tax
(other than taxes on net income including franchise taxes based on income,
and franchises), levy, impost, charge, fee, duty, deduction, or withholding
or any kind whatsoever or change the taxation of any Loan made or
maintained as a LIBOR Loan and the interest thereon (other than any change
which affects, and to the extent that it affects, the taxation of net
income including franchise taxes based on income and franchises).
Such Lender shall promptly and in no event later than ninety (90) days after its
knowledge of the occurrence of any such event notify the Agent and the Borrower
in writing of the occurrence of any such event, such notice to state, in
reasonable detail, the reasons therefor and the additional amount required fully
to compensate such Lender for such increased cost or reduced amount; provided,
however, no Lender may make any demand for any such amounts accrued under this
Section 5.3 for any period commencing more than ninety (90) days prior to the
-----------
receipt by the Borrower of such notice or, should such cost have accrued
retroactively, within ninety (90) days of the determination by such Lender of
such cost. Such additional amounts shall be payable by the Borrower directly to
such Lender within five (5) days of its receipt of such notice, and such notice
shall, in the absence of manifest error, be conclusive and binding on the
Borrower.
SECTION 5.4 Funding Losses. In the event any Lender shall incur any loss or
--------------
expense (including any loss or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender to make,
continue or maintain any portion of the
30
principal amount of any Loan as, or to convert any portion of the principal
amount of any Loan into, a LIBOR Loan) as a result of:
(a) any conversion or repayment or prepayment of the principal amount
of any LIBOR Loans on a date other than the scheduled last day of the
Interest Period applicable thereto, whether pursuant to Section 3.1 or
-----------
otherwise;
(b) any Loans not being made as LIBOR Loans in accordance with the
Borrowing Request therefor; or
(c) any Loans not being continued as, or converted into, LIBOR Loans
in accordance with the Continuation/Conversion Notice therefor;
then, upon the written notice of such Lender to the Borrower (with a copy to the
Agent), the Borrower shall, within five (5) days of its receipt thereof, pay
directly to such Lender such amount as will (in the reasonable determination of
such Lender) reimburse such Lender for such loss or expense. Such written
notice (which shall include calculations in reasonable detail) shall, in the
absence of manifest error, be conclusive and binding on the Borrower.
SECTION 5.5 Increased Capital Costs. If after the Effective Date any
-----------------------
change in, or the introduction, adoption, effectiveness, interpretation,
reinterpretation or phase-in of, any law or regulation, directive, guideline,
decision or request (whether or not having the force of law) of any court,
central bank, regulator or other government authority affects or would affect
the amount of capital required or expected to be maintained by any Lender or any
Person controlling such Lender, and such Lender determines (in its sole and
absolute discretion) that the rate of return on its or such controlling Person's
capital as a consequence of its Commitments or the Loans made by such Lender is
reduced to a level below that which such Lender or such controlling Person could
have achieved but for the occurrence of any such circumstance, then, in any such
case upon notice from time to time by such Lender to the Borrower (with copies
to the Agent), the Borrower shall within five (5) days of its receipt thereof
pay directly to such Lender additional amounts sufficient to compensate such
Lender or such controlling Person for such reduction in rate of return. Such
Lender shall promptly and in no event later than ninety (90) days after its
knowledge of any such event notify the Agent and the Borrower of the occurrence
of any such event; provided, however, no Lender may make any demand for any such
amounts accrued under this Section 5.5 for any period commencing more than
-----------
ninety (90) days prior to the receipt by the Borrower of any such notice or,
should such cost have accrued retroactively, within ninety (90) days of the
determination by such Lender of such cost. A statement of such Lender as to any
such additional amount or amounts (including calculations thereof in reasonable
detail) shall, in the absence of manifest error, be conclusive and binding on
the Borrower. In determining such amount, such Lender may use any reasonable
method of averaging and attribution that it (in its sole and absolute
discretion) shall deem applicable.
SECTION 5.6 Taxes. Without duplication of any payments made under any
-----
other provisions of this Article V, all payments by the Borrower of principal
---------
of, and interest on, the Loans and all other amounts payable hereunder shall be
made free and clear of and without deduction for any present or future income,
excise, stamp or franchise taxes and other taxes, fees, duties, withholdings or
other charges of any nature whatsoever imposed by any taxing authority,
31
but excluding franchise taxes and taxes imposed on or measured by any Lender's
net income (including franchise taxes based upon income) or receipts (such non-
excluded items being called "Taxes"). In the event that any withholding or
-----
deduction from any payment to be made by the Borrower hereunder is required in
respect of any Taxes pursuant to any applicable law, rule or regulation, then
the Borrower will:
(a) pay directly to the relevant authority the full amount required
to be so withheld or deducted;
(b) promptly forward to the Agent an official receipt or other
documentation satisfactory to the Agent evidencing such payment to such
authority; and
(c) pay to the Agent for the account of the Agent and the Lenders
such additional amount or amounts as is necessary to ensure that the net
amount actually received by the Agent and each Lender will equal the full
amount such Lender or the Agent would have received had no such withholding
or deduction been required; provided that the Agent or each Lender shall
promptly and in no event later than ninety (90) days after its knowledge
that any amount is payable under this clause (c) notify the Agent and the
----------
Borrower of the same;
provided, however, no Lender or the Agent may make any demand for any such
amounts accrued under this Section 5.6 for any period commencing more than
-----------
ninety (90) days prior to the receipt by the Borrower of any such notice or,
should such cost have accrued retroactively, within ninety (90) days of the
determination by such Lender or the Agent of such cost.
Moreover, if any Taxes are directly asserted against the Agent or any
Lender with respect to any payment received by the Agent or such Lender
hereunder, the Agent or such Lender may pay such Taxes and the Borrower will pay
on demand such additional amounts (including any penalties, interest or
expenses) as is necessary in order that the net amount received by such person
after the payment of such Taxes (including any Taxes on such additional amount)
shall equal the amount such person would have received had not such Taxes been
asserted.
If the Borrower fails to pay any Taxes when due to the appropriate taxing
authority or fails to remit to the Agent, for the account of the respective
Lenders and the Agent, the required receipts or other required documentary
evidence, the Borrower shall indemnify the Lenders and the Agent for any
incremental Taxes, interest or penalties that may become payable by any Lender
as a result of any such failure.
For purposes of this Section 5.6, a distribution hereunder by the Agent or any
-----------
Lender to or for the account of any Lender or the Agent shall be deemed a
payment by the Borrower.
Each Lender that is organized under the laws of a jurisdiction other than
the United States shall, prior to the due date of any payments under the Notes,
(i) execute and deliver to the Borrower and the Agent, on or about the first
scheduled payment date in each Fiscal Year, one or more (as the Borrower or the
Agent may reasonably request) United States Internal Revenue Service Forms 4224
or Forms 1001 or such other forms or documents (or successor forms or
32
documents), appropriately completed, as may be applicable to establish the
extent, if any, to which a payment to such Lender is exempt from withholding or
deduction of Taxes, and (ii) comply with the requirements of Section 10.10.
-------------
SECTION 5.7 Payments, Computations, etc. Unless otherwise expressly
---------------------------
provided, all payments by the Borrower pursuant to this Agreement, the Notes or
any other Loan Document shall be made in Dollars, in immediately available funds
by the Borrower to the Agent for the pro rata account of the Lenders entitled to
receive such payment. All such payments required to be made to the Agent shall
be made, without setoff, counterclaim, recoupment or other deduction, not later
than 11:00 a.m., New York City time, on the date due, in immediately available
funds, to such account as the Agent shall specify from time to time by notice to
the Borrower. Funds received after that time shall be deemed to have been
received by the Agent on the next succeeding Business Day. The Agent shall
promptly remit in same day funds to each Lender its share, if any, of such
payments received by the Agent for the account of such Lender. All interest
(other than interest computed at the Prime Rate) and fees shall be computed on
the basis of the actual number of days (including the first day but excluding
the last day) occurring during the period for which such interest or fee is
payable over a year comprised of three-hundred sixty (360) days. Interest
computed at the Prime Rate shall be computed on the basis of its actual number
of days (including the first day but excluding the last day) occurring during
the period for which such interest is payable over a year comprised of 365 or
366 days, as the case may be. Whenever any payment day is not a Business Day,
such payment shall (except as otherwise required by clause (c) of the definition
----------
of the term "Interest Period" with respect to LIBOR Loans) be made on the next
---------------
succeeding Business Day and such extension of time shall be included in
computing interest and fees, if any, in connection with such payment.
SECTION 5.8 Sharing of Payments. If any Lender shall obtain any payment
-------------------
or other recovery (whether voluntary, involuntary, by application of setoff or
otherwise) on account of any Loan (other than pursuant to the terms of Section
-------
5.3, 5.4 or 5.5 in excess of its pro rata share of payments then or therewith
--- --- --- --- ----
obtained by all Lenders, such Lender shall purchase from the other Lenders such
participations in Loans made by them as shall be necessary to cause such
purchasing Lender to share the excess payment or other recovery ratably with
each of them; provided, however, that if all or any portion of the excess
payment or other recovery is thereafter recovered from such purchasing Lender,
the purchase shall be rescinded and each Lender which has sold a participation
to the purchasing Lender shall repay to the purchasing Lender the purchase price
to the ratable extent of such recovery together with an amount equal to such
selling Lender's ratable share (according to the proportion of (a) the amount of
such selling Lender's required repayment to the purchasing Lender to (b) the
--
total amount so recovered from the purchasing Lender) of any interest or other
amount paid or payable by the purchasing Lender in respect of the total amount
so recovered. The Borrower agrees that any Lender so purchasing a participation
from another Lender pursuant to this Section may, to the fullest extent
permitted by law, exercise all its rights of payment (including pursuant to
Section 5.9) with respect to such participation as fully as if such Lender were
-----------
the direct creditor of the Borrower in the amount of such participation. If
under any applicable bankruptcy, insolvency or other similar law, any Lender
receives a secured claim in lieu of a setoff to which this Section applies, such
Lender shall, to the extent practicable, exercise its rights in respect of such
secured claim in a manner
33
consistent with the rights of the Lenders entitled under this Section to share
in the benefits of any recovery on such secured claim.
SECTION 5.9 Setoff. Each Lender shall, upon the occurrence of any Default
------
or any other Event of Default, have the right to appropriate and apply to the
payment of the Obligations (whether or not then due), and (as security for such
Obligations) the Borrower hereby grants to each Lender a continuing security
interest in, any and all balances, credits, deposits, accounts or moneys of the
Borrower then or thereafter maintained with such Lender; provided, however, that
any such appropriation and application shall be subject to the provisions of
Section 5.8. Each Lender agrees promptly to notify the Borrower and the Agent
-----------
after any such setoff and application made by such Lender; provided, however,
that the failure to give such notice shall not affect the validity of such
setoff and application. The rights of each Lender under this Section are in
addition to other rights and remedies (including other rights of setoff under
applicable law or otherwise) which such Lender may have.
SECTION 5.10 Recourse. The Obligations of the Borrower to the Agent, and
--------
the Lenders are secured and rank pari passu with all other Senior Debt. All of
the Collateral of the Borrower and the Material Subsidiaries will be pledged to
secure the Obligations and all other Senior Debt. In the event that the
Borrower obtains or creates any Material Subsidiaries (a) each such Material
Subsidiary must issue a guarantee of the Obligations in the form of Exhibit H-2
-----------
and each such guarantee will be in favor of the Agent for the benefit of the
Lenders and secured by a pledge of all of the accounts receivable, inventory,
cash, Customer Lists and stock of such Material Subsidiary, and (b) the Borrower
shall cause the Security Agreements to be amended to add such Material
Subsidiary as an Obligor thereunder and shall deliver, or cause such Material
Subsidiary to deliver, such other agreements, documents, instruments and
opinions in connection therewith as the Agent may request.
SECTION 5.11 Replacement of Lenders. In the event any Lender shall
----------------------
provide notice to the Agent pursuant to Section 5.3, 5.5 or 5.6 hereunder, the
----------- --- ---
Borrower shall be permitted to replace such Lender, provided, however, that such
Lender's replacement shall agree to all the obligations and conditions relating
to an Assignee Lender contained in Section 11.11.1 hereto. Any such replacement
---------------
shall be subject to the Agent's consent which consent shall not be unreasonably
withheld.
ARTICLE VI
CONDITIONS TO EFFECTIVENESS AND TO BORROWING
SECTION 6.1 Conditions to Effectiveness. The effectiveness of this
---------------------------
Agreement shall be subject to the prior or concurrent satisfaction of each of
the conditions precedent set forth in this Section 6.1.
-----------
SECTION 6.1.1 Credit Agreement and Loan Documents. This Agreement
-----------------------------------
and the other Loan Documents shall have been duly executed and delivered by
each party thereto.
34
SECTION 6.1.2 Resolutions; Incumbency. The Agent shall have received
-----------------------
each of the following documents:
(a) Copies of the resolutions of the board of directors of each of
the Managing General Partner, the Borrower and the Material Subsidiaries
and partnership authorizations of Star Gas Partners authorizing the
transactions contemplated hereby, certified as of the Effective Date by the
Secretary or an Assistant Secretary of each of the Managing General
Partner, the Borrower and the Material Subsidiaries; and
(b) A certificate of the Secretary or Assistant Secretary of each of
the Borrower and the Material Subsidiaries certifying the names and true
signatures of the officers of each of the Borrower and the Material
Subsidiaries authorized to execute, deliver and perform, as applicable, on
behalf of each of the Borrower and the Material Subsidiaries, this
Agreement and all other Loan Documents to be delivered by each of the
Borrower and the Material Subsidiaries hereunder (upon which certificate
the Agent and each Lender may conclusively rely until they shall have
received a further certificate of a Responsible Officer canceling or
amending such prior certificate).
(c) A certificate of the Secretary or Assistant Secretary of the
Managing General Partner certifying the names and the signatures of the
officers of the Managing General Partner authorized to execute, deliver and
perform, as applicable, on behalf of the Managing General Partner and Star
Gas Partners, the Loan Documents to be delivered by Star Gas Partners and
the Managing General Partner (upon which certificate the Agent and each
Lender may conclusively rely until they shall have received a further
certificate of a Responsible Officer canceling or amending such prior
certificate).
SECTION 6.1.3 Organization Documents; Good Standing. The Agent shall
-------------------------------------
have received each of the following documents:
(a) the articles or certificate of incorporation and the bylaws or
other organizational documents of each of the Managing General Partner, the
Borrower and the Material Subsidiaries, and the certificate of limited
partnership and the partnership agreement of Star Gas Partners, in each
case as in effect on the Effective Date, certified by the Secretary or
Assistant Secretary of the relevant entity as of the Effective Date; and
(b) a good standing and tax good standing certificate for each of
Star Gas Partners, the Borrower and the Material Subsidiaries from the
Secretary of State (or similar, applicable Government Authority) of its
state of incorporation or organization, as applicable, and each other state
designated by the Agent where such entity conducts significant business, in
each case as of a recent date.
SECTION 6.1.4 Closing Certificate. A certificate signed by a
-------------------
Responsible Officer of each of Star Gas Partners and the Borrower, dated as
of the Effective Date, certifying:
35
(a) the representations and warranties contained in Article VII are
-----------
true and correct on and as of such date, as though made on and as of such
date;
(b) since December 31, 2000, there has been no material adverse
change in the condition (financial or otherwise), operations, business
assets, liabilities (actual or contingent) or prospects taken as a whole of
the Borrower and its Material Subsidiaries from that set forth in the
financial statements as of December 31, 2000 for the period ending on that
date (which financial statements shall be attached);
(c) since December 31, 2000, there has been no material adverse
change in the condition (financial or otherwise), operations, business
assets, liabilities (actual or contingent) or prospects taken as a whole of
Star Gas Partners and its subsidiaries taken as a whole from that set forth
in the financial statements as of December 31, 2000 (which financial
statements shall be attached);
(d) There shall not have occurred since December 31, 2000 a material
adverse change in the condition (financial or otherwise), operations,
business, assets, liabilities (actual or contingent) or prospects of
regarding Star Gas Partners, the Borrower and the Material Subsidiaries
taken as a whole; and
(e) the financial statements delivered to the Lenders and Agent on
and prior the date of this Agreement are true and correct.
SECTION 6.1.5 Security Agreements; Prior Liens Removed; Prior
-----------------------------------------------
Indebtedness Paid. The Agent shall have received duly executed
-----------------
counterparts of the Security Agreements, dated as of the date hereof, duly
executed by the Borrower, Star Gas Partners, and the Material Subsidiaries,
as the case may be, together with:
(a) copies of properly executed Uniform Commercial Code financing
statements (Form UCC-1), naming (i) the Borrower as the debtor and the
Agent as the secured party, and (ii) each of the Material Subsidiaries as
the debtor and the Agent as the secured party;
(b) executed copies of proper Uniform Commercial Code Form UCC-3
termination statements, if any, necessary to release all Liens and other
rights of any Person in the Collateral;
(c) copies of Uniform Commercial Code Requests for Information or
Copies (Form UCC-11), or a similar search report, dated a date reasonably
near to the date of the initial Borrowing, listing all effective financing
statements which name any of the Borrower, and the Material Subsidiaries
(under its present name and any previous names) as the debtor and which are
filed in the jurisdictions in which filings were made pursuant to clause
------
(a) above, together with copies of such financing statements (none of which
---
shall cover any collateral described in the Security Agreements);
36
(d) letters of instruction to each of the depository banks in respect
of banking accounts of the Borrower and each Material Subsidiary at such
depository banks in form and substance satisfactory to the Agent; and
(e) each Prior Lien shall have been removed on or before the
Effective Date and all Indebtedness of the Borrower (except for
Indebtedness hereunder and the Subordinated Indebtedness) shall have been
paid and discharged in full, and no Person shall have any interest
whatsoever in, or be a creditor of, the Borrower except the existing
Shareholders of the Borrower as holders of common and preferred equity in
the Borrower, and the Agent shall have received evidence satisfactory to it
to such effect.
SECTION 6.1.6 Permits. The Agent shall have received a duly executed
-------
certificate of a Responsible Officer of the Borrower certifying that there
are no permits, licenses or regulatory approvals required for the
execution, delivery and performance of the Loan Documents.
SECTION 6.1.7 RESERVED
--------
SECTION 6.1.8 Opinion of Counsel. The Agent shall have received
------------------
opinions, dated the Effective Date and addressed to the Agent and all
Lenders, from ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ & Ballon, special counsel to the
Managing General Partner, Star Gas Partners, the Borrower and the Material
Subsidiaries substantially in the form of Exhibit G hereto and opinions of
---------
counsel to the Borrower and its Material Subsidiaries covering such matters
of law of the State of Florida, New York, New Jersey, Maryland,
Pennsylvania and the District of Columbia as shall be reasonably requested
by the Agent or any Lender.
SECTION 6.1.9 Closing Fees, Expenses, etc. The Agent shall have
---------------------------
received evidence satisfactory to it of payment for its own account, or for
the account of each Lender, as the case may be, all fees, costs and
expenses due and payable pursuant to Section 3.3 and, if then invoiced,
-----------
Section 11.3.
------------
SECTION 6.1.10 Insurance. Insurance complying with the Loan Documents
---------
shall be in full force and effect and the Agent shall have received a
certificate to that effect from independent insurance brokers or
consultants as shall be satisfactory to the Agent and the Required Lenders.
SECTION 6.1.11 Solvency Certificate. The Authorized Officer of each
--------------------
of the Borrower and the Guarantors shall have delivered to the Agent a
solvency certificate dated the Effective Date, substantially in the form of
Exhibit I hereto.
---------
SECTION 6.1.12 Borrowing Base Certificate. The Agent shall have
--------------------------
received a Borrowing Base Certificate.
SECTION 6.1.13 RESERVED
--------
37
SECTION 6.1.14 Material Contracts. The Agent and the Lenders shall
------------------
have received true and complete copies of all Project Contracts and each
other material agreement, entered into as of April 6, 2000, between the
Borrower, each Material Subsidiary and their respective suppliers and the
purchasers from them of services. Each such Project Contract shall be in
full force and effect without default thereunder and the Agent shall have
received a certificate of a Responsible Officer of the Borrower to such
effect.
SECTION 6.1.15 Consent of Petro Lenders. The Agent shall have
------------------------
received evidence satisfactory to it of the consent of the lenders under
the Petro Credit Facility to the issuance by Star Gas Partners of its
Guarantee Agreement.
SECTION 6.1.16 Other Documents. The Agent and each Lender shall have
---------------
received such other approvals, opinions, documents or materials as the
Agent or such Lender may reasonably request.
SECTION 6.2 All Borrowings. The obligation of each Lender to fund any
--------------
Loan on the occasion of any Borrowing (including the initial Borrowing) shall be
subject to the satisfaction of each of the conditions precedent set forth in
this Section 6.2.
SECTION 6.2.1 Compliance with Warranties, No Default, etc. Both
--------------------------------------------
before and after giving effect to any Borrowing (but, if any Default of the
nature referred to in Section 9.1.4 shall have occurred with respect to any
-------------
other Indebtedness, without giving effect to the application, directly or
indirectly, of the proceeds thereof) the following statements shall be true
and correct:
(a) the representations and warranties set forth in Article VII and
-----------
in the Security Agreements shall be true and correct with the same effect
as if then made (unless stated to relate solely to an earlier date, in
which case such representations and warranties shall be true and correct as
of such earlier date);
(b) no Default or Event of Default shall have then occurred and be
continuing;
(c) the Borrower shall not have made any distribution or payment to
shareholders of the Borrower or any payment in respect of Indebtedness of
the Borrower in violation of the provisions of Section 8.2.6 hereof; and
-------------
(d) no event or circumstance shall have occurred which could have a
Material Adverse Effect.
SECTION 6.2.2 Borrowing Request. The Agent shall have received a
-----------------
Borrowing Request, for such Borrowing. Each delivery of a Borrowing
Request and the acceptance by the Borrower of the proceeds of such
Borrowing shall constitute a representation and warranty by Star Gas
Partners, the Borrower and the Material Subsidiaries that on the date of
such Borrowing (both immediately before and after giving effect to such
Borrowing and the application of the proceeds thereof) each of the
statements made in Section 6.2.1 is true and correct.
-------------
38
SECTION 6.2.3 Lien Searches. With respect to the initial Borrowing
-------------
only, satisfactory results of lien searches against the Borrower in the
locations set forth on Schedule 6.2.3.
--------------
SECTION 6.2.4 Satisfactory Legal Form. All documents executed or
-----------------------
submitted pursuant hereto by or on behalf of the Borrower, any other
Obligor or any Subsidiary shall be satisfactory in form and substance to
the Agent and its counsel; the Agent and its counsel shall have received
all information, approvals, opinions, documents or instruments as the Agent
or its counsel may reasonably request.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders and the Agent to enter into this Agreement
and to make Loans hereunder, the Borrower represents and warrants unto the Agent
and each Lender as set forth in this Article VII.
-----------
SECTION 7.1 Organization etc.
----------------
(a) Each of the Managing General Partner, the Borrower and its
Material Subsidiaries is a corporation (or a limited liability company in
the case of the Managing General Partner) duly organized, validly existing
and in good standing under the laws of its state of organization and has
all requisite power and authority to own and operate its properties, to
conduct its business as conducted on the Effective Date, to enter into this
Agreement, the Notes and the other Loan Documents to which it is a party,
and to carry out the terms of this Agreement, the Notes and such other Loan
Documents.
(b) Star Gas Partners is a limited partnership duly organized,
validly existing and in good standing under the laws of its state of its
organization and has all requisite partnership power and authority to own
and operate its properties, to conduct its business as conducted on the
Effective Date, and to execute, deliver and carry out the terms of the Loan
Documents to which it is a party.
(c) Item 7.1 of the Disclosure Schedule accurately and completely
--------
lists, as to each of Star Gas Partners, the Borrower and each Material
Subsidiary: (i) the state of incorporation or organization of each such
entity, and the type of legal entity that each of them is, (ii) as to each
of them that is a corporation, the classes and number of authorized and
outstanding shares of Capital Stock of each such corporation, and the
owners of such outstanding shares of Capital Stock, (iii) as to each of
them that is a legal entity other than a corporation (but not a natural
person), the type and amount of equity interests authorized and outstanding
of each such entity, and the owners of such equity interests, and (iv) the
business in which each of such entities is engaged. All of the foregoing
shares or other equity interests that are issued and outstanding have been
duly and validly issued and are fully paid and non-assessable, and are
owned by the Persons referred to in
39
Item 7.1 of the Disclosure Schedule, free and clear of any Lien except as
--------
otherwise provided for herein. Except as set forth on Item 7.1 of the
--------
Disclosure Schedule, there are no outstanding warrants, options, contracts
or commitments of any kind entitling any Person to purchase or otherwise
acquire any shares of Capital Stock or other equity interests of the
Borrower or any Material Subsidiary nor are there outstanding any
securities that are convertible into or exchangeable for any shares of
Capital Stock or other equity interests of the Borrower or any Material
Subsidiary.
SECTION 7.2 Material Subsidiaries. The Material Subsidiaries of the
---------------------
Borrower are listed on Schedule 7.2 hereto, and none of the Borrower or any of
------------
its Material Subsidiaries existing on the date of this Agreement has made any
Investments in any other Person (other than Investments of the types permitted
in Section 8.2.5).
-------------
SECTION 7.3 Qualification. Each of Star Gas Partners, the Borrower and
-------------
its Material Subsidiaries is duly qualified or registered and is in good
standing as a foreign corporation or partnership for the transaction of
business, in the jurisdictions set forth in Item 7.3 of the Disclosure Schedule
--------
which are the only jurisdictions, on the date hereof, 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 the case of
Star Gas Partners only, in which the failure so to qualify or to be so
registered could be reasonably expected to have a Material Adverse Effect.
SECTION 7.4 Enforceability. Each of Star Gas Partners, the Borrower and
--------------
the Material Subsidiaries has taken all necessary partnership or corporate
action to authorize the execution, delivery and performance by it of this
Agreement, the Notes and each other Loan Document to which is a party. Each of
Star Gas Partners, the Borrower and the Material Subsidiaries has duly executed
and delivered each of this Agreement, the Notes and the other Loan Documents to
which it is a party, and each of them constitutes its legal, valid and binding
obligation enforceable in accordance with its terms, except as 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; provided, however, that such laws shall not
materially interfere with the practical realization of the Security Documents or
the Liens created thereby, except for (i) possible delay, (ii) situations that
may arise under Chapter 11 of the Bankruptcy Code, and (iii) equitable orders of
a bankruptcy court.
SECTION 7.5 Due Authorization; Non-contravention; etc. The execution,
-----------------------------------------
delivery and performance by each of Star Gas Partners, the Borrower and the
Material Subsidiaries of this Agreement, the Notes and each other Loan Document
required to be executed by it hereunder are within Star Gas Partner's, the
Borrower's and such Material Subsidiary's powers, have been duly authorized by
all necessary action, and do not:
(a) contravene Star Gas Partners', the Borrower's or any Material
Subsidiary's Organization Documents;
40
(b) contravene any contractual restriction, law or governmental
regulation or court decree or order binding on or affecting Star Gas
Partners, the Borrower or any Material Subsidiary; or
(c) result in, or require the creation or imposition of, any Lien on
any of Star Gas Partners', the Borrower's or such Material Subsidiary's
properties, except as contemplated hereby.
SECTION 7.6 Government Approvals; Regulations, etc. No authorization or
--------------------------------------
approval or other action, by, and no notice to or filing with, any government
authority or regulatory body or other Person (that has not been obtained) is
required for the due execution, delivery or performance by Star Gas Partners,
the Borrower or any Material Subsidiary of this Agreement, the Notes or any
other Loan Document to which it is a party. All such required authorizations
and approvals have been obtained and such required notices and filings have been
made.
SECTION 7.7 Business; Financial Statements.
------------------------------
(a) The audited consolidated financial statements of the Borrower and
its Subsidiaries dated for their fiscal year ending in 2000, together with
the related statements of income or operations, shareholders' equity and
cash flows for the fiscal periods ended on those respective dates:
(i) were prepared in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly
noted therein;
(ii) fairly present in accordance with GAAP the financial
condition of the Borrower and its Subsidiaries as of the date thereof
and results of operations for the period covered thereby; and
(iii) show all material indebtedness and other liabilities,
direct or contingent of the Borrower and its Subsidiaries required to
be disclosed in accordance with GAAP as of the date thereof including
liabilities for taxes, material commitment and Contingent Liabilities.
(b) The audited consolidated financial statements of Star Gas
Partners and its Subsidiaries for its fiscal years ending during 1998, 1999
and 2000, in each case together with the related consolidated statements of
income or operations, partners' (or shareholders) capital and cash flow for
the fiscal periods ended on those respective dates:
(i) were prepared in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly
noted therein;
41
(ii) fairly present in accordance with GAAP the financial
condition of Star Gas Partners and its Subsidiaries as of the date
thereof and results of operations for the period covered thereby; and
(iii) show all material indebtedness and other liabilities,
direct or contingent, of such Person and its consolidated Subsidiaries
required to be disclosed, including liabilities for taxes, material
commitments and Contingent Liabilities in accordance with GAAP as of
the date thereof.
SECTION 7.8 No Material Adverse Change. Since the date of the most recent
--------------------------
financial statements described in Section 7.7 or, for any determination after
-----------
the delivery of the first financial statements pursuant to Section 8.1.1(b),
---------------
since the date of such financial statements (if such financial statements shall
be satisfactory to the Required Lenders), there has been no material adverse
change in the condition (financial or otherwise), business, prospects,
operations, assets or properties of (a) the Borrower and the Material
Subsidiaries (taken as a whole), or (b) Star Gas Partners and its Subsidiaries
(taken as a whole).
SECTION 7.9 Litigation; Labor Controversies, etc. There is no pending or,
------------------------------------
to the knowledge of Star Gas Partners, the Borrower, or any of its Material
Subsidiaries, threatened litigation, action, proceeding, or labor controversy
affecting Star Gas Partners, the Borrower or any of their Subsidiaries, or any
of their respective properties, businesses, assets or revenues, (a) which has,
or could have, a Material Adverse Effect, (b) which could affect the legality,
validity or enforceability of this Agreement, the Notes or any other Loan
Document, or (c) which could affect the transaction contemplated hereby or the
ability of Star Gas Partners, the Borrower or any of its Material Subsidiary to
perform their respective obligations under the Loan Documents.
SECTION 7.10 Ownership of Properties; Project Contracts; Liens.
-------------------------------------------------
(a) Star Gas Partners, the Borrower and each of the Material
Subsidiaries have (i) title to all of their respective assets constituting
real property owned in fee simple, (ii) good and valid leasehold interests
in their respective assets constituting leased real property, pursuant to
which they enjoy undisturbed possession thereof, except for defects in, or
lack of recorded title and exceptions to, leasehold interests which could
not, in the aggregate, be reasonably expected to have a Material Adverse
Effect, and (iii) sufficient title to the portion of their respective
assets constituting personal property (including patents, trademarks, trade
names, service marks, copyrights and other intellectual property rights)
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 each case
subject to no Liens except as permitted pursuant to Section 8.2.3.
(b) Each Prior Lien has been removed.
(c) Each Project Contract is in full force and effect without
default thereunder .
42
(d) The Liens that, simultaneously with the execution and delivery of
this Agreement and the consummation of the initial Loans, have been created
and granted by the Security Documents and upon filing will constitute valid
perfected first Liens on the properties and assets covered by the Security
Documents; provided, however, that Liens on the Project Contracts shall be
created and granted only to the maximum extent permitted by such documents.
SECTION 7.11 Taxes. Star Gas Partners, the Borrower and each Material
-----
Subsidiary, and any predecessor entity thereto, have filed all tax returns and
reports required by law to have been filed by them and have paid all taxes and
governmental charges thereby shown to be owing, except (a) any such taxes or
charges which are being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP shall have
been set aside on its books, and (b) in the case only of Star Gas Partners,
where the failure to do so could not have a Material Adverse Effect.
SECTION 7.12 ERISA Compliance.
----------------
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other federal or state law.
Each Plan which is intended to qualify under Section 401(a) of the Code has
received a favorable determination letter from the Internal Revenue Service
and, to the best knowledge of the Borrower, nothing has occurred which
would cause the loss of such qualification. The Borrower and each ERISA
Affiliate has made all required contributions to any Plan subject to
Section 412 of the Code, and no application for a funding waiver or an
extension of any amortization period pursuant to Section 412 of the Code
has been made with respect to any Plan.
(b) There are no pending or, to the best knowledge of Borrower,
threatened claims, actions or lawsuits, or action by any Government
Authority, with respect to any Plan which has resulted in or could
reasonably be expected to have a Material Adverse Effect on the condition
(financial or otherwise), business, operations, assets or properties of
Star Gas Partners, the Borrower and the Subsidiaries (taken as a whole).
There has been no prohibited transaction or violation of the fiduciary
responsibility rules, or failure to be able to accurately value Plan assets
with respect to any Plan which has resulted in or could reasonably be
expected to have a Material Adverse Effect.
(c) (i) No ERISA Event has occurred or could reasonably be expected
to occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii)
neither the Borrower nor any ERISA Affiliate has incurred, or could
reasonably be expected to incur, any liability under Title IV of ERISA with
respect to any Pension Plan (other than premiums due and not delinquent
under Section 4007 of ERISA); (iv) neither the Borrower nor any ERISA
Affiliate has incurred, or reasonably could be expected to incur, any
liability (and no event has occurred which, with the giving of notice under
Section 4219 of ERISA, could result in such liability under Section 4201 or
4243 of ERISA with respect to a Multiemployer Plan; and (v) neither the
Borrower nor any ERISA Affiliate has engaged
43
in a transaction that could reasonably be expected to be subject to Section
4069 or 4212(c) of ERISA.
(d) From this date hereafter, each year the Borrower shall have no
underfunded Pension Plans.
SECTION 7.13 Environmental Warranties.
------------------------
(a) All facilities and property owned, leased, used, occupied or
controlled (in whole or in part) by Star Gas Partners, the Borrower or any
Material Subsidiary have been, and continue to be, owned, leased, used,
occupied or controlled by Star Gas Partners, the Borrower or such Material
Subsidiary in compliance with all Environmental Laws except where the
failure of any of the foregoing to be done could not reasonably be expected
to have a Material Adverse Effect.
(b) There have been no past, and there are no pending or threatened
(i) Environmental Claims received by Star Gas Partners, the
Borrower or any Material Subsidiary with respect to any alleged
violation of any Environmental Law, or
(ii) complaints, notices or inquiries to Star Gas Partners, the
Borrower or any Material Subsidiary regarding potential liability
under any Environmental Law;
which in either the case of clauses (i) or (ii) above, could be reasonably
----------- ----
expected to have a Material Adverse Effect on Star Gas Partners, the
Borrower and the Subsidiaries (taken as a whole).
(c) To the knowledge of each of Star Gas Partners, the Borrower and
the Material Subsidiaries there have been no Releases of Hazardous
Materials at, on or under any property now or previously owned or leased by
Star Gas Partners, the Borrower or any Material Subsidiary that, singly or
in the aggregate, have, or could reasonably be expected to have, a Material
Adverse Effect.
(d) Star Gas Partners, the Borrower and each Material Subsidiary
have been issued and are in material compliance with all permits,
certificates, approvals, licenses and other authorizations relating to
environmental matters and necessary or desirable for their businesses, the
absence of or non compliance with which could reasonably be expected to
have a Material Adverse Effect, and no order has been issued, no
Environmental Claim has been made, no penalty has been assessed and, to the
knowledge of the Borrower or any Material Subsidiary, no investigation or
review has occurred or is pending or threatened by any Person with respect
to any alleged failure by Star Gas Partners, the Borrower or any Material
Subsidiary to have any permit, certificate, approval, license or other
governmental authorization required under applicable Environmental Laws in
connection with the conduct of the business or operations of any
44
of them, except where the failure of any of the foregoing to be done could
not reasonably be expected individually or in the aggregate to have a
Material Adverse Effect.
(e) No property now or previously owned or leased by the Borrower or
any Material Subsidiary is listed or to the knowledge of Borrower is
proposed for listing (with respect to owned property only) on the National
Priorities List pursuant to CERCLA, on the CERCLIS or on any similar state
list of sites requiring investigation or clean-up where the circumstances
giving rise to such listing or proposed listing or the effect of such
listing or proposed listing has, or could reasonably be expected to have, a
Material Adverse Effect.
(f) To the knowledge of each of Star Gas Partners, the Borrower and
the Material Subsidiaries there are no underground storage tanks, active or
abandoned, including petroleum storage tanks, on or under any property now
leased, used, occupied or controlled (in whole or in part) by Star Gas
Partners, the Borrower or any Material Subsidiary.
(g) To the knowledge of each of Star Gas Partners, the Borrower and
each Material Subsidiary, none of Star Gas Partners, the Borrower or any
Material Subsidiary has directly transported or directly arranged for the
transportation of any Hazardous Material to any location, including
locations which are listed or proposed for listing on the National
Priorities List pursuant to CERCLA, on the CERCLIS or on any similar state
list or which is the subject of federal, state or local enforcement actions
or other investigations.
(h) To the knowledge of each of Star Gas Partners, the Borrower and
each Material Subsidiary there are no polychlorinated biphenyls or friable
asbestos present at any property now or previously owned, leased, used,
occupied or controlled (in whole or in part) by Star Gas Partners, the
Borrower or any Material Subsidiary that, singly or in the aggregate, have,
or could reasonably be expected to have, a Material Adverse Effect.
SECTION 7.14 Regulations U and X and Use of Proceeds.
---------------------------------------
(a) The Borrower is not engaged in the business of extending credit
for the purpose of buying or carrying margin stock, and no proceeds of any
Loans will be used for a purpose which violates, or would be inconsistent
with, F.R.S. Board Regulation U or X. Terms for which meanings are provided
in F.R.S. Board Regulation U or X or any regulations substituted therefor,
as from time to time in effect, are used in this Section with such
meanings.
(b) The Borrower shall (i) use the proceeds of the Facility A Loans,
solely for working capital purposes, and (ii) use the proceeds of the
Facility B Loans, solely for purposes of financing that portion of the
purchase price for acquisitions of customer accounts from direct marketers
which does not exceed $40 per customer and to finance capital expenditures
relating to the Borrower's Business or future acquired businesses of the
Borrower.
45
SECTION 7.15 Accuracy of Information. All factual information heretofore
-----------------------
or contemporaneously furnished by or on behalf of Star Gas Partners, the
Borrower in writing to the Agent or any Lender for purposes of or in connection
with this Agreement or any transaction contemplated hereby which were furnished
to the Agent and all other such factual information hereafter furnished by or on
behalf of Star Gas Partners, the Borrower or any of its Material Subsidiaries in
writing to the Agent or any Lender does not contain any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained therein not misleading. There is no fact known to either of
Star Gas Partners or the Borrower which has or in the future would (so far as
either of Star Gas Partners or the Borrower can now foresee) have a Material
Adverse Effect which has not been set forth or referred to in this Agreement or
the other factual information furnished by Star Gas Partners or the Borrower in
writing.
SECTION 7.16 Solvency. The Borrower, both before and after giving effect
--------
to any Borrowing hereunder (including the initial Borrowings), (i) is not
"insolvent" (as such term is defined in (S) 101(31)(A) of the Bankruptcy Code),
(ii) is able to pay its debts and other liabilities, contingent obligations and
commitments as they mature, and (iii) does not have unreasonably small capital
for the business in which it is engaged or for any business or transaction in
which it is about to engage.
SECTION 7.17 Compliance with Agreements and Laws. None of Star Gas
-----------------------------------
Partners, the Borrower or any of their Subsidiaries is in default under any
agreement by which it is bound or in violation of any statute, law or
governmental rule or regulation or court or arbitrator's judgment, decree or
order, in any such case, which either individually or in the aggregate, could
have a Material Adverse Effect.
SECTION 7.18 Investment Company Act; Other Regulations. None of Star Gas
-----------------------------------------
Partners, the Borrower or any Material Subsidiary is an "investment company" or
a company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended. None of Star Gas Partners, the
Borrower or any Material Subsidiary is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, the Interstate
Commerce Act, any state public utilities code, or any other federal or state
statute or regulation limiting its ability to incur Indebtedness.
ARTICLE VIII
COVENANTS
SECTION 8.1 Affirmative Covenants. The Borrower agrees with the Agent and
---------------------
each Lender that, until all Commitments have terminated and all Obligations have
been paid and performed in full, the Borrower will perform the obligations set
forth in this Section 8.1.
-----------
SECTION 8.1.1 Financial Information, Reports, Notices, etc. The
--------------------------------------------
Borrower will furnish, or will cause to be furnished, to each Lender and
the Agent copies of the following financial statements, reports, notices
and information:
46
(a) (i) as soon as practicable, but in any event within forty-five
(45) days after the end of each of the first three quarterly fiscal periods
in each Fiscal Year of the Borrower, consolidated balance sheets of the
Borrower and the Material 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 Borrower and the Material Subsidiaries for such
period, all in reasonable detail and certified by an authorized financial
officer of the Borrower 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;
(ii) as soon as practicable, but in any event within forty-five
(45) days after the end of each of the first three quarterly fiscal
periods in each Fiscal Year of Star Gas Partners, the report on Form
10-Q submitted by Star Gas Partners to the Securities Exchange
Commission in respect of such quarterly period;
(b) (i) as soon as practicable but in any event within one hundred
five (105) days after the end of each Fiscal Year of the Borrower,
consolidated balance sheets of the Borrower and the Material 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, cash flows
and stockholders' equity of the Borrower and the Material 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, and accompanied by a report thereon of KPMG LLP or other
independent public accountants of recognized national standing selected by
the Borrower, which report shall (1) contain no limitation on the scope of
the audit and no material qualification or exception and (2) state that
such consolidated financial statements present fairly in all material
respects the financial position of the Borrower and the Material
Subsidiaries as at the dates indicated and the results of their operations
and cash flows for the periods indicated in conformity with GAAP applied on
a basis consistent with prior years and that the audit by such accountants
in connection with such consolidated financial statements has been made in
accordance with GAAP;
(ii) as soon as practicable but in any event within ninety (90)
days after the end of each Fiscal Year of Star Gas Partners,
consolidated (and to the extent that such are being prepared,
consolidating) balance sheets of Star Gas Partners and its
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 and cash flows of Star Gas Partners and its
Subsidiaries for such Fiscal Year of Star Gas Partners, 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 of Star Gas
Partners, all in reasonable detail,
47
and accompanied by a report thereon of KPMG LLP or other independent
public accountants of recognized national standing selected by Star
Gas Partners, which report shall (1) contain no limitation on the
scope of the audit and no material qualification or exception and (2)
state that such consolidated financial statements present fairly in
all material respects the financial position of Star Gas Partners and
its Subsidiaries as at the dates indicated and the results of their
operations and cash flows for the periods indicated in conformity with
GAAP applied on a basis consistent with prior years and that the audit
by such accountants in connection with such consolidated financial
statements has been made in accordance with GAAP;
(iii) as soon as practicable, but in any event not later than
June 30, 2001 for Fiscal Year 2001, and thereafter, not later than the
beginning of each Fiscal Year of the Borrower, a copy of the annual
budget of the Borrower and each Material Subsidiary for such beginning
fiscal year of such Person, in each case in detail satisfactory to the
Agent and containing information sufficient to verify monthly
operation and maintenance expenses;
(c) as soon as available and in any event within forty-five (45) days
after the end of each of the first three (3) Fiscal Quarters of the
Borrower and within ninety (90) days after the end of each Fiscal Year of
the Borrower, a Compliance Certificate with respect to the period covered
by the financial statements referred to in Section 8.1.1(a) and 8.1.1(b)
---------------- --------
above together with an enumeration of the aggregate number of customers of
the Borrower and its Subsidiaries existing as at the end of such Fiscal
Quarters, and the number of customers acquired through use of the proceeds
of Facility B Loans during such Fiscal Quarter, in each case with
supporting calculations and such other supporting detail as the Agent and
the Required Lenders may require;
(d) promptly upon receipt thereof, copies of all reports, management
letters and other detailed information (if any) prepared with respect to
Star Gas Partners, the Borrower or any Material Subsidiary by any
independent public accountant in connection with each annual or interim
audit of such Person;
(e) as soon as possible and in any event within three (3) Business
Days after knowledge by a Responsible Officer of the occurrence of each
Default or Event of Default, a statement of the chief financial officer of
the Borrower setting forth details of such Default or Event of Default and
the action which the Borrower has taken and propose to take with respect
thereto;
(f) as soon as possible and in any event within three (3) Business
Days after knowledge by a Responsible Officer of (x) the occurrence of any
material adverse development with respect to any litigation, action,
proceeding, or labor controversy described in Section 7.9 or (y) the
-----------
commencement of any labor controversy, litigation, action, proceeding of
the type described in Section 7.9, notice thereof and copies of all
-----------
documentation relating thereto;
48
(g) within five (5) Business Days after the sending or filing
thereof, all reports, registration statements and prospectuses which Star
Gas Partners, the Borrower or any of its Subsidiaries files with the
Securities and Exchange Commission or any national securities exchange;
(h) as soon as possible and in any event within ten (10) days after
knowledge by a Responsible Officer of the occurrence of any of the
following events affecting the Borrower or any ERISA Affiliate, deliver to
the Agent and each Lender a copy of any notice with respect to such event
that is filed with the Government Authority and any notice delivered by a
Government Authority to the Borrower or any ERISA Affiliate with respect to
such event:
(i) an ERISA Event;
(ii) any Unfunded Pension Liability of any Pension Plan;
(iii) the adoption of, or the commencement of contributions to,
any Plan subject to Section 412 of the Code by the Borrower or any
ERISA Affiliate;
(iv) the adoption of any amendment to a Plan subject to Section
412 of the Code, if such amendment could result in a material increase
in contributions or Unfunded Pension Liability; or
(v) any Pension Plan's having incurred an "accumulated funding
deficiency" (as defined in Section 412 of the Code), or receiving
notice from the PBGC, Internal Revenue Service or any governmental
agency that it is the subject of an audit, review or any other
governmental action;
in addition, the Borrower shall instruct the actuaries for all Pension Plans to
deliver to the Agent a copy of each Pension Plan's Actuarial Valuation and each
Pension Plan's Schedule B to Form 5500 at the earliest time that such is
delivered to the Borrower or any ERISA Affiliate;
(i) within sixty (60) Business Days after each Fiscal Quarter end, a
certificate setting forth the net proceeds from Asset Dispositions, the
application of such proceeds as permitted under Section 8.2.8, and the
-------------
mandatory prepayments made as required by Section 3.1.3;
-------------
(j) on the twenty fifth (25/th/) day of each month (or if such day
shall not be a Business Day, the next preceding Business Day) and promptly
after any day on which the Agent requests, a Borrowing Base Certificate
showing the Facility A Borrowing Base as of the last day of the most
recently ended calendar month or such other date as reasonably requested by
the Agent, as the case may be, in each case certified as complete and
correct by the chief financial officer of the Borrower together with
supporting documents reasonably acceptable to the Agent; provided however,
that for the first three (3) months after the Effective Date, such
Borrowing Base Certificates shall be due thirty (30) days after the last
day of the most recently ended calendar month;
49
(k) within ten (10) days of knowledge by a Responsible Officer
thereof, notice of any litigation, proceeding, investigation or dispute
which may exist at any time between Star Gas Partners, the Borrower or any
Material Subsidiary and any governmental regulatory body which might
interfere with the normal business operations of Star Gas Partners, the
Borrower or any Material Subsidiary, such other information respecting the
condition or operations, financial or otherwise, of Star Gas Partners, the
Borrower or any Subsidiary as any Lender through the Agent may from time to
time reasonably request;
(l) within ten (10) days of knowledge by a Responsible Officer
thereof and to the extent not otherwise covered in clauses (a) - (k) above,
-----------------
notice of any event or circumstance that could have a Material Adverse
Effect, including without limitation an event or circumstance which leads
the Borrower to believe it will not meet the financial covenants set forth
in Section 8.2.4 on a pro forma basis;
--------------
(m) within ten (10) days of the occurrence thereof, a notice of the
occurrence of any default by Star Gas Partners or any of its Subsidiaries
under any agreement the breach of which could have a Material Adverse
Effect to which such Person is a party, setting forth in reasonable detail
the circumstances of such default; and
(n) not later than ten (10) Business Days after the occurrence
thereof, notice of any change, amendment, waiver or entering into of any
Project Contract.
SECTION 8.1.2 Maintenance of Properties. The Borrower will, and will
-------------------------
cause each of its Material Subsidiaries to, maintain, preserve, protect and
keep its properties in good repair, working order and condition, and make
necessary and proper repairs, renewals and replacements so that its
business carried on in connection therewith may be properly conducted at
all times unless the Borrower determines in good faith that the continued
maintenance of any of its or its Subsidiaries' properties is no longer
economically desirable.
SECTION 8.1.3 Insurance. In addition to insurance requirements set
---------
forth in the Security Documents, the Borrower shall maintain, and shall
cause each of the Material Subsidiaries to maintain, with financially sound
and reputable independent insurers, insurance with respect to its
properties and business against loss or damage of the kinds customarily
insured against by Persons engaged in the same or similar business, of such
types and in such amounts as are customarily carried under similar
circumstances by such other Persons; including workers' compensation
insurance, public liability and property and casualty insurance which
amount shall not be reduced by the Borrower or any Material Subsidiary in
the absence of thirty (30) days' prior notice to the Agent. All such
insurance shall name the Agent as loss payee/mortgagee and as additional
insured, for the benefit of the Lenders, as their interests may appear. All
casualty insurance maintained by the Borrower and the Material Subsidiaries
shall name the Agent as loss payee and all liability insurance shall name
the Agent as additional insured for the benefit of the Borrower, as their
interests may appear. Upon request of the Agent or any Lender, the Borrower
shall furnish the Agent, with sufficient copies for each Lender, at
50
reasonable intervals (but not more than once per calendar year) a
certificate of a Responsible Officer of the Borrower (and, if requested by
the Agent, any insurance broker of the Borrower) setting forth the nature
and extent of all insurance maintained by the Borrower and the Material
Subsidiaries in accordance with this Section or any Security Documents (and
which, in the case of a certificate of a broker, were placed through such
broker).
SECTION 8.1.4 Payment of Obligations. The Borrower shall, and shall
----------------------
cause each of its Material Subsidiaries to, pay and discharge as the same
shall become due and payable (except to the extent the failure to so pay
and discharge could not reasonably be expected to have a Material Adverse
Effect), all their respective obligations and liabilities, including:
(a) all tax liabilities, assessments and governmental charges or
levies upon it or its properties or assets, unless the same are being
contested in good faith by appropriate proceedings and adequate reserves in
accordance with GAAP are being maintained by the Borrower or such Material
Subsidiary;
(b) all lawful claims which, if unpaid, would by law become a Lien
upon its property; and
(c) all Indebtedness, as and when due and payable, but subject to
any subordination provisions contained in any instrument or agreement
evidencing such Indebtedness.
SECTION 8.1.5 Compliance with Laws. The Borrower shall, and shall
--------------------
cause each of its Material Subsidiaries to comply, in all material respects
with all Requirements of Law of any Government Authority having
jurisdiction over it or its business (including the Federal Fair Labor
Standards Act), except such as may be contested in good faith or as to
which a bona fide dispute may exist.
SECTION 8.1.6 Books and Records. Star Gas Partners and the Borrower
-----------------
will, and will cause each of the Material Subsidiaries to, keep books and
records which accurately reflect all of its business affairs and
transactions.
SECTION 8.1.7 Inspection. The Borrower shall permit the
----------
representatives of each Lender and the Agent, at the expense of the
Borrower at any time when a Default or Event of Default has occurred and is
in existence, and otherwise representatives of any Lender or the Agent with
prior written notice at the expense of such Lender or the Agent, to visit
and inspect during normal business hours any of the properties of the
Borrower or any Material Subsidiary, to examine all their respective books
of account, records, reports and other papers, to make copies and extracts
therefrom, and to discuss their respective affairs, finances and accounts
with their respective officers, employees and independent public
accountants all at such reasonable times and intervals and as often as may
be reasonably requested. The Borrower hereby authorizes the Borrower's and
the Material Subsidiaries' independent accountants, and shall upon such
request deliver a letter to the
51
Borrower's and the Material Subsidiaries' independent public accountants
authorizing them, to reply to and comply with the provisions of this
Section 8.1.7.
-------------
SECTION 8.1.8 Environmental Covenant. The Borrower will, and will
----------------------
cause each of the Material Subsidiaries to:
(a) use and operate all of its facilities and properties in compliance
with all Environmental Laws, keep all necessary permits, approvals,
certificates, licenses and other authorizations relating to environmental
matters in effect and remain in compliance therewith, and handle all
Hazardous Materials in compliance with all applicable Environmental Laws
except where non-compliance could not singly or in the aggregate be
reasonably expected to have a Material Adverse Effect;
(b) immediately notify the Agent and provide copies upon receipt of
all written claims, complaints, notices or inquiries relating to the
condition of its facilities and properties or compliance with Environmental
Laws other than those claims, complaints, notices or inquiries which singly
or in the aggregate could not have a Material Adverse Effect, and shall
promptly cure and have dismissed with prejudice to the satisfaction of the
Agent any such actions and proceedings relating to compliance with
Environmental Laws except to the extent being diligently contested in good
faith by appropriate proceedings and for which adequate reserves in
accordance with GAAP shall have been set aside on its books; and
(c) provide such information and certifications which the Agent may
reasonably request from time to time to evidence compliance with this
Section 8.1.8.
-------------
SECTION 8.1.9 Compliance with ERISA. The Borrower shall, and shall
---------------------
cause each of its ERISA Affiliates to: (a) maintain each Plan in compliance
in all material respects with the applicable provisions of ERISA, the Code
and other federal or state law; (b) cause each Plan which is qualified
under Section 401(a) of the Code to maintain such qualification; and (c)
make all required contributions to any Plan subject to Section 412 of the
Code.
SECTION 8.1.10 Collateral.
----------
(a) All of the Collateral will be pledged to secure the Senior Debt.
(b) In the event that the Borrower obtains or creates any Material
Subsidiary (after the date hereof), the Borrower shall (i) cause each such
Material Subsidiary to issue a guarantee of the Obligations and each such
guarantee will be in favor of the Agent and secured by a pledge of all of
the accounts receivable, inventory, cash, Customer Lists and stock of such
Material Subsidiary, and (ii) cause the Security Agreements to be amended
to add such Material Subsidiary as an Obligor thereunder and shall deliver,
or cause such Material Subsidiary to deliver, such other agreements,
documents, instruments and opinions in connection therewith as the Agent
may request.
52
(c) The Borrower shall, and shall cause each Material Subsidiary to,
use commercially reasonable efforts to cause each Project Contract entered
into after the date hereof to become subject to the grant of liens set out
in of the Security Agreements.
(d) All of the funds received by the Borrower and the Material
Subsidiaries under the Contracts (as defined in the Security Agreements)
shall be deposited into the Receipts Account for application in accordance
with the Security Agreements.
SECTION 8.1.11 Update of Project Contracts. The Borrower shall
---------------------------
deliver to the Agent and the Lenders, not later than June 30, 2001, an
updated Exhibit O indicating all Project Contracts in effect as of the date
---------
of delivery of such updated Exhibit O. Each Project Contract shall be in
---------
full force and effect without default thereunder and the Borrower shall
deliver to the Agent a certificate of a Responsible Officer of the Borrower
to such effect.
SECTION 8.1.12 Agreements Regarding Receipts Account . The Borrower
-------------------------------------
shall, not later than June 30, 2001 execute and deliver (i) an amendment to
this Agreement, (ii) an amendment and restatement of the Accounts Security
Deposit Agreement and (iii) an amendment and restatement of the Securities
Account Control Agreement, in each case in form and substance satisfactory
to the Agent, pursuant to which the Receipts Account shall be established
with Chase, and Chase shall become (a) the Depositary under the Accounts
Security Deposit Agreement and (b) the Securities Intermediary under the
Securities Account Control Agreement, together with such other documents,
certificates or other instruments the Agent determines are necessary to
effectuate the foregoing.
SECTION 8.1.13 Preservation of Corporate Existence. The Borrower
-----------------------------------
shall, and shall cause each of its Material Subsidiaries to:
(a) preserve and maintain in full force and effect its corporate or
partnership existence (as applicable) and good standing under the laws of
its state or jurisdiction of organization or incorporation, except to the
extent permitted by Section 8.2.7;
-------------
(b) preserve and maintain in full force and effect all governmental
rights, privileges, qualifications, permits, licenses and franchises
necessary or desirable in the normal conduct of its business except in
connection with transactions permitted by Section 8.2.7 and sale of assets
-------------
permitted by Section 8.2.8 or where the lapse could not reasonably be
-------------
expected to have a Material Adverse Effect;
(c) use reasonable efforts, in the ordinary course of business, to
preserve its business organization and goodwill; and
(d) preserve or renew all of its registered patents, trademarks,
trade names and service marks, the non-preservation of which could have a
Material Adverse Effect.
SECTION 8.1.14 Use of Proceeds.
---------------
53
(a) The Borrower shall not, and shall not suffer or permit any
Subsidiary to, use any portion of the Loan proceeds, directly or indirectly
for the purpose of buying or carrying margin stock or any purpose which
violates, or would be inconsistent with F.R.S. Board Regulation U or X.
Terms for which meanings are provided in F.R.S. Board Regulation U or X or
any regulations substituted therefor, as from time to time in effect, are
used in this Section with such meanings;
(b) The proceeds of the Loans shall be used for the purposes set forth
in Section 7.14.
------------
SECTION 8.1.15 Update of Customer Lists. The Borrower shall, and
------------------------
shall cause its Material Subsidiaries to, provide to the Agent and the
Lenders on such dates as the Agent reasonably may request one or more
computer information (or such other medium as may be acceptable to the
Agent) containing each Customer List owned by the Borrower or any of the
Material Subsidiaries and within fifteen (15) days of such request the
Borrower and the Agent agree that each Lender shall be permitted to review
such information (or other medium) during the reasonable business hours of
the Agent; provided that the Agent and the Lenders shall not disclose such
information unless an Event of Default has occurred and is continuing;
provided, however, that prior to an Event of Default, the Agent and the
Lenders may disclose such information only to (a) their respective
attorneys, auditors, employees, consultants or other agents, and (b) to any
Government Authority to the extent required by such Government Authority.
SECTION 8.1.16 Further Assurances.
------------------
(a) The Borrower shall ensure that all written information, exhibits
and reports furnished to the Agent or the Lenders by the Borrower do not
and will not contain any untrue statement of a material fact and do not and
will not omit to state any material fact or any fact necessary to make the
statements contained therein not misleading in light of the circumstances
in which made, and will promptly disclose to the Agent and the Lenders and
correct any defect or error that may be discovered therein or in any Loan
Document or in the execution, acknowledgment or recordation thereof.
(b) Promptly upon request by the Agent or the Required Lenders, the
Borrower shall (and shall cause any of its Subsidiaries to) do, execute,
acknowledge, deliver, record, re-record, file, re-file, register and re-
register, any and all such further acts, deeds, conveyances, security
agreements, mortgages, assignments, estoppel certificates, financing
statements and continuations thereof, termination statements, notices of
assignment, transfers, certificates, assurances and other instruments the
Agent or such Lenders, as the case may be, may reasonably require from time
to time in order (i) to carry out more effectively the purposes of this
Agreement or any other Loan Document, (ii) to subject to the Liens created
by any of the Security Documents any of the properties, rights or interests
covered by any of the Security Documents, (iii) to perfect and maintain the
validity, effectiveness and priority of any of the Security Documents and
the Liens intended to be created thereby, and (iv) to better assure,
54
convey, grant, assign, transfer, preserve, protect and confirm to the Agent
and Lenders the rights granted or now or hereafter intended to be granted
to the Agent and the Lenders under any Loan Document or under any other
document executed in connection therewith.
SECTION 8.2 Negative Covenants. The Borrower agrees with the Agent and
------------------
each Lender that, until all Commitments have terminated and all Obligations have
been paid and performed in full, the Borrower will perform the obligations set
forth in this Section 8.2.
-----------
SECTION 8.2.1 Business Activities. The Borrower will not, nor will
-------------------
it permit any of the Material Subsidiaries to, engage in any line of
business, if, as a result, the general nature of the business in which the
Borrower and the Material Subsidiaries taken as a whole are engaged in
would be substantially different from the nature of the business in which
the Borrower and the Material Subsidiaries are engaged in as of the
Effective Date.
SECTION 8.2.2 Indebtedness.
------------
(a) The Borrower will not, nor will it permit any of the Material
Subsidiaries to, create, incur, assume or suffer to exist or otherwise
become or be liable in respect of any Indebtedness, other than, (i)
Indebtedness evidenced by the Obligations; (ii) and Subordinated
Indebtedness to persons having an equity ownership interest in the Borrower
and which is subordinated on terms and conditions satisfactory to the
Agent; and (iii) Indebtedness incurred in connection with Section 8.2.3(e).
(b) Star Gas Partners will not create, incur, assume or suffer to
exist or otherwise become liable in respect of any Indebtedness except
Indebtedness evidenced by the Obligations and its Guaranty dated the date
hereof, and other Indebtedness permitted by Section 8.2.2(b) of the Petro
Credit Facility.
SECTION 8.2.3 Liens. The Borrower shall not, nor shall it permit any
-----
of the Material Subsidiaries to, create, incur, assume or suffer to exist
any Lien upon any of its property, revenues or assets, whether now owned or
hereafter acquired, except the Liens referred to below:
(a) Liens in the Collateral created in favor of the Agent for the
benefit of the Agent and the Lenders;
(b) Liens for taxes, assessments or other governmental charges or
levies not at the time delinquent or thereafter payable without penalty or
being diligently contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with GAAP shall have been set aside
on its books;
(c) Liens of carriers, warehousemen, mechanics, materialmen and
landlords incurred in the ordinary course of business for sums not overdue
and being diligently
55
contested in good-faith by appropriate proceedings and for which adequate
reserves in accordance with GAAP shall have been set aside on its books;
(d) Liens incurred in the ordinary course of business in connection
with workmen's compensation, unemployment insurance or other forms of
governmental insurance or benefits, or to secure performance of tenders,
statutory obligations, leases and contracts (other than for borrowed money)
entered into in the ordinary course of business or to secure obligations on
surety or appeal bonds;
(e) the purchase money security interests on any property acquired or
held by the Borrower or Material Subsidiaries in the ordinary course of
business, securing Indebtedness incurred or assumed for the purpose of
financing all or any part of the cost of acquiring such property; provided
that (i) any such Lien attaches to such property concurrently with or
within twenty (20) days after the acquisition thereof, (ii) such Lien
attaches solely to the property so acquired in such transaction, (iii) the
principal amount of the debt secured thereby does not exceed 100% of the
cost of such property and (iv) the principal amount of the Indebtedness
secured by any and all such purchase money security interests shall not at
any time exceed $100,000;
(f) 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 other similar changes,
encumbrances and Liens which do not materially impair the use thereof by
the Borrower or any of the Material Subsidiaries; and
(g) Liens (other than any Lien imposed by ERISA and other than on the
Collateral) consisting of pledges or deposits required in the ordinary
course of business in connection with workers' compensation, unemployment
insurance and other social security legislation;
provided, however, that the Borrower shall not purchase any real estate without
the prior written consent of the Lenders.
SECTION 8.2.4 Financial Covenants. The Borrower shall at all times:
-------------------
(a) maintain Consolidated EBITDA of not less than $2,000,000;
(b) not permit the ratio of Consolidated EBITDA to Senior Interest
Expense to be less than 1.25:1.00.
SECTION 8.2.5 Investments. Subject to Section 8.2.6, none of the
----------- -------------
Borrower or any of the Material Subsidiaries shall make or suffer to exist,
any Investment in any Person, including without limitation, any shareholder
of the Borrower or any Subsidiary except in accordance with Section 4 of
the Accounts Security Deposit Agreement referred to in the definition of
Security Agreements, and which are one of the following:
(a) Investments in:
56
(i) obligations issued or guaranteed by the United States of
America or any agency thereof maturing or being due or payable in full
not more than 1 year after the Borrower's acquisition thereof;
(ii) certificates of deposit, bankers acceptances and other
"money market instruments" issued by any Lender or a bank having
capital and surplus in an aggregate amount of not less than
$500,000,000 and a rating of at least A- by Standard & Poor's
Corporation or A3 by Moodys Investors Service or equivalent rating by
another nationally recognized credit rating agency maturing or being
due or payable in full not more than 1 year after the Borrower's
acquisition thereof;
(iii) open market commercial paper having a rating of at least
A-1 by Standard & Poor's Corporation or Prime-1 by ▇▇▇▇▇'▇ Investors
Service maturing or being due or payable in full not more than 270
days after the Borrower's acquisition thereof;
(iv) collateralized repurchase agreements entered into with any
bank or trust company organized under the laws of the United States of
America or any State thereof and having capital and surplus in an
aggregate amount of not less than $100,000,000 relating to United
States of America government obligations maturing or being due or
payable in full not more than 90 days after the Borrower's acquisition
thereof; and
(v) tax exempt short term securities having a rating of at
least A-1 by Standard & Poor's Corporation or Prime-1 by ▇▇▇▇▇'▇
Investors Service and tax exempt long-term securities having a rating
of at least A by Standard & Poor's Corporation or A2 by Moodys
Investors Service in each case maturing or being due or payable in
full not more than 180 days after the Borrower's acquisition thereof;
and
(b) Investments by the Borrower in any Material Subsidiary and by any
Material Subsidiary in the Borrower or another Material Subsidiary as in
effect on the date hereof.
SECTION 8.2.6 Restricted Payments, etc .
------------------------
(a) Except as permitted by subparagraph (b) below, the Borrower will
not, and will not permit any of the Material Subsidiaries to make or
authorize any Restricted Payment or any payment in respect of Subordinated
Indebtedness.
(b) The Borrower and any of the Material Subsidiaries may make or
authorize a Restricted Payment if such Restricted Payment is payable within
sixty (60) days of its declaration and no Default or Event of Default
exists on the day of such distribution or would exist after making such
declaration or distribution.
57
SECTION 8.2.7 Consolidation, Merger, etc. The Borrower shall not,
--------------------------
and shall not suffer or permit any Material Subsidiary to, merge,
consolidate with or into, or convey, transfer, lease or otherwise dispose
of (whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired)
to or in favor of any Person, except:
(a) any Material Subsidiary may merge with the Borrower, provided
that the Borrower shall be the continuing or surviving corporation, or with
any one or more Subsidiaries, provided that if any transaction shall be
between a Subsidiary and a Wholly-Owned Subsidiary, the Wholly-Owned
Subsidiary shall be the continuing or surviving corporation; and
(b) any Material Subsidiary may sell or otherwise transfer all or
substantially all of its assets (upon voluntary liquidation or otherwise),
to the Borrower or another Wholly-Owned Material Subsidiary.
SECTION 8.2.8 Asset Dispositions, etc. Except in connection with a
-----------------------
transaction permitted under Section 8.2.7, none of the Borrower or any of
-------------
the Material Subsidiaries may sell or dispose of any portion of its
property (excepting abandonment, sale of inventory or other dispositions in
the ordinary course of business), or sell equity interests in any Material
Subsidiary to any third party (all of the foregoing, are herein called
"Asset Dispositions"), unless:
-------------------
(a) immediately before and after giving effect to such transaction,
no Default or Event of Default shall exist or be continuing;
(b) one of the following two conditions shall be satisfied:
(i) the aggregate net after tax proceeds from such Asset
Disposition do not exceed 5% of the Consolidated Total Assets of the
Borrower during such Fiscal Year; or
(ii) in the event that such net after tax proceeds from such
Asset Disposition exceed 5% of such Consolidated Total Assets ("Excess
------
Sale Proceeds"), the Borrower shall within ninety (90) days of the
-------------
date of the disposal of the assets giving rise to such proceeds, cause
an amount equal to such Excess Sale Proceeds to be applied (x) to the
acquisition of assets in replacement of the assets so disposed of or
of assets which may be productively used in the United States in the
conduct of the Borrower's or any Material Subsidiary's business (and
such newly acquired assets shall become part of the Collateral and
shall be subjected to the Lien of the Security Documents), or may be
deemed by the Borrower to have been applied to fund the purchase of
such replacement assets purchased not earlier than 30 days prior to
such Asset Disposition or (y) to the extent not applied pursuant to
the immediately preceding clause (x) , for deposit with the Agent no
----------
later than ninety (90) days of after such disposition to be reinvested
in assets described in clause (x) and to the extent such Excess Sale
----------
58
Proceeds are not reinvested as described above within one-hundred
eighty (180) days of such disposition to the prepayment of the
Obligations pursuant to Section 3.1; and
-----------
(c) 100% of the consideration received is in cash or marketable
securities or notes secured by a letter of credit issued by a financial
institution acceptable to the Lenders.
SECTION 8.2.9 RESERVED.
--------
SECTION 8.2.10 Transactions with Affiliates. The Borrower will not,
----------------------------
and will not permit any Material Subsidiary to, directly or indirectly,
engage in any transaction with any Affiliate, including, without
limitation, the purchase, sale or exchange of assets or the rendering of
any service, to the Borrower's or such Material Subsidiary's business
except upon fair and reasonable terms that are no less favorable to the
Borrower or such Material 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.
SECTION 8.2.11 Negative Pledges, Restrictive Agreements, etc. The
---------------------------------------------
Borrower will not, and will not permit any of the Material Subsidiaries to,
enter into any agreement (excluding this Agreement, any other Loan Document
and any agreement governing any Indebtedness permitted herein) prohibiting
the creation or assumption of any Lien upon its properties, revenues or
assets, whether now owned or hereafter acquired, or the ability of the
Borrower or any other Obligor to amend or otherwise modify this Agreement
or any other Loan Document.
SECTION 8.2.12 RESERVED
--------
SECTION 8.2.13 Operating Leases. The aggregate obligations of the
----------------
Borrower and the Material Subsidiaries for the payment of rent for any
property under lease or agreement to lease for any Fiscal Year shall not
exceed $100,000.
SECTION 8.2.14 Prepayments. None of the Borrower or any Material
-----------
Subsidiary shall make any voluntary or optional prepayment of any
Indebtedness for borrowed money incurred or permitted to exist under the
terms of this Agreement other than (i) the Indebtedness hereunder, and (ii)
Subordinated Indebtedness repaid out of funds otherwise available for
distribution to the shareholders of the Borrower in full compliance with
the provisions of this Agreement.
SECTION 8.2.15 Organization Documents. Star Gas Partners and the
-----------------------
Borrower will not, and will not permit any Material Subsidiary, to alter
any Organization Document of such entity in any manner which could have a
Material Adverse Effect.
SECTION 8.2.16 Capital Expenditures. The Borrower will not, nor will
--------------------
it permit any of the Material Subsidiaries to, make at any time Capital
Expenditures in
59
respect of any line of business other than the Business which, in the
aggregate over the term of this Agreement, exceed 10% of the consolidated
tangible assets of the Borrower and the Material Subsidiaries as determined
in accordance with GAAP at such time.
SECTION 8.2.17 Contingent Liabilities. The Borrower shall not, and
----------------------
shall not suffer or permit any Material Subsidiary to, create, incur,
assume or suffer to exist any Contingent Liabilities except endorsements
for collection or deposit in the ordinary course of business or guarantees
of Indebtedness incurred by the Borrower or a Material Subsidiary in
accordance with the provisions of this Agreement.
SECTION 8.2.18 ERISA. The Borrower shall not, and shall not suffer or
-----
permit any of its ERISA Affiliates to: (a) engage in a prohibited
transaction or violation of the fiduciary responsibility rules with respect
to any Plan which has resulted, or otherwise act or fail to make a
contribution if such action or failure to act could result in liability of
the Borrower and/or ERISA Affiliate with respect to any Pension Plan; (b)
engage in a transaction that could be subject to Section 4069 or 4212(c) of
ERISA; or (c) permit to exist any "accumulated funding deficiency" (as
defined in Section 412 of the Code) with respect to any Pension Plan.
SECTION 8.2.19 Accounting Changes. The Borrower shall not, and shall
------------------
not suffer or permit any Material Subsidiary to, make any significant
change in accounting treatment or reporting practices, except as required
by GAAP, or change the Fiscal Year of the Borrower or of any Material
Subsidiary.
SECTION 8.2.20 Bank Accounts. None of the Borrower or any of the
-------------
Material Subsidiaries shall have any bank accounts other than those bank
accounts subject to the Security Agreements; provided that the Borrower and
its Material Subsidiaries may continue to have the bank accounts in
existence on the date hereof for sixty (60) days from the date hereof and
may draw funds from such bank accounts for a period of twenty (20) days
from the date hereof; provided, however, no receivables or other funds of
the Borrower shall be deposited into any other account after the date
hereof.
ARTICLE IX
EVENTS OF DEFAULT
SECTION 9.1 Listing of Events of Default. Each of the following events or
----------------------------
occurrences described in this Section 9.1 shall constitute an "Event of
----------- --------
Default".
-------
SECTION 9.1.1 Non-Payment of Obligations. The Borrower shall default
--------------------------
in the payment or prepayment when due of any principal or interest of any
Loan, or the payment of any fee or other Obligation.
SECTION 9.1.2 Breach of Warranty. Any material representation or
------------------
warranty of the Borrower or any other Obligor made or deemed to be made
hereunder or in any other Loan Document executed by it or any other writing
or certificate furnished by or on
60
behalf of the Borrower or any other Obligor to the Agent or any Lender for the
purposes of or in connection with this Agreement or any such other Loan Document
(including any certificates delivered pursuant to Article VI) is or shall be
----------
incorrect when made in any material respect.
SECTION 9.1.3 Non-Performance of Other Covenants and Obligations.
--------------------------------------------------
(a) Any Obligor shall default in the due performance and observance of any
term, covenant or agreement contained in any of Sections 8.1.5, 8.1.10 or
-------------- ------
8.1.14 or in Section 8.2; or
------- -----------
(b) any Obligor shall default in the due performance and observance of any
other Obligation or agreement contained herein or in any other Loan Document,
and such default shall continue unremedied for a period of fifteen (15) days
after actual knowledge thereof by a Responsible Officer.
SECTION 9.1.4 Default on Other Indebtedness. Star Gas Partners, any of its
-----------------------------
Subsidiaries, the Borrower or any Material Subsidiary shall default (after
notice and the expiration of any applicable grace period) in the payment of any
amount of principal, premium or interest on any Indebtedness (other than the
Notes) (including, without limitation, Indebtedness under the Petro Credit
Facility), or any event shall occur or condition shall exist in respect of any
Indebtedness of Star Gas Partners, the Borrower or any of their Subsidiaries
(other than the Notes) and the effect of such event or condition is to cause (or
to permit the holders of such Indebtedness to cause) such Indebtedness to become
due before its stated maturity, in each case, if the outstanding principal
balance of such Indebtedness is in excess of $2,000,000 in the aggregate.
SECTION 9.1.5 Judgments. Any judgment or order for the payment of money in
---------
excess of $1,000,000, net of insurance coverage, shall be rendered against Star
Gas Partners the Borrower or any of their Subsidiaries and:
(a) such judgment or order is non appealable, has not been stayed pending
appeal, or all rights to appeal such judgment have expired or been exhausted;
and
(b) such judgment or order shall remain undischarged for a period of sixty
(60) consecutive days after the date due.
SECTION 9.1.6 ERISA. (a) An ERISA Event shall occur with respect to a
-----
Pension Plan or Multiemployer Plan which has resulted or could result in
liability of the Borrower under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of $500,000; or
(b) there shall exist an Unfunded Pension Liability among all Pension Plans of
Star Gas Partners and its Affiliates at any time in excess of $7,000,000; or (c)
with respect to any Pension Plan, the Borrower or any ERISA Affiliate shall fail
to pay when due, after the expiration of any applicable grace period, any
contribution required or needed in order to avoid (i) an "accumulated funding
deficiency" (as defined in Section 412 of the Code), or (ii) adverse PBGC
action;
61
or (d) $500,000 is not contributed each year among the underfunded Pension Plans
related to Star Gas Partners and its Affiliates. For purposes of clause (d), the
-----------
$500,000 amount shall be in addition to contributions necessary
to satisfy Section 412 of the Code for such year.
SECTION 9.1.7 Change in Control. Any Change in Control shall occur except
-----------------
as is permitted by Section 8.2.7.
-------------
SECTION 9.1.8 Bankruptcy, Insolvency, etc. Any of the following events
---------------------------
shall occur:
(a) filing by or on the behalf of the Managing General Partner, Star Gas
Partners, the Borrower, or any of their Subsidiaries 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 Managing General Partner, Star Gas Partners, the Borrower or any
of their Subsidiaries for, or consent or acquiescence to, the appointment of a
receiver, trustee or other custodian of the Managing General Partner, Star Gas
Partners, the Borrower or any of their Subsidiaries, or of all or a substantial
part of its property; or the making by the Managing General Partner, Star Gas
Partners, the Borrower or any of their Subsidiaries of any assignment for the
benefit of creditors; or the admission by the Managing General Partner, Star Gas
Partners, the Borrower or any of their Subsidiaries in writing of its inability
to pay its debts as they become due; or
(b) filing of any involuntary petition against the Managing General
Partner, Star Gas Partners, the Borrower or any of their Subsidiaries in
bankruptcy or seeking reorganization, arrangement, readjustment or 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 Managing General Partner, Star Gas
Partners, the Borrower or any of their Subsidiaries or over all or a part of its
property shall have been entered; or the involuntary appointment of an interim
receiver, trustee or other custodian of the Managing General Partner, Star Gas
Partners, the Borrower or any of their Subsidiaries 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 Managing
General Partner, Star Gas Partners, the Borrower or any of their Subsidiaries
and continuance of any such event for sixty (60) consecutive days unless
dismissed, bonded to the satisfaction of the court having jurisdiction in the
premises or discharged; or
(c) taking any action authorizing, or in furtherance of, any of the
foregoing by Star Gas Partners, the Borrower or any Material Subsidiary.
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SECTION 9.1.9 Impairment of Security, etc. Any of the Security Documents
---------------------------
or documents guaranteeing the Notes shall 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 a
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 have
been exhausted) of a court or other governmental or regulatory authority having
jurisdiction or the validity or enforceability thereof shall be contested by or
on behalf of the Borrower or any Material Subsidiary or the Borrower or any
Material Subsidiary shall renounce any of the same or deny that it has any or
further liability thereunder or any security interest purported to be created by
any Security Document shall cease to be, or shall be asserted by the Borrower or
any Material Subsidiary not to be, a valid, perfected, first priority (except as
expressly otherwise provided in this Agreement or such Security Document)
security interest in the collateral covered thereby.
SECTION 9.1.10 Split-Up. Any order, judgment or decree is entered in any
--------
proceeding against the Borrower decreeing a split-up of the Borrower which
requires the divestiture of assets representing a substantial part, or the
divestiture of the stock of any Material Subsidiary whose assets represent a
substantial part, of the consolidated assets of the Borrower and its Material
Subsidiaries (determined in accordance with GAAP) or which requires the
divestiture of assets, or stock of any of their Material Subsidiaries, which
shall have contributed a substantial part of the Consolidated Net Income of the
Borrower and its Material Subsidiaries for any of the three Fiscal Years then
most recently ended, and such order, judgment or decree shall not be dismissed
or execution thereon stayed pending appeal or review within sixty (60) days
after entry thereof, or in the event of such a stay, such order, judgment or
decree shall not be dismissed within sixty (60) days after such stay expires.
SECTION 9.1.11 Guarantor Defaults. Any of Star Gas Partners or any
------------------
Material Subsidiary fails in any material respect to perform or observe any
term, covenant or agreement in its Guarantee Agreement; or any Guarantee
Agreement is for any reason partially (including with respect to future
advances) or wholly revoked or invalidated, or otherwise ceases to be in full
force and effect, or any of Star Gas Partners or any Material Subsidiary or any
other Person contests in any manner the validity or enforceability thereof or
denies that it has any further liability or obligation thereunder.
SECTION 9.2 Action if Bankruptcy. If any Event of Default described in
--------------------
Section 9.1.8 shall occur, the Commitments shall automatically terminate and the
-------------
outstanding principal amount of all outstanding Loans, and all other Obligations
shall automatically be and become immediately due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Borrower.
SECTION 9.3 Action if Other Event of Default.
--------------------------------
(a) If any Event of Default (other than any Event of Default
described in Section 9.1.8) shall occur for any reason, whether voluntary
-------------
or involuntary, and be continuing, the Agent, upon the direction of the
Required Lenders, shall by notice to the Borrower:
63
(i) declare the commitment of each Lender to make Loans to be
terminated, whereupon such commitments and obligation shall be
terminated;
(ii) declare the unpaid principal amount of all outstanding
Loans, all interest accrued and unpaid thereon, and all other amounts
owing or payable hereunder or under any other Loan Document to be
immediately due and payable (including, without limitation, amounts
due under Section 5.4), without presentment, demand, protest or other
-----------
notice of any kind, all of which are hereby expressly waived by the
Borrower; and
(iii) exercise on behalf of itself and the Lenders all rights
and remedies available to it and the Lenders under the Loan Documents
or applicable law.
(b) The affirmative vote of Lenders holding at least 66-2/3% of the
outstanding principal amount of the Obligations may rescind or annul the
acceleration at any time; provided, that, all Events of Default have been
cured or waived at such time.
(c) The rights provided for in this Agreement and the other Loan
Documents are cumulative and are not exclusive of any other rights, powers,
privileges or remedies provided by law or in equity, or under any other
instrument, document or agreement now existing or hereafter arising.
ARTICLE X
THE AGENT
SECTION 10.1 Appointment and Authorization. Each Lender hereby
-----------------------------
irrevocably (subject to Section 10.9) appoints, designates and authorizes the
------------
Agent to take such action on its behalf under the provisions of this Agreement
and each other Loan Document and to exercise such powers and perform such duties
as are expressly delegated to it by the terms of this Agreement or any other
Loan Document, together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Loan Document, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall the Agent
have or be deemed to have any fiduciary relationship with any Lender, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Agent.
SECTION 10.2 Delegation of Duties. The Agent may execute any of its
--------------------
duties under this Agreement or any other Loan Document by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct of any agent or attorney-in-fact
that it selects with reasonable care.
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SECTION 10.3 Liability of Agent. None of the Agent-Related Persons shall
------------------
(a) be liable for any action taken or omitted to be taken by any of them under
or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or willful
misconduct), or (b) be responsible in any manner to any of the Lenders for any
recital, statement, representation or warranty made by Star Gas Partners, the
Borrower or any Subsidiary or Affiliate of the Borrower, or any officer thereof,
contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection with, this Agreement or any
other Loan Document, or for the value or title to any Collateral or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of the Borrower or any
other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Lender
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of the Borrower or any
of the Borrower's Subsidiaries or Affiliates.
SECTION 10.4 Reliance by Agent.
-----------------
(a) The Agent shall be entitled to rely, and shall be fully protected
in relying, upon any writing, resolution, notice, consent, certificate,
affidavit, letter, facsimile or telephone message, statement or other
document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons, and upon
advice and statements of legal counsel (including counsel to the Borrower),
independent accountants and other experts selected by the Agent. The Agent
shall be fully justified in failing or refusing to take any action under
this Agreement or any other Loan Document unless it shall first receive
such advice or concurrence of the Required Lenders as it deems appropriate
and, if it so requests, it shall first be indemnified to its satisfaction
by the Lenders against any and all liability and expense which may be
incurred by it by reason of taking or continuing to take any such action.
The Agent shall in all cases be fully protected in acting, or in refraining
from acting, under this Agreement or any other Loan Document in accordance
with a request or consent of the Required Lenders and such request and any
action taken or failure to act pursuant thereto shall be binding upon all
of the Lenders; and
(b) For purposes of determining compliance with the conditions
specified in Section 6.1, each Lender that has executed this Agreement
-----------
shall be deemed to have consented to, approved or accepted or to be
satisfied with, each document or other matter either sent by the Agent to
such Lender for consent, approval, acceptance or satisfaction, or required
thereunder to be consented to or approved by or acceptable or satisfactory
to the Lender.
SECTION 10.5 Notice of Default. The Agent shall not be deemed to have
-----------------
knowledge or notice of the occurrence of any Default or Event of Default, except
with respect to defaults in the payment of principal, interest and fees required
to be paid to the Agent for the account of the Lenders, unless the Agent shall
have received written notice from a Lender or the Borrower
65
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". The Agent will notify the
Lenders, and the Borrower of its receipt of any such notice. The Agent shall
take such action with respect to such Default or Event of Default as may be
requested by the Required Lenders in accordance with Article IX; provided,
----------
however, that unless and until the Agent has received any such request, the
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable or in the best interest of the Lenders.
SECTION 10.6 Credit Decision. Each Lender acknowledges that none of the
---------------
Agent-Related Persons has made any representation or warranty to it, and that no
act by the Agent hereinafter taken, including any review of the affairs of Star
Gas Partners, the Borrower and its Subsidiaries, shall be deemed to constitute
any representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to the Agent that it has, independently and without reliance
upon any Agent-Related Person and based on such documents and information as it
has deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Borrower and its Subsidiaries, and all applicable bank
regulatory laws relating to the transactions contemplated hereby, and made its
own decision to enter into this Agreement and to extend credit to the Borrower
hereunder. Each Lender also represents that it will, independently and without
reliance upon any Agent-Related Person and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigations as
it deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of the Borrower.
Except for notices, reports and other documents expressly herein required to be
furnished to the Lenders by the Agent, the Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of the Borrower which may come into the possession
of any of the Agent-Related Persons.
SECTION 10.7 Indemnification of Agent. Whether or not the transactions
------------------------
contemplated hereby are consummated, the Lenders shall indemnify upon demand the
Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Borrower and without limiting the obligation of the Borrower to do so), pro
rata, from and against any and all Indemnified Liabilities; provided, however,
that no Lender shall be liable for the payment to the Agent-Related Persons of
any portion of such Indemnified Liabilities resulting solely from such Person's
gross negligence or willful misconduct. Without limitation of the foregoing,
each Lender shall reimburse the Agent upon demand for its ratable share of any
costs or out-of-pocket expenses (including attorney costs) incurred by the Agent
in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that the Agent is not
reimbursed for such expenses by or on behalf of the Borrower. The undertaking in
this Section shall survive the payment of all Obligations hereunder and the
resignation or replacement of the Agent.
66
SECTION 10.8 Agent in Individual Capacity. Chase and each other Lender
----------------------------
that may become the Agent and their respective Affiliates may make loans to,
issue letters of credit for the account of, accept deposits from, acquire equity
interests in and generally engage in any kind of banking, trust, financial
advisory, underwriting or other business with the Borrower and its Subsidiaries
and Affiliates as though Chase (or such other Lender) were not the Agent or a
Lender hereunder and without notice to or consent of the Lenders. The Lenders
acknowledge that, pursuant to such activities, Chase (or such other Lender) or
their respective Affiliates may receive information regarding the Borrower or
its Affiliates (including information that may be subject to confidentiality
obligations in favor of the Borrower or such Subsidiary) and acknowledge that
the Agent shall be under no obligation to provide such information to them. With
respect to its Loans, Chase (or other Lender) shall have the same rights and
powers under this Agreement as any other Lender and may exercise the same as
though it were not the Agent.
SECTION 10.9 Successor Agent. The Agent may, and at the request of the
---------------
Required Lenders shall, resign as Agent upon thirty (30) days' notice to the
Lenders. If the Agent resigns under this Agreement, the Required Lenders shall
appoint from among the Lenders a successor agent for the Lenders. If no
successor agent is appointed prior to the effective date of the resignation of
the Agent, the Agent may appoint, after consulting with the Lenders and the
Borrower, a successor agent from among the Lenders. Upon the acceptance of its
appointment as successor agent hereunder, such successor agent shall succeed to
all the rights, powers and duties of the retiring Agent and the term "Agent"
shall mean such successor agent and the retiring Agent's appointment, powers and
duties as Agent shall be terminated. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Article X and Sections 11.4 and 11.5
--------- ------------- ----
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement. If no successor agent has accepted
appointment as Agent by the date which is thirty (30) days following a retiring
Agent's notice of resignation, the retiring Agent's resignation shall
nevertheless thereupon become effective and the Lenders shall perform all of the
duties of the Agent hereunder until such time, if any, as the Required Lenders
appoint a successor agent as provided for above. Any successor agent shall have
a market capitalization equal to or greater than $500,000,000.
SECTION 10.10 Withholding Tax.
---------------
(a) If any Lender is a "foreign corporation, partnership or trust"
within the meaning of the Code and such Lender claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the Code,
such Lender agrees with and in favor of the Agent and the Borrower, to
deliver to the Agent (with a copy to the Borrower):
(i) if such Lender claims an exemption from, or a reduction
of, withholding tax under a United States tax treaty, properly
completed IRS Forms 1001 and W-8 (or any successor forms) before the
payment of any interest in the first calendar year and before the
payment of any interest, in each third succeeding calendar year during
which interest may be paid under this Agreement;
67
(ii) if such Lender claims that interest paid under this
Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such
Lender, two properly completed and executed copies of IRS Form 4224
(or any successor form) before the payment of any interest is due in
the first taxable year of such Lender and in each succeeding taxable
year of such Lender during which interest may be paid under this
Agreement, and IRS Form W-9 (or any successor form); and
(iii) such other form or forms as may be required under the Code
or other laws of the United States as a condition to exemption from,
or reduction of, United States withholding tax.
Such Lender agrees to promptly notify the Agent and the Borrower of any change
in circumstances which would modify or render invalid any claimed exemption or
reduction.
(b) If any Lender claims exemption from, or reduction of, withholding
tax under a United States tax treaty by providing IRS Form 1001 and such
Lender sells, assigns, grants a participation in, or otherwise transfers
all or part of the Obligations of the Borrower to such Lender, such Lender
agrees to notify the Agent of the percentage amount in which it is no
longer the beneficial owner of Obligations of the Borrower to such Lender.
To the extent of such percentage amount, the Agent will treat such Lender's
IRS Form 1001 as no longer valid.
(c) If any Lender claiming exemption from United States withholding
tax by filing IRS Form 4224 with the Agent sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations of
the Borrower to such Lender, such Lender agrees to undertake sole
responsibility for complying with the withholding tax requirements imposed
by Sections 1441 and 1442 of the Code.
(d) If any Lender is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to such
Lender an amount equivalent to the applicable withholding tax after taking
into account such reduction. If the forms or other documentation required
by subsection (a) of this Section are not delivered to the Agent, then the
Agent may withhold from any interest payment to such Under not providing
such forms or other documentation an amount equivalent to the applicable
withholding tax.
(e) If the Internal Revenue Service or any other Government Authority
of the United States or other jurisdiction asserts a claim that the Agent
did not properly withhold tax from amounts paid to or for the account of
any Lender (because the appropriate form was not delivered, was not
properly executed, or because such Lender failed to notify the Agent of a
change in circumstances which rendered the exemption from, or reduction of,
withholding tax ineffective, or for any other reason) such Lender shall
indemnify the Agent fully for all amounts paid, directly or indirectly, by
the Agent as tax or otherwise, including penalties and interest, and
including any taxes imposed by any jurisdiction on the amounts payable to
the Agent under this Section, together with all costs and expenses
(including attorney costs). The obligation of the Lenders under this
68
subsection shall survive the payment of all Obligations and the resignation
or replacement of the Agent.
SECTION 10.11 Collateral Matters.
------------------
(a) The Agent is authorized on behalf of all the Lenders, without the
necessity of any notice to or further consent from the Lenders, from time
to time to take any action with respect to any Collateral or the Security
Documents which may be necessary to perfect and maintain perfected the
security interest in and Liens upon the Collateral granted pursuant to the
Security Documents.
(b) The Lenders irrevocably authorize the Agent, at its option and in
its discretion, to authorize the release of any Lien granted for the
benefit of the Agent and the Lenders upon any Collateral (i) upon
termination of the Commitments and payment in full of all Loans and all
other Obligations known to the Agent and payable under this Agreement or
any other Loan Document; (ii) constituting property sold or to be sold or
disposed of as part of or in connection with any disposition permitted
hereunder; (iii) constituting property leased to the Borrower or any
Material Subsidiary under a lease which has expired or been terminated in a
transaction permitted under this Agreement or is about to expire and which
has not been, and is not intended by the Borrower or such Material
Subsidiary to be, renewed or extended; (iv) consisting of an instrument
evidencing Indebtedness or other debt instrument, if the indebtedness
evidenced thereby has been paid in full; or (v) if approved, authorized or
ratified in writing by the Required Lenders or all the Lenders, as the case
may be, as provided in Section 11.1. Upon request by the Agent at any
------------
time, the Lenders will confirm in writing the Agent's authority to
authorize the release of particular types or items of Collateral pursuant
to this Section 10. 11 (b).
---------------
(c) Each Lender agrees with and in favor of each other (which
agreement shall not be for the benefit of the Borrower or any Subsidiary)
that the Borrower's and the other Obligors' obligations to such Lender
under this Agreement and the other Loan Documents are not and shall not be
secured by any Lien on real property collateral now or hereafter granted to
such Lender.
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.1 Waivers, Amendments, etc. The provisions of this Agreement
------------------------
and of each other Loan Document may from time to time be amended, modified or
waived, if such amendment, modification or waiver is in writing and consented to
by the Borrower and the Required Lenders; provided, however, that no such
amendment, modification or waiver which would:
69
(a) modify any requirement hereunder that any particular action be
taken by all the Lenders or by the Required Lenders shall be effective
unless consented to by each Lender;
(b) modify this Section 11.1, change the definition of "Required
------------
Lenders", increase any Commitment or the Percentage of any Lender other
than pursuant to Section 11.11.1, reduce any fees described in Article III,
--------------- -----------
release any substantial portion of collateral security, except as otherwise
specifically provided in any Loan Document, extend the Commitment
Termination Date or Stated Maturity Dates or change the interest provisions
contained in Section 3.2 shall be made without the consent of each Lender
-----------
and each holder of a Note;
(c) extend the due date for, or reduce the amount of, any scheduled
repayment or prepayment of principal of or interest on any Loan (or reduce
the principal amount of or rate of interest on any Loan) shall be made
without the consent of the holder of that Note evidencing such Loan; or
(d) affect adversely the interests, rights or obligations of the
Agent shall be made without consent of the Agent.
No failure or delay on the part of the Agent, any Lender, or the holder of any
Note in exercising any power or right under this Agreement or any other Loan
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power or right preclude any other or further exercise
thereof or the exercise of any other power or right. No notice to or demand on
the Borrower in any case shall entitle it to any notice or demand in similar or
other circumstances. No waiver or approval by the Agent, any Lender or the
holder of any Note under this Agreement or any other Loan Document shall, except
as may be otherwise stated in such waiver or approval, be applicable to
subsequent transactions. No waiver or approval hereunder shall require any
similar or dissimilar waiver or approval thereafter to be granted hereunder.
SECTION 11.2 Notices. All notices and other communications provided to
-------
any party hereto under this Agreement or any other Loan Document shall be in
writing or facsimile and addressed, delivered or transmitted to such party at
its address or by facsimile number set forth below its signature hereto or, with
respect to Persons that become Lenders after the date hereof, set forth in an
Assignment and Acceptance Agreement or at such other address or facsimile number
as may be designated by such party in a notice to the other parties. Any notice,
if mailed and properly addressed with postage prepaid or if properly addressed
and sent by pre-paid courier service, shall be deemed given when received; any
notice, if transmitted by facsimile, shall be deemed given when transmitted.
SECTION 11.3 Payment of Costs and Expenses. The Borrower agrees to pay
-----------------------------
on demand all expenses of the Agent (including the fees and out-of-pocket
expenses of counsel to the Agent and of local counsel, if any, who may be
retained by counsel to the Agent) in connection with:
70
(a) the negotiation, preparation, execution, delivery, syndication
and administration of this Agreement and of each other Loan Document,
including schedules and exhibits, and any amendments, waivers, consents,
supplements or other modifications to this Agreement or any other Loan
Document as may from time to time hereafter be required, whether or not the
transactions contemplated hereby are consummated;
(b) the filing, recording, refiling or re-recording of the Security
Agreements and/or any Uniform Commercial Code financing statements relating
thereto and all amendments, supplements and modifications to any thereof
and any and all other documents or instruments of further assurance
required to be filed or recorded or refiled or re-recorded by the terms
hereof or of the Security Agreements; and
(c) the preparation and review of the form of any document or
instrument relevant to this Agreement or any other Loan Document.
The Borrower agrees to pay to the Agent customary fees in connection with any
amendment or waiver in respect of the Loan Documents in accordance with the then
current market as determined by the Agent.
The Borrower further agrees to pay, and to save the Agent and each Lender
harmless from all liability for, any stamp or other taxes which may be payable
in connection with the execution or delivery of this Agreement, the borrowings
hereunder, or the issuance of the Notes or any other Loan Documents. The
Borrower also agrees to reimburse the Agent and each Lender upon demand for all
reasonable out-of-pocket expenses (including reasonable attorneys' fees and
legal expenses) incurred by the Agent or such Lender in connection with (x) the
negotiation of any restructuring or "work-out" whether or not consummated, of
any Obligations and (y) the enforcement of any Obligations.
SECTION 11.4 Indemnification. In consideration of the execution and
---------------
delivery of this Agreement by each Lender and the extension of the Commitments,
the Borrower hereby indemnifies, exonerates and holds the Agent and each Lender
and each of their respective officers, directors, employees and agents
(collectively, the "Indemnified Parties") free and harmless from and against any
-------------------
and all actions, causes of action, suits, losses, costs, liabilities and
damages, and expenses incurred in connection therewith (irrespective of whether
any such Indemnified Party is a party to the action for which indemnification
hereunder is sought), including reasonable attorneys' fees and disbursements
(collectively, the "Indemnified Liabilities"), incurred by the Indemnified
-----------------------
Parties or any of them as a result of, or arising out of, or relating to:
(a) any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of any Loan;
(b) the entering into and performance of this Agreement and any other
Loan Document by any of the Indemnified Parties;
71
(c) any investigation, litigation or proceeding related to any
acquisition or proposed acquisition by the Borrower or any Subsidiaries of
all or any portion of the stock or assets of any Person, whether or not the
Agent or such Lender is party thereto;
(d) any Environmental Claim or other matter relating to the
protection of the environment or the Release by the Borrower or any
Subsidiary of any Hazardous Material; or
(e) the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission, discharging or releases from, any real
property owned or operated by the Borrower or any Subsidiary of any
Hazardous Material (including any losses, liabilities, damages, injuries,
costs, expenses or claims asserted or arising under any Environmental Law),
regardless of whether caused by, or within the control of, the Borrower or
such Subsidiary,
except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the relevant Indemnified Party's gross
negligence or willful misconduct. If and to the extent that the foregoing
undertaking may be unenforceable for any reason, the Borrower hereby agrees to
make the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law.
SECTION 11.5 Survival. The obligations of the Borrower under Section 5.3,
-------- -----------
5.4, 5.5, 5.6, 11.3 and 11.4, and the obligations of the Lenders under Section
--- --- --- ---- ---- -------
10.1, shall in each case survive until the applicable statute of limitations has
----
run on the bringing of any action thereon any termination of this Agreement, the
payment in full of all Obligations and the termination of all Commitments. The
representations and warranties made by each Obligor in this Agreement and in
each other Loan Document shall survive the execution and delivery of this
Agreement and each such other Loan Document.
SECTION 11.6 Severability. Any provision of this Agreement or any other
------------
Loan Document which is prohibited or unenforceable in any jurisdiction shall, as
to such provision and such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions of
this Agreement or such Loan Document or affecting the validity or enforceability
of such provision in any other jurisdiction.
SECTION 11.7 Headings. The various headings of this Agreement and of each
--------
other Loan Document are inserted for convenience only and shall not affect the
meaning or interpretation of this Agreement or such other Loan Document or any
provisions hereof or thereof.
SECTION 11.8 Execution in Counterparts, Effectiveness, etc. This Agreement
---------------------------------------------
may be executed by the parties hereto in several counterparts, all of which
shall constitute together but one and the same agreement. This Agreement shall
become effective when counterparts hereof executed on behalf of the Borrower,
the Agent and each Lender (or notice thereof satisfactory to the Agent) shall
have been received by the Agent and notice thereof shall have
72
been given by the Agent to the Borrower and each Lender and satisfaction of the
conditions set forth in Section 6.1.
-----------
SECTION 11.9 Governing Law; Entire Agreement. THIS AGREEMENT, THE NOTES AND
-------------------------------
EACH OTHER LOAN DOCUMENT SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK. On the Effective Date,
this Agreement, the Notes, the Security Agreements and the other Loan Documents
shall constitute the entire understanding among the parties hereto with respect
to the subject matter hereof and supersede any prior agreements, written or
oral, with respect thereto.
SECTION 11.10 Successors and Assigns. This Agreement shall be binding upon
----------------------
and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that:
(a) the Borrower may not assign or transfer its rights or obligations
hereunder without the prior written consent of the Agent and all Lenders
(and any attempted or purported assignment or transfer in contravention of
the foregoing shall be null and void); and
(b) the rights of sale, assignment and transfer of the Lenders are
subject to Section 11.11.
-------------
SECTION 11.11 Sale and Transfer of Loans and Notes; Participations in its
-----------------------------------------------------------
Loans and Notes. Each Lender may assign or sell participations in, its Loans
---------------
and Commitments to one or more other Persons in accordance with this
Section 11.11.
-------------
SECTION 11.11.1 Assignments. Any Lender:
-----------
(a) with the written consents of the Borrower and the Agent (which
consents shall not be unreasonably delayed or withheld and which consent,
in the case of the Borrower, shall be deemed to have been given in the
absence of a written notice delivered by the Borrower to the Agent, on or
before the fifth (5th) Business Day after receipt by the Borrower of such
Lender's request for consent, stating, in reasonable detail, the reasons
why the Borrower proposes to withhold such consent) may at any time assign
and delegate to one or more commercial banks or other financial
institutions; provided that such consent of the Borrower shall not be
required at any time a Default has occurred and is continuing;
(b) with notice to the Borrower and the Agent, but without the
consent of the Borrower or the Agent, may assign and delegate to any of its
Affiliates or to any other Lender; and
(c) notwithstanding the foregoing, any Lender may at any time pledge
or assign a security interest in all or any portion of its rights under
this Agreement to secure obligations of such Lender, including any pledge
or assignment to secure obligations to a
73
Federal Reserve Bank, and this Section shall not apply to any such pledge
or assignment of a security interest; provided that no such pledge or
assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto;
(each Person described in either of the foregoing clauses as being the Person to
whom such assignment and delegation is to be made, being hereinafter referred to
as an "Assignee Lender"), all or any fraction of such Lender's total Loans and
---------------
Commitments which assignment shall be a pro rata portion of the assigning
Lender's Facility A Loans, Facility A Commitment, Facility B Commitment and
Facility B Loans in a minimum aggregate amount of $2,000,000; provided, however,
that any such Assignee Lender will comply, if applicable, with the provisions
contained in Section 10.10 and the last sentence of Section 5.6 and provided,
------------- -----------
further, however, that the Borrower, each other Obligor and the Agent shall be
entitled to continue to deal solely and directly with such Lender in connection
with the interests so assigned and delegated to an Assignee Lender until:
(d) written notice of such assignment and delegation, together with
payment instructions, addresses (of credit and administrative contacts) and
related information with respect to such Assignee Lender, shall have been
given to the Borrower and the Agent by such Lender and such Assignee
Lender;
(e) such Assignee Lender shall have executed and delivered to the
Borrower and the Agent an Assignment and Acceptance Agreement, accepted by
the Agent; and
(f) the processing fees described below shall have been paid.
From and after the date that the Agent accepts such Assignment and Acceptance
Agreement, (x) the Assignee Lender thereunder shall be deemed automatically to
have become a party hereto and to the extent that rights and obligations
hereunder have been assigned and delegated to such Assignee Lender in connection
with such Assignment and Acceptance Agreement, shall have the rights and
obligations of a Lender hereunder and under the other Loan Documents, and (y)
the assignor Lender, to the extent that rights and obligations hereunder have
been assigned and delegated by it in connection with such Assignment and
Acceptance Agreement, shall be released from its obligations hereunder and under
the other Loan Documents. Such Assignee Lender must also pay a processing fee
to the Agent upon delivery of any Assignment and Acceptance Agreement in the
amount of $3,500; provided, however, with respect to assignments made by a
Lender to any of its Affiliates such processing fee shall be $2,000. Any
attempted assignment and delegation not made in accordance with this Section
-------
11.11.1 shall be null and void.
-------
SECTION 11.11.2 Participations. Any Lender may at any time sell to one or
--------------
more commercial banks or other Persons (each of such commercial banks and other
Persons being herein called a "Participant") participating interests in any of
-----------
the Loans, Commitments, or other interests of such Lender hereunder, provided,
however, that:
74
(a) no participation contemplated in this Section 11.11 shall relieve
-------------
such Lender from its Commitments or its other obligations hereunder or
under any other Loan Document;
(b) such Lender shall remain solely responsible for the performance
of its Commitments and such other obligations;
(c) the Borrower, each other Obligor and the Agent shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement and each of the other Loan
Documents;
(d) no Participant, unless such Participant is an Affiliate of such
Lender, or is itself a Lender, shall be entitled to require such Lender to
take or refrain from taking any action hereunder or under any other Loan
Document, except that such Lender may agree with any Participant that such
Lender will not, without such Participant's consent, take any actions of
the type described in clauses (b) or (c) of Section 11.1; and
----------- --- ------------
(e) the Borrower shall not be required to pay any amount under
Sections 5.3, 5.4, 5.5 or 5.6 that is greater than the amount which it
------------ -------- ---
would have been required to pay had no participating interest been sold.
The Borrower acknowledges and agrees that, subject to the preceding sentence, a
Participant, for purposes of Sections 5.3, 5.4, 5.5, 5.6, 5.8, 5.9, 11.3 and
-----------------------------------------------
11.4, shall be considered a Lender.
-----------------------------------
SECTION 11.12 Other Transactions. Nothing contained herein shall preclude
--------------------------------
the Agent, or any Lender from engaging in any transaction, in addition to those
contemplated by this Agreement or any other Loan Document, with the Borrower or
any of the Borrower's Affiliates in which the Borrower or such Affiliate is not
restricted hereby from engaging with any other Person. The Lenders hereby
acknowledge that Chase is involved in other financings with Affiliates of Star
Gas Partners, the Borrower and the Material Subsidiaries (the "Other
-----
Facilities") and that Chase's decisions with respect to its exercise of rights
----------
and remedies with respect to the Other Facilities will be made independently and
as if not involved in the credit facilities provided hereunder.
75
SECTION 11.13 Forum Selection and Consent to Jurisdiction. ANY LITIGATION
-------------------------------------------
BASED ON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE AGENT, THE LENDERS OR THE BORROWER
SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW
YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NEW
YORK, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE AGENT'S OPTION, IN THE
COURTS OF AND JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND.
EACH OF STAR GAS PARTNERS AND BORROWER HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS
TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED
STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NEW YORK FOR THE PURPOSE OF
ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY
JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. EACH OF STAR GAS
PARTNERS AND THE BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS
BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT
THE STATE OF NEW YORK. THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR
HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY
SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.
SECTION 11.14 Waiver of Jury Trial. EACH OF THE AGENT, THE LENDERS AND THE
--------------------
BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF THE AGENT, THE LENDERS OR THE BORROWER THE
BORROWER ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER LOAN
DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE AGENT AND THE LENDERS ENTERING INTO THIS AGREEMENT AND EACH
SUCH OTHER LOAN DOCUMENT.
[SIGNATURE PAGE ON NEXT PAGE]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
TOTAL GAS & ELECTRIC, INC.
By:
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Treasurer
Address: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Treasurer
Copies to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Star Gas Partners, LLC
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With copies to:
▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ & Ballon LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Acknowledged and Agreed:
STAR GAS PARTNERS, L.P.
By: Star Gas LLC, its General Partner
By: ____________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
77
THE CHASE MANHATTAN BANK,
as Agent
By:_________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Title: Vice President
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Lending Office Base Rate Loans and
LIBOR Loans:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Address for Notices:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
78
BANK OF AMERICA N.A.
By:
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Managing Director
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
Mail Code TX5-383-45-02
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Lending Office Base Rate Loans and LIBOR
Loans:
Bank of America Plaza
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Mail Code TX1-492-14-12
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Address for Notices:
Bank of America Plaza
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Mail Code TX1-492-14-12
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a Copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Bank of America NT & SA
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
Mail Code TX5-383-45-02
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
79
Schedules and Exhibits Omitted
------------------------------
80