1
EXHIBIT 10.16
===============================================================================
HERITAGE OPERATING, L.P.
_______________________
NOTE PURCHASE AGREEMENT
_______________________
Dated as of November 19, 1997
===============================================================================
2
TABLE OF CONTENTS
SECTION HEADINGPAGE
SECTION 1. AUTHORIZATION OF ISSUE OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1A. INITIAL SERIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1B. SUBSEQUENT SERIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2. PURCHASE AND SALE OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2A. SERIES A NOTES AND SERIES B NOTES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2B. SUBSEQUENT NOTES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 3. CONDITIONS OF CLOSINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 3A. OPINION OF PURCHASERS' SPECIAL COUNSEL . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 3B. OTHER OPINIONS OF COUNSEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 3C. LEGAL INVESTMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 3D. REPRESENTATIONS AND WARRANTIES; NO DEFAULT . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 3E. PURCHASE PERMITTED BY APPLICABLE LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 3F. PERFORMANCE; PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 3G. SALE OF NOTES TO OTHER PURCHASERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3H. DESIGNATION OF AGREEMENT AS ADDITIONAL PARITY DEBT AGREEMENT . . . . . . . . . . . . . . 5
SECTION 3I. PAYMENT OF CLOSING FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3J. PRIVATE PLACEMENT NUMBER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3K. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 4. PREPAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 4A. SERIES A AND SERIES B REQUIRED PREPAYMENTS; MATURITY . . . . . . . . . . . . . . . . . . 5
SECTION 4B. OPTIONAL PREPAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 4C. CONTINGENT PREPAYMENTS ON DISPOSITION, LOSS OF ASSETS OR MERGER OR CHANGE OF
CONTROL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 4D. PREPAYMENT PROCEDURE FOR CONTINGENT PREPAYMENTS . . . . . . . . . . . . . . . . . . . . . 7
SECTION 4E. ALLOCATION OF SECTION 4B PAYMENTS AMONG SERIES . . . . . . . . . . . . . . . . . . . . 10
SECTION 4F. ALLOCATION OF PARTIAL PAYMENTS WITHIN A SERIES . . . . . . . . . . . . . . . . . . . . 10
SECTION 4G. NOTICE OF OPTIONAL PREPAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 4H. RETIREMENT OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 4I. NOTES NOT TO BE REISSUED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 5A. FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 5B. INFORMATION REQUIRED BY RULE 144A . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 5C. INSPECTION OF PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 5D. COVENANT TO SECURE NOTES EQUALLY . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
-i-
3
SECTION 5E. PARTNERSHIP OR CORPORATE EXISTENCE, ETC.; COMPLIANCE WITH LAWS . . . . . . . . . . . . 16
SECTION 5F. PAYMENT OF TAXES AND CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 5G. COMPLIANCE WITH ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 5H. MAINTENANCE AND SUFFICIENCY OF PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 5I. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 5J. ENVIRONMENTAL LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 5K. AFTER-ACQUIRED PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 5L. FURTHER ASSURANCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 5M. NO ACTION REQUIRING REGISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 5N. BOOKS AND ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 5O. AVAILABLE CASH RESERVES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 5P. PARITY DEBT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 5Q. SPECIAL COUNSEL OPINIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 6. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 6A. FINANCIAL RATIOS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 6B. INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 6C. LIENS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 6D. PRIORITY DEBT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 6E. LOANS, ADVANCES, INVESTMENTS AND CONTINGENT LIABILITIES . . . . . . . . . . . . . . . . 26
SECTION 6F. RESTRICTED PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 6G. CONSOLIDATION, MERGER, SALE OF ASSETS, ETC . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 6H. BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 6I. TRANSACTIONS WITH AFFILIATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 6J. SUBSIDIARY STOCK AND INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 6K. PAYMENT OF DIVIDENDS BY SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 6L. SALES OF RECEIVABLES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 6M. MATERIAL AGREEMENTS; TAX STATUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 7. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 7A. ACCELERATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 7B. RESCISSION OF ACCELERATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 7C. NOTICE OF ACCELERATION OR RESCISSION . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 7D. OTHER REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 8. REPRESENTATIONS, COVENANTS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 8A. ORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 8B. PARTNERSHIP INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 8C. QUALIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 8D. BUSINESS; FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 8E. ACTIONS PENDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 8F. CHANGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 8G. OUTSTANDING INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
-ii-
4
SECTION 8H. TITLE TO PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 8I. TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 8J. COMPLIANCE WITH OTHER INSTRUMENTS, ETC.; SOLVENCY . . . . . . . . . . . . . . . . . . . 41
SECTION 8K. GOVERNMENTAL CONSENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 8L. OFFERING OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 8M. USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 8N. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 8O. ENVIRONMENTAL COMPLIANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 8P. PRE-EMPTIVE RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 8Q. DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 8R. FEDERAL RESERVE REGULATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 8S. INVESTMENT COMPANY ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 8T. PUBLIC UTILITY HOLDING COMPANY ACT . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 8U. INTERCREDITOR AGREEMENT AND SECURITY AGREEMENT . . . . . . . . . . . . . . . . . . . . 45
SECTION 8U. CERTAIN REPRESENTATIONS OF COMPANY AND GENERAL PARTNER . . . . . . . . . . . . . . . . 45
SECTION 9. REPRESENTATIONS OF EACH PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 9A. NATURE OF PURCHASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 9B. SOURCE OF FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 9C. STATUS OF PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 9D. REPRESENTATIONS OF EACH PURCHASER TO EACH OTHER PURCHASER . . . . . . . . . . . . . . . 47
SECTION 10. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 10A. YIELD-MAINTENANCE TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 10B. OTHER TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 10C. ACCOUNTING PRINCIPLES, TERMS AND DETERMINATIONS . . . . . . . . . . . . . . . . . . . . 67
SECTION 11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 11A. NOTE PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 11B. EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 11C. CONSENT TO AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 11D. FORM, REGISTRATION, TRANSFER AND EXCHANGE OF NOTES; LOST NOTES . . . . . . . . . . . . 69
SECTION 11E. PERSONS DEEMED OWNERS; PARTICIPATIONS . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 11F. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT . . . . . . . . . . . . . 70
SECTION 11G. SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 11H. DISCLOSURE TO OTHER PERSONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 11I. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 11J. SUBSTITUTION OF WHOLLY-OWNED SUBSIDIARY . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 11K. PAYMENTS DUE ON NON-BUSINESS DAYS . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 11L. SATISFACTION REQUIREMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 11M. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
-iii-
5
SECTION 11N. SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 11O. DESCRIPTIVE HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 11P. COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 11Q. SEVERALTY OF OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 11R. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SIGNATURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
EXHIBIT A-1 -- FORM OF SERIES A NOTE
EXHIBIT A-2 -- FORM OF SERIES B NOTE
EXHIBIT A-3 -- FORM OF SUBSEQUENT NOTE
EXHIBIT B -- FORM OF SUPPLEMENTAL NOTE PURCHASE AGREEMENT
EXHIBIT C-1 -- FORM OF OPINION OF ▇▇▇▇▇▇▇ AND ▇▇▇▇▇▇
EXHIBIT C-2 -- FORM OF OPINION OF DOERNER, SAUNDERS, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
EXHIBIT C-3 -- FORM OF OPINION TO COLLATERAL AGENT FROM ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P.
EXHIBIT C-4 -- FORM OF OPINION TO COLLATERAL AGENT FROM DOERNER, SAUNDERS,
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
INITIAL PURCHASER SCHEDULE
SCHEDULE 5Q -- LIST OF SPECIAL COUNSEL
SCHEDULE 6C -- EXISTING LIENS
SCHEDULE 6E -- INVESTMENTS
SCHEDULE 8B -- SUBSIDIARIES
SCHEDULE 8C -- FOREIGN QUALIFICATION
SCHEDULE 8G -- OTHER INDEBTEDNESS
SCHEDULE 8H -- TITLE TO PROPERTIES
SCHEDULE 9B -- EMPLOYEE BENEFIT PLANS
-iv-
6
HERITAGE OPERATING, L.P.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
As of November 19, 1997
To Each of the Purchasers Named in the Initial
Purchaser Schedule Attached Hereto
Ladies and Gentlemen:
Heritage Operating, L.P., a Delaware limited partnership (the "Company")
agrees with the purchasers named in the Initial Purchaser Schedule attached
hereto (the "Initial Purchasers") as follows:
SECTION 1. AUTHORIZATION OF ISSUE OF NOTES.
The Company will authorize the issue of its senior secured promissory
notes, in an aggregate principal amount not to exceed $100,000,000. Said
senior secured promissory notes will be issued in one or more series (each a
"Series") as hereinafter provided.
Section 1A. Initial Series. The senior secured promissory notes will
initially be issued in two Series.
(i) Series A Notes. The first such series (the "Series A Notes")
will be issued in the aggregate principal amount of $12,000,000; will be dated
the date of issue; will bear interest from such date at the rate of 7.17% per
annum, payable semiannually on the 19th day of each May and November in each
year (commencing May 19, 1998) until the principal amount thereof shall become
due and payable and shall bear interest on overdue principal (including any
overdue optional prepayment of principal) and premium, if any, and, to the
extent permitted by law, on any overdue installment of interest at the rate
specified therein after the date due for payment, whether by acceleration or
otherwise, until paid; will be expressed to mature on November 19, 2009; and
will otherwise be substantially in the form attached hereto as Exhibit A-1.
(ii) Series B Notes. The second such Series (the "Series B Notes")
will be issued in the aggregate principal amount of $20,000,000; will be dated
the date of issue; will bear interest from such date at the rate of 7.26% per
annum, payable semiannually on the 19th day of each May and November in each
year (commencing May 19, 1998) until the principal amount thereof shall become
due and payable and shall bear interest on overdue principal (including any
overdue optional prepayment of principal) and premium, if any, and, to the
extent permitted by law, on any overdue installment of interest at the rate
specified therein after the date due for payment, whether by acceleration or
otherwise, until paid; will be expressed to mature on November 19, 2012; and
will otherwise be substantially in the form attached hereto as Exhibit A-2.
7
Section 1B. Subsequent Series. Subsequent Series of promissory notes
(collectively, the "Subsequent Notes") may be issued pursuant to Subsequent
Note Purchase Agreements as provided in Section 2B in an aggregate principal
amount not to exceed $68,000,000 and shall (i) be sequentially identified as
"Series C Notes", "Series D Notes", "Series E Notes" et seq.; (ii) shall be in
the aggregate principal amount; (iii) shall be dated the date; (iv) shall bear
interest from such date at the rate per annum and at the frequency; (v) shall
bear interest on overdue principal (including any overdue optional prepayment
of principal) and premium, if any, and, to the extent permitted by law, on any
overdue installment of interest at the rate; and (vi) shall be expressed to
mature on the date, all as set forth in the Supplemental Note Purchase
Agreement relating thereto and shall otherwise be substantially in the form
attached hereto as Exhibit A-3.
The Series A Notes, Series B Notes and the Subsequent Notes are herein
sometimes collectively referred to as the "Notes". As used herein, the term
"Notes" shall include each Note delivered pursuant to this Agreement at any
Closing Date and each Note delivered in substitution or exchange for any such
Note pursuant hereto. Interest on the Notes will be computed on the basis of a
360-day year of twelve 30-day months. The Notes are not subject to prepayment
or redemption at the option of the Company prior to their respective expressed
maturity dates except on the terms and conditions and in the amount and with
the premium, if any set forth, or referred to, in Section 4 of this Agreement.
The Notes will be secured by the Security Agreement. The Security Agreement
and the Notes, to the extent secured thereby, are subject to the terms of the
Intercreditor Agreement.
SECTION 2. PURCHASE AND SALE OF NOTES.
Section 2A. Series A Notes and Series B Notes. The Company hereby
agrees to sell to each Initial Purchaser and, subject to the terms and
conditions herein set forth, each Initial Purchaser agrees to purchase from the
Company the aggregate principal amount of the Series A Notes and/or Series B
Notes set opposite such Initial Purchaser's name in the Initial Purchaser
Schedule at 100% of the aggregate principal amount. The sale of the Series A
Notes and/or Series B Notes shall take place at the offices of ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m., Chicago
time, at a closing (the "Initial Closing") on November 19, 1997, or such other
date as shall be agreed upon by the Company and each Initial Purchaser. At the
Initial Closing the Company will deliver to each Initial Purchaser one or more
Series A Notes or Series B Notes, as the case may be, registered in such
Initial Purchaser's name (or in the name of its nominee), evidencing the
aggregate principal amount of Series A Notes and Series B Notes to be purchased
by said Initial Purchaser and in the denomination or denominations specified
with respect to such Initial Purchaser in the Initial Purchaser Schedule
against payment of the purchase price thereof by transfer of immediately
available funds for credit to the Company's account on the date of the Initial
Closing (the "Initial Closing Date") (as specified in a notice to each Initial
Purchaser at least three Business Days prior to the Initial Closing Date).
Section 2B. Subsequent Notes. At any time, and from time to time,
during the 365 day period immediately following the Initial Closing Date, the
Company and one or more Eligible Purchasers may enter into an agreement
substantially in the form of the
-2-
8
Supplemental Note Purchase Agreement attached hereto as Exhibit B (a
"Supplemental Note Purchase Agreement") in which the Company shall agree to
sell to each such Eligible Purchaser named on the Supplemental Purchaser
Schedule attached thereto (collectively, the "Supplemental Purchasers") and,
subject to the terms and conditions herein and therein set forth, each such
Supplemental Purchaser shall agree to purchase from the Company the aggregate
principal amount of the Series of Supplemental Notes (which series shall
aggregate not less than $5,000,000) described in said Supplemental Note
Purchase Agreement and set opposite such Supplemental Purchaser's name in the
Supplemental Purchaser Schedule attached thereto at the price and otherwise
under the terms set forth in said Supplemental Note Purchase Agreement. The
sale of the Supplemental Notes of the Series described in said Supplemental
Note Purchase Agreement will take place at the location, date and time set
forth therein at a closing (a "Supplemental Closing"). At such Supplemental
Closing the Company will deliver to each such Supplemental Purchaser one or
more Notes of the Series to be purchased by said Supplemental Purchaser
registered in such Supplemental Purchaser's name (or in the name of its
nominee), evidencing the aggregate principal amount of Notes of such Series to
be purchased by said Supplemental Purchaser and in the denomination or
denominations specified with respect to such Supplemental Purchaser in such
Supplemental Purchaser Schedule against payment of the purchase price thereof
by transfer of immediately available funds for credit to the Company's account
on the date of such Supplemental Closing (a "Supplemental Closing Date") (as
specified in a notice to each such Supplemental Purchaser at least three
Business Days prior to such Supplemental Closing Date.
SECTION 3. CONDITIONS OF CLOSINGS.
The obligation of each Initial Purchaser and Subsequent Purchaser to
purchase and pay for the Notes to be purchased by such Purchaser hereunder on a
Closing Date is subject to the satisfaction, on or before such Closing Date, of
the following conditions:
Section 3A. Opinion of Purchasers' Special Counsel. Such Purchaser
shall have received from ▇▇▇▇▇▇▇, Carton & ▇▇▇▇▇▇▇, who are acting as special
counsel for the Purchasers in connection with the transactions contemplated by
this Agreement, a favorable opinion satisfactory to such Purchaser.
Section 3B. Other Opinions of Counsel. Such Purchaser shall have
received favorable opinions from ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, special counsel for the
Company, and Doerner, Saunders, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the Company,
satisfactory to such Purchaser and substantially in the form of Exhibits C-1
and C-2, respectively, attached hereto. The Collateral Agent shall have
received favorable opinions from ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P. and Doerner, Saunders,
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ satisfactory to such Purchaser and substantially in the form
of Exhibits C-3 and C-4, respectively, attached hereto. The Company hereby
directs each of their counsel referred to in this Section 3B to deliver to the
Purchasers such opinions and letters to be delivered by it pursuant to this
Section 3B and authorizes the Purchasers to rely thereon.
-3-
9
Section 3C. Legal Investment. On such Closing Date, the purchase of
Notes to be purchased on said date shall be permitted by the laws and
regulations of each jurisdiction to which each Purchaser's investments are
subject, but without recourse to provisions (such as section 1404(b) or
1405(a)(8) of the New York Insurance Law) permitting limited investments by
insurance companies in securities not otherwise legally eligible for
investment. If requested by a Purchaser by adequate prior written request to
the Company, such Purchaser shall have received an Officer's Certificate of the
Company certifying as to such matters of fact as such Purchaser may reasonably
specify to enable such Purchaser to determine whether such purchase is still so
permitted.
Section 3D. Representations and Warranties; No Default. (i) The
representations and warranties of the Company contained in this Agreement
(including, without limitation, Section 8) and the Parity Debt Designation and
those otherwise made in writing by or on behalf of the Company pursuant to this
Agreement and the Parity Debt Designation shall be true and correct when made
and on and as of such Closing Date, except to the extent (a) of changes caused
by the transactions herein contemplated and (b) that such representations and
warranties expressly relate to an earlier time or date, in which case such
representations and warranties shall have been true and correct as of such
earlier time or date.
(ii) There shall exist on such Closing Date, immediately after giving
effect to the issuance and sale of the Notes to be sold on such date, no
Default or Event of Default hereunder or under the Financing Documents or
default by the Company under the Partnership Agreement.
(iii) The Company shall have delivered to such Purchaser an Officer's
Certificate, dated such Closing Date,with respect to clauses (i) and (ii)
hereto.
Section 3E. Purchase Permitted by Applicable Laws. The purchase of
and payment for the Notes to be purchased by such Purchaser on such Closing
Date on the terms and conditions herein, and in the applicable Supplemental
Note Purchase Agreement, provided (including the use of the proceeds of such
Notes by Company) shall not violate any applicable law or governmental
regulation (including, without limitation, Section 5 of the Securities Act or
Regulation G, T or X of the Board of Governors of the Federal Reserve System)
and shall not subject such Purchaser to any tax, penalty, liability or other
onerous condition under or pursuant to any applicable law or governmental
regulation, and such Purchaser shall have received such certificates or other
evidence as it may request to establish compliance with this condition.
Section 3F. Performance; Proceedings. (i) The Company shall have
performed and complied in all material respects with all agreements and
covenants contained in this Agreement (including the applicable Supplemental
Note Purchase Agreement) required to be performed or complied with by it prior
to or at such Closing.
(ii) All proceedings taken or to be taken in connection with the
transactions contemplated hereby and all documents incident thereto shall be
satisfactory in substance and form to such Purchaser, and such Purchaser shall
have received all such additional
-4-
10
certificates and all such counterpart originals or certified or other copies of
such documents as it may reasonably request.
Section 3G. Sale of Notes to Other Purchasers. The Company shall have
sold to the other Purchasers, if any, participating in such Closing the Notes
to be purchased by them at such Closing and shall have received payment in full
therefor.
Section 3H. Designation of Agreement as Additional Parity Debt
Agreement. The Company shall have caused the Agreement to constitute an
"Additional Parity Debt Agreement" and the Notes to constitute "Additional
Parity Debt" all under the Intercreditor Agreement.
Section 3I. Payment of Closing Fees. The Company shall have paid the
fees and disbursements of the Purchasers' special counsel required by Section
11B to be paid by the Company on such Closing Date.
Section 3J. Private Placement Number. The Company shall have
obtained, for the Series of Notes being issued on such Closing Date, a Private
Placement Number issued by Standard & Poor's CUSIP Service Bureau (in
cooperation with the Securities Valuation Office of the National Association of
Insurance Commissioners).
Section 3K. Insurance. Such Purchaser shall have received from the
Company a summary description of all insurance policies, fidelity bonds or
other insurance service contracts providing coverage for the Business.
SECTION 4. PREPAYMENTS.
The Notes shall be subject to prepayment only (a) pursuant to the
required prepayments, if any, specified in Section 4A (with respect to the
Series A and Series B Notes), the applicable Supplemental Note Purchase
Agreement (with respect to each Series of Subsequent Notes), and Section 4C
(with respect to all Notes without regard to Series); and (b) pursuant to the
optional prepayments permitted by Section 4B (with respect to all Notes without
regard to Series).
Section 4A. Series A and Series B Required Prepayments; Maturity. (i)
Series A Notes. Until the Series A Notes shall be paid in full, the Company
shall apply to the prepayment of the Series A Notes, without premium, the sum
of $2,400,000 (or, if less, the principal amount of the Series A Notes as shall
at the time be outstanding) on November 19 in each of the years 2005 to 2009,
inclusive, and such principal amounts of the Series A Notes, together with
interest thereon to the prepayment dates, shall become due on such prepayment
dates, provided, however, that if the Company shall prepay all or any portion
of the Notes pursuant to Section 4B or 4C, or acquire any Series A Notes
pursuant to the provisions of Section 4H, each of the principal amount payable
at maturity and the principal amount of each required prepayment of the Series
A Notes becoming due under this Section 4A on and after the date of such
prepayment or purchase shall be reduced in the same proportion as the aggregate
unpaid principal amount of the Series A Notes is reduced
-5-
11
as a result of such prepayment or acquisition. The remaining outstanding
principal amount of the Series A Notes, together with all interest accrued on
the Series A Notes, shall become due and payable on November 19, 2009.
(ii) Series B Notes. Until the Series B Notes shall be paid in full,
the Company shall apply to the prepayment of the Series B Notes, without
premium, the sum of $2,000,000 (or, if less, the principal amount of the Series
B Notes as shall at the time be outstanding) on November 19 in each of the
years 2003 to 2011, inclusive, and such principal amounts of the Series B
Notes, together with interest thereon to the prepayment dates, shall become due
on such prepayment dates, provided, however, that if the Company shall prepay
all or any portion of the Notes pursuant to Section 4B or 4C, or acquire any
Series B Notes pursuant to the provisions of Section 4H, each of the principal
amount payable at maturity and the principal amount of each required prepayment
of the Series B Notes becoming due under this Section 4A on and after the date
of such prepayment or purchase shall be reduced in the same proportion as the
aggregate unpaid principal amount of Series B Notes is reduced as a result of
such prepayment or acquisition. The remaining outstanding principal amount of
the Series B Notes, together with all interest accrued on the Series A Notes,
shall become due and payable on November 19, 2012.
Section 4B. Optional Prepayment. All Notes shall be subject to
prepayment, in whole at any time or from time to time in part (in multiples of
$5,000,000 or, if less than $5,000,000, the principal amount of the Notes as
shall be outstanding at the time of such partial prepayment), at the option of
the Company, at 100% of the principal amount so prepaid plus interest thereon
to the prepayment date and the Yield Maintenance Amount, if any, with respect
to each Note.
Section 4C. Contingent Prepayments on Disposition, Loss of Assets or
Merger or Change of Control. (i) If at any time the Company or any of its
Subsidiaries disposes of assets or issues or sells Capital Stock of any
Subsidiary with the result that there are Excess Sale Proceeds, and the Company
does not apply such Excess Sale Proceeds in the manner described in Section
6G(iii)(c)(II)(x), the Company will offer to prepay (at the price specified
below and upon notice as provided in Section 4D) a principal amount of the
outstanding Notes equal to the Allocable Proceeds.
(ii) In the event of any damage to, or destruction, condemnation or
other taking of, all or any portion of the properties or assets of the Company
or any of its Subsidiaries, to the extent that the Company or any such
Subsidiary receives insurance or condemnation proceeds with the result that
Unutilized Taking Proceeds exceed $2,500,000 in respect of any fiscal year
(such excess amount being herein called "Excess Taking Proceeds"), the Company
will offer to prepay (at the price specified in clause (v) of this Section 4C
below and upon notice as provided in Section 4D) a principal amount of the
outstanding Notes equal to the Allocable Proceeds.
(iii) (a) If at any time any Responsible Officer has knowledge of the
occurrence of any Control Event, the Company will give notice as provided in
Section 4D of such Control Event to each holder of Notes. Such notice shall
contain and constitute an offer to prepay
-6-
12
all, but not less than all, of the Notes held by each holder. Upon the
occurrence of a Control Event, the Company will not take any voluntary action
that consummates or finalizes the Change of Control resulting from such Control
Event unless contemporaneously with such action, the Company prepays all Notes
required to be prepaid in accordance with this Section 4C and Section 4D.
(b) The obligation of the Company to prepay Notes pursuant to the
offer required by paragraph (a) of this clause (iii) and accepted in accordance
with Section 4D is subject to the consummation of the Change of Control in
respect of which any such offer and acceptance shall have been made. In the
event that such Change of Control does not occur on or before the proposed
prepayment date in respect thereof, the prepayment shall be deferred until and
shall be made on the date on which such Change of Control occurs. The Company
shall keep each holder of Notes reasonably and timely informed of (I) any such
deferral of the date of prepayment, (II) the date on which such Change of
Control and the prepayment are expected to occur, and (III) any determination
by the Company that efforts to effect such resulting Change of Control have
ceased or been abandoned (in which case any offer and acceptance made pursuant
to this Section 4C in respect of such Change of Control shall be deemed
rescinded).
(iv) Each such offer to prepay the Notes pursuant to Section 4C(i)
shall be made (a) to the extent such prepayment represents all or a portion of
an amount equal to $7,500,000 in the aggregate in respect of any fiscal year or
$12,500,000 in the aggregate for all fiscal years of unapplied Excess Sale
Proceeds and Excess Taking Proceeds (such unapplied amounts being herein
called, "Excess Proceeds"), at a price equal to 100% of the principal amount of
the Notes to be prepaid, plus interest thereon to the prepayment date, and (b)
to the extent such prepayment represents such Excess Proceeds in excess of the
$7,500,000 in the aggregate for any fiscal year or $12,500,000 in the aggregate
for all fiscal years, at a price equal to 100% of the principal amount of the
Notes to be prepaid, plus interest thereon to the prepayment date plus the
Yield-Maintenance Amount, if any, thereon.
(v) Each offer to prepay the Notes pursuant to Section 4C(iii) shall
be made at a price equal to the principal amount of the Notes to be prepaid,
plus interest thereon to the prepayment date plus a premium of 1% of the
principal amount to be so prepaid.
Section 4D. Prepayment Procedure for Contingent Prepayments. (i) If
at any time there are Excess Proceeds, and the Company is required to offer to
prepay the Notes with such Excess Proceeds pursuant to clause (i) or (ii) of
Section 4C, the Company will give written notice as provided in Section 11I
(which shall be in the form of an Officers' Certificate) to the holders of the
Notes not later than twelve months after the date of the applicable Asset Sale
or the end of the twelve month period following receipt of the applicable
Unutilized Taking Proceeds, as the case may be, stating that any holder failing
to elect not to accept the offer shall be deemed to have accepted such offer
and (a) setting forth in reasonable detail all calculations required to
determine the amount of Excess Proceeds and the Yield-Maintenance Amount, if
any, (b) setting forth the aggregate amount of the Allocable Proceeds and the
amount of the Allocable Proceeds which is allocable to each Note, determined by
applying the Allocable Proceeds pro rata among all Notes outstanding
-7-
13
on the date such prepayment is to be made according to the aggregate then
unpaid amounts of the Notes, and in reasonable detail the calculations used in
determining such amounts, and (c) stating that the Company irrevocably offers
to prepay on the date specified in such notice, which shall not be less than 25
nor more than 45 days after the date of such notice, a principal amount of each
outstanding Note equal to the amount of Allocable Proceeds allocated to such
Note as described in paragraph (b) above, plus such Note's share of the
Allocable Proceeds allocable to any other Note the holder of which elects on a
timely basis not to accept the Company's offer (collectively, the "Non-
Accepting Holders"), all in accordance with the procedures set forth in this
Section 4D. Such notice shall also indicate that any Accepting Holder that
fails to elect not to accept the Pro Rata Option shall be deemed to have
accepted such option as set forth below.
(ii) If at any time the Company is required to offer to prepay the
Notes following the occurrence of a Control Event which could result in a
Change in Control, the Company will give written notice as provided in Section
11I (which shall be in the form of an Officers' Certificate) to the holders of
the Notes not later than ten business days following such Control Event,
stating that any holder failing to elect not to accept the offer shall be
deemed to have accepted such offer and (a) setting forth in reasonable detail
the facts and circumstances underlying such Control Event known to it, and (b)
stating that the Company irrevocably offers to prepay on the date specified in
such notice, which shall be not less than 25 nor more than 45 days after the
date of such notice, at the price specified in clause (v) of Section 4C, each
outstanding Note, all in accordance with the procedures set forth in this
Section 4D.
(iii) Each holder of a Note electing not to accept an offer to prepay
given pursuant to this Section 4D shall make such election by notice delivered
to the Company at least 10 days prior to the date of prepayment specified in
the notice given by the Company pursuant to clause (i) or (ii) of this Section
4D. Each other holder of a Note (collectively, the "Accepting Holders") shall
be deemed to accept the Company's offer with respect to prepayment of such
Note. In the case of a notice given by the Company pursuant to clause (i) of
this Section each Accepting Holder shall be deemed to have accepted the
Company's offer to the extent of its Allocable Proceeds and shall be deemed to
have accepted an agreement (the "Pro Rata Option") to have prepaid, in addition
to the Allocable Proceeds allocable to such Note (up to the total Allocable
Proceeds), all or any part of the balance of the principal amount of such Note
using the Allocable Proceeds that would have been paid to the Non-Accepting
Holders; provided that any Accepting Holder may elect not to agree to the Pro
Rata Option by notice delivered to the Company at least 5 days prior to the
date of prepayment specified in the notice given by the Company pursuant to
clause (i) of this Section 4D.
(iv) Upon receipt of all timely notices from Non-Accepting Holders and
Accepting Holders pursuant to clause (iii) of this Section 4D, the Company
shall give written notice as provided in Section 11I (which shall be in the
form of an Officers' Certificate) to the holders of the Notes setting forth (a)
the names of each Accepting Holder and each Non-Accepting Holder, (b) the
principal amounts of the Notes of such Accepting Holders and Non-Accepting
Holders affected by the Company's offer of prepayment, (c) in the case of a
-8-
14
notice given by the Company pursuant to clause (i) of this Section 4D, if there
shall be any Allocable Proceeds remaining in addition to the amounts so to be
prepaid, the principal amounts of the Notes as to which such Accepting Holders
shall have exercised their Pro Rata Options together with a calculation of each
Accepting Holder's Pro Rata Option in accordance with clause (v) of this
Section 4D and (d) after giving effect to the prepayment contemplated by clause
(v) of this Section 4D in respect of such offer, the reduced amount of each
required payment thereafter becoming due with respect to the Notes under
Section 4A and upon the maturity thereof, specifying how each such amount was
determined, and certifying that such reduction has been computed in accordance
with such Section.
(v) Upon receipt of all timely notices from Non-Accepting Holders and
Accepting Holders pursuant to clause (iii) of this Section 4D, the Company
shall, in the case of a notice given by the Company pursuant to clause (i) of
this Section 4D. allocate that portion of the Allocable Proceeds that had been
allocated to the Notes of such Non-Accepting Holders among the Notes of
Accepting Holders in proportion to the respective Allocable Proceeds allocable
to the Notes of Accepting Holders (after giving effect to any Pro Rata Option).
Where the portion of the Allocable Proceeds thus allocated to the Note of an
Accepting Holder would exceed the maximum principal amount of such Note which
such Accepting Holder has agreed to have prepaid (including, without
limitation, pursuant to a Pro Rata Option), such excess shall be allocated
among the Notes of Accepting Holders who have agreed to accept prepayments
(including, without limitation, pursuant to a Pro Rata Option) in amounts which
still exceed the amount of prepayments previously allocated to them pursuant to
this Section 4D in proportion to the respective Allocable Proceeds allocable to
the Notes of such Accepting Holders (after giving effect to any Pro Rata
Option); and such allocation shall be repeated as many times as shall be
necessary until (a) the Allocable Proceeds have been fully allocated or (b) it
is no longer possible to allocate the Allocable Proceeds without exceeding the
maximum principal amounts of Notes which all Accepting Holders respectively
have agreed to have prepaid (including, without limitation, pursuant to all the
Pro Rata Options).
(vi) The principal amount of any Notes with respect to which an offer
to prepay pursuant to this Section 4D has been made and not rejected shall
become due and payable on the date specified in the notice of such offer given
by the Company pursuant to clause (i) or (ii), as the case may be, of this
Section 4D. In the case of a notice given by the Company pursuant to clause
(i) of this Section 4D, it is understood that all Allocable Proceeds not
applied to the prepayment of the Notes or to the payment of Parity Debt
pursuant to Section 4C and this Section 4D shall constitute amounts included
within clause (x) of the definition of "Unused Proceeds Reserve."
(vii) Each holder of a Note shall receive, not more than two Business
Days prior to the date scheduled for any prepayment pursuant to this Section
4D, an Officers' Certificate (i) certifying that the conditions of this Section
4D have been fulfilled with respect to such prepayment and specifying the
particulars of such fulfillment. including, without limitation, in reasonable
detail the calculations used in computing the amount of the prepayment in
respect of the Notes and the appropriate Premium (together with, in the case of
a calculation
-9-
15
of any Yield-Maintenance Amount, copies of the source of market data by
reference to which the Reinvestment Yield was determined) with respect thereto,
and (ii) in the case of any such prepayment that is a partial prepayment of the
Notes setting forth (a) the principal amount to be prepaid with respect to each
of the Notes and specifying how each such amount was determined and (b) after
giving effect to such partial prepayment the reduced amount to be prepaid with
respect to each required payment thereafter becoming due with respect to the
Notes under Section 4A and upon the maturity thereof, specifying how each such
amount was determined, and certifying that such reduction has been computed in
accordance with such Section. If for any reason the holder of a Note so to be
prepaid by written notice to the Company objects to such calculation of the
Yield-Maintenance Amount, the Company shall notify all other holders of Notes
so to be prepaid of such objection. If, after any such notice and objection, a
calculation of the Yield-Maintenance Amount shall be approved by the Required
Holders of the Notes to be prepaid and specified in a written notice provided
to the Company and the holders of such Notes, such calculation shall be final
and binding upon the Company and the holders of the Notes absent manifest
error.
Section 4E. Allocation of Section 4B Payments among Series. Upon any
partial prepayment of the Notes pursuant to Section 4B,
(x) during any period in which neither a Default nor an Event
of Default shall exist, the Company may allocate the principal amount to
be prepaid among the various Series of then outstanding Notes in any
manner which it, in its sole discretion, may elect, and
(y) during any period in which a Default or an Event of
Default shall exist, the principal amount to be prepaid shall be applied
on all outstanding Notes, without regard to Series, ratably in
accordance with the unpaid principal amounts thereof.
Section 4F. Allocation of Partial Payments within a Series. Upon any
partial prepayment of the Notes of any Series, the principal amount so prepaid
with respect to such Series shall be allocated to all Notes of such Series at
the time outstanding in proportion to the respective outstanding principal
amounts thereof, provided, that in the case of any prepayment of less than all
of the Notes pursuant to Section 4C, the principal amount of the Notes to be
prepaid will be allocable to the Notes to be prepaid as provided in Section 4C.
Section 4G. Notice of Optional Prepayment. The Company shall give the
holder of each Note of a Series then to be prepaid irrevocable written notice
as provided in Section 11I of any prepayment pursuant to Section 4B not less
than 30 days and not more than 60 days prior to the prepayment date, stating
that such prepayment is to be made pursuant to Section 4B and specifying (i)
such prepayment date, (ii) the principal amount of the Notes of such Series,
and of the Notes of such Series held by such holder, to be prepaid on such
date, and (iii) a calculation of the estimated Yield-Maintenance Amount, if
any, with respect to such repayment. Notice of prepayment having been given as
aforesaid, the principal amount of the Notes of such Series specified in such
notice, together with interest thereon to the prepayment date, and the
Yield-Maintenance Amount with respect thereto, shall become due and payable on
such prepayment date. The Company shall, on or
-10-
16
before the day on which it gives written notice of any prepayment pursuant to
Section 4B, give telephonic notice (confirmed in writing by facsimile
transmission or overnight courier) of the principal amount of the Notes of such
Series to be prepaid and the prepayment date to each holder which shall have
designated a recipient of such notices in the Purchaser Schedule applicable to
such Series or by notice in writing to the Company. In addition, each holder
of a Note of such Series shall receive, at least 2 Business Days prior to the
date scheduled for any such prepayment, an Officers' Certificate (i) certifying
that the conditions of Section 4B have been fulfilled and specifying the
particulars, including, without limitation, a calculation in reasonable detail
of the Yield-Maintenance Amount with attached copies of the source of market
data by reference to which the Reinvestment Yield was determined, of such
fulfillment and (ii) in the case of any such prepayment that is a partial
prepayment of the Notes of such Series, setting forth (a) the principal amount
to be prepaid with respect to each of the Notes of such Series and specifying
how each such amount was determined, and (b) after giving effect to such
partial prepayment the reduced amount to be prepaid with respect to each
required payment thereafter becoming due with respect to the Notes of such
Series under Section 4A, or the Supplemental Note Purchase Agreement pursuant
to which the Notes of such Series were issued, and upon the maturity thereof,
specifying how each such amount was determined, and certifying that such
reduction has been computed in accordance with such Section. If for any reason
the holder of a Note so to be prepaid, by written notice to the Company,
objects to such calculation of the Yield-Maintenance Amount, the Company shall
notify all other holders of Notes of such Series so to be prepaid of such
objection. If after any such notice and objection, a calculation of the Yield-
Maintenance Amount shall be approved by the holder or holders of at least 51%
of the aggregate principal amount of the Notes of such Series at the time
outstanding and specified in a written notice provided to the Company and the
other holders of the Notes of such Series, such calculation shall be final and
binding upon the Company and the holders of the Notes of such Series absent
manifest error.
Section 4H. Retirement of Notes. The Company shall not, and shall not
permit any of its Subsidiaries or Affiliates to, prepay or otherwise retire in
whole or in part prior to their stated final maturity (other than by prepayment
pursuant to Section 4A, 4B, 4C or the provisions of a Supplemental Note
Purchase Agreement or upon acceleration of such final maturity pursuant to
Section 7A), or purchase or otherwise acquire, directly or indirectly, Notes of
any Series held by any holder, unless the Company or such Subsidiary or
Affiliate shall have offered to prepay or otherwise retire or purchase or
otherwise acquire, as the case may be, the same proportion of the aggregate
principal amount of Notes of such Series held by each other holder of Notes of
such Series at the time outstanding, upon the same terms and conditions and
such offer shall remain open for a period of at least 20 Business Days;
provided that (x) neither the Company nor any of its Affiliates or Subsidiaries
shall make any such offer to prepay, redeem, retire, purchase or acquire Notes
of any Series at a price of less than 100% of the principal amount thereof and
(y) at the time of such offer and purchase no Default or Event of Default shall
have occurred and be continuing.
Section 4I. Notes Not to be Reissued. Any Notes prepaid or otherwise
retired or purchased or otherwise acquired by the Company or any of its
Subsidiaries or Affiliates
-11-
17
shall not be deemed to be outstanding for any purpose under this Agreement and
shall not be reissued.
SECTION 5. AFFIRMATIVE COVENANTS.
The Company hereby covenants and agrees that, from the Initial Closing
and thereafter so long as any of the Notes remain unpaid, it will perform and
comply with the terms and provisions of this Section 5.
Section 5A. Financial Statements. The Company will maintain, and will
cause each of its Subsidiaries to maintain, a system of accounting established
and administered in accordance with GAAP. The Company covenants that it will
deliver to each Purchaser, so long as such Purchaser or its nominee shall be
the holder of any Note, and to each other holder, in triplicate:
(i) as soon as practicable and in any event within 50 days
after the end of each quarterly period in each fiscal year, consolidated
statements of income, partners' capital and cash flows of the Company
and its Subsidiaries for such quarterly period and (in the case of the
second and third quarterly periods) for the period from the beginning of
the current fiscal year to the end of such quarterly period, and
consolidated balance sheets of the Company and its Subsidiaries as at
the end of such quarterly period, setting forth in each case, in
comparative form figures for the corresponding period in the preceding
fiscal year, all in reasonable detail and satisfactory in form to the
Required Holder(s) and certified by an authorized financial officer of
the Company as presenting fairly, in all material respects, the
information contained therein (except for the absence of footnotes and
subject to changes resulting from normal year-end adjustments), in
accordance with GAAP; provided, however, that at any time when the
Master Partnership shall be subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act delivery within the time period
specified above of copies of the Quarterly Report on Form 10-Q of the
Master Partnership for such quarterly period filed with the Commission
shall be deemed to satisfy the requirements of this clause (i) if (x)
the Consolidated Net Income of the Company and its Subsidiaries accounts
for at least 95% of the net income of the Master Partnership for such
quarterly period, and (y) all such statements required to be delivered
pursuant to this clause (i) with respect to the Company and its
Subsidiaries are either included in such Form 10-Q or delivered
separately by the Company together with such Form 10-Q;
(ii) as soon as practicable and in any event within 95 days
after the end of each fiscal year, consolidated and consolidating
statements of income and cash flows and a consolidated and consolidating
statement of partners' capital (or stockholders' equity, as applicable)
of the Company and its Subsidiaries for such year, and consolidated and
consolidating balance sheets of the Company and its Subsidiaries, as at
the end of such year, setting forth in each case, in comparative form
corresponding consolidated and, where applicable, consolidating figures
from the preceding annual audit, all in reasonable detail and, as to the
consolidated statements, reported on by
-12-
18
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, or other independent public accountants of
recognized national standing selected by the Company whose report shall
be without limitation as to the scope of the audit and, as to the
consolidating statements, certified by an authorized financial officer
of the Company as presenting fairly, in all material respects, the
information contained therein, in accordance with GAAP (except, in the
case of such consolidating financial statements, for the absence of
footnotes); provided, however, that at any time when the Master
Partnership shall be subject to the reporting requirements of Section 13
or 15(d) of the Exchange Act delivery within the time period specified
above of copies of the Annual Report on Form 10-K of the Master
Partnership for such fiscal year prepared in compliance with the
requirements therefor and filed with the Commission shall be deemed to
satisfy the requirements of this clause (ii) if (x) the Consolidated Net
Income of the Company and its Subsidiaries accounts for at least 95% of
the net income of the Master Partnership for such fiscal year, and (y)
all such statements required to be delivered pursuant to this clause
(ii) with respect to the Company and its Subsidiaries are either
included in such Form 10-K and such reports or delivered separately by
the Company together with such Form 10-K and such reports;
(iii) promptly upon receipt thereof by the Company, copies of
all reports submitted to the Company by independent public accountants
in connection with each special, annual or interim audit of the books of
the Company or any Subsidiary thereof made by such accountants,
including without limitation the comment letter submitted by each such
accountant to management in connection with their annual audit;
(iv) promptly upon transmission thereof, copies of (a) all
financial statements, proxy statements, notices and reports as the
Company or the Master Partnership shall send or make available to the
public holders of Units of the Master Partnership, (b) all registration
statements (without exhibits), all prospectuses and all reports which
the Company or the Master Partnership files with the Commission (or any
governmental body or agency succeeding to the functions of the
Commission), (c) all press releases and other similar written statements
made available by the Company or the Master Partnership to the public
concerning material developments in the business of the Company or the
Master Partnership, as the case may be, and (d) all reports, notices and
other similar written statements sent or made available by the Company
or the Master Partnership to any holder of its Indebtedness pursuant to
the terms of any agreement, indenture or other instrument evidencing
such Indebtedness, including without limitation the Credit Agreement,
except to the extent the same substantive information is already being
provided pursuant to this Section 5A;
(v) as soon as reasonably practicable, and in any event within
5 Business Days after a Responsible Officer obtains knowledge that any
Default or Event of Default has occurred, a written statement of such
Responsible Officer setting forth details of such Default or Event of
Default and the action which the Company has taken, is taking and
proposes to take with respect thereto;
-13-
19
(vi) as soon as reasonably practicable, and in any event within
5 Business Days after a Responsible Officer obtains knowledge of (a) the
occurrence of an adverse development with respect to any litigation or
proceeding involving the Company or any of its Subsidiaries which in the
reasonable judgment of the Company could reasonably be expected to have
a Material Adverse Effect or (b) the commencement of any litigation or
proceeding involving the Company or any of its Subsidiaries which in the
reasonable judgment of the Company could reasonably be expected to have
a Material Adverse Effect, a written notice of such Responsible Officer
describing in reasonable detail such commencement of, or adverse
development with respect to, such litigation or proceeding;
(vii) as soon as possible after, and in any event within 10
Business Days after any Responsible Officer of the Company or any ERISA
Affiliate knows or has reason to know that any ERISA Event has occurred
or is expected to occur that, alone or together with any other ERISA
Events that have occurred, in the opinion of the principal financial
officer of the Company could reasonably be expected to result in
liability of the Company in an aggregate amount exceeding $2,000,000, a
statement setting forth a detailed description of such ERISA Event and
the action, if any, that the Company or any ERISA Affiliate has taken,
is taking or proposes to take or cause to be taken with respect thereto
(together with a copy of any notice, report or other written
communication filed with or given to or received from the PBGC, the
Internal Revenue Service or the Department of Labor with respect to such
event or condition);
(viii) as soon as reasonably practicable, and in any event within
five Business Days after a Responsible Officer obtains knowledge of a
violation or alleged violation of any Environmental Law or the presence
or release of any Hazardous Substance within, on, from, relating to or
affecting any property, which in the reasonable judgment of the Company
could reasonably be expected to have a Material Adverse Effect, notice
thereof, and upon request, copies of relevant documentation;
(ix) together with each delivery of financial information
pursuant to clause (i) or clause (ii) of this Section 5A, a statement
setting forth, together with computations in reasonable detail, the
amount of Available Cash as of the date of the balance sheet contained
therein and the amounts of all Net Proceeds, Excess Sale Proceeds,
Unutilized Taking Proceeds and Unused Proceeds Reserves held by the
Company at the end of the applicable quarterly period or fiscal year, as
the case may be;
(x) as soon as reasonably practicable, and in any event within
5 Business Days after a Responsible Officer obtains knowledge that the
holder of any Note has given any notice to the Company or any Subsidiary
thereof or taken any other action with respect to a claimed Default or
Event of Default under this Agreement or any other Financing Document,
or that any Person has given any notice to the Company or any such
Subsidiary or taken any other action with respect to a claimed default
or event or condition of the type referred to in Section 7A(iii), a
written statement of such Responsible Officer describing such notice or
other action in reasonable detail and the
-14-
20
action which the Company has taken, is taking and proposes to take with
respect thereto;
(xi) within 45 days after the end of each calendar year,
commencing with the year ending December 31, 1997, a report prepared by
the Company or its broker or agent (a) setting forth the insurance
maintained pursuant to Section 5I, substantially in the form referred to
in Section 3L, and including, without limitation, the amounts thereof,
the names of the insurers and the property, hazards and risks covered
thereby, and certifying that all premiums with respect to the policies
described in such report then due thereon have been paid and that the
same are in full force and effect, (b) setting forth all self-insurance
maintained by the Company pursuant to Section 5I and (c) certifying that
such insurance or self insurance complies with the requirements of such
Section; and
(xii) with reasonable promptness, such other information and
data (financial or other) as from time to time may be reasonably
requested by any holder of Notes.
Together with each delivery of financial statements required by clauses
(i) and (ii) above, the Company will deliver to each holder of Notes an
Officers' Certificate (I) stating that the signers have reviewed the terms of
this Agreement and the other Financing Documents, and have made, or caused to
be made under their supervision, a review in reasonable detail of the
transactions and condition of the Company and its Subsidiaries during the
accounting period covered by such financial statements, and that no Default or
Event of Default has occurred and is continuing, or, if any such Default or
Event of Default then exists, specifying the nature and approximate period of
existence thereof and what action the Company has taken or is taking or
proposes to take with respect thereto, (II) specifying the amount available at
the end of such accounting period for Restricted Payments in compliance with
Section 6F and showing in reasonable detail all calculations required in
arriving at such amount, (III) demonstrating (with computations in reasonable
detail) compliance at the end of such accounting period by the Company and its
Subsidiaries with the provisions of Sections 4C, ▇▇, ▇▇, ▇▇, ▇▇, ▇▇(▇),
▇▇(▇)(▇), ▇▇(▇)(▇), 6G(iii) and 6L, and (IV) if not specified in the related
financial statements being delivered pursuant to clauses (i) and (ii) above,
specifying the aggregate amount of interest paid or accrued by, and aggregate
rental expenses of, the Company and its Subsidiaries, and the aggregate amount
of depreciation, depletion and amortization charged on the books of the Company
and its Subsidiaries, during the fiscal period covered by such financial
statements.
Together with each delivery of financial statements required by clause
(ii) above, the Company will deliver a certificate of such accountants stating
that they have reviewed the terms of this Agreement and the other Financing
Documents and that in making the audit necessary for their report on such
financial statements, they have obtained no knowledge of any Event of Default
or Default, or, if they have obtained knowledge of any Event of Default or
Default, specifying the nature and period of existence thereof. Such
accountants, however, shall not be liable to anyone by reason of their failure
to obtain knowledge of any Event of Default or Default which would not be
disclosed in the course of an audit conducted in accordance with generally
accepted auditing standards.
-15-
21
Section 5B. Information Required by Rule 144A. The Company will, upon
the request of a holder of any Note, provide such holder, and any qualified
institutional buyer designated by such holder, such financial and other
information as such holder may reasonably determine to be necessary in order to
permit compliance with the information requirements of Rule 144A under the
Securities Act in connection with the resale of Notes, except at such times as
the Company is subject to the reporting requirements of Section 13 or 15(d) of
the Exchange Act. For the purpose of this Section 5B, the term "qualified
institutional buyer" shall have the meaning specified in Rule 144A under the
Securities Act.
Section 5C. Inspection of Property. The Company will permit any
Person designated in writing by any holder of the Notes which is an
institutional investor, at the Company's expense during the continuance of a
Default or Event of Default and otherwise at such holder's expense, to visit
and inspect any of the properties of the Company and its Subsidiaries, to
examine the corporate books and financial records of the Company and its
Subsidiaries and make copies thereof or extracts therefrom and to discuss the
affairs, finances and accounts of any of such partnerships or corporations with
the principal officers of the Company and its independent public accountants,
all at such reasonable times and as often as such holder may reasonably
request. The Company hereby authorizes, and agrees to cause each of its
Subsidiaries to authorize, its and their independent public accountants to
discuss with such Person the affairs, finances and accounts of the Company and
its Subsidiaries in accordance with this Section 5C.
Section 5D. Covenant to Secure Notes Equally. If the Company or any
of its Subsidiaries shall create or assume any Lien upon any of its property or
assets, whether now owned or hereafter acquired, other than Liens permitted by
the provisions of Sections 6C and 6D (unless prior written consent to the
creation or assumption thereof shall have been obtained pursuant to Section
11C), the Company will make or cause to be made effective provision whereby the
Notes will be contemporaneously secured by such Lien equally and ratably with
any and all other Indebtedness thereby secured so long as any such other
Indebtedness shall be so secured (including, without limitation, the provision
of any financial accommodations extended to the holders of such other
Indebtedness in connection with the release of such Lien and/or the sale of any
property subject thereto), it being understood that the provision of such equal
and ratable security shall not constitute a cure or waiver of any related Event
of Default.
Section 5E. Partnership or Corporate Existence, etc.; Compliance with
Laws. (i) Except as otherwise expressly permitted in accordance with Section
6G or 6J, (a) the Company will at all times preserve and keep in full force and
effect its partnership existence and its status as a partnership not taxable as
a corporation for U.S. federal income tax purposes, (b) the Company will cause
each of its Subsidiaries to keep in full force and effect its partnership or
corporate existence, as the case may be, and (c) the Company will, and will
cause each of its Subsidiaries to, at all times preserve and keep in full force
and effect all of its material rights and franchises; provided, however, that
the partnership or corporate existence of any Subsidiary, and any right or
franchise of the Company or any Subsidiary, may be terminated notwithstanding
this Section 5E if such termination (x) is in the best interest of the Company
and the Subsidiaries, (y) is not disadvantageous to the holders of the
-16-
22
Notes in any material respect and (z) could not reasonably be expected to have
a Material Adverse Effect.
(ii) The Company will, and will cause each of its Subsidiaries to, at
all times comply with all laws, regulations and statutes (including without
limitation any zoning or building ordinances or code or Environmental Laws)
applicable to it except for any failure to so comply with, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
(iii) The Company will notify the holders of the Notes a reasonably
time prior to the adoption of any amendment to the Partnership Agreement or the
Credit Agreement and will include in that notice a reasonably detailed
description of such amendment and the intended effects thereof.
Section 5F. Payment of Taxes and Claims. The Company will, and will
cause each of its Subsidiaries to, pay all taxes, assessments and other
governmental charges imposed upon it or any of its Subsidiaries, or any of its
or its Subsidiaries' properties or assets or in respect of any of its or any of
its Subsidiaries' franchises, business, income or profits when the same become
due and payable, and all claims (including without limitation claims for labor,
services, materials and supplies) for sums which have become due and payable
and which by law have or might become a Lien upon any of its or any of its
Subsidiaries' properties or assets; provided that no such tax, assessment,
charge or claim need be paid if it is being contested in good faith by
appropriate proceedings promptly initiated and diligently conducted and if such
reserves or other appropriate provision, if any, as shall be required by GAAP
shall have been made therefor and be adequate in the good faith judgment of the
Board of Directors of the General Partner.
Section 5G. Compliance with ERISA. The Company will, and will cause
its Subsidiaries to, comply in all material respects with the provisions of
ERISA and the Code applicable to the Company and its Subsidiaries and their
respective employee benefit programs.
Section 5H. Maintenance and Sufficiency of Properties. (i) The
Company will maintain or cause to be maintained in good repair, working order
and condition, ordinary wear and tear excepted, all properties used in the
business of the Company and its Subsidiaries and from time to time will make or
cause to be made all appropriate repairs, renewals and replacements thereof,
all to the extent necessary to avoid a Material Adverse Effect.
(ii) The Company will maintain and will cause to be maintained as
employees of the Company and its Subsidiaries such number of individuals,
having appropriate skills, as may be necessary from time to time to sustain
continuous operation of the Business at the time. Except as described on
Schedule 8H, the Company will continue and will cause its Subsidiaries to
continue to own or have valid rights to use all of the assets constituting
personal or intellectual property (including without limitation computer
equipment,
-17-
23
computer software and other intellectual property) reasonably necessary for the
operation of the Business, in each case subject to no Liens except such as are
permitted by Section 6C.
Section 5I. Insurance. The Company will, and will cause its
Subsidiaries to, at its or their expense, at all times maintain, or cause to be
maintained, with financially sound and reputable insurers, insurance with
respect to their properties and business with coverages comparable to those
generally carried by companies of similar size that conduct the same or similar
business and have similar properties in the same general areas in which the
Company conducts its business; provided, however, that the Company may maintain
a system of self-insurance in an amount not exceeding an amount as is customary
for companies with reestablished reputations engaged in the same or similar
business and owning and operating similar properties.
(ii) The Company will, and will cause each of its Subsidiaries to, pay
as and when the same become due and payable the premiums for all insurance
policies that the Company and its Subsidiaries are required to maintain
hereunder.
Section 5J. Environmental Laws. The Company will, and will cause each
of its Subsidiaries to: (i) comply with all applicable Environmental Laws and
any permit, license, or approval required under any Environmental Law, except
for failures to so comply which could not reasonably be expected to have a
Material Adverse Effect;
(ii) store, use, release, or dispose of any Hazardous Substance at any
property owned or leased by the Company or any of its Subsidiaries in a manner
which could not reasonably be expected to have a Material Adverse Effect;
(ii) avoid committing any act or omission which would cause any Lien
to be asserted against any property owned by the Company or any of its
Subsidiaries pursuant to any Environmental Law, except where such Lien could
not reasonably be expected to have a Material Adverse Effect;
(iv) use, handle or store any propane in compliance, in all material
respects, with all applicable laws.
Section 5K. After-Acquired Property. From and after the date of the
Initial Closing, the Company will, and will cause each of its Subsidiaries to,
execute and deliver such amendments to the Security Agreement, execute and
deliver such instruments and agreements (including, without limitation, such
Certificates and Stock Powers) and execute and cause to be duly recorded,
published, registered or filed in the appropriate jurisdictions such Financing
Statements, as shall be necessary to grant to the Collateral Agent a valid,
perfected, first priority security interest, subject to Liens permitted by the
Security Agreement, in any asset acquired by the Company or any Subsidiary of
the Company (including, without limitation, the Capital Stock of any
Subsidiary) after the Initial Closing, to the extent such asset would have been
included in the Collateral at the Initial Closing had the Company or one of its
Subsidiaries owned such asset as of the Initial Closing. The Company will pay
or cause to be paid all taxes, fees and other governmental charges in
-18-
24
connection with the execution, delivery, recording, publishing, registration
and filing of such documents and instruments in such places.
Section 5L. Further Assurances. At any time and from time to time
promptly, the Company shall, at its expense, execute and deliver to each holder
of a Note and the Collateral Agent such instruments and documents, and take
such further action, as the holders of the Notes may from time to time
reasonably request, in order to further carry out the intent and purpose of
this Agreement and the other Financing Documents and to establish, perfect,
preserve and protect the rights, interests and remedies created, or intended to
be created, in favor of the holders of the Notes hereunder and thereunder,
including, without limitation, the execution and delivery of Certificates and
Stock Powers and the execution, delivery, recordation and filing of Financing
Statements and continuation statements under the Uniform Commercial Code of any
applicable jurisdiction, and the delivery of satisfactory opinions of counsel.
Section 5M. No Action Requiring Registration. Neither the Company nor
anyone acting on its behalf will take any action which would subject the
issuance and sale of the Notes to the registration and prospectus delivery
provisions of the Securities Act or to the registration or qualification
provisions of any securities or Blue Sky law of any applicable jurisdiction.
Section 5N. Books and Accounts. The Company will, and will cause each
of its Subsidiaries to, maintain proper books of record and account in which
full, true and proper entries shall be made of its transactions and set aside
on its books from its earnings for each fiscal year all such proper reserves as
in each case shall be required in accordance with GAAP.
Section 5O. Available Cash Reserves. The Company will maintain an
amount of cash reserves that is necessary or appropriate in the reasonable
discretion of the General Partner to (i) provide for the proper conduct of the
business of the Company and its Subsidiaries (including reserves for future
capital expenditures) subsequent to such quarter, (ii) comply with applicable
law or any loan agreement, security agreement, mortgage, debt instrument or
other agreement or obligation to which the Company or any Subsidiary is a party
or by which it is bound or its assets are subject and (iii) provide funds for
distributions to partners of the Master Partnership and the General Partner in
respect of any one or more of the next four quarters; provided that the General
Partner need not establish cash reserves pursuant to clause (iii) if the effect
of such reserves would be that the Master Partnership is unable to distribute
the Minimum Quarterly Distribution (as defined in the Agreement of Limited
Partnership of the Master Partnership) on all Common Units with respect to such
quarter; and provided, further, that disbursements made by the Company or a
Subsidiary of the Company or cash reserves established, increased or reduced
after the end of such quarter but on or before the date of determination of
Available Cash with respect to such quarter shall be deemed to have been made,
established, increased or reduced for purposes of determining Available Cash,
within such quarter if the General Partner so determines. In addition, without
limiting the foregoing, Available Cash for any fiscal quarter shall reflect
reserves equal to (x) 50% of the interest projected to be paid on the Notes in
the next
-19-
25
succeeding fiscal quarter, plus (y) beginning with a date three fiscal quarters
before a scheduled principal payment date on the Notes, 25% of the aggregate
principal amount thereof due on any such payment date in the third succeeding
fiscal quarter, 50% of the aggregate principal amount due on any such payment
date in the second succeeding fiscal quarter and 75% of the aggregate principal
amount due on any quarterly payment date in the next succeeding fiscal quarter,
plus (z) the Unused Proceeds Reserve as of the date of determination; provided
that the foregoing reserves for amounts to be paid on the Notes shall be
reduced by the aggregate amount of advances available to the Company from
responsible financial institutions under binding, irrevocable (a) credit or
financing commitments (which are subject to no conditions which the Company is
unable to meet) and (b) letters of credit (which are subject to no conditions
which the Company is unable to meet), in each case to be used to refinance such
amounts to the extent such amounts could be borrowed and remain outstanding
under Sections 6A and 6B.
Section 5P. Parity Debt. (i) The Company shall ensure that the
lenders from time to time in respect of any outstanding Parity Debt shall, in
the documents governing the terms of such Indebtedness, (a) recognize the
existence and validity of the obligations represented by the Notes and (b)
agree to refrain from making or asserting any claim that the Financing
Documents or the obligations represented by the Notes are invalid or not
enforceable in accordance with its and their terms as a result of the
circumstances surrounding the incurrence of such obligations.
(ii) Each holder of Notes from time to time, as evidenced by its
acceptance of such Notes, (a) acknowledges the existence and validity of the
obligations of the Company under the Credit Agreement (and any replacement,
extension, renewal, refunding or refinancing thereof permitted by clause (ii)
or (iii) of Section 6B, as the case may be) and the 1996 Senior Secured Notes
and (b) agrees to refrain from making or asserting any claim that such
obligations or the instruments governing the terms thereof are invalid or not
enforceable in accordance with its and their terms as a result of the
circumstances surrounding the incurrence of such obligations.
Section 5Q. Special Counsel Opinions. The Company shall either (x)
within 20 Business Days after the Initial Closing Date, cause to be delivered
to the Collateral Agent, a letter from each of the respective special counsel
listed on Schedule 5Q attached hereto addressed to the Collateral Agent and
accompanied by the opinion of such counsel delivered in connection with the
Note Purchase Agreement dated as of June 25, 1996 (the "1996 Opinion") among
Heritage, the Company and the Purchasers named therein, to the effect that the
Collateral Agent is entitled to rely on such 1996 Opinion as if such opinion
was originally addressed to the Collateral Agent; or, (y) in lieu of delivering
any such letter, within 45 days after the expiration of such 20 Business Day
period, cause an attorney or law firm, reasonably acceptable to the Initial
Purchasers, to deliver to the Collateral Agent an opinion substantially in the
form of the 1996 Opinion which was originally delivered by the special counsel
referred to in Schedule 5Q which has not delivered the letter referred to in
clause (x) above.
-20-
26
SECTION 6. NEGATIVE COVENANTS.
The Company hereby covenants and agrees that from the Closing and
thereafter so long as any of the Notes are outstanding:
Section 6A. Financial Ratios. The Company will not permit:
(i) Ratio of Consolidated Funded Indebtedness to Consolidated
EBITDA. The ratio as of the end of any fiscal quarter of Consolidated
Funded Indebtedness to Consolidated EBITDA to exceed 5.25 to 1.00;
(ii) Minimum Interest Coverage. The ratio as of the end of any
fiscal quarter of Consolidated EBITDA to Consolidated Interest Expense
to be less than 2.25 to 1.00.
Notwithstanding any of the provisions of this Agreement the Company will
not, and will not permit any Subsidiary to, enter into any transaction pursuant
to Section 6B, clauses (vii), (viii) and (xiv)(b) of Section 6C, Section 6F, or
clauses (i)(b), (i)(c), (ii)(b) and (iii) of Section 6G, (x) if after giving
effect to any such transaction a Default or Event of Default exists, or (y) if
the consummation of any such transaction would result in a violation of this
Section 6A, calculated for such purpose as of the date on which such
transaction were to be consummated both immediately before and after giving
effect to the consummation thereof; provided, however, that in the case of
transactions pursuant to Section 6G, the calculation shall be made on a pro
forma basis in accordance with GAAP after giving effect to any such
transaction, with the ratio recomputed as at the last day of the most recently
ended fiscal quarter of the Company as if such transaction had occurred on the
first day of the relevant four quarter period.
Section 6B. Indebtedness. The Company will not, and will not permit
any of its Subsidiaries to, create, incur, assume, or otherwise become directly
or indirectly liable with respect to, any Indebtedness, except (subject to the
provisions of Section 6D):
(i) the Company may become and remain liable with respect to
Indebtedness evidenced by the 1996 Senior Secured Notes and Indebtedness
incurred in connection with any extension, renewal, refunding or
refinancing of Indebtedness evidenced thereby, provided that (x) the
principal amount of such Indebtedness shall not exceed the principal
amount of the Indebtedness evidenced by the 1996 Senior Secured Notes,
together with any accrued interest and Yield Maintenance Amount, with
respect thereto being extended, renewed, refunded or refinanced, and (y)
such Indebtedness may not have an average life to maturity shorter than
the remaining average life to maturity of the Indebtedness being
extended, renewed, refunded or refinanced;
(ii) the Company may become and remain liable with respect to
Indebtedness incurred under the Revolving Working Capital Facility and
for any purpose permitted by the Revolving Working Capital Facility and
any Indebtedness incurred for any such permitted purpose which replaces,
extends, renews, refunds or refinances any such
-21-
27
Indebtedness, in whole or in part; provided that the aggregate principal
amount of Indebtedness permitted under this clause (ii) shall not at any
time exceed an amount equal to (x) $15,000,000 less (y) the amount of
Indebtedness, if any, outstanding under the revolving working capital
facility permitted by clause (v) of this Section 6B;
(iii) the Company may become and remain liable with respect to
Indebtedness incurred by the Company under the Acquisition Facility and
any Indebtedness incurred for any such permitted purpose which replaces,
extends, renews, refunds or refinances any such Indebtedness, in whole
or in part; and up to $3,000,000 of Indebtedness owing from time to time
to the seller(s) in Asset Acquisition(s) (in addition to Non-Compete
Obligations permitted pursuant to the provisions of clause (xii) of this
Section 6B); provided that the aggregate principal amount of
Indebtedness permitted under this clause (iii) shall not at any time
exceed $35,000,000;
(iv) any Subsidiary of the Company may become and remain liable
with respect to Indebtedness of such Subsidiary owing to the Company or
to a Wholly-Owned Subsidiary of the Company;
(v) Heritage Service Corp. may become and remain liable with
respect to Indebtedness incurred under a revolving working capital
facility and for any purpose permitted by such revolving working capital
facility and any Indebtedness incurred for any permitted purpose which
replaces, extends, renews, refunds or refinances any such Indebtedness,
in whole or in part; provided that the aggregate principal amount of
Indebtedness permitted under this clause (v) shall not at any time
exceed $1,000,000;
(vi) the Company and any of its Subsidiaries may become and
remain liable with respect to Indebtedness relating to any business,
property or assets acquired by or contributed to the Company or such
Subsidiary or which is secured by a loan on any property or assets
acquired by or contributed to the Company or such Subsidiary to the
extent such Indebtedness existed at the time such business, property or
assets were so acquired or contributed, and if such Indebtedness is
secured by such property or assets, such security interest does not
extend to or cover any other property of the Company or any of its
Subsidiaries; provided that (a) immediately after giving effect to such
acquisition or contribution, the Company could incur at least $1.00 of
additional Indebtedness pursuant to clause (xiii) of this Section 6B and
(b) such Indebtedness was not incurred in anticipation of such
acquisition or contribution;
(vii) the Company and any of its Subsidiaries may become and
remain liable with respect to Indebtedness arising from the honoring by
a bank or other financial institution of a check, draft or similar
instrument drawn against insufficient funds in the ordinary course of
business, provided that such Indebtedness is extinguished within 2
Business Days of its incurrence;
(viii) M-P Oils Partnership may become and remain liable with
respect to Indebtedness in an aggregate principal amount not to exceed
$3,000,000, and the
-22-
28
Company may become and remain liable with respect to Guarantees of such
Indebtedness of M-P Oils Partnership and of Indebtedness of Bi-State
Propane, provided that the aggregate amount of all Guarantees permitted
by this clause (viii) shall not exceed $5,000,000;
(ix) any Person that after the date of Closing becomes a
Subsidiary of the Company may become and remain liable with respect to
any Indebtedness to the extent such Indebtedness existed at the time
such Person became a Subsidiary; provided that (a) immediately after
giving effect to such Person becoming a Subsidiary of the Company, the
Company could incur at least $1.00 of additional Indebtedness in
compliance with clause (xiii) of this Section 6B and (b) such
Indebtedness was not incurred in anticipation of such Person becoming a
Subsidiary of the Company;
(x) the Company and any of its Subsidiaries may become and
remain liable with respect to Indebtedness owed to any person providing
workers' compensation, health, disability or other employee benefits or
property, casualty or liability insurance to the Company or any of its
Subsidiaries, pursuant to reimbursement or indemnification obligations
to such person;
(xi) the Company and any of its Subsidiaries may become and
remain liable with respect to Indebtedness in respect of performance
bonds, bid bonds, appeal bonds, surety bonds and similar obligations, in
each case provided in the ordinary course of business, including those
incurred to secure health, safety and environmental obligations in the
ordinary course of business, and any extension, renewal or refinancing
thereof to the extent not provided to secure the repayment of other
Indebtedness and to the extent that the amount of refinancing
Indebtedness is not greater than the amount of Indebtedness being
refinanced;
(xii) the Company may become and remain liable with respect to
Indebtedness incurred in respect of Capitalized Lease Obligations and
Non-Compete Obligations; provided that the Lien in respect thereof is
permitted by clause (viii) of Section 6C; and
(xiii) the Company and its Subsidiaries may become and remain
liable with respect to the Notes and other Indebtedness, in addition to
that otherwise permitted by the other clauses of this Section 6B, if on
the date the Company or any of its Subsidiaries becomes liable with
respect to any such additional Indebtedness and immediately after giving
effect thereto and to the substantially concurrent repayment of any
other Indebtedness (a) the ratio of Consolidated EBITDA to Consolidated
Debt Service is equal to or greater than 2.50 to 1.0, (b) the ratio of
Consolidated EBITDA to Consolidated Pro Forma Maximum Debt Service is
equal to or greater than 1.25 to 1.0 and (c) no Default or Event of
Default shall exist.
Section 6C. Liens. The Company will not, and will not permit any of
its Subsidiaries to, create, assume, incur or suffer to exist any Lien upon or
with respect to any of its properties or assets, whether now owned or hereafter
acquired, or any income or
-23-
29
profits therefrom (whether or not provision is made for the equal and ratable
securing of the Notes in accordance with the provisions of Section 5D), except:
(i) Liens existing on the date hereof on the property and
assets of the Company or any of its Subsidiaries as described in
Schedule 6C;
(ii) Liens for taxes, assessments or other governmental charges
the payment of which is not yet due and payable or the validity of which
is being contested in good faith in compliance with Section 5F;
(iii) attachment or judgment Liens not giving rise to an Event
of Default and with respect to which the underlying action has been
appealed or is being contested in good faith in compliance with Section
5F;
(iv) Liens of lessors, landlords, carriers, vendors, mechanics,
materialmen, warehousemen, repairmen and other like Liens incurred in
the ordinary course of business the payment of which is not yet due or
which is being contested in good faith in compliance with Section 5F, in
each case not incurred or made in connection with the borrowing of
money, the obtaining of advances or credit or the payment of the
deferred purchase price of property, provided that such Liens do not
materially interfere with the conduct of the business of the Company and
its Subsidiaries taken as a whole;
(v) Liens (other than any Lien imposed by ERISA) incurred and
pledges and deposits made in the ordinary course of business (a) in
connection with workers' compensation, unemployment insurance, old age
pensions, retiree health benefits and other types of social security, or
(b) to secure (or to obtain letters of credit that do not constitute
Indebtedness and that secure) the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, performance bonds,
contracts and other similar obligations, in each case not incurred or
made in connection with the borrowing of money or the obtaining of
advances or credit; provided that such Liens do not materially interfere
with the conduct of the business of the Company and its Subsidiaries
taken as a whole;
(vi) zoning restrictions, easements, licenses, reservations,
provisions, covenants, conditions, waivers, restrictions on the use of
property or irregularities of title (and with respect to leasehold
interests, mortgages, obligations, liens and other encumbrances
incurred, created, assumed or permitted to exist and arising by, through
or under a landlord or owner of the leased property, with or without
consent of the lessee) which do not in the aggregate materially detract
from the value of its property or assets or materially impair the use
thereof in the operation of its business;
(vii) Liens existing on any property of a Person at the time
such Person becomes a Subsidiary of the Company or existing at the time
of acquisition upon any property acquired by the Company or any of its
Subsidiaries at the time such property is so acquired, through purchase,
merger or consolidation or otherwise (whether or
-24-
30
not the Indebtedness secured thereby shall have been assumed); provided,
however, that in the case of any such Lien (1) such Lien shall at all
times be confined solely to any such property and, if required by the
terms of the instrument creating such Lien, other property which is an
improvement to such acquired property, (2) such Lien was not created in
anticipation of such transaction, and (3) the Indebtedness secured by
such Lien shall be permitted under Section 6B;
(viii) Liens created to secure all or any part of the purchase
price, or to secure Indebtedness (other than Parity Debt) incurred or
assumed to pay all or any part of the purchase price or cost of
construction, of property acquired or constructed by the Company or any
of its Subsidiaries after the Initial Closing Date or to secure
obligations incurred in consideration of noncompete agreements ("Non-
Compete Obligations") entered into in connection with any such
acquisition, including an acquisition complying with clause (b)(y) of
Section 6I; provided that (a) any such Lien shall be confined solely to
the item or items of such property (or improvement thereon) so acquired
or constructed and, if required by the terms of the instrument creating
such Lien, other property (or improvement thereon) which is an
improvement to such acquired or constructed property (and, in the case
of any Lien securing Non-Compete Obligations, shall also be limited to
(x) such items of property so acquired which are not of the character
included in the definition of Collateral and (y) such additional items
of the property so acquired, having a total fair market value (as
determined in good faith by the Board of Directors of the General
Partner) for the sum of (x) and (y) that is not more than the amount of
the Non-Compete Obligations so secured), (b) such item or items of
property so acquired are not required to become part of the Collateral
under the terms of the Security Documents, (c) any such Lien shall be
created contemporaneously with, or within 180 days after, the
acquisition or construction of such property, (d) such Lien does not
exceed an amount equal to 85% of the fair market value (100% in the case
of Capitalized Lease Obligations and 35% in the case of Non-Compete
Obligations) of such property (as determined in good faith by the Board
of Directors of the General Partner) at the time of acquisition thereof
and (e) after giving effect to such Lien no Default or Event of Default
shall exist;
(ix) Liens on property or assets of any Subsidiary of the
Company securing Indebtedness of such Subsidiary owing to the Company or
a Wholly-Owned Subsidiary;
(x) leases or subleases of equipment to customers which do not
materially interfere with the conduct of the business of the Company and
its Subsidiaries taken as a whole;
(xi) easements, exceptions or reservations in any property of
the Company or any Subsidiary granted or reserved for the purpose of
pipelines, roads, the removal of oil, gas, coal or other minerals, and
other like purposes, or for the joint or common use of real property,
facilities and equipment, which are incidental to, and do not
-25-
31
materially interfere with, the ordinary conduct of the business of the
Company or any of its Subsidiaries;
(xii) Liens (other than Liens securing Indebtedness) on the
property or assets of any Subsidiary of the Company in favor of the
Company or any other Wholly-Owned Subsidiary of the Company;
(xiii) Liens on the property or assets of Heritage Service Corp.
securing Indebtedness permitted by clause (v) of Section 6B provided
that (i) such Liens shall at all times be confined to property or assets
having an aggregate fair market value not exceeding $2,000,000, and (ii)
as a result of any such Lien no Default or Event of Default shall exist;
(xiv) Liens created by any of the Security Documents securing
(a) Indebtedness evidenced by the 1996 Senior Secured Notes, the
Acquisition Facility or the Revolving Working Capital Facility and (b)
the Notes and other Additional Parity Debt; and
(xv) any Lien renewing, extending or refunding any Lien
permitted by this Section 6C, provided that (a) the principal amount of
the Indebtedness secured by any such Lien shall not exceed the principal
amount of such Indebtedness outstanding immediately prior to the
renewal, extension or refunding of such Lien and (b) no assets
encumbered by any such Lien other than the assets encumbered immediately
prior to such renewal, extension or refunding shall be encumbered
thereby.
Notwithstanding the foregoing, the Company will not, and will not permit
any of its Subsidiaries to, create, assume or incur any Lien upon or with
respect to (a) any Subsidiary stock held by the Company or any Subsidiary of
the Company, or (b) any of its proprietary software developed by or on behalf
of the Company or its Affiliates necessary and useful for the conduct of the
Business. No Lien permitted under this Section 6C shall result in over-
collateralization except as required by conventional practice for specific
types of borrowings.
Section 6D. Priority Debt. The Company will not permit Priority Debt,
at any time, to exceed the sum of (i) $5,000,000 plus (ii) 10% of the then
Consolidated Tangible Net Worth of the Company and its Subsidiaries (but only
to the extent such Consolidated Tangible Net Worth is positive). The
provisions of this Section 6D are further limitations on Priority Debt that
shall otherwise be permitted by Section 6A, 6B, or 6C.
Section 6E. Loans, Advances, Investments and Contingent Liabilities.
The Company will not, and will not permit any of its Subsidiaries to, directly
or indirectly, purchase or own any stock, obligations or securities of, or any
other interest in, or make any capital contribution to, any Person, make or
permit to remain outstanding any loan or advance to, or guarantee, endorse or
otherwise be or become contingently liable, directly or indirectly, in
connection with the obligations of any Person, or make any other Investment,
except:
-26-
32
(i) the Company or any of its Subsidiaries may make and own
Investments (w) consisting of Units issued for purposes of making
acquisitions, (x) arising out of loans and advances to employees
incurred in the ordinary course of business and consisting of advances
to pay reimbursable expenditures, (y) arising out of extensions of trade
credit or advances to third parties in the ordinary course of business
and (z) acquired by reason of the exercise of customary creditors'
rights upon default or pursuant to the bankruptcy, insolvency or
reorganization of a debtor;
(ii) Guarantees that constitute Indebtedness to the extent
permitted by Sections 6A and 6B and other Guarantees that are not
Guarantees of Indebtedness and are undertaken in the ordinary course of
business;
(iii) investment in (collectively, "Cash Equivalents")
(a) marketable obligations issued or unconditionally
guaranteed by the United States of America, or issued by any
agency thereof and backed by the full faith and credit of the
United States of America, in each case maturing one year or less
from the date of acquisition thereof,
(b) marketable direct obligations issued by any state
of the United States of America or any political subdivision of
any such state or any public instrumentality thereof maturing
within one year from the date of acquisition thereof and having
as at such date the highest rating obtainable from either
Standard & Poor's Rating Group or ▇▇▇▇▇'▇ Investors Service,
Inc.,
(c) commercial paper maturing no more than 270 days
from the date of creation thereof and having as at the date of
acquisition thereof one of the two highest ratings obtainable
from either Standard & Poor's Rating Group or ▇▇▇▇▇'▇ Investors
Service, Inc.,
(d) certificates of deposit maturing one year or less
from the date of acquisition thereof (1) issued by commercial
banks incorporated under the laws of the United States of America
or any state thereof or the District of Columbia or Canada or
issued by the United States branch of any commercial bank
organized under the laws of any country in Western Europe or
Japan, with capital and stockholders' equity of at least
$500,000,000 (or the equivalent in the currency of such country),
(A) the commercial paper or other short term unsecured debt
obligations of which are as at such date rated either A-2 or
better (or comparably if the rating system is changed) by
Standard & Poor's Rating Group or Prime-2 or better (or
comparably if the rating system is changed) by ▇▇▇▇▇'▇ Investors
Service, Inc. or (B) the long-term debt obligations of which are
as at such date rated either A or better (or comparably if the
rating system is changed) by Standard & Poor's Rating Group or A2
or better (or comparably if the rating system is changed) by
▇▇▇▇▇'▇ Investors Service, Inc. ("Permitted Banks") or (2) issued
by Bank of Oklahoma, National
-27-
33
Association, in an aggregate amount for all such certificates of
deposit issued by Bank of Oklahoma, National Association, not to
exceed $ 1,000,000,
(e) Eurodollar time deposits having a maturity of less
than 270 days from the date of acquisition thereof purchased
directly from any Permitted Bank,
(f) bankers' acceptances eligible for rediscount under
requirements of The Board of Governors of the Federal Reserve
System and accepted by Permitted Banks, and
(g) obligations of the type described in clause (a),
(b), (c), (d) or (e) above purchased from a securities dealer
designated as a "primary dealer" by the Federal Reserve Bank of
New York or from a Permitted Bank as counterparty to a written
repurchase agreement obligating such counterparty to repurchase
such obligations not later than 14 days after the purchase
thereof and which provides that the obligations which are the
subject thereof are held for the benefit of the Company or any of
its Subsidiaries by a custodian which is a Permitted Bank and
which is not a counterparty to the repurchase agreement in
question;
(iv) the Company or any of its Subsidiaries may acquire Capital
Stock or other ownership interests of a Person (i) located in the United
States of America or Canada, (ii) incorporated or otherwise formed
pursuant to the laws of the United States of America or Canada or any
state or province thereof or the District of Columbia and (iii) engaged
in substantially the same business as the Company which Person at the
time of such acquisition is, or as a result thereof becomes, a
Subsidiary of the Company;
(v) the Company or any of its Subsidiaries may make and own
Investments (in addition to Investments permitted by clauses (i), (ii),
(iii), and (iv) of this Section 6E) in any Person incorporated or
otherwise formed pursuant to the laws of the United States of America or
Canada or any state or province thereof or the District of Columbia;
provided, however, that (i) the sum of (a) the aggregate amount of all
such Investments made by the Company and its Subsidiaries following the
Initial Closing Date which are outstanding pursuant to this clause (v)
plus (b) all other Investments held by the Company and its Subsidiaries
which are outstanding as of the Initial Closing Date and listed on
Schedule 6E shall not at any date of determination exceed 10% of
Consolidated Net Tangible Assets (the "Investment Limit"); (ii) the
representation in Section 8S shall be true and correct as of the date of
determination; and (iii) the aggregate amount of all such Investments
made by the Company and its Subsidiaries and outstanding pursuant to
this clause (v) in Persons engaged in a business which is not
substantially the same as a line of business described in Section 6H
shall not at any date exceed $3,000,000; and (iv) no Investment pursuant
to this clause (v) may be made unless if after giving effect thereto no
Default or Event of Default exists;
-28-
34
(vi) the Company may make and become liable with respect to any
Interest Rate Agreements; and
(vii) any Subsidiary of the Company may make Investments in the
Company or in a Wholly-Owned Subsidiary of the Company.
Section6F. Restricted Payments. The Company will not directly or
indirectly declare, order, pay, make or set apart any sum for any Restricted
Payment, except that the Company may declare or order, and make, pay or set
apart, during each fiscal quarter a Restricted Payment if (i) such Restricted
Payment, together with all other Restricted Payments during such fiscal
quarter, do not in the aggregate exceed the amount of Available Cash with
respect to the immediately preceding quarter, and (ii) no Default or Event of
Default exists before or immediately after any such proposed action.
Section 6G. Consolidation, Merger, Sale of Assets, etc. The Company
will not, and will not permit any of its Subsidiaries to, directly or
indirectly,
(i) consolidate with or merge into any other Person or permit
any other Person to consolidate with or merge into it, except that:
(a) any Subsidiary of the Company may consolidate with
or merge into the Company or a Wholly-Owned Subsidiary of the
Company if the Company or a Wholly-Owned Subsidiary of the
Company, as the case may be, shall be the surviving Person; and
(b) any entity (other than a Subsidiary of the Company)
may consolidate with or merge into the Company or a Subsidiary if
the Company or a Subsidiary of the Company, as the case may be,
shall be the surviving Person and if, immediately after giving
effect to such transaction, (I) the Company and its Subsidiaries
(x) shall not have a Consolidated Net Worth, determined in
accordance with GAAP applied on a basis consistent with the
consolidated financial statements of the Company most recently
delivered pursuant to Section 5A, of less than the Consolidated
Net Worth of the Company immediately prior to the effectiveness
of such transaction, satisfaction of this requirement to be set
forth in reasonable detail in an Officers' Certificate delivered
to each holder of a Note at the time of such transaction, and (y)
could incur at least $1.00 of additional Indebtedness in
compliance with Section 6A and clause (xiii) of Section 6B; (II)
substantially all of the assets of the Company and its
Subsidiaries, taken as a whole, shall be located and
substantially all of their business shall be conducted within the
continental United States of America or Canada; and (III) no
Default or Event of Default shall exist and be continuing; and
(c) the Company may consolidate with or merge into any
other entity if (I) the surviving entity is a corporation or
limited partnership organized and existing under the laws of the
United States of America or any state thereof or
-29-
35
the District of Columbia, with substantially all of its
properties located and its business conducted within the
continental United States of America, (II) such corporation or
limited partnership expressly and unconditionally assumes in
writing the obligations of the Company under this Agreement, the
Notes and the other Financing Documents and delivers to each
holder of a Note at the time outstanding an opinion of counsel
satisfactory to the Required Holders with respect to the due
authorization and execution of the related agreement of
assumption and the enforceability of such agreement against such
corporation or partnership, (III) immediately after giving effect
to such transaction, such corporation or limited partnership (x)
shall not have a Consolidated Net Worth, determined in accordance
with GAAP applied on a basis consistent with the consolidated
financial statements of the Company most recently delivered
pursuant to Section 5A (or if no such financials have yet been
delivered under Section 5A, consistent with the consolidated
financial statements referred to in Section 8D), of less than the
Consolidated Net Worth of the Company immediately prior to the
effectiveness of such transaction, satisfaction of this
requirement to be set forth in reasonable detail in an Officers'
Certificate delivered to each holder of a Note at the time of
such transaction, and (y) could incur at least $1.00 of
additional Indebtedness in compliance with Section 6A and clause
(xiii) of Section 6B, and (IV) no Default or Event of Default
shall exist and be continuing immediately before or after giving
effect to such transaction; or
(ii) sell, lease, abandon or otherwise dispose of all or
substantially all its assets, except that:
(a) any Subsidiary of the Company may sell, lease or
otherwise dispose of all or substantially all its assets to the
Company or to a Wholly-Owned Subsidiary of the Company; and
(b) the Company may sell, lease or otherwise dispose
of all or substantially all its assets to any corporation or
limited partnership into which the Company could be consolidated
or merged in compliance with clause (i)(c) of this Section 6G,
provided that each of the conditions set forth in such clause
(i)(c) shall have been fulfilled; or
(iii) sell, lease, convey, abandon or otherwise dispose of
(including, without limitation, in connection with a Sale and Lease-Back
Transaction) any of its assets (except in a transaction permitted by
clause (i)(a), (i)(b), (i)(c), (ii)(a) or (ii)(b) of this Section 6G or
sales of inventory in the ordinary course of business consistent with
past practice) or issue or sell Capital Stock of any Subsidiary of the
Company, whether in a single transaction or a series of related
transactions (each of the foregoing nonexcepted transactions, an "Asset
Sale"), unless:
(a) immediately after giving effect to such proposed
disposition no Default or Event of Default shall exist and be
continuing, satisfaction of this
-30-
36
requirement to be set forth in reasonable detail in an Officer's
Certificate delivered to each holder of a Note at the time of such
transaction in the case of any Asset Sale involving assets that generate
EBITDA and such Asset Sale involves consideration of $250,000 or more;
(b) such sale or other disposition is for cash consideration
or for consideration consisting of not less than 75% cash and not more
than 25% interest-bearing promissory notes; provided, that the 75%
limitation referred to in this clause (b) shall not apply to any Asset
Sale consisting solely of a sale or other disposition of land and
buildings for an interest bearing promissory note as long as the amount
of such promissory note does not exceed $250,000;
(c) one of the following two conditions must be satisfied:
(I) (x) the aggregate Net Proceeds of all assets so
disposed of (whether or not leased back) over the immediately
preceding 12-month period does not exceed $3,000,000 and (y) the
aggregate Net Proceeds of all assets so disposed of (whether or
not leased back) from the Initial Closing Date through the date
of such disposition does not exceed $10,000,000; or
(II) in the event that such Net Proceeds (less the
amount thereof previously applied in accordance with clause (x)
of this clause (c)(II)) exceeds the limitations determined
pursuant to clauses (x) and (y) of clause (c)(I) of this Section
6G (such excess amount being herein called "Excess Sale
Proceeds"), the Company shall within 12 calendar months of the
date on which such Net Proceeds exceeded any such limitation,
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 of America or Canada in the conduct of the
Business, or (y) to the extent not applied pursuant to the
immediately preceding clause (x), to offer to make prepayments on
the Notes pursuant to Section 4C hereto and, allocated on the
basis specified for such prepayments in the definition of
Allocable Proceeds, to offer to repay other Parity Debt (other
than Indebtedness under Section 6B(ii) or that by its terms does
not permit such offer to be made); and
(d) the Company shall have delivered to the Noteholders a
Certificate of the Board of Directors of the General Partner, certifying
that such sale or other disposition is for fair value and is in the best
interests of the Company.
Notwithstanding the foregoing, Asset Sales shall not be deemed to include (1)
any transfer of assets or issuance or sale of Capital Stock by the Company or
any of its Subsidiaries to the Company or a Wholly-Owned Subsidiary of the
Company, (2) any transfer of assets or issuance or sale of Capital Stock by the
Company or any of its Subsidiaries to any Person in
-31-
37
exchange for, or the Net Proceeds of which are applied within 12 months to the
purchase of, other assets used in a line of business permitted under Section 6H
and having a fair market value (as determined in good faith by the Board of
Directors of the General Partner) not less than that of the assets so
transferred or Capital Stock so issued or sold and (3) any transfer of assets
pursuant to an Investment permitted by Section 6E.
Section 6H. Business. The Company will not and will not permit any of
its Subsidiaries to engage in any line of business if as a result thereof the
Company and its Subsidiaries would not be principally and predominately engaged
in the Business and related general and administrative operations, as more
fully described in the Memorandum and subject in all respects to the provisions
of clause (iii) of the proviso to Section 6E(v).
Section 6I. Transactions with Affiliates. The Company will not, and
will not permit any of its Subsidiaries to, directly or indirectly, engage in
any transaction with any Affiliate unless (i) (a) such transaction is on fair
and reasonable terms that are no less favorable to the Company or such
Subsidiary, as the case may be, than those which would be obtained in an arm's-
length transaction from a Person other than an Affiliate and (b) (x) such
transaction is entered into in the ordinary course of business and pursuant to
the reasonable requirements at the time of the Company's or such Subsidiary's
operations, or (y) such transaction involves the acquisition by the Company
from the General Partner of assets formerly owned by an entity, the Capital
Stock of which was purchased by the General Partner, which acquisition is for a
substantially equivalent value as the value of such purchase and is consummated
within ten days after the consummation of such purchase, as long as such
transaction otherwise would be permitted hereunder had the Company acquired
such assets directly from such entity (including, for example, the acquisition
by the Company from the General Partner of assets formerly owned by Kingston
Propane, Inc.), (ii) such transaction is in connection with the incurrence of
Indebtedness pursuant to Section 6B(viii), (iii) such transaction is in
connection with the making of an Investment pursuant to Section 6E(i), (iv)
such transaction is a Restricted Payment permitted by Section 6F, (v) such
transaction involves performance under the Contribution Agreement
(substantially in the form in effect on the Initial Closing Date), (vi) such
transaction involves indemnification and contribution under Section 7.7 of the
Partnership Agreement (as said section is in effect on the Initial Closing
Date), to the extent such indemnification or contribution arises from
operations or activities in connection with the Business (including securities
issuances in connection with funding the Business) or (vii) such transaction is
a specific transaction described in the Registration Statement.
Section 6J. Subsidiary Stock and Indebtedness. (i) The Company will
not permit any of its Subsidiaries directly or indirectly to issue or sell any
Equity Interest of such Subsidiary of the Company to any Person other than the
Company or a Wholly-Owned Subsidiary of the Company except (a) for the purpose
of qualifying directors or (b) in satisfaction of pre-emptive rights of holders
of minority interests which are triggered by an issuance of Equity Interests to
the Company or a Subsidiary of the Company and permit such holders to maintain
their pro rata interests.
-32-
38
(ii) The Company will not directly or indirectly sell, assign, pledge
or otherwise dispose of any Equity Interest in or any Indebtedness of any of
its Subsidiaries, and will not permit any of its Subsidiaries directly or
indirectly to sell, assign, pledge or otherwise dispose of any Equity Interest
in or any Indebtedness of any other Subsidiary of the Company except to the
Company or a Wholly-Owned Subsidiary of the Company, unless (a) simultaneously
with such sale, transfer or disposition, all of the Equity Interests (other
than an Equity Interest representing less than 2% of the outstanding Equity
Interests of all classes of such Subsidiary taken together, provided that such
Equity Interest is considered an Investment pursuant to Section 6E(v) and is
permitted thereunder) or Indebtedness of such Subsidiary owned by the Company
and its Subsidiaries is sold, transferred or disposed of as an entirety, (b)
the Board of Directors of the General Partner shall have determined, as
evidenced by a resolution thereof, that the proposed sale, transfer or
disposition of such Equity Interests or Indebtedness is in the best interests
of the Company, (c) such Equity Interests or Indebtedness are sold, transferred
or otherwise disposed of for cash or Cash Equivalents or other assets used in a
line of business permitted by Section 6H and having a fair market value (as
determined in good faith by the Board of Directors of the General Partner) not
less than that of the Equity Interests or Indebtedness so transferred, to a
Person upon terms deemed by the Board of Directors of the General Partner to be
acceptable, (d) the Subsidiary being sold, transferred or otherwise disposed of
shall not have any continuing investment in the Company or any Subsidiary of
the Company not being so sold, transferred or disposed and (e) such sale,
transfer or disposition is permitted by Section 6G.
Section 6K. Payment of Dividends by Subsidiaries. The Company will
not, and will not permit any of its Subsidiaries to, be subject to or enter
into any agreement which restricts the ability of any Subsidiary of the Company
to declare or pay any dividend to the Company, to make any distribution on any
Equity Interest of such Subsidiary to the Company, or to lend money to the
Company.
Section 6L. Sales of Receivables. The Company will not, and will not
permit any of its Subsidiaries to, discount, pledge, sell (with or without
recourse), or otherwise sell for less than face value thereof any of its
accounts or notes receivable, except for sales of receivables (i) without
recourse which are seriously past due and which have been substantially written
off as uncollectible or collectible only after extended delays, or (ii) made in
connection with the sale of a business but only with respect to the receivables
directly generated by the business so sold.
Section 6M. Material Agreements; Tax Status. The Company will not:
(i) amend or directly or indirectly modify in any manner the
definitions of "Lenders' Portion" or "Designated Net Proceeds" of the
Credit Agreement or any similar provisions of any agreement applicable
to any extensions, renewals or refundings thereof as Parity Debt under
the provisions of paragraph 6B(ii) or 6B(iii);
(ii) amend or modify in any manner adverse to the holders of
the Notes, or grant any waiver or release under (if such action shall be
adverse to the holders of the
-33-
39
Notes), any Partnership Document, any notes evidencing Parity Debt or
any agreement relating to Parity Debt or terminate in any manner any
Partnership Document, it being understood. without limitation, that no
modification that reduces principal, interest or fees, premiums, make-
wholes or penalty charges, or extends any scheduled or mandatory
payment, prepayment or redemption of principal or interest, or makes
less restrictive any agreement or releases away any security, or waives
any condition precedent or default shall be adverse to the holders of
the Notes for purposes of this Agreement; or
(iii) permit the Master Partnership or the Company to be treated
as an association taxable as a corporation or otherwise to be taxed as
an entity for federal income tax purposes.
SECTION 7. EVENTS OF DEFAULT.
Section 7A. Acceleration. If any of the following conditions or
events ("Events of Default") shall occur and be continuing for any reason
whatsoever (and whether such occurrence shall be voluntary or involuntary or
come about or be effected by operation of law or otherwise):
(i) the Company defaults in the payment of any principal of,
or Premium, if any, on any Note when the same becomes due and payable,
either by the terms thereof or otherwise as herein provided; or
(ii) the Company defaults in the payment of any interest on any
Note for more than 5 days after the same becomes due and payable; or
(iii) the Company or any Subsidiary of the Company (whether as
primary obligor or as guarantor or other surety) defaults in any payment
of principal of or interest on any Parity Debt or any other Indebtedness
other than the Notes (including without limitation any Capitalized Lease
Obligation, any obligation under a conditional sale or other title
retention agreement, any obligation issued or assumed as full or partial
payment for property whether or not secured by a purchase money mortgage
or any obligation under notes payable or drafts accepted representing
extensions of credit), beyond any period of grace provided with respect
thereto, or the Company or any Subsidiary of the Company fails to
perform or observe any other agreement or term or condition contained in
any agreement under which any such obligation is created (or if any
other event thereunder or under any such agreement shall occur and be
continuing) and the effect of such failure or other event is to cause,
or to permit the holder or holders of such Indebtedness (or a trustee on
behalf of such holder or holders) to cause, such obligation to become
due or to be repurchased prior to any stated maturity, provided that the
aggregate amount of all Indebtedness as to which such a default (payment
or other) shall occur and be continuing or such a failure or other event
causing or permitting acceleration (or resale to the Company or any
Subsidiary of the Company) shall occur and be continuing exceeds
$2,000,000; provided, further, that no waiver, modification or amendment
relating to any such a
-34-
40
default (payment or other) or such a failure or other event with respect
to any Parity Debt or agreement or instrument relating to any Parity
Debt shall be effective for purposes of this clause (iii) if any
consideration (other than the payment of reasonable attorney's fees) is
given, directly or indirectly, by the Company or any of its Subsidiaries
or Affiliates in respect thereof, unless substantially the same
consideration is given to the holders of the Notes; or
(iv) any representation or warranty made in any writing by or
on behalf of the Company or the General Partner in this Agreement, any
other Financing Document or the Parity Debt Designation or any
instrument furnished pursuant to this Agreement shall prove to have been
false or incorrect in any material respect on the date as of which made;
or
(v) the Company fails to perform, observe or comply with any
agreement contained in Section 6; or
(vi) the Company fails to perform or observe any other
agreement, term or condition contained in this Agreement or the other
Financing Documents and such failure shall not be remedied within 30
days after any Responsible Officer obtains actual knowledge or notice
thereof; or
(vii) the General Partner, the Company or any Significant
Subsidiary Group makes an assignment for the benefit of creditors or is
generally not paying its debts as such debts become due; or
(viii) any decree or order for relief in respect of the General
Partner, the Company or any Significant Subsidiary Group is entered
under any bankruptcy, reorganization, compromise, arrangement,
insolvency, readjustment of debt, dissolution or liquidation or similar
law, whether now or hereafter in effect (herein called the "Bankruptcy
Law"), of any jurisdiction; or
(ix) the General Partner, the Company or any Significant
Subsidiary Group petitions or applies to any tribunal for, or consents
to, the appointment of, or taking possession by, a trustee, receiver,
custodian, liquidator or similar official of the General Partner, the
Company or any Significant Subsidiary Group, or of any substantial part
of the assets of the General Partner, the Company or any Significant
Subsidiary Group, or commences a voluntary case under the Bankruptcy Law
of the United States or any proceedings (other than proceedings for the
voluntary liquidation and dissolution of the General Partner, the
Company or any Significant Subsidiary Group) relating to the General
Partner, the Company or any Significant Subsidiary Group under the
Bankruptcy Law of any other jurisdiction; or
(x) any such petition or application is filed, or any such
proceedings are commenced, against the General Partner, the Company or
any Significant Subsidiary Group and the General Partner, the Company or
any Significant Subsidiary Group by any act indicates its approval
thereof, consents thereto or acquiescences therein, or an
-35-
41
order, judgment or decree is entered appointing any such trustee,
receiver, custodian, liquidator or similar official, or approving the
petition in any such proceedings, and such order. judgment or decree
remains unstayed and in effect for more than 30 days; or
(xi) a judgment or judgments for the payment of money in excess
of $2,000,000 in the aggregate (except to the extent covered by
insurance as to which the insurer has acknowledged in writing its
obligation to cover in full) shall be rendered against the Company or
any Subsidiary of the Company and either (i) enforcement proceedings
have been commenced by any creditor upon such judgment or order or (ii)
within 45 days after entry thereof, such judgment is not discharged or
execution thereof stayed pending appeal, or within 45 days after the
expiration of any such stay, such judgment is not discharged; or
(xii) any order, judgment or decree is entered in any
proceedings against the General Partner, the Company or any Significant
Subsidiary Group decreeing the dissolution of the General Partner, the
Company or any Significant Subsidiary Group and such order, judgment or
decree remains unstayed and in effect for more than 30 days or any other
event occurs that results in the termination, dissolution or winding up
of the Company, subject to Section 6G, the General Partner or any
Significant Subsidiary Group; or
(xiii) any order, judgment or decree is entered in any
proceedings against the Company or any of its Subsidiaries decreeing a
split-up of the Company or such Subsidiary which requires the
divestiture of assets representing a substantial part, or the
divestiture of the stock of a Subsidiary of the Company whose assets
represent a substantial part of the consolidated assets of the Company
and its Subsidiaries (determined in accordance with GAAP) or which
requires the divestiture of assets, or stock of a Subsidiary of the
Company, which shall have contributed a substantial part of the
Consolidated Net Income of the Company and its 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 45 days after entry thereof, or in the
event of such a stay, such order, judgment or decree shall not be
dismissed within 45 days after such stay expires; or
(xiv) any of the Security Documents shall at any time, for any
reason cease to be in full force and effect or shall fail to constitute
a valid, perfected first priority Lien with respect to the Collateral,
subject to Liens permitted by the Security Agreement, or shall be
declared to be null and void in whole or in any material respect (i.e.,
relating to the validity or priority of the Liens created by the
Security Documents or the remedies available thereunder) by the judgment
of any court or other Governmental Authority having jurisdiction in
respect thereof, or if the validity or the enforceability of any of the
Security Documents shall be contested by or on behalf of the Company, or
the Company shall renounce any of the Security Documents, or deny that
it is bound by the terms of any of the Security Documents; or
-36-
42
(xv) (a) the General Partner shall be engaged in any business
or activities other than those permitted by the Partnership Agreement as
in effect on the Initial Closing Date, (b) Heritage ceases to be the
sole general partner of the Company or the Master Partnership or (c)
Current Management shall own, directly or indirectly, less than 51% of
the Capital Stock of the General Partner; or
(xvi) an ERISA Event shall have occurred that, when taken
together with all other such ERISA Events that have occurred, could
reasonably be expected to result in liability of the Company and its
ERISA Affiliates in an aggregate amount exceeding $2,000,000; or
(xvii) an event of default under any of the Security Documents
has occurred and is continuing
then (a) if such event is an Event of Default specified in clause (i) or (ii)
of this Section 7A, the holder of any Note (other than the Company or any of
its Subsidiaries or Affiliates) may at its option, by notice in writing to the
Company, declare such Note to be, and such Note shall thereupon be and become,
immediately due and payable together with interest accrued thereon and together
with the Yield-Maintenance Amount, if any, with respect to such Note, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Company, (b) if such event is an Event of Default
specified in clause (viii), (ix) or (x) of this Section 7A with respect to the
Company, all of the Notes at the time outstanding shall automatically become
immediately due and payable together with interest accrued thereon and together
with the Yield-Maintenance Amount, if any, with respect to each such Note,
without presentment demand, protest or notice of any kind, all of which are
hereby waived by the Company, and (c) if such event is not an Event of Default
specified in clause (i), (ii), (viii), (ix) or (x) of this Section 7A with
respect to the Company, the Required Holder(s) may at its or their option, by
notice in writing to the Company, declare all of the Notes to be, and all of
the Notes shall thereupon be and become, immediately due and payable together
with interest accrued thereon and together with the Yield-Maintenance Amount,
if any, with respect to each Note, without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Company.
The Company acknowledges, and the parties hereto agree, that each holder
of a Note has the right to maintain its investment in the Notes free from
repayment by the Company (except as herein specifically provided for) and that
the provision for payment of the Yield-Maintenance Amount by the Company in the
event that the Notes are prepaid or are accelerated as a result of an Event of
Default is intended to provide prepaid compensation for the deprivation of such
right under such circumstances.
Section 7B. Rescission of Acceleration. At any time after any or all
of the Notes shall have been declared immediately due and payable pursuant to
Section 7A, the Required Holder(s) may, by notice in writing to the Company,
rescind and annul such declaration and its consequences if (i) the Company
shall have paid all overdue interest on the Notes, the principal of and
Premium, if any, payable with respect to any Notes which have become due
otherwise than by reason of such declaration, and interest on such overdue
interest and
-37-
43
overdue principal and Premium at the rate specified in the Notes, (ii) the
Company shall not have paid any amounts which have become due solely by reason
of such declaration, (iii) all Events of Default and Defaults, other than non-
payment of amounts which have become due solely by reason of such declaration,
shall have been cured or waived pursuant to Section 11C, and (iv) no judgment
or decree shall have been entered for the payment of any amounts due pursuant
to the Notes or this Agreement. No such rescission or annulment shall extend
to or affect any subsequent Event of Default or Default or impair any right
arising therefrom.
Section 7C. Notice of Acceleration or Rescission. Whenever any Note
shall be declared immediately due and payable pursuant to Section 7A or any
such declaration shall be rescinded and annulled pursuant to Section 7B, the
Company shall forthwith give written notice thereof to the holder of each Note
at the time outstanding.
Section 7D. Other Remedies. If any Event of Default or Default shall
occur and be continuing, the holder of any Note may proceed to protect and
enforce its rights under this Agreement and such Note by exercising such
remedies as are available to such holder in respect thereof under applicable
law, either by suit in equity or by action at law, or both, whether for
specific performance of any covenant or other agreement contained in this
Agreement or in aid of the exercise of any power granted in this Agreement. No
remedy conferred in this Agreement upon the holder of any Note is intended to
be exclusive of any other remedy, and each and every such remedy shall be
cumulative and shall be in addition to every other remedy conferred herein or
now or hereafter existing at law or in equity or by statute or otherwise.
SECTION 8. REPRESENTATIONS, COVENANTS AND WARRANTIES.
The Company represents, covenants and warrants as follows:
Section 8A. Organization. The Company is a limited partnership duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite partnership power and authority to own and
operate its properties, to conduct its business, to enter into this Agreement,
the other Financing Documents and the Parity Debt Designation, to issue and
sell the Notes, and to carry out the terms of this Agreement, the Notes and the
other Financing Documents. Each Subsidiary of the Company is 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 (including without limitation the assets owned and operated by it).
Section 8B. Partnership Interests. The sole general partner of the
Company is Heritage, which owns a 1.0101% general partner interest in the
Company. The only limited partner of the Company is the Master Partnership,
which owns a 98.9899% limited partner interest in the Company and the Company
does not have any partners other than Heritage and the Master Partnership. The
Company does not have any Subsidiary other than the Subsidiaries of the Company
as set forth on Schedule 8B or any Investments in any Person
-38-
44
(other than as set forth on Schedule 6E or 8B or Investments of the types
described in Section 6E(i), (iii) or (vi)).
Section 8C. Qualification. The Company is duly qualified or
registered and is in good standing as a foreign limited partnership for the
transaction of business, and each of the Subsidiaries of the Company is duly
qualified or registered and is in good standing as a foreign corporation or
partnership, as the case may be, for the transaction of business, in the states
and to the extent listed in Schedule 8C, and, except as reflected on Schedule
8C, there are no other jurisdictions in which the nature of their respective
activities or the character of the properties they own, lease or use makes such
qualification or registration necessary and in which the failure so to qualify
or to be so registered would have a Material Adverse Effect. The Company has
taken all necessary partnership action to authorize the execution, delivery and
performance by it of this Agreement, the other Financing Documents, the Parity
Debt Designation and the Notes. At or prior to the Initial Closing, the
Company will have duly executed and delivered each of this Agreement, the
Series A Notes and the Series B Notes. At or prior to each Subsequent Closing
the Company shall have duly executed and delivered each of the applicable
Supplemental Note Purchase Agreement and the Series of Notes to be issued and
sold pursuant thereto. This Agreement, said Supplemental Note Purchase
Agreements and said Series A Notes, Series B Notes and Supplemental Notes will
constitute the legal, valid and binding obligations of the Company enforceable
against it in accordance with their terms, except as such enforceability may be
limited by bankruptcy, insolvency, moratorium or similar laws affecting
creditors' rights generally and general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
Section 8D. Business; Financial Statements.
(a) Business. The Memorandum generally sets forth the business
conducted by the Company and its Subsidiaries at the date hereof.
(b) Financial Statements.
(i) The Annual Reports as Form 10-K of the Master Partnership
for the fiscal years ended August 31, 1996 and August 31, 1997 have been
prepared in compliance with the requirements therefor and filed with the
Commissioner and present a true and fair view of the state of affairs of
the Master Partnership as at such dates and, with respect to the profit
and cash flows of the Master Partnership and its Subsidiaries, for the
twelve month periods then ended. The Consolidated Net Income of the
Company and its Subsidiaries accounted for at least 95% of the net
income of the Master Partnership for each such fiscal year;
(ii) since August 31, 1997 there has been no change in the
financial condition of the Company and its Subsidiaries, as shown on the
Annual Report on Form 10-K with respect to the fiscal year ended on such
date, except changes which, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect.
-39-
45
Section 8E. Actions Pending. There is no action, suit, investigation
or proceeding pending or, to the knowledge of the Company, threatened against
the Company or any of the Subsidiaries of the Company, or any properties or
rights of the Company or any of the Subsidiaries of the Company, by or before
any court, arbitrator or administrative or governmental body (i) which
questions the validity or enforceability of this Agreement, any other Financing
Document, the Partnership Agreement, the Parity Debt Designation or the Notes
or any action to be taken pursuant to this Agreement, any other Financing
Document, the Partnership Agreement, the Parity Debt Designation or the Notes
or (ii) which could reasonably be expected to result in a Material Adverse
Effect.
Section 8F. Changes. Except as contemplated by this Agreement or the
Notes or as described in the Memorandum, since August 31, 1997 (i) the Company
has not incurred any material liabilities or obligations, direct or contingent,
nor entered into any material transaction, in each case other than in the
ordinary course of business, and (ii) there has not been any material adverse
change in or effect on the business, assets, financial condition or prospects
of the Company.
Section 8G. Outstanding Indebtedness. Other than the Indebtedness
represented by the Notes, neither the Company nor any of the Subsidiaries of
the Company as set forth on Schedule 8B has outstanding any Indebtedness except
as set forth on Schedule 8G and any such Indebtedness which is indicated in
Schedule 8G to be paid in full on the Initial Closing Date will be paid in full
at the time of the Initial Closing. There exists no default under the
provisions of any instrument evidencing such Indebtedness or of any agreement
relating thereto. No instrument or agreement to which the Company or any of
the Subsidiaries of the Company is a party or by which the Company, any such
Subsidiary, or their respective properties is bound (other than this Agreement
and other than as indicated in Schedule 8G) will contain any restriction on the
incurrence by the Company or any of the Subsidiaries of the Company of
additional Indebtedness.
Section 8H. Title to Properties. (i) Except as set forth on Schedule
8H, each of the Company and the Subsidiaries of the Company will at the Initial
Closing be in possession of, and operating in compliance with, all franchises,
grants, authorizations, approvals, licenses, permits, easements, rights-of-way,
consents, certificates and orders (collectively, the "Permits") required (a) to
own, lease or use its properties and (b) considering all such Permits in the
possession of, and complied with by, the Company and its Subsidiaries taken
together, to permit the conduct of the Business as now conducted and proposed
to be conducted, except for those Permits (x) which are routine and
administrative in nature and are expected in the reasonable judgment of the
Company to be obtained or given in the ordinary course of business after the
Initial Closing, and (y) which, if not obtained or given, would not,
individually or in the aggregate, present a reasonable likelihood of having a
Material Adverse Effect.
(ii) Except as set forth on Schedule 8H, on the Initial Closing Date,
the Company and the Subsidiaries of the Company will have, (i) good and
marketable title to, or valid leasehold interests in, all of their respective
assets constituting real property except for defects in, or lack of recorded
title and exceptions to leasehold interests that either alone or
-40-
46
in the aggregate could not reasonably be expected to result in a Material
Adverse Effect, and (ii) good and sufficient title to, or valid rights to use,
all of the their respective assets constituting personal property reasonably
necessary for the operation of such personal property as it is used on the date
hereof and proposed to be used in the Business, in each case subject to no
Liens except such as are permitted by Section 6C and Liens, if any, which will
be discharged at the Initial Closing. The assets owned by the Company and the
Subsidiaries of the Company are all of the assets and properties reasonably
necessary to enable the Company and its Subsidiaries to conduct the Business.
Subject to such exceptions as would not, individually or in the aggregate,
present a reasonable likelihood of having a Material Adverse Effect (A) on the
date hereof the Company and the Subsidiaries of the Company enjoy, peaceful and
undisturbed possession under all leases and subleases necessary in any material
respect for the conduct of the Business, and (B) all such leases and subleases
are valid and subsisting and are in full force and effect. None of the
properties or assets of the Company or any Subsidiaries of the Company is
subject to any Lien other than Liens permitted hereunder.
Section 8I. Taxes. On the Initial Closing Date, each of the Company
and its Subsidiaries will have filed all federal, state and other income tax
returns which, to the knowledge of the Company, are required to be filed or
will have properly filed for extensions of time for the filing thereof, and
will have paid all taxes, assessments and other governmental charges levied
upon it or any of its properties, assets, income or franchises as shown to be
due on such returns, except those which are not past due or are being contested
in good faith in compliance with Section 5F. The Company is a limited
partnership not subject to taxation with respect to its income or gross
receipts under applicable state laws and is treated as a pass-through entity
for U.S. federal income tax purposes.
Section 8J. Compliance with Other Instruments, etc.; Solvency. (i) On
the Initial Closing Date, neither the Company nor any of the Subsidiaries of
the Company will be in violation of (a) any provision of its certificate or
articles of incorporation or other constitutive documents or its by-laws, (b)
any provision of any agreement or instrument to which it is a party or by which
any of its properties is bound or (c) any applicable law, ordinance, rule or
regulation of any Governmental Authority or any applicable order, judgment or
decree of any court, arbitrator or Governmental Authority except (in the case
of clauses (b) and (c) above only) for such violations which would not,
individually or in the aggregate, present a reasonable likelihood of having a
Material Adverse Effect.
(ii) The execution, delivery and performance of this Agreement and the
Notes and the Parity Debt Designation will not violate (a) any provision of the
Partnership Agreement or other constitutive documents or by-laws of the Company
or any of the Subsidiaries of the Company, (b) any applicable law, ordinance,
rule or regulation of any Governmental Authority or any applicable order,
judgment or decree of any court, arbitrator or Governmental Authority, or (c)
any provision of any agreement or instrument to which the Company or any of the
Subsidiaries of the Company is a party or by which any of its properties is
bound.
-41-
47
(iii) Upon giving effect to the issuance of the Series A Notes and
Series B Notes on the Initial Closing Date and to the application of the
proceeds thereof as contemplated herein, no Note shall be "in default," as that
term is used in section 1405(a)(2) of the New York Insurance Law. The Company
is a "solvent institution," as that term is used in section 1405 of the New
York Insurance Law, whose "obligations are not in default as to principal or
interest," as those terms are used in said section 1405(c).
Section 8K. Governmental Consent. No consent, approval or
authorization of, or declaration or filing with, any Governmental Authority is
required for the valid execution, delivery and performance of this Agreement or
the Notes, or the Parity Debt Designation or for the valid offer, issue, sale,
delivery and performance of the Notes pursuant to this Agreement.
Section 8L. Offering of Notes. Neither the Company nor any of its
respective Affiliates nor any agent acting on behalf of any of the foregoing
has, directly or indirectly, offered the Notes or any part thereof or any
similar security of the Company for sale to, or solicited any offers to buy any
of the same from, or otherwise approached or negotiated with respect thereto
with, any Person other than the Purchasers and not more than 40 other
institutional investors, and neither the Company nor anyone acting on its
behalf has taken or will take any action which would subject the issuance or
sale of the Notes to the provisions of section 5 of the Securities Act or to
the provisions of any securities or "blue sky" laws of any applicable
jurisdiction.
Section 8M. Use of Proceeds. The net proceeds of the sale of the
Notes will be used (x) to repay outstanding Indebtedness of the Company which
was incurred under the Acquisition Facility for purposes of financing
acquisitions and (y) to provide working capital. None of such proceeds will be
used, directly or indirectly, for the purpose, whether immediate, incidental or
ultimate, of purchasing or carrying any margin stock (as defined in Section 8R
hereof) or for the purpose of maintaining, reducing or retiring any
Indebtedness which was originally incurred to purchase or carry any stock that
is currently a margin stock or for any other purpose which might constitute
this transaction a "purpose credit" within the meaning of such Regulation G.
Neither the Company nor anyone acting on its behalf has taken or will take any
action which might cause this Agreement or the Notes to violate Regulation G,
Regulation T or any other regulation of the Board of Governors of the Federal
Reserve System or to violate the Exchange Act, in each case as in effect now or
as the same may hereafter be in effect.
Section 8N. ERISA. Each of the Company and its ERISA Affiliates is in
compliance in all material respects with the applicable provisions of ERISA and
the Code and the regulations and published interpretations thereunder. No
ERISA Event has occurred or is reasonably expected to occur that, when taken
together with all other such ERISA Events, could reasonably be expected to
result in a Material Adverse Effect. The present value of all benefit
liabilities under each Plan (based on those assumptions used for purposes of
Statement of Financial Accounting Standards No. 87) did not, as of the last
annual valuation date applicable thereto, exceed by more than $2,000,000 the
fair market value of the assets of such Plan, and the present value of all
benefit liabilities of all underfunded Plans (based
-42-
48
on those assumptions used for purposes of Statement of Financial Accounting
Standards No. 87) did not, as of the last annual valuation dates applicable
thereto, exceed by more than $2,000,000 the fair market value of the assets of
all such underfunded Plans.
Section 8O. Environmental Compliance. (i) Except where the failure to
be in compliance could not present a reasonable likelihood of having a Material
Adverse Effect, as at the Initial Closing Date the Company and each Subsidiary
of the Company will be, in compliance with all Environmental Laws applicable to
it and to the Business or its assets. At the Initial Closing the Company and
each Subsidiary of the Company will be in compliance with all franchises,
grants, authorizations, permits, licenses, and approvals required under
Environmental Laws, except for any non-compliance or failure to obtain such
Permits which could not reasonably be expected to have a Material Adverse
Effect. The Company has submitted timely and complete applications to renew
any expired or expiring Permits required pursuant to any Environmental Law,
except for any non-compliance or failure to obtain such Permits which could not
reasonably be expected to have a Material Adverse Effect. All reports,
documents, or other submissions required by Environmental Laws to be submitted
by the Company to any Governmental Authority or Person have been filed by the
Company, except where the failure to do so would not present a reasonable
likelihood of having a Material Adverse Effect.
(ii) (a) There is no Hazardous Substance present at any of the real
property currently owned or leased by the Company or any of the Subsidiaries of
the Company except to the extent that such presence could not reasonably be
expected to have a Material Adverse Effect, and (b) to the knowledge of the
Company, there was no Hazardous Substance present at any of the real property
formerly owned or leased by the Company during the period of ownership or
leasing by the Company or Heritage; and with respect to such real property and
subject to the same knowledge and temporal qualifiers concerning Hazardous
Substances with respect to formerly owned or leased real properties, there has
not occurred (x) any release, or to the knowledge of the Company, any
threatened release of a Hazardous Substance, or (y) any discharge or, to the
knowledge of the Company, threatened discharge of any Hazardous Substance into
the ground, surface or navigable waters which discharge or threatened discharge
violates any federal, state, local or foreign laws, rules or regulations
concerning water pollution.
(iii) None of the Company or any of the Subsidiaries of the Company has
disposed of, transported, or arranged for the transportation or disposal of any
Hazardous Substance where such disposal, transportation, or arrangement would
give rise to liability pursuant to CERCLA or any analogous state statute other
than any such liabilities that could not reasonably be expected to have a
Material Adverse Effect.
(iv) As of the date hereof: (a) no Lien has been asserted by any
Governmental Authority or person resulting from the use, spill, discharge,
removal, or remediation of any Hazardous Substance with respect to any real
property currently owned or leased by the Company, and (b) to the knowledge of
the Company, no such Lien was asserted with respect to any of the real property
formerly owned or leased by Heritage during the period of ownership or leasing
of the real property by such Person.
-43-
49
(v) (a) There are no underground storage tanks, asbestos-containing
materials, polychlorinated biphenyls, or urea formaldehyde insulation at any of
the real property currently owned or leased by the Company in violation of any
Environmental Law, and (b) to the knowledge of the Company, there were no
underground storage tanks, asbestos-containing materials, polychlorinated
biphenyls, or urea formaldehyde insulation at any of the real property formerly
owned or leased by Heritage in violation of any Environmental Law during the
period of ownership or leasing of such real property by such Person.
(vi) As of the date hereof, any propane is stored, used and handled by
the Company and the Subsidiaries of the Company in compliance with all
applicable Environmental Laws except for any storage, use or handling of
propane that could not reasonably be expected to have a Material Adverse
Effect.
Section 8P. Pre-emptive Rights. There are no pre-emptive rights to
which a holder of a minority interest in any Subsidiary of the Company is
entitled.
Section 8Q. Disclosure. This Agreement, the Notes, the Memorandum and
any other document, certificate or statement furnished to any Purchaser by or
on behalf of the Company or any of its Subsidiaries or Affiliates, in
connection herewith, taken together, do not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements contained herein and therein, in light of the circumstances under
which they were made, not misleading. There is no fact known to the Company
which has or in the future could reasonably be expected to have (so far as the
Company can now foresee) a Material Adverse Effect and which has not been set
forth in this Agreement or in the other documents, certificates and statements
furnished to each Purchaser by or on behalf of the Company prior to the date
hereof in connection with the transactions contemplated hereby.
Section 8R. Federal Reserve Regulations. None of the Company, or any
Subsidiary of the Company will, directly or indirectly, use any of the proceeds
of the sale of the Notes for the purpose, whether immediate, incidental or
ultimate, of buying a "margin stock" or of maintaining, reducing or retiring
any indebtedness originally incurred to purchase a stock that is currently a
"margin stock," or for any other purpose which might constitute this
transaction a "purpose credit" which is secured "directly or indirectly by
margin stock," in each case within the meaning of Regulation G of the Board of
Governors of the Federal Reserve System (12 C.F.R. 207, as amended), or
otherwise take or permit to be taken any action which would involve a violation
of such Regulation G or of Regulation X (12 C.F.R. 224, as amended) or any
other applicable regulation of such Board. No indebtedness being retired,
directly or indirectly, out of the proceeds of the sale of the Notes was
incurred for the purpose of purchasing or carrying any stock which is currently
a "margin stock," and the Company does not own or have any present intention of
acquiring any amount of such "margin stock."
Section 8S. Investment Company Act. None of the Company or any
Subsidiary of the Company is an "investment company," or a company "controlled"
by an "investment company," within the meaning of the Investment Company Act of
1940, as amended.
-44-
50
Section 8T. Public Utility Holding Company Act. Each of the Company
and each Subsidiary of the Company is exempt from all of the provisions of the
Public Utility Holding Company Act of 1935, as amended (the "PUHCA") and the
rules thereunder other than Section 9(a)(2) thereof based upon a no-action
letter from the Commission dated June 19, 1996.
Section 8U. Intercreditor Agreement and Security Agreement. The
Intercreditor Agreement is, to the best knowledge of the Company, in full force
and effect. The Security Agreement is in full force and effect. Prior to the
date hereof neither the Security Agreement nor, to the best knowledge of the
Company, the Intercreditor Agreement has been amended or supplemented. The
Company has delivered to the Collateral Agent such Certificate and Stock Powers
and such Financing Statements under the Uniform Commercial Code of such
jurisdictions as are necessary to perfect the Liens created by the Security
Agreement. The Financing Statements have been filed in all of such necessary
jurisdictions to perfect the assignment of the security interest purported to
be created by the Security Agreement.
Section 8U. Certain Representations of Company and General Partner.
The representations and warranties of the Company and the General Partner
contained in the Financing Documents (other than the Agreement) and those
otherwise made in writing by or on behalf of the Company or the General Partner
pursuant to such Financing Documents were true and correct when made.
SECTION 9. REPRESENTATIONS OF EACH PURCHASER.
Each Purchaser severally and not jointly represents as follows:
Section 9A. Nature of Purchase. Such Purchaser is not acquiring the
Notes to be purchased by it hereunder with a view to or for sale in connection
with a distribution of the Notes within the meaning of the Securities Act,
provided that the disposition of such Purchaser's property shall at all times
be and remain within its control.
Section 9B. Source of Funds. At least one of the following statements
is an accurate representation as to the source of funds (the "Source") to be
used by such Purchaser to pay the purchase price of the Notes purchased by such
Purchaser hereunder:
(i) the Source is a general account of an insurance company,
and the amount of the reserves and liabilities (as defined by the annual
statement for life insurance companies approved by the National
Association of Insurance commissioners (the "NAIC Annual Statement"))
for the general account contract(s) held by or on behalf of any employee
benefit plans (as defined by Section 3(3) of ERISA) together with the
amount of the reserves and liabilities (as defined by the NAIC Annual
Statement) for the general account contract(s) held by or on behalf of
any other such employee benefit plans maintained by the same employer
(or affiliate thereof as defined in United States Department of Labor's
Prohibited Transaction Class Exemption ("PTCE") 95-60) or by the same
employee organization do not exceed 10% of the
-45-
51
total reserves and liabilities of such general account (exclusive of
separate account liabilities) plus surplus as set forth in the NAIC
Annual Statement filed with the state of domicile of the insurance
company. For purposes of the percentage limitation above, the amount of
reserves and liabilities for the general account contract(s) held by or
on behalf of an employee benefit plan shall be determined before
reduction for credits on account of any reinsurance ceded on a
coinsurance basis; or
(ii) the Source is either (a) an insurance company pooled
separate account, within the meaning of ▇▇▇▇ ▇▇-▇ (▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇,
▇▇▇▇), ▇▇ (▇) a bank collective investment fund, within the meaning of
PTCE 91-38 (issued July 12, 1991) and, except as disclosed on a list
that has been provided by such Purchaser to the Company, no employee
benefit plan or group of plans maintained by the same employer or
employee organization participates to the extent of 10% or more of all
assets allocated to such pooled separate account or collective
investment fund; or
(iii) the Source constitutes assets of an "investment fund"
(within the meaning of Part V of PTCE 84-14 (the "QPAM Exemption"))
managed by a "qualified professional asset manager" or "QPAM" (within
the meaning of Part V of the QPAM Exemption), no employee benefit plan's
assets that are included in such investment fund, when combined with the
assets of all other employee benefit plans established or maintained by
the same employer or by an affiliate (within the meaning of Section
V(c)(1) of the QPAM Exemption) of such employer or by the same employee
organization and managed by such QPAM, exceed 20% of the total client
assets managed by such QPAM, the conditions of Part I(c) and (g) of the
QPAM Exemption are satisfied, neither the QPAM nor a person controlling
or controlled by the QPAM (applying the definition of "control" in
Section V(e) of the QPAM Exemption) owns a 5% or more interest in the
Company and (i) the identity of such QPAM and (ii) the names of all
employee benefit plans whose assets are included in such investment fund
have been disclosed on Schedule 9B hereto; or
(iv) the Source is a governmental plan; or
(v) the Source is one or more employee benefit plans or plans
or a separate account, trust fund or other entity the assets of which
consist of "plan assets" of any employee benefit plans or plans as
defined in Department of Labor regulation Section 2510.3-101, and each
such employee benefit plan or plan has been disclosed on Schedule 9B
hereto; or
(vi) the Source does not include assets of any employee benefit
plan (other than a plan exempt from the coverage of ERISA) or plan or
any other entity the assets of which consist of "plan assets" of
employee benefit plans or plans as defined in Department of Labor
regulation Section 2510.3-101.
As used in this Section 9B, the terms "employee benefit plan," "governmental
plan," "party in interest" and "separate account" shall have the respective
meanings assigned to such terms
-46-
52
in Section 3 of ERISA, and the term "plan" has the meaning assigned thereto in
Section 4975(e)(1) of the Code.
Section 9C. Status of Purchaser. By its execution of this Agreement,
each Purchaser severally represents that it is an "accredited investor" by
reason of the provisions of clause (1), (3) or (7) of the definition of that
term in Regulation D under the Securities Act.
Section 9D. Representations of Each Purchaser to Each Other Purchaser.
By its execution of this Agreement, each Purchaser severally represents and
acknowledges to each other Purchaser that it has, independently and without
reliance upon any other Purchaser and based on the financial statements
referred to in Section 8D, the Memorandum and such other documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Purchaser also severally
represents and acknowledges to each other Purchaser that it will, independently
and without reliance upon any other Purchaser and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement. The
provisions of this Section 9C are for the sole benefit of the Purchasers and
are not intended to benefit or to confer any right upon the Company or any
other Person.
SECTION 10. DEFINITIONS.
For the purpose of this Agreement, the terms defined in the introductory
sentence and in Sections 1 and 2 shall have the respective meanings specified
therein, and the following terms shall have the meanings specified with respect
thereto below:
Section 10A. Yield-Maintenance Terms.
"Called Principal" shall mean, with respect to any Note, the principal
of such Note that is to be prepaid pursuant to Section 4B or 4C or is declared
to be immediately due and payable pursuant to Section 7A, as the context
requires.
"Discounted Value" shall mean, with respect to the Called Principal of
any Note, the amount obtained by discounting all Remaining Scheduled Payments
with respect to such Called Principal from their respective scheduled due dates
to the Settlement Date with respect to such Called Principal, in accordance
with accepted financial practice and at a discount factor (applied on the same
periodic basis as that on which interest on the Notes is payable) equal to the
Reinvestment Yield with respect to such Called Principal.
"Reinvestment Yield" shall mean, with respect to the Called Principal of
any Note, 0.50% over the yield to maturity implied by (i) the yields reported,
as of 10:00 a.m. (New York City time) on the Business Day next preceding the
Settlement Date with respect to such Called Principal, on the display
designated as "Page 678" on the Telerate Service (or such other display as may
replace Page 678 on the Telerate Service) for actively traded U.S. Treasury
securities having a maturity equal to the Remaining Average Life of such Called
Principal as of such Settlement Date, or if such yields shall not be reported
as of such time
-47-
53
or the yields reported as of such time shall not be ascertainable, (ii) the
Treasury Constant Maturity Series yields reported, for the latest day for which
such yields shall have been so reported as of the Business Day next preceding
the Settlement Date with respect to such Called Principal, in Federal Reserve
Statistical Release H.15 (519) (or any comparable successor publication) for
actively traded U.S. Treasury securities having a constant maturity equal to
the Remaining Average Life of such Called Principal as of such Settlement Date.
Such implied yield shall be determined, if necessary, by (a) converting U.S.
Treasury ▇▇▇▇ quotations to bond-equivalent yields in accordance with accepted
financial practice and (b) interpolating linearly between yields reported for
various maturities if no maturity corresponds to the applicable Remaining
Average Life.
"Remaining Average Life" shall mean, with respect to the Called
Principal of any Note, the number of years (calculated to the nearest one-
twelfth year) obtained by dividing (i) such Called Principal into (ii) the sum
of the products obtained by multiplying (a) each Remaining Scheduled Payment of
such Called Principal (but not of interest thereon) by (b) the number of years
(calculated to the nearest one-twelfth year) which will elapse between the
Settlement Date with respect to such Called Principal and the scheduled due
date of such Remaining Scheduled Payment.
"Remaining Scheduled Payments" shall mean, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon that would be due on or after the Settlement Date with respect to such
Called Principal if no payment of such Called Principal were made prior to its
scheduled due date.
"Settlement Date" shall mean, with respect to the Called Principal of
any Note, the date on which such Called Principal is to be prepaid pursuant to
Section 4B or 4C or is declared to be immediately due and payable pursuant to
Section 7A, as the context requires.
"Yield-Maintenance Amount" shall mean, with respect to any Note, an
amount equal to the excess, if any, of the Discounted Value of the Called
Principal of such Note over the sum of (i) such Called Principal plus (ii)
interest accrued thereon as of (including interest due on) the Settlement Date
with respect to such Called Principal. The Yield-Maintenance Amount shall in
no event be less than zero.
Section 10B. Other Terms.
"Accepting Holders" shall have the meaning specified in Section 4D(iii).
"Acquired Debt" shall mean with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person merged
with or into or became a Subsidiary of such specified Person, including
Indebtedness incurred in connection with, or in contemplation of, such other
Person merging with or into or becoming a Subsidiary of such specified Person
and (ii) Indebtedness encumbering any asset acquired by such specified Person.
-48-
54
"Acquisition Facility" shall mean the $35,000,000 acquisition revolving
credit facility of the Company provided for in the Credit Agreement for the
purpose of financing acquisitions and improvements and repairs.
"Additional Parity Debt" shall mean Indebtedness of the Company incurred
in accordance with Section 6A and clause (xiii) of Section 6B to fund
acquisitions or provide working capital, provided that the covenants imposed on
the Company therein or in any agreement or instrument relating thereto are no
more restrictive than the covenants imposed on the Company herein, and
provided, further, that no such Indebtedness shall be deemed Additional Parity
Debt unless immediately before and after giving effect to the incurrence
thereof no Default or Event of Default shall have occurred and be continuing.
"Administrative Agent" shall mean The First National Bank of Boston, as
administrative agent under the Credit Agreement, together with its successors
as such Administrative Agent.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person, except a Subsidiary of such Person. A Person
shall be deemed to control a corporation if such Person (i) possesses, directly
or indirectly, the power to direct or cause the direction of the management and
policies of such corporation, whether through the ownership of voting
securities, by contract or otherwise or (ii) owns at least 5% of the Voting
Stock of a corporation. As applied to the Company, "Affiliate" includes
without limitation the General Partner and the Master Partnership.
"Agreement" shall have the meaning set forth in Section 11C.
"Allocable Proceeds" shall mean, with respect to Excess Sale Proceeds or
Excess Taking Proceeds, as the case may be, to be applied on any date pursuant
to Sections 4C and 4D, the principal amount thereof available to prepay the
Notes determined by allocating such Excess Sale Proceeds or Excess Taking
Proceeds, as the case may be, pro rata among the holders of all Notes and other
Parity Debt (other than Indebtedness permitted by Section 6(B)(ii)), if any,
according to the aggregate principal amounts of the Notes and such other Parity
Debt outstanding on the date the applicable prepayment is to be made in
accordance with Sections 4C and 4D.
"Asset Acquisition" shall mean (a) an Investment by the Company or any
Subsidiary of the Company in any other Person pursuant to which such Person
shall become a Subsidiary of the Company or shall be merged with or into the
Company or any Subsidiary of the Company, (b) the acquisition by the Company or
any Subsidiary of the Company of the assets of any Person which constitute all
or substantially all of the assets of such Person or (c) the acquisition by the
Company or any Subsidiary of the Company of any division or line of business of
any Person (other than a Subsidiary of the Company).
"Asset Sale" shall have the meaning specified in Section 6G(iii).
-49-
55
"Attributable Debt" shall mean, with respect to any Sale and Lease-Back
Transaction not involving a Capitalized Lease Obligation, as of any date of
determination, the total obligation (discounted to present value at the rate of
interest implicit in the lease included in such transaction) of the lessee for
rental payments (other than accounts required to be paid on account of property
taxes, maintenance, repairs, insurance, assessments, utilities, operating and
labor costs and other items which do not constitute payments for property
rights) during the remaining portion of the term (including extensions which
are at the sole option of the lessor) of the lease included in such transaction
(in the case of any lease which is terminable by the lessee upon the payment of
a penalty, such rental obligation shall also include the amount of such
penalty, but no rent shall be considered as required to be paid under such
lease subsequent to the first date upon which it may be so terminated).
"Available Cash" shall mean, with respect to any fiscal quarter of the
Company: (1) the sum of (a) all cash and cash equivalents of the Company and
its Subsidiaries on hand at the end of such quarter and (b) all additional cash
and cash equivalents of the Company and its Subsidiaries on hand on the date of
determination of Available Cash with respect to such quarter resulting from
borrowings for working capital purposes made subsequent to the end of such
quarter, less (ii) the amount of any cash reserves that is necessary or
appropriate in the reasonable discretion of the General Partner to (a) provide
for the proper conduct of the business of the Company and its Subsidiaries
(including reserves for future capital expenditures) subsequent to such
quarter, (b) comply with applicable law or any loan agreement, security
agreement, mortgage, debt instrument or other agreement or obligation to which
the Company or any Subsidiary is a party or by which it is bound or its assets
are subject (including the Financing Documents) and (c) provide funds for
distributions to partners of the Master Partnership and the General Partner in
respect of any one or more of the next four quarters; provided that the General
Partner need not establish cash reserves pursuant to clause (c) if the effect
of such reserves would be that the Master Partnership is unable to distribute
the Minimum Quarterly Distribution (as defined in the Agreement of Limited
Partnership of the Master Partnership) on all Common Units with respect to such
quarter; and provided, further, that disbursements made by the Company or a
Subsidiary of the Company or cash reserves established, increased or reduced
after the end of such quarter but on or before the date of determination of
Available Cash with respect to such quarter shall be deemed to have been made,
established, increased or reduced for purposes of determining Available Cash,
within such quarter if the General Partner so determines. In addition, without
limiting the foregoing, Available Cash for any fiscal quarter shall reflect
reserves equal to (A) 50% of the interest projected to be paid on the Notes in
the next succeeding fiscal quarter plus (B) beginning with a date three fiscal
quarters before a scheduled principal payment date on the Notes, 25% of the
aggregate principal amount thereof due on any such payment date in the third
succeeding fiscal quarter, 50% of the aggregate principal amount due on any
such payment date in the second succeeding fiscal quarter and 75% of the
aggregate principal amount due on any quarterly payment date in the next
succeeding fiscal quarter, plus (C) the Unused Proceeds Reserve as of the date
of determination, provided that the foregoing reserves for amounts to be paid
on the Notes shall be reduced by the aggregate amount of advances available to
the Company from responsible financial institutions under binding irrevocable
(x) credit or financing commitments (which are subject to no conditions which
the Company is unable to meet) and
-50-
56
(y) letters of credit (which are subject to no conditions which the Company is
unable to meet), in each case, to be used to refinance such amounts to the
extent such amounts could be borrowed and remain outstanding under Sections 6A
and 6B.
"Bankruptcy Law" shall have the meaning specified in clause (viii) of
Section 7A.
"Bi-State" shall mean Heritage - Bi State Corp. a Delaware corporation.
"Business" shall mean the business of wholesale and retail sales,
storage and distribution of propane gas, providing repair, installation and
maintenance services for propane heating systems and the sale and distribution
of propane-related supplies and equipment, including appliances.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
day on which commercial banks in New York City are required or authorized to be
closed.
"Capital Stock" shall mean, with respect to any Person, any and all
shares, units representing interests, participations, rights in or other
equivalents (however designated) of such Person's capital stock, including,
with respect to partnerships, partnership interests (whether general or
limited) and any other interest or participation that confers upon a Person the
right to receive a share of the profits and losses of, or distributions of
assets of, such partnership, and any rights (other than debt securities
convertible into capital stock), warrants or options exchangeable for or
convertible into such capital stock.
"Capitalized Lease Obligation" shall mean any rental obligation which
under GAAP would be required to be capitalized on the books of the Company or
any of its Subsidiaries, taken at the amount thereof accounted for as
indebtedness (net of interest expense) in accordance with such principles.
"Cash Equivalents" shall have the meaning set forth in Section 6E(iii).
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. SS 9601 et seq., as the same
may be amended from time to time.
"Certificates and Stock Powers" shall mean certificates representing
shares of Capital Stock included in the Collateral and proper stock powers with
respect thereto duly endorsed in blank.
"Change of Control" shall mean the acquisition by any Person or group of
related persons (as such terms are defined in the Exchange Act) (other than the
Current Management or group of related persons (as so defined) including the
Current Management) of beneficial ownership of more than 50% of the Units.
"Closing" shall mean the Initial Closing or a Supplemental Closing.
-51-
57
"Closing Date" shall mean the Initial Closing Date or a Supplemental
Closing Date.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collateral" shall have the meaning specified in the Security Agreement;
provided, however, that Collateral shall not include for any purpose under this
Agreement or any other Financing Document any property subject to a Lien
incurred pursuant to clause (i), (vii) or (viii) of Section 6C or any renewals
of any such Lien pursuant to clause (xv) of Section 6C, unless the Indebtedness
secured by such Lien shall have been paid or discharged.
"Collateral Agent" shall mean Wilmington Trust Company, in its capacity
as Collateral Agent under the Intercreditor Agreement and under the Security
Agreement (together with its successors as such in such capacities).
"Commission" shall mean the United States Securities and Exchange
Commission.
"Common Units" shall mean common units representing a limited
partnership interest in the Master Partnership and the Company on a combined
basis.
"Company" shall have the meaning specified in the opening paragraph
hereof.
"Consolidated Debt Service" shall mean, as of any date of determination,
the total amount payable by the Company and its Subsidiaries on a consolidated
basis during the four consecutive calendar quarters next succeeding the date of
determination, in respect of scheduled principal and interest payments with
respect to Indebtedness of the Company and its Subsidiaries outstanding on such
date of determination, after giving effect to any Indebtedness proposed on such
date to be incurred and to the substantially concurrent repayment of any other
Indebtedness (a) including actual payments under Capitalized Lease Obligations,
(b) assuming, in the case of Indebtedness (other than Indebtedness referred to
in clause (c) below) bearing interest at fluctuating interest rates which
cannot be determined in advance, that the rate actually in effect on such date
will remain in effect throughout such period, (c) including only actual
interest (but not principal) payments associated with the Indebtedness incurred
pursuant to Section 6B(ii) and Section 6B(v) during the most recent four
consecutive calendar quarters and (d) treating the principal amount of all
Indebtedness outstanding as of such date of determination under a revolving
credit or similar agreement (other than the Indebtedness incurred pursuant to
Section 6B(ii) and Section 6B(v)) as maturing and becoming due and payable on
the scheduled maturity date or dates thereof (including the maturity of any
payment required by any commitment reduction or similar amortization
provision), without regard to any provision permitting such maturity date to be
extended (except for such extensions as may be made in the sole discretion of
the borrower thereunder and without any conditions that remain to be fulfilled
by the borrower or waived by the lender thereunder). See Section 10C.
"Consolidated EBITDA" shall mean, as of any date of determination for
any applicable period, (1) the sum of, without duplication, the amounts for
such period, taken as a single accounting period, of (a) Consolidated Net
Income and (b) to the extent deducted in
-52-
58
the determination of Consolidated Net Income, after excluding amounts
attributable to minority interests in Subsidiaries and without duplication, (i)
Consolidated Non-Cash Charges, (ii) Consolidated Interest Expense and (iii)
Consolidated Income Tax Expense less (2) any non-cash items increasing
Consolidated Net Income for such period to the extent that such items
constitute reversals of a Consolidated Non-Cash Charge for a previous period
and which were included in the computation of Consolidated EBITDA for such
previous period pursuant to the provisions of the preceding clause (1).
Consolidated EBITDA shall be calculated after giving effect, on a pro forma
basis and in accordance with GAAP, to, without duplication, any Asset Sales or
Asset Acquisitions (including without limitation any Asset Acquisition giving
rise to the need to make such calculation as a result of the Company or one of
its Subsidiaries incurring, assuming or otherwise being liable for Acquired
Debt) occurring during the period commencing on the first day of such period to
and including the date of the transaction (the "Reference Period"), as if such
Asset Sate or Asset Acquisition occurred on the first day of the Reference
Period; provided, however, that Consolidated EBITDA generated by an acquired
business or asset shall be determined by the actual gross profit (revenues
minus cost of goods sold) of such acquired business or asset during the
immediately preceding four full fiscal quarters in the Reference Period minus
the pro forma expenses that would have been incurred by the Company and its
Subsidiaries in the operation of such acquired business or asset during such
period computed on the basis of personnel expenses for employees retained or to
be retained by the Company and its Subsidiaries in the operation of such
acquired business or asset and non-personnel costs and expenses incurred by the
Company and its Subsidiaries in the operation of the Company's business at
similarly situated facilities of the Company or any of its Subsidiaries (as
determined in good faith by the General Partner based upon reasonable
assumptions). As used herein, Consolidated EBITDA shall be determined (a) on
the basis of 100% of that amount for the period of the four most recent fiscal
quarters ending on or prior to the date of determination, or (b) 50% of that
amount for the period of the eight most recent fiscal quarters ending on or
prior to the date of determination, whichever is higher. See Section 10C.
"Consolidated Funded Indebtedness" shall mean, as of any date of
determination, the aggregate amount of Indebtedness of the Company and its
Subsidiaries outstanding on that date and maturing in more than 12 months,
including the Notes and the 1996 Senior Secured Notes and borrowings under the
Acquisition Facility (including current maturities of any such Indebtedness).
Notwithstanding anything to the contrary contained herein, Consolidated Funded
Indebtedness shall not include borrowings under the Revolving Working Capital
Facility to the extent permitted hereby.
"Consolidated Income Tax Expense" shall mean, with respect to the
Company and its Subsidiaries, for any period, the provision for federal, state,
local and foreign income taxes of the Company and its Subsidiaries for such
period as determined on a consolidated basis in accordance with GAAP. See
Section 10C.
"Consolidated Interest Expense" shall mean, as of any date of
determination for any applicable period, without duplication, the sum of (i)
the interest expense of the Company and its Subsidiaries for such period as
determined on a consolidated basis in accordance with GAAP, including without
limitation (a) any amortization of debt discount, (b) the net cost
-53-
59
under Interest Rate Agreements, (c) the interest portion of any deferred
payment obligation, (d) all commissions, discounts and other fees and charges
owed with respect to letters of credit and bankers' acceptance financing and
(e) all accrued interest and (ii) the interest component of Capitalized Lease
Obligations paid, accrued or scheduled to be paid or accrued by the Company and
its Subsidiaries during such period as determined on a consolidated basis in
accordance with GAAP. In computing Consolidated Interest Expenses for purposes
of clause (ii) of Section 6A, the applicable period for the determination
thereof shall be the four most recent fiscal quarters ending on or prior to the
date of determination. See Section 10C.
"Consolidated Net Income" shall mean the net income of the Company and
its Subsidiaries, as determined on a consolidated basis in accordance with GAAP
and after provision for minority interests and as adjusted to exclude (i) net
after-tax extraordinary gains or losses, (ii) net after-tax gains or losses
attributable to Asset Sales, (iii) the net income or loss of any Person which
is not a Subsidiary of the Company and which is accounted for by the equity
method of accounting, provided that Consolidated Net Income shall include the
amount of cash dividends or distributions actually paid to the Company or any
Subsidiary of the Company, (iv) the net income or loss prior to the date of
acquisition of any Person combined with the Company or any Subsidiary of the
Company in a pooling of interest (v) the net income of any Subsidiary of the
Company to the extent that dividends or distributions of such net income are
not at the date of determination permitted by the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or other
regulation and (vi) the cumulative effect of any changes in accounting
principles. See Section 10C.
"Consolidated Net Tangible Assets" shall mean, as of any date of
determination, the Total Assets of the Company and its Subsidiaries, minus the
net book value of all assets of the Company and its Subsidiaries (after
deducting any reserves applicable thereto) which would be shown as intangible
assets on a consolidated balance sheet of the Company and its Subsidiaries as
of such time prepared in accordance with GAAP. See Section 10C.
"Consolidated Net Worth" shall mean, with respect to any Person, as of
any date of determination, the total partners' capital (in the case of a
partnership) or stockholders' equity (in the case of a corporation) of such
Person at such date, as would be shown on a consolidated balance sheet of such
Person and its Subsidiaries, if any, prepared in accordance with GAAP. See
Section 10C.
"Consolidated Non-Cash Charges" shall mean with respect to the Company
and its Subsidiaries, for any period, the aggregate depreciation and
amortization, in each case reducing Consolidated Net Income of the Company and
its Subsidiaries for such period, determined on a consolidated basis in
accordance with GAAP. See Section 10C.
"Consolidated Pro Forma Maximum Debt Service" shall mean, as of any date
of determination, the maximum amount payable by the Company and its
Subsidiaries on a consolidated basis during all periods of four consecutive
calendar quarters, commencing with the calendar quarter in which such date of
determination occurs and ending on the latest
-54-
60
final maturity date applicable to any Series of Notes at the time outstanding,
in respect of scheduled principal and interest payments with respect to all
Indebtedness of the Company and its Subsidiaries outstanding on such date of
determination, after giving effect to any Indebtedness proposed on such date to
be incurred and to the substantially concurrent repayment of any other
Indebtedness (a) including all payments under Capitalized Lease Obligations,
(b) assuming, in the case of Indebtedness (other than Indebtedness referred to
in clause (c) below) bearing interest at fluctuating interest rates which
cannot be determined in advance, that the rate actually in effect on such date
will remain in effect throughout such period, (c) including only actual
interest (but not principal) payments associated with the Indebtedness incurred
pursuant to Section 6B(ii) during the most recent four consecutive calendar
quarters and (d) treating the principal amount of all Indebtedness outstanding
as of such date of determination under a revolving credit or similar agreement
(other than the Indebtedness incurred pursuant to Section 6B(ii)) as maturing
and becoming due and payable on the scheduled maturity date or dates thereof
(including the maturity of any payment required by any commitment reduction or
similar amortization provision), without regard to any provision permitting
such maturity date to be extended (except for such extensions as may be made in
the sole discretion of the borrower thereunder and without any conditions that
remain to be fulfilled by the borrower or waived by the lender thereunder).
See Section 10C.
"Consolidated Senior Secured Indebtedness" shall mean, as of the date of
any determination, the aggregate amount of Consolidated Funded Indebtedness
which is secured by a Lien on assets of the Company or a Subsidiary of the
Company.
"Consolidated Tangible Net Worth" shall mean, with respect to any
Person, at any date of determination, the then Consolidated Net Worth of such
Person minus the net book value of all assets of such Person and its
Subsidiaries, if any (after deducting any reserves applicable thereto), which
would be shown as intangible assets on a consolidated balance sheet of such
Person and its Subsidiaries, if any, as of such time prepared in accordance
with GAAP. See Section 10C.
"Control Event" shall mean:
(i) the execution of any written agreement to which the
Company or any Affiliate of the Company is a party which could
reasonably be expected to result in a Change of Control, or
(ii) the commencement (as such term is used in Rule 14d-2(a)
under the Exchange Act as in effect on the date of the Closing) of a
tender offer by any person (as such term is used in Section 13(d) and
Section 14(d)(2) of the Exchange Act as in effect on the date of the
Closing) or related person constituting a group (as such term issued in
Rule 13d-5 under the Exchange Act as in effect on the date of the
Closing) for units which would result in such person or group owning,
directly or indirectly, more than 50% of the outstanding Units.
-55-
61
"Credit Agreement" shall mean the Credit Agreement dated as of June 25,
1996 among the Company, the agents listed therein and the financial
institutions which are or become parties from time to time thereto, evidencing
the Acquisition Facility and the Revolving Working Capital Facility, as the
same may be amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof and hereof.
"Current Management" shall mean ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇, ▇. ▇. ▇▇▇▇▇, G.
A. ▇▇▇▇ and H. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, the current executive officers of the General
Partner, together with the heirs of, and trusts for the benefit of family
members controlled by, any such executive officer.
"Eligible Purchaser" shall mean any Initial Purchaser and such
additional institutional investors which are identified in writing to the
Purchasers on or prior to the Initial Closing Date and from time to time
thereafter; provided that the aggregate number of Eligible Purchasers shall not
at any time exceed ______.
"Environmental Laws" shall mean all applicable federal, state, local and
foreign laws, rules or regulations as amended from time to time. relating to
emissions, discharges, releases, threatened releases, removal, remediation or
abatement of pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances or wastes into or in the environment (including without
limitation air, surface water, ground water or land), or otherwise used in
connection with the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants, contaminants, toxic or
hazardous substances or wastes, as defined under such applicable laws.
"Equity Interest" shall mean, with respect to any Person, any capital
stock issued by such Person, regardless of class or designation, or any limited
or general partnership interest in such Person, regardless of designation, and
all warrants, options, purchase rights, conversion or exchange rights, voting
rights, calls or claims of any character with respect thereto.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) that, together with the Company, is treated as a single employer
under Section 414(b) or (c) of the Code, or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" shall mean (i) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder, with respect to a
Plan; (ii) the adoption of any amendment to a Plan that would require the
provision of security pursuant to Section 401(a)(29) of the Code or Section 307
of ERISA; (iii) the existence with respect to any Plan of an "accumulated
funding deficiency" (as defined in Section 412 of the Code or Section 302 of
ERISA), whether or not waived; (iv) the filing pursuant to Section 412(d) of
the Code or Section 303(d) of ERISA of an application for a waiver of the
minimum
-56-
62
funding standard with respect to any Plan; (v) the incurrence of any liability
under Title IV of ERISA with respect to the termination of any Plan or the
withdrawal or partial withdrawal of the Company or any of its ERISA Affiliates
from any Plan or Multiemployer Plan; (vi) the receipt by the Company or any
ERISA Affiliate from the PBGC or a plan administrator of any notice relating to
the intention to terminate any Plan or Plans or to appoint a trustee to
administer any Plan; (vii) the receipt by the Company or any ERISA Affiliate of
any notice concerning the imposition of Withdrawal Liability or a determination
that a Multiemployer Plan is, or is expected to be, insolvent or in
reorganization, within the meaning of Title IV of ERISA; and (viii) the
occurrence of a "prohibited transaction" with respect to which the Company or
any of its Subsidiaries is a "disqualified person" (within the meaning of
Section 4975 of the Code) and with respect to which the Company or such
Subsidiary would be liable for the payment of an excise tax.
"Event of Default" shall mean any of the events specified in Section 7A,
provided that there has been satisfied any requirement in connection with such
event for the giving of notice, or the lapse of time, or the happening of any
further condition, event or act, and "Default" shall mean any of such events,
whether or not any such requirement has been satisfied.
"Excess Proceeds" shall have the meaning set forth in Section 4C(iv).
"Excess Sale Proceeds" shall have the meaning set forth in Section
6G(iii)(c)(II).
"Excess Taking Proceeds" shall have the meaning set forth in Section
4C(ii).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Financing Documents" shall mean this Agreement and the Security
Documents.
"Financing Statements" shall mean proper financing statements (whether
Form UCC-1 or any other form that may be required by any jurisdiction) under
the Uniform Commercial Code of such jurisdictions, as may be necessary, or, in
the opinion of the Purchasers' special counsel, desirable to perfect the Liens
created by the Security Agreement.
"GAAP" shall have the meaning specified in Section 10C.
"General Partner" shall mean Heritage in its capacity as general partner
of the Company.
"Governmental Authority" shall mean any governmental agency, authority,
instrumentality or regulatory body, other than a court or other tribunal, in
each case whether federal, state, local or foreign.
"Guaranty" shall mean, with respect to any Person, any direct or
indirect liability, contingent or otherwise, of such Person with respect to any
Indebtedness of another,
-57-
63
including, without limitation, any such obligation directly or indirectly
guaranteed, endorsed (otherwise than for collection or deposit in the ordinary
course of business) or discounted or sold with recourse by such Person, or in
respect of each such Person is otherwise directly or indirectly liable,
including, without limitation, any such obligation in effect guaranteed by such
Person through any agreement (contingent or otherwise) to purchase, repurchase
or otherwise acquire such obligation or any security therefor, or to provide
funds for the payment or discharge of such obligation (whether in the form of
loans, advances, stock purchases, capital contributions or otherwise), or to
maintain the solvency or any balance sheet or other financial condition of the
obligor of such obligation, or to make payment for any products, materials or
supplies or for any transportation or services regardless of the non-delivery
or non-furnishing thereof, in any such case if the purpose or intent of such
agreement is to provide assurance that such obligation will be paid or
discharged, or that any agreements relating thereto will be complied with, or
that the holders of such obligation will be protected against loss in respect
thereof. The amount of any Guaranty shall be equal to the outstanding
principal amount of the obligation guaranteed or such lesser amount to which
the maximum exposure of the guarantor shall have been specifically limited.
"Hazardous Substance" shall mean any substance so designated pursuant to
CERCLA, asbestos, petroleum, urea formaldehyde insulation and petroleum by-
products (other than propane).
"Heritage" shall mean Heritage Holdings, Inc., a Delaware corporation.
"Indebtedness" shall mean, with respect to any Person, without
duplication,
(a) any indebtedness for borrowed money, all obligations upon
which interest charges are customarily paid and all obligations
evidenced by any bond, note, debenture or other similar instrument which
such Person has directly or indirectly created, incurred or assumed;
(b) all obligations of others 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 such Person has not assumed the same or
become liable therefor, shall in no event be deemed to be greater than
the fair market value from time to time of the property subject to such
Lien;
(c) any indebtedness, whether or not for borrowed money
(excluding trade payables and accrued expenses arising in the ordinary
course of business), 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;
-58-
64
(d) the principal component of any Capitalized Lease
Obligations to the extent such obligations would, in accordance with
GAAP, appear on a balance sheet of such Person;
(e) all Attributable Debt of such Person in respect of Sale
and Lease-Back Transactions not involving a Capitalized Lease
Obligation;
(f) all Redeemable Capital Stock of such Person valued at the
greater of its voluntary or involuntary maximum fixed repurchase price
plus accrued dividends;
(g) any Preferred Stock of any Subsidiary of such Person
valued at the liquidation preference thereof, or any mandatory
redemption payment obligations in respect thereof plus, in either case,
accrued dividends thereof;
(h) any indebtedness of the character referred to in clause
(a), (b), (c), (d), (e), (f) or (g) of this definition deemed to be
extinguished under GAAP but for which such Person remains legally
liable;
(i) any indebtedness of any other Person of the character
referred to in clause (a), (b), (c), (d), (e), (f), (g) or (h) of this
definition with respect to which the Person whose Indebtedness is being
determined has become liable by way of a Guaranty;
(j) all obligations, contingent or fixed, of such person as an
account party in respect of letters of credit (other than letters of
credit incurred in the ordinary course of business and consistent with
past practice);
(k) all liabilities of such Person in respect of unfunded
vested benefits under pension plans (determined on a net basis for all
such plans) and all asserted withdrawal liabilities of such Person or a
commonly controlled entity to a Multiemployer Plan;
(l) Swaps (other than Interest Rate Agreements);
(m) all obligations of such Person in respect of bankers'
acceptances (other than in respect of accounts payable to suppliers
incurred in the ordinary course of business consistent with past
practice); and
(n) any amendment, supplement, modification, deferral,
renewal, extension or refunding of any liability of the types referred
to in clauses (a) through (m) above.
For purposes hereof, the "maximum fixed repurchase price" of any
Redeemable Capital Stock which does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Redeemable Capital Stock as if
such Redeemable Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to this Agreement and if such price
is based upon, or measured by, the fair market value of such Redeemable Capital
Stock, such fair market value shall be determined in good faith by
-59-
65
the board of directors or a similar governing body of the issuer of such
Redeemable Capital Stock.
"Initial Closing" shall have the meaning specified in Section 2A.
"Initial Closing Date: shall have the meaning specified in Section 2A.
"Initial Purchasers" shall have the meaning specified in the opening
paragraph hereof.
"Initial Purchaser Schedule" shall mean the Initial Purchaser Schedule
attached hereto.
"Intercreditor Agreement" shall mean the Intercreditor and Agency
Agreement dated as of June 28, 1996 among the Administrative Agent, the
purchasers listed on Schedule I attached thereto and the Collateral Agent, as
amended, supplemented or otherwise modified from time to time.
"Interest Rate Agreement" shall mean any fully matched interest rate
Swap entered into with the intent to protect the Company against fluctuations
in interest rates and entered into as a bona fide hedging arrangement and not
for purposes of investment or speculation.
"Investment" shall mean, as applied to any Person, any direct or
indirect purchase or other acquisition by such Person of stock or other
securities of any other Person, or any direct or indirect loan, advance or
capital contribution by such Person to any other Person, and any other item
which would be classified as an "investment" on a balance sheet of such Person
prepared in accordance with GAAP, including without limitation any direct or
indirect contribution by such Person of property or assets to a joint venture,
partnership or other business entity in which such Person retains an interest
(it being understood that a direct or indirect purchase or other acquisition by
such Person of assets of any other Person (other than stock or other
securities) shall not constitute an "Investment" for purposes of this Agreement
so long as such assets are all used in the Business). For the purposes of
Section 6E(v), the amount involved in Investments made during any period shall
be the aggregate cost to the Company and its Subsidiaries of all such
Investments made during such period, 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 Investments (determined in accordance
with GAAP, but without regard to any amounts received during such period as
earnings (in the form of dividends not constituting a return of capital,
interest or otherwise) on such Investments or as loans from any Person in whom
such Investments have been made). See Section 10C.
"Investment Limit" shall have the meaning specified in Section 6E.
-60-
66
"Legal Requirement" shall mean any law, statute, ordinance, decree,
requirement, order, judgment, rule or regulation (or published official
interpretation of any of the foregoing by any Governmental Authority) of any
Governmental Authority.
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
contractual deposit arrangement, lien (statutory or otherwise) or charge of any
kind (including any agreement to give any of the foregoing, any conditional
sale or other title retention agreement, any lease in the nature thereof, and
the filing of or agreement to give any financing statement under the Uniform
Commercial Code of any jurisdiction) or any other type of preferential
arrangement for the purpose, or having the effect, of protecting a creditor
against loss or securing the payment or performance of an obligation.
"Master Partnership" shall mean Heritage Propane Partners, L.P., a
Delaware limited partnership.
"Material Adverse Effect" shall mean (a) a material adverse effect on
the business, assets or financial condition of the Company or the Company and
its Subsidiaries taken as a whole or (b) a material impairment of the ability
of the Company to perform any of its obligations under the Financing Documents
to which it is a party or the Notes or (c) a material adverse effect on the
enforceability of any of the Financing Documents.
"Memorandum" shall mean the memorandum dated October, 1997, prepared by
ABN AMRO Chicago Corporation for use in connection with the Company's private
placement of the Notes.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
section 4001(a)(3) of ERISA.
"Net Proceeds" shall mean the proceeds of any sale of assets in the form
of cash or cash equivalents including payments in respect of deferred payment
obligations when received in the form of cash or cash equivalents net of (i)
brokerage commissions and other fees and expenses related to such sale, (ii)
provisions for any taxes payable as a result of such sale, (iii) amounts
required to be paid to any Person (other than the Company or any Subsidiary of
the Company) owning a beneficial interest in the assets sold, (iv) appropriate
amounts to be provided by the Company or any Subsidiary of the Company, as the
case may be, as a reserve required in accordance with GAAP against any
liabilities associated with such sale of assets and retained by the Company or
any Subsidiary of the Company, as the case may be, after such sale and (v)
amounts required to be applied to the repayment of Indebtedness (other than the
Notes, the 1996 Senior Secured Notes and amounts due under the Revolving
Working Capital Facility or Acquisition Facility) secured by a Lien on the
assets sold.
"1996 Senior Secured Notes" shall mean the 8.55% Senior Secured Notes
due June 30, 2011 issued and outstanding under and pursuant to that certain
Note Purchase Agreement dated as of June 25, 1996 among Heritage, the Company
and the institutional investors listed therein.
-61-
67
"Non-Accepting Holders" shall have the meaning specified in Section
4D(i).
"Non-Compete Obligations" shall have the meaning specified in Section
6C(viii).
"Notes" shall have the meaning specified in Section 1.
"Officer's Certificate" shall mean, as to any corporation, a certificate
executed on its behalf by the Chairman of the Board of Directors (if an
officer) or its President or one of its Vice Presidents, and its Treasurer, or
Controller, or one of its Assistant Treasurers or Assistant Controllers, and,
as to the Master Partnership or the Company, a certificate executed on behalf
of the Master Partnership or the Company, as the case may be, by its general
partner in a manner which would qualify such certificate (a) if such general
partner were a corporation, as an Officer's Certificate of such general partner
hereunder or (b) if such general partner were a partnership or other entity, as
a certificate executed on its behalf by Persons authorized to do so pursuant to
the constituting documents of such partnership or other entity.
"Parity Debt" shall mean (a) Indebtedness of the Company incurred in
accordance with clauses (i), (ii) and (iii) of Section 6B and (b) Additional
Parity Debt.
"Parity Debt Designation" shall mean the Additional Parity Debt
Agreement Designation(s) provided pursuant to Section 6 of the Intercreditor
Agreement with respect to the Notes.
"Partnership Agreement" shall mean the Agreement of Limited Partnership
of the Company as in effect on the Initial Closing Date, and as the same may
from time to time be amended, supplemented or otherwise modified in accordance
with the terms thereof.
"Partnership Documents" shall mean the Agreement of Limited Partnership
of the Master Partnership and the Partnership Agreement, in each case as in
effect on the Initial Closing Date and as the same may from time to time be
amended, supplemented or otherwise modified in accordance with the terms hereof
and thereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
Governmental Authority succeeding to any of its functions.
"Permits" shall have the meaning specified in Section 8H.
"Permitted Banks" shall have the meaning specified in Section 6E.
"Person" shall mean and include an individual, partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof.
"Plan" shall mean any "employee pension benefit plan" as such term is
defined in Section 3 of ERISA (other than a Multiemployer Plan) subject to the
provisions of Title IV
-62-
68
of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of
which the Company or any ERISA Affiliate is (or, if such plan were terminated,
would under Section 4069 of ERISA be deemed to be ) an "employer" as defined in
Section 3(f) of ERISA.
"Preferred Stock" shall mean, as applied to the Capital Stock of any
Person, Capital Stock of any class or classes (however designated), which is
preferred as to the payment of distributions or dividends, or upon any
voluntary or involuntary liquidation or dissolution of such Person, over shares
or units of Capital Stock of any other class of such Person.
"Premium" shall mean the Yield Maintenance Amount and any premium
payable in connection with a Change of Control.
"Priority Debt" shall mean as of any date of determination, the sum,
without duplication, of (i) Indebtedness of the Subsidiaries of the Company
(other than Indebtedness owed to the Company or another Wholly-Owned
Subsidiary), plus (ii) Indebtedness of the Company and its Subsidiaries secured
by Liens permitted by clauses (i) and (vii) of Section 6C and any renewals of
such Liens permitted by clause (xiv) of Section 6C.
"Property" shall mean any interest in any kind of property or asset
whether real, personal, or mixed, or tangible or intangible.
"Pro Rata Option" shall have the meaning specified in Section 4D(iii).
"PTCE" shall have the meaning specified in Section 9B.
"PUHCA" shall have the meaning specified in Section 8U.
"Purchaser Schedules" shall mean the Initial Purchaser Schedule and the
Supplemental Purchaser Schedules.
"Purchasers" shall mean the Initial Purchasers and the Supplemental
Purchasers.
"QPAM Exemption" shall have the meaning specified in Section 9B.
"Redeemable Capital Stock" shall mean, as of any date of determination,
any shares of any class or series of Capital Stock, that, either by the terms
thereof, by the terms of any security into which such shares are convertible or
exchangeable or by contract or otherwise, are or upon the happening of an event
or passage of time would be, required to be redeemed prior to the stated
maturity with respect to the principal of any Note or are redeemable at the
option of the holder thereof at any time prior to the stated maturity of any
Note, or are convertible into or exchangeable for Indebtedness at any time
prior to the stated maturity of any Note.
-63-
69
"Required Holder(s)" shall mean the holder or holders of at least 51% of
the aggregate principal amount of the Notes, without regard to Series, from
time to time outstanding.
"Responsible Officer" shall mean the chief executive officer, chief
operating officer, chief financial officer or chief accounting officer of the
Company or any other officer of the Company involved principally in its
financial administration or its controllership function.
"Restricted Payment" shall mean any payment or other distribution,
direct or indirect, in respect of any partnership or other equity interest in
the Company, except a distribution payable solely in additional partnership or
other equity interests in the Company, and any payment, direct or indirect on
account of the redemption, retirement, purchase or other acquisition of any
partnership or other equity interest in the Company.
"Revolving Working Capital Facility" shall mean the $15,000,000
revolving credit facility of the Company provided for in the Credit Agreement
for working capital and other general partnership purposes not to exceed
$15,000,000 aggregate principal amount at any time outstanding.
"Sale and Lease-Back Transaction" shall mean, with respect to any Person
(a "Transferor"), any arrangement (other than between the Company and a Wholly-
Owned Restricted Subsidiary or between Wholly-Owned Restricted Subsidiaries)
whereby (a) property (the "Subject Property") has been or is to be disposed of
by such Transferor to any other Person with the intention on the part of such
Transferor of taking back a lease of such Subject Property pursuant to which
the rental payments are calculated to amortize the purchase price of such
Subject Property substantially over the useful life of such Subject Property,
and (b) such Subject Property is in fact so leased by such Transferor or an
Affiliate of such Transferor.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Security Agreement" shall mean the Security Agreement dated as of June
28, 1996 among Heritage, the Company and the Collateral Agent, as amended,
supplemented or otherwise modified from time to time.
"Security Documents" shall mean the Security Agreement, the Certificates
and Stock Powers and the Financing Statements.
"Senior Debt" shall mean Indebtedness of the Company which is not
expressed to be junior or subordinate to any other Indebtedness of the Company.
"Series" shall have the meaning specified in Section 1.
"Series A Notes" shall have the meaning specified in Section 1A(i).
"Series B Notes" shall have the meaning specified in Section 1A(ii).
-64-
70
"Significant Subsidiary Group" shall mean any Subsidiary of the Company,
or any group of Subsidiaries of the Company, which at any time of determination
account for (or in the case of a recently formed or acquired Subsidiary would
have so accounted for on a pro forma basis) more than 5% of consolidated
operating revenues of the Company and its Subsidiaries for the fiscal year most
recently ended or more than 5% of consolidated total assets of the Company and
its Subsidiaries as of the end of the most recently ended fiscal quarter, in
each case computed in accordance with GAAP.
"Source" shall have the meaning specified in Section 9B.
"Subordinated Units" shall mean subordinated units representing all of
the limited partnership interest in the Master Partnership not represented by
Common Units.
"Subsequent Notes" shall have the meaning specified in Section 1B.
"Subsidiary" shall mean, with respect to any Person, any corporation,
limited liability company, partnership, joint venture, association, trust or
other entity of which (or in which) more than 50% of (a) the issued and
outstanding Capital Stock having ordinary voting power to elect a majority of
the board of directors of such corporation (irrespective of whether at the time
Capital Stock of any other class or classes of such corporation shall or might
have voting power upon the occurrence of any contingency), (b) the interests in
the capital or profits of such partnership, limited liability company, joint
venture or association with ordinary voting power to elect a majority of the
board of directors (or Persons performing similar functions) of such
partnership, limited liability company, joint venture or association, or (c)
the beneficial interests in such trust or other entity with ordinary voting
power to elect a majority of the board of trustees (or Persons performing
similar functions) of such trust or other entity, is at the time directly or
indirectly owned or controlled by such Person, by such Person and one or more
of its other Subsidiaries, or by one or more of such Person's other
Subsidiaries. For the purposes of any computation under Section 6A or clause
(xiii) of Section 6B, the defined terms Consolidated Debt Service, Consolidated
EBITDA, Consolidated Funded Indebtedness, Consolidated Interest Expense and
Consolidated Pro Forma Maximum Debt Service shall be calculated on the basis
that Bi-State is a Subsidiary of the Company, but only as long as the Company
shall own 50% or more of the interests in the capital or profits of Bi-State
with ordinary voting power to elect a majority of the board of directors (or
Persons performing similar functions) thereof.
"Supplemental Closing" shall have the meaning specified in Section 2B.
"Supplemental Closing Date" shall have the meaning specified in Section
2B.
"Supplemental Note Purchase Agreement" shall have the meaning specified
in Section 2B.
"Supplemental Purchasers" shall have the meaning specified in Section
2B.
-65-
71
"Supplemental Purchaser Schedule" shall mean the schedule of purchasers
of any Series of Subsequent Notes which is attached to the Supplemental Note
Purchase Agreement relating to such Series.
"Swaps" shall mean, with respect to any Person, payment obligations
(fixed or contingent) with respect to interest rate swap agreements, interest
rate cap agreements, interest rate collar agreements, currency swaps and
similar obligations obligating such Person to make payments, whether
periodically or upon the happening of a contingency. For the purposes of this
Agreement, the amount of the obligation under any Swap shall be the amount
determined in respect thereof as of the end of the then most recently ended
fiscal quarter of such Person, based on the assumption that such Swap had
terminated at the end of such fiscal quarter, and in making such determination,
if any agreement relating to such Swap provides for the netting of amounts
payable by and to such Person thereunder or if any such agreement provides for
the simultaneous payment of amounts by and to such Person, then in each such
case, the amount of such obligation shall be the net amount so determined.
"Total Assets" shall mean, as of any date of determination, the
consolidated total assets of the Company and its Subsidiaries as would be shown
on a consolidated balance sheet of the Company and its Subsidiaries prepared in
accordance with GAAP as of that date. See Section 10C.
"Transferee" shall mean any direct or indirect transferee of all or any
part of any Note purchased by any Purchaser under this Agreement.
"Units" shall mean, collectively, the Common Units and the Subordinated
Units.
"Unused Proceeds Reserve" shall mean, as of any date of determination,
all amounts theretofore offered to prepay Parity Debt under Section
6G(iii)(c)(II) and to prepay Notes under Section 4C, the prepayment of which
was declined by the applicable lenders, less the portion of such amounts
theretofore applied by the Company to operations or capital expenditures in
connection with the conduct of the Company's business.
"Unutilized Taking Proceeds" shall mean, as of any date, any insurance
or condemnation proceeds (net of the reasonable costs of proceedings in
connection therewith and settlements in respect thereof) in excess of $100,000
with respect to any single occurrence that were received by the Company or any
of its Subsidiaries in respect of any damage, destruction, condemnation or
other taking of all or any portion of the properties or assets of the Company
or any of its Subsidiaries and that have not been reinvested by the Company or
any of its Subsidiaries within a period of twelve months after such receipt in
the restoration, modification or replacement of the properties or assets in
respect of which such insurance or condemnation proceeds were received.
"Voting Stock" shall mean, with respect to any corporation, any shares
of stock of such corporation the holders of which are entitled under ordinary
circumstances to vote for the election of directors of such corporation
(irrespective of whether at the time stock of any
-66-
72
other class or classes shall have or might have voting power by reason of the
happening of any contingency).
"Wholly-Owned" shall mean, as applied to any Subsidiary of any Person, a
Subsidiary at least 98% (by vote or value) of the outstanding Equity Interests
(other than directors' qualifying shares, if required by law) of all classes,
taken together as a whole, of which are at the time owned by such Person or by
one or more of its Wholly-Owned Subsidiaries or by such Person and one or more
of its Wholly-Owned Subsidiaries.
"Withdrawal Liability" shall mean liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
Section 10C. Accounting Principles, Terms and Determinations. (i) All
references in this Agreement to "generally accepted accounting principles" or
to "GAAP" shall be deemed to refer to generally accepted accounting principles
in effect in the United States at the time of application thereof, but subject
to the provisions of this Section 10C. Unless otherwise specified herein, all
accounting terms used herein shall be interpreted, all determinations with
respect to accounting matters hereunder shall be made, and all unaudited
financial statements and certificates and reports as to financial matters
required to be prepared hereunder shall be prepared in accordance with
generally accepted accounting principles, applied on a basis consistent with
the most recent audited consolidated financial statements of the Company and
its Subsidiaries delivered pursuant to clause (ii) of Section 5A or, if no such
statements have been so delivered, the most recent audited financial statements
referred to in clause (iii) of Section 8D.
(ii) All references herein to "the Company and its Subsidiaries" for
the purposes of computing the consolidated financial position, results of
operations or other balance sheet or financial statement items (including
without limitation the computation of, Available Cash, Consolidated Debt
Service, Consolidated EBITDA, Consolidated Income Tax Expense, Consolidated
Indebtedness, Consolidated Interest Expense, Consolidated Net Income,
Consolidated Non-Cash Charges, Consolidated Pro Forma Maximum Debt Service and
Consolidated Total Assets) shall be deemed to include only the Company and its
Subsidiaries as separate legal entities and, unless otherwise provided herein,
shall not include the financial position, results of operations, cash flows or
other such items of any other Person, whether or not in any particular
instance, such accounting treatment would be in accordance with GAAP.
SECTION11. MISCELLANEOUS.
Section 11A. Note Payments. The Company agrees that, so long as any
Purchaser shall hold any Note, it will make payments of principal of, interest
on and any Premium payable with respect to such Note, which comply with the
terms of this Agreement, by wire transfer of immediately available funds for
credit (not later than 12:00 noon, New York City time, on the date due) to such
Purchaser's account or accounts as specified in the Purchaser Schedule attached
hereto, or to a Supplemental Note Purchase Agreement, or such
-67-
73
other account or accounts in the United States as such Purchaser may designate
in writing, notwithstanding any contrary provision herein or in any Note with
respect to the place of payment, and without any requirement of presenting such
Note for payment. Each Purchaser agrees that, before disposing of any Note,
such Purchaser will make a notation thereon (or on a schedule attached thereto)
of all principal payments previously made thereon and of the date to which
interest thereon has been paid. The Company agrees to afford the benefits of
this Section 11A to any Transferee which shall have made the same agreement as
each Purchaser has made in this Section 11A.
Section 11B. Expenses. The Company covenants and agrees, whether or
not the transactions contemplated hereby shall be consummated, to pay, and save
each Purchaser and any Transferee harmless against liability for the payment
of, all out-of-pocket expenses arising in connection with such transactions,
including without limitation or duplication all fees and expenses referred to
in Section 3K and (i) all document production and duplication charges and the
fees and expenses (including those incurred after any Closing) of not more than
one special counsel engaged by all of the Purchasers in connection with this
Agreement, and the transactions contemplated hereby and of any special counsel
employed by such Purchaser or such Transferee in connection with any subsequent
proposed modification of, or proposed consent under, this Agreement, whether or
not such proposed modification shall be effected or proposed consent granted,
(ii) the costs and expenses of the Collateral Agent, and (iii) the costs and
expenses, including attorneys' fees, incurred by such Purchaser or such
Transferee in obtaining or perfecting any security for the Notes, in enforcing
(or determining whether or how to enforce) any rights under this Agreement or
the Notes or the Security Documents or in responding to any subpoena or other
legal process or informal investigative demand issued in connection with this
Agreement or any Security Document or the transactions contemplated hereby or
by reason of such Purchaser's or such Transferee's having acquired any Note,
including without limitation costs and expenses incurred in any bankruptcy case
or a workout. The obligations of the Company under this Section 11B shall
survive the transfer of any Note or portion thereof or interest therein by any
Purchaser or any Transferee and the payment of any Note.
Section 11C. Consent to Amendments. (i) This Agreement may be amended,
and the Company may take any action herein prohibited, or omit to perform any
act herein required to be performed by it, if the Company shall obtain the
written consent to such amendment, action or omission to act of the Required
Holder(s) except that, without the written consent of the holder or holders of
all Notes at the time outstanding and affected thereby, no amendment to this
Agreement shall change the maturity of any Note, or change the principal of, or
the rate or time of payment of interest on or any Premium payable with respect
to any Note, or affect the time, amount or allocation of any prepayments, or
change the proportion of the principal amount of the Notes required with
respect to any consent, amendment, waiver or declaration, or change the
relative priority of the Notes in relation to any other Indebtedness of the
Company. Each holder of any Note at the time or thereafter outstanding shall
be bound by any consent authorized by this Section 11C, whether or not such
Note shall have been marked to indicate such consent but any Notes issued
thereafter may bear a notation referring to any such consent. No course of
dealing between the Company and the holder of any Note nor any delay in
exercising any rights hereunder or under any Note shall
-68-
74
operate as a waiver of any rights of any holder of such Note. As used herein
and in the Notes, the term "this Agreement" and references thereto shall mean
this Agreement as it may from time to time be amended or supplemented and,
without limiting the generality of the foregoing, shall include all
Supplemental Note Purchase Agreements.
(ii) So long as there are any Notes outstanding, neither the Company
nor any of its Affiliates will submit a request to the holder of any Note for
any proposed waiver or amendment of any of the provisions of this Agreement or
the Notes unless each holder of Notes (irrespective of the amount of Notes then
owned by it) shall be informed thereof by the Company and shall be afforded the
opportunity of considering the same and shall be supplied by the Company with
sufficient information to enable it to make an informed decision with respect
thereto. Neither the Company nor any of its Subsidiaries or Affiliates will,
directly or indirectly, pay or cause to be paid any remuneration, whether by
way of supplemental or additional interest fee or otherwise, to any holder of
Notes as consideration for or as inducement to entering into any waiver or
amendment of any of the terms and provisions of this Agreement or the Notes by
any holder of Notes unless such remuneration is concurrently offered, on the
same terms, ratably to each holder of Notes then outstanding even if such
holder did not consent to such waiver or amendment.
(iii) Any consent given pursuant to this Section 11C by a holder of a
Note which has (i) transferred or agreed to transfer all or a portion of its
Notes to the Company or any of its Affiliates and (ii) provided such consent as
a condition to such transfer shall be valid and binding only upon such holder.
Any amendment or waiver which becomes effective only with such consent (and the
consents of all other holders of the Notes which were acquired under the same
or similar conditions) shall be valid and binding only upon such holder or
holders, as the case may be.
Section 11D. Form, Registration, Transfer and Exchange of Notes; Lost
Notes. The Notes are issuable as registered notes without coupons in
denominations of at least $100,000 except as may be necessary to reflect any
principal amount less than or not evenly divisible by $100,000. The Company
shall keep at its principal office a register in which the Company shall
provide for the registration of Notes and of transfers of Notes. Upon
surrender for registration of transfer of any Note at the principal office of
the Company, the Company shall, at its expense within 5 Business Days, execute
and deliver one or more new Notes of the same Series and otherwise of like
tenor and of a like aggregate principal amount registered in the name of such
transferee or transferees. At the option of the holder of any Note, such Note
may be exchanged for other Notes of the same Series and otherwise of like tenor
and of any authorized denominations, of a like aggregate principal amount, upon
surrender of the Note to be exchanged at the principal office of the Company.
Whenever any Notes are so surrendered for exchange, the Company shall, at its
expense within 5 Business Days, execute and deliver the Notes which the holder
making the exchange is entitled to receive. Every Note surrendered for
registration of transfer or exchange shall be duly endorsed, or be accompanied
by a written instrument of transfer duly executed, by the holder of such Note
or such holder's attorney duly authorized in writing. Any Note or Notes issued
in exchange for any Note or upon transfer thereof shall carry the rights to
unpaid interest and interest to accrue which were carried by the Note so
exchanged or
-69-
75
transferred, so that neither gain nor loss of interest shall result from any
such transfer or exchange. Upon receipt of written notice from the holder of
any Note of the loss, theft, destruction or mutilation of such Note and, in the
case of any such loss, theft or destruction, upon receipt of such holder's
unsecured indemnity agreement (or, in the case of any holder of a Note other
than an institutional investor, upon receipt of an indemnity bond in such
reasonable amount as the Company may determine), or in the case of any such
mutilation upon surrender and cancellation of such Note, the Company will make
and deliver a new Note, of like tenor, in lieu of the lost, stolen, destroyed
or mutilated Note within 5 Business Days.
Section 11E. Persons Deemed Owners; Participations. Prior to due
presentment for registration of transfer, the Company may treat the Person in
whose name any Note is registered as the owner and holder of such Note for the
purpose of receiving payment of principal of, interest on and any Premium
payable with respect to such Note and for all other purposes whatsoever,
whether or not such Note shall be overdue, and the Company shall not be
affected by notice to the contrary. Subject to the preceding sentence, the
holder of any Note may from time to time grant participations in such Note to
any Person on such terms and conditions as may be determined by such holder in
its sole and absolute discretion, provided that any such participation shall be
in a principal amount of at least $100,000.
Section 11F. Survival of Representations and Warranties; Entire
Agreement. All representations and warranties contained herein or made in
writing by or on behalf of the Company in connection herewith shall survive the
execution and delivery of this Agreement (including any Supplemental Note
Purchase Agreement) and the Notes, the transfer by any Purchaser of any Note or
portion thereof or interest therein and the payment of any Note, and may be
relied upon by any Transferee, regardless of any investigation made at any time
by or on behalf of any Purchaser or any Transferee. Subject to the preceding
sentence, this Agreement and the Notes embody the entire agreement and
understanding between the Purchasers and the Company and supersede all prior
agreements and understandings relating to the subject matter hereof.
Section 11G. Successors and Assigns. All covenants and other
agreements in this Agreement (including any Supplemental Note Purchase
Agreement) contained by or on behalf of any of the parties hereto shall bind
and inure to the benefit of the respective successors and assigns of the
parties hereto (including, without limitation, any Transferee) whether so
expressed or not.
Section 11H. Disclosure to Other Persons. The Company acknowledges
that the holder of any Note may deliver copies of any financial statements and
other documents delivered to such holder, and disclose any other information
disclosed to such holder, by or on behalf of the Company or any of its
Subsidiaries in connection with or pursuant to this Agreement to (i) such
holder's directors, trustees, officers, employees, agents and professional
consultants, (ii) any other holder of any Note, (iii) any Person to which such
holder offers to sell such Note or any part thereof, (iv) any Person to which
such holder sells or offers to sell a participation in all or any part of such
Note, (v) any Person from which such holder offers to purchase any security of
the Company, (vi) any federal or state
-70-
76
regulatory authority having jurisdiction over such holder, (vii) the National
Association of Insurance Commissioners or any similar organization or (viii)
any other Person to which such delivery or disclosure may be necessary or
appropriate (a) in compliance with any law, rule, regulation or order
applicable to such holder, (b) in response to any subpoena or other legal
process or informal investigative demand, (c) in connection with any litigation
to which such holder is a party or (d) in connection with the enforcement (or
attempted enforcement) of any of the Financing Documents. Each Purchaser
agrees (and any Transferee which avails itself of the benefits of Section
5A(iii) or (xii) or Section 5C shall be deemed to have likewise agreed) (such
Purchaser and any such Transferee each herein called a "Holder") to hold in
confidence in accordance with its internal corporate practice for treating
confidential information received from third parties and not disclose any
information (other than information (a) which was publicly known or otherwise
known to such Holder at the time of disclosure (except pursuant to disclosure
in connection with this Agreement), (b) which subsequently becomes publicly
known through no act or omission by such Holder, or (c) which otherwise becomes
known to such Holder, other than through disclosure by the Company or any of
its Subsidiaries) delivered or made available by or on behalf of the Company or
any of its Subsidiaries to such Holder (including without limitation any
nonpublic information obtained pursuant to Section 5A or 5C) in connection with
or pursuant to this Agreement which is clearly marked or labeled as being
confidential information, provided that nothing herein shall prevent the holder
of any Note from disclosing such information as provided in the preceding
sentence.
Section 11I. Notices. All written communications provided for
hereunder shall be sent by first class mail or nationwide overnight delivery
service (with charges prepaid) and by telecopy (such delivery confirmed by
telephone) and (i) if to any Purchaser, addressed to such Purchaser at the
address (or facsimile telephone number) specified for such communications in
the Purchaser Schedule attached hereto or to a Supplemental Note Purchase
Agreement, or at such other address (or facsimile telephone number) as such
Purchaser shall have specified to the Company in writing, (ii) if to any other
holder of any Note, addressed to such other holder at such address (or
facsimile telephone number) as such other holder shall have specified to the
Company in writing or, if any such other holder shall not have so specified an
address to the Company, then addressed to such other holder in care of the last
holder of such Note which shall have so specified an address to the Company,
(iii) if to the Company, to Heritage Operating, L.P., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Chief Financial Officer, or at
such other address (or facsimile telephone number) as the Company shall have
specified to the holder of each Note in writing.
Section 11J. Substitution of Wholly-Owned Subsidiary. With respect to
the Notes being purchased by any institutional investor, such Purchaser shall
have the right to substitute one of its Wholly-Owned Subsidiaries as the
purchaser of any of the Notes to be purchased by such Purchaser hereunder, by
written notice delivered to the Company, which notice shall be signed by such
Purchaser and such Subsidiary, shall contain such Subsidiary's agreement to be
bound by this Agreement and shall contain a confirmation by such Subsidiary of
the accuracy with respect to it of the representations contained in Section 9,
provided that such confirmation may contain a statement to the effect that such
Subsidiary
-71-
77
shall at all times have the right to transfer the Notes being purchased by it
to such Purchaser. The Company agrees that, upon receipt of any such notice,
whenever the terms "Purchaser" and "holder" are used in this Agreement (other
than this Section 11J), in reference to such transferring Purchaser, such terms
shall be deemed to refer to such Subsidiary in lieu of said transferring
Purchaser. In the event that such Subsidiary is so substituted hereunder and
thereafter transfers its Notes or any portion thereof to such transferring
Purchaser, upon receipt by the Company of notice of such transfer, whenever the
terms "Purchaser" and "holder" are used in this Agreement (other than in this
Section 11J) in reference to such transferring Purchaser, such terms shall be
deemed to refer to such transferring Purchaser to the extent it owns all or any
portion of the Notes, and such transferring Purchaser and such Subsidiary to
such extent shall each have all the rights of any original Purchaser of Notes
under this Agreement.
Section 11K. Payments Due on Non-Business Days. Anything in this
Agreement or the Notes to the contrary notwithstanding, any payment of
principal of or interest on any Note that is due on a date other than a
Business Day shall be made on the next succeeding Business Day. If the date
for any payment is extended to the next succeeding Business Day by reason of
the preceding sentence, the period of such extension shall be included in the
computation of the interest payable on such Business Day.
Section 11L. Satisfaction Requirement. If any agreement, certificate
or other writing, or any action taken or to be taken, is by the terms of this
Agreement required to be satisfactory to any Purchaser or to the Required
Holder(s), the determination of such satisfaction shall be made by such
Purchaser or the Required Holder(s), as the case may be, in the sole and
exclusive judgment (exercised in good faith) of the Person or Persons making
such determination.
SECTION 11M. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED
BY, THE LAW OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PRINCIPLES.
Section 11N. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 11O. Descriptive Headings. The descriptive headings of the
several Sections of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
Section 11P. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original but all of which
together shall constitute one instrument.
-72-
78
Section 11Q. Severalty of Obligations. The sales of Notes to the
Purchasers are to be several sales, and the obligations of the Purchasers under
this Agreement are several obligations. Except as provided in Section 3G, no
failure by any Purchaser to perform its obligations under this Agreement shall
relieve any other Purchaser or the Company of any of its obligations hereunder,
and no Purchaser shall be responsible for the obligations of, or any action
taken or omitted by, any other Purchaser hereunder.
SECTION 11R. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING OUT OF, UNDER, OR IN
CONNECTION WITH THIS AGREEMENT, ANY EXHIBIT HERETO OR ANY FINANCING DOCUMENT,
OR ANY COURSE OF CONDUCT, COURSE OF DEALING OR STATEMENTS (WHETHER ORAL OR
WRITTEN) MADE HEREIN BY THE PARTIES.
-73-
79
The execution hereof by the Initial Purchasers shall constitute a
contract among the Company and the Initial Purchasers for the uses and purposes
hereinabove set forth.
HERITAGE OPERATING, L.P.
By Heritage Holdings, Inc., General Partner
By
----------------------------------------
Its
Accepted as of November 19, 1997
[VARIATION]
By
----------------------------------------
Its
-74-
80
FORM OF SERIES A NOTE
HERITAGE OPERATING, L.P.
7.17% Series A Note
Due November 19, 2009
No. ______________, ____
$
PPN: 42726# AB 7
HERITAGE OPERATING, L.P., a Delaware limited partnership (the
"Company"), for value received, hereby promises to pay to
or registered assigns
on the nineteenth day of November, 2009
the principal amount of
DOLLARS ($_____________)
and to pay interest (computed on the basis of a 360-day year of twelve 30-day
months) on the principal amount from time to time remaining unpaid at the rate
of 7.17% per annum from the date hereof until maturity, payable semiannually on
the 19th day of each May and November in each year commencing on the first of
such dates after the date hereof, and at maturity. The Company agrees to pay
interest on overdue principal (including any overdue optional prepayment of
principal) and premium, if any, and, to the extent permitted by law, on any
overdue installment of interest, payable semiannually as aforesaid (or, at the
option of the holder hereof, on demand) at a rate per annum from time to time
equal to the greater of (i) 9.17%, or (ii) 2% over the rate of interest
publicly announced by ▇▇▇▇▇▇ Guaranty Trust Company of New York as its "prime
rate" until paid. Both the principal hereof and interest hereon are payable at
the principal office of ▇▇▇▇▇▇ Guaranty Trust Company of New York, in New York,
New York in coin or currency of the United States of America which at the time
of payment shall be legal tender for the payment of public and private debts.
This promissory note is one of the 7.17% Series A Notes due November 19,
2009 (the "Series A Notes") of the Company in the aggregate principal amount of
$12,000,000 issued under and pursuant to the terms and provisions of the Note
Purchase Agreement dated as of November 19, 1997 (the "Agreement"), entered
into by the Company with the Initial Purchasers therein referred to. Under and
pursuant to said Agreement (including any Supplemental Note Purchase
Agreements, as such term is defined in the Agreement) the
EXHIBIT A-1
(to Note Purchase Agreement)
81
Company is, concurrently with the issuance of the Series A Notes, issuing
$20,000,000 aggregate principal amount of its 7.26% Series B Notes due November
19, 2012 (the "Series B Notes") and may from time to time issue additional
series of promissory notes (the "Supplemental Notes" and collectively with the
Series A Notes and Series B Notes, the "Notes"). The aggregate principal
amount of all Notes issued under the Agreement shall not exceed $100,000,000.
This Series A Note and the holder hereof are entitled equally and ratably with
the holders of all other Notes outstanding under the Agreement to all the
benefits provided for thereby or referred to therein. Reference is hereby made
to the Agreement for a statement of such rights and benefits.
This Series A Note and the other Notes outstanding under the Agreement
may be declared due prior to their expressed maturity dates, all in the events,
on the terms and in the manner and amounts as provided in the Agreement.
The Notes are not subject to prepayment or redemption at the option of
the Company prior to their expressed maturity dates except on the terms and
conditions and in the amounts and with the premium, if any, set forth in the
Agreement.
This Note is secured pursuant to the Security Agreement (as defined in
the Agreement), and, subject to the Intercreditor Agreement (as defined in the
Agreement), is entitled to the benefits thereof.
This Note is registered on the books of the Company and is transferable
only by surrender thereof at the principal office of the Company duly endorsed
or accompanied by a written instrument of transfer duly executed by the
registered holder of this Series A Note or its attorney duly authorized in
writing. Payment of or on account of principal, premium, if any, and interest
on this Series A Note shall be made only to or upon the order in writing of the
registered holder.
This Series A Note shall be governed by the laws of the State of New
York.
HERITAGE OPERATING, L.P.
By Heritage Holdings, Inc., General Partner
By
-----------------------------------
Its
A-1-2
82
FORM OF SERIES B NOTE
HERITAGE OPERATING, L.P.
7.26% Series B Note
Due November 19, 2012
No. ______________, ____
$
PPN: 42726# AC 5
HERITAGE OPERATING, L.P., a Delaware limited partnership (the
"Company"), for value received, hereby promises to pay to
or registered assigns
on the nineteenth day of November, 2012
the principal amount of
DOLLARS ($_____________)
and to pay interest (computed on the basis of a 360-day year of twelve 30-day
months) on the principal amount from time to time remaining unpaid at the rate
of 7.26% per annum from the date hereof until maturity, payable semiannually on
the 19th day of each May and November in each year commencing on the first of
such dates after the date hereof, and at maturity. The Company agrees to pay
interest on overdue principal (including any overdue optional prepayment of
principal) and premium, if any, and, to the extent permitted by law, on any
overdue installment of interest, payable semiannually as aforesaid (or, at the
option of the holder hereof, on demand) at a rate per annum from time to time
equal to the greater of (i) 9.26%, or (ii) 2% over the rate of interest
publicly announced by ▇▇▇▇▇▇ Guaranty Trust Company of New York as its "prime
rate" until paid. Both the principal hereof and interest hereon are payable at
the principal office of ▇▇▇▇▇▇ Guaranty Trust Company of New York, in New York,
New York in coin or currency of the United States of America which at the time
of payment shall be legal tender for the payment of public and private debts.
This promissory note is one of the 7.26% Series B Notes due November 19,
2012 (the "Series B Notes") of the Company in the aggregate principal amount of
$20,000,000 issued under and pursuant to the terms and provisions of the Note
Purchase Agreement dated as of November 19, 1997 (the "Agreement"), entered
into by the Company with the Initial Purchasers therein referred to. Under and
pursuant to said Agreement (including any Supplemental Note Purchase
Agreements, as such term is defined in the Agreement) the
EXHIBIT A-2
(to Note Purchase Agreement)
83
Company is, concurrently with the issuance of the Series B Notes, issuing
$12,000,000 aggregate principal amount of its 7.17% Series A Notes due November
19, 2009 (the "Series A Notes") and may from time to time issue additional
series of promissory notes (the "Supplemental Notes" and collectively with the
Series A Notes and the Series B Notes, the "Notes"). The aggregate principal
amount of all Notes issued under the Agreement shall not exceed $100,000,000.
This Series B Note and the holder hereof are entitled equally and ratably with
the holders of all other Notes outstanding under the Agreement to all the
benefits provided for thereby or referred to therein. Reference is hereby made
to the Agreement for a statement of such rights and benefits.
This Series B Note and the other Notes outstanding under the Agreement
may be declared due prior to their expressed maturity dates, all in the events,
on the terms and in the manner and amounts as provided in the Agreement.
The Notes are not subject to prepayment or redemption at the option of
the Company prior to their expressed maturity dates except on the terms and
conditions and in the amounts and with the premium, if any, set forth in the
Agreement.
This Note is secured pursuant to the Security Agreement (as defined in
the Agreement), and, subject to the Intercreditor Agreement (as defined in the
Agreement), is entitled to the benefits thereof.
This Note is registered on the books of the Company and is transferable
only by surrender thereof at the principal office of the Company duly endorsed
or accompanied by a written instrument of transfer duly executed by the
registered holder of this Series B Note or its attorney duly authorized in
writing. Payment of or on account of principal, premium, if any, and interest
on this Series B Note shall be made only to or upon the order in writing of the
registered holder.
This Series B Note shall be governed by the laws of the State of New
York.
HERITAGE OPERATING, L.P.
By Heritage Holdings, Inc., General Partner
By
-----------------------------------
Its
A-2-2
84
FORM OF SUBSEQUENT NOTE
HERITAGE OPERATING, L.P.
___% Series __ Note
Due ___________, _____
No. ______________, ____
$
PPN:
HERITAGE OPERATING, L.P., a Delaware limited partnership (the
"Company"), for value received, hereby promises to pay to
or registered assigns
on the ______ day of ___________, _____
the principal amount of
DOLLARS ($_____________)
and to pay interest (computed on the basis of a 360-day year of twelve 30-day
months) on the principal amount from time to time remaining unpaid at the rate
of ___% per annum from the date hereof until maturity, payable semiannually on
the ____ day of each ________ and ____________ in each year commencing on the
first of such dates after the date hereof, and at maturity. The Company agrees
to pay interest on overdue principal (including any overdue optional prepayment
of principal) and premium, if any, and, to the extent permitted by law, on any
overdue installment of interest, payable semiannually as aforesaid (or, at the
option of the holder hereof, on demand) at a rate per annum from time to time
equal to the greater of (i) ___%, or (ii) 2% over the rate of interest publicly
announced by ▇▇▇▇▇▇ Guaranty Trust Company of New York as its "prime rate"
until paid. Both the principal hereof and interest hereon are payable at the
principal office of ▇▇▇▇▇▇ Guaranty Trust Company of New York, in New York, New
York in coin or currency of the United States of America which at the time of
payment shall be legal tender for the payment of public and private debts.
This Promissory Note is one of the ___% Series __ Notes due
_____________, ____ (the "Series __ Notes") of the Company in the aggregate
principal amount of $_______________ issued under and pursuant to the terms and
provisions of the Note Purchase Agreement dated as of November 19, 1997 (the
"Agreement"), entered into by the Company with the Initial Purchasers therein
referred to, and a Supplemental Note Purchase Agreement dated as of
_________________, _____ entered into by the Company with the
EXHIBIT A-3
(to Note Purchase Agreement)
85
Supplemental Purchasers (as such term is defined in the Agreement) named
therein. Under and pursuant to said Agreement the Company has heretofore
issued Series A, Series B, _______________________ and Series __ Notes (the
"Issued Notes") in the aggregate principal amount of $_____________ and may,
from time to time issue additional Series (as such term is defined in the
Agreement) of promissory notes (such additional notes together with the Issued
Notes and the Series __ Notes are hereinafter collectively referred to as the
"Notes"). The aggregate principal amount of all Notes issued under the
Agreement shall not exceed $100,000,000. This Series __ Note and the holder
hereof are entitled equally and ratably with the holders of all other Notes
outstanding under the Agreement to all the benefits provided for thereby or
referred to therein. Reference is hereby made to the Agreement for a statement
of such rights and benefits.
This Series __ Note and the other Notes outstanding under the Agreement
(including any Supplemental Note Purchase Agreements, as such term is defined
in the Agreement) may be declared due prior to their expressed maturity dates
all in the events, on the terms and in the manner and amounts as provided in
the Agreement.
The Notes are not subject to prepayment or redemption at the option of
the Company prior to their expressed maturity dates except on the terms and
conditions and in the amounts and with the premium, if any, set forth in the
Agreement.
This Note is secured pursuant to the Security Agreement (as defined in
the Agreement), and, subject to the Intercreditor Agreement (as defined in the
Agreement), is entitled to the benefits thereof.
This Series __ Note is registered on the books of the Company and is
transferable only by surrender thereof at the principal office of the Company
duly endorsed or accompanied by a written instrument of transfer duly executed
by the registered holder of this Series __ Note or its attorney duly authorized
in writing. Payment of or on account of principal, premium, if any, and
interest on this Series __ Note shall be made only to or upon the order in
writing of the registered holder.
This Series __ Note shall be governed by the laws of the State of New
York.
HERITAGE OPERATING, L.P.
By Heritage Holdings, Inc., General Partner
By
-----------------------------------
Its
A-3-2
86
FORM OF SUPPLEMENTAL NOTE PURCHASE AGREEMENT
As of ____________, _____
To Each of the Purchasers
Named in the Supplemental
Purchaser Schedule Attached Hereto
Ladies and Gentlemen:
Reference is made to that certain Note Purchase Agreement dated as of
November 19, 1997 between the Company and each of the Initial Purchasers named
in the Initial Purchaser Schedule attached thereto (the "Agreement"). Terms
used but not defined herein shall have the respective meanings set forth in the
Agreement.
As contemplated in Section 2B of the Agreement, the Company agrees with
you as follows:
A. Subsequent Series of Notes. The Company will create a Subsequent
Series of Notes to be called the "Series ___ Notes". Said Series ___ Notes
will be dated the date of issue; will bear interest from such date at the rate
of ____% per annum, payable semi-annually on the ___ day of each _________ and
__________ in each year (commencing _________, _____) until the principal
amount thereof shall become due and payable and shall bear interest on overdue
principal (including any overdue optional prepayment of principal) and premium,
if any, and, to the extent permitted by law, on any overdue installment of
interest at the rate specified therein after the date due for payment, whether
by acceleration or otherwise, until paid; will be expressed to mature on
__________, _____; and will be substantially in the form attached to the
Agreement as Exhibit A-2 with the appropriate insertions to reflect the terms
and provisions set forth above.
B. Purchase and Sale of Series ___ Notes. The Company hereby agrees
to sell to each Supplemental Purchaser set forth on the Supplemental Purchaser
Schedule attached hereto (collectively, the "Series ___ Purchasers") and,
subject to the terms and conditions in the Agreement and herein set forth, each
Series ___ Purchaser agrees to purchase from the Company the aggregate
principal amount of the Series ___ Notes set opposite each Series ___
Purchaser's name in the Supplemental Purchaser Schedule at 100% of the
aggregate principal amount. The sale of the Series ___ Notes shall take place
at the offices of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇ at 10:00 a.m. Chicago time, at a closing the ("Series ___ Closing") on
____________, ____, or such other date as shall be agreed upon by the Company
and each Series ___ Purchaser. At the Series ___ Closing the Company will
deliver to each Series ___ Purchaser one or more Series ___ Notes registered in
such Series ___ Purchaser's name (or in the name of its nominee), evidencing
the aggregate principal amount of Series ___ Notes to be purchased by said
Series ___ Purchaser and in the denomination or denominations specified with
EXHIBIT B
(to Note Purchase Agreement)
87
respect to such Series ___ Purchaser in the Supplemental Purchaser Schedule
attached hereto against payment of the purchase price thereof by transfer of
immediately available funds for credit to the Company's account on the date of
the Series ___ Closing (the "Series ___ Closing Date") (as specified in a
notice to each Series ___ Purchaser at least three Business Days prior to the
Series ___ Closing Date).
C. Conditions of Series ___ Closing. The obligation of each Series
___ Purchaser to purchase and pay for the Series ___ Notes to be purchased by
such purchaser hereunder on the Series ___ Closing Date is subject to the
satisfaction, on or before such Series ___ Closing Date, of the conditions set
forth in Section 3 of the Agreement.
D. Prepayments. The Series ___ Notes shall be subject to prepayment
only (a) pursuant to the required prepayments, if any, specified in clause (x)
below, and in Section 4C of the Agreement; and (b) pursuant to the optional
prepayments permitted by Section 4B of the Agreement.
(x) Required Prepayments; Maturity [to be determined]
(y) Optional and Contingent Prepayments. As provided in
Sections 4B and 4C of the Agreement.
E. Series ___ Notes Issued under and Pursuant to Agreement. Except
as specifically provided above, the Series ___ Notes shall be deemed to be
issued under, to be subject to and to have the benefit of all of the terms and
provisions of the Agreement as the same may from time to time be amended and
supplemented in the manner provided therein.
B-2
88
The execution hereof by the Series ___ Purchasers shall constitute a
contract among the Company and the Series ___ Purchasers for the uses and
purposes hereinabove set forth. By their acceptance hereof, each of the Series
___ Purchasers shall also be deemed to have accepted and agreed to the terms
and provisions of the Agreement, as in effect on the date hereof.
HERITAGE OPERATING, L.P.
By Heritage Holdings, Inc., General Partner
By
-----------------------------------------
Its
Accepted as of
----------------------------
[VARIATION[
By
-----------------------------------------
Its
B-3
89
INITIAL PURCHASER SCHEDULE
PRINCIPAL AMOUNT
NAME AND ADDRESS AND SERIES OF NOTES
OF PURCHASER TO BE PURCHASED
PACIFIC LIFE INSURANCE COMPANY $12,000,000 Series A Notes
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Securities Administration
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"Heritage Operating, L.P., 7.17% Series A Notes due November 19, 2009, PPN
42726# AB 7, principal or interest) to:
BK OF NYC/CTR/BBK
IOC 565 - Inst'l Custody
ABA #▇▇▇▇-▇▇▇▇-▇
A/C Name: Pacific Life
A/C Number 280163
Regarding: Security Description & PPN
Notices
All notices and communications to be addressed as first provided above, except
notices of payments and written confirmation of such wire transfers, to be
addressed:
The Bank of New York
P.O. Box ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
A/C Name: Pacific Life
A/C Number: 280163
Name of Nominee in which Notes are to be issued: Hare & Co
General Taxpayer I.D. Number: ▇▇-▇▇▇▇▇▇▇
Private Placement Taxpayer I.D. Number: ▇▇-▇▇▇▇▇▇▇
90
PRINCIPAL AMOUNT
NAME AND ADDRESS AND SERIES OF NOTES
OF PURCHASER TO BE PURCHASED
PACIFIC LIFE INSURANCE COMPANY $8,000,000 Series B Notes
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Securities Administration
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"Heritage Operating, L.P., 7.26% Series B Notes due November 19, 2012, PPN
42726# AC 5, principal or interest") to:
BBK = Chase Manhattan Bank/SSTO
ABA #▇▇▇▇-▇▇▇▇-▇
A/C ▇▇▇-▇-▇▇▇▇▇▇
A/C Name: Pacific Life General Account
Sub A/C Number: 47363300
Regarding: Security Description & PPN
Notices
All notices and communications to be addressed as first provided above, except
notices with respect to payments and written confirmation of such wire
transfers, to be addressed:
The Chase Manhattan Bank
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Name of Nominee in which Notes are to be issued: ▇▇▇▇▇▇ & Co
General Taxpayer I.D. Number: ▇▇-▇▇▇▇▇▇▇
Private Placement Taxpayer I.D. Number: ▇▇-▇▇▇▇▇▇▇
-2-
91
PRINCIPAL AMOUNT
NAME AND ADDRESS AND SERIES OF NOTES
OF PURCHASER TO BE PURCHASED
NEW YORK LIFE INSURANCE COMPANY $5,000,000 Series B Notes
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Investment Department,
Private Finance Group, Room 206
Telefacsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"Heritage Operating, L.P., 7.26% Series B Notes due November 19, 2012, PPN
42726# AC 5, principal, premium or interest") to:
Chase ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
ABA #▇▇▇-▇▇▇-▇▇▇
For the account of New York Life Insurance Company
Account Number ▇▇▇-▇-▇▇▇▇▇
Notices
All notices with respect to payments and written confirmation of each such
payment, to be addressed:
New York Life Insurance Company
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Treasury Department, Securities Income Section, ▇▇▇▇ ▇▇▇ Fax
#: (▇▇▇) ▇▇▇-▇▇▇▇
All other notices and communications to be addressed as first provided above,
with a copy of any notices regarding defaults or Events of Default under the
operative documents to: ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇, Fax #: (▇▇▇) ▇▇▇-▇▇▇▇
-3-
92
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: ▇▇-▇▇▇▇▇▇▇
-4-
93
PRINCIPAL AMOUNT
NAME AND ADDRESS AND SERIES OF NOTES
OF PURCHASER TO BE PURCHASED
NEW YORK LIFE INSURANCE AND ANNUITY $7,000,000 Series B Notes
CORPORATION
c/o New York Life Insurance Company
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"Heritage Operating, L.P., 7.26% Series B Notes due November 19, 2012, PPN
42726# AC 5, principal, premium or interest") to:
Chase Manhattan Bank
New York, New York
ABA No. ▇▇▇-▇▇▇-▇▇▇
for the account of New York Life Insurance and Annuity Corporation
General Account Number ▇▇▇-▇-▇▇▇▇▇
Notices
All notices with respect to payments and written confirmation of each such
payment, to be addressed:
New York Life Insurance and Annuity Corporation
c/o New York Life Insurance Company
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Treasury Department
Securities Income Section
▇▇▇▇ ▇▇▇
Fax #: (▇▇▇) ▇▇▇-▇▇▇▇
All other notices and communications to be addressed as first provided above,
with a copy of any notices regarding defaults or Events of Default under the
-5-
94
operative documents to: ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇, Fax #: (▇▇▇) ▇▇▇-▇▇▇▇
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: ▇▇-▇▇▇▇▇▇▇
-6-
▇▇
▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, P.A. special Arizona counsel
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, P.C. special California counsel
Hollard & ▇▇▇▇ LLP, special Colorado counsel
▇▇▇▇▇▇▇▇▇ & Green, P.A., special Florida counsel
Hollard & ▇▇▇▇ LLP, special Idaho counsel
▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.C., special Michigan counsel
▇▇▇▇▇▇▇, Street and Deinard, special Minnesota counsel
▇▇▇▇▇▇▇, Haughey, Hanson, Toole & ▇▇▇▇▇▇▇▇ , P.L.L.P., special Montana
counsel
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.A., special New Mexico counsel
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P., special North Carolina counsel
▇▇▇▇▇▇▇ & ▇▇▇▇▇, L.L.P., special Texas counsel
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & Paterson, P.S., special Washington counsel
96
SCHEDULE 6C
LIENS
----------------------------------------------------------------------------------------------------
SECURED PARTY COLLATERAL DOCUMENTS*
----------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇ Mortgage and Security Agreement dated 7/12/96
(One District)
----------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Security Agreements dated 7/9/96
(One District)
----------------------------------------------------------------------------------------------------
Spring Lake Super Flame Gas & Oil, Inc.; Security Agreement dated 7/23/96
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇; ▇▇▇▇ ▇▇▇▇▇▇▇▇ (One District)
----------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Mortgage and Security Agreement dated 8/20/96
(One District)
----------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Security Agreement dated 10/30/96
(One District)
----------------------------------------------------------------------------------------------------
Central Gas & Appliance Company, Inc.; Deed of Trust and Security Agreement dated 3/18/97
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇; ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇; Security Agreement dated 3/18/97
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇; ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇; W.E. (Multiple Districts)**
▇▇▇▇▇▇▇, Jr.
----------------------------------------------------------------------------------------------------
Lancaster Gas Service, Inc.; Security Agreement Dated April 17, 1997
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇.; ▇▇▇▇▇▇ ▇. (One District)**
Lancaster; ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇; ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇; ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------------------------------------------------------------------------
Keen Compressed Gas, Co; Security Agreement dated 8/1/97
▇. ▇▇▇▇▇▇▇ Keen; ▇▇▇▇▇ ▇. ▇▇▇▇; ▇▇▇ ▇. (Multiple Districts)
Keen, Jr.; ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇; ▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------------------------------------------------------------------------
▇. ▇▇▇▇▇ ▇▇▇▇▇▇ Deeds of Trust, Security Agreement and Fixture
Filing dated 10/8/97 (Multiple Districts)
----------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇. Mass, ▇▇▇▇▇▇ ▇. Mass; First Real Estate Mortgage dated 6/30/92
Union National Bank of Florida*** (One District)
----------------------------------------------------------------------------------------------------
Wilmington Trust, as Collateral Agent Security Agreement date 6/28/96
----------------------------------------------------------------------------------------------------
* These documents reflect record encumbrances on the Company's Assets.
** The referenced documents are between Guilford Gas Service, Inc., an 100%
owned subsidiary of the Company, as debtor and the referenced secured
parties.
*** The referenced mortgage will remain an encumbrance on the real property of
the Company until all the non-competition payments have been made by
Heritage Holdings, Inc. The Company did not assume the obligation for
future non-competion payments which currently total $111,111.
**** Total indebtedness to secured party, excluding Wilmington Trust is
$6,761,072. Of this this amount $6,649,961 is included in schedule 8G.
97
SCHEDULE 6E
INVESTMENTS
1. 50% ownership of Bi-State Propane Partnership, a California general
partnership ("Bi-State"), and on-going advances to Bi-state pursuant to the
Administrative Services Agreement between Bi-state and Heritage.
98
SCHEDULE 8B
SUBSIDIARIES OF OPERATING PARTNERSHIP
1. Heritage Service Corp., a Delaware corporation (100% owned).
2. Heritage-BiState L.L.C., a Delaware limited liability company (99% owned).
3. M-P Oils, Ltd., an Alberta corporation (100% owned).
4. M-P Oils, Partnership, an Alberta partnership, 60% owned by M-P Oils, Ltd.
5. Guilford Gas, Inc., a North Carolina corporation (100% owned).
99
SCHEDULE 8C
FOREIGN QUALIFICATION
HERITAGE OPERATING, L.P.
1. Arizona
2. California
3. Colorado
4. Delaware
5. Florida
6. Idaho
7. Kentucky
8. Maryland
9. Massachusetts
10. Michigan
11. Minnesota
12. Mississippi
13. Montana
14. Nevada
15. New Jersey
16. New Mexico
17. New York
18. North Carolina
19. Oklahoma
20. Oregon
21. Pennsylvania
22. South Carolina
23. Tennessee
24. Texas
25. Vermont
26. Washington
HERITAGE - BI-STATE, L.L.C.
1. California
2. Delaware
3. Nevada
4. Oklahoma
M-P OILS, LTD.
1. Alberta, Canada
100
SCHEDULE 8G
OTHER INDEBTEDNESS OF
BORROWER AND SUBSIDIARIES
1. Borrower's indebtedness for the Private Placement Notes ($120,000,000).
2. Borrower's and Subsidiaries indebtedness for the Bank Credit Facility
($46,400,000).
3. Indebtedness of M-P Oils, Partnership to Bank of Montreal, from time to
time as required for working capital purposes (None).
4. Indebtedness of Bi-State Propane Partnership, a California general
partnership, to Bank of Oklahoma, National Association ($3,000,000).
5. Various purchase money indebtedness ($970,000).
6. Various noncompete indebtedness ($5,975,000).
101
SCHEDULE 8H
TITLE TO PROPERTIES
Certain of the Borrower's properties are subject to encumbrances as reflected on
Schedule 6C.