UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended April 30, 2000
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from __________ to __________
Commission file numbers: 1-11331
333-06693
Ferrellgas Partners, L.P.
Ferrellgas Partners Finance Corp.
(Exact name of registrants as specified in their charters)
Delaware 43-1698480
Delaware 43-1742520
- ---------------------------- -------------------------------
(States or other jurisdictions of (I.R.S. Employer Identification Nos.)
incorporation or organization)
One Liberty Plaza, Liberty, Missouri 64068
(Address of principal executive offices) (Zip Code)
Registrants' telephone number, including area code: (816) 792-1600
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [ X ] No [ ]
At June 14, 2000, the registrants had units or shares outstanding as follows:
Ferrellgas Partners, L.P. 31,307,116 Common Units
Ferrellgas Partners Finance Corp. 1,000 Common Stock
FERRELLGAS PARTNERS, L.P. and SUBSIDIARIES
FERRELLGAS PARTNERS FINANCE CORP.
Table of Contents
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Ferrellgas Partners, L.P. and Subsidiaries
Consolidated Balance Sheets - April 30, 2000 and July 31, 1999 1
Consolidated Statements of Earnings -
Three and nine months ended April 30, 2000 and 1999 2
Consolidated Statement of Partners' Capital -
Nine months ended April 30, 2000 3
Consolidated Statements of Cash Flows -
Nine months ended April 30, 2000 and 1999 4
Notes to Consolidated Financial Statements 5
Ferrellgas Partners Finance Corp.
Balance Sheets - April 30, 2000 and July 31, 1999 12
Statements of Earnings - Three and nine months ended April 30, 2000 and 1999 12
Statements of Cash Flows - Nine months ended April 30, 2000 and 1999 13
Notes to Financial Statements 13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
14
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 20
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 21
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS 21
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 22
ITEM 4. SUBMISSION TO A VOTE OF SECURITIES HOLDERS 22
ITEM 5. OTHER INFORMATION 22
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 22
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
April 30, July 31,
ASSETS 2000 1999
- ------------------------------------------------------------------------- ---------------- ------------
(unaudited)
Current Assets:
Cash and cash equivalents $ 12,766 $35,134
Accounts and notes receivable, net 117,537 58,380
Inventories 54,970 24,645
Prepaid expenses and other current assets 12,219 6,780
---------------- ------------
Total Current Assets 197,492 124,939
Property, plant and equipment, net 532,943 405,292
Intangible assets, net 256,861 118,117
Other assets, net 10,571 8,397
---------------- ------------
Total Assets $997,867 $656,745
================ ============
LIABILITIES AND PARTNERS' CAPITAL
- -------------------------------------------------------------------------
Current Liabilities:
Accounts payable $82,923 $60,754
Other current liabilities 66,183 48,266
Short-term borrowings 17,859 20,486
---------------- ------------
Total Current Liabilities 166,965 129,506
Long-term debt 712,042 583,840
Other liabilities 19,202 12,144
Contingencies and commitments - -
Minority interest 2,650 906
Partners' Capital:
Senior common unitholders (4,539,211 units outstanding
at April 30, 2000 - redeemable liquidation value - $177,139,946) 174,131 -
Common unitholders (31,307,116 and 14,710,765 units
outstanding at April 30, 2000 and July 31, 1999, respectively) (18,446) 1,215
Subordinated unitholders (0 and 16,593,721 units outstanding
at April 30, 2000 and July 31, 1999, respectively) - (10,516)
General partner (57,880) (59,553)
Accumulated other comprehensive income (797) (797)
---------------- ------------
Total Partners' Capital 97,008 (69,651)
---------------- ------------
Total Liabilities and Partners' Capital $997,867 $656,745
================ ============
See notes to consolidated financial statements.
1
FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands, except per-unit data)
(unaudited)
For the three months ended For the nine months ended
---------------------------- ----------------------------
April 30, April 30, April 30, April 30,
2000 1999 2000 1999
------------- ------------- ------------- -------------
Revenues:
Gas liquids and related product sales $279,043 $161,192 $736,575 $495,735
Other 21,197 8,700 67,399 34,573
------------- ------------- ------------- -------------
Total revenues 300,240 169,892 803,974 530,308
Cost of product sold (exclusive of
depreciation, shown separately below) 176,274 70,171 439,627 230,211
------------- ------------- ------------- -------------
Gross profit 123,966 99,721 364,347 300,097
Operating expense 70,556 52,811 197,074 160,763
Depreciation and amortization expense 17,382 12,156 43,381 35,273
Employee stock ownership plan compensation charge 840 800 2,893 2,490
General and administrative expense 7,070 5,366 18,213 14,231
Equipment lease expense 8,173 3,351 17,612 9,492
------------- ------------- ------------- -------------
Operating income 19,945 25,237 85,174 77,848
Interest expense (15,531) (11,264) (42,809) (34,842)
Interest income 959 330 1,568 874
Loss on disposal of assets 99 (495) (30) (1,007)
------------- ------------- ------------- -------------
Earnings before minority interest and
extraordinary item 5,472 13,808 43,903 42,873
Minority interest 94 179 561 550
------------- ------------- ------------- -------------
Earnings before extraordinary item 5,378 13,629 43,342 42,323
Extraordinary loss on early extinguishment of debt,
net of minority interest of $130 - - - (12,786)
------------- ------------- ------------- -------------
Net earnings 5,378 13,629 43,342 29,537
Paid in kind distribution to senior common unitholders 4,428 N/A 6,568 N/A
General partner's interest in net earnings 10 136 368 295
------------- ------------- ------------- -------------
Limited partners' interest in net earnings $940 $13,492 $36,406 $29,242
============= ============= ============= =============
Basic earnings per limited partner unit:
Earnings before extraordinary item $ 0.03 $ 0.43 $ 1.16 $ 1.34
Extraordinary loss - - - (0.41)
------------- ------------- ------------- -------------
Net earnings $ 0.03 $ 0.43 $ 1.16 $ 0.93
============= ============= ============= =============
Diluted earnings per limited partner unit:
Earnings before extraordinary item $ 0.03 $ 0.43 $ 1.16 $ 1.34
Extraordinary loss - - - (0.41)
------------- ------------- ------------- -------------
Net earnings $ 0.03 $ 0.43 $ 1.16 $ 0.93
============= ============= ============= =============
See notes to consolidated financial statements.
2
FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
(in thousands)
(unaudited)
Number of units Accumulated
------------------------------------- other
Senior Sub- Senior Sub- compre- Total
common Common ordinated common Common ordinated General hensive partners'
unitholders unitholders unitholders unitholders unitholders unitholders partner income capital
------------ ------------ ------------ ----------- ------------ ---------- ------------ ------- ---------
August 1, 1999 - 14,710.8 16,593.7 $ - $ 1,215 $(10,516) $(59,553) $(797) $(69,651)
Conversion of subordinated
units into common units - 16,593.7 (16,593.7) - (10,516) 10,516 - - -
Units issued in connection -
with acquisitions:
Common units - 2.6 - 45 - - - 45
Senior common units 4,375.0 - - 175,000 - - 1,768 - 176,768
Fees paid to issue
senior common units - - - (8,925) - - - - (8,925)
Accretion of discount on senior
common units - - - 1,488 (1,472) - (16) - -
Contribution from general
partner in connection with
ESOP compensation charge - - - - 2,837 - 28 - 2,865
Quarterly cash distributions - - - - (46,961) - (474) - (47,435)
Accrued paid in kind
distributions 164.2 - - 6,568 (6,503) - (66) - (1)
Comprehensive income:
Net earnings - - - - 42,909 - 433 - 43,342
----------
Comprehensive income 43,342
------------ ------------ ------------ ----------- ------------ ---------- ----------- -------- ---------
April 30, 2000 4,539.2 31,307.1 - $174,131 $(18,446) $ - $(57,880) $(797) $97,008
============ ============ ============ =========== ============ ========== ============ ======= =========
See notes to consolidated financial statements.
3
FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
For the nine months ended
----------------------------------
April 30, 2000 April 30, 1999
---------------- -----------------
Cash Flows From Operating Activities:
Net earnings $43,342 $29,537
Reconciliation of net earnings to net cash provided by
operating activities:
Depreciation and amortization 43,381 35,273
Extraordinary loss, net of minority interest - 12,786
Employee stock ownership plan compensation charge 2,893 2,490
Other 4,622 4,461
Changes in operating assets and liabilities, net of
effects from business acquisitions:
Accounts and notes receivable (39,926) (12,212)
Inventories (14,088) 7,040
Prepaid expenses and other current assets (4,778) 1,491
Accounts payable (1,923) (6,360)
Other current liabilities 915 561
Other liabilities (763) 2,305
---------------- -----------------
Net cash provided by operating activities 33,675 77,372
---------------- -----------------
Cash Flows From Investing Activities:
Business acquisitions, net of cash acquired 55,548 (27,915)
Capital expenditures (18,631) (20,558)
Proceeds from sale leaseback transaction 25,000 -
Cash paid for acquisition transaction fees (15,589) -
Other 3,942 1,360
---------------- -----------------
Net cash provided by (used in) investing activities 50,270 (47,113)
---------------- -----------------
Cash Flows From Financing Activities:
Net reductions to short-term borrowings (2,627) (21,150)
Additions to long-term debt 218,573 394,745
Reductions of long-term debt (274,743) (351,689)
Cash paid for debt and lease financing costs (3,093) (12,528)
Distributions (47,435) (47,418)
Cash contribution from general partner 3,571 3
Other (559) (560)
---------------- -----------------
Net cash used in financing activities (106,313) (38,597)
---------------- -----------------
Decrease in cash and cash equivalents (22,368) (8,338)
Cash and cash equivalents - beginning of period 35,134 16,961
---------------- -----------------
Cash and cash equivalents - end of period $12,766 $8,623
================ =================
Cash paid for interest $41,058 $33,973
================ =================
See notes to consolidated financial statements.
4
FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2000
(unaudited)
A. The consolidated financial statements of Ferrellgas Partners, L.P. and
subsidiaries (the "Partnership" or "MLP") reflect all adjustments which
are, in the opinion of management, necessary for a fair statement of the
interim periods presented. All adjustments to the financial statements were
of a normal, recurring nature. These financial statements should be read in
conjunction with the financial statements and related notes included in our
Annual Report on Form 10-K for the year ended July 31, 1999.
B. The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America ("GAAP")
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reported period.
Actual results could differ from these estimates.
C. The propane industry is seasonal in nature with peak activity during the
winter months. Therefore, the results of operations for the periods ended
April 30, 2000 and April 30, 1999 are not necessarily indicative of the
results to be expected for a full year.
D. Inventories consist of:
April 30, July 31,
(in thousands) 2000 1999
--------------- ---------------
Liquefied propane gas and related products $32,970 $15,480
Appliances, parts and supplies 22,000 9,165
--------------- ---------------
$54,970 $24,645
=============== ===============
In addition to inventories on hand, the Partnership enters into contracts
to buy product for supply purposes. Nearly all such contracts have terms of
less than one year and most call for payment based on market prices at date
of delivery. All fixed price contracts have terms of less than one year. As
of April 30, 2000, the Partnership had committed to take delivery of
approximately 13,518,000 gallons at a fixed price for its estimated future
retail propane sales.
Property, plant and equipment, net consist of:
April 30, July 31,
(in thousands) 2000 1999
--------------- ---------------
Property, plant and equipment $790,602 $650,536
Less: accumulated depreciation 257,659 245,244
--------------- ---------------
$532,943 $405,292
=============== ===============
Intangible assets, net consist of:
April 30, July 31,
(in thousands) 2000 1999
--------------- ---------------
Intangible assets $412,490 $257,390
Less: accumulated amortization 155,629 139,273
--------------- ---------------
$256,861 $118,117
=============== ===============
5
E. Quarterly Distributions of Available Cash
The Partnership makes quarterly cash distributions to its Common Unitholders
of all of its "Available Cash", generally defined as consolidated cash
receipts less consolidated cash disbursements and net changes in reserves
established by the General Partner for future requirements. Reserves are
retained in order to provide for the proper conduct of the Partnership
business, or to provide funds for distributions with respect to any one or
more of the next four fiscal quarters. Distributions are made within 45 days
after the end of each fiscal quarter ending January, April, July and October
to holders of record on the applicable record date.
Distributions by the Partnership in an amount equal to 100% of its Available
Cash, as defined in its Second Amended and Restated Agreement of Limited
Partnership of Ferrellgas Partners, L.P. (the "Partnership Agreement"), will
be made to the General Partner based upon the number of General Partner
Units held in the Partnership and its interest in Ferrellgas, L.P. (the
Operating Partnership" or "OLP"), currently an aggregate 2%, subject to the
payment of incentive distributions to the holders of Incentive Distribution
Rights to the extent that certain target levels of cash distributions are
achieved. The remaining Available Cash will be paid to the Senior Common
Unitholders (see footnote G for discussion of the in kind distribution paid
to the Senior Common Unitholders) and Common Unitholders (the
"Unitholders"). The Senior Common Units have certain preference rights over
the Common Units. See Notes G and I for additional information about the
Senior Common Units.
F. Long-term debt consists of:
April 30, July 31,
(in thousands) 2000 1999
---------------- ---------------
Senior Notes
Fixed rate, 7.16%, due 2005-2013 $350,000 $350,000
Fixed rate, 9.375%, due 2006 160,000 160,000
Fixed rate, 8.8%, due 2006-2009 184,000 -
Credit Agreement
Revolving credit loans, 9.2% and 8.5%, respectively, due 2003 3,741 58,314
Notes payable, 8.4% and 7.3% weighted average interest rates,
Respectively, due 2000 to 2009 17,130 18,154
---------------- ---------------
714,871 586,468
Less: current portion 2,829 2,628
---------------- ---------------
$712,042 $583,840
================ ===============
On December 17, 1999, in connection with the purchase of Thermogas L.L.C.
("Thermogas Acquisition") (see Note J), the OLP assumed a $183,000,000
bridge loan that was originally issued by Thermogas L.L.C. ("Thermogas") and
had a maturity date of June 30, 2000. On February 28, 2000, the OLP issued
$184,000,000 of fixed rate Senior Notes which have maturities ranging from
2006 to 2009 and an average interest rate of 8.8% in order to refinance the
$183,000,000 bridge loan. The additional $1,000,000 in borrowings was used
to fund debt issuance costs.
On December 17, 1999, in connection with the Thermogas Acquisition, the OLP
paid off the balance remaining of $35,000,000 then outstanding on its
$38,000,000 unsecured credit facility used for acquisitions, capital
expenditures, and general corporate purposes. This outstanding credit
facility was then terminated, leaving the OLP with the $145,000,000 credit
facility as its only senior bank credit facility.
6
On April 18, 2000, the OLP entered into an amended and restated credit
facility with a group of financial institutions. The unsecured $157,000,000
Credit Facility ("Credit Facility"), which expires June 30, 2003, consists
of a $117,000,000 unsecured working capital, general corporate and
acquisition facility, including a letter of credit facility, and a
$40,000,000 revolving working capital facility. The $40,000,000 facility is
subject to an annual reduction in outstanding balances to zero for 30
consecutive days. All borrowings under the Credit Facility bear interest, at
the borrower's option, at a rate equal to either a) LIBOR plus an applicable
margin varying from 1.25 percent to 2.25 percent or, b) the bank's base rate
plus an applicable margin varying from 0.25 percent to 1.25 percent.
Effective April 27, 2000, the Partnership entered into an interest rate swap
agreement ("Swap Agreement") with Bank of America, related to the
semi-annual interest payment due on the $160,000,000 fixed rate Senior Notes
due 2006 ("MLP Senior Notes"). The Swap Agreement, which expires June 15,
2006, requires Bank of America to pay an amount based on the stated fixed
interest rate (annual rate 9.375%) pursuant to the MLP Senior Notes equaling
$7,500,000 every six months due on each June 15 and December 15. In
exchange, the Partnership is required to make quarterly floating interest
rate payments on the 15th of March, June, September and December based on an
annual interest rate equal to the 3 month LIBOR interest rate plus 1.655%
applied to the same notional amount of $160,000,000.
Effective June 2, 2000, the OLP entered into an interest rate cap agreement
("Cap Agreement") with Bank of America, related to variable quarterly rent
payments due pursuant to two operating tank lease agreements. The variable
quarterly rent payments are determined based upon a floating LIBOR based
interest rate. The Cap Agreement, which expires June 30, 2003, requires Bank
of America to pay the OLP at the end of each March, June, September and
December the difference, if any, between the applicable 3 month floating
LIBOR interest rate and 9.3%, the cap, applied to the total obligation due
each quarter under the two operating tank lease agreements. The total
obligation under these two operating tank lease agreements as of April 30,
2000 was $159,600,000.
G. Partners' Capital
The Partnership's capital (after including the effect of an aggregate of
164,211.11 Senior Common Units issued in order to pay the applicable in-kind
quarterly distributions) consists of 4,539,211.11 Senior Common Units,
31,307,116 Common Units representing the entire limited partner interest, and
316,233 General Partner Units representing a 1% General Partner interest. The
Partnership Agreement contains specific provisions for the allocation of net
earnings and loss to each of the partners for purposes of maintaining the
partner capital accounts.
In connection with the Thermogas Acquisition (See Note J) on December 17,
1999, the Partnership issued 4,375,000 Senior Common Units to Williams
Natural Gas Liquids, Inc. ("Williams" or "Seller"). As of June 15, 2000,
Williams held 4,539,211.11 Senior Common Units with a liquidation value of
approximately $181,600,000 including accrued and unpaid distributions. The
Senior Common Units entitle the holder to quarterly distributions from the
MLP equivalent to 10 percent per annum of the liquidating value.
Distributions are payable quarterly, in-kind, through issuance of
additional Senior Common Units until the earlier of February 1, 2002 or the
occurrence of a Material Event, as defined in the Partnership Agreement
("Material Event") after which distributions are payable in cash. The
Senior Common Units are redeemable by the Partnership at any time, in whole
or in part, upon payment in cash of the face value of the Senior Common
Units and the amount of any accrued but unpaid distributions.
7
Williams has the right, subject to certain events and conditions, to
convert any outstanding Senior Common Units into Common Units at the end of
two years or upon the occurrence of a Material Event. Such conversion
rights are contingent upon the Partnership not previously redeeming such
securities, among other conditions. The Partnership also granted Williams
demand registration rights at the end of two years or upon the occurrence
of a Material Event with respect to any outstanding Senior Common Units (or
Common Units into which they may be convertible). On June 5, 2000, at a
special meeting of its common unitholders, the Partnership's common
unitholders approved both the common unit conversion feature and an
exemption under the Partnership Agreement to enable Williams to vote the
Common Units, if such a conversion were to occur.
Effective August 1, 1999, the Subordination period ended and the
Subordinated Units converted to Common Units. Certain financial tests,
which were primarily related to making the Minimum Quarterly Distribution
on all Units, were satisfied for each of the three consecutive four quarter
periods ending July 31, 1999.
The Partnership maintains a shelf registration statement for Common Units
representing limited partner interests in the Partnership. The Common Units
may be issued from time to time by the Partnership in connection with the
Partnership's acquisition of other businesses, properties or securities in
business
combination transactions. The Partnership also maintains another shelf
registration statement for the issuance of Common Units, Deferred
Participation Units, Warrants and Debt Securities. The Partnership
Agreement allows the General Partner to issue an unlimited number of
additional Partnership general and limited interests and other equity
securities of the Partnership for such consideration and on such terms and
conditions as shall be established by the General Partner without the
approval of any Unitholders.
H. Contingencies and Commitments
The Partnership is threatened with or named as a defendant in various
lawsuits that, among other items, claim damages for product liability. It
is not possible to determine the ultimate disposition of these matters;
however, management is of the opinion that there are no known claims or
contingent claims that are likely to have a material adverse effect on the
financial condition, results of operations or cash flows of the
Partnership.
On December 6, 1999, the OLP entered into, with Banc of America Leasing &
Capital LLC, as lender, a $25,000,000 operating tank lease facility
involving a portion of the OLP's customer tanks. This operating lease has a
term that expires June 30, 2003 and may be extended for two additional
one-year periods at the option of the OLP, if such extension is approved by
the lessor.
On December 17, 1999, immediately prior to the closing of the Thermogas
Acquisition (See Note J), Thermogas entered into, with Banc of America
Leasing & Capital LLC, as lender, a $135,000,000 operating tank lease
facility involving a portion of its customer tanks. In connection with the
Thermogas Acquisition, the OLP assumed all obligations under the
$135,000,000 operating tank lease facility, which has terms and conditions
similar to the December 6, 1999, $25,000,000 operating tank lease facility
discussed above.
On April 18, 2000, the OLP completed the syndication of both the
$25,000,000 and $135,000,000 operating tank lease facilities to a group of
banks and other financial institutions.
8
Certain property and equipment is leased under noncancellable operating
leases which require fixed monthly rental payments and which expire at
various dates through 2018. Future minimum lease commitments for such
leases, including the aforementioned operating tank leases, are $29,309,000
in 2000, $33,356,000 in 2001, $29,088,000 in 2002, $23,765,000 in 2003,
$4,971,000 in 2004 and $7,232,000 thereafter.
I. Partnership Distributions
On September 14, 1999, the Partnership paid a cash distribution of $0.50
per Common and Subordinated Unit for the quarter ended July 31, 1999. On
December 14, 1999, the Partnership paid a cash distribution of $0.50 per
Common Unit for the quarter ended October 31, 1999. On March 14, 2000, the
Partnership paid a cash distribution of $0.50 per Common Unit for the
quarter ended January 31, 2000. Additionally, on February 21, 2000, the
Partnership declared an in-kind distribution to the Senior Common
Unitholders of $2,140,000, payable by the issuance of 53,499 additional
Senior Common Units. On May 19, 2000, the Partnership declared its
third-quarter cash distribution of $0.50 per Common Unit, payable June 14,
2000. Additionally, on May 19, 2000, the Partnership declared an in-kind
distribution to the Senior Common Unitholders of $4,428,499, payable by the
issuance of 110,712 additional Senior Common Units. The Senior Common
Unitholders will continue to receive quarterly distributions in-kind
through issuance of additional Senior Common Units until the earlier of
February 1, 2002 or the occurrence of a Material Event, after which
distributions are payable in cash.
J. Business Combinations
On December 17, 1999, the Partnership purchased Thermogas, a subsidiary of
Williams. At closing the Partnership entered into the following noncash
transactions: a) issued $175,000,000 in Senior Common Units to the seller,
b) assumed a $183,000,000 bridge loan, (see Note F) and c) assumed a
$135,000,000 operating tank lease (see Note H). After the conclusion of
these acquisition-related transactions, including the merger of the OLP and
Thermogas, the Partnership acquired $61,842,000 of cash which remained on
the Thermogas balance sheet at the acquisition date. The Partnership has
paid $15,589,000 in additional costs and fees related to the acquisition
between December 17, 1999 and April 30, 2000. As part of the Thermogas
Acquisition, the OLP agreed to reimburse Williams for the value of working
capital received by the Partnership in excess of $9,147,500. On June 6,
2000, the OLP and Williams agreed upon the amount of working capital that
was acquired by the Partnership on December 17, 1999. The OLP reimbursed
Williams $5,652,500 as final settlement of this working capital
reimbursement obligation.
The total assets contributed to the OLP (at the Partnership's cost basis)
have been preliminarily allocated as follows: (i) working capital of
$9,147,500, (ii) property, plant and equipment of $151,502,000, (iii)
$60,200,000 to customer list, (iv) $18,500,000 to trademarks (v) $9,600,000
to assembled workforce and (vi) $62,387,000 to goodwill. The estimated fair
values and useful lives of assets acquired are based on a preliminary
valuation and are subject to final valuation adjustments. The Partnership
intends to continue its analysis of the net assets of Thermogas to
determine the final allocation of the total purchase price to the various
assets acquired. The transaction has been accounted for as a purchase and,
accordingly, the results of operations of Thermogas have been included in
the consolidated financial statements from the date of acquisition.
9
The following pro forma financial information assumes that the Thermogas
Acquisition occurred as of August 1, 1998:
Nine months ended
--------------------------------
Pro Forma
April 30, April 30,
(in thousands, except per unit amounts) 2000 1999
--------------- ----------------
Total revenues $899,982 $733,590
Earnings before extraordinary item 26,897 41,216
Net earnings 26,897 28,430
Limited partners' interest in net earnings 26,628 28,146
Basic and diluted earnings per limited partner unit before extraordinary item $ 0.85 $ 1.30
Basic and diluted earnings per limited partner unit after extraordinary item $ 0.85 $ 0.90
K. Earnings Per Unit
Below is a calculation of the basic and diluted Common Units (and
Subordinated Units prior to August 1, 1999) used to calculate basic and
diluted earnings per unit on the Statements of Earnings.
(in thousands, except per unit data)
Three months ended Nine months ended
April 30, 2000 April 30, 1999
Limited partners' interest in net
earnings $940 $13,492 $36,406 $29,241
---------------- ----------------- ----------------- ----------------
Weighted average common and
subordinated units outstanding
31,307.1 31,299.4 31,306.6 31,296.8
Basic earnings per unit before
extraordinary item $0.03 $0.43 $1.16 $1.34
---------------- ----------------- ----------------- ----------------
Basic earnings per unit $0.03 $0.43 $1.16 $0.93
================ ================= ================= ================
10
Three months ended Nine months ended
April 30, April 30, April 30, April 30,
2000 1999 2000 April 1999
Limited partners' interest in net
earnings $940 $13,492 $36,406 $29,241
---------------- ----------------- ----------------- ----------------
Weighted average common and
subordinated units outstanding
31,307.1 31,299.4 31,306.6 31,296.8
Dilutive securities - options 0.0 0.0 0.0 28.8
---------------- ----------------- ----------------- ----------------
Weighted average out-standing units
+ dilutive units 31,307.1 31,299.4 31,306.6 31,325.6
=============== ================= ================= ================
Diluted earnings per unit before
extraordinary item $0.03 $0.43 $1.16 $1.34
================ ================= ================= ================
Diluted earnings per unit $0.03 $0.43 $1.16 $0.93
================ ================= ================= ================
For diluted earnings per unit purposes, the Senior Common Units have been
excluded as they are considered contingently issuable Common Units for which all
necessary conditions for their issuance have not been satisfied as of the end of
the reporting period.
11
FERRELLGAS PARTNERS FINANCE CORP.
(a wholly owned subsidiary of Ferrellgas Partners, L.P.)
BALANCE SHEETS
April 30, July 31,
ASSETS 2000 1999
- -------------------------------------------------------------------- ------------------ -------------------
(unaudited)
Cash $1,000 $1,000
------------------ -------------------
Total Assets $1,000 $1,000
================== ===================
STOCKHOLDER'S EQUITY
- --------------------------------------------------------------------
Common stock, $1.00 par value; 2,000 shares
authorized; 1,000 shares issued and outstanding $1,000 $1,000
Additional paid in capital 1,259 774
Accumulated deficit (1,259) (774)
------------------ -------------------
Total Stockholder's Equity $1,000 $1,000
================== ===================
STATEMENTS OF EARNINGS
(unaudited)
Three Months Ended Nine Months Ended
-----------------------------------------------------------------------
April 30, April 30, April 30, April 30,
2000 1999 2000 1999
----------------- ------------------ ----------------- ----------------
General and administrative expense $ 249 $ 181 $ 485 $ 226
----------------- ------------------ ----------------- ----------------
Net loss $(249) $ (181) $(485) $(226)
================= ================== ================= ================
See notes to financial statements.
12
FERRELLGAS PARTNERS FINANCE CORP.
(A wholly owned subsidiary of Ferrellgas
Partners, L.P.)
STATEMENTS OF CASH FLOWS
(unaudited)
Nine Months Ended
--------------------------------------------------
April 30, April 30,
2000 1999
--------------------- ------------------------
Cash Flows From Operating Activities:
Net loss $(485) $(226)
--------------------- ------------------------
Cash used in operating activities (485) (226)
--------------------- ------------------------
Cash Flows From Financing Activities:
Capital contribution 485 226
--------------------- ------------------------
Cash provided by financing activities 485 226
--------------------- ------------------------
Change in cash - -
Cash - beginning of period 1,000 1,000
--------------------- ------------------------
Cash - end of period $1,000 $1,000
===================== ========================
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
April 30, 2000
(unaudited)
A. Ferrellgas Partners Finance Corp., a Delaware corporation, was formed on
March 28, 1996, and is a wholly-owned subsidiary of Ferrellgas Partners,
L.P.
B. The financial statements reflect all adjustments which are, in the opinion
of management, necessary for a fair presentation of the interim periods
presented. All adjustments to the financial statements were of a normal,
recurring nature.
13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following is a discussion of the results of operations and liquidity
and capital resources of Ferrellgas Partners, L.P. (the "Partnership" or "MLP").
Except for the $160,000,000 of 9 3/8% Senior Secured Notes issued in April 1996
by the MLP and the related interest expense, Ferrellgas, L.P. (the "Operating
Partnership" or "OLP") accounts for nearly all of the consolidated assets,
liabilities, sales and earnings of the MLP. When the discussion refers to the
consolidated MLP, the term Partnership will be used.
Ferrellgas Partners Finance Corp. has nominal assets and does not conduct
any operations. Accordingly, a discussion of the results of operations and
liquidity and capital resources is not presented.
Forward-looking statements
Certain statements included in this report that are not historical facts,
including statements of whether or not the OLP will have sufficient funds to
meet its obligations and to enable it to distribute to the MLP sufficient funds
to permit the MLP to meet its obligations with respect to the MLP Senior Notes
issued in April 1996, and sufficient funds to pay the required distribution on
both the Senior Common Units (see Note E in the Consolidated Financial
Statements included elsewhere in this report) and the Minimum Quarterly
Distribution ("MQD") ($0.50 per Unit) on all Common Units, are forward-looking
statements.
Such statements are subject to risks and uncertainties that could cause
actual results to differ materially from those expressed in or implied by the
statements. The risks and uncertainties and their effect on the Partnership's
operations include but are not limited to the following: a) the effect of
weather conditions on demand for propane, b) price and availability of propane
supplies, c) the availability of capacity to transport propane to market areas,
d) competition from other energy sources and within the propane industry, e)
operating risks incidental to transporting, storing, and distributing propane,
f) changes in interest rates, g) governmental legislation and regulations, h)
energy efficiency and technology trends, i) savings due to synergies realized
from the integration of the operations acquired pursuant to the Thermogas
Acquisition, and j) other factors that are discussed in the Risk Factor section
of the Partnership's most recent 1933 Act filing with the Securities and
Exchange Commission, Amendment No. 1 to Form S-3 Registration Statement, as
filed February 5, 1999.
Results of Operations
The propane industry is seasonal in nature with peak activity during the
winter months. Due to the seasonality of the business and the timing of business
acquisitions, results of operations for the nine months ended April 30, 2000 and
1999, are not necessarily indicative of the results to be expected for a full
year. Other factors affecting the results of operations include competitive
conditions, demand for product, variations in weather and fluctuations in
propane prices. As the Partnership has grown through acquisitions, fixed costs
such as personnel costs, depreciation and interest expense have increased.
Historically, these fixed cost increases have caused net losses in the first and
fourth quarters and net income in the second and third quarters to be more
pronounced.
On December 17, 1999, the Partnership purchased Thermogas L.L.C. (the
"Thermogas Acquisition" or "Thermogas"), a subsidiary of Williams. During the
second quarter of fiscal 2000, the Partnership was able to identify the effect
of the Thermogas Acquisition on the results of operations, because the Thermogas
operations acquired were being operated separately from the existing Ferrellgas
operations. Beginning in the third quarter of fiscal 2000, the Partnership began
to implement its strategic and operating plans for the integration of Thermogas
into the Partnership's existing operations. These integration actions resulted
in the merging of retail locations and the related customer groups. Due to the
extent of this integration, the Partnership is unable to quantify separately the
effect of the Thermogas Acquisition in the discussion of results of operations
in the current and future quarters. Three Months Ended April 30, 2000 vs. April
30, 1999
14
Total Revenues. Total gas liquids and related product sales increased 73.1%
to $279,043,000 as compared to $161,192,000 in the third quarter of fiscal 1999,
primarily due to the addition of Thermogas sales and increased sales price per
gallon. For the quarter, temperatures were 18% warmer than normal and 12% warmer
than last year as reported by the American Gas Association.
Sales price per gallon increased due to the effect of a significant
increase in the wholesale cost of propane as compared to the prior period.
Retail volumes increased 36.6% to 261,994,000 gallons as compared to 191,783,000
gallons for the prior period, primarily due to the acquisition effect of
Thermogas, partially offset by the effect of warmer weather. Other revenues
increased by $12,497,000 primarily due to favorable results from the risk
management operations.
Gross Profit. Gross profit increased 24.3% to $123,966,000 as compared to
$99,721,000 in the third quarter of fiscal 1999, primarily due to gross profit
generated from the acquired Thermogas operations and, to a lesser extent,
favorable results from the risk management operations, partially offset by lower
retail margins and a reduction in gallons due to warmer weather. Last year's
retail margins benefited significantly from a low wholesale cost environment.
That cost environment was not repeated this year.
Operating Expenses. Operating expenses increased 33.6% to $70,556,000 as
compared to $52,811,000 in the third quarter of fiscal 1999 primarily due to
expenses related to the acquired Thermogas operations.
Depreciation and Amortization. Depreciation and amortization expense
increased 43.0% to $17,382,000 as compared to $12,156,000 in the same quarter
last year primarily due to the addition of intangibles and property, plant and
equipment from the Thermogas Acquisition and other acquisitions of propane
businesses.
Equipment Lease Expense. Vehicle, tank and computer lease expense increased
by $4,822,000 primarily due to the addition of the operating tank leases during
the second quarter of fiscal 2000, and, to a lesser extent, increased operating
lease facilities for new vehicles and computers for the retail locations. See
Note H to the Consolidated Financial Statements included elsewhere in this
report for additional information regarding the operating tank leases.
Interest Expense. Interest expense increased 37.9% to $15,531,000 as
compared to $11,264,000 in the third quarter of fiscal 1999. This increase is
primarily the result of increased borrowings related to the Thermogas
acquisition. As a result of the Thermogas Acquisition, which closed on December
17, 1999, the OLP assumed $183,000,000 in debt and also refinanced a portion of
its existing revolving credit facility balances. On February 28, 2000, the OLP
issued $184,000,000 of fixed rate Senior Notes which have maturities ranging
from 2006 to 2009 and an average interest rate of 8.8% in order to repay the
$183,000,000 in assumed debt. The additional $1,000,000 in borrowings was used
to fund debt issuance costs. (see Financing Activities following)
Nine Months Ended April 30, 2000 vs. April 30, 1999
Total Revenues. Total gas liquids and related product sales increased 48.6%
to $736,575,000 as compared to $495,735,000 for the prior period, primarily due
to the addition of Thermogas sales and increased sales price per gallon. For the
fiscal year to date, temperatures were 14% warmer than normal and 6% warmer than
last year as reported by the American Gas Association.
Sales price per gallon increased due to the effect of a significant
increase in the wholesale cost of propane as compared to the prior period.
Retail volumes increased 24.1% to 729,467,000 gallons as compared to 587,711,000
gallons for the prior period, primarily due to the acquisition effect of
Thermogas, partially offset by the effect of warmer weather. Other revenues
increased by $32,826,000 primarily due to favorable results from risk management
operations.
15
Gross Profit. Gross profit increased 21.4% to $364,347,000 as compared to
$300,097,000 in the year ago period, primarily due to gross profit generated
from the acquired Thermogas operations and, to a lesser extent, increased
favorable results from the risk management operations, partially offset by lower
retail margins. Last year's margins benefited significantly from a low wholesale
cost environment. That cost environment was not repeated this year. In addition,
while the wholesale cost of propane rapidly increased during the year, the sales
price lagged the cost increase.
Operating Expenses. Operating expenses increased 22.6% to $197,074,000 as
compared to $160,763,000 in the first nine months of fiscal 2000 primarily due
to operating expenses incurred due to the acquired Thermogas operations and
higher risk management related operating expenses.
Depreciation and Amortization. Depreciation and amortization expense
increased 23.0% to $43,381,000 as compared to $35,273,000 for the same period
last year primarily due to the addition of intangibles and property, plant and
equipment from the Thermogas Acquisition and other acquisitions of propane
businesses.
Equipment Lease Expense. Vehicle, tank and computer lease expense increased
by $8,120,000 due to the addition of the operating tank leases, and increased
operating lease facilities for new vehicles and computers for retail locations.
See Note H to the Consolidated Financial Statements included elsewhere in this
report for additional information regarding the operating tank leases.
Interest Expense. Interest expense increased 22.9% to $42,809,000 as
compared to $34,842,000 in the first nine months of fiscal 2000. This increase
is primarily the result of increased borrowings related to the Thermogas
Acquisition and, to a lesser extent, an increase in the overall average interest
rate paid by the Partnership. As a result of the Thermogas Acquisition closed on
December 17, 1999, the OLP assumed $183,000,000 in debt and also refinanced a
portion of its existing revolving credit facility balances. On February 28,
2000, the OLP issued $184,000,000 of fixed rate Senior Notes which have
maturities ranging from 2006 to 2009 and an average interest rate of 8.8% in
order to repay the $183,000,000 in assumed debt. The additional $1,000,000 in
borrowings was used to fund debt issuance costs.
The extraordinary charge in fiscal 1999 is due primarily to the payment of
a $10,000,000 call premium related to the refinancing of $200,000,000 of fixed
rate debt on August 5, 1998. The remaining costs relate to the write off of
unamortized debt issuance costs related to refinancing of the fixed rate debt
and revolving credit facility balances. (See Financing Activities following)
Liquidity and Capital Resources
The ability of the MLP to satisfy its obligations is dependent upon future
performance, which will be subject to prevailing economic, financial, business
and weather conditions and other factors, many of which are beyond its control.
Due to the seasonality of the Partnership's retail propane business, a
significant portion of the Partnership's cash flow from operations is typically
generated during the winter heating season and the Partnership's corresponding
second and third fiscal quarters. During the summer season and the Partnership's
first and fourth fiscal quarters, it is not unusual for the Partnership to
generate negative cash flow from operations due to lower retail sales offset by
fixed expenses. As experienced in previous fiscal years, the next two fiscal
quarters ended July 31, 2000, and October 31, 2000, are expected to generate
negative cash flows from operations, and is typically the time period when the
Partnership utilizes other sources of funds to meet its obligations. Subject to
meeting certain financial tests discussed below, the General Partner believes
that the OLP will have sufficient funds available to meet its obligations and
enable it to distribute to the MLP sufficient funds to permit the MLP to meet
its obligations with respect to the $160,000,000 senior secured notes issued in
April 1996 ("MLP Senior Secured Notes") and enable it to distribute the MQD on
all Common Units for the fiscal quarters ending July 31, 2000, and October 31,
2000.
16
The MLP Senior Secured Notes, the $350,000,000 OLP senior notes ("$350
million Senior Notes"), the $184,000,000 OLP senior notes issued in February
2000 ("$184 million Senior Notes"), the $157,000,000 amended and restated OLP
credit facility ("Credit Facility") and the $25,000,000 and $135,000,000 OLP
operating tank leases ("Tank Leases") (See Financing Activities following)
contain several financial tests and covenants which restrict the Partnership's
ability to pay distributions, incur debt and engage in certain other business
transactions. These tests, in general, are based on the Partnership's debt to
cash flow ratio and cash flow to interest expense ratio. The General Partner
believes that the most restrictive of these tests currently are debt incurrence
limitations within the Credit Facility and Tank Leases and limitations on the
payment of distributions within the MLP Senior Secured Notes. The Credit
Facility and Tank Leases limit the OLP's ability to incur debt if the OLP
exceeds prescribed ratios of either debt to cash flow or cash flow to interest
expense. The MLP Senior Secured Notes restrict payments if a minimum ratio of
cash flow to interest expense is not met. This restriction places limitations on
the Partnership's ability to make certain restricted payments which include, but
are not limited to, the payment of distributions to unitholders. In general, the
cash flow used to determine these financial tests is based upon the
Partnership's most recent cash flow performance giving pro forma effect for
acquisitions and divestitures made during the test period.
The Partnership's financial performance during both fiscal 1999 and the
first three quarters of fiscal 2000 have been adversely impacted by average
temperatures that were among the warmest recorded in the last 100 years. In
addition, during fiscal 2000, the Partnership has experienced high product costs
which has negatively impacted retail margins. Despite these challenges, the
Partnership has continued to meet all of its financial tests and covenants.
These include the debt incurrence tests within the Credit Facility and Tank
Leases and the MLP Senior Secured Notes restricted payment test, as well as
other financial tests and covenants in the MLP Senior Secured Notes, the $350
million Senior Notes, the $184 million Senior Notes, Credit Facility and Tank
Leases.
Based upon current estimates of the Partnership's cash flow, the General
Partner believes that it will be able to meet all of the required financial
tests and covenants for the fiscal quarters ending July 31, 2000 and October 31,
2000. However, due to the lower than expected operating results experienced
during the current fiscal year to date, if the Partnership were to encounter
additional unexpected downturns in business operations, such as continued warmer
than normal weather or high products costs, the Partnership may not meet certain
financial tests during immediate future quarters. This could temporarily
restrict the ability of the OLP to incur debt or the MLP's ability to make cash
distributions to its Common Unitholders. Depending on the circumstances, the
Partnership could consider alternatives to permit the incurrence of debt at the
OLP or the continued payment by the MLP of the quarterly cash distribution to
its Common Unitholders. No assurances can be given, however, that such
alternatives can or will be implemented with respect to any given quarter.
Future maintenance and working capital needs of the Partnership are
expected to be provided by cash generated from future operations, existing cash
balances and the working capital borrowing facility. In order to fund expansive
capital projects and future acquisitions, the OLP may borrow on the existing
Credit Facility, the MLP or OLP may issue additional debt (to the extent
permitted under existing debt agreements) or the MLP may issue additional equity
securities, including, among others, Common Units.
Toward this purpose, on February 5, 1999, the MLP filed a shelf
registration statement with the Securities and Exchange Commission (the
"Commission") for the periodic sale of up to $300,000,000 in debt and/or equity
securities. The registered securities would be available for sale by the
Partnership in the future to fund acquisitions or to reduce indebtedness. Also,
the MLP maintains a shelf registration statement with the Commission for
2,010,484 Common Units representing limited partner interests in the MLP. The
Common Units may be issued from time to time by the MLP in connection with the
OLP's acquisition of other businesses, properties or securities in business
combination transactions.
17
On August 1, 1999, the subordination period ended and the Subordinated
Units converted to Common Units. This conversion is more fully described in Note
G of the Consolidated Financial Statements provided herein.
Operating Activities. Cash provided by operating activities was $33,675,000
for the nine months ended April 30, 2000, compared to $77,372,000 for the prior
period. This decrease in cash provided from operations is primarily due to the
net effect of increased wholesale cost of product on accounts receivable,
inventory, and accounts payable and to a lesser extent the timing of receipts
and payments related to risk management activities.
Investing Activities. During the nine months ended April 30, 2000, before
the effect of the Thermogas Acquisition, the Partnership made total acquisition
capital expenditures of $7,088,000. This amount was funded by $6,294,000 of cash
payments, $601,000 of noncompete notes, $46,000 of Common Units issued and
$147,000 of other costs and consideration.
On December 17, 1999, the Partnership purchased Thermogas. At closing the
Partnership entered into the following noncash transactions: a) issued
$175,000,000 in Senior Common Units to the seller, b) assumed a $183,000,000
bridge loan, which was refinanced from the proceeds of the $184 million Senior
Notes issued on February 28, 2000, and c) assumed a $135,000,000 operating tank
lease. After the conclusion of these acquisition-related transactions, the
Partnership acquired $61,842,000 of cash which remained on the Thermogas balance
sheet. The Partnership has paid $15,589,000 in additional costs and fees related
to the acquisition between December 17, 1999 and April 30, 2000. As part of the
Thermogas Acquisition, the OLP agreed to reimburse Williams for the value of
working capital received by the Partnership in excess of $9,147,500. On June 6,
2000, the OLP and Williams agreed upon the amount of working capital that was
acquired by the Partnership on December 17, 1999. The OLP has reimbursed
Williams $5,652,500 as final settlement of this working capital reimbursement
obligation.
The Partnership has accrued $7,033,000 in exit costs which it expects to
incur within twelve months from the acquisition date as it implements the
integration of the Thermogas operations. As of April 30, 2000, the Partnership
has paid $449,000 of exit costs. Other than future effects from the Thermogas
Acquisition, the Partnership does not have any material commitments of funds for
capital expenditures other than to support the current level of operations. In
fiscal 2000, the Partnership does not expect a significant increase in growth
and maintenance capital expenditures resulting from the Thermogas Acquisition as
compared to fiscal 1999 levels.
During the nine months ended April 30, 2000, the Partnership made growth
and maintenance capital expenditures of $18,631,000 consisting primarily of the
following: 1) additions to Partnership-owned customer tanks and cylinders, 2)
relocating and upgrading district plant facilities, 3) upgrading computer
equipment and software, and 4) vehicle lease buyouts. Capital requirements for
repair and maintenance of property, plant and equipment are relatively low since
technological change is limited and the useful lives of propane tanks and
cylinders, the Partnership's principal physical assets, are generally long.
The Partnership meets its vehicle and transportation equipment fleet needs
by leasing light and medium duty trucks, tractors and trailers. The General
Partner believes vehicle leasing is a cost-effective method for meeting the
Partnership's transportation equipment needs.
The Partnership continues seeking to expand its operations through
strategic acquisitions of smaller retail propane operations located throughout
the United States. These acquisitions will be funded through internal cash flow,
external borrowings or the issuance of additional Partnership interests.
Financing Activities. On February 28, 2000, the OLP issued the privately
placed unsecured $184
18
million Senior Notes. The proceeds of the $184 million
Senior Notes, which include three series with maturities ranging from year 2006
through 2009 and an average fixed interest rate of 8.8%, were used to retire
$183,000,000 of OLP bridge loan financing assumed in connection with the
Thermogas Acquisition.
On December 6, 1999, the OLP entered into, with Banc of America Leasing &
Capital, LLC. as lender, a $25,000,000 operating tank lease facility involving a
portion of the OLP's customer tanks. This operating lease has a term that
expires June 30, 2003 and may be extended for two additional one-year periods at
the option of the OLP, if such extension is approved by the lessor.
On December 17, 1999, immediately prior to the closing of the Thermogas
Acquisition (See Note J), Thermogas entered into, with Banc of America Leasing &
Capital, LLC as lender, a $135,000,000 operating tank lease facility involving a
portion of its customer tanks. In connection with the acquisition of Thermogas,
the OLP assumed all obligations under the $135,000,000 operating tank lease
facility, which have terms and conditions similar to the December 6, 1999,
$25,000,000 operating tank lease facility discussed above.
On April 18, 2000, the Partnership completed the syndication of both the
$25,000,000 and $135,000,000 operating tank lease facilities to a group of banks
and other financial institutions.
On August 4, 1998, the OLP issued the privately placed unsecured $350
million Senior Notes and entered into a Credit Facility with its existing banks.
The proceeds of the Senior Notes, which include five series with maturities
ranging from year 2005 through 2013 at an average fixed interest rate of 7.16%,
were used to redeem $200,000,000 of OLP fixed rate senior notes issued in July
1994, including a 5% call premium, and to repay outstanding indebtedness under
the former OLP revolving credit facility. On December 17, 1999, the OLP
terminated its Additional Credit Facility agreement that it had entered into on
April 30, 1999. This facility had provided for an unsecured facility for
acquisitions, capital expenditures, and general corporate purposes. The
outstanding Additional Credit Facility before its termination on December 17,
1999 was $35,000,000.
On April 18, 2000, the Partnership entered into an amended and restated
credit facility. This $157,000,000 Credit Facility, which expires on June 30,
2003 amends and restates the previous $145,000,000 Credit Facility. During the
nine months ended April 30, 2000, the Partnership repaid $2,627,000 to its
credit facility as it related to the funding of working capital, business
acquisitions, and capital expenditure needs. At April 30, 2000, $21,600,000 of
borrowings were outstanding under the Credit Facility. Nearly all of these
borrowings carried an interest rate of LIBOR plus 2.25% or 8.44%. Letters of
credit outstanding, used primarily to secure obligations under certain insurance
arrangements, totaled $25,865,000. At April 30, 2000, the Operating Partnership
had $109,535,000 available for general corporate, acquisition and working
capital purposes under the Credit Facility. Based on the pricing grid contained
in the Credit Facility, the current borrowing rate for future borrowings under
the Credit Facility is 2.25% plus LIBOR.
Effective April 27, 2000, the Partnership entered into an interest rate
swap agreement ("Swap Agreement") with Bank of America, related to the
semi-annual interest payment due on the $160,000,000 fixed rate Senior Notes due
2006 ("MLP Senior Notes"). The Swap Agreement, which expires June 15, 2006,
requires Bank of America to pay the stated fixed interest rate (annual rate
9.375%) pursuant to the MLP Senior Notes equaling $7,500,000 every six months
due on each June 15 and December 15. In exchange, the Partnership is required to
make quarterly floating interest rate payments on the 15th of March, June,
September and December based on an annual interest rate equal to the 3 month
LIBOR interest rate plus 1.655% applied to the same notional amount of
$160,000,000.
Effective June 2, 2000, the OLP entered into an interest rate cap agreement
("Cap Agreement") with Bank of America, related to variable quarterly rent
payments due pursuant to two operating tank lease agreements. The variable
quarterly rent payments are determined based upon a floating LIBOR based
interest rate. The Cap Agreement, which expires June 30, 2003, requires Bank of
America to pay the OLP
19
at the end of each March, June, September and December
the difference, if any, between the applicable 3 month floating LIBOR interest
rate and a cap of 9.3%, applied to the total obligation due each quarter under
the two operating tank lease agreements. The total obligation under these two
operating tank lease agreements as of April 30, 2000 was $159,600,000.
On May 19, 2000, the Partnership declared an in-kind cash distribution of
$1.00 per Senior Common Unit payable by the issuance of additional Senior Common
Units (see Notes G and I in the Consolidated Financial Statements included
elsewhere in this report for additional information regarding the in-kind
distributions to the Senior Common Unitholders) and $0.50 per Common Unit,
payable June 14, 2000.
Adoption of New Accounting Standards. The Financial Accounting Standards
Board ("FASB") recently issued Statement of Financial Accounting Standards No.
133 "Accounting for Derivative Instruments and Hedging Activities" ("SFAS No.
133"). SFAS No. 133, as amended by SFAS No. 137 is required to be adopted by the
Partnership for the first quarter of fiscal 2001. The Partnership is currently
assessing its impact on the Partnership's financial position, results of
operations and cash flows.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The market risk inherent in the Partnership's market risk sensitive
instruments and positions is the potential loss arising from adverse changes in
commodity prices. Additionally, the Partnership seeks to mitigate its interest
rate risk exposure on variable rate debt by entering into interest rate collar
agreements. After the execution of the Swap Transaction, the Partnership
effectively had $181,600,000 in variable rate debt and $25,000,000 notional
amount of interest rate collar agreements effectively outstanding. Thus,
assuming a 100 basis point increase in the variable interest rate to the
Partnership, the interest rate risk related to the variable rate debt, the Swap
Transaction and the associated interest rate collar agreements is not material
to the financial statements.
The Partnership's risk management activities utilize certain types of
energy commodity forward contracts and swaps traded on the over-the-counter
financial markets and futures traded on the New York Mercantile Exchange
("NYMEX" or "Exchange") to anticipate market movements, manage and hedge its
exposure to the volatility of floating commodity prices and to protect its
inventory positions. The Partnership's purchase price protection strategy
activity also utilizes certain over-the-counter energy commodity options to
limit overall price risk and to hedge its exposure to inventory price movements.
Market risks associated with energy commodities are monitored daily for
compliance with the Partnership's risk management trading policy. This policy
includes specific dollar exposure limits, limits on the term of various
contracts and volume limits for various energy commodities. The Partnership also
utilizes loss limits and daily review of open positions to manage exposures to
changing market prices.
Market and Credit Risk. NYMEX traded futures are guaranteed by the Exchange
and have nominal credit risk. The Partnership is exposed to credit risk
associated with futures, swaps and option transactions in the event of
nonperformance by counterparties. For each counterparty, the Partnership
analyzes the financial condition prior to entering into an agreement,
establishes credit limits and monitors the appropriateness of each limit. The
change in market value of Exchange-traded futures contracts requires daily cash
settlement in margin accounts with brokers. Forwards and most other
over-the-counter instruments are generally settled at the expiration of the
contract term.
Sensitivity Analysis. The Partnership has prepared a sensitivity analysis
to estimate the exposure to market risk of its energy commodity positions.
Forward contracts, futures, swaps and options were analyzed assuming a
hypothetical 10% change in forward prices for the delivery month for all energy
commodities. The potential loss in future earnings from these positions from a
10% adverse movement in market prices of the underlying energy commodities is
estimated at $1,500,000 as of April 30, 2000. The preceding hypothetical
analysis is limited because changes in prices may or may not equal 10%. Thus,
actual results may differ.
20
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On December 17, 1999, the Partnership purchased all of the member
interests in Thermogas from Williams Natural Gas Liquids, Inc. in
consideration for the issuance of Senior Common Units. (See Note J
in the Consolidated Financial Statement contained elsewhere in this
document.) The Senior Common Units represent limited partner
interests in the Partnership, and their face value was $175,000,000
million. Williams Natural Gas Liquids qualified as an accredited
investor (as that term is defined in Rule 501 of Regulation D) and
was the only purchaser of the Senior Common Units. As a result, the
issuance of Senior Common Units was exempted from the registration
requirements of the Securities Act pursuant to Rule 506 of
Regulation D.
The Senior Common Units entitle the holder to annual distributions
from the Partnership equivalent to 10 percent of face value.
Distributions are payable quarterly in kind through issuance of
further Senior Common Units until February 1, 2002, after which
distributions are payable in cash. Distributions are also payable in
cash upon the occurrence of a Material Event, as defined in the
Partnership Agreement. These distributions are made to the holders
of Senior Common Units in preference over holders of Common Units.
Williams has the right, subject to certain events and conditions, to
convert any outstanding Senior Common Units into Common Units either
at the end of two years or upon the occurrence of a Material Event,
as defined in the Partnership Agreement.
On June 5, 2000, the Common Unitholders approved amendments to the
MLP's partnership agreement to allow for the conversion of the
Senior Common Units into Common Units in accordance with the terms
of the partnership agreement and for those Common Units so converted
to be able to vote, regardless of the restriction otherwise placed
on voting if a holder owns more than 20% of the MLP.
Additionally, on June 5, 2000, the General Partner amended the MLP's
and the OLP's partnership agreements, as allowed therein, to allow
the MLP and the OLP to structure and complete transactions when the
General Partner may not have the cash available to make the
applicable capital contribution.
Specifically, the amendments provide for the issuance of 316,233
General Partner Units in the MLP that represent the General
Partner's current 1% interest. The General Partner is no longer
obligated to make a capital contribution to the MLP upon the making
of a capital contribution by another person or the issuance of MLP
securities. However, if the General Partner does not make that
capital contribution, its 1% interest in the MLP is reduced
accordingly. Similar amendments were made with respect to the OLP
partnership agreement, although no General Partner Units were issued
with respect to the OLP. Generally, the General Partner is allowed
at any time to make any capital contribution otherwise not made to
retain its overall 2% interest in the MLP and the OLP.
21
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION TO A VOTE OF SECURITIES HOLDERS
The Partnership held a special meeting of common unitholders on June
5, 2000. The common unitholders voted in favor of two proposals at
the special meeting as follows:
1. A proposal to approve the conversion provisions related to our
recently issued senior units to allow the holders of the senior units
to elect to convert into our common units upon the earlier of
February 1, 2002 or the occurrence of a material event, as defined in
our partnership agreement:
FOR AGAINST ABSTAIN
22,930,907 254,008 171,954
2. A proposal to amend the definition of "outstanding" in our
partnership agreement to provide that Williams Natural Gas Liquids,
Inc., its successors or The Williams Companies, Inc., as holders of
common units obtained upon the conversion of the senior units, may
vote their common units and shall be entitled to all other rights as
our common unitholders:
FOR AGAINST ABSTAIN
22,987,638 209,331 159,660
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
Exhibit No. Description of Exhibit
3.1 Second Amended and Restated Agreement of Limited
Partnership of Ferrellgas Partners, L.P.
dated as of June 5, 2000.
10.1 Third Amended and Restated Credit Agreement dated as of
April 18, 2000, among Ferrellgas, L.P., Ferrellgas, Inc.,
Bank of America National Trust and Savings Association, as
administrative agent, and the other financial institutions
party thereto.
10.2 First Amendment to the Second Amended and Restated
Agreement of Limited Partnership of
Ferrellgas, L.P.
10.3 Omnibus Amendment Agreement No. 2, Dated As Of April 18,
2000, In Respect Of Ferrellgas, LP TRUST NO. 1999-A
Participation Agreement Lease Intended As Security
Loan Agreement Each Dated As Of December 1, 1999
22
10.4 Omnibus Amendment Agreement No. 2 Dated As Of April 18, 2000
in respect ofTHERMOGAS TRUST NO. 1999-A Participation
Agreement Lease Intended as Security Loan Agreement Each Dated
As Of December 15, 1999
27.1 Financial Data Schedule - Ferrellgas Partners, L.P.
(filed in electronic format only)
27.2 Financial Data Schedule - Ferrellgas Partners Finance
Corp. (filed in electronic format only)
(b) Reports on Form 8-K
The Partnership filed the following reports on Form 8-K during the
quarter ended April 30, 2000.
(1) Form 8-K/A Amendment No. 1 dated March 1, 2000, reporting that
Ferrellgas Partners, L.P. completed the
acquisition of all of the member interests in Thermogas L.L.C.
from Williams. This amendment includes the required audited
and pro forma financial statements.
(2) Form 8-K dated March 2, 2000, announcing that Ferrellgas
Partners, L.P. operating subsidiary, Ferrellgas, L.P., completed
the issuance of $184 million of fixed rate Senior Notes in a
private placement to qualified institutional investors. The
proceeds of the financing were used to pay off the temporary
financing associated with the acquisition of Thermogas, the
nation's fifth largest retail marketer of propane.
23
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrants have duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FERRELLGAS PARTNERS, L.P.
By Ferrellgas, Inc. (General Partner)
Date: June 14, 2000 By /s/ Kevin T. Kelly
---------------------------------------------
Kevin T. Kelly
Vice President and Chief
Financial Officer (Principal
Financial and Accounting Officer)
FERRELLGAS PARTNERS FINANCE CORP.
Date: June 14, 2000 By /s/ Kevin T. Kelly
---------------------------------------------
Kevin T. Kelly
Chief Financial Officer (Principal
Financial and Accounting Officer)
24
INDEX TO EXHIBITS
Exhibit No. Description of Exhibit
3.1 Second Amended and Restated Agreement of Limited
Partnership of Ferrellgas Partners, L.P.
dated as of June 5, 2000.
10.1 Third Amended and Restated Credit Agreement dated as of
April 18, 2000, among Ferrellgas, L.P., Ferrellgas, Inc.,
Bank of America National Trust and Savings Association, as
administrative agent, and the other financial institutions
party thereto.
10.2 First Amendment to the Second Amended and Restated
Agreement of Limited Partnership of
Ferrellgas, L.P.
10.3 Omnibus Amendment Agreement No. 2, Dated As Of April 18,
2000, In Respect Of Ferrellgas, LP
TRUST NO. 1999-A Participation Agreement Lease Intended
As Security Loan Agreement Each Dated
As Of December 1, 1999
10.4 Omnibus Amendment Agreement No. 2 Dated As Of April 18,
2000 in respect of THERMOGAS TRUST NO. 1999-A
Participation Agreement Lease Intended as Security
Loan Agreement Each Dated As Of December 15, 1999
27.1 Financial Data Schedule - Ferrellgas Partners, L.P.
(filed in electronic format only)
27.2 Financial Data Schedule - Ferrellgas Partners Finance
Corp. (filed in electronic format only)
25
SECOND AMENDED AND RESTATED
AGREEMENT
OF
LIMITED PARTNERSHIP
OF
FERRELLGAS PARTNERS, L.P.
TABLE OF CONTENTS
ARTICLE I
ORGANIZATIONAL MATTERS
Section 1.1 Formation and Continuation................................................................2
Section 1.2 Name......................................................................................2
Section 1.3 Registered Office; Principal Office.......................................................2
Section 1.4 Power of Attorney.........................................................................2
Section 1.5 Term......................................................................................4
Section 1.6 Possible Restrictions on Transfer.........................................................4
ARTICLE II
DEFINITIONS
"Acquisition"............................................................................................5
"Additional Limited Partner".............................................................................5
"Additional Senior Units"................................................................................5
"Adjusted Capital Account"...............................................................................5
"Adjusted Property"......................................................................................5
"Affiliate"..............................................................................................6
"Agreed Allocation"......................................................................................6
"Agreed Value"...........................................................................................6
"Amended and Restated Agreement".........................................................................6
"Agreement"..............................................................................................6
"Assignee"...............................................................................................6
"Associate"..............................................................................................6
"Audit Committee"........................................................................................6
"Available Cash".........................................................................................6
"Book-Tax Disparity".....................................................................................8
"Business Day"...........................................................................................8
"Capital Account"........................................................................................8
"Capital Additions and Improvements".....................................................................8
"Capital Contribution"...................................................................................8
"Capital Interests"......................................................................................8
"Carrying Value".........................................................................................9
"Cash from Interim Capital Transactions".................................................................9
"Cash from Operations"...................................................................................9
"Cause".................................................................................................10
"Certificate"...........................................................................................10
"Certificate of Limited Partnership"....................................................................11
"Change of Control".....................................................................................11
"Citizenship Certification".............................................................................11
"Closing Price".........................................................................................11
"Code"..................................................................................................12
"Combined Interest".....................................................................................12
"Commission"............................................................................................12
"Common Unit"...........................................................................................12
"Contributed Property"..................................................................................12
"Contribution Agreement"................................................................................12
"Curative Allocation"...................................................................................12
"Current Market Price"..................................................................................12
"Delaware Act"..........................................................................................12
"Departing Partner".....................................................................................12
"Depositary"............................................................................................12
"Economic Risk of Loss".................................................................................12
"Eligible Citizen"......................................................................................13
"Event of Withdrawal"...................................................................................13
"FCI ESOT"..............................................................................................13
"Ferrell"...............................................................................................13
"Ferrellgas"............................................................................................13
"First Liquidation Target Amount".......................................................................13
"First Target Distribution".............................................................................13
"General Partner".......................................................................................13
"General Partner Interest"..............................................................................13
"Group".................................................................................................13
"Holder"................................................................................................14
"IDR"...................................................................................................14
"Incentive Distribution"................................................................................14
"Indemnified Persons"...................................................................................14
"Indemnitee"............................................................................................14
"Initial Closing Date"..................................................................................14
"Initial Limited Partners"..............................................................................14
"Initial Offering"......................................................................................14
"Initial Unit Price"....................................................................................14
"Interim Capital Transactions"..........................................................................14
"Issue Price"...........................................................................................15
"Limited Partner".......................................................................................15
"Liquidation Date"......................................................................................15
"Liquidator"............................................................................................15
"Maintenance Capital Expenditures"......................................................................15
"Material Event"........................................................................................15
"Merger Agreement"......................................................................................16
"Minimum Quarterly Distribution"........................................................................16
"National Securities Exchange"..........................................................................16
"Net Agreed Value"......................................................................................16
"Net Income"............................................................................................16
"Net Loss"..............................................................................................16
"Net Termination Gain"..................................................................................17
"Net Termination Loss"..................................................................................17
"Non-citizen Assignee"..................................................................................17
"Nonrecourse Built-in Gain".............................................................................17
"Nonrecourse Deductions"................................................................................17
"Nonrecourse Liability".................................................................................17
"Notice of Election to Purchase"........................................................................18
"Operating Partnership".................................................................................18
"Operating Partnership Agreement".......................................................................18
"Opinion of Counsel"....................................................................................18
"Organizational Limited Partner"........................................................................18
"Original Agreement"....................................................................................18
"Outstanding"...........................................................................................18
"Overallotment Option"..................................................................................18
"Partners"..............................................................................................18
"Partner Nonrecourse Debt"..............................................................................18
"Partner Nonrecourse Debt Minimum Gain".................................................................19
"Partner Nonrecourse Deductions"........................................................................19
"Partnership"...........................................................................................19
"Partnership Minimum Gain"..............................................................................19
"Partnership Securities"................................................................................19
"Per Unit Capital Amount"...............................................................................19
"Percentage Interest"...................................................................................19
"Person"................................................................................................19
"Pro Rata"..............................................................................................19
"Purchase Date".........................................................................................19
"Quarter"...............................................................................................20
"Recapture Income"......................................................................................20
"Record Date"...........................................................................................20
"Redeemable Units"......................................................................................20
"Registration Statement"................................................................................20
"Related Party".........................................................................................20
"Required Allocations"..................................................................................20
"Residual Gain or Residual Loss"........................................................................21
"Restricted Activities".................................................................................21
"Second Liquidation Target Amount"......................................................................21
"Second Target Distribution"............................................................................21
"Securities Act"........................................................................................21
"Senior Unit"...........................................................................................21
"Senior Unit Conversion Option".........................................................................21
"Senior Unit Liquidation Preference"....................................................................21
"Senior Unit Distribution"..............................................................................21
"Senior Unit Redemption Date"...........................................................................22
"Senior Unit Redemption Notice".........................................................................22
"Senior Unit Redemption Price"..........................................................................22
"Special Approval"......................................................................................23
"Special Limited Partner"...............................................................................23
"Special Limited Partners Book Capital".................................................................23
"Subordinated Unit".....................................................................................23
"Subordination Period"..................................................................................23
"Subsidiary"............................................................................................23
"Substituted Limited Partner"...........................................................................23
"Surviving Business Entity".............................................................................23
"Termination Capital Transactions"......................................................................23
"Thermogas".............................................................................................24
"Third Target Distribution".............................................................................24
"Trading Day"...........................................................................................24
"Transaction"...........................................................................................24
"Transfer"..............................................................................................24
"Transfer Agent"........................................................................................24
"Transfer Application"..................................................................................24
"Underwriter"...........................................................................................24
"Underwriting Agreement"................................................................................24
"Unit"..................................................................................................24
"Unitholders"...........................................................................................25
"Unpaid MQD"............................................................................................25
"Unrealized Gain".......................................................................................25
"Unrealized Loss".......................................................................................25
"Unrecovered Initial Unit Price"........................................................................25
"Withdrawal Opinion of Counsel".........................................................................25
"WNGL"..................................................................................................25
"WNGL Closing Date".....................................................................................25
"WNGL Purchase Agreement"...............................................................................25
"WNGL Registration Rights Agreement"....................................................................26
ARTICLE III
PURPOSE
Section 3.1 Purpose and Business.....................................................................26
Section 3.2 Powers...................................................................................26
ARTICLE IV
CAPITAL CONTRIBUTIONS
Section 4.1 Initial Contributions....................................................................26
Section 4.2 Contributions by the General Partner and the Initial Limited Partners;
...................................................................................................................
Contributions on the WNGL Closing Date and issuance of General Partner Units..........26
Section 4.3 Issuances of Additional Units and Other Securities.......................................28
Section 4.4 Limited Preemptive Rights................................................................29
Section 4.5 Capital Accounts.........................................................................30
Section 4.6 Interest.................................................................................32
Section 4.7 No Withdrawal............................................................................32
Section 4.8 Loans from Partners......................................................................32
Section 4.9 No Fractional Units......................................................................33
Section 4.10 Splits and Combinations.................................................................33
ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS
Section 5.1 Allocations for Capital Account Purposes.................................................34
Section 5.2 Allocations for Tax Purposes.............................................................41
Section 5.3 Requirement and Characterization of Distributions........................................43
Section 5.4 Distributions of Cash from Operations and Additional Senior Units........................44
Section 5.5 Distributions of Cash from Interim Capital Transactions..................................45
Section 5.6 Adjustment of Senior Unit Liquidation Preference, Senior Unit Distribution,
...................................................................................................................
Minimum Quarterly Distribution and Target Distribution Levels.........................45
Section 5.7 Special Provisions Relating to the Senior Units..........................................46
Section 5.8 Special Provisions Relating to the Special Limited Partners..............................49
Section 5.9 Special Provision Relating to Common Units that were Subordinated Units
...................................................................................................................
Prior to the Expiration of the Subordination Period...................................49
ARTICLE VI
MANAGEMENT AND OPERATION OF BUSINESS
Section 6.1 Management...............................................................................50
Section 6.2 Certificate of Limited Partnership.......................................................51
Section 6.3 Restrictions on General Partner's Authority..............................................52
Section 6.4 Reimbursement of the General Partner.....................................................53
Section 6.5 Outside Activities.......................................................................54
Section 6.6 Loans to and from the General Partner; Contracts with Affiliates.........................55
Section 6.7 Indemnification..........................................................................56
Section 6.8 Liability of Indemnitees.................................................................58
Section 6.9 Resolution of Conflicts of Interest......................................................59
Section 6.10 Other Matters Concerning the General Partner............................................60
Section 6.11 Title to Partnership Assets.............................................................61
Section 6.12 Purchase or Sale of Units...............................................................61
Section 6.13 Registration Rights of Ferrellgas and its Affiliates....................................61
Section 6.14 Reliance by Third Parties...............................................................63
ARTICLE VII
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 7.1 Limitation of Liability..................................................................64
Section 7.2 Management of Business...................................................................64
Section 7.3 Outside Activities.......................................................................64
Section 7.4 Return of Capital........................................................................64
Section 7.5 Rights of Limited Partners Relating to the Partnership...................................65
ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 8.1 Records and Accounting...................................................................66
Section 8.2 Fiscal Year..............................................................................66
Section 8.3 Reports..................................................................................66
ARTICLE IX
TAX MATTERS
Section 9.1 Preparation of Tax Returns...............................................................67
Section 9.2 Tax Elections............................................................................67
Section 9.3 Tax Controversies........................................................................67
Section 9.4 Organizational Expenses..................................................................67
Section 9.5 Withholding..............................................................................67
Section 9.6 Entity-Level Taxation....................................................................68
Section 9.7 Entity-Level Arrearage Collections.......................................................68
Section 9.8 Opinions of Counsel......................................................................69
ARTICLE X
CERTIFICATES
Section 10.1 Certificates............................................................................69
Section 10.2 Registration, Registration of Transfer and Exchange.....................................69
Section 10.3 Mutilated, Destroyed, Lost or Stolen Certificates.......................................70
Section 10.4 Record Holder...........................................................................71
ARTICLE XI
TRANSFER OF INTERESTS
Section 11.1 Transfer................................................................................71
Section 11.2 Transfer of the General Partner Interest................................................72
Section 11.3 Transfer of Units (other than General Partner Units)....................................72
Section 11.4 Restrictions on Transfers...............................................................73
Section 11.5 Citizenship Certificates; Non-citizen Assignees.........................................73
Section 11.6 Redemption of Interests.................................................................74
Section 11.7 Transfer of IDRs........................................................................75
ARTICLE XII
ADMISSION OF PARTNERS
Section 12.1 Admission of Initial Limited Partners...................................................75
Section 12.2 Admission of Substituted Limited Partners...............................................75
Section 12.3 Admission of Successor General Partner..................................................76
Section 12.4 Admission of Additional Limited Partners................................................76
Section 12.5 Amendment of Agreement and Certificate of Limited Partnership...........................77
ARTICLE XIII
WITHDRAWAL OR REMOVAL OF PARTNERS
Section 13.1 Withdrawal of the General Partner.......................................................77
Section 13.2 Removal of the General Partner..........................................................79
Section 13.3 Interest of Departing Partner and Successor General Partner.............................79
Section 13.4 Withdrawal of Limited Partners..........................................................80
ARTICLE XIV
DISSOLUTION AND LIQUIDATION
Section 14.1 Dissolution.............................................................................81
Section 14.2 Continuation of the Business of the Partnership after Dissolution.......................81
Section 14.3 Liquidation.............................................................................82
Section 14.4 Distributions in Kind...................................................................83
Section 14.5 Cancellation of Certificate of Limited Partnership......................................83
Section 14.6 Reasonable Time for Winding Up..........................................................83
Section 14.7 Return of Capital Contributions.........................................................84
Section 14.8 Capital Account Restoration.............................................................84
Section 14.9 Waiver of Partition.....................................................................84
ARTICLE XV
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE
Section 15.1 Amendment to be Adopted Solely by General Partner.......................................84
Section 15.2 Amendment Procedures....................................................................85
Section 15.3 Amendment Requirements..................................................................86
Section 15.4 Meetings................................................................................87
Section 15.5 Notice of a Meeting.....................................................................87
Section 15.6 Record Date.............................................................................87
Section 15.7 Adjournment.............................................................................87
Section 15.8 Waiver of Notice; Approval of Meeting; Approval of Minutes..............................87
Section 15.9 Quorum..................................................................................88
Section 15.10 Conduct of Meeting.....................................................................88
Section 15.11 Action Without a Meeting...............................................................89
Section 15.12 Voting and Other Rights................................................................89
Section 15.13 Voting Rights of Senior Units..........................................................89
ARTICLE XVI
MERGER
Section 16.1 Authority...............................................................................90
Section 16.2 Procedure for Merger or Consolidation...................................................90
Section 16.3 Approval by Holders of Common Units of Merger or Consolidation..........................91
Section 16.4 Certificate of Merger...................................................................92
Section 16.5 Effect of Merger........................................................................92
ARTICLE XVII
RIGHT TO ACQUIRE UNITS
Section 17.1 Right to Acquire Units..................................................................93
Section 17.2 Right to Acquire Senior Units...........................................................94
ARTICLE XVIII
GENERAL PROVISIONS
Section 18.1 Addresses and Notices...................................................................95
Section 18.2 References..............................................................................95
Section 18.3 Pronouns and Plurals....................................................................96
Section 18.4 Further Action..........................................................................96
Section 18.5 Binding Effect..........................................................................96
Section 18.6 Integration.............................................................................96
Section 18.7 Creditors...............................................................................96
Section 18.8 Waiver..................................................................................96
Section 18.9 Counterparts............................................................................96
Section 18.10 Applicable Law.........................................................................96
Section 18.11 Invalidity of Provisions ..............................................................96
#1076119 v3 - PARTNERSHIP AGREEMENT WITH GP INTEREST CHANGE 61300 1516C
#1076119 v3 - PARTNERSHIP AGREEMENT WITH GP INTEREST CHANGE 61300 1516C
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP OF
FERRELLGAS PARTNERS, L.P.
THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP OF FERRELLGAS PARTNERS, L.P., dated as of June 5, 2000, is entered
into by and among Ferrellgas, Inc., a Delaware corporation, as the General
Partner, the Persons who are Limited Partners in the Partnership as of the date
hereof and those Persons who become Partners in the Partnership or parties
hereto as provided herein. In consideration of the covenants, conditions and
agreements contained herein, the parties hereto hereby agree as follows:
RECITALS:
WHEREAS, the General Partner and the Organizational Limited
Partner organized the Partnership as a Delaware limited partnership pursuant to
an Agreement of Limited Partnership dated as of July 5, 1994 (the "Original
Agreement");
WHEREAS, the Partnership, the Operating Partnership and
Williams Natural Gas Liquids, Inc., a Delaware corporation, entered into a
Purchase Agreement dated November 7, 1999, relating to the sale of Thermogas,
L.L.C. to the Partnership in consideration, in part, for the issuance of Senior
Units, as defined below;
WHEREAS, to effect the transactions contemplated by the WNGL
Purchase Agreement and other matters, the Original Agreement was amended and
restated (the "Amended and Restated Agreement");
WHEREAS, on May 14, 2000, the General Partner made certain
amendments to the Amended and Restated Agreement with the consent of the holder
of all of the Senior Units, as allowed by this Agreement;
WHEREAS, on June 5, 2000, the holders of Common Units approved
a proposal at a special meeting of such holders to amend the definition of
"Outstanding" under the Amended and Restated Agreement; and
WHEREAS, Section 15.1 of the Amended and Restated Agreement
provides that the General Partner may amend the Amended and Restated Agreement
without the consent of any Limited Partner to reflect a change that, in the sole
discretion of the General Partner, does not adversely affect the Limited
Partners in any material respect;
NOW, THEREFORE, the Amended and Restated Agreement is hereby
amended and, as so amended, is restated in its entirety as follows:
1 ARTICLE
ORGANIZATIONAL MATTERS
SectionFormation and Continuation.
(a) The General Partner and the Organizational Limited Partner previously formed
the Partnership as a limited partnership pursuant to the provisions of the
Delaware Act. The General Partner hereby amends and restates the Amended and
Restated Agreement in its entirety to continue the Partnership as a limited
partnership pursuant to the provisions of the Delaware Act and to set forth the
rights and obligations of the Partners and certain matters related thereto. This
amendment and restatement shall become effective on the date of this Agreement.
Except as expressly provided to the contrary in this Agreement, the rights and
obligations of the Partners and the administration, dissolution and termination
of the Partnership shall be governed by the Delaware Act. All Partnership
Interests shall constitute personal property of the owner thereof for all
purposes.
(b) In connection with the formation of the Partnership, Ferrellgas was admitted
as a general partner of the Partnership, and the Organizational Limited Partner
was admitted as a limited partner of the Partnership. As of the Initial Closing
Date, the interest in the Partnership of the Organizational Limited Partner was
terminated and the Organizational Limited Partner withdrew as a limited partner
of the Partnership.
SectionName. The name of the Partnership is "Ferrellgas Partners, L.P." The
Partnership's business may be conducted under any other name or names deemed
necessary or appropriate by the General Partner, including, without limitation,
the name of the General Partner. The words "Limited Partnership," "L.P.," "Ltd."
or similar words or letters shall be included in the Partnership's name where
necessary for the purposes of complying with the laws of any jurisdiction that
so requires. The General Partner in its sole discretion may change the name of
the Partnership at any time and from time to time and shall notify the Limited
Partners of such change in the next regular communication to the Limited
Partners.
SectionRegistered Office; Principal Office. Unless and until changed by the
General Partner, the registered office of the Partnership in the State of
Delaware shall be located at The Corporation Trust Center, 1209 Orange Street,
New Castle County, Wilmington, Delaware 19801, and the registered agent for
service of process on the Partnership in the State of Delaware at such
registered office shall be The Corporation Trust Company. The principal office
of the Partnership shall be located at, and the address of the General Partner
shall be, One Liberty Plaza, Liberty, Missouri 64068, or such other place as the
General Partner may from time to time designate by notice to the Limited
Partners. The Partnership may maintain offices at such other place or places
within or outside the State of Delaware as the General Partner deems necessary
or appropriate.
SectionPower of Attorney.
(c) Each Limited Partner and each Assignee hereby constitutes and appoints each
of the General Partner and, if a Liquidator shall have been selected pursuant to
Section 14.3, the Liquidator severally (and any successor to either thereof by
merger, transfer, assignment, election or otherwise) and each of their
authorized officers and attorneys-in-fact, with full power of substitution, as
his true and lawful agent and attorney-in-fact, with full power and authority in
his name, place and stead, to:
(i) execute, swear to, acknowledge, deliver, file and record in the
appropriate public offices (A) all certificates, documents and other instruments
(including, without limitation, this Agreement and the Certificate of Limited
Partnership and all amendments or restatements thereof) that the General Partner
or the Liquidator deems necessary or appropriate to form, qualify or continue
the existence or qualification of the Partnership as a limited partnership (or a
partnership in which the limited partners have limited liability) in the State
of Delaware and in all other jurisdictions in which the Partnership may conduct
business or own property; (B) all certificates, documents and other instruments
that the General Partner or the Liquidator deems necessary or appropriate to
reflect, in accordance with its terms, any amendment, change, modification or
restatement of this Agreement; (C) all certificates, documents and other
instruments (including, without limitation, conveyances and a certificate of
cancellation) that the General Partner or the Liquidator deems necessary or
appropriate to reflect the dissolution and liquidation of the Partnership
pursuant to the terms of this Agreement; (D) all certificates, documents and
other instruments relating to the admission, withdrawal, removal or substitution
of any Partner pursuant to, or other events described in, Article XI, XII, XIII
or XIV or the Capital Contribution of any Partner; (E) all certificates,
documents and other instruments relating to the determination of the rights,
preferences and privileges of any class or series of Units or other Partnership
Securities issued pursuant to Section 4.2; and (F) all certificates, documents
and other instruments (including, without limitation, agreements and a
certificate of merger) relating to a merger or consolidation of the Partnership
pursuant to Article XVI; and
(ii) execute, swear to, acknowledge, deliver, file and record all ballots,
consents, approvals, waivers, certificates, documents and other instruments
necessary or appropriate, in the sole discretion of the General Partner or the
Liquidator, to make, evidence, give, confirm or ratify any vote, consent,
approval, agreement or other action that is made or given by the Partners
hereunder or is consistent with the terms of this Agreement or is necessary or
appropriate, in the sole discretion of the General Partner or the Liquidator, to
effectuate the terms or intent of this Agreement; provided, that when required
by Section 15.3 or any other provision of this Agreement that establishes a
percentage of the Limited Partners or of the Limited Partners of any class or
series required to take any action, the General Partner or the Liquidator may
exercise the power of attorney made in this Section 1.4(a)(ii) only after the
necessary vote, consent or approval of the Limited Partners or of the Limited
Partners of such class or series, as applicable.
Nothing contained in this Section 1.4(a) shall be construed as authorizing the
General Partner to amend this Agreement except in accordance with Article XV or
as may be otherwise expressly provided for in this Agreement.
(d) The foregoing power of attorney is hereby declared to be irrevocable and a
power coupled with an interest, and it shall survive and not be affected by the
subsequent death, incompetency, disability, incapacity, dissolution, bankruptcy
or termination of any Limited Partner or Assignee and the transfer of all or any
portion of such Limited Partner's or Assignee's Partnership Interest and shall
extend to such Limited Partner's or Assignee's heirs, successors, assigns and
personal representatives. Each such Limited Partner or Assignee hereby agrees to
be bound by any representation made by the General Partner or the Liquidator
acting in good faith pursuant to such power of attorney; and each such Limited
Partner or Assignee hereby waives any and all defenses that may be available to
contest, negate or disaffirm the action of the General Partner or the Liquidator
taken in good faith under such power of attorney. Each Limited Partner or
Assignee shall execute and deliver to the General Partner or the Liquidator,
within 15 days after receipt of the General Partner's or the Liquidator's
request therefor, such further designation, powers of attorney and other
instruments as the General Partner or the Liquidator deems necessary to
effectuate this Agreement and the purposes of the Partnership.
SectionTerm. The Partnership commenced upon the filing of the Certificate of
Limited Partnership in accordance with the Delaware Act and shall continue in
existence until the close of Partnership business on July 31, 2084, or until the
earlier dissolution of the Partnership in accordance with the provisions of
Article XIV.
SectionPossible Restrictions on Transfer. Notwithstanding anything to the
contrary contained in this Agreement, in the event of (a) the enactment (or
imminent enactment) of any legislation, (b) the publication of any temporary or
final regulation by the Treasury Department, (c) any ruling by the Internal
Revenue Service or (d) any judicial decision, that, in any such case, in the
Opinion of Counsel, would result in the taxation of the Partnership as an
association taxable as a corporation or would otherwise result in the
Partnership's being taxed as an entity for federal income tax purposes, then,
the General Partner may impose such restrictions on the transfer of Units or
Partnership Interests as may be required, in the Opinion of Counsel, to prevent
the Partnership from being taxed as an association taxable as a corporation or
otherwise as an entity for federal income tax purposes, including, without
limitation, making such amendments to this Agreement as the General Partner in
its sole discretion may determine to be necessary or appropriate to impose such
restrictions, provided, that any such amendment to this Agreement that would
result in the delisting or suspension of trading of any class of Units on any
National Securities Exchange on which such class of Units is then traded must be
approved by the holders of at least two-thirds of the Outstanding Units of such
class (excluding the vote in respect of Units held by the General Partner and
its Affiliates).
2 ARTICLE
DEFINITIONS
The following definitions shall be for all purposes, unless otherwise clearly
indicated to the contrary, applied to the terms used in this Agreement.
"Acquisition" means any transaction in which the Partnership or the Operating
Partnership acquires (through an asset acquisition, merger, stock acquisition or
other form of investment) control over all or a portion of the assets,
properties or business of another Person for the purpose of increasing the
operating capacity of the Partnership and the Operating Partnership, taken as a
whole, from the operating capacity of the Partnership and the Operating
Partnership, taken as a whole, existing immediately prior to such transaction.
"Additional Limited Partner" means a Person admitted to the Partnership as a
Limited Partner pursuant to Section 12.4 and who is shown as such on the books
and records of the Partnership.
"Additional Senior Units" has the meaning assigned to such term in Section 5.4.
"Adjusted Capital Account" means the Capital Account maintained for each
Partner as of the end of each fiscal year of the Partnership, (a) increased by
any amounts that such Partner is obligated to restore under the standards set by
Treasury Regulation Section 1.704-1(b)(2)(ii)(c) (or is deemed obligated to
restore under Treasury Regulation Sections 1.704-2(g) and 1.704-2(i)(5)) and (b)
decreased by (i) the amount of all losses and deductions that, as of the end of
such fiscal year, are reasonably expected to be allocated to such Partner in
subsequent years under Sections 704(e)(2) and 706(d) of the Code and Treasury
Regulation Section 1.751-1(b)(2)(ii), and (ii) the amount of all distributions
that, as of the end of such fiscal year, are reasonably expected to be made to
such Partner in subsequent years in accordance with the terms of this Agreement
or otherwise to the extent they exceed offsetting increases to such Partner's
Capital Account that are reasonably expected to occur during (or prior to) the
year in which such distributions are reasonably expected to be made (other than
increases as a result of a minimum gain chargeback pursuant to Section 5.1(d)(i)
or 5.1(d)(ii)). The foregoing definition of Adjusted Capital Account is intended
to comply with the provisions of Treasury Regulation Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith. The
"Adjusted Capital Account" in respect of a Common Unit, a General Partner Unit,
a Senior Unit, an IDR or any other specified interest in the Partnership shall
be the amount which such Adjusted Capital Account would be if such Common Unit,
General Partner Unit, Senior Unit or IDR or other interest in the Partnership
were the only interest in the Partnership held by a Partner.
"Adjusted Property" means any property the Carrying Value of which has been
adjusted pursuant to Section 4.5(d)(i) or 4.5(d)(ii).
"Affiliate" means, with respect to any Person, any other Person that directly
or indirectly controls, is controlled by or is under common control with, the
Person in question. As used herein, the term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through ownership of voting
securities, by contract or otherwise.
"Agreed Allocation" means any allocation, other than a Required Allocation,
of an item of income, gain, loss or deduction pursuant to the provisions of
Section 5.1, including, without limitation, a Curative Allocation (if
appropriate to the context in which the term "Agreed Allocation" is used).
"Agreed Value" of any Contributed Property means the fair market value of
such property or other consideration at the time of contribution as determined
by the General Partner using such reasonable method of valuation as it may
adopt. The General Partner shall, in its sole discretion, use such method as it
deems reasonable and appropriate to allocate the aggregate Agreed Value of
Contributed Properties contributed to the Partnership in a single or integrated
transaction among each separate property on a basis proportional to the fair
market value of each Contributed Property.
"Amended and Restated Agreement" has the meaning assigned to such term in
the Recitals hereto.
"Agreement" means this Second Amended and Restated Agreement of Limited
Partnership of Ferrellgas Partners, L.P., as it may be amended, supplemented or
restated from time to time.
"Assignee" means a Non-citizen Assignee or a Person to whom one or more Units
have been transferred in a manner permitted under this Agreement and who has
executed and delivered a Transfer Application as required by this Agreement, but
who has not become a Substituted Limited Partner.
"Associate" means, when used to indicate a relationship with any Person, (i)
any corporation or organization of which such Person is a director, officer or
partner or is, directly or indirectly, the owner of 20% or more of any class of
voting stock or other voting interest of such corporation or organization; (ii)
any trust or other estate in which such Person has at least a 20% beneficial
interest or as to which such Person serves as trustee or in a similar fiduciary
capacity; and (iii) any relative or spouse of such Person, or any relative of
such spouse, who has the same residence as such Person.
"Audit Committee" means a committee of the Board of Directors of the General
Partner composed entirely of two or more directors who are neither officers nor
employees of the General Partner or any of its Affiliates.
"Available Cash" means, with respect to any Quarter and without duplication:
(a) the sum of:
(i) all cash receipts of the Partnership during such
Quarter from all sources (including, without limitation,
distributions of cash received from the Operating Partnership
and cash proceeds from Interim Capital Transactions, but
excluding cash proceeds from Termination Capital
Transactions), plus, in the case of the Quarter ending October
31, 1994, the cash balance of the Partnership as of the close
of business on the Initial Closing Date; and
(ii) any reduction with respect to such Quarter in a
cash reserve previously established pursuant to clause (b)(ii)
below (either by reversal or utilization) from the level of
such reserve at the end of the prior Quarter;
(b) less the sum of:
(i) all cash disbursements of the Partnership during
such Quarter, including, without limitation, disbursements for
operating expenses, taxes, if any, debt service (including,
without limitation, the payment of principal, premium and
interest), redemption of Partnership Interests, capital
expenditures, contributions, if any, to the Operating
Partnership and cash distributions to Partners (but only to
the extent that such cash distributions to Partners exceed
Available Cash for the immediately preceding Quarter); and
(ii) any cash reserves established with respect to
such Quarter, and any increase with respect to such Quarter in
a cash reserve previously established pursuant to this clause
(b)(ii) from the level of such reserve at the end of the prior
Quarter, in such amounts as the General Partner determines in
its reasonable discretion to be necessary or appropriate (A)
to provide for the proper conduct of the business of the
Partnership or the Operating Partnership (including, without
limitation, reserves for future capital expenditures), (B) to
provide funds for distributions with respect to Units in
respect of any one or more of the next four Quarters provided,
however, that for so long as any Senior Units are Outstanding,
the General Partner may not establish cash reserves for
distributions pursuant to Section 5.4(b), (c), (d), (e) or (f)
unless the General Partner has determined that in its judgment
the establishment of such reserves will not prevent the
Partnership from making distributions pursuant to Section
5.4(a) with respect to the four Quarters next following the
date on which such cash reserves are to be so established or
(C) because the distribution of such amounts would be
prohibited by applicable law or by any loan agreement,
security agreement, mortgage, debt instrument or other
agreement or obligation to which the Partnership or the
Operating Partnership is a party or by which any of them is
bound or its assets are subject; provided, however, that for
purposes of determining Available Cash for the Quarter ending
October 31, 1994, such Quarter shall be deemed to have
commenced on the Initial Closing Date.
Notwithstanding the foregoing, "Available Cash" with respect to any
Quarter shall not include any cash receipts or reductions in reserves
or take into account any disbursements made or reserves established in
each case after the Liquidation Date. Taxes paid by the Partnership on
behalf of, or amounts withheld with respect to, all or less than all of
the Partners shall not be considered cash disbursements of the
Partnership that reduce Available Cash, but the payment or withholding
thereof shall be deemed to be a distribution of Available Cash to the
Partners other than the Limited Partners holding Senior Units.
Alternatively, in the discretion of the General Partner, such taxes (if
pertaining to all Partners) may be considered to be cash disbursements
of the Partnership which reduce Available Cash, but the payment or
withholding thereof shall not be deemed to be a distribution of
Available Cash to such Partners. Notwithstanding the foregoing, the
payment of taxes by the Partnership on behalf of Limited Partners
holding Senior Units will not satisfy the obligation of the Partnership
to pay the Senior Unit Distribution.
"Book-Tax Disparity" means with respect to any item of Contributed Property
or Adjusted Property, as of the date of any determination, the difference
between the Carrying Value of such Contributed Property or Adjusted Property and
the adjusted basis thereof for federal income tax purposes as of such date. A
Partner's share of the Partnership's Book-Tax Disparities in all of its
Contributed Property and Adjusted Property will be reflected by the difference
between such Partner's Capital Account balance as maintained pursuant to Section
4.5 and the hypothetical balance of such Partner's Capital Account computed as
if it had been maintained strictly in accordance with federal income tax
accounting principles.
"Business Day" means Monday through Friday of each week, except that a legal
holiday recognized as such by the government of the United States or the states
of New York or Missouri shall not be regarded as a Business Day.
"Capital Account" means the capital account maintained for a Partner pursuant
to Section 4.5.
"Capital Additions and Improvements" means (a) additions or improvements to
the capital assets owned by the Partnership or the Operating Partnership or (b)
the acquisition of existing or the construction of new capital assets
(including, without limitation, retail distribution outlets, propane tanks,
pipeline systems, storage facilities and related assets), made to increase the
operating capacity of the Partnership and the Operating Partnership, taken as a
whole, from the operating capacity of the Partnership and the Operating
Partnership, taken as a whole, existing immediately prior to such addition,
improvement, acquisition or construction.
"Capital Contribution" means any cash, cash equivalents or the Net Agreed
Value of Contributed Property that a Partner contributes to the Partnership
pursuant to the Contribution Agreement or Sections 4.1, 4.2, 4.3, 13.3(c) or
14.8.
"Capital Interests" means, with respect to any corporation, any and all
shares, participations, rights or other equivalent interests in the capital of
the corporation, and with respect to any partnership, any and all partnership
interests (whether general or limited) and any other interests or participations
that confer on a Person the right to receive a share of the profits and losses
of, or distributions of assets of, such partnership.
"Carrying Value" means (a) with respect to a Contributed Property, the Agreed
Value of such property reduced (but not below zero) by all depreciation,
amortization and cost recovery deductions charged to the Partners' and
Assignees' Capital Accounts in respect of such Contributed Property, and (b)
with respect to any other Partnership property, the adjusted basis of such
property for federal income tax purposes, all as of the time of determination.
The Carrying Value of any property shall be adjusted from time to time in
accordance with Sections 4.5(d)(i) and 4.5(d)(ii) and to reflect changes,
additions or other adjustments to the Carrying Value for dispositions and
acquisitions of Partnership properties, as deemed appropriate by the General
Partner.
"Cash from Interim Capital Transactions" means, at any date, such amounts of
Available Cash as are deemed to be Cash from Interim Capital Transactions
pursuant to Section 5.3.
"Cash from Operations" means, at the close of any Quarter but prior to the
Liquidation Date, on a cumulative basis and without duplication,
(a) the sum of all cash receipts of the Partnership
and the Operating Partnership during the period since the
Initial Closing Date through such date (including, without
limitation, the cash balance of the Partnership as of the
close of business on the Initial Closing Date, plus an initial
balance of $25 million, excluding any cash proceeds from any
Interim Capital Transactions (except to the extent specified
in Section 5.3) and Termination Capital Transactions),
(b) less the sum of:
(i) all cash operating expenditures of the
Partnership and the Operating Partnership during such
period, including, without limitation, taxes, if any,
and amounts owed to the General Partner as
reimbursement pursuant to Section 6.4,
(ii) all cash debt service payments of the
Partnership and the Operating Partnership during such
period (other than payments or prepayments of
principal and premium (A) required by reason of loan
agreements (including, without limitation, covenants
and default provisions therein) or by lenders, in
each case in connection with sales or other
dispositions of assets or (B) made in connection with
refinancings or refundings of indebtedness with the
proceeds from new indebtedness or from the sale of
equity interests, provided, that any payment or
prepayment of principal and premium, whether or not
then due, shall be deemed, at the election and in the
discretion of the General Partner, to be refunded or
refinanced by any indebtedness incurred or to be
incurred by the Partnership or the Operating
Partnership simultaneously with or within 180 days
prior to or after such payment or prepayment to the
extent of the principal amount of such indebtedness
so incurred),
(iii) all cash capital expenditures of the
Partnership and the Operating Partnership during such
period, including, without limitation, cash capital
expenditures made in respect of Maintenance Capital
Expenditures, but excluding (A) cash capital
expenditures made in respect of Acquisitions and
Capital Additions and Improvements and (B) cash
expenditures made in payment of transaction expenses
relating to Interim Capital Transactions,
(iv) any cash reserves of the Partnership or
the Operating Partnership outstanding as of such date
that the General Partner deems in its reasonable
discretion to be necessary or appropriate to provide
for the future cash payment of items of the type
referred to in clauses (i) through (iii) of this
sentence, and
(v) any cash reserves of the Partnership or
the Operating Partnership outstanding as of such date
that the General Partner deems in its reasonable
discretion to be necessary or appropriate to provide
funds for distributions with respect to Units in
respect of any one or more of the next four Quarters,
all as determined on a consolidated basis and after taking into account
the General Partner's interest therein attributable to its general
partner interest in the Operating Partnership. Where cash capital
expenditures are made in part in respect of Acquisitions or Capital
Additions and Improvements and in part for other purposes, the General
Partner's good faith allocation thereof between the portion made for
Acquisitions or Capital Additions and Improvements and the portion made
for other purposes shall be conclusive. Taxes paid by the Partnership
on behalf of, or amounts withheld with respect to, all or less than all
of the Partners shall not be considered cash operating expenditures of
the Partnership that reduce Cash from Operations, but the payment or
withholding thereof shall be deemed to be a distribution of Available
Cash to such Partners. Alternatively, in the discretion of the General
Partner, such taxes (if pertaining to all Partners) may be considered
to be cash operating expenditures of the Partnership which reduce Cash
from Operations, but the payment or withholding thereof shall not be
deemed to be a distribution of Available Cash to such Partners.
"Cause" means a court of competent jurisdiction has entered a final,
non-appealable judgment finding the General Partner liable for actual fraud,
gross negligence or willful or wanton misconduct in its capacity as general
partner of the Partnership.
"Certificate" means a certificate (a) substantially in the form of Exhibit A
to this Agreement with respect to the Common Units, (b) substantially in the
form of Exhibit B to this Agreement with respect to the Senior Units, (c) issued
in global or book-entry form in accordance with the rules and regulations of the
Depository, or (d) in such other form as may be adopted by the General Partner
in its sole discretion, issued by the Partnership evidencing ownership of one or
more Common Units or Senior Units, as the case may be, or a certificate, in such
form as may be adopted by the General Partner in its sole discretion, issued by
the Partnership evidencing ownership of one or more other Units.
"Certificate of Limited Partnership" means the Certificate of Limited
Partnership filed with the Secretary of State of the State of Delaware as
referenced in Section 6.2, as such Certificate of Limited Partnership may be
amended, supplemented or restated from time to time.
"Change of Control" means (a) the sale, lease, conveyance or other
disposition of all or substantially all of the assets of the Partnership or the
Operating Partnership to any Person or group (as such term is used in Section
13(d)(3) of the Exchange Act) other than James E. Ferrell, the Related Parties
and any Person of which James E. Ferrell and the Related Parties beneficially
own in the aggregate 51% or more of the outstanding voting stock (or if such
Person is a partnership, 51% or more of the general partner interests), (b) the
liquidation or dissolution of the Partnership, the Operating Partnership or the
General Partner, (c) the occurrence of any transaction, the result of which is
that James E. Ferrell and the Related Parties beneficially own in the aggregate,
directly or indirectly, less than 51% of the outstanding voting stock entitled
to vote for the election of directors of the General Partner and (d) the
occurrence of any transaction, the result of which is that the General Partner
is no longer the sole general partner of the Partnership or the Operating
Partnership.
"Citizenship Certification" means a properly completed certificate in such
form as may be specified by the General Partner by which an Assignee or a
Limited Partner certifies that he (and if he is a nominee holding for the
account of another Person, that to the best of his knowledge such other Person)
is an Eligible Citizen.
"Closing Price" for any day means the last sale price on such day, regular
way, or in case no such sale takes place on such day, the average of the closing
bid and asked prices on such day, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal National Securities Exchange on which the Units of such
class are listed or admitted to trading or, if the Units of such class are not
listed or admitted to trading on any National Securities Exchange, the last
quoted price on such day or, if not so quoted, the average of the high bid and
low asked prices on such day in the over the counter market, as reported by the
National Association of Securities Dealers, Inc. Automated Quotation System or
such other system then in use, or if on any such day the Units of such class are
not quoted by any such organization, the average of the closing bid and asked
prices on such day as furnished by a professional market maker making a market
in the Units of such class selected by the Board of Directors of the General
Partner, or if on any such day no market maker is making a market in the Units
of such class, the fair value of such Units on such day as determined reasonably
and in good faith by the Board of Directors of the General Partner.
"Code" means the Internal Revenue Code of 1986, as amended and in effect from
time to time, as interpreted by the applicable regulations thereunder. Any
reference herein to a specific section or sections of the Code shall be deemed
to include a reference to any corresponding provision of future law.
"Combined Interest" has the meaning assigned to such term in Section 13.3(a).
"Commission" means the Securities and Exchange Commission.
"Common Unit" means a Unit representing a fractional part of the Partnership
Interests of all Limited Partners and Assignees and having the rights and
obligations specified with respect to Common Units in this Agreement.
"Contributed Property" means each property or other asset, in such form as
may be permitted by the Delaware Act, but excluding cash, contributed to the
Partnership. Once the Carrying Value of a Contributed Property is adjusted
pursuant to Section 4.5(d), such property shall no longer constitute a
Contributed Property, but shall be deemed an Adjusted Property.
"Contribution Agreement" means that certain Contribution, Conveyance and
Assumption Agreement, dated as of the Initial Closing Date, between Ferrellgas,
the Partnership and the Operating Partnership, together with the additional
conveyance documents and instruments contemplated or referenced thereunder.
"Curative Allocation" means any allocation of an item of income, gain,
deduction, loss or credit pursuant to the provisions of Section 5.1(d)(xi).
"Current Market Price" as of any date of any class of Units listed or
admitted to trading on any National Securities Exchange means the average of the
daily Closing Prices per Unit of such class for the 20 consecutive Trading Days
immediately prior to such date.
"Delaware Act" means the Delaware Revised Uniform Limited Partnership Act,
6 Del C. ss. 17-101, et seq., as amended, supplemented or restated from time to
time, and any successor to such statute.
"Departing Partner" means a former General Partner from and after the
effective date of any withdrawal or removal of such former General Partner
pursuant to Section 13.1 or 13.2.
"Depositary" means with respect to any Units issued in global or book-entry
form, The Depository Trust Company and its successors and permitted assigns.
"Economic Risk of Loss" has the meaning set forth in Treasury Regulation
Section 1.752-2(a).
"Eligible Citizen" means a Person qualified to own interests in real property
in jurisdictions in which the Partnership or the Operating Partnership does
business or proposes to do business from time to time, and whose status as a
Limited Partner or Assignee does not or would not subject the Partnership or the
Operating Partnership to a substantial risk of cancellation or forfeiture of any
of its properties or any interest therein.
"Event of Withdrawal" has the meaning assigned to such term in Section 13.1(a).
"FCI ESOT" means the employee stock ownership trust related to the employee
stock ownership plan of Ferrell organized under Section 4975(e)(7) of the Code.
"Ferrell" means Ferrell Companies, Inc., a Kansas corporation.
"Ferrellgas" means Ferrellgas, Inc., a Delaware corporation and a wholly
owned subsidiary of Ferrell.
"First Liquidation Target Amount" has the meaning assigned to such term in
Section 5.1(c)(i)(D).
"First Target Distribution" means $0.55 per Unit (or, with respect to the
period commencing on the Initial Closing Date and ending on October 31, 1994,
the product of $0.55 multiplied by a fraction of which the numerator is the
number of days in such period and of which the denominator is 92), subject to
adjustment in accordance with Sections 5.6(b) and (c) and Section 9.6.
"General Partner" means Ferrellgas, and its successors as general partner
of the Partnership.
"General Partner Interest" means the ownership interest of the General
Partner in the Partnership (in its capacity as a general partner without
reference to any other Partnership Interests in the Partnership held by it)
which is evidenced by General Partner Units and includes any and all benefits to
which the General Partner is entitled as provided in this Agreement, together
with all obligations of the General Partner to comply with the terms and
provisions of this Agreement.
"General Partner Unit" means a Unit representing a fractional
part of the General Partner Interest and having the rights and
obligations specified with respect to the General Partner Units in this
Agreement.
"Group" means a Person that with or through any of its Affiliates or
Associates has any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting (except voting pursuant to a revocable proxy or
consent given to such Person in response to a proxy or consent solicitation made
to 10 or more Persons) or disposing of any Partnership Securities with any other
Person that beneficially owns, or whose Affiliates or Associates beneficially
own, directly or indirectly, Partnership Interests.
"Holder" has the meaning assigned to such term in Section 6.13(a).
"IDR" means a Partnership Interest issued to Ferrellgas in connection with
the transfer of its assets to the Partnership pursuant to Section 4.2, which
Partnership Interest shall confer upon the holder thereof only the rights and
obligations specifically provided in this Agreement with respect to IDRs (and no
other rights otherwise available to holders of a Partnership Interest).
"Incentive Distribution" means any amount of cash distributed to the Special
Limited Partners, pursuant to Section 5.4(d), (e) or (f).
"Indemnified Persons" has the meaning assigned to such term in Section 6.13(c).
"Indemnitee" means the General Partner, any Departing Partner, any Person who
is or was an Affiliate of the General Partner or any Departing Partner, any
Person who is or was an officer, director, employee, partner, agent or trustee
of the General Partner or any Departing Partner or any such Affiliate, or any
Person who is or was serving at the request of the General Partner or any
Departing Partner or any such Affiliate as a director, officer, employee,
partner, agent or trustee of another Person.
"Initial Closing Date" means July 5, 1994.
"Initial Limited Partners" means Ferrellgas (with respect to the Common Units
it owns) and the Underwriters.
"Initial Offering" means the initial offering and sale of Common Units to the
public, as described in the Registration Statement.
"Initial Unit Price" means (a) with respect to the Common Units, $21.00 or
(b) with respect to any other class or series of Units, the price per Unit at
which such class or series of Units is initially sold by the Partnership, as
determined by the General Partner, in each case adjusted as the General Partner
determines to be appropriate to give effect to any distribution, subdivision or
combination of Units.
"Interim Capital Transactions" means (a) borrowings, refinancings or
refundings of indebtedness and sales of debt securities (other than for working
capital purposes and other than for items purchased on open account in the
ordinary course of business) by the Partnership or the Operating Partnership,
(b) sales of equity interests (including Common Units sold to the Underwriters
pursuant to the exercise of the Overallotment Option) by the Partnership or the
Operating Partnership and (c) sales or other voluntary or involuntary
dispositions of any assets of the Partnership or the Operating Partnership
(other than (x) sales or other dispositions of inventory in the ordinary course
of business, (y) sales or other dispositions of other current assets including,
without limitation, receivables and accounts and (z) sales or other dispositions
of assets as a part of normal retirements or replacements), in each case prior
to the commencement of the dissolution and liquidation of the Partnership.
"Issue Price" means the price at which a Unit is purchased from the
Partnership, less any sales commission or underwriting discount charged to the
Partnership.
"Limited Partner" means, unless the context otherwise requires, (a) each
Initial Limited Partner, each Substituted Limited Partner, each Additional
Limited Partner and any Departing Partner upon the change of its status from
General Partner to Limited Partner pursuant to Section 13.3, subject to the
provisions of Section 5.7, (b) solely for the purposes of Section 1.4 and
Articles VI and VII, each Special Limited Partner and (c) solely for purposes of
Articles IV, V and VI and Sections 14.3 and 14.4, each Assignee.
"Liquidation Date" means (a) in the case of an event giving rise to the
dissolution of the Partnership of the type described in clauses (a) and (b) of
the first sentence of Section 14.2, the date on which the applicable time period
during which the holders of Outstanding Units have the right to elect to
reconstitute the Partnership and continue its business has expired without such
an election being made, and (b) in the case of any other event giving rise to
the dissolution of the Partnership, the date on which such event occurs.
"Liquidator" means the General Partner or other Person approved pursuant to
Section 14.3 who performs the functions described therein.
"Maintenance Capital Expenditures" means cash capital expenditures made to
maintain, up to the level thereof that existed at the time of such expenditure,
the operating capacity of the capital assets of the Partnership and the
Operating Partnership, taken as a whole, as such assets existed at the time of
such expenditure and shall, therefore, not include cash capital expenditures
made in respect of Acquisitions and Capital Additions and Improvements. Where
cash capital expenditures are made in part to maintain the operating capacity
level referred to in the immediately preceding sentence and in part for other
purposes, the General Partner's good faith allocation thereof between the
portion used to maintain such operating capacity level and the portion used for
other purposes shall be conclusive.
"Material Event" means the occurrence of any of the following events: (a) the
Closing Price for Common Units is below $7.50 (as adjusted to reflect any
distribution, combination or subdivision of Common Units made in accordance with
Section 4.10) for ten consecutive Trading Days; (b) a Change of Control; (c) the
Partnership or the Operating Partnership is treated as an association taxable as
a corporation for federal income tax purposes or is otherwise subject to
taxation as an entity for federal income tax purposes; (d) the default under any
mortgage, indenture or instrument under which there may be issued or by which
there may be secured or evidenced any indebtedness by the Partnership or by the
Operating Partnership (or the payment of which is guaranteed by the Partnership
or the Operating Partnership), whether such indebtedness or guarantee exists as
of the date of this Agreement or is created or incurred thereafter, if in each
case, such default shall not have been cured within the grace period provided
for in the mortgage, indenture or instrument governing such indebtedness and the
principal amount of any such indebtedness, together with the principal amount of
any other such indebtedness under which there has been a default, aggregates $10
million or more; (e) the Partnership issues any Partnership Interests for cash
prior to February 1, 2002 and the aggregate proceeds of such issuances above $50
million are not used to redeem the Senior Units; or (f) the Partnership fails to
obtain the approval of the holders of at least a majority of the Outstanding
Common Units for the Senior Unit Conversion Option within 240 days after the
WNGL Closing Date.
"Merger Agreement" has the meaning assigned to such term in Section 16.1.
"Minimum Quarterly Distribution" means $0.50 per Common Unit per Quarter (or,
with respect to the period commencing on the Initial Closing Date and ending on
October 31, 1994, the product of $0.55 multiplied by a fraction of which the
numerator is the number of days in such period and of which the denominator is
92), subject to adjustment in accordance with Sections 5.6(b) and (c) and
Section 9.6.
"National Securities Exchange" means an exchange registered with the
Securities and Exchange Commission under Section 6(a) of the Securities Exchange
Act of 1934, as amended, supplemented or restated from time to time, and any
successor to such statute.
"Net Agreed Value" means, (a) in the case of any Contributed Property, the
Agreed Value of such property reduced by any liabilities either assumed by the
Partnership upon such contribution or to which such property is subject when
contributed, and (b) in the case of any property distributed to a Partner or
Assignee by the Partnership, the Partnership's Carrying Value of such property
(as adjusted pursuant to Section 4.5(d)(ii)) at the time such property is
distributed, reduced by any indebtedness either assumed by such Partner or
Assignee upon such distribution or to which such property is subject at the time
of distribution, in either case, as determined under Section 752 of the Code.
"Net Income" means, for any taxable period, the excess, if any, of the
Partnership's items of income and gain (other than those items attributable to
dispositions constituting Termination Capital Transactions) for such taxable
period over the Partnership's items of loss and deduction (other than those
items attributable to dispositions constituting Termination Capital
Transactions) for such taxable period. The items included in the calculation of
Net Income shall be determined in accordance with Section 4.5(b) and shall not
include any items specially allocated under Section 5.1(d). Once an item of
income, gain, loss or deduction that has been included in the initial
computation of Net Income is subjected to a Required Allocation or a Curative
Allocation, Net Income or Net Loss, whichever the case may be, shall be
recomputed without regard to such item.
"Net Loss" means, for any taxable period, the excess, if any, of the
Partnership's items of loss and deduction (other than those items attributable
to dispositions constituting Termination Capital Transactions) for such taxable
period over the Partnership's items of income and gain (other than those items
attributable to dispositions constituting Termination Capital Transactions) for
such taxable period. The items included in the calculation of Net Loss shall be
determined in accordance with Section 4.5(b) and shall not include any items
specially allocated under Section 5.1(d). Once an item of income, gain, loss or
deduction that has been included in the initial computation of Net Loss is
subjected to a Required Allocation or a Curative Allocation, Net Income, or Net
Loss, whichever the case may be, shall be recomputed without regard to such
item.
"Net Termination Gain" means, for any taxable period, the sum, if positive,
of all items of income, gain, loss or deduction recognized by the Partnership
(including, without limitation, such amounts recognized through the Operating
Partnership) from Termination Capital Transactions occurring in such taxable
period. The items included in the determination of Net Termination Gain shall be
determined in accordance with Section 4.5(b) and shall not include any items of
income, gain or loss specially allocated under Section 5.1(d). Once an item of
income, gain or loss that has been included in the initial computation of Net
Termination Gain is subjected to a Required Allocation or a Curative Allocation,
Net Termination Gain or Net Termination Loss, whichever the case may be, shall
be recomputed without regard to such item.
"Net Termination Loss" means, for any taxable period, the sum, if negative,
of all items of income, gain, loss or deduction recognized by the Partnership
(including, without limitation, such amounts recognized through the Operating
Partnership) from Termination Capital Transactions occurring in such taxable
period. The items included in the determination of Net Termination Loss shall be
determined in accordance with Section 4.5(b) and shall not include any items of
income, gain or loss specially allocated under Section 5.1(d). Once an item of
gain or loss that has been included in the initial computation of Net
Termination Loss is subjected to a Required Allocation or a Curative Allocation,
Net Termination Gain or Net Termination Loss, whichever the case may be, shall
be recomputed without regard to such item.
"Non-citizen Assignee" means a Person who the General Partner has determined
in its sole discretion does not constitute an Eligible Citizen and as to whose
Partnership Interest the General Partner has become the Substituted Limited
Partner, pursuant to Section 11.5.
"Nonrecourse Built-in Gain" means with respect to any Contributed Properties
or Adjusted Properties that are subject to a mortgage or pledge securing a
Nonrecourse Liability, the amount of any taxable gain that would be allocated to
the Partners pursuant to Sections 5.2(b)(i)(A), 5.2(b)(ii)(A) or 5.2(b)(iii) if
such properties were disposed of in a taxable transaction in full satisfaction
of such liabilities and for no other consideration.
"Nonrecourse Deductions" means any and all items of loss, deduction or
expenditures (described in Section 705(a)(2)(B) of the Code) that, in accordance
with the principles of Treasury Regulation Section 1.704-2(b), are attributable
to a Nonrecourse Liability.
"Nonrecourse Liability" has the meaning set forth in Treasury Regulation
Section 1.752-1(a)(2).
"Notice of Election to Purchase" has the meaning assigned to such term in
Section 17.1(b).
"Operating Partnership" means Ferrellgas, L.P., a Delaware limited partnership.
"Operating Partnership Agreement" means the Agreement of Limited Partnership
of the Operating Partnership, as it may be amended, supplemented or restated
from time to time.
"Opinion of Counsel" means a written opinion of counsel (who may be regular
counsel to Ferrellgas, any Affiliate of Ferrellgas, the Partnership or the
General Partner) acceptable to the General Partner.
"Organizational Limited Partner" means Danley K. Sheldon, in his capacity
as the organizational limited partner of the Partnership.
"Original Agreement" has the meaning assigned to such term in the Recitals
hereto.
"Outstanding" means, with respect to the Units or other
Partnership Securities, all Units or other Partnership Securities that
are issued by the Partnership and reflected as outstanding on the
Partnership's books and records as of the date of determination;
provided that, if at any time any Person or Group (other than
Ferrellgas, its Affiliates and except as provided below) owns
beneficially 20% or more of all Common Units, such Common Units so
owned shall not be voted on any matter and shall not be considered to
be Outstanding when sending notices of a meeting of Limited Partners
(unless otherwise required by law), calculating required votes,
determining the presence of a quorum or for other similar purposes
under this Agreement, except that such Common Units shall be considered
to be Outstanding for purposes of Section 13.1(b)(iv) (such Common
Units shall not, however, be treated as a separate class of Partnership
Securities for purposes of this Agreement). Notwithstanding the above,
the Common Units issued upon conversion of the Senior Units, so long as
such Common Units are held by WNGL, its successors or The Williams
Companies, Inc. (1) shall at all times be considered Outstanding for
purposes of this Agreement and have all rights specified with respect
to Common Units in this Agreement and (2) shall be included with any
other Common Units in determining whether WNGL, its successors or The
Williams Companies, Inc. own beneficially 20% or more of all Common
Units with respect to those other Common Units that were not converted
from Senior Units.
"Overallotment Option" means the overallotment option granted to the
Underwriters by the Partnership pursuant to the Underwriting Agreement.
"Partners" means the General Partner, the Limited Partners and the Special
Limited Partners.
"Partner Nonrecourse Debt" has the meaning set forth in Treasury Regulation
Section 1.704-2(b)(4).
"Partner Nonrecourse Debt Minimum Gain" has the meaning set forth in Treasury
Regulation Section 1.704-2(i)(2).
"Partner Nonrecourse Deductions" means any and all items of loss, deduction
or expenditure (including, without limitation, any expenditure described in
Section 705(a)(2)(B) of the Code) that, in accordance with the principles of
Treasury Regulation Section 1.704-2(i), are attributable to a Partner
Nonrecourse Debt.
"Partnership" means Ferrellgas Partners, L.P., a Delaware limited partnership
established by the Certificate of Limited Partnership, and any successors
thereto.
"Partnership Interest" means an interest in the Partnership,
which shall include General Partner Units, Senior Units, Common Units,
IDRs or other Partnership Securities, or a combination thereof or
interest therein, as the case may be.
"Partnership Minimum Gain" means that amount determined in accordance with
the principles of Treasury Regulation Section 1.704-2(d).
"Partnership Securities" has the meaning assigned to such term in Section
4.3(a).
"Per Unit Capital Amount" means, as of any date of determination, the Capital
Account, stated on a per Unit basis, underlying any Unit held by a Person.
"Percentage Interest" means as of the date of such determination (a) as to
any Partner or Assignee holding Units, the product of (i) 100% less the
percentage applicable to clause (b) multiplied by (ii) the quotient of the
number of Units held by such Partner or Assignee divided by the total number of
all Outstanding Units (other than Senior Units), and (b) as to the holders of
additional Partnership Securities issued by the Partnership in accordance with
Section 4.3, the percentage established as a part of such issuance. The Senior
Units have not been allocated a Percentage Interest.
"Person" means an individual or a corporation, partnership, trust,
unincorporated organization, association or other entity.
"Pro Rata" means (a) when modifying Units or any class thereof, apportioned
equally among all designated Units or class thereof in accordance with their
relative Percentage Interests, (b) when modifying Partners and Assignees,
apportioned among all Partners and Assignees in accordance with their relative
Percentage Interests, and (c) when modifying holders of IDRs, apportioned
equally among all holders of IDRs in accordance with the relative number of IDRs
held by such holder.
"Purchase Date" means the date determined by the General Partner as the date
for purchase of all Outstanding Units (other than Units owned by the General
Partner and its Affiliates) pursuant to Article XVII.
"Quarter" means, unless the context requires otherwise, a three month period
of time ending on October 31, January 31, April 30, or July 31; provided,
however, that the General Partner, in its sole discretion, may amend such period
as it deems necessary or appropriate in connection with a change in the fiscal
year of the Partnership.
"Recapture Income" means any gain recognized by the Partnership (computed
without regard to any adjustment required by Sections 734 or 743 of the Code)
upon the disposition of any property or asset of the Partnership, which gain is
characterized as ordinary income because it represents the recapture of
deductions previously taken with respect to such property or asset.
"Record Date" means the date established by the General Partner for
determining (a) the identity of the Record Holder entitled to notice of, or to
vote at, any meeting of Limited Partners or entitled to vote by ballot or give
approval of Partnership action in writing without a meeting or entitled to
exercise rights in respect of any lawful action of Limited Partners or (b) the
identity of Record Holders entitled to receive any report or distribution.
"Record Holder" means the Person in whose name a Unit is
registered on the books of the Transfer Agent as of the opening of
business on a particular Business Day, or with respect to a holder of a
General Partner Unit or an IDR, the Person in whose name such General
Partner Unit or IDR is registered on the books which the General
Partner has caused to be kept as of the opening of business on such
Business Day.
"Redeemable Units" means any Units for which a redemption notice has been
given, and has not been withdrawn, under Section 11.6.
"Registration Statement" means the Registration Statement on Form S-1
(Registration No. 33-53383), as it has been or as it may be amended or
supplemented from time to time, filed by the Partnership with the Commission
under the Securities Act to register the offering and sale of the Common Units
in the Initial Offering.
"Related Party" means (a) the spouse or any lineal descendant of James E.
Ferrell, (b) any trust for his benefit or for the benefit of his spouse or any
such lineal descendants, (c) any corporation, partnership or other entity in
which James E. Ferrell and/or such other Persons referred to in the foregoing
clauses (a) and (b) are the direct record and beneficial owners of all of the
voting and nonvoting securities, (d) the FCI ESOT and (e) any participant in the
FCI ESOT whose ESOT account has been allocated shares of Ferrell.
"Required Allocations" means any allocation (or limitation imposed on any
allocation) of an item of income, gain, deduction or loss pursuant to (a)
Section 5.1(b)(ii) or (b) Sections 5.1(d)(i), 5.1(d)(ii), 5.1(d)(iv), 5.1(d)(v),
5.1(d)(vi), 5.1(d)(vii) and 5.1(d)(ix), such allocations (or limitations
thereon) being directly or indirectly required by the Treasury Regulations
promulgated under Section 704(b) of the Code.
"Residual Gain or Residual Loss" means any item of gain or loss, as the case
may be, of the Partnership recognized for federal income tax purposes resulting
from a sale, exchange or other disposition of a Contributed Property or Adjusted
Property, to the extent such item of gain or loss is not allocated pursuant to
Sections 5.2(b)(i)(A) or 5.2(b)(ii)(A), respectively, to eliminate Book-Tax
Disparities.
"Restricted Activities" means the retail sale of propane to end users within
the continental United States in the manner engaged in by Ferrellgas immediately
prior to the Closing Date.
"Second Liquidation Target Amount" has the meaning assigned to such term in
Section 5.1(c)(i)(E).
"Second Target Distribution" means $0.63 per Unit (or, with respect to the
period commencing on the Initial Closing Date and ending on October 31, 1994,
the product of $0.55 multiplied by a fraction of which the numerator is the
number of days in such period and of which the denominator is 92), subject to
adjustment in accordance with Sections 5.6(b) and (c) and Section 9.6.
"Securities Act" means the Securities Act of 1933, as amended, supplemented
or restated from time to time and any successor to such statute.
"Senior Unit" means a Unit representing a fractional part of the
Partnership Interests of all Limited Partners and Assignees having the rights
and obligations specified with respect to Senior Units in this Agreement. The
term "Senior Unit" includes all Additional Senior Units.
"Senior Unit Conversion Option" means the proposal submitted to the holders
of Outstanding Common Units on the Record Date for their approval to provide for
the conversion of the Senior Units into Common Units as provided in Section 5.7.
"Senior Unit Liquidation Preference" means $40.00 per Senior Unit, subject to
adjustment in accordance with Section 5.6(a).
"Senior Unit Distribution" means distributions that are required to be paid
on the Senior Units (including Additional Senior Units) at a quarterly rate
equal to the sum of (a) $1.00 per Senior Unit per Quarter (or part thereof or,
with respect to the period commencing with the WNGL Closing Date and ending on
January 31, 2000, the product of $1.00 multiplied by a fraction of which the
numerator is the number of days in such period and of which the denominator is
92), plus (b) an additional $0.50 per Senior Unit per Quarter (or part thereof)
if the Partnership fails, within 45 days following the end of any Quarter, to
pay in full the Senior Unit Distribution with respect to such Quarter, plus (c)
an additional $0.50 per Senior Unit per Quarter (or part thereof) if the
Partnership fails to pay in full the Senior Unit Redemption Price on or prior to
the Senior Unit Redemption Date, plus (d) an additional $0.50 per Senior Unit
per Quarter (or part thereof) if the Partnership fails to obtain the approval of
the holders of at least the majority of the Outstanding Common Units for the
Senior Unit Conversion Option within 180 days following the WNGL Closing Date,
in each case accumulating from and including the date of such failure or default
in clauses (a) through (d) until the date such failure or default has been cured
by the Partnership (which in the case of clause (d) may not be effected without
the approval of the holders of at least the majority of the Outstanding Common
Units). Each of the amounts set forth in clauses (a) through (d) are subject to
adjustment in accordance with Section 5.6(a).
All Senior Unit Distributions shall be cumulative, whether or
not declared and whether or not there is sufficient Available Cash for
the payment thereof, on a daily basis from the WNGL Closing Date and
shall be payable quarterly in arrears on each distribution payment date
pursuant to Section 5.3(a), commencing on the first distribution
payment date after the WNGL Closing Date. Any unpaid or undistributed
Senior Unit Distributions will compound on a quarterly basis at a rate
equal to the then applicable distribution rate, calculated in
accordance with the first sentence of this definition. If any Senior
Unit Distributions are payable through the issuance of Additional
Senior Units pursuant to Section 5.4 and are so paid by such issuance,
such Senior Unit Distributions shall be deemed paid in full. Any
Additional Senior Units that are required to be issued and distributed,
but which are not issued and distributed as required, will be entitled
to the Senior Unit Distribution as if they were issued and distributed
as required.
"Senior Unit Redemption Date" means the date the Partnership shall pay the
Senior Unit Redemption Price to the holders of Senior Units pursuant to Section
17.2(b).
"Senior Unit Redemption Notice" means a written notice from the Partnership
to the holder or holders of Senior Units setting forth:
(a) the Senior Unit Redemption Price;
(b) whether all or less than all of the Outstanding
Senior Units are to be redeemed and the total number
of Senior Units being redeemed;
(c) the Senior Unit Redemption Date;
(d) that the holder is to surrender to the Partnership,
in the manner, at the place or places and at the
price designated, his certificate or certificates
representing the Senior Units to be redeemed; and
(e) that distributions on the Senior Units to be redeemed
shall cease to accumulate on such Senior Unit
Redemption Date unless the Partnership defaults in
the payment of the redemption price.
"Senior Unit Redemption Price" means, with respect to each Senior Unit called
for redemption in accordance with the Senior Unit Redemption Notice pursuant to
Section 17.2(b), an amount in cash equal to the Senior Unit Liquidation
Preference, plus an amount equal to any accumulated and unpaid Senior Unit
Distributions on such Senior Units to the Senior Unit Redemption Date.
"Special Approval" means approval by the Audit Committee.
"Special Limited Partner" means each holder of an IDR.
"Special Limited Partners Book Capital" means, as of any date of
determination, the amount equal to the sum of the balances of the Capital
Accounts of all the Special Limited Partners, determined pursuant to Section 4.5
(prior to any adjustment pursuant to Section 4.5(d) arising upon the present
event requiring a valuation of the Partnership's assets).
"Subordinated Unit" means a Unit representing a fractional part of the
Partnership Interests of all Limited Partners and Assignees and having the
rights and obligations specified with respect to Subordinated Units in the
Original Agreement. Each Outstanding Subordinated Unit converted into a Common
Unit on a one-for-one basis as of August 1, 1999.
"Subordination Period" means the period which commenced on the Initial
Closing Date and ended on August 1, 1999.
"Subsidiary" means, with respect to any Person, (i) a corporation of which
more than 50% of the voting power of shares of Capital Interests entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors or other governing body of such corporation is owned, directly or
indirectly, by such Person, by one or more Subsidiaries of such Person, or a
combination thereof, (ii) a partnership (whether general or limited) in which
such Person or a Subsidiary of such Person is, at the date of determination, a
general or limited partner of such partnership, but only if more than 50% of the
Capital Interests of such partnership (considering all of the Capital Interests
of the partnership as a single class) is owned or controlled, directly or
indirectly, by such Person, by one or more Subsidiaries of such Person, or a
combination thereof, or (iii) any other Person (other than a corporation or a
partnership) in which such Person, directly or indirectly, at the date of
determination, has (x) at least a majority ownership interest or (y) the power
to elect or direct the election of a majority of the directors or other
governing body of such Person.
"Substituted Limited Partner" means a Person who is admitted as a Limited
Partner to the Partnership pursuant to Section 12.2 in place of and with all the
rights of a Limited Partner and who is shown as a Limited Partner on the books
and records of the Partnership.
"Surviving Business Entity" has the meaning assigned to such term in
Section 16.2(b).
"Termination Capital Transactions" means any sale, transfer or other
disposition of property of the Partnership or the Operating Partnership
occurring upon or incident to the liquidation and winding up of the Partnership
and the Operating Partnership pursuant to Article XIV.
"Thermogas" means Thermogas L.L.C., a Delaware limited liability company
(previously Thermogas Company, a Delaware corporation).
"Third Target Distribution" means $0.82 per Unit (or, with respect to the
period commencing on the Initial Closing Date and ending on October 31, 1994,
the product of $0.55 multiplied by a fraction of which the numerator is the
number of days in such period and of which the denominator is 92), subject to
adjustment in accordance with Sections 5.6(b) and (c) and Section 9.6.
"Trading Day" means a day on which the principal National Securities Exchange
on which the Units of any class are listed or admitted to trading is open for
the transaction of business or, if Units of a class are not listed or admitted
to trading on any National Securities Exchange, a day on which banking
institutions in New York City generally are open.
"Transaction" has the meaning assigned to such term in Section 5.7(g).
"Transfer" has the meaning assigned to such term in Section 11.1(a).
"Transfer Agent" means such bank, trust company or other Person (including,
without limitation, the General Partner or one of its Affiliates) as shall be
appointed from time to time by the Partnership to act as registrar and transfer
agent for the Units.
"Transfer Application" means an application and agreement for transfer of
Units in the form set forth on the back of a Certificate or in a form
substantially to the same effect in a separate instrument.
"Underwriter" means each Person named as an underwriter in Schedule I to the
Underwriting Agreement who purchased Common Units pursuant thereto.
"Underwriting Agreement" means the Underwriting Agreement dated June 27,
1994, among the Underwriters, the Partnership, the General Partner and Ferrell
providing for the purchase of Common Units by such Underwriters.
"Unit" means a Partnership Interest of a Partner or Assignee in the
Partnership representing a fractional part of the Partnership Interests of all
Partners and Assignees and shall include, without limitation, General Partner
Units, Senior Units and Common Units; provided, that each General Partner Unit
at any time Outstanding shall represent the same fractional part of the
Partnership Interests of all Partners and Assignees holding General Partner
Units as each other General Partner Unit, each Senior Unit at any time
Outstanding shall represent the same fractional part of the Partnership
Interests of all Partners and Assignees holding Senior Units as each other
Senior Unit, and each Common Unit at any time Outstanding shall represent the
same fractional part of the Partnership Interests of all Partners and Assignees
holding Common Units as each other Common Unit.
"Unitholders" means the holders of Common Units and General Partner Units but
shall not include holders of Senior Units.
"Unpaid MQD" has the meaning assigned to such term in Section 5.1(c)(i)(B).
"Unrealized Gain" attributable to any item of Partnership property means, as
of any date of determination, the excess, if any, of (a) the fair market value
of such property as of such date (as determined under Section 4.5(d)) over (b)
the Carrying Value of such property as of such date (prior to any adjustment to
be made pursuant to Section 4.5(d) as of such date).
"Unrealized Loss" attributable to any item of Partnership property means, as
of any date of determination, the excess, if any, of (a) the Carrying Value of
such property as of such date (prior to any adjustment to be made pursuant to
Section 4.5(d) as of such date) over (b) the fair market value of such property
as of such date (as determined under Section 4.5(d)).
"Unrecovered Initial Unit Price" means, at any time, with respect to a class
or series of Units (other than Senior Units and General Partner Units), the
price per Unit at which such class or series of Units was initially offered to
the public for sale by the underwriters in respect of such offering, as
determined by the General Partner, less the sum of all distributions theretofore
made in respect of a Unit of such class or series that was sold in the initial
offering of Units of said class or series constituting Cash from Interim Capital
Transactions and any distributions of cash (or the Net Agreed Value of any
distributions in kind) in connection with the dissolution and liquidation of the
Partnership theretofore made in respect of a Unit of such class or series that
was sold in the initial offering of Units of such class or series, adjusted as
the General Partner determines to be appropriate to give effect to any
distribution, subdivision or combination of Units.
"Withdrawal Opinion of Counsel" has the meaning assigned to such term in
Section 13.1(b).
"WNGL" means Williams Natural Gas Liquids, Inc., a Delaware corporation
"WNGL Closing Date" means the closing date of the transactions contemplated
by the WNGL Purchase Agreement.
"WNGL Purchase Agreement" means that certain Purchase Agreement, dated as of
November 7, 1999, as amended, by and among the Partnership, the Operating
Partnership and WNGL.
"WNGL Registration Rights Agreement" means that certain Registration Rights
Agreement, dated the WNGL Closing Date, as amended, between the Partnership and
WNGL.
3 ARTICLE
PURPOSE
SectionPurpose and Business. The purpose and nature of the business to be
conducted by the Partnership shall be (a) to serve as a limited partner in the
Operating Partnership and, in connection therewith, to exercise all of the
rights and powers conferred upon the Partnership as a limited partner in the
Operating Partnership pursuant to the Operating Partnership Agreement or
otherwise, (b) to engage directly in, or to enter into or form any corporation,
partnership, joint venture, limited liability company or other arrangement to
engage in, any business activity that the Operating Partnership is permitted to
engage in by the Operating Partnership Agreement and, in connection therewith,
to exercise all of the rights and powers conferred upon the Partnership pursuant
to the agreements relating to such business activity, (c) to engage directly in,
or to enter into or form any corporation, partnership, joint venture, limited
liability company or other arrangement to engage in, any business activity that
is approved by the General Partner and which lawfully may be conducted by a
limited partnership organized pursuant to the Delaware Act and, in connection
therewith, to exercise all of the rights and powers conferred upon the
Partnership pursuant to the agreements relating to such business activity, and
(d) to do anything necessary or appropriate to the foregoing, including, without
limitation, the making of capital contributions or loans to the Operating
Partnership. The General Partner has no obligation or duty to the Partnership,
the Limited Partners, the Special Limited Partners or the Assignees to propose
or approve, and in its sole discretion may decline to propose or approve, the
conduct by the Partnership of any business.
SectionPowers. The Partnership shall be empowered to do any and all acts and
things necessary, appropriate, proper, advisable, incidental to or convenient
for the furtherance and accomplishment of the purposes and business described in
Section 3.1 and for the protection and benefit of the Partnership.
4 ARTICLE
CAPITAL CONTRIBUTIONS
SectionInitial Contributions. In connection with the formation of the
Partnership under the Delaware Act, the General Partner made an initial Capital
Contribution to the Partnership and was admitted as the general partner of the
Partnership, and the Organizational Limited Partner made a Capital Contribution
to the Partnership and was admitted as a limited partner of the Partnership.
SectionContributions by the General Partner and the Initial Limited Partners;
Contributions on the WNGL Closing Date and issuance of General Partner Units.
(a) On the Initial Closing Date, the General Partner contributed and delivered
to the Partnership, as a Capital Contribution, a limited partner interest in the
Operating Partnership which, together with the Partnership Interest (as defined
in the Operating Partnership Agreement) previously held by the Partnership,
represented a 98.9899% Percentage Interest (as defined in the Operating
Partnership Agreement) in the Operating Partnership, in exchange for (i) the
continuation of its Partnership Interest as general partner in the Partnership,
subject to all of the rights, privileges and duties of the General Partner under
this Agreement, (ii) 1,000,000 Common Units and 16,593,721 Subordinated Units
and (iii) the IDRs.
(b) On the Initial Closing Date, each Underwriter contributed and delivered to
the Partnership cash in an amount equal to the Issue Price per Common Unit,
multiplied by the number of Common Units specified in the Underwriting Agreement
to be purchased by such Underwriter. In exchange for such Capital Contribution
by the Underwriters, the Partnership issued Common Units to each Underwriter on
whose behalf such Capital Contribution was made in an amount equal to the
quotient obtained by dividing (x) the cash contribution to the Partnership by or
on behalf of such Underwriter by (y) the Issue Price per Common Unit.
Immediately after these contributions, the Initial Capital Contribution of the
General Partner and the Organizational Limited Partner were refunded, the
interest of the Organizational Limited Partner was terminated and the
Organizational Limited Partner ceased to be a Limited Partner.
(c) To the extent that the Underwriters' Overallotment Option was exercised,
each Underwriter contributed and delivered to the Partnership cash in an amount
equal to the Issue Price per Common Unit multiplied by the number of Common
Units purchased by such Underwriter pursuant to the Overallotment Option. In
exchange for such Capital Contribution, the Partnership issued Common Units to
each Underwriter on whose behalf such Capital Contribution was made in an amount
equal to the quotient obtained by dividing (x) the cash contribution to the
Partnership by or on behalf of such Underwriter by (y) the Issue Price per
Common Unit.
(d) On the WNGL Closing Date, pursuant to the WNGL Purchase Agreement, WNGL
contributed all of its interests in Thermogas to the Partnership in exchange for
4,375,000 Senior Units.
(e) On June 5, 2000, the Partnership issued 316,233 General Partner Units to
represent the General Partner Interest as of that date, which number is equal to
one percent of the quotient of the number of Common Units then Outstanding
divided by ninety-nine percent rounded down to the nearest whole number of
General Partner Units.
(f) Immediately upon the conversion of Senior Units into Common Units as
provided in Section 5.7(b), the Partnership will issue to the General Partner
(for no consideration) that number of General Partner Units which will cause the
Percentage Interest of its General Partner Interest immediately after such
conversion to be equal to the Percentage Interest of its General Partner
Interest immediately prior to such conversion.
(g) If the Partnership issues additional Common Units and uses the proceeds from
that issuance to redeem any of the Senior Units pursuant to the terms of this
Agreement, the Partnership will issue to the General Partner (for no
consideration) that number of General Partner Units equal to the $1,767,677
Capital Contribution made by the General Partner to the Partnership at the time
of the issuance of the Senior Units divided by the issuance price of such Common
Units. This clause (g) shall not obviate the provisions of Section 4.3 to the
extent those provisions otherwise apply to that issuance of Common Units.
SectionIssuances of Additional Units and Other Securities.
(h) Subject to Section 4.3(c), the General Partner is hereby authorized to cause
the Partnership to issue, in addition to the Partnership Interests and Units
issued pursuant to Sections 4.1 and 4.2, such additional Units (other than
General Partner Units), or classes or series thereof, or options, rights,
warrants or appreciation rights relating thereto, or any other type of equity
security that the Partnership may lawfully issue, any unsecured or secured debt
obligations of the Partnership convertible into any class or series of equity
securities of the Partnership (collectively, "Partnership Securities"), for any
Partnership purpose, at any time or from time to time, to the Partners or to
other Persons for such consideration and on such terms and conditions as shall
be established by the General Partner in its sole discretion, all without the
approval of any Limited Partners. The General Partner shall have sole
discretion, subject to the guidelines set forth in this Section 4.3 and the
requirements of the Delaware Act, in determining the consideration and terms and
conditions with respect to any future issuance of Partnership Securities.
(i) Additional Partnership Securities to be issued by the Partnership pursuant
to this Section 4.3 shall be issuable from time to time in one or more classes,
or one or more series of any of such classes, with such designations,
preferences and relative, participating, optional or other special rights,
powers and duties, including, without limitation, rights, powers and duties
senior to existing classes and series of Partnership Securities (except as
provided in Section 4.3(c)), all as shall be fixed by the General Partner in the
exercise of its sole discretion, subject to Delaware law and Section 4.3(c),
including, without limitation, (i) the allocations of items of Partnership
income, gain, loss, deduction and credit to each such class or series of
Partnership Securities; (ii) the right of each such class or series of
Partnership Securities to share in Partnership distributions; (iii) the rights
of each such class or series of Partnership Securities upon dissolution and
liquidation of the Partnership; (iv) whether such class or series of additional
Partnership Securities is redeemable by the Partnership and, if so, the price at
which, and the terms and conditions upon which, such class or series of
additional Partnership Securities may be redeemed by the Partnership; (v)
whether such class or series of additional Partnership Securities is issued with
the privilege of conversion and, if so, the rate at which, and the terms and
conditions upon which, such class or series of Partnership Securities may be
converted into any other class or series of Partnership Securities or other
property; (vi) the terms and conditions upon which each such class or series of
Partnership Securities will be issued, evidenced by certificates and assigned or
transferred; and (vii) the right, if any, of each such class or series of
Partnership Securities to vote on Partnership matters, including, without
limitation, matters relating to the relative rights, preferences and privileges
of each such class or series.
(j) Notwithstanding the terms of Sections 4.3(a) and 4.3(b), the issuance by the
Partnership of any Partnership Securities pursuant to this Section 4.3 shall be
subject to the following restrictions and limitations:
(i) Except for the issuance of Additional Senior Units pursuant to Section
5.4, for so long as any Senior Units are Outstanding, the Partnership
shall not create, authorize or issue additional Partnership Securities
(or securities convertible into Partnership Securities) having
distribution rights or liquidation rights ranking prior or senior to,
or on a parity with, the Senior Units, without the prior approval of
the holders of at least a majority of the Outstanding Senior Units; and
(ii) The General Partner may, at any time, make a Capital Contribution to
the Partnership so that the General Partner will have a Capital Account equal to
at least 1.0% of the sum of the Capital Accounts of all Partners. Upon the
issuance of any Common Units by the Partnership to any Person, the General
Partner, in its sole discretion, may simultaneously purchase(or may purchase at
any time thereafter as specified below) a number of General Partner Units only
to the extent necessary such that after taking into account the additional
Common Units issued to such Person and the General Partner Units to be issued to
the General Partner pursuant to this Section 4.3(c)(ii), the General Partner
will have a Percentage Interest of no more than 1.0%. The consideration for the
General Partner Units to be issued to the General Partner shall be the higher of
the price at which the Common Units were issued or, only if the purchase is not
made simultaneously with the issuance of the Common Units, the Closing Price of
the Common Units on the day prior to the proposed issuance of such General
Partner Units;
(k) The General Partner is hereby authorized and directed to take all actions
that it deems necessary or appropriate in connection with each issuance of
Units, IDRs or other Partnership Securities pursuant to Section 4.3(a) and to
amend this Agreement in any manner that it deems necessary or appropriate to
provide for each such issuance, to admit Additional Limited Partners in
connection therewith and to specify the relative rights, powers and duties of
the holders of the Units, IDRs or other Partnership Securities being so issued.
(l) The General Partner shall do all things necessary to comply with the
Delaware Act and is authorized and directed to do all things it deems to be
necessary or advisable in connection with any future issuance of Partnership
Securities, including, without limitation, compliance with any statute, rule,
regulation or guideline of any federal, state or other governmental agency or
any National Securities Exchange on which the Units or other Partnership
Securities are listed for trading.
SectionLimited Preemptive Rights. Except as provided in this Section 4.4 and
Section 4.3, no Person shall have any preemptive, preferential or other similar
right with respect to (a) additional Capital Contributions; (b) issuance or sale
of any class or series of Units, IDRs or other Partnership Securities, whether
unissued, held in the treasury or hereafter created; (c) issuance of any
obligations, evidences of indebtedness or other securities of the Partnership
convertible into or exchangeable for, or carrying or accompanied by any rights
to receive, purchase or subscribe to, any such Units, IDRs or other Partnership
Securities; (d) issuance of any right of subscription to or right to receive, or
any warrant or option for the purchase of, any such Units, IDRs or other
Partnership Securities; or (e) issuance or sale of any other securities that may
be issued or sold by the Partnership. The General Partner shall have the right,
which it may from time to time assign in whole or in part to any of its
Affiliates, to purchase Units, IDRs or other Partnership Securities from the
Partnership whenever, and on the same terms that, the Partnership issues Units,
IDRs or other Partnership Securities to Persons other than the General Partner
and its Affiliates, to the extent necessary to maintain the Percentage Interests
of the General Partner and its Affiliates equal to that which existed
immediately prior to the issuance of such Units, IDRs or other Partnership
Securities. Notwithstanding the type of Partnership Securities issued by the
Partnership to Persons other than the General Partner and its Affiliates, the
right of the General Partner and its Affiliates to purchase Units, IDRs or other
Partnership Securities pursuant to the immediately preceding sentence may be
exercised through the purchase of General Partner Units (based on a value which
is proportionate to the price for which the Partnership Securities are issued to
such Persons) in an amount necessary to maintain the Percentage Interest of the
General Partner and its Affiliates with respect to the General Partner Interest
equal to that which existed immediately prior to the issuance of Units, IDRs or
other Partnership Securities.
SectionCapital Accounts.
(m) The Partnership shall maintain for each Partner (or a beneficial owner of a
Partnership Interest held by a nominee in any case in which the nominee has
furnished the identity of such owner to the Partnership in accordance with
Section 6031(c) of the Code or any other method acceptable to the General
Partner in its sole discretion) owning a Partnership Interest a separate Capital
Account with respect to such Partnership Interest in accordance with the rules
of Treasury Regulation Section 1.704-1(b)(2)(iv). Such Capital Account shall be
increased by (i) the amount of all Capital Contributions made to the Partnership
with respect to such Partnership Interest pursuant to this Agreement and (ii)
all items of Partnership income and gain (including, without limitation, income
and gain exempt from tax) computed in accordance with Section 4.5(b) and
allocated with respect to such Partnership Interest pursuant to Section 5.1, and
decreased by (x) the amount of cash or Net Agreed Value of all actual and deemed
distributions of cash or property made with respect to such Partnership Interest
pursuant to this Agreement and (y) all items of Partnership deduction and loss
computed in accordance with Section 4.5(b) and allocated with respect to such
Partnership Interest pursuant to Section 5.1.
(n) For purposes of computing the amount of any item of income, gain, loss or
deduction to be reflected in the Partners' Capital Accounts, the determination,
recognition and classification of any such item shall be the same as its
determination, recognition and classification for federal income tax purposes
(including, without limitation, any method of depreciation, cost recovery or
amortization used for that purpose), provided, that:
(i) Solely for purposes of this Section 4.5, the Partnership shall be
treated as owning directly its proportionate share (as determined by
the General Partner based upon the provisions of the Operating
Partnership Agreements) of all property owned by the Operating
Partnership.
(ii) All fees and other expenses incurred by the Partnership to promote the
sale of (or to sell) a Partnership Interest that can neither be
deducted nor amortized under Section 709 of the Code, if any, shall,
for purposes of Capital Account maintenance, be treated as an item of
deduction at the time such fees and other expenses are incurred and
shall be allocated among the Partners pursuant to Section 5.1.
(iii) Except as otherwise provided in Treasury Regulation Section
1.704-1(b)(2)(iv)(m), the computation of all items of income, gain,
loss and deduction shall be made without regard to any election under
Section 754 of the Code which may be made by the Partnership and, as to
those items described in Section 705(a)(1)(B) or 705(a)(2)(B) of the
Code, without regard to the fact that such items are not includable in
gross income or are neither currently deductible nor capitalized for
federal income tax purposes.
(iv) Any income, gain or loss attributable to the taxable disposition of any
Partnership property shall be determined as if the adjusted basis of
such property as of such date of disposition were equal in amount to
the Partnership's Carrying Value with respect to such property as of
such date.
(v) In accordance with the requirements of Section 704(b) of the Code, any
deductions for depreciation, cost recovery or amortization attributable to any
Contributed Property shall be determined as if the adjusted basis of such
property on the date it was acquired by the Partnership were equal to the Agreed
Value of such property. Upon an adjustment pursuant to Section 4.5(d) to the
Carrying Value of any Partnership property subject to depreciation, cost
recovery or amortization, any further deductions for such depreciation, cost
recovery or amortization attributable to such property shall be determined (A)
as if the adjusted basis of such property were equal to the Carrying Value of
such property immediately following such adjustment and (B) using a rate of
depreciation, cost recovery or amortization derived from the same method and
useful life (or, if applicable, the remaining useful life) as is applied for
federal income tax purposes; provided, however, that, if the asset has a zero
adjusted basis for federal income tax purposes, depreciation, cost recovery or
amortization deductions shall be determined using any reasonable method that the
General Partner may adopt.
(vi) If the Partnership's adjusted basis in a depreciable or cost recovery
property is reduced for federal income tax purposes pursuant to Section
48(q)(1) or 48(q)(3) of the Code, the amount of such reduction shall,
solely for purposes hereof, be deemed to be an additional depreciation
or cost recovery deduction in the year such property is placed in
service and shall be allocated among the Partners pursuant to Section
5.1. Any restoration of such basis pursuant to Section 48(q)(2) of the
Code shall, to the extent possible, be allocated in the same manner to
the Partners to whom such deemed deduction was allocated.
(o) A transferee of a Partnership Interest shall succeed to a pro rata portion
of the Capital Account of the transferor relating to the Partnership Interest so
transferred.
(i) Consistent with the provisions of Treasury Regulation Section
1.704-1(b)(2)(iv)(f), on an issuance of additional Units for cash or Contributed
Property, the conversion of Senior Units into Common Units pursuant to Section
5.7, or the conversion of the General Partner's Combined Interest to Common
Units pursuant to Section 13.3(b), the Capital Account of all Partners and the
Carrying Value of each Partnership property immediately prior to such issuance
shall be adjusted upward or downward to reflect any Unrealized Gain or
Unrealized Loss attributable to such Partnership property, as if such Unrealized
Gain or Unrealized Loss had been recognized on an actual sale of each such
property immediately prior to such issuance and had been allocated to the
Partners at such time pursuant to Sections 5.1(a) and 5.1(b). In determining
such Unrealized Gain or Unrealized Loss, the aggregate cash amount and fair
market value of all Partnership assets (including, without limitation, cash or
cash equivalents) immediately prior to the issuance of additional Units shall be
determined by the General Partner using such reasonable method of valuation as
it may adopt; provided, however, the General Partner, in arriving at such
valuation, must take fully into account the fair market value of the Partnership
Interests of all Partners at such time. The General Partner shall allocate such
aggregate value among the assets of the Partnership (in such manner as it
determines in its sole discretion to be reasonable) to arrive at a fair market
value for individual properties.
(ii) In accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(f),
immediately prior to any actual or deemed distribution to a Partner of any
Partnership property (other than a distribution of cash that is not in
redemption or retirement of a Partnership Interest), the Capital Accounts of all
Partners and the Carrying Value of all Partnership property shall be adjusted
upward or downward to reflect any Unrealized Gain or Unrealized Loss
attributable to such Partnership property, as if such Unrealized Gain or
Unrealized Loss had been recognized in a sale of such property immediately prior
to such distribution for an amount equal to its fair market value, and had been
allocated to the Partners, at such time, pursuant to Section 5.1. Any Unrealized
Gain or Unrealized Loss attributable to such property shall be allocated in the
same manner as Net Termination Gain or Net Termination Loss pursuant to Section
5.1(c); provided, however, that, in making any such allocation, Net Termination
Gain or Net Termination Loss actually realized shall be allocated first. In
determining such Unrealized Gain or Unrealized Loss the aggregate cash amount
and fair market value of all Partnership assets (including, without limitation,
cash or cash equivalents) immediately prior to a distribution shall be
determined and allocated by the Liquidator using such reasonable method of
valuation as it may adopt.
SectionInterest. No interest shall be paid by the Partnership on Capital
Contributions or on balances in Partners' Capital Accounts.
SectionNo Withdrawal. No Partner shall be entitled to withdraw any part of
its Capital Contributions or its Capital Account or to receive any distribution
from the Partnership, except as provided in Section 4.1, and Articles V, VII,
XIII and XIV.
SectionLoans from Partners. Loans by a Partner to the Partnership shall not
constitute Capital Contributions. If any Partner shall advance funds to the
Partnership in excess of the amounts required hereunder to be contributed by it
to the capital of the Partnership, the making of such excess advances shall not
result in any increase in the amount of the Capital Account of such Partner. The
amount of any such excess advances shall be a debt obligation of the Partnership
to such Partner and shall be payable or collectible only out of the Partnership
assets in accordance with the terms and conditions upon which such advances are
made.
SectionNo Fractional Units. Except for fractional Senior Units issued
pursuant to Section 5.4 and Section 4.10(d), no fractional Units shall be issued
by the Partnership.
SectionSplits and Combinations.
(p) Subject to Section 4.3(c) and 4.10(d), the General Partner may make a Pro
Rata distribution of Units or other Partnership Securities to all Record Holders
or may effect a subdivision or combination of Units or other Partnership
Securities; provided, however, that, after any such distribution, subdivision or
combination, each Partner shall have the same Percentage Interest in the
Partnership as before such distribution, subdivision or combination.
(q) Whenever such a distribution, subdivision or combination of Units or other
Partnership Securities is declared, the General Partner shall select a Record
Date as of which the distribution, subdivision or combination shall be effective
and shall send notice of the distribution, subdivision or combination at least
20 days prior to such Record Date to each Record Holder as of the date not less
than 10 days prior to the date of such notice. The General Partner also may
cause a firm of independent public accountants selected by it to calculate the
number of Units to be held by each Record Holder after giving effect to such
distribution, subdivision or combination. The General Partner shall be entitled
to rely on any certificate provided by such firm as conclusive evidence of the
accuracy of such calculation.
(r) Promptly following any such distribution, subdivision or combination, the
General Partner may cause Certificates to be issued to the Record Holders of
Units as of the applicable Record Date representing the new number of Units held
by such Record Holders, or the General Partner may adopt such other procedures
as it may deem appropriate to reflect such distribution, subdivision or
combination; provided, however, if any such distribution, subdivision or
combination results in a smaller total number of Units Outstanding, the General
Partner shall require, as a condition to the delivery to a Record Holder of such
new Certificate, the surrender of any Certificate held by such Record Holder
immediately prior to such Record Date.
(s) Except with respect to Senior Units, the Partnership shall not issue
fractional Units upon any distribution, subdivision or combination of Units. If
a distribution, subdivision or combination of Common Units would result in the
issuance of fractional Common Units but for the provisions of Section 4.9 and
this Section 4.10(d), each fractional Common Unit shall be rounded to the
nearest whole Common Unit (and a 0.5 Common Unit shall be rounded to the next
higher Common Unit).
5 ARTICLE
ALLOCATIONS AND DISTRIBUTIONS
SectionAllocations for Capital Account Purposes. For purposes of maintaining
the Capital Accounts and in determining the rights of the Partners among
themselves, the Partnership's items of income, gain, loss and deduction
(computed in accordance with Section 4.5(b)) shall be allocated among the
Partners in each taxable year (or portion thereof) as provided hereinbelow.
(a) Net Income. After giving effect to the special allocations set forth in
Section 5.1(d), Net Income for each taxable period and all items of income,
gain, loss and deduction taken into account in computing Net Income for such
taxable period shall be allocated as follows:
(i) First, 100% to the Limited Partners holding Senior Units, Pro Rata,
until the aggregate Net Income allocated to the Limited Partners
holding Senior Units pursuant to this Section 5.1(a)(i) for the current
and all previous taxable years is equal to the aggregate Net Losses
allocated to the Limited Partners holding Senior Units pursuant to
Section 5.1(b)(iii) for all previous taxable years;
(ii) Second, 100% to the General Partner until the aggregate Net Income
allocated to the General Partner pursuant to this Section 5.1(a)(ii)
for the current taxable year and all previous taxable years is equal to
the aggregate Net Losses allocated to the General Partner pursuant to
Section 5.1(b)(iv) for all previous taxable years;
(iii) Third, to the Unitholders, Pro Rata, until the aggregate Net Income
allocated to such Partners pursuant to this Section 5.1(a)(iii) for the
current taxable year and all previous taxable years is equal to the
aggregate Net Losses allocated to such Partners pursuant to Section
5.1(b)(ii) for all previous taxable years; and
(iv) Fourth, the balance, if any, to the Unitholders, Pro Rata.
(b) Net Losses. After giving effect to the special allocations set forth in
Section 5.1(d), Net Losses for each taxable period and all items of income,
gain, loss and deduction taken into account in computing Net Losses for such
taxable period shall be allocated as follows:
(i) First, to the Unitholders, Pro Rata, until the aggregate Net Losses
allocated to such Partners pursuant to this Section 5.1(b)(i) for the
current taxable year and all previous taxable years is equal to the
aggregate Net Income allocated to such Partners pursuant to Section
5.1(a)(iv) for all previous taxable years;
(ii) Second, to the Unitholders, Pro Rata; provided, that Net Losses shall
not be allocated to such Partners pursuant to this Section 5.1(b)(ii)
to the extent that such allocation would cause any Limited Partner
holding Common Units to have a deficit balance in its Adjusted Capital
Account at the end of such taxable year (or increase any existing
deficit balance in its Adjusted Capital Account);
(iii) Third, to the General Partner in an amount equal to the Percentage
Interest of its General Partner Interest and to the Limited Partners
holding Senior Units, Pro Rata, in an amount equal to 100% less the
Percentage Interest of the General Partner Interest; provided, that Net
Losses shall not be allocated to such Partners pursuant to this Section
5.1(b)(iii) to the extent such allocation would cause any Limited
Partner holding Senior Units to have a deficit balance in its Adjusted
Capital Account at the end of such taxable year (or increase any
existing deficit balance in its Adjusted Capital Account); and
(iv) Fourth, the balance, if any, 100% to the General Partner.
(c) Net Termination Gains and Losses. After giving effect to the special
allocations set forth in Section 5.1(d), all items of income gain, loss and
deduction taken into account in computing Net Termination Gain or Net
Termination Loss for such taxable period shall be allocated in the same manner
as such Net Termination Gain or Net Termination Loss is allocated hereunder. All
allocations under this Section 5.1(c) shall be made after Capital Account
balances have been adjusted by all other allocations provided under this Section
5.1 and after all distributions of Available Cash provided under Section 5.4
have been made with respect to the taxable period ending on the date of the
Partnership's liquidation pursuant to Section 14.3.
(i) If a Net Termination Gain is recognized (or deemed recognized pursuant
to Section 4.5(d)) from Termination Capital Transactions, such Net
Termination Gain shall be allocated among the Partners in the following
manner (and the Adjusted Capital Accounts of the Partners shall be
increased by the amount so allocated in each of the following
subclauses, in the order listed, before an allocation is made pursuant
to the next succeeding subclause):
(A) First, to each Partner having a deficit balance in its
Adjusted Capital Account, in the proportion that such deficit
balance bears to the total deficit balances in the Adjusted
Capital Accounts of all Partners, until each such Partner has
been allocated Net Termination Gain equal to any such deficit
balance in its Adjusted Capital Account;
(B) Second, to the Limited Partners holding Senior Units, Pro
Rata, in an amount equal to 100% less the Percentage Interest
of the General Partner Interest, and to the General Partner in
an amount equal to the Percentage Interest of its General
Partner Interest, until the Adjusted Capital Account in
respect of each Senior Unit then Outstanding is equal to the
sum of (i) the Senior Unit Liquidation Preference (or fraction
thereof) plus (ii) any accumulated and unpaid Senior Unit
Distributions.
(C) Third, to the Unitholders, Pro Rata, until the Adjusted Capital Account
in respect of each Common Unit then Outstanding is equal to the sum of (1) its
Unrecovered Initial Unit Price plus (2) the Minimum Quarterly Distribution for
the Quarter during which such Net Termination Gain is recognized, reduced by any
distribution pursuant to Section 5.4(b) hereof and Sections 5.4(a)(i) or
5.4(b)(i) of the Original Agreement with respect to such Common Unit for such
Quarter (the amount determined pursuant to this clause (2) is hereinafter
defined as the "Unpaid MQD");
(D) Fourth, to the Unitholders, Pro Rata, until the Adjusted Capital
Account in respect of each Common Unit then Outstanding is equal to the sum of
(1) its Unrecovered Initial Unit Price, plus (2) the Unpaid MQD, if any, for
such Common Unit with respect to the Quarter during which such Net Termination
Gain is recognized, plus (3) the excess of (aa) the First Target Distribution
less the Minimum Quarterly Distribution for each Quarter of the Partnership's
existence over (bb) the amount of any distributions of Cash from Operations that
was distributed pursuant to Section 5.4(c) hereof and Sections 5.4(a)(iv) or 5.4
(b)(ii) of the Original Agreement (the sum of (1) plus (2) plus (3) is
hereinafter defined as the "First Liquidation Target Amount");
(E) Fifth, 86.8673% to the Unitholders, Pro Rata, and 13.1327% to the
Special Limited Partners, Pro Rata, until the Adjusted Capital Account in
respect of each Common Unit then Outstanding is equal to the sum of (1) the
First Liquidation Target Amount, plus (2) the excess of (aa) the Second Target
Distribution less the First Target Distribution for each Quarter of the
Partnership's existence over (bb) the amount of any distributions of Cash from
Operations that was distributed pursuant to Section 5.4(d) hereof and Sections
5.4(a)(v) or 5.4(b)(iii) of the Original Agreement (the sum of (1) plus (2) is
hereinafter defined as the "Second Liquidation Target Amount");
(F) Sixth, 76.7653% to the Unitholders, Pro Rata, and 23.2347% to the
Special Limited Partners, Pro Rata, until the Adjusted Capital Account in
respect of each Common Unit then Outstanding is equal to the sum of (1) the
Second Liquidation Target Amount, plus (2) the excess of (aa) the Third Target
Distribution less the Second Target Distribution for each Quarter of the
Partnership's existence over (bb) the amount of any distributions of Cash from
Operations that was distributed pursuant to Section 5.4(e) hereof and Sections
5.4(a)(vi) or 5.4(b)(iv) of the Original Agreement; and
(G) Finally, any remaining amount 51.5102% to the Unitholders, Pro Rata,
and 48.4898% to the Special Limited Partners, Pro Rata.
(ii) If a Net Termination Loss is recognized (or deemed recognized pursuant
to Section 4.5(d)) from Termination Capital Transactions, such Net
Termination Loss shall be allocated to the Partners in the following
manner:
(A) First, to the Unitholders, Pro Rata, until the Adjusted
Capital Account in respect of each Common Unit then
Outstanding has been reduced to zero; and
(B) Second, to the Limited Partners holding Senior Units, Pro
Rata, in an amount equal to 100% less the Percentage Interest
of the General Partner Interest, and to the General Partner in
an amount equal to the Percentage Interest of its General
Partner Interest, until the Adjusted Capital Account in
respect of each Senior Unit then Outstanding has been reduced
to zero.
(C) Third, the balance, if any, 100% to the General Partner.
(d) Special Allocations. Notwithstanding any other provision of this Section
5.1, the following special allocations shall be made for such taxable period:
(i) Partnership Minimum Gain Chargeback. Notwithstanding any other
provision of this Section 5.1, if there is a net decrease in Partnership Minimum
Gain during any Partnership taxable period, each Partner shall be allocated
items of Partnership income and gain for such period (and, if necessary,
subsequent periods) in the manner and amounts provided in Treasury Regulation
Sections 1.704-2(f)(6), 1.704-2(g)(2) and 1.704-2(j)(2)(i), or any successor
provision. For purposes of this Section 5.1(d), each Partner's Adjusted Capital
Account balance shall be determined, and the allocation of income or gain
required hereunder shall be effected, prior to the application of any other
allocations pursuant to this Section 5.1(d) with respect to such taxable period
(other than an allocation pursuant to Sections 5.1(d)(vi) and 5.1(d)(vii)). This
Section 5.1(d)(i) is intended to comply with the Partnership Minimum Gain
chargeback requirement in Treasury Regulation Section 1.704-2(f) and shall be
interpreted consistently therewith.
(ii) Chargeback of Partner Nonrecourse Debt Minimum Gain. Notwithstanding
the other provisions of this Section 5.1 (other than Section 5.1(d)(i)), except
as provided in Treasury Regulation Section 1.704-2(i)(4), if there is a net
decrease in Partner Nonrecourse Debt Minimum Gain during any Partnership taxable
period, any Partner with a share of Partner Nonrecourse Debt Minimum Gain at the
beginning of such taxable period shall be allocated items of Partnership income
and gain for such period (and, if necessary, subsequent periods) in the manner
and amounts provided in Treasury Regulation Sections 1.704-2(i)(4) and
1.704-2(j)(2)(ii), or any successor provisions. For purposes of this Section
5.1(d), each Partner's Adjusted Capital Account balance shall be determined, and
the allocation of income or gain required hereunder shall be effected, prior to
the application of any other allocations pursuant to this Section 5.1(d), other
than Section 5.1(d)(i) and other than an allocation pursuant to Sections
5.1(d)(vi) and 5.1(d)(vii), with respect to such taxable period. This Section
5.1(d)(ii) is intended to comply with the chargeback of items of income and gain
requirement in Treasury Regulation Section 1.704-2(i)(4) and shall be
interpreted consistently therewith.
(iii) Priority Allocations. First, if the amount of cash or the Net Agreed
Value of any property distributed (except cash or property distributed pursuant
to Section 14.3 or 14.4) to any Limited Partner holding Common Units with
respect to a taxable year is greater (on a per Unit basis) than the amount of
cash or the Net Agreed Value of property distributed to the other Limited
Partners holding Common Units (on a per Unit basis), then (1) each Limited
Partner holding Common Units receiving such greater cash or property
distribution shall be allocated gross income in an amount equal to the product
of (aa) the amount by which the distribution (on a per Unit basis) to such
Limited Partners holding Common Units exceeds the distribution (on a per Unit
basis) to the Limited Partner holding Common Units receiving the smallest
distribution and (bb) the number of Units owned by the Limited Partners holding
Common Units receiving the greater distribution; and (2) the General Partner
shall be allocated gross income in an aggregate amount equal to the sum of the
amounts allocated in clause (1) above multiplied by the Percentage Interest of
its General Partner Interest, divided by 100% less the Percentage Interest of
the General Partner Interest. Second, gross income for the taxable period shall
be allocated 100% to the Limited Partners holding Senior Units, Pro Rata, until
the aggregate amount of such items allocated to the Limited Partners holding
Senior Units, Pro Rata, under this paragraph (iii) for the current taxable
period and all previous taxable periods is equal to the cumulative amount of
cash distributed to the Limited Partners holding Senior Units, Pro Rata,
pursuant to Sections 5.4(a) and 5.5(a) for the current and all previous taxable
periods. All or a portion of the remaining items of Partnership gross income or
gain for the taxable period, if any, shall be allocated 100% to the Special
Limited Partners, Pro Rata, until the aggregate amount of such items allocated
to the Special Limited Partners, Pro Rata, under this paragraph (iii) for the
current taxable period and all previous taxable periods is equal to the
cumulative amount of cash distributed to the Special Limited Partners, Pro Rata,
from the Closing Date through the end of such taxable period.
(iv) Qualified Income Offset. In the event any Partner unexpectedly
receives any adjustments, allocations or distributions described in Treasury
Regulation Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or
1.704-1(b)(2)(ii)(d)(6), items of Partnership income and gain shall be
specifically allocated to such Partner in an amount and manner sufficient to
eliminate, to the extent required by the Treasury Regulations promulgated under
Section 704(b) of the Code, the deficit balance, if any, in its Adjusted Capital
Account created by such adjustments, allocations or distributions as quickly as
possible unless such deficit balance is otherwise eliminated pursuant to Section
5.1(d)(i) or (ii).
(v) Gross Income Allocations. In the event any Partner has a deficit
balance in its Adjusted Capital Account at the end of any Partnership
taxable period, such Partner shall be specially allocated items of
Partnership gross income and gain in the amount of such excess as
quickly as possible; provided, that an allocation pursuant to this
Section 5.1(d)(v) shall be made only if and to the extent that such
Partner would have a deficit balance in its Adjusted Capital Account
after all other allocations provided for in this Section 5.1 have been
tentatively made as if this Section 5.1(d)(v) were not in this
Agreement.
(vi) Nonrecourse Deductions. Nonrecourse Deductions for any taxable period
shall be allocated to the Partners in accordance with their respective
Percentage Interests. If the General Partner determines in its good
faith discretion that the Partnership's Nonrecourse Deductions must be
allocated in a different ratio to satisfy the safe harbor requirements
of the Treasury Regulations promulgated under Section 704(b) of the
Code, the General Partner is authorized, upon notice to the Limited
Partners, to revise the prescribed ratio to the numerically closest
ratio that does satisfy such requirements.
(vii) Partner Nonrecourse Deductions. Partner Nonrecourse Deductions for any
taxable period shall be allocated 100% to the Partner that bears the
Economic Risk of Loss with respect to the Partner Nonrecourse Debt to
which such Partner Nonrecourse Deductions are attributable in
accordance with Treasury Regulation Section 1.704-2(i). If more than
one Partner bears the Economic Risk of Loss with respect to a Partner
Nonrecourse Debt, such Partner Nonrecourse Deductions attributable
thereto shall be allocated between or among such Partners in accordance
with the ratios in which they share such Economic Risk of Loss.
(viii) Nonrecourse Liabilities. For purposes of Treasury Regulation Section
1.752-3(a)(3), the Partners agree that Nonrecourse Liabilities of the
Partnership in excess of the sum of (A) the amount of Partnership
Minimum Gain and (B) the total amount of Nonrecourse Built-in Gain
shall be allocated among the Partners in accordance with their
respective Percentage Interests.
(ix) Code Section 754 Adjustments. To the extent an adjustment to the
adjusted tax basis of any Partnership asset pursuant to Section 734(b) or 743(b)
of the Code is required, pursuant to Treasury Regulation Section
1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts,
the amount of such adjustment to the Capital Accounts shall be treated as an
item of gain (if the adjustment increases the basis of the asset) or loss (if
the adjustment decreases such basis), and such item of gain or loss shall be
specially allocated to the Partners in a manner consistent with the manner in
which their Capital Accounts are required to be adjusted pursuant to such
Section of the Treasury regulations.
(x) Economic Uniformity.
(A) Immediately prior to a sale, exchange or other disposition of all or
any portion of the Senior Units, the holders disposing of Senior Units may elect
that the Partnership allocate items of Partnership gross income or gain 100% to
the Limited Partners disposing of Senior Units until the Limited Partners
disposing of Senior Units have been allocated an amount of gross income or gain
which causes the Capital Accounts maintained with respect to each of the Senior
Units to be equal. Immediately prior to the conversion of all or any portion of
the Senior Units into Common Units, the Limited Partners converting such Senior
Units may elect that the Partnership allocate items of Partnership gross income
or gain until the Limited Partners converting such Senior Units have been
allocated an amount of gross income or gain which causes the Capital Account
maintained with respect to each of the Senior Units to be converted to be equal
to the product of (x) the number of Common Units into which the Senior Units
will be converted and (y) the Per Unit Capital Account for a Common Unit.
(B) If at the time of the sale, exchange or other disposition of Senior
Units, the Senior Units are publicly traded or will become publicly traded as a
result of the sale, exchange or disposition, the General Partner may cause the
Partnership to allocate items of gross income or gain 100% to the Limited
Partners disposing of Senior Units until the Limited Partners disposing of
Senior Units have been allocated an amount of gross income or gain which causes
the Capital Accounts maintained with respect to each of the Senior Units that
will be publicly traded after the disposition to be equal. Immediately prior to
the sale, exchange or other disposition in the public marketplace of Common
Units into which Senior Units have been converted, the General Partner may cause
the Partnership to allocate items of gross income or gain 100% to the Limited
Partners disposing of such Common Units until the Limited Partners disposing of
such Common Units have been allocated an amount of gross income or gain which
causes the Capital Account maintained with respect to all Common Units that are
publicly traded after the disposition to be equal.
(C) At the election of the General Partner with respect to any taxable
period ending upon, or after, the termination of the Subordination Period, all
or a portion of the remaining items of Partnership gross income or gain for such
taxable period, if any, shall be allocated 100% to each Partner holding
Subordinated Units in the proportion of the number of Subordinated Units held by
such Partner to the total number of Subordinated Units then Outstanding, until
each such Partner has been allocated an amount of gross income or gain which
increases the Capital Account maintained with respect to such Subordinated Units
to an amount equal to the product of (x) the number of Subordinated Units held
by such Partner and (y) the Per Unit Capital Amount for a Common Unit. The
purpose of this allocation is to establish uniformity between the Capital
Accounts underlying Subordinated Units and the Capital Accounts underlying
Common Units held by Persons other than the General Partner and its Affiliates
immediately prior to the conversion of such Subordinated Units into Common
Units.
(xi) Curative Allocation.
(A) Notwithstanding any other provision of this Section 5.1, other than the
Required Allocations, the Required Allocations shall be taken into account in
making the Agreed Allocations so that, to the extent possible, the net amount of
items of income, gain, loss and deduction allocated to each Partner pursuant to
the Required Allocations and the Agreed Allocations, together, shall be equal to
the net amount of such items that would have been allocated to each such Partner
under the Agreed Allocations had the Required Allocations and the related
Curative Allocation not otherwise been provided in this Section 5.1.
Notwithstanding the preceding sentence, Required Allocations relating to (1)
Nonrecourse Deductions shall not be taken into account except to the extent that
there has been a decrease in Partnership Minimum Gain and (2) Partner
Nonrecourse Deductions shall not be taken into account except to the extent that
there has been a decrease in Partner Nonrecourse Debt Minimum Gain. Allocations
pursuant to this Section 5.1(d)(xi)(A) shall only be made with respect to
Required Allocations to the extent the General Partner reasonably determines
that such allocations will otherwise be inconsistent with the economic agreement
among the Partners. Further, allocations pursuant to this Section 5.1(d)(xi)(A)
shall be deferred with respect to allocations pursuant to clauses (1) and (2)
hereof to the extent the General Partner reasonably determines that such
allocations are likely to be offset by subsequent Required Allocations.
(B) The General Partner shall have reasonable discretion, with
respect to each taxable period, to (1) apply the provisions of
Section 5.1(d)(xi)(A) in whatever order is most likely to
minimize the economic distortions that might otherwise result
from the Required Allocations, and (2) divide all allocations
pursuant to Section 5.1(d)(xi)(A) among the Partners in a
manner that is likely to minimize such economic distortions.
(xii) Retirement of Assumed Indebtedness. All losses or deductions
attributable to premiums, consent fees, or other expenditures incurred
by the Partnership to retire indebtedness assumed from the General
Partner pursuant to the Contribution Agreement shall be allocated to
the General Partner.
SectionAllocations for Tax Purposes.
(e) Except as otherwise provided herein, for federal income tax purposes, each
item of income, gain, loss and deduction shall be allocated among the Partners
in the same manner as its correlative item of "book" income, gain, loss or
deduction is allocated pursuant to Section 5.1.
(f) In an attempt to eliminate Book-Tax Disparities attributable to a
Contributed Property or Adjusted Property, items of income, gain, loss,
depreciation, amortization and cost recovery deductions shall be allocated for
federal income tax purposes among the Partners as follows:
(i) (A) In the case of a Contributed Property, such items attributable
thereto shall be allocated among the Partners in the manner provided
under Section 704(c) of the Code that takes into account the variation
between the Agreed Value of such property and its adjusted basis at the
time of contribution; and (B) except as otherwise provided in Section
5.2(b)(iii), any item of Residual Gain or Residual Loss attributable to
a Contributed Property shall be allocated among the Partners in the
same manner as its correlative item of "book" gain or loss is allocated
pursuant to Section 5.1.
(ii) (A) In the case of an Adjusted Property, such items shall (1) first,
be allocated among the Partners in a manner consistent with the principles of
Section 704(c) of the Code to take into account the Unrealized Gain or
Unrealized Loss attributable to such property and the allocations thereof
pursuant to Section 4.5(d)(i) or (ii), and (2) second, in the event such
property was originally a Contributed Property, be allocated among the Partners
in a manner consistent with Section 5.2(b)(i)(A); and (B) except as otherwise
provided in Section 5.2(b)(iii), any item of Residual Gain or Residual Loss
attributable to an Adjusted Property shall be allocated among the Partners in
the same manner as its correlative item of "book" gain or loss is allocated
pursuant to Section 5.1.
(iii) The General Partner shall apply (a) the principles of Temporary
Regulation Section 1.704-3T to eliminate Book-Tax Disparities with
respect to the Book-Tax Disparities existing on the date of adoption of
Treasury Regulation Section 1.704-3(d) (the "Remedial Regulations") and
(b) the Remedial Regulations with respect to any Book-Tax Disparity
created thereafter.
(g) For the proper administration of the Partnership and for the preservation of
uniformity of the Units (or any class or classes thereof), the General Partner
shall have sole discretion to (i) adopt such conventions as it deems appropriate
in determining the amount of depreciation, amortization and cost recovery
deductions; (ii) make special allocations for federal income tax purposes of
income (including, without limitation, gross income) or deductions; and (iii)
amend the provisions of this Agreement as appropriate (x) to reflect the
proposal or promulgation of Treasury Regulations under Section 704(b) or Section
704(c) of the Code or (y) otherwise to preserve or achieve uniformity of the
Units (or any class or classes thereof). The General Partner may adopt such
conventions, make such allocations and make such amendments to this Agreement as
provided in this Section 5.2(c) only if such conventions, allocations or
amendments would not have a material adverse effect on the Partners, the holders
of any class or classes of Units issued and Outstanding or the Partnership, and
if such allocations are consistent with the principles of Section 704 of the
Code.
(h) The General Partner in its sole discretion may determine to depreciate or
amortize the portion of an adjustment under Section 743(b) of the Code
attributable to unrealized appreciation in any Adjusted Property (to the extent
of the unamortized Book-Tax Disparity) using a predetermined rate derived from
the depreciation or amortization method and useful life applied to the
Partnership's common basis of such property, despite the inconsistency of such
approach with Treasury Regulation Section 1.167(c)-1(a)(6) and Proposed Treasury
Regulation 1.197-2(g)(3) or any successor regulations thereto. If the General
Partner determines that such reporting position cannot reasonably be taken, the
General Partner may adopt depreciation and amortization conventions under which
all purchasers acquiring Units in the same month would receive depreciation and
amortization deductions, based upon the same applicable rate as if they had
purchased a direct interest in the Partnership's property. If the General
Partner chooses not to utilize such aggregate method, the General Partner may
use any other reasonable depreciation and amortization conventions to preserve
the uniformity of the intrinsic tax characteristics of any Units that would not
have a material adverse effect on the Limited Partners or the Record Holders of
any class or classes of Units.
(i) Any gain allocated to the Partners upon the sale or other taxable
disposition of any Partnership asset shall, to the extent possible, after taking
into account other required allocations of gain pursuant to this Section 5.2, be
characterized as Recapture Income in the same proportions and to the same extent
as such Partners (or their predecessors in interest) have been allocated any
deductions directly or indirectly giving rise to the treatment of such gains as
Recapture Income.
(j) All items of income, gain, loss, deduction and credit recognized by the
Partnership for federal income tax purposes and allocated to the Partners in
accordance with the provisions hereof shall be determined without regard to any
election under Section 754 of the Code which may be made by the Partnership;
provided, however, that such allocations, once made, shall be adjusted as
necessary or appropriate to take into account those adjustments permitted or
required by Sections 734 and 743 of the Code.
(k) Each item of Partnership income, gain, loss and deduction attributable to
transferred Units shall, for federal income tax purposes, be determined on an
annual basis and prorated on a monthly basis and shall be allocated to the
Partners as of the opening of the New York Stock Exchange on the first Business
Day of each month; provided, however, that gain or loss on a sale or other
disposition of any assets of the Partnership other than in the ordinary course
of business shall be allocated to the Partners as of the opening of the New York
Stock Exchange on the first Business Day of the month in which such gain or loss
is recognized for federal income tax purposes. The General Partner may revise,
alter or otherwise modify such methods of allocation as it determines necessary,
to the extent permitted or required by Section 706 of the Code and the
regulations or rulings promulgated thereunder.
(l) Allocations that would otherwise be made to a Limited Partner under the
provisions of this Article V shall instead be made to the beneficial owner of
Units held by a nominee in any case in which the nominee has furnished the
identity of such owner to the Partnership in accordance with Section 6031(c) of
the Code or any other method acceptable to the General Partner in its sole
discretion.
SectionRequirement and Characterization of Distributions.
(m) Within 45 days following the end of (i) the period beginning on the Initial
Closing Date and ending on October 31, 1994 and (ii) each Quarter commencing
with the Quarter beginning on November 1, 1994, an amount equal to 100% of
Available Cash with respect to such Quarter shall be distributed in accordance
with this Article V by the Partnership to the Partners, as of the Record Date
selected by the General Partner in its reasonable discretion. All amounts of
Available Cash distributed by the Partnership on any date from any source shall
be deemed to be Cash from Operations until the sum of all amounts of Available
Cash theretofore distributed by the Partnership to the Partners pursuant to
Section 5.4 equals the aggregate amount of all Cash from Operations generated by
the Partnership since the Initial Closing Date through the close of the
immediately preceding Quarter. Any remaining amounts of Available Cash
distributed by the Partnership on such date shall, except as otherwise provided
in Section 5.5, be deemed to be Cash from Interim Capital Transactions.
(n) Notwithstanding the definitions of Available Cash and Cash from Operations
contained herein, disbursements (including, without limitation, contributions to
the Operating Partnership or disbursements on behalf of the Operating
Partnership) made or cash reserves established, increased or reduced after the
end of any Quarter but on or before the date on which the Partnership makes its
distribution of Available Cash in respect of such Quarter as required by Section
5.3(a) shall be deemed to have been made, established, increased or reduced for
purposes of determining Available Cash and Cash from Operations, within such
Quarter if the General Partner so determines. Notwithstanding the foregoing, in
the event of the dissolution and liquidation of the Partnership, all proceeds of
such liquidation shall be applied and distributed in accordance with, and
subject to the terms and conditions of, Sections 14.3 and 14.4.
SectionDistributions of Cash from Operations and Additional Senior Units.
Subject to Section 17-607 of the Delaware Act, Available Cash with respect to
any Quarter that is deemed to be Cash from Operations pursuant to the provisions
of Section 5.3 or 5.5 shall be distributed as follows, except as otherwise
required by Section 4.3(b) in respect of additional Partnership Securities
issued pursuant thereto:
(o) First, to the Limited Partners holding Senior Units, Pro Rata, in an amount
equal to 100% less the Percentage Interest of the General Partner Interest, and
to the General Partner in an amount equal to the Percentage Interest of its
General Partner Interest, until there has been distributed in respect of each
Senior Unit then Outstanding an amount equal to the Senior Unit Distribution and
any accumulated and unpaid Senior Unit Distributions through the last day of the
preceding Quarter;
(p) Second, to the Unitholders, Pro Rata, until there has been distributed in
respect of each Common Unit then Outstanding an amount equal to the Minimum
Quarterly Distribution;
(q) Third, to the Unitholders, Pro Rata, until there has been distributed in
respect of each Common Unit then Outstanding an amount equal to the excess of
the First Target Distribution over the Minimum Quarterly Distribution;
(r) Fourth, 86.8673% to the Unitholders, Pro Rata, and 13.1327% to the Special
Limited Partners, Pro Rata, until there has been distributed in respect of each
Common Unit then Outstanding an amount equal to the excess of the Second Target
Distribution over the First Target Distribution;
(s) Fifth, 76.7653% to the Unitholders, Pro Rata, and 23.2347% to the Special
Limited Partners, Pro Rata, until there has been distributed in respect of each
Common Unit then Outstanding an amount equal to the excess of the Third Target
Distribution over the Second Target Distribution; and
(t) Thereafter, 51.5102% to the Unitholders, Pro Rata, and 48.4898% to the
Special Limited Partners, Pro Rata;
provided, however, that (1) notwithstanding the amount of Available Cash that is
deemed to be Cash from Operations with respect to such Quarter, Senior Unit
Distributions accruing prior to the earlier to occur of (x) February 1, 2002 and
(y) the first occurrence of a Material Event shall be paid by the issuance of
additional Senior Units having an aggregate Senior Unit Liquidation Preference
equal to the amount of such Senior Unit Distributions ("Additional Senior
Units"), which may include fractional Senior Units or the cash equivalent
thereof based on the Senior Unit Liquidation Preference;
(2) if (A) the Senior Unit Distribution has been reduced to zero pursuant to
the second sentence of Section 5.6(a), (B) all of the Senior Units have been
converted pursuant to Section 5.7(b) or (C) all of the Senior Units have been
redeemed pursuant to Section 17.2, then subsection (a) of this Section 5.4 shall
terminate and have no further force or effect; and,
(3) if the Minimum Quarterly Distribution, the First Target Distribution, the
Second Target Distribution and the Third Target Distribution have been reduced
to zero pursuant to the second sentence of Section 5.6(b), then subsections (b),
(c), (d) and (e) of this Section 5.4 shall terminate and have no further force
or effect.
SectionDistributions of Cash from Interim Capital Transactions. Subject to
Section 17-607 of the Delaware Act, Available Cash that constitutes Cash from
Interim Capital Transactions shall be distributed, unless the provisions of
Section 5.3 require otherwise, as follows:
(u) First, to the Limited Partners holding Senior Units, Pro Rata, in an amount
equal to 100% less the Percentage Interest of the General Partner Interest, and
to the General Partner in an amount equal to the Percentage Interest of its
General Partner Interest, until there has been distributed in respect of each
Senior Unit then Outstanding an amount equal to any accumulated and unpaid
Senior Unit Distribution through such date;
(v) Second, to the Limited Partners holding Senior Units, Pro Rata, in an amount
equal to 100% less the Percentage Interest of the General Partner Interest, and
to the General Partner in an amount equal to the Percentage Interest of its
General Partner Interest, until a hypothetical holder of a Senior Unit acquired
on the WNGL Closing Date has received with respect to such Senior Unit, during
the period since the WNGL Closing Date through such date, distributions of
Available Cash that are deemed to be Cash from Interim Capital Transactions in
an aggregate amount equal to the Senior Unit Liquidation Preference;
(w) Third, to the Unitholders, Pro Rata, until a hypothetical holder of a Common
Unit acquired on the Initial Closing Date has received with respect to such
Common Unit, during the period since the Initial Closing Date through such date,
distributions of Available Cash that are deemed to be Cash from Interim Capital
Transactions in an aggregate amount equal to the Initial Unit Price; and
(x) Thereafter, all Available Cash shall be distributed as if it were Cash from
Operations and shall be distributed in accordance with Section 5.4.
SectionAdjustment of Senior Unit Liquidation Preference, Senior Unit
Distribution, Minimum Quarterly Distribution and Target Distribution Levels.
(y) The Senior Unit Liquidation Preference and the Senior Unit Distribution
shall be proportionately adjusted in the event of any distribution, combination
or subdivision (whether effected by a distribution payable in Senior Units or
otherwise) of Senior Units in accordance with Section 4.10. In the event of a
distribution of Available Cash to the Limited Partners holding Senior Units
pursuant to Section 5.5(b), the Senior Unit Liquidation Preference shall be
reduced by the amount of that distribution to the Limited Partners holding
Senior Units, Pro Rata. In the event of a distribution of Available Cash to the
Limited Partners holding Senior Units pursuant to Section 5.5(b), the Senior
Unit Distribution shall be adjusted proportionately downward to equal the
product obtained by multiplying the otherwise applicable Senior Unit
Distribution by a fraction of which the numerator is the Senior Unit Liquidation
Preference immediately after giving effect to such distribution and of which the
denominator is the Senior Unit Liquidation Preference immediately prior to
giving effect to such distribution.
(z) The Minimum Quarterly Distribution, First Target Distribution, Second Target
Distribution and Third Target Distribution shall be proportionately adjusted in
the event of any distribution, combination or subdivision (whether effected by a
distribution payable in Units or otherwise) of Units or other Partnership
Securities in accordance with Section 4.10. If a distribution of Available Cash
is made that is deemed to be Cash from Interim Capital Transactions, the Minimum
Quarterly Distribution, First Target Distribution, Second Target Distribution
and Third Target Distribution shall be adjusted proportionately downward to
equal the product obtained by multiplying the otherwise applicable Minimum
Quarterly Distribution, First Target Distribution, Second Target Distribution
and Third Target Distribution, as the case may be, by a fraction of which the
numerator is the Unrecovered Initial Unit Price of the Common Units immediately
after giving effect to such distribution and of which the denominator is the
Unrecovered Initial Unit Price of the Common Units immediately prior to giving
effect to such distribution.
(aa) The Minimum Quarterly Distribution, First Target Distribution, Second
Target Distribution and Third Target Distribution shall also be subject to
adjustment pursuant to Section 9.6.
SectionSpecial Provisions Relating to the Senior Units.
(bb) Immediately upon the conversion of Senior Units into Common Units as
provided in Section 5.7(b), the holder of a Senior Unit so converted shall
possess all of the rights and obligations of a Limited Partner holding Common
Units hereunder, including, without limitation, the right to vote as a Limited
Partner holding Common Units, the right to participate in allocations of income,
gain, loss and deduction and distributions of cash made with respect to Common
Units pursuant to this Article V.
(cc) If the holders of the Common Units approve the Senior Unit Conversion
Option, each holder of Senior Units shall have the right, at its option, subject
to the terms of this Section 5.7, to convert any or all of such holders' Senior
Units into Common Units at any time during the time period commencing upon the
earlier to occur of:
(i) February 1, 2002, upon not less than 90 days prior written notice to
the Partnership (which notice may be given prior to February 1, 2002)
in accordance with Section 5.7(d), or
(ii) a Material Event, upon not less than 30 days prior written notice to
the Partnership in accordance with Section 5.7(d); provided, however, that prior
to the expiration of such 30-day period, the holders of the Senior Units may
revoke their election to convert Senior Units into Common Units at any time
during the pendency of a Material Event by written notice to the Partnership. If
the holders of the Senior Units revoke their election to convert Senior Units
into Common Units and the Partnership has cured the Material Event and a
subsequent Material Event occurs, the holders of the Senior Units may elect to
convert their Senior Units into Common Units upon not less than 10 days prior
written notice to the Partnership;
and ending on the date upon which the holders of the Senior Units give
the Partnership notice of their election to exercise their registration
rights with respect to the Senior Units pursuant to the WNGL
Registration Rights Agreement.
(iii) If the holders of the Senior Units elect to convert any or all of their
Senior Units into Common Units, such number of Senior Units shall be converted
into such number of fully paid and nonassessable (subject to Section 17-607 of
the Delaware Act) Common Units as is equal, subject to Section 5.7(g), to the
product of the number of Senior Units being so converted, multiplied by the
quotient of (A) 125% of the sum of (1) the Senior Unit Liquidation Preference
plus (2) any accumulated and unpaid Senior Unit Distributions to and including
the date of conversion, divided by (B) the Current Market Price of the Common
Units as of the date of conversion.
(dd) The holders of the Senior Units shall exercise the right to convert by the
delivery of written notice, at the Partnership's principal place of business,
during the applicable time period specified in (b) above, that the holder elects
to convert all or a portion of the Senior Units represented by such Certificates
and, subject to Section 5.7(i), specifying the name or names (with address) in
which Certificates representing Common Units are to be issued. Upon the
expiration of the applicable time period specified in (b) above, each converting
holder of Senior Units shall be deemed to be the holder of record of the number
of Common Units issuable upon conversion in accordance with (c) above,
notwithstanding that the Certificates representing such Common Units shall not
then actually be delivered to such Person. Upon notice from the Partnership,
each holder of Senior Units so converted shall promptly surrender to the
Partnership or the Transfer Agent, Certificates representing the Senior Units so
converted, in proper transfer form. On the date of conversion, all rights with
respect to the Senior Units so converted will terminate except for the right of
holders to receive Certificates for the number of Common Units into which such
Senior Units have been converted. If the date for the conversion of Senior Units
into Common Units shall not be a Business Day, then such conversion shall occur
on the next Business Day. Each Senior Unit shall be canceled by the General
Partner upon its conversion.
(ee) During the period beginning on the first of the twenty (20) Trading Days
immediately prior to the date of conversion through and including the date of
conversion, the Partnership shall not take any action that will affect the
Common Units, including, without limitation, the following:
(i) (A) make a redemption payment or make a distribution payable in Common
Units on any class of Partnership Interest (which, for purposes of this Section
5.7(e) shall include, without limitation, any distributions in the form of
options, warrants or other rights to acquire Partnership Interests) of the
Partnership (other than the issuance of Common Units in connection with the
payment in redemption for, of distributions on or the conversion of Senior
Units); (B) subdivide the outstanding Common Units into a larger number of
Common Units; (C) combine the outstanding Common Units into a smaller number of
Common Units; (D) issue any of its Partnership Securities in a reclassification
of the Common Units; or (E) set a Record Date with respect to any of the events
described in (A) through (D);
(ii) issue to all holders of its Common Units rights, options or warrants
entitling the holders thereof to subscribe for or purchase Common Units
(or securities convertible into or exchangeable for Common Units) other
than issuances of such rights, options or warrants if the holder of
Senior Units would be entitled to receive such rights, options or
warrants upon conversion at any time of Senior Units;
(iii) (A) other than distributions consistent with past practice, make a Pro
Rata distribution to all holders of Common Units consisting exclusively
of cash (excluding any cash distributed upon a merger or consolidation
to which paragraph (g) below applies), or (B) make a distribution to
all holders of its Common Units consisting of evidences of
indebtedness, its Partnership Interests other than Common Units or
assets (including securities, but excluding those rights, options,
warrants and distributions referred to in paragraphs (e)(i) or (e)(ii)
above); or
(iv) issue or sell Common Units or securities convertible into or
exchangeable for Common Units, or any options, warrants or other rights
to acquire Common Units.
(ff) No fractional Common Units shall be issued upon the conversion of any
Senior Units. If more than one Senior Unit shall be surrendered for conversion
at one time by the same holder, the number of full Common Units issuable upon
conversion thereof shall be computed on the basis of the aggregate Senior Unit
Liquidation Preference of the Senior Units so surrendered. If the conversion of
any Senior Units results in a fraction, an amount equal to such fraction
multiplied by the Current Market Price of the Common Units as of the date of
conversion shall be paid to such holder in cash by the Partnership.
(i) In the event of any capital reorganization or reclassification or other
change of outstanding Common Units, consolidation or merger of the Partnership
with or into another Person in accordance with Section 16.1(b) (other than a
consolidation or merger in which the Partnership is the Surviving Business
Entity and which does not result in any reclassification or change of
outstanding Common Units) or sale or other disposition to another Person of all
or substantially all of the assets of the Partnership, computed on a
consolidated basis in accordance with Section 16.1(b) (any of the foregoing, a
"Transaction"), lawful provision shall be made such that the Senior Units will
be convertible only into the kind and amount of stock or other securities (of
the Partnership or another issuer) or property or cash receivable upon such
Transaction by a holder of the number of Common Units into which such Senior
Units could have been converted immediately prior to such Transaction. The
provisions of this Section 5.7(g) and any equivalent thereof in any governing
document of the Surviving Business Entity similarly shall apply to successive
Transactions.
(gg) The Partnership shall not enter into any agreement that would prohibit the
issuance of the number of Common Units as will from time to time be sufficient
to permit the conversion of all outstanding Senior Units.
(hh) The issuance or delivery of certificates for Common Units upon the
conversion of Senior Units shall be made without charge to the converting holder
of Senior Units for such certificates or for any tax in respect of the issuance
or delivery of such certificates or the securities represented thereby, and such
certificates shall be issued or delivered in the respective names of, or in such
names as may be directed by, the holders of the Senior Units converted;
provided, however, that the Partnership shall not be required to pay any tax
which may be payable in respect of any transfer involved in the issuance and
delivery of any such certificate in a name other than that of the holder of the
Senior Units converted, and the Partnership shall not be required to issue or
deliver such certificate unless or until the Person or Persons requesting the
issuance or delivery thereof shall have paid to the Partnership the amount of
such tax or shall have established to the reasonable satisfaction of the
Partnership that such tax has been paid.
(ii) The Partnership covenants that all Common Units which may be delivered upon
conversion of Senior Units will be newly issued Common Units, will have been
duly authorized and validly issued and will be fully paid and non-assessable
(except as such non-assessability may be affected by Section 17-607 of the
Delaware Act).
(jj) The Common Units issued by the Partnership upon conversion of the Senior
Units shall have, as a substantive manner in the hands of a subsequent holder,
like intrinsic economic and federal income tax characteristics in all material
respects, to the intrinsic economic and federal income tax characteristics of a
Common Unit then Outstanding.
SectionSpecial Provisions Relating to the Special Limited Partners.
Notwithstanding anything to the contrary set forth in this Agreement, the
Special Limited Partners (a) shall (i) possess the rights and obligations
provided in this Agreement with respect to a Limited Partner pursuant to
Articles VI and VII and (ii) have a Capital Account as a Partner pursuant to
Section 4.5 and all other provisions related thereto and (b) shall not (i) be
entitled to vote on any matters requiring the approval or vote of the holders of
Outstanding Units, (ii) be entitled to any distributions other than to Partners
pursuant to Sections 5.4(d), (e) and (f), 14.3 and 14.4 or (iii) be allocated
items of income, gain, loss or deduction other than as specified in this Article
V.
SectionSpecial Provision Relating to Common Units that were
Subordinated Units Prior to the Expiration of the Subordination Period. Common
Units issued by the Partnership upon the conversion of the Subordinated Units at
the expiration of the Subordination Period shall remain subject to Section
5.1(d)(x)(C).
6 ARTICLE
MANAGEMENT AND OPERATION OF BUSINESS
SectionManagement.
(a) The General Partner shall conduct, direct and manage all activities of the
Partnership. Except as otherwise expressly provided in this Agreement, all
management powers over the business and affairs of the Partnership shall be
exclusively vested in the General Partner, and no Limited Partner or Assignee
shall have any management power over the business and affairs of the
Partnership. In addition to the powers now or hereafter granted a general
partner of a limited partnership under applicable law or which are granted to
the General Partner under any other provision of this Agreement, the General
Partner, subject to Section 6.3, shall have full power and authority to do all
things and on such terms as it, in its sole discretion, may deem necessary or
appropriate to conduct the business of the Partnership, to exercise all powers
set forth in Section 3.2 and to effectuate the purposes set forth in Section
3.1, including, without limitation, (i) the making of any expenditures, the
lending or borrowing of money, the assumption or guarantee of, or other
contracting for, indebtedness and other liabilities, the issuance of evidences
of indebtedness and the incurring of any other obligations; (ii) the making of
tax, regulatory and other filings, or rendering of periodic or other reports to
governmental or other agencies having jurisdiction over the business or assets
of the Partnership; (iii) the acquisition, disposition, mortgage, pledge,
encumbrance, hypothecation or exchange of any or all of the assets of the
Partnership or the merger or other combination of the Partnership with or into
another Person (the matters described in this clause (iii) being subject,
however, to any prior approval that may be required by Section 6.3); (iv) the
use of the assets of the Partnership (including, without limitation, cash on
hand) for any purpose consistent with the terms of this Agreement, including,
without limitation, the financing of the conduct of the operations of the
Partnership or the Operating Partnership, the lending of funds to other Persons
(including, without limitation, the Operating Partnership, the General Partner
and Affiliates of the General Partner) and the repayment of obligations of the
Partnership and the Operating Partnership and the making of capital
contributions to the Operating Partnership; (v) the negotiation, execution and
performance of any contracts, conveyances or other instruments (including,
without limitation, instruments that limit the liability of the Partnership
under contractual arrangements to all or particular assets of the Partnership,
with the other party to the contract to have no recourse against the General
Partner or its assets other than its interest in the Partnership, even if same
results in the terms of the transaction being less favorable to the Partnership
than would otherwise be the case); (vi) the distribution of Partnership cash;
(vii) the selection and dismissal of employees and agents (including, without
limitation, employees having titles such as "president," "vice president,"
"secretary" and "treasurer") and agents, outside attorneys, accountants,
consultants and contractors and the determination of their compensation and
other terms of employment or hiring; (viii) the maintenance of such insurance
for the benefit of the Partnership, the Operating Partnership and the Partners
(including, without limitation, the assets of the Operating Partnership and the
Partnership) as it deems necessary or appropriate; (ix) the formation of, or
acquisition of an interest in, and the contribution of property and the making
of loans to, any further limited or general partnerships, joint ventures,
corporations or other relationships (including, without limitation, the
acquisition of interests in, and the contributions of property to, the Operating
Partnership from time to time); (x) the control of any matters affecting the
rights and obligations of the Partnership, including, without limitation, the
bringing and defending of actions at law or in equity and otherwise engaging in
the conduct of litigation and the incurring of legal expense and the settlement
of claims and litigation; (xi) the indemnification of any Person against
liabilities and contingencies to the extent permitted by law; (xii) the entering
into of listing agreements with The New York Stock Exchange, Inc. and any other
securities exchange and the delisting of some or all of the Units from, or
requesting that trading be suspended on, any such exchange (subject to any prior
approval that may be required under Section 1.6); (xiii) the purchase, sale or
other acquisition or disposition of Units; and (xiv) the undertaking of any
action in connection with the Partnership's participation in the Operating
Partnership as the limited partner (including, without limitation, contributions
or loans of funds by the Partnership to the Operating Partnership). (b)
Notwithstanding any other provision of this Agreement, the Operating Partnership
Agreement, the Delaware Act or any applicable law, rule or regulation, each of
the Partners and Assignees and each other Person who may acquire an interest in
Units hereby (i) approves, ratifies and confirms the execution, delivery and
performance by the parties thereto of the Operating Partnership Agreement, the
Underwriting Agreement, the Contribution Agreement, the agreements and other
documents filed as exhibits to the Registration Statement, and the other
agreements described in or filed as a part of the Registration Statement, and
the engaging by any Affiliate of the General Partner in business and activities
(other than Restricted Activities) that are in direct competition with the
business and activities of the Partnership and the Operating Partnership; (ii)
agrees that the General Partner (on its own or through any officer of the
Partnership) is authorized to execute, deliver and perform the agreements
referred to in clause (i) of this sentence and the other agreements, acts,
transactions and matters described in or contemplated by the Registration
Statement on behalf of the Partnership without any further act, approval or vote
of the Partners or the Assignees or the other Persons who may acquire an
interest in Units; and (iii) agrees that the execution, delivery or performance
by the General Partner, the Partnership, the Operating Partnership or any
Affiliate of any of them, of this Agreement or any agreement authorized or
permitted under this Agreement (including, without limitation, the exercise by
the General Partner or any Affiliate of the General Partner of the rights
accorded pursuant to Article XVII), or the engaging by any Affiliate of the
General Partner in any business and activities (other than Restricted
Activities) that are in direct competition with the business and activities of
the Partnership and the Operating Partnership, shall not constitute a breach by
the General Partner of any duty that the General Partner may owe the Partnership
or the Limited Partners or the Assignees or any other Persons under this
Agreement (or any other agreements) or of any duty stated or implied by law or
equity. The term "Affiliate" when used in this Section 6.1(b) with respect to
the General Partner shall not include the Partnership or any Subsidiary of the
Partnership.
SectionCertificate of Limited Partnership. The General Partner has
caused the Certificate of Limited Partnership to be filed with the Secretary of
State of the State of Delaware as required by the Delaware Act and shall use all
reasonable efforts to cause to be filed such other certificates or documents as
may be determined by the General Partner in its sole discretion to be reasonable
and necessary or appropriate for the formation, continuation, qualification and
operation of a limited partnership (or a partnership in which the limited
partners have limited liability) in the State of Delaware or any other state in
which the Partnership may elect to do business or own property. To the extent
that such action is determined by the General Partner in its sole discretion to
be reasonable and necessary or appropriate, the General Partner shall file
amendments to and restatements of the Certificate of Limited Partnership and do
all things to maintain the Partnership as a limited partnership (or a
partnership in which the limited partners have limited liability) under the laws
of the State of Delaware or of any other state in which the Partnership may
elect to do business or own property. Subject to the terms of Section 7.5(a),
the General Partner shall not be required, before or after filing, to deliver or
mail a copy of the Certificate of Limited Partnership, any qualification
document or any amendment thereto to any Limited Partner or Assignee.
SectionRestrictions on General Partner's Authority.
(c) The General Partner may not, without written approval of the specific act by
all of the Outstanding Common Units or by other written instrument executed and
delivered by all of the Outstanding Common Units subsequent to the date of this
Agreement, take any action in contravention of this Agreement, including,
without limitation, (i) any act that would make it impossible to carry on the
ordinary business of the Partnership, except as otherwise provided in this
Agreement; (ii) possess Partnership property, or assign any rights in specific
Partnership property, for other than a Partnership purpose; (iii) admit a Person
as a Partner, except as otherwise provided in this Agreement; (iv) amend this
Agreement in any manner, except as otherwise provided in this Agreement; or (v)
transfer its interest as general partner of the Partnership, except as otherwise
provided in this Agreement.
(d) Except as provided in Articles XIV and XVI, the General Partner may not
sell, exchange or otherwise dispose of all or substantially all of the
Partnership's assets in a single transaction or a series of related transactions
or approve on behalf of the Partnership the sale, exchange or other disposition
of all or substantially all of the assets of the Operating Partnership, without
the approval of the holders of at least a majority of the Outstanding Common
Units; provided, however, that this provision shall not preclude or limit the
General Partner's ability to mortgage, pledge, hypothecate or grant a security
interest in all or substantially all of the Partnership's assets and shall not
apply to any forced sale of any or all of the Partnership's assets pursuant to
the foreclosure of, or other realization upon, any such encumbrance. Without the
approval of the holders of at least two-thirds of the Outstanding Common Units,
the General Partner shall not, on behalf of the Partnership, (i) consent to any
amendment to the Operating Partnership Agreement or, except as expressly
permitted by Section 6.9(d), take any action permitted to be taken by a partner
of the Operating Partnership, in either case, that would have a material adverse
effect on the Partnership as a partner of the Operating Partnership or (ii)
except as permitted under Sections 11.2, 13.1 and 13.2 elect or cause the
Partnership to elect a successor general partner of the Operating Partnership.
(e) Unless approved by the affirmative vote of the holders of at least
two-thirds of the Outstanding Common Units (excluding for purposes of such
determination Common Units owned by the General Partner and its Affiliates), the
General Partner shall not take any action or refuse to take any reasonable
action the effect of which, if taken or not taken, as the case may be, would be
to cause the Partnership or the Operating Partnership to be treated as an
association taxable as a corporation or otherwise to be taxed as an entity for
federal income tax purposes; provided that this Section 6.3(c) shall not be
construed to apply to amendments to this Agreement (which are governed by
Article XV) or mergers or consolidations of the Partnership with any Person
(which are governed by Article XVI).
SectionReimbursement of the General Partner.
(f) Except as provided in this Section 6.4 and elsewhere in this Agreement or in
the Operating Partnership Agreement, the General Partner shall not be
compensated for its services as general partner of the Partnership or the
Operating Partnership.
(g) The General Partner shall be reimbursed on a monthly basis, or such other
basis as the General Partner may determine in its sole discretion, for (i) all
direct and indirect expenses it incurs or payments it makes on behalf of the
Partnership (including, without limitation, salary, bonus, incentive
compensation and other amounts paid to any Person to perform services for the
Partnership or for the General Partner in the discharge of its duties to the
Partnership), and (ii) all other necessary or appropriate expenses allocable to
the Partnership or otherwise reasonably incurred by the General Partner in
connection with operating the Partnership's business (including, without
limitation, expenses allocated to the General Partner by its Affiliates). The
General Partner shall determine the fees and expenses that are allocable to the
Partnership in any reasonable manner determined by the General Partner in its
sole discretion. Reimbursements pursuant to this Section 6.4 shall be in
addition to any reimbursement to the General Partner as a result of
indemnification pursuant to Section 6.7.
(h) Subject to Section 4.3(c), the General Partner in its sole discretion and
without the approval of the Limited Partners (who shall have no right to vote in
respect thereof) may propose and adopt on behalf of the Partnership, employee
benefit and incentive plans (including, without limitation, plans involving the
issuance of Units), or issue Partnership Securities pursuant to any employee
benefit or incentive plan maintained or sponsored by the General Partner or one
of its Affiliates, in each case for the benefit of employees of the General
Partner, the Partnership, the Operating Partnership or any Affiliate of any of
them in respect of services performed, directly or indirectly, for the benefit
of the Partnership or the Operating Partnership. The Partnership agrees to issue
and sell to the General Partner any Units or other Partnership Securities that
the General Partner is obligated to provide to any employees pursuant to any
such benefit or incentive plans. Expenses incurred by the General Partner in
connection with any such plans (including the net cost to the General Partner of
Units purchased by the General Partner from the Partnership to fulfill options
or awards under such plans) shall be reimbursed in accordance with Section
6.4(b). Any and all obligations of the General Partner under any employee
benefit or incentive plans adopted by the General Partner as permitted by this
Section 6.4(c) shall constitute obligations of the General Partner hereunder and
shall be assumed by any successor General Partner approved pursuant to Section
13.1 or 13.2 or the transferee of or successor to all of the General Partner
Interest pursuant to Section 11.2.
SectionOutside Activities.
(i) After the Closing Date, the General Partner, for so long as it is the
general partner of the Partnership, (i) agrees that its sole business will be to
act as a general partner of the Partnership, the Operating Partnership and any
other partnership of which the Partnership or the Operating Partnership is,
directly or indirectly, a partner and to undertake activities that are ancillary
or related thereto (including being a limited partner in the Partnership), (ii)
shall not enter into or conduct any business or incur any debts or liabilities
except in connection with or incidental to (A) its performance of the activities
required or authorized by this Agreement or the Operating Partnership Agreement
or described in or contemplated by the Registration Statement and (B) the
acquisition, ownership or disposition of Partnership Interests in the
Partnership or partnership interests in the Operating Partnership or any other
partnership of which the Partnership or the Operating Partnership is, directly
or indirectly, a partner, except that, notwithstanding the foregoing, employees
of the General Partner may perform services for Ferrell and its Affiliates, and
(iii) shall not and shall cause its Affiliates not to engage in any Restricted
Activity.
(j) Except as described in Section 6.5(a), no Indemnitee shall be expressly or
implicitly restricted or proscribed pursuant to this Agreement, the Operating
Partnership Agreement or the partnership relationship established hereby or
thereby from engaging in other activities for profit, whether in the businesses
engaged in by the Partnership or the Operating Partnership or anticipated to be
engaged in by the Partnership, the Operating Partnership or otherwise,
including, without limitation, in the case of any Affiliates of the General
Partner those businesses and activities (other than Restricted Activities) in
direct competition with the business and activities of the Partnership or the
Operating Partnership or otherwise described in or contemplated by the
Registration Statement. Without limitation of and subject to the foregoing each
Indemnitee (other than the General Partner) shall have the right to engage in
businesses of every type and description and to engage in and possess an
interest in other business ventures of any and every type or description,
independently or with others, including, without limitation, in the case of any
Affiliates of the General Partner business interests and activities (other than
Restricted Activities) in direct competition with the business and activities of
the Partnership or the Operating Partnership, and none of the same shall
constitute a breach of this Agreement or any duty to the Partnership, the
Operating Partnership or any Partner or Assignee. Neither the Partnership, the
Operating Partnership, any Limited Partner nor any other Person shall have any
rights by virtue of this Agreement, the Operating Partnership Agreement or the
partnership relationship established hereby or thereby in any business ventures
of any Indemnitee (subject, in the case of the General Partner, to compliance
with Section 6.5(c)) and such Indemnitees shall have no obligation to offer any
interest in any such business ventures to the Partnership, the Operating
Partnership, any Limited Partner or any other Person. The General Partner and
any other Persons affiliated with the General Partner may acquire Units or other
Partnership Securities in addition to those acquired by any of such Persons on
the Closing Date, and, except as otherwise provided in this Agreement, shall be
entitled to exercise all rights of an Assignee or Limited Partner, as
applicable, relating to such Units or Partnership Securities, as the case may
be.
(k) Subject to the terms of Sections 6.5(a) and (b) but otherwise
notwithstanding anything to the contrary in this Agreement, (i) the competitive
activities of any Indemnitees (other than the General Partner) are hereby
approved by the Partnership and all Partners and (ii) it shall be deemed not to
be a breach of the General Partner's fiduciary duty or any other obligation of
any type whatsoever of the General Partner for the General Partner to permit an
Affiliate of the General Partner to engage, or for any such Affiliate to engage,
in business interests and activities (other than Restricted Activities) in
preference to or to the exclusion of the Partnership.
(l) The term "Affiliates" when used in this Section 6.5 with respect to the
General Partner shall not include the Partnership or any Subsidiary of the
Partnership.
SectionLoans to and from the General Partner; Contracts with
Affiliates.
(m) The General Partner or any Affiliate thereof may lend to the Partnership or
the Operating Partnership, and the Partnership and the Operating Partnership may
borrow, funds needed or desired by the Partnership and the Operating Partnership
for such periods of time as the General Partner may determine and (ii) the
General Partner or any Affiliate thereof may borrow from the Partnership or the
Operating Partnership, and the Partnership and the Operating Partnership may
lend to the General Partner or such Affiliate, excess funds of the Partnership
and the Operating Partnership for such periods of time and in such amounts as
the General Partner may determine; provided, however, that in either such case
the lending party may not charge the borrowing party interest at a rate greater
than the rate that would be charged the borrowing party (without reference to
the lending party's financial abilities or guarantees), by unrelated lenders on
comparable loans. The borrowing party shall reimburse the lending party for any
costs (other than any additional interest costs) incurred by the lending party
in connection with the borrowing of such funds. For purposes of this Section
6.6(a) and Section 6.6(b), the term "Partnership" shall include any Affiliate of
the Partnership that is controlled by the Partnership and the term "Operating
Partnership" shall include any Affiliate of the Operating Partnership that is
controlled by the Operating Partnership.
(n) The Partnership may lend or contribute to the Operating Partnership, and the
Operating Partnership may borrow, funds on terms and conditions established in
the sole discretion of the General Partner; provided, however, that the
Partnership may not charge the Operating Partnership interest at a rate greater
than the rate that would be charged to the Operating Partnership (without
reference to the General Partner's financial abilities or guarantees), by
unrelated lenders on comparable loans. The foregoing authority shall be
exercised by the General Partner in its sole discretion and shall not create any
right or benefit in favor of the Operating Partnership or any other Person.
(o) The General Partner may itself, or may enter into an agreement with any of
its Affiliates to, render services to the Partnership or to the General Partner
in the discharge of its duties as general partner of the Partnership. Any
services rendered to the Partnership by the General Partner or any of its
Affiliates shall be on terms that are fair and reasonable to the Partnership;
provided, however, that the requirements of this Section 6.6(c) shall be deemed
satisfied as to (i) any transaction approved by Special Approval, (ii) any
transaction, the terms of which are no less favorable to the Partnership than
those generally being provided to or available from unrelated third parties or
(iii) any transaction that, taking into account the totality of the
relationships between the parties involved (including other transactions that
may be particularly favorable or advantageous to the Partnership), is equitable
to the Partnership. The provisions of Section 6.4 shall apply to the rendering
of services described in this Section 6.6(c).
(p) The Partnership may transfer assets to joint ventures, other partnerships,
corporations, limited liability companies or other business entities in which it
is or thereby becomes a participant upon such terms and subject to such
conditions as are consistent with this Agreement and applicable law.
(q) Neither the General Partner nor any of its Affiliates shall sell, transfer
or convey any property to, or purchase any property from, the Partnership,
directly or indirectly, except pursuant to transactions that are fair and
reasonable to the Partnership; provided, however, that the requirements of this
Section 6.6(e) shall be deemed to be satisfied as to (i) the transactions
effected pursuant to Sections 4.1, 4.2 and 4.3, the Contribution Agreement and
any other transactions described in or contemplated by the Registration
Statement, (ii) any transaction approved by Special Approval, (iii) any
transaction, the terms of which are no less favorable to the Partnership than
those generally being provided to or available from unrelated third parties, or
(iv) any transaction that, taking into account the totality of the relationships
between the parties involved (including other transactions that may be
particularly favorable or advantageous to the Partnership), is equitable to the
Partnership.
(r) The General Partner and its Affiliates will have no obligation to permit the
Partnership or the Operating Partnership to use any facilities or assets of the
General Partner and its Affiliates, except as may be provided in contracts
entered into from time to time specifically dealing with such use, nor shall
there be any obligation on the part of the General Partner or its Affiliates to
enter into such contracts.
(s) Without limitation of Sections 6.6(a) through 6.6(f), and notwithstanding
anything to the contrary in this Agreement, the existence of the conflicts of
interest described in the Registration Statement are hereby approved by all
Partners.
SectionIndemnification.
(t) To the fullest extent permitted by law but subject to the limitations
expressly provided in this Agreement, the General Partner, any Departing Partner
and any Person who is or was an officer or director of the General Partner or
any Departing Partner and all other Indemnitees shall be indemnified and held
harmless by the Partnership from and against any and all losses, claims,
damages, liabilities, joint or several, expenses (including, without limitation,
legal fees and expenses), judgments, fines, penalties, interest, settlements and
other amounts arising from any and all claims, demands, actions, suits or
proceedings, whether civil, criminal, administrative or investigative, in which
any Indemnitee may be involved, or is threatened to be involved, as a party or
otherwise, by reason of its status as (i) the General Partner, a Departing
Partner or any of their Affiliates, (ii) an officer, director, employee,
partner, agent or trustee of the Partnership, the General Partner, any Departing
Partner or any of their Affiliates or (iii) a Person serving at the request of
the Partnership in another entity in a similar capacity, provided, that in each
case the Indemnitee acted in good faith and in a manner which such Indemnitee
reasonably believed to be in, or not opposed to, the best interests of the
Partnership and, with respect to any criminal proceeding, had no reasonable
cause to believe its conduct was unlawful; provided, further, no indemnification
pursuant to this Section 6.7 shall be available to the General Partner with
respect to its obligations incurred pursuant to the Underwriting Agreement or
the Contribution Agreement (other than obligations incurred by the General
Partner on behalf of the Partnership or the Operating Partnership). The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere, or its equivalent, shall not
create a presumption that the Indemnitee acted in a manner contrary to that
specified above. Any indemnification pursuant to this Section 6.7 shall be made
only out of the assets of the Partnership, it being agreed that the General
Partner shall not be personally liable for such indemnification and shall have
no obligation to contribute or loan any monies or property to the Partnership to
enable it to effectuate such indemnification.
(u) To the fullest extent permitted by law, expenses (including, without
limitation, legal fees and expenses) incurred by an Indemnitee who is
indemnified pursuant to Section 6.7(a) in defending any claim, demand, action,
suit or proceeding shall, from time to time, be advanced by the Partnership
prior to the final disposition of such claim, demand, action, suit or proceeding
upon receipt by the Partnership of an undertaking by or on behalf of the
Indemnitee to repay such amount if it shall be determined that the Indemnitee is
not entitled to be indemnified as authorized in this Section 6.7.
(v) The indemnification provided by this Section 6.7 shall be in addition to any
other rights to which an Indemnitee may be entitled under any agreement,
pursuant to any vote of the holders of Outstanding Units, as a matter of law or
otherwise, both as to actions in the Indemnitee's capacity as (i) the General
Partner, a Departing Partner or an Affiliate thereof, (ii) an officer, director,
employee, partner, agent or trustee of the Partnership, the General Partner, any
Departing Partner or an Affiliate thereof or (iii) a Person serving at the
request of the Partnership in another entity in a similar capacity, and as to
actions in any other capacity (including, without limitation, any capacity under
the Underwriting Agreement), and shall continue as to an Indemnitee who has
ceased to serve in such capacity and shall inure to the benefit of the heirs,
successors, assigns and administrators of the Indemnitee.
(w) The Partnership may purchase and maintain (or reimburse the General Partner
or its Affiliates for the cost of) insurance, on behalf of the General Partner
and such other Persons as the General Partner shall determine, against any
liability that may be asserted against or expense that may be incurred by such
Person in connection with the Partnership's activities, regardless of whether
the Partnership would have the power to indemnify such Person against such
liability under the provisions of this Agreement.
(x) For purposes of this Section 6.7, the Partnership shall be deemed to have
requested an Indemnitee to serve as fiduciary of an employee benefit plan
whenever the performance by it of its duties to the Partnership also imposes
duties on, or otherwise involves services by, it to the plan or participants or
beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect
to an employee benefit plan pursuant to applicable law shall constitute "fines"
within the meaning of Section 6.7(a); and action taken or omitted by it with
respect to an employee benefit plan in the performance of its duties for a
purpose reasonably believed by it to be in the interest of the participants and
beneficiaries of the plan shall be deemed to be for a purpose which is in, or
not opposed to, the best interests of the Partnership.
(y) In no event may an Indemnitee subject the Limited Partners to personal
liability by reason of the indemnification provisions set forth in this
Agreement.
(z) An Indemnitee shall not be denied indemnification in whole or in part under
this Section 6.7 because the Indemnitee had an interest in the transaction with
respect to which the indemnification applies if the transaction was otherwise
permitted by the terms of this Agreement.
(aa) The provisions of this Section 6.7 are for the benefit of the Indemnitees,
their heirs, successors, assigns and administrators and shall not be deemed to
create any rights for the benefit of any other Persons.
(bb) No amendment, modification or repeal of this Section 6.7 or any provision
hereof shall in any manner terminate, reduce or impair the right of any past,
present or future Indemnitee to be indemnified by the Partnership, nor the
obligation of the Partnership to indemnify any such Indemnitee under and in
accordance with the provisions of this Section 6.7 as in effect immediately
prior to such amendment, modification or repeal with respect to claims arising
from or relating to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such claims may arise or
be asserted.
SectionLiability of Indemnitees.
(cc) Notwithstanding anything to the contrary set forth in this Agreement, no
Indemnitee shall be liable for monetary damages to the Partnership, the Limited
Partners, the Assignees or any other Persons who have acquired interests in the
Units, for losses sustained or liabilities incurred as a result of any act or
omission if such Indemnitee acted in good faith.
(dd) Subject to its obligations and duties as General Partner set forth in
Section 6.1(a), the General Partner may exercise any of the powers granted to it
by this Agreement and perform any of the duties imposed upon it hereunder either
directly or by or through its agents, and the General Partner shall not be
responsible for any misconduct or negligence on the part of any such agent
appointed by the General Partner in good faith.
(ee) Any amendment, modification or repeal of this Section 6.8 or any provision
hereof shall be prospective only and shall not in any way affect the limitations
on the liability to the Partnership and the Limited Partners of the General
Partner, its directors, officers and employees under this Section 6.8 as in
effect immediately prior to such amendment, modification or repeal with respect
to claims arising from or relating to matters occurring, in whole or in part,
prior to such amendment, modification or repeal, regardless of when such claims
may arise or be asserted.
SectionResolution of Conflicts of Interest.
(ff) Unless otherwise expressly provided in this Agreement or the Operating
Partnership Agreement, whenever a potential conflict of interest exists or
arises between the General Partner or any of its Affiliates, on the one hand,
and the Partnership, the Operating Partnership, any Partner or any Assignee, on
the other, any resolution or course of action in respect of such conflict of
interest shall be permitted and deemed approved by all Partners, and shall not
constitute a breach of this Agreement, of the Operating Partnership Agreement,
of any agreement contemplated herein or therein, or of any duty stated or
implied by law or equity, if the resolution or course of action is, or by
operation of this Agreement is deemed to be, fair and reasonable to the
Partnership. The General Partner shall be authorized but not required in
connection with its resolution of such conflict of interest to seek Special
Approval of a resolution of such conflict or course of action. Any conflict of
interest and any resolution of such conflict of interest shall be conclusively
deemed fair and reasonable to the Partnership if such conflict of interest or
resolution is (i) approved by Special Approval, (ii) on terms no less favorable
to the Partnership than those generally being provided to or available from
unrelated third parties or (iii) fair to the Partnership, taking into account
the totality of the relationships between the parties involved (including other
transactions that may be particularly favorable or advantageous to the
Partnership). The General Partner may also adopt a resolution or course of
action that has not received Special Approval. The General Partner (including
the Audit Committee in connection with Special Approval) shall be authorized in
connection with its determination of what is "fair and reasonable" to the
Partnership and in connection with its resolution of any conflict of interest to
consider (A) the relative interests of any party to such conflict, agreement,
transaction or situation and the benefits and burdens relating to such interest;
(B) any customary or accepted industry practices and any customary or historical
dealings with a particular Person; (C) any applicable generally accepted
accounting practices or principles; and (D) such additional factors as the
General Partner (including such Audit Committee) determines in its sole
discretion to be relevant, reasonable or appropriate under the circumstances.
Nothing contained in this Agreement, however, is intended to nor shall it be
construed to require the General Partner (including such Audit Committee) to
consider the interests of any Person other than the Partnership. In the absence
of bad faith by the General Partner, the resolution, action or terms so made,
taken or provided by the General Partner with respect to such matter shall not
constitute a breach of this Agreement or any other agreement contemplated herein
or a breach of any standard of care or duty imposed herein or therein or under
the Delaware Act or any other law, rule or regulation.
(gg) Whenever this Agreement or any other agreement contemplated hereby provides
that the General Partner or any of its Affiliates is permitted or required to
make a decision (i) in its "sole discretion" or "discretion," that it deems
"necessary or appropriate" or under a grant of similar authority or latitude,
the General Partner or such Affiliate shall be entitled to consider only such
interests and factors as it desires and shall have no duty or obligation to give
any consideration to any interest of, or factors affecting, the Partnership, the
Operating Partnership, any Limited Partner or any Assignee, (ii) it may make
such decision in its sole discretion (regardless of whether there is a reference
to "sole discretion" or "discretion") unless another express standard is
provided for, or (iii) in "good faith" or under another express standard, the
General Partner or such Affiliate shall act under such express standard and
shall not be subject to any other or different standards imposed by this
Agreement, the Operating Partnership Agreement, any other agreement contemplated
hereby or under the Delaware Act or any other law, rule or regulation. In
addition, any actions taken by the General Partner or such Affiliate consistent
with the standards of "reasonable discretion" set forth in the definitions of
Available Cash or Cash from Operations shall not constitute a breach of any duty
of the General Partner to the Partnership or the Limited Partners. The General
Partner shall have no duty, express or implied, to sell or otherwise dispose of
any asset of the Operating Partnership or of the Partnership, other than in the
ordinary course of business. No borrowing by the Partnership or the Operating
Partnership or the approval thereof by the General Partner shall be deemed to
constitute a breach of any duty of the General Partner to the Partnership or the
Limited Partners by reason of the fact that the purpose or effect of such
borrowing is directly or indirectly to enable Incentive Distributions.
(hh) Whenever a particular transaction, arrangement or resolution of a conflict
of interest is required under this Agreement to be "fair and reasonable" to any
Person, the fair and reasonable nature of such transaction, arrangement or
resolution shall be considered in the context of all similar or related
transactions.
(ii) The Limited Partners hereby authorize the General Partner, on behalf of the
Partnership as a partner of the Operating Partnership, to approve of actions by
the general partner of the Operating Partnership similar to those actions
permitted to be taken by the General Partner pursuant to this Section 6.9.
SectionOther Matters Concerning the General Partner.
(jj) The General Partner may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, bond, debenture, or other paper or
document believed by it to be genuine and to have been signed or presented by
the proper party or parties.
(kk) The General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers and other consultants and
advisers selected by it, and any act taken or omitted to be taken in reliance
upon the opinion (including, without limitation, an Opinion of Counsel) of such
Persons as to matters that such General Partner reasonably believes to be within
such Person's professional or expert competence shall be conclusively presumed
to have been done or omitted in good faith and in accordance with such opinion.
(ll) The General Partner shall have the right, in respect of any of its powers
or obligations hereunder, to act through any of its duly authorized officers, a
duly appointed attorney or attorneys-in-fact or the duly authorized officers of
the Partnership. Each such attorney shall, to the extent provided by the General
Partner in the power of attorney, have full power and authority to do and
perform each and every act and duty that is permitted or required to be done by
the General Partner hereunder.
(mm) Any standard of care and duty imposed by this Agreement or under the
Delaware Act or any applicable law, rule or regulation shall be modified, waived
or limited as required to permit the General Partner to act under this Agreement
or any other agreement contemplated by this Agreement and to make any decision
pursuant to the authority prescribed in this Agreement so long as such action is
reasonably believed by the General Partner to be in, or not inconsistent with,
the best interests of the Partnership.
SectionTitle to Partnership Assets. Title to Partnership assets,
whether real, personal or mixed and whether tangible or intangible, shall be
deemed to be owned by the Partnership as an entity, and no Partner or Assignee,
individually or collectively, shall have any ownership interest in such
Partnership assets or any portion thereof. Title to any or all of the
Partnership assets may be held in the name of the Partnership, the General
Partner, one or more of its Affiliates or one or more nominees, as the General
Partner may determine. The General Partner hereby declares and warrants that any
Partnership assets for which record title is held in the name of the General
Partner or one or more of its Affiliates or one or more nominees shall be held
by the General Partner or such Affiliate or nominee for the use and benefit of
the Partnership in accordance with the provisions of this Agreement; provided,
however, that the General Partner shall use its reasonable efforts to cause
record title to such assets (other than those assets in respect of which the
General Partner determines that the expense and difficulty of conveyancing makes
transfer of record title to the Partnership impracticable) to be vested in the
Partnership as soon as reasonably practicable; provided that, prior to the
withdrawal or removal of the General Partner or as soon thereafter as
practicable, the General Partner shall use reasonable efforts to effect the
transfer of record title to the Partnership and, prior to any such transfer,
will provide for the use of such assets in a manner satisfactory to the
Partnership. All Partnership assets shall be recorded as the property of the
Partnership in its books and records, irrespective of the name in which record
title to such Partnership assets is held.
(nn) SectionPurchase or Sale of Units. The General Partner may cause the
Partnership to purchase or otherwise acquire Units; provided that, except as
permitted pursuant to Section 11.6 and in exchange for other Units or
Partnership Securities that are junior in right of distribution and liquidation
to the Senior Units, the General Partner may not cause the Partnership or any
Subsidiary to directly or indirectly purchase or otherwise acquire Common Units
or any other Units or Partnership Securities that are junior in right of
distribution or liquidation to the Senior Units at any time during which any of
the Senior Units are Outstanding. As long as Units are held by the Partnership
or the Operating Partnership, such Units shall not be considered Outstanding for
any purpose, except as otherwise provided herein. The General Partner or any
Affiliate of the General Partner may also purchase or otherwise acquire and sell
or otherwise dispose of Units for its own account, subject to the provisions of
Articles XI and XII.
SectionRegistration Rights of Ferrellgas and its Affiliates.
(oo) If (i) Ferrellgas or any Affiliate of Ferrellgas (including, without
limitation, for purposes of this Section 6.13, any Person that is an Affiliate
of Ferrellgas at the date hereof notwithstanding that it may later cease to be
an Affiliate of Ferrellgas) holds Units or other Partnership Securities that it
desires to sell and (ii) Rule 144 of the Securities Act (or any successor rule
or regulation to Rule 144) or another exemption from registration is not
available to enable such holder of Units (the "Holder") to dispose of the number
of Units or other securities it desires to sell at the time it desires to do so
without registration under the Securities Act, then upon the request of
Ferrellgas or any of its Affiliates, the Partnership shall file with the
Commission as promptly as practicable after receiving such request, and use all
reasonable efforts to cause to become effective and remain effective for a
period of not more than six months following its effective date, a registration
statement under the Securities Act registering the offering and sale of the
number of Units or other securities specified by the Holder; provided, however,
that the Partnership shall not be required to effect more than three
registrations pursuant to this Section 6.13(a); and provided further, that if
the General Partner or, if at the time a request pursuant to this Section 6.13
is submitted to the Partnership, Ferrellgas or its Affiliate requesting
registration is an Affiliate of the General Partner, the Audit Committee in
connection with Special Approval determines in its good faith judgment that a
postponement of the requested registration for up to six months would be in the
best interests of the Partnership and its Partners due to a pending transaction,
investigation or other event, the filing of such registration statement or the
effectiveness thereof may be deferred for up to six months, but not thereafter.
In connection with any registration pursuant to the immediately preceding
sentence, the Partnership shall promptly prepare and file (x) such documents as
may be necessary to register or qualify the securities subject to such
registration under the securities laws of such states as the Holder shall
reasonably request; provided, however, that no such qualification shall be
required in any jurisdiction where, as a result thereof, the Partnership would
become subject to general service of process or to taxation or qualification to
do business as a foreign corporation or partnership doing business in such
jurisdiction, and (y) such documents as may be necessary to apply for listing or
to list the securities subject to such registration on such National Securities
Exchange as the Holder shall reasonably request, and do any and all other acts
and things that may reasonably be necessary or advisable to enable the Holder to
consummate a public sale of such Units in such states. Except as set forth in
Section 6.13(c), all costs and expenses of any such registration and offering
(other than the underwriting discounts and commissions) shall be paid by the
Partnership, without reimbursement by the Holder.
(pp) If the Partnership shall at any time propose to file a registration
statement under the Securities Act for an offering of equity securities of the
Partnership for cash (other than an offering relating solely to an employee
benefit plan), the Partnership shall use all reasonable efforts to include such
number or amount of securities held by the Holder in such registration statement
as the Holder shall request. If the proposed offering pursuant to this Section
6.13(b) shall be an underwritten offering, then, in the event that the managing
underwriter of such offering advises the Partnership and the Holder in writing
that in its opinion the inclusion of all or some of the Holder's securities
would adversely and materially affect the success of the offering, the
Partnership shall include in such offering only that number or amount, if any,
of securities held by the Holder which, in the opinion of the managing
underwriter, will not so adversely and materially affect the offering. Except as
set forth in Section 6.13(c), all costs and expenses of any such registration
and offering (other than the underwriting discounts and commissions) shall be
paid by the Partnership, without reimbursement by the Holder.
(qq) If underwriters are engaged in connection with any registration referred to
in this Section 6.13, the Partnership shall provide indemnification,
representations, covenants, opinions and other assurance to the underwriters in
form and substance reasonably satisfactory to such underwriters. Further, in
addition to and not in limitation of the Partnership's obligation under Section
6.7, the Partnership shall, to the fullest extent permitted by law, indemnify
and hold harmless the Holder, its officers, directors and each Person who
controls the Holder (within the meaning of the Securities Act) and any agent
thereof (collectively, "Indemnified Persons") against any losses, claims,
demands, actions, causes of action, assessments, damages, liabilities (joint or
several), costs and expenses (including, without limitation, interest, penalties
and reasonable attorneys' fees and disbursements), resulting to, imposed upon,
or incurred by the Indemnified Persons, directly or indirectly, under the
Securities Act or otherwise (hereinafter referred to in this Section 6.13(c) as
a "claim" and in the plural as "claims"), based upon, arising out of, or
resulting from any untrue statement or alleged untrue statement of any material
fact contained in any registration statement under which any Units were
registered under the Securities Act or any state securities or Blue Sky laws, in
any preliminary prospectus (if used prior to the effective date of such
registration statement), or in any summary or final prospectus or in any
amendment or supplement thereto (if used during the period the Partnership is
required to keep the registration statement current), or arising out of, based
upon or resulting from the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
made therein not misleading; provided, however, that the Partnership shall not
be liable to any Indemnified Person to the extent that any such claim arises out
of, is based upon or results from an untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement,
such preliminary, summary or final prospectus or such amendment or supplement,
in reliance upon and in conformity with written information furnished to the
Partnership by or on behalf of such Indemnified Person specifically for use in
the preparation thereof.
(rr) The provisions of Sections 6.13(a) and 6.13(b) shall continue to be
applicable with respect to Ferrellgas (and any of Ferrellgas' Affiliates) after
it ceases to be a Partner of the Partnership, during a period of two years
subsequent to the effective date of such cessation and for so long thereafter as
is required for the Holder to sell all of the Units or other securities of the
Partnership with respect to which it has requested during such two year period
that a registration statement be filed; provided, however, that the Partnership
shall not be required to file successive registration statements covering the
same securities for which registration was demanded during such two-year period.
The provisions of Section 6.13(c) shall continue in effect thereafter.
(ss) Any request to register Partnership Securities pursuant to this Section
6.13 shall (i) specify the Partnership Securities intended to be offered and
sold by the Person making the request, (ii) express such Person's present intent
to offer such shares for distribution, (iii) describe the nature or method of
the proposed offer and sale of Partnership Securities, and (iv) contain the
undertaking of such Person to provide all such information and materials and
take all action as may be required in order to permit the Partnership to comply
with all applicable requirements in connection with the registration of such
Partnership Securities.
SectionReliance by Third Parties. Notwithstanding anything to the
contrary in this Agreement, any Person dealing with the Partnership shall be
entitled to assume that the General Partner and any officer of the Partnership
authorized by the General Partner to act on behalf and in the name of the
Partnership has full power and authority to encumber, sell or otherwise use in
any manner any and all assets of the Partnership and to enter into any contracts
on behalf of the Partnership, and such Person shall be entitled to deal with the
General Partner or any such officer as if it were the Partnership's sole party
in interest, both legally and beneficially. Each Limited Partner hereby waives
any and all defenses or other remedies that may be available against such Person
to contest, negate or disaffirm any action of the General Partner or any such
officer in connection with any such dealing. In no event shall any Person
dealing with the General Partner or any such officer or its representatives be
obligated to ascertain that the terms of this Agreement have been complied with
or to inquire into the necessity or expedience of any act or action of the
General Partner or any such officer. Each and every certificate, document or
other instrument executed on behalf of the Partnership by the General Partner or
any such officer shall be conclusive evidence in favor of any and every Person
relying thereon or claiming thereunder that (a) at the time of the execution and
delivery of such certificate, document or instrument, this Agreement was in full
force and effect, (b) the Person executing and delivering such certificate,
document or instrument was duly authorized and empowered to do so for and on
behalf of the Partnership and (c) such certificate, document or instrument was
duly executed and delivered in accordance with the terms and provisions of this
Agreement and is binding upon the Partnership.
7 ARTICLE
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
SectionLimitation of Liability. The Limited Partners and the Assignees
shall have no liability under this Agreement except as expressly provided in
this Agreement or the Delaware Act.
SectionManagement of Business. No Limited Partner or Assignee (other
than the General Partner, any of its Affiliates or any officer, director,
employee, partner, agent or trustee of the General Partner or any of its
Affiliates, in its capacity as such, if such Person shall also be a Limited
Partner or Assignee) shall participate in the operation, management or control
(within the meaning of the Delaware Act) of the Partnership's business, transact
any business in the Partnership's name or have the power to sign documents for
or otherwise bind the Partnership. The transaction of any such business by the
General Partner, any of its Affiliates or any member, officer, director,
employee, partner, agent or trustee of the General Partner or any of its
Affiliates, in its capacity as such, shall not affect, impair or eliminate the
limitations on the liability of the Limited Partners or Assignees under this
Agreement.
SectionOutside Activities. Subject to the provisions of Section 6.5,
which shall continue to be applicable to the Persons referred to therein,
regardless of whether such Persons shall also be Limited Partners or Assignees,
any Limited Partner or Assignee shall be entitled to and may have business
interests and engage in business activities in addition to those relating to the
Partnership, including, without limitation, business interests and activities in
direct competition with the Partnership or the Operating Partnership. Neither
the Partnership nor any of the other Partners or Assignees shall have any rights
by virtue of this Agreement in any business ventures of any Limited Partner or
Assignee.
SectionReturn of Capital. No Limited Partner or Assignee shall be
entitled to the withdrawal or return of its Capital Contribution, except to the
extent, if any, that distributions made pursuant to this Agreement or upon
termination of the Partnership may be considered as such by law and then only to
the extent provided for in this Agreement. Except to the extent provided by
Article V or as otherwise expressly provided in this Agreement, no Limited
Partner or Assignee shall have priority over any other Limited Partner or
Assignee either as to the return of Capital Contributions or as to profits,
losses or distributions. Any such return shall be a compromise to which all
Partners and Assignees agree within the meaning of ss. 17-502(b) of the Delaware
Act.
SectionRights of Limited Partners Relating to the Partnership.
(a) In addition to other rights provided by this Agreement or by applicable law,
and except as limited by Section 7.5(b), each Limited Partner shall have the
right, for a purpose reasonably related to such Limited Partner's interest as a
limited partner in the Partnership, upon reasonable demand and at such Limited
Partner's own expense:
(i) to obtain true and full information regarding the status of the
business and financial condition of the Partnership;
(ii) promptly after becoming available, to obtain a copy of the
Partnership's federal, state and local tax returns for each year;
(iii) to have furnished to him, upon notification to the General Partner, a
current list of the name and last known business, residence or mailing
address of each Partner;
(iv) to have furnished to him, upon notification to the General Partner, a
copy of this Agreement and the Certificate of Limited Partnership and
all amendments thereto, together with a copy of the executed copies of
all powers of attorney pursuant to which this Agreement, the
Certificate of Limited Partnership and all amendments thereto have been
executed;
(v) to obtain true and full information regarding the amount of cash and a
description and statement of the Agreed Value of any other Capital
Contribution by each Partner and which each Partner has agreed to
contribute in the future, and the date on which each became a Partner;
and
(vi) to obtain such other information regarding the affairs of the
Partnership as is just and reasonable.
(b) Notwithstanding any other provision of this Agreement, the General Partner
may keep confidential from the Limited Partners and Assignees, for such period
of time as the General Partner deems reasonable, any information that the
General Partner reasonably believes to be in the nature of trade secrets or
other information the disclosure of which the General Partner in good faith
believes is not in the best interests of the Partnership or the Operating
Partnership or could damage the Partnership or the Operating Partnership or that
the Partnership or the Operating Partnership are required by law or by
agreements with third parties to keep confidential (other than agreements with
Affiliates the primary purpose of which is to circumvent the obligations set
forth in this Section 7.5).
8 ARTICLE
BOOKS, RECORDS, ACCOUNTING AND REPORTS
SectionRecords and Accounting. The General Partner shall keep or cause
to be kept at the principal office of the Partnership appropriate books and
records with respect to the Partnership's business, including, without
limitation, all books and records necessary to provide to the Limited Partners
any information, lists and copies of documents required to be provided pursuant
to Section 7.5(a). Any books and records maintained by or on behalf of the
Partnership in the regular course of its business, including, without
limitation, the record of the Record Holders and Assignees of Units or other
Partnership Securities, books of account and records of Partnership proceedings,
may be kept on, or be in the form of, computer disks, hard drives, punch cards,
magnetic tape, photographs, micrographics or any other information storage
device, provided, that the books and records so maintained are convertible into
clearly legible written form within a reasonable period of time. The books of
the Partnership shall be maintained, for both tax and financial reporting
purposes, on an accrual basis in accordance with generally accepted accounting
principles.
SectionFiscal Year. The fiscal year of the Partnership shall be August
1 to July 31.
SectionReports.
(a) As soon as practicable, but in no event later than 120 days after the close
of each fiscal year of the Partnership, the General Partner shall cause to be
mailed to each Record Holder of a Unit as of a date selected by the General
Partner in its sole discretion, an annual report containing financial statements
of the Partnership for such fiscal year of the Partnership, presented in
accordance with generally accepted accounting principles, including a balance
sheet and statements of operations, Partners' equity and cash flows, such
statements to be audited by a firm of independent public accountants selected by
the General Partner.
(b) As soon as practicable, but in no event later than 90 days after the close
of each Quarter except the last Quarter of each year, the General Partner shall
cause to be mailed to each Record Holder of a Unit, as of a date selected by the
General Partner in its sole discretion, a report containing unaudited financial
statements of the Partnership and such other information as may be required by
applicable law, regulation or rule of any National Securities Exchange on which
the Units are listed for trading, or as the General Partner determines to be
necessary or appropriate.
9 ARTICLE
TAX MATTERS
SectionPreparation of Tax Returns. The General Partner shall arrange
for the preparation and timely filing of all returns of Partnership income,
gains, deductions, losses and other items required of the Partnership for
federal and state income tax purposes and shall use all reasonable efforts to
furnish, within 90 days of the close of each calendar year, the tax information
reasonably required by holders of Outstanding Units for federal and state income
tax reporting purposes. The classification, realization and recognition of
income, gain, losses and deductions and other items shall be on the accrual
method of accounting for federal income tax purposes. The taxable year of the
Partnership shall be August 1 to July 31.
SectionTax Elections. Except as otherwise provided herein, the General
Partner shall, in its sole discretion, determine whether to make any available
election pursuant to the Code; provided, however, that the General Partner shall
make the election under Section 754 of the Code in accordance with applicable
regulations thereunder. The General Partner shall have the right to seek to
revoke any such election (including, without limitation, the election under
Section 754 of the Code) upon the General Partner's determination in its sole
discretion that such revocation is in the best interests of the Limited Partners
and Assignees. For purposes of computing the adjustments under Section 743(b) of
the Code, the General Partner shall be authorized (but not required) to adopt a
convention whereby the price paid by a transferee of Units will be deemed to be
the lowest quoted closing price of the Units on any National Securities Exchange
on which such Units are traded during the calendar month in which such transfer
is deemed to occur pursuant to Section 5.2(g) without regard to the actual price
paid by such transferee.
SectionTax Controversies. Subject to the provisions hereof, the General
Partner is designated the Tax Matters Partner (as defined in Section 6231 of the
Code), and is authorized and required to represent the Partnership (at the
Partnership's expense) in connection with all examinations of the Partnership's
affairs by tax authorities, including, without limitation, resulting
administrative and judicial proceedings, and to expend Partnership funds for
professional services and costs associated therewith. Each Partner and Assignee
agrees to cooperate with the General Partner and to do or refrain from doing any
or all things reasonably required by the General Partner to conduct such
proceedings.
SectionOrganizational Expenses. The Partnership shall elect to deduct
expenses, if any, incurred by it in organizing the Partnership ratably over a
60-month period as provided in Section 709 of the Code.
SectionWithholding. Notwithstanding any other provision of this
Agreement, the General Partner is authorized to take any action that it
determines in its sole discretion to be necessary or appropriate to cause the
Partnership and the Operating Partnership to comply with any withholding
requirements established under the Code or any other federal, state or local law
including, without limitation, pursuant to Sections 1441, 1442, 1445 and 1446 of
the Code. To the extent that the Partnership is required to withhold and pay
over to any taxing authority any amount resulting from the allocation or
distribution of income to any Partner or Assignee (including, without
limitation, by reason of Section 1446 of the Code), the amount withheld shall be
treated as a distribution of cash pursuant to Section 5.3 in the amount of such
withholding from such Partner.
SectionEntity-Level Taxation. If legislation is enacted or the
interpretation of existing language is modified which causes the Partnership or
the Operating Partnership to be treated as an association taxable as a
corporation or otherwise subjects the Partnership or the Operating Partnership
to entity-level taxation for federal income tax purposes, the Minimum Quarterly
Distribution, First Target Distribution, Second Target Distribution or Third
Target Distribution, as the case may be, shall be equal to the product obtained
by multiplying (a) the amount thereof by (b) 1 minus the sum of (i) the highest
marginal federal corporate (or other entity, as applicable) income tax rate of
the Partnership for the taxable year of the Partnership in which such Quarter
occurs (expressed as a percentage) plus (ii) the effective overall state and
local income tax rate (expressed as a percentage) applicable to the Partnership
for the calendar year next preceding the calendar year in which such Quarter
occurs (after taking into account the benefit of any deduction allowable for
federal income tax purposes with respect to the payment of state and local
income taxes), but only to the extent of the increase in such rates resulting
from such legislation or interpretation. Such effective overall state and local
income tax rate shall be determined for the taxable year next preceding the
first taxable year during which the Partnership or the Operating Partnership is
taxable for federal income tax purposes as an association taxable as a
corporation or is otherwise subject to entity-level taxation by determining such
rate as if the Partnership or the Operating Partnership had been subject to such
state and local taxes during such preceding taxable year.
SectionEntity-Level Arrearage Collections. If the Partnership is
required by applicable law to pay any federal, state or local income tax on
behalf of, or withhold such amount with respect to, any Partner or Assignee or
any former Partner or Assignee in respect of Common Units held by such Person
(a) the General Partner shall cause the Partnership to pay such tax on behalf of
such Partner or Assignee or former Partner or Assignee from the funds of the
Partnership; (b) any amount so paid on behalf of, or withheld with respect to,
any such Partner or Assignee shall constitute a distribution out of Available
Cash to such Partner or Assignee pursuant to Section 5.3; provided, however, in
the discretion of the General Partner, such taxes (if pertaining to all such
Partners) may be considered to be cash disbursements of the Partnership which
reduce Available Cash, but the payment or withholding thereof shall not be
deemed to be a distribution of Available Cash to such Partners; and (c) to the
extent any such Partner or Assignee (but not a former Partner or Assignee) is
not then entitled to such distribution under this Agreement, the General Partner
shall be authorized, without the approval of any Partner or Assignee, to amend
this Agreement insofar as is necessary to maintain the uniformity of intrinsic
tax characteristics as to all Common Units and to make subsequent adjustments to
distributions in a manner which, in the reasonable judgment of the General
Partner, will make as little alteration as practicable in the priority and
amount of distributions otherwise applicable under this Agreement, and will not
otherwise alter the distributions to which Partners and Assignees are entitled
under this Agreement. If the Partnership is permitted (but not required) by
applicable law to pay any such tax on behalf of, or withhold such amount with
respect to, any Partner or Assignee or former Partner or Assignee with respect
to Common Units held by such Person, the General Partner shall be authorized
(but not required) upon the affirmative vote of the holders of at least a
majority of the Outstanding Senior Units, if any, to cause the Partnership to
pay such tax from the funds of the Partnership and to take any action consistent
with this Section 9.7. The General Partner shall be authorized (but not
required) to take all necessary or appropriate actions to collect all or any
portion of a deficiency in the payment of any such tax that relates to prior
periods and that is attributable to Persons who were Limited Partners or
Assignees with respect to Common Units held by such Person when such
deficiencies arose, from such Persons. The payment of taxes by the Partnership
on behalf of Limited Partners holding Senior Units will not satisfy the
obligation of the Partnership to pay the Senior Unit Distribution.
SectionOpinions of Counsel. Notwithstanding any other provision of this
Agreement, if the Partnership or the Operating Partnership is treated as an
association taxable as a corporation at any time or is otherwise taxable for
federal income tax purposes as an entity at any time and, pursuant to the
provisions of this Agreement, an Opinion of Counsel would otherwise be required
to the effect that an action will not cause the Partnership or the Operating
Partnership to become so treated as an association taxable as a corporation or
otherwise taxable as an entity for federal income tax purposes, such requirement
for an Opinion of Counsel shall be deemed automatically waived.
10 ARTICLE
CERTIFICATES
SectionCertificates. Upon the Partnership's issuance of Common Units or
Senior Units to any Person, the Partnership shall issue one or more Certificates
in the name of such Person evidencing the number of such Units being so issued.
Certificates shall be executed on behalf of the Partnership by the General
Partner. No Common Unit Certificate shall be valid for any purpose until it has
been countersigned by the Transfer Agent; provided, however, that if the General
Partner elects to issue Units in global or book-entry form, the Certificates
shall be valid upon receipt of a certificate from the Transfer Agent certifying
that such Units have been duly registered in accordance with the directions of
the Partnership. The Partners holding Certificates evidencing Senior Units may
exchange such Certificates for Certificates evidencing Common Units on or after
the date on which such Senior Units are converted into Common Units pursuant to
the terms of Section 5.7(d). The General Partner Units need not be certificated,
but upon request of the General Partner, may be represented by Certificates in
the same manner as the Common Units or Senior Units.
SectionRegistration, Registration of Transfer and Exchange.
(a) The General Partner shall cause to be kept on behalf of the Partnership a
register in which, subject to such reasonable regulations as it may prescribe
and subject to the provisions of Section 10.2(b), the General Partner will
provide for the registration and transfer of Units. The Transfer Agent is hereby
appointed registrar and transfer agent for the purpose of registering Common
Units and transfers of such Common Units as herein provided. The Partnership
shall not recognize transfers of Certificates representing Units unless same are
effected in the manner described in this Section 10.2. Upon surrender for
registration of transfer of any Units evidenced by a Certificate, and subject to
the provisions of Section 10.2(b), the General Partner on behalf of the
Partnership shall execute, and in the case of Common Units, the Transfer Agent
shall countersign, and deliver (or, in the case of Units issued in global or
book-entry form, register in accordance with the rules and regulations of the
Depositary), in the name of the holder or the designated transferee or
transferees, as required pursuant to the holder's instructions, one or more new
Certificates evidencing the same aggregate number of Units as was evidenced by
the Certificate so surrendered.
(b) Except as otherwise provided in Section 11.5, the Partnership shall not
recognize any transfer of Units until the Certificates evidencing such Units are
surrendered for registration of transfer and such Certificates are accompanied
by a Transfer Application duly executed by the transferee (or the transferee's
attorney-in-fact duly authorized in writing). No charge shall be imposed by the
Partnership for such transfer, provided, that as a condition to the issuance of
any new Certificate under this Section 10.2, the General Partner may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed with respect thereto.
SectionMutilated, Destroyed, Lost or Stolen Certificates.
(c) If any mutilated Certificate is surrendered to the Transfer Agent, the
General Partner on behalf of the Partnership shall execute, and upon its request
the Transfer Agent shall countersign and deliver in exchange therefor, a new
Certificate evidencing the same number of Units as the Certificate so
surrendered.
(d) The General Partner on behalf of the Partnership shall execute, and upon its
request, in the case of Common Units, the Transfer Agent shall countersign and
deliver (or, in the case of Units issued in global or book-entry form, register
in accordance with the rules and regulations of the Depositary) a new
Certificate in place of any Certificate previously issued if the Record Holder
of the Certificate:
(i) makes proof by affidavit, in form and substance satisfactory to the
General Partner, that a previously issued Certificate has been lost,
destroyed or stolen;
(ii) requests the issuance of a new Certificate before the Partnership has
notice that the Certificate has been acquired by a purchaser for value
in good faith and without notice of an adverse claim;
(iii) if requested by the General Partner, delivers to the Partnership a
bond, in form and substance satisfactory to the General Partner, with
surety or sureties and with fixed or open penalty as the General
Partner may reasonably direct, in its sole discretion, to indemnify the
Partnership, the General Partner and the Transfer Agent against any
claim that may be made on account of the alleged loss, destruction or
theft of the Certificate; and
(iv) satisfies any other reasonable requirements imposed by the General Partner.
If a Limited Partner or Assignee fails to notify the Partnership within a
reasonable time after he has notice of the loss, destruction or theft of a
Certificate, and a transfer of the Units represented by the Certificate is
registered before the Partnership, the General Partner or the Transfer Agent
receives such notification, the Limited Partner or Assignee shall be precluded
from making any claim against the Partnership, the General Partner or the
Transfer Agent for such transfer or for a new Certificate.
(e) As a condition to the issuance of any new Certificate under this Section
10.3, the General Partner may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto and
any other expenses (including, without limitation, the fees and expenses of the
Transfer Agent) reasonably connected therewith.
SectionRecord Holder. In accordance with Section 10.2(b), the
Partnership shall be entitled to recognize the Record Holder as the Limited
Partner or Assignee with respect to any Units and, accordingly, shall not be
bound to recognize any equitable or other claim to or interest in such Units on
the part of any other Person, whether or not the Partnership shall have actual
or other notice thereof, except as otherwise provided by law or any applicable
rule, regulation, guideline or requirement of any National Securities Exchange
on which the Units are listed for trading. Without limiting the foregoing, when
a Person (such as a broker, dealer, bank, trust company or clearing corporation
or an agent of any of the foregoing) is acting as nominee, agent or in some
other representative capacity for another Person in acquiring and/or holding
Units, as between the Partnership on the one hand, and such other Persons, on
the other, such representative Person (a) shall be the Limited Partner or
Assignee (as the case may be) of record and beneficially, (b) must execute and
deliver a Transfer Application and (c) shall be bound by this Agreement and
shall have the rights and obligations of a Limited Partner or Assignee (as the
case may be) hereunder and as provided for herein.
11 ARTICLE
TRANSFER OF INTERESTS
SectionTransfer.
(a) The term "transfer," when used in this Article XI with respect to a
Partnership Interest, shall be deemed to refer to a transaction by which the
General Partner assigns its General Partner Interest to another Person, by which
the holder of a Unit assigns such Unit to another Person who is or becomes an
Assignee or by which a Special Limited Partner holding an IDR assigns such IDR
to another Person, and includes a sale, assignment, gift, pledge, encumbrance,
hypothecation, mortgage, exchange or any other disposition by law or otherwise.
(b) No Partnership Interest shall be transferred, in whole or in part, except in
accordance with the terms and conditions set forth in this Article XI. Any
transfer or purported transfer of a Partnership Interest not made in accordance
with this Article XI shall be null and void.
(c) Nothing contained in this Article XI shall be construed to prevent a
disposition by the parent entity of the General Partner of any or all of the
issued and outstanding capital stock of the General Partner.
(d) Nothing contained in this Article XI, or elsewhere in this Partnership
Agreement, shall preclude the settlement of any transactions involving Common
Units entered into through the facilities of the New York Stock Exchange.
SectionTransfer of the General Partner Interest. Except for a transfer
by the General Partner of all, but not less than all, of its General Partner
Interest to (a) an Affiliate of the General Partner or (b) another Person in
connection with the merger or consolidation of the General Partner with or into
another Person or the transfer by the General Partner of all or substantially
all of its assets to another Person, the transfer by the General Partner of all
or any part of its General Partner Interest to a Person prior to July 31, 2004
shall be subject to the prior approval of at least a majority of the Outstanding
Common Units (excluding for purposes of such determination Units owned by the
General Partner and its Affiliates). Notwithstanding anything herein to the
contrary, no transfer by the General Partner of all or any part of its General
Partner Interest to another Person shall be permitted unless (i) the transferee
agrees to assume the rights and duties of the General Partner under this
Agreement and the Operating Partnership Agreement and to be bound by the
provisions of this Agreement and the Operating Partnership Agreement, (ii) the
Partnership receives an Opinion of Counsel that such transfer would not result
in the loss of limited liability of any Limited Partner or of any limited
partner of the Operating Partnership or cause the Partnership or any of the
Operating Partnership to be treated as an association taxable as a corporation
or otherwise to be taxed as an entity for federal income tax purposes and (iii)
such transferee also agrees to purchase all (or the appropriate portion thereof,
if applicable) of the partnership interest of the General Partner as the general
partner of the Operating Partnership. In the case of a transfer pursuant to and
in compliance with this Section 11.2, the transferee or successor (as the case
may be) shall, subject to compliance with the terms of Section 12.3, be admitted
to the Partnership as a General Partner immediately prior to the transfer of the
General Partner Interest, and the business of the Partnership shall continue
without dissolution.
SectionTransfer of Units (other than General Partner Units).
(e) Units (other than General Partner Units) may be transferred only in the
manner described in Section 10.2. The transfer of any Units (other than General
Partner Units) and the admission of any new Partner shall not constitute an
amendment to this Agreement.
(f) Until admitted as a Substituted Limited Partner pursuant to Article XII, the
Record Holder of a Unit shall be an Assignee in respect of such Unit. Limited
Partners may include custodians, nominees, or any other individual or entity in
its own or any representative capacity.
(g) Each distribution in respect of Units shall be paid by the Partnership,
directly or through the Transfer Agent or through any other Person or agent,
only to the Record Holders thereof as of the Record Date set for the
distribution. Such payment shall constitute full payment and satisfaction of the
Partnership's liability in respect of such payment, regardless of any claim of
any Person who may have an interest in such payment by reason of an assignment
or otherwise.
(h) A transferee who has completed and delivered a Transfer Application shall be
deemed to have (i) requested admission as a Substituted Limited Partner, (ii)
agreed to comply with and be bound by and to have executed this Agreement, (iii)
represented and warranted that such transferee has the right, power and
authority and, if an individual, the capacity to enter into this Agreement, (iv)
granted the powers of attorney set forth in this Agreement and (v) given the
consents and approvals and made the waivers contained in this Agreement.
SectionRestrictions on Transfers. Notwithstanding the other provisions
of this Article XI, no transfer of any Unit or interest therein of any Limited
Partner, Special Limited Partner or Assignee shall be made if such transfer
would (a) violate the then applicable federal or state securities laws or rules
and regulations of the Securities and Exchange Commission, any state securities
commission or any other governmental authorities with jurisdiction over such
transfer, (b) result in the taxation of the Partnership or the Operating
Partnership as an association taxable as a corporation or otherwise subject the
Partnership or the Operating Partnership to entity-level taxation for federal
income tax purposes or (c) affect the Partnership's or the Operating
Partnership's existence or qualification as a limited partnership under the
Delaware Act.
SectionCitizenship Certificates; Non-citizen Assignees.
(i) If the Partnership or the Operating Partnership is or becomes subject to any
federal, state or local law or regulation that, in the reasonable determination
of the General Partner, creates a substantial risk of cancellation or forfeiture
of any property in which the Partnership or the Operating Partnership has an
interest based on the nationality, citizenship or other related status of a
Limited Partner or Assignee, the General Partner may request any Limited Partner
or Assignee to furnish to the General Partner, within 30 days after receipt of
such request, an executed Citizenship Certification or such other information
concerning his nationality, citizenship or other related status (or, if the
Limited Partner or Assignee is a nominee holding for the account of another
Person, the nationality, citizenship or other related status of such Person) as
the General Partner may request. If a Limited Partner or Assignee fails to
furnish to the General Partner within the aforementioned 30-day period such
Citizenship Certification or other requested information or if upon receipt of
such Citizenship Certification or other requested information the General
Partner determines, with the advice of counsel, that a Limited Partner or
Assignee is not an Eligible Citizen, the Units owned by such Limited Partner or
Assignee shall be subject to redemption in accordance with the provisions of
Section 11.6. In addition, the General Partner may require that the status of
any such Limited Partner or Assignee be changed to that of a Non-citizen
Assignee, and, thereupon, the General Partner shall be substituted for such
Non-citizen Assignee as the Limited Partner in respect of his Units.
(j) The General Partner shall, in exercising voting rights in respect of Units
held by it on behalf of Non-citizen Assignees, distribute the votes in the same
ratios as the votes of Limited Partners in respect of Units other than those of
Non-citizen Assignees are cast, either for, against or abstaining as to the
matter.
(k) Upon dissolution of the Partnership, a Non-citizen Assignee shall have no
right to receive a distribution in kind pursuant to Section 14.4 but shall be
entitled to the cash equivalent thereof, and the General Partner shall provide
cash in exchange for an assignment of the Non-citizen Assignee's share of the
distribution in kind. Such payment and assignment shall be treated for
Partnership purposes as a purchase by the General Partner from the Non-citizen
Assignee of his Partnership Interest (representing his right to receive his
share of such distribution in kind).
(l) At any time after he can and does certify that he has become an Eligible
Citizen, a Non-citizen Assignee may, upon application to the General Partner,
request admission as a Substituted Limited Partner with respect to any Units of
such Non-citizen Assignee not redeemed pursuant to Section 11.6, and upon his
admission pursuant to Section 12.2 the General Partner shall cease to be deemed
to be the Limited Partner in respect of the Non-citizen Assignee's Units.
SectionRedemption of Interests.
(m) If at any time a Limited Partner or Assignee fails to furnish a Citizenship
Certification or other information requested within the 30-day period specified
in Section 11.5(a), or if upon receipt of such Citizenship Certification or
other information the General Partner determines, with the advice of counsel,
that a Limited Partner or Assignee is not an Eligible Citizen, the Partnership
may, unless the Limited Partner or Assignee establishes to the satisfaction of
the General Partner that such Limited Partner or Assignee is an Eligible Citizen
or has transferred his Units to a Person who furnishes a Citizenship
Certification to the General Partner prior to the date fixed for redemption as
provided below, redeem the Partnership Interest of such Limited Partner or
Assignee as follows:
(i) The General Partner shall, not later than the 30th day before the date
fixed for redemption, give notice of redemption to the Limited Partner or
Assignee, at his last address designated on the records of the Partnership or
the Transfer Agent, by registered or certified mail, postage prepaid. The notice
shall be deemed to have been given when so mailed. The notice shall specify the
Redeemable Units, the date fixed for redemption, the place of payment, that
payment of the redemption price will be made upon surrender of the Certificate
evidencing the Redeemable Units and that on and after the date fixed for
redemption no further allocations or distributions to which the Limited Partner
or Assignee would otherwise be entitled in respect of the Redeemable Units will
accrue or be made.
(ii) The aggregate redemption price for Redeemable Units shall be an amount
equal to the Current Market Price (the date of determination of which
shall be the date fixed for redemption) of Units of the class to be so
redeemed multiplied by the number of Units of each such class included
among the Redeemable Units. The redemption price shall be paid, in the
sole discretion of the General Partner, in cash or by delivery of a
promissory note of the Partnership in the principal amount of the
redemption price, bearing interest at the rate of 10% annually and
payable in three equal annual installments of principal together with
accrued interest, commencing one year after the redemption date.
(iii) Upon surrender by or on behalf of the Limited Partner or Assignee, at
the place specified in the notice of redemption, of the Certificate
evidencing the Redeemable Units, duly endorsed in blank or accompanied
by an assignment duly executed in blank, the Limited Partner or
Assignee or his duly authorized representative shall be entitled to
receive the payment therefor.
(iv) After the redemption date, Redeemable Units shall no longer constitute
issued and Outstanding Units.
(n) The provisions of this Section 11.6 shall also be applicable to Units held
by a Limited Partner or Assignee as nominee of a Person determined to be other
than an Eligible Citizen.
(o) Nothing in this Section 11.6 shall prevent the recipient of a notice of
redemption from transferring his Units before the redemption date if such
transfer is otherwise permitted under this Agreement. Upon receipt of notice of
such a transfer, the General Partner shall withdraw the notice of redemption,
provided, the transferee of such Units certifies in the Transfer Application
that he is an Eligible Citizen. If the transferee fails to make such
certification, such redemption shall be effected from the transferee on the
original redemption date.
SectionTransfer of IDRs. A Special Limited Partner holding IDRs may
transfer any or all of the IDRs held by such Special Limited Partner. The
General Partner shall have the authority (but shall not be required) to adopt
such reasonable restrictions on the transfer of IDRs, consistent with the
restrictions on transfer of Units provided for in this Agreement, and
requirements for registering the transfer of IDRs as the General Partner, in its
sole discretion, shall determine are necessary or appropriate including, without
limitation, if the General Partner shall so determine, in its sole discretion,
the right of the Partnership to redeem IDRs upon terms and conditions similar to
those applicable to Units.
12 ARTICLE
ADMISSION OF PARTNERS
SectionAdmission of Initial Limited Partners. On the Initial Closing
Date, the General Partner was admitted to the Partnership as a Limited Partner
in respect of the Common Units and Subordinated Units issued to it and as a
Special Limited Partner in respect of the IDRs issued to it, and the
Underwriters were admitted to the Partnership as Initial Limited Partners.
SectionAdmission of Substituted Limited Partners. By transfer of a Unit
(other than a General Partner Unit) in accordance with Article XI, the
transferor shall be deemed to have given the transferee the right to seek
admission as a Substituted Limited Partner subject to the conditions of, and in
the manner permitted under, this Agreement. A transferor of a Certificate (other
than a Certificate representing a General Partner Unit) shall, however, only
have the authority to convey to a purchaser or other transferee who does not
execute and deliver a Transfer Application (a) the right to negotiate such
Certificate to a purchaser or other transferee and (b) the right to transfer the
right to request admission as a Substituted Limited Partner to such purchaser or
other transferee in respect of the transferred Units. Each transferee of a Unit
(other than a General Partner Unit) (including, without limitation, any nominee
holder or an agent acquiring such Unit for the account of another Person) who
executes and delivers a Transfer Application shall, by virtue of such execution
and delivery, be an Assignee and be deemed to have applied to become a
Substituted Limited Partner with respect to the Units so transferred to such
Person. Such Assignee shall become a Substituted Limited Partner (x) at such
time as the General Partner consents thereto, which consent may be given or
withheld in the General Partner's sole discretion, and (y) when any such
admission is shown on the books and records of the Partnership. If such consent
is withheld, such transferee shall be an Assignee. An Assignee shall have an
interest in the Partnership equivalent to that of a Limited Partner with respect
to allocations and distributions, including, without limitation, liquidating
distributions, of the Partnership. With respect to voting rights attributable to
Units that are held by Assignees, the General Partner shall be deemed to be the
Limited Partner with respect thereto and shall, in exercising the voting rights
in respect of such Units on any matter, vote such Units at the written direction
of the Assignee who is the Record Holder of such Units. If no such written
direction is received, such Units will not be voted. An Assignee shall have no
other rights of a Limited Partner.
SectionAdmission of Successor General Partner. A successor General
Partner approved pursuant to Section 13.1 or 13.2 or the transferee of or
successor to all of the General Partner Interest pursuant to Section 11.2 who is
proposed to be admitted as a successor General Partner shall be admitted to the
Partnership as the General Partner, effective immediately prior to the
withdrawal or removal of the General Partner pursuant to Section 13.1 or 13.2 or
the transfer of the General Partner Interest pursuant to Section 11.2; provided,
however, that no such successor shall be admitted to the Partnership until
compliance with the terms of Section 11.2 has occurred and such successor has
executed and delivered such other documents or instruments as may be required to
effect such admission. Any such successor shall, subject to the terms hereof,
carry on the business of the Partnership and Operating Partnership without
dissolution.
SectionAdmission of Additional Limited Partners.
(a) A Person (other than the General Partner, an Initial Limited Partner or a
Substituted Limited Partner) who makes a Capital Contribution to the Partnership
in accordance with this Agreement shall be admitted to the Partnership as an
Additional Limited Partner only upon furnishing to the General Partner (i)
evidence of acceptance in form satisfactory to the General Partner of all of the
terms and conditions of this Agreement, including, without limitation, the power
of attorney granted in Section 1.4, and (ii) such other documents or instruments
as may be required in the discretion of the General Partner to effect such
Person's admission as an Additional Limited Partner.
(b) Notwithstanding anything to the contrary in this Section 12.4, no Person
shall be admitted as an Additional Limited Partner without the consent of the
General Partner, which consent may be given or withheld in the General Partner's
sole discretion. The admission of any Person as an Additional Limited Partner
shall become effective on the date upon which the name of such Person is
recorded as such in the books and records of the Partnership, following the
consent of the General Partner to such admission.
(c) Upon the issuance by the Partnership of Senior Units to WNGL pursuant to the
WNGL Purchase Agreement and the execution and delivery in writing evidencing
WNGL's acceptance of all of the terms and conditions of this Agreement,
including, without limitation, the power of attorney granted in Section 1.4, the
General Partner shall admit WNGL to the Partnership as an Additional Limited
Partner on the WNGL Closing Date.
SectionAmendment of Agreement and Certificate of Limited Partnership.
To effect the admission to the Partnership of any Partner, the General Partner
shall take all steps necessary and appropriate under the Delaware Act to amend
the records of the Partnership to reflect such admission and, if necessary, to
prepare as soon as practical an amendment of this Agreement and, if required by
law, to prepare and file an amendment to the Certificate of Limited Partnership
and may for this purpose, among others, exercise the power of attorney granted
pursuant to Section 1.4.
13 ARTICLE
WITHDRAWAL OR REMOVAL OF PARTNERS
SectionWithdrawal of the General Partner.
(a) The General Partner shall be deemed to have withdrawn from the Partnership
upon the occurrence of any one of the following events (each such event herein
referred to as an "Event of Withdrawal");
(i) the General Partner voluntarily withdraws from the Partnership by
giving written notice to the other Partners (and it shall be deemed
that the General Partner has withdrawn pursuant to this Section
13.1(a)(i) if the General Partner voluntarily withdraws as general
partner of the Operating Partnership);
(ii) the General Partner transfers all of its General Partner Interest
pursuant to Section 11.2;
(iii) the General Partner is removed pursuant to Section 13.2;
(iv) the General Partner (A) makes a general assignment for the benefit of
creditors; (B) files a voluntary bankruptcy petition; (C) files a
petition or answer seeking for itself a reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief
under any law; (D) files an answer or other pleading admitting or
failing to contest the material allegations of a petition filed against
the General Partner in a proceeding of the type described in clauses
(A)-(C) of this Section 13.1(a)(iv); or (E) seeks, consents to or
acquiesces in the appointment of a trustee, receiver or liquidator of
the General Partner or of all or any substantial part of its
properties;
(v) a final and non-appealable judgment is entered by a court with
appropriate jurisdiction ruling that the General Partner is bankrupt or
insolvent, or a final and non-appealable order for relief is entered by
a court with appropriate jurisdiction against the General Partner, in
each case under any federal or state bankruptcy or insolvency laws as
now or hereafter in effect; or
(vi) a certificate of dissolution or its equivalent is filed for the General
Partner, or 90 days expire after the date of notice to the General
Partner of revocation of its charter without a reinstatement of its
charter, under the laws of its state of incorporation.
If an Event of Withdrawal specified in Section 13.1(a)(iv), (v) or (vi) occurs,
the withdrawing General Partner shall give notice to the Limited Partners within
30 days after such occurrence. The Partners hereby agree that only the Events of
Withdrawal described in this Section 13.1 shall result in the withdrawal of the
General Partner from the Partnership.
(b) Withdrawal of the General Partner from the Partnership upon the occurrence
of an Event of Withdrawal shall not constitute a breach of this Agreement under
the following circumstances: (i) at any time during the period beginning on the
Closing Date and ending at 12:00 midnight, Central Standard Time, on July 31,
2004, the General Partner voluntarily withdraws by giving at least 90 days'
advance notice of its intention to withdraw to the Limited Partners, provided,
that prior to the effective date of such withdrawal the withdrawal is approved
by the holders of at least two-thirds of the Outstanding Common Units (excluding
for purposes of such determination Common Units owned by the General Partner and
its Affiliates) and the General Partner delivers to the Partnership an Opinion
of Counsel ("Withdrawal Opinion of Counsel") that such withdrawal (following the
selection of the successor General Partner) would not result in the loss of the
limited liability of any Limited Partner or of the limited partner of the
Operating Partnership or cause the Partnership or the Operating Partnership to
be treated as an association taxable as a corporation or otherwise to be taxed
as an entity for federal income tax purposes; (ii) at any time after 12:00
midnight, Central Standard Time, on July 31, 2004, the General Partner
voluntarily withdraws by giving at least 90 days' advance notice to the Limited
Partners, such withdrawal to take effect on the date specified in such notice;
(iii) at any time that the General Partner ceases to be a General Partner
pursuant to Section 13.1(a)(ii) or is removed pursuant to Section 13.2; or (iv)
notwithstanding clause (i) of this sentence, at any time that the General
Partner voluntarily withdraws by giving at least 90 days' advance notice of its
intention to withdraw to the Limited Partners, such withdrawal to take effect on
the date specified in the notice, if at the time such notice is given one Person
and its Affiliates (other than the General Partner and its Affiliates) own
beneficially or of record or control at least 50% of the Outstanding Common
Units. The withdrawal of the General Partner from the Partnership upon the
occurrence of an Event of Withdrawal shall also constitute the withdrawal of the
General Partner as general partner of the Operating Partnership. If the General
Partner gives a notice of withdrawal pursuant to Section 13.1(a)(i), holders of
at least a majority of the Outstanding Common Units (excluding for purposes of
such determination Common Units owned by the General Partner and its Affiliates)
may, prior to the effective date of such withdrawal, elect a successor General
Partner. If, prior to the effective date of the General Partner's withdrawal, a
successor is selected by the Limited Partners as provided herein, the
Partnership, as the limited partner of the Operating Partnership, shall cause
such Person to become the successor general partner of the Operating
Partnership, as provided in the Operating Partnership Agreement. If, prior to
the effective date of the General Partner's withdrawal, a successor is not
selected by the Limited Partners as provided herein or the Partnership does not
receive a Withdrawal Opinion of Counsel, the Partnership shall be dissolved in
accordance with Section 14.1. Any successor General Partner elected in
accordance with the terms of this Section 13.1 shall be subject to the
provisions of Section 12.3.
SectionRemoval of the General Partner. The General Partner may be
removed if such removal is approved by Limited Partners holding at least
two-thirds of the Outstanding Common Units. Any such action by such Limited
Partners for removal of the General Partner must also provide for the election
of a successor General Partner by Limited Partners holding at least a majority
of the Outstanding Common Units. Such removal shall be effective immediately
following the admission of a successor General Partner pursuant to Article XII.
The removal of the General Partner shall also automatically constitute the
removal of the General Partner as general partner of the Operating Partnership,
as provided in the Operating Partnership Agreement. If a Person is elected as a
successor General Partner in accordance with the terms of this Section 13.2, the
Partnership, as the limited partner of the Operating Partnership, shall cause
such Person to become the successor general partner of the Operating
Partnership, as provided in the Operating Partnership Agreement. The right of
the Limited Partners holding Outstanding Common Units to remove the General
Partner shall not exist or be exercised unless the Partnership has received an
opinion opining as to the matters covered by a Withdrawal Opinion of Counsel.
Any successor General Partner elected in accordance with the terms of this
Section 13.2 shall be subject to the provisions of Section 12.3.
SectionInterest of Departing Partner and Successor General Partner.
(c) In the event of (i) withdrawal of the General Partner under circumstances
where such withdrawal does not violate this Agreement or (ii) removal of the
General Partner by the holders of Common Units under circumstances where Cause
does not exist, if a successor General Partner is elected in accordance with the
terms of Section 13.1 or 13.2, the Departing Partner shall have the option
exercisable prior to the effective date of the departure of such Departing
Partner to require its successor to purchase its General Partner Interest and
its partnership interest as the general partner in the Operating Partnership
(collectively, the "Combined Interest") in exchange for an amount in cash equal
to the fair market value of such Combined Interest, such amount to be determined
and payable as of the effective date of its departure. If the General Partner is
removed by the Limited Partners under circumstances where Cause exists or if the
General Partner withdraws under circumstances where such withdrawal violates
this Agreement or the Operating Partnership Agreement, and if a successor
General Partner is elected in accordance with the terms of Section 13.1 or 13.2,
such successor shall have the option, exercisable prior to the effective date of
the departure of such Departing Partner, to purchase the Combined Interest of
the Departing Partner for such fair market value of such Combined Interest. In
either event, the Departing Partner shall be entitled to receive all
reimbursements due such Departing Partner pursuant to Section 6.4, including,
without limitation, any employee-related liabilities (including, without
limitation, severance liabilities), incurred in connection with the termination
of any employees employed by the General Partner for the benefit of the
Partnership or the Operating Partnership. Subject to Section 13.3(b), the
Departing Partner shall, as of the effective date of its departure, cease to
share in any allocations or distributions with respect to its General Partner
Interest and Partnership income, gain, loss, deduction and credit will be
prorated and allocated as set forth in Section 5.2(g).
For purposes of this Section 13.3(a), the fair market value of the
Departing Partner's Combined Interest shall be determined by agreement between
the Departing Partner and its successor or, failing agreement within 30 days
after the effective date of such Departing Partner's departure, by an
independent investment banking firm or other independent expert selected by the
Departing Partner and its successor, which, in turn, may rely on other experts
and the determination of which shall be conclusive as to such matter. If such
parties cannot agree upon one independent investment banking firm or other
independent expert within 45 days after the effective date of such departure,
then the Departing Partner shall designate an independent investment banking
firm or other independent expert, the Departing Partner's successor shall
designate an independent investment banking firm or other independent expert,
and such firms or experts shall mutually select a third independent investment
banking firm or independent expert, which shall determine the fair market value
of the Combined Interest. In making its determination, such independent
investment banking firm or other independent expert shall consider the then
current trading price of Units on any National Securities Exchange on which
Units are then listed, the value of the Partnership's assets, the rights and
obligations of the General Partner and other factors it may deem relevant.
(d) If the Combined Interest is not purchased in the manner set forth in Section
13.3(a), the Departing Partner shall become a Limited Partner and the Combined
Interest shall be converted into Common Units pursuant to a valuation made by an
investment banking firm or other independent expert selected pursuant to Section
13.3(a), without reduction in such Partnership Interest (but subject to
proportionate dilution by reason of the admission of its successor). Any
successor General Partner shall indemnify the Departing Partner as to all debts
and liabilities of the Partnership arising on or after the date on which the
Departing Partner becomes a Limited Partner. For purposes of this Agreement,
conversion of the General Partner's Combined Interest to Common Units will be
characterized as if the General Partner contributed its Combined Interest to the
Partnership in exchange for the newly issued Common Units.
(e) If a successor General Partner is elected in accordance with the terms of
Section 13.1 or 13.2 and the option described in Section 13.3(a) is not
exercised by the party entitled to do so, the successor General Partner shall,
at the effective date of its admission to the Partnership, contribute to the
capital of the Partnership cash in an amount such that its Capital Account,
after giving effect to such contribution and any adjustments made to the Capital
Accounts of all Partners pursuant to Section 4.4(d)(i), shall be equal to that
percentage of the Capital Accounts of all Partners that is equal to its
Percentage Interest as the General Partner. In such event, such successor
General Partner shall, subject to the following sentence, be entitled to such
Percentage Interest of all Partnership allocations and distributions and any
other allocations and distributions to which the Departing Partner was entitled.
SectionWithdrawal of Limited Partners. No Limited Partner shall have
any right to withdraw from the Partnership; provided, however, that when a
transferee of a Limited Partner's Units becomes a Record Holder, such
transferring Limited Partner shall cease to be a Limited Partner with respect to
the Units so transferred.
14 ARTICLE
DISSOLUTION AND LIQUIDATION
SectionDissolution. The Partnership shall not be dissolved by the
admission of Substituted Limited Partners or Additional Limited Partners or by
the admission of a successor General Partner in accordance with the terms of
this Agreement. Upon the removal or withdrawal of the General Partner, if a
successor General Partner is elected pursuant to Section 13.1 or 13.2, the
Partnership shall not be dissolved and such successor General Partner shall
continue the business of the Partnership. The Partnership shall dissolve, and
(subject to Section 14.2) its affairs should be wound up, upon:
(a) the expiration of its term as provided in Section 1.5;
(b) an Event of Withdrawal of the General Partner as provided in Section 13.1(a)
(other than Section 13.1(a)(ii)), unless a successor is elected and an Opinion
of Counsel is received as provided in Section 13.1(b) or 13.2 and such successor
is admitted to the Partnership pursuant to Section 12.3;
(c) an election to dissolve the Partnership by the General Partner that is
approved by (i) the holders of at least a majority of the Outstanding Units
other than the Senior Units and (ii) the holders of at least a majority of the
Outstanding Senior Units (and all holders of Units hereby expressly consent that
such approval may be effected upon written consent of said applicable percentage
of the Outstanding Units);
(d) entry of a decree of judicial dissolution of the Partnership pursuant to the
provisions of the Delaware Act; or
(e) the sale of all or substantially all of the assets and properties of the
Partnership and the Operating Partnership taken as a whole.
SectionContinuation of the Business of the Partnership after
Dissolution. Upon (a) dissolution of the Partnership following an Event of
Withdrawal caused by the withdrawal or removal of the General Partner as
provided in Section 13.1(a)(i) or (iii) and the failure of the Partners to
select a successor to such Departing Partner pursuant to Section 13.1 or 13.2,
then within 90 days thereafter or (b) dissolution of the Partnership upon an
event constituting an Event of Withdrawal as defined in Section 13.1(a)(iv), (v)
or (vi), then within 180 days thereafter, a majority of the Outstanding Common
Units may elect to reconstitute the Partnership and continue its business on the
same terms and conditions set forth in this Agreement by forming a new limited
partnership on terms identical to those set forth in this Agreement and having
as the successor general partner a Person approved by a majority of the
Outstanding Common Units. Upon any such election by a majority of the
Outstanding Common Units, all Partners shall be bound thereby and shall be
deemed to have approved thereof. Unless such an election is made within the
applicable time period as set forth above, the Partnership shall conduct only
activities necessary to wind up its affairs. If such an election is so made,
then:
(i) the reconstituted Partnership shall continue until the end of the term
set forth in Section 1.5 unless earlier dissolved in accordance with
this Article XIV;
(ii) if the successor General Partner is not the former General Partner,
then the interest of the former General Partner shall be treated
thenceforth as the interest of a Limited Partner and converted into
Common Units in the manner provided in Section 13.3(b); and
(iii) all necessary steps shall be taken to cancel this Agreement and the
Certificate of Limited Partnership and to enter into and, as necessary, to file
a new partnership agreement and certificate of limited partnership, and the
successor general partner may for this purpose exercise the powers of attorney
granted the General Partner pursuant to Section 1.4; provided, that the right of
a majority of Outstanding Common Units to approve a successor General Partner
and to reconstitute and to continue the business of the Partnership shall not
exist and may not be exercised unless the Partnership has received an Opinion of
Counsel that (x) the exercise of the right would not result in the loss of
limited liability of any Limited Partner and (y) neither the Partnership, the
reconstituted limited partnership nor the Operating Partnership would be treated
as an association taxable as a corporation or otherwise be taxable as an entity
for federal income tax purposes upon the exercise of such right to continue.
SectionLiquidation. Upon dissolution of the Partnership, unless the
Partnership is continued under an election to reconstitute and continue the
Partnership pursuant to Section 14.2, the General Partner, or in the event the
General Partner has been dissolved or removed, become bankrupt as set forth in
Section 13.1 or withdrawn from the Partnership, a liquidator or liquidating
committee approved by the holders of at least a majority of the Outstanding
Common Units, shall be the Liquidator. The Liquidator (if other than the General
Partner) shall be entitled to receive such compensation for its services as may
be approved by the holders of at least a majority of the Outstanding Common
Units. The Liquidator shall agree not to resign at any time without 15 days'
prior notice and (if other than the General Partner) may be removed at any time,
with or without cause, by notice of removal approved by a majority of the
Outstanding Units. Upon dissolution, removal or resignation of the Liquidator, a
successor and substitute Liquidator (who shall have and succeed to all rights,
powers and duties of the original Liquidator) shall within 30 days thereafter be
approved by the holders of at least a majority of the Outstanding Common Units.
The right to approve a successor or substitute Liquidator in the manner provided
herein shall be deemed to refer also to any such successor or substitute
Liquidator approved in the manner herein provided. Except as expressly provided
in this Article XIV, the Liquidator approved in the manner provided herein shall
have and may exercise, without further authorization or consent of any of the
parties hereto, all of the powers conferred upon the General Partner under the
terms of this Agreement (but subject to all of the applicable limitations,
contractual and otherwise, upon the exercise of such powers, other than the
limitation on sale set forth in Section 6.3(b)) to the extent necessary or
desirable in the good faith judgment of the Liquidator to carry out the duties
and functions of the Liquidator hereunder for and during such period of time as
shall be reasonably required in the good faith judgment of the Liquidator to
complete the winding up and liquidation of the Partnership as provided for
herein. The Liquidator shall liquidate the assets of the Partnership, and apply
and distribute the proceeds of such liquidation in the following order of
priority, unless otherwise required by mandatory provisions of applicable law:
(f) the payment to creditors of the Partnership, including, without limitation,
Partners who are creditors, in the order of priority provided by law; and the
creation of a reserve of cash or other assets of the Partnership for contingent
liabilities in an amount, if any, determined by the Liquidator to be appropriate
for such purposes; and
(g) to all Partners in accordance with, and to the extent of, the positive
balances in their respective Capital Accounts, as determined after taking into
account all Capital Account adjustments (other than those made by reason of this
clause) for the taxable year of the Partnership during which the liquidation of
the Partnership occurs (with the date of such occurrence being determined
pursuant to Treasury Regulation Section 1.704-1(b)(2)(ii)(g)); and such
distribution shall be made by the end of such taxable year (or, if later, within
90 days after said date of such occurrence).
SectionDistributions in Kind. Notwithstanding the provisions of Section
14.3, which require the liquidation of the assets of the Partnership, but
subject to the order of priorities set forth therein, if prior to or upon
dissolution of the Partnership the Liquidator determines that an immediate sale
of part or all of the Partnership's assets would be impractical or would cause
undue loss to the Partners, the Liquidator may, in its absolute discretion,
defer for a reasonable time the liquidation of any assets except those necessary
to satisfy liabilities of the Partnership (including, without limitation, those
to Partners as creditors) and or distribute to the Partners or to specific
classes of Partners, in lieu of cash, as tenants in common and in accordance
with the provisions of Section 14.3, undivided interests in such Partnership
assets as the Liquidator deems not suitable for liquidation. Any such
distributions in kind shall be made only if, in the good faith judgment of the
Liquidator, such distributions in kind are in the best interest of the Limited
Partners, and shall be subject to such conditions relating to the disposition
and management of such properties as the Liquidator deems reasonable and
equitable and to any agreements governing the operation of such properties at
such time. The Liquidator shall determine the fair market value of any property
distributed in kind using such reasonable method of valuation as it may adopt.
SectionCancellation of Certificate of Limited Partnership. Upon the
completion of the distribution of Partnership cash and property as provided in
Sections 14.3 and 14.4 in connection with the liquidation of the Partnership,
the Partnership shall be terminated and the Certificate of Limited Partnership
and all qualifications of the Partnership as a foreign limited partnership in
jurisdictions other than the State of Delaware shall be cancelled and such other
actions as may be necessary to terminate the Partnership shall be taken.
SectionReasonable Time for Winding Up. A reasonable time shall be
allowed for the orderly winding up of business and affairs of the Partnership
and the liquidation of its assets pursuant to Section 14.3 in order to minimize
any losses otherwise attendant upon such winding up, and the provisions of this
Agreement shall remain in effect between the Partners during the period of
liquidation.
SectionReturn of Capital Contributions. The General Partner shall not
be personally liable for, and shall have no obligation to contribute or loan any
monies or property to the Partnership to enable it to effectuate, the return of
the Capital Contributions of the Limited Partners, or any portion thereof, it
being expressly understood that any such return shall be made solely from
Partnership assets.
SectionCapital Account Restoration. No Limited Partner shall have any
obligation to restore any negative balance in its Capital Account upon
liquidation of the Partnership. The General Partner shall be obligated to
restore any negative balance in its Capital Account upon liquidation of its
interest in the Partnership by the end of the taxable year of the Partnership
during which such liquidation occurs, or, if later, within 90 days after the
date of such liquidation.
SectionWaiver of Partition. To the maximum extent permitted by law,
each Partner hereby waives any right to partition of the Partnership property.
15 ARTICLE
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE
SectionAmendment to be Adopted Solely by General Partner. Each Limited
Partner agrees that the General Partner (pursuant to its powers of attorney from
the Limited Partners, Special Limited Partners and Assignees), without the
approval of any Limited Partner or Assignee, may amend any provision of this
Agreement, and execute, swear to, acknowledge, deliver, file and record whatever
documents may be required in connection therewith, to reflect: (a) a change in
the name of the Partnership, the location of the principal place of business of
the Partnership, the registered agent of the Partnership or the registered
office of the Partnership;
(b) admission, substitution, withdrawal or removal of Partners in
accordance with this Agreement;
(c) a change that, in the sole discretion of the General Partner, is necessary
or appropriate to qualify or continue the qualification of the Partnership as a
limited partnership or a partnership in which the limited partners have limited
liability under the laws of any state or that is necessary or advisable in the
opinion of the General Partner to ensure that neither the Partnership nor the
Operating Partnership will be treated as an association taxable as a corporation
or otherwise taxed as an entity for federal income tax purposes;
(d) a change (i) that, in the sole discretion of the General Partner, does not
adversely affect the Limited Partners in any material respect, (ii) that is
necessary or desirable to satisfy any requirements, conditions or guidelines
contained in any opinion, directive, order, ruling or regulation of any federal
or state agency or judicial authority or contained in any federal or state
statute (including, without limitation, the Delaware Act) or that is necessary
or desirable to facilitate the trading of the Units (including, without
limitation, the division of Outstanding Units into different classes to
facilitate uniformity of tax consequences within such classes of Units) or
comply with any rule, regulation, guideline or requirement of any National
Securities Exchange on which the Units are or will be listed for trading,
compliance with any of which the General Partner determines in its sole
discretion to be in the best interests of the Partnership and the Limited
Partners or (iii) that is necessary or desirable to implement certain
tax-related provisions of the Partnership Agreement, or (iv) that is required to
effect the intent of the provisions of this Agreement or is otherwise
contemplated by this Agreement;
(e) a change in the fiscal year or taxable year of the Partnership and any
changes that, in the sole discretion of the General Partner, are necessary or
appropriate as a result of a change in the fiscal year or taxable year of the
Partnership including, without limitation, if the General Partner shall so
determine, a change in the definition of "Quarter" and the dates on which
distributions are to be made by the Partnership;
(f) an amendment that is necessary, in the Opinion of Counsel, to prevent the
Partnership or the General Partner or its directors or officers from in any
manner being subjected to the provisions of the Investment Company Act of 1940,
as amended, the Investment Advisers Act of 1940, as amended, or "plan asset"
regulations adopted under the Employee Retirement Income Security Act of 1974,
as amended, whether or not substantially similar to plan asset regulations
currently applied or proposed by the United States Department of Labor;
(g) subject to the terms of Section 4.3, an amendment that, in the sole
discretion of the General Partner, is necessary or desirable in connection with
the authorization for issuance of any class or series of Partnership Securities
pursuant to Section 4.3;
(h) any amendment expressly permitted in this Agreement to be made by the
General Partner acting alone;
(i) an amendment effected, necessitated or contemplated by a Merger Agreement
approved in accordance with Section 16.3;
(j) an amendment that, in the sole discretion of the General Partner, is
necessary or desirable to reflect, account for and deal with appropriately the
formation by the Partnership of, or investment by the Partnership in, any
corporation, partnership, joint venture, limited liability company or other
entity other than the Operating Partnership, in connection with the conduct by
the Partnership of activities permitted by the terms of Section 3.1; or
(k) any other amendments substantially similar to the foregoing.
SectionAmendment Procedures. Except as provided in Sections 15.1, 15.3
and 15.13, all amendments to this Agreement shall be made in accordance with the
following requirements. Amendments to this Agreement may be proposed only by or
with the consent of the General Partner. A proposed amendment shall be effective
upon its approval by the holders of at least a majority of the Outstanding
Common Units, unless a greater or different percentage is required under this
Agreement. Each proposed amendment that requires the approval of the holders of
a specified percentage of Outstanding Common Units shall be set forth in a
writing that contains the text of the proposed amendment. If such an amendment
is proposed, the General Partner shall seek the written approval of the
requisite percentage of Outstanding Common Units or call a meeting of the
holders of Common Units to consider and vote on such proposed amendment. The
General Partner shall notify all Record Holders upon final adoption of any such
proposed amendments.
SectionAmendment Requirements.
(l) Notwithstanding the provisions of Sections 15.1 and 15.2, no provision of
this Agreement that establishes a percentage of Outstanding Units required to
take any action shall be amended, altered, changed, repealed or rescinded in any
respect that would have the effect of reducing such voting requirement unless
such amendment is approved by the written consent or the affirmative vote of
holders of Outstanding Units whose aggregate Outstanding Units constitute not
less than the voting requirement sought to be reduced.
(m) Notwithstanding the provisions of Sections 15.1 and 15.2, no amendment to
this Agreement may (i) enlarge the obligations of any Limited Partner without
its consent, (ii) enlarge the obligations of the General Partner without its
consent, which may be given or withheld in its sole discretion, (iii) modify the
amounts distributable, reimbursable or otherwise payable to the General Partner
by the Partnership or the Operating Partnership, (iv) change Section 14.1(a) or
(c), (v) restrict in any way any action by or rights of the General Partner as
set forth in this Agreement or (vi) change the term of the Partnership or,
except as set forth in Section 14.1(c), give any Person the right to dissolve
the Partnership.
(n) Except as otherwise provided, and without limitation of the General
Partner's authority to adopt amendments to this Agreement as contemplated in
Section 15.1, any amendment that would have a material adverse effect on the
rights or preferences of any class of Outstanding Units in relation to other
classes of Units must be approved by the holders of not less than a majority of
the Outstanding Units of the class affected (excluding for purposes of such
determination Units owned by the General Partner and its Affiliates).
(o) Notwithstanding any other provision of this Agreement, except for amendments
pursuant to Section 6.3 or 15.1 and except as otherwise provided by Section
16.3(b), no amendments shall become effective without the approval of the
holders of at least 95% of the Outstanding Common Units unless the Partnership
obtains an Opinion of Counsel to the effect that (a) such amendment will not
cause the Partnership or the Operating Partnership to be treated as an
association taxable as a corporation or otherwise taxable as an entity for
federal income tax purposes and (b) such amendment will not affect the limited
liability of any Limited Partner or any limited partner of the Operating
Partnership under applicable law.
(p) This Section 15.3 shall only be amended with the approval of the
holders of not less than 95% of the Outstanding Common Units.
SectionMeetings. All acts of Limited Partners to be taken pursuant to
this Agreement shall be taken in the manner provided in this Article XV.
Meetings of the Limited Partners may be called by the General Partner or by
Limited Partners owning 20% or more of the Outstanding Units of the class or
classes for which a meeting is proposed. Limited Partners shall call a meeting
by delivering to the General Partner one or more requests in writing stating
that the signing Limited Partners wish to call a meeting and indicating the
general or specific purposes for which the meeting is to be called. Within 60
days after receipt of such a call from Limited Partners or within such greater
time as may be reasonably necessary for the Partnership to comply with any
statutes, rules, regulations, listing agreements or similar requirements
governing the holding of a meeting or the solicitation of proxies for use at
such a meeting, the General Partner shall send a notice of the meeting to the
Limited Partners either directly or indirectly through the Transfer Agent. A
meeting shall be held at a time and place determined by the General Partner on a
date not more than 60 days after the mailing of notice of the meeting. Limited
Partners shall not vote on matters that would cause the Limited Partners to be
deemed to be taking part in the management and control of the business and
affairs of the Partnership so as to jeopardize the Limited Partners' limited
liability under the Delaware Act or the law of any other state in which the
Partnership is qualified to do business.
SectionNotice of a Meeting. Notice of a meeting called pursuant to
Section 15.4 shall be given to the Record Holders in writing by mail or other
means of written communication in accordance with Section 18.1. The notice shall
be deemed to have been given at the time when deposited in the mail or sent by
other means of written communication.
SectionRecord Date. For purposes of determining the Limited Partners
entitled to notice of or to vote at a meeting of the Limited Partners or to give
approvals without a meeting as provided in Section 15.11, the General Partner
may set a Record Date, which shall not be less than 10 nor more than 60 days
before (a) the date of the meeting (unless such requirement conflicts with any
rule, regulation, guideline or requirement of any National Securities Exchange
on which the Units are listed for trading, in which case the rule, regulation,
guideline or requirement of such exchange shall govern) or (b) in the event that
approvals are sought without a meeting, the date by which Limited Partners are
requested in writing by the General Partner to give such approvals.
SectionAdjournment. When a meeting is adjourned to another time or
place, notice need not be given of the adjourned meeting and a new Record Date
need not be fixed, if the time and place thereof are announced at the meeting at
which the adjournment is taken, unless such adjournment shall be for more than
45 days. At the adjourned meeting, the Partnership may transact any business
which might have been transacted at the original meeting. If the adjournment is
for more than 45 days or if a new Record Date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given in accordance with
this Article XV.
SectionWaiver of Notice; Approval of Meeting; Approval of Minutes. The
transactions of any meeting of Limited Partners, however called and noticed, and
whenever held, shall be as valid as if had at a meeting duly held after regular
call and notice, if a quorum is present either in person or by proxy, and if,
either before or after the meeting, Limited Partners representing such quorum
who were present in person or by proxy and entitled to vote, sign a written
waiver of notice or an approval of the holding of the meeting or an approval of
the minutes thereof. All waivers and approvals shall be filed with the
Partnership records or made a part of the minutes of the meeting. Attendance of
a Limited Partner at a meeting shall constitute a waiver of notice of the
meeting, except when the Limited Partner does not approve, at the beginning of
the meeting, of the transaction of any business because the meeting is not
lawfully called or convened; and except that attendance at a meeting is not a
waiver of any right to disapprove the consideration of matters required to be
included in the notice of the meeting, but not so included, if the disapproval
is expressly made at the meeting.
SectionQuorum. The holders of two-thirds of the Outstanding Units of
the class or classes for which a meeting has been called represented in person
or by proxy shall constitute a quorum at a meeting of Limited Partners of such
class or classes unless any such action by the Limited Partners requires
approval by holders of a majority in interest of such Units, in which case the
quorum shall be a majority (excluding, in either case, if such are to be
excluded from the vote, Outstanding Units owned by the General Partner and its
Affiliates). At any meeting of the Limited Partners duly called and held in
accordance with this Agreement at which a quorum is present, the act of Limited
Partners holding Outstanding Units that in the aggregate represent a majority of
the Outstanding Units entitled to vote and be present in person or by proxy at
such meeting shall be deemed to constitute the act of all Limited Partners,
unless a greater or different percentage is required with respect to such action
under the provisions of this Agreement, in which case the act of the Limited
Partners holding Outstanding Units that in the aggregate represent at least such
greater or different percentage shall be required. The Limited Partners present
at a duly called or held meeting at which a quorum is present may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
Limited Partners to leave less than a quorum, if any action taken (other than
adjournment) is approved by the required percentage of Outstanding Units
specified in this Agreement. In the absence of a quorum, any meeting of Limited
Partners may be adjourned from time to time by the affirmative vote of a
majority of the Outstanding Units of the class or classes for which the meeting
was called represented either in person or by proxy, but no other business may
be transacted, except as provided in Section 15.7.
SectionConduct of Meeting. The General Partner shall have full power
and authority concerning the manner of conducting any meeting of the Limited
Partners or solicitation of approvals in writing, including, without limitation,
the determination of Persons entitled to vote, the existence of a quorum, the
satisfaction of the requirements of Section 15.4, the conduct of voting, the
validity and effect of any proxies and the determination of any controversies,
votes or challenges arising in connection with or during the meeting or voting.
The General Partner shall designate a Person to serve as chairman of any meeting
and shall further designate a Person to take the minutes of any meeting. All
minutes shall be kept with the records of the Partnership maintained by the
General Partner. The General Partner may make such other regulations consistent
with applicable law and this Agreement as it may deem advisable concerning the
conduct of any meeting of the Limited Partners or solicitation of approvals in
writing, including, without limitation, regulations in regard to the appointment
of proxies, the appointment and duties of inspectors of votes and approvals, the
submission and examination of proxies and other evidence of the right to vote,
and the revocation of approvals in writing.
SectionAction Without a Meeting. Any action that may be taken at a
meeting of the Limited Partners may be taken without a meeting if an approval in
writing setting forth the action so taken is signed by Limited Partners owning
not less than the minimum percentage of the Outstanding Units that would be
necessary to authorize or take such action at a meeting at which all the Limited
Partners were present and voted. Prompt notice of the taking of action without a
meeting shall be given to the Limited Partners who have not approved in writing.
The General Partner may specify that any written ballot submitted to Limited
Partners for the purpose of taking any action without a meeting shall be
returned to the Partnership within the time period, which shall be not less than
20 days, specified by the General Partner. If a ballot returned to the
Partnership does not vote all of the Units held by the Limited Partner, the
Partnership shall be deemed to have failed to receive a ballot for the Units
that were not voted. If approval of the taking of any action by the Limited
Partners is solicited by any Person other than by or on behalf of the General
Partner, the written approvals shall have no force and effect unless and until
(a) they are deposited with the Partnership in care of the General Partner, (b)
approvals sufficient to take the action proposed are dated as of a date not more
than 90 days prior to the date sufficient approvals are deposited with the
Partnership and (c) an Opinion of Counsel is delivered to the General Partner to
the effect that the exercise of such right and the action proposed to be taken
with respect to any particular matter (i) will not cause the Limited Partners to
be deemed to be taking part in the management and control of the business and
affairs of the Partnership so as to jeopardize the Limited Partners' limited
liability, (ii) will not jeopardize the status of the Partnership as a
partnership under applicable tax laws and regulations and (iii) is otherwise
permissible under the state statutes then governing the rights, duties and
liabilities of the Partnership and the Partners.
SectionVoting and Other Rights.
(q) Only those Record Holders of Units on the Record Date set pursuant to
Section 15.6 (and also subject to the limitations contained in the definition of
"Outstanding") shall be entitled to notice of, and to vote at, a meeting of
Limited Partners or to act with respect to matters as to which the holders of
the Outstanding Units have the right to vote or to act. All references in this
Agreement to votes of, or other acts that may be taken by, the Outstanding Units
shall be deemed to be references to the votes or acts of the Record Holders of
such Outstanding Units.
(r) With respect to Units that are held for a Person's account by another Person
(such as a broker, dealer, bank, trust company or clearing corporation, or an
agent of any of the foregoing), in whose name such Units are registered, such
broker, dealer or other agent shall, in exercising the voting rights in respect
of such Units on any matter, and unless the arrangement between such Persons
provides otherwise, vote such Units in favor of, and at the direction of, the
Person who is the beneficial owner, and the Partnership shall be entitled to
assume it is so acting without further inquiry. The provisions of this Section
15.12(b) (as well as all other provisions of this Agreement) are subject to the
provisions of Section 10.4.
SectionVoting Rights of Senior Units. Except as provided in Sections
4.3(c)(i), 9.7, 14.1, 15.3(c), 16.1(b), 17.1, this Section 15.13 or otherwise as
required by law, the Senior Units shall have no voting rights. So long as any
Senior Units remain outstanding, unless a greater percentage shall then be
required by law, the Partnership shall not, without the approval of the holders
of at least a majority of the Outstanding Senior Units voting separately as a
class, (i) amend the Partnership Agreement so as to affect adversely the
specified rights, preferences or privileges of the Senior Units, including any
amendment made in order to issue additional Senior Units other than as provided
for in this Agreement as in effect on the WNGL Closing Date, (ii) except as
permitted pursuant to Section 6.12 and Section 11.6, purchase, redeem or
otherwise acquire for value any Common Units or (iii) permit any of its
Subsidiaries to issue equity interests to any Person (other than the Partnership
and its Subsidiaries and an interest not to exceed a percentage equal to one
percent divided by ninety-nine percent to the General Partner). The holders of
at least a majority of the Outstanding Senior Units, voting separately as one
class, may waive compliance with any provision of this Agreement. In exercising
any voting rights provided for in this Agreement, each Outstanding Senior Unit
shall be entitled to one vote.
16 ARTICLE
MERGER
SectionAuthority. (a) Subject to (b) below, the Partnership may merge
or consolidate with one or more corporations, business trusts or associations,
real estate investment trusts, common law trusts or unincorporated businesses,
including, without limitation, a general partnership or limited partnership,
formed under the laws of the State of Delaware or any other state of the United
States of America, pursuant to a written agreement of merger or consolidation
("Merger Agreement") in accordance with this Article XVI;
(b) Without the approval of the holders of at least the
majority of the Outstanding Senior Units, the Partnership shall not, in a single
transaction or series of related transactions, consolidate with or merge with or
into, or sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its or the Operating Partnership's (which includes the sale
by the Partnership of its limited partnership interests in the Operating
Partnership) assets to, another Person unless: (A) either (1) the Partnership is
the Surviving Business Entity or (2) the Person (if other than the Partnership)
formed by such consolidation or into which the Partnership is merged or to which
the properties and assets of the Partnership or Operating Partnership are sold,
assigned, transferred, leased, conveyed or otherwise disposed of shall be an
entity organized under the laws of the United States or any State thereof or the
District of Columbia and shall expressly assume all of the obligations of the
Partnership under this Agreement, the WNGL Purchase Agreement and the WNGL
Registration Rights Agreement with respect to the Senior Units; and (B) if the
Partnership is not the Surviving Business Entity, the Senior Units shall be
converted into or exchanged for and shall become equity interests of such
Surviving Business entity, having in respect of such Surviving Business Entity
the same powers, preferences and relative, participating, optional or other
special rights and the qualifications, limitations or restrictions thereon, that
the Senior Units had immediately prior to such transactions.
SectionProcedure for Merger or Consolidation. Merger or consolidation
of the Partnership pursuant to this Article XVI requires the prior approval of
the General Partner. If the General Partner shall determine, in the exercise of
its sole discretion, to consent to the merger or consolidation, the General
Partner shall approve the Merger Agreement, which shall set forth:
(a) The names and jurisdictions of formation or organization of each of the
business entities proposing to merge or consolidate;
(b) The name and jurisdictions of formation or organization of the business
entity that is to survive the proposed merger or consolidation (the "Surviving
Business Entity");
c) The terms and conditions of the proposed merger or consolidation;
(d) The manner and basis of exchanging or converting the equity securities of
each constituent business entity for, or into, cash, property or general or
limited partnership interests, rights, securities or obligations of the
Surviving Business Entity; and (i) if any general or limited partnership
interests, securities or rights of any constituent business entity are not to be
exchanged or converted solely for, or into, cash, property or general or limited
partnership interests, rights, securities or obligations of the Surviving
Business Entity, the cash, property or general or limited partnership interests,
rights, securities or obligations of any limited partnership, corporation, trust
or other entity (other than the Surviving Business Entity) which the holders of
such general or limited partnership interests, securities or rights are to
receive in exchange for, or upon conversion of, their general or limited
partnership interests, securities or rights, and (ii) in the case of securities
represented by certificates, upon the surrender of such certificates, which
cash, property or general or limited partnership interests, rights, securities
or obligations of the Surviving Business Entity or any general or limited
partnership, corporation, trust or other entity (other than the Surviving
Business Entity), or evidences thereof, are to be delivered;
(e) A statement of any changes in the constituent documents or the adoption of
new constituent documents (the articles or certificate of incorporation,
articles of trust, declaration of trust, certificate or agreement of limited
partnership or other similar charter or governing document) of the Surviving
Business Entity to be effected by such merger or consolidation;
(f) The effective time of the merger, which may be the date of the filing of the
certificate of merger pursuant to Section 16.4 or a later date specified in or
determinable in accordance with the Merger Agreement (provided, that if the
effective time of the merger is to be later than the date of the filing of the
certificate of merger, the effective time shall be fixed no later than the time
of the filing of the certificate of merger and stated therein); and
(g) Such other provisions with respect to the proposed merger or consolidation
as are deemed necessary or appropriate by the General Partner.
SectionApproval by Holders of Common Units of Merger or Consolidation.
(h) The General Partner of the Partnership, upon its approval of the Merger
Agreement, shall direct that the Merger Agreement be submitted to a vote of the
Limited Partners holding Common Units whether at a meeting or by written
consent, in either case in accordance with the requirements of Article XV. A
copy or a summary of the Merger Agreement shall be included in or enclosed with
the notice of a meeting or the written consent.
(i) The Merger Agreement shall be approved upon receiving the affirmative vote
or consent of the holders of at least a majority of the Outstanding Common Units
unless the Merger Agreement contains any provision which, if contained in an
amendment to this Agreement, the provisions of this Agreement or the Delaware
Act would require the vote or consent of a greater percentage of the Outstanding
Common Units or of any class of Limited Partners, in which case such greater
percentage vote or consent shall be required for approval of the Merger
Agreement; provided that, in the case of a merger or consolidation in which the
surviving entity is a corporation or other entity intended to be treated as an
association taxable as a corporation or otherwise taxable as an entity for
federal income tax purposes, if in the opinion of the General Partner it is
necessary to effect, in contemplation of such merger or consolidation, an
amendment that would otherwise require a vote pursuant to Section 15.3(d), no
such vote pursuant to Section 15.3(d) shall be required unless such amendment by
its terms will be applicable to the Partnership in the event the merger or
consolidation is abandoned or unless such amendment will be applicable to the
Partnership during a period in excess of ten days prior to the merger or
consolidation.
(j) After such approval by vote or consent of the holders of the Common Units,
and at any time prior to the filing of the certificate of merger pursuant to
Section 16.4, the merger or consolidation may be abandoned pursuant to
provisions therefor, if any, set forth in the Merger Agreement.
SectionCertificate of Merger. Upon the required approval by the General
Partner and the Limited Partners of a Merger Agreement, a certificate of merger
shall be executed and filed with the Secretary of State of the State of Delaware
in conformity with the requirements of the Delaware Act.
SectionEffect of Merger.
(k) At the effective time of the certificate of merger:
(i) all of the rights, privileges and powers of each of the business
entities that has merged or consolidated, and all property, real,
personal and mixed, and all debts due to any of those business entities
and all other things and causes of action belonging to each of those
business entities shall be vested in the Surviving Business Entity and
after the merger or consolidation shall be the property of the
Surviving Business Entity to the extent they were of each constituent
business entity;
(ii) the title to any real property vested by deed or otherwise in any of
those constituent business entities shall not revert and is not in any
way impaired because of the merger or consolidation;
(iii) all rights of creditors and all liens on or security interests in
property of any of those constituent business entities shall be
preserved unimpaired; and
(iv) all debts, liabilities and duties of those constituent business
entities shall attach to the Surviving Business Entity, and may be
enforced against it to the same extent as if the debts, liabilities and
duties had been incurred or contracted by it.
(l) A merger or consolidation effected pursuant to this Article shall not be
deemed to result in a transfer or assignment of assets or liabilities from one
entity to another having occurred.
17 ARTICLE
RIGHT TO ACQUIRE UNITS
SectionRight to Acquire Units.
(a) Notwithstanding any other provision of this Agreement, if at any time not
more than 20% of the total Units of any class then Outstanding are held by
Persons other than the General Partner and its Affiliates, the General Partner
shall, upon the approval of the holders of at least a majority of the
Outstanding Senior Units, have the right, which right it may assign and transfer
to the Partnership or any Affiliate of the General Partner, exercisable in its
sole discretion, to purchase all, but not less than all, of the Units of such
class then Outstanding held by Persons other than the General Partner and its
Affiliates, at the greater of (x) the Current Market Price as of the date three
days prior to the date that the notice described in Section 17.1(b) is mailed,
and (y) the highest cash price paid by the General Partner or any of its
Affiliates for any such Unit purchased during the 90-day period preceding the
date that the notice described in Section 17.1(b) is mailed.
(b) If the General Partner, any Affiliate of the General Partner or the
Partnership elects to exercise the right to purchase Units granted pursuant to
Section 17.1(a), the General Partner shall deliver to the Transfer Agent notice
of such election to purchase (the "Notice of Election to Purchase") and shall
cause the Transfer Agent to mail a copy of such Notice of Election to Purchase
to the Record Holders of Units (as of a Record Date selected by the General
Partner) at least 10, but not more than 60, days prior to the Purchase Date.
Such Notice of Election to Purchase shall also be published for a period of at
least three consecutive days in at least two daily newspapers of general
circulation printed in the English language and published in the Borough of
Manhattan, New York. The Notice of Election to Purchase shall specify the
Purchase Date and the price (determined in accordance with Section 17.1(a) at
which Units will be purchased and state that the General Partner, its Affiliate
or the Partnership, as the case may be, elects to purchase such Units, upon
surrender of Certificates representing such Units in exchange for payment, at
such office or offices of the Transfer Agent as the Transfer Agent may specify,
or as may be required by any National Securities Exchange on which the Units are
listed or admitted to trading. Any such Notice of Election to Purchase mailed to
a Record Holder of Units at his address as reflected in the records of the
Transfer Agent shall be conclusively presumed to have been given whether or not
the owner receives such notice. On or prior to the Purchase Date, the General
Partner, its Affiliate or the Partnership, as the case may be, shall deposit
with the Transfer Agent cash in an amount sufficient to pay the aggregate
purchase price of all of the Units to be purchased in accordance with this
Section 17.1. If the Notice of Election to Purchase shall have been duly given
as aforesaid at least 10 days prior to the Purchase Date, and if on or prior to
the Purchase Date the deposit described in the preceding sentence has been made
for the benefit of the holders of Units subject to purchase as provided herein,
then from and after the Purchase Date, notwithstanding that any Certificate
shall not have been surrendered for purchase, all rights of the holders of such
Units (including, without limitation, any rights pursuant to Articles IV, V and
XIV) shall thereupon cease, except the right to receive the purchase price
(determined in accordance with Section 17.1(a)) for Units therefor, without
interest, upon surrender to the Transfer Agent of the Certificates representing
such Units, and such Units shall thereupon be deemed to be transferred to the
General Partner, its Affiliate or the Partnership, as the case may be, on the
record books of the Transfer Agent and the Partnership, and the General Partner
or any Affiliate of the General Partner, or the Partnership, as the case may be,
shall be deemed to be the owner of all such Units from and after the Purchase
Date and shall have all rights as the owner of such Units (including, without
limitation, all rights as owner of such Units pursuant to Articles IV, V and
XIV).
(c) At any time from and after the Purchase Date, a holder of an Outstanding
Unit subject to purchase as provided in this Section 17.1 may surrender his
Certificate, as the case may be, evidencing such Unit to the Transfer Agent in
exchange for payment of the amount described in Section 17.1(a), therefor,
without interest thereon.
SectionRight to Acquire Senior Units.
(d) Notwithstanding any other provision of this Agreement, the Partnership shall
have the right, which it may assign to any of its Affiliates, exercisable in its
sole discretion, to purchase for cash, in whole or in part, at any time or from
time to time, Senior Units at the Senior Unit Redemption Price. The right of the
Partnership and its permitted assigns to purchase Outstanding Senior Units at
the Senior Unit Redemption Price shall not apply to Common Units issued upon
conversion of the Senior Units in accordance with Section 5.7; provided,
however, that the Partnership and its permitted assigns shall have the right to
exercise such right at any time prior to the date of conversion.
(e) If the Partnership or its permitted assigns exercises the right to purchase
Senior Units granted pursuant to Section 17.2(a), the Partnership shall deliver
or cause to be delivered to the holder or holders of Senior Units, a Senior Unit
Redemption Notice at least three, but not more than thirty (30) Business Days
prior to the Senior Unit Redemption Date.
(f) On or prior to the Senior Unit Redemption Date, the General Partner, its
Affiliate or the Partnership, as the case may be, shall deposit with the
Transfer Agent (or if all of the Outstanding Senior Units are held by one Holder
(including Affiliates of such Holder), pay to such Holder and its Affiliates)
cash in an amount sufficient to pay the aggregate Senior Unit Redemption Price
of all of the Senior Units acquired pursuant to this Section 17.2. On the Senior
Unit Redemption Date, each holder of Senior Units shall surrender the
Certificates representing the number of Senior Units set forth in the Senior
Unit Redemption Notice, in proper transfer form, in the manner and place
designated in such notice. On the Senior Unit Redemption Date, the Senior Unit
Redemption Price shall be payable in cash to the person whose name appears on
such Certificates as the owner thereof, and, if purchased by the Partnership and
not any of its Affiliates, each surrendered Certificate shall be canceled and
retired. In the event that less than all of the Senior Units represented by any
such Certificates are being acquired by the Partnership or any of its
Affiliates, new Certificates shall be issued representing the number of Senior
Units to remain Outstanding. (g) On and after the Senior Unit Redemption Date,
unless the Partnership or any of its Affiliates defaults in the payment in full
of the Senior Unit Redemption Price, all distributions on the Senior Units to be
purchased shall cease, and all rights associated with the Senior Units to be
purchased shall terminate other than the right to receive the Senior Unit
Redemption Price.
18 ARTICLE
GENERAL PROVISIONS
SectionAddresses and Notices. Any notice, demand, request, report or
proxy materials required or permitted to be given or made to a Partner or
Assignee under this Agreement shall be in writing and shall be deemed given or
made when delivered in person or when sent by first class United States mail or
by other means of written communication to the Partner or Assignee at the
address described below. Any notice, payment or report to be given or made to a
Partner or Assignee hereunder shall be deemed conclusively to have been given or
made, and the obligation to give such notice or report or to make such payment
shall be deemed conclusively to have been fully satisfied, upon sending of such
notice, payment or report to the Record Holder of such Unit at his address as
shown on the records of the Transfer Agent or as otherwise shown on the records
of the Partnership, regardless of any claim of any Person who may have an
interest in such Unit or the Partnership Interest of a General Partner by reason
of any assignment or otherwise. An affidavit or certificate of making of any
notice, payment or report in accordance with the provisions of this Section 18.1
executed by the General Partner, the Transfer Agent or the mailing organization
shall be prima facie evidence of the giving or making of such notice, payment or
report. If any notice, payment or report addressed to a Record Holder at the
address of such Record Holder appearing on the books and records of the Transfer
Agent or the Partnership is returned by the United States Post Office marked to
indicate that the United States Postal Service is unable to deliver it, such
notice, payment or report and any subsequent notices, payments and reports shall
be deemed to have been duly given or made without further mailing (until such
time as such Record Holder or another Person notifies the Transfer Agent or the
Partnership of a change in his address) if they are available for the Partner or
Assignee at the principal office of the Partnership for a period of one year
from the date of the giving or making of such notice, payment or report to the
other Partners and Assignees. Any notice to the Partnership shall be deemed
given if received by the General Partner at the principal office of the
Partnership designated pursuant to Section 1.3. The General Partner may rely and
shall be protected in relying on any notice or other document from a Partner,
Assignee or other Person if believed by it to be genuine.
SectionReferences. Except as specifically provided otherwise,
references to "Articles" and "Sections" are to Articles and Sections of this
Agreement.
SectionPronouns and Plurals. Whenever the context may require, any
pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and verbs
shall include the plural and vice versa.
SectionFurther Action. The parties shall execute and deliver all
documents, provide all information and take or refrain from taking action as may
be necessary or appropriate to achieve the purposes of this Agreement.
SectionBinding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their heirs, executors, administrators,
successors, legal representatives and permitted assigns.
SectionIntegration. This Agreement constitutes the entire agreement
among the parties hereto pertaining to the subject matter hereof and supersedes
all prior agreements and understandings pertaining thereto.
SectionCreditors. None of the provisions of this Agreement shall be for
the benefit of, or shall be enforceable by, any creditor of the Partnership.
SectionWaiver. No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof shall
constitute waiver of any such breach or any other covenant, duty, agreement or
condition.
SectionCounterparts. This Agreement may be executed in counterparts,
all of which together shall constitute an agreement binding on all the parties
hereto, notwithstanding that all such parties are not signatories to the
original or the same counterpart. Each party shall become bound by this
Agreement immediately upon affixing its signature hereto or, in the case of a
Person acquiring a Unit, upon accepting the certificate evidencing such Unit or
executing and delivering a Transfer Application as herein described,
independently of the signature of any other party.
SectionApplicable Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of Delaware, without regard to the
principles of conflicts of law.
SectionInvalidity of Provisions . If any provision of this Agreement is
or becomes invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not be affected thereby.
#1076119 v3 - PARTNERSHIP AGREEMENT WITH GP INTEREST CHANGE 61300 1516C
1
#1076119 v3 - PARTNERSHIP AGREEMENT WITH GP INTEREST CHANGE 61300 1516C
1
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
GENERAL PARTNER:
FERRELLGAS, INC.
By: /s/ Kevin T. Kelly
Name: Kevin T. Kelly
Title: Vice President and CFO
LIMITED PARTNERS:
All Limited Partners
now and hereafter
admitted as limited
partners of the
Partnership, pursuant
to Powers of Attorney
now and hereafter
executed in favor of,
and granted and
delivered to, the
General Partner.
By: FERRELLGAS, INC.
General
Partner, as
attorney-in-fact
for all
Limited
Partners
pursuant to
the Powers of
Attorney
granted
pursuant to
Section 1.4.
By: /s/ Kevin T. Kelly
Name: Kevin T. Kelly
Title: Vice President and CFO
EXHIBIT A
to the Second Amended and Restated Agreement of
Limited Partnership of
FERRELLGAS PARTNERS, L.P.
Certificate Evidencing Common Units
Representing Limited Partner Interests
FERRELLGAS PARTNERS, L.P.
No. Common Units
FERRELLGAS, INC., a Delaware corporation, as the General Partner of
FERRELLGAS PARTNERS, L.P., a Delaware limited partnership (the "Partnership"),
hereby certifies that (the "Holder") is the registered owner of Common Units
representing limited partner interests in the Partnership (the "Common Units")
transferable on the books of the Partnership, in person or by duly authorized
attorney, upon surrender of this Certificate properly endorsed and accompanied
by a properly executed application for transfer of the Common Units represented
by this Certificate. The rights, preferences and limitations of the Common Units
are set forth in, and this Certificate and the Common Units represented hereby
are issued and shall in all respects be subject to the terms and provisions of,
the Second Amended and Restated Agreement of Limited Partnership of FERRELLGAS
PARTNERS, L.P., as amended, supplemented or restated from time to time (the
"Partnership Agreement"). Copies of the Partnership Agreement are on file at,
and will be furnished without charge on delivery of written request to the
Partnership at, the principal office of the Partnership located at One Liberty
Plaza, Liberty, Missouri 64068. Capitalized terms used herein but not defined
shall have the meaning given them in the Partnership Agreement.
The Holder, by accepting this Certificate, is deemed to have (i)
requested admission as, and agreed to become, a Limited Partner and to have
agreed to comply with and be bound by and to have executed the Partnership
Agreement, (ii) represented and warranted that the Holder has all right, power
and authority and, if an individual, the capacity necessary to enter into the
Partnership Agreement, (iii) granted the powers of attorney provided for in the
Partnership Agreement and (iv) made the waivers and given the consents and
approvals contained in the Partnership Agreement.
This Certificate shall not be valid for any purpose unless it has been
countersigned and registered by the Transfer Agent and Registrar.
Dated:
Countersigned and Registered by: FERRELLGAS, INC.,
as General Partner
By:
Transfer Agent and Registrar President
By:
Secretary
Authorized Signature
[Reverse of Certificate]
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this Certificate, shall be construed as follows according to applicable laws
or regulations:
TEN COM- as tenants in common UNIF GIFT MIN ACT-
TEN ENT- as tenants by the entireties ................Custodian...............
JT TEN- as joint tenants with right of (Cust) (Minor)
survivorship and not as under Uniform Gifts to Minors
tenants in common Act.....................................
State
Additional abbreviations, though not in the above list,
may also be used.
ASSIGNMENT OF COMMON UNITS
in
FERRELLGAS PARTNERS, L.P.
IMPORTANT NOTICE REGARDING INVESTOR RESPONSIBILITIES
DUE TO TAX SHELTER STATUS OF FERRELLGAS PARTNERS, L.P.
You have acquired an interest in Ferrellgas Partners, L.P.,
One Liberty Plaza, Liberty, Missouri 64068, whose taxpayer identification number
is 43-1698480. The Internal Revenue Service has issued Ferrellgas Partners, L.P.
the following tax shelter registration number 94201000010:
YOU MUST REPORT THIS REGISTRATION NUMBER TO THE INTERNAL
REVENUE SERVICE IF YOU CLAIM ANY DEDUCTION, LOSS, CREDIT, OR OTHER TAX BENEFIT
OR REPORT ANY INCOME BY REASON OF YOUR INVESTMENT IN FERRELLGAS PARTNERS, L.P.
You must report the registration number as well as the name
and taxpayer identification number of Ferrellgas Partners, L.P. on Form 8271.
FORM 8271 MUST BE ATTACHED TO THE RETURN ON WHICH YOU CLAIM THE DEDUCTION, LOSS,
CREDIT, OR OTHER TAX BENEFIT OR REPORT ANY INCOME BY REASON OF YOUR INVESTMENT
IN FERRELLGAS PARTNERS, L.P.
If you transfer your interest in Ferrellgas Partners, L.P. to
another person, you are required by the Internal Revenue Service to keep a list
containing (a) that person's name, address and taxpayer identification number,
(b) the date on which you transferred the interest and (c) the name, address and
tax shelter registration number of Ferrellgas Partners, L.P. If you do not want
to keep such a list, you must (1) send the information specified above to the
Partnership, which will keep the list for this tax shelter, and (2) give a copy
of this notice to the person to whom you transfer your interest. Your failure to
comply with any of the above-described responsibilities could result in the
imposition of a penalty under Section 6707(b) or 6708(a) of the Internal Revenue
Code of 1986, as amended, unless such failure is shown to be due to reasonable
cause.
ISSUANCE OF A REGISTRATION NUMBER DOES NOT INDICATE THAT THIS
INVESTMENT OR THE CLAIMED TAX BENEFITS HAVE BEEN REVIEWED, EXAMINED, OR APPROVED
BY THE INTERNAL REVENUE SERVICE.
FOR VALUE RECEIVED,
hereby assigns, conveys, sells and transfers unto
(Please
print
or
typewrite
name
and
address
of
Assignee)
(Please
insert
Social
Security
or
other
identifying
number
of
Assignee)
Common Units representing limited partner interests
evidenced by this Certificate, subject to the Partnership Agreement, and does
hereby irrevocably constitute and appoint as its attorney-in-fact with full
power of substitution to transfer the same on the books of Ferrellgas Partners,
L.P.
Date: NOTE: The signature to any endorsement hereon must
correspond with the name as written upon the face of
this Certificate in every particular, without
alteration, enlargement or change.
SIGNATURE(S) MUST BE GUARANTEED BY A MEMBER FIRM OF THE
NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. OR BY A
COMMERCIAL BANK OR TRUST COMPANY (Signature)
(Signature)
SIGNATURE(S) GUARANTEED
No transfer of the Common Units evidenced hereby will be registered on
the books of the Partnership, unless the Certificate evidencing the Common Units
to be transferred is surrendered for registration or transfer and an Application
for Transfer of Common Units has been executed by a transferee either (a) on the
form set forth below or (b) on a separate application that the Partnership will
furnish on request without charge. A transferor of the Common Units shall have
no duty to the transferee with respect to execution of the transfer application
in order for such transferee to obtain registration of the transfer of the
Common Units.
APPLICATION FOR TRANSFER OF COMMON UNITS
The undersigned ("Assignee") hereby applies for transfer to the name of
the Assignee of the Common Units evidenced hereby.
The Assignee (a) requests admission as a Substituted Limited Partner
and agrees to comply with and be bound by, and hereby executes, the Second
Amended and Restated Agreement of Limited Partnership of Ferrellgas Partners,
L.P. (the "Partnership"), as amended, supplemented or restated to the date
hereof (the "Partnership Agreement"), (b) represents and warrants that the
Assignee has all right, power and authority and, if an individual, the capacity
necessary to enter into the Partnership Agreement, (c) grants the powers of
attorney provided for in the Partnership Agreement and (d) makes the waivers and
gives the consents and approvals contained in the Partnership Agreement.
Capitalized terms not defined herein have the meanings assigned to such
terms in the Partnership Agreement.
Date:
Signature of Assignee
Social Security or other identifying number of Assignee Name and Address of
Assignee
Purchase Price
including commissions, if any
Type of Entity (check one)
Individual Partnership Corporation
Trust Other (specify)
Nationality (Check One):
U.S. Citizen, Resident or Domestic Entity
Foreign Corporation, or Non-resident alien
If the U.S. Citizen, Resident or Domestic Entity box is checked, the
following certification must be completed.
Under Section 1445(e) of the Internal Revenue Code of 1986, as amended (the
"Code"), the Partnership must withhold tax with respect to certain transfers of
property if a holder of an interest in the Partnership is a foreign person. To
inform the Partnership that no withholding is required with respect to the
undersigned interest holder's interest in it, the undersigned hereby certifies
the following (or, if applicable, certifies the following on behalf of the
interest holder).
Complete Either A or B:
A. Individual Interest Holder
1. I am not a non-resident alien for purposes of U.S. income taxation.
2. My U.S. taxpayer identifying number (Social Security Number) is.
3. My home address is
.
B. Partnership, Corporate or Other Interest-Holder
1. is not a
(Name of Interest-Holder)
foreign corporation, foreign partnership, foreign trust or foreign
estate (as those terms are defined in the Code and Treasury
Regulations).
2. The interest-holder's U.S. employer identification number is
.
3. The interest-holder's office address and place of incorporation
(if applicable) is
The interest-holder agrees to notify the Partnership within 60 days of the
date the interest-holder becomes a foreign person.
The interest-holder understands that this certificate may be disclosed to
the Internal Revenue Service by the Partnership and that any false statement
contained herein could be punishable by fine, imprisonment or both.
Under penalties of perjury, I declare that I have examined this
certification and to the best of my knowledge and belief it is true, correct and
complete and, if applicable, I further declare that I have authority to sign
this document on behalf of
(Name of Interest-Holder)
Signature and Date
Title (if applicable)
Note: If the Assignee is a broker, dealer, bank, trust company, clearing
corporation, other nominee holder or an agent of any of the foregoing, and is
holding for the account of any other person, this application should be
completed by an officer thereof or, in the case of a broker or dealer, by a
registered representative who is a member of a registered national securities
exchange or a member of the National Association of Securities Dealers, Inc.,
or, in the case of any other nominee holder, a person performing a similar
function. If the Assignee is a broker, dealer, bank trust company, clearing
corporation, other nominee owner or an agent of any of the foregoing, the above
certification as to any person for whom the Assignee will hold the Common Units
shall be made to the best of the Assignee's knowledge.
EXHIBIT B
to the Agreement of
Limited Partnership of
FERRELLGAS PARTNERS, L.P.
Certificate Evidencing Senior Units
Representing Limited Partner Interests
FERRELLGAS PARTNERS, L.P.
No.________ Senior Units
FERRELLGAS, INC., a Delaware corporation, as the General Partner of
FERRELLGAS PARTNERS, L.P., a Delaware limited partnership (the "Partnership"),
hereby certifies that ____________________ (the "Holder") is the registered
owner of _____ Senior Units representing limited partner interests in the
Partnership (the "Senior Units") transferable on the books of the Partnership,
in person or by duly authorized attorney, upon surrender of this Certificate
properly endorsed and accompanied by a properly executed application for
transfer of the Senior Units represented by this Certificate. The rights,
preferences and limitations of the Senior Units are set forth in, and this
Certificate and the Senior Units represented hereby are issued and shall in all
respects be subject to the terms and provisions of, the Second Amended and
Restated Agreement of Limited Partnership of FERRELLGAS PARTNERS, L.P., as
amended, supplemented or restated from time to time (the "Partnership
Agreement"). Copies of the Partnership Agreement are on file at, and will be
furnished without charge on delivery of written request to the Partnership at,
the principal office of the Partnership located at One Liberty Plaza, Liberty,
Missouri 64068. Capitalized terms used herein but not defined shall have the
meaning given them in the Partnership Agreement.
The Holder, by accepting this Certificate, is deemed to have (i) requested
admission as, and agreed to become, a Limited Partner and to have agreed to
comply with and be bound by and to have executed the Partnership Agreement, (ii)
represented and warranted that the Holder has all right, power and authority
and, if an individual, the capacity necessary to enter into the Partnership
Agreement, (iii) granted the powers of attorney provided for in the Partnership
Agreement and (iv) made the waivers and given the consents and approvals
contained in the Partnership Agreement.
Dated:
FERRELLGAS, INC.,
as General Partner
By:
President
By:
Secretary
[Reverse of Certificate]
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this Certificate, shall be construed as follows according to applicable laws
or regulations:
TEN COM- as tenants in common UNIF GIFT MIN ACT-
TEN ENT- as tenants by the entireties ................Custodian...............
JT TEN- as joint tenants with right of (Cust) (Minor)
survivorship and not as under Uniform Gifts to Minors
tenants in common Act.....................................
State
Additional abbreviations, though not in the above list,
may also be used.
ASSIGNMENT OF SENIOR UNITS
in
FERRELLGAS PARTNERS, L.P.
IMPORTANT NOTICE REGARDING INVESTOR RESPONSIBILITIES
DUE TO TAX SHELTER STATUS OF FERRELLGAS PARTNERS, L.P.
You have acquired an interest in Ferrellgas Partners, L.P.,
One Liberty Plaza, Liberty, Missouri 64068, whose taxpayer identification number
is 43-1698480. The Internal Revenue Service has issued Ferrellgas Partners, L.P.
the following tax shelter registration number 94201000010:
YOU MUST REPORT THIS REGISTRATION NUMBER TO THE INTERNAL
REVENUE SERVICE IF YOU CLAIM ANY DEDUCTION, LOSS, CREDIT, OR OTHER TAX BENEFIT
OR REPORT ANY INCOME BY REASON OF YOUR INVESTMENT IN FERRELLGAS PARTNERS, L.P.
You must report the registration number as well as the name
and taxpayer identification number of Ferrellgas Partners, L.P. on Form 8271.
FORM 8271 MUST BE ATTACHED TO THE RETURN ON WHICH YOU CLAIM THE DEDUCTION, LOSS,
CREDIT, OR OTHER TAX BENEFIT OR REPORT ANY INCOME BY REASON OF YOUR INVESTMENT
IN FERRELLGAS PARTNERS, L.P.
If you transfer your interest in Ferrellgas Partners, L.P. to
another person, you are required by the Internal Revenue Service to keep a list
containing (a) that person's name, address and taxpayer identification number,
(b) the date on which you transferred the interest and (c) the name, address and
tax shelter registration number of Ferrellgas Partners, L.P. If you do not want
to keep such a list, you must (1) send the information specified above to the
Partnership, which will keep the list for this tax shelter, and (2) give a copy
of this notice to the person to whom you transfer your interest. Your failure to
comply with any of the above-described responsibilities could result in the
imposition of a penalty under Section 6707(b) or 6708(a) of the Internal Revenue
Code of 1986, as amended, unless such failure is shown to be due to reasonable
cause.
ISSUANCE OF A REGISTRATION NUMBER DOES NOT INDICATE THAT THIS
INVESTMENT OR THE CLAIMED TAX BENEFITS HAVE BEEN REVIEWED, EXAMINED, OR APPROVED
BY THE INTERNAL REVENUE SERVICE.
FOR VALUE RECEIVED,
hereby assigns, conveys, sells and transfers unto
(Please print or typewrite name
(Please insert Social Security or other identifying
and address of Assignee) number of Assignee)
Senior Units representing limited partner interests
evidenced by this Certificate, subject to the Partnership Agreement, and does
hereby irrevocably constitute and appoint as its attorney-in-fact with full
power of substitution to transfer the same on the books of Ferrellgas Partners,
L.P.
Date:
NOTE: The signature to any endorsement hereon must correspond
with the name as written upon the face of this Certificate in
every particular, without alteration, enlargement or change.
(Signature)
No transfer of the Senior Units evidenced hereby will be registered on
the books of the Partnership, unless the Certificate evidencing the Senior Units
to be transferred is surrendered for registration or transfer and an Application
for Transfer of Senior Units has been executed by a transferee either (a) on the
form set forth below or (b) on a separate application that the Partnership will
furnish on request without charge. A transferor of the Senior Units shall have
no duty to the transferee with respect to execution of the transfer application
in order for such transferee to obtain registration of the transfer of the
Senior Units.
APPLICATION FOR TRANSFER OF SENIOR UNITS
The undersigned ("Assignee") hereby applies for transfer to the name of
the Assignee of the Senior Units evidenced hereby.
The Assignee (a) requests admission as a Substituted Limited Partner
and agrees to comply with and be bound by, and hereby executes, the Second
Amended and Restated Agreement of Limited Partnership of Ferrellgas Partners,
L.P. (the "Partnership"), as amended, supplemented or restated to the date
hereof (the "Partnership Agreement"), (b) represents and warrants that the
Assignee has all right, power and authority and, if an individual, the capacity
necessary to enter into the Partnership Agreement, (c) grants the powers of
attorney provided for in the Partnership Agreement and (d) makes the waivers and
gives the consents and approvals contained in the Partnership Agreement.
Capitalized terms not defined herein have the meanings assigned to such
terms in the Partnership Agreement.
Date: Signature of Assignee
Social Security or other identifying Name and Address of Assignee
number of Assignee
Purchase Price
including commissions, if any
Type of Entity (check one)
Individual Partnership Corporation
Trust Other (specify)
Nationality (Check One):
U.S. Citizen, Resident or Domestic Entity
Foreign Corporation, or Non-resident alien
If the U.S. Citizen, Resident or Domestic Entity box is checked, the
following certification must be completed.
Under Section 1445(e) of the Internal Revenue Code of 1986, as amended (the
"Code"), the Partnership must withhold tax with respect to certain transfers of
property if a holder of an interest in the Partnership is a foreign person. To
inform the Partnership that no withholding is required with respect to the
undersigned interest holder's interest in it, the undersigned hereby certifies
the following (or, if applicable, certifies the following on behalf of the
interest holder).
Complete Either A or B:
A. Individual Interest Holder
1. I am not a non-resident alien for purposes of U.S. income taxation.
2. My U.S. taxpayer identifying number (Social Security Number) is.
3. My home address is
.
B. Partnership, Corporate or Other Interest-Holder
1.
(Name of Interest-Holder)
foreign corporation, foreign partnership, foreign trust or foreign
estate (as those terms are defined in the Code and Treasury
Regulations).
2. The interest-holder's U.S. employer identification number is
.
3. The interest-holder's office address and place of incorporation
(if applicable) is
The interest-holder agrees to notify the Partnership within 60 days of the
date the interest-holder becomes a foreign person.
The interest-holder understands that this certificate may be disclosed to
the Internal Revenue Service by the Partnership and that any false statement
contained herein could be punishable by fine, imprisonment or both.
Under penalties of perjury, I declare that I have examined this
certification and to the best of my knowledge and belief it is true, correct and
complete and, if applicable, I further declare that I have authority to sign
this document on behalf of
(Name of Interest-Holder)
Signature and Date
Title (if applicable)
Note: If the Assignee is a broker, dealer, bank, trust company, clearing
corporation, other nominee holder or an agent of any of the foregoing, and is
holding for the account of any other person, this application should be
completed by an officer thereof or, in the case of a broker or dealer, by a
registered representative who is a member of a registered national securities
exchange or a member of the National Association of Securities Dealers, Inc.,
or, in the case of any other nominee holder, a person performing a similar
function. If the Assignee is a broker, dealer, bank trust company, clearing
corporation, other nominee owner or an agent of any of the foregoing, the above
certification as to any person for whom the Assignee will hold the Senior Units
shall be made to the best of the Assignee's knowledge.
Form of Election to Convert
To Ferrellgas Partners, L.P.
The undersigned owner of the Senior Units evidenced by this Certificate
hereby exercises the option to convert all such Senior Units, or the number of
Senior Units below designated, into Common Units of Ferrellgas Partners, L.P. in
accordance with the terms of the Partnership Agreement referred to in this
Certificate, and directs that the Common Units issuable and deliverable upon
conversion, together with any check in payment for fractional shares, be issued
with any check in payment for fractional shares, be issued in the name of and
delivered to the undersigned registered Holder hereof, unless a different name
has been indicated in the assignment below. If Common Units are to be issued in
the name of person other than the undersigned, the undersigned will pay all
transfer taxes payable with respect thereto. Any amount required to be paid by
the undersigned on account of accumulated and undistributed distributions
accompanies this Certificate.
Dated:
Number of Senior Units to be converted:
Signature (for conversion only)
If Common Units are to be issued and registered
otherwise than to the registered Holder named above,
please print or typewrite name and address, including
zip code, and social security or other taxpayer
identification number.
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of April 18, 2000
among
FERRELLGAS, L.P.,
FERRELLGAS, INC.,
THE FINANCIAL INSTITUTIONS PARTY HERETO
and
BANK OF AMERICA, N.A.,
as Administrative Agent and Documentation Agent
Arranged By
BANC OF AMERICA SECURITIES LLC
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
This THIRD AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of
April 18, 2000, among FERRELLGAS, L.P., a Delaware limited partnership (the
"Borrower"), FERRELLGAS, INC., a Delaware corporation and the sole general
partner of the Borrower (the "General Partner"), the several financial
institutions from time to time party to this Agreement (collectively, the
"Banks"; individually, a "Bank") and BANK OF AMERICA, N.A. ("BofA"), as agent
for the Banks (in such capacity, the "Administrative Agent" and as documentation
agent (in such capacity, "Documentation Agent") under this Agreement.
R E C I T A L S
WHEREAS, the Borrower, the General Partner, the Banks and the
Administrative Agent are parties to the Existing Credit Agreement (as defined
below), pursuant to which the Banks have (a) made revolving credit loans to the
Borrower pursuant to the Facility A Commitments under the Existing Credit
Agreement solely for working capital purposes in an aggregate amount of up to
$40,000,000, (b) made revolving credit loans to the Borrower and have issued or
participated in letters of credit for the account of the Borrower pursuant to
the Facility B Commitments under the Existing Credit Agreement, in each case
under this clause (b) for working capital and general partnership purposes in an
aggregate amount of up to $50,000,000, and (c) made revolving credit loans to
the Borrower pursuant to the Facility C Commitments under the Existing Credit
Agreement for working capital, Acquisitions and general partnership purposes in
an aggregate amount of up to $55,000,000.
WHEREAS, the Borrower has requested that (i) the Facility A Commitments
and Facility A Revolving Loans outstanding under the Existing Credit Agreement
be continued as Facility A Commitments and Facility A Revolving Loans under this
Agreement, the proceeds of which are to be used by the Borrower solely for
working capital purposes, (ii) the Facility B Commitments, Facility B Revolving
Loans, Facility C Commitments, Facility C Revolving Loans and Existing Letters
of Credit (as defined below) outstanding under the Existing Credit Agreement be
continued as or converted into (as the case may be) Facility B Commitments,
Facility B Revolving Loans and Letters of Credit under this Agreement, the
proceeds of which are to be used by the Borrower for Acquisitions, capital
expenditures, working capital and general partnership purposes and (iii) the
Existing Credit Agreement otherwise be amended and restated in its entirety as
set forth below in this Agreement; and
WHEREAS, the Banks are willing, on and subject to the terms and
conditions set forth in this Agreement, to amend and restate the terms of the
Existing Credit Agreement and to extend credit under this Agreement as more
particularly hereinafter set forth.
ACCORDINGLY, the parties hereto agree to amend and restate the Existing
Credit Agreement as follows:
ARTICLE I
DEFINITIONS
1.01 Certain Defined Terms. The following terms have the following
meanings: ---------------------
"1994 Fixed Rate Senior Notes" means the 10% Series A Fixed
Rate Senior Notes due 2001 that were issued by the Borrower and
Ferrellgas Finance Corp. pursuant to that certain Indenture dated as of
July 5, 1994 among the Borrower, Ferrellgas Finance Corp. and Norwest
Bank Minnesota, National Association. All of the 1994 Fixed Rate Senior
Notes were redeemed prior to the Restatement Effective Date.
"1996 Indenture" means the Indenture dated as of April 26,
1996, among the MLP, Ferrellgas Partners Finance Corp. and American
Bank National Association, pursuant to which the MLP Senior Notes were
issued, as it may be amended, modified or supplemented from time to
time.
"1998 Fixed Rate Senior Notes" means, collectively, (a) the
$109,000,000 6.99% Senior Notes, Series A, due August 1, 2005, (b) the
$37,000,000 7.08% Senior Notes, Series B, due August 1, 2006, (c) the
$52,000,000 7.12% Senior Notes, Series C, due 2008, (d) the $82,000,000
7.24% Senior Notes, Series D, due August 1, 2010 and (e) the
$70,000,000 7.42% Senior Notes, Series E, due August 1, 2013, in each
case issued by the Borrower pursuant to the 1998 Note Purchase
Agreement.
"1998 Note Purchase Agreement" means the Note Purchase
Agreement, dated as of July 1, 1998, among the Borrower and the
Purchasers named therein, pursuant to which the 1998 Fixed Rate Senior
Notes were issued, as it may be amended, modified or supplemented from
time to time.
"2000 Note Purchase Agreement" means the Note Purchase
Agreement, dated as of February 1, 2000, among the Borrower and the
Purchasers named therein, pursuant to which the 2000 Notes were issued,
as it may be amended, modified or supplemented from time to time.
"2000 Notes" means, collectively, (a) the $21,000,000 8.68%
Senior Notes, Series A, due August 1, 2006, (b) the $90,000,000 8.78%
Senior Notes, Series B, due August 1, 2007 and (c) the $73,000,000
8.87% Senior Notes, Series C, due August 1, 2009, in each case issued
by the Borrower pursuant to the 2000 Note Purchase Agreement.
"Accounts Receivable Securitization" shall mean a financing
arrangement involving the transfer or sale of accounts receivable of
the Borrower in the ordinary course of business through one or more
SPEs, the terms of which arrangement do not impose (a) any recourse or
repurchase obligations upon the Borrower or any Affiliate of the
Borrower (other than any such SPE) except to the extent of the breach
of a representation or warranty by the Borrower in connection therewith
or (b) any negative pledge or Lien on any accounts receivable not
actually transferred to any such SPE in connection with such
arrangement.
"Acquired Debt" means, with respect to any specified Person,
(a) 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 (b) Indebtedness encumbering
any asset acquired by such specified Person.
"Acquisition" means any transaction or series of related
transactions for the purpose of or resulting, directly or indirectly,
in (a) the acquisition of all or substantially all of the assets of a
Person, or of any business or division of a Person, (b) the acquisition
of in excess of 50% of the capital stock, partnership interests or
equity of any Person or otherwise causing any Person, to become a
Subsidiary of the acquiring Person, or (c) a merger or consolidation or
any other combination with another Person (other than a Person that is
a Subsidiary of the acquiring Person) provided that the Borrower or the
Subsidiary of the acquiring entity is the surviving Person.
"Administrative Agent" has the meaning specified in the
introductory clause hereto. References to the "Administrative Agent"
shall include BofA in its capacity as agent for the Banks under this
Agreement, and any successor agent arising under Section 10.09.
"Administrative Agent's Payment Office" means the address for
payments set forth on Schedule 11.02 hereto in relation to the
Administrative Agent, or such other address as the Administrative Agent
may from time to time specify.
"Affiliate" means, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person. A Person shall be deemed to control
another Person if the controlling Person possesses, directly or
indirectly, the power to direct or cause the direction of the
management and policies of the other Person, whether through the
ownership of voting securities, by contract, or otherwise. No Bank
shall be deemed an Affiliate of the Borrower by reason of the
relationship established and governed by this Agreement.
"Agent-Related Persons" means BofA and any successor
Administrative Agent arising under Section 10.09, together with their
respective Affiliates (including, in the case of BofA, the Arranger),
and the officers, directors, employees, agents and attorneys-in-fact of
such Persons and Affiliates.
"Agreement" means this Credit Agreement.
"Applicable Margin" means, for each Type of Loan, effective as
of the first day of each fiscal quarter, the percentage per annum set
forth below opposite the Level of the Pricing Ratio applicable to such
fiscal quarter as set forth herein.
Pricing Ratio Base Rate Loans Eurodollar Rate Loans
------------- --------------- ---------------------
Level 1 0.25% 1.25%
Level 2 0.50% 1.50%
Level 3 0.75% 1.75%
Level 4 1.00% 2.00%
Level 5 1.25% 2.25%
"Arranger" means Banc of America Securities LLC, a
wholly-owned subsidiary of BankAmerica Corporation. The Arranger is a
registered broker-dealer and permitted to underwrite and deal in
certain Ineligible Securities.
"Asset Sale" has the meaning specified in Section 8.02.
"Assignee" has the meaning specified in Section 11.08(a).
"Attorney Costs" means and includes all reasonable and
itemized fees and disbursements of any law firm or other external
counsel, the allocated cost of internal legal services and all
disbursements of internal counsel.
"Attributable Debt" means, in respect of a sale and leaseback
arrangement of any property, as at the time of determination, the
present value (calculated using a discount rate equal to 7.16%) of the
total obligations of the lessee for rental payments during the
remaining term of the lease included in such arrangement (including any
period for which such lease has been extended).
"Available Cash" has the meaning given to such term in the
Partnership Agreement, as amended to October 14, 1998; provided, that
(a) Available Cash shall not include any amount of Net Proceeds of
Asset Sales until the 270-day period following the consummation of the
applicable Asset Sale, (b) investments, loans and other contributions
to a Non-Recourse Subsidiary, Unrestricted Subsidiary or Joint Venture
are to be treated as "cash disbursements" when made for purposes of
determining the amount of Available Cash and (c) cash receipts of a
Non-Recourse Subsidiary, Unrestricted Subsidiary or Joint Venture shall
not constitute cash receipts of the Borrower for purposes of
determining the amount of Available Cash until cash is actually
distributed by such Non-Recourse Subsidiary, Unrestricted Subsidiary or
Joint Venture to the Borrower or a Restricted Subsidiary.
"Bank" has the meaning specified in the introductory clause to
this Agreement. References to the "Banks" shall include BofA and any
other Bank designated by the Administrative Agent as an Issuing Bank
from time to time, including in their respective capacities as Issuing
Banks; for purposes of clarification only, to the extent that an
Issuing Bank may have any rights or obligations in addition to those of
a Bank due to its status as an Issuing Bank, its status as such will be
specifically referenced.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978, as
amended (11 U.S.C. ss.101, et seq.).
"Base Rate" means, for any day, the higher of: (a) 0.50% per
annum above the Federal Funds Rate in effect on such day; and (b) the
rate of interest in effect for such day as publicly announced from time
to time by BofA in San Francisco, California, as its "reference rate."
(The "reference rate" is a rate set by BofA based upon various factors
including BofA's costs and desired return, general economic conditions
and other factors, and is used as a reference point for pricing some
loans, which may be priced at, above, or below such announced rate.)
Any change in the reference rate announced by BofA shall take effect at
the opening of business on the day specified in the public announcement
of such change or if no day is so specified, on the day of the
announcement.
"Base Rate Loan" means a Loan that bears interest based on the
Base Rate.
"BofA" has the meaning specified in the introductory clause hereto.
"Borrower" has the meaning specified in the introductory clause to this
Agreement.
"Borrowing" means a borrowing under this Agreement consisting
of Loans of the same Type made to the Borrower on the same day by the
Banks (or, in the case of Swingline Loans, by BofA) and, for Eurodollar
Rate Loans, having the same Interest Period, in either case under
Article II.
"Borrowing Date" means any date on which a Borrowing occurs.
"Business Day" means any day other than a Saturday, Sunday or
other day on which commercial banks in New York or San Francisco are
authorized or required by law to close and, if the applicable Business
Day relates to any Eurodollar Rate Loan, means such a day on which
dealings are carried on in the London interbank dollar market.
"Capital Adequacy Regulation" means any guideline, request or
directive of any central bank or other Governmental Authority, or any
other law, rule or regulation, whether or not having the force of law,
in each case, regarding capital adequacy of any bank or of any
corporation controlling a bank.
"Capital Interests" means, (a) with respect to any
corporation, any and all shares, participations, rights or other
equivalent interests in the capital of the corporation, (b) with
respect to any partnership or limited liability company, any and all
partnership interests (whether general or limited) or limited liability
company interests, respectively, and other interests or participations
that confer on a Person the right to receive a share of the profits and
losses of, or distributions of assets of, such partnership or limited
liability company, and (c) with respect to any other Person, ownership
interests of any type in such Person.
"Capital Lease Obligation" means, at the time any
determination thereof is to be made, the amount of the liability in
respect of a capital lease that would at such time be so required to be
capitalized on the balance sheet in accordance with GAAP.
"Cash Collateralize" means to pledge and deposit with or
deliver to the Administrative Agent, for the benefit of the
Administrative Agent, the Issuing Banks and the Banks, as collateral
for the L/C Obligations or any outstanding Loan, cash or deposit
account balances pursuant to documentation in form and substance
satisfactory to the Administrative Agent (which documents are hereby
consented to by the Banks). Derivatives of such term shall have
corresponding meaning. The Borrower hereby grants to the Administrative
Agent, for the benefit of the Administrative Agent, the Issuing Banks
and the Banks, a security interest in all such cash and deposit account
balances. Cash collateral shall be maintained in blocked, non-interest
bearing deposit accounts at BofA. Such collateral may be invested from
time to time in short-term money market instruments and other
investments with the consent of the Administrative Agent and the
Majority Banks (which consent may be given or withheld in their sole
and absolute discretion) provided that the Administrative Agent, the
Issuing Banks and the Banks shall at all times have a first priority
perfected security interest in such collateral and the proceeds
thereof.
"Cash Equivalents" means (a) United States dollars, (b)
securities issued or directly and fully guaranteed or insured by the
United States government or any agency or instrumentality thereof
having maturities of not more than eighteen months from the date of
acquisition, (c) certificates of deposit and eurodollar time deposits
with maturities of six months or less from the date of acquisition,
bankers' acceptances with maturities not exceeding six months and
overnight bank deposits, in each case with any Bank or with any other
domestic commercial bank having capital and surplus in excess of $500
million and a Keefe Bank Watch Rating of "B" or better, (d) repurchase
obligations with a term of not more than seven days for underlying
securities of the types described in clauses (b) and (c) entered into
with any financial institution meeting the qualifications specified in
clause (c) above, (e) commercial paper or direct obligations of a
Person, provided such Person has publicly outstanding debt having the
highest short-term rating obtainable from Moody's Investors Service,
Inc. or Standard & Poor's Ratings Services and provided further that
such commercial paper or direct obligation matures within 270 days
after the date of acquisition, and (f) investments in money market
funds all of whose assets consist of securities of the types described
in the foregoing clauses (a) through (e).
"Change of Control" means (a) the sale, lease, conveyance or
other disposition of all or substantially all of the Borrower's assets
to any Person or group (as such term is used in Section 13(d)(3) of the
Exchange Act) other than James E. Ferrell, the Related Parties and any
Person of which James E. Ferrell and the Related Parties beneficially
own in the aggregate 51% or more of the voting Capital Interests (or if
such Person is a partnership, 51% or more of the general partner
interests), (b) the liquidation or dissolution of the Borrower or the
General Partner, (c) the occurrence of any transaction, the result of
which is that James E. Ferrell and the Related Parties beneficially own
in the aggregate, directly or indirectly, less than 51% of the total
voting power entitled to vote for the election of directors of the
General Partner and (d) the occurrence of any transaction, the result
of which is that the General Partner is no longer the sole general
partner of the Borrower.
"Class" means, with respect to any Loan, whether such Loan is
a Facility A Revolving Loan, a Facility B Revolving Loan or a Swingline
Loan.
"Code" means the Internal Revenue Code of 1986, as amended,
and regulations promulgated thereunder.
"Commercial Letters of Credit" means commercial documentary
letters of credit issued by an Issuing Bank pursuant to Article III.
"Commercial Letter of Credit Risk Participation Percentage"
means, as of any date and based upon the Level of the Pricing Ratio on
such date, the percentage per annum set forth below opposite such
Level:
Commercial Letter of Credit Risk
Pricing Ratio Participation Percentage
Level 1 0.425%
Level 2 0.500%
Level 3 0.575%
Level 4 0.650%
Level 5 0.725%
"Commitment Fee Rate" means, as of any date and based upon the
Level of the Pricing Ratio on such date, the percentage per annum set
forth below opposite such Level:
Pricing Ratio Commitment Fee Rate
------------- -------------------
Level 1 0.275%
Level 2 0.325%
Level 3 0.375%
Level 4 0.425%
Level 5 0.500%
Notwithstanding the foregoing, each of the Commitment Fee Rates
specified above shall be increased by 0.125% per annum for each day on
which the Effective Amount of the Revolving Loans of the Banks and the
L/C Obligations shall be less than 33% of the aggregate amount of the
Revolving Loan Commitments of the Banks on such day.
"Compliance Certificate" means a certificate signed by a
Responsible Officer of the Borrower substantially in the form of
Exhibit C, demonstrating compliance with the covenants contained in
this Agreement, including Sections 7.12, 7.13 and 8.12 and the 30 day
clean-up period contained in Section 2.01(a)(ii).
"Consolidated Cash Flow" means, with respect to the Borrower
and the Restricted Subsidiaries for any period, the Consolidated Net
Income for such period, plus (a) an amount equal to any extraordinary
loss plus any net loss realized in connection with an asset sale, to
the extent such losses were deducted in computing Consolidated Net
Income, plus (b) provision for taxes based on income or profits of the
Borrower and the Restricted Subsidiaries for such period, to the extent
such provision for taxes was deducted in computing Consolidated Net
Income, plus (c) Consolidated Interest Expense for such period, whether
paid or accrued (including amortization of original issue discount,
non-cash interest payments and the interest component of any payments
associated with Capital Lease Obligations and net payments (if any)
pursuant to Hedging Obligations), to the extent such expense was
deducted in computing Consolidated Net Income, plus (d) depreciation
and amortization (including amortization of goodwill and other
intangibles but excluding amortization of prepaid cash expenses that
were paid in a prior period) of the Borrower and the Restricted
Subsidiaries for such period, to the extent such depreciation and
amortization were deducted in computing Consolidated Net Income, plus
(e) non-cash employee compensation expenses of the Borrower and the
Restricted Subsidiaries for such period, plus (f) the Synthetic Lease
Principal Component of the Borrower and the Restricted Subsidiaries for
such period; in each case, for such period without duplication on a
consolidated basis and determined in accordance with GAAP.
"Consolidated Interest Expense" means, with respect to the
Borrower and the Restricted Subsidiaries for any fiscal period, on a
consolidated basis, the sum of (a) all interest, fees (including Letter
of Credit fees), charges and related expenses paid or payable (without
duplication) by the Borrower and the Restricted Subsidiaries for that
fiscal period to the Banks hereunder or to any other lender in
connection with borrowed money or the deferred purchase price of assets
that are considered "interest expense" under GAAP, plus (b) the portion
of rent paid or payable (without duplication) by the Borrower and the
Restricted Subsidiaries for that fiscal period under Capital Lease
Obligations that should be treated as interest in accordance with
Financial Accounting Standards Board Statement No. 13, on a
consolidated basis, plus (c) the Synthetic Lease Interest Component of
the Borrower and the Restricted Subsidiaries for that fiscal period.
"Consolidated Net Income" means, with respect to the Borrower
and the Restricted Subsidiaries for any period, the aggregate of the
Net Income of the Borrower and the Restricted Subsidiaries for such
period, on a consolidated basis, determined in accordance with GAAP;
provided, that (a) the Net Income of any Person that is not a
Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of
dividends or distributions paid to the Borrower or a Wholly-Owned
Subsidiary of the Borrower, (b) the Net Income of any Person that is a
Restricted Subsidiary (other than a Wholly-Owned Subsidiary) shall be
included only to the extent of the amount of dividends or distributions
paid to the Borrower or a Wholly-Owned Subsidiary of the Borrower, (c)
the Net Income of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition shall
be excluded except to the extent otherwise includable under clause (a)
above and (d) the cumulative effect of a change in accounting
principles shall be excluded.
"Consolidated Net Worth" means, with respect to the Borrower
and the Restricted Subsidiaries as of any date, the sum of (a) the
consolidated equity of the common stockholders or partners of the
Borrower and the Restricted Subsidiaries as of such date, plus (b) the
respective amounts reported on the balance sheet of the Borrower and
the Restricted Subsidiaries as of such date with respect to any series
of preferred stock (other than Disqualified Interests) that by its
terms is not entitled to the payment of dividends unless such dividends
may be declared and paid only out of net earnings in respect of the
year of such declaration and payment, but only to the extent of any
cash received by the Borrower and the Restricted Subsidiaries upon
issuance of such preferred stock, less (x) all write-ups (other than
write-ups resulting from foreign currency translations and write-ups of
tangible assets of a going concern business made within 12 months after
the acquisition of such business) subsequent to the Restatement
Effective Date in the book value of any asset owned by the Borrower and
the Restricted Subsidiaries, (y) all Investments as of such date in
unconsolidated Subsidiaries and in Persons that are not Restricted
Subsidiaries (except, in each case, Permitted Investments), and (z) all
unamortized debt discount and expense and unamortized deferred charges
as of such date, all of the foregoing determined in accordance with
GAAP.
"Contingent Obligation" means, as to any Person, any direct or
indirect liability of that Person, whether or not contingent, with or
without recourse: (a) with respect to any Indebtedness, lease,
dividend, distribution, letter of credit or other obligation (the
"primary obligations") of another Person (the "primary obligor"),
including any obligation of that Person (i) to purchase, repurchase or
otherwise acquire such primary obligations or any security therefor,
(ii) to advance or provide funds for the payment or discharge of any
such primary obligation, or to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth
or solvency or any balance sheet item, level of income or financial
condition of the primary obligor, (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor to
make payment of such primary obligation, or (iv) otherwise to assure or
hold harmless the holder of any such primary obligation against loss in
respect thereof (each, a "Guaranty Obligation"); (b) with respect to
any Surety Instrument (other than any Letter of Credit) issued for the
account of that Person or as to which that Person is otherwise liable
for reimbursement of drawings or payments; (c) to purchase any
materials, supplies or other property from, or to obtain the services
of, another Person if the relevant contract or other related document
or obligation requires that payment for such materials, supplies or
other property, or for such services, shall be made regardless of
whether delivery of such materials, supplies or other property is ever
made or tendered, or such services are ever performed or tendered; or
(d) in respect of any Hedging Obligation. The amount of any Contingent
Obligation shall, in the case of Guaranty Obligations, be deemed equal
to the stated or determinable amount of the primary obligation in
respect of which such Guaranty Obligation is made or, if not stated or
if indeterminable, the maximum reasonably anticipated liability in
respect thereof, and in the case of other Contingent Obligations, shall
be equal to the maximum reasonably anticipated liability in respect
thereof.
"Contractual Obligation" means, as to any Person, any
provision of any security issued by such Person or of any agreement,
undertaking, contract, indenture, mortgage, deed of trust or other
instrument, document or agreement to which such Person is a party or by
which it or any of its property is bound.
"Conversion/Continuation Date" means any date on which, under
Section 2.04, the Borrower (a) converts Loans of one Type to another
Type, or (b) continues as Loans of the same Type, but with a new
Interest Period, Loans having Interest Periods expiring on such date.
"Default" means any event or circumstance which, with the
giving of notice, the lapse of time, or both, would (if not cured or
otherwise remedied during such time) constitute an Event of Default.
"Disqualified Interests" means any Capital Interests which, by
their terms (or by the terms of any security into which they are
convertible or for which they are exchangeable), or upon the happening
of any event, mature or are mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of
the holder thereof, in whole or in part, on or prior to December 31,
2003.
"Documentation Agent" means BofA.
"Dollars", "dollars" and "$" each mean lawful money of the United States.
"Effective Amount" means (a) with respect to any Loans on any
date, the aggregate outstanding principal amount thereof after giving
effect to any Borrowings and prepayments or repayments of Loans
occurring on such date; and (b) with respect to any outstanding L/C
Obligations on any date, the amount of such L/C Obligations on such
date after giving effect to any Issuances of Letters of Credit
occurring on such date and any other changes in the aggregate amount of
the L/C Obligations as of such date, including as a result of any
reimbursements of outstanding unpaid drawings under any Letters of
Credit or any reductions in the maximum amount available for drawing
under Letters of Credit taking effect on such date. For purposes of
Section 2.07, the Effective Amount shall be determined without giving
effect to any mandatory prepayments to be made under such Section 2.07.
"Eligible Assignee" means (a) a commercial bank organized
under the laws of the United States, or any state thereof, and having a
combined capital and surplus of at least $500,000,000; (b) a commercial
bank organized under the laws of any other country which is a member of
the Organization for Economic Cooperation and Development (the "OECD"),
or a political subdivision of any such country, and having a combined
capital and surplus of at least $500,000,000, provided that such bank
is acting through a branch or agency located in the United States; and
(c) a Person that is primarily engaged in the business of commercial
banking and that is (i) a Subsidiary of a Bank, (ii) a Subsidiary of a
Person of which a Bank is a Subsidiary, or (iii) a Person of which a
Bank is a Subsidiary.
"Environmental Claims" means all claims, however asserted, by
any Governmental Authority or other Person alleging potential liability
or responsibility for violation of any Environmental Law, or for
release or injury to the environment.
"Environmental Laws" means all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative orders, directed duties, requests,
licenses, authorizations and permits of, and agreements with, any
Governmental Authorities, in each case relating to environmental,
health, safety and land use matters.
"Equity Interests" means Capital Interests and all warrants,
options or other rights to acquire Capital Interests (but excluding any
debt security that is convertible into, or exchangeable for, Capital
Interests).
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and regulations promulgated thereunder.
"ERISA Event" means (a) a Reportable Event with respect to a
Pension Plan; (b) a withdrawal by the Borrower or the General Partner
from a Pension Plan subject to Section 4063 of ERISA during a plan year
in which it was a substantial employer (as defined in Section
4001(a)(2) of ERISA) or a cessation of operations which is treated as
such a withdrawal under Section 4062(e) of ERISA; (c) the filing of a
notice of intent to terminate, the treatment of a plan amendment as a
termination under Section 4041 or 4041A of ERISA or the commencement of
proceedings by the PBGC to terminate a Pension Plan subject to Title IV
of ERISA; (d) a failure by the Borrower or the General Partner to make
required contributions to a Pension Plan or other Plan subject to
Section 412 of the Code; (e) an event or condition which might
reasonably be expected to constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan; (f) the imposition of any liability under
Title IV of ERISA, other than PBGC premiums due but not delinquent
under Section 4007 of ERISA, upon the Borrower or the General Partner;
or (g) an application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code with respect to
any Pension Plan.
"Eurodollar Rate" shall mean, for each Interest Period in
respect of Eurodollar Rate Loans comprising part of the same Borrowing,
an interest rate per annum (rounded to the nearest 1/16th of 1% or, if
there is no nearest 1/16th of 1%, rounded upward) determined pursuant
to the following formula:
Eurodollar Rate = LIBOR
1.00 - Eurodollar Reserve Percentage
The Eurodollar Rate shall be adjusted automatically as of the effective
date of any change in the Eurodollar Reserve Percentage.
"Eurodollar Rate Loan" means a Loan that bears interest based
on the Eurodollar Rate.
"Eurodollar Reserve Percentage" shall mean the maximum reserve
percentage (expressed as a decimal, rounded to the nearest 1/100th of
1% or, if there is no nearest 1/100th of 1%, rounded upward) in effect
on the date LIBOR for such Interest Period is determined (whether or
not applicable to any Bank) under regulations issued from time to time
by the Federal Reserve Board for determining the maximum reserve
requirement (including any emergency, supplemental or other marginal
reserve requirement) with respect to Eurocurrency funding (currently
referred to as "Eurocurrency liabilities") having a term comparable to
such Interest Period. Without limiting the effect of the foregoing, the
Eurodollar Reserve shall include any other reserves required to be
maintained by any Bank with respect to (a) any category of liabilities
that includes deposits by reference to which the Eurodollar Rate is to
be determined as provided in the definition of "Eurodollar Rate" in
this Section 1.01 or (b) any category of extensions of credit or other
assets that includes Eurodollar Rate Loans.
"Event of Default" means any of the events or circumstances specified in
Section 9.01.
"Exchange Act" means the Securities Exchange Act of 1934, and
regulations promulgated thereunder.
"Existing Credit Agreement" means the Second Amended and
Restated Credit Agreement, dated as of July 2, 1998, as amended prior
to the Restatement Effective Date, among the Borrower, the General
Partner, the several financial institutions from time to time party
thereto and Bank of America, N.A., as Administrative Agent.
"Existing Indebtedness" means Indebtedness and Synthetic Lease
Obligations of the Borrower and its Subsidiaries (other than the
Obligations) and certain Indebtedness of the General Partner with
respect to which the Borrower has assumed the General Partner's
repayment obligations, in each case in existence on the Restatement
Effective Date and as more fully set forth on Schedule 8.05.
"Existing Letters of Credit" means the letters of credit
issued and outstanding on the Restatement Effective Date which are
described in Schedule 3.03. Each of the Existing Letters of Credit is
designated on such schedule as a standby letter of credit or a
commercial documentary letter of credit.
"Facility A Commitment" means, as to each Bank, the amount set
forth opposite such Bank's name on Schedule 2.01 under the caption
"Facility A Commitment," as the same may be reduced under Section 2.05
or 2.07 or reduced or increased as a result of one or more assignments
under Section 11.08; provided, that the maximum aggregate Facility A
Commitment of all Banks shall not exceed $40,000,000 at any time.
"Facility A Revolving Loan" has the meaning specified in
Section 2.01(a), and may be a Base Rate Loan or a Eurodollar Rate Loan.
"Facility B Commitment" means, as to each Bank, the amount set
forth opposite such Bank's name on Schedule 2.01 under the caption
"Facility B Commitment," as the same may be reduced under Section 2.05
or 2.07 or reduced or increased as a result of one or more assignments
under Section 11.08; provided, that the maximum aggregate Facility B
Commitment of all Banks shall not exceed $117,000,000 at any time.
"Facility B Revolving Loan" has the meaning specified in
Section 2.01(b), and may be a Base Rate Loan or a Eurodollar Rate Loan.
"FDIC" means the Federal Deposit Insurance Corporation, and
any Governmental Authority succeeding to any of its principal
functions.
"Federal Funds Rate" means, for any day, the rate set forth in
the weekly statistical release designated as H.15(519), or any
successor publication, published by the Federal Reserve Bank of New
York (including any such successor, "H.15(519)") on the preceding
Business Day opposite the caption "Federal Funds (Effective)"; or, if
for any relevant day such rate is not so published on any such
preceding Business Day, the rate for such day will be the arithmetic
mean as determined by the Administrative Agent of the rates for the
last transaction in overnight Federal funds arranged prior to 9:00 a.m.
(New York City time) on that day by each of three leading brokers of
Federal funds transactions in New York City selected by the
Administrative Agent.
"Fee Letter" has the meaning specified in Section 2.10(a).
"FCI ESOT" means the employee stock ownership trust of Ferrell Companies,
Inc. organized under Section 4975(e)(7) of the Code.
"Ferrellgas Partners Finance Corp." means Ferrellgas Partners
Finance Corp., a Delaware corporation and a Wholly-Owned Subsidiary of
the MLP.
"Fixed Charge Coverage Ratio" means with respect to the
Borrower and the Restricted Subsidiaries for any period, the ratio of
Consolidated Cash Flow for such period to Fixed Charges for such
period. In the event that the Borrower or any of the Restricted
Subsidiaries (a) incurs, assumes or guarantees any Indebtedness or
Synthetic Lease Obligations (other than revolving credit borrowings
including, with respect to the Borrower, the Loans) or (b) redeems or
repays any Indebtedness or Synthetic Lease Obligations (other than
revolving credit borrowings that are properly classified as a current
liability for GAAP including, with respect to the Borrower, the Loans
to the extent that such Loans are so classified and excluding,
regardless of classification, any Loans or other Indebtedness or
Synthetic Lease Obligations the proceeds of which are used for
Acquisitions or Growth Related Capital Expenditures), in any case
subsequent to the commencement of the period for which the Fixed Charge
Coverage Ratio is being calculated but prior to the date of the event
for which the calculation of the Fixed Charge Coverage Ratio is made
(the "Fixed Charge Ratio Calculation Date"), then the Fixed Charge
Coverage Ratio shall be calculated giving pro forma effect to such
incurrence, assumption, guarantee, redemption or repayment of
Indebtedness or Synthetic Lease Obligations, as if the same had
occurred at the beginning of the applicable reference period. The
foregoing calculation of the Fixed Charge Coverage Ratio shall also
give pro forma effect to Acquisitions (including all mergers and
consolidations), Asset Sales and other dispositions and discontinuances
of businesses or assets that have been made by the Borrower or any of
the Restricted Subsidiaries during the reference period or subsequent
to such reference period and on or prior to the Fixed Charge Ratio
Calculation Date assuming that all such Acquisitions, Asset Sales and
other dispositions and discontinuances of businesses or assets had
occurred on the first day of the reference period; provided, however,
that with respect to the Borrower and the Restricted Subsidiaries, (a)
Fixed Charges shall be reduced by amounts attributable to businesses or
assets that are so disposed of or discontinued only to the extent that
the obligations giving rise to such Fixed Charges would no longer be
obligations contributing to the Fixed Charges of the Borrower or the
Restricted Subsidiaries subsequent to Fixed Charge Ratio Calculation
Date and (b) Consolidated Cash Flow generated by an acquired business
or asset of the Borrower or the Restricted Subsidiaries shall be
determined by the actual gross profit (revenues minus costs of goods
sold) of such acquired business or asset during the immediately
preceding number of full fiscal quarters as are in the reference period
minus the pro forma expenses that would have been incurred by the
Borrower and the Restricted Subsidiaries in the operation of such
acquired business or asset during such period computed on the basis of
(i) personnel expenses for employees retained by the Borrower and the
Restricted Subsidiaries in the operation of the acquired business or
asset and (ii) non-personnel costs and expenses incurred by the
Borrower and the Restricted Subsidiaries on a per gallon basis in the
operation of the Borrower's business at similarly situated Borrower
facilities.
"Fixed Charges" means, with respect to the Borrower and the
Restricted Subsidiaries for any period, the sum, without duplication,
of (a) Consolidated Interest Expense for such period, whether paid or
accrued, to the extent such expense was deducted in computing
Consolidated Net Income (including amortization of original issue
discounts, non-cash interest payments, the interest component of all
payments associated with Capital Lease Obligations and net payments (if
any) pursuant to Hedging Obligations permitted under this Agreement),
(b) commissions, discounts and other fees and charges incurred with
respect to letters of credit, (c) any interest expense on Indebtedness
of another Person that is guaranteed by the Borrower and the Restricted
Subsidiaries or secured by a Lien on assets of any such Person, and (d)
the product of (i) all cash dividend payments on any series of
preferred stock of the Borrower and the Restricted Subsidiaries, times
(ii) a fraction, the numerator of which is one and the denominator of
which is one minus the then current combined federal, state and local
statutory tax rate of the Borrower, expressed as a decimal, determined,
in each case, on a consolidated basis and in accordance with GAAP.
"FRB" means the Board of Governors of the Federal Reserve
System, and any Governmental Authority succeeding to any of its
principal functions.
"Funded Debt" means all Indebtedness of the Borrower and the
Restricted Subsidiaries, excluding all Contingent Obligations of the
Borrower and the Restricted Subsidiaries under or in connection with
Letters of Credit outstanding from time to time.
"GAAP" means generally accepted accounting principles set
forth from time to time in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of Certified
Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date
of determination.
"General Partner" has the meaning specified in the introductory clause to
this Agreement.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, and any
corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"Growth-Related Capital Expenditures" means, with respect to
any Person, all capital expenditures by such Person made to improve or
enhance the existing capital assets or to increase the customer base of
such Person or to acquire or construct new capital assets (but
excluding capital expenditures made to maintain, up to the level
thereof that existed at the time of such expenditure, the operating
capacity of the capital assets of such Person as such assets existed at
the time of such expenditure).
"Guarantor" means each Person that executes a Guaranty and its successors
and assigns.
"Guaranty" means a continuing guaranty of the Obligations in
favor of the Administrative Agent on behalf of the Banks, in
substantially the form of Exhibit G or otherwise in form and substance
satisfactory to the Administrative Agent.
"Guaranty Obligation" has the meaning specified in the definition of
"Contingent Obligation."
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (a) interest rate swap agreements,
interest rate cap agreements and interest rate collar agreements and
(b) other agreements or arrangements designed to protect such Person
against fluctuations in interest rates.
"Honor Date" has the meaning specified in Section 3.03(c).
"Indebtedness" of any Person means, without duplication: (a)
all indebtedness for borrowed money; (b) all obligations issued,
undertaken or assumed as the deferred purchase price of property or
services (other than trade payables entered into in the ordinary course
of business on ordinary terms); (c) all non-contingent reimbursement or
payment obligations with respect to Surety Instruments; (d) all
obligations evidenced by notes, bonds, debentures or similar
instruments, including obligations so evidenced incurred in connection
with the acquisition of property, assets or businesses; (e) all
indebtedness created or arising under any conditional sale or other
title retention agreement, or incurred as financing, in either case
with respect to property acquired by the Person (even though the rights
and remedies of the seller or bank under such agreement in the event of
default are limited to repossession or sale of such property); (f) all
Capital Lease Obligations; (g) all Hedging Obligations; (h) all
obligations in respect of Accounts Receivable Securitizations; (i) all
indebtedness referred to in clauses (a) through (h) above secured by
(or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in property
(including accounts and contracts rights) owned by such Person, even
though such Person has not assumed or become liable for the payment of
such Indebtedness; and (j) all Guaranty Obligations in respect of
indebtedness or obligations of others of the kinds referred to in
clauses (a) through (i) above; provided, however, that "Indebtedness"
shall not include Synthetic Lease Obligations.
"Indemnified Liabilities" has the meaning specified in Section 11.05.
"Indemnified Person" has the meaning specified in Section 11.05.
"Independent Auditor" has the meaning specified in Section 7.01(a).
"Ineligible Securities" means securities which may not be underwritten or
dealt in by member banks of the Federal Reserve System under Section 16 of the
Banking Act of 1933 (12 U.S.C. ss. 24, Seventh), as amended.
"Insolvency Proceeding" means (a) any case, action or
proceeding before any court or other Governmental Authority relating to
bankruptcy, reorganization, insolvency, liquidation, receivership,
dissolution, winding-up or relief of debtors, or (b) any general
assignment for the benefit of creditors, composition, marshalling of
assets for creditors, or other similar arrangement in respect of a
Person's creditors generally or any substantial portion of a Person's
creditors; undertaken under U.S.
Federal, state or foreign law, including the Bankruptcy Code.
"Interest Coverage Ratio" means with respect to the Borrower
and the Restricted Subsidiaries for any period, the ratio of
Consolidated Cash for such period to Consolidated Interest Expense for
such period. In the event that the Borrower or any of the Restricted
Subsidiaries (a) incurs, assumes or guarantees any Indebtedness or
Synthetic Lease Obligations (other than revolving credit borrowings
including, with respect to the Borrower, the Loans) or (b) redeems or
repays any Indebtedness or Synthetic Lease Obligations (other than
revolving credit borrowings that are properly classified as a current
liability under GAAP including, with respect to the Borrower, the
Loans, to the extent such Loans are so classified and excluding,
regardless of classification, any Loans or other Indebtedness or
Synthetic Lease Obligations the proceeds of which are used for
Acquisitions or Growth Related Capital Expenditures), in any case
subsequent to the commencement of the period for which the Interest
Coverage Ratio is being calculated, but prior to the date on which the
calculation of the Interest Coverage Ratio is made (the "Interest
Coverage Ratio Calculation Date"), then the Interest Coverage Ratio
shall be calculated giving pro forma effect to such incurrence,
assumption, guarantee, redemption or repayment of Indebtedness or
Synthetic Lease Obligations, as if the same had occurred at the
beginning of the applicable reference period. The foregoing calculation
of the Interest Coverage Ratio shall also give pro forma effect to
Acquisitions (including all mergers and consolidations), Asset Sales
and other dispositions and discontinuances of businesses or assets that
have been made by the Borrower or any of the Restricted Subsidiaries
during the reference period or subsequent to such reference period and
on or prior to the Interest Coverage Ratio Calculation Date assuming
that all such Acquisitions, Asset Sales and other dispositions and
discontinuances of businesses or assets had occurred on the first day
of the reference period; provided, however, that with respect to the
Borrower and the Restricted Subsidiaries, (a) Consolidated Interest
Expense shall be reduced by amounts attributable to businesses or
assets that are so disposed of or discontinued only to the extent that
the Indebtedness or Synthetic Lease Obligations giving rise to such
Consolidated Interest Expense would no longer be Indebtedness or
Synthetic Lease Obligations contributing to the Consolidated Interest
Expense of the Borrower or the Restricted Subsidiaries subsequent to
the Interest Coverage Ratio Calculation Date and (b) Consolidated Cash
Flow generated by an acquired business or asset of the Borrower and the
Restricted Subsidiaries shall be determined by the actual gross profit
(revenues minus costs of goods sold) of such acquired business or asset
during the immediately preceding number of full fiscal quarters as in
the reference period minus the pro forma expenses that would have been
incurred by the Borrower and the Restricted Subsidiaries in the
operation of such acquired business or asset during such period
computed on the basis of (i) personnel expenses for employees retained
by the Borrower and the Restricted Subsidiaries in the operation of the
acquired business or asset and (ii) non-personnel costs and expenses
incurred by the Borrower and the Restricted Subsidiaries on a per
gallon basis in the operation of the Borrower's business at similarly
situated facilities of the Borrower.
"Interest Payment Date" means, as to any Eurodollar Rate Loan,
the last day of each Interest Period applicable to such Loan and, as to
any Base Rate Loan, the first Business Day of each fiscal quarter of
the Borrower; provided, however, that if any Interest Period for a
Eurodollar Rate Loan exceeds three months, the date that is three
months after the beginning of such Interest Period and after each
Interest Payment Date thereafter is also an Interest Payment Date,
provided, further, that if there is no numerically corresponding day in
the calendar month during which an Interest Payment Date is to occur,
such Interest Payment Date shall occur on the last Business Day of such
calendar month.
"Interest Period" means, as to any Eurodollar Rate Loan, the
period commencing on the Borrowing Date of such Loan or on the
Conversion/Continuation Date on which the Loan is converted into or
continued as a Eurodollar Rate Loan, and ending on the date one, two,
three or six months thereafter as selected by the Borrower in its
Notice of Borrowing or Notice of Conversion/Continuation;
provided that:
(a) if any Interest Period would otherwise end on a day that
is not a Business Day, that Interest Period shall be extended to the following
Business Day unless the result of such extension would be to carry such Interest
Period into another calendar month, in which event such Interest Period shall
end on the preceding Business Day;
(b) any Interest Period that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall end on the
last Business Day of the calendar month at the end of such Interest Period; and
(c) no Interest Period for any Revolving Loan shall extend
beyond the Revolving Loan Termination Date.
"Investment" means, relative to any Person, any direct or
indirect purchase or other acquisition by such Person of stock or other
securities of any other Person, or any direct or indirect loan, advance or
capital contribution by such Person to any other Person, and any other item
which would be classified as an "investment" on a balance sheet of such Person
prepared in accordance with GAAP, including, without limitation, any direct or
indirect contribution by such Person of property or assets to a joint venture,
partnership or other business entity in which such Person retains an interest.
For purposes of this Agreement, the amount involved in Investments made during
any period shall be the aggregate cost to the Borrower 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 Investment (determined in accordance with GAAP, but without
regard to any amounts received during such period as earnings (in the form of
dividends not constituting a return of capital, interest or otherwise) on such
Investment or as loans from any Person in whom such Investment has been made).
"IRS" means the Internal Revenue Service, and any Governmental
Authority succeeding to any of its principal functions.
"Issuance Date" has the meaning specified in Section 3.01(a).
"Issue" means, with respect to any Letter of Credit, to issue
or to extend the expiry date of, or to renew or increase the amount of,
such Letter of Credit; and the terms "Issued," "Issuing" and "Issuance"
have corresponding meanings.
"Issuing Banks" means BofA and Paribas in their respective
capacities as issuers of one or more Letters of Credit under this
Agreement.
"Joint Venture" means a single-purpose corporation,
partnership, joint venture or other similar legal arrangement (whether
created by contract or conducted through a separate legal entity) now
or hereafter formed by the Borrower or any of its Subsidiaries with
another Person in order to conduct a common venture or enterprise with
such Person.
"L/C Advance" means each Bank's participation in any L/C
Borrowing in accordance with its Pro Rata Share.
"L/C Amendment Application" means an application form for
amendment of outstanding Standby Letters of Credit or Commercial
Letters of Credit as shall at any time be in use at the applicable
Issuing Bank, as such Issuing Bank shall request.
"L/C Application" means an application form for issuances of
Standby Letters of Credit or Commercial Letters of Credit as shall at
any time be in use at the applicable Issuing Bank, as such Issuing Bank
shall request.
"L/C Borrowing" means an extension of credit resulting from a
drawing under any Letter of Credit which shall not have been reimbursed
on the date when made nor converted into a Borrowing of Facility B
Revolving Loans under Section 3.03(c).
"L/C Commitment" means the commitment of the Issuing Banks to
Issue, and the commitment of the Banks severally to participate in,
Letters of Credit from time to time Issued or outstanding under Article
III, in an aggregate amount not to exceed on any date the lesser of
$60,000,000 and the aggregate Facility B Commitment, as such amount may
be reduced as a result of a reduction in the L/C Commitment pursuant to
Section 2.05; provided that the L/C Commitment is a part of the
aggregate Facility B Commitment, rather than a separate, independent
commitment.
"L/C Obligations" means at any time the sum of (a) the
aggregate undrawn amount of all Letters of Credit then outstanding,
plus (b) the amount of all unreimbursed drawings under all Letters of
Credit, including all outstanding L/C Borrowings, plus (c) all other
Obligations of the Borrower under or in connection with the L/C-Related
Documents, to the extent not included within clauses (a) and (b)
hereof.
"L/C-Related Documents" means the Letters of Credit, the L/C
Applications, the L/C Amendment Applications and any other document
relating to any Letter of Credit, including any of the Issuing Banks'
standard form reimbursement agreements and other documents for letter
of credit issuances.
"Lending Office" means, as to any Bank, the office or offices
of such Bank specified as its "Lending Office" or "Domestic Lending
Office" or "Eurodollar Lending Office", as the case may be, on Schedule
11.02, or such other office or offices as such Bank may from time to
time notify the Borrower and the Administrative Agent.
"Letters of Credit" means, collectively, Standby Letters of
Credit and Commercial Letters of Credit.
"Level" means, at any time, Level 1, Level 2, Level 3, Level 4
or Level 5 based on the amount of the Pricing Ratio at such time. For
purposes of this Agreement, the following "Levels" of Pricing Ratio
(PR) shall apply:
Level Pricing Ratio
Level 1 PR < 3.25
Level 2 3.25 < PR < 3.75
Level 3 3.75 < PR < 4.25
Level 4 4.25 < PR < 4.75
Level 5 4.75 < PR
The Level of the Pricing Ratio for the period from and after the
Restatement Effective Date through the next date on which a change in
the Pricing Level shall become effective (as determined as forth below
in this paragraph) shall be equal to Level 5. Any change in the Level
of the Pricing Ratio shall be determined by the Administrative Agent
based upon the financial information required to be contained in the
Compliance Certificate delivered by the Borrower to the Administrative
Agent with respect to each fiscal quarter of the Borrower and shall
become effective as of the third Business Day following the date on
which the Compliance Certificate for such quarter was delivered. Upon
any failure of the Borrower to deliver a Compliance Certificate for any
fiscal quarter prior to 10 days after the date on which such Compliance
Certificate is required to be delivered to the Administrative Agent,
and without limiting the other rights and remedies of the
Administrative Agent and the Banks under this Agreement, the Pricing
Ratio shall be deemed to be Level 5 during the period from the due date
of such Compliance Certificate through the third Business Day following
the date on which such Compliance Certificate is so delivered.
"Leverage Ratio" means, with respect to the Borrower and the
Restricted Subsidiaries for any period, the ratio of Funded Debt plus
Synthetic Lease Obligations, in each case of the Borrower and the
Restricted Subsidiaries as of the last day of such period, to
Consolidated Cash Flow for such period. In the event that the Borrower
or any of the Restricted Subsidiaries (a) incurs, assumes or guarantees
any Indebtedness or Synthetic Lease Obligations (other than revolving
credit borrowings including, with respect to the Borrower, the Loans)
or (b) redeems or repays any Indebtedness or Synthetic Lease
Obligations (other than revolving credit borrowings that are properly
classified as a current liability under GAAP including, with respect to
the Borrower, the Loans to the extent such Loans are so classified and
excluding, regardless of classification, any Loans or other
Indebtedness or Synthetic Lease Obligations the proceeds of which are
used for Acquisitions or Growth Related Capital Expenditures), in any
case subsequent to the commencement of the period for which the
Leverage Ratio is being calculated but prior to the date on which the
calculation of the Leverage Ratio is made (the "Leverage Ratio
Calculation Date"), then the Leverage Ratio shall be calculated giving
pro forma effect to such incurrence, assumption, guarantee, redemption
or repayment of Indebtedness or Synthetic Lease Obligations, as if the
same had occurred at the beginning of the applicable reference period.
The foregoing calculation of the Leverage Ratio shall also give pro
forma effect to Acquisitions (including all mergers and
consolidations), Asset Sales and other dispositions and discontinuances
of businesses or assets that have been made by the Borrower or any of
the Restricted Subsidiaries during the reference period or subsequent
to such reference period and on or prior to the Leverage Ratio
Calculation Date assuming that all such Acquisitions, Asset Sales and
other dispositions and discontinuances of businesses or assets had
occurred on the first day of the reference period; provided, however,
that with respect to the Borrower and the Restricted Subsidiaries, (a)
Funded Debt and Synthetic Lease Obligations shall be reduced by amounts
attributable to businesses or assets that are so disposed of or
discontinued only to the extent that the Indebtedness or Synthetic
Leases included within such Funded Debt and Synthetic Lease Obligations
would no longer be an obligation of the Borrower or the Restricted
Subsidiaries subsequent to the Leverage Ratio Calculation Date and (b)
Consolidated Cash Flow generated by an acquired business or asset of
the Borrower or the Restricted Subsidiaries shall be determined by the
actual gross profit (revenues minus costs of goods sold) of such
acquired business or asset during the immediately preceding number of
full fiscal quarters as in the reference period minus the pro forma
expenses that would have been incurred by the Borrower and the
Restricted Subsidiaries in the operation of such acquired business or
asset during such period computed on the basis of (i) personnel
expenses for employees retained by the Borrower and the Restricted
Subsidiaries in the operation of the acquired business or asset and
(ii) non-personnel costs and expenses incurred by the Borrower and the
Restricted Subsidiaries on a per gallon basis in the operation of the
Borrower's business at similarly situated facilities of the Borrower.
"LIBOR" means, with respect to any Eurodollar Rate Loan for
any Interest Period for such Loan, the per annum rate of interest
appearing on page 3750 of the Telerate Service as of 11:00 London time,
two Business Days prior to the beginning of such Interest Period, or if
such rate does not appear on page 3750 of the Telerate Service (or
otherwise on such service), the rate of interest determined by the
Administrative Agent as the rate at which deposits in Dollars in the
approximate amount of BofA's Eurodollar Rate Loan for such Interest
Period would be offered by BofA's Grand Cayman Branch, Grand Cayman,
British West Indies (or such other office as may be designated for such
purpose by BofA), to major banks in the offshore Dollar interbank
market upon request of such banks at approximately 8:00 a.m. San
Francisco time two Business Days prior to the first day of such
Interest Period.
"Lien" means any security interest, mortgage, deed of trust,
pledge, hypothecation, assignment, charge or deposit arrangement,
encumbrance, lien (statutory or other) or preferential arrangement of
any kind or nature whatsoever in respect of any property (including
those created by, arising under or evidenced by any conditional sale or
other title retention agreement, the interest of a lessor under a
capital lease, any financing lease having substantially the same
economic effect as any of the foregoing, or the filing of any financing
statement naming the owner of the asset to which such lien relates as
debtor, under the Uniform Commercial Code or any comparable law) and
any contingent or other agreement to provide any of the foregoing, but
not including the interest of a lessor under an operating lease.
"Loan" means an extension of credit by a Bank to the Borrower
under Article II or Article III in the form of a Facility A Revolving
Loan, Facility B Revolving Loan, L/C Advance or (in the case of BofA)
Swingline Loan.
"Loan Documents" means this Agreement, any Notes, the Fee
Letter, the L/C-Related Documents, the Guaranties and all other
documents delivered to the Administrative Agent or any Bank in
connection with this Agreement.
"Majority Banks" means at any time Banks then holding more
than 50% of the then aggregate unpaid principal amount of the Loans
(other than the Swingline Loans), or, if no such principal amount is
then outstanding, Banks then having more than 50% of the aggregate
Revolving Loan Commitments, but in no event shall Majority Banks
consist of less than three (3) Banks.
"Margin Stock" means "margin stock" as such term is defined in
Regulation U of the FRB.
"Material Adverse Effect" means (a) a material adverse change
in, or a material adverse effect upon, the operations, business,
properties, condition (financial or otherwise) or prospects of the
Borrower or the Borrower and its Subsidiaries taken as a whole; (b) a
material impairment of the ability of the General Partner, the Borrower
or any Subsidiary to perform under any Loan Document or otherwise to
avoid any Event of Default; or (c) a material adverse effect upon the
legality, validity, binding effect or enforceability against the
Borrower or any Subsidiary of any Loan Document.
"MLP" means Ferrellgas Partners, L.P., a Delaware limited
partnership and the sole limited partner of the Borrower.
"MLP Senior Notes" means the $160,000,000 9-3/8% Senior Secured Notes
issued by the MLP and Ferrellgas Partners Finance Corp. pursuant to the 1996
Indenture.
"Net Income" means, with respect to the Borrower and the
Restricted Subsidiaries, the net income (loss) of such Persons,
determined in accordance with GAAP and before any reduction in respect
of preferred stock dividends, excluding, however, (a) any gain (but not
loss), together with any related provision for taxes on such gain (but
not loss), realized in connection with (i) any asset sale (including,
without limitation, dispositions pursuant to sale and leaseback
transactions), or (ii) the disposition of any securities or the
extinguishment of any Indebtedness of the Borrower or any of the
Restricted Subsidiaries, and (b) any extraordinary gain (but not loss),
together with any related provision for taxes on such extraordinary
gain (but not loss); provided, however, that all costs and expenses
with respect to the redemption of the 1994 Fixed Rate Senior Notes,
including, without limitation, cash premiums, tender offer premiums,
consent payments and all fees and expenses in connection therewith,
shall be added back to the Net Income of the Borrower, the General
Partner or the Restricted Subsidiaries to the extent that they were
deducted from such Net Income in accordance with GAAP.
"Net Proceeds of Asset Sale" means the aggregate cash proceeds
received by the Borrower or any of the Restricted Subsidiaries in
respect of any Asset Sale, net of the direct costs relating to such
Asset Sale (including, without limitation, legal, accounting and
investment banking fees, and sales commissions) and any relocation
expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), and amounts required to
be applied to the repayment of Indebtedness secured by a Lien on the
asset or assets the subject of such Asset Sale.
"Non-Recourse Subsidiary" means any Person that would
otherwise be a Subsidiary of the Borrower but is designated as a
Non-Recourse Subsidiary in a resolution of the Board of Directors of
the General Partner, so long as each of the following remains true: (a)
no portion of the Indebtedness or any other obligation (contingent or
otherwise) of such Person (i) is a Contingent Obligation of the
Borrower or any of its Subsidiaries, (ii) is recourse or obligates the
Borrower or any of its Subsidiaries in any way or (iii) subjects any
property or asset of the Borrower or any of its Subsidiaries, directly
or indirectly, contingently or otherwise, to satisfaction thereof, (b)
neither the Borrower nor any of its Subsidiaries has any contract,
agreement, arrangement or understanding or is subject to an obligation
of any kind, written or oral, with such Person other than on terms no
less favorable to the Borrower and its Subsidiaries than those that
might be obtained at the time from persons who are not Affiliates of
the Borrower, (c) neither the Borrower nor any of its Subsidiaries has
any obligation with respect to such Person (i) to subscribe for
additional shares of capital stock, Capital Interests or other Equity
Interests therein or (ii) maintain or preserve such Person's financial
condition or to cause such Person to achieve certain levels of
operating or other financial results, (d) such Person has no more than
$1,000 of assets at the time of such designation, (e) such Person is in
compliance with the restrictions applicable to Affiliates of the MLP
under Section 8.22 and (f) such Person takes steps designed to assure
that neither the Borrower nor any of its Subsidiaries will be liable
for any portion of the Indebtedness or other obligations of such
Person, including maintenance of a corporate or limited partnership
structure and observance of applicable formalities such as regular
meetings and maintenance of minutes, a substantial and meaningful
capitalization and the use of a corporate or partnership name, trade
name or trademark not misleadingly similar to those of the Borrower.
"Note" means a promissory note executed by the Borrower in
favor of a Bank pursuant to Section 2.02(b), in substantially the form
of Exhibit F-1 or F-2.
"Notice of Borrowing" means a notice in substantially the form of Exhibit
A.
"Notice of Conversion/Continuation" means a notice in substantially the
form of Exhibit B.
"Obligations" means all advances, debts, liabilities,
obligations, covenants and duties arising under any Loan Document,
owing by the Borrower to any Bank, the Administrative Agent, or any
Indemnified Person, whether direct or indirect (including those
acquired by assignment), absolute or contingent, due or to become due,
now existing or hereafter arising including, without limitation, all
Indebtedness of the Borrower to the Banks for the payment of principal
of and interest on all outstanding Loans and all obligations of the
Borrower to the Issuing Banks for reimbursement of drawings under
Letters of Credit from time to time.
"Organization Documents" means, (a) for any corporation, the
certificate or articles of incorporation, the bylaws, any certificate
of determination or instrument relating to the rights of preferred
shareholders of such corporation, any shareholder rights agreement, and
all applicable resolutions of the board of directors (or any committee
thereof) of such corporation, (b) for any general or limited
partnership, the partnership agreement of such partnership and all
amendments thereto and any agreements otherwise relating to the rights
of the partners thereof, and (c) for any limited liability company, the
limited liability, operating or similar agreement and all amendments
thereto and any agreements otherwise relating to the rights of the
members thereof.
"Other Taxes" means any present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies
which arise from any payment made under this Agreement or from the
execution, delivery or registration of, or otherwise with respect to,
this Agreement or any other Loan Documents.
"Participant" has the meaning specified in Section 11.08(d).
"Partners' Equity" means the partners' equity as shown on a
balance sheet prepared in accordance with GAAP for any partnership.
"Partnership Agreement" shall mean the Second Amended and
Restated Agreement of Limited Partnership of the Borrower dated October
14, 1998, as amended from time to time in accordance with the terms of
this Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation, or any
Governmental Authority succeeding to any of its principal functions
under ERISA.
"Pension Plan" means a pension plan (as defined in Section
3(2) of ERISA) subject to Title IV of ERISA which the Borrower or the
General Partner sponsors, maintains, or to which it makes, is making,
or is obligated to make contributions, or in the case of a multiple
employer plan (as described in Section 4064(a) of ERISA) has made
contributions at any time during the immediately preceding five (5)
plan years.
"Permitted Acquisitions" means Acquisitions by the Borrower
and its Subsidiaries which comply with the provisions of Section 8.04.
"Permitted Investments" means (a) any Investments in Cash
Equivalents; (b) any Investments in the Borrower or(subject to the
provisions of Section 8.21) in a Restricted Subsidiary of the Borrower
that is a Guarantor; (c) Investments by the Borrower or any Restricted
Subsidiary of the Borrower in a Person in compliance with the other
provisions of this Agreement, if as a result of such Investment (i)
such Person becomes a Restricted Subsidiary of the Borrower and a
Guarantor or (ii) such Person is merged, consolidated or amalgamated
with or into, or transfers or conveys substantially all of its assets
to, or is liquidated into, the Borrower or a Restricted Subsidiary of
the Borrower that is a Guarantor; and (d) Investments by the Borrower
or any Restricted Subsidiary in Unrestricted Subsidiaries and Joint
Ventures; provided that the amount of cash or property contributed,
loaned or otherwise advanced by the Borrower or such Restricted
Subsidiaries in respect of such Investments may not exceed at any time
an aggregate amount equal to the greater of (i) $15,000,000 and (ii)
10% of Consolidated Cash Flow for the most recently ended four fiscal
quarters of the Borrower.
"Permitted Liens" has the meaning specified in Section 8.01.
"Permitted Refinancing Indebtedness" means any Indebtedness of
the Borrower or any Subsidiary of the Borrower issued in exchange for,
or the net proceeds of which are used to extend, refinance, renew,
replace, defease or refund other Indebtedness of the Borrower or any of
its Subsidiaries; provided that (a) the principal amount of such
Indebtedness does not exceed the principal amount of the Indebtedness
so extended, refinanced, renewed, replaced, defeased or refunded (the
"Prior Indebtedness") (plus the amount of reasonable expenses incurred
in connection therewith), and the effective interest rate per annum on
such Indebtedness does not or is not likely to exceed the effective
interest rate per annum of the Prior Indebtedness, as determined by the
Administrative Agent in its sole discretion; (b) such Indebtedness has
a Weighted Average Life to Maturity equal to or greater than the
Weighted Average Life to Maturity of the Prior Indebtedness; (c) if the
Prior Indebtedness is subordinated to the Obligations, such
Indebtedness is subordinated to the Obligations on the terms and
conditions set forth on part II of Schedule 8.05; and (d) such
Indebtedness is incurred by the Borrower or the Subsidiary who is the
obligor on the Prior Indebtedness.
"Person" means an individual, partnership, corporation,
limited liability company, business trust, joint stock company, trust,
unincorporated association, Joint Venture or Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section
3(3) of ERISA) which the Borrower sponsors or maintains or to which the
Borrower or the General Partner makes, is making, or is obligated to
make contributions and includes any Pension Plan.
"Pricing Ratio" means, as of the last day of each fiscal
quarter of the Borrower, the Leverage Ratio for the fiscal period
consisting of such fiscal quarter of the Borrower and the three
immediately preceding fiscal quarters of the Borrower.
"Pro Rata Share" means, as to any Bank at any time, the
percentage set forth on Schedule 2.01 hereto as its "Pro Rata Share,"
as such amount may be adjusted by assignments under Section 11.08.
"Related Party" means (a) the spouse or any lineal descendant
of James E. Ferrell, (b) any trust for his benefit or for the benefit
of his spouse or any such lineal descendants, (c) any corporation,
partnership or other entity in which James E. Ferrell and/or such other
Persons referred to in the foregoing clauses (a) and (b) are the direct
record and beneficial owners of all of the voting and nonvoting Equity
Interests, (d) the FCI ESOT or (e) any participant in the FCI ESOT
whose ESOT account has been allocated shares of Ferrell Companies, Inc.
"Reportable Event" means any of the events set forth in
Section 4043(b) of ERISA or the regulations thereunder, other than any
such event for which the 30-day notice requirement under ERISA has been
waived in regulations issued by the PBGC.
"Requirement of Law" means, as to any Person, any law
(statutory or common), treaty, rule or regulation or determination of
an arbitrator or of a Governmental Authority, in each case applicable
to or binding upon the Person or any of its property or to which the
Person or any of its property is subject.
"Responsible Officer" means the chief executive officer or the
president of the General Partner or any other officer having
substantially the same authority and responsibility to act for the
General Partner on behalf of the Borrower; or, with respect to actions
taken or to be taken under Articles II and III and compliance with
financial covenants, the chief financial officer or the treasurer of
the General Partner or any other officer having substantially the same
authority and responsibility to act for the General Partner on behalf
of the Borrower or any other employee of the General Partner designated
in a certificate of a Responsible Officer to have authority in such
matters.
"Restatement Effective Date" means the first date on or before
April 20, 2000 on which all conditions precedent set forth in Sections
5.01 and 5.02 are satisfied or waived by each Bank (or, in the case of
subsection 5.01(f), waived by the Persons entitled to receive such
payments).
"Restricted Subsidiary" means any Subsidiary of the Borrower
(a) of which 80% of the voting Capital Interests are beneficially
owned, directly or indirectly, by the Borrower and none of which
Capital Interests are owned, directly or indirectly, by Unrestricted
Subsidiaries, (b) which is engaged in the same or substantially the
same line of business as the Borrower, (c) which is organized under the
laws of the United States or any State thereof, (d) which maintains
substantially all of its assets and conducts substantially all of its
business within the United States and (e) which is designated as a
Restricted Subsidiary in Schedule 6.16 as of the Restatement Effective
Date or which shall be designated as a Restricted Subsidiary by the
Borrower at a subsequent date pursuant to Section 7.16; provided,
however, that (x) to the extent a newly formed or acquired Subsidiary
meeting the foregoing requirements is not declared a Restricted
Subsidiary or an Unrestricted Subsidiary within 90 days of its
formation or acquisition, such Subsidiary shall be deemed to have been
designated by the Borrower as a Restricted Subsidiary (in which event
the Borrower shall comply, and shall cause such Restricted Subsidiary
to comply, with Section 8.21) and (b) a Restricted Subsidiary may be
designated as an Unrestricted Subsidiary in accordance with the
provisions of Section 7.16.
"Revolving Loan Commitments" means, as to each Bank, the
Facility A Commitment and the Facility B Commitment of such Bank.
"Revolving Loans" means, collectively, the Facility A
Revolving Loans and the Facility B Revolving Loans.
"Revolving Loan Termination Date" means the earlier of (a)
June 30, 2003 (or such later date to which the Revolving Loan
Termination Date may be extended pursuant to Section 2.08(c) of this
Agreement) and (b) the date on which the Revolving Loan Commitments
shall have been terminated pursuant to this Agreement.
"SEC" means the Securities and Exchange Commission, or any
Governmental Authority succeeding to any of its principal functions.
"Significant Subsidiary" means any Subsidiary of the Borrower
that would be a "significant subsidiary" as defined in Article 1, Rule
1-02 of Regulation S-X, promulgated pursuant to the Securities Act of
1933, as such Regulation is in effect on the date of this Agreement.
"Solvent" shall mean, with respect to any Person on any date,
that on such date (a) the fair value of the property of such Person is
greater than the fair value of the liabilities (including, without
limitation, contingent liabilities) of such Person, (b) such Person
does not intend to, and does not believe that it will, incur debts and
liabilities beyond such Person's ability to pay as such debts and
liabilities mature and (c) such Person is not engaged in business or a
transaction, and is not about to engage in a business or a transaction,
for which such Person's property would constitute an unreasonably small
capital.
"SPE" shall mean any special purpose Non-Recourse Subsidiary
of the Borrower established in connection with Accounts Receivable
Securitizations permitted by Section 8.05.
"Standby Letters of Credit" means standby letters of credit
Issued by an Issuing Bank pursuant to Article III.
"Standby Letter of Credit Risk Participation Percentage"
means, as of any date and based upon the Level of the Pricing Ratio on
such date, the percent per annum set forth below opposite such Level:
Standby Letter of Credit Risk
Pricing Ratio Participation Percentage
------------- ------------------------
Level 1 1.25%
Level 2 1.50%
Level 3 1.75%
Level 4 2.00%
Level 5 2.25%
"Subsidiary" means, with respect to any Person, any
corporation, limited liability company, partnership, association or
other business entity of which more than 50% of the total voting power
of shares of Capital Interests entitled (without regard to the
occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof (or, in the case of a limited partnership,
more than 50% of either the general partners' Capital Interests or the
limited partners' Capital Interests) is at the time owned or
controlled, directly or indirectly, by such Person or one or more of
the other Subsidiaries of that Person or a combination thereof. Unless
otherwise indicated in this Agreement, "Subsidiary" shall mean a
Subsidiary of the Borrower. Notwithstanding the foregoing, any
Subsidiary of the Borrower that is designated a "Non-Recourse
Subsidiary" pursuant to the definition thereof in this Agreement shall,
for so long as all of the statements in the definition thereof remain
true, not be deemed a Subsidiary of the Borrower.
"Surety Instruments" means all letters of credit (including
standby and commercial), bankers' acceptances, bank guaranties,
shipside bonds, surety bonds and similar instruments.
"Swingline Loan" has the meaning specified in Section 2.15.
"Synthetic Lease" means each arrangement, however described,
under which the obligor accounts for its interest in the property
covered thereby under GAAP as lessee of a lease which is not a capital
lease under GAAP and accounts for its interest in the property covered
thereby for Federal income tax purposes as the owner.
"Synthetic Lease Interest Component" means, with respect to
any Person for any period, the portion of rent paid or payable (without
duplication) for such period under Synthetic Leases of such Person that
would be treated as interest in accordance with Financial Accounting
Standards Board Statement No. 13 if such Synthetic Leases were treated
as capital leases under GAAP.
"Synthetic Lease Obligation" means, as to any Person with
respect to any Synthetic Lease at any time of determination, the amount
of the liability of such Person in respect of such Synthetic Lease that
would (if such lease was required to be classified and accounted for as
a capital lease on a balance sheet of such Person in accordance with
GAAP) be required to be capitalized on the balance sheet of such Person
at such time.
"Synthetic Lease Principal Component" means, with respect to
any Person for any period, the portion of rent (exclusive of the
Synthetic Lease Interest Component) paid or payable (without
duplication) for such period under Synthetic Leases of such Person that
was deducted in calculating Consolidated Net Income of such Person for
such period.
"Taxes" means any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding, in the case of each Bank and the
Administrative Agent, such taxes (including income taxes or franchise
taxes) as are imposed on or measured by each Bank's net income by the
jurisdiction (or any political subdivision thereof) under the laws of
which such Bank or the Administrative Agent, as the case may be, is
organized or maintains a lending office.
"Type" means, with respect to any Loan, whether such Loan is a
Base Rate Loan or a Eurodollar Rate Loan.
"UCP" has the meaning specified in Section 3.09.
"Unfunded Pension Liability" means the excess of a Plan's
benefit liabilities under Section 4001(a)(16) of ERISA, over the
current value of that Plan's assets, determined in accordance with the
assumptions used for funding the Pension Plan pursuant to Section 412
of the Code for the applicable plan year.
"Unrestricted Subsidiary" means any Subsidiary which is not a Restricted
Subsidiary.
"United States" and "U.S." each means the United States of America.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a)
the sum of the products obtained by multiplying (x) the amount of each
then remaining installment, sinking fund, serial maturity or other
required payments of principal, including payment at final maturity, in
respect thereof, by (y) the number of years (calculated to the nearest
one-twelfth) that will elapse between such date and the making of such
payment, by (b) the then outstanding principal amount of such
Indebtedness; provided, however, that with respect to any revolving
Indebtedness, the foregoing calculation of Weighted Average Life to
Maturity shall be determined based upon the total available commitments
and the required reductions of commitments in lieu of the outstanding
principal amount and the required payments of principal, respectively.
"Wholly-Owned Subsidiary" means a Subsidiary of which all of
the outstanding Capital Interests or other ownership interests (other
than directors' qualifying shares) or, in the case of a limited
partnership, all of the partners' Capital Interests (other than up to a
1% general partner interest), is owned, beneficially and of record, by
the Borrower, a Wholly-Owned Subsidiary of the Borrower or both.
1.02 Other Interpretive Provisions.
(a) The meanings of defined terms are equally applicable to the singular and
plural forms of the defined terms.
(b) The words "hereof", "herein", "hereunder" and similar words refer to this
Agreement as a whole and not to any particular provision of this Agreement; and
subsection, Section, Schedule and Exhibit references are to this Agreement
unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments, documents,
agreements, certificates, indentures, notices and other writings,
however evidenced.
(ii) The term "including" is not limiting and means "including without
limitation."
(iii) In the computation of periods of time from a
specified date to a later specified date, the word "from" means "from
and including"; the words "to" and "until" each mean "to but
excluding", and the word "through" means "to and including."
(d) Unless otherwise expressly provided in this Agreement, (i) references to
agreements (including this Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document, and (ii) references to any statute or regulation
are to be construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting the statute or
regulation.
(e) The captions and headings of this Agreement are for convenience of reference
only and shall not affect the interpretation of this Agreement.
(f) This Agreement and other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar matters. All
such limitations, tests and measurements are cumulative and shall each be
performed in accordance with their terms.
(g) Unless otherwise expressly provided in this Agreement, financial
calculations applicable to the Borrower shall be made on a consolidated basis.
(h) This Agreement and the other Loan Documents are the result of negotiations
among and have been reviewed by counsel to the Administrative Agent, the
Borrower and the other parties, and are the products of all parties.
Accordingly, they shall not be construed against the Banks or the Administrative
Agent merely because of the Administrative Agent's or Banks' involvement in
their preparation.
1.03 Accounting Principles.
(a) Unless the context otherwise clearly requires, all accounting terms not
expressly defined in this Agreement shall be construed, and all financial
computations required under this Agreement shall be made, in accordance with
GAAP, consistently applied. In the event that GAAP changes during the term of
this Agreement such that the covenants contained in Section 7.12 would then be
calculated in a different manner or with different components, (i) the Borrower
and the Banks agree to amend this Agreement in such respects as are necessary to
conform those covenants as criteria for evaluating the Borrower's financial
condition to substantially the same criteria as were effective prior to such
change in GAAP and (ii) the Borrower shall be deemed to be in compliance with
the covenants contained in Section 7.12 during the 90-day period following any
such change in GAAP if and to the extent that the Borrower would have been in
compliance therewith under GAAP as in effect immediately prior to such change.
(b) Except as otherwise specified, references in this Agreement to "fiscal year"
and "fiscal quarter" refer to such fiscal periods of the Borrower.
ARTICLE II
THE CREDITS
2.01 Amounts and Terms of Revolving Loan Commitments.
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(a) Facility A Revolving Loans.
(i) Each Bank severally agrees, on the terms and subject to the conditions
set forth in this Agreement, to make loans to the Borrower (each such loan, a
"Facility A Revolving Loan") from time to ------------------------- time on any
Business Day during the period from the Restatement Effective Date to the
Revolving Loan Termination Date, in an aggregate principal amount not to exceed
at any time outstanding such Bank's Facility A Commitment as in effect from time
to time; provided, however, that, after giving effect to -------- ------- any
Borrowing of Facility A Revolving Loans, the Effective Amount of all outstanding
Facility A Revolving Loans shall not at any time exceed the combined Facility A
Commitments, and the Effective Amount of the Facility A Revolving Loans of any
Bank shall not at any time exceed such Bank's Facility A Commitment.
(ii) Within the limits of each Bank's Facility A Commitment and on the other
terms and subject to the other conditions of this Agreement, the
Borrower may borrow under this Section 2.01(a), prepay under Section
2.06 and reborrow under this Section 2.01(a); provided, that the
Borrower shall cause the aggregate outstanding principal amount of
Facility A Revolving Loans to be reduced to zero for at least one
period of 30 consecutive days during each fiscal year of the Borrower,
commencing with the fiscal year in which the Restatement Effective Date
occurs.
(b) Facility B Revolving Loans, Letters of Credit and Swingline Loans.
(i) Each Bank severally agrees, on the terms and subject to the conditions
set forth in this Agreement, to make loans to the Borrower (each such loan, a
"Facility B Revolving Loan") from time to ------------------------- time on any
Business Day during the period from the Restatement Effective Date to the
Revolving Loan Termination Date, in an aggregate principal amount not to exceed
at any time outstanding such Bank's Facility B Commitment as in effect from time
to time; provided, however, that, after giving effect to -------- ------- any
Borrowing of Facility B Revolving Loans, the sum of the Effective Amount of all
outstanding Facility B Revolving Loans plus the Effective Amount of all L/C
Obligations plus the Effective Amount of all Swingline Loans shall not at any
time exceed the combined Facility B Commitments, and the Effective Amount of the
Facility B Revolving Loans of any Bank plus the participation of such Bank in
the Effective Amount of all L/C Obligations plus such Bank's Pro Rata Share of
the Effective Amount of all outstanding Swingline Loans shall not at any time
exceed such Bank's Facility B Commitment. On the Restatement Effective Date, the
aggregate outstanding principal amount of the Facility B Revolving Loans and
Swingline Loans, in each case under (and as defined in) the Existing Credit
Agreement shall be automatically deemed to be Facility B Revolving Loans under
this Agreement for all purposes of this Agreement and the other Loan Documents
(including for the purpose of determining usage of the Facility B Commitment
under this Agreement as set forth above).
(ii) Within the limits of each Bank's Facility B Commitment and on the other
terms and subject to the other conditions of this Agreement, the
Borrower may borrow under this Section 2.01(b), prepay under Section
2.06 and reborrow under this Section 2.01(b).
(iii) As a subfacility of the Banks' Facility B Commitments, the Borrower may
request the Issuing Banks to Issue Letters of Credit from time to time
pursuant to Article III. On the Restatement Effective Date, all
Existing Letters of Credit shall be Letters of Credit under this
Agreement and shall constitute usage of the Facility B Commitment under
this Agreement.
(iv) In addition, the Borrower may request BofA to make Swingline Loans to
the Borrower from time to time pursuant to Section 2.15.
2.02 Loan Accounts. (a) The Loans made by each Bank and the Letters of Credit
Issued by the Issuing Banks shall be evidenced by one or more accounts or
records maintained by such Bank or Issuing Bank, as the case may be, in the
ordinary course of business. The accounts or records maintained by the
Administrative Agent, the Issuing Banks and each Bank shall be conclusive absent
manifest error of the amount of the Loans made by the Banks to the Borrower and
the Letters of Credit Issued for the account of the Borrower, and the interest
and payments thereon. Any failure so to record or any error in doing so shall
not, however, limit or otherwise affect the obligation of the Borrower under
this Agreement to pay any amount owing with respect to the Loans or any Letter
of Credit.
(b) Upon the request of any Bank made through the
Administrative Agent, the Loans made by such Bank may be evidenced by one or
more Notes, instead of loan accounts. Each such Bank shall endorse on the
schedules annexed to its Note(s) the date, amount and maturity of each Loan made
by it and the amount of each payment of principal made by the Borrower with
respect thereto. Each such Bank is irrevocably authorized by the Borrower to
endorse its Note(s) and each Bank's record shall be conclusive absent manifest
error; provided, however, that the failure of a Bank to make, or an error in
making, a notation thereon with respect to any Loan shall not limit or otherwise
affect the obligations of the Borrower under this Agreement or under any such
Note to such Bank.
2.03 Procedure for Borrowing. (a) Each Borrowing of Loans (other than Swingline
Loans) shall be made upon the Borrower's irrevocable written notice delivered to
the Administrative Agent in the form of a Notice of Borrowing (which notice must
be received by the Administrative Agent prior to 9:00 a.m. San Francisco time
(i) three Business Days prior to the requested Borrowing Date, in the case of
Eurodollar Rate Loans and (ii) one Business Day prior to the requested Borrowing
Date, in the case of Base Rate Loans, specifying:
(A) the amount of the Borrowing, which shall be in an aggregate
minimum amount of $3,000,000 or any multiple of $1,000,000 in
excess thereof for Eurodollar Rate Loans or $1,000,000 or any
multiple of $100,000 in excess thereof for Base Rate Loans;
(B) the requested Borrowing Date, which shall be a Business Day;
(C) the Type and Class of Loans comprising the Borrowing; and
(D) the duration of the Interest Period applicable to any
Eurodollar Rate Loans included in such notice. If the Notice
of Borrowing fails to specify the duration of the Interest
Period for any Borrowing comprised of Eurodollar Rate Loans,
such Interest Period shall be one month.
(b) The Administrative Agent will promptly notify each Bank of
the Administrative Agent's receipt of any Notice of Borrowing and of the amount
of such Bank's Pro Rata Share of that Borrowing.
(c) Each Bank will make the amount of its Pro Rata Share of
each Borrowing available to the Administrative Agent for the account of the
Borrower at the Administrative Agent's Payment Office by 11:00 a.m. San
Francisco time on the Borrowing Date requested by the Borrower in funds
immediately available to the Administrative Agent. The proceeds of all such
Loans will then be made available to the Borrower by the Administrative Agent at
such office by crediting the account of the Borrower on the books of BofA with
the aggregate of the amounts made available to the Administrative Agent by the
Banks and in like funds as received by the Administrative Agent.
(d) After giving effect to any Borrowing, there may not be
more than ten different Interest Periods in effect with respect to Eurodollar
Rate Loans.
2.04 Conversion and Continuation Elections. (a) The Borrower may, upon
irrevocable written notice to the Administrative Agent in accordance with
Section 2.04(b):
(i) elect, as of any Business Day, in the case of Base Rate Loans, or as of
the last day of the applicable Interest Period, in the case of
Eurodollar Rate Loans, to convert any such Loans (or any part thereof
in an amount not less than $3,000,000, or that is in an integral
multiple of $1,000,000 in excess thereof) into Loans of the other Type;
or
(ii) elect as of the last day of the applicable Interest Period, to continue
as Eurodollar Rate Loans any Loans having Interest Periods expiring on
such day (or any part thereof in an amount not less than $3,000,000, or
that is in an integral multiple of $1,000,000 in excess thereof);
provided, that if at any time the aggregate amount of Eurodollar Rate Loans in
respect of any Borrowing is reduced, by payment, prepayment, or conversion of
part thereof to be less than $3,000,000, such Eurodollar Rate Loans shall
automatically convert into Base Rate Loans, and on and after such date the right
of the Borrower to continue such Loans as, and convert such Loans into,
Eurodollar Rate Loans shall terminate.
(b) The Borrower shall deliver a Notice of
Conversion/Continuation to be received by the Administrative Agent not later
than 9:00 a.m. San Francisco time at least (i) three Business Days in advance of
the Conversion/Continuation Date, if the Loans are to be converted into or
continued as Eurodollar Rate Loans; and (ii) one Business Day in advance of the
Conversion/Continuation Date, if the Loans are to be converted into Base Rate
Loans, specifying:
(A) the proposed Conversion/Continuation Date;
(B) the aggregate amount and Class of Loans to be converted or renewed;
(C) the Type of Loans resulting from the proposed conversion or continuation;
and
(D) other than in the case of conversions into Base Rate Loans, the
duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable
to Eurodollar Rate Loans, the Borrower has failed to select a new Interest
Period within the time period specified in Section 2.04(b) to be applicable to
such Eurodollar Rate Loans, or if any Default or Event of Default then exists,
the Borrower shall be deemed to have elected to convert such Eurodollar Rate
Loans into Base Rate Loans effective as of the expiration date of such Interest
Period.
(d) The Administrative Agent will promptly notify each Bank of
its receipt of a Notice of Conversion/Continuation, or, if no notice is provided
by the Borrower within the time period specified in Section 2.04(b), the
Administrative Agent will promptly notify each Bank of the details of any
automatic conversion. All conversions and continuations shall be made ratably
according to the respective outstanding principal amounts of the Loans with
respect to which the notice was given held by each Bank.
(e) Unless the Majority Banks otherwise agree, during the
existence of a Default or Event of Default, the Borrower may not elect to have a
Loan converted into or continued as a Eurodollar Rate Loan.
(f) After giving effect to any conversion or continuation of
Loans, there may not be more than ten different Interest Periods in effect.
2.05 Voluntary Termination or Reduction of Revolving Loan Commitments.
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(a) The Borrower may, not later than 11:00 a.m. San Francisco time at least
three Business Days prior to its effective date by notice to the Administrative
Agent, terminate or permanently reduce the Facility A Commitments by an
aggregate minimum amount of $5,000,000 or any multiple of $5,000,000 in excess
thereof; unless, after giving effect thereto and to any prepayments of Loans
made on the effective date thereof, the Effective Amount of all Facility A
Revolving Loans would exceed the amount of the combined Facility A Commitments
then in effect.
(b) The Borrower may, not later than 11:00 a.m. San Francisco time at least
three Business Days prior to its effective date by notice to the Administrative
Agent, terminate or permanently reduce the Facility B Commitments by an
aggregate minimum amount of $5,000,000 or any multiple of $5,000,000 in excess
thereof; unless, after giving effect thereto and to any prepayments of Loans
made on the effective date thereof, (i) the Effective Amount of all Facility B
Revolving Loans, L/C Obligations and Swingline Loans together would exceed the
amount of the combined Facility B Commitments then in effect, or (ii) the
Effective Amount of all L/C Obligations then outstanding would exceed the L/C
Commitment.
(c) Once reduced in accordance with this Section, the Commitments may not be
increased. Any reduction of the Revolving Loan Commitments shall be applied to
each Bank according to its Pro Rata Share.
2.06 Optional Prepayments. (a) Subject to Section 4.04, the Borrower may, at any
time or from time to time, not later than 9:00 a.m. San Francisco time at least
three (3) Business Days prior to its effective date by irrevocable notice to the
Administrative Agent, in the case of Eurodollar Rate Loans, and not later than
9:00 a.m. San Francisco time at least one (1) Business Day prior to its
effective date by irrevocable notice to the Administrative Agent, in the case of
Base Rate Loans, ratably prepay Loans in whole or in part, in minimum amounts of
$3,000,000 or any multiple of $1,000,000 in excess thereof, for Eurodollar Rate
Loans, and in minimum amounts of $1,000,000 or any multiple of $100,000 in
excess thereof, for Base Rate Loans.
(b) Any such notice of prepayment shall specify the date and
amount of such prepayment and the Type(s) and, with respect to voluntary
prepayments occurring on or prior to the Revolving Loan Termination Date, the
Class(es) of Loans to be prepaid. Prepayments of Base Rate Loans of any Class
may be made pursuant to this Agreement on any Business Day. Prepayments of
Eurodollar Rate Loans of any Class may be made pursuant to this Agreement only
on the last day of any applicable Interest Period; provided, that prepayments of
Eurodollar Rate Loans may be made on a day other than the last day of the
applicable Interest Period only with payment by the Borrower of the aggregate
amount of any associated funding losses of any affected Banks pursuant to
Section 4.04. The Administrative Agent will promptly notify each Bank of its
receipt of any such notice, and of such Bank's Pro Rata Share of such
prepayment.
(c) If any such notice is given by the Borrower, the Borrower
shall make such prepayment and the payment amount specified in such notice shall
be due and payable on the date specified therein, together, in the case of a
Eurodollar Rate Loan, with accrued interest to each such date on the amount
prepaid and any amounts required pursuant to Section 4.04.
2.07 Mandatory Prepayments of Loans; Mandatory Commitment Reductions. (a)
Subject to Section 4.04, if on any date on or prior to the Revolving Loan
Termination Date the Effective Amount of all Facility A Revolving Loans then
outstanding exceeds the combined Facility A Commitments, the Borrower shall
immediately, and without notice or demand, prepay the outstanding principal
amount of Facility A Revolving Loans by an aggregate amount equal to the
applicable excess.
(b) If on any date the Effective Amount of L/C Obligations
exceeds the L/C Commitment, the Borrower shall Cash Collateralize on such date
the outstanding Letters of Credit in an amount equal to the excess of the
aggregate maximum amount then available to be drawn under the Letters of Credit
over the L/C Commitment. Subject to Section 4.04, if on any date after giving
effect to any Cash Collateralization made on such date pursuant to the preceding
sentence, the Effective Amount of all Facility B Revolving Loans then
outstanding plus the Effective Amount of all L/C Obligations then outstanding
plus the Effective Amount of all Swingline Loans then outstanding exceeds the
combined Facility B Commitments, the Borrower shall immediately, and without
notice or demand, prepay the outstanding principal amount of the Facility B
Revolving Loans, the Swingline Loans and any L/C Advances by an aggregate amount
equal to the applicable excess.
(c) The Borrower shall immediately, and without notice or
demand, prepay the Obligations (and if necessary, Cash Collateralize Letters of
Credit) in full, including, without limitation, the aggregate principal amount
of all outstanding Loans, all accrued and unpaid interest thereon and all
amounts payable under Section 4.04, and all of the Revolving Loan Commitments
shall be automatically reduced to zero, in each case on the 30th day after any
Change of Control shall have occurred and be continuing.
(d) If and to the extent that the Revolving Loan Commitments
are not equal to zero on the Revolving Loan Termination Date, such Revolving
Loan Commitments shall be automatically reduced to zero on the Revolving Loan
Termination Date.
2.08 Repayment.
(a) Revolving Loans. The Borrower shall repay to the Banks in full on the
Revolving Loan Termination Date the aggregate principal amount of Revolving
Loans outstanding on such date together with all accrued and unpaid interest
thereon.
(b) Swingline Loans. The Borrower shall repay to BofA in full
on the Revolving Loan Termination Date the aggregate principal amount of
Swingline Loans outstanding on such date, together with all accrued and unpaid
interest thereon.
(c) Extension of Revolving Loan Termination Date. Each Bank,
at its sole option and in its sole discretion, upon the written request of
Borrower given to the Administrative Agent and each Bank not more than 90 days
nor less than 60 days prior to the Revolving Loan Termination Date at any time
in effect, may elect to extend such Revolving Loan Termination Date by a period
of one year. Within 30 days following receipt of such request, each Bank shall
give notice to the Borrower and the Administrative Agent of its decision to
extend or not to extend such Revolving Loan Termination Date. If, in accordance
with the immediately preceding sentence, all Banks shall have elected to extend
such Revolving Loan Termination Date, the Revolving Loan Termination Date shall
be extended by a period of one year. In the event that any Bank notifies the
Borrower and the Administrative Agent that it will not extend the Revolving Loan
Termination Date then in effect, or if any Bank fails to notify the Borrower and
the Administrative Agent of its decision to extend or not to extend such
Revolving Loan Termination Date, in either case within the applicable 30 day
period referred to above, such Revolving Loan Termination Date shall not be
extended and the Revolving Loan Termination Date then in effect shall be the
Revolving Loan Termination Date for all purposes of this Agreement. Nothing in
this Section 2.08(c) shall prevent the Borrower from replacing any Bank that is
unwilling to extend the Revolving Loan Termination Date with another Bank or an
Eligible Assignee that is willing to extend the Revolving Loan Termination Date
as provided in Section 4.07.
2.09 Interest. (a) Each Loan shall bear interest on the outstanding principal
amount thereof from the applicable Borrowing Date at a rate per annum equal to
the Eurodollar Rate (other than with respect to Swingline Loans) or the Base
Rate, as the case may be (and subject to the Borrower's right to convert to
other Types of Loans under Section 2.04), plus the Applicable Margin.
(b) Interest on each Loan shall be paid in arrears on each
applicable Interest Payment Date and on the Revolving Loan Termination Date.
Interest in all cases shall also be paid on the date of any prepayment of Loans
under Section 2.07(d) and interest on Eurodollar Rate Loans shall also be paid
on the date of prepayment of Loans in all other circumstances under Section 2.06
or 2.07, in each case for the portion of the Loans so prepaid and upon payment
(including prepayment) in full thereof and, during the existence of any Event of
Default, interest shall be paid on demand of the Administrative Agent at the
request or with the consent of the Majority Banks.
(c) Notwithstanding subsection (a) of this Section, while any
Event of Default exists or after acceleration, the Borrower shall pay interest
(after as well as before entry of judgment thereon to the extent permitted by
law) on the principal amount of all outstanding Obligations, at a rate per annum
which is determined by adding 2% per annum to the Applicable Margin then in
effect for such Loans and, in the case of Obligations not subject to an
Applicable Margin, including, without limitation, all letter of credit and
commitment fees provided in this Agreement, at a rate per annum equal to the
Base Rate plus the Applicable Margin plus 2%; provided, however, that, on and
after the expiration of any Interest Period applicable to any Eurodollar Rate
Loan outstanding on the date of occurrence of such Event of Default or
acceleration, the principal amount of such Loan shall, during the continuation
of such Event of Default or after acceleration, bear interest at a rate per
annum equal to the Base Rate plus the Applicable Margin plus 2%.
(d) Anything in this Agreement to the contrary
notwithstanding, the obligations of the Borrower to any Bank under this
Agreement shall be subject to the limitation that payments of interest shall not
be required for any period for which interest is computed under this Agreement,
to the extent (but only to the extent) that contracting for or receiving such
payment by such Bank would be contrary to the provisions of any law applicable
to such Bank limiting the highest rate of interest that may be lawfully
contracted for, charged or received by such Bank, and in such event the Borrower
shall pay such Bank interest at the highest rate permitted by applicable law.
2.10 Fees. In addition to certain fees described in Section 3.08:
----
(a) Agency Fees. The Borrower shall pay a non-refundable agency fee to the
Administrative Agent for the Administrative Agent's own account, as required by
the letter agreement (the "Fee Letter") between the Borrower and the
Administrative Agent dated as of the Restatement Effective Date.
(b) Commitment Fees. The Borrower shall pay to the Administrative Agent for the
account of each Bank (i) a commitment fee with respect to such Bank's Facility A
Commitment equal to the Commitment Fee Rate per annum times the actual daily
amount by which such Bank's Facility A Commitment exceeded the sum of the
aggregate Effective Amount of its Facility A Revolving Loans and (ii) a
commitment fee with respect to such Bank's Facility B Commitment equal to the
Commitment Fee Rate per annum times the actual daily amount by which such Bank's
Facility B Commitment exceeded the aggregate Effective Amount of its Facility B
Revolving Loans plus its Pro Rata Share of the Effective Amount of L/C
Obligations. Such commitment fees shall accrue from the Restatement Effective
Date to the Revolving Loan Termination Date and shall be due and payable
quarterly in arrears on the first Business Day of each fiscal quarter following
the quarter for which payment is to be made, commencing on the Restatement
Effective Date through the Revolving Loan Termination Date, with the final
payment to be made on the Revolving Loan Termination Date; provided that, in
connection with the full termination of Revolving Loan Commitments under Section
2.05 or Section 2.07, the accrued commitment fees calculated for the period
ending on such date shall also be paid on the date of such termination. The
commitment fees provided in this subsection shall accrue at all times after the
above-mentioned commencement date, including at any time during which one or
more conditions in Article V are not met.
(c) Participation Fees. On the Restatement Effective Date, the Borrower shall
pay to the Administration Agent for the account of each Bank a non-refundable
participation fee in an amount equal to (i) 3/8% multiplied by (ii) the sum of
such Bank's Revolving Loan Commitments.
2.11 Computation of Fees and Interest. (a) All computations of interest for Base
Rate Loans when the Base Rate is determined by BofA's "reference rate" shall be
made on the basis of a year of 365 or 366 days, as the case may be, and actual
days elapsed. All other computations of fees and interest shall be made on the
basis of a 360-day year and actual days elapsed (which results in more interest
being paid than if computed on the basis of a 365-day year). Interest and fees
shall accrue during each period during which interest or such fees are computed
from the first day thereof to the last day thereof.
(b) Each determination of an interest rate by the
Administrative Agent shall be conclusive and binding on the Borrower and the
Banks in the absence of manifest error.
2.12 Payments by the Borrower. (a) All payments to be made by the Borrower under
any Loan Document shall be made without set-off, recoupment, counterclaim or
other defense. Except as otherwise expressly provided in this Agreement, all
payments by the Borrower shall be made to the Administrative Agent for the
account of the Banks at the Administrative Agent's Payment Office, and shall be
made in dollars and in immediately available funds, no later than 10:00 a.m.
(San Francisco time) on the date specified in this Agreement. The Administrative
Agent will promptly distribute to each Bank its Pro Rata Share (or other
applicable share as expressly provided in this Agreement) of such payment in
like funds as received. Any payment received by the Administrative Agent later
than 10:00 a.m. (San Francisco time) shall be deemed to have been received on
the following Business Day and any applicable interest or fee shall continue to
accrue.
(b) Subject to the provisions set forth in the definition of
"Interest Period" in this Agreement, whenever any payment is due on a day other
than a Business Day, such payment shall be made on the following Business Day,
and such extension of time shall in such case be included in the computation of
interest or fees, as the case may be.
(c) Unless the Administrative Agent receives notice from the
Borrower prior to the date on which any payment is due to the Banks that the
Borrower will not make such payment in full as and when required, the
Administrative Agent may assume that the Borrower has made such payment in full
to the Administrative Agent on such date in immediately available funds and the
Administrative Agent may (but shall not be so required), in reliance upon such
assumption, distribute to each Bank on such due date an amount equal to the
amount then due such Bank. If and to the extent the Borrower has not made such
payment in full to the Administrative Agent, each Bank shall repay to the
Administrative Agent on demand such amount distributed to such Bank, together
with interest thereon at the Federal Funds Rate for each day from the date such
amount is distributed to such Bank until the date repaid.
(d) Unless a due date is otherwise specified in this
Agreement, the due date for any Obligation shall be 30 days after demand
therefor by the Person to whom the Obligation is owed.
2.13 Payments by the Banks to the Administrative Agent. (a) Unless the
Administrative Agent receives notice from a Bank on or prior to the Restatement
Effective Date or, with respect to any Borrowing after the Restatement Effective
Date, by 2:00 p.m. (San Francisco time) on the Business Day prior to the date of
such Borrowing, that such Bank will not make available as and when required
under this Agreement to the Administrative Agent for the account of the Borrower
the amount of that Bank's Pro Rata Share of the Borrowing, the Administrative
Agent may assume that each Bank has made such amount available to the
Administrative Agent in immediately available funds on the Borrowing Date and
the Administrative Agent may (but shall not be so required), in reliance upon
such assumption, make available to the Borrower on such date a corresponding
amount. If and to the extent any Bank shall not have made its full amount
available to the Administrative Agent in immediately available funds and the
Administrative Agent in such circumstances has made available to the Borrower
such amount, that Bank shall on the Business Day following such Borrowing Date
make such amount available to the Administrative Agent, together with interest
at the Federal Funds Rate for each day during such period. A notice of the
Administrative Agent submitted to any Bank with respect to amounts owing under
this subsection (a) shall be conclusive, absent manifest error. If such amount
is so made available, such payment to the Administrative Agent shall constitute
such Bank's Loan on the date of Borrowing for all purposes of this Agreement. If
such amount is not made available to the Administrative Agent on the Business
Day following the Borrowing Date, the Administrative Agent will notify the
Borrower of such failure to fund and, upon demand by the Administrative Agent,
the Borrower shall pay such amount to the Administrative Agent for the
Administrative Agent's account, together with interest thereon for each day
elapsed since the date of such Borrowing, at a rate per annum equal to the
interest rate applicable at the time to the Loans comprising such Borrowing.
(b) The failure of any Bank to make any Loan on any Borrowing
Date shall not relieve any other Bank of any obligation under this Agreement to
make a Loan on such Borrowing Date, but no Bank shall be responsible for the
failure of any other Bank to make the Loan to be made by such other Bank on any
Borrowing Date.
2.14 Sharing of Payments, Etc. If, other than as expressly provided elsewhere in
this Agreement, any Bank shall obtain on account of the Loans made by it any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) in excess of its Pro Rata Share, such Bank shall
immediately (a) notify the Administrative Agent of such fact, and (b) purchase
from the other Banks such participations in the Loans made by them as shall be
necessary to cause such purchasing Bank to share the excess payment pro rata
with each of them; provided, however, that if all or any portion of such excess
payment is thereafter recovered from the purchasing Bank, such purchase shall to
that extent be rescinded and each other Bank shall repay to the purchasing Bank
the purchase price paid therefor, together with an amount equal to such paying
Bank's ratable share (according to the proportion of (i) the amount of such
paying Bank's required repayment to (ii) the total amount so recovered from the
purchasing Bank) of any interest or other amount paid or payable by the
purchasing Bank in respect of the total amount so recovered. The Borrower agrees
that any Bank so purchasing a participation from another Bank may, to the
fullest extent permitted by law, exercise all its rights of payment (including
the right of set-off) with respect to such participation as fully as if such
Bank were the direct creditor of the Borrower in the amount of such
participation. The Administrative Agent will keep records (which shall be
conclusive and binding in the absence of manifest error) of participations
purchased under this Section and will in each case notify the Banks following
any such purchases or repayments.
2.15 Discretionary Swingline Loans.
(a) From time to time, subject to the conditions set forth below, at the request
of the Borrower, made through the Administrative Agent as set forth below, BofA
in its sole and absolute discretion may make short-term loans to the Borrower
not to exceed in the aggregate at any one time outstanding the principal sum of
$25,000,000, to be used by the Borrower to cover overdrafts, for cash management
purposes, or for other general working capital needs of the Borrower (each, a
"Swingline Loan"). The availability of Swingline Loans is conditioned on the
satisfaction of each of the following conditions: (i) it shall be in the sole
and absolute discretion of BofA, on each occasion that a Swingline Loan is
requested, whether to make such Swingline Loan; (ii) each Swingline Loan shall
bear interest from the time made until the time repaid, or until the time, if
any, that such Swingline Loan is converted into a Base Rate Loan as provided
below, at the rate(s) from time to time applicable to Base Rate Loans under this
Agreement; (iii) at the time of making of any Swingline Loan, the sum of the
Effective Amount of all outstanding Swingline Loans plus the Effective Amount of
all outstanding Facility B Revolving Loans plus the Effective Amount of all L/C
Obligations then outstanding, without duplication, shall not exceed the
aggregate Facility B Commitment; (iv) each Swingline Loan, when made, all
interest accrued thereon, and all reimbursable costs and expenses incurred or
payable in connection therewith, shall constitute an Obligation of Borrower
under this Agreement; and (v) each request for a Swingline Loan from BofA
pursuant to this Section 2.15 shall be made by the Borrower to the
Administrative Agent, shall be funded by BofA through the Administrative Agent,
and shall be repaid by the Borrower through the Administrative Agent (in order
that the Administrative Agent may keep an accurate record of the outstanding
balance at any time of Swingline Loans so as to monitor compliance with the
terms and provisions hereof), and each such request shall be in writing unless
the Administrative Agent in its sole discretion accepts an oral or telephonic
request. Each Swingline Loan shall be made upon the Borrower's irrevocable
written notice delivered to the Administrative Agent substantially in the form
of a Notice of Borrowing (which notice must be received by the Administrative
Agent prior to 1:00 p.m. (San Francisco time) on the requested date of such
Swingline Loan), specifying:
(i) the amount of the Swingline Loan, which shall be in a minimum amount of
$200,000 or any multiple of $100,000 in excess thereof; and
(ii) the requested date of such Swingline Loan, which shall be a Business Day;
(b) If any Swingline Loan made pursuant to this Section 2.15, and in compliance
with the conditions set forth in the immediately preceding paragraph of this
Section 2.15, is not repaid by the Borrower on or before the seventh calendar
day following the day that it was funded by BofA, BofA shall have the right in
BofA's sole and absolute discretion, by giving notice to the Borrower and the
Banks, to cause such Swingline Loan automatically upon the giving of such notice
to be converted into a Facility B Revolving Loan which is a Base Rate Loan, and
upon receipt of such notice each Bank shall fund to the Administrative Agent,
for the account of BofA, such Bank's ratable share of such Facility B Revolving
Loan, based on such Bank's Pro Rata Share; provided, that if any Insolvency
Proceeding has been commenced with respect to the Borrower on or prior to the
date on which such Swingline Loan is due, and in lieu of funding its Pro Rata
Share of a Facility B Revolving Loan, each Bank shall be deemed to, and hereby
irrevocably and unconditionally agrees to, purchase from BofA a participation in
such Swingline Loan equal to the product of such Bank's Pro Rata Share times the
amount of such Swingline Loan.
(c) Each Bank's obligation in accordance with this Agreement to make Facility B
Revolving Loans upon the failure of a Swingline Loan to be repaid in full when
due, or to purchase participations in such Swingline Loans, shall, in each case,
be absolute and unconditional and without recourse to BofA and shall not be
affected by any circumstance, including (i) any set-off, counterclaim,
recoupment, defense or other right which such Bank may have against BofA, the
Borrower or any other Person for any reason whatsoever; (ii) the occurrence or
continuance of a Default, an Event of Default or a Material Adverse Effect; or
(iii) any other circumstance, happening or event whatsoever, whether or not
similar to any of the foregoing.
ARTICLE III
THE LETTERS OF CREDIT
3.01 The Letter of Credit Subfacility. (a) On the terms and subject to the
conditions set forth in this Agreement and as a subfacility of the Facility B
Commitment, (i) the Issuing Banks agree, from time to time on any Business Day
during the period from the Restatement Effective Date to the date that is 30
days prior to the Revolving Loan Termination Date to issue Letters of Credit for
the account of the Borrower and to amend or renew Letters of Credit previously
issued by them, in each case in accordance with Sections 3.02(c) and 3.02(d);
and (ii) the Banks severally agree to participate in Letters of Credit Issued
for the account of the Borrower; provided, that the Issuing Banks shall not be
obligated to Issue, and no Bank shall be obligated to participate in, any Letter
of Credit if, as of the date of Issuance of such Letter of Credit (the "Issuance
Date"), (1) the Effective Amount of all L/C Obligations plus the Effective
Amount of all Facility B Revolving Loans plus the Effective Amount of all
Swingline Loans exceeds the combined Facility B Commitments, or (2) the
Effective Amount of L/C Obligations exceeds the L/C Commitment. Within the
foregoing limits, and subject to the other terms and conditions hereof, the
ability of the Borrower to obtain Letters of Credit shall be fully revolving,
and, accordingly, the Borrower may, during the foregoing period, obtain Letters
of Credit to replace Letters of Credit which have expired or which have been
drawn upon and reimbursed.
(b) No Issuing Bank is under any obligation to Issue any Letter of Credit
if:
(i) any order, judgment or decree of any Governmental Authority or
arbitrator shall by its terms purport to enjoin or restrain such Issuing Bank
from Issuing such Letter of Credit, or any Requirement of Law applicable to such
Issuing Bank or any request or directive (whether or not having the force of
law) from any Governmental Authority with jurisdiction over such Issuing Bank
shall prohibit, or request that such Issuing Bank refrain from, the Issuance of
letters of credit generally or such Letter of Credit in particular or shall
impose upon such Issuing Bank with respect to such Letter of Credit any
restriction, reserve or capital requirement (for which such Issuing Bank is not
otherwise compensated under this Agreement) not in effect on the Restatement
Effective Date, or shall impose upon such Issuing Bank any unreimbursed loss,
cost or expense which was not applicable on the Restatement Effective Date and
which such Issuing Bank in good faith deems material to it;
(ii) such Issuing Bank has received written notice from any Bank, the
Administrative Agent or the Borrower, on or prior to the Business Day
prior to the requested date of Issuance of such Letter of Credit, that
one or more of the applicable conditions contained in Article V is not
then satisfied;
(iii) the expiry date of any requested Letter of Credit is (A) with respect
to Commercial Letters of Credit supporting the purchase of inventory by the
Borrower, more than (1) 180 days after the date of Issuance or (2) 30 days prior
to the Revolving Loan Termination Date, unless the Majority Banks have approved
such expiry date in writing, (B) with respect to Standby Letters of Credit, more
than (1) 364 days after the date of Issuance or (2) 30 days prior to the
Revolving Loan Termination Date, unless the Majority Banks have approved such
expiry date in writing; or (C) with respect to any other Letter of Credit, 30
days prior to the Revolving Loan Termination Date, unless all of the Banks have
approved such expiry date in writing;
(iv) the expiry date of any requested Letter of Credit is prior to the
maturity date of any financial obligation to be supported by the
requested Letter of Credit;
(v) any requested Letter of Credit does not provide for drafts (unless
there is a demand for payment in the documentation required to be
delivered in connection with any drawing), or is not otherwise in form
and substance acceptable to such Issuing Bank, or the Issuance of a
Letter of Credit shall violate any applicable policies of such Issuing
Bank;
(vi) any Standby Letter of Credit is for the purpose of supporting the
issuance of any letter of credit by any other Person other than with
respect to any Existing Letter of Credit so designated in Schedule
3.03; or
(vii) such Letter of Credit is to be used for a purpose other than any
permitted use of the proceeds of Facility B Revolving Loans as set
forth in Section 7.11.
3.02 Issuance, Amendment and Renewal of Letters of Credit. (a) Each Letter of
Credit shall be issued upon the irrevocable written request of the Borrower
received by the Issuing Bank (with a copy sent by the Borrower to the
Administrative Agent) prior to 10:00 a.m. (San Francisco time) on the proposed
date of Issuance for Letters of Credit in the form of Exhibit H, I or J hereto
and at least four days prior to the proposed date of Issuance for other forms of
Letters of Credit. Each such request for issuance of a Letter of Credit shall be
by facsimile, confirmed by telephone, in the form of an L/C Application, and
shall specify in form and detail satisfactory to the applicable Issuing Bank:
(i) the proposed date of issuance of the Letter of Credit (which shall be a
Business Day); (ii) the face amount of the Letter of Credit; (iii) the expiry
date of the Letter of Credit; (iv) the name and address of the beneficiary
thereof; (v) the documents to be presented by the beneficiary of the Letter of
Credit in case of any drawing thereunder; (vi) the full text of any certificate
to be presented by the beneficiary in case of any drawing thereunder; and (vii)
such other matters as the Issuing Bank may require.
(b) Prior to the Issuance of any Letter of Credit, the
applicable Issuing Bank will confirm with the Administrative Agent (by telephone
or in writing) that the Administrative Agent has received a copy of the L/C
Application or L/C Amendment Application from the Borrower and, if not, such
Issuing Bank will provide the Administrative Agent with a copy thereof. Unless
such Issuing Bank has received notice on or before 11:00 a.m. (San Francisco
time) on the date such Issuing Bank is to issue a requested Letter of Credit
from the Administrative Agent (A) directing such Issuing Bank not to issue such
Letter of Credit because such issuance is not then permitted under Section
3.01(a) as a result of the limitations set forth in clauses (1) or (2) thereof
or Section 3.01(b)(ii); or (B) that one or more conditions specified in Article
V are not then satisfied; then, subject to the terms and conditions hereof, such
Issuing Bank shall, on the requested date, issue a Letter of Credit in
accordance with such Issuing Bank's usual and customary business practices.
(c) From time to time while a Letter of Credit is outstanding
and prior to the Revolving Loan Termination Date, any Issuing Bank will, upon
the written request of the Borrower received by such Issuing Bank (with a copy
sent by the Borrower to the Administrative Agent) at least four days (or such
shorter time as such Issuing Bank may agree in a particular instance in its sole
discretion) prior to the proposed date of amendment, amend any Letter of Credit
issued by it. Each such request for amendment of a Letter of Credit shall be
made by facsimile, confirmed by telephone, made in the form of an L/C Amendment
Application and shall specify in form and detail satisfactory to such Issuing
Bank: (i) the Letter of Credit to be amended; (ii) the proposed date of
amendment of the Letter of Credit (which shall be a Business Day); (iii) the
nature of the proposed amendment; and (iv) such other matters as such Issuing
Bank may require. The applicable Issuing Bank shall be under no obligation to
amend any Letter of Credit if: (A) such Issuing Bank would have no obligation at
such time to issue such Letter of Credit in its amended form under the terms of
this Agreement; or (B) the beneficiary of any such Letter of Credit does not
accept the proposed amendment to the Letter of Credit. The Administrative Agent
will promptly notify the Banks of the receipt by it of any L/C Application or
L/C Amendment Application.
(d) The Issuing Banks and the Banks agree that, while a Letter
of Credit is outstanding and prior to the Revolving Loan Termination Date, at
the option of the Borrower and upon the written request of the Borrower received
by the applicable Issuing Bank (with a copy sent by the Borrower to the
Administrative Agent) at least four days (or such shorter time as such Issuing
Bank may agree in a particular instance in its sole discretion) prior to the
proposed date of notification of renewal, such Issuing Bank shall be entitled to
authorize the automatic renewal of any Letter of Credit issued by it. Each such
request for renewal of a Letter of Credit shall be made by facsimile, confirmed
by telephone, in the form of an L/C Amendment Application, and shall specify in
form and detail satisfactory to such Issuing Bank: (i) the Letter of Credit to
be renewed; (ii) the proposed date of notification of renewal of the Letter of
Credit (which shall be a Business Day); (iii) the revised expiry date of the
Letter of Credit; and (iv) such other matters as such Issuing Bank may require.
The applicable Issuing Bank shall be under no obligation to so renew any Letter
of Credit if: (A) such Issuing Bank would have no obligation at such time to
issue or amend such Letter of Credit in its renewed form under the terms of this
Agreement; or (B) the beneficiary of any such Letter of Credit does not accept
the proposed renewal of the Letter of Credit. If any outstanding Letter of
Credit shall provide that it shall be automatically renewed unless the
beneficiary thereof receives notice from the applicable Issuing Bank that such
Letter of Credit shall not be renewed, and if at the time of renewal such
Issuing Bank would be entitled to authorize the automatic renewal of such Letter
of Credit in accordance with this Section 3.02(d) upon the request of the
Borrower, but such Issuing Bank shall not have received any L/C Amendment
Application with respect to such renewal or other written direction by the
Borrower with respect thereto, such Issuing Bank shall nonetheless be permitted
to allow such Letter of Credit to renew, and the Borrower and the Banks hereby
authorize such renewal, and, accordingly, such Issuing Bank shall be deemed to
have received an L/C Amendment Application from the Borrower requesting such
renewal.
(e) The Issuing Banks may, at their election (or as required
by the Administrative Agent at the direction of the Majority Banks), deliver any
notices of termination or other communications to any Letter of Credit
beneficiary or transferee, and take any other action as necessary or
appropriate, at any time and from time to time, in order to cause the expiry
date of such Letter of Credit to be a date not later than the Revolving Loan
Termination Date.
(f) This Agreement shall control in the event of any conflict
with any L/C-Related Document (other than any Letter of Credit).
(g) The Issuing Banks will also deliver to the Administrative
Agent, concurrently or promptly following delivery of a Letter of Credit, or
amendment to or renewal of a Letter of Credit, to an advising bank or a
beneficiary, a true and complete copy of each such Letter of Credit or amendment
to or renewal of a Letter of Credit.
3.03 Existing Letters of Credit; Risk Participations, Drawings and
Reimbursements. (a) On and after the Restatement Effective Date, the Existing
Letters of Credit shall be deemed for all purposes, including for purposes of
the fees to be collected pursuant to Sections 3.08(a) and 3.08(c), and
reimbursement costs and expenses to the extent provided in this Agreement,
Letters of Credit outstanding under this Agreement and entitled to the benefits
of this Agreement and the other Loan Documents, and shall be governed by the
applications and agreements pertaining thereto and by this Agreement. Each
Existing Letter of Credit designated as a "standby letter of credit" on Schedule
3.03 shall be deemed to be a Standby Letter of Credit, and each Existing Letter
of Credit designated as a "commercial documentary letter of credit" on Schedule
3.03 shall be deemed to be a Commercial Letter of Credit. Each Bank shall be
deemed to, and hereby irrevocably and unconditionally agrees to, purchase from
the Issuing Banks on the Restatement Effective Date a participation in each such
Letter of Credit and each drawing thereunder in an amount equal to the product
of (i) such Bank's Pro Rata Share times (ii) the maximum amount available to be
drawn under such Letter of Credit and the amount of such drawing, respectively.
For purposes of Sections 2.01(a) and 2.10(b), the Existing Letters of Credit
shall be deemed to utilize the Pro Rata Share of each Bank.
(b) Immediately upon the Issuance of each Letter of Credit in
addition to those described in Section 3.03(a), each Bank shall be deemed to,
and hereby irrevocably and unconditionally agrees to, purchase from the
applicable Issuing Bank a participation in such Letter of Credit and each
drawing thereunder in an amount equal to the product of (i) the Pro Rata Share
of such Bank, times (ii) the maximum amount available to be drawn under such
Letter of Credit and the amount of such drawing, respectively. For purposes of
Sections 2.01(a) and 2.10(b), each Issuance of a Letter of Credit shall be
deemed to utilize the Facility B Commitment of each Bank by an amount equal to
the amount of such participation.
(c) In the event of any request for a drawing under a Letter
of Credit by the beneficiary or transferee thereof, the applicable Issuing Bank
will promptly notify the Borrower. The Borrower shall reimburse such Issuing
Bank prior to 10:00 a.m. (San Francisco time), on each date that any amount is
paid by such Issuing Bank under any Letter of Credit (each such date, an "Honor
Date"), in an amount equal to the amount so paid by such Issuing Bank. In the
event the Borrower fails to reimburse such Issuing Bank of any Letter of Credit
for the full amount of any drawing under such Letter of Credit by 10:00 a.m.
(San Francisco time) on the Honor Date, such Issuing Bank will promptly notify
the Administrative Agent and the Administrative Agent will promptly notify each
Bank thereof, and the Borrower shall be deemed to have requested that Base Rate
Loans be made by the Banks to be disbursed on the Honor Date under such Letter
of Credit, subject to the conditions set forth in Section 5.02 (including,
without limitation, the condition that no Insolvency Proceeding shall have been
commenced by or against the Borrower on the Honor Date). Any notice given by an
Issuing Bank or the Administrative Agent pursuant to this Section 3.03(c) may be
oral if immediately confirmed in writing (including by facsimile); provided that
the lack of such an immediate confirmation shall not affect the conclusiveness
or binding effect of such notice.
(d) Each Bank shall upon any notice pursuant to Section
3.03(c) make available to the Administrative Agent for the account of the
applicable Issuing Bank an amount in Dollars and in immediately available funds
equal to its Pro Rata Share of the amount of the drawing, whereupon the
participating Banks shall (subject to Section 3.03(e)) each be deemed to have
made a Facility B Revolving Loan consisting of a Base Rate Loan to the Borrower
in that amount. If any Bank so notified fails to make available to the
Administrative Agent for the account of the applicable Issuing Bank the amount
of such Bank's Pro Rata Share of the amount of the drawing by no later than
11:00 a.m. (San Francisco time) on the Honor Date, then interest shall accrue on
such Bank's obligation to make such payment, from the Honor Date to the date
such Bank makes such payment, at a rate per annum equal to the Federal Funds
Rate in effect from time to time during such period. The Administrative Agent
will promptly give notice of the occurrence of the Honor Date, but failure of
the Administrative Agent to give any such notice on the Honor Date or in
sufficient time to enable any Bank to effect such payment on such date shall not
relieve such Bank from its obligations under this Section 3.03.
(e) With respect to any unreimbursed drawing that is not
converted into Facility B Revolving Loans consisting of Base Rate Loans to the
Borrower in whole or in part, because of the Borrower's failure to satisfy the
conditions set forth in Section 5.02 or for any other reason, the Borrower shall
be deemed to have incurred from an Issuing Bank an L/C Borrowing in the amount
of such drawing, which L/C Borrowing shall be due and payable on demand
(together with interest) and shall bear interest at a rate per annum equal to
the Base Rate plus the Applicable Margin plus 2% per annum, and each Bank's
payment to such Issuing Bank pursuant to Section 3.03(d) shall be deemed payment
in respect of its participation in such L/C Borrowing and shall constitute an
L/C Advance from such Bank in satisfaction of its participation obligation under
this Section 3.03.
(f) Each Bank's obligation in accordance with this Agreement
to make the Facility B Revolving Loans or L/C Advances, as contemplated by this
Section 3.03, as a result of a drawing under a Letter of Credit, shall be
absolute and unconditional and without recourse to the Issuing Banks (except in
circumstances arising solely as a result of willful misconduct or gross
negligence by the Issuing Banks) and shall not be affected by any circumstance,
including (i) any set-off, counterclaim, recoupment, defense or other right
which such Bank may have against any Issuing Bank, the Borrower or any other
Person for any reason whatsoever; (ii) the occurrence or continuance of a
Default, an Event of Default or a Material Adverse Effect; or (iii) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing.
3.04 Repayment of Participations. (a) Upon (and only upon) receipt by the
Administrative Agent for the account of an Issuing Bank of immediately available
funds from the Borrower (i) in reimbursement of any payment made by such Issuing
Bank under the Letter of Credit with respect to which any Bank has paid the
Administrative Agent for the account of such Issuing Bank for such Bank's
participation in the Letter of Credit pursuant to Section 3.03 or (ii) in
payment of interest thereon, the Administrative Agent will pay to each Bank, in
the same funds as those received by the Administrative Agent for the account of
such Issuing Bank, the amount of such Bank's Pro Rata Share of such funds, and
such Issuing Bank shall receive the amount of the Pro Rata Share of such funds
of any Bank that did not so pay the Administrative Agent for the account of such
Issuing Bank.
(b) If the Administrative Agent or any Issuing Bank is
required at any time to return to the Borrower, or to a trustee, receiver,
liquidator, custodian, or any official in any Insolvency Proceeding, any portion
of the payments made by the Borrower to the Administrative Agent for the account
of such Issuing Bank pursuant to Section 3.04(a) in reimbursement of a payment
made under the Letter of Credit or interest or fee thereon, each Bank shall, on
demand of the Administrative Agent, forthwith return to the Administrative Agent
or such Issuing Bank the amount of its Pro Rata Share of any amounts so returned
by the Administrative Agent or such Issuing Bank plus interest thereon from the
date such demand is made to the date such amounts are returned by such Bank to
the Administrative Agent or such Issuing Bank, at a rate per annum equal to the
Federal Funds Rate in effect from time to time.
3.05 Role of the Issuing Banks. (a) Each Bank and the Borrower agree that, in
paying any drawing under a Letter of Credit, the applicable Issuing Bank shall
not have any responsibility to obtain any document (other than any sight draft
and certificates expressly required by the Letter of Credit) or to ascertain or
inquire as to the validity or accuracy of any such document or the authority of
the Person executing or delivering any such document.
(b) No Agent-Related Person nor any of the respective
correspondents, participants or assignees of an Issuing Bank shall be liable to
any Bank for: (i) any action taken or omitted in connection herewith at the
request or with the approval of the Banks (including the Majority Banks, as
applicable); (ii) any action taken or omitted in the absence of gross negligence
or willful misconduct; or (iii) the due execution, effectiveness, validity or
enforceability of any L/C-Related Document.
(c) The Borrower hereby assumes all risks of the acts or
omissions of any beneficiary or transferee with respect to its use of any Letter
of Credit; provided, however, that this assumption is not intended to, and shall
not, preclude the Borrower's pursuing such rights and remedies as it may have
against the beneficiary or transferee at law or under any other agreement. No
Agent-Related Person, nor any of the respective correspondents, participants or
assignees of any Issuing Bank, shall be liable or responsible for any of the
matters described in clauses (i) through (vii) of Section 3.06; provided,
however, anything in such clauses to the contrary notwithstanding, that the
Borrower may have a claim against an Issuing Bank, and an Issuing Bank may be
liable to the Borrower, to the extent, but only to the extent, of any direct, as
opposed to consequential or exemplary, damages suffered by the Borrower which
the Borrower proves were caused by an Issuing Bank's willful misconduct or gross
negligence or an Issuing Bank's willful failure to pay under any Letter of
Credit after the presentation to it by the beneficiary of a sight draft and
certificate(s) strictly complying with the terms and conditions of a Letter of
Credit. In furtherance and not in limitation of the foregoing: (i) an Issuing
Bank may accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary; and (ii) an Issuing Bank shall not be responsible
for the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason.
3.06 Obligations Absolute. The obligations of the Borrower under this Agreement
and any L/C-Related Document to reimburse the Issuing Banks for drawings under
Letters of Credit, and to repay any L/C Borrowing and any drawings under Letters
of Credit converted into Facility B Revolving Loans, shall be unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement and each such other L/C-Related Document under all circumstances,
including the following:
(i) any lack of validity or enforceability of this Agreement or any
L/C-Related Document;
(ii) any change in the time, manner or place of payment of, or in any other
term of, all or any of the obligations of the Borrower in respect of
any Letter of Credit or any other amendment or waiver of or any consent
to departure from all or any of the L/C-Related Documents;
(iii) the existence of any claim, set-off, defense or other right that the
Borrower may have at any time against any beneficiary or any transferee
of any Letter of Credit (or any Person for whom any such beneficiary or
any such transferee may be acting), an Issuing Bank or any other
Person, whether in connection with this Agreement, the transactions
contemplated hereby or by the L/C-Related Documents or any unrelated
transaction;
(iv) any draft, demand, certificate or other document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect; or any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under any
Letter of Credit;
(v) any payment by an Issuing Bank under any Letter of Credit against
presentation of a draft or certificate that does not strictly comply
with the terms of any Letter of Credit; or any payment made by an
Issuing Bank under any Letter of Credit to any Person purporting to be
a trustee in bankruptcy, debtor-in-possession, assignee for the benefit
of creditors, liquidator, receiver or other representative of or
successor to any beneficiary or any transferee of any Letter of Credit,
including any arising in connection with any Insolvency Proceeding;
(vi) any exchange, release or non-perfection of any collateral, or any
release or amendment or waiver of or consent to departure from any
other guarantee, for all or any of the obligations of the Borrower in
respect of any Letter of Credit; or
(vii) any other circumstance or happening whatsoever, whether or not similar
to any of the foregoing, including any other circumstance that might
otherwise constitute a defense available to, or a discharge of, the
Borrower or a guarantor.
3.07 Cash Collateral Pledge. Upon (i) the request of the Administrative Agent,
(A) if an Issuing Bank has honored any full or partial drawing request on any
Letter of Credit and such drawing has resulted in an L/C Borrowing under this
Agreement, or (B) if, as of the Revolving Loan Termination Date, any Letters of
Credit may for any reason remain outstanding and partially or wholly undrawn, or
(ii) the occurrence of the circumstances described in Section 2.07(b) requiring
the Borrower to Cash Collateralize Letters of Credit, then, the Borrower shall
immediately Cash Collateralize the L/C Obligations in an amount equal to the L/C
Obligations.
3.08 Letter of Credit Fees. (a) The Borrower agrees to pay to the Administrative
Agent for the account of each of the Banks based on their respective Pro Rata
Shares a letter of credit fee (i) with respect to the Standby Letters of Credit
equal to the Standby Letter of Credit Risk Participation Percentage of the
average daily maximum amount available to be drawn of the outstanding Standby
Letters of Credit and (ii) with respect to the Commercial Letters of Credit
equal to the Commercial Letter of Credit Risk Participation Percentage of the
average daily maximum amount available to be drawn of the outstanding Commercial
Letters of Credit, in each case computed on a quarterly basis in arrears on the
last Business Day of each fiscal quarter based upon Letters of Credit
outstanding for that quarter as calculated by the Administrative Agent. Such
letter of credit fees shall be due and payable quarterly in arrears on the first
Business Day following each fiscal quarter during which Standby Letters of
Credit or Commercial Letters of Credit, as the case may be, are outstanding,
commencing on the first such quarterly date to occur after the Restatement
Effective Date, through the Revolving Loan Termination Date, with the final
payment to be made on the Revolving Loan Termination Date.
(b) The Borrower agrees to pay to the applicable Issuing Bank
for its sole account a letter of credit fronting fee (i) for each Standby Letter
of Credit Issued by such Issuing Bank, equal to 0.125% per annum of the face
amount (or increased face amount, as the case may be) of such Standby Letter of
Credit and (ii) for each Commercial Letter of Credit Issued by such Issuing
Bank, equal to 0.10% per annum of the face amount (or increased face amount, as
the case may be) of such Commercial Letter of Credit. Such Letter of Credit
fronting fee shall be due and payable quarterly in arrears on the first Business
Day following each fiscal quarter during which such Letter of Credit is
outstanding, commencing on the first such quarterly date to occur after the
Restatement Effective Date, with the final payment to be made on the Revolving
Loan Termination Date.
(c) The Borrower agrees to pay to the Issuing Banks from time
to time on demand the normal issuance, presentation, amendment and other
processing fees, and other standard costs and charges, of the Issuing Banks
relating to Standby Letters of Credit and Commercial Letters of Credit as from
time to time in effect.
3.09 Uniform Customs and Practice. The Uniform Customs and Practice for
Documentary Credits as published by the International Chamber of Commerce
("UCP") most recently at the time of issuance of any Letter of Credit shall
(unless otherwise expressly provided in the Letters of Credit) apply to such
Letter of Credit.
ARTICLE IV
TAXES, YIELD PROTECTION AND ILLEGALITY
4.01 Taxes. (a) Any and all payments by the Borrower to each Bank or the
Administrative Agent under this Agreement and any other Loan Document shall be
made free and clear of, and without deduction or withholding for any Taxes. In
addition, the Borrower shall pay all Other Taxes.
(b) The Borrower agrees to indemnify and hold harmless each
Bank and the Administrative Agent for the full amount of Taxes or Other Taxes
(including any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section) paid by the Bank or the Administrative Agent and any
liability (including interest, additions to tax and expenses) arising therefrom
or with respect thereto, whether or not such Taxes or Other Taxes were correctly
or legally asserted. Payment under this indemnification shall be made within 30
days after the date the Bank or the Administrative Agent makes written demand
therefor; provided, however, that if a Bank or the Administrative Agent fails to
make such demand within 90 days after such Bank or the Administrative Agent, as
the case may be, obtains actual knowledge of the event entitling such Bank or
the Administrative Agent to indemnification under this Section 4.01, such Bank
or the Administrative Agent shall, with respect to indemnification payable
pursuant to this Section 4.01 in respect of any costs resulting from such event,
only be entitled to payment under this Section 4.01 for costs incurred from and
after the date 90 days prior to the date that such Bank makes such demand.
(c) If the Borrower shall be required by law to deduct or
withhold any Taxes or Other Taxes from or in respect of any sum payable under
this Agreement to any Bank or the Administrative Agent, then:
(i) the sum payable shall be increased as necessary
so that after making all required deductions and withholdings
(including deductions and withholdings applicable to additional sums
payable under this Section) such Bank or the Administrative Agent, as
the case may be, receives an amount equal to the sum it would have
received had no such deductions or withholdings been made;
(ii) the Borrower shall make such deductions and withholdings;
(iii) the Borrower shall pay the full amount deducted
or withheld to the relevant taxing authority or other authority in
accordance with applicable law; and
(iv) the Borrower shall also pay to each Bank or the
Administrative Agent for the account of such Bank, at the time interest
is paid, all additional amounts which the respective Bank specifies as
necessary to preserve the after-tax yield the Bank would have received
if such Taxes or Other Taxes had not been imposed.
(d) Within 30 days after the date of any payment by the
Borrower of Taxes or Other Taxes, the Borrower shall furnish the Administrative
Agent the original or a certified copy of a receipt evidencing payment thereof,
or other evidence of payment satisfactory to the Administrative Agent.
(e) If the Borrower is required to pay additional amounts to
any Bank or the Administrative Agent pursuant to subsection (c) of this Section,
then such Bank shall use reasonable efforts (consistent with legal and
regulatory restrictions) to change the jurisdiction of its Lending Office so as
to eliminate any such additional payment by the Borrower which may thereafter
accrue, if such change in the judgment of such Bank is not otherwise
disadvantageous to such Bank.
4.02 Illegality. (a) If any Bank determines that the introduction of any
Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has asserted
that it is unlawful, for any Bank or its applicable Lending Office to make
Eurodollar Rate Loans, then, on notice thereof by the Bank to the Borrower
through the Administrative Agent, any obligation of that Bank to make Eurodollar
Rate Loans shall be suspended until the Bank notifies the Administrative Agent
and the Borrower that the circumstances giving rise to such determination no
longer exist.
(b) If a Bank determines that it is unlawful to maintain any
Eurodollar Rate Loan, the Borrower shall, upon its receipt of notice of such
fact and demand from such Bank (with a copy to the Administrative Agent), prepay
in full such Eurodollar Rate Loans of that Bank then outstanding, together with
interest accrued thereon and amounts required under Section 4.04, either on the
last day of the Interest Period thereof, if the Bank may lawfully continue to
maintain such Eurodollar Rate Loans to such day, or immediately, if the Bank may
not lawfully continue to maintain such Eurodollar Rate Loan. If the Borrower is
required to so prepay any Eurodollar Rate Loan, then concurrently with such
prepayment, the Borrower shall borrow from the affected Bank, in the amount of
such repayment, a Base Rate Loan.
(c) If the obligation of any Bank to make or maintain
Eurodollar Rate Loans has been so terminated or suspended, the Borrower may
elect, by giving notice to the Bank through the Administrative Agent that all
Loans which would otherwise be made by the Bank as Eurodollar Rate Loans shall
be instead Base Rate Loans.
(d) Before giving any notice to the Administrative Agent under
this Section, the affected Bank shall designate a different Lending Office with
respect to its Eurodollar Rate Loans if such designation will avoid the need for
giving such notice or making such demand and will not, in the judgment of the
Bank, be illegal or otherwise disadvantageous to the Bank.
4.03 Increased Costs and Reduction of Return. (a) If any Bank determines that,
due to either (i) the introduction of or any change (other than any change by
way of imposition of or increase in reserve requirements included in the
calculation of the Eurodollar Rate or in respect of the assessment rate payable
by any Bank to the FDIC for insuring U.S. deposits) in or in the interpretation
of any law or regulation or (ii) the compliance by that Bank with any guideline
or request from any central bank or other Governmental Authority (whether or not
having the force of law), there shall be any increase in the cost to such Bank
of agreeing to make or making, funding or maintaining any Eurodollar Rate Loans
or participating in Letters of Credit, or, in the case of any Issuing Bank, any
increase in the cost to such Issuing Bank of agreeing to issue, issuing or
maintaining any Letter of Credit or of agreeing to make or making, funding or
maintaining any unpaid drawing under any Letter of Credit, then the Borrower
shall be liable for, and shall from time to time, upon demand (with a copy of
such demand to be sent to the Administrative Agent), pay to the Administrative
Agent for the account of such Bank, additional amounts as are sufficient to
compensate such Bank for such increased costs; provided, however, that if a Bank
fails to make such demand within 90 days after such Bank obtains actual
knowledge of the event entitling such Bank to compensation under this Section
4.03(a), such Bank shall, with respect to compensation payable pursuant to this
Section 4.03(a) in respect of any costs resulting from such event, only be
entitled to payment under this Section 4.03(a) for costs incurred from and after
the date 90 days prior to the date that such Bank makes such demand.
(b) If any Bank shall have determined that (i) the
introduction of any Capital Adequacy Regulation, (ii) any change in any Capital
Adequacy Regulation, (iii) any change in the interpretation or administration of
any Capital Adequacy Regulation by any central bank or other Governmental
Authority charged with the interpretation or administration thereof, or (iv)
compliance by the Bank (or its Lending Office) or any corporation controlling
the Bank with any Capital Adequacy Regulation, affects or would affect the
amount of capital required or expected to be maintained by the Bank or any
corporation controlling the Bank and (taking into consideration such Bank's or
such corporation's policies with respect to capital adequacy and such Bank's
desired return on capital) determines that the amount of such capital is
increased as a consequence of its Revolving Loan Commitments, Loans, credits or
obligations under this Agreement, then, upon demand of such Bank to the Borrower
through the Administrative Agent, the Borrower shall pay to the Bank, from time
to time as specified by the Bank, additional amounts sufficient to compensate
the Bank for such increase; provided, however, that if a Bank fails to make such
demand within 90 days after such Bank obtains actual knowledge of the event
entitling such Bank to compensation under this Section 4.03(a), such Bank shall,
with respect to compensation payable pursuant to this Section 4.03(a) in respect
of any costs resulting from such event, only be entitled to payment under this
Section 4.03(a) for costs incurred from and after the date 90 days prior to the
date that such Bank makes such demand.
4.04 Funding Losses. The Borrower shall reimburse each Bank and hold each Bank
harmless from any loss or expense which the Bank may sustain or incur as a
consequence of:
(a) the failure of the Borrower to make on a timely basis any payment of
principal of any Eurodollar Rate Loan;
(b) the failure of the Borrower to borrow, continue or convert a Loan after the
Borrower has given (or is deemed to have given) a Notice of Borrowing or a
Notice of Conversion/ Continuation;
(c) the failure of the Borrower to make any prepayment of Eurodollar Rate Loans
in accordance with any notice delivered under Section 2.06;
(d) the prepayment (including pursuant to Section 2.07) or other payment
(including after acceleration thereof) of a Eurodollar Rate Loan on a day that
is not the last day of the relevant Interest Period; or
(e) the automatic conversion under Section 2.04 of any Eurodollar Rate Loan to a
Base Rate Loan on a day that is not the last day of the relevant Interest
Period;
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its Eurodollar Rate Loans or from fees
payable to terminate the deposits from which such funds were obtained. Such
reimbursement of funding losses or expenses shall be paid by the Borrower to the
Administrative Agent within 15 days after demand therefor. For purposes of
calculating amounts payable by the Borrower to the Banks under this Section and
under Section 4.03(a), each Eurodollar Rate Loan made by a Bank (and each
related reserve, special deposit or similar requirement) shall be conclusively
deemed to have been funded at the LIBOR used in determining the Eurodollar Rate
for such Eurodollar Rate Loan by a matching deposit or other borrowing in the
interbank eurodollar market for a comparable amount and for a comparable period,
whether or not such Eurodollar Rate Loan is in fact so funded.
4.05 Inability to Determine Rates . If the Administrative Agent determines that
for any reason adequate and reasonable means do not exist for determining the
Eurodollar Rate for any requested Interest Period with respect to a proposed
Eurodollar Rate Loan or that the Eurodollar Rate applicable pursuant to Section
2.09(a) for any requested Interest Period with respect to a proposed Eurodollar
Rate Loan does not adequately and fairly reflect the cost to such Banks of
funding such Loan, the Administrative Agent will promptly so notify the Borrower
and each Bank. Thereafter, the obligation of the Banks to make or maintain
Eurodollar Rate Loans under this Agreement shall be suspended until the
Administrative Agent upon the instruction of the Majority Banks revokes such
notice in writing. Upon receipt of such notice, the Borrower may revoke any
Notice of Borrowing or Notice of Conversion/Continuation then submitted by it.
If the Borrower does not revoke such Notice, the Banks shall make, convert or
continue the Loans, as proposed by the Borrower, in the amount specified in the
applicable notice submitted by the Borrower, but such Loans shall be made,
converted or continued as Base Rate Loans instead of Eurodollar Rate Loans.
4.06 Survival. The agreements and obligations of the Borrower in this Article IV
shall survive the payment of all other Obligations.
4.07 Replacement of Banks. In the event that (a) any Bank shall request
compensation from the Borrower pursuant to Section 4.01 or 4.03 or (b) any Bank
shall elect not to extend the Revolving Loan Termination Date as provided in
Section 2.08(c), the Borrower may, so long as no Event of Default has occurred
and is continuing, give not less than ten Business Days' prior notice to such
Bank (with a copy to the Administrative Agent) that the Borrower intends to
replace such Bank with respect to its rights and obligations as a "Bank" under
this Agreement (including with respect to such Bank's Revolving Loan
Commitments, Loans and interest in L/C Obligations) with one or more Eligible
Assignees (which may be one or more of the Banks) selected by the Borrower and
acceptable to the Administrative Agent and the Issuing Bank(s) (none of which
shall unreasonably withhold its consent). The Borrower and each such Bank to be
so replaced agrees that such Bank's Revolving Loan Commitments, Loans, interest
in L/C Obligations and other rights and obligations of such Bank under this
Agreement shall be transferred pursuant and subject to an assignment made in
compliance with Section 11.08.
ARTICLE V
CONDITIONS PRECEDENT
5.01 Conditions to Effectiveness. The effectiveness of the amendment and
restatement of the Existing Credit Agreement is subject to the condition that
the Administrative Agent have received on or before April 30, 2000 all of the
following, in form and substance satisfactory to the Administrative Agent and,
where provided below, each Bank, and in sufficient copies for each Bank:
(a) Credit Agreement and any Notes. This Agreement and any Notes requested by
the Banks, executed by each party thereto.
(b) Resolutions; Incumbency.
(i) Copies of partnership authorizations for the Borrower and resolutions
of the board of directors of the General Partner authorizing the
transactions contemplated hereby, certified as of the Restatement
Effective Date by the Secretary or an Assistant Secretary of the
General Partner; and
(ii) A certificate of the Secretary or Assistant Secretary of the General
Partner certifying the names and true signatures of the officers of the
General Partner authorized to execute, deliver and perform, as
applicable, on behalf of the Borrower and the General Partner, this
Agreement and all other Loan Documents to be delivered by the Borrower
and the General Partner under this Agreement.
(c) Organization Documents; Good Standing. Each of the following documents:
(i) the articles or certificate of incorporation and the bylaws of the
General Partner and the Certificate of Limited Partnership and the
Partnership Agreement of the Borrower, in each case as in effect on the
Restatement Effective Date, certified by the Secretary or Assistant
Secretary of the General Partner as of the Restatement Effective Date;
(ii) a good standing and tax good standing certificate for the General
Partner and the Borrower from the Secretary of State (or similar,
applicable Governmental Authority) of its state of incorporation or
organization, as applicable, and each other state designated by
Administrative Agent where the General Partner or the Borrower conducts
significant business, in each case as of a recent date.
(d) Legal Opinions. The following legal opinions:
(i) the opinion of Bracewell & Patterson, L.L.P., counsel to the Borrower,
the General Partner and the Guarantors, or of such other counsel as are
acceptable to the Administrative Agent and the Banks, addressed to the
Administrative Agent and the Banks, substantially in the form of
Exhibit D; and
(ii) a favorable opinion of Orrick, Herrington & Sutcliffe LLP, special
counsel to the Administrative Agent.
(e) Payment of Fees. Evidence of payment by the Borrower of all accrued and
unpaid fees, costs and expenses to the extent then due and payable on the
Restatement Effective Date, together with Attorney Costs of the Administrative
Agent to the extent invoiced prior to or on the Restatement Effective Date, plus
such additional amounts of Attorney Costs as shall constitute the Administrative
Agent's reasonable estimate of Attorney Costs incurred or to be incurred by it
through the closing proceedings (provided that such estimate shall not
thereafter preclude final settling of accounts between the Borrower and the
Administrative Agent); including any such costs, fees and expenses arising under
or referenced in the Fee Letter or otherwise in Sections 2.10 and 11.04.
(f) Certificate. A certificate signed by a Responsible Officer, dated as of the
Restatement Effective Date, stating that:
(i) the representations and warranties contained in Article VI are true and
correct on and as of such date, as though made on and as of such date;
(ii) no Default or Event of Default shall have occurred and is continuing;
(iii) there has not occurred since April 30, 1999 any event or circumstance
that has resulted or could reasonably be expected to result in a
Material Adverse Effect; and
(iv) on February 28, 2000, the Borrower (A) issued the 2000 Notes in an
aggregate principal amount equal to $184,000,000 and (B) repaid in full
all of its outstanding obligations and irrevocably terminated the
commitments under its Credit Agreement dated as of December 17, 1999
with BofA (in its capacity as the Administrative Agent and the sole
Bank thereunder).
(g) No Material Change. There shall have been no Material Adverse Effect between
April 30, 1999 and the Restatement Effective Date.
(h) Trading Policies. The trading position policy and the supply inventory
position policy as in effect on the Restatement Effective Date, as evidenced by
the written policies delivered to the Administrative Agent, shall be
satisfactory to the Administrative Agent and the Majority Banks.
(i) Payments under Existing Credit Agreement. Evidence that all interest and
fees accrued under the Existing Credit Agreement through and including the
Restatement Effective Date shall have been paid by the Borrower.
(j) Assignments. The Banks which are a party to the Existing Credit Agreement
shall have effected any assignments of their rights and obligations under the
Existing Credit Agreement as may be necessary in order to reflect any change to
the Pro Rata Shares of the Banks under this Agreement as of the Restatement
Effective Date.
(k) Other Documents. Such other approvals, opinions, documents or materials as
the Administrative Agent or any Bank may request.
5.02 Conditions to All Extensions of Credit. The obligation of each Bank to make
any Loan to be made by it (including its initial Loan) or to continue or convert
any Loan under Section 2.04 and the obligation of the Issuing Banks to Issue any
Letters of Credit (including any initial Letters of Credit) is subject to the
satisfaction of the following conditions precedent on the relevant Borrowing
Date, Conversion/Continuation Date or Issuance Date:
(a) Notice, Application. The Administrative Agent shall have received (with, in
the case of the initial Loans only, a copy for each Bank) a Notice of Borrowing
or a Notice of Conversion/Continuation, as applicable, or in the case of any
Issuance of any Letter of Credit, the applicable Issuing Bank and the
Administrative Agent shall have received an L/C Application or L/C Amendment
Application, as required under Section 3.02;
(b) Continuation of Representations and Warranties. The representations and
warranties in Article VI shall be true and correct in all material respects on
and as of such Borrowing Date, Conversion/Continuation Date or Issuance Date
with the same effect as if made on and as of such Borrowing Date,
Conversion/Continuation Date or Issuance Date (except to the extent such
representations and warranties expressly refer to an earlier date, in which case
they shall be true and correct in all material respects as of such earlier date
and other than Section 6.22, which shall be true and correct in all material
respects on the Restatement Effective Date); and
(c) No Existing Default. No Default or Event of Default shall exist or shall
result from such Borrowing, continuation or conversion or Issuance.
(d) Note Purchase Agreements. The incurrence and maintenance
of such Loan or Letter of Credit, as the case may be, shall be permitted under
Section 10.1 or Section 10.3, as applicable, of the 1998 Note Purchase Agreement
and the 2000 Note Purchase Agreement, and the Borrower shall have delivered to
the Administrative Agent an officer's certificate demonstrating compliance with
such sections.
Each Notice of Borrowing, Notice of Conversion/Continuation
and L/C Application or L/C Amendment Application submitted by the Borrower under
this Agreement shall constitute a representation and warranty by the Borrower
under this Agreement, as of the date of each such notice and as of each
Borrowing Date, Conversion/Continuation Date or Issuance Date, as applicable,
that the conditions in Section 5.02 are satisfied.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
Each of the Borrower and the General Partner represents and
warrants to the Administrative Agent and each Bank that:
6.01 Corporate or Partnership Existence and Power. The General Partner, the MLP,
the Borrower and each of the Restricted Subsidiaries:
(a) is a corporation or partnership duly organized, validly existing and in
good standing under the laws of the jurisdiction of its formation;
(b) has the power and authority and all governmental licenses, authorizations,
consents and approvals to own its assets, carry on its business as now being or
as proposed to be conducted and to execute, deliver, and perform its obligations
under the Loan Documents;
(c) is duly qualified as a foreign corporation or partnership and is licensed
and in good standing under the laws of each jurisdiction where its ownership,
lease or operation of property or the conduct of its business requires such
qualification or license or where the failure so to qualify could reasonably be
expected to have a Material Adverse Effect; and
(d) is in compliance with all Requirements of Law, except where the failure to
so comply could not reasonably be expected to have a Material Adverse Effect.
6.02 Corporate or Partnership Authorization; No Contravention. The execution,
delivery and performance by the Borrower and the General Partner of this
Agreement and each other Loan Document to which the General Partner, the
Borrower or any Restricted Subsidiary is party, have been duly authorized by all
necessary partnership action on behalf of the Borrower and all necessary
corporate action on behalf of the General Partner and any Restricted Subsidiary,
and do not and will not:
(a) contravene the terms of any of the General Partner's, the MLP's, the
Borrower's or any Restricted Subsidiary's Organization Documents;
(b) conflict with or result in any breach or contravention of, or the creation
of any Lien under, any document evidencing any Contractual Obligation to which
the General Partner, the MLP, the Borrower or any Restricted Subsidiary is a
party or any order, injunction, writ or decree of any Governmental Authority to
which such Person or its property is subject where such conflict, breach,
contravention or Lien could reasonably be expected to have a Material Adverse
Effect; or
(c) violate any material Requirement of Law.
6.03 Governmental Authorization. No approval, consent, exemption, authorization,
or other action by, or notice to, or filing with, any Governmental Authority is
necessary or required in connection with (a) the execution, delivery or
performance by, or enforcement against, the General Partner, the Borrower or any
Restricted Subsidiary of this Agreement or any other Loan Document, or (b) the
continued operation of Borrower's business as contemplated to be conducted after
the date hereof by the Loan Documents, except in each case such approvals,
consents, exemptions, authorizations or other actions, notices or filings (i) as
have been obtained, (ii) as may be required under state securities or Blue Sky
laws, (iii) as are of a routine or administrative nature and are either (A) not
customarily obtained or made prior to the consummation of transactions such as
the transactions described in clauses (a) or (b) or (B) expected in the judgment
of the Borrower to be obtained in the ordinary course of business subsequent to
the consummation of the transactions described in clauses (a) or (b), or (iv)
that, if not obtained, could not reasonably be expected to have a Material
Adverse Effect.
6.04 Binding Effect. This Agreement and each other Loan Document to which the
General Partner, the Borrower or any Restricted Subsidiary is a party constitute
the legal, valid and binding obligations of such Person, enforceable against
such Person in accordance with their respective terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, or similar laws affecting
the enforcement of creditors' rights generally or by equitable principles
relating to enforceability.
6.05 Litigation. There are no actions, suits, proceedings, claims or disputes
pending, or to the best knowledge of the Borrower, threatened or contemplated,
at law, in equity, in arbitration or before any Governmental Authority, against
the General Partner, the MLP, the Borrower or any of its Subsidiaries or any of
their respective properties which:
(a) purport to affect or pertain to this Agreement or any other Loan
Document or any of the transactions contemplated hereby or thereby; or
(b) if determined adversely to the Borrower or its Subsidiaries, would
reasonably be expected to have a Material Adverse Effect. No injunction, writ,
temporary restraining order or any order of any nature has been issued by any
court or other Governmental Authority purporting to enjoin or restrain the
execution, delivery or performance of this Agreement or any other Loan Document,
or directing that the transactions provided for herein or therein not be
consummated as herein or therein provided.
6.06 No Default. No Default or Event of Default exists or would result from the
incurring, continuing or converting of any Obligations by the Borrower. As of
the Restatement Effective Date, neither the Borrower nor any Affiliate of the
Borrower is in default under or with respect to any Contractual Obligation in
any respect which, individually or together with all such defaults, could
reasonably be expected to have a Material Adverse Effect, or that would, if such
default had occurred after the Restatement Effective Date, create an Event of
Default under Section 9.01(e).
6.07 ERISA Compliance. (a) Each Plan is in compliance in all material respects
with the applicable provisions of ERISA, the Code and other federal or state
law. Each Plan which is intended to qualify under Section 401(a) of the Code has
received a favorable determination letter from the IRS and to the best knowledge
of the Borrower and the General Partner, nothing has occurred which would cause
the loss of such qualification.
(b) There are no pending, or to the best knowledge of Borrower
and the General Partner, threatened claims, actions or lawsuits, or action by
any Governmental Authority, with respect to any Plan which has resulted or could
reasonably be expected to result in a Material Adverse Effect. There has been no
prohibited transaction or other violation of the fiduciary responsibility rule
with respect to any Plan which could reasonably result in a Material Adverse
Effect.
(c) No ERISA Event has occurred or is reasonably expected to
occur with respect to any Pension Plan.
(d) No Pension Plan has any Unfunded Pension Liability that
could reasonably be expected to have a Material Adverse Effect.
(e) The Borrower has not incurred, nor does it reasonably
expect to incur, any liability under Title IV of ERISA with respect to any
Pension Plan (other than premiums due and not delinquent under Section 4007 of
ERISA).
(f) The Borrower has not transferred any Unfunded Pension
Liability to any Person or otherwise engaged in a transaction that could be
subject to Section 4069 of ERISA.
(g) Except as specifically disclosed in Schedule 6.07, no
trade or business (whether or not incorporated under common control with the
Borrower within the meaning of Section 414(b), (c), (m) or (o) of the Code)
maintains or contributes to any Pension Plan or other Plan subject to Section
412 of the Code. Except as specifically disclosed in Schedule 6.07, neither the
Borrower nor any Person under common control with the Borrower (as defined in
the preceding sentence) has ever contributed to any multiemployer plan within
the meaning of Section 4001(a)(3) of ERISA.
6.08 Use of Proceeds; Margin Regulations. The proceeds of the Loans are to be
used solely for the purposes set forth in and permitted by Section 7.11 and
Section 8.07. Neither the Borrower nor any Affiliate of the Borrower is
generally engaged in the business of purchasing or selling Margin Stock or
extending credit for the purpose of purchasing or carrying Margin Stock.
6.09 Title to Properties. The Borrower and each Restricted Subsidiary have good
record and marketable title in fee simple to, or valid leasehold interests in,
all real property necessary or used in the ordinary conduct of their respective
businesses, except for such defects in title as could not, individually or in
the aggregate, have a Material Adverse Effect. As of the Restatement Effective
Date and subject to the preceding sentence, the property of the Borrower and its
Restricted Subsidiaries is subject to no Liens other than Permitted Liens.
6.10 Taxes. The General Partner has filed all Federal and other material tax
returns and reports required to be filed, for itself and for the Borrower, and
has paid all Federal and other material taxes, assessments, fees and other
governmental charges levied or imposed upon it or its properties, income or
assets otherwise due and payable, except those which are being contested in good
faith by appropriate proceedings and for which adequate reserves have been
provided in accordance with GAAP. There is no proposed tax assessment against
the Borrower that would, if made, have a Material Adverse Effect.
6.11 Financial Condition. (a) The audited consolidated financial statements of
the General Partner, the Borrower, the MLP and their respective Subsidiaries
dated July 31, 1999 and the unaudited consolidated financial statements of the
General Partner, the Borrower, the MLP and their respective Subsidiaries dated
January 31, 2000, in each case together with the related consolidated statements
of income or operations, shareholders' equity and cash flows for the fiscal
periods ended on those respective dates:
(i) were prepared in accordance with GAAP consistently applied throughout
the period covered thereby, except as otherwise expressly noted
therein, subject to ordinary, good faith year end audit adjustments;
(ii) fairly present the financial condition of the Borrower and its
Subsidiaries as of the date thereof and results of operations for the
period covered thereby; and
(iii) show all material indebtedness and other liabilities, direct or
contingent, of the Borrower and its consolidated Subsidiaries as of the
date thereof, including liabilities for taxes, material commitments and
Contingent Obligations (except that since such date the Borrower (x)
issued $184,000,000 aggregate principal amount of the 2000 Notes and
(y) repaid in full and irrevocably terminated the commitments under its
$183,000,000 credit facility with BofA).
(b) Since January 31, 2000, there has been no Material Adverse Effect.
(c) The General Partner, the MLP, the Borrower and each of the
Restricted Subsidiaries are each Solvent, both before and after giving effect to
the consummation of each of the transactions contemplated by the Loan Documents.
6.12 Environmental Matters. The Borrower conducts in the ordinary course of
business a review of the effect of existing Environmental Laws and existing
Environmental Claims on its business, operations and properties, and as a result
thereof the Borrower has reasonably concluded that such Environmental Laws and
Environmental Claims could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
6.13 Regulated Entities. None of the Borrower or any Affiliate of the Borrower,
is an "Investment Company" within the meaning of the Investment Company Act of
1940. The Borrower is not subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Interstate Commerce Act, any
state public utilities code, or any other Federal or state statute or regulation
limiting its ability to incur Indebtedness.
6.14 No Burdensome Restrictions. Neither the Borrower nor any Restricted
Subsidiary is a party to or bound by any Contractual Obligation, or subject to
any restriction in any Organization Document, or any Requirement of Law, which
could reasonably be expected to have a Material Adverse Effect.
6.15 Copyrights, Patents, Trademarks and Licenses, etc. The Borrower and the
Restricted Subsidiaries own or are licensed or otherwise have the right to use
all of the patents, trademarks, service marks, trade names, copyrights,
contractual franchises, authorizations and other rights that are reasonably
necessary for the operation of their respective businesses, without conflict
with the rights of any other Person, except for those patents, trademarks,
service marks, trade names, copyrights, contractual franchises, authorizations
and other rights the failure of which to obtain could not reasonably be expected
to have a Material Adverse Effect. To the best knowledge of the Borrower, no
slogan or other advertising device, product, process, method, substance, part or
other material now employed, or now contemplated to be employed, by the Borrower
or any Restricted Subsidiary infringes upon any rights held by any other Person.
No claim or litigation regarding any of the foregoing is pending or, to the best
knowledge of the Borrower, threatened, and no patent, invention, device,
application, principle or any statute, law, rule, regulation, standard or code
is pending or, to the knowledge of the Borrower, proposed, which, in either
case, could reasonably be expected to have a Material Adverse Effect.
6.16 Subsidiaries and Affiliates. The Borrower (a) has no Subsidiaries or other
Affiliates except (i) those specifically disclosed in Schedule 6.16 as of the
Restatement Effective Date, (ii) SPEs established in connection with Accounts
Receivable Securitizations permitted by Section 8.05, (iii) Restricted and
Unrestricted Subsidiaries established in compliance with Section 8.21 subsequent
to the Restatement Effective Date and (iv) Joint Ventures established in
compliance with Section 8.10 subsequent to the Restatement Effective Date, and
(b) has no equity investments in any corporation or entity other than
Subsidiaries and Affiliates disclosed in subsection (a) above and other
Permitted Investments.
6.17 Insurance. The properties of the Borrower and the Restricted Subsidiaries
are insured with financially sound and reputable insurance companies not
Affiliates of the Borrower, in such amounts, with such deductibles and covering
such risks as are customarily carried by companies engaged in similar businesses
and owning similar properties in localities where the Borrower or each such
Subsidiary operates and consistent with the practice of the Borrower and the
Restricted Subsidiaries as of the Restatement Effective Date.
6.18 Tax Status. The Borrower is subject to taxation under the Code only as
a partnership and not as a corporation.
6.19 Full Disclosure. None of the representations or warranties made by the
Borrower or any Affiliate of the Borrower in the Loan Documents as of the date
such representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate furnished
by or on behalf of the Borrower or any Affiliate of the Borrower in connection
with the Loan Documents contains any untrue statement of a material fact or
omits any material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they are
made, not misleading as of the time when made or delivered.
6.20 Fixed Price Supply Contracts. None of the Borrower and its Subsidiaries
(other than Non-Recourse Subsidiaries) is a party to any contract for the supply
of propane or other product except where (a) the purchase price is set with
reference to a spot index or indices substantially contemporaneously with the
delivery of such product or (b) delivery of such propane or other product is to
be made no more than two years after the purchase price is agreed to.
6.21 Trading Policies. The Borrower has provided to the Administrative Agent an
accurate and complete summary of its trading position policy and supply
inventory position policy and the Borrower has complied in all material respects
with such policies.
6.22 Year 2000. The Borrower and its Subsidiaries have reviewed the areas within
their business and operations which could have been or could continue to be
adversely affected by the "Year 2000 Problem" (that is, the risk that computer
applications used by the Borrower and its Subsidiaries may be unable to
recognize and perform properly date-sensitive functions involving certain dates
prior to and any date on or after December 31, 1999). Accordingly, the Borrower
and its Subsidiaries have developed a program to address such related problems,
and have made related appropriate inquiry of material suppliers and vendors. To
date, no problems connected with the Year 2000 Problem have occurred which have
had a Material Adverse Effect on the Borrower or its Subsidiaries. Although some
problems related to the Year 2000 Problem may remain as yet undetected, the
Borrower believes that, based on such review and program, the "Year 2000
Problem" will not have a Material Adverse Effect.
ARTICLE VII
AFFIRMATIVE COVENANTS
So long as any Bank shall have any Revolving Loan Commitment
under this Agreement, or any Loan or other Obligation shall remain unpaid or
unsatisfied, or any Letter of Credit shall remain outstanding, unless the
Majority Banks waive compliance in writing:
7.01 Financial Statements. The Borrower shall deliver to the Administrative
Agent, in form and detail satisfactory to the Administrative Agent and the
Majority Banks and consistent with the form and detail of financial statements
and projections provided to the Administrative Agent by the Borrower and its
Affiliates prior to the Restatement Effective Date, with sufficient copies for
each Bank:
(a) as soon as available, but not later than 100 days after the end of each
fiscal year (commencing with the fiscal year ended July 31, 2000), a copy of the
audited consolidated balance sheet of the Borrower and its Subsidiaries as at
the end of such year and the related consolidated statements of income or
operations, partners' or shareholders' equity and cash flows for such year,
setting forth in each case in comparative form the figures for the previous
fiscal year, and accompanied by the opinion of a nationally-recognized
independent public accounting firm ("Independent Auditor") which report shall
state that such consolidated financial statements present fairly the financial
position for the periods indicated in conformity with GAAP applied on a basis
consistent with prior years. Such opinion shall not be qualified or limited in
any manner, including on account of any limitation on it because of a restricted
or limited examination by the Independent Auditor of any material portion of the
Borrower's or any Subsidiary's records;
(b) as soon as available, but not later than 45 days after the end of each of
the first three fiscal quarters of each fiscal year (commencing with the fiscal
quarter ended April 30, 2000), a copy of the unaudited consolidated balance
sheet of the Borrower and its Subsidiaries as of the end of such quarter and the
related consolidated statements of income, partners' or shareholders' equity and
cash flows for the period commencing on the first day and ending on the last day
of such quarter, and certified by a Responsible Officer as fairly presenting, in
accordance with GAAP (subject to ordinary, good faith year-end audit
adjustments), the financial position and the results of operations of the
Borrower and the Subsidiaries;
(c) as soon as available, but not later than 100 days after the end of each
fiscal year (commencing with the first fiscal year during all or any part of
which the Borrower had one or more Significant Subsidiaries), a copy of an
unaudited consolidating balance sheet of the Borrower and its Subsidiaries as at
the end of such year and the related consolidating statement of income,
partners' or shareholders' equity and cash flows for such year, certified by a
Responsible Officer as having been developed and used in connection with the
preparation of the financial statements referred to in Section 7.01(a);
(d) as soon as available, but not later than 45 days after the end of each of
the first three fiscal quarters of each fiscal year (commencing with the first
fiscal quarter during all or any part of which the Borrower had one or more
Significant Subsidiaries), a copy of the unaudited consolidating balance sheets
of the Borrower and its Subsidiaries, and the related consolidating statements
of income, partners' or shareholders' equity and cash flows for such quarter,
all certified by a Responsible Officer as having been developed and used in
connection with the preparation of the financial statements referred to in
Section 7.01(b);
(e) as soon as available, but not later than 60 days after the end of each
fiscal year (commencing with the fiscal year ended July 31, 2000), projected
consolidated balance sheets of the Borrower and its Subsidiaries as at the end
of each of the current and following two fiscal years and related projected
consolidated statements of income, partners' or shareholders' equity and cash
flows for each such fiscal year, including therein a budget for the current
fiscal year, certified by a Responsible Officer as having been developed and
prepared by the Borrower in good faith and based upon the Borrower's best
estimates and best available information;
(f) as soon as available, but not later than 100 days after the end of each
fiscal year of the General Partner (commencing with the fiscal year ended July
31, 2000), a copy of the unaudited (or audited, if available) consolidated
balance sheets of the General Partner as of the end of such fiscal year and the
related consolidated statements of income, shareholders' equity and cash flows
for such fiscal year, certified by a Responsible Officer as fairly presenting,
in accordance with GAAP, the financial position and the results of operations of
the General Partner and its Subsidiaries (or, if available, accompanied by an
opinion of an Independent Auditor as described in Section 7.01(a)); and
(g) as soon as available, but not later than 45 days after the end of each of
the first three fiscal quarters of each fiscal year and, with respect to the
final fiscal quarter, concurrently with the financial statements referred to in
Section 7.01(a), a trading position report as of the last day of each fiscal
quarter, certified by a Responsible Officer.
7.02 Certificates; Other Information. The Borrower shall furnish to the
Administrative Agent, with sufficient copies for each Bank:
(a) concurrently with the delivery of the financial statements referred to in
Section 7.01(a), a certificate of the Independent Auditor stating that in making
the examination necessary therefor no knowledge was obtained of any Default or
Event of Default, except as specified in such certificate;
(b) concurrently with the delivery of the financial statements referred to in
Sections 7.01(a) and (b), a Compliance Certificate executed by a Responsible
Officer with respect to the periods covered by such financial statements
together with supporting calculations and such other supporting detail as the
Administrative Agent and Majority Banks shall require;
(c) promptly, copies of all financial statements and reports that the Borrower,
the General Partner, the MLP or any Subsidiary sends to its partners or
shareholders, and copies of all financial statements and regular, periodic or
special reports (including Forms 10-K, 10-Q and 8-K) that the Borrower or any
Affiliate of the Borrower, the General Partner, the MLP or any Subsidiary may
make to, or file with, the SEC; and
(d) promptly, such additional information regarding the business, financial or
corporate affairs of the Borrower, the General Partner, the MLP or any
Subsidiary as the Administrative Agent, at the request of any Bank, may from
time to time request.
7.03 Notices. The Borrower shall promptly notify the Administrative Agent
and each Bank: -------
(a) of the occurrence of any Default or Event of Default;
(b) of any matter that has resulted or may reasonably be expected to result in a
Material Adverse Effect, including (i) breach or non-performance of, or any
default under, a Contractual Obligation of the Borrower, the General Partner,
the MLP or any Subsidiary; (ii) any dispute, litigation, investigation,
proceeding or suspension between the Borrower, the General Partner, the MLP or
any Subsidiary and any Governmental Authority; or (iii) the commencement of, or
any material development in, any litigation or proceeding affecting the
Borrower, the General Partner, the MLP or any Subsidiary, including pursuant to
any applicable Environmental Laws, in each case to the extent that any of the
foregoing has resulted or may reasonably be expected to result in a Material
Adverse Effect;
(c) of any of the following events affecting the Borrower, the General Partner,
the MLP or any Subsidiary, together with a copy of any notice with respect to
such event that may be required to be filed with a Governmental Authority and
any notice delivered by a Governmental Authority to such Person with respect to
such event:
(i) an ERISA Event;
(ii) if any of the representations and warranties in Section 6.07 ceases to
be true and correct;
(iii) the adoption of any new Pension Plan or other Plan subject to Section
412 of the Code;
(iv) the adoption of any amendment to a Pension Plan or other Plan subject
to Section 412 of the Code, if such amendment results in a material
increase in contributions or Unfunded Pension Liability; or
(v) the commencement of contributions to any Pension Plan or other Plan
subject to Section 412 of the Code;
(d) of any material change in accounting policies or financial reporting
practices by the Borrower or any of its consolidated Subsidiaries; and
(e) not later than five Business Days after the effective date of a change in
the Borrower's trading position policy or inventory supply position policy, of
any change in either policy.
Each notice under this Section shall be accompanied by a
written statement by a Responsible Officer setting forth details of the
occurrence referred to therein, and stating what action the Borrower or any
affected Affiliate proposes to take with respect thereto and at what time. Each
notice under Section 7.03(a) shall describe with particularity any and all
clauses or provisions of this Agreement or other Loan Document that have been
breached or violated.
7.04 Preservation of Corporate or Partnership Existence, Etc. The General
Partner and the Borrower shall, and the Borrower shall cause each Restricted
Subsidiary to:
(a) preserve and maintain in full force and effect its partnership or corporate
existence and good standing under the laws of its state or jurisdiction of
organization or incorporation except in connection with transactions permitted
by Section 8.03;
(b) preserve and maintain in full force and effect all governmental rights,
privileges, qualifications, permits, licenses and franchises necessary or
desirable in the normal conduct of its business except in connection with
transactions permitted by Section 8.03 and sales of assets permitted by Section
8.02, except where the failure to so preserve or maintain such governmental
rights, privileges, qualifications, permits, licenses and franchises could not
reasonably be expected to have a Material Adverse Effect;
(c) preserve its business organization and goodwill, except where the failure to
so preserve its business organization or goodwill could not reasonably be
expected to have a Material Adverse Effect; and
(d) preserve or renew all of its registered patents, trademarks, trade names and
service marks, the non-preservation of which could reasonably be expected to
have a Material Adverse Effect.
7.05 Maintenance of Property. The Borrower shall maintain, and shall cause each
Restricted Subsidiary to maintain, and preserve all its property which is used
or useful in its business in good working order and condition, ordinary wear and
tear excepted. The Borrower and each Restricted Subsidiary shall use the
standard of care typical in the industry in the operation and maintenance of its
facilities.
7.06 Insurance. The Borrower shall maintain, and shall cause each Restricted
Subsidiary to maintain, with financially sound and reputable independent
insurers, insurance with respect to its properties and business against loss or
damage of the kinds customarily insured against by Persons engaged in the same
or similar business, of such types and in such amounts as are customarily
carried under similar circumstances by such other Persons.
7.07 Payment of Obligations. The Borrower and the General Partner shall, and
shall cause each Restricted Subsidiary to, pay and discharge as the same shall
become due and payable (except to the extent the failure to so pay and discharge
could not reasonably be expected to have a Material Adverse Effect), all their
respective obligations and liabilities, including:
(a) all tax liabilities, assessments and governmental charges or levies upon it
or its properties or assets, unless the same are being contested in good faith
by appropriate proceedings and adequate reserves in accordance with GAAP are
being maintained by the Borrower, the General Partner or such Subsidiary;
(b) all lawful claims which, if unpaid, would by law become a Lien upon its
property, unless such claims are being contested in good faith by appropriate
proceedings and adequate reserves in accordance with GAAP are being maintained
by the Borrower, the General Partner or such Subsidiary; and
(c) all Indebtedness, as and when due and payable, but subject to any
subordination provisions contained in any instrument or agreement evidencing
such Indebtedness.
7.08 Compliance with Laws. The Borrower shall comply, and shall cause each
Restricted Subsidiary to comply, with all Requirements of Law of any
Governmental Authority having jurisdiction over it or its business (including
the Federal Fair Labor Standards Act), except such as may be contested in good
faith or as to which a bona fide dispute may exist or the failure of which to
comply with could not reasonably be expected to have a Material Adverse Effect.
7.09 Inspection of Property and Books and Records. The Borrower shall maintain
and shall cause each Subsidiary to maintain proper books of record and account,
in which full, true and correct entries in conformity with GAAP consistently
applied shall be made of all financial transactions and matters involving the
assets and business of the Borrower and such Subsidiary. The Borrower shall
permit, and shall cause each Subsidiary to permit, representatives and
independent contractors of the Administrative Agent or any Bank to visit and
inspect any of their respective properties, to examine their respective
corporate, financial and operating records, and make copies thereof or abstracts
therefrom, and to discuss their respective affairs, finances and accounts with
their respective directors, officers, and independent public accountants, all at
the expense of the Borrower and at such reasonable times during normal business
hours and as often as may be reasonably desired, upon reasonable advance notice
to the Borrower; provided, however, when an Event of Default exists the
Administrative Agent or any Bank may do any of the foregoing at the expense of
the Borrower at any time during normal business hours and without advance
notice.
7.10 Environmental Laws. The Borrower shall, and shall cause each Restricted
Subsidiary to, conduct its operations and keep and maintain its property in
material compliance with all Environmental Laws, except where failure to comply
with such Environmental Laws could not reasonably be expected to have a Material
Adverse Effect.
7.11 Use of Proceeds. The Borrower shall use the proceeds of (a) the Facility A
Revolving Loans for working capital purposes only and (b) the Facility B
Revolving Loans for working capital purposes, Acquisitions, capital expenditures
and other general partnership purposes, in each case not in contravention of any
Requirement of Law or of any Loan Document.
7.12 Financial Covenants.
(a) Leverage Ratio. The Borrower shall maintain as of the last day of each
fiscal quarter a Leverage Ratio equal to or less than (i) 5.10 to 1.00 as of the
last day of each fiscal quarter ending on or prior to July 31, 2000, (ii) 5.25
to 1.00 as of the last day of each fiscal quarter ending after July 31, 2000 and
on or prior to January 31, 2001, and (iii) 4.75 to 1.00 as of the last day of
each fiscal quarter ending after January 31, 2001. For purposes of this Section
7.12(a), (x) Funded Debt and Synthetic Lease Obligations shall be calculated as
of the last day of such fiscal quarter and (y) Consolidated Cash Flow shall be
calculated for the most recently ended four consecutive fiscal quarters,
provided, however, that prior to or concurrently with each delivery of a
Compliance Certificate pursuant to Section 7.02(b), the Borrower may elect to
calculate Consolidated Cash Flow for the most recently ended eight consecutive
fiscal quarters (in which case Consolidated Cash Flow shall be divided by two).
(b) Interest Coverage Ratio. The Borrower shall maintain, as of the last day of
each fiscal quarter of the Borrower, an Interest Coverage Ratio for the fiscal
period consisting of such fiscal quarter and the three immediately preceding
fiscal quarters of at least (i) 2.25 to 1.00 for each such period of four fiscal
quarters ending on or prior to January 31, 2001 and (ii) 2.50 to 1.00 each such
period of four fiscal quarters ending after January 31, 2001.
7.13 Trading and Supply Policies. The Borrower and its Affiliates shall comply
with the Borrower's trading position policy and supply inventory position policy
as in effect as of the Restatement Effective Date; provided, however, that the
Borrower and its Affiliates may, during any period of four consecutive fiscal
quarters, (a) increase the loss limits specified in either the trading position
or supply inventory position policy by up to 100% of the amount of such limit as
in effect as of the Restatement Effective Date and (b) increase the volume
limits specified in either of such policies on the number of barrels of a single
product or of all products in the aggregate by up to 100% of each such number as
in effect as of the Restatement Effective Date.
7.14 Other General Partner Obligations.
(a) The General Partner shall cause the Borrower to pay and perform each of its
Obligations when due. The General Partner acknowledges and agrees that it is
executing this Agreement as a principal as well as the general partner on behalf
of the Borrower, and that its obligations under this Agreement as general
partner are full recourse obligations to the same extent as those of the
Borrower.
(b) The General Partner represents, warrants and covenants that it is Solvent,
both before and after giving effect to the consummation of the transactions
contemplated by the Loan Documents, and that it will remain Solvent until all
Obligations under this Agreement shall have been repaid in full and all
commitments shall have terminated.
(c) The General Partner, for so long as it is the general partner of the
Borrower, (i) agrees that its sole business will be to act as the general
partner of the Borrower, the MLP and any further limited partnership of which
the Borrower or the MLP is, directly or indirectly, a limited partner and to
undertake activities that are ancillary or related thereto (including being a
limited partner in the Borrower), (ii) shall not enter into or conduct any
business or incur any debts or liabilities except in connection with or
incidental to (A) its performance of the activities required or authorized by
the partnership agreement of the MLP or the Partnership Agreement or described
in or contemplated by the MLP Registration Statement, and (B) the acquisition,
ownership or disposition of partnership interests in the Borrower or the MLP or
any further limited partnership of which the Borrower or the MLP is, directly or
indirectly, a limited partner, except that, notwithstanding the foregoing,
employees of the General Partner may perform services for Ferrell Companies,
Inc. and its Affiliates.
(d) The General Partner agrees that, until all Obligations under this Agreement
shall have been repaid in full and all commitments shall have terminated, it
will not exercise any rights it may have (at law, in equity, by contract or
otherwise) to terminate, limit or otherwise restrict (whether through repurchase
or otherwise and whether or not the General Partner shall remain a general
partner in the Borrower) the ability of the Borrower to use the name
"Ferrellgas".
(e) The General Partner shall not take any action or refuse to take any
reasonable action the effect of which, if taken or not taken, as the case may
be, would be to cause the Borrower to be treated as an association taxable as a
corporation or otherwise to be taxed as an entity other than a partnership for
federal income tax purposes.
7.15 Monetary Judgments. If one or more judgments, orders, decrees or
arbitration awards is entered against the Borrower or any Restricted Subsidiary
involving in the aggregate a material liability (to the extent not covered by
independent third-party insurance as to which the insurer does not dispute
coverage other than through a standard reservation of rights letter) as to any
single or related series of transactions, incidents or conditions, then the
Borrower shall maintain adequate reserves for such amount in accordance with
GAAP. Such amount so reserved shall be treated as establishment of a reserve for
purposes of calculating Available Cash under this Agreement.
7.16 Designations With Respect to Subsidiaries.
(a) The Borrower may designate any Restricted Subsidiary or newly acquired or
formed Subsidiary as an Unrestricted Subsidiary or any Unrestricted Subsidiary
or newly acquired or formed Subsidiary as a Restricted Subsidiary, in each case
subject to satisfaction of each of the following conditions:
(i) immediately before and after giving effect to
such designation, no Default or Event of Default shall exist and be
continuing;
(ii) after giving effect to such designation, the
Borrower would be permitted to incur at least $1 of additional
Indebtedness in accordance with the provisions of Section 8.05;
(iii) in the case of a designation of a Restricted
Subsidiary, such Restricted Subsidiary shall have executed and
delivered to the Administrative Agent a Guaranty and the Borrower shall
otherwise be in compliance with Section 8.21;
(iv) in the case of a designation as an Unrestricted
Subsidiary (including the designation of a Restricted Subsidiary as an
Unrestricted Subsidiary), (x) if such designation were deemed to
constitute a sale by the Borrower or any Restricted Subsidiary of all
the assets of the Subsidiary so designated, such sale would be in
compliance with of Section 8.02 and (y) if such designation (and all
other prior designations of Restricted Subsidiaries or newly acquired
or formed Subsidiaries as Unrestricted Subsidiaries) were deemed to
constitute an Investment by the Borrower or any Restricted Subsidiary
in respect of all the assets of the Subsidiary so designated, such
investment would be a Permitted Investment, in each case with the net
proceeds of such sale or the amount of such Investment being deemed to
equal the net book value of such assets in the case of a Restricted
Subsidiary or the cost of acquisition or formation in the case of a
newly acquired or formed Subsidiary; and
(v) in the case of a designation of a Restricted
Subsidiary as an Unrestricted Subsidiary, such Restricted Subsidiary
shall not have been an Unrestricted Subsidiary prior to being
designated a Restricted Subsidiary.
(b) The Borrower shall deliver to the Administrative Agent and
each Bank, within 20 Business Days after any such designation, a certificate of
a Responsible Officer stating the effective date of such designation and stating
that the foregoing conditions have been satisfied. Such certificate shall be
accompanied by a schedule setting forth in reasonable detail the calculations
demonstrating compliance with such conditions, where appropriate.
(c) In the case of the designation of any Unrestricted
Subsidiary as a Restricted Subsidiary, such new Restricted Subsidiary shall be
deemed to have made or acquired all Investments owned by it and incurred all
Indebtedness and other obligations owing by it and all Liens to which it or any
of its properties are subject, on the date of such designation.
ARTICLE VIII
NEGATIVE COVENANTS
So long as any Bank shall have any Revolving Loan Commitment
under this Agreement, or any Loan or other Obligation shall remain unpaid or
unsatisfied, or any Letter of Credit shall remain outstanding, unless the
Majority Banks waive compliance in writing:
8.01 Limitation on Liens. The Borrower shall not, and shall not suffer or permit
any Restricted Subsidiary to, directly or indirectly, make, create, incur,
assume or suffer to exist any Lien upon or with respect to any part of its
property or sell any of its accounts receivable, whether now owned or hereafter
acquired, other than the following ("Permitted Liens"):
(a) Liens existing on the Restatement Effective Date set forth in Schedule
8.01;
(b) Liens in favor of the Borrower or Liens to secure Indebtedness of a
Restricted Subsidiary to the Borrower or a Wholly-Owned Subsidiary;
(c) Liens on property of a Person existing at the time such Person is merged
into or consolidated with the Borrower or any Restricted Subsidiary, provided
that such Liens were in existence prior to the contemplation of such merger or
consolidation and do not extend to any assets other than those of the Person
merged into or consolidated with the Borrower;
(d) Liens on property existing at the time acquired by the Borrower or any
Restricted Subsidiary, provided that such Liens were in existence prior to the
contemplation of such acquisition and do not extend to any assets other than
those of the Person acquired;
(e) Liens on any property or asset acquired by the Borrower or any Restricted
Subsidiary in favor of the seller of such property or asset and construction
mortgages on property, in each case, created within six months after the date of
acquisition, construction or improvement of such property or asset by the
Borrower or such Subsidiary to secure the purchase price or other obligation of
the Borrower or such Subsidiary to the seller of such property or asset or the
construction or improvement cost of such property in an amount up to 80% of the
total cost of the acquisition, construction or improvement of such property or
asset; provided that in each case such Lien does not extend to any other
property or asset of the Borrower and its Subsidiaries;
(f) Liens incurred or pledges and deposits made in connection with worker's
compensation, unemployment insurance and other social security benefits and
Liens to secure the performance of statutory obligations, surety or appeal
bonds, performance bonds or other obligations of a like nature, in each case,
incurred in the ordinary course of business;
(g) Liens for taxes, assessments or governmental charges or claims that are not
yet delinquent or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently concluded, provided that any
reserve or other appropriate provision as shall be required in conformity with
GAAP shall have been made therefor;
(h) Liens imposed by law, such as mechanics', carriers', warehousemen's,
materialmen's, and vendors' Liens, incurred in good faith in the ordinary course
of business with respect to amounts not yet delinquent or being contested in
good faith by appropriate proceedings if a reserve or other appropriate
provisions, if any, as shall be required by GAAP shall have been made therefor;
(i) zoning restrictions, easements, licenses, covenants, reservations,
restrictions on the use of real property or minor irregularities of title
incident thereto that do not, in the aggregate, materially detract from the
value of the property or the assets of the Borrower or any of its Subsidiaries
or impair the use of such property in the operation of the business of the
Borrower or any of its Subsidiaries;
(j) Liens of landlords or mortgages of landlords, arising solely by operation of
law, on fixtures and movable property located on premises leased by the Borrower
or any of its Subsidiaries in the ordinary course of business; (k) Liens
incurred and financing statements filed or recorded, in each case with respect
to personal property leased by the Borrower and its Subsidiaries in the ordinary
course of business to the owners of such personal property which are either (i)
operating leases (including, without limitation, Synthetic Leases) or (ii)
Capital Leases to the extent (but only to the extent) permitted by Section 8.05;
provided, that in each case such Lien does not extend to any other property or
asset of the Borrower and its Subsidiaries;
(l) judgment Liens to the extent that such judgments do not cause or
constitute a Default or an Event of Default;
(m) Liens incurred in the ordinary course of business of the Borrower or any
Restricted Subsidiary with respect to obligations that do not exceed $5,000,000
in the aggregate at any one time outstanding and that (i) are not incurred in
connection with the borrowing of money or the obtaining of advances or credit
(other than trade credit in the ordinary course of business) and (ii) do not in
the aggregate materially detract from the value of the property or materially
impair the use thereof in the operation of business by the Borrower or such
Subsidiary;
(n) Liens securing Indebtedness incurred to refinance Indebtedness that has been
secured by a Lien otherwise permitted under this Agreement, provided that (i)
any such Lien shall not extend to or cover any assets or property not securing
the Indebtedness so refinanced and (ii) the refinancing Indebtedness secured by
such Lien shall have been permitted to be incurred under Section 8.05 and shall
not have a principal amount in excess of the Indebtedness so refinanced;
(o) any extension or renewal, or successive extensions or renewals, in whole or
in part, of Liens permitted pursuant to the foregoing clauses (a) through (n);
provided that no such extension or renewal Lien shall (i) secure more than the
amount of Indebtedness or other obligations secured by the Lien being so
extended or renewed or (ii) extend to any property or assets not subject to the
Lien being so extended or renewed;
(p) Liens in favor of the Administrative Agent, any Issuing Bank and the Banks
relating to the Cash Collateralization of the Borrower's Obligations; and
(q) Liens securing Indebtedness of an SPE in connection with an Accounts
Receivable Securitization permitted by Section 8.05 (including the filing of any
related financing statements naming the Borrower as the debtor thereunder in
connection with the sale of accounts receivable by the Borrower to such SPE in
connection with any such permitted Accounts Receivable Securitization); provided
that the aggregate amount of accounts receivable subject to all such Liens shall
at no time exceed 133% of the amount of Accounts Receivable Securitizations
permitted to be outstanding under such Section 8.05.
8.02 Asset Sales. The Borrower shall not, and shall not permit any of the
Restricted Subsidiaries to, (i) sell, lease, convey or otherwise dispose of any
assets (including by way of a sale-and-leaseback) other than sales of inventory
in the ordinary course of business consistent with past practice (provided that
the sale, lease, conveyance or other disposition of all or substantially all of
the assets of the Borrower shall be governed by the provisions of Section 8.03
and not by the provisions of this Section 8.02), or (ii) issue or sell Equity
Interests of any of its Subsidiaries, in the case of either clause (i) or (ii)
above, whether in a single transaction or a series of related transactions, (A)
that have a fair market value in excess of the lesser of $10,000,000 or the
amount (which amount is equal to $5,000,000 as of the Restatement Effective
Date) specified in Section 4.10 the 1996 Indenture as amended from time to time
(such lesser amount, the "Applicable Amount"), or (B) for net proceeds in excess
of the Applicable Amount (each of the foregoing, an "Asset Sale"), unless (X)
the Borrower (or the Restricted Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair market
value (evidenced by a resolution of the board of directors of the General
Partner (and, if applicable, the audit committee of such board of directors) set
forth in a certificate signed by a Responsible Officer and delivered to the
Administrative Agent) of the assets sold or otherwise disposed of and (Y) at
least 80% of the consideration therefor received by the Borrower or such
Subsidiary is in the form of cash; provided, however, that the amount of (1) any
liabilities (as shown on the Borrower's or such Subsidiary's most recent balance
sheet or in the notes thereto), of the Borrower or any Subsidiary (other than
liabilities that are by their terms subordinated in right of payment to the
Obligations) that are assumed by the transferee of any such assets and (2) any
notes or other obligations received by the Borrower or any such Subsidiary from
such transferee that are immediately converted by the Borrower or such
Subsidiary into cash (to the extent of the cash received), shall be deemed to be
cash for purposes of this provision; and provided, further, that the 80%
limitation referred to in this clause (Y) shall not apply to any Asset Sale in
which the cash portion of the consideration received therefrom, determined in
accordance with the foregoing proviso, is equal to or greater than what the
after-tax proceeds would have been had such Asset Sale complied with the
aforementioned 80% limitation. Notwithstanding the foregoing, Asset Sales shall
not be deemed to include (w) sales or transfers of accounts receivable by the
Borrower to an SPE and by an SPE to any other Person in connection with any
Accounts Receivable Securitization permitted by Section 8.05 (provided that the
aggregate amount of such accounts receivable that shall have been transferred to
and held by all SPEs at any time shall not exceed 133% of the amount of Accounts
Receivable Securitizations permitted to be outstanding under Section 8.05), (x)
any transfer of assets by the Borrower or any of its Subsidiaries to the
Borrower or a Restricted Subsidiary, (y) any transfer of assets by the Borrower
or any of its Subsidiaries to any Person in exchange for other assets used in a
line of business permitted under Section 8.15 and having a fair market value not
less than that of the assets so transferred and (z) any transfer of assets
pursuant to a Permitted Investment or any sale-leaseback (including
sale-leasebacks involving Synthetic Leases) permitted by Section 8.17.
8.03 Consolidations and Mergers.
(a) The Borrower shall not consolidate or merge with or into (whether or not the
Borrower is the surviving Person), or sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of its properties or assets in one
or more related transactions, to another Person unless (i) the Borrower is the
surviving Person, or the Person formed by or surviving any such consolidation or
merger (if other than the Borrower) or to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made is a corporation or
partnership organized or existing under the laws of the United States, any state
thereof or the District of Columbia; and (ii) the Person formed by or surviving
any such consolidation or merger (if other than the Borrower) or Person to which
such sale, assignment, transfer, lease, conveyance or other disposition shall
have been made assumes all the Obligations of the Borrower pursuant to an
assumption agreement in a form reasonably satisfactory to the Administrative
Agent, under this Agreement; (iii) immediately after such transaction no Default
or Event of Default exists; and (iv) the Borrower or any Person formed by or
surviving any such consolidation or merger, or to which such sale, assignment,
transfer, lease, conveyance or other disposition shall have been made (A) shall
have Consolidated Net Worth (immediately after the transaction but prior to any
purchase accounting adjustments resulting from the transaction) equal to or
greater than the Consolidated Net Worth of the Borrower immediately preceding
the transaction and (B) shall, at the time of such transaction and after giving
effect thereto, be permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Leverage Ratio test set forth in Section 7.12(a).
(b) The Borrower shall deliver to the Administrative Agent prior to the
consummation of the proposed transaction pursuant to the foregoing paragraph (a)
an officers' certificate to the foregoing effect signed by a Responsible Officer
and an opinion of counsel satisfactory to the Administrative Agent stating that
the proposed transaction complies with this Agreement. The Administrative Agent
and the Banks shall be entitled to conclusively rely upon such officer's
certificate and opinion of counsel.
(c) Upon any consolidation or merger, or any sale, assignment, transfer, lease,
conveyance or other disposition of all or substantially all of the assets of the
Borrower in accordance with this Section 8.03, the successor Person formed by
such consolidation or into or with which the Borrower is merged or to which such
sale, assignment, transfer, lease, conveyance or other disposition is made shall
succeed to, and be substituted for (so that from and after the date of such
consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Agreement referring to the "Borrower" shall refer to or
include instead the successor Person and not the Borrower), and may exercise
every right and power of the Borrower under this Agreement with the same effect
as if such successor Person had been named as the Borrower in this Agreement;
provided, however, that the predecessor Borrower shall not be relieved from the
obligation to pay the principal of, premium, if any, and interest on the
Obligations except in the case of a sale of all of such Borrower's assets that
meets the requirements of Section 8.03.
8.04 Acquisitions. Without limiting the generality of any other provision of
this Agreement, neither the Borrower nor any Restricted Subsidiary shall
consummate any Acquisition unless (i) the acquiree is primarily a retail propane
distribution business; (ii) such Acquisition is undertaken in accordance with
all applicable Requirements of Law; (iii) the prior, effective written consent
or approval to such Acquisition of the board of directors or equivalent
governing body of the acquiree is obtained; and (iv) immediately after giving
effect thereto, no Default or Event of Default will occur or be continuing and
each of the representations and warranties of the Borrower in this Agreement is
true on and as of the date of such Acquisition, both before and after giving
effect thereto. Nothing in Section 8.22 shall prohibit (x) the making by the
Borrower of a Permitted Acquisition indirectly through the General Partner, the
MLP or any of its or their Affiliates in a series of substantially
contemporaneous transactions in which the Borrower shall ultimately own the
assets that are the subject of such Permitted Acquisition or (y) the assumption
of Acquired Debt in connection therewith to the extent such Acquired Debt is (if
not otherwise permitted to be incurred by the Borrower pursuant to this
Agreement) upon such assumption immediately repaid (with the proceeds of
Revolving Loans or otherwise).
8.05 Limitation on Indebtedness. The Borrower shall not, and shall not permit
any of the Restricted Subsidiaries to, directly or indirectly, create, incur,
issue, assume, suffer to exist, guarantee or otherwise become directly or
indirectly liable with respect to any Indebtedness (including Acquired Debt) or
any Synthetic Leases and the Borrower shall not issue any Disqualified Interests
and shall not permit any of the Restricted Subsidiaries to issue any shares of
preferred stock; provided, however, that the Borrower and any Restricted
Subsidiary of the Borrower may create, incur, issue, assume, suffer to exist,
guarantee or otherwise become directly or indirectly liable with respect to any
Indebtedness (including Acquired Debt) or any Synthetic Lease to the extent that
the Leverage Ratio is maintained in accordance with Section 7.12(a), both before
and after giving effect to the incurrence of such Indebtedness or such Synthetic
Lease, as the case may be, and, provided, further, that (x) the aggregate
principal amount of (1) all Capitalized Lease Obligations and all Synthetic
Lease Obligations (other than Capitalized Lease Obligations and Synthetic Lease
Obligations in respect of Growth-Related Capital Expenditures) of the Borrower
and the Restricted Subsidiaries and (2) all Indebtedness for which the Borrower
and any Restricted Subsidiary of the Borrower become liable in connection with
Acquisitions of retail propane businesses in favor of the sellers of such
businesses and secured by any Lien on any property of the Borrower or any of the
Restricted Subsidiaries, shall not exceed $65,000,000 at any one time
outstanding, and (y) the principal amount of any Indebtedness for which the
Borrower or any Restricted Subsidiary of the Borrower becomes liable in
connection with Acquisitions of retail propane businesses in favor of the
sellers of such businesses shall not exceed the fair market value of the assets
so acquired, and (z) the aggregate amount of Indebtedness of the Borrower and
its Subsidiaries through one or more SPEs in connection with Accounts Receivable
Securitizations shall not exceed $60,000,000 at any one time outstanding.
8.06 Transactions with Affiliates. The Borrower shall not, and shall not permit
any of the Restricted Subsidiaries to, sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into any contract, agreement, understanding, loan, advance
or guarantee with, or for the benefit of, any Affiliate, including any
Non-Recourse Subsidiary (each of the foregoing, an "Affiliate Transaction"),
unless (a) such Affiliate Transaction is on terms that are no less favorable to
the Borrower or the relevant Restricted Subsidiary than those that would have
been obtained in a comparable transaction by the Borrower or such Restricted
Subsidiary with an unrelated Person and (b) with respect to (i) any Affiliate
Transaction with an aggregate value in excess of $500,000, a majority of the
directors of the General Partner having no direct or indirect economic interest
in such Affiliate Transaction determines by resolution that such Affiliate
Transaction complies with clause (a) above and approves such Affiliate
Transaction and (ii) any Affiliate Transaction involving the purchase or other
acquisition or sale, lease, transfer or other disposition of properties or
assets other than in the ordinary course of business, in each case, having a
fair market value or for net proceeds in excess of $15,000,000, the Borrower
delivers to the Administrative Agent an opinion as to the fairness to the
Borrower or such Restricted Subsidiary from a financial point of view issued by
an investment banking firm of national standing; provided, however, that (i) any
employment agreement or stock option agreement entered into by the Borrower or
any of the Restricted Subsidiaries in the ordinary course of business and
consistent with the past practice of the Borrower (or the General Partner) or
such Restricted Subsidiary, Restricted Payments permitted by the provisions of
Section 8.12, and transactions entered into by the Borrower in the ordinary
course of business in connection with reinsuring the self-insurance programs or
other similar forms of retained insurable risks of the retail propane businesses
operated by the Borrower, the Restricted Subsidiaries and its Affiliates, in
each case, shall not be deemed Affiliate Transactions, and (ii) nothing in this
Agreement shall authorize the payments by the Borrower to the General Partner or
any other Affiliate of the Borrower for administrative expenses incurred by such
Person other than such out-of-pocket administrative expenses as such Person
shall incur and the Borrower shall pay in the ordinary course of business; and
provided, further, that the foregoing provisions of this Section 8.06 shall not
apply to transfers of accounts receivable of the Borrower to an SPE in
connection with any Accounts Receivable Securitization permitted by Section
8.05.
8.07 Use of Proceeds. The Borrower shall not, and shall not suffer or permit any
Restricted Subsidiary to, use any portion of the Loan proceeds or any Letter of
Credit, directly or indirectly, (i) to purchase or carry Margin Stock, (ii) to
repay or otherwise refinance indebtedness of the Borrower or others incurred to
purchase or carry Margin Stock, (iii) to extend credit for the purpose of
purchasing or carrying any Margin Stock, or (iv) to acquire any security in any
transaction that is subject to Section 13 or 14 of the Exchange Act.
8.08 Use of Proceeds - Ineligible Securities. The Borrower shall not, directly
or indirectly, use any portion of the Loan proceeds or any Letter of Credit (i)
knowingly to purchase Ineligible Securities from the Arranger during any period
in which the Arranger makes a market in such Ineligible Securities, (ii)
knowingly to purchase during the underwriting or placement period Ineligible
Securities being underwritten or privately placed by the Arranger, or (iii) to
make payments of principal or interest on Ineligible Securities underwritten or
privately placed by the Arranger and issued by or for the benefit of the
Borrower or any Affiliate of the Borrower.
8.09 Contingent Obligations. The Borrower shall not, and shall not suffer or
permit any Restricted Subsidiary to, create, incur, assume or suffer to exist
any Contingent Obligations except:
(a) endorsements for collection or deposit in the ordinary course of
business;
(b) subject to compliance with the trading policies in effect from time to time
as submitted to the Administrative Agent, Hedging Obligations entered into in
the ordinary course of business as bona fide hedging transactions;
(c) the Guaranties under this Agreement;
(d) Guaranty Obligations to the extent not prohibited by Section 8.05; and (e)
indemnities not guaranteeing Indebtedness or Synthetic Lease Obligations of any
Person.
8.10 Joint Ventures. The Borrower shall not, and shall not suffer or permit any
Restricted Subsidiary, to enter into any Joint Venture unless the same shall be
a Permitted Investment.
8.11 Lease Obligations. The aggregate obligations of the Borrower and the
Restricted Subsidiaries for the payment of rent for any property under lease or
agreement to lease (excluding obligations of the Borrower and its Subsidiaries
under or with respect to Synthetic Leases) for any fiscal year shall not exceed
the greater of (a) $40,000,000 or (b) 20% of (i) Consolidated Cash Flow of the
Borrower for the most recently ended eight consecutive fiscal quarters divided
by (ii) two; provided, however, that any payment of rent for any property under
lease or agreement to lease for a term of less than one year (after giving
effect to all automatic renewals) shall not be subject to this Section 8.11. For
purposes of this Section 8.11, the calculation of Consolidated Cash Flow shall
give pro forma effect to Acquisitions (including all mergers and
consolidations), Asset Sales and other dispositions and discontinuances of
businesses or assets that have been made by the Borrower or any of the
Restricted Subsidiaries during the reference period or subsequent to such
reference period and on or prior to the date of calculation of Consolidated Cash
Flow assuming that all such Acquisitions, Asset Sales and other dispositions and
discontinuances of businesses or assets had occurred on the first day of the
reference period.
8.12 Restricted Payments. The Borrower shall not and shall not permit any of the
Restricted Subsidiaries to, directly or indirectly (i) declare or pay any
dividend or make any distribution on account of the Borrower's or any Restricted
Subsidiary's Equity Interests (other than (x) dividends or distributions payable
in Equity Interests (other than Disqualified Interests) of the Borrower, (y)
dividends or distributions payable to the Borrower or a Wholly-Owned Subsidiary
that is a Restricted Subsidiary and a Guarantor or (z) distributions or
dividends payable pro rata to all holders of Capital Interests of any such
Subsidiary); (ii) purchase, redeem, call or otherwise acquire or retire for
value any Equity Interests of the Borrower or any Restricted Subsidiary or other
Affiliate of the Borrower (other than, subject to compliance with Section 8.21,
any such Equity Interests owned by a Wholly-Owned Subsidiary that is a
Restricted Subsidiary and a Guarantor); (iii) make any Investment other than a
Permitted Investment; or (iv) prepay, purchase, redeem, retire, defease or
refinance the 1998 Fixed Rate Senior Notes or the 2000 Notes (all payments and
other actions set forth in clauses (i) through (iv) above being collectively
referred to as "Restricted Payments"), except to the extent that, at the time of
such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be continuing or
would occur as a consequence thereof and each of the representations and
warranties of the Borrower set forth in this Agreement is true on and as of the
date of such Restricted Payment both before and after giving effect thereto; and
(b) the Fixed Charge Coverage Ratio for the Borrower's most recently ended four
full fiscal quarters for which internal financial statements are available
immediately preceding the date on which such Restricted Payment is made,
calculated on a pro forma basis as if such Restricted Payment had been made at
the beginning of such four-quarter period, would have been more than (i) 2.15 to
1.00 for each such period of four fiscal quarters ending on or prior to January
31, 2001 and (ii) 2.25 to 1.00 for each such period of four fiscal quarters
ending after January 31, 2001; and
(c) such Restricted Payment (the amount of any such payment, if other than cash,
to be determined by the Board of Directors, whose determination shall be
conclusive and evidenced by a resolution in an officer's certificate signed by a
Responsible Officer and delivered to the Administrative Agent), together with
the aggregate of all other Restricted Payments (other than any Restricted
Payments permitted by the provisions of clause (ii) of the penultimate paragraph
of this Section 8.12) made by the Borrower and its Subsidiaries in the fiscal
quarter during which such Restricted Payment is made shall not exceed an amount
equal to (x) Available Cash of the Borrower for the immediately preceding fiscal
quarter plus (y) the lesser of (i) the amount of any Available Cash of the
Borrower during the first 45 days of such fiscal quarter and (ii) the excess of
the aggregate amount of Loans that the Borrower could have borrowed over the
actual amount of Loans outstanding, in each case as of the last day of the
immediately preceding fiscal quarter; and
(d) such Restricted Payment (other than (x) Restricted Payments described in
clause (i) of the first paragraph of this Section 8.12 made during the fiscal
quarter ending January 31, 1997 that do not exceed $26,000,000 in the aggregate
or (y) any Restricted Payments described in clauses (iii) or (iv) of the first
paragraph of this Section 8.12) the amount of which (to be determined in
accordance with clause (c) of this Section 8.12 if made other than with cash)
shall not exceed an amount equal to (1) Consolidated Cash Flow of the Borrower
and the Restricted Subsidiaries for the period from and after October 31, 1996
through and including the last day of the fiscal quarter ending immediately
preceding the date of the proposed Restricted Payment (the "Determination
Period"), minus (2) the sum of Consolidated Interest Expense of the Borrower and
the Restricted Subsidiaries for the Determination Period plus all capital
expenditures (other than Growth-Related Capital Expenditures and net of capital
asset sales in the ordinary course of business) made by the Borrower and the
Restricted Subsidiaries during the Determination Period plus the aggregate of
all other Restricted Payments (other than (x) Restricted Payments described in
clause (i) of the first paragraph of this Section 8.12 made during the fiscal
quarter ending January 31, 1997 that do not exceed $26,000,000 in the aggregate
or (y) any Restricted Payments described in clauses (iii) or (iv) of the first
paragraph of this Section 8.12) made by the Borrower and the Restricted
Subsidiaries during the period from and after October 31, 1996 through and
including the date of the proposed Restricted Payment, plus (3) $30,000,000,
plus (4) the excess, if any, of consolidated working capital of the Borrower and
the Restricted Subsidiaries at July 31, 1996 over consolidated working capital
of the Borrower and the Restricted Subsidiaries at the end of the fiscal year
immediately preceding the date of the proposed Restricted Payment, minus (5) the
excess, if any, of consolidated working capital of the Borrower and the
Restricted Subsidiaries at the end of the fiscal year immediately preceding the
date of the proposed Restricted Payment over consolidated working capital of the
Borrower and the Restricted Subsidiaries at July 31, 1996. For purposes of this
Section 8.12(d), the calculation of Consolidated Cash Flow shall give pro forma
effect to Acquisitions (including all mergers and consolidations), Asset Sales
and other dispositions and discontinuances of businesses or assets that have
been made by such Person or any of the Restricted Subsidiaries during the
reference period or subsequent to such reference period and on or prior to the
date of calculation of Consolidated Cash Flow assuming that all such
Acquisitions, Asset Sales and other dispositions and discontinuances of
businesses or assets had occurred on the first day of the reference period.
The foregoing provisions will not prohibit (i) the payment of
any distribution within 60 days after the date on which the Borrower becomes
committed to make such distribution, if at said date of commitment such payment
would have complied with the provisions of this Agreement; and (ii) the
redemption, repurchase, retirement or other acquisition of any Equity Interests
of the Borrower in exchange for, or out of the proceeds of, the substantially
concurrent sale (other than to a Subsidiary of the Borrower) of other Equity
Interests of the Borrower (other than any Disqualified Interests).
Not later than the date of making any Restricted Payment, the
General Partner shall deliver to the Administrative Agent an officer's
certificate signed by a Responsible Officer stating that such Restricted Payment
is permitted and setting forth the basis upon which the calculations required by
this Section 7.12 were computed, which calculations may be based upon the
Borrower's latest available financial statements.
8.13 Prepayments of Subordinated Indebtedness. The Borrower shall not, and shall
not permit any of the Restricted Subsidiaries to, (a) purchase, redeem, retire
or otherwise acquire for value, or set apart any money for a sinking, defeasance
or other analogous fund for, the purchase, redemption, retirement or other
acquisition of, or make any payment or prepayment of the principal of or
interest on, or any other amount owing in respect of, any Indebtedness that is
subordinated to the Obligations, except for regularly scheduled payments of
interest in respect of such Indebtedness required pursuant to the instruments
evidencing such Indebtedness that are not made in contravention of the terms and
conditions of subordination set forth on part II of Schedule 8.05 or (b)
directly or indirectly, make any payment in respect of, or set apart any money
for a sinking, defeasance or other analogous fund on account of, Guaranty
Obligations subordinated to the Obligations. The foregoing provisions will not
prohibit the defeasance, redemption or repurchase of subordinated Indebtedness
with the proceeds of Permitted Refinancing Indebtedness.
8.14 Dividend and Other Payment Restrictions Affecting Subsidiaries. The
Borrower shall not, and shall not permit any of the Restricted Subsidiaries to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any encumbrance or restriction on the ability of any Restricted
Subsidiary to (a) pay dividends or make any other distributions to the Borrower
or any of the Restricted Subsidiaries (1) on its Capital Interests or (2) with
respect to any other interest or participation in, or interest measured by, its
profits, (b) pay any indebtedness owed to the Borrower or any of the Restricted
Subsidiaries, (c) make loans or advances to the Borrower or any of the
Restricted Subsidiaries or (d) transfer any of its properties or assets to the
Borrower or any of the Restricted Subsidiaries, except for such encumbrances or
restrictions existing under or by reason of (i) Existing Indebtedness, (ii) this
Agreement, the 1998 Note Purchase Agreement, the 1998 Fixed Rate Senior Notes,
the 2000 Note Purchase Agreement and the 2000 Notes, (iii) applicable law, (iv)
any instrument governing Indebtedness or Capital Interests of a Person acquired
by the Borrower or any of the Restricted Subsidiaries as in effect at the time
of such Acquisition (except to the extent such Indebtedness was incurred in
connection with or in contemplation of such Acquisition), which encumbrance or
restriction is not applicable to any Person, or the properties or assets of any
Person, other than the Person, or the property or assets of the Person, so
acquired, provided that the Consolidated Cash Flow of such Person to the extent
that dividends, distributions, loans, advances or transfers thereof is limited
by such encumbrance or restriction on the date of acquisition is not taken into
account in determining whether such acquisition was permitted by the terms of
this Agreement, (v) customary non-assignment provisions in leases entered into
in the ordinary course of business and consistent with past practices, (vi)
purchase money obligations for property acquired in the ordinary course of
business that impose restrictions of the nature described in clause (d) above on
the property so acquired, (vii) Permitted Refinancing Indebtedness of any
Existing Indebtedness, provided that the restrictions contained in the
agreements governing such Permitted Refinancing Indebtedness are no more
restrictive than those contained in the agreements governing the Indebtedness
being refinanced or (viii) other Indebtedness permitted to be incurred
subsequent to the Restatement Effective Date pursuant to the provisions of
Section 8.05, provided that such restrictions are no more restrictive than those
contained in this Agreement.
8.15 Change in Business. The Borrower shall not, and shall not suffer or permit
any Restricted Subsidiary to, engage in any material line of business
substantially different from those lines of business carried on by the Borrower
and the Restricted Subsidiaries on the date of this Agreement.
8.16 Accounting Changes. The Borrower shall not, and shall not suffer or permit
any Restricted Subsidiary to, make any significant change in accounting
treatment or reporting practices, except as required by GAAP, or change the
fiscal year of the Borrower or of any Restricted Subsidiary except as required
by the Code.
8.17 Limitation on Sale and Leaseback Transactions. The Borrower will not, and
will not permit any of the Restricted Subsidiaries to, enter into any
arrangement with any Person providing for the leasing by the Borrower or such
Restricted Subsidiary of any property that has been or is to be sold or
transferred by the Borrower or such Restricted Subsidiary to such Person in
contemplation of such leasing; provided, however, that the Borrower or such
Restricted Subsidiary may enter into such sale and leaseback transaction if: (i)
the Borrower could have (A) incurred Indebtedness in an amount equal to the
Attributable Debt relating to such sale and leaseback transaction pursuant to
the Leverage Ratio test set forth in Section 7.12(a) and (B) secured a Lien on
such Indebtedness pursuant to Section 8.01; (ii) the lease in such sale and
leaseback transaction is for a term not in excess of the lesser of (A) three
years and (B) 60% of the remaining useful life of such property; or (iii) such
sale and leaseback transaction is otherwise permitted by the last sentence of
Section 4.17 of the 1996 Indenture as in effect as of the date of this
Agreement.
8.18 [Intentionally Omitted]
8.19 Amendments of Organization Documents or Certain Debt Agreements. The
Borrower shall not modify, amend, supplement or replace, nor permit any
modification, amendment, supplement or replacement of the Organization Documents
of the General Partner, the Borrower or any Subsidiary of the Borrower, the MLP
Senior Notes, the 1996 Indenture, the 1998 Fixed Rate Senior Notes, the 1998
Note Purchase Agreement, the 2000 Notes or the 2000 Note Purchase Agreement or
any document executed and delivered in connection with any of the foregoing, in
any respect that would adversely affect the Banks, the Borrower's ability to
perform the Obligations, or the Guarantor's ability to perform its obligations
under the Guaranty, in each such case without the prior written consent of the
Administrative Agent and the Majority Banks. Furthermore, the Borrower shall not
permit any modification, amendment, supplement or replacement of the
Organization Documents of the MLP that would have a material effect on the
Borrower without the prior written consent of the Administrative Agent and the
Majority Banks.
8.20 Fixed Price Supply Contracts. None of the Borrower and the Restricted
Subsidiaries shall at any time be a party or subject to any contract for the
supply of propane or other product except where (a) the purchase price is set
with reference to a spot index or indices substantially contemporaneously with
the delivery of such product or (b) delivery of such propane or other product is
to be made no more than two years after the purchase price is agreed to.
8.21 Operations through Subsidiaries. The Borrower shall not conduct any of its
operations through Restricted Subsidiaries unless: (a) such Restricted
Subsidiary executes a Guaranty guaranteeing payment of the Obligations
accompanied by an opinion of counsel to the Restricted Subsidiary addressed to
the Administrative Agent and the Banks as to the due authorization, execution,
delivery and enforceability of the Guaranty; (b) such Restricted Subsidiary
agrees not to incur any Indebtedness other than (i) trade debt, (ii) debt owed
to the Borrower or any other Restricted Subsidiary and (iii) Acquired Debt
otherwise permitted by this Agreement; (c) the Consolidated Cash Flow of such
Restricted Subsidiary, when added to Consolidated Cash Flow of all other
Restricted Subsidiaries for any fiscal year, shall not exceed 10% of the
Consolidated Cash Flow of the Borrower and the Restricted Subsidiaries for such
fiscal year; and (d) the value of the assets of such Restricted Subsidiary, when
added to the value of the assets of all other Restricted Subsidiaries for any
fiscal year, shall not exceed 10% of the consolidated value of the assets of the
Borrower and the Restricted Subsidiaries for such fiscal year, as determined in
accordance with GAAP; provided that the requirements of subsections (c) and (d)
above shall not apply as to any Restricted Subsidiary if the aggregate
Indebtedness of such Restricted Subsidiary, when added to the Indebtedness of
all other Restricted Subsidiaries at such time (excluding, in each case, debt of
any such Restricted Subsidiary owed to the Borrower or another Restricted
Subsidiary), shall not exceed $5 million. The Borrower shall not conduct any of
its operations through, and shall not establish, create or otherwise invest in,
any Unrestricted Subsidiary unless the same shall be a Permitted Investment.
8.22 Operations of MLP. Except in connection with an indirect Acquisition
permitted by Section 8.04, the General Partner and the Borrower shall not permit
the MLP or any of its Affiliates (including any Non-Recourse Subsidiary or any
Unrestricted Subsidiary) to operate or conduct any business substantially
similar to that conducted by the Borrower and the Restricted Subsidiaries within
a 25 mile radius of any business conducted by the Borrower and the Restricted
Subsidiaries. In order to comply with this Section 8.22, the Borrower may enter
into one or more transactions by which its assets and properties are "swapped"
or "exchanged" for assets and properties of another Person prior to or
concurrently with another transaction which, but for such swap or exchange would
violate this Section; provided, that (i) if the value of the MLP's assets or
units to be so swapped or exchanged exceeds $15 million, as determined by the
audit committee of the Board of Directors of the General Partner, the Borrower
shall have first obtained at its expense an opinion from a nationally recognized
investment banking firm, addressed to it, the Administrative Agent and the Banks
and opining without material qualification and based on assumptions that are
realistic at the time, that the exchange or swap transactions are fair to the
Borrower and the Restricted Subsidiaries, and (ii) if the value of the MLP's
assets or units to be so swapped or exchanged exceeds $50 million, as determined
by the audit committee of the Board of Directors of the General Partner, at the
option of the Majority Banks, the Administrative Agent shall have first
retained, at the Borrower's expense, an investment banking firm on behalf of the
Banks who shall also have rendered an opinion containing the statements and
content referred to in clause (i).
ARTICLE IX
EVENTS OF DEFAULT
9.01 Event of Default. Any of the following shall constitute an "Event of
Default": ----------------
(a) Non-Payment. The Borrower or the General Partner fails to pay, (i) when and
as required to be paid under this Agreement, any amount of principal of any Loan
or of any L/C Obligation, or (ii) within 5 days after the same becomes due, any
interest, fee or any other amount payable under this Agreement or under any
other Loan Document; or
(b) Representation or Warranty. Any representation or warranty by the Borrower,
the General Partner or any Subsidiary made or deemed made in this Agreement, in
any other Loan Document, or which is contained in any certificate, document or
financial or other statement by the Borrower, the General Partner, any
Subsidiary, or any Responsible Officer, furnished at any time under this
Agreement, or in or under any other Loan Document, is incorrect in any material
respect on or as of the date made or deemed made; or
(c) Specific Defaults. The Borrower fails to perform or observe any term,
covenant or agreement contained in any of Sections 2.01(a)(ii), 7.03 (other than
subsection (d) thereof), 7.12, 7.13 or in any Section in Article VIII; or
(d) Other Defaults. The Borrower, the General Partner or any Subsidiary fails to
perform or observe any other term or covenant contained in this Agreement or any
other Loan Document, and such default shall continue unremedied for a period of
30 days after the earlier of (i) the date upon which a Responsible Officer knew
or reasonably should have known of such failure or (ii) the date upon which
written notice thereof is given to the Borrower by the Administrative Agent or
any Bank; or
(e) Cross-Default. The Borrower, the General Partner or any Restricted
Subsidiary (i) fails to make any payment in respect of any Indebtedness,
Synthetic Lease Obligation or Contingent Obligation having an aggregate
principal amount (including undrawn committed or available amounts and including
amounts owing to all creditors under any combined or syndicated credit
arrangement) of more than $10,000,000 when due (whether by scheduled maturity,
required prepayment, acceleration, demand, or otherwise) and such failure
continues after the applicable grace or notice period, if any, specified in the
relevant document on the date of such failure; or (ii) fails to perform or
observe any other condition or covenant, or any other event (including any
termination or similar event in respect of any Accounts Receivable
Securitization) shall occur or condition exist, under any agreement or
instrument relating to any such Indebtedness, Synthetic Lease Obligation or
Contingent Obligation, and such failure continues after the applicable grace or
notice period, if any, specified in the relevant document on the date of such
failure if the effect of such failure, event or condition is to cause, or to
permit the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Indebtedness or Synthetic Lease Obligation (or a trustee
or agent on behalf of such holder or holders or beneficiary or beneficiaries) to
cause such Indebtedness or Synthetic Lease Obligation to be declared to be due
and payable prior to its stated maturity or to cause such Indebtedness,
Synthetic Lease Obligation or Contingent Obligation to be prepaid, purchased or
redeemed by the Borrower, the MLP, the General Partner or any Restricted
Subsidiary, or such Contingent Obligation to become payable or cash collateral
in respect thereof to be demanded; or
(f) Insolvency; Voluntary Proceedings. The General Partner, the MLP, the
Borrower or any Restricted Subsidiary (i) ceases or fails to be solvent, or
generally fails to pay, or admits in writing its inability to pay, its debts as
they become due, subject to applicable grace periods, if any, whether at stated
maturity or otherwise; (ii) voluntarily ceases to conduct its business in the
ordinary course; (iii) commences any Insolvency Proceeding with respect to
itself; or (iv) takes any action to effectuate or authorize any of the
foregoing; or
(g) Involuntary Proceedings. (i) Any involuntary Insolvency Proceeding is
commenced or filed against the General Partner, the MLP, the Borrower or any
Restricted Subsidiary, or any writ, judgment, warrant of attachment, execution
or similar process, is issued or levied against a substantial part of any such
Person's properties, and any such proceeding or petition shall not be dismissed,
or such writ, judgment, warrant of attachment, execution or similar process
shall not be released, vacated or fully bonded within 60 days after
commencement, filing or levy; (ii) the General Partner, the MLP, the Borrower or
any Restricted Subsidiary admits the material allegations of a petition against
it in any Insolvency Proceeding, or an order for relief (or similar order under
non-U.S. law) is ordered in any Insolvency Proceeding; or (iii) the General
Partner, the MLP, the Borrower or any Restricted Subsidiary acquiesces in the
appointment of a receiver, trustee, custodian, conservator, liquidator,
mortgagee in possession (or agent therefor), or other similar Person for itself
or a substantial portion of its property or business; or
(h) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan which has
resulted or could reasonably be expected to result in liability of the Borrower
or the General Partner under Title IV of ERISA to the Pension Plan or the PBGC
in an aggregate amount in excess of $10,000,000; or (ii) the commencement or
increase of contributions to, or the adoption of or the amendment of a Pension
Plan by the Borrower, the General Partner or any of their Affiliates which has
resulted or could reasonably be expected to result in an increase in Unfunded
Pension Liability among all Pension Plans in an aggregate amount in excess of
$10,000,000.
(i) Monetary Judgments. One or more judgments, orders, decrees or arbitration
awards is entered against the Borrower, the General Partner or any Restricted
Subsidiary involving in the aggregate a liability (to the extent not covered by
independent third-party insurance as to which the insurer does not dispute
coverage) as to any single or related series of transactions, incidents or
conditions, of more than $10,000,000; or
(j) Non-Monetary Judgments. Any non-monetary judgment, order or decree is
entered against the Borrower, the General Partner or any Restricted Subsidiary
which does or would reasonably be expected to have a Material Adverse Effect,
and there shall be any period of 60 consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; or
(k) Adverse Change. There occurs a Material Adverse Effect; or
(l) Certain Indenture Defaults, Etc. (i) To the extent not otherwise within the
scope of Section 9.01(e) above, any "Event of Default" shall occur and be
continuing under and as defined in the 1998 Note Purchase Agreement or 2000 Note
Purchase Agreement or (ii) any of the following shall occur under or with
respect to the 1996 Indenture or any other Indebtedness guaranteed by the
Borrower or its Subsidiaries (collectively, the "Guaranteed Indebtedness"): (A)
any demand for payment shall be made under any such Guaranty Obligation with
respect to the Guaranteed Indebtedness or (B) so long as any such Guaranty
Obligation shall be in effect (x) the Borrower or any such Subsidiary shall fail
to pay principal of or premium, if any, or interest on such Guaranteed
Indebtedness after the expiration of any applicable notice or cure periods or
(y) any "Event of Default" (however defined) shall occur and be continuing under
such Guaranteed Indebtedness which results in the acceleration of such
Guaranteed Indebtedness; or
(m) Guarantor Defaults. Any Guarantor fails in any material respect to perform
or observe any term, covenant or agreement in its Guaranty; or any Guaranty is
for any reason partially (including with respect to future advances) or wholly
revoked or invalidated, or otherwise ceases to be in full force and effect, or
any Guarantor or any other Person contests in any manner the validity or
enforceability thereof or denies that it has any further liability or obligation
thereunder; or any event described at subsections (f) or (g) of this Section
occurs with respect to the Guarantor.
9.02 Remedies. If any Event of Default occurs, the Administrative Agent
shall, at the request of, or may, with the consent of, the Majority Banks,
(a) declare the commitment of each Bank to make Loans and any obligation of an
Issuing Bank to Issue Letters of Credit to be terminated, whereupon such
commitments and obligation shall be terminated;
(b) declare an amount equal to the maximum aggregate amount that is or at any
time thereafter may become available for drawing under any outstanding Letters
of Credit (whether or not any beneficiary shall have presented, or shall be
entitled at such time to present, the drafts or other documents required to draw
under such Letters of Credit) to be immediately due and payable;
(c) declare the unpaid principal amount of all outstanding Loans, all interest
accrued and unpaid thereon, and all other amounts owing or payable under this
Agreement or under any other Loan Document to be immediately due and payable
(including, without limitation, amounts due under Section 4.04), without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Borrower; and
(d) exercise on behalf of itself and the Banks all rights and remedies available
to it and the Banks under the Loan Documents or applicable law;
provided, however, that upon the occurrence of any event specified in subsection
(f) or (g) of Section 9.01 (in the case of clause (i) of subsection (g) upon the
expiration of the 60-day period mentioned therein), the obligation of each Bank
to make Loans and any obligation of the Issuing Banks to Issue Letters of Credit
shall automatically terminate and the unpaid principal amount of all outstanding
Loans and all interest and other amounts as aforesaid shall automatically become
due and payable without further act of the Administrative Agent, any Issuing
Bank or any Bank.
9.03 Rights Not Exclusive. The rights provided for in this Agreement and the
other Loan Documents are cumulative and are not exclusive of any other rights,
powers, privileges or remedies provided by law or in equity, or under any other
instrument, document or agreement now existing or hereafter arising.
9.04 Certain Financial Covenant Defaults. In the event that, after taking into
account any extraordinary charge to earnings taken or to be taken as of the end
of any fiscal period of the Borrower (a "Charge"), and if solely by virtue of
such Charge, there would exist an Event of Default due to the breach of any of
Sections 7.12(a) or 7.12(b) as of such fiscal period end date, such Event of
Default shall be deemed to arise upon the earlier of (a) the date after such
fiscal period end date on which the Borrower announces publicly it will take, is
taking or has taken such Charge (including an announcement in the form of a
statement in a report filed with the SEC) or, if such announcement is made prior
to such fiscal period end date, the date that is such fiscal period end date,
and (b) the date the Borrower delivers to the Administrative Agent its audited
annual or unaudited quarterly financial statements in respect of such fiscal
period reflecting such Charge as taken.
ARTICLE X
THE ADMINISTRATIVE AGENT
10.01 Appointment and Authorization. (a) Each of the Banks and each Issuing Bank
hereby irrevocably appoints, designates and authorizes the Administrative Agent
to take such action on its behalf under the provisions of this Agreement and
each other Loan Document and to exercise such powers and perform such duties as
are expressly delegated to it by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Loan Document, the Administrative Agent shall not have
any duties or responsibilities, except those expressly set forth in this
Agreement, nor shall the Administrative Agent have or be deemed to have any
fiduciary relationship with any Bank or any Issuing Bank, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or any other Loan Document or otherwise exist
against the Administrative Agent. The Documentation Agent shall have no duties
or responsibilities in such capacity under this Agreement.
(b) Each Issuing Bank shall act on behalf of the Banks with
respect to any Letters of Credit Issued by it and the documents associated
therewith until such time and except for so long as the Administrative Agent may
agree at the request of the Majority Lenders to act for such Issuing Bank with
respect thereto; provided, however, that such Issuing Bank shall have all of the
benefits and immunities (i) provided to the Administrative Agent in this Article
X with respect to any acts taken or omissions suffered by such Issuing Bank in
connection with Letters of Credit Issued by it or proposed to be Issued by it
and the application and agreements for letters of credit pertaining to the
Letters of Credit as fully as if the term "Administrative Agent", as used in
this Article X, included such Issuing Bank with respect to such acts or
omissions, and (ii) as additionally provided in this Agreement with respect to
such Issuing Bank.
10.02 Delegation of Duties. The Administrative Agent may execute any of its
duties under this Agreement or any other Loan Document by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent shall
not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects with reasonable care.
10.03 Liability of Administrative Agent and Issuing Banks. None of the
Agent-Related Persons and Issuing Banks shall (i) be liable for any action taken
or omitted to be taken by any of them under or in connection with this Agreement
or any other Loan Document or the transactions contemplated hereby (except for
its own gross negligence or willful misconduct), or (ii) be responsible in any
manner to any of the Banks for any recital, statement, representation or
warranty made by the Borrower or any Subsidiary or Affiliate of the Borrower, or
any officer thereof, contained in this Agreement or in any other Loan Document,
or in any certificate, report, statement or other document referred to or
provided for in, or received by the Administrative Agent under or in connection
with, this Agreement or any other Loan Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document, or for any failure of the Borrower or any other party to any Loan
Document to perform its obligations hereunder or thereunder. No Agent-Related
Person shall be under any obligation to any Bank to ascertain or to inquire as
to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the
properties, books or records of the Borrower or any of the Borrower's
Subsidiaries or Affiliates.
10.04 Reliance by Administrative Agent and Issuing Banks. (a) The Administrative
Agent and each Issuing Bank shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to the
Borrower), independent accountants and other experts selected by the
Administrative Agent or applicable Issuing Bank. The Administrative Agent and
each Issuing Bank shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Majority Banks as it deems appropriate
and, if it so requests, it shall first be indemnified to its satisfaction by the
Banks against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The Administrative Agent
and each Issuing Bank shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement or any other Loan Document in
accordance with a request or consent of the Majority Banks and such request and
any action taken or failure to act pursuant thereto shall be binding upon all of
the Banks.
(b) For purposes of determining compliance with the conditions
specified in Section 5.01, each Bank that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by the Administrative Agent or an Issuing
Bank to such Bank for consent, approval, acceptance or satisfaction, or required
thereunder to be consented to or approved by or acceptable or satisfactory to
the Bank.
10.05 Notice of Default. The Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default, except
with respect to defaults in the payment of principal, interest and fees required
to be paid to the Administrative Agent for the account of the Banks, unless the
Administrative Agent shall have received written notice from a Bank or the
Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". The
Administrative Agent will notify the Banks of its receipt of any such notice.
The Administrative Agent shall take such action with respect to such Default or
Event of Default as may be requested by the Majority Banks in accordance with
Article IX; provided, however, that unless and until the Administrative Agent
has received any such request, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable or in the best
interest of the Banks.
10.06 Credit Decision. Each Bank acknowledges that none of the Agent-Related
Persons or any Issuing Bank has made any representation or warranty to it, and
that no act by the Administrative Agent or any Issuing Bank hereinafter taken,
including any review of the affairs of the Borrower and its Subsidiaries, shall
be deemed to constitute any representation or warranty by any Agent-Related
Person or any Issuing Bank to any Bank. Each Bank represents to the
Administrative Agent and the Issuing Banks that it has, independently and
without reliance upon any Agent-Related Person or any Issuing Bank and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Borrower and
its Subsidiaries, and all applicable bank regulatory laws relating to the
transactions contemplated hereby, and made its own decision to enter into this
Agreement and to extend credit to the Borrower hereunder. Each Bank also
represents that it will, independently and without reliance upon any
Agent-Related Person or any Issuing Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigations as
it deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of the Borrower.
Except for notices, reports and other documents to be furnished to the Banks by
the Administrative Agent or any Issuing Bank as specified on Schedule 10.06,
neither the Administrative Agent nor any Issuing Bank shall have any duty or
responsibility to provide any Bank with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of the Borrower which may come into the possession
of any of the Agent-Related Persons or any Issuing Bank. The Administrative
Agent shall promptly deliver to the Banks the items specified on Schedule 10.06
that are required to be provided by the Borrower only to the extent such items
are actually provided by the Borrower.
10.07 Indemnification. Whether or not the transactions contemplated hereby are
consummated, the Banks shall indemnify upon demand the Agent-Related Persons and
the Issuing Banks (to the extent not reimbursed by or on behalf of the Borrower
and without limiting the obligation of the Borrower to do so), pro rata in
accordance with its Pro Rata Share on the date the Borrower's reimbursement
obligation arises, from and against any and all Indemnified Liabilities;
provided, however, that no Bank shall be liable for the payment to the
Agent-Related Persons or the Issuing Banks of any portion of such Indemnified
Liabilities resulting solely from such Person's gross negligence or willful
misconduct. Without limitation of the foregoing, each Bank shall reimburse the
Administrative Agent and the Issuing Banks upon demand for their ratable share
of any costs or out-of-pocket expenses (including Attorney Costs) incurred by
them in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to in this Agreement, to the extent that the
Administrative Agent or the applicable Issuing Bank is not reimbursed for such
expenses by or on behalf of the Borrower. The undertaking in this Section shall
survive the payment of all Obligations and the resignation or replacement of the
Administrative Agent or any Issuing Bank.
10.08 Administrative Agent in Individual Capacity. BofA and its Affiliates may
make loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with the Borrower and its
Subsidiaries and Affiliates as though BofA were not the Administrative Agent or
an Issuing Bank hereunder and without notice to or consent of the Banks. The
Banks acknowledge that, pursuant to such activities, BofA or its Affiliates may
receive information regarding the Borrower or its Affiliates (including
information that may be subject to confidentiality obligations in favor of the
Borrower or such Subsidiary) and acknowledge that the Administrative Agent shall
be under no obligation to provide such information to them. With respect to its
Loans and participations in Letters of Credit, BofA shall have the same rights
and powers under this Agreement as any other Bank and may exercise the same as
though it were not the Administrative Agent or an Issuing Bank.
10.09 Successor Administrative Agent. The Administrative Agent may, and at the
request of the Majority Banks shall, resign as Administrative Agent upon 30
days' notice to the Banks. If the Administrative Agent resigns under this
Agreement, the Majority Banks shall appoint from among the Banks a successor
agent for the Banks. If no successor agent is appointed prior to the effective
date of the resignation of the Administrative Agent, the Administrative Agent
may appoint, after consulting with the Banks and the Borrower, a successor agent
from among the Banks. Upon the acceptance of its appointment as successor agent
under this Agreement, such successor agent shall succeed to all the rights,
powers and duties of the retiring Administrative Agent and the term
"Administrative Agent" shall mean such successor agent and the retiring
Administrative Agent's appointment, powers and duties as Administrative Agent
shall be terminated. After any retiring Administrative Agent's resignation
hereunder as Administrative Agent, the provisions of this Article X and Sections
11.04 and 11.05 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Administrative Agent under this Agreement. If no
successor agent has accepted appointment as Administrative Agent by the date
which is 30 days following a retiring Administrative Agent's notice of
resignation, the retiring Administrative Agent's resignation shall nevertheless
thereupon become effective and the Banks shall perform all of the duties of the
Administrative Agent under this Agreement until such time, if any, as the
Majority Banks appoint a successor agent as provided for above. Notwithstanding
the foregoing, however, BofA may not be removed as the Administrative Agent at
the request of the Majority Banks unless BofA shall also simultaneously be
replaced as an "Issuing Bank" hereunder pursuant to documentation in form and
substance reasonably satisfactory to BofA.
10.10 Withholding Tax. (a) If any Bank is a "foreign corporation, partnership or
trust" within the meaning of the Code and such Bank claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the Code, such
Bank agrees with and in favor of the Administrative Agent, to deliver to the
Administrative Agent:
(i) if such Bank claims an exemption from, or a reduction of, withholding
tax under a United States tax treaty, properly completed IRS Forms 1001
and W-8 (or any successor forms) before the payment of any interest in
the first calendar year and before the payment of any interest in each
third succeeding calendar year during which interest may be paid under
this Agreement;
(ii) if such Bank claims that interest paid under this Agreement is exempt
from United States withholding tax because it is effectively connected
with a United States trade or business of such Bank, two properly
completed and executed copies of IRS Form 4224 (or any successor form)
before the payment of any interest is due in the first taxable year of
such Bank and in each succeeding taxable year of such Bank during which
interest may be paid under this Agreement, and IRS Form W-9 (or any
successor form); and
(iii) such other form or forms as may be required under the Code or other
laws of the United States as a condition to exemption from, or
reduction of, United States withholding tax.
Such Bank agrees to promptly notify the Administrative Agent of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
(b) If any Bank claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form 1001 and
such Bank sells, assigns, grants a participation in, or otherwise transfers all
or part of the Obligations of the Borrower to such Bank, such Bank agrees to
notify the Administrative Agent of the percentage amount in which it is no
longer the beneficial owner of Obligations of the Borrower to such Bank. To the
extent of such percentage amount, the Administrative Agent will treat such
Bank's IRS Form 1001 as no longer valid.
(c) If any Bank claiming exemption from United States
withholding tax by filing IRS Form 4224 with the Administrative Agent sells,
assigns, grants a participation in, or otherwise transfers all or part of the
Obligations of the Borrower to such Bank, such Bank agrees to undertake sole
responsibility for complying with the withholding tax requirements imposed by
Sections 1441 and 1442 of the Code.
(d) If any Bank is entitled to a reduction in the applicable
withholding tax, the Administrative Agent may withhold from any interest payment
to such Bank an amount equivalent to the applicable withholding tax after taking
into account such reduction. If the forms or other documentation required by
subsection (a) of this Section are not delivered to the Administrative Agent,
then the Administrative Agent may withhold from any interest payment to such
Bank not providing such forms or other documentation an amount equivalent to the
applicable withholding tax.
(e) If the IRS or any other Governmental Authority of the
United States or other jurisdiction asserts a claim that the Administrative
Agent did not properly withhold tax from amounts paid to or for the account of
any Bank (because the appropriate form was not delivered, was not properly
executed, or because such Bank failed to notify the Administrative Agent of a
change in circumstances which rendered the exemption from, or reduction of,
withholding tax ineffective, or for any other reason) such Bank shall indemnify
the Administrative Agent fully for all amounts paid, directly or indirectly, by
the Administrative Agent as tax or otherwise, including penalties and interest,
and including any taxes imposed by any jurisdiction on the amounts payable to
the Administrative Agent under this Section, together with all costs and
expenses (including Attorney Costs). The obligation of the Banks under this
subsection shall survive the payment of all Obligations and the resignation or
replacement of the Administrative Agent.
ARTICLE XI
MISCELLANEOUS
11.01 Amendments and Waivers. No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent with respect to any
departure by the Borrower or the General Partner therefrom, shall be effective
unless the same shall be in writing and signed by the Majority Banks (or by the
Administrative Agent at the written request of the Majority Banks) and the
Borrower and acknowledged by the Administrative Agent, and then any such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no such waiver, amendment, or
consent shall, unless in writing and signed by all the Banks, the Borrower and
the General Partner and acknowledged by the Administrative Agent, do any of the
following:
(a) increase or extend the Revolving Loan Commitment of any Bank (or reinstate
any Revolving Loan Commitment terminated pursuant to Section 9.02);
(b) postpone or delay any date fixed by this Agreement or any other Loan
Document for any payment of principal, interest, fees or other amounts due to
the Banks (or any of them) under this Agreement or under any other Loan
Document;
(c) reduce the principal of, or the rate of interest specified in this Agreement
on any Loan, or (subject to clause (ii) below) any fees or other amounts payable
under this Agreement or under any other Loan Document;
(d) change the percentage of the Revolving Loan Commitments or of the aggregate
unpaid principal amount of the Loans which is required for the Banks or any of
them to take any action under this Agreement;
(e) amend this Section, or Section 2.14, or any provision of this Agreement
providing for consent or other action by all Banks; or
(f) release any of the Guaranties or any liability of any Guarantor under a
Guaranty;
and, provided, further, that (i) no amendment, waiver or consent shall, unless
in writing and signed by the Issuing Banks in addition to the Majority Banks or
all the Banks, as the case may be, affect the rights or duties of the Issuing
Banks under this Agreement or any L/C-Related Document relating to any Letter of
Credit Issued or to be Issued by any such Issuing Bank, (ii) no amendment,
waiver or consent shall, unless in writing and signed by the Administrative
Agent in addition to the Majority Banks or all the Banks, as the case may be,
affect the rights or duties of the Administrative Agent under this Agreement or
any other Loan Document, and (iii) the Fee Letter may be amended, or rights or
privileges thereunder waived, in a writing executed solely by the parties
thereto.
11.02 Notices. (a) Except as otherwise specifically provided in Section 3.02,
all notices, requests and other communications shall be in writing (including,
unless the context expressly otherwise provides, by facsimile transmission;
provided, that any matter transmitted by the Borrower by facsimile (i) shall be
immediately confirmed by a telephone call to the recipient at the number
specified on Schedule 11.02, and (ii) shall be followed promptly by delivery of
a hard copy original thereof) and mailed, faxed or delivered, to the address or
facsimile number specified for notices on Schedule 11.02; or, as directed to the
Borrower or the Administrative Agent, to such other address as shall be
designated by such party in a written notice to the other parties, and as
directed to any other party, at such other address as shall be designated by
such party in a written notice to the Borrower and the Administrative Agent.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next-day) delivery, or transmitted in legible form by facsimile
machine, respectively, or if mailed, upon the third Business Day after the date
deposited into the U.S. mail, or if delivered, upon delivery; except that
notices pursuant to Article II, III or X shall not be effective until actually
received by the Administrative Agent, and notices pursuant to Article III to any
Issuing Bank shall not be effective until actually received by such Issuing Bank
at the address specified for the "Issuing Banks" on the applicable signature
page of this Agreement.
(c) Any agreement of the Administrative Agent and the Banks in
this Agreement to receive certain notices by telephone or facsimile is solely
for the convenience and at the request of the Borrower. The Administrative Agent
and the Banks shall be entitled to rely on the authority of any Person
purporting to be a Person authorized by the Borrower to give such notice and the
Administrative Agent and the Banks shall not have any liability to the Borrower
or other Person on account of any action taken or not taken by the
Administrative Agent or the Banks in reliance upon such telephonic or facsimile
notice. The obligation of the Borrower to repay the Loans and L/C Obligations
shall not be affected in any way or to any extent by any failure by the
Administrative Agent and the Banks to receive written confirmation of any
telephonic or facsimile notice or the receipt by the Administrative Agent and
the Banks of a confirmation which is at variance with the terms understood by
the Administrative Agent and the Banks to be contained in the telephonic or
facsimile notice.
11.03 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Administrative Agent or any Bank, any right,
remedy, power or privilege under this Agreement, shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power or
privilege under this Agreement preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege.
11.04 Costs and Expenses. The Borrower shall:
------------------
(a) whether or not the transactions contemplated hereby are consummated, pay or
reimburse BofA (including in its capacity as Administrative Agent and an Issuing
Bank) and the Arranger within five Business Days after demand (subject to
Section 5.01(e)) for all costs and expenses incurred by BofA (including in its
capacity as Administrative Agent and an Issuing Bank) and the Arranger in
connection with the development, preparation, delivery, administration,
syndication and execution of, and any amendment, supplement, waiver or
modification to (in each case, whether or not consummated), this Agreement, any
Loan Document, the Existing Credit Agreement and any other documents prepared in
connection herewith or therewith, and the consummation of the transactions
contemplated hereby and thereby, including reasonable (giving due regard to the
prevailing circumstances) Attorney Costs incurred by BofA (including in its
capacity as Administrative Agent and an Issuing Bank) and the Arranger with
respect thereto; and
(b) pay or reimburse the Administrative Agent, the Arranger, each Issuing Bank
and each Bank within five Business Days after demand for all costs and expenses
(including Attorney Costs) incurred by them in connection with the enforcement,
attempted enforcement, or preservation of any rights or remedies under this
Agreement or any other Loan Document during the existence of an Event of Default
or after acceleration of the Loans (including in connection with any "workout"
or restructuring regarding the Loans, and including in any Insolvency Proceeding
or appellate proceeding).
11.05 Indemnity. Whether or not the transactions contemplated hereby are
consummated, the Borrower shall indemnify and hold the Agent-Related Persons,
the Issuing Banks, the Arranger and each Bank and each of their respective
officers, directors, employees, counsel, agents and attorneys-in-fact (each, an
"Indemnified Person") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits and
reasonable (giving due regard to the prevailing circumstances) costs, charges,
expenses and disbursements (including Attorney Costs) of any kind or nature
whatsoever which may at any time (including at any time following repayment of
the Loans, the termination of the Letters of Credit and the termination,
resignation or replacement of the Administrative Agent or replacement of any
Bank or Issuing Bank) be imposed on, incurred by or asserted against any such
Person in any way relating to or arising out of this Agreement or any document
contemplated by or referred to herein, or the transactions contemplated hereby,
or any action taken or omitted by any such Person under or in connection with
any of the foregoing, including with respect to any investigation, litigation or
proceeding (including any Insolvency Proceeding or appellate proceeding) related
to or arising out of this Agreement or the Loans or Letters of Credit or the
actual or proposed use of the proceeds thereof, whether or not any Indemnified
Person is a party thereto (all the foregoing, collectively, the "Indemnified
Liabilities"); provided, that the Borrower shall have no obligation hereunder to
any Indemnified Person with respect to Indemnified Liabilities resulting solely
from the gross negligence or willful misconduct of such Indemnified Person. The
agreements in this Section shall survive payment of all other Obligations.
11.06 Payments Set Aside. To the extent that the Borrower makes a payment to the
Administrative Agent or the Banks, or the Administrative Agent or the Banks
exercise their right of set-off, and such payment or the proceeds of such
set-off or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required (including pursuant to any
settlement entered into by the Administrative Agent or such Bank in its
discretion) to be repaid to a trustee, receiver or any other party, in
connection with any Insolvency Proceeding or otherwise, then (a) to the extent
of such recovery the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such set-off had not occurred, and (b) each Bank
severally agrees to pay to the Administrative Agent upon demand its pro rata
share of any amount so recovered from or repaid by the Administrative Agent.
11.07 Successors and Assigns. The provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that the Borrower may not assign or transfer any
of its rights or obligations under this Agreement without the prior written
consent of the Administrative Agent and each Bank. Any attempted or purported
assignment in contravention of the preceding sentence shall be null and void.
11.08 Assignments, Participations, Etc. (a) Any Bank may, with the written
consent of the Borrower (at all times other than during the existence of an
Event of Default), the Administrative Agent and the applicable Issuing Bank(s),
which consents shall not be unreasonably withheld, at any time assign and
delegate to one or more Eligible Assignees (provided that no written consent of
the Borrower, the Administrative Agent or an Issuing Bank shall be required in
connection with any assignment and delegation by a Bank to an Eligible Assignee
that is an Affiliate of such Bank) (each an "Assignee") all, or any ratable part
of all, of the Loans, the Revolving Loan Commitments, the L/C Obligations and
the other rights and obligations of such Bank under this Agreement in an
aggregate minimum amount of $10,000,000 or a lesser amount as is agreed upon by
the Administrative Agent and the Borrower (except that no minimum amount shall
apply to an assignment from a Bank to an Assignee that is then a Bank),
pro-rated in accordance with the respective amounts of the Facility A Commitment
and the Facility B Commitment of such Bank; provided that such Bank shall retain
an aggregate amount of not less than $10,000,000 in respect thereof, unless such
Bank assigns and delegates all of its rights and obligations pursuant to this
Agreement to one or more Eligible Assignees at the time and subject to the
conditions set forth in this Agreement; and provided, further, however, that the
Borrower and the Administrative Agent may continue to deal solely and directly
with such Bank in connection with the interest so assigned to an Assignee until
(i) written notice of such assignment, together with payment instructions,
addresses and related information with respect to the Assignee, shall have been
given to the Borrower and the Administrative Agent by such Bank and the
Assignee; (ii) such Bank and its Assignee shall have delivered to the Borrower
and the Administrative Agent an Assignment and Acceptance in the form of Exhibit
E ("Assignment and Acceptance"), together with any Note or Notes subject to such
assignment; and (iii) the assignor Bank has paid to the Administrative Agent a
processing fee in the amount of $3,500.
(b) From and after the date that the Administrative Agent
notifies the assignor Bank that it has received (and provided its consent with
respect to) an executed Assignment and Acceptance and payment of the
above-referenced processing fee, (i) the Assignee thereunder shall be a party
hereto and, to the extent that rights and obligations under this Agreement have
been assigned to it pursuant to such Assignment and Acceptance, shall have the
rights and obligations of a Bank under the Loan Documents, and (ii) the assignor
Bank shall, to the extent that rights and obligations under this Agreement and
under the other Loan Documents have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Loan Documents.
(c) Within five Business Days after its receipt of notice by
the Administrative Agent that it has received an executed Assignment and
Acceptance and payment of the processing fee (and provided that it consents to
such assignment in accordance with Section 11.08(a)), if the Assignee so
requests, the Borrower shall execute and deliver to the Administrative Agent,
new Notes evidencing such Assignee's assigned Loans and Revolving Loan
Commitments and, if the assignor Bank has retained a portion of its Loans and
its Revolving Loan Commitments and so requests, replacement Notes in the
principal amount or amounts of the Loans retained by the assignor Bank (such
Notes to be in exchange for, but not in payment of, the Notes held by such
Bank). Immediately upon each Assignee's making its processing fee payment under
the Assignment and Acceptance, this Agreement shall be deemed to be amended to
the extent, but only to the extent, necessary to reflect the addition of the
Assignee and the resulting adjustment of the Revolving Loan Commitments arising
therefrom. The Revolving Loan Commitments allocated to each Assignee shall
reduce such Revolving Loan Commitments of the assigning Bank pro tanto and the
Administrative Agent shall promptly prepare and distribute a new Schedule 2.01
reflecting the new commitments.
(d) Any Bank may at any time sell to one or more commercial
banks or other Persons not Affiliates of the Borrower (a "Participant")
participating interests in any Loans, the Revolving Loan Commitments of that
Bank and the other interests of that Bank (the "originating Bank") under this
Agreement and under the other Loan Documents; provided, however, that (i) the
originating Bank's obligations under this Agreement shall remain unchanged, (ii)
the originating Bank shall remain solely responsible for the performance of such
obligations, (iii) the Borrower, the Issuing Banks and the Administrative Agent
shall continue to deal solely and directly with the originating Bank in
connection with the originating Bank's rights and obligations under this
Agreement and the other Loan Documents, and (iv) no Bank shall transfer or grant
any participating interest under which the Participant has rights to approve any
amendment to, or any consent or waiver with respect to, this Agreement or any
other Loan Document, except to the extent such amendment, consent or waiver
would require unanimous consent of the Banks as described in the first proviso
to Section 11.01. In the case of any such participation, the Participant shall
be entitled to the benefit of Sections 4.01, 4.03 and 11.05 as though it were
also a Bank under this Agreement, and if amounts outstanding under this
Agreement are due and unpaid, or shall have been declared or shall have become
due and payable upon the occurrence of an Event of Default, each Participant
shall be deemed to have the right of set-off in respect of its participating
interest in amounts owing under this Agreement to the same extent as if the
amount of its participating interest were owing directly to it as a Bank under
this Agreement.
(e) Each Bank agrees to take normal and reasonable precautions
and exercise due care to maintain the confidentiality of all information
identified as "confidential" or "secret" by the Borrower and provided to it by
the Borrower or any Subsidiary, or by the Administrative Agent on such
Borrower's or Subsidiary's behalf, under this Agreement or any other Loan
Document, and neither it nor any of its Affiliates shall use any such
information other than in connection with or in enforcement of this Agreement
and the other Loan Documents; except to the extent such information (i) was or
becomes generally available to the public other than as a result of disclosure
by the Bank, or (ii) was or becomes available on a non-confidential basis from a
source other than the Borrower, provided that such source is not bound by a
confidentiality agreement with the Borrower known to the Bank; provided,
however, that any Bank may disclose such information (A) at the request or
pursuant to any requirement of any Governmental Authority to which the Bank is
subject or in connection with an examination of such Bank by any such authority;
(B) pursuant to subpoena or other court process; (C) when required to do so in
accordance with the provisions of any applicable Requirement of Law; (D) to the
extent reasonably required in connection with any litigation or proceeding to
which the Administrative Agent, any Bank or their respective Affiliates may be
party; (E) to the extent reasonably required in connection with the exercise of
any remedy under this Agreement or under any other Loan Document; (F) to such
Bank's independent auditors and other professional advisors; (G) to any
Affiliate of such Bank, or to any Participant or Assignee, actual or potential,
provided that such Affiliate, Participant or Assignee agrees to keep such
information confidential to the same extent required of the Banks under this
Agreement, and (H) as to any Bank, as expressly permitted under the terms of any
other document or agreement regarding confidentiality to which the Borrower is
party or is deemed party with such Bank.
(f) Notwithstanding any other provision in this Agreement, any
Bank may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement and any Note held by
it in favor of any Federal Reserve Bank in accordance with Regulation A of the
FRB or U.S. Treasury Regulation 31 CFR ss.203.14, and such Federal Reserve Bank
may enforce such pledge or security interest in any manner permitted under
applicable law.
11.09 Set-off. In addition to any rights and remedies of the Banks provided by
law, if an Event of Default exists or the Loans have been accelerated, each Bank
is authorized at any time and from time to time, without prior notice to the
Borrower, any such notice being waived by the Borrower to the fullest extent
permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held by, and other
indebtedness at any time owing by, such Bank to or for the credit or the account
of the Borrower against any and all Obligations owing to such Bank, now or
hereafter existing, irrespective of whether or not the Administrative Agent or
such Bank shall have made demand under this Agreement or any Loan Document and
although such Obligations may be contingent or unmatured. Each Bank agrees
promptly to notify the Borrower and the Administrative Agent after any such
set-off and application made by such Bank; provided, however, that the failure
to give such notice shall not affect the validity of such set-off and
application.
11.10 Notification of Addresses, Lending Offices, Etc. Each Bank shall notify
the Administrative Agent in writing of any changes in the address to which
notices to the Bank should be directed, of addresses of any Lending Office, of
payment instructions in respect of all payments to be made to it under this
Agreement and of such other administrative information as the Administrative
Agent shall reasonably request.
11.11 Assignment of Revolving Loans. (a) On or prior to the Restatement
Effective Date, the Administrative Agent shall notify each Bank of the amount
required to be paid by or to such Bank so that the Revolving Loans held by the
Banks on the Restatement Effective Date (before giving effect to any new
Revolving Loans made on such date) shall be held by each Bank pro rata in
accordance with the Revolving Loan Commitments of the Banks set forth on
Schedule 2.01. Each Bank which is required to reduce the amount of Revolving
Loans held by it (each such Bank, a "Decreasing Bank") shall irrevocably assign,
without recourse or warranty of any kind whatsoever (except that each Decreasing
Bank warrants that it is the legal and beneficial owner of the Loans assigned by
it under this Section 11.11 and that such Loans are held by such Decreasing Bank
free and clear of adverse claims), to each Bank which is required to increase
the amount of Revolving Loans held by it (each such Bank, an "Increasing Bank"),
and each Increasing Bank shall irrevocably acquire from the Decreasing Banks, a
portion of the principal amount of the Revolving Loans of each Decreasing Bank
(collectively, the "Acquired Portion") outstanding on the Restatement Effective
Date (before giving effect to any new Revolving Loans made on such date) in an
amount such that the principal amount of the Revolving Loans held by each
Increasing Bank and each Decreasing Bank as of the Restatement Effective Date
shall be held in accordance with each such Bank's Pro Rata Share (if any) as of
such date. Such assignment and acquisition shall be effective on the Restatement
Effective Date automatically and without any action required on the part of any
party other than the payment by the Increasing Banks to the Administrative Agent
for the account of the Decreasing Banks of an aggregate amount equal to the
Acquired Portion, which amount shall be allocated and paid by the Administrative
Agent at or before 12:00 p.m. San Francisco time on the Restatement Effective
Date to the Decreasing Banks pro rata based upon the respective reductions in
the principal amount of the Revolving Loans held by such Banks on the
Restatement Effective Date (before giving effect to any new Revolving Loans made
on such date). Each of the Administrative Agent and the Banks shall adjust its
records accordingly to reflect the payment of the Acquired Portion. The payment
to be made in respect of the Acquired Portion shall be made by the Increasing
Banks to the Administrative Agent in Dollars in immediately available funds at
or before 11:00 a.m. San Francisco time on the Restatement Effective Date, such
payment to be made by the Increasing Banks pro rata based upon the respective
increases in the principal amount of the Revolving Loans held by such Banks on
the Restatement Effective Date (before giving effect to any new Revolving Loans
made on such date).
(b) To the extent any of the Revolving Loans acquired by the Increasing Banks
from the Decreasing Banks pursuant to Section 11.11(a) above are Eurodollar Rate
Loans and the Restatement Effective Date is not the last day of an Interest
Period for such Loans, the Decreasing Banks shall be entitled to compensation
from the Borrower as provided in Section 4.04 of the Existing Credit Agreement
(as if the Borrower had prepaid such Loans in an amount equal to the Acquired
Portion on the Restatement Effective Date). The payment made by the Increasing
Banks in respect of the Acquired Portion shall constitute a Loan made by the
Increasing Banks on the Restatement Effective Date, and to the extent any Loan
acquired by the Increasing Banks on the Restatement Effective Date is a
Eurodollar Rate Loan and such date is not the last day of an Interest Period for
such Loan, such Loan shall accrue interest at the rate then applicable to such
Loan until such last day; provided, however, that the Borrower shall compensate
the Increasing Banks for an amount equal to the amount, if any, by which the
cost to the Increasing Banks of funding the amount of each such Loan in the
respective market for the period from such date to the last day of the then
Interest Period for such Loan exceeds such applicable rate.
11.12 Counterparts. This Agreement may be executed in any number of separate
counterparts, each of which, when so executed, shall be deemed an original, and
all of said counterparts taken together shall be deemed to constitute but one
and the same instrument. Transmission by telecopier of an executed counterpart
of this Agreement shall be deemed to constitute due and sufficient delivery of
such counterpart. The parties hereto shall deliver to each other an original
counterpart of this Agreement promptly after the delivery by telecopier;
provided, however, that the failure by any party to so deliver an original
counterpart shall not affect the sufficiency of a telecopy of such counterpart
(and the fact that such telecopy constitutes the due and sufficient delivery of
such counterpart), as provided above.
11.13 Severability. The illegality or unenforceability of any provision of this
Agreement or any instrument or agreement required under this Agreement shall not
in any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required under this
Agreement.
11.14 No Third Parties Benefited. This Agreement is made and entered into for
the sole protection and legal benefit of the Borrower, the Banks, the
Administrative Agent and the Agent-Related Persons, the Arranger and their
permitted successors and assigns, and no other Person shall be a direct or
indirect legal beneficiary of, or have any direct or indirect cause of action or
claim in connection with, this Agreement or any of the other Loan Documents.
11.15 Governing Law and Jurisdiction. (a) THIS AGREEMENT AND ALL NOTES ISSUED
UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF NEW YORK; PROVIDED THAT THE ADMINISTRATIVE AGENT AND THE
BANKS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE
OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE BORROWER, THE GENERAL
PARTNER, THE ADMINISTRATIVE AGENT AND THE BANKS CONSENTS, FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH
OF THE BORROWER, THE GENERAL PARTNER, THE ADMINISTRATIVE AGENT AND THE BANKS
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT
OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE BORROWER, THE GENERAL
PARTNER, THE ADMINISTRATIVE AGENT AND THE BANKS EACH WAIVE PERSONAL SERVICE OF
ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS
PERMITTED BY NEW YORK LAW.
11.16 Waiver of Jury Trial. THE BORROWER, THE GENERAL PARTNER, THE BANKS AND THE
ADMINISTRATIVE AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY
ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON,
PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS,
OR OTHERWISE. THE BORROWER, THE GENERAL PARTNER, THE BANKS AND THE
ADMINISTRATIVE AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE
TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE
PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED
BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF
THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF.
THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
11.17 Entire Agreement. From and after the Restatement Effective Date (if it
shall occur), this Agreement, together with the other Loan Documents, embodies
the entire agreement and understanding between and among the Borrower, the
General Partner, the Banks and the Administrative Agent, and supersedes the
Existing Credit Agreement and all other understandings of such Persons, verbal
or written, relating to the subject matter hereof and thereof.
DOCSLA1:344952.1
DOCSLA1:344952.1
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
FERRELLGAS, L.P.
By: Ferrellgas, Inc.
Its: General Partner
By: /s/ Kevin T. Kelly
Name: Kevin T. Kelly
Title: Vice President and Chief Financial Officer
FERRELLGAS, INC.
By: /s/ Kevin T. Kelly
Name: Kevin T. Kelly
Title: Vice President and Chief Financial Officer
Address for Notices for
each of the Borrower and
the General Partner:
One Liberty Plaza
Liberty, Missouri 64068
Attention: Chief Financial Officer
Telephone: (816) 792-6901
Facsimile: (816) 792-6979
BANK OF AMERICA, N.A., as Administrative Agent
By: /s/ Daryl G.Patterson
Name: Daryl G. Patterson
Title: Managing Director
[SIGNATURES CONTINUED ON NEXT PAGE]
BANK OF AMERICA, N.A., as a Bank
By: /s/ Daryl G. Patterson
Name: Daryl G. Patterson
Title: Managing Director
[SIGNATURES CONTINUED ON NEXT PAGE]
WELLS FARGO BANK (TEXAS), N.A.
By: /s/ Charles D. Kirkham
Name: Charles D. Kirkham
Title: Vice President
[SIGNATURES CONTINUED ON NEXT PAGE]
BANK ONE, NA (Chicago Office)
By: /s/ Jeanie C. Harman
Name: Jeanie C. Harman
Title: Officer
[SIGNATURES CONTINUED ON NEXT PAGE]
FIRSTAR BANK N.A.
By: /s/ Barry P. Sullivan
Name: Barry P. Sullivan
Title: Vice President
[SIGNATURES CONTINUED ON NEXT PAGE]
LASALLE BANK NATIONAL ASSOCIATION
By: /s/ Brian Peterson
Name: Brian Peterson
Title: Vice President
[SIGNATURES CONTINUED ON NEXT PAGE]
PARIBAS
By: /s/ Rosine K. Matthews
Name: Rosine K. Matthews
Title: Vice President
By: /s/ Larry Robinson
Name: Larry Robinson
Title: Vice President
[SIGNATURES CONTINUED ON NEXT PAGE]
BANK OF OKLAHOMA, N.A.
By: /s/ Chris Amburgy
Name: Chris Amburgy
Title: Assistant Vice President
[SIGNATURES CONTINUED ON NEXT PAGE]
THE FUJI BANK, LIMITED
By: /s/ Nate Ellis
Name: Nate Ellis
Title: Senior Vice President and Manager
TABLE OF CONTENTS
(continued)
Page
TABLE OF CONTENTS
ARTICLE I DEFINITIONS................................................................................2
1.01 Certain Defined Terms..........................................................................2
1.02 Other Interpretive Provisions.................................................................29
1.03 Accounting Principles.........................................................................29
ARTICLE II THE CREDITS...............................................................................30
2.01 Amounts and Terms of Revolving Loan Commitments...............................................30
2.02 Loan Accounts.................................................................................31
2.03 Procedure for Borrowing.......................................................................32
2.04 Conversion and Continuation Elections.........................................................32
2.05 Voluntary Termination or Reduction of Revolving Loan Commitments..............................34
2.06 Optional Prepayments..........................................................................34
2.07 Mandatory Prepayments of Loans; Mandatory Commitment Reductions...............................35
2.08 Repayment.....................................................................................35
2.09 Interest......................................................................................36
2.10 Fees..........................................................................................37
2.11 Computation of Fees and Interest..............................................................37
2.12 Payments by the Borrower......................................................................38
2.13 Payments by the Banks to the Administrative Agent.............................................38
2.14 Sharing of Payments, Etc......................................................................39
2.15 Discretionary Swingline Loans.................................................................39
ARTICLE III THE LETTERS OF CREDIT.....................................................................41
3.01 The Letter of Credit Subfacility..............................................................41
3.02 Issuance, Amendment and Renewal of Letters of Credit..........................................42
3.03 Existing Letters of Credit; Risk Participations, Drawings and Reimbursements..................44
3.04 Repayment of Participations...................................................................46
3.05 Role of the Issuing Banks.....................................................................46
3.06 Obligations Absolute..........................................................................47
3.07 Cash Collateral Pledge........................................................................48
3.08 Letter of Credit Fees.........................................................................48
3.09 Uniform Customs and Practice..................................................................48
ARTICLE IV TAXES, YIELD PROTECTION AND ILLEGALITY....................................................49
4.01 Taxes.........................................................................................49
4.02 Illegality....................................................................................50
4.03 Increased Costs and Reduction of Return.......................................................50
4.04 Funding Losses................................................................................51
4.05 Inability to Determine Rates..................................................................52
4.06 Survival......................................................................................52
4.07 Replacement of Banks..........................................................................52
ARTICLE V CONDITIONS PRECEDENT......................................................................53
5.01 Conditions to Effectiveness...................................................................53
5.02 Conditions to All Extensions of Credit........................................................55
ARTICLE VI REPRESENTATIONS AND WARRANTIES............................................................56
6.01 Corporate or Partnership Existence and Power..................................................56
6.02 Corporate or Partnership Authorization; No Contravention......................................56
6.03 Governmental Authorization....................................................................56
6.04 Binding Effect................................................................................57
6.05 Litigation....................................................................................57
6.06 No Default....................................................................................57
6.07 ERISA Compliance..............................................................................57
6.08 Use of Proceeds; Margin Regulations...........................................................58
6.09 Title to Properties...........................................................................58
6.10 Taxes.........................................................................................58
6.11 Financial Condition...........................................................................59
6.12 Environmental Matters.........................................................................59
6.13 Regulated Entities............................................................................59
6.14 No Burdensome Restrictions....................................................................59
6.15 Copyrights, Patents, Trademarks and Licenses, etc.............................................59
6.16 Subsidiaries and Affiliates...................................................................60
6.17 Insurance.....................................................................................60
6.18 Tax Status....................................................................................60
6.19 Full Disclosure...............................................................................60
6.20 Fixed Price Supply Contracts..................................................................60
6.21 Trading Policies..............................................................................61
6.22 Year 2000.....................................................................................61
ARTICLE VII AFFIRMATIVE COVENANTS.....................................................................61
7.01 Financial Statements..........................................................................61
7.02 Certificates; Other Information...............................................................62
7.03 Notices.......................................................................................63
7.04 Preservation of Corporate or Partnership Existence, Etc.......................................64
7.05 Maintenance of Property.......................................................................64
7.06 Insurance.....................................................................................65
7.07 Payment of Obligations........................................................................65
7.08 Compliance with Laws..........................................................................65
7.09 Inspection of Property and Books and Records..................................................65
7.10 Environmental Laws............................................................................66
7.11 Use of Proceeds...............................................................................66
7.12 Financial Covenants...........................................................................66
7.13 Trading and Supply Policies...................................................................66
7.14 Other General Partner Obligations.............................................................66
7.15 Monetary Judgments............................................................................67
7.16 Designations With Respect to Subsidiaries.....................................................67
ARTICLE VIII NEGATIVE COVENANTS........................................................................68
8.01 Limitation on Liens...........................................................................69
8.02 Asset Sales...................................................................................71
8.03 Consolidations and Mergers....................................................................72
8.04 Acquisitions..................................................................................72
8.05 Limitation on Indebtedness....................................................................73
8.06 Transactions with Affiliates..................................................................73
8.07 Use of Proceeds...............................................................................74
8.08 Use of Proceeds - Ineligible Securities.......................................................74
8.09 Contingent Obligations........................................................................74
8.10 Joint Ventures................................................................................75
8.11 Lease Obligations.............................................................................75
8.12 Restricted Payments...........................................................................75
8.13 Prepayments of Subordinated Indebtedness......................................................77
8.14 Dividend and Other Payment Restrictions Affecting Subsidiaries................................77
8.15 Change in Business............................................................................78
8.16 Accounting Changes............................................................................78
8.17 Limitation on Sale and Leaseback Transactions.................................................78
8.19 Amendments of Organization Documents or Certain Debt Agreements...............................78
8.20 Fixed Price Supply Contracts..................................................................79
8.21 Operations through Subsidiaries...............................................................79
8.22 Operations of MLP.............................................................................79
ARTICLE IX EVENTS OF DEFAULT.........................................................................80
9.01 Event of Default..............................................................................80
9.02 Remedies......................................................................................82
9.03 Rights Not Exclusive..........................................................................83
9.04 Certain Financial Covenant Defaults...........................................................83
ARTICLE X THE ADMINISTRATIVE AGENT..................................................................83
10.01 Appointment and Authorization.................................................................83
10.02 Delegation of Duties..........................................................................84
10.03 Liability of Administrative Agent and Issuing Banks...........................................84
10.04 Reliance by Administrative Agent and Issuing Banks............................................84
10.05 Notice of Default.............................................................................85
10.06 Credit Decision...............................................................................85
10.07 Indemnification...............................................................................86
10.08 Administrative Agent in Individual Capacity...................................................86
10.09 Successor Administrative Agent................................................................86
10.10 Withholding Tax...............................................................................87
ARTICLE XI MISCELLANEOUS.............................................................................88
11.01 Amendments and Waivers........................................................................88
11.02 Notices.......................................................................................89
11.03 No Waiver; Cumulative Remedies................................................................90
11.04 Costs and Expenses............................................................................90
11.05 Indemnity.....................................................................................90
11.06 Payments Set Aside............................................................................91
11.07 Successors and Assigns........................................................................91
11.08 Assignments, Participations, Etc..............................................................91
11.09 Set-off.......................................................................................93
11.10 Notification of Addresses, Lending Offices, Etc...............................................94
11.11 Assignment of Revolving Loans.................................................................94
11.12 Counterparts..................................................................................95
11.13 Severability..................................................................................95
11.14 No Third Parties Benefited....................................................................95
11.15 Governing Law and Jurisdiction................................................................95
11.16 Waiver of Jury Trial..........................................................................96
11.17 Entire Agreement..............................................................................96
An extra Section break has been inserted above this paragraph. Do not delete
this Section break if you plan to add text after the Table of
Contents/Authorities. Deleting this break will cause Table of
Contents/Authorities headers and footers to appear on any pages following the
Table of Contents/Authorities.
FIRST AMENDMENT TO SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP OF FERRELLGAS, L.P.
This First Amendment to Second Amended and Restated Agreement of Limited
Partnership of Ferrellgas, L.P. is executed effective as of June 5, 2000,
between Ferrellgas, Inc., the general partner of Ferrellgas, L.P. (the "General
Partner"), and Ferrellgas Partners, L.P., the sole limited partner of
Ferrellgas, L.P. (the "Limited Partner").
WHEREAS, Ferrellgas, L.P. (the "Partnership") is governed by the Second
Amended and Restated Agreement of Limited Partnership dated as of October 14,
1998 (the "Partnership Agreement"); and
WHEREAS, pursuant to Section 14.2 of the Partnership Agreement, the
General Partner and the Limited Partner desire to amend the Partnership
Agreement as set forth herein;
NOW, THEREFORE, in consideration of good and valuable consideration,
the sufficiency of which is hereby acknowledged, the General Partner and the
Limited Partner agree as follows:
1. The definition of "Percentage Interest" in Article II of the
Partnership Agreement is hereby amended in its entirety to be as
follows:
"Percentage Interest" means as of the date of such determination as to
any Partner, the percentage determined by dividing the amount of that
Partner's cumulative Capital Contributions to the Partnership by the
cumulative Capital Contributions of all Partners to the Partnership. As
of June 5, 2000, the Percentage Interest of the General Partner, in its
capacity as such, was 1.0101%, and the Percentage Interest of the
Limited Partner, was 98.9899%.
2. Section 4.3 of the Partnership Agreement is hereby amended in its
entirety to be as follows:
With the consent of the General Partner, the Limited Partner may, but
shall not be obligated to, make additional Capital Contributions to the
Partnership. Contemporaneously with the making of any such additional
Capital Contributions by the Limited Partner, the General Partner may
make an additional Capital Contribution to the Partnership in an amount
equal to 1.0204% of the additional Capital Contribution then made by
the Limited Partner. The General Partner may, at any time and from time
to time, make a Capital Contribution to the Partnership so that the
General Partner will have a Capital Account equal to no more than
1.0204% of the sum of the Capital Accounts of all Partners. Except as
set forth in Section 13.8, the General Partner shall not be obligated
to make any additional Capital Contributions to the Partnership.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.
FERRELLGAS, INC.
By:/s/Kevin T. Kelly
_____________________________
Kevin T. Kelly
Vice President and Chief Financial
Officer
FERRELLGAS PARTNERS, L.P.
By: Ferrellgas, Inc., as general partner
By:/s/ Kevin T. Kelly
______________________________
Kevin T. Kelly
Vice President and Chief Financial
Officer
OMNIBUS AMENDMENT AGREEMENT NO. 2
Dated as of April 18, 2000
in respect of
FERRELLGAS, LP TRUST NO. 1999-A
PARTICIPATION AGREEMENT
LEASE INTENDED AS SECURITY
LOAN AGREEMENT
Each dated as of December 1, 1999
TABLE OF CONTENTS
SECTION HEADING PAGE
SECTION 1. AMENDMENT OF ORIGINAL AGREEMENTS.......................................................1
Section 1.1. Amendments to Participation Agreement..................................................1
ARTICLE V COVENANTS OF LESSEE AND GUARANTOR......................................................6
Section 5.1. Financial Statements...................................................................6
Section 5.2. Certificates; Other Information........................................................7
Section 5.3. Notices................................................................................7
Section 5.4. Preservation of Corporate or Partnership Existence, Etc................................8
Section 5.5. Maintenance of Property................................................................9
Section 5.6. Insurance..............................................................................9
Section 5.7. Payment of Obligations.................................................................9
Section 5.8. Compliance with Laws..................................................................10
Section 5.9. Inspection of Property and Books and Records..........................................10
Section 5.10. Environmental Laws....................................................................10
Section 5.11. Use of Proceeds.......................................................................10
Section 5.12. Financial Covenants...................................................................10
Section 5.13. Trading and Supply Policies...........................................................11
Section 5.14. Other General Partner Obligations.....................................................11
Section 5.15. Monetary Judgments....................................................................12
Section 5.16. Designation With Respect to Subsidiaries..............................................12
Section 5.17. Limitation on Liens...................................................................13
Section 5.18. Asset Sales...........................................................................15
Section 5.19. Consolidations and Mergers............................................................16
Section 5.20. Acquisitions..........................................................................17
Section 5.21. Limitation on Indebtedness............................................................17
Section 5.22. Transactions with Affiliates..........................................................18
Section 5.23. Use of Proceeds.......................................................................18
Section 5.24. Use of Proceeds - Ineligible Securities...............................................19
Section 5.25. Contingent Obligations................................................................19
Section 5.26. Joint Ventures........................................................................19
Section 5.27. Lease Obligations.....................................................................19
Section 5.28. Restricted Payments...................................................................20
Section 5.29. Prepayments of Subordinated Indebtedness..............................................22
Section 5.30. Dividend and Other Payment Restrictions Affecting Subsidiaries........................22
Section 5.31. Change in Business....................................................................23
Section 5.32. Accounting Changes....................................................................23
Section 5.33. Limitation on Sale and Leaseback Transactions.........................................23
Section 5.34. [Intentionally Omitted]...............................................................23
Section 5.35. Amendments of Organization Documents or Certain Debt Agreements.......................23
Section 5.37. Operations through Subsidiaries.......................................................23
Section 5.38. Operations of MLP.....................................................................24
Section 5.39. Miscellaneous.........................................................................24
Section 5.40. Accounting Principles.................................................................25
Section 1.2. Amendments to Lease...................................................................36
Section 1.3. Amendments to Loan Agreement..........................................................40
SECTION 2. REPRESENTATIONS OF THE LESSEE.........................................................40
SECTION 3. AUTHORIZATION AND DIRECTION...........................................................40
SECTION 4. EFFECTIVENESS.........................................................................40
SECTION 5. FEES AND EXPENSES.....................................................................41
SECTION 6. MISCELLANEOUS.........................................................................41
Section 6.1. Construction..........................................................................41
Section 6.2. References............................................................................41
Section 6.3. Headings and Table of Contents........................................................41
Section 6.4. Counterparts..........................................................................41
Section 6.5. Governing Law.........................................................................41
OMNIBUS AMENDMENT AGREEMENT NO. 2
THIS OMNIBUS AMENDMENT AGREEMENT NO. 2 dated as of April 18, 2000 (this
"Amendment") is among FERRELLGAS, LP, a Delaware limited partnership (the
"Lessee"), FERRELLGAS, INC., a Delaware corporation (the "General Partner"),
FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking association, in
its individual capacity and in its capacity as certificate trustee under the
Trust Agreement referred to below (the "Certificate Trustee"), FIRST SECURITY
TRUST COMPANY OF NEVADA, a Nevada banking corporation (the "Agent"), the Persons
named on Schedule I hereto, as Certificate Purchasers (the "Certificate
Purchasers") and the Persons named on Schedule II hereto, as Lenders (the
"Lenders").
RECITALS:
A. Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings set forth in the Participation Agreement (as
hereinafter defined and as amended hereby).
B. The Lessee, the General Partner, the Certificate Trustee, the
Agent, Banc of America Leasing & Capital, LLC, as the original Certificate
Purchaser and the original Lender, have heretofore entered into that certain
Participation Agreement dated as of December 1, 1999, as amended by that certain
Omnibus Amendment Agreement dated as of February 4, 2000 ("Amendment No. 1") (as
so amended by Amendment No. 1, the "Participation Agreement").
C. The Lessee and the Certificate Trustee have heretofore entered into
that certain Lease Intended as Security dated as of December 1, 1999 (the
"Lease").
D. The Certificate Trustee, the Agent and Banc of America Leasing &
Capital, LLC, as the original Lender have heretofore entered into that certain
Loan Agreement dated as of December 1, 1999, as amended by Amendment No. 1 (as
so amended by Amendment No.
1, the "Loan Agreement").
E. The Lessee, the General Partner, the Certificate Trustee, the
Agent, the Certificate Purchasers and the Lenders now desire to amend the
Participation Agreement, the Lease and the Loan Agreement (collectively, the
"Agreements") in the respects, but only in the respects, hereinafter set forth.
NOW, THEREFORE, the Lessee, the General Partner, the Certificate
Trustee, the Agent, the Certificate Purchasers and the Lenders, in consideration
of good and valuable consideration the receipt and sufficiency of which is
hereby acknowledged, do hereby agree as follows:
SECTION 1. AMENDMENT OF AGREEMENTS.
Section 1.1. Amendments to Participation Agreement. (a) Section 4.1 of the
Participation Agreement shall be and is hereby amended as follows:
(i) Section 4.1(a) shall be and is hereby amended and restated to read as
follows:
"(a) Corporate or Partnership Existence and Power. The General Partner, the
MLP, Lessee and each of the Restricted Subsidiaries:
(i) is a corporation or partnership duly organized, validly existing and in
good standing under the laws of the jurisdiction of its formation;
(ii) has the power and authority and all
governmental licenses, authorizations, consents and
approvals to own its assets, carry on its business as
now being or as proposed to be conducted and to
execute, deliver, and perform its obligations under
the Operative Documents;
(iii) is duly qualified as a foreign
corporation or partnership and is licensed and in
good standing under the laws of each jurisdiction
where its ownership, lease or operation of property
or the conduct of its business requires such
qualification or license or where the failure so to
qualify could reasonably be expect to have a Material
Adverse Effect; and
(iv) is in compliance with all material
Requirements of Law, except where the failure to so
comply could not reasonably be expected to have a
Material Adverse Effect."
(ii) Sections 4.1(b), (c), (d), (i) and (n) shall be and are
hereby amended by deleting all references therein to the term
"Subsidiary" and substituting in place thereof the term "Restricted
Subsidiary".
(iii) Section 4.1(g)(iv) shall be and is hereby amended and restated in its
entirety to read as follows:
"(iv) No pension Plan has any Unfunded Pension
Liability that could reasonably be expected to have a Material
Adverse Effect."
(iv) Section 4.1(k) shall be and is hereby amended and restated in its
entirety to read as follows:
"(k) Financial Condition. (i) The audited
consolidated financial statements of the General Partner,
Lessee, the MLP and their respective Subsidiaries dated July
31, 1999 and the unaudited consolidated financial statements
of the General Partner, Lessee, the MLP and their respective
Subsidiaries dated January 31, 2000, in each case together
with the related consolidated statements of income or
operations, shareholders' equity and cash flows for the fiscal
periods ended on those respective dates:
(A) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby,
except as otherwise expressly noted therein, subject to
ordinary, good faith year end audit adjustments;
(B) fairly present the financial condition of Lessee
and its Subsidiaries as of the date thereof and results of
operations for the period covered thereby; and
(C) show all material indebtedness and other
liabilities, direct or contingent, of Lessee and its
consolidated Subsidiaries as of the date thereof, including
liabilities for taxes, material commitments and Contingent
Obligations (except that since such date Lessee (x) issued
$184,000,000 aggregate principal amount of the 2000 Notes
and (y) repaid in full and irrevocably terminated the
commitments under its $183,000,000 credit facility with
BofA.
(ii) Since January 31, 2000, there has been
no Material Adverse Effect.
(iii) The General Partner, the MLP, Lessee
and each of the other Subsidiaries of Lessee are
each Solvent, both before and after giving effect
to the consummation of each of the transactions
contemplated by the Operative Documents."
(v) Section 4.1(o) shall be and is hereby amended and restated in its
entirety to read as follows:
"(o) Copyrights, Patents, Trademarks and
Licenses, Etc. Lessee and the Restricted
Subsidiaries own or are licensed or otherwise have
the right to use all of the patents, trademarks,
service marks, trade names, copyrights, contractual
franchises, authorizations and other rights that
are reasonably necessary for the operation of their
respective businesses, without conflict with the
rights of any other Person, except for those
patents, trademarks, service marks, trade names,
copyrights, contractual franchises, authorizations
and other rights the failure of which to obtain
could not reasonably be expected to have a Material
Adverse Effect. To the best knowledge of Lessee, no
slogan or other advertising device, product,
process, method, substance, part or other material
now employed, or now contemplated to be employed,
by Lessee or any Restricted Subsidiary infringes
upon any rights held by any other Person. No claim
or litigation regarding any of the foregoing is
pending or, to the best knowledge of Lessee,
threatened, and no patent, invention, device,
application, principle or any statute, law, rule,
regulation, standard or code is pending or, to the
knowledge of Lessee, proposed, which, in either
case, could reasonably be expected to have a
Material Adverse Effect."
(vi) Section 4.1(p) shall be and is hereby amended and restated in its
entirety to read as follows:
"(p) Subsidiaries and Affiliates. Lessee (i)
has no Subsidiaries or other Affiliates except (A)
those specifically disclosed in Schedule IV of
Ominibus Amendment Agreement No. 2 as of the
Effective Date (B) one or more SPEs established in
connection with Accounts Receivable Securitizations
permitted by Section 5.21, (C) Restricted and
Unrestricted Subsidiaries established in compliance
with Section 5.37 and (D) Joint Ventures
established in compliance with Section 5.26
subsequent to the Effective Date, and (ii) has no
equity investments in any corporation or entity
other than (A) Subsidiaries and Affiliates
disclosed in subsection (i) above and (B) other
Permitted Lessee Investments."
(vii) Section 4.1(q) shall be and is hereby amended and restated in its
entirety to read as follows:
"(q) Insurance. The properties of Lessee and
the Restricted Subsidiaries are insured with
financially sound and reputable insurance companies
not Affiliates of Lessee, in such amounts, with
such deductibles and covering such risks as are
customarily carried by companies engaged in similar
businesses and owning similar properties in
localities where Lessee or each such Subsidiary
operates and consistent with the practice of the
Lessee and the Restricted Subsidiaries as of the
Effective Date."
(viii) Section 4.1(t) shall be and is hereby amended and restated in its
entirety to read as follows:
"(t) Fixed Price Supply Contracts. None of
Lessee and its Subsidiaries (other than
Non-Recourse Subsidiaries) is a party to any
contract for the supply of propane or other product
except where (a) the purchase price is set with
reference to a spot index or indices substantially
contemporaneously with the delivery of such product
or (b) delivery of such propane or other product is
to be made no more than two years after the
purchase price is agreed to."
(ix) Section 4.1(w) shall be and is hereby amended and restated in its
entirety to read as follows:
"(w) Year 2000. Lessee and its Subsidiaries
have reviewed the areas within their business and
operations which could have been or could continue
to be adversely affected by the "Year 2000 Problem"
(that is, the risk that computer applications used
by Lessee and its Subsidiaries may be unable to
recognize and perform properly date-sensitive
functions involving certain dates prior to and any
date on or after December 31, 1999). Accordingly,
Lessee and its Subsidiaries have developed a
program to address such related problems, and have
made related appropriate inquiry of material
suppliers and vendors. To date, no problems
connected with the Year 2000 Problem have occurred
which have had a Material Adverse Effect on Lessee
or its Subsidiaries. Although some problems related
to the Year 2000 Problem may remain as yet
undetected, the Borrower believes that, based on
such review and program, the "Year 2000 Problem"
will not have a Material Adverse Effect."
(b) Article V of the Participation Agreement shall be and is hereby
amended and restated in its entirety to read as follows:
"ARTICLE V
COVENANTS OF LESSEE
Section 5.1. Financial Statements. Lessee shall deliver to Agent, in
form and detail satisfactory to Agent and the Required Participants and
consistent with the form and detail of financial statements and projections
provided to Agent by Lessee and its Affiliates prior to the Delivery Date, with
sufficient copies for each Participant:
(a) as soon as available, but not later than 100 days after
the end of each fiscal year (commencing with the fiscal year ended July
31, 2000), a copy of the audited consolidated balance sheet of Lessee
and its Subsidiaries as at the end of such year and the related
consolidated statements of income or operations, partners' or
shareholders' equity and cash flows for such year, setting forth in
each case in comparative form the figures for the previous fiscal year,
and accompanied by the opinion of a nationally-recognized independent
public accounting firm ("Independent Auditor") which report shall state
that such consolidated financial statements present fairly the
financial position for the periods indicated in conformity with GAAP
applied on a basis consistent with prior years. Such opinion shall not
be qualified or limited in any manner, including on account of any
limitation on it because of a restricted or limited examination by the
Independent Auditor of any material portion of Lessee's or any
Subsidiary's records;
(b) as soon as available, but not later than 45 days after
the end of each of the first three fiscal quarters of each fiscal year
(commencing with the fiscal quarter ended April 30, 2000), a copy of
the unaudited consolidated balance sheet of Lessee and its Subsidiaries
as of the end of such quarter and the related consolidated statements
of income, partners' or shareholders' equity and cash flows for the
period commencing on the first day and ending on the last day of such
quarter, and certified by a Responsible Officer as fairly presenting,
in accordance with GAAP (subject to ordinary, good faith year-end audit
adjustments), the financial position and the results of operations of
Lessee and the Subsidiaries;
(c) as soon as available, but not later than 100 days after
the end of each fiscal year (commencing with the first fiscal year
during all or any part of which Lessee had one or more Significant
Subsidiaries), a copy of an unaudited consolidating balance sheet of
Lessee and its Subsidiaries as at the end of such year and the related
consolidating statement of income, partners' or shareholders' equity
and cash flows for such year, certified by a Responsible Officer as
having been developed and used in connection with the preparation of
the financial statements referred to in subsection 5.1(a);
(d) as soon as available, but not later than 45 days after
the end of each of the first three fiscal quarters of each fiscal year
(commencing with the first fiscal quarter during all or any part of
which Lessee had one or more Significant Subsidiaries), a copy of the
unaudited consolidating balance sheets of Lessee and its Subsidiaries,
and the related consolidating statements of income, partners' or
shareholders' equity and cash flows for such quarter, all certified by
a Responsible Officer as having been developed and used in connection
with the preparation of the financial statements referred to in
subsection 5.1(b);
(e) as soon as available, but not later than 60 days after
the end of each fiscal year (commencing with the fiscal year ended July
31, 2000), projected consolidated balance sheets of Lessee and its
Subsidiaries as at the end of each of the current and following two
fiscal years and related projected consolidated statements of income,
partners' or shareholders' equity and cash flows for each such fiscal
year, including therein a budget for the current fiscal year, certified
by a Responsible Officer as having been developed and prepared by
Lessee in good faith and based upon Lessee's best estimates and best
available information; and
(f) as soon as available, but not later than 100 days after
the end of each fiscal year of the General Partner (commencing with the
fiscal year ended July 31, 2000), a copy of the unaudited (or audited,
if available) consolidated balance sheets of the General Partner as of
the end of such fiscal year and the related consolidated statements of
income, shareholders' equity and cash flows for such fiscal year,
certified by a Responsible Officer as fairly presenting, in accordance
with GAAP, the financial position and the results of operations of the
General Partner and its Subsidiaries (or, if available, accompanied by
an opinion of an Independent Auditor as described in subsection
5.1(a)).
Section 5.2. Certificates; Other Information. Lessee shall furnish
to Agent, with sufficient copies for each Participant:
(a) concurrently with the delivery of the financial
statements referred to in subsection 5.1(a), a certificate of the
Independent Auditor stating that in making the examination necessary
therefor no knowledge was obtained of any Lease Default or Lease Event
of Default, except as specified in such certificate;
(b) concurrently with the delivery of the financial
statements referred to in subsections 5.1(a) and (b), a Compliance
Certificate executed by a Responsible Officer with respect to the
periods covered by such financial statements together with supporting
calculations and such other supporting detail as Agent and the Required
Participants shall require;
(c) promptly, copies of all financial statements and reports
that Lessee, the General Partner, the MLP or any Subsidiary sends to
its partners or shareholders, and copies of all financial statements
and regular, periodic or special reports (including Forms 10-K, 10-Q
and 8-K) that Lessee or any Affiliate of Lessee, the General Partner,
the MLP or any Subsidiary may make to, or file with, the SEC; and
(d) promptly, such additional information regarding the
business, financial or corporate affairs of Lessee, the General
Partner, the MLP or any Subsidiary as Agent, at the request of any
Participant, may from time to time request.
Section 5.3. Notices. Lessee shall promptly notify Agent:
(a) of the occurrence of any Lease Default or Lease Event of Default;
(b) of any matter that has resulted or may reasonably be
expected to result in a Material Adverse Effect, including (i) breach
or non-performance of, or any default under, a Contractual Obligation
of Lessee, the General Partner, the MLP or any Subsidiary; (ii) any
dispute, litigation, investigation, proceeding or suspension between
Lessee, the General Partner, the MLP or any Subsidiary and any
Governmental Authority; or (iii) the commencement of, or any material
development in, any litigation or proceeding affecting Lessee, the
General Partner, the MLP or any Subsidiary, including pursuant to any
applicable Environmental Laws, in each case to the extent that any of
the foregoing has resulted or may reasonably be expected to result in a
Material Adverse Effect;
(c) of any of the following events affecting Lessee, the
General Partner, the MLP or any Subsidiary, together with a copy of any
notice with respect to such event that may be required to be filed with
a Governmental Authority and any notice delivered by a Governmental
Authority to such Person with respect to such event:
(i) an ERISA Event;
(ii) if any of the representations and warranties in Section 4.1(g) ceases
to be true and correct;
(iii) the adoption of any new Pension Plan or other Plan subject to Section
412 of the Code;
(iv) the adoption of any amendment to a Pension Plan
or other Plan subject to Section 412 of the Code, if such
amendment results in a material increase in contributions or
Unfunded Pension Liability; or
(v) the commencement of contributions to any Pension Plan or other Plan
subject to Section 412 of the Code; and
(d) of any material change in accounting policies or
financial reporting practices by Lessee or any of its consolidated
Subsidiaries.
Each notice under this Section shall be accompanied by a written
statement by a Responsible Officer setting forth details of the occurrence
referred to therein, and stating what action Lessee or any affected Affiliate
proposes to take with respect thereto and at what time. Each notice under
subsection 5.3(a) shall describe with particularity any and all clauses or
provisions of this Agreement or other Operative Document that have been breached
or violated.
Section 5.4. Preservation of Corporate or Partnership Existence, Etc. The
General Partner and Lessee shall, and Lessee shall cause each Restricted
Subsidiary to:
(a) preserve and maintain in full force and effect its
partnership or corporate existence and good standing under the laws of
its state or jurisdiction of organization or incorporation except in
connection with transactions permitted by Section 5.19;
(b) preserve and maintain in full force and effect all
material governmental rights, privileges, qualifications, permits,
licenses and franchises necessary or desirable in the normal conduct of
its business except in connection with transactions permitted by
Section 5.19 and sales of assets permitted by Section 5.18, except
where the failure to so preserve or maintain such governmental rights,
privileges, qualifications, permits, licenses and franchises could not
reasonably be expected to have a Material Adverse Effect;
(c) preserve its business organization and goodwill, except
where the failure to so preserve its business organization or goodwill
could not reasonably be expected to have a Material Adverse Effect; and
(d) preserve or renew all of its registered patents,
trademarks, trade names and service marks, the non-preservation of
which could reasonably be expected to have a Material Adverse Effect.
Section 5.5. Maintenance of Property. Lessee shall maintain, and shall
cause each Restricted Subsidiary to maintain, and preserve all its property
which is used or useful in its business in good working order and condition,
ordinary wear and tear excepted. Lessee and each Restricted Subsidiary shall use
the standard of care typical in the industry in the operation and maintenance of
its facilities. Lessee shall maintain the Units in accordance with the Lease.
Section 5.6. Insurance. Lessee shall maintain, and shall cause each
Restricted Subsidiary to maintain, with financially sound and reputable
independent insurers, insurance with respect to its properties and business
against loss or damage of the kinds customarily insured against by Persons
engaged in the same or similar business, of such types and in such amounts as
are customarily carried under similar circumstances by such other Persons.
Lessee shall insure the Units in accordance with the Lease.
Section 5.7. Payment of Obligations. Lessee and the General Partner
shall, and shall cause each Restricted Subsidiary to, pay and discharge as the
same shall become due and payable (except to the extent the failure to so pay
and discharge could not reasonably be expected to have a Material Adverse
Effect), all their respective obligations and liabilities, including:
(a) all tax liabilities, assessments and governmental charges
or levies upon it or its properties or assets, unless the same are
being contested in good faith by appropriate proceedings and adequate
reserves in accordance with GAAP are being maintained by Lessee, the
General Partner or such Subsidiary;
(b) all lawful claims which, if unpaid, would by law become a
Lien upon its property, unless such claims are being contested in good
faith by appropriate proceedings and adequate reserves in accordance
with GAAP are being maintained by Lessee, the General Partner or such
Subsidiary; and
(c) all Indebtedness, as and when due and payable, but
subject to any subordination provisions contained in any instrument or
agreement evidencing such Indebtedness.
Section 5.8. Compliance with Laws. Lessee shall comply, and shall cause
each Restricted Subsidiary to comply with all Requirements of Law of any
Governmental Authority having jurisdiction over it or its business (including
the Federal Fair Labor Standards Act), except such as may be contested in good
faith or as to which a bona fide dispute may exist or the failure of which to
comply with could not reasonably be expected to have a Material Adverse Effect..
Section 5.9. Inspection of Property and Books and Records. Lessee shall
maintain and shall cause each Subsidiary to maintain proper books of record and
account, in which full, true and correct entries in conformity with GAAP
consistently applied shall be made of all financial transactions and matters
involving the assets and business of Lessee and such Subsidiary. Lessee shall
permit, and shall cause each Subsidiary to permit, representatives and
independent contractors of Agent or any Participant to visit and inspect any of
their respective properties, to examine their respective corporate, financial
and operating records, and make copies thereof or abstracts therefrom, and to
discuss their respective affairs, finances and accounts with their respective
directors, officers, and independent public accountants, all at the expense of
Lessee and at such reasonable times during normal business hours and as often as
may be reasonably desired, upon reasonable advance notice to Lessee; provided,
however, when a Lease Event of Default exists Agent or any Participant may do
any of the foregoing at the expense of Lessee at any time during normal business
hours and without advance notice.
Section 5.10. Environmental Laws. Lessee shall, and shall cause each
Restricted Subsidiary to, conduct its operations and keep and maintain its
property in material compliance with all Environmental Laws, except where
failure to comply with such Environmental Laws could not reasonably be expected
to have a Material Adverse Effect.
Section 5.11. Use of Proceeds. Lessee shall use the proceeds of the sale
of the Units, the Certificates and the Notes for working capital purposes and
other general partnership purposes, in each case not in contravention of any
Requirement of Law or of any Operative Document.
Section 5.12. Financial Covenants.
(a) Leverage Ratio. Lessee shall maintain as of the last day of each
fiscal quarter a Leverage Ratio equal to or less than (i) 5.10 to 1.00 as of the
last day of each fiscal quarter ending on or prior to July 31, 2000, (ii) 5.25
to 1.00 as of the last day of each fiscal quarter ending after July 31, 2000 and
on or prior to January 31, 2001, and (iii) 4.75 to 1.00 as of the last day of
each fiscal quarter ending after January 31, 2001. For purposes of this Section
5.12(a), (x) Funded Debt and Synthetic Lease Obligations shall be calculated as
of the last day of such fiscal quarter and (y) Consolidated Cash Flow shall be
calculated for the most recently ended four consecutive fiscal quarters,
provided, however, that prior to or concurrently with each delivery of a
Compliance Certificate pursuant to Section 5.02(b), Lessee may elect to
calculate Consolidated Cash Flow for the most recently ended eight consecutive
fiscal quarters (in which case Consolidated Cash Flow shall be divided by two).
(b) Interest Coverage Ratio. Lessee shall maintain, as of the last day
of each fiscal quarter of Lessee, an Interest Coverage Ratio for the fiscal
period consisting of such fiscal quarter and the three immediately preceding
fiscal quarters of at least (i) 2.25 to 1.00 for each such period of four fiscal
quarters ending on or prior to January 31, 2001 and (ii) 2.50 to 1.00 each such
period of four fiscal quarters ending after January 31, 2001.
Section 5.13. Trading and Supply Policies. Lessee and its Affiliates
shall comply with Lessee's trading position policy and supply inventory position
policy as in effect as of the Effective Date; provided, however, that Lessee and
its Affiliates may, during any period of four consecutive fiscal quarters, (a)
increase the loss limits specified in either the trading position or supply
inventory position policy by up to 100% of the amount of such limit as in effect
as of the Effective Date and (b) increase the volume limits specified in either
of such policies on the number of barrels of a single product or of all products
in the aggregate by up to 100% of each such number as in effect as of the
Effective Date.
Section 5.14. Other General Partner Obligations. (a) The General Partner
shall cause Lessee to pay and perform each of its Obligations when due. The
General Partner acknowledges and agrees that it is executing this Agreement as a
principal as well as the general partner on behalf of Lessee, and that its
obligations hereunder as general partner are full recourse obligations to the
same extent as those of Lessee.
(b) The General Partner represents, warrants and covenants that it is
Solvent, both before and after giving effect to the consummation of the
transactions contemplated by the Operative Documents, and that it will remain
Solvent until all Obligations hereunder and under the other Operative Documents
shall have been repaid in full.
(c) The General Partner, for so long as it is the general partner of
Lessee, (i) agrees that its sole business will be to act as the general partner
of Lessee, the MLP and any further limited partnership of which Lessee or the
MLP is, directly or indirectly, a limited partner and to undertake activities
that are ancillary or related thereto (including being a limited partner in
Lessee), (ii) shall not enter into or conduct any business or incur any debts or
liabilities except in connection with or incidental to (A) its performance of
the activities required or authorized by the partnership agreement of the MLP or
the Partnership Agreement or described in or contemplated by the MLP
Registration Statement, and (B) the acquisition, ownership or disposition of
partnership interests in Lessee or partnership interests in the MLP or any
further limited partnership of which Lessee or the MLP is, directly or
indirectly, a limited partner, except that, notwithstanding the foregoing,
employees of the General Partner may perform services for Ferrell Companies,
Inc. and its Affiliates.
(d) The General Partner agrees that, until all Obligations hereunder
and under the other Operative Documents shall have been repaid in full and all
commitments shall have terminated, it will not exercise any rights it may have
(at law, in equity, by contract or otherwise) to terminate, limit or otherwise
restrict (whether through repurchase or otherwise and whether or not the General
Partner shall remain a general partner in Lessee) the ability of Lessee to use
the name "Ferrellgas".
(e) The General Partner shall not take any action or refuse to take any
reasonable action the effect of which, if taken or not taken, as the case may
be, would be to cause Lessee to be treated as an association taxable as a
corporation or otherwise to be taxed as an entity other than a partnership for
federal income tax purposes.
Section 5.15. Monetary Judgments. If one or more judgments, orders,
decrees or arbitration awards is entered against Lessee or any Restricted
Subsidiary involving in the aggregate a material liability (to the extent not
covered by independent third-party insurance as to which the insurer does not
dispute coverage other than through a standard reservation of rights letter) as
to any single or related series of transactions, incidents or conditions, then
Lessee shall maintain adequate reserves for such amount in accordance with GAAP.
Such amount so reserved shall be treated as establishment of a reserve for
purposes of calculating Available Cash hereunder.
Section 5.16. Designation With Respect to Subsidiaries. (a) Lessee may
designate any Restricted Subsidiary or newly acquired or formed Subsidiary as an
Unrestricted Subsidiary or any Unrestricted Subsidiary or newly acquired or
formed Subsidiary as a Restricted Subsidiary, in each case subject to
satisfaction of each of the following conditions:
(i) immediately before and after giving effect to such
designation, no Default or Event of Default shall exist and be continuing;
(ii) after giving effect to such designation, Lessee would be
permitted to incur at least $1 of additional Indebtedness in accordance with the
provisions of Section 5.21;
(iii) in the case of a designation of a Restricted Subsidiary,
such Restricted Subsidiary shall have executed and delivered to Agent a Guaranty
and Lessee shall otherwise be in compliance with Section 5.37;
(iv) in the case of a designation as an Unrestricted Subsidiary
(including the designation of a Restricted Subsidiary as an Unrestricted
Subsidiary), (x) if such designation were deemed to constitute a sale by Lessee
or any Restricted Subsidiary of all the assets of the Subsidiary so designated,
such sale would be in compliance with of Section 5.18 and (y) if such
designation (and all other prior designations of Restricted Subsidiaries or
newly acquired or formed Subsidiaries as Unrestricted Subsidiaries) were deemed
to constitute an Investment by Lessee or any Restricted Subsidiary in respect of
all the assets of the Subsidiary so designated, such Investment would be a
Permitted Lessee Investment, in each case with the net proceeds of such sale or
the amount of such Investment being deemed to equal the net book value of such
assets in the case of a Restricted Subsidiary or the cost of acquisition or
formation in the case of a newly acquired or formed Subsidiary; and
(v) in the case of a designation of a Restricted Subsidiary as
an Unrestricted Subsidiary, such Restricted Subsidiary shall not have been an
Unrestricted Subsidiary prior to being designated a Restricted Subsidiary.
(b) Lessee shall deliver to Agent and each Participant, within 20
Business Days after any such designation, a certificate of a Responsible Officer
stating the effective date of such designation and stating that the foregoing
conditions have been satisfied. Such certificate shall be accompanied by a
schedule setting forth in reasonable detail the calculations demonstrating
compliance with such conditions, where appropriate.
(c) In the case of the designation of any Unrestricted Subsidiary as a
Restricted Subsidiary, such new Restricted Subsidiary shall be deemed to have
made or acquired all Investments owned by it and incurred all Indebtedness and
other obligations owing by it and all Liens to which it or any of its properties
are subject, on the date of such designation.
Section 5.17. Limitation on Liens. Lessee shall not, and shall not
suffer or permit any Restricted Subsidiary to, directly or indirectly, make,
create, incur, assume or suffer to exist any Lien upon or with respect to any
part of its property or sell any of its accounts receivable, whether now owned
or hereafter acquired, other than (x) in the case of the Units or the other
Lessee Collateral, Permitted Liens, and (y) in the case of any other property of
Lessee or such Subsidiary, the following ("Permitted Encumbrances"):
(a) Liens existing on the Effective Date set forth in Schedule III to
Omnibus Amendment Agreement No. 2;
(b) Liens in favor of Lessee or Liens to secure Indebtedness
of a Restricted Subsidiary to Lessee or a Wholly-Owned Subsidiary;
(c) Liens on property of a Person existing at the time such
Person is merged into or consolidated with Lessee or any Restricted
Subsidiary, provided that such Liens were in existence prior to the
contemplation of such merger or consolidation and do not extend to any
assets other than those of the Person merged into or consolidated with
Lessee;
(d) Liens on property existing at the time acquired by Lessee
or any Restricted Subsidiary, provided that such Liens were in
existence prior to the contemplation of such acquisition and do not
extend to any assets other than those of the Person acquired;
(e) Liens on any property or asset acquired by Lessee or any
Restricted Subsidiary in favor of the seller of such property or asset
and construction mortgages on property, in each case, created within
six months after the date of acquisition, construction or improvement
of such property or asset by Lessee or such Subsidiary to secure the
purchase price or other obligation of Lessee or such Subsidiary to the
seller of such property or asset or the construction or improvement
cost of such property in an amount up to 80% of the total cost of the
acquisition, construction or improvement of such property or asset;
provided that in each case such Lien does not extend to any other
property or asset of Lessee and its Subsidiaries;
(f) Liens incurred or pledges and deposits made in connection
with worker's compensation, unemployment insurance and other social
security benefits and Liens to secure the performance of statutory
obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature, in each case, incurred in the ordinary
course of business;
(g) Liens for taxes, assessments or governmental charges or
claims that are not yet delinquent or that are being contested in good
faith by appropriate proceedings promptly instituted and diligently
concluded, provided that any reserve or other appropriate provision as
shall be required in conformity with GAAP shall have been made
therefor;
(h) Liens imposed by law, such as mechanics', carriers',
warehousemen's, materialmen's, and vendors' Liens, incurred in good
faith in the ordinary course of business with respect to amounts not
yet delinquent or being contested in good faith by appropriate
proceedings if a reserve or other appropriate provisions, if any, as
shall be required by GAAP shall have been made therefor;
(i) zoning restrictions, easements, licenses, covenants,
reservations, restrictions on the use of real property or minor
irregularities of title incident thereto that do not, in the aggregate,
materially detract from the value of the property or the assets of
Lessee or any of its Subsidiaries or impair the use of such property in
the operation of the business of Lessee or any of its Subsidiaries;
(j) Liens of landlords or mortgages of landlords, arising
solely by operation of law, on fixtures and movable property located on
premises leased by Lessee or any of its Subsidiaries in the ordinary
course of business;
(k) Liens incurred and financing statements filed or
recorded, in each case with respect to personal property leased by
Lessee and its Subsidiaries in the ordinary course of business to the
owners of such personal property which are either (i) operating leases
(including, without limitation, Synthetic Leases) or (ii) capital
leases to the extent (but only to the extent) permitted by Section
5.21; provided, that in each case such Lien does not extend to any
other property or asset of Lessee and its Subsidiaries;
(l) judgment Liens to the extent that such judgments do not
cause or constitute a Lease Default or Lease Event of Default;
(m) Liens incurred in the ordinary course of business of
Lessee or any Restricted Subsidiary with respect to obligations that do
not exceed $5,000,000 in the aggregate at any one time outstanding and
that (i) are not incurred in connection with the borrowing of money or
the obtaining of advances or credit (other than trade credit in the
ordinary course of business) and (ii) do not in the aggregate
materially detract from the value of the property or materially impair
the use thereof in the operation of business by Lessee or such
Subsidiary;
(n) Liens securing Indebtedness incurred to refinance
Indebtedness that has been secured by a Lien otherwise permitted under
this Agreement, provided that (i) any such Lien shall not extend to or
cover any assets or property not securing the Indebtedness so
refinanced and (ii) the refinancing Indebtedness secured by such Lien
shall have been permitted to be incurred under Section 5.21 hereof and
shall not have a principal amount in excess of the Indebtedness so
refinanced;
(o) any extension or renewal, or successive extensions or
renewals, in whole or in part, of Liens permitted pursuant to the
foregoing clauses (a) through (n); provided that no such extension or
renewal Lien shall (i) secure more than the amount of Indebtedness or
other obligations secured by the Lien being so extended or renewed or
(ii) extend to any property or assets not subject to the Lien being so
extended or renewed;
(p) Liens in favor of the Administrative Agent under the
Credit Agreement, any Issuing Bank and the Credit Agreement Banks
relating to the Cash Collateralization of Lessee's obligations under
the Credit Agreement or Liens created by the Operative Documents; and
(q) Liens securing Indebtedness of an SPE in connection with
an Accounts Receivable Securitization permitted by Section 5.21
(including the filing of any related financing statements naming Lessee
as the debtor thereunder in connection with the sale of accounts
receivable by Lessee to such SPE in connection with any such permitted
Accounts Receivable Securitization); provided that the aggregate amount
of accounts receivable subject to all such Liens shall at no time
exceed 133% of the amount of Accounts Receivable Securitizations
permitted to be outstanding under such Section 5.21.
Section 5.18. Asset Sales. Lessee shall not, and shall not permit any of
the Restricted Subsidiaries to, (i) sell, lease, convey or otherwise dispose of
any assets (including by way of a sale-and-leaseback) other than sales of
inventory in the ordinary course of business consistent with past practice
(provided that the sale, lease, conveyance or other disposition of all or
substantially all of the assets of Lessee shall be governed by the provisions of
Section 5.19 hereof and not by the provisions of this Section 5.18), or (ii)
issue or sell Equity Interests of any of its Subsidiaries, in the case of either
clause (i) or (ii) above, whether in a single transaction or a series of related
transactions, (A) that have a fair market value in excess of the lesser of
$10,000,000 or the amount (which amount is equal to $5,000,000 as of the
Effective Date) specified in Section 4.10 of the 1996 Indenture as amended from
time to time (such lesser amount, the "Applicable Amount"), or (B) for net
proceeds in excess of the "Applicable Amount" (each of the foregoing, an "Asset
Sale"), unless (X) Lessee (or the Restricted Subsidiary, as the case may be)
receives consideration at the time of such Asset Sale at least equal to the fair
market value (evidenced by a resolution of the board of directors of the General
Partner (and, if applicable, the audit committee of such board of directors) set
forth in a certificate signed by a Responsible Officer and delivered to Agent)
of the assets sold or otherwise disposed of and (Y) at least 80% of the
consideration therefor received by Lessee or such Subsidiary is in the form of
cash; provided, however, that the amount of (1) any liabilities (as shown on
Lessee's or such Subsidiary's most recent balance sheet or in the notes
thereto), of Lessee or any Subsidiary (other than liabilities that are by their
terms subordinated in right of payment to the Obligations hereunder and under
the other Operative Documents) that are assumed by the transferee of any such
assets and (2) any notes or other obligations received by Lessee or any such
Subsidiary from such transferee that are immediately converted by Lessee or such
Subsidiary into cash (to the extent of the cash received), shall be deemed to be
cash for purposes of this provision; and provided, further, that the 80%
limitation referred to in this clause (Y) shall not apply to any Asset Sale in
which the cash portion of the consideration received therefrom, determined in
accordance with the foregoing proviso, is equal to or greater than what the
after-tax proceeds would have been had such Asset Sale complied with the
aforementioned 80% limitation. Notwithstanding the foregoing, Asset Sales shall
not be deemed to include (w) sales or transfers of accounts receivable by Lessee
to an SPE and by an SPE to any other Person in connection with any Accounts
Receivable Securitization permitted by Section 5.21 (provided that the aggregate
amount of such accounts receivable that shall have been transferred to and held
by all SPEs at any time shall not exceed 133% of the amount of Accounts
Receivable Securitizations permitted to be outstanding under Section 5.21), (x)
any transfer of assets by Lessee or any of its Subsidiaries to Lessee or a
Restricted Subsidiary, (y) any transfer of assets by Lessee or any of its
Subsidiaries to any Person in exchange for other assets used in a line of
business permitted under Section 5.31 and having a fair market value not less
than that of the assets so transferred and (z) any transfer of assets pursuant
to a Permitted Lessee Investment or any sale-leaseback (including
sale-leasebacks involving Synthetic Leases) permitted by Section 5.33.
Notwithstanding the foregoing, Lessee may not sell, lease, convey or otherwise
dispose of any Unit except as permitted by the Lease.
Section 5.19. Consolidations and Mergers. (a) Lessee shall not
consolidate or merge with or into (whether or not Lessee is the surviving
Person), or sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its properties or assets in one or more related
transactions, to another Person unless (i) Lessee is the surviving Person, or
the Person formed by or surviving any such consolidation or merger (if other
than Lessee) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made is a corporation or partnership organized
or existing under the laws of the United States, any state thereof or the
District of Columbia; and (ii) the Person formed by or surviving any such
consolidation or merger (if other than Lessee) or Person to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made assumes all the Obligations of Lessee under this Agreement and the other
Operative Documents pursuant to an assumption agreement in a form reasonably
satisfactory to Agent; (iii) immediately after such transaction no Lease Default
or Lease Event of Default exists; and (iv) Lessee or any Person formed by or
surviving any such consolidation or merger, or to which such sale, assignment,
transfer, lease, conveyance or other disposition shall have been made (A) shall
have Consolidated Net Worth (immediately after the transaction but prior to any
purchase accounting adjustments resulting from the transaction) equal to or
greater than the Consolidated Net Worth of Lessee immediately preceding the
transaction and (B) shall, at the time of such transaction and after giving
effect thereto, be permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Leverage Ratio test set forth in Section 5.12(a).
(b) Lessee shall deliver to Agent prior to the consummation of the
proposed transaction pursuant to the foregoing paragraph (a) an officers'
certificate to the foregoing effect signed by a Responsible Officer and an
opinion of counsel satisfactory to Agent stating that the proposed transaction
complies with this Agreement. Agent, Certificate Trustee and the Participants
shall be entitled to conclusively rely upon such officer's certificate and
opinion of counsel.
(c) Upon any consolidation or merger, or any sale, assignment,
transfer, lease, conveyance or other disposition of all or substantially all of
the assets of Lessee in accordance with this Section 5.19, the successor Person
formed by such consolidation or into or with which Lessee is merged or to which
such sale, assignment, transfer, lease, conveyance or other disposition is made
shall succeed to, and be substituted for (so that from and after the date of
such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Agreement and the other Operative Documents referring to the
"Lessee" shall refer to or include instead the successor Person and not Lessee),
and may exercise every right and power of Lessee under this Agreement with the
same effect as if such successor Person had been named as Lessee herein;
provided, however, that the predecessor Lessee shall not be relieved from the
obligation to pay Rent or perform the other Obligations except in the case of a
sale of all of such Lessee's assets that meets the requirements of this Section
5.19 hereof.
Section 5.20. Acquisitions. Without limiting the generality of any other
provision of this Agreement, neither Lessee nor any Restricted Subsidiary shall
consummate any Acquisition unless (i) the acquiree is primarily a retail propane
distribution business; (ii) such Acquisition is undertaken in accordance with
all applicable Requirements of Law; (iii) the prior, effective written consent
or approval to such Acquisition of the board of directors or equivalent
governing body of the acquiree is obtained; and (iv) immediately after giving
effect thereto, no Lease Default or Lease Event of Default will occur or be
continuing and each of the representations and warranties of Lessee herein is
true on and as of the date of such Acquisition, both before and after giving
effect thereto. Nothing in Section 5.38 shall prohibit (x) the making by Lessee
of a Permitted Acquisition indirectly through the General Partner, the MLP or
any of its or their Affiliates in a series of substantially contemporaneous
transactions in which Lessee shall ultimately own the assets that are the
subject of such Permitted Acquisition or (y) the assumption of Acquired Debt in
connection therewith to the extent such Acquired Debt is (if not otherwise
permitted to be incurred by Lessee pursuant to this Agreement) upon such
assumption immediately repaid (with the proceeds of Revolving Loans or
otherwise).
Section 5.21. Limitation on Indebtedness. Lessee shall not, and shall
not permit any of the Restricted Subsidiaries to, directly or indirectly,
create, incur, issue, assume, suffer to exist, guarantee or otherwise become
directly or indirectly liable with respect to any Indebtedness (including
Acquired Debt) or any Synthetic Leases and Lessee shall not issue any
Disqualified Interests and shall not permit any of the Restricted Subsidiaries
to issue any shares of preferred stock; provided, however, that Lessee and any
Restricted Subsidiary of Lessee may create, incur, issue, assume, suffer to
exist, guarantee or otherwise become directly or indirectly liable with respect
to any Indebtedness (including Acquired Debt) or any Synthetic Lease to the
extent that the Leverage Ratio is maintained in accordance with Section 5.12(a),
both before and after giving effect to the incurrence of such Indebtedness or
such Synthetic Lease, as the case may be, and, provided, further, that (x) the
aggregate principal amount of (1) all Capitalized Lease Obligations and all
Synthetic Lease Obligations (other than Capitalized Lease Obligations and
Synthetic Lease Obligations in respect of Growth-Related Capital Expenditures)
of Lessee and the Restricted Subsidiaries and (2) all Indebtedness for which
Lessee and any Restricted Subsidiary of Lessee become liable in connection with
Acquisitions of retail propane businesses in favor of the sellers of such
businesses and secured by any Lien on any property of Lessee or any of the
Restricted Subsidiaries, shall not exceed $65,000,000 at any one time
outstanding, and (y) the principal amount of any Indebtedness for which Lessee
or any Restricted Subsidiary of Lessee becomes liable in connection with
Acquisitions of retail propane businesses in favor of the sellers of such
businesses shall not exceed the fair market value of the assets so acquired, and
(z) the aggregate amount of Indebtedness of Lessee and its Subsidiaries through
one or more SPEs in connection with Accounts Receivable Securitizations shall
not exceed $60,000,000 at any one time outstanding.
Section 5.22. Transactions with Affiliates. Lessee shall not, and shall
not permit any of the Restricted Subsidiaries to, sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into any contract, agreement, understanding,
loan, advance or guarantee with, or for the benefit of, any Affiliate, including
any Non-Recourse Subsidiary (each of the foregoing, an "Affiliate Transaction"),
unless (a) such Affiliate Transaction is on terms that are no less favorable to
Lessee or the relevant Restricted Subsidiary than those that would have been
obtained in a comparable transaction by Lessee or such Restricted Subsidiary
with an unrelated Person and (b) with respect to (i) any Affiliate Transaction
with an aggregate value in excess of $500,000, a majority of the directors of
the General Partner having no direct or indirect economic interest in such
Affiliate Transaction determines by resolution that such Affiliate Transaction
complies with clause (a) above and approves such Affiliate Transaction and (ii)
any Affiliate Transaction involving the purchase or other acquisition or sale,
lease, transfer or other disposition of properties or assets other than in the
ordinary course of business, in each case, having a fair market value or for net
proceeds in excess of $15,000,000, Lessee delivers to Agent and the Participants
an opinion as to the fairness to Lessee or such Restricted Subsidiary from a
financial point of view issued by an investment banking firm of national
standing; provided, however, that (i) any employment agreement or stock option
agreement entered into by Lessee or any of the Restricted Subsidiaries in the
ordinary course of business and consistent with the past practice of Lessee (or
the General Partner) or such Restricted Subsidiary, Restricted Payments
permitted by the provisions of Section 5.28, and transactions entered into by
Lessee in the ordinary course of business in connection with reinsuring the
self-insurance programs or other similar forms of retained insurable risks of
the retail propane businesses operated by Lessee, the Restricted Subsidiaries
and its Affiliates, in each case, shall not be deemed Affiliate Transactions,
and (ii) nothing herein shall authorize the payments by Lessee to the General
Partner or any other Affiliate of Lessee for administrative expenses incurred by
such Person other than such out-of-pocket administrative expenses as such Person
shall incur and Lessee shall pay in the ordinary course of business; and
provided, further, that the foregoing provisions of this Section 5.22 shall not
apply to transfers of accounts receivable of Lessee to an SPE in connection with
any Accounts Receivable Securitization permitted by Section 5.21.
Section 5.23. Use of Proceeds. Lessee shall not, and shall not suffer or
permit any Restricted Subsidiary to, use any portion of the proceeds of the sale
of the Units, the Certificates or the Notes, directly or indirectly, (i) to
purchase or carry Margin Stock, (ii) to repay or otherwise refinance
indebtedness of Lessee or others incurred to purchase or carry Margin Stock,
(iii) to extend credit for the purpose of purchasing or carrying any Margin
Stock, or (iv) to acquire any security in any transaction that is subject to
Section 13 or 14 of the Exchange Act.
Section 5.24. Use of Proceeds - Ineligible Securities. Lessee shall not,
directly or indirectly, use any portion of the proceeds of the sale of the
Units, the Certificates or the Notes (i) knowingly to purchase Ineligible
Securities from the Credit Agreement Arranger during any period in which the
Credit Agreement Arranger makes a market in such Ineligible Securities, (ii)
knowingly to purchase during the underwriting or placement period Ineligible
Securities being underwritten or privately placed by the Credit Agreement
Arranger, or (iii) to make payments of principal or interest on Ineligible
Securities underwritten or privately placed by the Credit Agreement Arranger and
issued by or for the benefit of Lessee or any Affiliate of Lessee.
Section 5.25. Contingent Obligations. Lessee shall not, and shall not
suffer or permit any Restricted Subsidiary to, create, incur, assume or suffer
to exist any Contingent Obligations except:
(a) endorsements for collection or deposit in the ordinary course of
business;
(b) subject to compliance with the trading policies in effect
from time to time as submitted to Agent, Hedging Obligations entered
into in the ordinary course of business as bona fide hedging
transactions;
(c) the Guaranties under the Credit Agreement and the Operative Documents;
(d) Guaranty Obligations to the extent not prohibited by Section 5.21; and
(e) indemnities not guaranteeing Indebtedness or Synthetic Lease
Obligations of any Person.
Section 5.26. Joint Ventures. Lessee shall not, and shall not suffer or
permit any Restricted Subsidiary to enter into any Joint Venture unless the same
shall be a Permitted Lessee Investment.
Section 5.27. Lease Obligations. The aggregate obligations of Lessee and
the Restricted Subsidiaries for the payment of rent for any property under lease
or agreement to lease (excluding obligations of Lessee and its Subsidiaries
under or with respect to Synthetic Leases) for any fiscal year shall not exceed
the greater of (a) $40,000,000 or (b) 20% of (i) Consolidated Cash Flow of
Lessee for the most recently ended eight consecutive fiscal quarters divided by
(ii) two; provided, however, that any payment of rent for any property under
lease or agreement to lease for a term of less than one year (after giving
effect to all automatic renewals) shall not be subject to this Section 5.27. For
purposes of this Section 5.27, the calculation of Consolidated Cash Flow shall
give pro forma effect to Acquisitions (including all mergers and
consolidations), Asset Sales and other dispositions and discontinuances of
businesses or assets that have been made by Lessee or any of the Restricted
Subsidiaries during the reference period or subsequent to such reference period
and on or prior to the date of calculation of Consolidated Cash Flow assuming
that all such Acquisitions, Asset Sales and other dispositions and
discontinuances of businesses or assets had occurred on the first day of the
reference period.
Section 5.28. Restricted Payments. Lessee shall not and shall not permit
any of the Restricted Subsidiaries to, directly or indirectly (i) declare or pay
any dividend or make any distribution on account of Lessee's or any Restricted
Subsidiary's Equity Interests (other than (x) dividends or distributions payable
in Equity Interests (other than Disqualified Interests) of Lessee, (y) dividends
or distributions payable to Lessee or a Wholly-Owned Subsidiary that is a
Restricted Subsidiary and a Guarantor or (z) distributions or dividends payable
pro rata to all holders of Capital Interests of any such Subsidiary); (ii)
purchase, redeem, call or otherwise acquire or retire for value any Equity
Interests of Lessee or any Restricted Subsidiary or other Affiliate of Lessee
(other than, subject to compliance with Section 5.37, any such Equity Interests
owned by a Wholly-Owned Subsidiary of Lessee that is a Restricted Subsidiary and
a Guarantor); (iii) make any Investment other than a Permitted Lessee
Investment; or (iv) prepay, purchase, redeem, retire, defease or refinance the
1998 Fixed Rate Senior Notes or the 2000 Notes (all payments and other actions
set forth in clauses (i) through (iv) above being collectively referred to as
"Restricted Payments"), except to the extent that, at the time of such
Restricted Payment:
(a) no Lease Default or Lease Event of Default shall have
occurred and be continuing or would occur as a consequence thereof and
each of the representations and warranties of Lessee set forth herein
is true on and as of the date of such Restricted Payment both before
and after giving effect thereto; and
(b) the Fixed Charge Coverage Ratio for Lessee's most
recently ended four full fiscal quarters for which internal financial
statements are available immediately preceding the date on which such
Restricted Payment is made, calculated on a pro forma basis as if such
Restricted Payment had been made at the beginning of such four-quarter
period, would have been more than (i) 2.15 to 1.00 for each such period
of four fiscal quarters ending on or prior to January 31, 2001 and (ii)
2.25 to 1.00 for each such period of four fiscal quarters ending after
January 31, 2001; and
(c) such Restricted Payment (the amount of any such payment,
if other than cash, to be determined by the Board of Directors, whose
determination shall be conclusive and evidenced by a resolution in an
officer's certificate signed by a Responsible Officer and delivered to
Agent), together with the aggregate of all other Restricted Payments
(other than any Restricted Payments permitted by the provisions of
clause (ii) of the penultimate paragraph of this Section 5.28) made by
Lessee and its Subsidiaries in the fiscal quarter during which such
Restricted Payment is made shall not exceed an amount equal to (x)
Available Cash of Lessee for the immediately preceding fiscal quarter
plus (y) the lesser of (i) the amount of any Available Cash of Lessee
during the first 45 days of such fiscal quarter and (ii) the excess of
the aggregate amount of Credit Agreement Loans that Lessee could have
borrowed over the actual amount of Credit Agreement Loans outstanding,
in each case as of the last day of the immediately preceding fiscal
quarter; and
(d) such Restricted Payment (other than (x) Restricted
Payments described in clause (i) of the first paragraph of this Section
5.28 made during the fiscal quarter ending January 31, 1997 that do not
exceed $26,000,000 in the aggregate or (y) any Restricted Payments
described in clauses (iii) or (iv) of the first paragraph of this
Section 5.28) the amount of which (to be determined in accordance with
clause (c) of this Section 5.28 if made other than with cash) shall not
exceed an amount equal to (1) Consolidated Cash Flow of Lessee and the
Restricted Subsidiaries for the period from and after October 31, 1996
through and including the last day of the fiscal quarter ending
immediately preceding the date of the proposed Restricted Payment (the
"Determination Period"), minus (2) the sum of Consolidated Interest
Expense of Lessee and the Restricted Subsidiaries for the Determination
Period plus all capital expenditures (other than Growth-Related Capital
Expenditures and net of capital asset sales in the ordinary course of
business) made by Lessee and the Restricted Subsidiaries during the
Determination Period plus the aggregate of all other Restricted
Payments (other than (x) Restricted Payments described in clause (i) of
the first paragraph of this Section 5.28 made during the fiscal quarter
ending January 31, 1997 that do not exceed $26,000,000 in the aggregate
or (y) any Restricted Payments described in clauses (iii) or (iv) of
the first paragraph of this Section 5.28) made by Lessee and the
Restricted Subsidiaries during the period from and after October 31,
1996 through and including the date of the proposed Restricted Payment,
plus (3) $30,000,000, plus (4) the excess, if any, of consolidated
working capital of Lessee and the Restricted Subsidiaries at July 31,
1996 over consolidated working capital of Lessee and the Restricted
Subsidiaries at the end of the fiscal year immediately preceding the
date of the proposed Restricted Payment, minus (5) the excess, if any,
of consolidated working capital of Lessee and the Restricted
Subsidiaries at the end of the fiscal year immediately preceding the
date of the proposed Restricted Payment over consolidated working
capital of Lessee and the Restricted Subsidiaries at July 31, 1996. For
purposes of this subsection 5.28(d), the calculation of Consolidated
Cash Flow shall give pro forma effect to Acquisitions (including all
mergers and consolidations), Asset Sales and other dispositions and
discontinuances of business or assets that have been made by such
Person or any of the Restricted Subsidiaries during the reference
period or subsequent to such reference period and on or prior to the
date of calculation of Consolidated Cash Flow assuming that all such
Acquisitions, Asset Sales and other dispositions and discontinuances of
businesses or assets had occurred on the first day of the reference
period.
The foregoing provisions will not prohibit (i) the payment of any
distribution within 60 days after the date on which Lessee becomes committed to
make such distribution, if at said date of commitment such payment would have
complied with the provisions of this Agreement; and (ii) the redemption,
repurchase, retirement or other acquisition of any Equity Interests of Lessee in
exchange for, or out of the proceeds of, the substantially concurrent sale
(other than to a Subsidiary of Lessee) of other Equity Interests of Lessee
(other than any Disqualified Interests).
Not later than the date of making any Restricted Payment, the General
Partner shall deliver to Agent an officer's certificate signed by a Responsible
Officer stating that such Restricted Payment is permitted and setting forth the
basis upon which the calculations required by this Section 5.28 were computed,
which calculations may be based upon Lessee's latest available financial
statements.
Section 5.29. Prepayments of Subordinated Indebtedness. Lessee shall
not, and shall not permit any of the Restricted Subsidiaries to, (a) purchase,
redeem, retire or otherwise acquire for value, or set apart any money for a
sinking, defeasance or other analogous fund for, the purchase, redemption,
retirement or other acquisition of, or make any payment or prepayment of the
principal of or interest on, or any other amount owing in respect of, any
Indebtedness that is subordinated to the Obligations, except for regularly
scheduled payments of interest in respect of such Indebtedness required pursuant
to the instruments evidencing such Indebtedness that are not made in
contravention of the terms and conditions of subordination set forth on part II
of Schedule 5.21 or (b) directly or indirectly, make any payment in respect of,
or set apart any money for a sinking, defeasance or other analogous fund on
account of, Guaranty Obligations subordinated to the Obligations. The foregoing
provisions will not prohibit the defeasance, redemption or repurchase of
subordinated Indebtedness with the proceeds of Permitted Refinancing
Indebtedness.
Section 5.30. Dividend and Other Payment Restrictions Affecting
Subsidiaries. Lessee shall not, and shall not permit any of the Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (a) pay dividends or make any other distributions to
Lessee or any of the Restricted Subsidiaries (1) on its Capital Interests or (2)
with respect to any other interest or participation in, or interest measured by,
its profits, (b) pay any indebtedness owed to Lessee or any of the Restricted
Subsidiaries, (c) make loans or advances to Lessee or any of the Restricted
Subsidiaries or (d) transfer any of its properties or assets to Lessee or any of
the Restricted Subsidiaries, except for such encumbrances or restrictions
existing under or by reason of (i) Existing Indebtedness, (ii) the Operative
Documents, the Credit Agreement, the 1998 Note Purchase Agreement, the 1998
Fixed Rate Senior Notes, the 2000 Note Purchase Agreement and the 2000 Notes,
(iii) applicable law, (iv) any instrument governing Indebtedness or Capital
Interests of a Person acquired by Lessee or any of the Restricted Subsidiaries
as in effect at the time of such Acquisition (except to the extent such
Indebtedness was incurred in connection with or in contemplation of such
Acquisition), which encumbrance or restriction is not applicable to any Person,
or the properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired, provided that the Consolidated
Cash Flow of such Person to the extent that dividends, distributions, loans,
advances or transfers thereof is limited by such encumbrance or restriction on
the date of acquisition is not taken into account in determining whether such
acquisition was permitted by the terms of this Agreement, (v) customary
non-assignment provisions in leases entered into in the ordinary course of
business and consistent with past practices, (vi) purchase money obligations for
property acquired in the ordinary course of business that impose restrictions of
the nature described in clause (d) above on the property so acquired, (vii)
Permitted Refinancing Indebtedness of any Existing Indebtedness, provided that
the restrictions contained in the agreements governing such Permitted
Refinancing Indebtedness are no more restrictive than those contained in the
agreements governing the Indebtedness being refinanced or (viii) other
Indebtedness permitted to be incurred subsequent to the Effective Date pursuant
to the provisions of Section 5.21 hereof, provided that such restrictions are no
more restrictive than those contained in this Agreement.
Section 5.31. Change in Business. Lessee shall not, and shall not suffer
or permit any Restricted Subsidiary to, engage in any material line of business
substantially different from those lines of business carried on by Lessee and
the Restricted Subsidiaries on the date hereof.
Section 5.32. Accounting Changes. Lessee shall not, and shall not suffer
or permit any Restricted Subsidiary to, make any significant change in
accounting treatment or reporting practices, except as required by GAAP, or
change the fiscal year of Lessee or of any Restricted Subsidiary except as
required by the Code.
Section 5.33. Limitation on Sale and Leaseback Transactions. Lessee will
not, and will not permit any of the Restricted Subsidiaries to, enter into any
arrangement with any Person providing for the leasing by Lessee or such
Restricted Subsidiary of any property that has been or is to be sold or
transferred by Lessee or such Restricted Subsidiary to such Person in
contemplation of such leasing; provided, however, that Lessee or such Restricted
Subsidiary may enter into such sale and leaseback transaction if: (i) Lessee
could have (A) incurred Indebtedness in an amount equal to the Attributable Debt
relating to such sale and leaseback transaction pursuant to the Leverage Ratio
test set forth in Section 5.12(a) and (B) secured a Lien on such Indebtedness
pursuant to Section 5.17; (ii) the lease in such sale and leaseback transaction
is for a term not in excess of the lesser of (A) three years and (B) 60% of the
remaining useful life of such property; or (iii) such sale and leaseback
transaction is otherwise permitted by the last sentence of Section 4.17 of the
1996 Indenture as in effect as of the date hereof.
Section 5.34. [Intentionally Omitted].
Section 5.35. Amendments of Organization Documents or Certain Debt
Agreements. Lessee shall not modify, amend, supplement or replace, nor permit
any modification, amendment, supplement or replacement of the Organization
Documents of the General Partner, Lessee or any Subsidiary of Lessee, the MLP
Senior Notes, the 1996 Indenture, the 1998 Fixed Rate Senior Notes, the 1998
Note Purchase Agreement, the 2000 Notes or the 2000 Note Purchase Agreement or
any document executed and delivered in connection with any of the foregoing, in
any respect that would adversely affect the Participants, Lessee's ability to
perform the Obligations, any Guarantor's ability to perform its obligations
under the Guaranty, in each such case without the prior written consent of Agent
and the Required Participants. Furthermore, the Lessee shall not permit any
modification, amendment, supplement or replacement of the Organization Documents
of the MLP that would have a material effect on Lessee without the prior written
consent of Agent and the Required Participants.
Section 5.36. [Intentionally Omitted].
Section 5.37. Operations through Subsidiaries. Lessee shall not conduct
any of its operations through Restricted Subsidiaries unless: (a) such
Restricted Subsidiary executes a Guaranty guaranteeing payment of the
Obligations, accompanied by an opinion of counsel to the Restricted Subsidiary
addressed to Agent and the Participants as to the due authorization, execution,
delivery and enforceability of the Guaranty; (b) such Restricted Subsidiary
agrees not to incur any Indebtedness other than (i) trade debt, (ii) debt owed
to Lessee or any other Restricted Subsidiary and (iii) Acquired Debt otherwise
permitted by this Agreement; (c) the Consolidated Cash Flow of such Restricted
Subsidiary, when added to Consolidated Cash Flow of all other Restricted
Subsidiaries for any fiscal year, shall not exceed 10% of the Consolidated Cash
Flow of Lessee and the Restricted Subsidiaries for such fiscal year; and (d) the
value of the assets of such Restricted Subsidiary, when added to the value of
the assets of all other Restricted Subsidiaries for any fiscal year, shall not
exceed 10% of the consolidated value of the assets of Lessee and the Restricted
Subsidiaries for such fiscal year, as determined in accordance with GAAP;
provided that the requirements of subsections (c) and (d) above shall not apply
as to any Restricted Subsidiary if the aggregate Indebtedness of such Restricted
Subsidiary, when added to the Indebtedness of all other Restricted Subsidiaries
at such time (excluding, in each case, debt of any such Restricted Subsidiary
owed to Lessee or another Restricted Subsidiary), shall not exceed $5 million.
Lessee shall not conduct any of its operations through, and shall not establish,
create or otherwise invest in, any Unrestricted Subsidiary unless the same shall
be a Permitted Lessee Investment.
Section 5.38. Operations of MLP. Except in connection with an indirect
Acquisition permitted by Section 5.20, the General Partner and Lessee shall not
permit the MLP or any of its Affiliates (including any Non-Recourse Subsidiary
or any Unrestricted Subsidiary) to operate or conduct any business substantially
similar to that conducted by Lessee and the Restricted Subsidiaries within a 25
mile radius of any business conducted by Lessee and the Restricted Subsidiaries.
In order to comply with this Section 5.38, Lessee may enter into one or more
transactions by which its assets and properties are "swapped" or "exchanged" for
assets and properties of another Person prior to or concurrently with another
transaction which, but for such swap or exchange would violate this Section;
provided, that (i) if the value of the MLP's assets or units to be so swapped or
exchanged exceeds $15 million, as determined by the audit committee of the Board
of Directors of the General Partner, Lessee shall have first obtained at its
expense an opinion from a nationally recognized investment banking firm,
addressed to it, Agent and the Participants and opining without material
qualification and based on assumptions that are realistic at the time, that the
exchange or swap transactions are fair to Lessee and the Restricted
Subsidiaries, and (ii) if the value of the MLP's assets or units to be so
swapped or exchanged exceeds $50 million, as determined by the audit committee
of the Board of Directors of the General Partner, at the option of the Required
Participants, Agent shall have first retained, at Lessee's expense, an
investment banking firm on behalf of the Participants who shall also have
rendered an opinion containing the statements and content referred to in clause
(i).
Section 5.39. Miscellaneous.
(a) Further Assurances. The Lessee, at its cost and expense, will cause
to be promptly and duly taken, executed, acknowledged and delivered all such
further acts, documents and assurances as Certificate Trustee or Agent
reasonably may request from time to time in order to carry out more effectively
the intent and purposes of this Agreement and the other Operative Documents and
the Overall Transaction. The Lessee, at its cost and expense, will cause all
financing statements (including precautionary financing statements), fixture
filings, mortgages and other documents, to be recorded or filed at such places
and times in such manner, and will take all such other actions or cause such
actions to be taken, as may be necessary or as may be reasonably requested by
Agent or Certificate Trustee in order to establish, preserve, protect and
perfect the title and Lien of Agent in the Units, the Lessee Collateral and the
Lessor Collateral and Certificate Trustee's, Agent's and/or any Participant's
rights under this Agreement and the other Operative Documents.
(b) Change of Name or Address. Lessee shall provide Agent thirty (30)
days' prior written notice of any change in name, or the address of its chief
executive office and principal place of business or the office where it keeps
its records concerning its accounts and the Units.
(c) Securities. Lessee shall not, nor shall it permit anyone authorized
to act on its behalf to, take any action which would subject the issuance or
sale of the Notes or Certificates, the Units, the Trust Estate or the Operative
Documents, or any security or lease the offering of which, for purposes of the
Securities Act or any state securities laws, would be deemed to be part of the
same offering as the offering of the aforementioned items to the registration
requirements of Section 5 of the Securities Act or any state securities laws.
(d) Rates. With respect to each determination of Interest and Yield
pursuant to this Agreement, the Loan Agreement, the Trust Agreement and Basic
Rent under the Lease, Lessee agrees to be bound by Sections 2.6 and 2.7 of the
Loan Agreement, Sections 2.4 and 2.5 of the Trust Agreement, and Sections 2.8
and 2.9 hereof and the applicable definitions in Appendix 1.
Section 5.40. Accounting Principles. (a) Unless the context otherwise
clearly requires, all accounting terms not expressly defined herein shall be
construed, and all financial computations required under this Agreement shall be
made in accordance with GAAP consistently applied. In the event that GAAP
changes during the term of the Lease such that the covenants contained in
Section 5.12 would then be calculated in a different manner or with different
components, (i) Lessee and the Participants agree to amend this Agreement in
such respects as are necessary to conform those covenants as criteria for
evaluating Lessee's financial condition to substantially the same criteria as
were effective prior to such change in GAAP and (ii) Lessee shall be deemed to
be in compliance with the covenants contained in Section 5.12 during the 90-day
period following any such change in GAAP if and to the extent that Lessee would
have been in compliance therewith under GAAP as in effect immediately prior to
such change.
(b) Except as otherwise specified, references herein to "fiscal year"
and "fiscal quarter" refer to such fiscal periods of Lessee."
(c) The following definitions set forth in Appendix I to the
Participation Agreement shall be and are hereby added as new defined terms or
amended and restated, as the case may be, to read as follows:
"Acquisition" means any transaction or series of
related transactions for the purpose of or resulting, directly
or indirectly, in (a) the acquisition of all or substantially
all of the assets of a Person, or of any business or division
of a Person, (b) the acquisition of in excess of 50% of the
capital stock, partnership interests or equity of any Person
or otherwise causing any Person to become a Subsidiary of the
acquiring Person, or (c) a merger or consolidation or any
other combination with another Person (other than a Person
that is a Subsidiary of the acquiring Person) provided that
Lessee or the Subsidiary of the acquiring entity is the
surviving Person.
"Available Cash" has the meaning given to such term
in the Partnership Agreement, as amended to October 14, 1998;
provided, that (a) Available Cash shall not include any amount
of Net Proceeds of Asset Sales until the 270-day period
following the consummation of the applicable Asset Sale, (b)
investments, loans and other contributions to a Non-Recourse
Subsidiary, Unrestricted Subsidiary or Joint Venture are to be
treated as "cash disbursements" when made for purposes of
determining the amount of Available Cash and (c) cash receipts
of a Non-Recourse Subsidiary, Unrestricted Subsidiary or Joint
Venture shall not constitute cash receipts of Lessee for
purposes of determining the amount of Available Cash until
cash is actually distributed by such Non-Recourse Subsidiary,
Unrestricted Subsidiary or Joint Venture to Lessee or a
Restricted Subsidiary.
"Capital Interests" means, (a) with respect to any
corporation, any and all shares, participations, rights or
other equivalent interests in the capital of the corporation,
(b) with respect to any partnership or limited liability
company, any and all partnership interests (whether general or
limited) or limited liability company interests, respectively,
and other interests or participations that confer on a Person
the right to receive a share of the profits and losses of, or
distributions of assets of, such partnership or limited
liability company, and (c) with respect to any other Person,
ownership interests of any type in such Person.
"Consolidated Cash Flow" means, with respect to
Lessee and the Restricted Subsidiaries for any period, the
Consolidated Net Income for such period, plus (a) an amount
equal to any extraordinary loss plus any net loss realized in
connection with an asset sale, to the extent such losses were
deducted in computing Consolidated Net Income, plus (b)
provision for taxes based on income or profits of Lessee and
the Restricted Subsidiaries for such period, to the extent
such provision for taxes was deducted in computing
Consolidated Net Income, plus (c) Consolidated Interest
Expense for such period, whether paid or accrued (including
amortization of original issue discount, non-cash interest
payments and the interest component of any payments associated
with Capital Lease Obligations and net payments (if any)
pursuant to Hedging Obligations), to the extent such expense
was deducted in computing Consolidated Net Income, plus (d)
depreciation and amortization (including amortization of
goodwill and other intangibles but excluding amortization of
prepaid cash expenses that were paid in a prior period) of
Lessee and the Restricted Subsidiaries for such period, to the
extent such depreciation and amortization were deducted in
computing Consolidated Net Income, plus (e) non-cash employee
compensation expenses of Lessee and the Restricted
Subsidiaries for such period, plus (f) the Synthetic Lease
Principal Component of Lessee and the Restricted Subsidiaries
for such period; in each case, for such period without
duplication on a consolidated basis and determined in
accordance with GAAP.
"Consolidated Interest Expense" means, with respect
to Lessee and the Restricted Subsidiaries for any fiscal
period, on a consolidated basis, the sum of (a) all interest,
fees (including Letter of Credit fees), charges and related
expenses paid or payable (without duplication) by Lessee and
the Restricted Subsidiaries for that fiscal period to the
Banks hereunder or to any other lender in connection with
borrowed money or the deferred purchase price of assets that
are considered "interest expense" under GAAP, plus (b) the
portion of rent paid or payable (without duplication) by
Lessee and the Restricted Subsidiaries for that fiscal period
under Capital Lease Obligations that should be treated as
interest in accordance with Financial Accounting Standards
Board Statement No. 13, on a consolidated basis, plus (c) the
Synthetic Lease Interest Component of Lessee and the
Restricted Subsidiaries for that fiscal period.
"Consolidated Net Income" means, with respect to
Lessee and the Restricted Subsidiaries for any period, the
aggregate of the Net Income of Lessee and the Restricted
Subsidiaries for such period, on a consolidated basis,
determined in accordance with GAAP; provided, that (a) the Net
Income of any Person that is not a Restricted Subsidiary or
that is accounted for by the equity method of accounting shall
be included only to the extent of the amount of dividends or
distributions paid to Lessee or a Wholly-Owned Subsidiary of
Lessee, (b) the Net Income of any Person that is a Restricted
Subsidiary (other than a Wholly-Owned Subsidiary) shall be
included only to the extent of the amount of dividends or
distributions paid to Lessee or a Wholly-Owned Subsidiary of
Lessee, (c) the Net Income of any Person acquired in a pooling
of interests transaction for any period prior to the date of
such acquisition shall be excluded except to the extent
otherwise includable under clause (a) above and (d) the
cumulative effect of a change in accounting principles shall
be excluded.
"Consolidated Net Worth" means, with respect to
Lessee and the Restricted Subsidiaries as of any date, the sum
of (a) the consolidated equity of the common stockholders or
partners of Lessee and the Restricted Subsidiaries as of such
date, plus (b) the respective amounts reported on the balance
sheet of Lessee and the Restricted Subsidiaries as of such
date with respect to any series of preferred stock (other than
Disqualified Interests) that by its terms is not entitled to
the payment of dividends unless such dividends may be declared
and paid only out of net earnings in respect of the year of
such declaration and payment, but only to the extent of any
cash received by Lessee and the Restricted Subsidiaries upon
issuance of such preferred stock, less (x) all write-ups
(other than write-ups resulting from foreign currency
translations and write-ups of tangible assets of a going
concern business made within 12 months after the acquisition
of such business) subsequent to the Effective Date in the book
value of any asset owned by Lessee and the Restricted
Subsidiaries, (y) all Investments as of such date in
unconsolidated Subsidiaries and in Persons that are not
Restricted Subsidiaries (except, in each case, Permitted
Lessee Investments), and (z) all unamortized debt discount and
expense and unamortized deferred charges as of such date, all
of the foregoing determined in accordance with GAAP.
"Credit Agreement" means the Third Amended and
Restated Credit Agreement dated as of April 18, 2000 among
Lessee, the General Partner, the Administrative Agent, the
Credit Agreement Banks and the Documentation Agent.
"Credit Agreement Arranger" means Banc of America Securities LLC.
"Credit Agreement Bank" means the financial
institutions defined as "Banks" in the introductory clause to
the Credit Agreement.
"Documentation Agent" has the meaning specified in the introductory clause
to the Credit Agreement.
"Effective Date" means the first date on which all
conditions precedent set forth in Section 5 of Omnibus
Amendment Agreement No. 2 are satisfied or waived by the
Certificate Purchasers or the Lenders.
"Existing Credit Agreement" means the Second Amended
and Restated Credit Agreement, dated as of July 2, 1998, as
amended prior to the Effective Date, among Lessee, the General
Partner, the several financial institutions from time to time
party thereto and Bank of America, N.A., as Administrative
Agent.
"Existing Indebtedness" means Indebtedness and
Synthetic Lease Obligations of Lessee and its Subsidiaries
(other than the "Obligations" as defined in the Credit
Agreement) and certain Indebtedness of the General Partner
with respect to which Lessee has assumed the General Partner's
repayment obligations, in each case in existence on the
Restatement Effective Date and as more fully set forth on
Schedule V to Omnibus Amendment Agreement No. 2.
"Fixed Charge Coverage Ratio" means with respect to
Lessee and the Restricted Subsidiaries for any period, the
ratio of Consolidated Cash Flow for such period to Fixed
Charges for such period. In the event that Lessee or any of
the Restricted Subsidiaries (a) incurs, assumes or guarantees
any Indebtedness or Synthetic Lease Obligations (other than
revolving credit borrowings including, with respect to Lessee,
the Loans) or (b) redeems or repays any Indebtedness or
Synthetic Lease Obligations (other than revolving credit
borrowings that are properly classified as a current liability
for GAAP including, with respect to Lessee, the Loans to the
extent that such Loans are so classified and excluding,
regardless of classification, any Loans or other Indebtedness
or Synthetic Lease Obligations the proceeds of which are used
for Acquisitions or Growth Related Capital Expenditures), in
any case subsequent to the commencement of the period for
which the Fixed Charge Coverage Ratio is being calculated but
prior to the date of the event for which the calculation of
the Fixed Charge Coverage Ratio is made (the "Fixed Charge
Ratio Calculation Date"), then the Fixed Charge Coverage Ratio
shall be calculated giving pro forma effect to such
incurrence, assumption, guarantee, redemption or repayment of
Indebtedness or Synthetic Lease Obligations, as if the same
had occurred at the beginning of the applicable reference
period. The foregoing calculation of the Fixed Charge Coverage
Ratio shall also give pro forma effect to Acquisitions
(including all mergers and consolidations), Asset Sales and
other dispositions and discontinuances of businesses or assets
that have been made by Lessee or any of the Restricted
Subsidiaries during the reference period or subsequent to such
reference period and on or prior to the Fixed Charge Ratio
Calculation Date assuming that all such Acquisitions, Asset
Sales and other dispositions and discontinuances of businesses
or assets had occurred on the first day of the reference
period; provided, however, that with respect to Lessee and the
Restricted Subsidiaries, (a) Fixed Charges shall be reduced by
amounts attributable to businesses or assets that are so
disposed of or discontinued only to the extent that the
obligations giving rise to such Fixed Charges would no longer
be obligations contributing to the Fixed Charges of Lessee or
the Restricted Subsidiaries subsequent to Fixed Charge Ratio
Calculation Date and (b) Consolidated Cash Flow generated by
an acquired business or asset of Lessee or the Restricted
Subsidiaries shall be determined by the actual gross profit
(revenues minus costs of goods sold) of such acquired business
or asset during the immediately preceding number of full
fiscal quarters as are in the reference period minus the pro
forma expenses that would have been incurred by Lessee and the
Restricted Subsidiaries in the operation of such acquired
business or asset during such period computed on the basis of
(i) personnel expenses for employees retained by Lessee and
the Restricted Subsidiaries in the operation of the acquired
business or asset and (ii) non-personnel costs and expenses
incurred by Lessee and the Restricted Subsidiaries on a per
gallon basis in the operation of Lessee's business at
similarly situated Lessee facilities.
"Fixed Charges" means, with respect to Lessee and the
Restricted Subsidiaries for any period, the sum, without
duplication, of (a) Consolidated Interest Expense for such
period, whether paid or accrued, to the extent such expense
was deducted in computing Consolidated Net Income (including
amortization of original issue discounts, non-cash interest
payments, the interest component of all payments associated
with Capital Lease Obligations and net payments (if any)
pursuant to Hedging Obligations permitted under this
Agreement), (b) commissions, discounts and other fees and
charges incurred with respect to letters of credit, (c) any
interest expense on Indebtedness of another Person that is
guaranteed by Lessee and the Restricted Subsidiaries or
secured by a Lien on assets of any such Person, and (d) the
product of (i) all cash dividend payments on any series of
preferred stock of Lessee and the Restricted Subsidiaries,
times (ii) a fraction, the numerator of which is one and the
denominator of which is one minus the then current combined
federal, state and local statutory tax rate of Lessee,
expressed as a decimal, determined, in each case, on a
consolidated basis and in accordance with GAAP.
"Funded Debt" means all Indebtedness of Lessee and
the Restricted Subsidiaries, excluding all Contingent
Obligations of Lessee and the Restricted Subsidiaries under or
in connection with Letters of Credit outstanding from time to
time.
"Guaranty" means a continuing guaranty of the
Obligations in favor of the Agent on behalf of the
Participants, in form and substance satisfactory to the Agent.
"Interest Coverage Ratio" means with respect to
Lessee and the Restricted Subsidiaries for any period, the
ratio of Consolidated Cash for such period to Consolidated
Interest Expense for such period. In the event that Lessee or
any of the Restricted Subsidiaries (a) incurs, assumes or
guarantees any Indebtedness or Synthetic Lease Obligations
(other than revolving credit borrowings including, with
respect to Lessee, the Loans) or (b) redeems or repays any
Indebtedness or Synthetic Lease Obligations (other than
revolving credit borrowings that are properly classified as a
current liability under GAAP including, with respect to
Lessee, the Loans, to the extent such Loans are so classified
and excluding, regardless of classification, any Loans or
other Indebtedness or Synthetic Lease Obligations the proceeds
of which are used for Acquisitions or Growth Related Capital
Expenditures), in any case subsequent to the commencement of
the period for which the Interest Coverage Ratio is being
calculated, but prior to the date on which the calculation of
the Interest Coverage Ratio is made (the "Interest Coverage
Ratio Calculation Date"), then the Interest Coverage Ratio
shall be calculated giving pro forma effect to such
incurrence, assumption, guarantee, redemption or repayment of
Indebtedness or Synthetic Lease Obligations, as if the same
had occurred at the beginning of the applicable reference
period. The foregoing calculation of the Interest Coverage
Ratio shall also give pro forma effect to Acquisitions
(including all mergers and consolidations), Asset Sales and
other dispositions and discontinuances of businesses or assets
that have been made by Lessee or any of the Restricted
Subsidiaries during the reference period or subsequent to such
reference period and on or prior to the Interest Coverage
Ratio Calculation Date assuming that all such Acquisitions,
Asset Sales and other dispositions and discontinuances of
businesses or assets had occurred on the first day of the
reference period; provided, however, that with respect to
Lessee and the Restricted Subsidiaries, (a) Consolidated
Interest Expense shall be reduced by amounts attributable to
businesses or assets that are so disposed of or discontinued
only to the extent that the Indebtedness or Synthetic Lease
Obligations giving rise to such Consolidated Interest Expense
would no longer be Indebtedness or Synthetic Lease Obligations
contributing to the Consolidated Interest Expense of Lessee or
the Restricted Subsidiaries subsequent to the Interest
Coverage Ratio Calculation Date and (b) Consolidated Cash Flow
generated by an acquired business or asset of Lessee and the
Restricted Subsidiaries shall be determined by the actual
gross profit (revenues minus costs of goods sold) of such
acquired business or asset during the immediately preceding
number of full fiscal quarters as in the reference period
minus the pro forma expenses that would have been incurred by
Lessee and the Restricted Subsidiaries in the operation of
such acquired business or asset during such period computed on
the basis of (i) personnel expenses for employees retained by
Lessee and the Restricted Subsidiaries in the operation of the
acquired business or asset and (ii) non-personnel costs and
expenses incurred by Lessee and the Restricted Subsidiaries on
a per gallon basis in the operation of Lessee's business at
similarly situated facilities of Lessee.
"Investment" means, relative to any Person, any
direct or indirect purchase or other acquisition by such
Person of stock or other securities of any other Person, or
any direct or indirect loan, advance or capital contribution
by such Person to any other Person, and any other item which
would be classified as an "investment" on a balance sheet of
such Person prepared in accordance with GAAP, including,
without limitation, any direct or indirect contribution by
such Person of property or assets to a joint venture,
partnership or other business entity in which such Person
retains an interest. For purposes of the Operative Documents,
the amount involved in Investments made during any period
shall be the aggregate cost to Lessee 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 Investment (determined in accordance with
GAAP, but without regard to any amounts received during such
period as earnings (in the form of dividends not constituting
a return of capital, interest or otherwise) on such Investment
or as loans from any Person in whom such Investment has been
made).
"Leverage Ratio" means, with respect to Lessee and
the Restricted Subsidiaries for any period, the ratio of
Funded Debt plus Synthetic Lease Obligations, in each case of
Lessee and the Restricted Subsidiaries as of the last day of
such period, to Consolidated Cash Flow for such period. In the
event that Lessee or any of the Restricted Subsidiaries (a)
incurs, assumes or guarantees any Indebtedness or Synthetic
Lease Obligations (other than revolving credit borrowings
including, with respect to Lessee, the Loans) or (b) redeems
or repays any Indebtedness or Synthetic Lease Obligations
(other than revolving credit borrowings that are properly
classified as a current liability under GAAP including, with
respect to Lessee, the Loans to the extent such Loans are so
classified and excluding, regardless of classification, any
Loans or other Indebtedness or Synthetic Lease Obligations the
proceeds of which are used for Acquisitions or Growth Related
Capital Expenditures), in any case subsequent to the
commencement of the period for which the Leverage Ratio is
being calculated but prior to the date on which the
calculation of the Leverage Ratio is made (the "Leverage Ratio
Calculation Date"), then the Leverage Ratio shall be
calculated giving pro forma effect to such incurrence,
assumption, guarantee, redemption or repayment of Indebtedness
or Synthetic Lease Obligations, as if the same had occurred at
the beginning of the applicable reference period. The
foregoing calculation of the Leverage Ratio shall also give
pro forma effect to Acquisitions (including all mergers and
consolidations), Asset Sales and other dispositions and
discontinuances of businesses or assets that have been made by
Lessee or any of the Restricted Subsidiaries during the
reference period or subsequent to such reference period and on
or prior to the Leverage Ratio Calculation Date assuming that
all such Acquisitions, Asset Sales and other dispositions and
discontinuances of businesses or assets had occurred on the
first day of the reference period; provided, however, that
with respect to Lessee and the Restricted Subsidiaries, (a)
Funded Debt and Synthetic Lease Obligations shall be reduced
by amounts attributable to businesses or assets that are so
disposed of or discontinued only to the extent that the
Indebtedness or Synthetic Leases included within such Funded
Debt and Synthetic Lease Obligations would no longer be an
obligation of Lessee or the Restricted Subsidiaries subsequent
to the Leverage Ratio Calculation Date and (b) Consolidated
Cash Flow generated by an acquired business or asset of Lessee
or the Restricted Subsidiaries shall be determined by the
actual gross profit (revenues minus costs of goods sold) of
such acquired business or asset during the immediately
preceding number of full fiscal quarters as in the reference
period minus the pro forma expenses that would have been
incurred by Lessee and the Restricted Subsidiaries in the
operation of such acquired business or asset during such
period computed on the basis of (i) personnel expenses for
employees retained by Lessee and the Restricted Subsidiaries
in the operation of the acquired business or asset and (ii)
non-personnel costs and expenses incurred by Lessee and the
Restricted Subsidiaries on a per gallon basis in the operation
of Lessee's business at similarly situated facilities of
Lessee.
"Net Income" means, with respect to Lessee and the
Restricted Subsidiaries, the net income (loss) of such
Persons, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding,
however, (a) any gain (but not loss), together with any
related provision for taxes on such gain (but not loss),
realized in connection with (i) any asset sale (including,
without limitation, dispositions pursuant to sale and
leaseback transactions), or (ii) the disposition of any
securities or the extinguishment of any Indebtedness of Lessee
or any of the Restricted Subsidiaries, and (b) any
extraordinary gain (but not loss), together with any related
provision for taxes on such extraordinary gain (but not loss);
provided, however, that all costs and expenses with respect to
the redemption of the 1994 Fixed Rate Senior Notes, including,
without limitation, cash premiums, tender offer premiums,
consent payments and all fees and expenses in connection
therewith, shall be added back to the Net Income of Lessee,
the General Partner or the Restricted Subsidiaries to the
extent that they were deducted from such Net Income in
accordance with GAAP.
"Net Proceeds of Asset Sale" means the aggregate cash
proceeds received by Lessee or any of the Restricted
Subsidiaries in respect of any Asset Sale, net of the direct
costs relating to such Asset Sale (including, without
limitation, legal, accounting and investment banking fees, and
sales commissions) and any relocation expenses incurred as a
result thereof, taxes paid or payable as a result thereof
(after taking into account any available tax credits or
deductions and any tax sharing arrangements), and amounts
required to be applied to the repayment of Indebtedness
secured by a Lien on the asset or assets the subject of such
Asset Sale.
"1994 Fixed Rate Senior Notes" means the 10% Series A
Fixed Rate Senior Notes due 2001 that were issued by Lessee
and Ferrellgas Finance Corp. pursuant to that certain
Indenture dated as of July 5, 1994 among Lessee, Ferrellgas
Finance Corp. and Norwest Bank Minnesota, National
Association. All of the 1994 Fixed Rate Senior Notes were
redeemed prior to the Effective Date.
"Omnibus Amendment Agreement No. 2" means Omnibus Amendment Agreement No. 2
in respect of the Participation Agreement and the Lease, dated as of April 18,
2000, between the Lessee, the General Partner, the Certificate Trustee, the
Agent, the Certificate Purchasers and the Lender.
"Organization Documents" means, (a) for any
corporation, the certificate or articles of incorporation, the
bylaws, any certificate of determination or instrument
relating to the rights of preferred shareholders of such
corporation, any shareholder rights agreement, and all
applicable resolutions of the board of directors (or any
committee thereof) of such corporation, (b) for any general or
limited partnership, the partnership agreement of such
partnership and all amendments thereto and any agreements
otherwise relating to the rights of the partners thereof, and
(c) for any limited liability company, the limited liability,
operating or similar agreement and all amendments thereto and
any agreements otherwise relating to the rights of the members
thereof.
"Partnership Agreement" shall mean the Second Amended
and Restated Agreement of Limited Partnership of Lessee dated
October 14, 1998, as amended from time to time in accordance
with the terms of the Participation Agreement.
"Permitted Lessee Investments" means (a) any
Investments in Cash Equivalents; (b) any Investments in Lessee
or(subject to the provisions of Section 5.37) in a Restricted
Subsidiary of Lessee that is a Guarantor; (c) Investments by
Lessee or any Restricted Subsidiary of Lessee in a Person in
compliance with the other provisions of this Agreement, if as
a result of such Investment (i) such Person becomes a
Restricted Subsidiary of Lessee and a Guarantor or (ii) such
Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is
liquidated into, Lessee or a Restricted Subsidiary of Lessee
that is a Guarantor; and (d) Investments by Lessee or any
Restricted Subsidiary in Unrestricted Subsidiaries and Joint
Ventures; provided that the amount of cash or property
contributed, loaned or otherwise advanced by Lessee or such
Restricted Subsidiaries in respect of such Investments may not
exceed at any time an aggregate amount equal to the greater of
(i) $15,000,000 and (ii) 10% of Consolidated Cash Flow for the
most recently ended four fiscal quarters of Lessee.
"Person" means an individual, partnership,
corporation, limited liability company, business trust, joint
stock company, trust, unincorporated association, Joint
Venture or Governmental Authority.
"Quarterly Payment Period" shall mean successive
calendar quarters commencing on the Interim Term Expiration
Date and thereafter on the last business day in March, June,
September and December in each year; provided, however, that
no Quarterly Payment Period may end later than the last day of
the Lease Term.
"Restricted Subsidiary" means any Subsidiary of
Lessee (a) of which 80% or more of the voting Capital
Interests are beneficially owned, directly or indirectly, by
Lessee and none of which Capital Interests are owned, directly
or indirectly, by Unrestricted Subsidiaries, (b) which is
engaged in the same or substantially the same line of business
as Lessee, (c) which is organized under the laws of the United
States or any State thereof, (d) which maintains substantially
all of its assets and conducts substantially all of its
business within the United States and (e) which is designated
as a Restricted Subsidiary in Schedule IV to Omnibus Amendment
Agreement No. 2 as of the Effective Date or which shall be
designated as a Restricted Subsidiary by Lessee at a
subsequent date pursuant to Section 5.16; provided, however,
that (x) to the extent a newly formed or acquired Subsidiary
meeting the foregoing requirements is not declared a
Restricted Subsidiary or an Unrestricted Subsidiary within 90
days of its formation or acquisition, such Subsidiary shall be
deemed to have been designated by Lessee as a Restricted
Subsidiary (in which event Lessee shall comply, and shall
cause such Restricted Subsidiary to comply, with Section 5.37)
and (b) a Restricted Subsidiary may be designated as an
Unrestricted Subsidiary in accordance with the provisions of
Section 5.16.
"2000 Note Purchase Agreement" means the Note
Purchase Agreement, dated as of February 1, 2000 among Lessee
and the Purchasers named therein, pursuant to which the 2000
Notes were issued, as it may be amended, modified or
supplemented from time to time.
"2000 Notes" means, collectively, (a) the $21,000,000
8.68% Senior Notes, Series A, due August 1, 2006, (b) the
$90,000,000 8.78% Senior Notes, Series B, due August 1, 2007
and (c) the $73,000,000 8.87% Senior Notes, Series C, due
August 1, 2009, in each case issued by Lessee pursuant to the
2000 Note Purchase Agreement.
"Unrestricted Subsidiary" means any Subsidiary which is not a Restricted
Subsidiary."
Section 1.2. Amendments to Lease. (a) Section 8.1 of the Lease shall be and
is hereby amended and restated in its entirety to read as follows:
"Section 8.1. Events of Default. The following shall constitute events of
default (each a "Lease Event of Default") hereunder:
(a) Non-Payment. Lessee fails to pay, (i) when and as
required to be paid herein, any payment of Basic Rent or any amount
payable pursuant to Section 6.1(a), or Article IX, or (ii) within 5
days after the same becomes due, any Supplemental Rent (other than
Supplemental Rent described in clause (i)); or
(b) Representation or Warranty. Any representation or
warranty by Lessee or the General Partner made or deemed made herein,
in any other Operative Document, or which is contained in any
certificate, document or financial or other statement by Lessee, the
General Partner, or any Responsible Officer, furnished at any time
under this Lease, or in or under any other Operative Document, is
incorrect in any material respect on or as of the date made or deemed
made; or
(c) Specific Defaults. (i) Lessee fails to maintain the
insurance required by Section 6.2 or Lessee fails to perform or observe
any term, covenant or agreement contained in any of (A) Section 5.2
hereof or (B) Section 5.3 (other than subsection (d) thereof), 5.12,
5.13 or 5.17 through 5.38, inclusive, of the Participation Agreement;
or (ii) Lessee shall fail to sell all of the Units on the Termination
Date in accordance with and satisfaction of each of the terms,
covenants, conditions and agreements set forth under Article IX in
connection with and following its exercise of the Sale Option; or
(d) Other Defaults. Lessee, the General Partner or any
Subsidiary fails to perform or observe any other term or covenant
contained in this Lease or any other Operative Document, and such
default shall continue unremedied for a period of 30 days after the
earlier of (i) the date upon which a Responsible Officer knew of such
failure or (ii) the date upon which written notice thereof is given to
Lessee by the Lessor or Agent; provided that if (i) such default is not
curable by the payment of money and cannot be cured within such 30 day
period, and (ii) Lessee, the General Partner or such Subsidiary is
diligently pursuing the cure of such default, then the period for cure
of such default will be extended for the period necessary for Lessee,
the General Partner or such Subsidiary to effect such cure, but in no
event longer than 90 days from the date of such notice or knowledge; or
(e) Cross-Default. Lessee, the General Partner or any
Restricted Subsidiary (i) fails to make any payment in respect of any
Indebtedness, Synthetic Lease Obligation or Contingent Obligation
having an aggregate principal amount (including undrawn committed or
available amounts and including amounts owing to all creditors under
any combined or syndicated credit arrangement) of more than $10,000,000
when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) and such failure continues after the
applicable grace or notice period, if any, specified in the relevant
document on the date of such failure or (ii) fails to perform or
observe any other condition or covenant, or any other event (including
any termination or similar event in respect of any Accounts Receivable
Securitization) shall occur or condition exist, under any agreement or
instrument relating to any such Indebtedness, Synthetic Lease
Obligation or Contingent Obligation, and such failure continues after
the applicable grace or notice period, if any, specified in the
relevant document on the date of such failure if the effect of such
failure, event or condition is to cause, or to permit the holder or
holders of such Indebtedness or beneficiary or beneficiaries of such
Indebtedness or Synthetic Lease Obligation (or a trustee or agent on
behalf of such holder or holders or beneficiary or beneficiaries) to
cause such Indebtedness or Synthetic Lease Obligation to be declared to
be due and payable prior to its stated maturity or to cause such
Indebtedness, Synthetic Lease Obligation or Contingent Obligation to be
prepaid, purchased or redeemed by Lessee, the MLP, the General Partner
or any Restricted Subsidiary, or such Contingent Obligation to become
payable or cash collateral in respect thereof to be demanded; or
(f) Insolvency; Voluntary Proceedings. The General Partner,
the MLP, Lessee or any Restricted Subsidiary (i) ceases or fails to be
solvent, or generally fails to pay, or admits in writing its inability
to pay, its debts as they become due, subject to applicable grace
periods, if any, whether at stated maturity or otherwise, (ii)
voluntarily ceases to conduct its business in the ordinary course,
(iii) commences any Insolvency Proceeding with respect to itself, or
(iv) takes any action to effectuate or authorize any of the foregoing;
or
(g) Involuntary Proceedings. (i) Any involuntary Insolvency
Proceeding is commenced or filed against the General Partner, the MLP,
Lessee or any Restricted Subsidiary, or any writ, judgment, warrant of
attachment, execution or similar process is issued or levied against a
substantial part of any such Person's properties, and any such
proceeding or petition shall not be dismissed, or such writ, judgment,
warrant of attachment, execution or similar process shall not be
released, vacated or fully bonded within 60 days after commencement,
filing or levy, (ii) the General Partner, the MLP, Lessee or any
Restricted Subsidiary admits the material allegations of a petition
against it in any Insolvency Proceeding, or an order for relief (or
similar order under non-U.S. law) is ordered in any Insolvency
Proceeding or (iii) the General Partner, the MLP, Lessee or any
Restricted Subsidiary acquiesces in the appointment of a receiver,
trustee, custodian, conservator, liquidator, mortgagee in possession
(or agent therefor) or other similar Person for itself or a substantial
portion of its property or business; or
(h) ERISA. (i) An ERISA Event occurs with respect to a
Pension Plan which has resulted or could reasonably be expected to
result in liability of Lessee or the General Partner under Title IV of
ERISA to the Pension Plan or the PBGC in an aggregate amount in excess
of $10,000,000 or (ii) the commencement or increase of contributions
to, or the adoption of or the amendment of a Pension Plan by Lessee,
the General Partner or any of their Affiliates which has resulted or
could reasonably be expected to result in an increase in Unfunded
Pension Liability among all Pension Plans in an aggregate amount in
excess of $10,000,000.
(i) Monetary Judgments. One or more judgments, orders,
decrees or arbitration awards is entered against Lessee, the General
Partner or any Restricted Subsidiary involving in the aggregate a
liability (to the extent not covered by independent third-party
insurance as to which the insurer does not dispute coverage) as to any
single or related series of transactions, incidents or conditions, of
more than $10,000,000; or
(j) Non-Monetary Judgments. Any non-monetary judgment, order
or decree is entered against Lessee, the General Partner or any
Restricted Subsidiary which does or would reasonably be expected to
have a Material Adverse Effect, and there shall be any period of 60
consecutive days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not be in
effect; or
(k) [Intentionally Omitted.]
(l) Adverse Change. There occurs a Material Adverse Effect; or
(m) Certain Indenture Defaults, Etc. (i) To the extent not
otherwise within the scope of subsection (e) above, any "Event of
Default" shall occur and be continuing under and as defined in the 1998
Note Purchase Agreement or the 2000 Note Purchase Agreement or (ii) any
of the following shall occur under or with respect to the 1996
Indenture or any other Indebtedness guaranteed by Lessee or its
Subsidiaries (collectively, the "Guaranteed Indebtedness"): (A) any
demand for payment shall be made under any such Guaranty Obligation
with respect to the Guaranteed Indebtedness or (B) so long as any such
Guaranty Obligation shall be in effect (x) Lessee or any such
Subsidiary shall fail to pay principal of or premium, if any, or
interest on such Guaranteed Indebtedness after the expiration of any
applicable notice or cure periods or (y) any "Event of Default"
(however defined) shall occur and be continuing under such Guaranteed
Indebtedness which results in the acceleration of such Guaranteed
Indebtedness; or
(n) Guarantor Defaults. Any Guarantor fails in any material
respect to perform or observe any term, covenant or agreement in its
Guaranty, or any Guaranty is for any reason partially (including with
respect to future advances) or wholly revoked or invalidated, or
otherwise ceases to be in full force and effect, or any Guarantor or
any other Person contests in any manner the validity or enforceability
thereof or denies that it has any further liability or obligation
thereunder or any event described at subsections (f) or (g) of this
Section 8.1 occurs with respect to any Guarantor; or
(o) Operative Documents. Any Operative Document shall (except
in accordance with its terms), in whole or in part, terminate, cease to
be effective or cease to be the legally valid, binding and enforceable
obligation of Lessee, or Lessee or any of its Affiliates shall,
directly or indirectly, contest in any manner in any court the
effectiveness, validity, binding nature or enforceability thereof, or
the Lien securing Lessee's obligations under the Operative Documents
shall, in whole or in part, cease to be a perfected first priority Lien
free and clear of all Liens (other than Permitted Liens), or, in any
case, Lessee or any of its Affiliates shall, at any time, directly or
indirectly, contest in any manner in any court the validity or
enforceability thereof; or
(p) Other Lease. A "Lease Event of Default" shall occur under
the Other Lease.
(q) Change of Control. A Change of Control occurs."
(b) Section 8.2 shall be and is hereby amended by deleting the
reference to "Section 8.1(e) or Section 8.1(f)" contained in the fourth
paragraph thereof and substituting in place thereof the phrase "Section 8.1(f)
or Section 8.1(g)".
Section 1.3. Amendment to Loan Agreement. Schedule II to the Loan Agreement
shall be and is hereby amended in its entirety to read as Exhibit A attached
hereto.
SECTION 2. REPRESENTATIONS OF THE LESSEE.
As of the date hereof, Lessee represents and warrants as follows:
(a) all representations and warranties set forth in the Participation
Agreement and Lease, as amended by this Amendment, are true and correct as of
the date hereof and are incorporated herein by reference with the same force and
effect as though herein set forth in full; and
(b) no Lease Default or Lease Event of Default exists.
SECTION 3. AUTHORIZATION AND DIRECTION.
The Certificate Purchaser, by its execution hereof, authorizes the
Certificate Trustee to execute and deliver this Amendment.
SECTION 4. EFFECTIVENESS.
This Amendment shall not become effective until, and shall become
effective when, each and every one of the following conditions shall have been
satisfied:
(a) The Lessee, the General Partner, the Certificate Trustee, the
Agent, the Certificate Purchasers and the Lenders shall have executed this
Amendment;
(b) The Certificate Trustee, the Certificate Purchasers and the Lenders
shall have received (i) certificates of existence and good standing with respect
to Lessee and the General Partner from the Secretary of State of the state of
its organization dated no earlier than the 30th day prior to the Effective Date,
(ii) copies of Lessee's Certificate of Limited Partnership, certified by the
Secretary of State of the state of its organization dated no earlier than the
30th day prior to the Effective Date, (iii) certificates of the Secretary or
Assistant Secretary of the general partner of Lessee, in form and substance
satisfactory to Agent and the Participants, and attaching and certifying as to
(A) the Lessee's limited partnership agreement, (B) the directors' resolutions
in respect of the execution, delivery and performance by Lessee of this
Amendment, (C) the general partner's articles of incorporation and bylaws and
(D) the incumbency and signatures of persons authorized to execute and deliver
documents on behalf of Lessee, and (iv) a legal opinion of Bracewell & Patterson
L.L.P., satisfactory in form and substance to the Certificate Trustee, the
Certificate Purchasers and the Lenders;
(c) The reasonable fees and expenses of the Certificate Purchasers
(including the fees and expenses of their special counsel) shall have been paid
in accordance with Section 5 hereof; and
(d) All proceedings taken in connection with this Amendment and any
documents relating thereto shall be reasonably satisfactory to Agent,
Certificate Trustee, the Certificate Purchasers, the Lenders and their
respective counsel, and each such Person shall have received copies of such
documents as they may reasonably request in connection therewith, all in form
and substance reasonably satisfactory to each such Person.
SECTION 5. FEES AND EXPENSES.
Lessee agrees to pay all the reasonable fees and expenses of the
Certificate Purchasers in connection with the negotiation, preparation,
approval, execution and delivery of this Amendment (including the fees and
expenses of their special counsel).
SECTION 6. MISCELLANEOUS.
Section 6.1. Construction. This Amendment shall be construed in
connection with and as part of the Agreements, and except as modified and
expressly amended by this Amendment, all terms, conditions and covenants
contained in the Agreements are hereby ratified and shall be and remain in full
force and effect.
Section 6.2. References. Any and all notices, requests, certificates
and other instruments executed and delivered after the execution and delivery of
this Amendment may refer to the Agreements without making specific reference to
this Amendment but nevertheless all such references shall be deemed to include
this Amendment unless the context otherwise requires.
Section 6.3. Headings and Table of Contents. The headings of the
Sections of this Amendment and the Table of Contents are inserted for purposes
of convenience only and shall not be construed to affect the meaning or
construction of any of the provisions hereof and any reference to numbered
Sections, unless otherwise indicated, are to Sections of this Amendment.
Section 6.4. Counterparts. This Amendment may be executed in
any number of counterparts, each executed counterpart
constituting an original but all together only one Amendment.
SECTION 6.5. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (EXCLUDING
CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE THE
APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE).
IN WITNESS WHEREOF, the Lessee, the General Partner, the Certificate
Trustee, the Agent, the Certificate Purchasers and the Lenders have caused this
instrument to be executed, all as of the day and year first above written.
Lessee: FERRELLGAS, LP, as Lessee
By Ferrellgas, Inc., its General Partner
By:
Name:
Title:
General Partner: FERRELLGAS, INC.
By:
Name:
Title:
Certificate Trustee: FIRST SECURITY BANK, NATIONAL ASSOCIATION, in its
individual capacity and as Certificate Trustee
By:
Name:
Title:
Agent: FIRST SECURITY TRUST COMPANY OF NEVADA, not in its individual capacity
except as expressly stated herein, but solely as Agent
By:
Name:
Title:
Certificate Purchaser: [_____________________], as Certificate Purchaser
By:
Name:
Title:
Certificate Purchaser: [_____________________], as Certificate Purchaser
By:
Name:
Title:
Certificate Purchaser: [_____________________], as Certificate Purchaser
By:
Name:
Title:
Lender: [_____________________], as Lender
By:
Name:
Title:
Lender: [_____________________], as Lender
By:
Name:
Title:
Lender: [_____________________], as Lender
By:
Name:
Title:
Lender: [_____________________], as Lender
By:
Name:
Title:
SCHEDULE I
[CERTIFICATE PURCHASERS]
SCHEDULE II
[LENDERS]
SCHEDULE III
[LIENS]
SCHEDULE IV
[SUBSIDIARIES AND AFFILIATES]
SCHEDULE V
[EXISTING INDEBTEDNESS]
EXHIBIT A
SCHEDULE II
(TO LOAN AGREEMENT)
AMORTIZATION OF CLASS A NOTE
Payment Loan
Year Date* Principal Balance
100.000000%
1 3/30/00 0.303030% 99.696970%
6/30/00 0.303030% 99.393939%
9/30/00 0.303030% 99.090909%
12/30/00 0.303030% 98.787879%
2 3/30/01 0.303030% 98.484848%
6/30/01 0.303030% 98.181818%
9/30/01 0.303030% 97.878788%
12/30/01 0.303030% 97.575758%
3 3/30/02 0.303030% 97.272727%
6/30/02 0.303030% 96.969697%
9/30/02 0.303030% 96.666667%
12/30/02 0.303030% 96.363636%
4 3/30/03 0.303030% 96.060606%
6/30/03 0.303030% 95.757576%
9/30/03 0.303030% 95.454545%
12/30/03 0.303030% 95.151515%
5 3/30/04 0.303030% 94.848485%
6/30/04 0.303030% 94.545455%
9/30/04 0.303030% 94.242424%
12/30/04 0.303030% 93.939394%
6 3/30/05 0.303030% 93.636364%
6/30/05 93.636364% 0.000000%
*last Business Day of calendar quarter
OMNIBUS AMENDMENT AGREEMENT NO. 2
Dated as of April 18, 2000
in respect of
THERMOGAS TRUST NO. 1999-A
PARTICIPATION AGREEMENT
LEASE INTENDED AS SECURITY
LOAN AGREEMENT
Each dated as of December 15, 1999
-----------------------------------
TABLE OF CONTENTS
SECTION HEADING PAGE
SECTION 1. AMENDMENT OF ORIGINAL AGREEMENTS.......................................................2
Section 1.1. Amendments to Participation Agreement..................................................2
ARTICLE V COVENANTS OF LESSEE AND GUARANTOR......................................................6
Section 5.1. Financial Statements...................................................................6
Section 5.2. Certificates; Other Information........................................................7
Section 5.3. Notices................................................................................8
Section 5.4. Preservation of Corporate or Partnership Existence, Etc................................9
Section 5.5. Maintenance of Property................................................................9
Section 5.6. Insurance..............................................................................9
Section 5.7. Payment of Obligations.................................................................9
Section 5.8. Compliance with Laws..................................................................10
Section 5.9. Inspection of Property and Books and Records..........................................10
Section 5.10. Environmental Laws....................................................................10
Section 5.11. Use of Proceeds.......................................................................10
Section 5.12. Financial Covenants...................................................................10
Section 5.13. Trading and Supply Policies...........................................................11
Section 5.14. Other General Partner Obligations.....................................................11
Section 5.15. Monetary Judgments....................................................................12
Section 5.16. Designation With Respect to Subsidiaries..............................................12
Section 5.17. Limitation on Liens...................................................................13
Section 5.18. Asset Sales...........................................................................15
Section 5.19. Consolidations and Mergers............................................................16
Section 5.20. Acquisitions..........................................................................17
Section 5.21. Limitation on Indebtedness............................................................17
Section 5.22. Transactions with Affiliates..........................................................18
Section 5.23. Use of Proceeds.......................................................................19
Section 5.24. Use of Proceeds - Ineligible Securities...............................................19
Section 5.25. Contingent Obligations................................................................19
Section 5.26. Joint Ventures........................................................................19
Section 5.27. Lease Obligations.....................................................................19
Section 5.28. Restricted Payments...................................................................20
Section 5.29. Prepayments of Subordinated Indebtedness..............................................22
Section 5.30. Dividend and Other Payment Restrictions Affecting Subsidiaries........................22
Section 5.31. Change in Business....................................................................23
Section 5.32. Accounting Changes....................................................................23
Section 5.33. Limitation on Sale and Leaseback Transactions.........................................23
Section 5.34. [Intentionally Omitted]...............................................................23
Section 5.35. Amendments of Organization Documents or Certain Debt Agreements.......................23
Section 5.37. Operations through Subsidiaries.......................................................24
Section 5.38. Operations of MLP.....................................................................24
Section 5.39. Miscellaneous.........................................................................24
Section 5.40. Accounting Principles.................................................................25
Section 1.2. Amendments to Loan Agreement..........................................................37
Section 1.3. Amendments to Loan Agreement..........................................................40
SECTION 2. REPRESENTATIONS OF THE LESSEE.........................................................40
SECTION 3. AUTHORIZATION AND DIRECTION...........................................................40
SECTION 4. EFFECTIVENESS.........................................................................40
SECTION 5. FEES AND EXPENSES.....................................................................41
SECTION 6. MISCELLANEOUS.........................................................................41
Section 6.1. Construction..........................................................................41
Section 6.2. References............................................................................41
Section 6.3. Headings and Table of Contents........................................................41
Section 6.4. Counterparts..........................................................................42
Section 6.5. Governing Law.........................................................................42
OMNIBUS AMENDMENT AGREEMENT NO. 2
THIS OMNIBUS AMENDMENT AGREEMENT NO. 2 dated as of April 18, 2000 (this
"Amendment") is among FERRELLGAS, LP, a Delaware limited partnership (as
successor in interest to Thermogas L.L.C., a Delaware limited liability company
("Thermogas"), pursuant to the hereinafter defined Assumption Agreement) (the
"Lessee"), FERRELLGAS, INC., a Delaware corporation (the "General Partner"),
FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking association, in
its individual capacity and in its capacity as certificate trustee under the
Trust Agreement referred to below (the "Certificate Trustee"), FIRST SECURITY
TRUST COMPANY OF NEVADA, a Nevada banking corporation (the "Agent"), the Persons
named on Schedule I hereto, as Certificate Purchasers (the "Certificate
Purchasers") and the Persons named on Schedule II hereto, as Lenders (the
"Lenders").
RECITALS:
A. Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings set forth in the Participation Agreement (as
hereinafter defined and as amended hereby).
B. Thermogas, The Williams Companies, Inc., a Delaware corporation,
the Certificate Trustee, the Agent, Banc of America Leasing & Capital, LLC, as
the original Certificate Purchaser and the original Lender, have heretofore
entered into that certain Participation Agreement dated as of December 15, 1999,
as amended by that certain Omnibus Amendment Agreement dated as of February 4,
2000 ("Amendment No. 1") (as so amended by Amendment No. 1, the "Participation
Agreement").
C. Thermogas and the Certificate Trustee have heretofore entered into
that certain Lease Intended as Security dated as of December 15, 1999 (the
"Lease").
D. The Certificate Trustee, the Agent and Banc of America Leasing &
Capital, LLC, as the original Lender, have heretofore entered into that certain
Loan Agreement dated as of December 15, 1999, as amended by Amendment No. 1 (as
so amended by Amendment No. 1, the "Loan Agreement").
E. Pursuant to that certain Assumption Agreement dated as of December
15, 1999 (the "Assumption Agreement"), the Lessee has assumed all of the
obligations of Thermogas under the Operative Documents.
F. The Lessee, the General Partner, the Certificate Trustee, the
Agent, the Certificate Purchasers and the Lenders now desire to amend the
Participation Agreement, the Lease and the Loan Agreement (collectively, the
"Agreements") in the respects, but only in the respects, hereinafter set forth.
NOW, THEREFORE, the Lessee, the General Partner, the Certificate
Trustee, the Agent, the Certificate Purchasers and the Lenders, in consideration
of good and valuable consideration the receipt and sufficiency of which is
hereby acknowledged, do hereby agree as follows:
SECTION 1. AMENDMENT OF AGREEMENTS.
Section 1.1. Amendments to Participation Agreement. (a) Section 4.1 of the
Participation Agreement shall be and is hereby amended as follows:
(i) Section 4.1(a) shall be and is hereby amended and restated to read as
follows:
"(a) Corporate or Partnership Existence and Power. The General Partner, the
MLP, Lessee and each of the Restricted Subsidiaries:
(i) is a corporation or partnership duly organized, validly existing and in
good standing under the laws of the jurisdiction of its formation;
(ii) has the power and authority and all
governmental licenses, authorizations, consents and
approvals to own its assets, carry on its business as
now being or as proposed to be conducted and to
execute, deliver, and perform its obligations under
the Operative Documents;
(iii) is duly qualified as a foreign
corporation or partnership and is licensed and in
good standing under the laws of each jurisdiction
where its ownership, lease or operation of property
or the conduct of its business requires such
qualification or license or where the failure so to
qualify could reasonably be expect to have a Material
Adverse Effect; and
(iv) is in compliance with all material
Requirements of Law, except where the failure to so
comply could not reasonably be expected to have a
Material Adverse Effect."
(ii) Sections 4.1(b), (c), (d), (i) and (n) shall be and are
hereby amended by deleting all references therein to the term
"Subsidiary" and substituting in place thereof the term "Restricted
Subsidiary".
(iii) Section 4.1(g)(iv) shall be and is hereby amended and restated in its
entirety to read as follows:
"(iv) No pension Plan has any Unfunded Pension
Liability that could reasonably be expected to have a Material
Adverse Effect."
(iv) Section 4.1(k) shall be and is hereby amended and restated in its
entirety to read as follows:
"(k) Financial Condition. (i) The audited
consolidated financial statements of the General Partner,
Lessee, the MLP and their respective Subsidiaries dated July
31, 1999 and the unaudited consolidated financial statements
of the General Partner, Lessee, the MLP and their respective
Subsidiaries dated January 31, 2000, in each case together
with the related consolidated statements of income or
operations, shareholders' equity and cash flows for the fiscal
periods ended on those respective dates:
(A) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby,
except as otherwise expressly noted therein, subject to
ordinary, good faith year end audit adjustments;
(B) fairly present the financial condition of Lessee
and its Subsidiaries as of the date thereof and results of
operations for the period covered thereby; and
(C) show all material indebtedness and other
liabilities, direct or contingent, of Lessee and its
consolidated Subsidiaries as of the date thereof, including
liabilities for taxes, material commitments and Contingent
Obligations (except that since such date Lessee (x) issued
$184,000,000 aggregate principal amount of the 2000 Notes
and (y) repaid in full and irrevocably terminated the
commitments under its $183,000,000 credit facility with
BofA).
(ii) Since January 31, 2000, there has been
no Material Adverse Effect.
(iii) The General Partner, the MLP, Lessee
and each of the other Subsidiaries of Lessee are
each Solvent, both before and after giving effect
to the consummation of each of the transactions
contemplated by the Operative Documents."
(v) Section 4.1(o) shall be and is hereby amended and restated in its
entirety to read as follows:
"(o) Copyrights, Patents, Trademarks and
Licenses, Etc. Lessee and the Restricted
Subsidiaries own or are licensed or otherwise have
the right to use all of the patents, trademarks,
service marks, trade names, copyrights, contractual
franchises, authorizations and other rights that
are reasonably necessary for the operation of their
respective businesses, without conflict with the
rights of any other Person, except for those
patents, trademarks, service marks, trade names,
copyrights, contractual franchises, authorizations
and other rights the failure of which to obtain
could not reasonably be expected to have a Material
Adverse Effect. To the best knowledge of Lessee, no
slogan or other advertising device, product,
process, method, substance, part or other material
now employed, or now contemplated to be employed,
by Lessee or any Restricted Subsidiary infringes
upon any rights held by any other Person. No claim
or litigation regarding any of the foregoing is
pending or, to the best knowledge of Lessee,
threatened, and no patent, invention, device,
application, principle or any statute, law, rule,
regulation, standard or code is pending or, to the
knowledge of Lessee, proposed, which, in either
case, could reasonably be expected to have a
Material Adverse Effect."
(vi) Section 4.1(p) shall be and is hereby amended and restated in its
entirety to read as follows:
"(p) Subsidiaries and Affiliates. Lessee (i)
has no Subsidiaries or other Affiliates except (A)
those specifically disclosed in Schedule IV of
Ominibus Amendment Agreement No. 2 as of the
Effective Date (B) one or more SPEs established in
connection with Accounts Receivable Securitizations
permitted by Section 5.21, (C) Restricted and
Unrestricted Subsidiaries established in compliance
with Section 5.37 and (D) Joint Ventures
established in compliance with Section 5.26
subsequent to the Effective Date, and (ii) has no
equity investments in any corporation or entity
other than (A) Subsidiaries and Affiliates
disclosed in subsection (i) above and (B) other
Permitted Lessee Investments."
(vii) Section 4.1(q) shall be and is hereby amended and restated in its
entirety to read as follows:
"(q) Insurance. The properties of Lessee and
the Restricted Subsidiaries are insured with
financially sound and reputable insurance companies
not Affiliates of Lessee, in such amounts, with
such deductibles and covering such risks as are
customarily carried by companies engaged in similar
businesses and owning similar properties in
localities where Lessee or each such Subsidiary
operates and consistent with the practice of the
Lessee and the Restricted Subsidiaries as of the
Effective Date."
(viii) Section 4.1(t) shall be and is hereby amended and restated in its
entirety to read as follows:
"(t) Fixed Price Supply Contracts. None of
Lessee and its Subsidiaries (other than
Non-Recourse Subsidiaries) is a party to any
contract for the supply of propane or other product
except where (a) the purchase price is set with
reference to a spot index or indices substantially
contemporaneously with the delivery of such product
or (b) delivery of such propane or other product is
to be made no more than two years after the
purchase price is agreed to."
(ix) Section 4.1(w) shall be and is hereby amended and restated in its
entirety to read as follows:
"(w) Year 2000. Lessee and its Subsidiaries
have reviewed the areas within their business and
operations which could have been or could continue
to be adversely affected by the "Year 2000 Problem"
(that is, the risk that computer applications used
by Lessee and its Subsidiaries may be unable to
recognize and perform properly date-sensitive
functions involving certain dates prior to and any
date on or after December 31, 1999). Accordingly,
Lessee and its Subsidiaries have developed a
program to address such related problems, and have
made related appropriate inquiry of material
suppliers and vendors. To date, no problems
connected with the Year 2000 Problem have occurred
which have had a Material Adverse Effect on Lessee
or its Subsidiaries. Although some problems related
to the Year 2000 Problem may remain as yet
undetected, the Borrower believes that, based on
such review and program, the "Year 2000 Problem"
will not have a Material Adverse Effect."
(b) Article V of the Participation Agreement shall be and is hereby
amended and restated in its entirety to read as follows:
"ARTICLE V
COVENANTS OF LESSEE
Section 5.1. Financial Statements. Lessee shall deliver to Agent, in
form and detail satisfactory to Agent and the Required Participants and
consistent with the form and detail of financial statements and projections
provided to Agent by Lessee and its Affiliates prior to the Delivery Date, with
sufficient copies for each Participant:
(a) as soon as available, but not later than 100 days after
the end of each fiscal year (commencing with the fiscal year ended July
31, 2000), a copy of the audited consolidated balance sheet of Lessee
and its Subsidiaries as at the end of such year and the related
consolidated statements of income or operations, partners' or
shareholders' equity and cash flows for such year, setting forth in
each case in comparative form the figures for the previous fiscal year,
and accompanied by the opinion of a nationally-recognized independent
public accounting firm ("Independent Auditor") which report shall state
that such consolidated financial statements present fairly the
financial position for the periods indicated in conformity with GAAP
applied on a basis consistent with prior years. Such opinion shall not
be qualified or limited in any manner, including on account of any
limitation on it because of a restricted or limited examination by the
Independent Auditor of any material portion of Lessee's or any
Subsidiary's records;
(b) as soon as available, but not later than 45 days after
the end of each of the first three fiscal quarters of each fiscal year
(commencing with the fiscal quarter ended April 30, 2000), a copy of
the unaudited consolidated balance sheet of Lessee and its Subsidiaries
as of the end of such quarter and the related consolidated statements
of income, partners' or shareholders' equity and cash flows for the
period commencing on the first day and ending on the last day of such
quarter, and certified by a Responsible Officer as fairly presenting,
in accordance with GAAP (subject to ordinary, good faith year-end audit
adjustments), the financial position and the results of operations of
Lessee and the Subsidiaries;
(c) as soon as available, but not later than 100 days after
the end of each fiscal year (commencing with the first fiscal year
during all or any part of which Lessee had one or more Significant
Subsidiaries), a copy of an unaudited consolidating balance sheet of
Lessee and its Subsidiaries as at the end of such year and the related
consolidating statement of income, partners' or shareholders' equity
and cash flows for such year, certified by a Responsible Officer as
having been developed and used in connection with the preparation of
the financial statements referred to in subsection 5.1(a);
(d) as soon as available, but not later than 45 days after
the end of each of the first three fiscal quarters of each fiscal year
(commencing with the first fiscal quarter during all or any part of
which Lessee had one or more Significant Subsidiaries), a copy of the
unaudited consolidating balance sheets of Lessee and its Subsidiaries,
and the related consolidating statements of income, partners' or
shareholders' equity and cash flows for such quarter, all certified by
a Responsible Officer as having been developed and used in connection
with the preparation of the financial statements referred to in
subsection 5.1(b);
(e) as soon as available, but not later than 60 days after
the end of each fiscal year (commencing with the fiscal year ended July
31, 2000), projected consolidated balance sheets of Lessee and its
Subsidiaries as at the end of each of the current and following two
fiscal years and related projected consolidated statements of income,
partners' or shareholders' equity and cash flows for each such fiscal
year, including therein a budget for the current fiscal year, certified
by a Responsible Officer as having been developed and prepared by
Lessee in good faith and based upon Lessee's best estimates and best
available information; and
(f) as soon as available, but not later than 100 days after
the end of each fiscal year of the General Partner (commencing with the
fiscal year ended July 31, 2000), a copy of the unaudited (or audited,
if available) consolidated balance sheets of the General Partner as of
the end of such fiscal year and the related consolidated statements of
income, shareholders' equity and cash flows for such fiscal year,
certified by a Responsible Officer as fairly presenting, in accordance
with GAAP, the financial position and the results of operations of the
General Partner and its Subsidiaries (or, if available, accompanied by
an opinion of an Independent Auditor as described in subsection
5.1(a)).
Section 5.2. Certificates; Other Information. Lessee shall furnish to
Agent, with sufficient copies for each Participant:
(a) concurrently with the delivery of the financial
statements referred to in subsection 5.1(a), a certificate of the
Independent Auditor stating that in making the examination necessary
therefor no knowledge was obtained of any Lease Default or Lease Event
of Default, except as specified in such certificate;
(b) concurrently with the delivery of the financial
statements referred to in subsections 5.1(a) and (b), a Compliance
Certificate executed by a Responsible Officer with respect to the
periods covered by such financial statements together with supporting
calculations and such other supporting detail as Agent and the Required
Participants shall require;
(c) promptly, copies of all financial statements and reports
that Lessee, the General Partner, the MLP or any Subsidiary sends to
its partners or shareholders, and copies of all financial statements
and regular, periodic or special reports (including Forms 10-K, 10-Q
and 8-K) that Lessee or any Affiliate of Lessee, the General Partner,
the MLP or any Subsidiary may make to, or file with, the SEC; and
(d) promptly, such additional information regarding the
business, financial or corporate affairs of Lessee, the General
Partner, the MLP or any Subsidiary as Agent, at the request of any
Participant, may from time to time request.
Section 5.3. Notices. Lessee shall promptly notify Agent:
(a) of the occurrence of any Lease Default or Lease Event of Default;
(b) of any matter that has resulted or may reasonably be
expected to result in a Material Adverse Effect, including (i) breach
or non-performance of, or any default under, a Contractual Obligation
of Lessee, the General Partner, the MLP or any Subsidiary; (ii) any
dispute, litigation, investigation, proceeding or suspension between
Lessee, the General Partner, the MLP or any Subsidiary and any
Governmental Authority; or (iii) the commencement of, or any material
development in, any litigation or proceeding affecting Lessee, the
General Partner, the MLP or any Subsidiary, including pursuant to any
applicable Environmental Laws, in each case to the extent that any of
the foregoing has resulted or may reasonably be expected to result in a
Material Adverse Effect;
(c) of any of the following events affecting Lessee, the
General Partner, the MLP or any Subsidiary, together with a copy of any
notice with respect to such event that may be required to be filed with
a Governmental Authority and any notice delivered by a Governmental
Authority to such Person with respect to such event:
(i) an ERISA Event;
(ii) if any of the representations and warranties in Section 4.1(g) ceases
to be true and correct;
(iii) the adoption of any new Pension Plan or other Plan subject to Section
412 of the Code;
(iv) the adoption of any amendment to a Pension Plan
or other Plan subject to Section 412 of the Code, if such
amendment results in a material increase in contributions or
Unfunded Pension Liability; or
(v) the commencement of contributions to any Pension Plan or other Plan
subject to Section 412 of the Code; and
(d) of any material change in accounting policies or
financial reporting practices by Lessee or any of its consolidated
Subsidiaries.
Each notice under this Section shall be accompanied by a written
statement by a Responsible Officer setting forth details of the occurrence
referred to therein, and stating what action Lessee or any affected Affiliate
proposes to take with respect thereto and at what time. Each notice under
subsection 5.3(a) shall describe with particularity any and all clauses or
provisions of this Agreement or other Operative Document that have been breached
or violated.
Section 5.4. Preservation of Corporate or Partnership Existence, Etc. The
General Partner and Lessee shall, and Lessee shall cause each Restricted
Subsidiary to:
(a) preserve and maintain in full force and effect its
partnership or corporate existence and good standing under the laws of
its state or jurisdiction of organization or incorporation except in
connection with transactions permitted by Section 5.19;
(b) preserve and maintain in full force and effect all
material governmental rights, privileges, qualifications, permits,
licenses and franchises necessary or desirable in the normal conduct of
its business except in connection with transactions permitted by
Section 5.19 and sales of assets permitted by Section 5.18, except
where the failure to so preserve or maintain such governmental rights,
privileges, qualifications, permits, licenses and franchises could not
reasonably be expected to have a Material Adverse Effect;
(c) preserve its business organization and goodwill, except
where the failure to so preserve its business organization or goodwill
could not reasonably be expected to have a Material Adverse Effect; and
(d) preserve or renew all of its registered patents,
trademarks, trade names and service marks, the non-preservation of
which could reasonably be expected to have a Material Adverse Effect.
Section 5.5. Maintenance of Property. Lessee shall maintain, and shall
cause each Restricted Subsidiary to maintain, and preserve all its property
which is used or useful in its business in good working order and condition,
ordinary wear and tear excepted. Lessee and each Restricted Subsidiary shall use
the standard of care typical in the industry in the operation and maintenance of
its facilities. Lessee shall maintain the Units in accordance with the Lease.
Section 5.6. Insurance. Lessee shall maintain, and shall cause each
Restricted Subsidiary to maintain, with financially sound and reputable
independent insurers, insurance with respect to its properties and business
against loss or damage of the kinds customarily insured against by Persons
engaged in the same or similar business, of such types and in such amounts as
are customarily carried under similar circumstances by such other Persons.
Lessee shall insure the Units in accordance with the Lease.
Section 5.7. Payment of Obligations. Lessee and the General Partner
shall, and shall cause each Restricted Subsidiary to, pay and discharge as the
same shall become due and payable (except to the extent the failure to so pay
and discharge could not reasonably be expected to have a Material Adverse
Effect), all their respective obligations and liabilities, including:
(a) all tax liabilities, assessments and governmental charges
or levies upon it or its properties or assets, unless the same are
being contested in good faith by appropriate proceedings and adequate
reserves in accordance with GAAP are being maintained by Lessee, the
General Partner or such Subsidiary;
(b) all lawful claims which, if unpaid, would by law become a
Lien upon its property, unless such claims are being contested in good
faith by appropriate proceedings and adequate reserves in accordance
with GAAP are being maintained by Lessee, the General Partner or such
Subsidiary; and
(c) all Indebtedness, as and when due and payable, but
subject to any subordination provisions contained in any instrument or
agreement evidencing such Indebtedness.
Section 5.8. Compliance with Laws. Lessee shall comply, and shall cause
each Restricted Subsidiary to comply with all Requirements of Law of any
Governmental Authority having jurisdiction over it or its business (including
the Federal Fair Labor Standards Act), except such as may be contested in good
faith or as to which a bona fide dispute may exist or the failure of which to
comply with could not reasonably be expected to have a Material Adverse Effect..
Section 5.9. Inspection of Property and Books and Records. Lessee shall
maintain and shall cause each Subsidiary to maintain proper books of record and
account, in which full, true and correct entries in conformity with GAAP
consistently applied shall be made of all financial transactions and matters
involving the assets and business of Lessee and such Subsidiary. Lessee shall
permit, and shall cause each Subsidiary to permit, representatives and
independent contractors of Agent or any Participant to visit and inspect any of
their respective properties, to examine their respective corporate, financial
and operating records, and make copies thereof or abstracts therefrom, and to
discuss their respective affairs, finances and accounts with their respective
directors, officers, and independent public accountants, all at the expense of
Lessee and at such reasonable times during normal business hours and as often as
may be reasonably desired, upon reasonable advance notice to Lessee; provided,
however, when a Lease Event of Default exists Agent or any Participant may do
any of the foregoing at the expense of Lessee at any time during normal business
hours and without advance notice.
Section 5.10. Environmental Laws. Lessee shall, and shall cause each
Restricted Subsidiary to, conduct its operations and keep and maintain its
property in material compliance with all Environmental Laws, except where
failure to comply with such Environmental Laws could not reasonably be expected
to have a Material Adverse Effect.
Section 5.11. Use of Proceeds. Lessee shall use the proceeds of the sale
of the Units, the Certificates and the Notes for working capital purposes and
other general partnership purposes, in each case not in contravention of any
Requirement of Law or of any Operative Document.
Section 5.12. Financial Covenants.
(a) Leverage Ratio. Lessee shall maintain as of the last day of each
fiscal quarter a Leverage Ratio equal to or less than (i) 5.10 to 1.00 as of the
last day of each fiscal quarter ending on or prior to July 31, 2000, (ii) 5.25
to 1.00 as of the last day of each fiscal quarter ending after July 31, 2000 and
on or prior to January 31, 2001, and (iii) 4.75 to 1.00 as of the last day of
each fiscal quarter ending after January 31, 2001. For purposes of this Section
5.12(a), (x) Funded Debt and Synthetic Lease Obligations shall be calculated as
of the last day of such fiscal quarter and (y) Consolidated Cash Flow shall be
calculated for the most recently ended four consecutive fiscal quarters,
provided, however, that prior to or concurrently with each delivery of a
Compliance Certificate pursuant to Section 5.02(b), Lessee may elect to
calculate Consolidated Cash Flow for the most recently ended eight consecutive
fiscal quarters (in which case Consolidated Cash Flow shall be divided by two).
(b) Interest Coverage Ratio. Lessee shall maintain, as of the last day
of each fiscal quarter of Lessee, an Interest Coverage Ratio for the fiscal
period consisting of such fiscal quarter and the three immediately preceding
fiscal quarters of at least (i) 2.25 to 1.00 for each such period of four fiscal
quarters ending on or prior to January 31, 2001 and (ii) 2.50 to 1.00 each such
period of four fiscal quarters ending after January 31, 2001.
Section 5.13. Trading and Supply Policies. Lessee and its Affiliates
shall comply with Lessee's trading position policy and supply inventory position
policy as in effect as of the Effective Date; provided, however, that Lessee and
its Affiliates may, during any period of four consecutive fiscal quarters, (a)
increase the loss limits specified in either the trading position or supply
inventory position policy by up to 100% of the amount of such limit as in effect
as of the Effective Date and (b) increase the volume limits specified in either
of such policies on the number of barrels of a single product or of all products
in the aggregate by up to 100% of each such number as in effect as of the
Effective Date.
Section 5.14. Other General Partner Obligations. (a) The General Partner
shall cause Lessee to pay and perform each of its Obligations when due. The
General Partner acknowledges and agrees that it is executing this Agreement as a
principal as well as the general partner on behalf of Lessee, and that its
obligations hereunder as general partner are full recourse obligations to the
same extent as those of Lessee.
(b) The General Partner represents, warrants and covenants that it is
Solvent, both before and after giving effect to the consummation of the
transactions contemplated by the Operative Documents, and that it will remain
Solvent until all Obligations hereunder and under the other Operative Documents
shall have been repaid in full.
(c) The General Partner, for so long as it is the general partner of
Lessee, (i) agrees that its sole business will be to act as the general partner
of Lessee, the MLP and any further limited partnership of which Lessee or the
MLP is, directly or indirectly, a limited partner and to undertake activities
that are ancillary or related thereto (including being a limited partner in
Lessee), (ii) shall not enter into or conduct any business or incur any debts or
liabilities except in connection with or incidental to (A) its performance of
the activities required or authorized by the partnership agreement of the MLP or
the Partnership Agreement or described in or contemplated by the MLP
Registration Statement, and (B) the acquisition, ownership or disposition of
partnership interests in Lessee or partnership interests in the MLP or any
further limited partnership of which Lessee or the MLP is, directly or
indirectly, a limited partner, except that, notwithstanding the foregoing,
employees of the General Partner may perform services for Ferrell Companies,
Inc. and its Affiliates.
(d) The General Partner agrees that, until all Obligations hereunder
and under the other Operative Documents shall have been repaid in full and all
commitments shall have terminated, it will not exercise any rights it may have
(at law, in equity, by contract or otherwise) to terminate, limit or otherwise
restrict (whether through repurchase or otherwise and whether or not the General
Partner shall remain a general partner in Lessee) the ability of Lessee to use
the name "Ferrellgas".
(e) The General Partner shall not take any action or refuse to take any
reasonable action the effect of which, if taken or not taken, as the case may
be, would be to cause Lessee to be treated as an association taxable as a
corporation or otherwise to be taxed as an entity other than a partnership for
federal income tax purposes.
Section 5.15. Monetary Judgments. If one or more judgments, orders,
decrees or arbitration awards is entered against Lessee or any Restricted
Subsidiary involving in the aggregate a material liability (to the extent not
covered by independent third-party insurance as to which the insurer does not
dispute coverage other than through a standard reservation of rights letter) as
to any single or related series of transactions, incidents or conditions, then
Lessee shall maintain adequate reserves for such amount in accordance with GAAP.
Such amount so reserved shall be treated as establishment of a reserve for
purposes of calculating Available Cash hereunder.
Section 5.16. Designation With Respect to Subsidiaries. (a) Lessee may
designate any Restricted Subsidiary or newly acquired or formed Subsidiary as an
Unrestricted Subsidiary or any Unrestricted Subsidiary or newly acquired or
formed Subsidiary as a Restricted Subsidiary, in each case subject to
satisfaction of each of the following conditions:
(i) immediately before and after giving effect to such
designation, no Default or Event of Default shall exist and be continuing;
(ii) after giving effect to such designation, Lessee would be
permitted to incur at least $1 of additional Indebtedness in accordance with the
provisions of Section 5.21;
(iii) in the case of a designation of a Restricted Subsidiary,
such Restricted Subsidiary shall have executed and delivered to Agent a Guaranty
and Lessee shall otherwise be in compliance with Section 5.37;
(iv) in the case of a designation as an Unrestricted Subsidiary
(including the designation of a Restricted Subsidiary as an Unrestricted
Subsidiary), (x) if such designation were deemed to constitute a sale by Lessee
or any Restricted Subsidiary of all the assets of the Subsidiary so designated,
such sale would be in compliance with of Section 5.18 and (y) if such
designation (and all other prior designations of Restricted Subsidiaries or
newly acquired or formed Subsidiaries as Unrestricted Subsidiaries) were deemed
to constitute an Investment by Lessee or any Restricted Subsidiary in respect of
all the assets of the Subsidiary so designated, such Investment would be a
Permitted Lessee Investment, in each case with the net proceeds of such sale or
the amount of such Investment being deemed to equal the net book value of such
assets in the case of a Restricted Subsidiary or the cost of acquisition or
formation in the case of a newly acquired or formed Subsidiary; and
(v) in the case of a designation of a Restricted Subsidiary as
an Unrestricted Subsidiary, such Restricted Subsidiary shall not have been an
Unrestricted Subsidiary prior to being designated a Restricted Subsidiary.
(b) Lessee shall deliver to Agent and each Participant, within 20
Business Days after any such designation, a certificate of a Responsible Officer
stating the effective date of such designation and stating that the foregoing
conditions have been satisfied. Such certificate shall be accompanied by a
schedule setting forth in reasonable detail the calculations demonstrating
compliance with such conditions, where appropriate.
(c) In the case of the designation of any Unrestricted Subsidiary as a
Restricted Subsidiary, such new Restricted Subsidiary shall be deemed to have
made or acquired all Investments owned by it and incurred all Indebtedness and
other obligations owing by it and all Liens to which it or any of its properties
are subject, on the date of such designation.
Section 5.17. Limitation on Liens. Lessee shall not, and shall not
suffer or permit any Restricted Subsidiary to, directly or indirectly, make,
create, incur, assume or suffer to exist any Lien upon or with respect to any
part of its property or sell any of its accounts receivable, whether now owned
or hereafter acquired, other than (x) in the case of the Units or the other
Lessee Collateral, Permitted Liens, and (y) in the case of any other property of
Lessee or such Subsidiary, the following ("Permitted Encumbrances"):
(a) Liens existing on the Effective Date set forth in Schedule III to
Omnibus Amendment Agreement No. 2;
(b) Liens in favor of Lessee or Liens to secure Indebtedness
of a Restricted Subsidiary to Lessee or a Wholly-Owned Subsidiary;
(c) Liens on property of a Person existing at the time such
Person is merged into or consolidated with Lessee or any Restricted
Subsidiary, provided that such Liens were in existence prior to the
contemplation of such merger or consolidation and do not extend to any
assets other than those of the Person merged into or consolidated with
Lessee;
(d) Liens on property existing at the time acquired by Lessee
or any Restricted Subsidiary, provided that such Liens were in
existence prior to the contemplation of such acquisition and do not
extend to any assets other than those of the Person acquired;
(e) Liens on any property or asset acquired by Lessee or any
Restricted Subsidiary in favor of the seller of such property or asset
and construction mortgages on property, in each case, created within
six months after the date of acquisition, construction or improvement
of such property or asset by Lessee or such Subsidiary to secure the
purchase price or other obligation of Lessee or such Subsidiary to the
seller of such property or asset or the construction or improvement
cost of such property in an amount up to 80% of the total cost of the
acquisition, construction or improvement of such property or asset;
provided that in each case such Lien does not extend to any other
property or asset of Lessee and its Subsidiaries;
(f) Liens incurred or pledges and deposits made in connection
with worker's compensation, unemployment insurance and other social
security benefits and Liens to secure the performance of statutory
obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature, in each case, incurred in the ordinary
course of business;
(g) Liens for taxes, assessments or governmental charges or
claims that are not yet delinquent or that are being contested in good
faith by appropriate proceedings promptly instituted and diligently
concluded, provided that any reserve or other appropriate provision as
shall be required in conformity with GAAP shall have been made
therefor;
(h) Liens imposed by law, such as mechanics', carriers',
warehousemen's, materialmen's, and vendors' Liens, incurred in good
faith in the ordinary course of business with respect to amounts not
yet delinquent or being contested in good faith by appropriate
proceedings if a reserve or other appropriate provisions, if any, as
shall be required by GAAP shall have been made therefor;
(i) zoning restrictions, easements, licenses, covenants,
reservations, restrictions on the use of real property or minor
irregularities of title incident thereto that do not, in the aggregate,
materially detract from the value of the property or the assets of
Lessee or any of its Subsidiaries or impair the use of such property in
the operation of the business of Lessee or any of its Subsidiaries;
(j) Liens of landlords or mortgages of landlords, arising
solely by operation of law, on fixtures and movable property located on
premises leased by Lessee or any of its Subsidiaries in the ordinary
course of business;
(k) Liens incurred and financing statements filed or
recorded, in each case with respect to personal property leased by
Lessee and its Subsidiaries in the ordinary course of business to the
owners of such personal property which are either (i) operating leases
(including, without limitation, Synthetic Leases) or (ii) capital
leases to the extent (but only to the extent) permitted by Section
5.21; provided, that in each case such Lien does not extend to any
other property or asset of Lessee and its Subsidiaries;
(l) judgment Liens to the extent that such judgments do not
cause or constitute a Lease Default or Lease Event of Default;
(m) Liens incurred in the ordinary course of business of
Lessee or any Restricted Subsidiary with respect to obligations that do
not exceed $5,000,000 in the aggregate at any one time outstanding and
that (i) are not incurred in connection with the borrowing of money or
the obtaining of advances or credit (other than trade credit in the
ordinary course of business) and (ii) do not in the aggregate
materially detract from the value of the property or materially impair
the use thereof in the operation of business by Lessee or such
Subsidiary;
(n) Liens securing Indebtedness incurred to refinance
Indebtedness that has been secured by a Lien otherwise permitted under
this Agreement, provided that (i) any such Lien shall not extend to or
cover any assets or property not securing the Indebtedness so
refinanced and (ii) the refinancing Indebtedness secured by such Lien
shall have been permitted to be incurred under Section 5.21 hereof and
shall not have a principal amount in excess of the Indebtedness so
refinanced;
(o) any extension or renewal, or successive extensions or
renewals, in whole or in part, of Liens permitted pursuant to the
foregoing clauses (a) through (n); provided that no such extension or
renewal Lien shall (i) secure more than the amount of Indebtedness or
other obligations secured by the Lien being so extended or renewed or
(ii) extend to any property or assets not subject to the Lien being so
extended or renewed;
(p) Liens in favor of the Administrative Agent under the
Credit Agreement, any Issuing Bank and the Credit Agreement Banks
relating to the Cash Collateralization of Lessee's obligations under
the Credit Agreement or Liens created by the Operative Documents; and
(q) Liens securing Indebtedness of an SPE in connection with
an Accounts Receivable Securitization permitted by Section 5.21
(including the filing of any related financing statements naming Lessee
as the debtor thereunder in connection with the sale of accounts
receivable by Lessee to such SPE in connection with any such permitted
Accounts Receivable Securitization); provided that the aggregate amount
of accounts receivable subject to all such Liens shall at no time
exceed 133% of the amount of Accounts Receivable Securitizations
permitted to be outstanding under such Section 5.21.
Section 5.18. Asset Sales. Lessee shall not, and shall not permit any of
the Restricted Subsidiaries to, (i) sell, lease, convey or otherwise dispose of
any assets (including by way of a sale-and-leaseback) other than sales of
inventory in the ordinary course of business consistent with past practice
(provided that the sale, lease, conveyance or other disposition of all or
substantially all of the assets of Lessee shall be governed by the provisions of
Section 5.19 hereof and not by the provisions of this Section 5.18), or (ii)
issue or sell Equity Interests of any of its Subsidiaries, in the case of either
clause (i) or (ii) above, whether in a single transaction or a series of related
transactions, (A) that have a fair market value in excess of the lesser of
$10,000,000 or the amount (which amount is equal to $5,000,000 as of the
Effective Date) specified in Section 4.10 of the 1996 Indenture as amended from
time to time (such lesser amount, the "Applicable Amount"), or (B) for net
proceeds in excess of the "Applicable Amount" (each of the foregoing, an "Asset
Sale"), unless (X) Lessee (or the Restricted Subsidiary, as the case may be)
receives consideration at the time of such Asset Sale at least equal to the fair
market value (evidenced by a resolution of the board of directors of the General
Partner (and, if applicable, the audit committee of such board of directors) set
forth in a certificate signed by a Responsible Officer and delivered to Agent)
of the assets sold or otherwise disposed of and (Y) at least 80% of the
consideration therefor received by Lessee or such Subsidiary is in the form of
cash; provided, however, that the amount of (1) any liabilities (as shown on
Lessee's or such Subsidiary's most recent balance sheet or in the notes
thereto), of Lessee or any Subsidiary (other than liabilities that are by their
terms subordinated in right of payment to the Obligations hereunder and under
the other Operative Documents) that are assumed by the transferee of any such
assets and (2) any notes or other obligations received by Lessee or any such
Subsidiary from such transferee that are immediately converted by Lessee or such
Subsidiary into cash (to the extent of the cash received), shall be deemed to be
cash for purposes of this provision; and provided, further, that the 80%
limitation referred to in this clause (Y) shall not apply to any Asset Sale in
which the cash portion of the consideration received therefrom, determined in
accordance with the foregoing proviso, is equal to or greater than what the
after-tax proceeds would have been had such Asset Sale complied with the
aforementioned 80% limitation. Notwithstanding the foregoing, Asset Sales shall
not be deemed to include (w) sales or transfers of accounts receivable by Lessee
to an SPE and by an SPE to any other Person in connection with any Accounts
Receivable Securitization permitted by Section 5.21 (provided that the aggregate
amount of such accounts receivable that shall have been transferred to and held
by all SPEs at any time shall not exceed 133% of the amount of Accounts
Receivable Securitizations permitted to be outstanding under Section 5.21), (x)
any transfer of assets by Lessee or any of its Subsidiaries to Lessee or a
Restricted Subsidiary, (y) any transfer of assets by Lessee or any of its
Subsidiaries to any Person in exchange for other assets used in a line of
business permitted under Section 5.31 and having a fair market value not less
than that of the assets so transferred and (z) any transfer of assets pursuant
to a Permitted Lessee Investment or any sale-leaseback (including
sale-leasebacks involving Synthetic Leases) permitted by Section 5.33.
Notwithstanding the foregoing, Lessee may not sell, lease, convey or otherwise
dispose of any Unit except as permitted by the Lease.
Section 5.19. Consolidations and Mergers. (a) Lessee shall not
consolidate or merge with or into (whether or not Lessee is the surviving
Person), or sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its properties or assets in one or more related
transactions, to another Person unless (i) Lessee is the surviving Person, or
the Person formed by or surviving any such consolidation or merger (if other
than Lessee) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made is a corporation or partnership organized
or existing under the laws of the United States, any state thereof or the
District of Columbia; and (ii) the Person formed by or surviving any such
consolidation or merger (if other than Lessee) or Person to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made assumes all the Obligations of Lessee under this Agreement and the other
Operative Documents pursuant to an assumption agreement in a form reasonably
satisfactory to Agent; (iii) immediately after such transaction no Lease Default
or Lease Event of Default exists; and (iv) Lessee or any Person formed by or
surviving any such consolidation or merger, or to which such sale, assignment,
transfer, lease, conveyance or other disposition shall have been made (A) shall
have Consolidated Net Worth (immediately after the transaction but prior to any
purchase accounting adjustments resulting from the transaction) equal to or
greater than the Consolidated Net Worth of Lessee immediately preceding the
transaction and (B) shall, at the time of such transaction and after giving
effect thereto, be permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Leverage Ratio test set forth in Section 5.12(a).
(b) Lessee shall deliver to Agent prior to the consummation of the
proposed transaction pursuant to the foregoing paragraph (a) an officers'
certificate to the foregoing effect signed by a Responsible Officer and an
opinion of counsel satisfactory to Agent stating that the proposed transaction
complies with this Agreement. Agent, Certificate Trustee and the Participants
shall be entitled to conclusively rely upon such officer's certificate and
opinion of counsel.
(c) Upon any consolidation or merger, or any sale, assignment,
transfer, lease, conveyance or other disposition of all or substantially all of
the assets of Lessee in accordance with this Section 5.19, the successor Person
formed by such consolidation or into or with which Lessee is merged or to which
such sale, assignment, transfer, lease, conveyance or other disposition is made
shall succeed to, and be substituted for (so that from and after the date of
such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Agreement and the other Operative Documents referring to the
"Lessee" shall refer to or include instead the successor Person and not Lessee),
and may exercise every right and power of Lessee under this Agreement with the
same effect as if such successor Person had been named as Lessee herein;
provided, however, that the predecessor Lessee shall not be relieved from the
obligation to pay Rent or perform the other Obligations except in the case of a
sale of all of such Lessee's assets that meets the requirements of this Section
5.19 hereof.
Section 5.20. Acquisitions. Without limiting the generality of any other
provision of this Agreement, neither Lessee nor any Restricted Subsidiary shall
consummate any Acquisition unless (i) the acquiree is primarily a retail propane
distribution business; (ii) such Acquisition is undertaken in accordance with
all applicable Requirements of Law; (iii) the prior, effective written consent
or approval to such Acquisition of the board of directors or equivalent
governing body of the acquiree is obtained; and (iv) immediately after giving
effect thereto, no Lease Default or Lease Event of Default will occur or be
continuing and each of the representations and warranties of Lessee herein is
true on and as of the date of such Acquisition, both before and after giving
effect thereto. Nothing in Section 5.38 shall prohibit (x) the making by Lessee
of a Permitted Acquisition indirectly through the General Partner, the MLP or
any of its or their Affiliates in a series of substantially contemporaneous
transactions in which Lessee shall ultimately own the assets that are the
subject of such Permitted Acquisition or (y) the assumption of Acquired Debt in
connection therewith to the extent such Acquired Debt is (if not otherwise
permitted to be incurred by Lessee pursuant to this Agreement) upon such
assumption immediately repaid (with the proceeds of Revolving Loans or
otherwise).
Section 5.21. Limitation on Indebtedness. Lessee shall not, and shall
not permit any of the Restricted Subsidiaries to, directly or indirectly,
create, incur, issue, assume, suffer to exist, guarantee or otherwise become
directly or indirectly liable with respect to any Indebtedness (including
Acquired Debt) or any Synthetic Leases and Lessee shall not issue any
Disqualified Interests and shall not permit any of the Restricted Subsidiaries
to issue any shares of preferred stock; provided, however, that Lessee and any
Restricted Subsidiary of Lessee may create, incur, issue, assume, suffer to
exist, guarantee or otherwise become directly or indirectly liable with respect
to any Indebtedness (including Acquired Debt) or any Synthetic Lease to the
extent that the Leverage Ratio is maintained in accordance with Section 5.12(a),
both before and after giving effect to the incurrence of such Indebtedness or
such Synthetic Lease, as the case may be, and, provided, further, that (x) the
aggregate principal amount of (1) all Capitalized Lease Obligations and all
Synthetic Lease Obligations (other than Capitalized Lease Obligations and
Synthetic Lease Obligations in respect of Growth-Related Capital Expenditures)
of Lessee and the Restricted Subsidiaries and (2) all Indebtedness for which
Lessee and any Restricted Subsidiary of Lessee become liable in connection with
Acquisitions of retail propane businesses in favor of the sellers of such
businesses and secured by any Lien on any property of Lessee or any of the
Restricted Subsidiaries, shall not exceed $65,000,000 at any one time
outstanding, and (y) the principal amount of any Indebtedness for which Lessee
or any Restricted Subsidiary of Lessee becomes liable in connection with
Acquisitions of retail propane businesses in favor of the sellers of such
businesses shall not exceed the fair market value of the assets so acquired, and
(z) the aggregate amount of Indebtedness of Lessee and its Subsidiaries through
one or more SPEs in connection with Accounts Receivable Securitizations shall
not exceed $60,000,000 at any one time outstanding.
Section 5.22. Transactions with Affiliates. Lessee shall not, and shall
not permit any of the Restricted Subsidiaries to, sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into any contract, agreement, understanding,
loan, advance or guarantee with, or for the benefit of, any Affiliate, including
any Non-Recourse Subsidiary (each of the foregoing, an "Affiliate Transaction"),
unless (a) such Affiliate Transaction is on terms that are no less favorable to
Lessee or the relevant Restricted Subsidiary than those that would have been
obtained in a comparable transaction by Lessee or such Restricted Subsidiary
with an unrelated Person and (b) with respect to (i) any Affiliate Transaction
with an aggregate value in excess of $500,000, a majority of the directors of
the General Partner having no direct or indirect economic interest in such
Affiliate Transaction determines by resolution that such Affiliate Transaction
complies with clause (a) above and approves such Affiliate Transaction and (ii)
any Affiliate Transaction involving the purchase or other acquisition or sale,
lease, transfer or other disposition of properties or assets other than in the
ordinary course of business, in each case, having a fair market value or for net
proceeds in excess of $15,000,000, Lessee delivers to Agent and the Participants
an opinion as to the fairness to Lessee or such Restricted Subsidiary from a
financial point of view issued by an investment banking firm of national
standing; provided, however, that (i) any employment agreement or stock option
agreement entered into by Lessee or any of the Restricted Subsidiaries in the
ordinary course of business and consistent with the past practice of Lessee (or
the General Partner) or such Restricted Subsidiary, Restricted Payments
permitted by the provisions of Section 5.28, and transactions entered into by
Lessee in the ordinary course of business in connection with reinsuring the
self-insurance programs or other similar forms of retained insurable risks of
the retail propane businesses operated by Lessee, the Restricted Subsidiaries
and its Affiliates, in each case, shall not be deemed Affiliate Transactions,
and (ii) nothing herein shall authorize the payments by Lessee to the General
Partner or any other Affiliate of Lessee for administrative expenses incurred by
such Person other than such out-of-pocket administrative expenses as such Person
shall incur and Lessee shall pay in the ordinary course of business; and
provided, further, that the foregoing provisions of this Section 5.22 shall not
apply to transfers of accounts receivable of Lessee to an SPE in connection with
any Accounts Receivable Securitization permitted by Section 5.21.
Section 5.23. Use of Proceeds. Lessee shall not, and shall not suffer or
permit any Restricted Subsidiary to, use any portion of the proceeds of the sale
of the Units, the Certificates or the Notes, directly or indirectly, (i) to
purchase or carry Margin Stock, (ii) to repay or otherwise refinance
indebtedness of Lessee or others incurred to purchase or carry Margin Stock,
(iii) to extend credit for the purpose of purchasing or carrying any Margin
Stock, or (iv) to acquire any security in any transaction that is subject to
Section 13 or 14 of the Exchange Act.
Section 5.24. Use of Proceeds - Ineligible Securities. Lessee shall not,
directly or indirectly, use any portion of the proceeds of the sale of the
Units, the Certificates or the Notes (i) knowingly to purchase Ineligible
Securities from the Credit Agreement Arranger during any period in which the
Credit Agreement Arranger makes a market in such Ineligible Securities, (ii)
knowingly to purchase during the underwriting or placement period Ineligible
Securities being underwritten or privately placed by the Credit Agreement
Arranger, or (iii) to make payments of principal or interest on Ineligible
Securities underwritten or privately placed by the Credit Agreement Arranger and
issued by or for the benefit of Lessee or any Affiliate of Lessee.
Section 5.25. Contingent Obligations. Lessee shall not, and shall not
suffer or permit any Restricted Subsidiary to, create, incur, assume or suffer
to exist any Contingent Obligations except:
(a) endorsements for collection or deposit in the ordinary course of
business;
(b) subject to compliance with the trading policies in effect
from time to time as submitted to Agent, Hedging Obligations entered
into in the ordinary course of business as bona fide hedging
transactions;
(c) the Guaranties under the Credit Agreement and the Operative Documents;
(d) Guaranty Obligations to the extent not prohibited by Section 5.21; and
(e) indemnities not guaranteeing Indebtedness or Synthetic Lease
Obligations of any Person.
Section 5.26. Joint Ventures. Lessee shall not, and shall not suffer or
permit any Restricted Subsidiary to enter into any Joint Venture unless the same
shall be a Permitted Lessee Investment.
Section 5.27. Lease Obligations. The aggregate obligations of Lessee and
the Restricted Subsidiaries for the payment of rent for any property under lease
or agreement to lease (excluding obligations of Lessee and its Subsidiaries
under or with respect to Synthetic Leases) for any fiscal year shall not exceed
the greater of (a) $40,000,000 or (b) 20% of (i) Consolidated Cash Flow of
Lessee for the most recently ended eight consecutive fiscal quarters divided by
(ii) two; provided, however, that any payment of rent for any property under
lease or agreement to lease for a term of less than one year (after giving
effect to all automatic renewals) shall not be subject to this Section 5.27. For
purposes of this Section 5.27, the calculation of Consolidated Cash Flow shall
give pro forma effect to Acquisitions (including all mergers and
consolidations), Asset Sales and other dispositions and discontinuances of
businesses or assets that have been made by Lessee or any of the Restricted
Subsidiaries during the reference period or subsequent to such reference period
and on or prior to the date of calculation of Consolidated Cash Flow assuming
that all such Acquisitions, Asset Sales and other dispositions and
discontinuances of businesses or assets had occurred on the first day of the
reference period.
Section 5.28. Restricted Payments. Lessee shall not and shall not permit
any of the Restricted Subsidiaries to, directly or indirectly (i) declare or pay
any dividend or make any distribution on account of Lessee's or any Restricted
Subsidiary's Equity Interests (other than (x) dividends or distributions payable
in Equity Interests (other than Disqualified Interests) of Lessee, (y) dividends
or distributions payable to Lessee or a Wholly-Owned Subsidiary that is a
Restricted Subsidiary and a Guarantor or (z) distributions or dividends payable
pro rata to all holders of Capital Interests of any such Subsidiary); (ii)
purchase, redeem, call or otherwise acquire or retire for value any Equity
Interests of Lessee or any Restricted Subsidiary or other Affiliate of Lessee
(other than, subject to compliance with Section 5.37, any such Equity Interests
owned by a Wholly-Owned Subsidiary of Lessee that is a Restricted Subsidiary and
a Guarantor); (iii) make any Investment other than a Permitted Lessee
Investment; or (iv) prepay, purchase, redeem, retire, defease or refinance the
1998 Fixed Rate Senior Notes or the 2000 Notes (all payments and other actions
set forth in clauses (i) through (iv) above being collectively referred to as
"Restricted Payments"), except to the extent that, at the time of such
Restricted Payment:
(a) no Lease Default or Lease Event of Default shall have
occurred and be continuing or would occur as a consequence thereof and
each of the representations and warranties of Lessee set forth herein
is true on and as of the date of such Restricted Payment both before
and after giving effect thereto; and
(b) the Fixed Charge Coverage Ratio for Lessee's most
recently ended four full fiscal quarters for which internal financial
statements are available immediately preceding the date on which such
Restricted Payment is made, calculated on a pro forma basis as if such
Restricted Payment had been made at the beginning of such four-quarter
period, would have been more than (i) 2.15 to 1.00 for each such period
of four fiscal quarters ending on or prior to January 31, 2001 and (ii)
2.25 to 1.00 for each such period of four fiscal quarters ending after
January 31, 2001; and
(c) such Restricted Payment (the amount of any such payment,
if other than cash, to be determined by the Board of Directors, whose
determination shall be conclusive and evidenced by a resolution in an
officer's certificate signed by a Responsible Officer and delivered to
Agent), together with the aggregate of all other Restricted Payments
(other than any Restricted Payments permitted by the provisions of
clause (ii) of the penultimate paragraph of this Section 5.28) made by
Lessee and its Subsidiaries in the fiscal quarter during which such
Restricted Payment is made shall not exceed an amount equal to (x)
Available Cash of Lessee for the immediately preceding fiscal quarter
plus (y) the lesser of (i) the amount of any Available Cash of Lessee
during the first 45 days of such fiscal quarter and (ii) the excess of
the aggregate amount of Credit Agreement Loans that Lessee could have
borrowed over the actual amount of Credit Agreement Loans outstanding,
in each case as of the last day of the immediately preceding fiscal
quarter; and
(d) such Restricted Payment (other than (x) Restricted
Payments described in clause (i) of the first paragraph of this Section
5.28 made during the fiscal quarter ending January 31, 1997 that do not
exceed $26,000,000 in the aggregate or (y) any Restricted Payments
described in clauses (iii) or (iv) of the first paragraph of this
Section 5.28) the amount of which (to be determined in accordance with
clause (c) of this Section 5.28 if made other than with cash) shall not
exceed an amount equal to (1) Consolidated Cash Flow of Lessee and the
Restricted Subsidiaries for the period from and after October 31, 1996
through and including the last day of the fiscal quarter ending
immediately preceding the date of the proposed Restricted Payment (the
"Determination Period"), minus (2) the sum of Consolidated Interest
Expense of Lessee and the Restricted Subsidiaries for the Determination
Period plus all capital expenditures (other than Growth-Related Capital
Expenditures and net of capital asset sales in the ordinary course of
business) made by Lessee and the Restricted Subsidiaries during the
Determination Period plus the aggregate of all other Restricted
Payments (other than (x) Restricted Payments described in clause (i) of
the first paragraph of this Section 5.28 made during the fiscal quarter
ending January 31, 1997 that do not exceed $26,000,000 in the aggregate
or (y) any Restricted Payments described in clauses (iii) or (iv) of
the first paragraph of this Section 5.28) made by Lessee and the
Restricted Subsidiaries during the period from and after October 31,
1996 through and including the date of the proposed Restricted Payment,
plus (3) $30,000,000, plus (4) the excess, if any, of consolidated
working capital of Lessee and the Restricted Subsidiaries at July 31,
1996 over consolidated working capital of Lessee and the Restricted
Subsidiaries at the end of the fiscal year immediately preceding the
date of the proposed Restricted Payment, minus (5) the excess, if any,
of consolidated working capital of Lessee and the Restricted
Subsidiaries at the end of the fiscal year immediately preceding the
date of the proposed Restricted Payment over consolidated working
capital of Lessee and the Restricted Subsidiaries at July 31, 1996. For
purposes of this subsection 5.28(d), the calculation of Consolidated
Cash Flow shall give pro forma effect to Acquisitions (including all
mergers and consolidations), Asset Sales and other dispositions and
discontinuances of business or assets that have been made by such
Person or any of the Restricted Subsidiaries during the reference
period or subsequent to such reference period and on or prior to the
date of calculation of Consolidated Cash Flow assuming that all such
Acquisitions, Asset Sales and other dispositions and discontinuances of
businesses or assets had occurred on the first day of the reference
period.
The foregoing provisions will not prohibit (i) the payment of any
distribution within 60 days after the date on which Lessee becomes committed to
make such distribution, if at said date of commitment such payment would have
complied with the provisions of this Agreement; and (ii) the redemption,
repurchase, retirement or other acquisition of any Equity Interests of Lessee in
exchange for, or out of the proceeds of, the substantially concurrent sale
(other than to a Subsidiary of Lessee) of other Equity Interests of Lessee
(other than any Disqualified Interests).
Not later than the date of making any Restricted Payment, the General
Partner shall deliver to Agent an officer's certificate signed by a Responsible
Officer stating that such Restricted Payment is permitted and setting forth the
basis upon which the calculations required by this Section 5.28 were computed,
which calculations may be based upon Lessee's latest available financial
statements.
Section 5.29. Prepayments of Subordinated Indebtedness. Lessee shall
not, and shall not permit any of the Restricted Subsidiaries to, (a) purchase,
redeem, retire or otherwise acquire for value, or set apart any money for a
sinking, defeasance or other analogous fund for, the purchase, redemption,
retirement or other acquisition of, or make any payment or prepayment of the
principal of or interest on, or any other amount owing in respect of, any
Indebtedness that is subordinated to the Obligations, except for regularly
scheduled payments of interest in respect of such Indebtedness required pursuant
to the instruments evidencing such Indebtedness that are not made in
contravention of the terms and conditions of subordination set forth on part II
of Schedule 5.21 or (b) directly or indirectly, make any payment in respect of,
or set apart any money for a sinking, defeasance or other analogous fund on
account of, Guaranty Obligations subordinated to the Obligations. The foregoing
provisions will not prohibit the defeasance, redemption or repurchase of
subordinated Indebtedness with the proceeds of Permitted Refinancing
Indebtedness.
Section 5.30. Dividend and Other Payment Restrictions Affecting
Subsidiaries. Lessee shall not, and shall not permit any of the Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (a) pay dividends or make any other distributions to
Lessee or any of the Restricted Subsidiaries (1) on its Capital Interests or (2)
with respect to any other interest or participation in, or interest measured by,
its profits, (b) pay any indebtedness owed to Lessee or any of the Restricted
Subsidiaries, (c) make loans or advances to Lessee or any of the Restricted
Subsidiaries or (d) transfer any of its properties or assets to Lessee or any of
the Restricted Subsidiaries, except for such encumbrances or restrictions
existing under or by reason of (i) Existing Indebtedness, (ii) the Operative
Documents, the Credit Agreement, the 1998 Note Purchase Agreement, the 1998
Fixed Rate Senior Notes, the 2000 Note Purchase Agreement and the 2000 Notes,
(iii) applicable law, (iv) any instrument governing Indebtedness or Capital
Interests of a Person acquired by Lessee or any of the Restricted Subsidiaries
as in effect at the time of such Acquisition (except to the extent such
Indebtedness was incurred in connection with or in contemplation of such
Acquisition), which encumbrance or restriction is not applicable to any Person,
or the properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired, provided that the Consolidated
Cash Flow of such Person to the extent that dividends, distributions, loans,
advances or transfers thereof is limited by such encumbrance or restriction on
the date of acquisition is not taken into account in determining whether such
acquisition was permitted by the terms of this Agreement, (v) customary
non-assignment provisions in leases entered into in the ordinary course of
business and consistent with past practices, (vi) purchase money obligations for
property acquired in the ordinary course of business that impose restrictions of
the nature described in clause (d) above on the property so acquired, (vii)
Permitted Refinancing Indebtedness of any Existing Indebtedness, provided that
the restrictions contained in the agreements governing such Permitted
Refinancing Indebtedness are no more restrictive than those contained in the
agreements governing the Indebtedness being refinanced or (viii) other
Indebtedness permitted to be incurred subsequent to the Effective Date pursuant
to the provisions of Section 5.21 hereof, provided that such restrictions are no
more restrictive than those contained in this Agreement.
Section 5.31. Change in Business. Lessee shall not, and shall not suffer
or permit any Restricted Subsidiary to, engage in any material line of business
substantially different from those lines of business carried on by Lessee and
the Restricted Subsidiaries on the date hereof.
Section 5.32. Accounting Changes. Lessee shall not, and shall not suffer
or permit any Restricted Subsidiary to, make any significant change in
accounting treatment or reporting practices, except as required by GAAP, or
change the fiscal year of Lessee or of any Restricted Subsidiary except as
required by the Code.
Section 5.33. Limitation on Sale and Leaseback Transactions. Lessee will
not, and will not permit any of the Restricted Subsidiaries to, enter into any
arrangement with any Person providing for the leasing by Lessee or such
Restricted Subsidiary of any property that has been or is to be sold or
transferred by Lessee or such Restricted Subsidiary to such Person in
contemplation of such leasing; provided, however, that Lessee or such Restricted
Subsidiary may enter into such sale and leaseback transaction if: (i) Lessee
could have (A) incurred Indebtedness in an amount equal to the Attributable Debt
relating to such sale and leaseback transaction pursuant to the Leverage Ratio
test set forth in Section 5.12(a) and (B) secured a Lien on such Indebtedness
pursuant to Section 5.17; (ii) the lease in such sale and leaseback transaction
is for a term not in excess of the lesser of (A) three years and (B) 60% of the
remaining useful life of such property; or (iii) such sale and leaseback
transaction is otherwise permitted by the last sentence of Section 4.17 of the
1996 Indenture as in effect as of the date hereof.
Section 5.34. [Intentionally Omitted].
Section 5.35. Amendments of Organization Documents or Certain Debt
Agreements. Lessee shall not modify, amend, supplement or replace, nor permit
any modification, amendment, supplement or replacement of the Organization
Documents of the General Partner, Lessee or any Subsidiary of Lessee, the MLP
Senior Notes, the 1996 Indenture, the 1998 Fixed Rate Senior Notes, the 1998
Note Purchase Agreement, the 2000 Notes or the 2000 Note Purchase Agreement or
any document executed and delivered in connection with any of the foregoing, in
any respect that would adversely affect the Participants, Lessee's ability to
perform the Obligations, any Guarantor's ability to perform its obligations
under the Guaranty, in each such case without the prior written consent of Agent
and the Required Participants. Furthermore, the Lessee shall not permit any
modification, amendment, supplement or replacement of the Organization Documents
of the MLP that would have a material effect on Lessee without the prior written
consent of Agent and the Required Participants.
Section 5.36. [Intentionally Omitted].
Section 5.37. Operations through Subsidiaries. Lessee shall not conduct
any of its operations through Restricted Subsidiaries unless: (a) such
Restricted Subsidiary executes a Guaranty guaranteeing payment of the
Obligations, accompanied by an opinion of counsel to the Restricted Subsidiary
addressed to Agent and the Participants as to the due authorization, execution,
delivery and enforceability of the Guaranty; (b) such Restricted Subsidiary
agrees not to incur any Indebtedness other than (i) trade debt, (ii) debt owed
to Lessee or any other Restricted Subsidiary and (iii) Acquired Debt otherwise
permitted by this Agreement; (c) the Consolidated Cash Flow of such Restricted
Subsidiary, when added to Consolidated Cash Flow of all other Restricted
Subsidiaries for any fiscal year, shall not exceed 10% of the Consolidated Cash
Flow of Lessee and the Restricted Subsidiaries for such fiscal year; and (d) the
value of the assets of such Restricted Subsidiary, when added to the value of
the assets of all other Restricted Subsidiaries for any fiscal year, shall not
exceed 10% of the consolidated value of the assets of Lessee and the Restricted
Subsidiaries for such fiscal year, as determined in accordance with GAAP;
provided that the requirements of subsections (c) and (d) above shall not apply
as to any Restricted Subsidiary if the aggregate Indebtedness of such Restricted
Subsidiary, when added to the Indebtedness of all other Restricted Subsidiaries
at such time (excluding, in each case, debt of any such Restricted Subsidiary
owed to Lessee or another Restricted Subsidiary), shall not exceed $5 million.
Lessee shall not conduct any of its operations through, and shall not establish,
create or otherwise invest in, any Unrestricted Subsidiary unless the same shall
be a Permitted Lessee Investment.
Section 5.38. Operations of MLP. Except in connection with an indirect
Acquisition permitted by Section 5.20, the General Partner and Lessee shall not
permit the MLP or any of its Affiliates (including any Non-Recourse Subsidiary
or any Unrestricted Subsidiary) to operate or conduct any business substantially
similar to that conducted by Lessee and the Restricted Subsidiaries within a 25
mile radius of any business conducted by Lessee and the Restricted Subsidiaries.
In order to comply with this Section 5.38, Lessee may enter into one or more
transactions by which its assets and properties are "swapped" or "exchanged" for
assets and properties of another Person prior to or concurrently with another
transaction which, but for such swap or exchange would violate this Section;
provided, that (i) if the value of the MLP's assets or units to be so swapped or
exchanged exceeds $15 million, as determined by the audit committee of the Board
of Directors of the General Partner, Lessee shall have first obtained at its
expense an opinion from a nationally recognized investment banking firm,
addressed to it, Agent and the Participants and opining without material
qualification and based on assumptions that are realistic at the time, that the
exchange or swap transactions are fair to Lessee and the Restricted
Subsidiaries, and (ii) if the value of the MLP's assets or units to be so
swapped or exchanged exceeds $50 million, as determined by the audit committee
of the Board of Directors of the General Partner, at the option of the Required
Participants, Agent shall have first retained, at Lessee's expense, an
investment banking firm on behalf of the Participants who shall also have
rendered an opinion containing the statements and content referred to in clause
(i).
Section 5.39. Miscellaneous.
(a) Further Assurances. The Lessee, at its cost and expense, will cause
to be promptly and duly taken, executed, acknowledged and delivered all such
further acts, documents and assurances as Certificate Trustee or Agent
reasonably may request from time to time in order to carry out more effectively
the intent and purposes of this Agreement and the other Operative Documents and
the Overall Transaction. The Lessee, at its cost and expense, will cause all
financing statements (including precautionary financing statements), fixture
filings, mortgages and other documents, to be recorded or filed at such places
and times in such manner, and will take all such other actions or cause such
actions to be taken, as may be necessary or as may be reasonably requested by
Agent or Certificate Trustee in order to establish, preserve, protect and
perfect the title and Lien of Agent in the Units, the Lessee Collateral and the
Lessor Collateral and Certificate Trustee's, Agent's and/or any Participant's
rights under this Agreement and the other Operative Documents.
(b) Change of Name or Address. Lessee shall provide Agent thirty (30)
days' prior written notice of any change in name, or the address of its chief
executive office and principal place of business or the office where it keeps
its records concerning its accounts and the Units.
(c) Securities. Lessee shall not, nor shall it permit anyone authorized
to act on its behalf to, take any action which would subject the issuance or
sale of the Notes or Certificates, the Units, the Trust Estate or the Operative
Documents, or any security or lease the offering of which, for purposes of the
Securities Act or any state securities laws, would be deemed to be part of the
same offering as the offering of the aforementioned items to the registration
requirements of Section 5 of the Securities Act or any state securities laws.
(d) Rates. With respect to each determination of Interest and Yield
pursuant to this Agreement, the Loan Agreement, the Trust Agreement and Basic
Rent under the Lease, Lessee agrees to be bound by Sections 2.6 and 2.7 of the
Loan Agreement, Sections 2.4 and 2.5 of the Trust Agreement, and Sections 2.8
and 2.9 hereof and the applicable definitions in Appendix 1.
Section 5.40. Accounting Principles. (a) Unless the context otherwise
clearly requires, all accounting terms not expressly defined herein shall be
construed, and all financial computations required under this Agreement shall be
made in accordance with GAAP consistently applied. In the event that GAAP
changes during the term of the Lease such that the covenants contained in
Section 5.12 would then be calculated in a different manner or with different
components, (i) Lessee and the Participants agree to amend this Agreement in
such respects as are necessary to conform those covenants as criteria for
evaluating Lessee's financial condition to substantially the same criteria as
were effective prior to such change in GAAP and (ii) Lessee shall be deemed to
be in compliance with the covenants contained in Section 5.12 during the 90-day
period following any such change in GAAP if and to the extent that Lessee would
have been in compliance therewith under GAAP as in effect immediately prior to
such change.
(b) Except as otherwise specified, references herein to "fiscal year"
and "fiscal quarter" refer to such fiscal periods of Lessee."
(c) The following definitions set forth in Appendix I to the
Participation Agreement shall be and are hereby added as new defined terms or
amended and restated, as the case may be, to read as follows:
"Acquisition" means any transaction or series of
related transactions for the purpose of or resulting, directly
or indirectly, in (a) the acquisition of all or substantially
all of the assets of a Person, or of any business or division
of a Person, (b) the acquisition of in excess of 50% of the
capital stock, partnership interests or equity of any Person
or otherwise causing any Person to become a Subsidiary of the
acquiring Person, or (c) a merger or consolidation or any
other combination with another Person (other than a Person
that is a Subsidiary of the acquiring Person) provided that
Lessee or the Subsidiary of the acquiring entity is the
surviving Person.
"Available Cash" has the meaning given to such term
in the Partnership Agreement, as amended to October 14, 1998;
provided, that (a) Available Cash shall not include any amount
of Net Proceeds of Asset Sales until the 270-day period
following the consummation of the applicable Asset Sale, (b)
investments, loans and other contributions to a Non-Recourse
Subsidiary, Unrestricted Subsidiary or Joint Venture are to be
treated as "cash disbursements" when made for purposes of
determining the amount of Available Cash and (c) cash receipts
of a Non-Recourse Subsidiary, Unrestricted Subsidiary or Joint
Venture shall not constitute cash receipts of Lessee for
purposes of determining the amount of Available Cash until
cash is actually distributed by such Non-Recourse Subsidiary,
Unrestricted Subsidiary or Joint Venture to Lessee or a
Restricted Subsidiary.
"Capital Interests" means, (a) with respect to any
corporation, any and all shares, participations, rights or
other equivalent interests in the capital of the corporation,
(b) with respect to any partnership or limited liability
company, any and all partnership interests (whether general or
limited) or limited liability company interests, respectively,
and other interests or participations that confer on a Person
the right to receive a share of the profits and losses of, or
distributions of assets of, such partnership or limited
liability company, and (c) with respect to any other Person,
ownership interests of any type in such Person.
"Consolidated Cash Flow" means, with respect to
Lessee and the Restricted Subsidiaries for any period, the
Consolidated Net Income for such period, plus (a) an amount
equal to any extraordinary loss plus any net loss realized in
connection with an asset sale, to the extent such losses were
deducted in computing Consolidated Net Income, plus (b)
provision for taxes based on income or profits of Lessee and
the Restricted Subsidiaries for such period, to the extent
such provision for taxes was deducted in computing
Consolidated Net Income, plus (c) Consolidated Interest
Expense for such period, whether paid or accrued (including
amortization of original issue discount, non-cash interest
payments and the interest component of any payments associated
with Capital Lease Obligations and net payments (if any)
pursuant to Hedging Obligations), to the extent such expense
was deducted in computing Consolidated Net Income, plus (d)
depreciation and amortization (including amortization of
goodwill and other intangibles but excluding amortization of
prepaid cash expenses that were paid in a prior period) of
Lessee and the Restricted Subsidiaries for such period, to the
extent such depreciation and amortization were deducted in
computing Consolidated Net Income, plus (e) non-cash employee
compensation expenses of Lessee and the Restricted
Subsidiaries for such period, plus (f) the Synthetic Lease
Principal Component of Lessee and the Restricted Subsidiaries
for such period; in each case, for such period without
duplication on a consolidated basis and determined in
accordance with GAAP.
"Consolidated Interest Expense" means, with respect
to Lessee and the Restricted Subsidiaries for any fiscal
period, on a consolidated basis, the sum of (a) all interest,
fees (including Letter of Credit fees), charges and related
expenses paid or payable (without duplication) by Lessee and
the Restricted Subsidiaries for that fiscal period to the
Banks hereunder or to any other lender in connection with
borrowed money or the deferred purchase price of assets that
are considered "interest expense" under GAAP, plus (b) the
portion of rent paid or payable (without duplication) by
Lessee and the Restricted Subsidiaries for that fiscal period
under Capital Lease Obligations that should be treated as
interest in accordance with Financial Accounting Standards
Board Statement No. 13, on a consolidated basis, plus (c) the
Synthetic Lease Interest Component of Lessee and the
Restricted Subsidiaries for that fiscal period.
"Consolidated Net Income" means, with respect to
Lessee and the Restricted Subsidiaries for any period, the
aggregate of the Net Income of Lessee and the Restricted
Subsidiaries for such period, on a consolidated basis,
determined in accordance with GAAP; provided, that (a) the Net
Income of any Person that is not a Restricted Subsidiary or
that is accounted for by the equity method of accounting shall
be included only to the extent of the amount of dividends or
distributions paid to Lessee or a Wholly-Owned Subsidiary of
Lessee, (b) the Net Income of any Person that is a Restricted
Subsidiary (other than a Wholly-Owned Subsidiary) shall be
included only to the extent of the amount of dividends or
distributions paid to Lessee or a Wholly-Owned Subsidiary of
Lessee, (c) the Net Income of any Person acquired in a pooling
of interests transaction for any period prior to the date of
such acquisition shall be excluded except to the extent
otherwise includable under clause (a) above and (d) the
cumulative effect of a change in accounting principles shall
be excluded.
"Consolidated Net Worth" means, with respect to
Lessee and the Restricted Subsidiaries as of any date, the sum
of (a) the consolidated equity of the common stockholders or
partners of Lessee and the Restricted Subsidiaries as of such
date, plus (b) the respective amounts reported on the balance
sheet of Lessee and the Restricted Subsidiaries as of such
date with respect to any series of preferred stock (other than
Disqualified Interests) that by its terms is not entitled to
the payment of dividends unless such dividends may be declared
and paid only out of net earnings in respect of the year of
such declaration and payment, but only to the extent of any
cash received by Lessee and the Restricted Subsidiaries upon
issuance of such preferred stock, less (x) all write-ups
(other than write-ups resulting from foreign currency
translations and write-ups of tangible assets of a going
concern business made within 12 months after the acquisition
of such business) subsequent to the Effective Date in the book
value of any asset owned by Lessee and the Restricted
Subsidiaries, (y) all Investments as of such date in
unconsolidated Subsidiaries and in Persons that are not
Restricted Subsidiaries (except, in each case, Permitted
Lessee Investments), and (z) all unamortized debt discount and
expense and unamortized deferred charges as of such date, all
of the foregoing determined in accordance with GAAP.
"Credit Agreement" means the Third Amended and
Restated Credit Agreement dated as of April 18, 2000 among
Lessee, the General Partner, the Administrative Agent, the
Credit Agreement Banks and the Documentation Agent.
"Credit Agreement Arranger" means Banc of America Securities LLC.
"Credit Agreement Bank" means the financial
institutions defined as "Banks" in the introductory clause to
the Credit Agreement.
"Documentation Agent" has the meaning specified in the introductory
clause to the Credit Agreement.
"Effective Date" means the first date on which all
conditions precedent set forth in Section 5 of Omnibus
Amendment Agreement No. 2 are satisfied or waived by the
Certificate Purchasers or the Lenders.
"Existing Credit Agreement" means the Second Amended
and Restated Credit Agreement, dated as of July 2, 1998, as
amended prior to the Effective Date, among Lessee, the General
Partner, the several financial institutions from time to time
party thereto and Bank of America, N.A., as Administrative
Agent.
"Existing Indebtedness" means Indebtedness and
Synthetic Lease Obligations of Lessee and its Subsidiaries
(other than the "Obligations" as defined in the Credit
Agreement) and certain Indebtedness of the General Partner
with respect to which Lessee has assumed the General Partner's
repayment obligations, in each case in existence on the
Restatement Effective Date and as more fully set forth on
Schedule V to Omnibus Amendment Agreement No. 2.
"Fixed Charge Coverage Ratio" means with respect to
Lessee and the Restricted Subsidiaries for any period, the
ratio of Consolidated Cash Flow for such period to Fixed
Charges for such period. In the event that Lessee or any of
the Restricted Subsidiaries (a) incurs, assumes or guarantees
any Indebtedness or Synthetic Lease Obligations (other than
revolving credit borrowings including, with respect to Lessee,
the Loans) or (b) redeems or repays any Indebtedness or
Synthetic Lease Obligations (other than revolving credit
borrowings that are properly classified as a current liability
for GAAP including, with respect to Lessee, the Loans to the
extent that such Loans are so classified and excluding,
regardless of classification, any Loans or other Indebtedness
or Synthetic Lease Obligations the proceeds of which are used
for Acquisitions or Growth Related Capital Expenditures), in
any case subsequent to the commencement of the period for
which the Fixed Charge Coverage Ratio is being calculated but
prior to the date of the event for which the calculation of
the Fixed Charge Coverage Ratio is made (the "Fixed Charge
Ratio Calculation Date"), then the Fixed Charge Coverage Ratio
shall be calculated giving pro forma effect to such
incurrence, assumption, guarantee, redemption or repayment of
Indebtedness or Synthetic Lease Obligations, as if the same
had occurred at the beginning of the applicable reference
period. The foregoing calculation of the Fixed Charge Coverage
Ratio shall also give pro forma effect to Acquisitions
(including all mergers and consolidations), Asset Sales and
other dispositions and discontinuances of businesses or assets
that have been made by Lessee or any of the Restricted
Subsidiaries during the reference period or subsequent to such
reference period and on or prior to the Fixed Charge Ratio
Calculation Date assuming that all such Acquisitions, Asset
Sales and other dispositions and discontinuances of businesses
or assets had occurred on the first day of the reference
period; provided, however, that with respect to Lessee and the
Restricted Subsidiaries, (a) Fixed Charges shall be reduced by
amounts attributable to businesses or assets that are so
disposed of or discontinued only to the extent that the
obligations giving rise to such Fixed Charges would no longer
be obligations contributing to the Fixed Charges of Lessee or
the Restricted Subsidiaries subsequent to Fixed Charge Ratio
Calculation Date and (b) Consolidated Cash Flow generated by
an acquired business or asset of Lessee or the Restricted
Subsidiaries shall be determined by the actual gross profit
(revenues minus costs of goods sold) of such acquired business
or asset during the immediately preceding number of full
fiscal quarters as are in the reference period minus the pro
forma expenses that would have been incurred by Lessee and the
Restricted Subsidiaries in the operation of such acquired
business or asset during such period computed on the basis of
(i) personnel expenses for employees retained by Lessee and
the Restricted Subsidiaries in the operation of the acquired
business or asset and (ii) non-personnel costs and expenses
incurred by Lessee and the Restricted Subsidiaries on a per
gallon basis in the operation of Lessee's business at
similarly situated Lessee facilities.
"Fixed Charges" means, with respect to Lessee and the
Restricted Subsidiaries for any period, the sum, without
duplication, of (a) Consolidated Interest Expense for such
period, whether paid or accrued, to the extent such expense
was deducted in computing Consolidated Net Income (including
amortization of original issue discounts, non-cash interest
payments, the interest component of all payments associated
with Capital Lease Obligations and net payments (if any)
pursuant to Hedging Obligations permitted under this
Agreement), (b) commissions, discounts and other fees and
charges incurred with respect to letters of credit, (c) any
interest expense on Indebtedness of another Person that is
guaranteed by Lessee and the Restricted Subsidiaries or
secured by a Lien on assets of any such Person, and (d) the
product of (i) all cash dividend payments on any series of
preferred stock of Lessee and the Restricted Subsidiaries,
times (ii) a fraction, the numerator of which is one and the
denominator of which is one minus the then current combined
federal, state and local statutory tax rate of Lessee,
expressed as a decimal, determined, in each case, on a
consolidated basis and in accordance with GAAP.
"Funded Debt" means all Indebtedness of Lessee and
the Restricted Subsidiaries, excluding all Contingent
Obligations of Lessee and the Restricted Subsidiaries under or
in connection with Letters of Credit outstanding from time to
time.
"Guaranty" means a continuing guaranty of the
Obligations in favor of the Agent on behalf of the
Participants, in form and substance satisfactory to the Agent.
"Interest Coverage Ratio" means with respect to
Lessee and the Restricted Subsidiaries for any period, the
ratio of Consolidated Cash for such period to Consolidated
Interest Expense for such period. In the event that Lessee or
any of the Restricted Subsidiaries (a) incurs, assumes or
guarantees any Indebtedness or Synthetic Lease Obligations
(other than revolving credit borrowings including, with
respect to Lessee, the Loans) or (b) redeems or repays any
Indebtedness or Synthetic Lease Obligations (other than
revolving credit borrowings that are properly classified as a
current liability under GAAP including, with respect to
Lessee, the Loans, to the extent such Loans are so classified
and excluding, regardless of classification, any Loans or
other Indebtedness or Synthetic Lease Obligations the proceeds
of which are used for Acquisitions or Growth Related Capital
Expenditures), in any case subsequent to the commencement of
the period for which the Interest Coverage Ratio is being
calculated, but prior to the date on which the calculation of
the Interest Coverage Ratio is made (the "Interest Coverage
Ratio Calculation Date"), then the Interest Coverage Ratio
shall be calculated giving pro forma effect to such
incurrence, assumption, guarantee, redemption or repayment of
Indebtedness or Synthetic Lease Obligations, as if the same
had occurred at the beginning of the applicable reference
period. The foregoing calculation of the Interest Coverage
Ratio shall also give pro forma effect to Acquisitions
(including all mergers and consolidations), Asset Sales and
other dispositions and discontinuances of businesses or assets
that have been made by Lessee or any of the Restricted
Subsidiaries during the reference period or subsequent to such
reference period and on or prior to the Interest Coverage
Ratio Calculation Date assuming that all such Acquisitions,
Asset Sales and other dispositions and discontinuances of
businesses or assets had occurred on the first day of the
reference period; provided, however, that with respect to
Lessee and the Restricted Subsidiaries, (a) Consolidated
Interest Expense shall be reduced by amounts attributable to
businesses or assets that are so disposed of or discontinued
only to the extent that the Indebtedness or Synthetic Lease
Obligations giving rise to such Consolidated Interest Expense
would no longer be Indebtedness or Synthetic Lease Obligations
contributing to the Consolidated Interest Expense of Lessee or
the Restricted Subsidiaries subsequent to the Interest
Coverage Ratio Calculation Date and (b) Consolidated Cash Flow
generated by an acquired business or asset of Lessee and the
Restricted Subsidiaries shall be determined by the actual
gross profit (revenues minus costs of goods sold) of such
acquired business or asset during the immediately preceding
number of full fiscal quarters as in the reference period
minus the pro forma expenses that would have been incurred by
Lessee and the Restricted Subsidiaries in the operation of
such acquired business or asset during such period computed on
the basis of (i) personnel expenses for employees retained by
Lessee and the Restricted Subsidiaries in the operation of the
acquired business or asset and (ii) non-personnel costs and
expenses incurred by Lessee and the Restricted Subsidiaries on
a per gallon basis in the operation of Lessee's business at
similarly situated facilities of Lessee.
"Investment" means, relative to any Person, any
direct or indirect purchase or other acquisition by such
Person of stock or other securities of any other Person, or
any direct or indirect loan, advance or capital contribution
by such Person to any other Person, and any other item which
would be classified as an "investment" on a balance sheet of
such Person prepared in accordance with GAAP, including,
without limitation, any direct or indirect contribution by
such Person of property or assets to a joint venture,
partnership or other business entity in which such Person
retains an interest. For purposes of the Operative Documents,
the amount involved in Investments made during any period
shall be the aggregate cost to Lessee 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 Investment (determined in accordance with
GAAP, but without regard to any amounts received during such
period as earnings (in the form of dividends not constituting
a return of capital, interest or otherwise) on such Investment
or as loans from any Person in whom such Investment has been
made).
"Leverage Ratio" means, with respect to Lessee and
the Restricted Subsidiaries for any period, the ratio of
Funded Debt plus Synthetic Lease Obligations, in each case of
Lessee and the Restricted Subsidiaries as of the last day of
such period, to Consolidated Cash Flow for such period. In the
event that Lessee or any of the Restricted Subsidiaries (a)
incurs, assumes or guarantees any Indebtedness or Synthetic
Lease Obligations (other than revolving credit borrowings
including, with respect to Lessee, the Loans) or (b) redeems
or repays any Indebtedness or Synthetic Lease Obligations
(other than revolving credit borrowings that are properly
classified as a current liability under GAAP including, with
respect to Lessee, the Loans to the extent such Loans are so
classified and excluding, regardless of classification, any
Loans or other Indebtedness or Synthetic Lease Obligations the
proceeds of which are used for Acquisitions or Growth Related
Capital Expenditures), in any case subsequent to the
commencement of the period for which the Leverage Ratio is
being calculated but prior to the date on which the
calculation of the Leverage Ratio is made (the "Leverage Ratio
Calculation Date"), then the Leverage Ratio shall be
calculated giving pro forma effect to such incurrence,
assumption, guarantee, redemption or repayment of Indebtedness
or Synthetic Lease Obligations, as if the same had occurred at
the beginning of the applicable reference period. The
foregoing calculation of the Leverage Ratio shall also give
pro forma effect to Acquisitions (including all mergers and
consolidations), Asset Sales and other dispositions and
discontinuances of businesses or assets that have been made by
Lessee or any of the Restricted Subsidiaries during the
reference period or subsequent to such reference period and on
or prior to the Leverage Ratio Calculation Date assuming that
all such Acquisitions, Asset Sales and other dispositions and
discontinuances of businesses or assets had occurred on the
first day of the reference period; provided, however, that
with respect to Lessee and the Restricted Subsidiaries, (a)
Funded Debt and Synthetic Lease Obligations shall be reduced
by amounts attributable to businesses or assets that are so
disposed of or discontinued only to the extent that the
Indebtedness or Synthetic Leases included within such Funded
Debt and Synthetic Lease Obligations would no longer be an
obligation of Lessee or the Restricted Subsidiaries subsequent
to the Leverage Ratio Calculation Date and (b) Consolidated
Cash Flow generated by an acquired business or asset of Lessee
or the Restricted Subsidiaries shall be determined by the
actual gross profit (revenues minus costs of goods sold) of
such acquired business or asset during the immediately
preceding number of full fiscal quarters as in the reference
period minus the pro forma expenses that would have been
incurred by Lessee and the Restricted Subsidiaries in the
operation of such acquired business or asset during such
period computed on the basis of (i) personnel expenses for
employees retained by Lessee and the Restricted Subsidiaries
in the operation of the acquired business or asset and (ii)
non-personnel costs and expenses incurred by Lessee and the
Restricted Subsidiaries on a per gallon basis in the operation
of Lessee's business at similarly situated facilities of
Lessee.
"Net Income" means, with respect to Lessee and the
Restricted Subsidiaries, the net income (loss) of such
Persons, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding,
however, (a) any gain (but not loss), together with any
related provision for taxes on such gain (but not loss),
realized in connection with (i) any asset sale (including,
without limitation, dispositions pursuant to sale and
leaseback transactions), or (ii) the disposition of any
securities or the extinguishment of any Indebtedness of Lessee
or any of the Restricted Subsidiaries, and (b) any
extraordinary gain (but not loss), together with any related
provision for taxes on such extraordinary gain (but not loss);
provided, however, that all costs and expenses with respect to
the redemption of the 1994 Fixed Rate Senior Notes, including,
without limitation, cash premiums, tender offer premiums,
consent payments and all fees and expenses in connection
therewith, shall be added back to the Net Income of Lessee,
the General Partner or the Restricted Subsidiaries to the
extent that they were deducted from such Net Income in
accordance with GAAP.
"Net Proceeds of Asset Sale" means the aggregate cash
proceeds received by Lessee or any of the Restricted
Subsidiaries in respect of any Asset Sale, net of the direct
costs relating to such Asset Sale (including, without
limitation, legal, accounting and investment banking fees, and
sales commissions) and any relocation expenses incurred as a
result thereof, taxes paid or payable as a result thereof
(after taking into account any available tax credits or
deductions and any tax sharing arrangements), and amounts
required to be applied to the repayment of Indebtedness
secured by a Lien on the asset or assets the subject of such
Asset Sale.
"1994 Fixed Rate Senior Notes" means the 10% Series A
Fixed Rate Senior Notes due 2001 that were issued by Lessee
and Ferrellgas Finance Corp. pursuant to that certain
Indenture dated as of July 5, 1994 among Lessee, Ferrellgas
Finance Corp. and Norwest Bank Minnesota, National
Association. All of the 1994 Fixed Rate Senior Notes were
redeemed prior to the Effective Date.
"Omnibus Amendment Agreement No. 2" means Omnibus Amendment Agreement No. 2
in respect of the Participation Agreement and the Lease, dated as of April 18,
2000, between the Lessee, the General Partner, the Certificate Trustee, the
Agent, the Certificate Purchasers and the Lender.
"Organization Documents" means, (a) for any
corporation, the certificate or articles of incorporation, the
bylaws, any certificate of determination or instrument
relating to the rights of preferred shareholders of such
corporation, any shareholder rights agreement, and all
applicable resolutions of the board of directors (or any
committee thereof) of such corporation, (b) for any general or
limited partnership, the partnership agreement of such
partnership and all amendments thereto and any agreements
otherwise relating to the rights of the partners thereof, and
(c) for any limited liability company, the limited liability,
operating or similar agreement and all amendments thereto and
any agreements otherwise relating to the rights of the members
thereof.
"Partnership Agreement" shall mean the Second Amended
and Restated Agreement of Limited Partnership of Lessee dated
October 14, 1998, as amended from time to time in accordance
with the terms of the Participation Agreement.
"Permitted Lessee Investments" means (a) any
Investments in Cash Equivalents; (b) any Investments in Lessee
or(subject to the provisions of Section 5.37) in a Restricted
Subsidiary of Lessee that is a Guarantor; (c) Investments by
Lessee or any Restricted Subsidiary of Lessee in a Person in
compliance with the other provisions of this Agreement, if as
a result of such Investment (i) such Person becomes a
Restricted Subsidiary of Lessee and a Guarantor or (ii) such
Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is
liquidated into, Lessee or a Restricted Subsidiary of Lessee
that is a Guarantor; and (d) Investments by Lessee or any
Restricted Subsidiary in Unrestricted Subsidiaries and Joint
Ventures; provided that the amount of cash or property
contributed, loaned or otherwise advanced by Lessee or such
Restricted Subsidiaries in respect of such Investments may not
exceed at any time an aggregate amount equal to the greater of
(i) $15,000,000 and (ii) 10% of Consolidated Cash Flow for the
most recently ended four fiscal quarters of Lessee.
"Person" means an individual, partnership,
corporation, limited liability company, business trust, joint
stock company, trust, unincorporated association, Joint
Venture or Governmental Authority.
"Quarterly Payment Period" shall mean successive
calendar quarters commencing on the Interim Term Expiration
Date and thereafter on the last business day in March, June,
September and December in each year; provided, however, that
no Quarterly Payment Period may end later than the last day of
the Lease Term.
"Restricted Subsidiary" means any Subsidiary of
Lessee (a) of which 80% or more of the voting Capital
Interests are beneficially owned, directly or indirectly, by
Lessee and none of which Capital Interests are owned, directly
or indirectly, by Unrestricted Subsidiaries, (b) which is
engaged in the same or substantially the same line of business
as Lessee, (c) which is organized under the laws of the United
States or any State thereof, (d) which maintains substantially
all of its assets and conducts substantially all of its
business within the United States and (e) which is designated
as a Restricted Subsidiary in Schedule IV to Omnibus Amendment
Agreement No. 2 as of the Effective Date or which shall be
designated as a Restricted Subsidiary by Lessee at a
subsequent date pursuant to Section 5.16; provided, however,
that (x) to the extent a newly formed or acquired Subsidiary
meeting the foregoing requirements is not declared a
Restricted Subsidiary or an Unrestricted Subsidiary within 90
days of its formation or acquisition, such Subsidiary shall be
deemed to have been designated by Lessee as a Restricted
Subsidiary (in which event Lessee shall comply, and shall
cause such Restricted Subsidiary to comply, with Section 5.37)
and (b) a Restricted Subsidiary may be designated as an
Unrestricted Subsidiary in accordance with the provisions of
Section 5.16.
"2000 Note Purchase Agreement" means the Note
Purchase Agreement, dated as of February 1, 2000 among Lessee
and the Purchasers named therein, pursuant to which the 2000
Notes were issued, as it may be amended, modified or
supplemented from time to time.
"2000 Notes" means, collectively, (a) the $21,000,000
8.68% Senior Notes, Series A, due August 1, 2006, (b) the
$90,000,000 8.78% Senior Notes, Series B, due August 1, 2007
and (c) the $73,000,000 8.87% Senior Notes, Series C, due
August 1, 2009, in each case issued by Lessee pursuant to the
2000 Note Purchase Agreement.
"Unrestricted Subsidiary" means any Subsidiary which is not a Restricted
Subsidiary."
Section 1.2. Amendments to Lease. (a) Section 8.1 of the Lease shall be and
is hereby amended and restated in its entirety to read as follows:
"Section 8.1. Events of Default. The following shall constitute events of
default (each a "Lease Event of Default") hereunder:
(a) Non-Payment. Lessee fails to pay, (i) when and as
required to be paid herein, any payment of Basic Rent or any amount
payable pursuant to Section 6.1(a), or Article IX, or (ii) within 5
days after the same becomes due, any Supplemental Rent (other than
Supplemental Rent described in clause (i)); or
(b) Representation or Warranty. Any representation or
warranty by Lessee or the General Partner made or deemed made herein,
in any other Operative Document, or which is contained in any
certificate, document or financial or other statement by Lessee, the
General Partner, or any Responsible Officer, furnished at any time
under this Lease, or in or under any other Operative Document, is
incorrect in any material respect on or as of the date made or deemed
made; or
(c) Specific Defaults. (i) Lessee fails to maintain the
insurance required by Section 6.2 or Lessee fails to perform or observe
any term, covenant or agreement contained in any of (A) Section 5.2
hereof or (B) Section 5.3 (other than subsection (d) thereof), 5.12,
5.13 or 5.17 through 5.38, inclusive, of the Participation Agreement;
or (ii) Lessee shall fail to sell all of the Units on the Termination
Date in accordance with and satisfaction of each of the terms,
covenants, conditions and agreements set forth under Article IX in
connection with and following its exercise of the Sale Option; or
(d) Other Defaults. Lessee, the General Partner or any
Subsidiary fails to perform or observe any other term or covenant
contained in this Lease or any other Operative Document, and such
default shall continue unremedied for a period of 30 days after the
earlier of (i) the date upon which a Responsible Officer knew of such
failure or (ii) the date upon which written notice thereof is given to
Lessee by the Lessor or Agent; provided that if (i) such default is not
curable by the payment of money and cannot be cured within such 30 day
period, and (ii) Lessee, the General Partner or such Subsidiary is
diligently pursuing the cure of such default, then the period for cure
of such default will be extended for the period necessary for Lessee,
the General Partner or such Subsidiary to effect such cure, but in no
event longer than 90 days from the date of such notice or knowledge; or
(e) Cross-Default. Lessee, the General Partner or any
Restricted Subsidiary (i) fails to make any payment in respect of any
Indebtedness, Synthetic Lease Obligation or Contingent Obligation
having an aggregate principal amount (including undrawn committed or
available amounts and including amounts owing to all creditors under
any combined or syndicated credit arrangement) of more than $10,000,000
when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) and such failure continues after the
applicable grace or notice period, if any, specified in the relevant
document on the date of such failure or (ii) fails to perform or
observe any other condition or covenant, or any other event (including
any termination or similar event in respect of any Accounts Receivable
Securitization) shall occur or condition exist, under any agreement or
instrument relating to any such Indebtedness, Synthetic Lease
Obligation or Contingent Obligation, and such failure continues after
the applicable grace or notice period, if any, specified in the
relevant document on the date of such failure if the effect of such
failure, event or condition is to cause, or to permit the holder or
holders of such Indebtedness or beneficiary or beneficiaries of such
Indebtedness or Synthetic Lease Obligation (or a trustee or agent on
behalf of such holder or holders or beneficiary or beneficiaries) to
cause such Indebtedness or Synthetic Lease Obligation to be declared to
be due and payable prior to its stated maturity or to cause such
Indebtedness, Synthetic Lease Obligation or Contingent Obligation to be
prepaid, purchased or redeemed by Lessee, the MLP, the General Partner
or any Restricted Subsidiary, or such Contingent Obligation to become
payable or cash collateral in respect thereof to be demanded; or
(f) Insolvency; Voluntary Proceedings. The General Partner,
the MLP, Lessee or any Restricted Subsidiary (i) ceases or fails to be
solvent, or generally fails to pay, or admits in writing its inability
to pay, its debts as they become due, subject to applicable grace
periods, if any, whether at stated maturity or otherwise, (ii)
voluntarily ceases to conduct its business in the ordinary course,
(iii) commences any Insolvency Proceeding with respect to itself, or
(iv) takes any action to effectuate or authorize any of the foregoing;
or
(g) Involuntary Proceedings. (i) Any involuntary Insolvency
Proceeding is commenced or filed against the General Partner, the MLP,
Lessee or any Restricted Subsidiary, or any writ, judgment, warrant of
attachment, execution or similar process is issued or levied against a
substantial part of any such Person's properties, and any such
proceeding or petition shall not be dismissed, or such writ, judgment,
warrant of attachment, execution or similar process shall not be
released, vacated or fully bonded within 60 days after commencement,
filing or levy, (ii) the General Partner, the MLP, Lessee or any
Restricted Subsidiary admits the material allegations of a petition
against it in any Insolvency Proceeding, or an order for relief (or
similar order under non-U.S. law) is ordered in any Insolvency
Proceeding or (iii) the General Partner, the MLP, Lessee or any
Restricted Subsidiary acquiesces in the appointment of a receiver,
trustee, custodian, conservator, liquidator, mortgagee in possession
(or agent therefor) or other similar Person for itself or a substantial
portion of its property or business; or
(h) ERISA. (i) An ERISA Event occurs with respect to a
Pension Plan which has resulted or could reasonably be expected to
result in liability of Lessee or the General Partner under Title IV of
ERISA to the Pension Plan or the PBGC in an aggregate amount in excess
of $10,000,000 or (ii) the commencement or increase of contributions
to, or the adoption of or the amendment of a Pension Plan by Lessee,
the General Partner or any of their Affiliates which has resulted or
could reasonably be expected to result in an increase in Unfunded
Pension Liability among all Pension Plans in an aggregate amount in
excess of $10,000,000.
(i) Monetary Judgments. One or more judgments, orders,
decrees or arbitration awards is entered against Lessee, the General
Partner or any Restricted Subsidiary involving in the aggregate a
liability (to the extent not covered by independent third-party
insurance as to which the insurer does not dispute coverage) as to any
single or related series of transactions, incidents or conditions, of
more than $10,000,000; or
(j) Non-Monetary Judgments. Any non-monetary judgment, order
or decree is entered against Lessee, the General Partner or any
Restricted Subsidiary which does or would reasonably be expected to
have a Material Adverse Effect, and there shall be any period of 60
consecutive days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not be in
effect; or
(k) [Intentionally Omitted.]
(l) Adverse Change. There occurs a Material Adverse Effect; or
(m) Certain Indenture Defaults, Etc. (i) To the extent not
otherwise within the scope of subsection (e) above, any "Event of
Default" shall occur and be continuing under and as defined in the 1998
Note Purchase Agreement or the 2000 Note Purchase Agreement or (ii) any
of the following shall occur under or with respect to the 1996
Indenture or any other Indebtedness guaranteed by Lessee or its
Subsidiaries (collectively, the "Guaranteed Indebtedness"): (A) any
demand for payment shall be made under any such Guaranty Obligation
with respect to the Guaranteed Indebtedness or (B) so long as any such
Guaranty Obligation shall be in effect (x) Lessee or any such
Subsidiary shall fail to pay principal of or premium, if any, or
interest on such Guaranteed Indebtedness after the expiration of any
applicable notice or cure periods or (y) any "Event of Default"
(however defined) shall occur and be continuing under such Guaranteed
Indebtedness which results in the acceleration of such Guaranteed
Indebtedness; or
(n) Guarantor Defaults. Any Guarantor fails in any material
respect to perform or observe any term, covenant or agreement in its
Guaranty, or any Guaranty is for any reason partially (including with
respect to future advances) or wholly revoked or invalidated, or
otherwise ceases to be in full force and effect, or any Guarantor or
any other Person contests in any manner the validity or enforceability
thereof or denies that it has any further liability or obligation
thereunder or any event described at subsections (f) or (g) of this
Section 8.1 occurs with respect to any Guarantor; or
(o) Operative Documents. Any Operative Document shall (except
in accordance with its terms), in whole or in part, terminate, cease to
be effective or cease to be the legally valid, binding and enforceable
obligation of Lessee, or Lessee or any of its Affiliates shall,
directly or indirectly, contest in any manner in any court the
effectiveness, validity, binding nature or enforceability thereof, or
the Lien securing Lessee's obligations under the Operative Documents
shall, in whole or in part, cease to be a perfected first priority Lien
free and clear of all Liens (other than Permitted Liens), or, in any
case, Lessee or any of its Affiliates shall, at any time, directly or
indirectly, contest in any manner in any court the validity or
enforceability thereof; or
(p) Other Lease. A "Lease Event of Default" shall occur under
the Other Lease.
(q) Change of Control. A Change of Control occurs."
(b) Section 8.2 shall be and is hereby amended by deleting the
reference to "Section 8.1(e) or Section 8.1(f)" contained in the fourth
paragraph thereof and substituting in place thereof the phrase "Section 8.1(f)
or Section 8.1(g)".
Section 1.3. Amendment to Loan Agreement. Schedule II to the Loan Agreement
shall be and is hereby amended in its entirety to read as Exhibit A attached
hereto.
SECTION 2. REPRESENTATIONS OF THE LESSEE.
As of the date hereof, Lessee represents and warrants as follows:
(a) all representations and warranties set forth in the Participation
Agreement and Lease, as amended by this Amendment, are true and correct as of
the date hereof and are incorporated herein by reference with the same force and
effect as though herein set forth in full; and
(b) no Lease Default or Lease Event of Default exists.
SECTION 3. AUTHORIZATION AND DIRECTION.
The Certificate Purchaser, by its execution hereof, authorizes the
Certificate Trustee to execute and deliver this Amendment.
SECTION 4. EFFECTIVENESS.
This Amendment shall not become effective until, and shall become
effective when, each and every one of the following conditions shall have been
satisfied:
(a) The Lessee, the General Partner, the Certificate Trustee, the
Agent, the Certificate Purchasers and the Lenders shall have executed this
Amendment;
(b) The Certificate Trustee, the Certificate Purchasers and the Lenders
shall have received (i) certificates of existence and good standing with respect
to Lessee and the General Partner from the Secretary of State of the state of
its organization dated no earlier than the 30th day prior to the Effective Date,
(ii) copies of Lessee's Certificate of Limited Partnership, certified by the
Secretary of State of the state of its organization dated no earlier than the
30th day prior to the Effective Date, (iii) certificates of the Secretary or
Assistant Secretary of the general partner of Lessee, in form and substance
satisfactory to Agent and the Participants, and attaching and certifying as to
(A) the Lessee's limited partnership agreement, (B) the directors' resolutions
in respect of the execution, delivery and performance by Lessee of this
Amendment, (C) the general partner's articles of incorporation and bylaws and
(D) the incumbency and signatures of persons authorized to execute and deliver
documents on behalf of Lessee, and (iv) a legal opinion of Bracewell & Patterson
L.L.P., satisfactory in form and substance to the Certificate Trustee, the
Certificate Purchasers and the Lenders;
(c) The reasonable fees and expenses of the Certificate Purchasers
(including the fees and expenses of their special counsel) shall have been paid
in accordance with Section 5 hereof; and
(d) All proceedings taken in connection with this Amendment and any
documents relating thereto shall be reasonably satisfactory to Agent,
Certificate Trustee, the Certificate Purchasers, the Lenders and their
respective counsel, and each such Person shall have received copies of such
documents as they may reasonably request in connection therewith, all in form
and substance reasonably satisfactory to each such Person.
SECTION 5. FEES AND EXPENSES.
Lessee agrees to pay all the reasonable fees and expenses of the
Certificate Purchasers in connection with the negotiation, preparation,
approval, execution and delivery of this Amendment (including the fees and
expenses of their special counsel).
SECTION 6. MISCELLANEOUS.
Section 6.1. Construction. This Amendment shall be construed in
connection with and as part of the Agreements, and except as modified and
expressly amended by this Amendment, all terms, conditions and covenants
contained in the Agreements are hereby ratified and shall be and remain in full
force and effect.
Section 6.2. References. Any and all notices, requests, certificates
and other instruments executed and delivered after the execution and delivery of
this Amendment may refer to the Agreements without making specific reference to
this Amendment but nevertheless all such references shall be deemed to include
this Amendment unless the context otherwise requires.
Section 6.3. Headings and Table of Contents. The headings of the
Sections of this Amendment and the Table of Contents are inserted for purposes
of convenience only and shall not be construed to affect the meaning or
construction of any of the provisions hereof and any reference to numbered
Sections, unless otherwise indicated, are to Sections of this Amendment.
Section 6.4. Counterparts. This Amendment may be executed in any number of
counterparts, each executed counterpart constituting an original but all
together only one Amendment.
SECTION 6.5. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (EXCLUDING
CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE THE
APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE).
IN WITNESS WHEREOF, the Lessee, the General Partner, the Certificate
Trustee, the Agent, the Certificate Purchasers and the Lenders have caused this
instrument to be executed, all as of the day and year first above written.
Lessee: FERRELLGAS, LP, as Lessee
By Ferrellgas, Inc., its General Partner
By:
Name:
Title:
General Partner: FERRELLGAS, INC.
By:
Name:
Title:
Certificate Trustee: FIRST SECURITY BANK, NATIONAL ASSOCIATION,
in its individual capacity and as
Certificate Trustee
By:
Name:
Title:
Agent: FIRST SECURITY TRUST COMPANY OF NEVADA,
not in its individual capacity except as
expressly stated
herein, but solely as Agent
By:
Name:
Title:
Certificate Purchaser: [_____________________], as Certificate Purchaser
By:
Name:
Title:
Certificate Purchaser: [_____________________], as Certificate Purchaser
By:
Name:
Title:
Certificate Purchaser: [_____________________], as Certificate Purchaser
By:
Name:
Title:
Lender: [_____________________], as Lender
By:
Name:
Title:
Lender: [_____________________], as Lender
By:
Name:
Title:
Lender: [_____________________], as Lender
By:
Name:
Title:
Lender: [_____________________], as Lender
By:
Name:
Title:
SCHEDULE I
[CERTIFICATE PURCHASERS]
SCHEDULE II
[LENDERS]
SCHEDULE III
[LIENS]
SCHEDULE IV
[SUBSIDIARIES AND AFFILIATES]
SCHEDULE V
[EXISTING INDEBTEDNESS]
EXHIBIT A
SCHEDULE II
(TO LOAN AGREEMENT)
AMORTIZATION OF CLASS A NOTE
Payment Loan
Year Date* Principal Balance
100.000000%
1 3/30/00 0.303030% 99.696970%
6/30/00 0.303030% 99.393939%
9/30/00 0.303030% 99.090909%
12/30/00 0.303030% 98.787879%
2 3/30/01 0.303030% 98.484848%
6/30/01 0.303030% 98.181818%
9/30/01 0.303030% 97.878788%
12/30/01 0.303030% 97.575758%
3 3/30/02 0.303030% 97.272727%
6/30/02 0.303030% 96.969697%
9/30/02 0.303030% 96.666667%
12/30/02 0.303030% 96.363636%
4 3/30/03 0.303030% 96.060606%
6/30/03 0.303030% 95.757576%
9/30/03 0.303030% 95.454545%
12/30/03 0.303030% 95.151515%
5 3/30/04 0.303030% 94.848485%
6/30/04 0.303030% 94.545455%
9/30/04 0.303030% 94.242424%
12/30/04 0.303030% 93.939394%
6 3/30/05 0.303030% 93.636364%
6/30/05 93.636364% 0.000000%
*last Business Day of calendar quarter
5
0000922358
FERRELLGAS PARTNERS, L.P.
1,000
U.S. DOLLARS
9-MOS
JUL-31-2000
AUG-01-1999
APR-30-2000
1
12,766
0
117,537
0
54,970
197,492
790,602
(257,659)
997,867
166,965
712,042
0
0
155,686
(58,677)
997,867
736,575
803,974
439,627
697,694
0
0
42,809
43,342
0
43,342
0
0
0
43,342
1.16
1.16
5
0001012493
FERRELLGAS PARTNERS FINANCE CORP.
1
U.S. DOLLARS
9-MOS
JUL-31-2000
AUG-01-1999
APR-30-2000
1
1,000
0
0
0
0
1,000
0
0
1,000
0
0
0
0
1,000
0
1,000
0
0
0
0
0
0
0
(485)
0
(485)
0
0
0
(485)
0
0