Draft -- December 5, 1996
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FORM OF
CORNERSTONE PROPANE GP, INC.,
SYN INC.
AND
CORNERSTONE PROPANE, L.P.
$220,000,000
7.53% Senior Secured Notes due December __, 2010
(Private Placement Number: ___________)
_________________________
NOTE AGREEMENT
_________________________
Dated as of December __, 1996
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TABLE OF CONTENTS
Section Page
1. AUTHORIZATION OF NOTES. . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. SALE AND PURCHASE OF NOTES. . . . . . . . . . . . . . . . . . . . . . . . 1
3. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4. CONDITIONS TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.1. Representations and Warranties. . . . . . . . . . . . . . . . . 3
4.2. Performance; No Default . . . . . . . . . . . . . . . . . . . . 3
4.3. Compliance Certificates . . . . . . . . . . . . . . . . . . . . 3
4.4. Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . . 4
4.5. Legal Investment. . . . . . . . . . . . . . . . . . . . . . . . 4
4.6. Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . 5
4.7. Security Documents. . . . . . . . . . . . . . . . . . . . . . . 5
4.8. Conveyance; Recordation; Taxes, etc.. . . . . . . . . . . . . . 5
4.9. Operative Agreements. . . . . . . . . . . . . . . . . . . . . . 6
4.10. Sale and Issuance of Other Notes. . . . . . . . . . . . . . . . 6
4.11. Sale of Units . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.12. Proceedings and Documents . . . . . . . . . . . . . . . . . . . 7
4.13. Rating. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.14. Insurance Broker's Certificate. . . . . . . . . . . . . . . . . 7
4.15. Payment of Closing Fees . . . . . . . . . . . . . . . . . . . . 7
4.16. Private Placement Number. . . . . . . . . . . . . . . . . . . . 7
4.17. Other Agreements. . . . . . . . . . . . . . . . . . . . . . . . 7
5. REPRESENTATIONS AND WARRANTIES, ETC. OF THE GENERAL PARTNERS AND THE
COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.1. Organization, Standing, etc.. . . . . . . . . . . . . . . . . . 8
5.2. Partnership Interests . . . . . . . . . . . . . . . . . . . . . 9
5.3. Qualification . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.4. Business; Financial Statements. . . . . . . . . . . . . . . . . 9
5.5. Changes, etc. . . . . . . . . . . . . . . . . . . . . . . . . .11
5.6. Tax Returns and Payments. . . . . . . . . . . . . . . . . . . .12
5.7. Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . .12
5.8. Transfer of Assets and Business . . . . . . . . . . . . . . . .12
5.9. Litigation, etc.. . . . . . . . . . . . . . . . . . . . . . . .14
5.10. Compliance with Other Instruments, etc. . . . . . . . . . . . .14
5.11. Governmental Consent. . . . . . . . . . . . . . . . . . . . . .15
5.12. Offer of Notes. . . . . . . . . . . . . . . . . . . . . . . . .15
5.13. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . .15
5.14. Federal Reserve Regulations . . . . . . . . . . . . . . . . . .16
5.15. Investment Company Act. . . . . . . . . . . . . . . . . . . . .16
5.16. Public Utility Holding Company Act; Federal Power Act . . . . .16
5.17. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
5.18. Environmental Matters . . . . . . . . . . . . . . . . . . . . .18
5.19. Foreign Assets Control Regulations, etc.. . . . . . . . . . . .20
5.20. Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . .20
5.21. Chief Executive Office. . . . . . . . . . . . . . . . . . . . .21
5.22. Solvency. . . . . . . . . . . . . . . . . . . . . . . . . . . .21
6. PURCHASER'S REPRESENTATIONS; SOURCE OF FUNDS. . . . . . . . . . . . . . .21
7. ACCOUNTING; FINANCIAL STATEMENTS AND OTHER
INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
8. INSPECTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
9. PREPAYMENT OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . .32
9.1. Required Prepayments of the Notes . . . . . . . . . . . . . . .32
9.2. Optional Prepayments of the Notes with Make Whole Amount. . . .33
9.3. Prepayment on Change of Control . . . . . . . . . . . . . . . .33
9.4. Contingent Prepayments on Disposition of Property, Taking
or Destruction. . . . . . . . . . . . . . . . . . . . . . . . .34
9.5. Notice of Prepayments; Officers' Certificate. . . . . . . . . .35
9.6. Allocation of Partial Prepayments . . . . . . . . . . . . . . .35
9.7. Maturity; Surrender, etc. . . . . . . . . . . . . . . . . . . .36
9.8. Acquisition of Notes. . . . . . . . . . . . . . . . . . . . . .36
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10. BUSINESS AND FINANCIAL COVENANTS OF THE COMPANY . . . . . . . . . . . . .37
10.1. Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . .37
10.2. Liens, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . .44
10.3. Investments, Guaranties, etc. . . . . . . . . . . . . . . . . . .48
10.4. Restricted Payments . . . . . . . . . . . . . . . . . . . . . . .51
10.5. Transactions with Affiliates. . . . . . . . . . . . . . . . . . .51
10.6. Subsidiary Stock and Indebtedness . . . . . . . . . . . . . . . .52
10.7. Consolidation, Merger, Sale of Assets, etc. . . . . . . . . . . .53
10.8. Partnership or Corporate Existence, etc.; Business. . . . . . . .58
10.9. Payment of Taxes and Claims . . . . . . . . . . . . . . . . . . .59
10.10. Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . .59
10.11. Maintenance of Properties; Insurance. . . . . . . . . . . . . . .60
10.12. Operative Agreements; Security Documents. . . . . . . . . . . . .61
10.13. Chief Executive Office. . . . . . . . . . . . . . . . . . . . . .62
10.14. Recordation; Opinions . . . . . . . . . . . . . . . . . . . . . .62
10.15. Information Required by Rule 144A . . . . . . . . . . . . . . . .63
10.16. Covenant to Secure Notes Equally. . . . . . . . . . . . . . . . .63
10.17. Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . .63
10.18. Further Assurances. . . . . . . . . . . . . . . . . . . . . . . .64
10.19. Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . .64
10.20. Damage, Destruction, Taking, etc. . . . . . . . . . . . . . . . .66
10.21. Accounting Changes. . . . . . . . . . . . . . . . . . . . . . . .66
10.22. Acquisitions. . . . . . . . . . . . . . . . . . . . . . . . . . .67
10.23. Impairment of Security Interests. . . . . . . . . . . . . . . . .67
10.24. Limitation on Restrictions on Subsidiary Dividends, etc.. . . . .67
10.25. No Other Negative Pledges . . . . . . . . . . . . . . . . . . . .68
10.26. Sales of Receivables. . . . . . . . . . . . . . . . . . . . . . .68
10.27. Fixed Price Supply Contracts; Certain Policies. . . . . . . . . .68
10.28. Independent Corporate Existence . . . . . . . . . . . . . . . . .69
10.29. Other Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . .70
10.30. Restriction on General Partner. . . . . . . . . . . . . . . . . .71
10.31. Recordation of Conveyance Documents . . . . . . . . . . . . . . .71
11. EVENTS OF DEFAULT; ACCELERATION . . . . . . . . . . . . . . . . . . . . .72
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12. REMEDIES ON DEFAULT; RECOURSE, ETC. . . . . . . . . . . . . . . . . . . .77
13. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .77
14. REGISTRATION, TRANSFER AND SUBSTITUTION OF NOTES. . . . . . . . . . . . 101
14.1. Note Register; Ownership of Notes . . . . . . . . . . . . . . . 101
14.2. Transfer and Exchange of Notes. . . . . . . . . . . . . . . . . 101
14.3. Replacement of Notes. . . . . . . . . . . . . . . . . . . . . . 102
14.4. Notes Held by Company, etc., Deemed Not Outstanding . . . . . . 102
15. PAYMENTS ON NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
15.1. Place of Payment. . . . . . . . . . . . . . . . . . . . . . . . 102
15.2. Home Office Payment . . . . . . . . . . . . . . . . . . . . . . 103
16. EXPENSES, INDEMNIFICATION, ETC. . . . . . . . . . . . . . . . . . . . . 103
17. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . 107
18. AMENDMENTS AND WAIVERS. . . . . . . . . . . . . . . . . . . . . . . . . 107
19. NOTICES, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
20. REPRODUCTION OF DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . . 108
21. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
22. SUBMISSION TO JURISDICTION. . . . . . . . . . . . . . . . . . . . . . . 109
23. WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . . . . . . . . . . . 110
24. GOVERNING LAW.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
25. CONFIDENTIAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . 110
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Schedule A -- Schedule of Purchasers
Schedule 5.2 -- Subsidiaries and Investments
Schedule 5.3 -- Jurisdiction of Qualification
Schedule 5.4(c) -- Certain Changes
Schedule 5.7 -- Indebtedness
Schedule 5.8(a) -- List of Assets
[Schedule 5.8(b) -- ]
Schedule 5.8(b)(i) -- List of Required Consents
Schedule 5.9 -- Litigation
Schedule 5.18 -- Environmental Notices
Schedule 10.2 -- Liens
Exhibit A -- Form of Note
Exhibit B1 -- Form of Opinion of Company Counsel
Exhibit B2 -- Form of Opinion of Local Counsel for the Company
Exhibit B3 -- Form of Opinion of Trustee's Counsel
Exhibit B4 -- Form of Opinion of Debevoise & Xxxxxxxx
Exhibit C -- Form of Trust Agreement
Exhibit D -- Form of Subordination Provisions
Exhibit E -- Form of Cash Collateral Agreement
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Exhibit F -- Form of Company Security Agreement
Exhibit G -- Form of General Partner's Guarantee Agreement
Exhibit H -- Form of Intercompany Note
Exhibit I -- Form of Agency Account Agreement
Exhibit J -- Form of Partnership Agreement
Exhibit K -- Form of Partnership Note
Exhibit L -- Form of Partners Security Agreement
Exhibit M -- Form of Perfection Certificate
Exhibit N -- Restricted Subsidiaries
Exhibit O -- Form of Subsidiary Guarantee Agreement
Exhibit P -- Form of Supplemental Agreement
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CORNERSTONE PROPANE GP, INC.
CORNERSTONE PROPANE, L.P.
SYN INC.
7.53% Senior Secured Notes due December __, 2010
Dated as of December __, 1996
TO EACH OF THE PURCHASERS LISTED
IN THE ATTACHED SCHEDULE A
Dear Purchaser:
Cornerstone Propane GP, Inc., a California corporation ("Cornerstone
Propane GP,") SYN Inc., a Delaware corporation (the "Special General Partner"),
and together with Cornerstone Propane GP, each a "General Partner" and together,
the "General Partners," and Cornerstone Propane, L.P., a Delaware limited
partnership (the "Company"), having been formed to acquire and to operate the
Assets, hereby agree with you as follows:
SECTION 1. AUTHORIZATION OF NOTES.
The Company will authorize the issue and sale of $220,000,000
aggregate principal amount of its 7.53% Senior Secured Notes due December __,
2010 (the "Notes", such term to include any Notes issued in substitution
therefor or replacement thereof pursuant to Section 14). The Notes shall be
substantially in the form of Exhibit A, with such changes therefrom, if any, as
may be approved by you and the Company. Certain capitalized terms used in this
Note Agreement (the "Agreement") are defined in Section 13; references to a
"Section" or a "Schedule" or an "Exhibit" are, unless otherwise specified, to a
Section of this Agreement or to a Schedule or an Exhibit attached to this
Agreement.
SECTION 2. SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this Agreement, the Company
will issue and sell to you and you will purchase from the Company, at the
Closing provided for
in Section 3, Notes in the principal amount specified opposite your name in
Schedule A for purchase by you at the Closing, at the purchase price of 100% of
the principal amount thereof. At the Closing provided for in Section 3, the
General Partners and Empire Energy SC Corporation, a Delaware corporation, will
convey all of their assets to the Company pursuant to the Conveyance Agreements
in exchange for general and limited partner interests in the Company and the
assumption by the Company of substantially all the liabilities of the General
Partners.
Contemporaneously with entering into this Agreement, the General
Partners and the Company are entering into identical Note Agreements (the "Other
Agreements") with each of the other purchasers named in Schedule A (the "Other
Purchasers"), providing for the sale to each of the Other Purchasers, at the
Closing, of Notes in the principal amount specified opposite its name in
Schedule A. The sale of Notes to you and the Other Purchasers are to be
separate sales, and this Agreement and the Other Agreements constitute separate
agreements.
SECTION 3. CLOSING.
The sales of the Notes to you and the Other Purchasers shall take
place at the offices of ________________________________, at 10:00 a.m., New
York City time, at a closing (the "Closing") on December __, 1996, or such later
date as may be agreed upon by Cornerstone Propane GP, the Company, you and the
Other Purchasers. At the Closing, the Company will deliver to you Notes in the
principal amount to be purchased by you, in the form of a single Note (or such
greater number of Notes as you may request, provided that each such Note shall
be in a denomination of at least $500,000), each dated the date of the Closing
and registered in your name (or in the name of your nominee as indicated in
Schedule A), against payment of the purchase price therefor on the date of
Closing by transfer of immediately available funds to the Company, or as
otherwise directed by the Company in writing (at least two days prior to the
date of the Closing). If at the Closing the Company shall fail to tender such
Notes to you as provided above in this Section 3 or if any of the conditions
specified in Section 4 shall not have been fulfilled to your satisfaction, you
shall, at your election, be relieved of all further obligations under this
Agreement, without thereby waiving any other rights you may have by reason of
such failure or such nonfulfillment. If the Closing shall not have occurred on
or prior to December 31, 1996, you will promptly thereafter instruct the Trustee
to release its lien on, and its security interest in, all of the Collateral.
2
SECTION 4. CONDITIONS TO CLOSING.
Your obligation to purchase and pay for the Notes to be sold to you at
the Closing is subject to the fulfillment to your satisfaction, prior to or at
the Closing, of the following conditions:
4.1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company and its Affiliates contained in this Agreement, the
other Operative Agreements, and those otherwise made in writing by or on behalf
of the Company or any Affiliate of the Company in connection with the
transactions contemplated by this Agreement, shall be true and correct when made
and at the time of the Closing, except as affected by the consummation of such
transactions and except for any representation and warranty that is expressly
stated to relate to a specific date, in which case such representation and
warranty shall be true and correct as of such earlier date.
4.2. PERFORMANCE; NO DEFAULT. Each of the Company and its
Affiliates shall have performed and complied with all agreements and conditions
contained in this Agreement or any other Operative Agreement required to be
performed or complied with by it prior to or at the Closing, and at the time of
the Closing no Event of Default or Potential Event of Default under this
Agreement or default by any party under any other Operative Agreement shall have
occurred and be continuing.
4.3. COMPLIANCE CERTIFICATES. You shall have received Officers'
Certificates of the Company, Northwestern, each General Partner and the Public
Partnership, each dated the date of the Closing and satisfactory in substance
and form to you, certifying that the conditions specified in Sections 4.1 and
4.2 have been fulfilled in all material respects insofar as the relevant
representation or warranty is made by, or the relevant agreement or condition is
required to be performed or complied with by, or the relevant Event of Default,
Potential Event of Default or default has been caused by or relates to, each of
such entities and, with respect to the Officers' Certificate of the Company, its
Subsidiaries, and, in the case of the Officers' Certificate of Cornerstone
Propane GP and the Company, certifying that no material adverse change has
occurred in the financial condition of the Business subsequent to the date of
the financial statements delivered pursuant to Section 5.4(c) and, in the case
of the Officers' Certificate of Northwestern, certifying that neither the
Memorandum (as of the date thereof) nor the Registration Statement contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the
3
statements contained therein, in light of the circumstances under which they
were made, not misleading.
4.4. OPINIONS OF COUNSEL. You shall have received favorable
opinions from (a) __________________, special counsel for the Company and its
Affiliates, substantially in the form of Exhibit B1, (b) (i) Xxxxx & Xxxxxxx,
special Alabama counsel for the Company and its Affiliates, (ii) Rose Law Firm,
special Arkansas counsel for the Company and its Affiliates, (iii) McCutchen,
Xxxxx, Brown & Xxxxxxx, L.L.P., special California counsel for the Company and
its Affiliates, (iv) Xxxx, Xxxx & Bell, special Florida counsel for the Company
and its Affiliates, (v) Xxxxxxxxxx, Xxxx & McDonald, special Kentucky counsel
for the Company and its Affiliates, (vi) Xxxxxxxx, XxXxxx, Threadgill, Xxxxx &
Xxxx, special Mississippi counsel for the Company and its Affiliates,
(vii) Xxxxxxxx Xxxxxx, special Missouri counsel for the Company and its
Affiliates, (viii) Winthrop, Stimson, Xxxxxx & Xxxxxxx, special New York counsel
for the Company and its Affiliates, and (ix) Bass, Xxxxx & Xxxx, special
Tennessee counsel for the Company and its Affiliates, each substantially in the
form of Exhibit B2, (c) __________________, counsel for the Trustee,
substantially in the form of Exhibit B3 and (d) Debevoise & Xxxxxxxx, your
special counsel in connection with the transactions contemplated by this
Agreement, substantially in the form of Exhibit B4, and in each case covering
such other matters incident to such transactions as you may reasonably request,
each addressed to you, dated the date of the Closing and otherwise reasonably
satisfactory in substance and form to you. You shall have received copies of
each of the opinions delivered pursuant to the Underwriting Agreement (other
than the opinion of counsel to the underwriters), accompanied by letters, dated
the date of the Closing and addressed to you, from the counsel rendering such
opinions, stating that you are entitled to rely on such opinions as if they were
addressed to you. The Company and the General Partners xxxxxx direct each of
their counsel referred to in clauses (a) and (b) of this Section 4.4, and each
of its counsel who deliver opinions pursuant to the Underwriting Agreement, to
deliver to you such opinions and letters to be delivered by it and authorize you
to rely thereon.
4.5. LEGAL INVESTMENT. On the date of the Closing your purchase
of Notes shall be permitted by the laws and regulations of each jurisdiction to
which your investments are subject, but without recourse to provisions (such as
section 1404(b) or 1405(a)(8) of the New York Insurance Law) permitting limited
investments by insurance companies in securities not otherwise legally eligible
for investment. If requested by you by prior written request to the Company or
the General Partners, you
4
shall have received, at least five Business Days prior to the Closing, an
Officers' Certificate of the Company or the General Partners, as the case may
be, certifying as to such matters of fact as you may reasonably specify to
enable you to determine whether such purchase is so permitted.
4.6. TRUST AGREEMENT. The Company, [the General Partners], the
Qualifying Restricted Subsidiaries, if any, and the Trustee shall have duly
authorized, executed and delivered the Trust Agreement. The Trust Agreement
shall be in full force and effect and shall constitute the valid, binding and
enforceable obligation of the Company, [the General Partners], the Qualifying
Restricted Subsidiaries, if any, and the Trustee, except that such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws of general application relating to
or affecting the rights and remedies of creditors, and no default on the part of
the Company, [the General Partners], or the Qualifying Restricted Subsidiaries
shall exist thereunder.
4.7. SECURITY DOCUMENTS. Each of the Security Documents shall
have been duly authorized, executed and delivered by each of the Company and/or
its Affiliates party thereto, shall be in full force and effect and shall (i)
constitute the valid, binding and enforceable obligation of each such party,
except that such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws of general application
relating to or affecting the rights and remedies of creditors and by general
equitable principles, regardless of whether such enforceability is considered in
a proceeding in equity or at law, and (ii) to the extent duly recorded pursuant
to Section 4.8, constitute a valid assignment of, and create a valid, presently
effective security interest of record in, property covered by such Security
Document and all other interests described therein, subject to no prior security
interest in any such property other than as specifically permitted therein, and
no default on the part of any such party shall exist thereunder.
4.8. CONVEYANCE; RECORDATION; TAXES, ETC. Prior to the Closing,
the Conveyance Agreements referred to in clause (b) of the definition of such
term and the Company Security Agreement, or proper notices, statements or other
instruments in respect thereof, covering all of the Assets covered by such
Conveyance Agreements and the Security Documents, shall have been duly
delivered, and all other actions deemed necessary by your special counsel shall
have been duly performed or taken, in such manner and in such places as is
required by applicable law (a) to convey to the
5
Company ownership of the Assets referred to in Section 5.8(c)(ii) purported to
be conveyed by such Conveyance Agreements and (B) to establish, perfect,
preserve and protect the rights and first priority Liens purported to be granted
by each such Security Document to the Trustee with respect to the Assets
referred to in Section 5.8(c)(ii) for the benefit of the holders of the Notes
and their respective successors and assigns and all taxes, fees and other
charges then due in connection with the execution, delivery, recording,
publishing, registration and to the extent filed prior, to filing of such
documents or instruments shall have been paid in full.
4.9. OPERATIVE AGREEMENTS. Each of the Operative Agreements to
be executed on or before the Closing Date shall have been duly authorized,
executed and delivered by the respective parties thereto, in form and substance
satisfactory to you, shall be in full force and effect, and shall constitute the
legal, valid and binding obligations of the respective parties thereto, except
that such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws of general application relating to
or affecting the rights and remedies of creditors and by general equitable
principles, regardless of whether such enforceability is considered in a
proceeding in equity or law, and all actions required to be performed or taken
thereunder on or prior to the date of the Closing shall have been duly taken and
no default or accrued right of termination on the part of any of the parties
thereto shall exist thereunder as of the date of the Closing, and you and the
Trustee shall have received a fully executed original, or a true and complete
copy, of each such document.
4.10. SALE AND ISSUANCE OF OTHER NOTES. Contemporaneously with
the Closing, the Company shall sell to the Other Purchasers the Notes to be
purchased by them at the Closing under the Other Agreements as specified in
Schedule A.
4.11. SALE OF UNITS. At the time of the Closing, (a) the
Underwriting Agreement shall be in full force and effect, (b) all conditions to
closing contained in the Underwriting Agreement shall have been fulfilled or, in
a manner acceptable to you, waived, (c) your special counsel shall have received
a copy of each agreement, document, opinion (as specified in Section 4.4) and
certificate delivered in connection with the closing under the Underwriting
Agreement, and (d) substantially simultaneously with the receipt of the proceeds
of the sale of the Notes to you and the Other Purchasers at the Closing and in
the order contemplated by the Registration Statement, (i) the Public Partnership
shall sell to the Underwriters the Units provided to be sold under the
Underwriting Agreement for an aggregate gross purchase price of not less
6
than $170,800,000, (ii) [the General Partner shall transfer approximately its
_______% limited partner interest in the Company to the Public Partnership in
exchange for a ____% subordinated general partner interest in the Public
Partnership and the Company on a combined basis (____%, if the Overallotment
Option is exercised in full) and a __% unsubordinated general partner interest
in the Public Partnership], and (iii) all transactions contemplated by the
Registration Statement and the Memorandum to be completed by the General
Partners, the Company and their Affiliates prior to or substantially
simultaneously with the issuance of the Notes shall have been completed
substantially as contemplated therein and in a manner acceptable to you.
4.12. PROCEEDINGS AND DOCUMENTS. All proceedings in connection
with the transactions contemplated by this Agreement and all documents and
instruments incident to such transactions shall be satisfactory to you and your
special counsel, and you and your special counsel shall have received all such
counterpart originals or certified or other copies of such documents as you or
they may reasonably request.
4.13. RATING. Prior to the Closing, the Notes shall have received
a rating of at least BBB from Fitch Investors Service, Inc., which rating
remains in effect as of the Closing.
4.14. INSURANCE BROKER'S CERTIFICATE. Insurance complying with
the provisions of Section 10.11 hereof shall be in full force and effect and
you, the Other Purchasers and the Trustee shall have received a certificate from
Xxxxxxxx Xxxxxx Insurance Brokers or such other independent insurance brokers or
consultants as shall be reasonably satisfactory to you, dated the date of the
Closing.
4.15. PAYMENT OF CLOSING FEES. The Company shall have paid the
fees and disbursements required by Section 16 to be paid by the Company on the
date of the Closing.
4.16. PRIVATE PLACEMENT NUMBER. The Company shall have obtained
for the Notes a Private Placement Number issued by Standard & Poor's CUSIP
Service Bureau (in cooperation with the Securities Valuation Office of the
National Association of Insurance Commissioners).
4.17. OTHER AGREEMENTS. The Company shall have delivered to you a
true and complete copy the Registration Statement.
7
SECTION 5. REPRESENTATIONS AND WARRANTIES, ETC. OF THE GENERAL PARTNERS AND
THE COMPANY.
Each of the General Partners and the Company represents and warrants
that:
5.1. ORGANIZATION, STANDING, ETC. (a) The Company is a limited
partnership duly organized, validly existing and in good standing under the
Delaware Revised Uniform Limited Partnership Act and has all requisite
partnership power and authority to own and operate its properties (including,
without limitation, the Assets), to conduct its business as described in the
Registration Statement after giving effect to the transfer of the Assets, to
enter into this Agreement and the other Operative Agreements to which it is a
party, to issue and deliver the Notes and to carry out the terms of this
Agreement, such other Operative Agreements and the Notes.
(b) Each General Partner is a corporation duly organized, validly
existing and in good standing under the laws of the State of California (in the
case of Cornerstone Propane GP) or the State of Delaware (in the case of the
Special General Partner) and has all requisite corporate power and authority to
own and operate its properties, to conduct its business as described in the
Registration Statement, to enter into and carry out the terms of this Agreement
and the other Operative Agreements to which it is a party, and [in the case of
Cornerstone Propane GP,] to execute and deliver as Managing General Partner of
the Company this Agreement, the Notes and the other Operative Agreements to
which the Company is a party.
(c) The Restricted Subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to own and operate its
properties, to conduct its business as described in the Registration Statement
after giving effect to the transfer of the Assets.
(d) The Public Partnership is a limited partnership duly organized,
validly existing and in good standing under the Delaware Revised Uniform Limited
Partnership Act and has all requisite partnership power and authority to own and
operate its properties, to conduct its business as described in the Registration
Statement, and to execute, deliver and carry out the terms of the Operative
Agreements to which it is a party.
8
5.2. PARTNERSHIP INTERESTS. The only general partners of the
Company are the General Partners, which upon the consummation of the Closing
will own an aggregate [______]% general partner interest in the Company. Upon
the consummation of the Closing the only limited partner of the Company will be
the Public Partnership, which will own a [_______]% limited partner interest in
the Company acquired as provided in the Registration Statement. The Company
will not have any other partners upon the consummation of the Closing. Except
for Cornerstone Services, Inc., a Delaware corporation, the Company does not
have, and immediately after giving effect to the transactions contemplated by
the Conveyance Agreements will not have, any Subsidiaries or any Investments in
any Person (other than Investments of the types described in Section 10.3(a)).
5.3. QUALIFICATION. The Company is duly qualified or registered
and is in good standing as a foreign limited partnership for the transaction of
business, and each General Partner and the Restricted Subsidiary is qualified or
registered and is in good standing as a foreign corporation for the transaction
of business, in the jurisdictions set forth in Schedule 5.3 which are the only
jurisdictions in which, after giving effect to the conveyance to the Company of
the Assets, the nature of their respective activities or the character of the
properties they own, lease or use makes such qualification or registration
necessary and in which the failure so to qualify or to be so registered would
have a Material Adverse Effect. Each of the General Partners, Northwestern, the
Restricted Subsidiaries and the Company has taken all necessary partnership or
corporate action to authorize the execution, delivery and performance by it of
this Agreement, the Notes, as the case may be, and each other Operative
Agreement to which it is a party. Each of the General Partners, the Restricted
Subsidiaries and the Company has duly executed and delivered each of this
Agreement, the Notes and the other Operative Agreements to which it is a party,
and each of them constitutes its legal, valid, binding and enforceable
obligation in accordance with its terms, except that such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws of general application relating to or affecting the rights and
remedies of creditors and by general equitable principles, regardless of whether
such enforceability is considered in a proceeding in equity or at law.
5.4. BUSINESS; FINANCIAL STATEMENTS. (a) The Company has not
engaged in any business or activities prior to the date of this Agreement,
except for activities related to its formation, organization and prospective
operations, and will not have any
9
significant assets or liabilities prior to its acquisition of the Assets and
assumption of liabilities, as contemplated by this Agreement and the
Registration Statement.
(b) The Company has delivered to you complete and correct copies of
(i) the Registration Statement, and (ii) the memorandum prepared by Xxxxxx
Xxxxxxx & Co. Incorporated and Xxxx Xxxxxx Xxxxxxxx, Inc. for use in connection
with the Company's private placement of the Notes (the "Memorandum"). The
[unaudited] PRO FORMA consolidated financial statements of the Public
Partnership set forth in the Registration Statement comply in all respects with
the applicable accounting requirements of the Securities Act of 1933, as
amended, and the published rules and regulations thereunder and, in the opinion
of the Managing General Partner, the assumptions on which the pro forma
adjustments to such pro forma consolidated financial statements of the Public
Partnership are based provide a reasonable basis for presenting the significant
effects of the transactions contemplated by such pro forma consolidated
financial statements and such pro forma adjustments give appropriate effect to
such assumptions and are properly applied in such pro forma consolidated
financial statements. The financial statements and schedules included in the
Registration Statement (other than with respect to pro forma matters) have been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods specified and present fairly the financial position of the corporation
to which they relate as of the respective dates specified and the results of
their operations and cash flows for the respective periods specified. Since
________, 199_, there has been no material adverse change in the business,
financial condition, or results of operations of [Northwestern], the General
Partners and their consolidated subsidiaries taken as a whole. [The financial
data included under the caption "Selected Historical and Pro Forma Consolidated
Financial and Operating Data" for Cornerstone Propane GP and for the Public
Partnership in the Registration Statement present fairly, on the basis stated in
the Registration Statement, the information set forth therein and have been
compiled on a basis consistent with that of the audited financial statements
included in the Registration Statement. The historical aspects of the financial
data included under the caption "Capitalization" in the Registration Statement
present fairly, on the basis stated in the Registration Statement, the
information set forth therein and have been compiled on a basis consistent with
that of the audited financial statements included in the Registration Statement;
the pro forma aspects of such financial data included under the caption
"Capitalization" have been prepared in all material respects in accordance with
all applicable rules and guidelines of the Securities and Exchange Commission
with respect to pro forma financial information; and the assumptions on which
the pro forma adjustments to the pro forma
10
aspects of the financial data included under the caption "Capitalization" are
based provide a reasonable basis for presenting all of the significant effects
of the transactions contemplated by such pro forma financial data and such pro
forma adjustments give appropriate effect to such assumptions and are properly
applied in such pro forma financial data.]
(c) The unaudited pro forma balance sheets of Cornerstone Propane GP
as of ________ __, 1996 present fairly the financial condition of Cornerstone
Propane GP as of that date. Except as disclosed on Schedule 5.4(c), since
September 30, 1996, there has been no change or event which could reasonably be
expected to have a Material Adverse Effect. The financial data for Cornerstone
Propane GP in the Memorandum present fairly, on the basis stated in the
Memorandum, the information set forth therein and have been compiled based on
the audited financial statements included in the Registration Statement.
Schedule 5.4(c) specifies information in the Registration Statement that
modifies and updates information previously contained in the Memorandum.
Modifications of a non-material nature are not reflected in Schedule 5.4(c).
Except as otherwise provided on SCHEDULE 5.4(c), the financial data identified
as historical included in the Memorandum present fairly, on the basis stated in
the Memorandum, the information set forth therein and have been compiled on a
basis consistent with that of the audited financial statements included in the
Registration Statement; the pro forma financial data included in the Memorandum
represent, in all material respects and on the basis stated in the Memorandum,
Cornerstone Propane GP's best estimate at such time with respect to pro forma
financial information; and the assumptions on which the pro forma adjustments to
the pro forma aspects of the financial data included in the Memorandum are based
provide a reasonable basis for presenting all of the significant effects of the
transactions contemplated by such pro forma financial data and such pro forma
adjustments give appropriate effect to such assumptions and are properly applied
in such pro forma financial data.
5.5. CHANGES, ETC. Except as contemplated by this Agreement, the
other Operative Agreements, the Registration Statement or the Memorandum,
subsequent to the respective dates as of which information is given in the
Registration Statement or the Memorandum, the Company and its Affiliates have
not incurred any material liabilities or obligations, direct or contingent, or
entered into any material transaction not in the ordinary course of business, no
events have occurred, which individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect, and there has not been (a) any
Restricted Payment of any kind declared, paid or made by
11
the Company or either General Partner (other than those referred to in Section
5.13) or (b) any incurrence of Indebtedness under the Bank Credit Facilities.
5.6. TAX RETURNS AND PAYMENTS. On the Closing Date and after
giving effect to the transactions then to be consummated under the Operative
Agreements, each of the Company and its Affiliates has filed all federal, state
and other tax returns required by law to be filed by it or has properly filed
for an extension of time for the filing thereof and has paid all, taxes,
assessments and other governmental charges levied upon it or any of its
properties, assets, income or franchises which are due and payable, except those
(a) which are not past due or are presently being contested in good faith by
appropriate proceedings diligently conducted for which such reserves or other
appropriate provisions, if any, as shall be required by GAAP have been made.
The Company is a limited partnership that is treated as a pass-through entity
for federal income tax purposes, or (b) for which the failure to file or extend
would not reasonably be expected to have a Material Adverse Effect.
5.7. INDEBTEDNESS. At the time of the Closing, other than the
Indebtedness represented by the Notes and the Indebtedness listed in Schedule
5.7, none of Company, either General Partner or the Restricted Subsidiary will
have any secured or unsecured Indebtedness outstanding. At the time of the
Closing, no instrument or agreement to which the Company or, other than [Section
7.6(a) of the MLP Agreement] either General Partner is a party or by which the
Company or either General Partner is bound or which is applicable to the Company
or either General Partner (other than this Agreement and the Bank Credit
Facilities) contains any restrictions on the incurrence by the Company or either
General Partner of additional Indebtedness.
5.8. TRANSFER OF ASSETS AND BUSINESS. (a) The Company and the
Restricted Subsidiary, will at the Closing, after giving effect to the transfer
of the Assets on or prior to the date of the Closing as described in the
Registration Statement, be in possession of and operating in compliance in all
respects with all franchises, grants, authorizations, approvals, licenses,
permits, easements, rights-of-way, consents, certificates and orders required to
own, lease or use its properties (including, without limitation, to own, lease
or use the Assets and to assume certain liabilities relating to the Assets as
described in the Registration Statement and the Operative Agreements) and
(considering all such Permits (as below defined) in the possession of, and being
complied with by, the Company and the Restricted Subsidiary taken together) to
permit the conduct of the Business as now conducted and proposed to be conducted
12
("Permits"). Permits (collectively, "Permitted Exceptions") (i) which are not
required at such time and are routine or administrative in nature and are
expected in the reasonable judgment of Cornerstone Propane GP to be obtained or
given in the ordinary course of business after the date of the Closing, or
(ii) which, if not obtained or given, would not, individually or in the
aggregate, have a Material Adverse Effect.
(b) Except as set forth in Schedule 5.8(b), the General Partners
have, and upon the consummation of the Closing the Company will have, (i) title
to the portion of the Assets constituting real property owned in fee simple,
(ii) good and valid leasehold interests in the portion of the Assets
constituting real property and leased, pursuant to which the Company shall enjoy
undisturbed possession thereof, except for defects in, or lack of recorded title
and exceptions to, leasehold interests as would not, in the aggregate, be
reasonably expected to have a Material Adverse Effect, and (iii) sufficient
title to the portion of the Assets constituting personal property reasonably
necessary for the use and operation of such personal property as it has been
used in the past and as it is proposed to be used in the Business in each case
subject to no Liens except Permitted Encumbrances and Liens that will be
discharged prior to the Closing. The Assets are all of the assets and
properties reasonably necessary to enable the Company to conduct the Business
and include all options to purchase or rights of first refusal granted to or for
the General Partners with respect to any of the Assets leased by either General
Partner. Subject to exceptions as would not, individually or in the aggregate,
be reasonably expected to have a Material Adverse Effect, the General Partners
enjoy, and, upon execution and delivery of the Operative Agreements and the
consummation of the Conveyance Agreements, the Company will enjoy, peaceful and
undisturbed possession under all leases necessary for the operation of the
Business, other than certain immaterial leased property of which the Company
shall enjoy undisturbed possession, and all such leases are valid and subsisting
and are in full force and effect. Except to perfect and to protect security
interests permitted by Section 10.2, (x) at the time of the Closing, no
effective financing statement under the Uniform Commercial Code which names the
Company, Northwestern, any Restricted Subsidiary or either General Partner as
debtor, which individually or in the aggregate relates to any part of the Assets
or other assets pledged pursuant to any Security Document, will be on file in
any jurisdiction and (y) at the time of the Closing, none of the Company,
Northwestern, any Restricted Subsidiary or either General Partner will have
signed any effective financing statement or any effective security agreement,
which relates to any part of the Assets or other assets pledged pursuant to any
Security Document, authorizing any secured party thereunder to file any such
financing state-
13
xxxx, except for financing statements to be executed and filed in connection
with the Closing.
(c) Upon the consummation of the Closing, (i) the General Partners
will have transferred to the Company (except in the case of motor vehicles
covered by certificates of title where the certificates of title will have been
duly executed in favor of the Company, and such certificates of title will have
been delivered to the Company, but will not have yet been submitted to the
appropriate governmental agency for re-issuance) ownership of properties,
easements and licenses comprising the Assets, (ii) the Conveyance Agreements
referred to in clause (b) of the definition of such term (except in the case of
motor vehicles covered by certificates of title) will have been duly delivered
as required by Section 4.8 with respect to the Assets covered by the Company
Security Agreement, and (iii) the Company Security Agreement or proper notices,
statements or other instruments in respect thereof, will have been duly
recorded, published, registered and filed as required by Section 4.8 with
respect to Assets.
5.9. LITIGATION, ETC. Except as set forth on Schedule 5.9, there
is no action, proceeding or investigation pending or, to the knowledge of the
Company and the General Partners upon reasonable inquiry, threatened (or any
basis therefor known to the Company or either General Partner) which questions
the validity of this Agreement, any other Operative Agreement or the Notes or
any action taken or to be taken pursuant to this Agreement, any other Operative
Agreement or the Notes, or which could reasonably be expected to have, either in
any case or in the aggregate, a Material Adverse Effect.
5.10. COMPLIANCE WITH OTHER INSTRUMENTS, ETC. Neither the
Company, the Restricted Subsidiary nor either General Partner (i) is in
violation of any term of the Partnership Agreement or, in the case of the
Restricted Subsidiary and the General Partners, of their respective articles or
certificates of incorporation or by-laws, or (ii) is in violation of any term of
any other agreement or instrument to which the Company, the Restricted
Subsidiary or either General Partner is a party or by which any of them or any
of their properties is bound or any term of any applicable law, ordinance, rule
or regulation of any governmental authority or any term of any applicable order,
judgment or decree of any court, arbitrator or governmental authority, in the
case of clause (ii), the consequences of which would have a Material Adverse
Effect; the execution, delivery and performance by each of the General Partners
and the Company
14
of this Agreement and the other Operative Agreements to which it is a party and
the Notes, as the case may be, will not result in any violation of or be in
conflict with or constitute a default under any such term or result in the
creation of (or impose any obligation on the Company, the Restricted Subsidiary
or either General Partner to create) any Lien upon any of the properties or
assets of the Company or either General Partner prohibited by any such term,
except for Permitted Encumbrances and for any such term relating to Indebtedness
to be repaid in full at the time of the Closing; and there is no such term the
compliance with which would have, or in the future may in the reasonable
judgment of either General Partner or the Company be likely to have, a Material
Adverse Effect.
5.11. GOVERNMENTAL CONSENT. No consent, approval or authorization
of, or declaration or filing with, any governmental authority (which has not
been obtained) is required for the valid execution, delivery and performance of
this Agreement or the other Operative Agreements (other than Permitted
Exceptions), and no such consent, approval, authorization, declaration or filing
is required for the valid offer, issue, sale and delivery of the Notes pursuant
to this Agreement and the Other Agreements.
5.12. OFFER OF NOTES. Neither the Company nor any of its
Affiliates nor anyone acting on its or their behalf has directly or indirectly
offered the Notes or any part thereof or any similar securities for sale to, or
solicited any offer to buy any of the same from, or otherwise approached or
negotiated in respect thereof with, anyone other than you, the Other Purchasers
and not more than 85 other institutional investors. Neither the General
Partners nor the Company nor anyone authorized to act on their behalf has taken
or will take any action which would subject the issuance and sale of the Notes
to the registration and prospectus delivery provisions of the Securities Act of
1933, as amended, or to the registration or qualification provisions of any
securities or Blue Sky law of any applicable jurisdiction or require
qualification of any Security Document under the Trust Indenture Act of 1939, as
amended; PROVIDED, HOWEVER, that it is understood that any action taken by you
or any Other Purchaser shall not have been taken on behalf of the Company or the
General Partners.
5.13. USE OF PROCEEDS. The proceeds of the sale of the Units by
the Public Partnership will be used by the Public Partnership and the Company as
contemplated by the Registration Statement. The proceeds of the sale of the
Notes to you and the Other Purchasers will be used to repay existing debt, to
make a distribution to the Special General Partner who will use $44,220,000 to
redeem a portion of its preferred
15
stock and the remaining $15,000,000 will provide net worth for the Special
General Partners and for general partnership purposes and to pay fees and
expenses associated with the offering.
5.14. FEDERAL RESERVE REGULATIONS. Neither the General Partners
nor the Company will, directly or indirectly, use any of the proceeds of the
sale of the Notes for the purpose, whether immediate, incidental or ultimate, of
buying a "margin stock" or of maintaining, reducing or retiring any indebtedness
originally incurred to purchase a stock that is currently a "margin stock", or
for any other purpose which might constitute this transaction a "purpose
credit", in each case within the meaning of Regulation G of the Board of
Governors of the Federal Reserve System (12 C.F.R. 207, as amended), or
otherwise take or permit to be taken any action which would involve a violation
of such Regulation G or of Regulation X (12 C.F.R. 224, as amended) or any other
applicable regulation of such Board. No indebtedness being reduced or retired,
directly or indirectly, out of the proceeds of the sale of the Notes was
incurred for the purpose of purchasing or carrying any stock which is currently
a "margin stock", and neither General Partner nor the Company owns or has any
present intention of acquiring with the proceeds thereof any amount of such
"margin stock".
5.15. INVESTMENT COMPANY ACT. None of the General Partners or the
Company is an "investment company", or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended.
5.16. PUBLIC UTILITY HOLDING COMPANY ACT; FEDERAL POWER ACT. None
of the General Partners or the Company is a "holding company", or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company", as such terms are defined in the
Public Utility Holding Company Act of 1935, as amended; each of the General
Partners, the Company, and the issue and sale of the Notes by the Company is not
subject to regulation under such Act; and none of the General Partners or the
Company is a "public utility" as such term is defined in the Federal Power Act,
as amended.
5.17. ERISA. (a) None of the General Partners, the Company, any
Subsidiary of the Company or any Related Person of the General Partners or the
Company (other than Northwestern and any Subsidiaries of Northwestern (except
for the General Partners and any Subsidiary of the General Partners that is a
Related Person of the Company)) is obligated to contribute to, and none of the
General Partners, the
16
Company or any Related Person of the Company has any liability or obligation
with respect to, any Plan that is subject to Section 302 or Title IV of ERISA or
Section 412 of the Code (other than a Multiemployer Plan). None of the Company,
any Subsidiary of the Company or any Related Person of the Company has any
liability or obligation to provide any amount or type of compensation or benefit
in respect of any employee or former employee of the Business which relates to
periods, services performed or benefits or amounts accrued prior to the transfer
of the Business or the Assets pursuant to the Operative Agreements and the
transactions contemplated thereby (other than pursuant to a Multiemployer Plan),
continuation coverage provided pursuant to Section 4980B of the Code or Section
601, et seq., of ERISA, or any liability or obligation for contributions
pursuant to a Plan not yet required to be paid. None of the General Partners,
the Company, any Subsidiary of the Company or any Related Person of the Company
has incurred any material liability under Title IV of ERISA with respect to any
such Plan and no event or condition exists or has occurred as a result of which
such a liability would reasonably be expected to be incurred. None of the
General Partners, the Company, any Subsidiary of the Company or any Related
Person of the Company has engaged in any transaction, including the transactions
contemplated hereunder which could subject the Company or any Related Person of
the Company to a material liability pursuant to Section 4069(a) or 4212(c) of
ERISA. There has been no reportable event (within the meaning of Section
4043(b) of ERISA other than one for which the applicable notice requirements
have been waived by PBGC regulation) or any other event or condition with
respect to any Plan which presents a risk of the termination of, or the
appointment of a trustee to administer, any such Plan (other than a
Multiemployer Plan) by the PBGC. No prohibited transaction (within the meaning
of Section 406(a) of ERISA or Section 4975 of the Code) exists or has occurred
with respect to any Plan which has subjected or could reasonably be expected to
subject either General Partner, the Company or any Subsidiary of the Company to
a material liability under Section 502(i) or 502(l) of ERISA or Section 4975 of
the Code. No material liability to the PBGC (other than liability for premiums
not yet due) has been or is expected to be incurred with regard to any Plan by
the General Partners, the Company, any Subsidiary of the Company or any Related
Person of the Company. None of the General Partners, the Company, any
Subsidiary of the Company or any Related Person of the Company contributes or is
obligated to contribute or has ever contributed or been obligated to contribute
to any single employer plan that has at least two contributing sponsors not
under common control [(other than the General Partners' 401(k) Plan)]. Timely
payment has been made of all amounts which the General Partners, the Company,
any Subsidiary of the Company or any Related Person of the
17
Company is required under applicable law, the terms of each Plan or any
collective bargaining agreement to have paid as contributions to each such Plan
except to the extent that failure to do so would not have a Material Adverse
Effect. To the knowledge of the General Partners and the Company, no
Multiemployer Plan has been terminated or presents a material risk of
termination, is insolvent or is in reorganization within the meaning of Section
4241 or 4245 of ERISA and the transactions contemplated hereby will not result
in a withdrawal from any Multiemployer Plan that would have a Material Adverse
Effect. None of the General Partners, the Company or any Subsidiary of the
Company has any obligation to provide any material amount of post-employment
welfare benefits or coverage (other than continuation coverage provided pursuant
to Section 4980B of the Code or Section 601, et seq., of ERISA).
(b) The execution and delivery of this Agreement and the Other
Agreements and the issue and sale of the Notes, and delivery of the Notes
hereunder and thereunder will not involve any non-exempt "prohibited
transaction" within the meaning of Section 406 of ERISA or Section 4975 of the
Code. The representations by the Company and the General Partners in the
immediately preceding sentence are made in reliance upon and subject to the
accuracy of your representation in Section 6.2 of this Agreement and the
representations of the Other Purchasers in Section 6.2 of the Other Agreements
as to the source of the funds to be used to pay the purchase price of the Notes
to be purchased by you and the Other Purchasers, respectively. With respect to
each employee benefit plan identified to the Company in accordance with
clause (c) of Section 6.2 of this Agreement or of any of the Other Agreements,
none of the General Partners, the Company or any "affiliate" (as defined in
Section V(c) of the QPAM Exemption) of either General Partner or the Company has
at this time, and has not exercised at any time within the one year period
preceding the date of the Closing, the authority to appoint or terminate you or
any Other Purchaser as manager of any of the assets of any such plan or to
negotiate the terms of any management agreement with you or any Other Purchaser
on behalf of any such plan.
5.18. ENVIRONMENTAL MATTERS. (a) Except as disclosed in Schedule
5.18 each of the Company, each Restricted Subsidiary and either General Partner
is, and after giving effect to the transfer to the Company of the Assets will
be, in compliance with all Environmental Laws applicable to it or to the
Business or Assets except where such noncompliance would not have a Material
Adverse Effect. Each of the Company and the Restricted Subsidiary has timely
and properly applied for renewal of all environmental permits or licenses that
have expired or are about to expire and are necessary
18
for the conduct of the Business as now conducted and as proposed to be
conducted, except where the failure to timely and properly reapply would not
have a Material Adverse Effect. Schedule 5.18 lists (i) all notices from
Federal, state or local environmental agencies to the Company, the Restricted
Subsidiary or the General Partners citing environmental violations that have not
been finally resolved and disposed of, and no such violation, whether or not
notice regarding such violation is listed on Schedule 5.18, if ultimately
resolved against the Company, the Restricted Subsidiary or either General
Partner, as the case may be, individually or in the aggregate, would have a
Material Adverse Effect, and (ii) all current reports filed by the Company, the
Restricted Subsidiary or either General Partner with any Federal, state or local
environmental agency having jurisdiction over the Assets, true and complete
copies of which reports have been made available to you, your special counsel
and your environmental advisor. Notwithstanding any such notice, the Company,
the Restricted Subsidiary and either General Partner are currently operating in
all material respects within the limits set forth in such environmental permits
or licenses and any current noncompliance with such permits or licenses will not
result in any material liability or penalty to the Company, the Restricted
Subsidiary or either General Partner or in the revocation, loss or termination
of any such environmental permits or licenses, the revocation, loss or
termination of which would have a Material Adverse Effect.
(b) Except as disclosed in Schedule 5.18, all facilities located on
the real property included in the Assets which are subject to regulation by RCRA
are and have been operated in compliance with RCRA, except where such
noncompliance would not have a Material Adverse Effect and none of the Company,
the Restricted Subsidiary or either General Partner has received, or, to the
knowledge of the Company and either General Partner been threatened with, a
notice of violation of RCRA regarding such facilities.
(c) Except as disclosed in Schedule 5.18, no hazardous substance (as
defined in CERCLA) or hazardous waste (as defined in RCRA) is located or present
at any of the real property included in the Assets in violation of any
Environmental Law, which violation will have a Material Adverse Effect, and with
respect to such real property there has not occurred (i) any release or
threatened release of any such hazardous substance, (ii) any discharge or
threatened discharge of any substance into ground, surface, or navigable waters
which violates any Federal, state, local or foreign laws, rules or regulations
concerning water pollution, or (iii) any assertion of any Lien pursuant to
Environmental Laws resulting from any use, spill, discharge or clean-up of any
haz-
19
ardous or toxic substance or waste, which occurrence will have a Material
Adverse Effect.
5.19. FOREIGN ASSETS CONTROL REGULATIONS, ETC. The issue and sale
of the Notes by the Company and its use of the proceeds thereof as contemplated
by this Agreement, will not violate any of the regulations (other than those
regulations, if any, that are implicated solely as a result of the actions of
the purchasers of the Notes) administered by the Office of Foreign Assets
Control, the United States Department of the Treasury, including, without
limitation, the Foreign Assets Control Regulations, the Transaction Control
Regulations, the Cuban Assets Control Regulations, the Foreign Funds Control
Regulations, the Iranian Assets Control Regulations, the Iranian Transactions
Regulations, the Iraqi Sanctions Regulations, the Libyan Sanctions Regulations,
the Federal Republic of Yugoslavia (Serbia and Montenegro) and Bosnian Serb-
Controlled Areas of the Republic of Bosnia and Herzegovina Sanctions
Regulations, the Unita (Angola) Sanctions Regulations, the Terrorism Sanctions
Regulations, and the Soviet Gold Coin Regulations of the United States Treasury
Department (31 C.F.R., Subtitle B, Chapter V, as amended) or the restrictions
set forth in Executive Orders No. 8389, 9193, 12543 (Libya), 12544 (Libya),
12801 (Libya), 12722 (Iraq), 12724 (Iraq), 12775 (Haiti), 12779 (Haiti), 12808
(Yugoslavia), 12810 (Yugoslavia) or 12831 (Yugoslavia), as amended, of the
President of the United States of America or of any rules or regulations issued
thereunder.
5.20. DISCLOSURE. This Agreement, the other Operative Agreements,
the Memorandum, the Registration Statement, and each other historical financial
statement, document, certificate or instrument delivered to you by or on behalf
of the Company, the Restricted Subsidiary, or either General Partner or any of
their Affiliates (as amended, updated or revised by any subsequent delivery) in
connection with the transactions contemplated by this Agreement, taken together
do not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements contained therein, in
light of the circumstances under which they were made, not misleading (other
than the statements made regarding general economic conditions relating to
national or local economies and except for projections made and delivered in
good faith and on the basis of reasonable assumptions). There is no fact
actually known to the Company or either General Partner which has or in the
future would (so far as the Company or either General Partner can now reasonably
foresee) have a Material Adverse Effect which has not been set forth or referred
to in this Agreement, the Memorandum or the Registration Statement or another
document,
20
certificate or instrument delivered to you. You and the Other Purchasers shall
be entitled to rely on the statements and disclosures set forth in the
Registration Statement.
5.21. CHIEF EXECUTIVE OFFICE. The chief executive office of the
Company and the Managing General Partner and the office where each maintains its
records relating to the transactions contemplated by the Operative Agreements is
located at 000 Xxxxxxxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxxxx 00000.
5.22. SOLVENCY. Upon the sale of the Notes and the concurrent or
prior consummation of the transactions contemplated hereby, the Company and the
Restricted Subsidiary will be Solvent. "SOLVENT" means, with respect to any
Person, that (a) the sum of the assets of such Person, both at a fair valuation
and at present fair saleable value, will exceed the liabilities of such Person,
(b) such Person will have sufficient capital with which to conduct its business
as presently conducted and as proposed to be conducted and (c) such Person has
not incurred debts, and does not intend to incur debts, beyond its ability to
pay such debts as they mature. For purposes of the foregoing definition,
"DEBTS" means any liabilities or claims, and "CLAIM" means (i) a right to
payment, whether or not such right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured or (ii) a right to an equitable remedy
for breach of performance if such breach gives rise to a payment, whether or not
such right to an equitable remedy is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured. With respect to any contingent
liabilities, such liabilities shall be computed at the amount which, in light of
all the facts and circumstances existing at the time, represents the amount
which can reasonably be expected to become an actual or matured liability.
SECTION 6. PURCHASER'S REPRESENTATIONS; SOURCE OF FUNDS.
6.1. You represent that you are purchasing the Notes for your own
account or for one or more separate accounts maintained by you or for the
account of one or more pension or trust funds, in each case not with a view to
or for sale in connection with any distribution thereof within the meaning of
the Securities Act of 1933, as amended, or with any present intention of selling
any of the Notes in connection with any distribution, PROVIDED that the
disposition of your property shall at all times be within your control. If you
are purchasing for the account of one or more pension or trust funds (other than
pension or trust funds included in the general account of an
21
insurance company), you represent that (except to the extent that you have
otherwise advised Xxxxxxxxx & Xxxxxxxx and the Company in writing) you have sole
investment discretion with respect to the acquisition of the Notes to be issued
to you pursuant to this Agreement and the authority to make the representations
herein contained on behalf of such pension or trust funds [and on your own
behalf] and that the determination and decision on your behalf to purchase such
Notes for such pension or trust funds is being made by the same individual or
group of individuals who customarily pass on such investments.
6.2. You represent that at least one of the following statements
is an accurate representation as to the source of funds to be used by you to pay
the purchase price of the Notes purchased by you hereunder:
(a) if you are an insurance company, no part of such funds
constitutes assets allocated to any separate account maintained by you in
which an employee benefit plan (or its related trust) has any interest; or
(b) if you are an insurance company, to the extent that any of such
funds constitutes assets allocated to any separate account maintained by
you, (i) such separate account is a "pooled separate account" within the
meaning of Prohibited Transaction Class Exemption 90-1, in which case you
have disclosed to the Company the names of each employee benefit plan whose
assets in such separate account exceed 10% of the total assets or are
expected to exceed 10% of the total assets of such account as of the date
of such purchase (and for the purposes of this subdivision (b), all
employee benefit plans maintained by the same employer or employee
organization are deemed to be a single plan), or (ii) such separate account
contains only the assets of a specific employee benefit plan, complete and
accurate information as to the identity of which you have delivered to the
Company in writing; or
(c) if you are a "qualified professional asset manager" or "QPAM" (as
defined in Part V of Prohibited Transaction Class Exemption 84-14, issued
March 13, 1984 (the "QPAM Exemption")), all of such funds constitute assets
of an "investment fund" (as defined in Part V of the QPAM Exemption)
managed by you, no employee benefit plan assets which are included in such
investment fund, when combined with the assets of all other employee
benefit plans (i) established or maintained by the same employer or an
affiliate (as defined in Part V of the
22
QPAM Exemption) of such employer or by the same employee organization and
(ii) managed by you, exceed 20% of the total client assets managed by you,
the conditions of the QPAM Exemption (other than Section I(a) thereof) are
satisfied and you have disclosed to the Company the names of all employee
benefit plans whose assets are included in such investment fund; or
(d) if you are other than an insurance company, all or a portion of
such funds consists of funds which do not constitute assets of any employee
benefit plan (other than a governmental plan exempt from the coverage of
ERISA) and the remaining portion, if any, of such funds consists of funds
which may be deemed to constitute assets of one or more specific employee
benefit plans, complete and accurate information as to the identity of each
of which you have delivered to the Company in writing; or
(e) if you are an insurance company, the source of the funds is an
insurance company general account in respect of which the reserves and
liabilities for the general account contract(s) held by or on behalf of any
benefit plan (as defined by the annual statement for life insurance
companies approved by the National Association of Insurance Commissioners
(the "NAIC Annual Statement"), determined before reduction for credits on
account of any reinsurance ceded on a coinsurance basis) together with the
amount of the reserves and liabilities for the general account contract(s)
held by or on behalf of any other benefit plans (as defined by the NAIC
Annual Statement) maintained by the same employer (or affiliate thereof as
defined in Prohibited Transaction Class Exemption 95-60) or by the same
employee organization (as defined by the NAIC Annual Statement) in the
general account do not exceed 10% of the total reserves and liabilities of
the general account (exclusive of separate account liabilities) plus
surplus as set forth in the NAIC Annual Statement filed with the state of
domicile of the insurance company.
As used in this Section 6.2, the terms "employee benefit plan", "governmental
plan" and "separate account" shall have the respective meanings assigned to such
terms in Section 3 of ERISA.
23
SECTION 7. ACCOUNTING; FINANCIAL STATEMENTS AND OTHER INFORMATION.
The Company will maintain, and will cause each Restricted Subsidiary
to maintain, a system of accounting established and administered in accordance
with GAAP, and will accrue, and will cause each Restricted Subsidiary to accrue,
all such liabilities as shall be required by GAAP. The Company will deliver (in
duplicate, unless you have advised us otherwise) to you, so long as you shall be
entitled to purchase Notes under this Agreement or you or your nominee shall be
the holder of any Notes, and to each other Institutional Investor holding any
Notes (other than a Competitor of the Company):
(a) as soon as practicable, but in any event within 60 days after the
end of each of the first three quarterly fiscal periods in each fiscal year
of the Company beginning with the fiscal period ending March 31, 1997,
consolidated (and to the extent that such are being prepared,
consolidating) balance sheets of the Company and the Restricted
Subsidiaries as at the end of such period and the related consolidated
(and, as to statements of income and cash flows, if applicable and as
appropriate, consolidating) statements of income, surplus or partners'
capital, cash flows and stockholders' equity of the Company and the
Restricted Subsidiaries (i) for such period and (ii) (in the case of the
second and third quarterly periods) for the period from the beginning of
the current fiscal year to the end of such quarterly period, setting forth
in each case (except in the case of financial statements with respect to
the fiscal year of the Company beginning ________, 1998 or if consolidating
balance sheets of the Restricted Subsidiaries were not required to be
delivered pursuant to this subdivision (a) for the previous corresponding
period) in comparative form the consolidated and, where applicable and as
appropriate, consolidating figures for the corresponding periods of the
previous fiscal year, all in reasonable detail and certified by an
authorized financial officer of the Managing General Partner as presenting
fairly, in all material respects, the information contained therein
(subject to changes resulting from normal year-end adjustments), in
accordance with GAAP applied on a basis consistent with prior fiscal
periods, PROVIDED that delivery within the time period specified above of
copies of the Company's Quarterly Report on Form 10-Q prepared in
compliance with the requirements therefor and filed with the Securities and
Exchange Commission shall be deemed to satisfy the requirements hereof to
the extent such reports otherwise satisfy such requirements;
24
(b) as soon as practicable, but in any event within 120 days after
the end of each fiscal year of the Company beginning with the fiscal year
ending June 30, 1998, consolidated (and to the extent that such are being
prepared, consolidating) balance sheets of the Company and the Restricted
Subsidiaries and the consolidated balance sheets of each General Partner as
at the end of such year and the related consolidated (and, as to statements
of income and cash flows, if applicable and as appropriate, consolidating)
statements of income, partners' capital, cash flows and stockholders'
equity of the Company and the Restricted Subsidiaries and the consolidated
statements of income, surplus, cash flow and stockholders' equity of each
General Partner for such fiscal year, setting forth in each case (except in
the case of the financial statements with respect to the fiscal year of the
Company ending June 30, 1998 or if consolidating balance sheets of the
Restricted Subsidiaries were not required to be delivered pursuant to this
subdivision (b) for the preceding corresponding period) in comparative form
the consolidated and, where applicable and as appropriate, consolidating
figures for the previous fiscal year, all in reasonable detail, PROVIDED
that delivery within the time periods specified above of copies of the
Company's Annual Report on Form 10-K prepared in compliance with the
requirements therefor and filed with the Securities and Exchange Commission
shall be deemed to satisfy the requirements hereof to the extent such
reports otherwise satisfy such requirements, and (i) in the case of such
consolidated financial statements of the Company, accompanied by a report
thereon of Xxxxxx Xxxxxxxx LLP or other independent public accountants of
recognized national standing selected by the Company, which report shall
state that such consolidated financial statements present fairly in all
material respects the financial position of the Company and the Restricted
Subsidiaries as at the dates indicated and the results of their operations
and cash flows for the periods indicated in conformity with GAAP applied on
a basis consistent with prior years and that the audit by such accountants
in connection with such consolidated financial statements has been made in
accordance with generally accepted auditing standards in effect in the
United States from time to time, and (ii) in the case of such consolidated
financial statements of each General Partner and such consolidating
financial statements of the Company, certified by the principal financial
officer of the Managing General Partner of the Company, as presenting
fairly in all material respects the information contained therein, in
accordance with GAAP applied on a basis consistent with prior fiscal
periods;
25
(c) together with each delivery of financial statements pursuant to
subdivisions (a) and (b) of this Section 7, a certificate by an authorized
financial officer of the Managing General Partner of the Company
(i) stating that the signer has reviewed the terms of this Agreement and
the other Operative Agreements and has made, or caused to be made under his
or her supervision, a review in reasonable detail of the transactions and
condition of the Company and the Restricted Subsidiaries during the
accounting period covered by such financial statements and that the signer
does not have knowledge of the existence and continuance as at the date of
such certificate of any condition or event which constitutes an Event of
Default or Potential Event of Default, or, if any such condition or event
exists, specifying the nature and period of existence thereof and what
action the Company has taken or is taking or proposes to take with respect
thereto, (ii) specifying the amount available at the end of such accounting
period for Restricted Payments in compliance with Section 10.4 and showing
in reasonable detail all calculations required in arriving at such amount,
(iii) demonstrating in reasonable detail, if applicable, compliance during
and at the end of such accounting period with the restrictions contained in
Sections 10.1(b), (d), (e), (f), (g), (h), (i) and (n), 10.3(c),
10.7(a)(ii), 10.7(a)(iii), 10.7(c)(ii), 10.19 and 10.30, (iv) if not
specified in the related financial statements being delivered pursuant to
subdivisions (a) and (b) above, specifying the aggregate amount of interest
paid or accrued by the Company and the Restricted Subsidiaries, and the
aggregate amount of depreciation, depletion and amortization charged on the
books of the Company and the Restricted Subsidiaries, during the fiscal
period covered by such financial statements;
(d) together with each delivery of consolidated financial statements
pursuant to subdivision (b) of this Section 7, a written statement by the
independent public accountants giving the report thereon (i) stating that
in connection with their audit examination, the terms of this Agreement and
the other Operative Agreements were reviewed to the extent considered
necessary for the purpose of expressing an opinion on the consolidated
financial statements and for making the statement contained in clause (ii)
hereof (it being understood that no special audit procedures in addition to
those required by generally accepted auditing standards then in effect in
the United States shall be required) and (ii) stating whether, in the
course of their audit examination, they obtained knowledge (and whether, as
of the date of such written statement, they have knowledge) of the
existence and continuance of any condition or event which constitutes an
Event of Default or Potential Event of
26
Default insofar as such Event of Default or Potential Event of Default
relates to accounting or financial matters, and, if so, specifying the
nature and period of existence thereof;
(e) promptly upon their becoming publicly available, copies of
(i) all financial statements, reports, notices and proxy statements sent or
made available by the Company, the Managing General Partner or the Public
Partnership to all of its security holders in compliance with the
Securities Exchange Act of 1934, as amended from time to time, or any
comparable Federal or state laws relating to the disclosure by any Person
of information to its security holders, (ii) all regular and periodic
reports and all registration statements and prospectuses filed by the
Company, the Managing General Partner or the Public Partnership with any
securities exchange or with the Securities and Exchange Commission or any
governmental authority succeeding to any of its functions (other than
Registration Statements on Form S-8), and (iii) all press releases and
other statements made available by the Company, the Managing General
Partner or the Public Partnership to the public concerning material
developments in the business of the Company, either General Partner of the
Company or the Public Partnership, as the case may be;
(f) promptly, but in any event within five days after any Responsible
Officer of the Company knows, that (x) any condition or event which
constitutes an Event of Default or Potential Event of Default has occurred
or exists, or is expected to occur or exist, (y) the holder of any Note has
given any notice or taken any other action with respect to a claimed Event
of Default or Potential Event of Default under this Agreement or default
under any other Operative Agreement or (z) any Person has given any notice
to the Company, either General Partner or any Restricted Subsidiary or
taken any other action with respect to a claimed default or event or
condition of the type referred to in Section 11(f), an Officers'
Certificate of the Company describing the same and the period of existence
thereof and what action the Company has taken, is taking and proposes to
take with respect thereto;
(g) promptly, and in any event within five Business Days after a
Responsible Officer of the Company obtains knowledge of (i) the occurrence
of an adverse development with respect to any litigation or proceeding
involving the Company, any of its Subsidiaries or either General Partner
which in the reasonable judgment of the Company presents a reasonable
likelihood of having a Material Adverse Effect or (ii) the commencement of
any litigation or proceeding involving the
27
Company, any of the Subsidiaries or either General Partner which in the
reasonable judgment of the Company presents a reasonable likelihood of
having a Material Adverse Effect, a written notice of a Responsible
Officer describing in reasonable detail such commencement of, or adverse
development with respect to, such litigation or proceeding;
(h) promptly, but in any event within five days after any Responsible
Officer of the Company knows, that any of the events or conditions
specified below with respect to any Plan has occurred or exists, or is
expected to occur or exist, a statement setting forth details respecting
such event or condition and the action, if any, that the Company or any
Related Person of the Company has taken, is taking and proposes to take or
cause to be taken with respect thereto (and a copy of any notice or report
filed with or given to or communication received from the PBGC, the
Internal Revenue Service or the Department of Labor with respect to such
event or condition):
(A) any reportable event, as defined in Section 4043(b) of ERISA
and the regulations issued thereunder;
(B) the filing under Section 4041 of ERISA of a notice of intent
to terminate any Plan or the termination of any Plan;
(C) a substantial cessation of operations within the meaning of
Section 4062(e) of ERISA under circumstances which could result in the
treatment of the Company or any Related Person of the Company as a
substantial employer under a "multiple employer plan" or the
application of the provisions of Section 4062, 4063 or 4064 of ERISA
to the Company or any Related Person of the Company;
(D) the taking of any steps by the PBGC or the institution by
the PBGC of proceedings under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any
Plan, or the receipt by the Company or any Related Person of the
Company of a notice from a Multiemployer Plan that such action has
been taken by the PBGC with respect to such Multiemployer Plan;
28
(E) the complete or partial withdrawal by the Company or any
Related Person of the Company under Section 4063, 4203 or 4205 of
ERISA from a Plan which is a "multiple employer plan" or a
Multiemployer Plan, or the receipt by the Company or any Related
Person of the Company of notice from a Multiemployer Plan regarding
any alleged withdrawal or that it intends to impose withdrawal
liability on the Company or any Related Person of the Company or that
it is in reorganization or is insolvent within the meaning of
Section 4241 or 4245 of ERISA or that it intends to terminate under
Section 4041A of ERISA or from a "multiple employer plan" that it
intends to terminate;
(F) the taking of any steps concerning the threat or the
institution of a proceeding against the Company or any Related Person
of the Company to enforce Section 515 of ERISA;
(G) the occurrence or existence of any event or series of events
which could result in a liability to the Company or any Related Person
of the Company pursuant to Section 4069(a) or 4212(c) of ERISA;
(H) the failure to make a contribution to any Plan, which
failure, either alone or when taken together with any other such
failure, is sufficient to result in the imposition of a lien on any
property of the Company or any Related Person of the Company pursuant
to Section 302(f) of ERISA or Section 412(n) of the Code or could
result in the imposition of a material tax or material penalty
pursuant to Section 4971 of the Code on the Company or any Related
Person of the Company;
(I) the amendment of any Plan in a manner which would be treated
as a termination of such Plan under Section 4041(e) of ERISA or
require the Company or any Related Person of the Company to provide
security to such Plan pursuant to Section 307 of ERISA or
Section 401(a)(29) of the Code; or
(J) the incurrence of liability in connection with the
occurrence of a "prohibited transaction" (within the meaning of
Section 406 of ERISA or Section 4975 of the Code);
29
(i) promptly, but in any event within five days, after an officer of
any of the Company, any Subsidiary or either General Partner receives any
notice or request from any Person (other than any Affiliate or any agent,
attorney or similar party employed by the Company or either General
Partner) for information, or if the Company, any Subsidiary or either
General Partner provides any notice or information to any such Person
(other than any Affiliate or any agent, attorney or similar party employed
by the Company or either General Partner), concerning the presence or
release of any hazardous substance (as defined in CERCLA) or hazardous
waste (as defined in RCRA) or other contaminants (as defined by any
applicable federal, state, local or foreign laws) within, on, from,
relating to or affecting any property owned, leased, or subleased by the
Company, any Subsidiary or either General Partner (each such notice,
request or information, an "Environmental Notice"), copies of such
Environmental Notice, except (i) any Environmental Notice which the Company
reasonably determines will not result in any claim or liability in excess
of $250,000 (it being understood that to the extent that all such
Environmental Notices could reasonably be expected to result in aggregate
claims or liabilities in excess of $250,000, the Company shall provide a
summary of such Environmental Notices) and (ii) any Environmental Notice
made in the normal course of business which do not pertain to the violation
by the Company, any Subsidiary or either General Partner of an
Environmental Law;
(j) with reasonable promptness, such other financial reports and
information and data (including, without limitation, any management letter
issued or provided by independent public accountants of the Company or any
Restricted Subsidiary) with respect to the Company, any Restricted
Subsidiary, any other Subsidiary (to the extent such reports, information
and data relate to environmental matters or any material litigation or
proceeding) or either General Partner as from time to time may be requested
by you (so long as you hold a Note), or by any Institutional Investor
holder of any Note other than a Competitor of the Company;
(k) promptly, after a Responsible Officer of the Company or any
Restricted Subsidiary becomes aware of (i) any material violation of or
notice of potential liability under any Environmental Law or (ii) any
release or threatened release of any Hazardous Material at, on, into, under
or from any real property of any facility or equipment thereat in excess of
reportable or allowable standards or levels under any Environmental Law, or
in a manner and/or amount which could reasonably be expected to result in
liability under any Environmental Law, which
30
liability would result in a Material Adverse Effect a statement setting
forth details respecting such event or condition and the action, if any,
that the Company or any Related Person of the Company has taken, is taking
and proposes to take or cause to be taken with respect thereto; and
(l) promptly, and, in any event, within 30 days after such material
is provided to the governmental authority or third party, copies of any
notice, submission or documentation provided by the Company or any
Restricted Subsidiary to any governmental authority or third party under
any Environmental Law if the matter which is the subject of the notice,
submission or other documentation could reasonably be expected to have a
Material Adverse Effect.
SECTION 8. INSPECTION.
The Company will permit or cause the Managing General Partner to
permit (a) at any time when an Event of Default or Potential Event of Default
shall have occurred and be continuing, any authorized representatives designated
by you, so long as you shall be entitled to purchase the Notes under this
Agreement or you or your nominee shall be the holder of any Notes, or by any
other institutional holder of any Notes (other than a Competitor of the
Company), and (b) at any other time, any authorized representative designated by
any Purchaser or Purchasers holding at least $10,000,000 of the principal
amount of the Notes, or by any other holder or holders of at least $10,000,000
of the principal amount of the Notes (other than a Competitor of the Company)
then outstanding and an authorized representative of all of the holders of the
Notes, in each case, upon prior written notice and as may be reasonably
requested, to visit during normal business hours and inspect any of the
properties of the Company, any Restricted Subsidiary and any other Subsidiary
(to the extent relating to environmental or litigation matters) and, to the
extent relating to the Business, any properties of either General Partner or of
either General Partner's Subsidiaries, including the books of account of the
Company, the Restricted Subsidiaries, such other Subsidiaries, either General
Partner and either General Partner's Subsidiaries, and to make copies and take
extracts therefrom, and to discuss its and their affairs, finances and accounts
with its and their senior officers and (with reasonable prior written notice)
independent public accountants (and by this provision each of the Company and
either General Partner authorizes such accountants to discuss with such
representatives the affairs, finances and accounts of the Company, any
Restricted Subsidiary, such other Subsidiaries, [either General Partner or any
of either General Partner's Subsidiaries], as the
31
case may be) all at such times and as often as may be requested, PROVIDED that
you shall bear the expenses of your authorized representative, except the
Company will bear the expenses of such authorized representatives if an Event of
Default or Potential Event of Default has occurred and is continuing; and the
Company shall at all times bear the expenses of its and its Affiliates' officers
and independent public accountants.
SECTION 9. PREPAYMENT OF NOTES.
9.1. REQUIRED PREPAYMENTS OF THE NOTES. On each of the dates set
forth in the following table, the Company will prepay the principal amount of
the Notes set forth opposite such date in such table (or such lesser principal
amount of the Notes as shall at the time be outstanding), at the principal
amount of the Notes so prepaid, without premium, together with interest accrued
thereon:
Principal Amount
Date of Prepayment of Prepayment
--------------------------------- ----------------------------
December __, 2003 $27,500,000
December __, 2004 27,500,000
December __, 2005 27,500,000
December __, 2006 27,500,000
December __, 2007 27,500,000
December __, 2008 27,500,000
December __, 2009 27,500,000
Any partial prepayment of the Notes pursuant to Section 9.2, 9.3 or
(to the extent not applied to satisfy a prepayment required under this Section
9.1) 9.4 shall be applied to reduce each prepayment thereafter required to be
made pro rata, but otherwise no acquisition of the Notes by the Company or any
of its Affiliates, shall relieve the Company from its obligation to make the
required prepayments provided for in this Section 9.1. The Company shall notify
the holders of the Notes of any application provided for in the immediately
preceding sentence five days prior to such application. On the maturity date,
the Company will pay the then outstanding principal amount of the Notes together
with interest accrued thereon.
32
9.2. OPTIONAL PREPAYMENTS OF THE NOTES WITH MAKE WHOLE AMOUNT. The
Notes shall be subject to prepayment, in whole at any time or from time to time
in part (in an amount of not less than $5,000,000), at the option of the
Company, upon notice as provided in Section 9.5 at 100% of the principal amount
of the Notes so prepaid plus interest thereon to the prepayment date and the
Make Whole Amount.
9.3. PREPAYMENT ON CHANGE OF CONTROL. (a) The Company will, within
90 days after any Change of Control give written notice of such Change of
Control to each holder of Notes. Such notice shall contain and constitute an
offer to prepay the Notes as described in subdivision (b) of this Section 9.3
and shall be accompanied by the certificate described in subdivision (e) of this
Section 9.3.
(b) The offer to prepay Notes contemplated by subdivision (a) of
this Section 9.3 shall be an offer to prepay, in accordance with and subject to
this Section 9.3, all, but not less than all, the Notes held by each holder (in
this case only, "holder" in respect of any Note registered in the name of a
nominee for a disclosed beneficial owner shall mean such beneficial owner) on a
date specified in such offer (the "Proposed Prepayment Date") that is not less
than 20 days and not more than 30 days after the date of such offer (if the
Proposed Prepayment Date shall not be specified in such offer, the Proposed
Prepayment Date shall be the 20th day after the date of such offer).
(c) A holder of Notes may accept the offer to prepay made pursuant
to this Section 9.3 by causing a notice of such acceptance to be delivered to
the Company at least 5 days prior to the Proposed Prepayment Date. A failure by
a holder of Notes to respond to an offer to prepay made pursuant to this
Section 9.3 shall be deemed to constitute a rejection of such offer by such
holder.
(d) Prepayment of the Notes to be prepaid pursuant to this
Section 9.3 shall be at 100% of the principal amount of such Notes, plus a
premium equal to 1% of such principal amount (the "Premium Amount"), together
with interest on such Notes accrued to the date of prepayment. The principal
amount and accrued interest and the Premium Amount shall, with respect to all
Notes the holders of which accepted the offer to prepay pursuant to subdivision
(c), become due and payable on the Proposed Prepayment Date.
(e) Each offer to prepay the Notes pursuant to this Section 9.3
shall be accompanied by an Officers' Certificate, executed by a senior financial
officer of the
33
Company and dated the date of such offer, specifying: (i) the Proposed
Prepayment Date; (ii) that such offer is made pursuant to this Section 9.3;
(iii) the principal amount of each Note offered to be prepaid; (iv) the Premium
Amount due on each Note in connection with such prepayment; (v) the interest
that would be due on each Note offered to be prepaid, accrued to the Proposed
Prepayment Date; (vi) that the conditions of this Section 9.3 have been
fulfilled; (vii) in reasonable detail, the nature and date of the Change of
Control; and (viii) that a failure to respond to such notice shall be deemed a
rejection of such offer to prepay the Notes.
9.4. CONTINGENT PREPAYMENTS ON DISPOSITION OF PROPERTY, TAKING OR
DESTRUCTION. (a) If at any time the Company or any of the Restricted
Subsidiaries disposes of property or such property shall be damaged, destroyed
or taken in eminent domain or there shall be title insurance proceeds with
respect to such property, in any such case, with the result that there are
Excess Proceeds, and the Company does not apply such Excess Proceeds in the
manner described in Section 10.7(c)(ii)(B)(x), and if the next scheduled date of
prepayment of the Notes pursuant to Section 9.1 occurs within 365 days after
receipt of such Excess Proceeds, such Excess Proceeds may be applied to such
prepayment required under Section 9.1 (unless such scheduled prepayment has been
paid by the Company). To the extent that there are such Excess Proceeds
remaining after application in accordance with the first sentence of this
Section 9.4(a), the Company shall prepay, upon notice as provided in Section 9.5
(which notice shall be given not later than 365 days after the date of such sale
of property), a principal amount of the outstanding Notes equal to the amount of
such remaining Excess Proceeds allocable to the Notes, determined by allocating
such remaining Excess Proceeds pro rata among the holders of all Notes and
Parity Debt, if any, outstanding on the date such prepayment is to be made,
according to the aggregate then unpaid principal amounts of the Notes (and the
Make Whole Amount on the principal amount of the Notes to be prepaid) and Parity
Debt, respectively. Each prepayment of Notes pursuant to this Section 9.4(a)
shall be made at 100% of the principal amount of the Notes to be prepaid, plus
interest thereon to the prepayment date plus, to the extent the prepayment is
not made in satisfaction of a required prepayment in accordance with Section
9.1, the Make Whole Amount thereon.
(b) In the event that damage, destruction or a taking shall occur
in respect of all or a portion of the properties subject to any of the Security
Documents, all net insurance proceeds, self-insurance amounts or net awards
which, as of any date, shall not theretofore have been applied to the cost of
repairing or replacing any damaged or
34
destroyed assets shall be deemed to be proceeds of property disposed of
voluntarily, shall be subject to the provisions of Section 10.7(c) and, if
subdivision (ii)(B)(y) of Section 10.7(c) is applicable thereto, shall be
subject to the prepayment provisions of Section 9.4(a). Any amounts prepaid
pursuant to this Section 9.4(b) on the date on which a prepayment is required
under Section 9.1 may be applied to satisfy such prepayment required under
Section 9.1.
9.5. NOTICE OF PREPAYMENTS; OFFICERS' CERTIFICATE. The Company will
give each holder of any Notes irrevocable written notice of each prepayment
under Section 9.2 or 9.4 not less than 10 days and not more than 30 days prior
to the date fixed for such prepayment, in each case specifying such prepayment
date, the aggregate principal amount of the Notes and the principal amount of
each Note held by such holder to be prepaid and the Section under which such
prepayment is to be made. Notice of prepayment having been given as aforesaid,
the principal amount of the Notes specified in such notice, together with
interest thereon to the prepayment date and together with the Make Whole Amount,
if any, with respect thereto, shall become due and payable on such prepayment
date. The Company shall, on or before the Business Day next succeeding the date
which the Company sends such written notice, give telephonic notice of the
principal amount of the Notes to be prepaid and the prepayment date to each
holder of any Notes which shall have designated a recipient of such notices in
the Schedule of Purchasers attached hereto or by notice in writing to the
Company. Each holder of a Note shall receive, on the Business Day immediately
preceding the date scheduled for any such prepayment, an Officers' Certificate
certifying that the conditions of the Section under which such prepayment is to
be made have been fulfilled and specifying the particulars of such fulfillment.
In the event that there shall have been a partial prepayment of the Notes under
Section 9.2, 9.3 or 9.4, the Company shall promptly give notice to the holders
of the Notes, accompanied by an Officers' Certificate setting forth the
principal amount of each of the Notes that was prepaid and specifying how each
such amount was determined, setting forth the reduced amount of each required
prepayment thereafter becoming due with respect to the Notes under Section 9.1,
and certifying that such reduction has been computed in accordance with such
Section.
9.6. ALLOCATION OF PARTIAL PREPAYMENTS. Upon any partial prepayment
of the Notes pursuant to Section 9.1, 9.2 or 9.4 the principal amount so prepaid
shall be allocated (in integral multiples of $1,000 as nearly as practicable) to
all Notes at the time outstanding in proportion to the respective outstanding
principal amounts thereof not
35
theretofore called for prepayment, with adjustments, to the extent practicable,
to compensate for any prior prepayments not made exactly in such proportion.
9.7. MATURITY; SURRENDER, ETC. In the case of each prepayment, the
principal amount of each Note to be prepaid shall mature and become due and
payable on the date fixed for such prepayment, together with interest on such
principal amount accrued to such date and the applicable Make Whole Amount or
other premium, if any. From and after such date, unless the Company shall fail
to pay such principal amount when so due and payable, together with the interest
and Make Whole Amount or other premium, if any, as aforesaid, interest on such
principal amount shall cease to accrue. Any Note paid or prepaid in full shall,
after such payment or prepayment in full, be surrendered to the Company and
canceled and shall not be reissued, and no Note shall be issued in lieu of any
such paid or prepaid principal amount of any Note.
9.8. ACQUISITION OF NOTES. None of the General Partners or the
Company shall, nor shall any permit any of their respective Subsidiaries or any
Restricted Affiliate to, prepay or otherwise retire in whole or in part prior to
their stated final maturity (other than by prepayment pursuant to Section 9.1,
9.2, 9.3 or 9.4 or upon acceleration of such final maturity pursuant to
Section 11), or purchase or otherwise acquire, directly or indirectly, Notes
held by any holder, except, in the case of such purchase or acquisition,
pursuant to an offer to purchase made pro rata to the holders of all of the
Notes on the same terms and conditions. Any Notes prepaid or otherwise retired
or purchased or otherwise acquired by the Company or any of its Subsidiaries or
either General Partner shall not be deemed to be outstanding for any purpose
under this Agreement or any other Operative Agreement. Any Notes prepaid or
otherwise purchased or otherwise acquired by any Affiliate of the Company (other
than any of its Subsidiaries or either General Partner) shall not be deemed
outstanding for the purpose of any vote of the holders of the Notes (including,
without limitation, the calculation of any percentage of principal amount of the
Notes outstanding with respect to any such vote) pursuant to this Agreement or
any other Operative Agreement but shall be deemed outstanding with respect to
the calculation of any future payment of principal, premium and interest on the
Notes.
36
SECTION 10. BUSINESS AND FINANCIAL COVENANTS OF THE COMPANY.
The Company covenants that from the date of this Agreement through the
Closing and thereafter so long as any of the Notes are outstanding:
10.1. INDEBTEDNESS. The Company will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, create, incur, assume or
otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness, except that:
(a) the Company may become and remain liable with respect to the
Indebtedness evidenced by the Notes;
(b) the Company and the Restricted Subsidiaries may become and
remain liable with respect to Indebtedness, which may be secured equally
and ratably with the Notes, incurred by the Company and the Restricted
Subsidiaries to finance the making of expenditures for the improvement or
repair of or additions to the Assets, PROVIDED that (i) the aggregate
principal amount of Indebtedness incurred under this Section 10.1(b) and
outstanding at any time shall not exceed an amount equal to the sum of (x)
the net cash proceeds received by the Company from the Managing General
Partner or from the Public Partnership as a capital contribution or as
consideration for the issuance by the Company of additional partnership
interests, in each case for the sole purpose of financing such
expenditures, and (y) the fair market value of the Units contributed to the
Company by the Public Partnership or issued directly to the Person selling
such asset or making such repair or improvement by the Public Partnership
for the sole purpose of financing such expenditures, only to the extent,
however, that such Units are used to pay, substantially concurrently with
the date of contribution, at least 50% of the purchase price or cost of
such improvements, repairs or additions, and (ii) if such Indebtedness is
to be secured under the Security Documents as provided in Section 10.2(i),
the agreement or instrument pursuant to which such Indebtedness is incurred
(A) contains no financial or business covenants that are more restrictive
on the Company or its Subsidiaries than or that are in addition to those
contained in this Section 10 (unless prior to or simultaneously with the
incurrence of such Indebtedness this Agreement and the Other Agreements are
amended to provide the benefits of such more restrictive covenants to the
holders of the Notes) and (B) specifies no events of default (other than
with respect to the payment of
37
principal and interest on such Indebtedness or the accuracy of representations
and warranties made in connection with such agreement or instrument) which are
capable of occurring prior to the occurrence of the Events of Default specified
in Section 11 (unless prior to or simultaneously with the incurrence of such
Indebtedness this Agreement and the Other Agreements are amended to provide the
benefit of such events of default to the holders of the Notes);
(c) any Restricted Subsidiary may become and remain liable with
respect to Indebtedness of such Restricted Subsidiary owing to the Company
or to another Restricted Subsidiary, PROVIDED that such Indebtedness is
created and is outstanding under an agreement or instrument pursuant to
which such Indebtedness is subordinated to the Notes and to Indebtedness
secured under the Security Documents at least to the extent provided in the
subordination provisions set forth in Exhibit E and PROVIDED FURTHER that
such Indebtedness is evidenced by an Intercompany Note pledged to the
Trustee;
(d) the Company and the Restricted Subsidiaries may become and
remain liable with respect to unsecured Indebtedness owing to either
General Partner or an Affiliate of either General Partner, PROVIDED that
(i) the aggregate principal amount of such Indebtedness of the Company and
the Restricted Subsidiaries outstanding at any time shall not be in excess
of $20,000,000 and (ii) such Indebtedness is created and is outstanding
under an agreement or instrument pursuant to which such Indebtedness is
subordinated to the Notes and to Indebtedness secured under the Security
Documents at least to the extent provided in the subordination provisions
set forth in Exhibit E;
(e) the Company may become and remain liable with respect to
Indebtedness incurred under the Bank Credit Facilities, PROVIDED that
(i) the aggregate principal amount outstanding under the
Initial Acquisition Facility, together with amounts outstanding
pursuant to Indebtedness permitted by subdivisions (h)(3)(i) and (j)
of this Section 10.1, will be in an aggregate principal amount not in
excess of the greater of (i) $75,000,000, and (ii) 40% of the
Consolidated Net Worth of the Company as of the date of incurrence of
the Indebtedness outstanding at any time, and
38
(ii) in respect of the Working Capital Facility:
(1) there shall be a period of at least 30 consecutive
days during each fiscal year of the Company on each day of
which there shall be no such Indebtedness outstanding under the
Working Capital Facility (the "Requisite Period"), PROVIDED
that, in the event that there shall not have been any Requisite
Period in any fiscal year, the lowest average balance for a
period of 30 consecutive days outstanding during such fiscal
year shall be treated as outstanding funded Indebtedness for
purposes of future incurrences of Indebtedness pursuant to
Section 10.1(f)(iii), and
(2) the aggregate principal amount of loans, exposure
under letters of credit in respect of the Working Capital
Facility and the unfunded commitments thereunder at any time
outstanding thereunder shall not be in excess of $50,000,000;
(f) the Company and the Restricted Subsidiaries may become and
remain liable with respect to Indebtedness, in addition to that otherwise
permitted by the foregoing subdivisions of this Section 10.1, which may be
secured equally and ratably with the Notes, if on the date the Company or
any Restricted Subsidiary becomes liable with respect to any such
additional Indebtedness and immediately after giving effect thereto and to
the substantially concurrent repayment of any other Indebtedness (i) the
ratio of Consolidated Cash Flow to Consolidated Pro Forma Debt Service is
greater than 2.50 to 1.0, (ii) the ratio of Consolidated Cash Flow to
Maximum Consolidated Pro Forma Debt Service is greater than 1.25 to 1.0,
and (iii) the ratio of total funded Indebtedness (including the
Indebtedness to be incurred) to Consolidated Cash Flow is less than 5.0 to
1.0, PROVIDED that, in addition to the foregoing, if such Indebtedness is
to be secured under the Security Documents as provided in Section 10.2(i),
such Indebtedness shall be incurred pursuant to an agreement or instrument
which complies with the requirements set forth in clause (ii) of the
proviso to Section 10.1(b);
(g) the Company and the Restricted Subsidiaries may become and
remain liable with respect to the Indebtedness referred to in Schedule 5.7,
PROVIDED that the aggregate principal amount of all such Indebtedness at
any time outstanding shall not exceed $15,000,000;
39
(h) the Company and any Restricted Subsidiary may become and remain
liable with respect to pre-existing Indebtedness relating to any Person,
business or assets acquired by the Company or such Restricted Subsidiary,
or both, as the case may be, PROVIDED that (1) no condition or event shall
exist which constitutes an Event of Default or Potential Event of Default,
(2) such Indebtedness was not incurred in anticipation of the acquisition
of such Person, business or assets and (3) after giving effect to such
Person becoming a Restricted Subsidiary, or the acquisition of such
business or assets, either (i) the sum of (A) such Indebtedness, and (B)
the then outstanding aggregate principal amount of Indebtedness under the
Initial Acquisition Facility, and under subdivision (j)(i) of this
Section 10.1, does not exceed the greater of (A) $75,000,000 and (B) 40% of
the Consolidated Net Worth of the Company as of the date of the incurrence
of the Indebtedness, or (ii) the Company or such Restricted Subsidiary
could incur at least $1 of additional Indebtedness in compliance with the
requirements set forth in clauses (i), (ii) and (iii) of Section 10.1(f)
(it being understood for purposes of this Section 10(h) and
Section 10.1(e)(i) that any Indebtedness which on the date of acquisition
of any Person, business or assets could be incurred under the foregoing
clause (i) or (ii) of this Section 10.1(h) shall be deemed to have been
incurred under clause (ii) of this Section 10.1(h));
(i) so long as no Event of Default or Potential Event of Default
has occurred and is continuing, the Company and the Restricted Subsidiaries
may become and remain liable with respect to Indebtedness secured equally
and ratably with the Notes, incurred for any extension, renewal, refunding
or refinancing of Indebtedness permitted pursuant to subdivisions (a), (b)
and (f) of this Section 10.1, PROVIDED that (i) the principal amount
(including any exposure under letters of credit and any unfunded
commitments) of such Indebtedness shall not exceed the principal amount
(including any exposure under letters of credit and any unfunded
commitments) of such Indebtedness being extended, renewed, refunded or
refinanced together with any accrued interest and Make Whole Amount,
Premium Amount or other premium with respect thereto and any costs and
expenses related to such extension, renewal, refunding or refinancing, (ii)
the maturity date of such Indebtedness shall not be sooner than the
maturity date of such Indebtedness being extended, renewed, refunded or
refinanced, (iii) the average life to maturity of such Indebtedness shall
be equal to or greater than the remaining average life to maturity of such
Indebtedness being extended, renewed, refunded or refinanced and (iv) if
such Indebtedness is incurred for any extension, renewal, refunding or
40
refinancing of Indebtedness permitted pursuant to subdivision (b) or (f),
such Indebtedness satisfies the conditions specified in clause (ii) of the
proviso to subdivision (b) and such Indebtedness specifies no events of
default (other than with respect to the payment of principal and interest
on such Indebtedness or the accuracy of representations and warranties made
in connection with such agreement or instrument) which are capable of
occurring prior to the occurrence of the events of default specified in the
Bank Credit Facilities as of the date of this Agreement (unless prior to or
simultaneously with the incurrence of such Indebtedness this Agreement and
the Other Agreements are amended to provide the benefit of such more
restrictive covenants and events of default to the holders of the Notes);
(j) so long as no Event of Default or Potential Event of Default
has occurred and is continuing, the Company and the Restricted Subsidiaries
may become and remain liable with respect to Indebtedness secured equally
and ratably with the Notes, incurred for any extension, renewal, refunding
or refinancing of Indebtedness permitted pursuant to subdivision (e) of
this Section 10.1, PROVIDED that (x) after giving effect thereto (i) the
aggregate principal amount of (A) such Indebtedness incurred to extend,
refund, renew or refinance Indebtedness incurred pursuant to
subdivision (e)(i) in connection with the Initial Acquisition Facility,
(B) any such Indebtedness incurred pursuant to subdivision (e)(i) and
remaining outstanding, and (C) any outstanding Indebtedness incurred
pursuant to subdivision (h)(3)(i), shall not exceed the greater of
$75,000,000 and 40% of Consolidated Net Worth of the Company determined as
of the last day of the month immediately preceding the date of such
extension, renewal, refunding or refinancing, and (ii) the aggregate
principal amount of (A) such Indebtedness incurred to extend, refund, renew
or refinance Indebtedness incurred pursuant to subdivision (e)(ii) in
connection with the Working Capital Facility, (B) any such Indebtedness
incurred pursuant to subdivision (e)(ii) and remaining outstanding
(including any exposure in respect of issued but undrawn letters of
credit), and (C) any remaining unfunded commitment under the Working
Capital Facility, shall not exceed $50,000,000, and (y) such Indebtedness,
any such letters of credit and commitments shall be incurred pursuant to
the Initial Acquisition Facility or a working capital facility (A) which
complies with the requirements set forth in clause (ii)(1) of
Section 10.1(e) and (B) the financial and business covenants of such
Indebtedness are no more restrictive on the Company and its Subsidiaries
and there are no additional covenants than those contained in the Bank
Credit Facilities
41
as of the date of this Agreement and such Indebtedness specifies no events
of default (other than with respect to the payment of principal and
interest on such Indebtedness or the accuracy of representations and
warranties made in connection with such agreement or instrument) which are
capable of occurring prior to the occurrence of the events of default
specified in the Bank Credit Facilities as of the date of this Agreement
(unless prior to or simultaneously with the incurrence of such Indebtedness
this Agreement and the Other Agreements are amended to provide the benefit
of such more restrictive covenants and events of default to the holders of
the Notes);
(k) so long as no Event of Default or Potential Event of Default
has occurred and is continuing, the Company and the Restricted Subsidiaries
may become and remain liable with respect to unsecured Indebtedness
incurred for any extension, renewal, refunding or refinancing of
Indebtedness otherwise permitted by this Section 10.1, PROVIDED that (i)
the principal amount of such unsecured Indebtedness to be incurred shall
not exceed the principal amount of such Indebtedness being extended,
renewed, refunded or refinanced together with any accrued interest and Make
Whole Amount, Premium Amount or other premium with respect thereto and any
costs and expenses related to such extension, renewal, refunding or
refinancing, (ii) the maturity date of such unsecured Indebtedness shall
not be sooner than the maturity date of such Indebtedness being extended,
renewed, refunded or refinanced and (iii) the average life to maturity of
such unsecured Indebtedness shall be equal to or greater than the remaining
average life to maturity of such Indebtedness being extended, renewed,
refunded or refinanced;
(l) so long as no Event of Default or Potential Event of Default
has occurred and is continuing, the Company and the Restricted Subsidiaries
may become and remain liable with respect to secured Indebtedness incurred
for any extension, renewal, refunding or refinancing of secured
Indebtedness (other than Indebtedness permitted by subdivisions [(a), (b),
(e) or (f)]) otherwise permitted pursuant to this Section 10.1, PROVIDED
that (i) the principal amount of such Indebtedness to be incurred shall not
exceed the principal amount of such Indebtedness being extended, renewed,
refunded or refinanced together with any accrued interest and premium with
respect thereto and any and all costs and expenses related to such
extension, renewal, refunding or refinancing, (ii) the maturity date of
such Indebtedness shall not be sooner than the maturity date of such
Indebtedness being extended, renewed, refunded or refinanced, and (iii) the
average life to maturity of
42
such Indebtedness to be incurred shall be equal to or greater than the
remaining average life to maturity of such Indebtedness being extended,
renewed, refunded or refinanced;
(m) the Company and any Restricted Subsidiaries may become and
remain liable with respect to any Interest Rate Agreement;
(n) the Company and any Restricted Subsidiaries may become and
remain liable with respect to any Commodity Hedging Agreements;
(o) any Qualified Restricted Subsidiary may become and remain
liable with respect to Indebtedness evidenced by the Subsidiary Guarantee
Agreements or Guarantees of Parity Debt;
(p) the Company may become and remain liable with respect to
secured Indebtedness incurred in connection with Capital Lease obligations,
PROVIDED that (1) the security for such Indebtedness shall extend only to
such property or asset, (2) the obligation incurred does not exceed the
fair market value of such property or asset (as determined in good faith by
the board of directors of the Managing General Partner) and (3) after
incurring such Indebtedness, and giving effect to the substantially
concurrent retirement of any other Indebtedness, the Company could incur at
least $1 of additional Indebtedness in compliance with the requirements set
forth in clauses (i), (ii) and (iii) of Section 10.1(f);
(q) the Company may become and remain liable with respect to
secured Indebtedness incurred in connection with purchase money
obligations, PROVIDED that (1) the security for such Indebtedness shall
extend only to such property or asset, (2) the obligation incurred does not
exceed 85% of the fair market value of such property or asset (as
determined in good faith by the Board of Directors of the Managing General
Partner) and (3) after incurring such Indebtedness and giving effect to the
substantially concurrent retirement of any other Indebtedness the Company
could incur at least $1 of additional Indebtedness in compliance with the
requirements set forth in clauses (i), (ii) and (iii) of Section 10.1(f);
and
(r) the Company may become and remain liable with respect to
secured Indebtedness incurred to pay all or a portion of the purchase price
of property acquired by the Company or to secure obligations incurred in
consideration of non-
43
compete agreements, PROVIDED that (1) the security for such Indebtedness
shall extend only to the property or assets so acquired, (2) such
obligation does not exceed 85% of the fair market value of such property or
asset or 35% in the case of non-compete obligations (each as determined in
good faith by the board of directors of the Managing General Partner of the
Company) and (3) either (A) after incurring such Indebtedness, and giving
effect to the substantially concurrent retirement of any other
Indebtedness, the Company could incur at least $1 of additional
Indebtedness in compliance with the requirements set forth in clauses (i),
(ii) and (iii) of Section 10.1(f) or (B) the amount of Indebtedness
permitted under subdivision (e)(i) of this Section 10.1 is permanently
reduced by the amount of such Indebtedness.
Notwithstanding the foregoing, the aggregate principal amount of all
Indebtedness of all Restricted Subsidiaries at any time outstanding (other than
Indebtedness permitted by Section 10.1(o) (but only to the extent such
Guarantees are in favor of the holders of Parity Debt) shall not exceed $10
million. For the purpose of this Section 10.1, any Person becoming a Restricted
Subsidiary after the date of this Agreement shall be deemed to have become
liable with respect to all of its then outstanding Indebtedness at the time it
becomes a Restricted Subsidiary, and any Person extending, renewing or refunding
any Indebtedness shall be deemed to have become liable with respect to such
Indebtedness at the time of such extension, renewal or refunding. The Company
or any Restricted Subsidiary shall be deemed to have become liable with respect
to any Indebtedness secured by any real property acquired by the Company or such
Restricted Subsidiary, as the case may be, at the time of such acquisition. Any
amendment of the terms of this Agreement required by clause (ii) of the proviso
to Section 10.1(b) shall provide that such amendment shall only be effective
until the date the Indebtedness (the incurrence of which required the amendment
of this Agreement) is paid in full and all commitments to lend and letters of
credit outstanding under such facility are canceled or terminated. The Company
shall provide written notice to each holder of the repayment in full in cash of
such Indebtedness and the cancellation of all commitments and letters of credit
pursuant to any such facility, which notice shall provide that the amendments to
this Agreement required by clause (ii) of the proviso to Section 10.1(b) with
respect to such facility, are no longer effective.
10.2. LIENS, ETC. The Company will not, and will not permit any
Restricted Subsidiary to, directly or indirectly create, incur, assume or permit
to exist any Lien on or with respect to any property or asset (including any
document or instrument in re-
44
spect of goods or accounts receivable) of the Company or any Restricted
Subsidiary, whether now owned or held or hereafter acquired, or any income or
profits therefrom (whether or not provision is made for the equal and ratable
securing of the Notes in accordance with the provisions of Section 10.16),
except:
(a) Liens for taxes, assessments or other governmental charges the
payment of which is not at the time required by Section 10.9;
(b) Liens of landlords and carriers, vendors, warehousemen,
mechanics, materialmen, repairmen and other like Liens incurred in the
ordinary course of business for sums not yet due or the payment of which is
not at the time required by Section 10.9, in each case not incurred or made
in connection with the borrowing of money, the obtaining of advances or
credit or the payment of the deferred purchase price of property;
(c) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business (i) in connection with
workers' compensation, unemployment insurance, old age pension, retiree
health benefits and other types of social security, or (ii) to secure (or
to obtain letters of credit that secure) the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, performance
bonds, purchase, construction or sales contracts and other similar
obligations, in each case not incurred or made in connection with the
borrowing of money, the obtaining of advances or credit or the payment of
the deferred purchase price of property;
(d) any attachment or judgment Lien, unless the judgment it secures
shall not, within 60 days after the entry thereof, have been discharged or
execution thereof stayed pending appeal, or shall not have been discharged
within 60 days after expiration of any such stay;
(e) leases or subleases granted to others, zoning restrictions,
easements, licenses, reservations, rights-of-way, restrictions on the use
of property or irregularities of title (and with respect to leasehold
interests, mortgages, obligations, liens and other encumbrances incurred,
created, assumed or permitted to exist and arising by, through or under a
landlord or owner of the leased property with or without the consent of the
lessee) and other similar charges or
45
encumbrances, which do not materially interfere with the ordinary conduct
of the business of the Company or any Restricted Subsidiary;
(f) Liens on property or assets of any Restricted Subsidiary
securing Indebtedness of such Restricted Subsidiary owing to the Company or
any other Restricted Subsidiary;
(g) Liens existing on the Assets at the time of the acquisition
thereof by the Company and described in Schedule 10.2;
(h) Liens created by any of the Security Documents securing
Indebtedness incurred in accordance with Section 10.1(a) or
Section 10.1(e);
(i) Liens created by any of the Security Documents securing
Indebtedness incurred in accordance with Section 10.1(b), 10.1(f) or
10.1(m), PROVIDED that (1) such Liens are effected through an amendment to
the Security Documents to the extent necessary to provide the holders of
such Indebtedness equal and ratable security in the property and assets
subject to the Security Documents with the holders of the Notes and of
other Indebtedness secured under the Security Documents as provided in
Section 10.1(b), 10.1(f) or 10.1(m), (2) the Security Documents are amended
to the extent necessary to extend the Lien thereof to any property or
assets acquired or otherwise financed with the proceeds of such
Indebtedness, (3) the Company has delivered to the Trustee an Officers'
Certificate demonstrating that the principal amount of such Indebtedness
does not exceed the lesser of the cost to the Company of such property or
assets and the fair market value of such property or assets (as determined
in good faith by the Managing General Partner of the Company), that such
incurrence of Indebtedness pursuant to Section 10.1(b), 10.1(f) or 10.1(m),
as the case may be, complies in all respects with the requirements of such
Section and that the amendments to the Security Documents required by this
Section 10.2(i) and the filing and recordation of such amendments and
related supplements will not have a Material Adverse Effect, and (4) the
Company has delivered to the Trustee an opinion of counsel reasonably
satisfactory to the Trustee to the effect that the Lien of the Security
Documents has attached and is perfected with respect to such additional
property and assets;
(j) Liens existing on any property of any Person at the time it
becomes a Restricted Subsidiary, or existing prior to the time of
acquisition (and not created
46
in anticipation of such acquisition) upon any property acquired by the
Company or any Restricted Subsidiary through purchase, merger or
consolidation or otherwise, whether or not assumed by the Company or such
Restricted Subsidiary, or created to secure Indebtedness incurred under
Section 10.1(f) to pay all or any part of the purchase price ("Purchase
Money Lien") of property acquired by the Company or a Restricted Subsidiary
or to pay the cost of an improvement (other than improvements to property
subject to the Lien of the Security Documents), PROVIDED that (i) any such
Lien shall be confined solely to the item or items of property so acquired
and, if required by the terms of the instrument originally creating such
Lien, other property which is an improvement to or is acquired for specific
use in connection with such acquired property, (ii) such item or items of
property so acquired (other than property (which may include stock or other
equity interests) subject to Liens existing prior to the time of
acquisition and not created in anticipation of such acquisition) are not
required to become part of the Collateral under the terms of the Security
Documents, (iii) the principal amount of the Indebtedness secured by any
such Lien shall at no time exceed an amount equal to the lesser of (A) the
cost of such property to the Company or such Restricted Subsidiary, as the
case may be, and (B) the fair market value of such property (as determined
in good faith by the Managing General Partner) at the time such Person
owning such property becomes a Restricted Subsidiary or at the time of such
acquisition by the Company or such Restricted Subsidiary, as the case may
be, (iv) any such Purchase Money Lien shall be created not later than 90
days after, in the case of property, its acquisition, or, in the case of
improvements, their completion and (v) any such Lien (other than a Purchase
Money Lien) shall not have been created or assumed in contemplation of such
Person's becoming a Restricted Subsidiary or such acquisition of property
by the Company or any Subsidiary;
(k) Liens in amounts not exceeding $500,000 incurred, required or
provided for under state law in connection with self-insurance
arrangements;
(l) Liens arising from or constituting Permitted Encumbrances;
(m) any Lien securing Indebtedness referred to in Section 10.1(i),
(j) or (l) renewing or extending any Lien permitted by the foregoing
subdivisions of this Section 10.2, PROVIDED that (i) the Indebtedness
secured by any such Lien shall not exceed the principal amount of such
Indebtedness outstanding (including any exposure under letters of credit
and any unfunded commitments) immediately prior to
47
the renewal or extension of such Lien, (ii) no assets encumbered by any such
Lien other than the assets encumbered immediately prior to such renewal or
extension shall be encumbered thereby or with respect to any Indebtedness
extending, renewing, refunding or refinancing any Indebtedness secured pursuant
to the Security Documents, the assets specified therein and (iii) the maturity
date of the Indebtedness secured by any such Lien shall not be sooner than the
maturity date of such Indebtedness outstanding immediately prior to the renewal
or extension of such Lien;
(n) any Lien securing Indebtedness incurred in accordance with
Section 10.1(n), Section 10.1 (p), Section 10.1(q) or Section 10.1(r);
(o) any Lien arising from the action of collecting banks; and
(p) those Liens described on Schedule 10.2.
10.3. INVESTMENTS, GUARANTIES, ETC. The Company will not, and will
not permit any Restricted Subsidiary to, directly or indirectly (i) make or own
any Investment in any Person, or (ii) create or become liable with respect to
any Guaranty, except:
(a) the Company or any Restricted Subsidiary may make and own
Investments in
(1) marketable obligations issued or unconditionally
guaranteed by the United States of America, or issued by any agency
thereof and backed by the full faith and credit of the United States
of America in each case maturing within one year from the date of
acquisition thereof,
(2) marketable direct obligations issued by any state of
the United States of America or any political subdivision of any such
state or any public instrumentality thereof maturing within one year
from the date of acquisition thereof and having as at any date of
determination the highest rating obtainable from either Standard &
Poor's Ratings Group or Xxxxx'x Investors Service, Inc.,
(3) commercial paper maturing no more than 270 days from
the date of creation thereof and having as at any date of
determination one of the two
48
highest ratings obtainable from either Standard & Poor's Ratings
Group or Xxxxx'x Investors Service, Inc.,
(4) certificates of deposit maturing one year or less from
the date of acquisition thereof issued by commercial banks
incorporated under the laws of the United States of America or any
state thereof or the District of Columbia or Canada, (A) the
commercial paper or other short-term unsecured debt obligations of
which are rated either A-1 or better (or comparably if the rating
system is changed) by Standard & Poor's Ratings Group or Prime-1 or
better (or comparably if the rating system is changed) by Xxxxx'x
Investors Service, Inc. or (B) the long-term debt obligations of which
are rated either AA- or better (or comparably if the rating system is
changed) by Standard & Poor's Ratings Group or Aa3 or better (or
comparably if the rating system is changed) by Xxxxx'x Investors
Service, Inc. ("Permitted Banks"), or by any bank party to the Bank
Credit Facilities,
(5) Eurodollar time deposits having a maturity of less than
270 days from the date of acquisition thereof purchased directly from
any Permitted Bank,
(6) bankers' acceptances eligible for rediscount under
requirements of The Board of Governors of the Federal Reserve System
and accepted by Permitted Banks, and
(7) obligations of the type described in clause (1), (2),
(3) or (4) above purchased from a securities dealer designated as a
"primary dealer" by the Federal Reserve Bank of New York or from a
Permitted Bank as counterparty to a written repurchase agreement
obligating such counterparty to repurchase such obligations not later
than 14 days after the purchase thereof and which provides that the
obligations which are the subject thereof are held for the benefit of
the Company or a Restricted Subsidiary by a custodian which is a
Permitted Bank;
(b) the Company and any Restricted Subsidiary may make and own
Investments in any Restricted Subsidiary or Investments in capital stock
of, or other equity interests in, any Person which as a result of such
Investment becomes a Restricted Subsidiary, and any Qualified Restricted
Subsidiary may make and permit to be outstanding Investments in the Company
and may create or become
49
liable with respect to the Subsidiary Guarantee Agreement in respect of the
Company's obligations under the Notes or under Parity Debt;
(c) the Company or any Restricted Subsidiary may make and own
Investments (other than those included in subdivision (b) above) in the
capital stock of, or joint venture, partnership or other equity interests
in, or the contributions to capital in the ordinary course of business of,
any Unrestricted Subsidiary if immediately after giving effect to the
making of any such Investment, (A) the aggregate amount of all such
Investments made and outstanding pursuant to this subdivision (c) during
the period from the date of this Agreement to and including the date of
determination shall not at any time exceed 20% of the Consolidated Net
Worth of the Company and (B) the aggregate amount of all Investments made
and outstanding pursuant to this subdivision (c) as at the end of any
fiscal quarter of the Company shall not exceed by more than $15,000,000 the
amount of such Investments outstanding as at the end of the corresponding
fiscal quarter of the immediately preceding fiscal year of the Company, and
in the case of both clauses (A) and (B) of this subdivision (c), (i) the
amounts specified therein may be increased by an amount equal to the net
cash proceeds received by the Company from the Managing General Partner or
from the Public Partnership as a capital contribution or as consideration
for the issuance by the Company of additional partnership interests for the
sole purpose of making an Investment in an Unrestricted Subsidiary, and
(ii) net of cash distributions received from all Unrestricted Subsidiaries
for such period;
(d) the Company or any Restricted Subsidiary may make and own
Investments (x) constituting trade credits or advances to any Person
incurred in the ordinary course of business, (y) arising out of loans and
advances to officers, directors and employees for travel, entertainment and
relocation expenses, in each case incurred in the ordinary course of
business or (z) acquired by reason of the exercise of customary creditors'
rights upon default or pursuant to the bankruptcy, insolvency or
reorganization of a debtor;
(e) the Company or any Restricted Subsidiary may create or become
liable with respect to any Guaranty constituting an obligation, warranty or
indemnity, not guaranteeing Indebtedness of any Person, which is undertaken
or made in the ordinary course of business;
50
(f) the Company or any Restricted Subsidiary may create and become
liable with respect to any Interest Rate Agreements; and
(g) the Company may create and become liable with respect to
Commodity Hedging Agreements.
10.4. RESTRICTED PAYMENTS. The Company will not, directly or
indirectly, declare, order, pay, make or set apart any sum for any Restricted
Payment (other than payments needed to pay pass through taxes), except that
(a) the Company may declare, order, pay, make or set apart once during each
calendar quarter a Restricted Payment in cash if (i) such Restricted Payment is
in an amount not exceeding Available Cash for the immediately preceding calendar
quarter, (ii) prior to any such proposed action no condition or event shall
exist which constitutes a Potential Event of Default under Section 11(b) or an
Event of Default and immediately after giving effect to any such proposed
Restricted Payment no condition or event shall exist which constitutes a
Potential Event of Default or an Event of Default, (iii) the ratio of
Consolidated Cash Flow to Consolidated Interest Expense, as of the date of such
action, is greater than 1.75 to 1.00 (the "Coverage Test") and (iv) the Company
shall have given to each holder of a Note written notice thereof on the date
such Restricted Payment is declared, which date shall be within 50 days of the
date on which the Coverage Test was satisfied and at least 10 days prior to the
date such Restricted Payment is made and (b) any Subsidiary may make, pay or set
apart dividends and distributions so long as such dividends or distributions are
made, paid or set apart for each holder of such Person's capital stock or other
equity on a pro-rata basis. Upon satisfaction of the Coverage Test at the time
of declaration, the Company may make such Restricted Payment within 60 days
thereafter, and, notwithstanding any other provision of this Section 10.4, the
Coverage Test shall not be applied to any Restricted Payment so made which
satisfied the Coverage Test on the date of declaration thereof. The Company
will not, in any event, directly or indirectly declare, order, pay or make any
Restricted Payment except in cash.
10.5. TRANSACTIONS WITH AFFILIATES. Except for the transactions or
conduct effected pursuant to the Operative Agreements as in effect on the date
of the Closing or any other transactions or conduct described in or contemplated
by the Registration Statement or listed on Schedule 10.5, the Company will not,
and will not permit any Restricted Subsidiary to, directly or indirectly, engage
in any transaction with any Affiliate of the Company, including, without
limitation, the purchase, sale or exchange
51
of assets or the rendering of any service, to the Company's or such Restricted
Subsidiary's business except upon fair and reasonable terms that are no less
favorable to the Company or such Restricted Subsidiary, as the case may be, than
those which might be obtained in an arm's-length transaction at the time such
transaction is agreed upon from Persons which are not such an Affiliate,
PROVIDED that the foregoing limitations and restrictions shall not apply to any
transaction between the Company and any Restricted Subsidiary or between
Restricted Subsidiaries or to loans and advances to officers, or directors and
employees made in the ordinary course of business.
10.6. SUBSIDIARY STOCK AND INDEBTEDNESS. The Company will not:
(a) directly or indirectly sell, assign, pledge or otherwise
dispose of any Indebtedness of or any shares of stock or similar interests
of (or warrants, rights or options to acquire stock or similar interests
of) any Subsidiary, except to a Restricted Subsidiary;
(b) permit any Restricted Subsidiary directly or indirectly to
sell, assign, pledge or otherwise dispose of any Indebtedness of (i) the
Company or (ii) any other Restricted Subsidiary, or any shares of stock or
similar interests of (or warrants, rights or options to acquire stock or
similar interests of) any other Subsidiary, except to, in the case of
clause (i), the Company or, in all other cases, [the Company or] a
Restricted Subsidiary;
(c) permit any Restricted Subsidiary to have outstanding any shares
of stock or similar interests which are preferred over any other shares of
stock or similar interests owned by the Company unless such shares of
preferred stock or similar interests are owned by the Company; or
(d) permit any Restricted Subsidiary directly or indirectly to
issue or sell (including, without limitation, in connection with a merger
or consolidation of a Restricted Subsidiary otherwise permitted by
Section 10.7(a)) any shares of its stock or similar interests (or warrants,
rights or options to acquire its stock or similar interests) except to the
Company or a Restricted Subsidiary;
PROVIDED that, (i) any Restricted Subsidiary may sell, assign or otherwise
dispose of Indebtedness of the Company or a Restricted Subsidiary if, assuming
such Indebtedness were incurred immediately after such sale, assignment or
disposition, such Indebtedness
52
would be permitted under Section 10.1 (and if such Indebtedness is secured, such
Lien would be permitted pursuant to Section 10.2) or (ii) subject to compliance
with Section 10.7(c), all Indebtedness and shares of stock or partnership
interests of any Restricted Subsidiary owned by the Company or by another
Restricted Subsidiary may be simultaneously sold as an entirety for
consideration at least equal to the fair value thereof (as determined in good
faith by the Managing General Partner) at the time of such sale if such
Restricted Subsidiary does not at the time own (A) any Indebtedness of the
Company (other than Indebtedness which, if incurred immediately after such
transaction, would be permitted under Section 10.1) or (B) any Indebtedness,
stock or other interest in any other Restricted Subsidiary which is not also
being simultaneously sold as an entirety in compliance with this proviso or
Section 10.7(b)(ii).
10.7. CONSOLIDATION, MERGER, SALE OF ASSETS, ETC. The Company will
not, and will not permit any Restricted Subsidiary to, directly or indirectly,
(a) consolidate with or merge into any other Person or permit any
other Person to consolidate with or merge into it, except that:
(i) any Restricted Subsidiary may consolidate with or merge
into the Company or a Restricted Subsidiary if, in the case of a
consolidation with or merger into the Company, the Company shall be
the surviving Person and if, immediately after giving effect to such
transaction, no condition or event shall exist which constitutes an
Event of Default or Potential Event of Default; and
(ii) any entity (other than a Restricted Subsidiary) may
consolidate with or merge into the Company or a Restricted Subsidiary
if the Company or a Restricted Subsidiary, as the case may be, shall
be the surviving Person and if, immediately after giving effect to
such transaction, (w) the Company (1) shall not have a Consolidated
Net Worth (but without giving effect to any write-up in assets or
amounts attributable to goodwill pursuant to purchase accounting
methods) of less than the Consolidated Net Worth of the Company
immediately prior to the effectiveness of such transaction, (2) shall
not be liable with respect to any Indebtedness or allow its property
to be subject to any Lien which it could not become liable with
respect to or allow its property to become subject to under this
Agreement on the date of such transaction, and (3) could incur, if the
consolidating or merging entity has outstanding Indebtedness, at least
$1 of additional Indebtedness in compliance with Sec-
53
tion 10.1(f) after giving effect to such transaction, (x) substantially all
of the assets of such entity shall be located and substantially all of its
business shall be conducted within the United States of America, and (y) no
condition or event shall exist which constitutes an Event of Default or
Potential Event of Default; and
(iii) the Company may consolidate with or merge into any
other entity if (v) the surviving entity is a corporation, limited
partnership, limited liability company or business trust organized and
existing under the laws of the United States of America or a state
thereof or the District of Columbia, with substantially all of its
properties located and its business conducted within the United States
of America, (w) such corporation, limited partnership, limited
liability company or business trust expressly and unconditionally
assumes the obligations of the Company under this Agreement and each
of the other Operative Agreements and delivers to each holder of a
Note at the time outstanding in connection with such assumption an
opinion of counsel reasonably satisfactory to the Required Holders
with respect to such matters incident to such assumption as may be
reasonably requested by such holders, including, without limitation,
as to the due authorization and execution of the related agreement of
assumption and the enforceability of such agreement against such
corporation, limited partnership, limited liability company or
business trust, (x) immediately after giving effect to such
transaction, such corporation, limited partnership, limited liability
company or business trust (1) shall not have a Consolidated Net Worth
(but without giving effect to any write-up in assets or amounts
attributable to goodwill pursuant to purchase accounting methods) of
less than the Consolidated Net Worth of the Company immediately prior
to the effectiveness of such transaction, (2) shall not be liable with
respect to any Indebtedness or allow its property to be subject to any
Lien which it could not become liable with respect to or allow its
property to become subject to under this Agreement on the date of such
transaction and (3) could incur, if the consolidating or merging
entity had outstanding Indebtedness, at least $1 of additional
Indebtedness in compliance with Section 10.1(f) after giving effect to
such transaction, and (y) immediately after giving effect to such
transaction no condition or event shall exist which constitutes an
Event of Default or a Potential Event of Default; or
54
(b) sell, lease, abandon or otherwise dispose of all or
substantially all its assets, except that:
(i) any Restricted Subsidiary may sell, lease or otherwise
dispose of all or substantially all its assets to the Company or to a
Restricted Subsidiary; and
(ii) the Company may sell, lease or otherwise dispose of all
or substantially all its assets to any corporation, limited
partnership, limited liability company or business trust into which
the Company could be consolidated or merged in compliance with
clause (a)(iii) of this Section 10.7, PROVIDED that each of the
conditions set forth in such subdivision (a)(iii) shall have been
fulfilled; or
(c) sell, lease, abandon or otherwise dispose of any property to
any Person other than the Company or any Restricted Subsidiary unless
(except for (x) sales, leases or other dispositions of property in
transactions permitted by the foregoing clauses (a) or (b) of this
Section 10.7, and (y) sales of inventory in the ordinary course of
business) immediately before and after giving effect to such transaction,
no Event of Default or Potential Event of Default shall exist or be
continuing and:
(i) at least 70% or more of the consideration (or 25% or
more in the event such consideration is less than $1,000,000) therefor
shall be in the form of cash consideration or marketable securities,
PROVIDED, that the amount of (A) any liabilities (as shown on the
Company's or such Restricted Subsidiary's most recent balance sheet or
in the notes thereto) of the Company or any Restricted Subsidiary
(other than liabilities that are by their terms subordinated in right
of payment to the Notes) that are assumed by the transferee of any
such assets and (B) any notes or other obligations received by the
Company or any such Restricted Subsidiary from such transferee that
are promptly converted into cash (to the extent of the cash received),
shall be deemed to be cash for the purposes of this
Section 10.7(c)(i), and
(ii) either
(A) the aggregate net after-tax proceeds of all such
dispositions by the Company and all Restricted Subsidiaries
during the current fiscal year (including all proceeds under
title insurance policies with respect to real
55
property and all net insurance proceeds, self-insurance amounts
and net awards with respect to property lost as a result of
damage, destruction or a taking which have not been applied to
the cost of repairing or replacing any damaged or destroyed
assets ), less the amount of all such net after-tax proceeds
previously applied in accordance with subdivision (ii)(B) of
this Section 10.7(c) and the amount of such net after-tax
proceeds equal to the purchase price of any assets acquired to
the extent that (1) such assets were acquired within 90 days
prior to the date of such disposal of property, (2) the
purchase price of such assets was not previously applied to
reduce the amount of net after-tax proceeds of property
disposed of under this Section 10.7(c), (3) such assets were
acquired for subsequent replacement of the property so disposed
of or may be productively used in the United States of America
in the conduct of the Business, (4) if the assets so disposed
were or should have been, then such newly acquired assets shall
be subject to the Lien of the Security Documents, and (5) to
the extent such assets were acquired (in whole or in part) with
borrowed money, such borrowing has been repaid in full, (x)
shall not exceed $7,500,000 during such fiscal year and
(y) when aggregated with such net after-tax proceeds of all
prior transactions under this Section 10.7(c), shall not exceed
$30,000,000; or
(B) in the event that such net after-tax proceeds (less the
amount thereof previously applied in accordance with this
subdivision (ii)(B) and the amount thereof equal to the
purchase price of any assets acquired to the extent that
(1) such assets were acquired within 90 days prior to the date
of such disposal of property, (2) the purchase price of such
assets was not previously applied to reduce the amount of net
after-tax proceeds of property disposed of under this Section
10.7(c), (3) such assets were acquired for subsequent
replacement of the property so disposed of or may be
productively used in the United States of America in the
conduct of the Business, (4) if the assets so disposed were or
should have been, then such newly acquired assets shall be
subject to the Lien of the Security Documents, and (5) to the
extent such assets were acquired (in whole or in part) with
borrowed money, such borrowing has been repaid in full) during
the current fiscal year exceed $7,500,000 or, when aggregated
with such net after-tax proceeds of all prior transactions
under this Section 10.7(c), exceed $30,000,000 (the larger
amount of such
56
excess net after-tax proceeds actually realized being herein
called "Excess Proceeds"), the Company shall promptly pay over
to the Trustee under the Trust Agreement such Excess Proceeds
not at the time held by the Trustee for application by the
Trustee (x) within 365 days of the date of the disposal or loss
of property to the acquisition of assets in replacement of the
property so disposed of or lost or of assets which may be used
in the United States of America in the conduct of the Business
(and if the assets so disposed were or should have been, then
such newly acquired assets shall be subjected to the Lien of
the Security Documents) or to the cost of repairing or
replacing any damaged or destroyed assets, or (y) to the extent
of Excess Proceeds not applied pursuant to the immediately
preceding clause (x), to the payment and/or prepayment of the
Notes and Parity Debt, if any, pursuant to Section 9.1 and/or
9.4(a), all as provided in Section 4(d) of the Trust Agreement
and such Section 9.1 and/or 9.4(a), and the Trustee shall have
received an Officers' Certificate from the Managing General
Partner of the Company certifying that the consideration
received for such property is at least equal to its fair value
(as determined in good faith by the Managing General Partner of
the Company) and that such consideration has been applied in
accordance with the terms of this Agreement.
Notwithstanding the foregoing, the Company and any Restricted Subsidiary
may sell or dispose of (i) real property assets sold or disposed of within 12
months of the acquisition of such assets, and (ii) all other assets sold or
disposed of within 6 months of the acquisition of such assets, in each case
constituting a portion of an acquired business, if (y) such assets are
specifically designated to the holders of any Notes in writing at the time of
such acquisition or within 30 Business Days thereafter as assets to be disposed
of, and (z) the Trustee shall have received an Officers' Certificate from the
Managing General Partner of the Company certifying that the consideration
received for such property is at least equal to its fair value (as determined in
good faith by the Managing General Partner of the Company). Such sales under
this paragraph will not be applied towards the annual or cumulative limitations
in subdivision (c) of this Section 10.7. In addition, notwithstanding the
foregoing, the Company may, at any time, exchange assets for other like assets
which may be used in the conduct of the Business, PROVIDED (1) the fair value of
the assets so acquired is substantially equivalent to the fair value of the
assets so exchanged (as determined in good faith by the Managing General Partner
of the Company), (2) if the assets exchanged were or should
57
have been, then such newly acquired assets shall be subject to the Lien of the
Security Documents and (3) the total value of the assets so exchanged in any
twelve month period shall not in the aggregate exceed 15% of the total assets of
the Company. The holders of Notes agree to take all actions reasonably
requested by the Company (and at the expense of the Company) to cause
dispositions of any Collateral made in compliance with this Section 10.7 to be
made free and clear of the Liens created by the Security Documents.
10.8. PARTNERSHIP OR CORPORATE EXISTENCE, ETC.; BUSINESS. (a) (i)
The Company will at all times preserve and keep in full force and effect its
partnership existence and (subject to the provisions of subdivision (b) of this
Section 10.8) its status as a partnership not taxable as a corporation for
federal income tax purposes; (ii) the Company will cause each Restricted
Subsidiary to keep in full force and effect its partnership or corporate
existence; and (iii) the Company will, and will cause each Restricted Subsidiary
to, at all times preserve and keep in full force and effect all of its material
rights and franchises (in each case except as otherwise specifically permitted
in Sections 10.6 and 10.7; PROVIDED, HOWEVER, that notwithstanding the preceding
provisions of this Section 10.8 the partnership or corporate existence of any
Restricted Subsidiary, and any right or franchise of the Company or any
Restricted Subsidiary, may be terminated if, in the good faith judgment of the
Managing General Partner, such termination is in the best interest of the
Company, is not disadvantageous to the holders of the Notes in any material
respect and would not have a Material Adverse Effect).
(b) The Company shall not be obligated to preserve its status as a
partnership not taxable as a corporation for federal income tax purposes if
(i) the Company's failure to preserve such status shall be the result of an
amendment to the tax laws enacted by the Congress of the United States and
(ii) after giving effect to the loss of such status the ratio of Consolidated
Cash Flow to Maximum Consolidated Pro Forma Debt Service, determined as of the
date of the loss of such status, would be greater than 1.1 to 1.0, assuming, for
the purposes of the computation of Consolidated Cash Flow, that Consolidated
Cash Flow would be reduced by taxes at the applicable tax rate of the Company
for such period had the Company been taxable as a corporation.
(c) The Company will not, and will not permit any Restricted
Subsidiary to, engage in any material lines of business other than the Business
as described in the
58
Registration Statement and other activities incidental or related to the
Business; PROVIDED that, the Company will not permit Cornerstone Services
Corporation to exist for any purpose, or to carry on any business, other than
the ownership and operation of the Service Assets (as defined in the Conveyance
Agreements) and other assets of that type.
10.9. PAYMENT OF TAXES AND CLAIMS. The Company will, and will cause
each Subsidiary to, pay all taxes, assessments and other governmental charges or
levies imposed upon it or any of its properties or assets or in respect of any
of its franchises, business, income or profits when the same become due and
payable, but in any event before any penalty or interest accrues thereon, and
all claims (including, without limitation, claims for labor, services, materials
and supplies) for sums which have become due and payable and which by law have
or might become a Lien upon any of its properties or assets, and promptly
reimburse the holders of the Notes for any such taxes, assessments, charges or
claims paid by them, PROVIDED that no such tax, assessment, charge or claim need
be paid or reimbursed if it is being contested in good faith by appropriate
proceedings promptly initiated and diligently conducted and if such reserves or
other appropriate provision, if any, as shall be required by GAAP shall have
been made therefor and be adequate in the good faith judgment of the Managing
General Partner.
10.10. COMPLIANCE WITH XXXXX. The Company will not, and will not
permit any Subsidiary or Related Person of the Company to:
(a) (i) engage in any transaction in connection with which the
Company or any Subsidiary could be subject to either a civil penalty
assessed pursuant to Section 502(i) of ERISA or a tax imposed by
Section 4975 of the Code, (ii) terminate (within the meaning of Title IV of
ERISA) or withdraw from any Plan in a manner, or take, or fail to take, any
other action with respect to any Plan (including, without limitation, a
substantial cessation of operations within the meaning of Section 4062(e)
of ERISA), (iii) establish, maintain, contribute to or become obligated to
contribute to any welfare benefit plan (as defined in Section 3(1) of
ERISA) or other welfare benefit arrangement which provides post-employment
benefits, which cannot be unilaterally terminated by the Company, (iv) fail
to make full payment when due of all amounts which, under the provisions of
any Plan or applicable law, the Company or any Subsidiary or Related Person
of the Company is required to pay as contributions or permit to exist any
material accumulated funding de-
59
ficiency, whether or not waived, with respect to any Plan or (v) engage in
any transaction in connection with which the Company, any Subsidiary or any
Related Person of the Company could be subject to liability pursuant to
Section 4069(a) or 4212(c) of ERISA, if any such event, condition or
transaction described in clauses (i) through (v) above, either individually
or together with any other such event, condition or transaction, could
reasonably be expected to result in (x) the imposition of a Lien in a
material amount on any assets or property of the Company or any Subsidiary
of the Company pursuant to Section 302(f) of ERISA or Section 412(n) of the
Code or (y) any liability to the Company, any Subsidiary of the Company or
any Related Person of the Company, which liability could have a Material
Adverse Effect; or
(b) as of any date of determination (i) permit the amount of
unfunded benefit liabilities under any Plan (other than a Multiemployer
Plan) maintained at such time by the Company or any Subsidiary or Related
Persons of the Company to exceed the current value of the assets of any
such Plan by more than $1,000,000 or (ii) permit the aggregate liability
incurred by the Company and any Subsidiary of the Company and Related
Persons of the Company pursuant to Title IV of ERISA with respect to one or
more terminations of, or one or more complete or partial withdrawals from,
any Plan to exceed $1,000,000.
As used in this Section 10.10, the term "accumulated funding deficiency" has the
meaning specified in Section 302 of ERISA and Section 412 of the Code, the term
"current value" has the meaning specified in Section 3 of ERISA and the terms
"benefit liabilities" and "amount of unfunded benefit liabilities" have the
meanings specified in Section 4001 of ERISA.
10.11. MAINTENANCE OF PROPERTIES; INSURANCE. (a) The Company will
maintain or cause to be maintained in working order and condition, in accordance
with normal industry standards and as otherwise required by the Security
Documents, all material properties used or useful in the business of the Company
and the Restricted Subsidiaries and from time to time will make or cause to be
made all appropriate repairs, renewals and replacements thereof.
(b) The Company will, and will cause each of the Restricted
Subsidiaries to, keep its insurable properties adequately insured at all times
by Permitted Insurers; maintain such other insurance, to such extent and against
such risks, including fire and
60
other risks insured against by extended coverage, as is customary with companies
in the same or similar businesses, including public liability insurance against
claims for personal injury or death or property damage occurring upon, in, about
or in connection with the use of any properties owned, occupied or controlled by
it; maintain such other insurance policy as may be required by law or any
Security Document; and cause each such insurance policy to name the Trustee, as
an additional insured or loss payee thereunder. The Company may maintain a
system of self-insurance in an amount customary for companies with established
reputations engaged in the same or similar business and owning similar
properties as the Company. The Company will permit the holders of the Notes and
an insurance consultant retained by the Required Holders, at the expense of the
Company, to review the insurance policies maintained by the Company on an annual
basis and will implement any changes to such policies reasonably recommended by
such consultant if available on a commercially reasonable basis.
10.12. OPERATIVE AGREEMENTS; SECURITY DOCUMENTS. The Company will,
and will cause each Restricted Subsidiary to, perform and comply with all of its
obligations under each of the Operative Agreements to which it is a party, will
enforce each such Operative Agreement against each other party thereto and will
not accept the termination of any such Operative Agreement, unless the taking of
or omitting to take any such action would not have a Material Adverse Effect and
will not amend, modify or supplement any Operative Agreement without the prior
written consent of the Required Holders (or with respect to this Agreement as
specified in Section 18), PROVIDED that (i) the MLP Agreement and the
Partnership Agreement (other than [Sections 4.5, 6.3, and 7.5(a)] of the
Partnership Agreement the amendment of which requires the consent of the
Required Holders) may be amended, modified or supplemented without the prior
written consent of the Required Holders if such amendment, modification or
supplement would not have a Material Adverse Effect and the Company shall have
delivered to each holder of any Notes a copy of such proposed amendment,
modification or supplement together with an Officers' Certificate describing
such proposed amendment, modification or supplement and stating that to the best
of the Company's knowledge (after due inquiry) that such proposed amendment,
modification or supplement would not have a Material Adverse Effect, (ii) the
Bank Credit Facilities may be amended, modified or supplemented without the
prior written consent of the Required Holders if such amendment, modification or
supplement may be made without the written consent of any holders of the Notes
under the Trust Agreement, and (iii) the conveyance, assignments and bills of
sale referred to in clause (b) of the definition of Conveyances
61
Agreements may be amended, modified or supplemented so long as such amendments,
modifications or supplements do not, in the aggregate, have a Material Adverse
Effect.
10.13. CHIEF EXECUTIVE OFFICE. The Company will not move its chief
executive office and the office at which it maintains its records relating to
the transactions contemplated by this Agreement and the Security Documents
unless (a) not less than 45 days' prior written notice of its intention to do
so, clearly describing the new location, shall have been given to the Trustee
and each holder of a Note and (b) such action, reasonably satisfactory to the
Trustee and each holder of a Note, to maintain any security interest in the
property subject to the Security Documents at all times fully perfected and in
full force and effect shall have been taken.
10.14. RECORDATION; OPINIONS. (a) The Company will promptly, but in
any event within 30 days from the date of the Closing, cause to be duly
recorded, published, registered and filed all Conveyance Agreements (as set
forth in paragraph (b) of the definition of such term) and the Security
Documents (in each case, not previously recorded, published, registered or filed
in accordance with Section 4.8), in such manner and in such places as is
required by law to establish, perfect, preserve and protect the rights and first
priority security interests of the parties thereto and their respective
successors and assigns in all of the Collateral and shall deliver to the Trustee
and your special counsel within six calendar months of the date of the Closing
copies (originals with respect to certificates of title for motor vehicles and
other rolling stock) of such duly recorded, published, registered and filed
Security Documents. The Company will pay all taxes, fees and other charges then
due in connection with the execution, delivery, recording, publishing,
registration and filing of such documents or instruments in such places.
(b) The Company, at its expense, will furnish to the Trustee and
each holder of a Note during the period commencing April 1 to May 1 of the years
2001 and 2006 and at such other times as the Trustee may reasonably request in
connection with the perfection of Xxxxx granted pursuant to the Security
Documents an opinion of counsel satisfactory to the Trustee stating that in the
opinion of such counsel such action has been taken with respect to the
recording, filing, re-recording and re-filing of the Security Documents and any
financing statements necessary to maintain the Lien or security interest created
thereby and reciting the details of such action or stating that in the opinion
of such counsel no such action is necessary to maintain such lien or security
interest; PROVIDED, HOWEVER, that such opinion may be from counsel not located
in such
62
jurisdiction and PROVIDED, FURTHER, that such opinion is not required to address
filings with respect to the perfection of any lien or security interest in
fixtures.
10.15. INFORMATION REQUIRED BY RULE 144A. The Company covenants that
it will, upon the prior written request of the holder of any Note, provide such
holder, and any qualified institutional buyer designated by such holder, such
financial and other information as such holder may reasonably determine to be
necessary in order to permit compliance with the information requirements of
Rule 144A under the Securities Act of 1933, as amended, in connection with the
resale of Notes, except at such times as the Company is subject to the reporting
requirements of section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended. For the purpose of this Section 10.15, the term "qualified
institutional buyer" shall have the meaning specified in Rule 144A under the
Securities Act of 1933, as amended.
10.16. COVENANT TO SECURE NOTES EQUALLY. The Company covenants that,
if it or any Restricted Subsidiary shall create or assume any Lien upon any of
its property or assets, whether now owned or hereafter acquired, other than
Liens permitted by the provisions of Section 10.2 (unless prior written consent
to the creation or assumption thereof shall have been obtained pursuant to
Section 18 and except any such Lien arising by operation of law), it will make
or cause to be made effective provision whereby the Notes will be secured by
such Lien equally and ratably with any and all other Indebtedness thereby
secured so long as any such other Indebtedness shall be so secured, it being
understood that the provision of such equal and ratable security shall not
constitute a cure or waiver of any related Event of Default.
10.17. COMPLIANCE WITH LAWS. (a) The Company will, and will cause
each Subsidiary to, comply with all applicable statutes, rules, regulations, and
orders of, and all applicable restrictions imposed by, the United States of
America, foreign countries, states, provinces and municipalities, and of or by
any governmental department, commission, board, regulatory authority, bureau,
agency and instrumentality of the foregoing, and of or by any court, arbitrator
or grand jury, in respect of the conduct of their respective businesses and the
ownership of their respective properties or business (including, without
limitation, Environmental Laws), except (I) such as are being contested in good
faith by appropriate proceedings promptly initiated and diligently conducted and
if such reserve or other appropriate provision, if any, as shall be required by
GAAP shall have been made therefor or (ii) for any failure to so comply which,
63
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
(b) The Company will, and will cause each Restricted Subsidiary to,
comply with all Environmental Laws, other than noncompliance which could not
reasonably be expected to result in a Material Adverse Effect, individually or
in the aggregate, with any other liability under any Environmental Laws.
10.18. FURTHER ASSURANCES. At any time and from to time promptly, the
Company shall, at its expense, execute and deliver to each holder of a Note and
to the Trustee such further instruments and documents, and take such further
action, as the holders of the Notes may from time to time reasonably request, in
order to further carry out the intent and purpose of this Agreement and to
establish and protect the rights, interests and remedies created, or intended to
be created, in favor of the holders of the Notes, including, without limitation,
the execution, delivery and recordation and filing of security agreements and
financing statements and continuation statements under the Uniform Commercial
Code of any applicable jurisdiction.
10.19. SUBSIDIARIES. (a) The Company may designate any Restricted
Subsidiary or newly acquired or formed Subsidiary as an Unrestricted Subsidiary
or any Unrestricted Subsidiary or newly acquired or formed Subsidiary as a
Restricted Subsidiary, in each case subject to satisfaction of the following
conditions:
(i) immediately before and after giving effect to such designation
no condition or event shall exist which constitutes an Event of Default or
Potential Event of Default;
(ii) immediately after giving effect to such designation, (1) (other
than in the case of a designation of an Unrestricted Subsidiary that does
not have any Indebtedness as a Restricted Subsidiary), the Company would be
permitted to incur at least $1 of additional Indebtedness in compliance
with subdivisions (i), (ii) and (iii) of Section 10.1(f), (2) the Company
and the Restricted Subsidiaries would not be liable with respect to
Indebtedness or any Guaranty, would not own any Investments and their
property would not be subject to any Lien which is not permitted by this
Agreement and (3) substantially all of the Company's and the Restricted
Subsidiaries' assets will be located, and sub-
64
stantially all of the Company's and the Restricted Subsidiaries' business
will be conducted, in the United States of America;
(iii) in the case of a designation as an Unrestricted Subsidiary, if
such designation (and all other prior designations of Restricted
Subsidiaries or newly acquired or formed Subsidiaries as Unrestricted
Subsidiaries during the current fiscal year) were deemed to constitute an
Investment by the Company in respect of all the assets of the Subsidiary so
designated, such Investment would be in compliance with Section 10.3(c),
with the amount of such Investment being deemed to equal the net book value
of such assets (as determined in good faith by the Managing General
Partner) in the case of a Restricted Subsidiary or the cost of acquisition
or formation in the case of a newly acquired or formed Subsidiary,
PROVIDED, that this subdivision (iii) of this Section 10.19(a) shall not
apply to an acquisition or formation by the Company or a Restricted
Subsidiary of a newly acquired or formed Unrestricted Subsidiary to the
extent such acquisition or formation (1) is funded solely by the net cash
proceeds received by the Company from the Managing General Partner or from
the Public Partnership as a capital contribution or as consideration for
the issuance by the Company of additional partnership interests or (2) the
assets involved in such acquisition are acquired in exchange for additional
partnership interests of the Company or the Public Partnership PROVIDED,
FURTHER, the net book value of the Restricted Subsidiary designated an
Unrestricted Subsidiary and the cost (other than the amount paid in cash)
of the acquisition or formation of a newly acquired or formed Subsidiary
shall be deemed proceeds from the sale of assets of the Company for
purposes of Section 10.7 and Section 9.4;
(iv) in the case of a designation of a Restricted Subsidiary as an
Unrestricted Subsidiary, such Restricted Subsidiary shall not have been an
Unrestricted Subsidiary prior to being designated a Restricted Subsidiary;
and
(v) the Company shall deliver to each holder of Notes, within 20
Business Days after any such designation, an Officers' Certificate stating
the effective date of such designation and confirming compliance with the
provisions of this Section 10.19.
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In the case of the designation of any Unrestricted Subsidiary as a
Restricted Subsidiary, such new Restricted Subsidiary shall be deemed to have
(a) made or acquired all Investments owned by it, and (b) incurred all
Indebtedness owing by it and all Liens to which any of its properties are
subject, on the date of such designation.
(b) The Company will cause each Qualifying Restricted Subsidiary,
at the time it is or is deemed to be designated as a Restricted Subsidiary, to
(i) become a party to the Company Security Agreement, the Trust Agreement and
the Subsidiary Guarantee Agreement by execution of a Supplemental Agreement and
(ii) enter into such documents as may be necessary or as you may request in form
and substance satisfactory to the Required Holders in order to secure such
Restricted Subsidiary's obligations under the Subsidiary Guarantee Agreement
with all or substantially all of the assets of such Restricted Subsidiary.
Prior to the designation of a Subsidiary as a Restricted Subsidiary, the Company
shall deliver to the holders of the Notes an opinion of counsel with respect to
the due execution and delivery of the Supplemental Agreement by such Subsidiary
and as to the enforceability of the Company Security Agreement, the Trust
Agreement, the Supplemental Agreement and the Subsidiary Guarantee Agreement
with respect to such Subsidiary, such opinion to be in form and substance
satisfactory to the Required Holders.
(c) The Company will not own any Unrestricted Subsidiaries other
than Wholly Owned Subsidiaries satisfying the requirements in clauses (a), (b)
and (c) of the definition of Restricted Subsidiary.
10.20. DAMAGE, DESTRUCTION, TAKING, ETC. In the event of any damage,
destruction or a taking in respect of all or a portion of the properties subject
to any of the Security Documents or in the event there shall be proceeds under
title insurance policies with respect to any real property, the Company will not
apply any net insurance proceeds or self-insurance amounts, net awards, if such
proceeds (whether resulting from one or a series of events or circumstances)
exceed $25,000,000 in the aggregate, to the cost of repairing or replacing any
damaged or destroyed assets without the prior written consent of the Required
Holders.
10.21. ACCOUNTING CHANGES. The Company will not, and will not suffer
or permit any Restricted Subsidiary to, make any significant change in
accounting treatment or reporting practices, except as required by GAAP or
consented to by the
66
Company's independent public accountant. The Company will, and will cause each
Restricted Subsidiary to, cause its fiscal year to end on June 30 in each year.
10.22. ACQUISITIONS. Except as otherwise permitted by Section 10.7,
the Company will not, and will not cause or permit any of the Restricted
Subsidiaries to, purchase, lease or otherwise acquire (in one transaction or a
series of transactions) all or any substantial part of the assets of any other
Person, except that (a) the Company and any of the Restricted Subsidiaries may
purchase Inventory in the ordinary course of business and (b) the Company or any
Restricted Subsidiary may engage in any such acquisition if no Event of Default
or Potential Event of Default has occurred and is continuing at the time of any
such acquisition or would occur immediately after giving effect thereto.
10.23. IMPAIRMENT OF SECURITY INTERESTS. Other than with respect to
Permitted Encumbrances, the Company will not, and will not permit any of the
Restricted Subsidiaries to, take or omit to take any action, which action or
omission might or would have the result of materially impairing the security
interests in favor of the Trustee with respect to the Collateral, and the
Company will not, and will not permit any of the Restricted Subsidiaries to,
grant to any Person (other than the Trustee) any interest whatsoever in the
Collateral.
10.24. LIMITATION ON RESTRICTIONS ON SUBSIDIARY DIVIDENDS, ETC. The
Company will not, and will not cause or permit any of the Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or restriction on the
ability of any Restricted Subsidiary to (a) pay dividends or make any other
distributions on or in respect of its capital stock, or pay any Indebtedness
owed to the Company or any Restricted Subsidiary, (b) make loans or advances to
the Company or any Restricted Subsidiary or (c) transfer any of its properties
or assets to the Company or any Restricted Subsidiary, except for such
encumbrances or restrictions existing under or by reason of (i) customary non-
assignment provisions in any lease governing a leasehold interest or other
contract entered into in the ordinary course of business consistent with past
practices, (ii) restrictions on the payment of dividends and distributions
pursuant to the terms of Indebtedness incurred by such Restricted Subsidiary in
accordance with Section 10.1 or (iii) this Agreement or any other Operative
Agreement.
67
10.25. NO OTHER NEGATIVE PLEDGES. The Company will not, and will not
cause or permit any of the Restricted Subsidiaries to, directly or indirectly,
enter into any agreement prohibiting the creation or assumption of any Lien upon
the properties or assets of the Company or any Restricted Subsidiary, whether
now owned or hereafter acquired, or requiring an obligation to be secured if
some other obligation is secured, except for this Agreement, the Other
Agreements, the Bank Credit Facilities and the terms of any other Indebtedness
incurred in accordance with Section 10.1 (PROVIDED that the terms of such
agreement for such other Indebtedness are no more onerous to the Company and its
Subsidiaries than those agreements relating to the Indebtedness in respect of
which Liens are permitted in accordance with Section 10.2); PROVIDED that no
such agreement shall prohibit the granting of Liens on assets of the Company and
its Restricted Subsidiaries as contemplated by the terms of this Agreement, the
Security Documents and any documents evidencing or creating any other Parity
Debt.
10.26. SALES OF RECEIVABLES. The Company will not, and will not cause
or permit any of the Restricted Subsidiaries to, sell with recourse, discount or
otherwise sell or dispose of its notes or accounts receivable, except for
(a) accounts receivable consisting of assets of an operating unit sold as a
going concern in accordance with all other provisions of this Agreement and (b)
sales of account receivables which are seriously past due and which have been
substantially written off as uncollectable or collectable only after extended
delays.
10.27. FIXED PRICE SUPPLY CONTRACTS; CERTAIN POLICIES. (a) The
Company will not, and will not permit any of the Restricted Subsidiaries to, at
any time be a party or subject to any contract for the purchase or supply by
such parties of propane or other product except where (i) the purchase price is
set with reference to a spot index or indices substantially contemporaneously
with the delivery of such product or (ii) delivery of such propane or other
product is to be made no more than one year after the purchase price is agreed
to.
(b) The Company will not amend, modify or waive the trading policy
or supply inventory position policy existing as of the date of Closing, except
that the Company may amend its supply inventory position policy such that such
policy provides that neither it nor any of the Restricted Subsidiaries will hold
on hand more than 90 days' of commodities inventory. The Company will provide
each holder of a Note with prompt written notice of any such new commodity
hedging agreement or
68
any such change in such policy. Subject to the foregoing exception, the Company
and the Restricted Subsidiaries will comply in all material respects with such
policies at all times.
10.28. INDEPENDENT CORPORATE EXISTENCE. (a) The Company shall
maintain, and shall cause each of its Subsidiaries to maintain, books, records
and accounts that are separate from the books, records and accounts of
Northwestern, the General Partners or any of their respective Subsidiaries
(other than the Company and its Subsidiaries) such that: (i) the revenues of the
Company and its Subsidiaries will be credited to the accounts of the Company and
its Subsidiaries only; (ii) all expenses incurred by the Company and its
Subsidiaries shall be paid only from the accounts of the Company and its
Subsidiaries (other than those paid by Northwestern or the Managing General
Partner and allocated to the Company or its Subsidiaries in the manner set forth
in subdivision (c) of this Section); (iii) only officers and employees of the
Managing General Partner, the Company and its Subsidiaries in their capacity as
such shall have the authority to make disbursements with respect to the accounts
of the Company and its Subsidiaries as the case may be; (iv) there shall occur
no sharing of accounts or funds between the Company and its Subsidiaries, on the
one hand, and Northwestern, either General Partner or any of their respective
Subsidiaries (other than the Company and its Subsidiaries), on the other hand;
and (v) all cash and funds of the Company and its Subsidiaries shall be managed
separately from the cash and funds of Northwestern, either General Partner or
any of their respective Subsidiaries (other than the Company and its
Subsidiaries), and there shall not occur any commingling, including for
investment purposes, of funds or assets of the Company and its Subsidiaries with
the funds or assets of Northwestern, either General Partner or any of their
respective Subsidiaries (other than the Company and its Subsidiaries).
(b) All full-time employees, consultants and agents of the Company
and its Subsidiaries shall be compensated directly from the bank accounts of the
Managing General Partner, the Company and such Subsidiaries for services
provided by such employees, consultants and agents and, to the extent any
employee, consultant or agent is also an employee, consultant or agent of
Northwestern, either General Partner or any of their respective Subsidiaries
(other than the Company and its Subsidiaries), the compensation of such
employee, consultant or agent shall be allocated in accordance with
subdivision (c) of this Section among the Company and its Subsidiaries, on the
one hand, and Northwestern, either General Partner and any of their respective
Sub-
69
sidiaries (other than the Company and its Subsidiaries), on the other hand, on a
basis which reasonably reflects the services rendered to the Company and its
Subsidiaries.
(c) All overhead expenses (including telephone and other utility
charges) for items shared by the Company and its Subsidiaries, on the one
hand, and Northwestern, either General Partner or any of their respective
Subsidiaries (other than the Company and its Subsidiaries), on the other hand,
shall be allocated on the basis of actual use to the extent practicable and, to
the extent such allocation is not practicable, on a basis reasonably related to
actual use.
(d) The Company shall not permit Northwestern, either General
Partner or any of their respective Subsidiaries (other than the Company and its
Subsidiaries) to be named as a loss payee or additional insured on the insurance
policy covering the property of the Company or any of its Subsidiaries, or enter
into an agreement with the holder of such policy whereby in the event of a loss
in connection with such property, proceeds are paid to Northwestern, either
General Partner and their respective Subsidiaries (other than the Company and
its Subsidiaries).
10.29. OTHER DEBT. (a) The Company shall ensure that the lenders from
time to time in respect of any Parity Debt or any other Indebtedness in the
aggregate principal amount of at least $3,750,000 outstanding as permitted by
paragraphs (b) through (f), (i) through (l) and (r) of Section 10.1, in the
documents governing the terms of such Indebtedness, (i) recognize the existence
and validity of the obligations represented by the Notes and (ii) agree to
refrain from making or asserting any claim that this Agreement or the
obligations represented by the Notes are invalid or not enforceable in
accordance with its and their terms as a result of the circumstances surrounding
the incurrence of such obligations.
(b) Each holder of Notes from time to time, as evidenced by its
acceptance of such Notes, (i) acknowledges the existence and validity of the
obligations of the Company under the Bank Credit Facilities (and any extension,
renewal, refunding or refinancing thereof permitted by Section 10.1) and (ii)
agrees to refrain from making or asserting any claim that such obligations or
the instruments governing the terms thereof are invalid or not enforceable in
accordance with its and their terms as a result of the circumstances surrounding
the incurrence of such obligations.
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10.30. RESTRICTION ON GENERAL PARTNER. The Managing General Partner
shall not (i) exist for any purpose or engage in any business or business
activity except (a) to serve as the Managing General Partner of the Company and
the Public Partnership, in the circumstances provided in the Partnership
Agreement and Public Partnership Agreement, and (b) to own other wholly-owned
corporate Subsidiaries, PROVIDED that, each General Partner shall have agreed
(x) that it will not guaranty or otherwise agree to be liable with respect to
any Indebtedness incurred by such Subsidiary and at the time of formation or
acquisition thereof and in connection therewith, the assets of either General
Partner are not and will not be subject to any Liens relating to and
Indebtedness or other obligations of such Subsidiaries and (y) to be bound by
the provisions of Section 10.28 (all references therein to the Company to be
deemed references to the General Partners and all references therein to
Subsidiaries to be deemed references to Subsidiaries of the General Partners)
and (z) the General Partners shall confirm with an Approved Rating Agency (as
defined below) that its rating on the Notes in effect at such time will not be
downgraded solely as a result thereof, or (ii) incur any Indebtedness or other
liabilities (other than tax liabilities). "Approved Rating Agency" shall mean
any of Fitch Investors Services, Inc., Standard & Poor's Ratings Group, Xxxxx'x
Investor Service, Inc. or Duff and Xxxxxx Credit Rating Co.
10.31. RECORDATION OF CONVEYANCE DOCUMENTS. The Company will cause,
within 60 days subsequent to the date of Closing, the Conveyance Agreements
referred to in clause (b) of the definition of such term, and all proper
notices, statements or other instruments in respect thereof, covering all of the
Assets covered by such Conveyance Agreements to have been duly recorded,
published, registered and filed and all other actions deemed necessary by your
special counsel shall have been duly performed or taken, in such manner and in
such places as is required by applicable law (a) to convey to the Company record
and beneficial ownership of the Assets referred to in Section 5.8(c)(ii)
purported to be conveyed by such Conveyance Agreements and (b) to establish,
perfect, preserve and protect the rights and first priority Liens purported to
be granted by each such Security Document to the Trustee with respect to the
Assets referred to in Section 5.8(c)(ii) for the benefit of the holders of the
Notes and their respective successors and assigns, and the Company will cause
all taxes, fees and other charges then due in connection with the execution,
delivery, recording, publishing, registration and filing of such documents or
instruments to have been paid in full.
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SECTION 11. EVENTS OF DEFAULT; ACCELERATION.
If any of the following conditions or events ("Events of Default")
shall occur and be continuing:
(a) the Company shall default in the payment of any principal of or
Make Whole Amount, Premium Amount, if any, on any Note when the same
becomes due and payable, whether at maturity or at a date fixed for
prepayment or by declaration or otherwise; or
(b) the Company shall default in the payment of any interest on any
Note or any amount due and payable under any Operative Agreement for more
than 5 Business Days after the same becomes due and payable; or
(c) the Company or any Restricted Subsidiary shall default in the
performance of or compliance with any term contained in Section 7(f), any
of Sections 10.1 through 10.8 (other than Section 10.8(c)), inclusive, or
the Dedicated Funds are not used to repay Indebtedness as specified in the
pro forma calculations set forth in the definition of Consolidated Pro
Forma Debt Service or the definition of Maximum Consolidated Pro Forma Debt
Service, as the case may be; or
(d) the Company, either General Partner, Northwestern, the Public
Partnership or any Restricted Subsidiary shall default in the performance
of or compliance with any other term contained in this Agreement or any
other Operative Agreement and such default shall not have been remedied
within 30 Business Days after the earlier of the date such default shall
first have become actually known to any Responsible Officer of such Person
or the date written notice thereof shall have been received by the Company
from the Trustee; or
(e) any material representation or warranty made in writing by or
on behalf of the Company or any of its Affiliates in this Agreement, any
other Operative Agreement or in any instrument furnished in connection with
the transactions contemplated by this Agreement shall prove to have been
false or incorrect in any material respect on the date as of which made or
deemed made; or
[(f) (i) the Company or any Restricted Subsidiary (as principal or
guarantor or other surety) shall default (after receiving notice, if any,
and/or the expiration of
72
any applicable grace period) in the payment of any amount of principal of
or premium or interest on the Bank Credit Facilities or any facility
extending, renewing or refinancing the Bank Credit Facilities (including
any prior extension, renewal or refinancing thereof); or any event shall
occur or condition shall exist in respect of the Bank Credit Facilities or
any facility extending, renewing or refinancing the Bank Credit Facilities,
or of any mortgage, indenture or other agreement relating to the Bank
Credit Facilities or any facility extending, renewing or refinancing the
Bank Credit Facilities the effect of which is to cause such Bank Credit
Facilities or any facility extending, renewing or refinancing the Bank
Credit Facilities (including any prior extension, renewal or refinancing
thereof), to become due before its stated maturity or before its regularly
scheduled dates of payment or to permit the holders thereof to cause the
Company or any Restricted Subsidiary to repurchase or repay such Bank
Credit Facilities or any facility extending, renewing or refinancing the
Bank Credit Facilities (including any prior extension, renewal or
refinancing thereof), and such default, event or condition shall continue
for more than the period of grace, if any, specified therein and shall not
have been waived pursuant thereto;]
(ii) the Company or any Restricted Subsidiary (as principal or
guarantor or other surety) shall default (after receiving notice, if any,
and/or the expiration of any applicable grace period) in the payment of any
amount of principal of or premium or interest on any Indebtedness in an
amount at least equal to $10,000,000 [(other than the Bank Credit
Facilities or any facility extending, renewing or refinancing the Bank
Credit Facilities and the Notes)]; or any event shall occur or condition
shall exist in respect of such other Indebtedness which is outstanding in a
principal amount of at least $10,000,000 or under any evidence of any such
Indebtedness or of any mortgage, indenture or other agreement relating to
such other Indebtedness, the effect of which is to cause such other
Indebtedness to become due before its stated maturity or before its
regularly scheduled dates of payment; or
(g) filing by or on the behalf of the Company or the Managing
General Partner of a voluntary petition or an answer seeking
reorganization, arrangement, readjustment of its debts or for any other
relief under any bankruptcy, reorganization, compromise, arrangement,
insolvency, readjustment of debt, dissolution or liquidation or similar act
or law, state or federal, now or hereafter existing ("Bankruptcy Law"), or
any action by the Company or the Managing
73
General Partner, or consent or acquiescence to, the appointment of a
receiver, trustee or other custodian of the Company or the Managing General
Partner, or of all or a substantial part of its property; or the making by
the Company or the Managing General Partner of any assignment for the
benefit of creditors; or the admission by the Company or the Managing
General Partner of the Company in writing of its inability to pay its debts
as they become due; or
(h) filing of any involuntary petition against the Company or the
Managing General Partner in bankruptcy or seeking reorganization,
arrangement, readjustment of its debts or for any other relief under any
Bankruptcy Law and an order for relief by a court having jurisdiction in
the premises shall have been issued or entered therein; or any other
similar relief shall be granted under any applicable Federal or state law;
or a decree or order of a court having jurisdiction in the premises for the
appointment of a receiver, liquidator, sequestrator, trustee or other
officer having similar powers over the Company or the Managing General
Partner or over all or a part of its property shall have been entered; or
the involuntary appointment of an interim receiver, trustee or other
custodian of the Company or the Managing General Partner or of all or a
substantial part of its property; or the issuance of a warrant of
attachment, execution or similar process against any substantial part of
the property of the Company or the Managing General Partner; and
continuance of any such event for 60 consecutive days unless dismissed,
bonded to the satisfaction of the court having jurisdiction in the premises
or discharged; or
(i) filing by or on the behalf of any Restricted Subsidiary of a
voluntary petition or an answer seeking reorganization, arrangement,
readjustment of its debts or for any other relief under any Bankruptcy Law,
or any action by any Restricted Subsidiary for, or consent or acquiescence
to, the appointment of a receiver, trustee or other custodian of such
Restricted Subsidiary or of all or a substantial part of its property; or
the making by any Restricted Subsidiary of any assignment for the benefit
of creditors; or the admission by any Restricted Subsidiary in writing of
its inability to pay its debts as they become due; or
(j) filing of any involuntary petition against any Restricted
Subsidiary in bankruptcy or seeking reorganization, arrangement,
readjustment of its debts or for any other relief under any Bankruptcy Law
and an order for relief by a court having jurisdiction in the premises
shall have been issued or entered therein; or any
74
other similar relief shall be granted under any applicable Federal or state
law; or a decree or order of a court having jurisdiction in the premises
for the appointment of a receiver, liquidator, sequestrator, trustee or
other officer having similar powers over any Restricted Subsidiary or over
all or a part of its property shall have been entered; or the involuntary
appointment of an interim receiver, trustee or other custodian of any
Restricted Subsidiary or of all or a substantial part of its property; or
the issuance of a warrant of attachment, execution or similar process
against any substantial part of the property of any Restricted Subsidiary;
and continuance of any such event for 60 consecutive days unless dismissed,
bonded to the satisfaction of the court having jurisdiction in the premises
or discharged; or
(k) a final judgment or judgments (which is or are non-appealable
or which has or have not been stayed pending appeal or as to which all
rights to appeal have expired or been exhausted) shall be rendered against
the Company or any Restricted Subsidiary for the payment of money in excess
of $10,000,000 in the aggregate (net of any insurance coverage) and any one
of such judgments shall not be discharged or execution thereon stayed
pending appeal within 60 days after the date due, or, in the event of such
a stay, such judgment shall not be discharged within 60 days after such
stay expires or any action shall be legally taken by a judgment creditor to
levy upon the assets or properties of the Company or any Restricted
Subsidiary to enforce any such judgment; or
(l) any of the Security Documents shall at any time, for any
reason, cease in any material respect to be in full force and effect or
shall be declared to be null and void in whole or in any material part by
the final judgment (which is non-appealable or has not been stayed pending
appeal or as to which all rights to appeal have expired or been exhausted)
of any court or other governmental or regulatory authority having
jurisdiction in respect thereof, or if the validity or the enforceability
of any of the Security Documents shall be contested by or on behalf of the
Company, either General Partner, the Managing General Partner, the Public
Partnership, Northwestern or any Restricted Subsidiary, or the Company,
either General Partner, the Managing General Partner, the Public
Partnership, Northwestern or any Restricted Subsidiary shall renounce any
of the Security Documents or deny that it is bound by the terms of any of
the Security Documents; or
75
(m) any order, judgment or decree is entered in any proceedings
against the Company decreeing a split-up of the Company, and such order,
judgment or decree shall not be dismissed or execution xxxxxxx stayed
pending appeal or review within 60 days after entry thereof, or in the
event of such a stay, such order, judgment or decree shall not be dismissed
within 60 days after such stay expires;
then, (x) upon the occurrence of any Event of Default described in subdivision
(g) or (h) of this Section 11, the unpaid principal amount of and accrued
interest on the Notes shall automatically become due and payable (without Make
Whole Amount), or, (y) upon the occurrence and continuance of any other Event of
Default, any holder or holders of more than 50% in principal amount of the Notes
at the time outstanding, may at any time (unless all defaults shall theretofore
have been remedied in accordance with the terms hereof) at its or their option,
by written notice or notices to the Company, declare all the Notes to be due and
payable, whereupon the same shall forthwith mature and become due and payable,
together with interest accrued thereon and, to the extent permitted by
applicable law, the applicable Make Whole Amount, if any, with respect to such
Notes, all without presentment, demand, protest or further notice, which are
hereby waived, PROVIDED that during the existence of an Event of Default
described in subdivision (a) or (b) (insofar as subdivision (b) relates to
interest on any Note) of this Section 11, any holder of the Notes at the time
outstanding may, at its option, by notice in writing to the Company, declare the
Notes then held by such holder to be due and payable, whereupon the Notes then
held by such holder shall forthwith mature and become due and payable, together
with interest accrued thereon and, to the extent permitted by applicable law,
the applicable Make Whole Amount with respect to such Notes.
At any time after the principal of, and interest accrued on, all the
Notes are declared due and payable, the Required Holders, by written notice to
the Company, may rescind and annul any such declaration and its consequences
(other than in respect of any Note which has been individually accelerated
pursuant to the proviso contained in the immediately preceding paragraph) if
(x) the Company has paid all overdue interest on the Notes, the principal of and
Make Whole Amount, if any, on any such Notes which have become due otherwise
than by reason of such declaration, and interest on such overdue principal and
the applicable Make Whole Amount and (to the extent permitted by applicable law)
overdue interest, at a rate per annum equal to the rate of interest stated on
the face of the Notes plus 2.0%, (y) all Events of Default, other than
nonpayment of amounts which have become due solely by reason of such
76
declaration, and all conditions and events which constitute Events of Default or
Potential Events of Default have been cured or waived, and (z) no judgment or
decree has been entered for the payment of any monies due pursuant to the Notes
or this Agreement; but no such rescission and annulment shall extend to or
affect any subsequent Event of Default or Potential Event of Default or impair
any right consequent thereon.
SECTION 12. REMEDIES ON DEFAULT; RECOURSE, ETC.
In case any one or more Events of Default or Potential Events of
Default shall occur and be continuing, (i) the holder of any Note at the time
outstanding may proceed to protect and enforce the rights of such holder by an
action at law, suit in equity or other appropriate proceeding, whether for the
specific performance of any agreement contained herein or in such Note, or for
an injunction against a violation of any of the terms hereof or thereof, or in
aid of the exercise of any power granted hereby or thereby or by law or
otherwise, and (ii) the Trustee and the holders of the Notes may exercise any
rights or remedies in their respective capacities under the Security Documents
in accordance with the provisions thereof. In case of a default in the payment
or performance of any provision hereof or of the Notes or of the Security
Documents, the Company will pay to the holder of each Note such further amount
as shall be sufficient to cover the costs and expenses of collection, including,
without limitation, reasonable attorneys' fees, expenses and disbursements, and
any out-of-pocket costs and expenses of any such holder incurred in connection
with analyzing, evaluating, protecting, ascertaining, defending or enforcing any
of its rights as set forth herein or in any of the Security Documents. No
course of dealing and no delay on the part of any holder of any Note in
exercising any right, power or remedy shall, to the extent permitted by law,
operate as a waiver thereof or otherwise prejudice such holder's rights, powers
or remedies. No right, power or remedy conferred by this Agreement or by any
Note upon any holder thereof shall be exclusive of any other right, power or
remedy referred to herein or therein or now or hereafter available at law, in
equity, by statute or otherwise.
SECTION 13. DEFINITIONS.
As used herein the following terms have the following respective
meanings:
77
ADMINISTRATIVE AGENT: Bank of America National Trust and Savings
Association in its capacity as administrative agent for the Banks under the Bank
Credit Facilities, and its successors in such capacity.
AFFILIATE: as applied to any Person, any other Person directly or
indirectly controlling or controlled by or under common control with such
Person, PROVIDED that (i) for purposes of this definition, "control" (including,
with correlative meanings, the terms "controlled by" and "under common control
with") as used with respect to any Person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether as a general partner or through the ownership
of voting securities or by contract or otherwise, (ii) as applied to the
Company, the term "Affiliate" shall include each General Partner and the Public
Partnership, and (iii) neither you nor any other Person which is an institution
shall be deemed to be an Affiliate of the Company solely by reason of ownership
of the Notes or other securities issued in exchange for the Notes or by reason
of having the benefits of any agreements or covenants contained in this
Agreement or the other Operative Agreements.
AGREEMENT: the meaning specified in Section 1.
ASSETS: the assets conveyed to the Company pursuant to the Conveyance
Agreements.
AVAILABLE CASH: with respect to any calendar quarter, (a) the sum of
(i) all cash and cash equivalents of the Company and the Restricted Subsidiaries
on hand at the end of such quarter and (ii) all additional cash and cash
equivalents of the Company and the Restricted Subsidiaries on hand on the date
of determination of Available Cash with respect to such quarter obtained through
available borrowings under the Working Capital Facility made after the end of
such quarter (provided that such borrowings under the Working Capital Facility
shall in no event exceed available borrowings under the Working Capital
Facility as of the end of such quarter), less (b) (i) any cash reserves in such
amounts as the Managing General Partner shall determine to be necessary or
appropriate in its reasonable discretion to (A) provide for the proper conduct
of the business of the Company and the Restricted Subsidiaries (including,
without limitation, cash reserves for future capital expenditures) or
(B) provide funds for distributions under Sections [6.4(a)(i), (ii), and (iii)
or 6.4(b)(i)] of the MLP Agreement in respect of any one or more of next four
quarters or (C) comply with
78
applicable law or any loan agreement (including this Agreement), mortgage,
security agreement, debt instrument or other agreement or obligation to which
the Company or any Restricted Subsidiary is a party or its assets are subject,
(including the payment of principal, Make Whole Amount, Premium Amount or
premium, if applicable, and interest) in respect of the Notes, (ii) all
Dedicated Funds and (iii) all amounts which a Restricted Subsidiary is
prohibited from dividending or distributing to the Company; PROVIDED that
Available Cash shall exclude without duplication (x) in each calendar quarter a
reserve equal to at least 50% of the aggregate amount of all interest payments,
except for interest payments to be made in respect of the Working Capital
Facility, in respect of all Indebtedness of the Company and the Restricted
Subsidiaries upon which interest is due semiannually or less frequently to be
made in the next quarter (assuming, in the case of Indebtedness incurred under
the Bank Credit Facilities and other Indebtedness bearing interest at
fluctuating interest rates which cannot be determined in advance, that the
interest rate in effect on the last Business Day of the immediately preceding
calendar quarter will remain in effect until such Indebtedness is due to be
paid), (y) with respect to any Indebtedness secured equally and ratably with the
Notes of which principal is payable annually, in the third calendar quarter
immediately preceding each calendar quarter in which any scheduled principal
payment is due with respect to such Notes and other Indebtedness (a "principal
payment quarter"), a reserve equal to at least 25% of the aggregate amount of
all principal to be paid in respect of such Notes and other such Indebtedness
secured equally and ratably with the Notes in such principal payment quarter; in
the second calendar quarter immediately preceding a principal payment quarter, a
reserve equal to at least 50% of the aggregate amount of all principal to be
paid in respect of such Notes and other such Indebtedness in such principal
payment quarter; and in the calendar quarter immediately preceding a principal
payment quarter, a reserve equal to at least 75% of the aggregate amount of all
principal to be paid in respect of such Notes and other such Indebtedness in
such principal payment quarter, and (z) with respect to the Notes and any other
Indebtedness secured equally and ratably with the Notes of which principal is
payable semiannually, in each calendar quarter which immediately precedes a
quarter in which principal is payable in respect of such Notes and such
Indebtedness a reserve equal to at least 50% of the aggregate amount of all
principal to be paid in respect of such Notes and other such Indebtedness in the
next quarter; PROVIDED FURTHER that the amount of such reserve specified in
clauses (y) and (z) of this definition for principal amounts to be paid shall be
reduced by the aggregate principal amount of all binding, irrevocable letters of
credit established to refinance such principal amounts.
79
BANK CREDIT FACILITIES: that Credit Agreement, dated as of December
__, 1996, among the Company, Bank of America National Trust and Savings
Association, as administrative agent, _____________________, as syndication
agent, and the Banks, pursuant to which the Initial Acquisition Facility and the
Working Capital Facility will be made available to the Company, and any
extension, renewal, refunding or replacement thereof otherwise permitted to be
incurred and outstanding under Section 10.1.
BANKRUPTCY LAW: the meaning specified in Section 11(g).
BANKS: the financial institutions listed in the signature pages of
the Bank Credit Facilities, each assignee which becomes a lender under the Bank
Credit Facilities pursuant to the terms thereof and their respective successors.
BUSINESS: the operation by the Company and its Subsidiaries (and
prior to the consummation of the Conveyance Agreements by the General Partners
and their Affiliates) of the wholesale and retail sale, distribution and storage
of propane gas and related petroleum derivative products, the leasing of propane
storage tanks and the related retail sale of supplies and equipment, including
home appliances, and such other businesses in which the Company and its
Restricted Subsidiaries were engaged on the date of Closing as described in the
Registration Statement.
BUSINESS DAY: any day other than a Saturday, a Sunday or a day on
which commercial banks in New York City are required or authorized by law to be
closed.
CALLED PRINCIPAL: with respect to any Note, the principal of such
Note that is to be prepaid pursuant to Section 9.2, 9.3 or 9.4 or becomes or is
declared to be immediately due and payable pursuant to Section 11, as the
context requires.
CAPITAL LEASE: as applied to any Person, any lease of any property
(whether real, personal or mixed) by such Person (as lessee or guarantor or
other surety) which would, in accordance with GAAP, be required to be classified
and accounted for as a capital lease on a balance sheet of such Person.
CERCLA: the Federal Comprehensive Environmental Response,
Compensation and Liability Act, as amended.
CHANGE OF CONTROL: any of the following:
80
(a) the liquidation or dissolution of the Managing General Partner
of the Company;
(b) any merger or consolidation of the Managing General Partner
with or into any Person if the Managing General Partner is not the surviving
entity thereof, or any sale, whether direct or indirect, of all or substantially
all of the assets of the Managing General Partner to any Person or "group" (as
used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended), other than to a Permitted Holder;
(c) any Person or "group" is or becomes, directly or indirectly,
the beneficial owner of more than 50% of the then outstanding total voting power
of all classes of stock (or other securities) of the Managing General Partner,
the holders of which are ordinarily, in the absence of contingencies, entitled
to elect a majority of the directors (or Persons performing similar functions)
of the Managing General Partner; or
(d) during any period of twelve consecutive months after the date
of Closing, individuals who at the beginning of such twelve month period (or
Persons nominated by such members of the Board of Directors of the general
partner of the Company to succeed them) constitute the Board of Directors of the
general partner of the Company cease, for any reason, to constitute a majority
of the Board of Directors of the general partner of the Company then in office;
PROVIDED it shall not be a Change of Control pursuant to paragraphs (b), (c) or
(d), if the Chief Executive Officer or Chief Financial Officer of the Company,
immediately prior to the events specified therein, serves as Chief Executive
Officer or Chief Financial Officer, after the occurrence of such an event.
(e) if Northwestern shall cease to own, directly or indirectly, in
the aggregate, an amount of the general partnership interest in the Company
equal to at least fifty percent of the amount of the general partnership
interest in the Company owned, collectively, by the General Partners on the date
of Closing.
CLOSING: the meaning specified in Section 3.
CODE: the Internal Revenue Code of 1986, as amended from time to
time.
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COLLATERAL: collectively, the properties referred to as the
"Collateral" under the Company Security Agreement and as the "Security" in the
Trust Agreement.
COMMODITY HEDGING AGREEMENT(S): any agreement or arrangement designed
solely to protect the Company against fluctuations in the price of propane or
natural gas with respect to quantities of propane that the Company reasonably
expects to purchase from suppliers, sell to its customers or need for its
inventory during the period covered by such agreement or arrangement.
COMPANY: the meaning specified in the Introduction and, for the
purposes of calculating any financial test or financial covenant under this
Agreement with respect to the period prior to the date of the Closing, "Company"
shall mean the General Partners and their Affiliates (but only to the extent
that any such General Partner or Affiliate operated a portion of the Business),
and any such calculations with respect to any such prior period shall be made on
a pro forma basis substantially consistent with the pro forma calculations of
prior periods set forth in the Registration Statement.
COMPANY SECURITY AGREEMENT: the Pledge and Security Agreement among
the Company, [the General Partners], the Qualifying Restricted Subsidiaries and
the Trustee substantially in the form attached hereto as Exhibit G, as amended
from time to time.
COMPETITOR: any Person engaged primarily in the wholesale and retail
sale, distribution and storage of propane gas and related petroleum derivative
products.
CONSOLIDATED CASH FLOW: at any date of determination, for the period
of four consecutive fiscal quarters most recently completed at least 45 days
(except that, in connection with any calculation required pursuant to Section
10.4, for the period of four consecutive fiscal quarters most recently
completed) prior to such date of determination,
(a) the sum of, without duplication, the amounts for such period,
taken as a single accounting period, (i) Consolidated Net Income and (ii)
all amounts deducted in the determination of such Consolidated Net Income
for such period in respect of (v) interest charges (including amortization
of debt discount and expense and imputed interest on Capital Lease
obligations), (x) provisions for all income taxes and reserves (including
reserves for deferred income taxes), (y) all other non-
82
cash items, and (z) all fees, cost and expenses with respect to the
retirement or repayment of Indebtedness of the Managing General Partner
existing immediately prior to the Closing, LESS
(b) without duplication, all amounts added in the determination of
such Consolidated Net Income for such period in respect of non-cash items.
Consolidated Cash Flow shall be calculated after giving effect (without
duplication) on a pro forma basis for the four consecutive fiscal quarters most
recently completed prior to such date of determination to any asset sales or
asset acquisitions (including, without limitation, any asset acquisition giving
rise to the need to make such calculation as a result of the Company or any
Restricted Subsidiary (including any Person who becomes a Restricted Subsidiary
as a result of such asset acquisition) incurring, assuming or otherwise being
liable for acquired Indebtedness) occurring during the period commencing on the
first day of such four fiscal quarter period to and including the date of
determination (the "REFERENCE PERIOD"), as if such asset sale or asset
acquisition occurred on the first day of the Reference Period; PROVIDED, that
Consolidated Cash Flow generated by an acquired business or asset shall be
determined on the basis of, without duplication, (a) the actual gross profit
(revenues minus cost of goods sold) of the acquired business or asset during the
immediately preceding four full fiscal quarters), minus (b) the pro forma
expenses that would have been incurred by the Company in the operation of such
acquired business or asset during such period computed on the basis of personnel
expenses for employees retained or to be retained by the Company in the
operation of such acquired business or asset and non-personnel costs and
expenses incurred by the Company or the Managing General Partner in the
operation of the Company's business at similarly situated Company facilities or
Restricted Subsidiary facilities. If the applicable Reference Period for any
calculation of Consolidated Cash Flow shall include a partial period occurring
prior to the Closing, then such Consolidated Cash Flow shall be calculated based
upon the Consolidated Cash Flow on a PRO FORMA basis for such portion of the
Reference Period prior to the Closing (giving effect to the transactions
occurring on the date of Closing) and the Consolidated Cash Flow for the
remaining portion of the Reference Period occurring on and after the Closing,
giving PRO FORMA effect, as described in the preceding sentences, to all
applicable transactions occurring on the date of Closing or otherwise.
CONSOLIDATED INTEREST EXPENSE: as of any date of determination, the
total amount payable by the Company and the Restricted Subsidiaries on a
consolidated
83
basis, during the period of twelve consecutive months immediately following such
date of determination in respect of all interest charges (including amortization
of debt discount and expense and imputed interest on payments under Capital
Lease obligations) with respect to Indebtedness of the Company and the
Restricted Subsidiaries outstanding on the date of determination, assuming for
such purpose (a) the amount of such Indebtedness is not reduced or increased
during such twelve month period, and (b) that interest expense for such twelve
month period with respect to Indebtedness of a revolving nature shall equal the
actual interest expense for Indebtedness of a revolving nature during the most
recently completed twelve month period .
CONSOLIDATED NET INCOME: with reference to any period, the net income
(or deficit) of the Company and the Restricted Subsidiaries for such period
(taken as a cumulative whole), after deducting all operating expenses,
provisions for all taxes and reserves (including reserves for deferred income
taxes) and all other proper deductions, all determined in accordance with GAAP
on a consolidated basis, after eliminating all intercompany transactions,
PROVIDED that there shall be excluded (a) the income (or deficit) of any Person
accrued prior to the date it becomes a Restricted Subsidiary or is merged into
or consolidated with the Company or a Restricted Subsidiary, (b) the income (or
deficit) of any Person (other than a Restricted Subsidiary) in which the Company
or any Restricted Subsidiary has an ownership interest, except to the extent
that any such income has been actually received by the Company or such
Restricted Subsidiary in the form of dividends or similar distributions, (c) the
undistributed earnings of any Restricted Subsidiary to the extent that the
declaration or payment of dividends or similar distributions by such Restricted
Subsidiary is not at the time permitted by the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to such Restricted Subsidiary, (d) any restoration to
income of any contingency reserve, except to the extent that provision for such
reserve was made out of income accrued during such period, (e) any aggregate net
gain or net loss during such period arising from the sale, exchange or other
disposition of capital assets (such term to include all fixed assets, whether
tangible or intangible, all Inventory sold in conjunction with the disposition
of fixed assets, and all securities), (f) any write-up of any asset, (g) any net
gain from the collection of the proceeds of life insurance policies, (h) any
gain arising from the acquisition of any securities, or the extinguishment,
under GAAP, of any Indebtedness, of the Company or any Restricted Subsidiary,
(i) any after tax gain or loss during such period from any change in accounting,
from any discontinued operations or the disposition thereof, from any
extraordinary events or from any prior period
84
adjustments, (j) any deferred credit representing the excess of equity in any
Restricted Subsidiary at the date of acquisition over the cost of the investment
in such Restricted Subsidiary, and (k) in the case of a successor to the Company
by consolidation or merger or as a transferee of its assets, any earnings of the
successor corporation prior to such consolidation, merger or transfer of assets.
CONSOLIDATED NET WORTH: as to the Company, the amount by which
(i) the total assets of the Company and the Restricted Subsidiaries
appearing on a consolidated balance sheet of the Company and the Restricted
Subsidiaries prepared in accordance with GAAP as of the date of
determination exceeds
(ii) total liabilities of the Company and the Restricted
Subsidiaries appearing on a consolidated balance sheet of the Company and
the Restricted Subsidiaries prepared in accordance with GAAP as of the date
of determination on a consolidated basis,
in each case after eliminating all intercompany transactions; and as to any
other Person, the amount by which
(i) the total assets of such Person and its Subsidiaries appearing
on a consolidated balance sheet of such Person and its Subsidiaries
prepared in accordance with GAAP as of the date of determination (after
eliminating all amounts properly attributable to minority interests in the
stock and surplus, if any, of its Subsidiaries) exceeds
(ii) total liabilities of such Person and its Subsidiaries appearing
on a consolidated balance sheet of such Person and its Subsidiaries
prepared in accordance with GAAP as of the date of determination on a
consolidated basis,
in each case after eliminating all intercompany transactions.
CONSOLIDATED PRO FORMA DEBT SERVICE: as of any date of determination,
the total amount payable by the Company and the Restricted Subsidiaries
on a consolidated basis, during the four consecutive calendar quarters next
succeeding the date of determination, in respect of scheduled principal payments
and all cash interest charges with respect to Indebtedness of the Company and
the Restricted Subsidiaries outstand-
85
ing on such date of determination, after giving effect to any Indebtedness
proposed to be incurred on such date (the "Incurrence Date") and to any
Indebtedness proposed to be repaid from funds of such newly incurred
Indebtedness (x) within 30 days of the Incurrence Date, or (y) within the twelve
months following such Incurrence Date as to which funds for such payments have
been within 30 days of the Incurrence Date irrevocably placed in escrow with the
Trustee with irrevocable instructions to the Trustee to make such repayments
(such funds pursuant to clauses (x) and (y) collectively, the "Dedicated Funds")
and (a) including actual payments under Capital Lease obligations, (b) assuming,
in the case of Indebtedness (other than Indebtedness incurred under the Bank
Credit Facilities) bearing interest at fluctuating interest rates which cannot
be determined in advance, that the rate in effect on such date will remain in
effect throughout such period, (c) assuming in the case of Indebtedness incurred
under the Bank Credit Facilities, that (1) the interest payments payable during
such four consecutive calendar quarters next succeeding the date of
determination will equal the actual interest payments associated with the Bank
Credit Facilities during the most recent four fiscal quarters, (2) except for
the twelve-month period immediately prior to the termination or final maturity
thereof (unless extended, renewed or refinanced), no principal payments will be
made under the Working Capital Facility and (3) principal payments relating to
the Initial Acquisition Facility will (unless already converted to a fixed
amortization schedule) become due based on the assumption that the conversion to
the fixed amortization schedule pursuant to Section [2.11(c)] of the Bank Credit
Facilities is effected on the dates set forth therein, (d) treating the
principal amount of all Indebtedness outstanding as of such date of
determination under a revolving credit or similar agreement (other than the Bank
Credit Facilities) as maturing and becoming due and payable on the scheduled
maturity date or dates thereof (including the maturity of any payment required
by any commitment reduction or similar amortization provision), without regard
to any provision permitting such maturity date to be extended and (e) including
any other designated repayments of Indebtedness due within twelve months from
such date of determination.
CONVEYANCE AGREEMENTS: (a) (i) the Contribution, Conveyance and
Assumption Agreement, dated as of the date of the Closing, among the Company,
the Public Partnership, the General Partners and Empire Energy SC Corporation, a
Delaware corporation, and (ii) the Conveyance, Contribution and Assumption
Agreement, dated as of the date of the Closing, among the Public Partnership,
the Company and the General Partner, and (b) each of the individual conveyances,
deeds
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assignments and bills of sale delivered to the Company pursuant to the
agreements referred to in the foregoing clause (a).
DEDICATED FUNDS: the meaning specified in the definition of
"Consolidated Pro Forma Debt Service."
DISCOUNTED VALUE: with respect to the Called Principal of any Note,
the amount obtained by discounting all Remaining Scheduled Payments with respect
to such Called Principal from their respective scheduled due dates to the
Settlement Date with respect to such Called Principal, in accordance with
accepted financial practice and at a discount factor (applied on a semi-annual
basis) equal to the Reinvestment Yield plus 50 basis points with respect to such
Called Principal.
DOLLAR AND SIGN "$": lawful money of the United States of America.
ENVIRONMENTAL LAWS: applicable federal, state, local and foreign
laws, rules or regulations relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants, chemicals or industrial, toxic
or hazardous substances or wastes into the environment (including, without
limitation, air, surface water, ground water or land), or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or wastes.
ENVIRONMENTAL NOTICE: the meaning specified in Section 7(i).
ERISA: the Employee Retirement Income Security Act of 1974, as
amended from time to time.
EVENT OF DEFAULT: the meaning specified in Section 11.
EXCESS PROCEEDS: the meaning specified in Section 10.7(c).
GAAP: generally accepted accounting principles in effect in the
United States from time to time.
GENERAL PARTNER(S): the meaning specified in the Introduction.
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GUARANTY: as applied to any Person, any direct or indirect liability,
contingent or otherwise, of such Person with respect to any indebtedness, lease
(other than operating leases under which the Company or a Restricted Subsidiary
is the lessee), dividend or other obligation of another, including, without
limitation, any such obligation directly or indirectly guaranteed, endorsed
(otherwise than for collection or deposit in the ordinary course of business) or
discounted or sold with recourse by such Person, or in respect of which such
Person is otherwise directly or indirectly liable or any other obligation under
any contract which, in economic effect, is substantially equivalent to a
guaranty, including, without limitation, any such obligation of a partnership in
which such Person is a general partner or of a joint venture in which such
Person is a joint venturer, and any such obligation in effect guaranteed by such
Person through any agreement (contingent or otherwise) to purchase, repurchase
or otherwise acquire such obligation or any security therefor, or to provide
funds for the payment or discharge of such obligation (whether in the form of
loans, advances, stock purchases, capital contributions or otherwise), or to
maintain the solvency or any balance sheet or other financial condition of the
obligor of such obligation, or to make payment for any products, materials or
supplies or for any transportation or services regardless of the non-delivery or
nonfurnishing thereof, in any such case if the purpose or intent of such
agreement is to provide assurance that such obligation will be paid or
discharged, or that any agreements relating thereto will be complied with, or
that the holders of such obligation will be protected against loss in respect
thereof.
HAZARDOUS MATERIALS: any gasoline or petroleum (including crude oil
or any fraction thereof) or petroleum products, polychlorinated biphenyls, urea-
formaldehyde insulation, asbestos or asbestos-containing materials, pollutants,
contaminants, radioactivity, and any other materials or substances of any kind,
whether or not any such substance is defined as hazardous under any
Environmental Law, that is regulated pursuant to any Environmental Law or that
could give rise to liability under any Environmental Law.
INCURRENCE DATE: the meaning specified in the definition of
"Consolidated Pro Forma Debt Service."
INDEBTEDNESS: as applied to any Person (without duplication):
(a) any indebtedness for borrowed money which such Person has
directly or indirectly created, incurred or assumed;
88
(b) any indebtedness, whether or not for borrowed money, with respect
to which such Person has become directly or indirectly liable and which
represents the deferred purchase price (or a portion thereof) or has been
incurred to finance the purchase price (or a portion thereof) of any
property or service or business acquired by such Person, whether by
purchase, consolidation, merger or otherwise;
(c) all obligations evidenced by notes, bonds, debentures or similar
instruments, including obligations so evidenced incurred in connection with
the acquisition or property, assets or businesses;
(d) all indebtedness created or arising under any conditional sale or
other title retention agreement, or incurred as financing, in either case
with respect to property acquired by the Person (even though the rights and
remedies of the seller or lender under such agreement in the event of
default are limited to repossession or sale of such property);
(e) any obligations under Capital Leases to the extent such
obligations would, in accordance with GAAP, appear on a balance sheet of
such Person;
(f) any indebtedness, whether or not for borrowed money, secured by
(or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien in respect of property
owned by such Person, whether or not such Person has assumed or become
liable for the payment of such indebtedness, PROVIDED that the amount of
such Indebtedness if not so assumed shall in no event be deemed to be
greater than the fair market value from time to time (as determined in good
faith by such Person) of the property subject to such Lien;
(g) all capital stock of such Person redeemable at the option of the
holder prior to the final maturity of the Notes, valued at the greater of
its voluntary or involuntary maximum fixed repurchase price or any
mandatory redemption payment obligations in respect thereon plus, in
either case, accrued dividends thereon;
(h) any preferred stock of any Restricted Subsidiary of such Person
redeemable at the option of the holder prior to the final maturity of the
Notes, valued
89
at the sum of the liquidation preference thereof or any mandatory
redemption payment obligations in respect thereof PLUS, in either case,
accrued dividends thereon;
(i) all liabilities of such Person in respect of letters of credit or
instruments serving a similar function issued or accepted for its account
by banks and other financial institutions (whether or not representing
obligations for borrowed money);
(j) any indebtedness of the character referred to in clause (a)
through (i) of this definition deemed to be extinguished under GAAP but for
which such Person remains legally liable; and
(k) any indebtedness of any other Person of the character referred to
in clause (a) through (j) of this definition with respect to which the
Person whose Indebtedness is being determined has become liable by way of a
Guaranty.
Notwithstanding the foregoing, in determining the Indebtedness of the Company
and the Restricted Subsidiaries, there shall be excluded all undrawn letters of
credit (not yet due and payable), trade accounts payable, accrued interest and
other accrued expenses and customer credit balances arising in the ordinary
course of business on ordinary terms.
INITIAL ACQUISITION FACILITY: that Initial Acquisition Facility under
the Bank Credit Facilities which shall permit borrowings thereunder in an
aggregate amount at any time no greater than as permitted by Section 10.1(e) and
which shall be secured by the Collateral pursuant to the Security Documents, and
any extension, renewal, refunding or replacement thereof otherwise permitted to
be incurred and outstanding under Section 10.1.
INSTITUTIONAL INVESTOR: means (a) any original purchaser of a Note,
(b) any holder of a Note holding $1,000,000 or more of the aggregate principal
amount of the Notes then outstanding, and (c) any bank, trust company, savings
and loan association or other financial institution, any pension plan, any
investment company, any insurance company, any broker or dealer, or any other
similar financial institution or entity, regardless of legal form.
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INTERCOMPANY NOTES: any and all promissory notes of a Restricted
Subsidiary issued to the Company or to another Restricted Subsidiary, in the
form attached hereto as Exhibit I or such other form as may be satisfactory to
the Required Holders, representing all Indebtedness of such Restricted
Subsidiary to the Company or such other Restricted Subsidiary, as the case may
be.
INTEREST RATE AGREEMENT: any interest rate swap agreement, interest
rate cap agreement, interest rate collar agreement or other similar agreement or
arrangement designed solely to protect the Company against fluctuations in
interest rates on Indebtedness outstanding under the Bank Credit Facilities
entered into with one or more of the banks party to the Bank Credit Facilities.
INVENTORY: goods held by a Person for sale or lease and accounted for
as inventory under GAAP.
INVESTMENT: as applied to any Person, any direct or indirect purchase
or other acquisition by such Person of stock or other securities of any other
Person, or any direct or indirect loan, advance or capital contribution by such
Person to any other Person, and any other item which would be classified as an
"investment" on a balance sheet of such Person prepared in accordance with GAAP,
including, without limitation, any direct or indirect contribution by such
Person of property or assets to a joint venture, partnership or other business
entity in which such Person retains an interest. For the purposes of
Section 10.3(b), the amount involved in Investments made during any period shall
be the aggregate cost to the Company of all such Investments made during such
period, determined in accordance with GAAP, but without regard to unrealized
increases or decreases in value, or write-ups, write-downs or write-offs, of
such investments and without regard to the existence of any undistributed
earnings or accrued interest with respect thereto accrued after the respective
dates on which such Investments were made, less any net return of capital
realized during such period upon the sale, repayment or other liquidation of
such Investment (determined in accordance with GAAP, but without regard to any
amounts received during such period as earnings (in the form of dividends not
constituting a return of capital, interest or otherwise) on such Investment or
as loans from any Person in whom such Investments have been made).
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LEGAL REQUIREMENT: any law, statute, ordinance, decree, requirement,
order, judgment, rule or regulation (or published official interpretation by any
governmental authority of any of the foregoing) of any governmental authority.
LIEN: as to any Person, any mortgage, lien (statutory or otherwise),
pledge, reservation, right of entry, encroachment, easement, right of way,
restrictive covenant, license, charge, security interest or other encumbrance in
or on, or any interest or title of any vendor, lessor under any lease not
intended to be an Operating Lease, lender or other secured party to or of such
Person under any conditional sale or other title retention agreement or Capital
Lease with respect to, any property or asset owned or held by such Person, or
the signing or filing of a financing statement with respect to any of the
foregoing which names such Person as debtor, or the signing of any security
agreement with respect to any of the foregoing authorizing any other party as
the secured party thereunder to file any financing statement or any other
agreement to give or grant any of the foregoing. Negative pledge agreements,
however, shall not constitute Liens for purposes of this Agreement or any other
Operative Agreement. For the purposes of this Agreement, a Person shall be
deemed to be the owner of any asset which it has placed in trust for the benefit
of the holders of Indebtedness of such Person and such trust shall be deemed to
be a Lien if such Person remains legally liable therefor, notwithstanding that
such Indebtedness is or may be deemed to be extinguished under GAAP.
MAKE WHOLE AMOUNT: with respect to any Note, an amount equal to the
excess, if any, of the Discounted Value of the Remaining Scheduled Payments of
the Called Principal of such Note over such Called Principal. The Make Whole
Amount shall in no event be less than zero.
MANAGING GENERAL PARTNER: Cornerstone Propane G.P., Inc., so long as
it holds a general partner interest in the Company and shall be the managing
general partner as provided in the Partnership Agreement, and any successor to
such interest or any part thereof, so long as such successor shall hold such
interest or part thereof.
MATERIAL ADVERSE EFFECT: a material adverse effect on (a) the
business, operations, property, condition (financial or otherwise) or prospects
(financial or otherwise) of the Company and the Restricted Subsidiaries, taken a
whole (after giving effect to the transactions contemplated by the Operative
Documents) or the Business, (b) the ability of the Company, either General
Partner or any Restricted Subsidiary to perform
92
its obligations under this Agreement or any other Operative Agreement to which
it is a party, or (c) the validity, enforceability, perfection or priority of
this Agreement or any other Operative Agreement or of the rights or remedies of
the holder of any Notes or the Trustee.
MAXIMUM CONSOLIDATED PRO FORMA DEBT SERVICE: as of any date of
determination, the highest total amount payable by the Company and the
Restricted Subsidiaries on a consolidated basis, during any period of four
consecutive fiscal quarters, commencing with the fiscal quarter in which such
date of determination occurs and ending on the maturity date of the Notes, in
respect of scheduled principal payments and all cash interest charges with
respect to all Indebtedness of the Company and the Restricted Subsidiaries
outstanding or to be outstanding as a result of the transaction occurring on
such date of determination, after giving effect to any Indebtedness to be
incurred on the Incurrence Date and to any Indebtedness proposed to be repaid
from Dedicated Funds and (a) including actual payments under Capital Lease
obligations, (b) assuming, in the case of Indebtedness (other than Indebtedness
incurred under the Bank Credit Facilities) bearing interest at fluctuating
interest rates which cannot be determined in advance, that the rate in effect on
such date will remain in effect throughout such period, (c) assuming in the case
of Indebtedness incurred under the Bank Credit Facilities, that (1) the interest
payments payable during such four consecutive calendar quarters will equal the
actual interest payments associated with the Bank Credit Facilities during the
most recent four fiscal quarters, (2) except for the twelve-month period
immediately prior to the termination or final maturity thereof (unless extended,
renewed or refinanced) no principal payments will be made under the Working
Capital Facility and (3) principal payments relating to the Initial Acquisition
Facility will (unless already converted to a fixed amortization schedule) become
due based on the assumption that the conversion to the fixed amortization
schedule pursuant to Section [2.11(c)] of the Bank Credit Facilities is effected
on the dates set forth therein, (d) treating the principal amount of all
Indebtedness outstanding as of such date of determination under a revolving
credit or similar agreement (other than the Bank Credit Facilities) as maturing
and becoming due and payable on the scheduled maturity date or dates thereof
(including the maturity of any payment required by any commitment reduction or
similar amortization provision), without regard to any provision permitting such
maturity date to be extended and (e) including any other designated repayments
of Indebtedness.
MEMORANDUM: the meaning specified in Section 5.4(b).
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MLP AGREEMENT: the [Amended and Restated Agreement of Limited
Partnership of the Public Partnership].
MULTIEMPLOYER PLAN: a Plan which is a "multiemployer plan" within the
meaning of Section 4001(a)(3) of ERISA.
NON-RELATED SUBSIDIARIES: Subsidiaries of Northwestern other than (i)
the General Partner and (ii) any such Subsidiary which is a Related Person.
NORTHWESTERN: Northwestern Growth Corporation, a Delaware
corporation.
NOTES: the meaning specified in Section 1.
OBSOLETE ASSETS: means assets, property or equipment that have been
determined by the Company, in good faith, to no longer be useful in the
operations or the business of the Company or a Restricted Subsidiary.
OFFICERS' CERTIFICATE: as to any corporation, a certificate executed
on its behalf by the Chairman of the Board of Directors (if an officer) or its
President or one of its Vice Presidents and its Treasurer, or Controller, or one
of its Assistant Treasurers or Assistant Controllers, and, as to any
partnership, a certificate executed on behalf of such partnership by its
Managing General Partner in a manner which would qualify such certificate as an
Officers' Certificate of such Managing General Partner hereunder.
OPERATIVE AGREEMENTS: this Agreement, the Other Agreements, the
Notes, the Bank Credit Facilities, the Security Documents, the Underwriting
Agreement, the Conveyance Agreements, the MLP Agreement and the Partnership
Agreement.
OTHER AGREEMENTS: the meaning specified in Section 2.
OTHER PURCHASERS: the meaning specified in Section 2.
OVERALLOTMENT OPTION: the overallotment option granted to the
Underwriters by the Public Partnership pursuant to the Underwriting Agreement.
94
PARITY DEBT: Indebtedness of the Company incurred in accordance with
Section 10.1(b), 10.1(e), 10.1(f), 10.1(i), 10.1(j) or 10.1(m) and secured by
the lien of the Security Documents in accordance with Section 10.2(h), 10.2(i)
or 10.2(m).
PARTNERSHIP AGREEMENT: the [Amended and Restated] Agreement of
Limited Partnership of the Company, as in effect on the date of the Closing, and
as the same may from time to time be amended, modified or supplemented in
accordance with the terms thereof and Section 10.12 hereof, in the form of
Exhibit K.
PBGC: the Pension Benefit Guaranty Corporation or any governmental
authority succeeding to any of its functions.
PERFECTION CERTIFICATE: a certificate from the Company in
substantially the form attached hereto as Exhibit N.
PERMITTED BANKS: the meaning specified in Section 10.3(a).
PERMITTED ENCUMBRANCES: the encumbrances and exceptions to title to
the Assets (a) described in the Security Documents or (b) existing on the date
of Closing as permitted by the applicable provisions hereof with respect to real
property owned or leased by the Company or otherwise permitted hereunder
pursuant to Section 10.2(l).
PERMITTED EXCEPTIONS: the meaning specified in Section 5.8(a).
PERMITTED INSURERS: insurers with ratings of A- or better according
to Best's Insurance Reports or a comparable rating agency for insurance
companies located outside of the United States of America and Canada and with
assets of no less than $500 million.
PERSON: a corporation, a limited liability company, a firm, a joint
venture, an association, a partnership, an organization, a business, a trust or
other entity or enterprise, an individual, a government or political subdivision
thereof or a governmental agency, department or instrumentality.
PLAN: an "employee pension benefit plan" (as defined in Section 3(2)
of ERISA) which is or has been established or maintained, or to which
contributions are or have been made, by either General Partner, the Company or
any Related Person of
95
the Company or either General Partner or to which either General Partner, the
Company or any Related Person of the Company or either General Partner is or has
been obligated to contribute, or an employee benefit plan as to which either
General Partner, the Company or any Related Person of the Company or either
General Partner could be treated as a contributory sponsor under Section 4069 or
Section 4212 of ERISA if such plan were terminated.
POTENTIAL EVENT OF DEFAULT: any condition or event which, with notice
or lapse of time or both, would become an Event of Default.
PREMIUM AMOUNT: the meaning specified in Section 9.3(d).
PUBLIC PARTNERSHIP: Cornerstone Propane Partners, L.P., a Delaware
limited partnership.
PURCHASE MONEY LIEN: the meaning specified in Section 10.2(j).
QPAM EXEMPTION: the meaning specified in Section 6.2(c).
QUALIFYING RESTRICTED SUBSIDIARIES: the Restricted Subsidiaries other
than Cornerstone Services Corporation.
RCRA: the Federal Resource Conservation and Recovery Act, as amended.
REGISTRATION STATEMENT: the Registration Statement on Form S-1 under
the Securities Act of 1933, as amended, of the Public Partnership (Registration
Number 33-2768), as initially filed with the Securities and Exchange Commission
on October 12, 1996, and as may be amended from time to time through the date of
closing by subsequent filings with the Securities and Exchange Commission.
REINVESTMENT YIELD: with respect to the Called Principal of any Note,
the yield to maturity implied by (i) the yields reported, as of 10:00 a.m. (New
York City time) on the Business Day next preceding the Settlement Date with
respect to such Called Principal, on the display designated as "USD" on the
Bloomberg Financial Markets (or such other display as may replace USD on the
Bloomberg Financial Markets) for actively traded U.S. Treasury securities having
a maturity equal to the Remaining Average Life of such Called Principal as of
such Settlement Date, or if such
96
yields shall not be reported as of such time or the yields reported as of such
time shall not be ascertainable, (ii) the Treasury constant maturity series
yields reported, for the latest day for which such yields shall have been so
reported as of the Business Date next preceding the Settlement Date with respect
to such Called Principal, in Federal Reserve Statistical Release H.15 (519) (or
any comparable successor publication) for actively traded U.S. Treasury
securities having a constant maturity equal to the Remaining Average Life of
such Called Principal as of such Settlement Date. Such implied yield shall be
determined, if necessary, by (a) converting U.S. Treasury bill quotations to
bond-equivalent yields in accordance with accepted financial practice and
(b) interpolating linearly between (1) the actively traded U.S. Treasury
security with the maturity closest to and equal to or greater than the Remaining
Average Life and (2) the actively traded U.S. Treasury security with the
maturity closest to and equal to or less than the Remaining Average Life.
RELATED PERSON: with respect to a Person, any trade or business,
whether or not incorporated, which, as of any date of determination, would be
treated as a single employer together with such Person under Section 414 of the
Code.
REMAINING AVERAGE LIFE: with respect to the Called Principal of any
Note, the number of years (calculated to the nearest one-twelfth year) obtained
by dividing (i) such Called Principal into (ii) the sum of the products obtained
by multiplying (a) each Remaining Scheduled Payment of such Called Principal
(but not of interest thereon) by (b) the number of years (calculated to the
nearest one-twelfth year) which will elapse between the Settlement Date with
respect to such Called Principal and the scheduled due date of such Remaining
Scheduled Payment.
REMAINING SCHEDULED PAYMENTS: with respect to the Called Principal of
any Note, all payments of such Called Principal and interest thereon that would
be due on or after the Settlement Date with respect to such Called Principal if
no payment of such Called Principal were made prior to its scheduled due date,
PROVIDED that if such Settlement Date is not a date on which interest payments
are due to be made under the terms of the Notes, then the amount of the next
succeeding scheduled interest payment will be reduced by the amount of interest
accrued to such Settlement Date and required to be paid on such Settlement Date
pursuant to Sections 9 or 11.
REQUIRED HOLDERS: the holders of at least 66-2/3% in principal amount
of the Notes at the time outstanding.
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REQUISITE PERIOD: the meaning specified in Section 10.1(e)(ii)(l).
RESPONSIBLE OFFICER: with respect to any Person, the President, any
Senior Vice President, the Chief Financial Officer, the Treasurer and the
Secretary of such Person and any other officer of such Person who is responsible
for compliance with or performance of any obligation under this Agreement or the
other Operative Agreements, with respect to the Company, any such officer of the
Managing General Partner and, in any case, any employee of the Company
performing any of the above functions.
RESTRICTED AFFILIATE: Northwestern or any of its Subsidiaries as long
as any such Person would otherwise be an Affiliate of the Company.
RESTRICTED PAYMENT: as to any Person, (a) any payment, dividend or
other distribution, direct or indirect, in respect of any partnership interest
(general or limited) in, or on account of any shares of any class of stock of,
such Person, except a distribution payable solely in additional partnership
interests in, or shares of stock of, such Person, and (b) any payment, direct or
indirect, on account of the redemption, retirement, purchase or other
acquisition of any partnership interest in, or any shares of any class of stock
of, such Person now or hereafter outstanding or of any warrants, rights or
options to acquire any such shares, except to the extent that the consideration
therefor consists of shares of stock [or partnership interests in] of such
Person, PROVIDED payments by the Company or a Restricted Subsidiary of the
Company to either General Partner or any of its Affiliates for services rendered
to or on behalf of the Company or any Restricted Subsidiary of the Company or
expenses incurred in connection with the operation of the business of the
Company or any Restricted Subsidiary of the Company (including, without
limitation, reimbursement of expenses incurred under any employee benefit plan,
including plans providing for the issuance of Units or options to acquire Units
in the Public Partnership shall not be deemed to be Restricted Payments.
RESTRICTED SUBSIDIARY: any Wholly Owned Subsidiary of the Company
(a) organized under the laws of the United States of America or any state
thereof or the District of Columbia, (b) none of the capital stock or ownership
interests of which is owned by Unrestricted Subsidiaries, (c) substantially all
of the operating assets of which are located in, and substantially all of the
business of which is conducted within the United States of America and the
business of which consists principally of the
98
wholesale and retail sale, distribution and storage of propane gas and related
petroleum derivative products and/or the related retail sale of supplies and
equipment, including home appliances, and for the provision of related services
and (d) designated by the Company as a Restricted Subsidiary in Exhibit O or at
a subsequent date, PROVIDED that (i) to the extent a newly formed or acquired
Wholly Owned Subsidiary satisfying the requirements of the foregoing clauses
(a), (b) and (c) is not declared either a Restricted Subsidiary or an
Unrestricted Subsidiary within 90 days of its formation or acquisition, such
Wholly Owned Subsidiary shall be deemed a Restricted Subsidiary and (ii) a
Restricted Subsidiary may be designated as an Unrestricted Subsidiary in
accordance with the provisions of Section 10.19(a).
SECURITY DOCUMENTS: the Trust Agreement, the Company Security
Agreement, the Subsidiary Guarantee Agreement, the Perfection Certificate, and
all other security agreements and documents and instruments executed and
delivered in order to secure the Indebtedness and/or perfect the Liens referred
to in the Trust Agreement or to guarantee the Company's [and the General
Partners'] obligations hereunder and under the Notes.
SETTLEMENT DATE: shall mean, with respect to the Called Principal of
any Note, the date on which such Called Principal is to be prepaid pursuant to
Section 9.2, 9.3 or 9.4 or is declared to be or becomes immediately due and
payable pursuant to Section 11, as the context requires.
SUBSIDIARY: of any Person, means any corporation, limited liability
company, business trust, association, partnership, joint venture or other
business entity at least a majority (by number of votes) of the stock of any
class or classes (or equivalent interests) of which is at the time owned by such
Person or by one or more Subsidiaries of such Person or by such Person and one
or more Subsidiaries of such Person, if the holders of the stock of such class
or classes (or equivalent interests) (a) are ordinarily, in the absence of
contingencies, entitled to vote for the election of a majority of the directors
(or Persons performing similar functions) of such business entity, even though
the right so to vote has been suspended by the happening of such a contingency,
or (b) are at the time entitled, as such holders, to vote for the election of
the majority of the directors (or Persons performing similar functions) of such
business entity, whether or not the right so to vote exists by reason of the
happening of a contingency. Unless the context otherwise requires, any
reference to a Subsidiary shall mean a Subsidiary of the Company.
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SUBSIDIARY GUARANTEE AGREEMENT: the Guarantee Agreement among the
Qualifying Restricted Subsidiaries and the Trustee substantially in the form
attached hereto as Exhibit P, as amended from time to time.
SUBSTANTIAL PORTION: the meaning specified in Section 7(a).
SUPPLEMENTAL AGREEMENT: an agreement between a Restricted Subsidiary
and the Trustee substantially in the form attached hereto as Exhibit Q, as
amended from time to time.
TRUST AGREEMENT: the Intercreditor and Trust Agreement, dated as of
________, 1996, among the Company, [the General Partners], the Qualifying
Restricted Subsidiaries, the Trustee, the holders of the Notes, the
Administrative Agent and the Banks, substantially in the form attached hereto as
Exhibit C, as amended from time to time.
TRUSTEE: U.S. Trust Company of Texas, N.A. as Trustee under the Trust
Agreement and its successors and assigns thereunder.
UNDERWRITERS: the underwriters named in the Underwriting Agreement.
UNDERWRITING AGREEMENT: the Purchase Agreement, dated ________, 1996,
among the Public Partnership, the General Partners, the Company, Northwestern
and the Underwriters, relating to securities of the Public Partnership
registered under the Registration Statement.
UNIFORM COMMERCIAL CODE: the Uniform Commercial Code or similar
statute in effect from time to time in any jurisdiction.
UNITS: the units to be issued and sold by the Public Partnership
pursuant to the Underwriting Agreement, representing preference limited
partnership interests in the Public Partnership.
UNRESTRICTED SUBSIDIARY: any Subsidiary other than a Restricted
Subsidiary which is organized under the laws of the United States of America or
any state thereof or the District of Columbia and substantially all of the
operating assets of which are located in, and substantially all of the business
of which is conducted within the United
100
States of America and which business consists principally of the distribution of
propane gas or related supplies and equipment.
WHOLLY OWNED: as applied to any Subsidiary, a Subsidiary all of the
outstanding shares (other than directors' qualifying shares, if required by law)
of every class of stock or other equity interests of which are at the time owned
by the Company or by one or more Wholly Owned Restricted Subsidiaries or by the
Company and one or more Wholly Owned Restricted Subsidiaries.
WORKING CAPITAL FACILITY: that Working Capital Facility under the
Bank Credit Facilities which shall permit borrowings and the extensions of
letters of credit for the Company thereunder in an aggregate amount outstanding
at any time no greater than as permitted by Section 10.1(e) and which shall be
secured by the Collateral pursuant to the Security Documents and any extension,
renewal, refunding or replacement thereof otherwise permitted to be incurred and
outstanding under Section 10.1.
SECTION 14. REGISTRATION, TRANSFER AND SUBSTITUTION OF
NOTES.
14.1. NOTE REGISTER; OWNERSHIP OF NOTES. Any Notes issued in
substantially the form of Exhibit A are in "registered form". The Company will
keep at its principal office a register in which the Company will provide for
the registration of Notes in registered form and the registration of transfers
of Notes in registered form. The Company and the Trustee may treat the Person
in whose name any Note is registered on such register as the owner thereof for
the purpose of receiving payment of the principal of and the Make Whole Amount
or premium, if any, and interest on such Note and for all other purposes,
whether or not such Note shall be overdue, and the Company shall not be affected
by any notice to the contrary. All references in this Agreement or in a Note to
a "holder" of any Note shall mean the Person in whose name such Note is at the
time registered on such register.
14.2. TRANSFER AND EXCHANGE OF NOTES. Upon surrender of any Note
for registration of transfer or for exchange to the Company at its principal
office, the Company at its expense will execute and deliver in exchange therefor
a new Note or Notes in denominations of at least $500,000 (except one Note may
be issued in a lesser principal amount if the unpaid principal amount of the
surrendered Note is not evenly divisible by, or is less than, $500,000), as
requested by the holder or transferee, which
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aggregate the unpaid principal amount of such surrendered Note. Each such new
Note shall be in registered form. Each such Note shall be dated so that there
will be no loss of interest on such surrendered Note and otherwise of like
tenor, and shall be registered in the name or names of such Person as such
holder or transferee may request. Any Note in lieu of which any such new Note
has been executed and delivered shall not be deemed to be an outstanding Note
for any purpose of this Agreement.
14.3. REPLACEMENT OF NOTES. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Note and, in the case of any such loss, theft or destruction of any Note, upon
delivery of an indemnity bond in such reasonable amount as the Company may
determine (or, in the case of any Note held by you or another Institutional
Investor holder or your or its nominee, of an unsecured indemnity agreement from
you or such other holder), or, in the case of any such mutilation, upon the
surrender of such Note for cancellation to the Company at its principal office,
the Company at its expense will execute and deliver, in lieu thereof, a new Note
in the unpaid principal amount of such lost, stolen, destroyed or mutilated
Note, dated so that there will be no loss of interest on such Note and otherwise
of like tenor. Any Note in lieu of which any such new Note has been so executed
and delivered by the Company shall not be deemed to be an outstanding Note for
any purpose of this Agreement.
14.4. NOTES HELD BY COMPANY, ETC., DEEMED NOT OUTSTANDING. For
the purposes of determining whether the holders of the Notes of the requisite
principal amount at the time outstanding have taken any action authorized by
this Agreement or any other Operative Agreement with respect to the giving of
consents or approvals or with respect to the acceleration upon an Event of
Default, any Notes directly or indirectly owned by the Company, either General
Partner, the Managing General Partner or any of their respective Affiliates
shall be disregarded and deemed not to be outstanding.
SECTION 15. PAYMENTS ON NOTES.
15.1. PLACE OF PAYMENT. Payments of principal, Make Whole Amount,
Premium Amount or premium, if any, and interest becoming due and payable on the
Notes shall be made at the principal office of the Trustee, in the Borough of
Manhattan, the City and State of New York by 12:00 noon, unless the Company, by
written notice to each holder of any Notes, shall designate the principal office
of another bank
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or trust company in such Borough as such place of payment, in which case the
principal office of such other bank or trust company shall thereafter be such
place of payment.
15.2. HOME OFFICE PAYMENT. So long as you or your nominee shall
be the holder of any Note, and notwithstanding anything contained in
Section 15.1 or in such Note to the contrary, the Company will pay all sums
becoming due on such Note for principal, Make Whole Amount and Premium Amount,
if any, and interest no later than 12:00 noon (New York City time) and by the
method and at the address specified for such purpose in Schedule A, or by such
other reasonable method or at such other address as you shall have from time to
time specified to the Company in writing for such purpose, without the
presentation or surrender of such Note or the making of any notation thereon,
except that any Note paid or prepaid in full shall, after such payment or
prepayment in full, be surrendered to the Company at its principal office or at
the place of payment maintained by the Company pursuant to Section 15.1 for
cancellation. Prior to any sale or other disposition of any Note held by you or
your nominee you will, at your election, either endorse thereon the amount of
principal paid thereon and the last date to which interest has been paid thereon
or surrender such Note to the Company in exchange for a new Note or Notes
pursuant to Section 14.2. The Company will afford the benefits of this
Section 15.2 to any Institutional Investor which is the direct or indirect
transferee of any Note purchased by you under this Agreement and which has made
the same agreement relating to such Note as you have made in this Section 15.2.
SECTION 16. EXPENSES, INDEMNIFICATION, ETC.
(a) Whether or not the transactions contemplated hereby shall be
consummated, the Company will pay all reasonable expenses in connection with
such transactions and in connection with any amendments or waivers (whether or
not the same become effective) under or in respect of this Agreement, the other
Operative Agreements or the Notes, including, without limitation: (i) the cost
and expenses of preparing and reproducing this Agreement, the other Operative
Agreements and the Notes, of furnishing all opinions by counsel for the Company,
the Restricted Subsidiaries, Northwestern or the General Partners (including any
opinions requested by your special counsel, Xxxxxxxxx & Xxxxxxxx, as to any
legal matter arising hereunder) and all certificates on behalf of the Company,
either General Partner, Northwestern or any Restricted Subsidiary, and of the
Company's, either General Partner's, Northwestern's or any Restricted
Subsidiary's performance of and
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compliance with all agreements and conditions contained herein on its part to be
performed or complied with; (ii) the cost of delivering to your principal
office, insured to your satisfaction, the Notes issued in exchange for the Notes
sold to you hereunder and any Notes delivered to you upon any substitution
thereof pursuant to Section 14 and of your delivering any Notes, insured to your
satisfaction, upon any such substitution; (iii) the reasonable fees, expenses
and disbursements of your special counsel, Debevoise & Xxxxxxxx and your local
counsel in connection with such transactions and any such amendments or waivers;
(iv) the costs and expenses, including attorneys' fees, incurred by you or any
subsequent holder of a Note in enforcing (or determining whether or how to
enforce) any rights under this Agreement, any other Operative Agreement or the
Notes or in responding to any subpoena or other legal process in connection with
this Agreement, any other Operative Agreement or the Notes or the transactions
contemplated hereby or by reason of you or any subsequent holder of Notes having
acquired any Note, including without limitation costs and expenses incurred in
any bankruptcy case; (v) the cost and expenses of obtaining a Private Placement
Number for the Notes; and (vi) the reasonable out-of-pocket expenses incurred by
you in connection with such transactions and any such amendments or waivers,
PROVIDED that the Company shall be required to pay the cost and expenses of only
one firm (and any local counsel) retained by the Noteholders in connection with
any waivers or amendments. The Company also will pay, and will save you and
each holder of any Notes harmless from, all claims in respect of the fees, if
any, of brokers and finders (unless engaged by you) and any and all liabilities
with respect to any taxes (including interest and penalties) (other than income
taxes) which may be payable in respect of the execution and delivery hereof, the
issue of the Notes hereunder and any amendment or waiver under or in respect
hereof or of the Notes. In furtherance of the foregoing, on the date of the
Closing the Company will pay the reasonable fees and disbursements of your
special counsel which are reflected as unpaid in the statement of Debevoise &
Xxxxxxxx, your special counsel, delivered to the Company prior to the date of
the Closing; and thereafter the Company will pay, promptly upon receipt of
supplemental statements therefor from time to time, additional fees, if any, and
disbursements of your special counsel in connection with the transactions hereby
contemplated (including unposted disbursements as of the date of the Closing).
(b) The Company will protect, indemnify and save harmless the Trustee
and each present, future and former holder of any Note and their respective
officers, directors, trustees, employees, agents and representatives
(individually, an "Indemnified Party" and collectively, the "Indemnified
Parties") from and against all losses, liabil-
104
ities, obligations, claims, damages, penalties, causes of action, costs and
expenses (including, without limitation, attorneys' fees and expenses)
imposed upon or incurred by or asserted against any Indemnified Party by
reason of (a) ownership of the Collateral, or any interest therein, or
receipt of any rent or other sum therefrom, (b) any accident or injury to or
death of persons or loss of or damage to property occurring on or about the
Collateral or any part thereof, (c) any use, non-use or condition of the
Collateral or any part thereof, (d) any failure on the part of the Company,
either General Partner or any of their respective Subsidiaries or Affiliates
to perform or comply with any of the terms of this Agreement or any other
Operative Agreement, (e) the performance of any labor or services or the
furnishing of any materials or other property in respect of the Collateral or
any part thereof, (f) any negligence or tortious act on the part of the
Company, either General Partner, any of their respective Subsidiaries or
Affiliates or any of their respective agents, contractors, sublessees,
licensees or invitees, (g) any work in connection with any alterations,
changes or construction of the Collateral, (h) any other relationship that
has arisen or may arise between the Company, either General Partner or any of
their respective Subsidiaries or Affiliates and the Indemnified Parties or
the Collateral as a result of the delivery or performance of this Agreement,
any other Operative Agreement or any action contemplated hereby or thereby
or by any other document executed in connection herewith or therewith, (i)
the presence or removal, or the discharge, spillage, leakage, emission,
release, threat of release or disposal, of any Hazardous Substances on,
under, about or from the Collateral or the noncompliance with any Legal
Requirement relating thereto, whether arising prior to the issuance of the
Notes or at any time thereafter and whether or not the Company, either
General Partner or any of their respective Subsidiaries or Affiliates is
responsible therefor or (j) the holding of, or any interest in, any sum
deposited or paid under this Agreement, the Notes or any other Operative
Agreement, PROVIDED that nothing contained herein shall be deemed to require
the Company to indemnify the Indemnified Parties for conditions (other than
matters covered by clause (f) above) first occurring subsequent to the
earlier of (x) the taking of exclusive possession and control of the
Collateral for operational purposes pursuant to Section 6.03 of the Company
Security Agreement, (y) the foreclosure of the Lien under any Security
Document and the transfer of title to the Trustee, or (z) for their
respective gross negligence or willful misconduct, or for their breach of
their respective obligations under this Agreement or the other Operative
Agreements.
In case any action, claim, suit or proceeding is brought against an
Indemnified Party by reason of any such occurrence, the Company may, and upon
the request of
105
such Indemnified Party will, at the Company's expense resist and defend such
action, suit or proceeding or cause the same to be resisted and defended by
counsel for the insurer of the liability or by counsel designated by the Company
and reasonably satisfactory to the Indemnified Party, as the case may be,
PROVIDED that any Indemnified Party shall be entitled to participate in any such
action, suit or proceeding with counsel of its own choice but at its own
expense, and PROVIDED FURTHER that if any Indemnified Party reasonably
determines that a conflict of interest exists with respect to the representation
by such counsel of such Indemnified Party, the Company shall pay the fees and
expenses of counsel selected by such Indemnified Party. In any event, if the
Company fails to assume the defense within a reasonable time after any such
request, the Indemnified Party may assume such defense or other indemnification
obligation and the fees and expenses of its attorney will be paid by the
Company. The obligations of the Company under this Section 16 shall survive any
termination or satisfaction of this Agreement. Any amounts payable to any
Indemnified Party under this Section 16 which are not paid within 15 days after
written demand therefor by any Indemnified Party shall bear interest at the rate
of _____% per annum from the date of such demand. In the event that the Company
shall be required to pay any indemnity under this Section 16, the Company shall
pay the Indemnified Party an amount which, after deduction of all taxes required
to be paid by such Indemnified Party in respect of the receipt or accrual
thereof (but not for any taxes payable with respect to amounts received for the
payment of income taxes), shall be equal to the amount of such indemnity.
(c) In connection with the Closing, the Managing General Partner and
the Company are requesting that you make available for funding an amount equal
to the principal amount specified opposite your name in Schedule A. If, for any
reason, on the date scheduled by the General Partners and the Company as the
date for the Closing, you shall at their request have made such amount
available, and (i) the closing conditions are not satisfied by 11:00 a.m. on
such scheduled date, (ii) the General Partners and the Company do not, by 11:00
a.m. on such scheduled date reschedule such Closing for a subsequent date, and
(iii) the Closing in fact does not occur on such scheduled date, the General
Partners and the Company will protect, indemnify and hold you harmless from and
against any and all losses resulting from your failure or inability to invest on
the scheduled date for the Closing the purchase price of the Notes to be
purchased by you, for the period ending on the next following Business Day at a
rate of interest equal to or greater than the rate of interest on the Notes.
106
SECTION 17. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
All representations and warranties contained in this Agreement or the
other Operative Agreements, or made in writing by or on behalf of either General
Partner, the Company, any Restricted Subsidiary or any of their Affiliates in
connection with the transactions contemplated by this Agreement or the other
Operative Agreements, shall survive the execution and delivery of this Agreement
and the other Operative Agreements, any investigation at any time made by you or
on your behalf, the purchase of the Notes by you under this Agreement and any
disposition or payment of the Notes. All statements contained in any
certificate or other instrument delivered by or on behalf of the General
Partners, the Company, any Restricted Subsidiary or the Managing General Partner
pursuant to this Agreement and/or the other Operative Agreements or in
connection with any amendment, waiver or modification of this Agreement or any
of the other Operative Agreements shall be deemed representations and warranties
of the Company under this Agreement.
SECTION 18. AMENDMENTS AND WAIVERS.
Any term of this Agreement or of the Notes may be amended and the
observance of any term of this Agreement or of the Notes may be waived (either
generally or in a particular instance and either retroactively or prospectively)
only with the written consent of the Company and the Required Holders, PROVIDED
that, without the prior written consent of the holders of all the Notes at the
time outstanding, no such amendment or waiver shall (a) change the maturity or
the principal amount of, or change the rate of interest or the time of payment
of interest on, or change the amount or the time of payment of any principal or
Make Whole Amount, Premium Amount on any prepayment of, any Note, (b), subject
to other requirements set forth in the Trust Agreement, release any Lien against
the Collateral for the benefit of the holders of the Notes, (c) reduce the
aforesaid percentage of the principal amount of the Notes the holders of which
are required to consent to any such amendment or waiver or change the rights of
the holders of a Note with respect thereto, (d) change the percentage of the
principal amount of the Notes the holders of which may declare the Notes to be
due and payable as provided in Section 11 or change the rights of the holders of
a Note with respect thereto, (e) change the percentage of the principal amount
of the Notes the holders of which may rescind and annul any such declaration as
provided in Section 11 or (f) modify the provisions of Section 9.8 or this
Section 18. Any amendment or waiver effected in accordance with this Section 18
shall be binding upon each holder of
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any Note at the time outstanding, each future holder of any Note, either General
Partner and the Company.
SECTION 19. NOTICES, ETC.
Except as otherwise provided in this Agreement, notices and other
communications under this Agreement shall be in writing and shall be delivered
by hand, by express courier service or by registered or certified mail, return
receipt requested, postage prepaid, addressed, (a) if to you, at the address set
forth in Schedule A or at such other address as you shall have furnished to the
Company in writing, except as otherwise provided in Section 15.2 with respect to
payments on Notes held by you or your nominee, or (b) if to any other holder of
any Note, at such address as such other holder shall have furnished to the
Company in writing, or, until any such other holder so furnishes to the Company
an address, then to and at the address of the last holder of such Note who has
furnished an address to the Company, or (c) if to the Company or either General
Partner, at the address set forth at the beginning of this Agreement to the
attention of Senior Vice President and Chief Financial Officer, or at such other
address, or to the attention of such other officer, as the Company shall have
furnished to you and each such other holder in writing.
SECTION 20. REPRODUCTION OF DOCUMENTS.
This Agreement, each Operative Agreement and all documents relating
thereto, including, without limitation, (a) consents, waivers and notifications
which may hereafter be executed, (b) documents received by you at the Closing
(except the Notes themselves), and (c) financial statements, certificates and
other information previously or hereafter furnished to you, may be reproduced by
you by any photographic, photostatic, microfilm, microcard, miniature
photographic or other similar process and you may destroy any original document
so reproduced. Each General Partner and the Company agrees and stipulates that,
to the extent permitted by applicable law, any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and (but only to the
extent permitted by law) whether or not such reproduction was made by you in the
regular course of business) and any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
108
SECTION 21. MISCELLANEOUS.
This Agreement shall be binding upon and inure to the benefit of and
be enforceable by the respective successors and assigns of the parties hereto,
whether so expressed or not, and, in particular, shall inure to the benefit of
and be enforceable by any holder or holders at the time of the Notes or any part
thereof, PROVIDED that the benefits of Sections 7, 14.3 and 15.2 shall be
limited as therein provided. Except as stated in Section 17, this Agreement
embodies the entire agreement and understanding among you, the General Partners
and the Company and supersedes all prior agreements and understandings relating
to the subject matter hereof. The headings in this Agreement are for purposes
of reference only and shall not limit or otherwise affect the meaning hereof.
This Agreement may be executed in any number of counterparts, each of which
shall be an original, but all of which together shall constitute one instrument.
SECTION 22. SUBMISSION TO JURISDICTION.
For the purpose of assuring that any holder of Notes may enforce its
rights under this Agreement, the Notes and the other Operative Agreements, each
General Partner and the Company, for itself and its successors and assigns,
hereby, to the fullest extent permitted by applicable law, irrevocably (a)
agrees that any legal or equitable action, suit or proceeding brought against it
arising out of or relating to this Agreement, any other Operative Agreement and
the Notes, or any transaction contemplated hereby or the subject matter of any
of the foregoing or for recognition or enforcement of any judgment rendered in
any such action, suit or proceeding may be instituted in any state or federal
court sitting in the Borough of Manhattan in the State of New York, (b) waives
any objection which it may now or hereafter have to the laying of venue of any
such action, suit or proceeding brought in any such court, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim that any
such action, suit or proceeding brought in any such court has been brought in an
inconvenient forum, or any right to require the proceeding to be conducted in
any other jurisdiction by reason of its present or future domicile, (c)
irrevocably submits itself to the non-exclusive jurisdiction of any state or
federal court of competent jurisdiction sitting in the Borough of Manhattan in
the State of New York for purposes of any such action, suit or proceeding, and
(d) irrevocably waives any immunity from jurisdiction to which it might
otherwise be entitled in any such action, suit or proceeding which may be
instituted in any state or federal court sitting in the Borough of Manhattan in
the State of New York, and irrevocably waives any immunity from, or
109
objection to, the maintaining of an action against it to enforce any judgment
for money obtained in any such action, suit or proceeding and any immunity from
execution.
SECTION 23. WAIVER OF JURY TRIAL.
EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES THE
RIGHT TO TRIAL BY JURY IN ANY LEGAL OR EQUITABLE ACTION, SUIT OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES OR ANY OTHER OPERATIVE
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY OR THE SUBJECT
MATTER OF ANY OF THE FOREGOING.
SECTION 24. GOVERNING LAW.
THIS AGREEMENT HAS BEEN EXECUTED AND DELIVERED IN THE CITY OF NEW
YORK, STATE OF NEW YORK, UNITED STATES OF AMERICA. THIS AGREEMENT AND (UNLESS
OTHERWISE EXPRESSLY PROVIDED) ALL AMENDMENTS AND SUPPLEMENTS TO, AND ALL
CONSENTS AND WAIVERS PURSUANT TO, THIS AGREEMENT SHALL IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE.
SECTION 25. CONFIDENTIAL INFORMATION.
For the purposes of this Section 25, "Confidential Information" means
information delivered to you by or on behalf of the Company or any Restricted
Subsidiary in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in nature and that was clearly
marked or labeled or otherwise adequately identified when received by you as
being confidential information of the Company or such Restricted Subsidiary,
PROVIDED that such term does not include information that (a) was publicly known
or otherwise known to you prior to the time of such disclosure, (b) subsequently
becomes publicly known through no act or omission by you or any person acting on
your behalf, (c) otherwise becomes known to you other than through disclosure by
the Company or any Restricted Subsidiary or (d) constitutes financial statements
delivered to you under Section 7 that are otherwise
110
publicly available. You will maintain the confidentiality of such Confidential
Information in accordance with procedures adopted by you in good faith to
protect confidential information of third parties delivered to you, PROVIDED
that you may deliver or disclose Confidential Information to (i) your directors,
trustees, officers, employees, agents, attorneys and affiliates (to the extent
such disclosure reasonably relates to the administration of the investment
represented by your Notes), (ii) your financial advisors and other professional
advisors who agree to hold confidential the Confidential Information
substantially in accordance with the terms of this Section 25, (iii) any other
holder of any Note, (iv) any Institutional Investor to which you sell or offer
to sell such Note or any part thereof or any participation therein (if such
Person has agreed in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this Section 25), (v) any Person
from which you offer to purchase any security of the Company (if such Person has
agreed in writing prior to its receipt of such Confidential Information to be
bound by the provisions of this Section 25), (vi) any federal or state
regulatory authority having jurisdiction over you, (vii) the National
Association of Insurance Commissioners or any similar organization, or any
nationally recognized rating agency that requires access to information about
your investment portfolio or (viii) any other Person to which such delivery or
disclosure may be necessary or appropriate (w) to effect compliance with any
law, rule, regulation or order applicable to you, (x) in response to any
subpoena or other legal process, (y) in connection with any litigation to which
you are a party or (z) if an Event of Default has occurred and is continuing, to
the extent you may reasonably determine such delivery and disclosure to be
necessary or appropriate in the enforcement or for the protection of the rights
and remedies under your Notes and this Agreement. Each holder of a Note, by its
acceptance of a Note, will be deemed to have agreed to be bound by and to be
entitled to the benefits of this Section 25 as though it were a party to this
Agreement. On reasonable request by the Company in connection with the delivery
to any holder of a Note of information required to be delivered to such holder
under this Agreement or requested by such holder (other than a holder that is a
party to this Agreement or its nominee), such holder will enter into an
agreement with the Company embodying the provisions of this Section 25.
111
If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterpart of this Agreement and return the same to
the undersigned, whereupon this Agreement shall become a binding agreement
between you and the undersigned.
Very truly yours,
CORNERSTONE PROPANE, L.P.
By: CORNERSTONE PROPANE G.P., INC.
as General Partner
By
---------------------------------
Name:
Title:
By: CORNERSTONE PROPANE G.P., INC.
By
---------------------------------
Name:
Title:
By: SYN, INC.
By
---------------------------------
Name:
Title:
112
The foregoing Agreement is
hereby accepted and agreed
to as of the date first
above written.
By
----------------------------------
Name:
Title:
113
