SGU » Topics » Item 1.01 Entry into a Material Definitive Agreement

This excerpt taken from the SGU 8-K filed Jul 7, 2009.

Item 1.01 Entry into a Material Definitive Agreement

On July 2, 2009, Petroleum Heat and Power Co., Inc., a Minnesota corporation (“Petro” or the “heating oil segment”), which is a subsidiary of Star Gas Partners, L.P., a Delaware limited partnership (the “Partnership,” “Star,” “we,” “us” or “our”), entered into an amended and restated asset based revolving credit facility agreement (the “amended facility”). The bank syndication supporting the amended facility is comprised of nine banks, with J.P., Morgan Securities Inc. and Banc of America Securities LLC, acting as Joint Lead Arranger and Joint Book Managers. JPMorgan Chase Bank, N.A. is serving as Administrative Agent. RBS Citizens, N.A. served as Co-Syndication Agent.

The amended facility provides us with the ability to borrow up to $290 million for working capital purposes (subject to certain borrowing base limitations and coverage ratios), including the issuance of up to $100 million in letters of credit, which may be increased in the future to up to $340 million at the Partnership’s request. Obligations under the revolving credit facility are secured by liens on substantially all of our assets including accounts receivable, inventory, general intangibles, real property, fixtures and equipment. As of the closing date, no borrowings were outstanding and $46.0 million in letters of credit were outstanding under the amended facility.

The amended facility contains customary covenants for credit facilities of this type, including limitations on disposition of assets and mergers and reorganizations. The Partnership is also obligated to meet certain financial covenants under the amended facility, including the requirement to maintain at all times either availability (borrowing base less amounts borrowed and letters of credit issued) of $43.5 million or a fixed charge coverage ratio (as defined in the credit agreement) of not less than 1.1 to 1.0.

All outstanding amounts owed under the amended facility become due and payable no later than the maturity date of July, 2012 and are subject to acceleration upon the occurrence of events of default which the Partnership considers usual and customary for an agreement of this type, including failure to make payments under the amended facility, non-performance of covenants and obligations or insolvency or bankruptcy (as described in the loan agreement).

The foregoing description of the amended facility does not purport to be complete and is qualified in its entirety by reference to the amended and restated revolving credit facility agreement and the amended and restated pledge and security agreement, which are filed as Exhibits 10.1 and 10.2 to this Current Report on Form 8-K.

This excerpt taken from the SGU 8-K filed Oct 23, 2006.

Item 1.01 Entry into a Material Definitive Agreement

Indemnification Agreements

On October 19, 2006, the Board of Directors of Kestrel Heat, LLC, a Delaware limited liability company (the “Company”) and the general partner of Star Gas Partners, L.P. (the “Partnership”), authorized Kestrel Heat to enter into amendments (the “Amendments”) to the Indemnification Agreements dated as of July 20, 2006 with each of its directors and executive officers. The Amendments expand the indemnification rights provided for under the Indemnification Agreements to include indemnification for judgments, penalties, fines and amounts paid in settlement in connection with proceedings brought by or in the right of the Company or the Partnership, if the officer or director acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Company and the Partnership, and, with respect to any criminal Proceeding, had no reasonable cause to believe his conduct was unlawful.

The description of the Amendments that is contained in this Form 8-K are qualified in its entirety to the text of the actual form of Amendment that is filed as an exhibits hereto.

This excerpt taken from the SGU 8-K filed May 1, 2006.

Item 1.01 Entry into a Material Definitive Agreement

Effective as of April 28, 2006, Star Gas Partners, L.P., a Delaware limited partnership (the “Partnership”), completed a strategic recapitalization (the “recapitalization”) of the Partnership pursuant to the terms of that certain unit purchase agreement dated as of December 5, 2005, as amended (the “unit purchase agreement”), by and among the Partnership, Star Gas LLC (“Star Gas”), Kestrel Energy Partners, LLC (“Kestrel”), Kestrel Heat, LLC (“Kestrel Heat” or the “general partner”) and KM2, LLC (“M2”). In connection with the recapitalization:

 

    The Partnership received an aggregate of $57.7 million in new equity financing (i) through the sale of an aggregate of 6,750,000 common units to Kestrel Heat and M2 at a purchase price of $2.50 per unit (the “Kestrel Units”) and (ii) pursuant to the sale of 19,687,500 common units in a rights offering to common unitholders at a subscription price of $2.00 per common unit ($2.25 per unit in the case of units purchased by M2 pursuant to a standby commitment).

 

    The Partnership (i) repurchased $65.3 million in face of amount of its 10 1/4% senior notes due 2013 (the “existing notes”), (ii) converted $26.9 million in face amount of existing notes into 13,433,962 common units at a conversion price of $2.00 per unit and (iii) exchanged $165.3 million in principal amount of existing notes for a like amount of new 10 1/4% senior notes due 2013 that were issued under an indenture dated as of April 28, 2006 (the “new indenture”), as to which the Union Bank of California is the trustee. The terms of the new indenture are substantially the same as the terms of the indenture (the “existing indenture”) under which the existing notes were issued, except that the new indenture provides for a restricted payments “basket” of $22 million and a “basket” for acquisitions of $60 million and provides that proceeds of asset sales may not be invested in current assets for purposes of the “asset sale” covenant. The repurchase, conversion and exchange of the existing notes in connection with the recapitalization has resolved any claims of the participating noteholders resulting from the sale of the Partnership’s propane business in December 2004, including the Partnership’s use of such proceeds to purchase working capital inventory and Star Gas Partners’ determination that “excess proceeds” (as defined in the existing indenture) shall not include any amounts invested in such inventory and the granting of liens or collateral to the lenders pursuant to the credit facility.

 

    The Partnership also entered into an amended and restated indenture (the “amended indenture”) for the $7.6 million in face amount of existing notes that remain outstanding that removed the following restrictive covenants from the existing indenture:

 

    the limitation on restricted payments;

 

    the limitation on dividends and other payment restrictions affecting restricted subsidiaries;

 

    the limitation on indebtedness;

 

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    the limitation on transactions with affiliates;

 

    the limitation on liens;

 

    the limitation on the sale of assets;

 

    the limitation on sale and leaseback transactions;

 

    the limitation on other lines of business; and

 

    the limitation on co-issuers.

 

    The Partnership entered into a second amended and restated agreement of limited partnership of the Partnership (the “amended partnership agreement”) pursuant to which, among other things:

 

    Star Gas withdrew as the general partner of the Partnership, and Kestrel Heat was appointed the general partner of the Partnership and received 325,729 general partner units in the Partnership;

 

    each outstanding senior subordinated unit and each junior subordinated unit was converted into one common unit, as a result of which the subordination period has ended;

 

    the minimum quarterly distribution on the common units was reduced from $0.575 per unit per quarter, or $2.30 per year, to $0.0 per unit through September 30, 2008. Beginning October 1, 2008, minimum quarterly distributions will start accruing at a rate of $0.0675 per quarter ($0.27 on an annual basis). If the Partnership elects to commence making distributions of available cash before October 1, 2008, minimum quarterly distributions will start accruing at that earlier date;

 

    all previously accrued cumulative distribution arrearages, which aggregated $111.0 million at February 14, 2006, were eliminated;

 

    the target distribution levels for the incentive distribution rights were reduced so that, commencing with the quarter beginning October 1, 2008, or, if the Partnership elects to commence making distributions sooner, the quarter in which any distribution of available cash is made, the new general partner units in the aggregate will be entitled to receive 10% of the cash distributions in a quarter once each common unit and general partner unit has received $.0675 for that quarter, plus any arrearages on the common units from prior quarters, and 20% of the cash distributions in a quarter once each common unit and general partner unit has received $.1125 for that quarter, plus any arrearages on the common units from prior quarters;

 

    the Partnership is not required to distribute available cash through the quarter ending September 30, 2008; and

 

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The descriptions of the new indenture, the amended indenture and the amended partnership agreement that are contained in this Form 8-K are qualified in their entirety to the text of the actual agreements that are filed as exhibits hereto.

This excerpt taken from the SGU 8-K filed Mar 30, 2006.

Item 1.01 Entry Into a Material Definitive Agreement

On March 30, 2006, Star Gas Partners, L.P., a Delaware limited partnership (the “Partnership” or “Star”) entered into a second amendment (the “second amendment”) to that certain unit purchase agreement dated as of December 5, 2005 (as amended by a first amendment dated as of March 12, 2006, the “unit purchase agreement”), by and among Star Gas Partners, Star Gas LLC (“Star Gas”), Kestrel Energy Partners, LLC (“Kestrel”), Kestrel Heat, LLC (“Kestrel Heat”) and KM2, LLC (“M2”).

The second amendment provides for:

 

    an increase in the per unit price being paid by Kestrel Heat and M2 to $2.50 (from $2.25) and a decrease in the number of common units being purchased by Kestrel and M2 to 6,750,000 (from 7,500,000), resulting in no change in Kestrel’s equity investment of $16,875,000 and a reduction in dilution to existing common unitholders; and

 

    a decrease in the exercise price per unit in the rights offering to the Partnership’s common unitholders to $2.00 per common unit (from $2.25) and an increase in the number of common units being offered in the rights offering to 19,687,500 (from 17,500,000), with a standby commitment from M2 to purchase all units that are not subscribed for in the rights offering at an exercise price of $2.25. The holder of record of each common unit held at the close of business on April 6, 2006, the record date for the distribution, will be issued .6121 (as compared to .5441) rights to purchase one common unit.

Except as set forth above, the unit purchase agreement remains in full force and effect. On March 30, 2006, the Partnership issued a press release announcing it had entered into the second amendment and the determination of the board of directors of Star Gas that the new proposal received from Soros Fund Management, LLC, Atticus Capital LP and Almeida Oil Co., Inc. was not a “Superior Proposal” under the terms of the unit purchase agreement.

The descriptions of the agreement and press release that are contained in this Form 8-K are qualified in their entirety to the text of the actual agreement and press release that are filed as exhibits hereto.

This excerpt taken from the SGU 8-K filed Mar 14, 2006.

Item 1.01 Entry Into a Material Definitive Agreement

On March 12, 2006, Star Gas Partners, L.P., a Delaware limited partnership (the “Partnership” or “Star”) entered into a contingent amendment to that certain unit purchase agreement dated as of December 5, 2005 (the “unit purchase agreement”), by and among Star Gas Partners, Star Gas LLC (“Star Gas”), Kestrel Energy Partners, LLC (“Kestrel”), Kestrel Heat, LLC (“Kestrel Heat”) and KM2, LLC (“M2”).

The contingent amendment provides for:

 

  (i) an increase in Kestrel’s equity investment to $16.875 million (compared to $15 million under the original unit purchase agreement) in which Kestrel Heat and M2 will purchase an aggregate of 7,500,000 common units from the Partnership at $2.25 per unit (compared to $2.00 per unit under the original unit purchase agreement); and

 

  (ii) an increase in the size of the rights offering to the Partnership’s common unitholders to $39.375 million (compared to $35 million under the original unit purchase agreement) at an exercise price of $2.25 per unit (compared to $2.00 per unit under the original unit purchase agreement), with a standby commitment from M2 to purchase all units that are not subscribed for in the rights offering.

The contingent amendment will only become effective, and amend the existing unit purchase agreement, upon the satisfaction of certain conditions. The contingent amendment will become effective if Star Gas Partners receives the consent to the contingent amendment from the holders of 2/3 of Star Gas Partners’ outstanding senior notes prior to the close of business on Tuesday, March 28, 2006. The contingent amendment will also become effective if Kestrel and Star Gas Partners mutually agree in writing to such effectiveness. In the event that neither of the conditions discussed above are satisfied, the contingent amendment will be of no further force and effect and Star Gas Partners will proceed with the existing unit purchase agreement, which will remain in effect without amendment thereto.

Except as set forth above, the original unit purchase agreement remains in full force and effect.

The description of the agreement that is contained in this Form 8-K is qualified in its entirety to the text of the actual agreement that is filed as an exhibit hereto.

This excerpt taken from the SGU 8-K filed Sep 12, 2005.

Item 1.01 Entry Into a Material Definitive Agreement

 

On September 8, 2005, Star Gas LLC, a Delaware limited liability company (the “Company”), which is the general partner of Star Gas Partners, L.P., a Delaware limited partnership entered into the Company’s standard form of Director and Officer indemnification agreement with the following director and officers: Joseph Cavanaugh, Chief Executive Officer and a Director of the Company; Richard Ambury, Chief Financial Officer of the Company and Dan Donovan, President and Chief Operating Officer of the Company.

 

In general, the indemnification agreement provides that the Company will, to the extent permitted by applicable law, indemnify the indemnitee against all expenses, judgments, fines, and penalties actually and reasonably incurred in connection with the defense or settlement of any criminal, civil or administrative action brought against the indemnitee by reason of his relationship with the Company, including third-party claims and proceedings brought by or in the right of the Company. In addition, the indemnification agreement provides for the advancement of expenses incurred by the indemnitee in connection with any proceeding covered by the agreement to the fullest extent permitted by Delaware law. The Agreements are effective as of the respective dates on which the indemnitees assumed their present positions with the Company and continue until the later of (i) 10 years after the date the indemnitee ceases to serve as an officer or director of the Company or (ii) the final termination of all proceedings as to which an indemnitee is indemnified.

 

The above description of the indemnification agreement does not purport to be complete and is qualified in its entirety by reference to the form of indemnification agreement, which is filed as Exhibit 99.1 to this Current Report on Form 8-K.

 

This excerpt taken from the SGU 8-K filed Aug 1, 2005.

Item 1.01 Entry Into a Material Definitive Agreement

 

On July 27, 2005, Star Gas LLC, a Delaware limited liability company (the “General Partner”), which is the general partner of Star Gas Partners, L.P., a Delaware limited partnership (the “Partnership”) and, together with the General Partner and their affiliates, successors and assigns, the “Company”) and Mr. Ami Trauber entered into an agreement, effective as of July 15, 2005 (the “Agreement”), to resolve all claims arising out of the termination of Mr. Trauber as Chief Financial Officer of the Partnership, effective May 6, 2005.

 

Mr. Trauber was employed pursuant to an employment agreement dated as of October 15, 2001. The agreement was terminable at will at any time upon 90 days’ prior written notice. The agreement provided for an annual base salary of $360,000. In addition, Mr. Trauber could earn a bonus of up to 40% of the base salary for services rendered based upon certain performance criteria.

 

In connection with the termination of this agreement, Mr. Trauber will receive a payment of $92,700 representing salary in lieu of the 90 days’ notice plus six months severance compensation equal to $185,400 In addition, the Partnership will pay the premiums for Mr. Trauber’s healthcare coverage for nine months. Mr. Trauber will also be entitled to receive any amounts payable to him in accordance with the terms of the unit appreciation rights that were previously granted to him in 2001 and 2002.

 

This excerpt taken from the SGU 8-K filed Mar 8, 2005.

Item 1.01 Entry into a Material Definitive Agreement.

 

On March 7, 2005, Star Gas LLC, a Delaware limited liability company (the “General Partner”), which is the general partner of Star Gas Partners, L.P., a Delaware limited partnership (the “Partnership” and, together with the General Partner and their affiliates, successors and assigns, the “Company”) and Mr. Irik P. Sevin entered into a letter agreement and general release (the “Agreement”). In accordance with the Agreement, Mr. Sevin confirmed his resignation as Chairman of the Board of the General Partner and his resignation from employment as the Chief Executive Officer and President of the General Partner (and its subsidiaries) under the employment agreement between Mr. Sevin and the General Partner dated as of September 30, 2001, in each case effective immediately. Pursuant to the Agreement, Mr. Sevin will not be eligible for any benefits or compensation, other than as specifically provided in the Agreement. Pursuant to the Agreement, for the 13-year period beginning with the month following the five-year anniversary of the termination date, the General Partner will provide Mr. Sevin with a monthly retirement benefit equal to $29,166.67.

 

Mr. Sevin continues to be a director of the General Partner and will provide consulting services to the Company for a period of five years following the termination date (the “Consulting Period”). Mr. Sevin will be entitled to annual consulting fees of $395,000, payable in equal monthly installments. For a period of two years following the termination date, the General Partner will reimburse Mr. Sevin for all reasonable expenses incurred in maintaining an office to provide the consulting services provided that such expenses shall in no event exceed $50,000 per year. The General Partner will also provide Mr. Sevin with one administrative assistant at the same level as his current assistant during this two-year period. Mr. Sevin executed a general release in favor of the Company, containing certain exceptions.

 

On March 7, 2005, the General Partner entered into a voting trust agreement (the “Voting Trust Agreement”) with Irik P. Sevin, in his capacity as a member of the General Partner, and Irik P. Sevin, Stephen Russell and Joseph P. Cavanaugh in their capacities as trustees under the Voting Trust Agreement (the “Voting Trustees”). Pursuant to the Voting Trust Agreement, Mr. Sevin transferred all of his member interests (representing 15.6363% of the membership interests) in the General Partner to a voting trust for his benefit. Under the terms of the voting trust, these interests will be voted in accordance with the decision of a majority of the Voting Trustees. The voting trust created by the Voting Trust Agreement terminates on the earliest of (i) March 4, 2030, unless extended by further agreement as provided by law, (ii) at any time upon the agreement of all three of the Voting Trustees and the holders of voting trust certificates representing all of the interests in the General Partner that are being held in trust pursuant to the Voting Trust Agreement and (iii) the date upon which the Voting Trust Agreement is required to be terminated in order to comply with applicable law.

 

On March 7, 2005, the General Partner and Audrey L. Sevin entered into a letter agreement and general release (the “Letter Agreement”). In accordance with the Letter Agreement, Ms. Sevin confirmed her resignation from employment as the Secretary of the General Partner (and its subsidiaries), effective immediately. Pursuant to separate letter from Ms. Sevin to the Company, Ms. Sevin also agreed to resign as a member of the Board of Directors of the General Partner, effective immediately. Pursuant to the Letter Agreement, Ms. Sevin will not be eligible for any benefits or compensation, other than as specifically provided in the Letter Agreement. Within 10 days of the termination date, the Company will provide or cause to be provided to Ms. Sevin as severance 26 weeks of her base salary, payable in intervals in accordance with the Company’s customary payroll practices. Ms. Sevin executed a general release in favor of the Company, containing certain exceptions.


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