Exhibit 5
MANAGEMENT SERVICES AGREEMENT
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MANAGEMENT SERVICES AGREEMENT made as of this 21st day
of December, 1993 by and between STAR GAS CORPORATION, a Delaware
corporation with offices at 500 Birchfield Dr., Mt. Laurel, NJ
08054 (the "Company") and PETROLEUM HEAT AND POWER CO., INC., a
Minnesota corporation with offices at 2187 Atlantic Street,
Stamford, CT 06902 ("Petro").
W I T N E S S E T H :
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WHEREAS, the Company is engaged in the business of
propane distribution; and
WHEREAS, the Company desires to retain Petro to provide
executive, financial, and managerial oversight services to it on
the terms herein set forth, and Petro has capability enabling it
to provide such services and is agreeable to providing the same
on such terms:
NOW, THEREFORE, in consideration of the mutual
covenants herein contained, it is hereby agreed as follows:
1. Term and Duties.
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For the ten-year period commencing on the date
hereof unless sooner terminated pursuant to the provisions of
paragraph 7 hereof (the "Term"), Petro shall provide executive,
financial, and managerial oversight services to the Company and
the Company's subsidiaries from time to time. It is understood
that all persons who will provide services to the Company will be
employees of Petro and will also have such other duties with
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Petro, and that, therefore, none of said persons will devote full
business time to the business of the Company, but that they will
devote thereto only such time as may be necessary from time to
time properly to perform their duties.
2. Degree of Care.
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Petro shall use its best efforts to perform its
services, and to cause its personnel to perform their services,
hereunder in a professional manner and with due care, but shall
have no liability to the Company for any act or omission except
for wilful default or gross negligence.
3. Fee.
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In full consideration and compensation for the
services to be furnished by Petro to the Company and its
subsidiaries during the Term, the Company will pay to Petro and
Petro will accept (i) a basic fee of $500,000 per year, payable
in cash in equal monthly installments of $41,666.67, plus (ii) an
annual bonus fee equal to five percent (5%) of the increase, if
any, in the EBITDA (as defined below) of the Company for each
fiscal year of the Company ending during the Term beginning with
the fiscal year ending September 30, 1994 over the EBITDA of the
Company for the twelve-month period ended September 30, 1993,
payable no later than 30 days after the issuance of the audited
annual financial statements of the Company with respect to a
fiscal year, in the case of the bonus fee, in shares of common
stock of the Company at a per share price equal to (a)(i) the
product of the EBITDA of the Company for the immediately
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preceding fiscal year multiplied by 5.5, (ii) minus the amount of
Long-Term Obligations of the Company as defined in the
Shareholder Put/Call Agreement dated as of December 21, 1993 (the
"Put/Call Agreement") (iii) plus the amount of net working
capital of the Company as of the last day of the preceding fiscal
year in excess of $4,000,000 and (iv) plus the amount of proceeds
that would be received by the Company from the exercise of all
options, warrants and other rights to purchase securities of the
Company outstanding on the last day of the preceding fiscal year
to the extent such shares are included in Fully Diluted Shares
(as defined below) of the Company divided by (b) the number of
Fully Diluted Shares of the Company.
The term "Fully Diluted Shares" means with respect
to the Company, as of the date of determination, the number of
shares of Common Stock of the Company actually issued and
outstanding, plus the number of shares issuable upon the
conversion of the 8% Cumulative Convertible Preferred Stock, plus
the number of shares of Common Stock issuable pursuant to that
certain option dated as of December 21, 1993 granted by the
Company to Petro, plus the number of shares of Common Stock
issuable pursuant to all other options, warrants and similar
rights to purchase Common Stock, and plus the number of shares of
Common Stock issuable upon the conversion of any other class of
convertible securities of the Corporation; provided, however,
that only those options, warrants and similar rights to purchase
shares of Common Stock, that have an exercise price that is less
than either (i) the average of the then current Put Option Price
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and the then current Call Option Price as set forth in the
Shareholder Put/Call Agreement dated as of December 21, 1993 (the
"Put/Call Agreement") (provided, however, that for purposes of
this calculation, Section 1.3(a)(ii)(B) of the Put/Call Agreement
shall not apply) or (ii) if the Common Stock is publicly traded,
the average of the last reported sales price for the shares of
Common Stock for the 10 trading days preceding the date on which
the option, warrant or similar right is exercised as reported by
the NASDAQ National Market System, or if a class of stock is not
included in the NASDAQ National Market System, then on the stock
exchange or listing service on which such class is included
(provided, however, that if no such sales prices exist, then the
formula set forth in (i) above applies) shall be deemed to be
included in this definition.
The term "EBITDA" means consolidated income before
interest, depreciation and amortization and income taxes
excluding gains or losses from the sale of assets other than in
the ordinary course of business, non-recurring gains and losses,
extraordinary items and the costs of restructuring, all
calculated in accordance with generally accepted accounting
principles as reported in the Company's audited year-end
financial statements; provided that consolidated income of any
other person (other than a corporation of which a majority of the
capital stock having voting power under ordinary circumstances to
elect a majority of the board of directors is owned by the
Company or a subsidiary) will be included only to the extent of
dividends and distributions received by the Company. EBITDA
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shall include (without duplication) EBITDA (defined in the same
manner as in this Agreement) of each business (on a pro forma
basis) which has been acquired during the applicable fiscal year
of Star Gas using the pro forma adjustments comparable to those
customarily made by Petro in reporting of its acquisitions of
businesses on filings with the United States Securities &
Exchange Commission pursuant to the periodic reporting
requirements of the Securities Exchange Act of 1934.
The shares issuable in payment of the bonus fee
shall be issued when the amount of the bonus fee, if any, is
calculated.
The Company shall also grant to Petro an option to
purchase shares of the common stock of the Company in accordance
with, and on the terms and conditions set forth in, the Option
Agreement annexed hereto as Exhibit A.
4. Expenses.
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(a) During the Term, the personnel of Petro
assigned to perform duties hereunder will engage in such travel
as may be reasonably required in connection with the performance
of those duties. The Company will pay (or reimburse) all such
reasonable expenses upon submission of proper documentation.
(b) The Company will pay for, or reimburse Petro
for, all equipment and supplies bought by Petro and specifically
dedicated to the purposes of this Agreement (e.g. computer
supplies). Petro shall not be entitled to reimbursement of
incidental expense (e.g. use of Petro's offices) for purposes
hereof.
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(c) Petro will pay all salaries, wages, bonuses,
Blue Cross and other insurance expenses, pension fund payments,
payroll taxes and withholding and the like applicable to its
employees furnishing services hereunder, without right of reim-
bursement by the Company, except to the extent specified in
Section 4(d) hereof.
(d) The Company shall reimburse Petro for the
actual cost of services provided to the Company by Petro (other
than services provided by Irik P. Sevin, C. Justin McCarthy,
George Leibowitz and George Russell or their respective
successors in the offices of Chairman of the Board, Chief
Executive Officer, President, Senior Vice President - Operations,
Senior Vice President - Finance and Corporate Development and
Senior Vice President - Marketing) based on Petro's total
compensation cost (the components of total compensation cost are
set forth in Exhibit B annexed hereto) for persons providing such
services and the amount of time such employee actually spends on
matters directly related to the Company and its operations. The
reimbursement fee shall be based on reasonable rates taking into
account such employee's annual compensation from Petro; provided,
however, that in no event shall the amount of such reimbursement
be greater than the amount the Company would be required to pay
to an independent third party. Petro shall maintain time records
and shall provide the Company with a monthly statement for such
reimbursement fee, which the Company shall promptly pay. After
the financial statements become available for the quarter ended
March 31 and the year ended September 30, Petro shall submit to
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the Company's Board of Directors the monthly statements for
reimbursement and the supporting records for the immediately
preceding six months, which the disinterested directors shall
review as to reasonableness. Annually, the disinterested
directors, with the assistance of the Company's independent
public accountants, shall review the reasonableness of such
monthly statements. If a majority of the disinterested directors
determines to terminate the reimbursement of Petro for certain
services, Petro and such directors shall agree on a procedure for
the orderly termination of the provision of such services and a
reimbursement of Petro that is appropriate in the circumstances.
(e) The Company will indemnify to the full extent
permitted by law the personnel of Petro who perform services
hereunder against any claims which may be made against them by
reason thereof.
5. Confidentiality; Propane Operations.
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(a) All business opportunities which are referred
to Petro during the Term in the propane distribution business
shall be deemed business opportunities of the Company and not of
Petro. Petro may not avail itself of any such opportunity
without the unanimous vote of the disinterested director of the
Company.
(b) The Company acknowledges that Petro is
engaged in the #2 fuel oil business, and also is engaged in
propane operations in two locations in Massachusetts, one
location in Connecticut and one location in Rhode Island (the
"Propane Operations") and that all persons who perform services
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for the Company pursuant to this Agreement will be full time
employees of Petro and that their primary loyalty is to Petro.
The mere fact of Petro's business activities as described above
and the use of such employees to perform services for Petro shall
in no way give rise to any liability of Petro or such employees
under this Agreement. Business opportunities which are referred
to Petro during the Term in any business other than the
distribution of propane shall be deemed to be business
opportunities of Petro and not of the Company.
(c) In the event that Petro receives a bona fide
written offer (the "Offer") which it desires to accept for the
purchase of some or all of its Propane Operations (the
"Disposition Propane Assets"), other than a sale of Petro or all
or substantially all of its assets, Petro shall give written
notice to the Board of Directors of the terms of such Offer.
Within 30 days after the receipt of such notice, a majority of
the disinterested directors shall notify Petro in writing of
whether the Company will purchase such Propane Operations on the
terms of such Offer. If the Company does not agree to purchase
the Disposition Propane Assets on the terms of such Offer, or
having so agreed fails to consummate such purchase within 90 days
after receipt of such notice, Petro may sell the Disposition
Propane Assets in accordance with the terms and conditions of the
Offer after which this paragraph shall apply only to any future
offer to purchase other assets of the Propane Operations as well
as any Disposition Propane Assets not sold pursuant to the Offer.
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6. Relationship Between Parties.
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The parties are not partners or joint venturers,
and neither shall have any power or right to incur any liability
on behalf of the other party; provided, however, that any of the
personnel of Petro elected an officer of the Company, shall have
power to obligate the Company as appropriate for his office.
Each party shall discharge its own debt and obligations without
recourse against the other.
7. Defaults.
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The following shall constitute events of default:
(a) The failure of the Company to pay Petro any
sums due it hereunder within ten (10) days of written demand
therefor by Petro.
(b) The failure of either party to perform, keep
or fulfill in any material respect any of the other covenants,
undertakings, obligations or conditions set forth in this
Agreement or the failure of Petro to perform the services
required under this Agreement with the degree of care set forth
in Paragraph 2 hereof, and the continuance of such default for a
period of thirty (30) days after notice of said failure.
Upon the occurrence of any of the events of
default, the non-defaulting party may give to the defaulting
party notice of intention to terminate this Agreement and upon
the expiration of a period of sixty (60) days from the date of
such notice specifying the cause therefor and if the defaulting
party shall fail to cure such defaults before the 60 day period
should expire, this Agreement shall terminate.
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The rights granted hereunder shall not be in
substitution for, but shall be in addition to, any rights and
remedies available to the non-defaulting party hereunder by
reason of applicable provisions of law.
8. Waiver.
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The failure of either party to insist upon a
strict performance of any of the terms or provisions of this
Agreement or to exercise any option, right or remedy herein
contained, shall not be construed as a waiver or as a
relinquishment for the future of such term, provision, option,
right or remedy, but the same shall continue and remain in full
force and effect. No waiver by either party of any term or
provision hereof shall be deemed to have been made unless
expressed in writing and signed by such party. In the event of
consent by either party to an assignment of this Agreement, no
further assignment shall be made without the express consent in
writing of such party, unless such assignment may otherwise be
made without such consent pursuant to the terms of this
Agreement. In the event that any portion of this Agreement shall
be declared invalid by order, decree or judgment of a court, this
Agreement shall be construed as if such portion had not been
inserted herein except when such construction would operate as an
undue hardship to Petro or the Company or constitute a
substantial deviation from the general intent and purpose of said
parties as reflected in this Agreement.
9. Assignment.
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Neither party shall assign or transfer or permit
the assignment or transfer of this Agreement, or it rights or
obligations hereunder without the prior written consent of the
other; provided, however, that the sale of substantially all the
assets of Petro to, or the merger of Petro into, a single entity
or a group of entities under common control, shall not constitute
an assignment or transfer for purposes of this section.
10. Miscellaneous.
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(a) Right to Make Agreement. The Company and
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Petro each warrant that neither the execution of this Agreement
nor the consummation of the transactions contemplated hereby
shall violate any provision of law or judgment, writ, injunction,
order or decree of any court or governmental authority having
jurisdiction over the Company or Petro; result in or constitute a
breach under any indenture, contract, other commitment or
restriction to which either is a party or by which either is
bound; or require any consent, vote or approval which has not
been taken, or at the time of the transaction involved shall not
have been given or taken. Each party covenants that it has and
will continue to have throughout the term of this Agreement and
any extensions thereof, the full right to enter into this
Agreement and perform its obligations hereunder.
(b) Applicable Law. This Agreement shall be
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construed under and shall be governed by the laws of the State of
Delaware.
(c) Notices. Notices, statements and other
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communications to be given under the terms of this Agreement
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shall be in writing and delivered by hand against receipt or sent
by certified or registered mail, return receipt requested:
To the Company: Star Gas Corporation
500 Birchfield Drive
Mt. Laurel, NJ 08054
With Copy to: Wilmer, Cutler & Pickering
2445 M Street, N.W.
Washington, D.C. 20037
Attn: Richard Cass, Esq.
To Petro: Petroleum Heat and Power Co.,
Inc.
2187 Atlantic Street
Stamford, CT 06902
Attn: Irik P. Sevin
With Copy to: Phillips, Nizer, Benjamin,
Krim & Ballon
31 West 52nd Street
New York, NY 10019
Attn: Alan Shapiro, Esq.
With Copy to: The Prudential Insurance
Company of America
c/o Prudential Financial
Restructuring Group
Four Gateway Center-9th Fl.
100 Mulberry Street
Newark, NJ 07102-4069
Attn: Managing Director
Fax: 201-802-2662
With Copy to: Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, NY 10022-4669
Attn: Duncan Stewart, Esq.
Fax: 212-821-8111
With Copy to: First Reserve Corporation
475 Steamboat Road
Greenwich, CT 06830
Attn: William E. Macaulay
(d) Entire Agreement. This Agreement, together
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with other writings signed by the parties expressly stated to be
supplementing hereto and together with any instruments to be
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executed and delivered pursuant to this Agreement, constitutes
the entire agreement between the parties and supersedes all prior
understandings and writings.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers on the
year and day first above written.
PETROLEUM HEAT AND POWER CO., INC.
By: /s/ George Leibowitz
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George Leibowitz
Senior Vice President
STAR GAS CORPORATION
By: /s/ Robert M. Cherry
-------------------------
Name: Robert M. Cherry
Title: Senior Vice President
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EXHIBIT A
Neither this Option, nor the shares of Common Stock issuable
upon its exercise, have been registered under the Securities
Act of 1933, as amended. This Option has been, and the shares
of Common Stock issuable upon its exercise will be, acquired
for investment. This Option may not be sold, transferred,
pledged, hypothecated or otherwise disposed of except in
accordance with the terms hereof and except pursuant to an
effective registration statement under the Securities Act of
1933, as amended, or an opinion of counsel, in form and
substance satisfactory to the Company, to the effect that
registration is not then required under such Act.
Option
To Purchase 500,000 shares of Class A Common Stock of
STAR GAS CORPORATION
December 21, 1993
THIS IS TO CERTIFY THAT Petroleum Heat and Power Co.,
Inc. is entitled to purchase from Star Gas Corporation, a
Delaware corporation, (the "Company") at any time after
December 21, 1993, until 5:00 P.M., New York time, on December
20, 1998 (the "Expiration Date"), Five Hundred Thousand
(500,000) shares (subject to adjustment as provided in Article
Four hereof) of Class A Common Stock, par value $.10 per
share, of the Company, at the Purchase Price (defined below)
subject to exercise of the other appurtent rights, powers and
privileges, all on the terms and conditions hereinafter
provided.
1. Certain Definitions
For all purposes of this Option, unless the context
otherwise requires:
Act
The term "Act" means the Securities Act of 1933, as
amended, or any similar Federal statute, and the rules and
regulations of the Securities and Exchange Commission
thereunder, all as the same shall be in effect at the time.
Affiliate
The term "Affiliate", as it applies to the Optionholder,
means an individual, corporation, partnership or other entity
which controls, is controlled by, or is under common control
with, the Optionholder.
Shares of Common Stock
The term "shares of Common Stock" means the Company's
shares of Class A Common Stock, par value $.10 per share, and
any capital stock into which such shares of Common Stock may
thereafter have been changed, and for purposes of Article Four
shall also include capital stock of the Company or any class
of the Company's securities thereafter authorized which ranks,
or is entitled to a participation, as to assets or dividends,
substantially on a parity with the shares of Common Stock.
Company
The term "Company" means Star Gas Corporation, a Delaware
corporation.
Expiration Date
The term "Expiration Date" means 5:00 P.M., New York
time, on December 20, 1998.
Number of Option Shares
The term "number of Option Shares" has the meaning
assigned to it in Article Four hereof.
Optionholder
The term "Optionholder" means Petroleum Heat and Power
Co., Inc.
Options
The term "Options" means this Option and all Options
issued in substitution, combination or subdivision thereof.
All Options shall at all times be identical as to terms and
conditions and expiration date, except as to the number of
shares of Common Stock for which they may be exercised and
except as otherwise required by this Option or as otherwise
agreed to by the Company and the Optionholder.
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Option Shares
The term "Option Shares" means the shares of Common Stock
issuable upon the exercise of the Options.
Purchase Price
The term "Purchase Price" means $9.9031 per share as
adjusted pursuant to Article Four hereof.
2. Exercise of Option
2.1 Manner of Exercise
Until the Expiration Date, the Optionholder may exercise
this Option in whole at any time or in part from time to time
for the purchase of the number of shares of Common Stock which
such Optionholder is then entitled to purchase hereunder, at
the Purchase Price per Common Share determined in accordance
with the provisions hereof.
In order to exercise this Option, in whole or in part,
the Optionholder shall deliver on the exercise date to the
Company at its principal office or such other office or agency
designated by it for such purpose, (a) written notice of the
Optionholder's election to exercise this Option, which notice
shall specify the number of shares of Common Stock to be
purchased, (b) cash or a certified or bank check payable to
the order of the Company in an amount equal to the Purchase
Price of the number of shares of Common Stock being purchased
and (c) this Option.
Upon receipt of the materials delivered by the
Optionholder under this section, the Company shall, as
promptly as practicable, execute and deliver, or cause to be
executed and delivered, to the Optionholder a certificate or
certificates representing the aggregate number of shares of
Common Stock specified in such notice. The certificate or
certificates so delivered shall be in such denomination or
denominations as may be specified in such notice and shall be
registered in the name of the Optionholder or, subject to
Article Three, such other name as shall be designated
(together with an address) in such notice.
Such certificate or certificates shall be deemed to have
been issued and the Optionholder or any other person so
designated to be named therein shall be deemed to have become
a holder of record of such shares of Common Stock as of the
date such notice and payment is received by the Company as
aforesaid if this Option has been exercised in compliance with
the above provisions. If this Option shall have been
exercised only in part, the Company shall, at the time of
delivery of such certificate or certificates, deliver to the
Optionholder a new Option evidencing the rights of the holder
to purchase the
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remaining shares of Common Stock called for by this
Option, which new Option shall in all other respects,
except as provided in Article Three, be identical with this
Option, or, at the request of the Optionholder, appropriate
notation may be made on this Option and the same returned to
such holder. The Company shall pay all expenses, taxes and
other charges payable in connection with the preparation,
issuance and delivery of share certificates under this
section, except that, in the case such share certificates
shall be registered in a name or names other than the name of
the Optionholder, funds sufficient to pay all share transfer
taxes which shall be payable upon issuance of such share
certificate or certificates shall be paid by the Optionholder
at the time the notice of exercise hereinabove mentioned is
delivered to the Company.
2.2 Option Shares Fully Paid
All Option Shares shall be, when issued, duly authorized,
validly issued, fully paid and non-assessable.
2.3 Fractional Shares
The Company shall not be required upon the exercise of
this Option to issue a certificate representing any fraction
of a share of Common Stock, but, at the option of the Company,
in lieu of issuing such a fractional share, may pay for such
fraction of a share at the Purchase Price in effect on the
date of such exercise of this Option.
3. Transferability; Compliance With Securities Act
3.1 Restrictive Legend
Unless otherwise not required by this Article Three, each
certificate for Option Shares initially issued upon the
exercise of this Option, and each certificate for shares of
Common Stock issued to a subsequent transferee of any such
certificate, shall be stamped or otherwise imprinted with a
legend in substantially the following form:
The shares of Common Stock represented by this
certificate have not been registered under the
Securities Act of 1933, as amended, and may not be
sold, transferred, pledged, hypothecated or
otherwise disposed of except in accordance with the
terms hereof and except pursuant to an effective
registration statement under such Act and any
applicable state securities laws, or an opinion of
counsel, in form and substance satisfactory to the
Company, to the effect that such registration is not
then required.
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3.2 Restriction On Transferability
The Options shall not be transferable. The Option Shares
shall be freely transferable except to the extent limited by
law or by any agreement among shareholders of the Company.
4. Adjustments To Purchase Price And Number of Option Shares
The Purchase Price and the number of Option Shares
purchasable hereunder (such number, as in effect from time to
time, being hereinafter called the "number of Option Shares"),
as specified in this Option, shall be subject to adjustment
from time to time as follows:
4.1 Dividends and Reclassifications. In case the
Company shall (i) declare a dividend, or make a distribution,
on its outstanding shares of Common Stock in shares of its
Common Stock, (ii) subdivide or reclassify its outstanding
Common Stock into a greater number of shares or (iii) combine
or reclassify its outstanding Common Stock into a smaller
number of shares, the number of Option Shares in effect at the
time of the record date for such dividend or distribution or
subdivision or combination, or the effective date thereof if
no record date is fixed therefor, shall be proportionately
adjusted so that the holder of any Option surrendered for
exercise immediately after the time of such record date or
such effective date (if no record date is fixed) shall be
entitled to receive the number of Option Shares which such
holder would have owned or been entitled to receive had the
Option been exercised immediately prior to such time.
Adjustment in the Purchase Price shall be made successively
whenever any event specified above shall occur.
4.2 Liquidating Dividends. In the event that the
Company shall make any distribution of its assets upon or with
respect to its Common Stock, as a liquidating or partial
liquidating dividend, or other than as a dividend payable out
of earnings or any surplus legally available for dividends
under the laws of the state of incorporation of the Company,
the Optionholder shall, upon the exercise of the Option after
the record date for such distribution or, in the absence of a
record date, after the date of such distribution, receive, in
addition to the Option Shares, the amount of such assets (or,
at the option of the Company, a sum equal to the value thereof
at the time of distribution as determined by the Board of
Directors in its sole discretion) which would have been
distributed to the Optionholder if it had exercised the Option
immediately prior to the record date for such distribution, or
in the absence of a record date, immediately prior to the date
of such distribution.
4.3 Adjustment of Purchase Price. Upon each adjustment
of the number of Option Shares pursuant to this Article, the
Purchase Price shall be adjusted to equal the amount obtained
by
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multiplying the Purchase Price in effect immediately prior to
such adjustment by a fraction, the numerator of which equals
the number of Option Shares in effect prior to such adjustment
and the denominator of which equals the number of Option
Shares in effect after such adjustment.
4.4 Miscellaneous Matters.
4.4.1 No adjustment of the Purchase Price shall be
made if the amount of such adjustment shall be less than one
percent of the then Purchase Price, but in such case any
adjustment that would otherwise be required then to be made
shall be carried forward and shall be made at the time of and
together with the next subsequent adjustment which, together
with the next subsequent adjustment which, together with any
adjustment so carried forward, shall amount to not less than
one percent of the then Purchase Price.
4.4.2 The certificate of any independent firm of
public accountants of recognized standing selected by the
Board of Directors shall be conclusive of the correctness of
any computation made under this Article.
4.4.3 Whenever any adjustment is required in the
then Purchase Price, the Company shall forthwith (i) prepare a
statement describing in reasonable detail the adjustment and
the method of calculation used and (ii) cause a copy of such
statement to be mailed to the Optionholder.
4.4.4 The Company shall at all times reserve and
keep available out of its authorized shares of Common Stock
the full number of Option Shares into which all Options from
time to time outstanding are exercisable. If at any time the
number of authorized and unissued shares of Common Stock shall
not be sufficient to effect the exercise this Option at the
Purchase Price then in effect, the Company shall take such
corporate action as may, in the opinion of its counsel, be
necessary to increase its authorized Common Stock to such
number of shares as shall be sufficient for such purpose.
4.4.5 In case of any reclassification of or change
in the outstanding shares of Common Stock (other than a change
in par value, or a change from no par to par value or from par
value to no par value) or in the case of any consolidation of
the Company with, or merger of the Company into, another
corporation (other than a consolidation in which the Company
is the continuing corporation and which does not result in any
reclassification of or change in the outstanding shares of
Common Stock), or in case of any sale or conveyance to another
corporation of all or substantially all the assets of the
Company, the Optionholder shall have the right to exercise
such Option into the kind and amount of shares and other
securities and property receivable upon such reclassification,
change, consolidation, merger, sale or conveyance by a holder
of the
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number of shares of Common Stock into which the Option
could have been exercised immediately prior to such
reclassification, change, consolidation, merger, sale or
conveyance. After such reclassification, change,
consolidation, merger, sale or conveyance, adjustments of the
Purchase Price shall be as nearly equivalent as may be
practicable to the adjustments of the Purchase Price provided
for herein.
The Company and any successor shall not effect any such
consolidation, merger, sale or conveyance of property as an
entirety with or to another corporation unless and until such
other corporation shall agree to deliver to the Optionholder,
upon the exercise of the Option, such shares, securities and
property which, in accordance with the foregoing provisions,
such Optionholder shall have the right to receive. Successive
reclassifications, changes, consolidations, mergers, sales or
conveyances and adjustments of Purchase Price shall be
similarly treated.
Immediately before any such consolidation, merger, sale
or conveyance of property as an entirety with or to another
corporation the Company shall pay to the Optionholder an
amount of cash equal to the number of Option Shares multiplied
by the difference between (a) the cash or fair value of any
property or securities to be received by a holder of a share
of Common Stock pursuant to any such consolidation, merger,
sale or conveyance of property and (b) the Purchase Price.
5. Notice Of Certain Events.
In case at any time on or after the date hereof:
(a) there shall be any capital reorganization or
reclassification of the shares of Common Stock (other than a
subdivision or combination of its outstanding shares of Common
Stock and other than a change in the par value or the shares
of Common Stock, or a change from par value to no par value or
from no par value to par value), or any consolidation or
merger to which the Company is a party and for which approval
of any shareholders of the Company is required, or any sale or
transfer of all or substantially all the assets of the
Company; or
(b) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Company;
then the Company shall cause to be delivered to each
Optionholder, as promptly as possible but in any event at
least 10 days prior to the applicable date hereinafter
specified, a notice stating the date on which such
reorganization, reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding up is expected
to become effective, and the date as of which it is expected
that holders of shares of Common Stock of record shall be
entitled to exchange their shares of Common Stock for
securities or other property
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deliverable upon such reorganization, reclassification,
consolidation, merger, sale, transfer, dissolution,
liquidation or winding up is expected to become effective,
and the date as of which it is expected that holders
of shares of Common Stock of record shall be entitled
to exchange their shares of Common Stock for securities
or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up.
6. Limitation of Liability
No provision hereof, in the absence of affirmative action
by the Optionholder to purchase shares of Common Stock, and no
mere enumeration herein of the rights and privileges of the
Optionholder, shall give rise to any liability of such
Optionholder for the Purchase Price or as a shareholder of the
Company, whether such liability is asserted by the Company or
by creditors of the Company.
7. Miscellaneous Provisions
7.1 Notices and Demands on Company and Optionholder.
Any notice or demand which by any provision of this Option is
required or permitted to be given or served may be given or
served by being deposited postage prepaid, registered or
certified mail, return receipt requested, in a post office
letter box addressed (until another address of the Company is
given by the Company to the Optionholder) as follows: if to
the Company, then to Star Gas Corporation, 500 Birchfield
Drive, Mt. Laurel, New Jersey 08054; if to the Optionholder,
then to Petroleum Heat and Power Co., Inc., Davenport Street,
Stamford, Connecticut 06094, Attn: George Leibowitz, Senior
Vice President. All notices shall be deemed to have been
given upon delivery or mailing thereof.
7.2 Amendments And Waivers. Any term of this Option may
be changed, waived, discharged or terminated only be a written
consent of the Company and the Optionholder.
7.3 Laws Of Delaware To Govern. This Option shall be
deemed to be a contract made under the laws of the State of
Delaware and for all purposes shall be governed by and
construed in accordance with the internal laws of such State.
7.4 Effect Of Headings. The Article and Section
headings herein are for convenience only and shall not affect
the construction hereof.
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IN WITNESS WHEREOF, the Company has caused this Option to
be signed in its name by a duly authorized officer and
attested by its Secretary or Assistant Secretary.
Dated: December 21, 1993
STAR GAS CORPORATION
___________________________________
Name:
Title:
ATTEST:
____________________________
Name:
Title:
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EXHIBIT B - TOTAL COMPENSATION COST
The amount of compensation shown in the employee's Form
W-2 plus the following:
employer's share of FICA tax
federal unemployment tax
state unemployment tax
state disability tax
employee group insurance benefits
retirement benefits
expenses of a similar nature