AGREEMENT entered into this 1st day of December, 1994 between
Petroleum Heat and Power Co., Inc., a Minnesota corporation ("Petro"),
PruSupply, Inc. ("PruSupply") and The Prudential Insurance Company of America, a
New Jersey corporation ("Prudential").
1. Recitals. This Agreement is entered into with reference to the
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following facts.
1.1 Petro and Prudential are parties to a shareholder/put call
agreement dated December 21, 1993 ("Put/Call Agreement") among Petro, Prudential
and the FRC Shareholders (as defined in the Put/Call Agreement), pursuant to
which, among other things, Petro was granted an option (the "Call Option") to
purchase all shares of the 8% cumulative convertible preferred stock of Star Gas
Corporation ("Star Gas") owned from time to time by Prudential.
1.2 As of the date of this Agreement, Prudential owns 159,564.98
shares of the 8% cumulative convertible preferred stock of Star Gas (the
"Preferred Stock") which shares of Preferred Stock Petro may buy pursuant to the
Call Option for a total purchase price of $16,877,109.56 (the "Call Price").
1.3 Prudential has entered into with Star Gas a note agreement
dated as of January 10, 1989, as amended (the "1989 Note Agreement") and a note
agreement dated as of February 28, 1991 (the "1991 Note Agreement") and
Prudential as Administrative Agent and PruSupply as Term Lender, have entered
into with Star Gas a Term Loan Agreement dated as of February 28, 1991 (the
"Term Loan Agreement"). The 1989 Note Agreement, the 1991 Note Agreement and
the Term Loan Agreement are referred to herein collectively as the "Prudential
Note Agreements".
1.4 Pursuant to the Prudential Note Agreements, there are
presently outstanding 11.56% senior notes in the principal amount of $27,425,000
(the "Senior Notes"), 12.625% senior subordinated participating notes in the
principal amount of $7,500,000 ("Subordinated Notes"), senior reset term notes
in the principal amount of $20,000,000 ("Senior Reset Term Notes") and floating
rate notes in the principal amount of $8,725,000 ("Floating Rate Notes")
(collectively the "Prudential Notes").
1.5 Prudential has purchased from Star Gas and now owns 82,641
shares of Star Gas 12.625% Cumulative Redeemable Preferred Stock ("Cumulative
Redeemable Preferred Stock").
1.6 The Prudential Note Agreements provide for make-whole
payments which Prudential has agreed to modify to the extent set forth herein.
2. Exercise of Call Option; Payment of Option Price. Petro hereby
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exercises the Call Option and on this date is paying to Prudential the sum of
$16,877,109.56 by (i) issuing to Prudential 1,521,316 shares of its Class A
Common Stock ("Petro Shares") and (ii) making a cash payment in the amount of
$3,375,430.06 which Prudential agrees to accept as payment in full of the Call
Price, and Prudential has delivered the Preferred Stock to Petro.
3. Petro's Right to Repurchase the Petro Shares. From the date
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hereof and through May 31, 1995, Petro shall have the
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right to purchase all but not less than all of (a) the Prudential Notes, (b) the
Cumulative Redeemable Preferred Stock and (c) the Petro Shares for a purchase
price of $87,305,562.50 less all principal payments made with respect to the
Prudential Notes after December 1, 1994 and plus (i) any accrued and unpaid
dividends after December 1, 1994 on the Cumulative Redeemable Preferred Stock
and (ii) an amount as will provide Prudential a yield of 12.625% per annum
compounded semiannually from the date hereof on the $13,501,679.50 it paid for
the Petro Shares but less any dividends paid on the Petro Shares from the date
hereof.
3.1 Prudential agrees that it will not directly or indirectly
(i) sell or offer for sale or (ii) hypothecate, pledge or in any way incumber or
create a charge against, any of the Petro Shares, Prudential Notes or Cumulative
Redeemable Preferred Stock prior to May 31, 1995, until it obtains a written
acknowledgement from the purchaser to be bound by the terms of this Agreement.
3.2 In order to exercise its rights to purchase these securities
under this Article 3, Petro shall deliver to Prudential at its principal office,
at least 5 days prior written notice of Petro's intention to exercise its rights
specifying a closing date and the amount to be paid, and on the closing date
Petro shall make a wire transfer of immediately available funds equal to full
purchase price to accounts designated by Prudential.
3.3 Simultaneously with payment by Petro, Prudential shall
deliver to Petro the Petro Shares, the Prudential Notes and the 12.625%
Cumulative Redeemable Preferred Stock,
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together with executed transfer powers to Petro or to any person designated by
Petro.
4. Petro's Future Rights With Respect to the Petro Shares. If Petro
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does not exercise its rights pursuant to Article 3, then before Prudential sells
any of the Petro Shares it shall notify Petro of its intention to sell the Petro
Shares in which event Petro may, within three business days following receipt of
such notice, offer to purchase the Petro Shares which Prudential intends to sell
at a price specified by Petro ("Offer Price"). Any offer made by Petro may be
withdrawn after 30 days; however, so long as Petro's offer is outstanding,
Prudential agrees that it shall not sell or agree to sell the Petro Shares to
any one other than Petro at a price per share at or below the Offer Price. If
Prudential accepts Petro's offer, Petro shall purchase the Petro Shares for cash
within 20 business days after acceptance of the offer.
5. Miscellaneous.
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5.1 Amendment and Modification. This Agreement may be amended,
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modified and supplemented only by written agreement of the parties hereto.
5.2 Waiver of Compliance. Any failure of Petro, on the one
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hand, or Prudential, on the other, to comply with any obligation, covenant,
agreement or condition herein may be expressly waived in writing by the
president or a vice president (of any designation) or any other duly authorized
officer of Prudential or Petro, respectively, but such waiver or failure to
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insist upon strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
5.3 Notices. All notices, requests, demands and other
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communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given if delivered by hand or mailed, certified or
registered mail with postage prepaid:
(a) If to Petro, to:
Petroleum Heat and Power Co., Inc.
2187 Atlantic Street
Stamford, CT 06902
Attn: George Leibowitz
Senior Vice President
(with a copy to:)
Phillips, Nizer, Benjamin, Krim & Ballon
31 West 52nd Street
New York, NY 10019
Attn: Alan Shapiro, Esq.
(b) If to Prudential or PruSupply, to:
The Prudential Insurance Company of America
c/o Prudential Financial Restructuring Group
4 Gateway Center - 9th Fl.
100 Mulberry Street
Newark, NJ 07102-4069
Attn: Managing Director
Fax: 201-802-2662
with a copy to:
The Prudential Insurance Company of America
c/o Prudential Financial Restructuring Group
4 Gateway Center - 9th Fl.
100 Mulberry Street
Newark, NJ 07102
Attn: Jack Pfeilsticker, Esq.
Fax: 201-802-3853
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or to such other person or address as shareholders shall furnish to the Company
in writing.
5.4 Assignment. This Agreement and all of the provisions hereof
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shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Except as provided in Section 3.1,
neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any of the parties hereto without the prior written consent
of the other party.
5.5 Governing Law. This Agreement and the legal relations among
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the parties hereto shall be governed by and construed in accordance with the
laws of the State of New York, without regard to its conflicts of law doctrine.
5.6 Counterparts. This Agreement may be executed simultaneously
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in two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
5.7 Headings. The headings of the Sections and Articles of this
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Agreement are inserted for convenience only and shall not constitute a part
hereof or affect in any way the meaning or interpretation of this Agreement.
5.8 Entire Agreement. This Agreement sets forth the entire
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agreement and understanding of the parties hereto in respect of the subject
matter contained herein, and supersede all prior agreements, promises,
covenants, arrangements, communications, representations or warranties, whether
oral or
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written, by any officer, employee or representative of any party hereto.
5.9 Third Parties. Nothing herein expressed or implied is
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intended or shall be construed to confer upon or give to any person or
corporation other than the parties hereto and their successors or assigns, any
rights or remedies under or by reason of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and their respective corporate seals to be affixed hereto, all
as of the day and year first above written.
PETROLEUM HEAT AND POWER CO., INC.
By /s/ IRIK P. SEVIN
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Irik P. Sevin, President
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By /s/ RICHARD GREENWOOD
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Richard Greenwood
Vice President
PRUSUPPLY, INC.
By_________________________________
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