Other preliminary proxy statements



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UNITED STATES




SECURITIES AND EXCHANGE COMMISSION


< br>
Washington, D.C. 20549










SCHEDULE 14A




(Rule 14a-101)




INFORMATION REQUIRED IN PROXY STATEMENT




SCHEDULE 14A INFORMATION




Proxy Statement Pursuant to Section 14(a) of the




Securities Exchange Act of 1934









Filed by the
Registrant  ☒                             Filed by a Party other than the
Registrant  ☐



Check the appropriate box:


























































Preliminary Proxy Statement







Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))







Definitive Proxy Statement






Definitive Additional Materials






Soliciting Material Pursuant to §240.14a-12



STAR GAS
PARTNERS, L.P.




(Name of Registrant as Specified in Its Charter)






(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)



Payment of Filing Fee (Check the appropriate box):


































































































































No fee required.






Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.






(1)



Title of each class of securities to which transaction applies:









(2)



Aggregate number of securities to which transaction applies:









(3)



Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is calculated and state how it was determined):









(4)



Proposed maximum aggregate value of transaction:









(5)



Total fee paid:












Fee paid previously with preliminary materials.






Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.






(1)



Amount previously paid:









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Date Filed:



















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STAR GAS PARTNERS, L.P.




9 West Broad Street, Suite 310




Stamford, Connecticut 06902



[●],
2017



Dear Unitholder:



You are cordially
invited to attend our special meeting of unitholders to be held on [●], 2017, at [●] local time at the offices of Thompson & Knight LLP, 900 Third Avenue, 20

th

Floor, New
York, New York 10022-4728. The board of directors (the “Board”) of Kestrel Heat, LLC, our general partner, has called the special meeting.



At the special meeting, unitholders will be voting on a proposal that would allow Star Gas Partners, L.P. (the “Partnership”) to
elect to be treated as a corporation, instead of a partnership, for federal income tax purposes (commonly known as a “check-the-box” election), and a proposal to approve and adopt the Third Amended and Restated Agreement of Limited
Partnership of the Partnership to give effect to the change in federal income tax classification. Please consider the issues presented and vote your units as promptly as possible.



The Board has unanimously determined that the proposals are in the best interests of the Partnership and our unitholders and recommends that
unitholders vote FOR each of the proposals.



If the unitholders adopt the proposals and the Partnership makes the check-the-box election:













•


unitholders should no longer incur “phantom income” (“phantom income” is taxable income allocated to our partners in excess of cash distributed to those partners); and












•


unitholders will begin to receive corporate dividends reported on an IRS Form 1099 rather than a share of income and expenses reported on an IRS Form 1065 Schedule K-1;












•


the Partnership expects to realize approximately $240,000 per year in administrative costs savings as a result of “checking-the-box”;












•


the Partnership expects to be able to fully deduct for tax purposes approximately $1,200,000 in annual expenses related to being a publicly-traded entity if the election is effected which at present are not fully tax
deductible by individual unitholders;












•


the check-the-box election should not be a taxable event for the unitholders; and












•


the partnership agreement of the Partnership will be amended to effect the above changes.


Immediately following the special meeting, the Partnership’s name will be changed to “Star Group, L.P.” in order to more
closely align the Partnership’s name with the expanded scope of its products and services it offers. The Partnership will continue to trade under the ticker “SGU” on the New York Stock Exchange.




Representation of your units at the meeting is very important

. Whether or not you plan to attend the special meeting, please complete
your proxy card and return it to us to ensure that your vote is counted. If you hold your units through an account with a brokerage firm, bank or other nominee, please follow the instructions you receive from them to vote your units. If your
completed proxy card is not received, you may be contacted by representatives of the Partnership, the Partnership’s transfer agent, or the Partnership’s proxy solicitor, Georgeson LLC (“Georgeson”). Georgeson has been engaged to
assist the Partnership in soliciting proxies. Representatives of Georgeson will remind you to vote your units and may be contacted at (888) 505-6583.



Thank you for voting.



Sincerely,




Paul A. Vermylen, Jr.




Chairman of the Board of
Directors of




Kestrel Heat, LLC, the general partner of




Star Gas Partners, L.P.








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STAR GAS PARTNERS, L.P.




9 West Broad Street, Suite 310




Stamford, Connecticut 06902




NOTICE OF SPECIAL MEETING OF UNITHOLDERS



To the Owners of Common Units of Star Gas Partners, L.P. (the “Partnership”):



Our special meeting of unitholders will be held on

[





]

, 2017 at [●] local time at the offices of
Thompson & Knight LLP, 900 Third Avenue, 20

th

Floor, New York, New York 10022-4728 to:












1.

consider a proposal that would allow the Partnership to elect to be treated as a corporation, instead of a partnership, for federal income tax purposes;











2.

consider a proposal to approve and adopt the Third Amended and Restated Agreement of Limited Partnership of the Partnership (the “Third Amended and Restated Partnership Agreement”) to give effect to the change
in federal income tax classification from a partnership to a corporation as proposed by Proposal No. 1; and











3.

transact any other business that properly comes before the meeting, or any adjournment thereof, by or at the direction of the board of directors of Kestrel Heat, LLC, our general partner.


The board of directors of Kestrel Heat, LLC recommends a vote “

FOR

” the proposal to allow the Partnership to elect to be
treated as a corporation for federal income tax purposes and the proposal to approve and adopt the Third Amended and Restated Partnership Agreement.



We discuss the above business matters in more detail in the attached proxy statement.



Only holders of record of our Common Units at the close of business on September 13, 2017 will be entitled to vote.



Richard F. Ambury




Secretary



[●],
2017




Important Notice Regarding the Availability of Proxy Materials




for the Unitholder Meeting to Be Held on [





], 2017:




The Proxy Statement and 2016 Annual Report are available at





www.star-gas.com/financial-information/sec-filings









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STAR GAS PARTNERS, L.P.




9 West Broad Street, Suite 310




Stamford, Connecticut 06902




PROXY STATEMENT




SPECIAL MEETING OF UNITHOLDERS




[





], 2017



This proxy statement contains information related to the special meeting of unitholders of Star Gas Partners, L.P. (the
“Partnership”) and any postponements or adjournments thereof. The special meeting will be held on

[





]

, 2017

, at [





]

local time at the offices of Thompson & Knight LLP, 900
Third Avenue, 20

th

Floor, New York, New York 10022-4728.



At the meeting, our
unitholders will:












1.

consider a proposal that would allow the Partnership to elect to be treated as a corporation for federal income tax purposes;











2.

consider a proposal to approve and adopt the Third Amended and Restated Agreement Limited Partnership of the Partnership (the “Third Amended and Restated Partnership Agreement”) to give effect to the change in
federal income tax classification from a partnership to a corporation as proposed by Proposal No. 1; and











3.

transact any other business that properly comes before the meeting, or any adjournment thereof, by or at the direction of the board of directors of Kestrel Heat, LLC, our general partner.


This proxy statement is first being mailed to the Partnership’s unitholders on or about

[





]

, 2017.








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TABLE OF CONTENTS



































































































































































































QUESTIONS & ANSWERS ON VOTING PROCEDURES





1






MATTERS YOU ARE VOTING ON





5




Proposal No. 
1: Proposal to Allow the Partnership to Elect to be Treated as a Corporation for Federal Income Tax Purposes





5




Proposal No. 
2: Proposal to Approve and Adopt the Third Amended and Restated Partnership Agreement





5




Other Business Matters





5






PROPOSAL NO. 1: PROPOSAL TO ALLOW THE PARTNERSHIP TO ELECT TO BE TREATED AS A
CORPORATION, INSTEAD OF A PARTNERSHIP, FOR FEDERAL INCOME TAX PURPOSES





6




Proposal





6




Vote Required





6




Recommendation of the Board





6




Reasons for the Transaction





6




“Special Approval” of the Election and the Third Amended and Restated
Partnership Agreement





9




Material U.S. Federal Income Tax Considerations





11






PROPOSAL NO. 2: PROPOSAL TO APPROVE AND ADOPT THE THIRD AMENDED AND RESTATED
PARTNERSHIP AGREEMENT





19




Proposal





19




Vote Required





19




Recommendation of the Board





19




Description of the Third Amended and Restated Partnership
Agreement





19






SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT





22






HOUSEHOLDING MATTERS





23






SOLICITATION OF PROXIES





23






OTHER MATTERS





23











Appendix A




Form of Third Amended and Restated Agreement of Limited Partnership, a clean copy of which is attached hereto as Appendix A-1, and a copy marked to show changes compared to the existing
Second Amended and Restated Agreement of Limited Partnership, as amended as of the date of this proxy statement, is attached hereto as Appendix A-2.




i








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QUESTIONS & ANSWERS ON VOTING PROCEDURES





Who is entitled to vote at the special meeting, and how many votes do they have?




With respect to Proposal Nos. 1 and 2, holders of record of our Common Units (each, a “Common Unit,” and collectively, the
“Common Units”) who owned such units as of the close of business on September 13, 2017, the record date for the special meeting, may vote at the meeting. Each Common Unit has one vote. There were [●] Common Units outstanding and
eligible to vote on the record date. There are no rights of appraisal or similar rights of dissenters arising from any of the Proposals to be acted on at the meeting.





How can I access the proxy materials over the Internet?




You can view the proxy materials for the special meeting on the Internet by using your control number, which can be found on your proxy card or
voting instruction form.



Our proxy materials are also available on our website at

www.star-gas.com/financial-information/sec-filings.





What is a quorum of unitholders?




The holders of a majority of the outstanding Common Units represented in person or by proxy shall constitute a quorum at the special meeting.
Because there were [●] Common Units outstanding on September 13, 2017, holders of [●] Common Units represented in person or by proxy at the special meeting will constitute a quorum. We must have a quorum of the Common Units to
conduct the meeting.





How many votes does it take to pass each matter?




If a quorum of unitholders is present at the meeting, we need:













•


the affirmative vote of the holders of a majority of the Common Units outstanding and entitled to vote and be present in person or by proxy at the special meeting, to approve the proposal that would authorize Star Gas
Partners, L.P. to elect to be treated as a corporation for federal income tax purposes; and












•


the affirmative vote of the holders of a majority of the Common Units outstanding, to approve the proposal to approve and adopt the Third Amended and Restated Agreement of Limited Partnership (the “Third Amended
and Restated Partnership Agreement”).


The implementation of Proposals No. 1 and 2 is conditioned on approval of
both proposals. Thus, even if Proposal No. 1 is approved by unitholders, the Partnership will not be authorized to elect to be treated as a corporation for federal income tax purposes unless Proposal No. 2 is also approved by unitholders.
Similarly, even if Proposal No. 2 is approved by unitholders, the Third Amended and Restated Partnership Agreement will not become effective unless Proposal No. 1 is also approved by unitholders.





How are abstentions and broker non-votes treated?




Abstentions and broker non-votes count for purposes of determining the presence of a quorum. “Broker non-votes” occur when a bank,
broker or other holder of record holding units for a beneficial owner does not vote on a particular proposal because that holder does not have discretionary voting power for that particular item and has not received instructions from the beneficial
owner. Abstentions and broker non-votes will have the same effect as a vote against Proposals No. 1 and 2.





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How do I vote?




You may vote by any of the following methods:













•



By Telephone or Internet

—If you have telephone or Internet access, you may submit your proxy vote by following the instructions provided on your proxy card or voting instruction form.












•



By Mail

—You may submit your proxy vote by mail by signing a proxy card if your Common Units are registered or, for units held beneficially in street name, by following the voting instructions included by
your broker, trustee or nominee, and mailing it in the enclosed envelope. If you provide specific voting instructions, your Common Units will be voted as you have instructed.












•



In Person at the Special Meeting

—If your Common Units are registered directly in your name with our transfer agent, Computershare, you are considered, with respect to those units, the unitholder of record.
As the unitholder of record, you have the right to vote in person at the special meeting. If your Common Units are held in a brokerage account or by another nominee or trustee, you are considered the beneficial owner of Common Units held in street
name. As the beneficial owner, you are also invited to attend the special meeting. Because a beneficial owner is not the unitholder of record, you may not vote these Common Units in person at the meeting unless you obtain a “legal proxy”
from your broker, trustee or nominee that holds your Common Units, giving you the right to vote the Common Units at the special meeting. If you plan on attending the special meeting in person and need directions to the meeting site, please contact
Investor Relations at (203) 328-7310 to have your name registered with building security at the special meeting site.




If I vote
by telephone or Internet and received a proxy card in the mail, do I need to return my proxy card?




No.





If my Common Units are held in “street name” by my broker, will my broker vote my Common Units for me?




If your Common Units are held in a brokerage account, you will receive a full meeting package, including a voting instructions form to vote
your Common Units. Your brokerage firm may permit you to provide voting instructions by telephone or by the Internet. Brokerage firms have the authority under NYSE rules to vote their clients’ unvoted units on certain routine matters. Your
brokerage firm is not permitted, however, to vote your Common Units on Proposal No. 1 with respect to the proposal that would authorize the Partnership to elect to be treated as a corporation for federal income tax purposes or Proposal
No. 2 with respect to the proposal to approve and adopt the Third Amended and Restated Partnership Agreement as both of these proposals are non-routine. We urge you to respond to your brokerage firm so that your vote will be cast in accordance
with your instructions.





What is a proxy?




A proxy is another person you authorize to vote on your behalf. We solicit proxy cards that are used to instruct the proxy how to vote so that
all Common Units may be voted at the special meeting even if the holders do not attend the meeting in person.





How will my proxy vote my Common
Units?




If you properly sign and return your proxy card or voting instructions form, your Common Units will be voted as you direct.
If you sign and return your proxy card, but do not specify how you want your Common Units voted, they will be voted “

FOR

” the proposal that would authorize the Partnership to elect to be treated as a corporation for federal income
tax purposes and “

FOR

” the proposal to approve and adopt the Third Amended and Restated Partnership Agreement. Also, you will give your proxies authority to vote, using their discretion, on any other business that properly comes
before the meeting, including to adjourn the meeting.





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How do I vote using my proxy card?




There are three steps.












1.

Vote on each of the matters as follows:



Proposal No. 1.

Check the box
“FOR” or “AGAINST,” or “ABSTAIN” (to not cast a vote); and




Proposal No. 2.

Check the box
“FOR” or “AGAINST,” or “ABSTAIN” (to not cast a vote).












2.

Sign and date your proxy card. If you do not sign and date your proxy card or do not submit a proxy by telephone or internet, your votes cannot be counted.











3.

Mail your proxy card in the pre-addressed, postage-paid envelope.


Please check the box on
your proxy card if you plan to attend the special meeting.





Can I vote by proxy even if I plan to attend the special meeting?




Yes. If you vote by proxy and decide to attend the special meeting, you do not need to fill out a ballot at the meeting, unless you want to
change your vote.





Who can attend the special meeting?




All unitholders as of the record date, or their duly appointed proxies, may attend the special meeting. Each unitholder may be asked to present
valid picture identification, such as a driver’s license or passport. Cameras, recording devices and other electronic devices will not be permitted at the meeting.



Please note that if you own Common Units in “street name,” meaning through a broker or other nominee, you will need to bring a copy
of a brokerage statement reflecting your unit ownership as of the record date. You will not be able to vote your Common Units in person without a legal proxy (as described above).





Why might I receive more than one proxy card? Should I vote on each proxy card I receive?




First, you may have various accounts with us that are registered differently, perhaps in different names or with different social security or
federal tax identification numbers. Second, you may also own Common Units indirectly through your broker. Your broker will send you a proxy card or voting instructions form for these Common Units. You should vote on each proxy card or voting
instructions form you receive and mail it to the address shown on the applicable proxy card or form.





How do I change my vote or revoke my proxy?




You may change your vote at any time before the special meeting by:













•


notifying Richard F. Ambury, Secretary, in writing received prior to the commencement of the special meeting at Star Gas Partners, L.P., 9 West Broad Street, Suite 310, Stamford, Connecticut 06902, that you are changing
your vote or revoking your proxy; or












•


completing and sending in another proxy card or voting instructions form with a later date, which proxy card or voting instructions form is received prior to the closing of the polls at the special meeting; or












•


attending the special meeting and voting in person.




Who is soliciting my proxy, how is it being
solicited, and who pays the cost?




The Partnership, on behalf of the Board of Directors of Kestrel Heat, LLC, our general partner
(the “Board”), through its managers, officers and employees, is soliciting proxies primarily by mail. However,





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proxies may also be solicited in person, by telephone or facsimile. The Partnership has also retained Georgeson, LLC (“Georgeson”) to assist in soliciting proxies from brokers, bank
nominees, and other institutional holders. The Partnership will pay the cost of soliciting proxies.





What should I do if I want to make a proposal
to be considered at the meeting?




Your Common Units do not entitle you to make proposals at the special meeting. Under the Second
Amended and Restated Agreement of Limited Partnership, as amended as of the date of this proxy statement (the “Second Amended and Restated Partnership Agreement”), only our general partner, Kestrel Heat, LLC, can make a proposal at the
meeting. The Second Amended and Restated Partnership Agreement establishes a procedure for calling meetings whereby limited partners owning 20% or more of the outstanding units of the class for which a meeting is proposed may call a meeting at which
they may make proposals.





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MATTERS YOU ARE VOTING ON






Proposal No. 1: Proposal to Allow the Partnership to Elect to be Treated as a Corporation for Federal Income Tax Purposes



This proposal is to authorize the Partnership to take the required regulatory steps to allow the Partnership to be treated as a
corporation, instead of a partnership, for federal income tax purposes, beginning on the date selected by the Board, which will not be earlier than the date on which the Partnership files IRS Form 8832. See Proposal No. 1 beginning on the
following page.


The Board recommends a vote “

FOR

” Proposal No. 1


for the reasons described under Proposal No. 1, including the following:













•


we believe that enacting Proposal No. 1 would improve the after-tax returns of our taxable unitholders by eliminating taxable “phantom income” currently incurred by our unitholders (“phantom
income” is taxable income allocated to our partners in excess of cash distributed to those partners);












•


we believe that enacting Proposal No. 1 would allow the Partnership to fully deduct certain administrative and compliance costs associated with it being a publicly-traded entity that are not currently deductible in
full by individual unitholders (including individual unitholders who indirectly own Common Units through pass-through entities) of approximately $1,200,000 per year;












•


we believe that enacting Proposal No. 1 may enhance the marketability of our Common Units because if the Partnership is no longer being taxed as a partnership, it would no longer be required to issue IRS Form 1065
Schedule K-1 to our unitholders; and












•


we estimate that enacting Proposal No. 1 would generate approximately $240,000 in annual administrative cost savings, primarily from avoiding the expense associated with generating and mailing IRS Form 1065
Schedule K-1.





Proposal No. 2: Proposal to Approve and Adopt the Third Amended and Restated Partnership
Agreement



This proposal is to approve and adopt the Third Amended and Restated Partnership Agreement, effective as of [●], 2017.
See Proposal No. 2 beginning on page 19.


The Board recommends a vote “

FOR

” Proposal No. 2


for the same reasons set forth above for Proposal No. 1 since the primary purpose of the amendments set forth in
the Third Amended and Restated Partnership Agreement is to delete or amend those provisions of the Second Amended and Restated Partnership Agreement that pertain to the Partnership’s federal income tax classification as a partnership. In other
words, the primary purpose of those amendments is to permit and effect the election contemplated by Proposal No. 1. The amendments will also reflect the name change of the Partnership to “Star Group, L.P.” which name change will
become effective immediately following the special meeting.






Other Business Matters



The Board is not aware of any other business for the special meeting. However, if any matters concerning the conduct of the meeting are
properly presented for action, then unitholders present at the meeting may vote on such items. If you are represented by proxy, your proxy will vote your Common Units using his or her discretion.





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PROPOSAL NO. 1: PROPOSAL TO ALLOW THE PARTNERSHIP TO ELECT TO BE
TREATED AS A CORPORATION, INSTEAD OF A PARTNERSHIP, FOR FEDERAL INCOME TAX PURPOSES






Proposal



The Board has approved and hereby proposes, and recommends, that the unitholders approve a proposal to authorize the Partnership to take the
required regulatory steps to allow the Partnership to be treated as a corporation, instead of a partnership, for federal income tax purposes (the “election”). If the election is approved by the unitholders, after the Partnership makes the
election the Partnership will cease to be taxed as a pass-through entity for federal income tax purposes and will begin to be taxed as a corporation effective as of the date selected by the Board, which will not be earlier than the date on which the
Partnership files IRS Form 8832. That date is expected to be [●], 2017. However, the Partnership will remain a limited partnership for state law purposes even if the Partnership makes the election, and all other provisions of the Partnership
Agreement will remain in effect, including the provisions relating to incentive distributions.



In conjunction with this proposal, the
Board also recommends that unitholders approve and adopt an amendment and restatement of the Second Amended and Restated Partnership Agreement, which would, in part, delete or amend, as applicable, those provisions of the Second Amended and Restated
Partnership Agreement that pertain to the Partnership’s federal income tax classification as a partnership and allow it to be taxed as a corporation as described in Proposal No. 2 below. This Proposal No. 1 is conditioned on Proposal
No. 2 being approved by the partners, such that even if unitholders approve the election pursuant to this Proposal No. 1, the Partnership will not consummate the election unless unitholders also approve and adopt the Third Amended and
Restated Partnership Agreement pursuant to Proposal No. 2 below. In addition, the election will not be consummated unless any required consents are obtained from lenders under the Partnership’s credit facility.






Vote Required



Approval of this proposal requires the affirmative vote of the holders of a majority of the Common Units outstanding and entitled to vote and
be present in person or by proxy at the special meeting. Abstentions and broker non-votes will have the same effect as a vote against this proposal.






Recommendation of the Board



The Board believes that it is in the best interests of our unitholders to authorize the Partnership to
elect to be treated as a corporation for federal income tax purposes. As such, the Board recommends that you vote


FOR


this proposal.




THE BOARD RECOMMENDS THAT UNITHOLDERS VOTE “FOR” THE PROPOSAL TO ALLOW THE PARTNERSHIP TO ELECT TO BE TREATED AS A CORPORATION,
INSTEAD OF A PARTNERSHIP, FOR FEDERAL INCOME TAX PURPOSES. IF NOT OTHERWISE SPECIFIED IN PROXY CARDS, THE PROXY WILL VOTE COMMON UNITS “

FOR

” APPROVAL OF THIS PROPOSAL.






Reasons for the Transaction



The Board believes that the election is in the best interests of the Partnership and our unitholders and should be approved for the following
reasons:




Elimination of Phantom Income Allocation and Increased Availability of Tax Deductions for Expenses



We are currently structured as a pass-through entity for federal income tax purposes. As such, our unitholders are required to pay federal
income taxes and, in some cases, state and local income taxes, on their share of our taxable income, whether or not they receive cash distributions from us.





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We annually allocate an amount of taxable income to our unitholders that exceeds the amount of
their cash distributions (such excess, “phantom income”) and such phantom income, which is currently an economic detriment to taxable unitholders, should be eliminated after the election. The Partnership uses cash distributions from its
corporate subsidiaries, Star Acquisitions, Inc. (“Star Acquisitions”) and Star Gas Finance Company (“SGFC”), to pay certain administrative and compliance expenses, make unit repurchases and fund distributions to the unitholders.
Moreover, phantom income could result if we directly acquired the equity or assets of a target company using dividends from our corporate subsidiaries. To the extent the cash distributions from Star Acquisitions and SGFC are classified as dividends
for federal income tax purposes, the amount received by the Partnership that exceeds the amount actually distributed to the unitholders results in phantom income allocated to the unitholders. Our unitholders have been required to pay the actual tax
liability that results from their share of our dividend income, even if such dividend income exceeds the cash distributions received by them from us. Over the last five years, the phantom income allocated to our unitholders has been as low as zero
and as high as $9.6 million, or 16.9 cents per Common Unit.



In addition, the various administrative and compliance expenses paid by the
Partnership must be separately reported on each unitholder’s Form 1065 Schedule K-1. Section 67 of the Code provides that these types of expenses, referred to as “miscellaneous itemized deductions” will be deductible by an
individual (including individual unitholders who indirectly own Common Units through pass-through entities) only to the extent they exceed 2% of such individual’s adjusted gross income. This limitation on deductions for certain individuals has
the effect of further increasing the amount of phantom income required to be reported by such individual unitholders. The Partnership currently incurs approximately $1,200,000 in such expenses each year related to being a publicly-traded entity that
it expects to be fully deductible if the election is made.



After the election, the Partnership should not generate phantom income and
should be able to deduct its administrative and compliance costs on the consolidated corporate tax return it will file with its subsidiaries.



If the election is approved by the unitholders and the Partnership makes the election, the Partnership will become a member of the Star
Acquisitions consolidated group and join the consolidated federal income tax return currently filed by such group. Currently, the cash distributions we receive from Star Acquisitions and SGFC are net of corporate taxes paid by the Star Acquisitions
consolidated group. After the election, the Partnership will be the common parent of the consolidated group and the cash distributions paid by Star Acquisitions and SGFC to the Partnership will be nontaxable intercompany distributions. Accordingly,
we do not expect that the federal corporate tax liability of such consolidated group will increase as a result of the election. Electing to be treated as a corporation for federal income tax purposes will eliminate our unitholders’ liability to
pay taxes on their share of our phantom income. Instead, unitholders will only be required to pay taxes on the distributions actually received. The election will not alter the rights of the holders of our Common Units or our general partner to the
distributions described in the Second Amended and Restated Partnership Agreement.




Enhanced Marketability of Common Units



Electing to be treated as a corporation for federal tax purposes eliminates the tax uncertainty associated with future phantom income,
eliminates the requirement to issue Form 1065 Schedule K-1s and allows the Partnership to deduct certain administrative and compliance expenses, all of which we believe could result in enhanced marketability of our Common Units and could result in
additional investors acquiring our Common Units who previously may not have invested in the Partnership due to it being treated as a pass-through entity for federal income tax purposes. We believe certain types of investors may have been less
inclined to purchase our Common Units when there was a risk that the Partnership would generate phantom income that would be allocated to those investors. In addition, we believe many investors prefer not to invest in pass-through entities such as
the Partnership because of the relatively greater administrative burden of receiving a Form 1065 Schedule K-1 as compared to a Form 1099 in respect of their investment in the pass-through entity, and the resulting obligation to file state tax
returns in all of the states in which the pass-through entity operates.





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Additionally, after the election, the Partnership believes that certain tax-exempt investors may
be more likely to invest in the Partnership because, when treated as a corporation for federal tax purposes, such investors do not have a risk that they will be allocated unrelated business taxable income associated with an investment in Partnership
units, except to the extent that the tax-exempt entity has units that are considered debt-financed. While the Partnership currently does not generate material amounts of unrelated business taxable income, the classification of the Partnership as a
partnership for federal income tax purposes may cause some tax-exempt investors to conclude that they are at risk of unrelated business taxable income by investing in the Partnership.



The same rationale applies with respect to foreign investors and regulated investment companies (“RICs”) investors. Foreign
investors in publicly traded partnerships (“PTPs”) taxed as partnerships are subject to onerous reporting and tax payment obligations and for that reason typically do not invest in such entities. That concern will no longer apply after the
election. Similarly, RICs cannot hold more than 25% of their investments in PTPs taxed as partnerships and this requirement is often seen as a reason why RICs typically avoid investing in such entities. Accordingly, by no longer being taxed as a
partnership, the Partnership believes that investor perception of the Partnership will improve and make it more widely appealing to investors.




Administrative Cost Savings



As a PTP,
the Partnership incurs significant external and internal costs to calculate and issue approximately 17,000 Form 1065 Schedule K-1s to the unitholders annually (approximately 16,450 such forms in 2016). We estimate that eliminating Form 1065 Schedule
K-1 production by us will reduce our administrative costs by approximately $240,000 annually.



The Partnership is a PTP for U.S. federal
income tax purposes. Generally, a PTP is treated as a corporation unless certain qualifying gross income requirements are met. When a PTP is treated as a corporation, it is taxed as a corporation and thus subject to an entity level federal income
tax. However, if the PTP meets the qualifying gross income requirements, the business entity is not subject to federal corporate income tax but instead, is treated as a partnership or a pass-through entity for federal income tax purposes. To meet
the qualifying gross income requirement, 90 percent or more of the PTP’s gross income for the taxable year must consist of qualifying passive-type income. Qualifying passive-type income generally includes: interest; dividends; real property
rents; gains from the sale or other disposition of real property; income and gains from certain natural resource activities; gain from the sale or disposition of a capital asset held for the production of income described above; and in certain
cases, income and gains from commodities or futures, forwards, and options with respect to commodities. Income from the retail distribution of propane is qualifying income, but the retail distribution of heating oil does not generate qualifying
income.



After the Partnership sold its propane business, Star Gas Propane L.P. (“Star Gas Propane”), in 2004, it had no active
business operations that generated qualifying income. Currently, the Partnership’s only material assets are the stock of corporations, Star Acquisitions and SGFC, that are primarily engaged in the retail distribution of heating oil (which does
not meet the qualifying income test) and the Partnership’s sole sources of income are dividends from such corporations. Even though the Partnership does not directly conduct any active business operations that generate qualifying income,
dividend income is qualifying income, and thus, 90 percent or more of the Partnership’s gross income for the taxable year consists of qualifying income.



Although certain corporate subsidiaries of the Partnership conduct active propane operations, the tax efficiencies of a PTP taxed as a
partnership are lost because the qualifying income generated by these propane operations is subject to a corporate level tax prior to the dividend distributions made to the Partnership. Therefore, the Partnership’s income is subject to two
levels of taxation even though it is a PTP taxed as a partnership.



As a PTP, the Partnership incurs significant external and internal
costs to calculate and issue approximately 17,000 Form 1065 Schedule K-1s to the unitholders annually (approximately 16,450 such forms in 2016). We





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estimate that eliminating Form 1065 Schedule K-1 production by us will reduce our administrative costs by approximately $240,000 annually.



The Partnership’s external administrative costs arise from hiring professionals, such as PricewaterhouseCoopers (“PwC”), to
prepare the Form 1065 Schedule K-1s. Internally, the Partnership is required to allocate resources to maintain a website to permit the unitholders of the Partnership to access their tax information, manage and collect data necessary to prepare the
Form 1065 Schedule K-1s, manage the Form 1065 Schedule K-1 filing process, correct Form 1065 Schedule K-1 errors and resolve unitholders’ questions. These costs are typical to an entity that is a PTP, such as the Partnership, and a PTP
structure typically generates tax benefits to the unitholders because qualifying income is allocated to the unitholders and is not subject to double taxation. However, since the sale of the Partnership’s propane distribution and services
segment in 2004, the Partnership no longer directly conducts active business operations that generate qualifying income and the current partnership tax structure no longer provides any tax efficiency to the unitholders. Yet the Partnership is still
incurring significant external and internal costs. After the election, the incremental costs related to the tax compliance of the Partnership noted above would be reduced. Additionally, when a PTP issues or repurchases units or when units are
transferred between unitholders, the Partnership incurs additional administrative costs to determine the appropriate basis adjustments. PwC is currently responsible for calculating such adjustments and the fees incurred to perform the partnership
basis calculation would be eliminated if the proposed election occurs.






“Special Approval” of the Election and the
Third Amended and Restated Partnership Agreement



On May 19, 2017 the Board constituted the Conflicts Committee, a committee of
the Board meeting the requirements set forth in the Partnership Agreement consisting of Henry D. Babcock, C. Scott Baxter and William P. Nicoletti, and authorized the Conflicts Committee to (among other things) review and evaluate the election
(commonly referred to as a “check the box” election) and the potential amendments to the Partnership Agreement proposed to effect the election set forth in the Third Amended and Restated Partnership Agreement. The Board took this action
because (among other things), while making the election would benefit the limited partners by eliminating phantom income, it would likely provide a proportionately greater benefit to the general partner on a per-unit basis because, though in
aggregate the amount of phantom income allocated to the limited partners has been greater than that allocated to the general partner, the general partner has been allocated a greater amount of phantom income on a per-unit basis; accordingly, the
Board determined that an actual, potential or perceived conflict of interest may have existed.



The Conflicts Committee engaged Akin Gump
Strauss Hauer & Feld LLP (“Akin Gump”) as the Conflicts Committee’s independent legal advisor, and held a series of meetings with members of management of the general partner and Akin Gump to review and evaluate the election
and the Third Amended and Restated Partnership Agreement. In a number of those meetings, the Conflicts Committee reviewed and discussed materials provided to it by management of the general partner, including:













•


historical financial information of the Partnership, including information regarding phantom income that had been generated by the Partnership and allocated to its general partner and limited partners;












•


projected financial information of the Partnership, including information regarding projected amounts of phantom income that would be allocated to the general partner and the limited partners in the future if the
election were not made;












•


information regarding projected expenses of the Partnership that are not currently tax-deductible but would be if the election were effected;












•


information regarding projected expenses of the Partnership related to Form 1065 Schedule K-1 preparation and mailing, which would be eliminated if the election were effected;












•


various memos, board presentations, and other summaries regarding the potential impacts of, and process and business rationales for, the election;




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•


information regarding the treatment by the Partnership of capital accounts for liquidation purposes if the election were effected; and












•


the proposed changes to the Partnership’s partnership agreement reflected in the form of the Third Amended and Restated Partnership Agreement.


In considering whether to approve the election and the Third Amended and Restated Partnership Agreement, the Conflicts Committee considered a
number of factors, both in consultation with management of the general partner and in executive session, including the following:













•


legal presentations and other information provided to the Conflicts Committee by Akin Gump and Thompson & Knight LLP (Thompson & Knight), counsel to the general partner;












•


financial presentations and other information provided by management of the general partner, including:












•


the amount of phantom income that had historically been allocated to the general partner and the limited partners, and the amount of phantom income that is projected to be allocated to the partners in the future if the
election were not made,












•


the amount of public company-related expenses incurred at the Partnership level that cannot currently be deducted but would be deductible to the Partnership if the election were effected,












•


the amount of expenses incurred by the Partnership relating to Form 1065 Schedule K-1 preparation and mailing that would be eliminated if the election were effected, and












•


the additional phantom income that would be allocated to the partners in the future if the Partnership repurchased common units or acquired other companies and/or assets, and the election were not made;












•


the relative interests of the general partner and the limited partners in the election, including the historical and projected allocations of phantom income to the general partner and the limited partners;












•


the potential benefits and burdens to the Partnership and its limited partners of making the election, including:












•


the benefits to the limited partners of reducing their exposure to phantom income,












•


the expected future deductibility of certain Partnership expenses associated with being a publicly-traded entity,












•


the expenses expected to be incurred in connection with evaluating the election and the Third Amended and Restated Partnership Agreement and holding a limited partner vote on the election and the Third Amended and
Restated Partnership Agreement,












•


the effect of the election on the Partnership’s ability to repurchase common units or acquire other companies and/or assets in the future without generating phantom income,












•


the Partnership’s current method of acquiring propane assets through its corporate subsidiary, and fact that the election would therefore not affect the Partnership’s ability to acquire similar propane assets
in the future, and












•


the potential for additional potential investors in the Partnership’s common units after the election as a result of the Partnership (i) no longer delivering Form 1065 Schedule K-1 to its limited partners and
(ii) no longer allocating partnership income and loss to its investors;












•


the potential benefits and burdens to the Partnership and its limited partners of choosing to not pursue making the election, including:












•


avoiding the expenses expected to be incurred in connection with holding a limited partner vote on the election and the Third Amended and Restated Partnership Agreement, and












•


avoiding the expenses expected to be incurred in connection with effecting the election;




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•


the requirements of the Partnership Agreement and Delaware law relevant to decisions to be made by the Conflicts Committee; and












•


an opinion with respect to certain tax matters provided to the Partnership (and on which the Conflicts Committee was permitted to rely) by Thompson & Knight, which, among other things, concluded that the
Partnership and the unitholders of the Partnership should recognize no gain or loss as a result of the election.


After
extensive meetings covering the election, the Third Amended and Restated Partnership Agreement, and such other information relevant thereto as was determined appropriate by the Conflicts Committee, including the foregoing, the Conflicts Committee by
unanimous written consent on August 14, 2017:













•


determined that the election and the Third Amended and Restated Partnership Agreement are fair and reasonable to and in the best interests of the Partnership and the common unitholders unaffiliated with Kestrel Heat
(the Unaffiliated Unitholders);












•


approved the election and the Third Amended and Restated Partnership Agreement in all respects, which approval constituted “Special Approval” under the Partnership Agreement;












•


recommended that the Board approve the election and the Third Amended and Restated Partnership Agreement;












•


recommended that the Board submit the election and the Third Amended and Restated Partnership Agreement to a vote of the holders of common units for approval; and












•


recommended that the holders of common units approve the election and the Third Amended and Restated Partnership Agreement.





Material U.S. Federal Income Tax Considerations



The following is a discussion of the material U.S. federal income tax consequences of the election that may be relevant to our unitholders.
This discussion is based upon current provisions of the Internal Revenue Code of 1986, as amended (the “Code”), existing and proposed regulations and current administrative rulings and court decisions, all of which are subject to change,
possibly with retroactive effect. Changes in these authorities may cause the tax consequences to vary substantially from the consequences described below. For purposes of this discussion, unless otherwise indicated, references to
“unitholders” refer to holders of our common units and general partner units and references to “units” refer to our common units and general partner units.



This discussion does not address any U.S. federal estate or gift tax laws or the tax considerations arising under the laws of any foreign,
state, local or other jurisdiction. The discussion focuses on unitholders who are individual citizens or residents of the U.S. and has only limited application to corporations, estates, entities treated as partnerships for U.S. federal income tax
purposes, trusts, nonresident aliens, U.S. expatriates and former citizens or long-term residents of the United States or other unitholders subject to specialized tax treatment, such as banks, insurance companies and other financial institutions,
tax-exempt institutions, foreign persons (including, without limitation, controlled foreign corporations, passive foreign investment companies and non-U.S. persons eligible for the benefits of an applicable income tax treaty with the United States),
IRAs, real estate investment trusts (REITs) or mutual funds, dealers in securities or currencies, traders in securities, U.S. persons whose “functional currency” is not the U.S. dollar, persons holding their units as part of a
“straddle,” “hedge,” “conversion transaction” or other risk reduction transaction, and persons deemed to sell their units under the constructive sale provisions of the Code.




Each unitholder should consult its own tax advisors as to its particular U.S. federal income tax consequences as a result of the election,
as well as the applicability and effect of U.S. federal income and estate or gift, and state or local or foreign tax laws in light of its particular circumstances.





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General



We intend for the election to be a transaction qualifying for non-recognition of gain and loss under Section 351 of the Code. We received
an opinion from Thompson & Knight LLP, dated as of August 14, 2017, to the effect that for federal income tax purposes:












1.

The election should be treated as if immediately before the close of the day immediately before the effective date of the election (the “Effective Date”), (a) the Partnership transferred all of its assets
to a new entity taxable as a corporation (“Newco”) solely in exchange for stock in Newco (the “Exchange”), and (b) immediately thereafter, the Partnership liquidated, distributing the stock of Newco to its unitholders in
exchange for their interests in the Partnership (the “Distribution”).











2.

The Exchange should be treated as a reverse acquisition. At the end of the day on the Effective Date, the Partnership becomes the new common parent of the affiliated group of corporations that previously filed a
consolidated federal income tax return with Star Acquisitions as the common parent.











3.

The Partnership, as an entity treated as a partnership for federal income tax purposes, should recognize no gain or loss upon the Exchange.











4.

The Partnership, after it is treated as a corporation for federal income tax purposes, should recognize no gain or loss upon the Exchange.











5.

The Partnership and the unitholders of the Partnership should recognize no gain or loss on the Distribution.











6.

The basis of the Newco stock deemed received by the Partnership should be the same as the Partnership’s basis in the assets surrendered in exchange, and the Newco stock deemed received by the Partnership should
have a split holding period—(i) to the extent that the value of the Newco stock is received in exchange for capital assets and Section 1231 assets of the Partnership, the Partnership should have a holding period in the Newco stock that
includes the Partnership’s holding period in such assets, and (ii) to the extent that the value of the Newco stock is received in exchange for cash or other assets that are not capital assets or Section 1231 assets, the Partnership
should have a holding period in the Newco stock that begins on the Effective Date.











7.

The basis of the Partnership assets received by Newco should be the same as the basis of such assets in the hands of the Partnership immediately before the Exchange, except that Newco’s basis in the Star
Acquisitions stock should be redetermined to equal Star Acquisition’s net asset basis. The holding period of each of the Partnership assets received by Newco in the Exchange should include the holding period of such assets in the hands of the
Partnership immediately before the Exchange.











8.

The basis of the Newco stock deemed received by a unitholder of the Partnership should be the same as such unitholder’s basis in its Partnership interest immediately before the Distribution and a unitholder’s
holding period for the Newco stock deemed received should include the Partnership’s holding period of the Newco stock (which should be a split holding period, as described above).


The Conflicts Committee can also rely on the opinion. The opinion is based on customary assumptions and representations from the Partnership
and Kestrel Heat, LLC, as well as certain covenants and undertakings by the Partnership. If any of the assumptions, representations, covenants or undertakings is incorrect, incomplete or inaccurate or is violated, the validity of the opinion
described above may be affected and the tax consequences of the election could differ from those described in this proxy statement. An opinion of counsel represents counsel’s best legal judgment but is not binding on the Internal Revenue
Service (the “IRS”) or any court, so there can be no certainty that the IRS will not challenge the conclusions reflected in the opinion or that a court would not sustain such a challenge. We have not sought and will not seek a ruling from
the IRS, with respect to any of the tax consequences discussed below, and the IRS is not precluded from taking positions contrary to those described herein. As a result, no assurance can be given that the IRS will agree with all of the tax
characterizations and the tax consequences described in the opinion or in this proxy statement.





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The Election for the Partnership to be Taxed as a Corporation



We will file with the IRS our election to be treated as a corporation for federal income tax purposes on IRS Form 8832. We anticipate that the
IRS will make a determination on our election and we should generally receive such determination within 60 days after we have filed IRS Form 8832. Once we make an election to change our federal income tax classification, we generally cannot change
our classification by election again during the 60 months after the effective date of the election. Once the election is made, any change to our tax classification for federal income tax purposes will have tax consequences to both the entity and the
unitholders.



For U.S. federal income tax purposes the election should be treated as follows. We should be deemed to have transferred all
of our assets to a new entity treated as a corporation for U.S. federal income tax purposes; to have received interests in such company in exchange, and then to have distributed those interests to the unitholders in complete liquidation. If no gain
or loss is recognized by us as a result of the election, our assets will retain the same tax basis in our hands as they had prior to the election, except that our tax basis in the Star Acquisitions stock should be redetermined to equal Star
Acquisition’s net asset basis.



The foregoing conclusions are based on the assumption that the unitholders will own, in the
aggregate, at least 80% of our units outstanding immediately after the election, excluding from the numerator any shares received in the election that are sold after the election pursuant to a plan or arrangement established before the election (the
“Control Assumption”). The Control Assumption should be correct unless, contrary to the best knowledge of the Partnership, unitholders holding a significant percentage of our units agree prior to the election to sell the shares they are
deemed to receive as a result of the election. If the Control Assumption is not correct, the election will be treated as if we (a) sold all of our assets to the new entity treated as a corporation for U.S. federal income tax purposes for an
amount equal to the value of the units received in the election, plus the liabilities of the Partnership assumed in the election, and (b) distributed the units received in the election to the unitholders. Accordingly, we would recognize gain
(or loss) on the election in an amount equal to the amount by which the value of the units received plus the amount of the Partnership’s liabilities assumed exceeds (or is less than) our tax basis in the assets transferred and all such gain or
loss would be allocated to the holders of our common units in accordance with their interests in the Partnership.



If the Control
Assumption is not correct, the new entity’s tax basis in the assets acquired from us would equal the value of the units deemed issued as a result of the election plus the amount of our liabilities assumed, and the new entity’s holding
period in the assets would begin the day after the election takes effect.



Provided that we recognize no gain or loss on the election, a
unitholder should not recognize any gain or loss except to the extent that our liabilities allocated to such unitholder for U.S. federal income tax purposes prior to the election and assumed by the new entity, which is treated as a corporation for
U.S. federal income tax purposes, exceed such unitholder’s tax basis in its units. For U.S. federal income tax purposes, a unitholder’s relief from such share of our liabilities is treated as if such unitholder received a cash distribution
from us in the amount of the liabilities deemed assumed by the new entity. We will pay all of our liabilities in full prior to the Effective Date. Therefore, we do not believe that a unitholder will recognize any gain or loss as a result of the
election since we will have no outstanding liabilities on the Effective Date.



The aggregate basis of the units received as a result of
the election by a unitholder in the deemed liquidation of their interests in us will equal the aggregate basis in such units immediately before the election (reduced by the amount of liabilities deemed assumed as a result of the election) and
increased by the gain, if any, that we recognize as a result of the election.



The Partnership will have a holding period in the units
received that includes the period during which the transferred assets were held by the Partnership, provided that such assets were held as capital assets. To the extent that the value of such units received is attributable to certain of our assets
(essentially our assets that would generate ordinary income or loss when sold and cash), a unit received will have a holding period that





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begins on the day following the election. Upon the deemed distribution of the units to the unitholders in complete liquidation, the unitholders will hold such units with a holding period that
includes the Partnership’s holding period in the units. Therefore, unitholders may have a split holding period in the units received. A unit received in exchange for a unitholder’s interests in us will have a holding period that begins on
the day following the election to the extent that the value of such units on such date is attributable to the cash held by the Partnership immediately before the transfer, if any, and to the extent of the balance, will have a holding period that
includes the Partnership’s holding period of the assets transferred.




Differences in Taxation of Partnerships and Corporations and Their Owners



A partnership is not a taxable entity and incurs no federal income tax liability. Instead, each partner of a partnership is required
to take into account his share of items of income, gain, loss and deduction of the partnership in computing his federal income tax liability, regardless of whether cash distributions are made to him by the partnership. Distributions by a partnership
to a partner are generally not taxable to the partnership or the partner unless the amount of cash distributed to him is in excess of the partner’s adjusted basis in his partnership interest.



A partner has a basis in his partnership interest generally equal to either the cost of the partnership interest if purchased, or if not
purchased, the amount of any cash or basis of any other property that the partner transferred to the partnership, increased (or decreased) by that partner’s share of the partnership’s income (or loss) and decreased by the amount of any
cash (or the basis of any property) distributed to that partner. Upon sale of the partnership interest, the partner realizes gain (or loss) equal to the excess (or deficit) of the amount received for the partnership interest less the partner’s
basis in the partnership interest. A partner’s amount realized will be measured by the sum of the cash or the fair market value of other property received by him plus his share of the partnership’s nonrecourse liabilities, if any. The
partner’s gain (or loss) upon sale is generally capital gain, but will be characterized as ordinary income to the extent of the partner’s share of certain assets held by the partnership.



Because a partnership does not pay tax on income it earns (but rather its partners are subject to tax on such income), partners of a
partnership are subject to only one level of U.S. federal income tax on income earned in the business of such partnership.



A corporation
or an entity treated as a corporation for U.S. federal income tax purposes is a taxable entity and pays U.S. federal income tax (currently at a maximum rate of 35%) on its taxable income. A shareholder of a corporation generally is not taxed on any
income earned by a corporation until the corporation distributes either cash or property (other than its stock) to the shareholder or the shareholder sells or exchanges stock at a gain. A distribution in respect to shares of common stock is
generally treated as a dividend to the extent it is paid from current or accumulated earnings and profits. If the distribution exceeds current and accumulated earnings and profits, the excess will be treated as a nontaxable return of capital
reducing the shareholder’s tax basis in the common stock to the extent of the shareholder’s tax basis in that stock. Any remaining excess is treated as capital gain. Subject to certain holding period requirements and exceptions, dividends
received by individual holders generally will be subject to a current reduced tax rate ranging from 0% to 20% depending on the shareholder’s applicable tax bracket for qualified dividend income. Additionally, the dividends may be subject to the
net investment income tax, which imposes an additional tax of 3.8% on dividends, or some portion thereof, paid to individual taxpayers with adjusted gross income in excess of the threshold amount (married filing jointly, $250,000; married filing
separately, $125,000; single or head of household, $200,000; or qualifying widow(er) with a child, $250,000). The net investment income tax also applies to certain estates and trusts. If a U.S. shareholder is a U.S. corporation, it may be eligible
to claim the deduction allowed to U.S. corporations in respect of dividends received from other U.S. corporations equal to a portion of any dividends received, subject to generally applicable limitations on that deduction.



Because corporations are taxed on their own taxable income, and because shareholders may be taxed again on that same income if it is
distributed to them in the form of cash or property or realized through the sale or





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exchange of shares of stock at a gain, there are two levels of potential tax upon income earned by a corporation. Upon a sale of stock, a shareholder’s gain (or loss) will be equal to the
excess (or deficit) of the amount received for the stock over the shareholder’s basis in that stock. The character of such gain (or loss) generally will be capital in nature.



Special rules apply to entities that are ordinarily exempt from U.S. federal income tax. In many instances, a tax-exempt limited
partner’s share of a partnership’s taxable income constitutes “unrelated business taxable income” (“UBTI”) and therefore a tax-exempt limited partner must pay U.S. federal income tax on its share of the
partnership’s taxable income at the income tax rates that apply to taxable entities. However, a tax-exempt entity that owns shares of stock of a corporation is not subject to tax on any of the corporation’s taxable income (because such
income does not flow through to the shareholders of the corporation). In addition, any dividends received from, and any gain attributable to the sale of shares of stock of, the corporation by a tax-exempt entity generally will not constitute UBTI
(and therefore will not be taxable to the tax-exempt entity) except to the extent such tax-exempt entity’s investment in the stock is considered debt-financed.



As holders of units or interests in an entity treated as a corporation for U.S. federal income tax purposes, our unitholders will be subject
to the tax treatment for shareholders of corporations described above.




Post-election Treatment of the Partnership and its Limited Partners




Distributions on Units



After the election, the income and deductions attributable to the assets and liabilities of the new entity treated as a corporation for U.S.
federal income tax purposes will not be allocated to our unitholders. A unitholder will be taxed only on cash dividends and other distributions of property received from us, if any, eliminating the phantom income issue discussed above. Such
distributions generally will be taxable as dividends to the extent of our current or accumulated earnings, if any. As previously discussed, any other distributions will be treated as a nontaxable return of capital to the extent of the
unitholder’s basis in his units and as capital gain to the extent of the balance.



Subject to the withholding requirements under
FATCA (as defined below) and with respect to effectively connected dividends, each of which is discussed below, any distribution made to a non-U.S. unitholder on our Common Units generally will be subject to U.S. withholding tax at a rate of 30% of
the gross amount of the distribution unless an applicable income tax treaty provides for a lower rate. To receive the benefit of a reduced treaty rate, a non-U.S. unitholder must provide the applicable withholding agent with an IRS Form W-8BEN or
IRS Form W-8BEN-E (or other applicable or successor form) certifying qualification for the reduced rate.



Dividends paid to a non-U.S.
unitholder that are effectively connected with a trade or business conducted by the non-U.S. unitholder in the United States (and, if required by an applicable income tax treaty, are treated as attributable to a permanent establishment maintained by
the non-U.S. unitholder in the United States) generally will be taxed on a net income basis at the rates and in the manner generally applicable to United States persons (as defined under the Code). Such effectively connected dividends will not be
subject to U.S. withholding tax if the non-U.S. unitholder satisfies certain certification requirements by providing the applicable withholding agent with a properly executed IRS Form W-8ECI certifying eligibility for exemption. If the non-U.S.
unitholder is a corporation for U.S. federal income tax purposes, it may also be subject to a branch profits tax (at a 30% rate or such lower rate as specified by an applicable income tax treaty) on its effectively connected earnings and profits (as
adjusted for certain items), which will include effectively connected dividends.




Sale or Disposition of Units



A unitholder who subsequently sells our units deemed received as a result of the election will recognize gain or loss measured by the
difference between the amount realized on such sale and the unitholder’s tax basis in the





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units sold. Each unitholder who is deemed to receive such units as a result of the election and who owns at least 5% (by vote or value) of the total outstanding units of the new entity
immediately after receiving such units may be required to file with the unitholder’s U.S. federal income tax return for the year in which the election is completed a statement that provides details relating to the units deemed received, and the
unitholder’s share of any liabilities assumed by the corporation as a result of the election. We will provide unitholders with information to assist them in preparing such statement.




Dispositions by Non-U.S. Unitholders



Subject to the discussion below under “Backup Withholding and Information Reporting” and “Additional Withholding Requirements
under FATCA,” a non-U.S. unitholder generally will not be subject to U.S. federal income tax or subject to withholding on any gain recognized on the sale or other disposition of our units unless:













•


the non-U.S. unitholder is a nonresident alien individual who holds our units as a capital asset and is present in the United States for 183 or more days in the taxable year of the sale or other disposition and other
conditions are met;












•


the gain is effectively connected with the conduct of a U.S. trade or business by the non-U.S. unitholder (and, if required by an applicable income tax treaty, is attributable to a U.S. permanent establishment of that
unitholder); or












•


our Common Units constitute a United States real property interest by reason of our status as a United States real property holding corporation (“USRPHC”) for U.S. federal income tax purposes during the
shorter of (a) the five-year period ending on the date of the disposition or (b) the non-U.S. unitholder’s holding period for our Common Units, we are or have been a “United States real property holding corporation” (a
“USRPHC”) for U.S. federal income tax purposes.


A non-U.S. unitholder described in the first bullet point above
will be subject to U.S. federal income tax at a rate of 30% (or such lower rate as specified by an applicable income tax treaty) on the amount of such gain, which generally may be offset by U.S. source capital losses.



A non-U.S. unitholder whose gain is described in the second bullet point above or, subject to the exceptions described in the next paragraph,
the third bullet point above generally will be taxed on a net income basis at the rates and in the manner generally applicable to United States persons (as defined under the Code) unless an applicable income tax treaty provides otherwise. If the
non-U.S. unitholder is a corporation for U.S. federal income tax purposes whose gain is described in the second bullet point above, then such gain would also be included in its effectively connected earnings and profits (as adjusted for certain
items), which may be subject to a branch profits tax (at a 30% rate or such lower rate as specified by an applicable income tax treaty).



Generally, a corporation is a USRPHC if the fair market value of its United States real property interests equals or exceeds 50% of the sum of
the fair market value of its worldwide real property interests and its other assets used or held for use in a trade or business. We believe that we currently are not a USRPHC for U.S. federal income tax purposes, and we do not expect to become a
USRPHC for the foreseeable future.



Non-U.S. unitholders should consult their tax advisors with respect to the application of the
foregoing rules to their ownership and disposition of our Common Units.




Backup Withholding and Information Reporting



Any dividends paid to a non-U.S. unitholder must be reported annually to the IRS and to the non-U.S. unitholder. Copies of these information
returns may be made available to the tax authorities in the country in which the non-U.S. unitholder resides or is established. Payments of dividends to a non-U.S. unitholder generally will not be subject to backup withholding if the non-U.S.
unitholder establishes an exemption by properly certifying its non-U.S. status on an IRS Form W-8BEN, IRS Form W-8BEN-E (or other applicable or successor form).





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Payments of the proceeds from a sale or other disposition by a non-U.S. unitholder of our Common
Units effected by or through a U.S. office of a broker generally will be subject to information reporting and backup withholding (at the applicable rate) unless the non-U.S. unitholder establishes an exemption by properly certifying its non-U.S.
status on an IRS Form W-8BEN, IRS Form W-8BEN-E (or other applicable or successor form) and certain other conditions are met. Information reporting and backup withholding generally will not apply to any payment of the proceeds from a sale or other
disposition of our Common Units effected outside the United States by a non-U.S. office of a broker. However, unless such broker has documentary evidence in its records that the non-U.S. unitholder is not a United States person and certain other
conditions are met, or the non-U.S. unitholder otherwise establishes an exemption, information reporting will apply to a payment of the proceeds of the disposition of our Common Units effected outside the United States by such a broker if it has
certain relationships within the United States.



Backup withholding is not an additional tax. Rather, the U.S. income tax liability (if
any) of persons subject to backup withholding will be reduced by the amount of tax withheld. If backup withholding results in an overpayment of taxes, a refund may be obtained, provided that the required information is timely furnished to the IRS.




Additional Withholding Requirements under FATCA



Sections 1471 through 1474 of the Code, and the U.S. Treasury regulations and administrative guidance issued thereunder (“FATCA”),
impose a 30% withholding tax on any dividends paid on our Units and on the gross proceeds from a disposition of our Units (if such disposition occurs after December 31, 2018), in each case if paid to a “foreign financial institution”
or a “non-financial foreign entity” (each as defined in the Code) (including, in some cases, when such foreign financial institution or non-financial foreign entity is acting as an intermediary), unless (i) in the case of a foreign
financial institution, such institution enters into an agreement with the U.S. government to withhold on certain payments, and to collect and provide to the U.S. tax authorities substantial information regarding U.S. account holders of such
institution (which includes certain equity and debt holders of such institution, as well as certain account holders that are non-U.S. entities with U.S. owners); (ii) in the case of a non-financial foreign entity, such entity certifies that it
does not have any “substantial United States owners” (as defined in the Code) or provides the applicable withholding agent with a certification identifying the direct and indirect substantial United States owners of the entity (in either
case, generally on an IRS Form W-8BEN-E); or (iii) the foreign financial institution or non-financial foreign entity otherwise qualifies for an exemption from these rules and provides appropriate documentation (such as an IRS Form
W-8BEN-E). Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the United States governing these rules may be subject to different rules. Under certain circumstances, a unitholder might be eligible
for refunds or credits of such taxes. Non-U.S. unitholders are encouraged to consult their own tax advisors regarding the effects of FATCA on their investment in our Common Units.




Legislative Developments



President Trump and Republicans in the U.S. House of Representatives each include corporate tax reform as part of their respective agendas as
well as changes to certain taxes, including the net investment income tax, enacted as part of the Patient Protection and Affordable Care Act (2010). President Trump outlined plans for tax reform in a release called the “2017 Tax Reform for
Economic Growth and American Jobs” which broadly described changes to corporate taxes but has not yet provided specific changes. House Republicans released the “Better Way for Tax Reform” or “Blueprint” that outlined several
significant corporate tax reforms. Some of the proposed changes, which have not been fully agreed to by President Trump and the House Republicans, include reduction of the corporate tax rate from 35% to 15% in the President’s outline, or 20% in
House Republican’s Blueprint, elimination of the tax deduction for interest expense, immediate tax imposed at a reduced rate on un-repatriated offshore earnings, elimination of U.S. tax on foreign earnings, immediate deductions for new
investments instead of deductions for depreciation expense over time, and the imposition of income tax on imported goods. Additionally, there have been discussions regarding the repeal of the net investment income tax





17








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as a part of the repeal of the Affordable Care Act. It is unclear whether these proposed tax revisions will be enacted, or if enacted, what the precise scope of the revisions will be. However,
depending on their final form, the proposals, if enacted, could affect the tax treatment described above and the conclusions regarding the tax consequences provided herein.



THE FOREGOING DESCRIPTION ADDRESSES ONLY THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE ELECTION APPLICABLE TO UNITHOLDERS GENERALLY. EACH
UNITHOLDER SHOULD CONSULT ITS OWN TAX ADVISOR CONCERNING THE PARTICULAR U.S. FEDERAL INCOME, U.S. FEDERAL ESTATE OR GIFT, STATE, LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES OF THE ELECTION TO IT.





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PROPOSAL NO. 2: PROPOSAL TO APPROVE AND ADOPT THE THIRD AMENDED AND
RESTATED PARTNERSHIP AGREEMENT






Proposal



The Board has approved and declared advisable and hereby proposes, and recommends, that the unitholders approve and adopt the Third Amended and
Restated Partnership Agreement. The Third Amended and Restated Partnership Agreement has been prepared in connection with and, if approved by the unitholders, will become effective upon the effectiveness of the Partnership being treated as a
corporation for federal income tax purposes, as described in Proposal No. 1 above. This Proposal No. 2 is conditioned on Proposal No. 1 being approved by the unitholders. As a result, even if unitholders approve this Proposal
No. 2, the adoption of the Third Amended and Restated Partnership Agreement the Partnership will not become effective unless unitholders also approve Proposal No. 1 above.






Vote Required



Approval of this proposal requires the affirmative vote of the holders of a majority of the Common Units outstanding. Abstentions and broker
non-votes will have the same effect as a vote against this proposal.






Recommendation of the Board



The Board believes that it is in the best interests of our unitholders to approve and adopt the Third Amended and Restated Partnership
Agreement. As such, the Board recommends that you vote


FOR


this proposal.




THE BOARD RECOMMENDS THAT UNITHOLDERS VOTE
“FOR” APPROVAL AND ADOPTION OF THE THIRD AMENDED AND RESTATED PARTNERSHIP AGREEMENT. IF NOT OTHERWISE SPECIFIED IN PROXY CARDS, THE PROXY WILL VOTE COMMON UNITS “

FOR

” APPROVAL OF THIS PROPOSAL.






Description of the Third Amended and Restated Partnership Agreement



The Third Amended and Restated Partnership Agreement has been prepared in connection with the proposal to authorize the Partnership to elect to
be treated as a corporation for federal income tax purposes, as described in Proposal No. 1 above. The primary purpose of amending and restating the Second Amended and Restated Partnership Agreement is to delete or amend those provisions of the
Second Amended and Restated Partnership Agreement that pertain to the Partnership’s federal income tax classification as a partnership (the “Tax Amendments”) and to effect the election contemplated by Proposal No. 1. In addition
to the Tax Amendments, the Board also believes that it is in the best interests of the Partnership and our unitholders to make certain additional amendments to the Second Amended and Restated Partnership Agreement. The additional amendments included
in the Third Amended and Restated Partnership Agreement are principally focused on (i) deleting references to and amending provisions concerning certain agreements that existed and facts and definitions that were current at the time our initial
partnership agreement was adopted, which agreements are no longer in existence and which facts and definitions are no longer current and (ii) updating references to reflect the Partnership’s name change to “Star Group, L.P.,” as
previously approved by the Board (the “Updating Amendments”). The Board approved the name change of the Partnership in order to more closely align the Partnership’s name with the expanded scope of its products and services it offers.
The name change will be effective immediately following the Special Meeting. Neither the Tax Amendments nor the Updating Amendments will alter the rights of the holders of our Common Units or our general partner to the distributions described in the
Second Amended and Restated Partnership Agreement. Under the terms of the Third Amended and Restated Partnership Agreement, the Partnership will remain a partnership for state law purposes.



The following is a brief summary of the foregoing amendments included in the Third Amended and Restated Partnership Agreement (capitalized
terms used not defined herein have the meanings ascribed thereto in





19








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the Third Amended and Restated Partnership Agreement). In addition to the material amendments described below, the Third Amended and Restated Partnership Agreement also contains certain
non-substantive amendments, including, but not limited to, updating section references and making other clerical changes. The following is not a complete list of the amendments and deletions included in the Third Amended and Restated Partnership
Agreement. To view a complete marked copy of the Third Amended and Restated Partnership Agreement, which reflects all amendments to the Second Amended and Restated Partnership Agreement please see Appendix A-2 hereto.




Tax Amendments



The Tax Amendments
include, but are not limited to, the following:













•


deleting restrictions of transfer of Units to prevent the Partnership from being taxed as a corporation for federal income tax purposes (Section 1.6);












•


amending definitions of Adjusted Capital Account, Capital Account, Distribution Levels, First Target Distribution, Minimum Quarterly Distribution, Nonrecourse Built-in Gain, Partner Nonrecourse Deductions, Partnership
Minimum Gain, and Required Allocations to reflect that capital accounts will be maintained and allocations made as if the Partnership were taxed as a partnership for determination of liquidation rights (Article II);












•


adding definition of Tax Election (Article II);












•


deleting definitions of Book-Tax Disparity, Distribution Levels, Distribution Ratio, Recapture Income, Residual Gain or Residual Loss, Trigger Date that are not relevant for entities taxed as corporations for federal
income tax purposes (Article II);












•


adding a provision clarifying that notwithstanding the election to be treated as a corporation for federal income tax purposes, Capital Accounts will be maintained as if the Partnership were taxed as a partnership for
the sole purpose of determining the rights of the unitholders to receive distributions on liquidation and each unitholder’s Capital Account prior to the election will be the unitholder’s Capital Account after the election; and adding a
provision relating to the treatment of the taxes incurred by the Partnership as an association taxable as a corporation as items of deduction for allocation purposes (Section 4.7);












•


deleting provisions related to Allocations for Tax Purposes (Section 5.2);












•


amending the provision related to the payment of taxes on a partner’s behalf by the Partnership and its treatment as a distribution (Section 5.3);












•


deleting references related to the adjustments to Minimum Quarterly Distributions and First Target Distribution (Section 5.6);












•


deleting provisions related to Entity Level Taxation (Section 5.7);












•


deleting provisions related to Adjustment of Minimum Quarterly Distribution and Target Level Distributions in Connection with Rights because the Rights previously expired and are no longer applicable (Section 5.8);












•


deleting the provision related to protecting existing partners of the Partnership against a low tax basis (Section 6.6);












•


adding a provision that the Partnership shall provide the necessary tax information for the unitholders for taxable years ending on or prior the Effective Date (Section 9.1);












•


adding a provision authorizing the authorized officers of the Partnership to make the Tax Election (Section 9.2);












•


amending certain provisions to clarify that the General Partner is designated as the Tax Matters Partner for taxable years that end on or prior to the Effective Date (Section 9.3);




20








Table of Contents











•


amending the provisions related to withholding of taxes (Section 9.4);












•


deleting provisions providing that the General Partner may not transfer all or any part of its General Partner Interest if it receives an opinion of counsel that such restrictions are necessary to avoid a significant
risk of any Group Member becoming taxable as a corporation or otherwise becoming taxable as an entity for federal income tax purposes (Section 11.2);












•


deleting provisions providing that no Units may be transferred or interest of any Limited Partner of Assignee may be made if such transfer would result in entity level taxation of federal income tax purposes (Section
11.4);












•


deleting provisions providing that Limited Partners may not remove the General Partner unless the Partnership receives an opinion of counsel that such removal would not result in any Group Member becoming taxable as a
corporation or otherwise becoming taxable as an entity for federal income tax purposes (Section 13.2);












•


deleting provisions providing that the continuation of the business of the Partnership after dissolution requires an opinion of counsel that such continuation would not result in the Partnership or any Group Member
becoming taxable as a corporation or otherwise becoming taxable as an entity for federal income tax purposes (Section 14.2);












•


adding a provision that allows the General Partner, if it determines in its sole discretion that the positive balance of the Capital Account of any Limited Partner is less than it would have been if the election had not
been made and it deems necessary, to adjust the allocations of Net Income and Net Loss in the year of liquidation to cause the positive Capital Accounts of each Limited Partner at the time of the Liquidation Distributions to not be materially
different than the Capital Account balance the Limited Partner would have had if the Tax Election had not been made; provided that the General Partner may not reduce the positive Capital Account Balance of any Limited Partner (Section 14.4);












•


deleting the notice relating to the tax shelter status of the Partnership (Form of Certificate of Common Units); and












•


deleting certain defined terms relating to the foregoing matters (Article II).



Updating Amendments



The Updating Amendments include, but are not limited to, the following:













•


changing the name of the Partnership to “Star Group, L.P.,” as previously approved by the Board (Section 1.2);












•


amending the registered agent, registered office and principal office of the Partnership to reflect the Partnership’s new registered agent and new principal office (Section 1.3);












•


deleting the provisions related to “Junior Subordinated Unit” and “Senior Subordinated Unit,” which are no longer classes of Outstanding Units of the Partnership (Sections 4.4 and 10.1);












•


amending the language regarding the portion of Incentive Distributions that fund the bonus pool to the participants of the Partnership’s Management Incentive Plan to clarify that they will be retained by the
Partnership to fund such pool (Section 5.10);












•


deleting references to “Non-competition Agreement,” which has been terminated (Sections 6.5 and 7.3);












•


changing references of “Successor General Partner” to “General Partner” to reflect that Kestrel Heat, LLC is the current general partner of the Partnership and no change in general partner is
contemplated (Sections 6.2, 12.3, 13.3, and 20.2);












•


deleting references to “Transaction Agreement,” which has been terminated (Sections 6.2 and 6.7);




21








Table of Contents











•


adding the definition of “Second A&R Effective Date” to clarify the certain provisions that were enacted in connection with the adoption of the Second Amended and Restated Partnership Agreement (Article II
and Sections 4.4, 5.3, 5.5, 6.5 and 6.11);












•


amending the definition of Proxy Statement to reflect the date of this Proxy Statement (Article II); and












•


deleting certain defined terms relating to the foregoing matters (Article II).





SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT



The following table shows the beneficial ownership as of
August 14, 2017 of Common Units and general partner units by:












(1)

Kestrel Heat, LLC;











(2)

each of the named executive officers and directors of Kestrel Heat, LLC;











(3)

all directors and executive officers of Kestrel Heat, LLC as a group; and











(4)

each person the Partnership knows to hold 5% or more of the Partnership’s units.


Except
as indicated, the address of each person is c/o Star Gas Partners, L.P. at 9 West Broad, Street, Suite 310, Stamford, Connecticut 06902.















































































































































































































































































































































Common Units





General Partner Units





Name





Number





Percentage





Number





Percentage




Kestrel (a)





500,000




*




325,729




100.00

%


Paul A. Vermylen, Jr. (b)





1,274,512




2.28

%










Sheldon B. Lubar (c)





1,254,662




2.24

%










Henry D. Babcock (d)





106,121




*











William P. Nicoletti





35,506




*











Bryan H. Lawrence (e)





8,134,925




14.56

%










C. Scott Baxter





—




—











Daniel P. Donovan





25,000




*











Richard F. Ambury





23,890




*











Steven J. Goldman





24,900




*











Richard G. Oakley





—




—











All officers and directors and Kestrel Heat, LLC as a group (11 persons)





11,379,516




20.36

%



325,729




100.00

%


Bandera Partners LLC (f)





2,457,687




4.40

%










Yorktown Energy Partners VI, L.P. (g)





7,546,567




13.50

%

















(a)

Includes 500,000 Common Units and 325,729 general partner units owned by Kestrel Heat.







(b)

Includes 210,281 Common Units held by The Robin C. Vermylen 2016 Irrevocable Trust, with respect to which Mr. Vermylen is a trustee of the trust and Mr. Vermylen’s spouse is a beneficiary of the trust;
and 210,281 Common Units held by The Paul A. Vermylen, Jr. 2015 Irrevocable Trust, with respect to which Mr. Vermylen is a beneficiary of the trust and is the settlor of the trust.







(c)

All Common Units are owned by Lubar Equity Fund, LLC, with respect to which Mr. Lubar is a director and officer of Lubar & Co. Incorporated, which is the sole manager of Lubar Equity Fund, LLC, whose
owners include Mr. Lubar, members of his family and other legal entities that are associated with or controlled by Mr. Lubar and members of his family.







(d)

Includes 15,000 Common Units owned by White Hill Trust, with respect to which Mr. Babcock’s sister-in-law and step-son are the trustees and Mr. Babcock’s wife is the primary beneficiary.




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(e)

Includes 7,546,567 Common Units owned by Yorktown Energy Partners VI, L.P. (“Yorktown VI”), with respect to which Mr. Lawrence is a member and manager of Yorktown VI Associates LLC (“Yorktown VI
Associates”), the general partner of Yorktown VI Company LP (“Yorktown VI Company”), the general partner of Yorktown VI.







(f)

According to a Form 13F filed by Bandera Partners LLC with the SEC on August 11, 2017. The address of Bandera Partners, LLC is 50 Broad Street, Suite 1820, New York, New York 10004.







(g)

According to a Schedule 13G filed by Yorktown Energy Partners VI, L.P. on February 21, 2017. The address of Yorktown Energy Partners VI, L.P. is 410 Park Avenue,
19

th

Floor, New York, New York 10022.







*

Amount represents less than 1%.





HOUSEHOLDING MATTERS



Unitholders who share a single address will receive only one proxy statement at that address unless we have received instructions to the
contrary from any unitholder at that address. This practice, known as “householding,” is designed to reduce our printing and postage costs. However, if a unitholder of record residing at such an address wishes to receive a separate copy of
this proxy statement or of future proxy statements (as applicable), he or she may contact our Investor Relations at (203) 328-7310 or write to Investor Relations, Star Gas Energy Partners, L.P., 9 West Broad Street, Suite 310, Stamford,
Connecticut 06902. We will deliver separate copies of this proxy statement promptly upon written or oral request. If you are a unitholder of record receiving multiple copies of our proxy statement, you can request householding by contacting us in
the same manner. If you own your common units through a bank, broker or other unitholder of record, you can request additional copies of this proxy statement or request householding by contacting the unitholder of record.






SOLICITATION OF PROXIES



Solicitation of proxies for use at the annual meeting may be made in person or by mail, telephone or facsimile, by managers, officers and
employees of the Partnership. These persons will receive no special compensation for any solicitation activities. The Partnership has requested banking institutions, brokerage firms, custodians, trustees, nominees and fiduciaries to forward
solicitation materials to the beneficial owners of the units for whom they are record holder, and the Partnership will, upon request, reimburse reasonable forwarding expenses. The Partnership has retained Georgeson to assist in soliciting proxies
from brokers, bank nominees, and other institutional holders for a fee of $8,500 plus expenses. All costs of the solicitation will be borne by the Partnership.






OTHER MATTERS



If other matters are properly presented at the special meeting for consideration, the persons named in the proxy will have the discretion to
vote on those matters for you. At the date this proxy statement went to press, we did not know of any other matters to be raised at the special meeting.





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APPENDIX A-1















THIRD




AMENDED AND
RESTATED




AGREEMENT OF LIMITED PARTNERSHIP




OF




STAR GROUP, L.P.















A-1








Table of Contents






TABLE OF CONTENTS








































































































































































































































































































































































































































































Page




ARTICLE I ORGANIZATIONAL MATTERS





A-1-1




Section 1.1




Formation and Continuation



A-1-1




Section 1.2




Name



A-1-2




Section 1.3




Registered Office; Principal Office



A-1-2




Section 1.4




Power of Attorney



A-1-2




Section 1.5




Term



A-1-3






ARTICLE II DEFINITIONS





A-1-3






ARTICLE III PURPOSE







A-1-16






Section 3.1




Purpose and Business



A-1-16




Section 3.2




Powers



A-1-16






ARTICLE IV CONTRIBUTIONS AND UNITS





A-1-16




Section 4.1




Organization Contributions and Return



A-1-16




Section 4.2




Contributions by Initial Limited Partners



A-1-16




Section 4.3




Prior Contributions; General Partner Contributions



A-1-16




Section 4.4




Issuances of Additional Partnership Securities



A-1-17




Section 4.5




Intentionally Omitted



A-1-17




Section 4.6




Limited Preemptive Rights



A-1-17




Section 4.7




Splits and Combinations



A-1-17




Section 4.8




Capital Accounts



A-1-18




Section 4.9




Interest and Withdrawal



A-1-20






ARTICLE V ALLOCATIONS AND DISTRIBUTIONS





A-1-20




Section 5.1




Allocations for Capital Account Purposes



A-1-20




Section 5.2




Intentionally Omitted



A-1-25




Section 5.3




Requirement and Characterization of Distributions



A-1-25




Section 5.4




Distributions of Available Cash From Operating Surplus



A-1-25




Section 5.5




Distributions of Cash from Capital Surplus



A-1-26




Section 5.6




Adjustment of Minimum Quarterly Distribution and Target Distribution Levels



A-1-26




Section 5.7




Intentionally Omitted



A-1-26




Section 5.8




Intentionally Omitted



A-1-26




Section 5.9




Special Provision Relating to Elimination of Cumulative Common Unit Arrearages



A-1-26




Section 5.10




Special Provision Relating to Management Incentive Compensation Plan



A-1-27






ARTICLE VI MANAGEMENT AND OPERATION OF BUSINESS





A-1-27




Section 6.1




Management



A-1-27




Section 6.2




Certificate of Limited Partnership



A-1-28




Section 6.3




Restrictions on General Partner’s Authority



A-1-28




Section 6.4




Reimbursement of the General Partner



A-1-29




Section 6.5




Outside Activities



A-1-29




Section 6.6




Loans from the General Partner: Contracts with Affiliates: Certain Restrictions on the General Partner



A-1-30




Section 6.7




Indemnification



A-1-31




Section 6.8




Liability of Indemnitees



A-1-32




Section 6.9




Resolution of Conflicts of Interest



A-1-33




Section 6.10




Other Matters Concerning the General Partner



A-1-34




Section 6.11




Title to Partnership Assets



A-1-34




Section 6.12




Purchase or Sale of Units



A-1-35




Section 6.13




Registration Rights



A-1-35




Section 6.14




Reliance by Third Parties



A-1-37





A-1-i








Table of Contents









































































































































































































































































































































































































































































ARTICLE VII RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS





A-1-37




Section 7.1




Limitation of Liability



A-1-37




Section 7.2




Management of Business



A-1-37




Section 7.3




Outside Activities



A-1-37




Section 7.4




Return of Capital



A-1-38




Section 7.5




Rights of Limited Partners to the Partnership



A-1-38






ARTICLE VIII BOOKS, RECORDS, ACCOUNTING AND REPORTS





A-1-38




Section 8.1




Records and Accounting



A-1-38




Section 8.2




Fiscal Year



A-1-39




Section 8.3




Reports



A-1-39






ARTICLE IX TAX MATTERS





A-1-39




Section 9.1




Tax Returns and Information



A-1-39




Section 9.2




Tax Elections



A-1-39




Section 9.3




Tax Controversies



A-1-40




Section 9.4




Withholding



A-1-40






ARTICLE X CERTIFICATES





A-1-40




Section 10.1




Certificates



A-1-40




Section 10.2




Registration. Registration of Transfer and Exchange



A-1-40




Section 10.3




Mutilated, Destroyed, Lost or Stolen Certificates



A-1-41




Section 10.4




Record Holders



A-1-41






ARTICLE XI TRANSFER OF INTERESTS





A-1-42




Section 11.1




Transfer



A-1-42




Section 11.2




Transfer of a General Partner’s Partnership Interest



A-1-42




Section 11.3




Transfer of Units



A-1-42




Section 11.4




Restrictions on Transfers



A-1-43




Section 11.5




Citizenship Certificates; Non-citizen Assignees



A-1-43




Section 11.6




Redemption of Interests



A-1-43






ARTICLE XII ADMISSION OF PARTNERS





A-1-44




Section 12.1




Admission of Initial Limited Partners



A-1-44




Section 12.2




Admission of Substituted Limited Partners



A-1-45




Section 12.3




Admission of General Partner



A-1-45




Section 12.4




Admission of Additional Limited Partners



A-1-45




Section 12.5




Amendment of Agreement and Certificate of Limited Partnership



A-1-46






ARTICLE XIII WITHDRAWAL OR REMOVAL OF PARTNERS





A-1-46




Section 13.1




Withdrawal of the General Partner



A-1-46




Section 13.2




Removal of the General Partner



A-1-47




Section 13.3




Interest of Departing Partner and General Partner



A-1-47




Section 13.4




Withdrawal of Limited Partners



A-1-48






ARTICLE XIV DISSOLUTION AND LIQUIDATION





A-1-48




Section 14.1




Dissolution



A-1-48




Section 14.2




Continuation of the Business of the Partnership After Dissolution



A-1-49




Section 14.3




Liquidator



A-1-49




Section 14.4




Liquidation



A-1-50




Section 14.5




Cancellation of Certificate of Limited Partnership



A-1-50




Section 14.6




Return of Capital Contributions



A-1-51




Section 14.7




Waiver of Partition



A-1-51




Section 14.8




Capital Account Restoration



A-1-51





A-1-ii








Table of Contents































































































































































































































































































































































































ARTICLE XV AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE





A-1-51




Section 15.1




Amendment to be Adopted Solely by General Partner



A-1-51




Section 15.2




Amendment Procedures



A-1-52




Section 15.3




Amendment Requirements



A-1-52




Section 15.4




Meetings



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Section 15.5




Notice of a Meeting



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Section 15.6




Record Date



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Section 15.7




Adjournment



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Section 15.8




Waiver of Notice; Approval of Meeting; Approval of Minutes



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Section 15.9




Quorum



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Section 15.10




Conduct of Meeting



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Section 15.11




Action Without a Meeting



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Section 15.12




Voting and Other Rights



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ARTICLE XVI MERGER





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Section 16.1




Authority



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Section 16.2




Procedure for Merger or Consolidation



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Section 16.3




Approval by Limited Partners of Merger or Consolidation



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Section 16.4




Certificate of Merger



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Section 16.5




Effect of Merger



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ARTICLE XVII RIGHT TO ACQUIRE UNITS





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Section 17.1




Right to Acquire Units



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ARTICLE XVIII GENERAL PROVISIONS





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Section 18.1




Addresses and Notices



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Section 18.2




References



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Section 18.3




Pronouns and Plurals



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Section 18.4




Further Action



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Section 18.5




Binding Effect



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Section 18.6




Integration



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Section 18.7




Creditors



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Section 18.8




Waiver



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Section 18.9




Counterparts



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Section 18.10




Applicable Law



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Section 18.11




Invalidity of Provisions



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Section 18.12




Consent of Partners



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ARTICLE XIX INTENTIONALLY OMITTED





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ARTICLE XX BUSINESS COMBINATIONS WITH INTERESTED
HOLDERS





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Section 20.1




Limitation on Business Combinations



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Section 20.2




Definitions Applicable to Article XX



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EXHIBIT A





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THIRD AMENDED AND RESTATED



AGREEMENT OF LIMITED PARTNERSHIP OF



STAR GROUP, L.P.



THIS THIRD
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF STAR GROUP, L.P. (“Third Amended and Restated Agreement”) dated as of         , 2017 (“Effective Date”), is entered into by and
among KESTREL HEAT LLC, a Delaware limited liability company (the “General Partner”), and those Persons who are or become Partners in the Partnership or parties hereto as provided herein In consideration of the covenants, conditions and
agreements contained herein, the parties hereto hereby agree as follows:





R


E


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A


L


S


:




WHEREAS, Star Gas Corporation, a Delaware corporation and the initial general partner of the Partnership (the
“Initial General Partner”), and certain other parties organized the Partnership as a Delaware limited partnership pursuant to an Agreement of Limited Partnership dated as of December 20, 1995 (the “Original Agreement”);



WHEREAS, Star Gas LLC, a Delaware limited liability company (the “Withdrawing General Partner”) and certain other parties entered
into an Amended and Restated Agreement of Limited Partnership, dated as of March 26, 1999 (the “First Amended and Restated Agreement”);



WHEREAS, the First Amended and Restated Agreement was previously amended by Amendment No. 1, dated as of April 17, 2001, Amendment
No. 2 dated as of July 25, 2003 and Amendment No. 3 dated as of November 29, 2004;



WHEREAS, the Withdrawing General
Partner, the General Partner and certain other parties entered into the Second Amended and Restated Agreement, dated as of April 28, 2006 (the “Second Amended and Restated Agreement”) and previously amended by Amendment No. 1,
dated as of July 20, 2006, Amendment No. 2 dated as of February 21, 2008 and Amendment No. 3 dated as of July 9, 2012;



WHEREAS, the Partnership has elected to be classified as an association taxable as a corporation for federal income tax purposes pursuant to
Treasury Regulation Section 301.7701-3(c) (the “Tax Election”);



WHEREAS, in order to effect the Tax Election, it is
necessary to amend this Agreement as provided herein; and



WHEREAS, the Tax Election has been (i) approved by the Board, and
(ii) submitted to, and approved by the requisite vote of, the Limited Partners;



NOW, THEREFORE, the Second Amended and Restated
Agreement is hereby amended and, as so amended, is restated in its entirety as follows:





ARTICLE I



ORGANIZATIONAL MATTERS





Section 1.1

Formation and Continuation.



The Initial General Partner and the Organizational Limited Partner previously
formed the Partnership as a limited partnership pursuant to the provisions of the Delaware Act. The General Partner and the Limited Partners hereby amend and restate this Agreement in its entirety to continue the Partnership as a limited partnership





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pursuant to the provisions of the Delaware Act and to set forth the rights and obligations of the Partners and certain matters related thereto. This amendment and restatement shall become
effective on the date of this Agreement. Except as expressly provided to the contrary in this Agreement, the rights, duties (including fiduciary duties), liabilities and obligations of the Partners and the administration, dissolution and termination
of the Partnership shall be governed by the Delaware Act. All Partnership Interests shall constitute personal property of the owner thereof for all purposes.





Section 1.2

Name.



The name of the Partnership is “Star Group, L.P.” The Partnership’s business may be conducted under any other name or names
deemed necessary or appropriate by the General Partner, including the name of the General Partner. The words “Limited Partnership,” “L.P.,” “Ltd.” or similar words or letters shall be included in the Partnership’s
name where necessary for the purpose of complying with the laws of any jurisdiction that so requires. The General Partner in its sole discretion may change the name of the Partnership at any time and from time to time and shall notify the Limited
Partners of such change in the next regular communication to the Limited Partners.





Section 1.3

Registered Office; Principal Office.



Unless and until changed by the General Partner, the registered office of the Partnership in
the State of Delaware shall be located at 1675 South State Street, Suite B, Dover, Delaware 19901, and the registered agent for service of process on the Partnership in the State of Delaware at such registered office shall be Capitol Services, Inc.
The principal office of the Partnership shall be located at, and the address of the General Partner shall be, 9 West Broad Street, Suite 310, Stamford, CT 06902, or such other place as the General Partner may from time to time designate by notice to
the Limited Partners. The Partnership may maintain offices at such other place or places within or outside the State of Delaware as the General Partner deems necessary or appropriate.





Section 1.4

Power of Attorney.



(a) Each Limited Partner and each Assignee hereby constitutes and appoints each of the General Partner and, if a Liquidator shall have been
selected pursuant to Section 14.3, the Liquidator, severally (and any successor to either thereof by merger, transfer, assignment, election or otherwise) and each of their authorized officers and attorneys-in-fact, with full power of
substitution, as his true and lawful agent and attorney-in-fact, with full power and authority in his name, place and stead, to:



(i) execute, swear to, acknowledge, deliver, file and record in the appropriate public offices (A) all certificates,
documents and other instruments (including this Agreement and the Certificate of Limited Partnership and all amendments or restatements thereof) that the General Partner or the Liquidator deems necessary or appropriate to form, qualify or continue
the existence or qualification of the Partnership as a limited partnership (or a partnership in which the limited partners have limited liability) in the State of Delaware and in all other jurisdictions in which the Partnership may conduct business
or own property; (B) all certificates, documents and other instruments that the General Partner or the Liquidator deems necessary or appropriate to reflect, in accordance with its terms, any amendment, change, modification or restatement of
this Agreement; (C) all certificates, documents and other instruments (including conveyances and a certificate of cancellation) that the General Partner or the Liquidator deems necessary or appropriate to reflect the dissolution and liquidation
of the Partnership pursuant to the terms of this Agreement; (D) all certificates, documents and other instruments relating to the admission, withdrawal, removal or substitution of any Partner pursuant to, or other events described in, Article
XI, XII, XIII or XIV; (E) all certificates, documents and other instruments relating to the determination of the rights, preferences and privileges of any class or series of Partnership Securities issued pursuant to Section 4.4; and
(F) all certificates, documents and other instruments (including agreements and a certificate of merger) relating to a merger or consolidation of the Partnership pursuant to Article XVI; and





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(ii) execute, swear to, acknowledge, deliver, file and record all ballots,
consents, approvals, waivers, certificates, documents and other instruments necessary or appropriate, in the sole discretion of the General Partner or the Liquidator, to make, evidence, give, confirm or ratify any vote, consent, approval, agreement
or other action that is made or given by the Partners hereunder or is consistent with the terms of this Agreement or is necessary or appropriate, in the sole discretion of the General Partner or the Liquidator, to effectuate the terms or intent of
this Agreement; provided, that when required by Section 15.3 or any other provision of this Agreement that establishes a percentage of the Limited Partners or of the Limited Partners of any class or series required to take any action, the
General Partner or the Liquidator may exercise the power of attorney made in this Section 1.4(a)(ii) only after the necessary vote, consent or approval of the Limited Partners or of the Limited Partners of such class or series, as applicable.



Nothing contained in this Section 1.4(a) shall be construed as authorizing the General Partner to amend this Agreement except in
accordance with Article XV or as may be otherwise expressly provided for in this Agreement.



(b) The foregoing power of attorney is hereby
declared to be irrevocable and a power coupled with an interest, and it shall survive and not be affected by the subsequent death, incompetency, disability, incapacity, dissolution, bankruptcy or termination of any Limited Partner or Assignee and
the transfer of all or any portion of such Limited Partner’s or Assignee’s Partnership Interest and shall extend to such Limited Partner’s or Assignee’s heirs, successors, assigns and personal representatives. Each such Limited
Partner or Assignee hereby agrees to be bound by any representation made by the General Partner or the Liquidator acting in good faith pursuant to such power of attorney; and each such Limited Partner or Assignee hereby waives any and all defenses
that may be available to contest, negate or disaffirm the action of the General Partner or the Liquidator taken in good faith under such power of attorney. Each Limited Partner or Assignee shall execute and deliver to the General Partner or the
Liquidator, within 15 days after receipt of the General Partner’s or the Liquidator’s request therefor, such further designation, powers of attorney and other instruments as the General Partner or the Liquidator deems necessary to
effectuate this Agreement and the purposes of the Partnership.





Section 1.5

Term.



The Partnership commenced upon the filing of the Certificate of Limited Partnership in accordance with the Delaware Act and shall continue in
existence until the close of Partnership business on December 31, 2085, or until the earlier dissolution of the Partnership in accordance with the provisions of Article XIV.





ARTICLE II



DEFINITIONS



The following
definitions shall be for all purposes, unless otherwise clearly indicated to the contrary, applied to the terms used in this Agreement.





“

Acquisition

” means any transaction in which any Group Member acquires (through an asset acquisition, merger, stock
acquisition or other form of investment) control over all or a portion of the assets, properties or


business of another Person for the purpose of increasing the operating capacity of the Partnership Group from the operating capacity of the
Partnership Group existing immediately prior to such transaction.






“

Additional Book Basis

” means the
portion of any remaining Carrying Value of an Adjusted Property that is attributable to positive adjustments made to such Carrying Value as a result of Book-Up Events. For purposes of determining the extent to which Carrying Value constitutes
Additional Book Basis:




(i) Any negative adjustment made to the Carrying Value of an Adjusted Property as a result
of either a Book-Down Event or a Book-Up Event shall first be deemed to offset or decrease that portion of the Carrying Value of such Adjusted Property that is attributable to any prior positive adjustments made thereto pursuant to a Book-Up Event
or Book-Down Event.





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(ii) If Carrying Value that constitutes Additional Book Basis is reduced as a
result of a Book-Down Event and the Carrying Value of other property is increased as a result of such Book-Down Event, an allocable portion of any such increase in Carrying Value shall be treated as Additional Book Basis; provided that the amount
treated as Additional Book Basis pursuant hereto as a result of such Book-Down Event shall not exceed the amount by which the Aggregate Remaining Net Positive Adjustments after such Book-Down Event exceeds the remaining Additional Book Basis
attributable to all of the Partnership’s Adjusted Property after such Book-Down Event (determined without regard to the application of this clause (ii) to such Book-Down Event).





“

Additional Book Basis Derivative Items

” means any Book Basis Derivative Items that are computed with reference to
Additional Book Basis. To the extent that the Additional Book Basis attributable to all of the Partnership’s Adjusted Property as of the beginning of any taxable period exceeds the Aggregate Remaining Net Positive Adjustments as of the
beginning of such period (the “Excess Additional Book Basis”), the Additional Book Basis Derivative Items for such period shall be reduced by the amount that bears the same ratio to the amount of Additional Book Basis Derivative Items
determined without regard to this sentence as the Excess Additional Book Basis bears to the Additional Book Basis as of the beginning of such period.






“

Additional Limited Partner

” means a Person admitted to the Partnership as a Limited Partner pursuant to
Section 12.4 and who is shown as such on the books and records of the Partnership.






“

Adjusted Capital
Account

” means the Capital Account maintained for each Partner as of the end of each fiscal year of the Partnership as if the Partnership were taxed as a partnership for federal income tax purposes, (a) increased by any amounts that
such Partner would have been obligated to restore under the standards set by Treasury Regulation Section 1.704-l(b)(2)(ii)(c) (or would have been deemed obligated to restore under Treasury Regulation Sections 1.704-2(g) and 1.704-2(i)(5)) and
(b) decreased by (i) the amount or all losses and deductions that, as of the end of such fiscal year, would have been reasonably expected to be allocated to such Partner in subsequent years under Sections 704(e)(2) and 706(d) of the Code
and Treasury Regulation Section 1.751-l(b)(2)(ii), and (ii) the amount of all distributions that, as of the end of such fiscal year, would have been reasonably expected to be made to such Partner in subsequent years in accordance with the
terms of this Agreement or otherwise to the extent they exceed offsetting increases to such Partner’s Capital Account that would have been reasonably expected to occur during (or prior to) the year in which such distributions would have been
reasonably expected to be made (other than increases as a result of a minimum gain chargeback pursuant to Section 5.1(d)(i) or 5.1(d)(ii)). The foregoing definition of Adjusted Capital Account is intended to comply with the provisions of
Treasury Regulation Section 1.704-l(b)(2)(ii)(d) and shall be interpreted consistently therewith. The “Adjusted Capital Account” in respect of Common Unit, General Partner Unit or any other specified interest in the Partnership shall
be the amount which such Adjusted Capital Account would be if such Common Unit, a General Partner Unit or other interest in the Partnership were the only interest in the Partnership held by a Partner.






“

Adjusted Property

” means any property the Carrying Value of which has been adjusted pursuant to
Section 4.8(d)(i) or 4.8(d)(ii).






“

Affiliate

” means, with respect to any Person, any other Person
that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with, the Person in question. As used herein, the term “control” means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.






“

Aggregate Remaining Net Positive Adjustments

” means as of the end of any taxable period, the sum of the Remaining Net
Positive Adjustments of all the Partners.






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“

Agreed Allocation

” means any allocation, other than a Required
Allocation, of an item of income, gain, loss or deduction pursuant to the provisions of Section 5.1, including, without limitation, a Curative Allocation (if appropriate to the context in which the term “Agreed Allocation” is used).






“

Agreed Value

” of any Contributed Property means the fair market value of such property or other
consideration at the time of contribution as determined by the General Partner using such reasonable method of valuation as it may adopt. The General Partner shall, in its sole discretion, use such method as it deems reasonable and appropriate to
allocate the aggregate Agreed Value of Contributed Properties contributed to the Partnership in a single or integrated transaction among each separate property on a basis proportional to the fair market value of each Contributed Property.






“

Agreement

” means this Third Amended and Restated Agreement of Limited Partnership of Star Group, L.P., as it
may be amended, supplemented or restated from time to time.






“

Assignee

” means a Non-citizen Assignee or a
Person to whom one or more Units representing a Limited Partner Interest have been transferred in a manner permitted under this Agreement and who has executed and delivered a Transfer Application as required by this Agreement, but who has not become
a Substituted Limited Partner.






“

Associate

” means, when used to indicate a relationship with any Person,
(a) any corporation or organization of which such Person is a director, officer or partner or is, directly or indirectly, the owner of 20% or more of any class of voting stock or other voting interest; (b) any trust or other estate in
which such Person has at least a 20% beneficial interest or as to which such Person serves as trustee or in a similar fiduciary capacity; and (c) any relative or spouse of such Person, or any relative of such spouse, with the same residence as
such Person.




“

Available Cash

,” as to any Quarter ending before the Liquidation Date, means



(a) the sum of (i) all cash and cash equivalents of the Partnership Group on hand at the end of such Quarter and (ii) all additional
cash and cash equivalents of the Partnership Group on hand on the date of determination of Available Cash with respect to such Quarter resulting from Working Capital Borrowings subsequent to the end of such Quarter, less



(b) the amount of cash reserves that is necessary or appropriate in the reasonable discretion of the General Partner to (i) provide for
the proper conduct of the business of the Partnership Group (including reserves for future capital expenditures) subsequent to such Quarter, (ii) provide funds for distributions under Sections 5.4 or 5.5 in respect of any one or more of the
next four Quarters, or (iii) comply with applicable law or any debt instrument or other agreement or obligation to which any member of the Partnership Group is a party or its assets are subject; provided, however, that the General Partner may
not establish cash reserves for distributions pursuant to Section 5.4 unless the General Partner has determined that in its judgment the establishment of reserves will not prevent the Partnership from distributing the Minimum Quarterly
Distribution on all Common Units and any Common Unit Arrearages thereon with respect to the next four Quarters.



Notwithstanding the
foregoing, “Available Cash” with respect to the Quarter in which the Liquidation Date occurs and any subsequent Quarter shall equal zero.





“

Book Basis Derivative Items

” means any item of income, deduction, gain, or loss included in the determination of Net
Income, Net Loss, Net Termination Gain or Net Termination Loss that is computed with reference to the Carrying Value of an Adjusted Property (e.g., depreciation, depletion, or gain or loss with respect to an Adjusted Property).




“

Board

” means the Board of Directors of the General Partner.





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“

Book-Down Event

” means an event which triggers a negative adjustment to
the Capital Accounts of the Partners pursuant to Section 4.8(d).






“

Book-Up Event

” means an event which
triggers a positive adjustment to the Capital Accounts of the Partners pursuant to Section 4.8(d).






“

Business
Day

” means Monday through Friday of each week, except that a legal holiday recognized as such by the government of the United States or the states of New York or Connecticut shall not be regarded as a Business Day.






“

Capital Account

” means the capital account maintained for a Partner pursuant to Section 4.8 as if the
Partnership were taxed as a partnership for federal income tax purposes. The “Capital Account” in respect of a Common Unit, a General Partner Unit or any other specified interest in the Partnership shall be the amount which such Capital
Account would be if such Common Unit, General Partner Unit or other interest in the Partnership were the only interest in the Partnership held by a Partner.






“

Capital Contribution

” means any cash, cash equivalents or the Net Agreed Value of Contributed Property that a Partner
contributes or has contributed to the Partnership.






“

Capital Improvements

” means (a) additions or
improvements to the capital assets owned by any Group Member or (b) the acquisition of existing or the construction of new capital assets (including retail distribution outlets, petroleum product tanks, propane tanks, pipeline systems, storage
facilities and related assets), made to increase the operating capacity of the Partnership Group from the operating capacity of the Partnership Group existing immediately prior to such addition, improvement, acquisition or construction.






“

Capital Surplus

” has the following meaning: all Available Cash distributed by the Partnership from any source will be
treated as distributed from Operating Surplus until the sum of all Available Cash distributed since the commencement of the Partnership equals the Operating Surplus as of the end of the Quarter prior to such distribution. Any excess Available Cash
will be deemed to be Capital Surplus.




“

Carrying Value

” means (a) with respect to a Contributed Property,
the Agreed Value of such property reduced (but not below zero) by all depreciation, amortization and cost recovery deductions charged to the Partners’ and Assignees’ Capital Accounts in respect of such Contributed Property, and
(b) with respect to any other Partnership property, the adjusted basis of such property for federal income tax purposes, all as of the time of determination. The Carrying Value of any property shall be adjusted from time to time in accordance
with Sections 4.8(d)(i) and 4.8(d)(ii) and to reflect changes, additions or other adjustments to the Carrying Value for dispositions and acquisitions of Partnership properties, as deemed appropriate by the General Partner.





“

Cause

” means a court of competent jurisdiction has entered a final, non-appealable judgment finding the General
Partner liable for actual fraud, gross negligence or willful or wanton misconduct in its capacity as general partner of the Partnership.






“

Certificate

” means a certificate, (a) substantially in the form of Exhibit A hereto with respect to Common Units
(b) issued in global form in accordance with the rules and regulations of the Depositary, or (c) in such other form as may be adopted by the General Partner in its sole discretion, issued by the Partnership evidencing ownership of one or
more Common Units, or a certificate in such form as may be adopted by the General Partner in its sole discretion, issued by the Partnership evidencing ownership of one or more other Units.






“

Certificate of Limited Partnership

” means the Certificate of Limited Partnership filed with the Secretary of State of
the State of Delaware as referenced in Section 6.2, as such Certificate of Limited Partnership may be amended, supplemented or restated from time to time.






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“

Citizenship Certification

” means a properly completed certificate in
such form as may be specified by the General Partner by which an Assignee or a Limited Partner certifies that he (and if he is a nominee holding for the account of another Person, that to the best of his knowledge such other Person) is an Eligible
Citizen.




“

Claim

” has the meaning assigned to such term in Section 6.13(c).





“

Closing Price

” for any day means the last sale price on such day, regular way, or in case no such sale takes place on
such day, the average of the closing bid and asked prices on such day, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the principal
National Securities Exchange (other than the Nasdaq Stock Market) on which the Units of such class are listed or admitted to trading or, if the Units of such class are not listed or admitted to trading on any National Securities Exchange (other than
the Nasdaq Stock Market), the last quoted price on such day or, if not so quoted, the average of the high bid and low asked prices on such day in the over-the-counter market, as reported by the Nasdaq Stock Market or such other system then in use,
or, if on any such day the Units of such class are not quoted by any such organization, the average of the closing bid and asked prices on such day as furnished by a professional market maker making a market in the Units of such class selected by
the Board, or if on any such day no market maker is making a market in the Units of such class, the fair value of such Units on such day as determined reasonably and in good faith by the Board.






“

Code

” means the Internal Revenue Code of 1986, as amended and in effect from time to time. Any reference herein to a
specific section or sections of the Code shall be deemed to include a reference to any corresponding provision of future law.




“

Combined Interest

” has the meaning assigned to such term in Section 13.3(a).



“

Commission

” means the Securities and Exchange Commission.





“

Common Unit

” means a Unit representing a fractional part of the Partnership Interests of all Limited Partners and
Assignees and having the rights and obligations specified with respect to Common Units in this Agreement.






“

Common
Unit Arrearage

” means, with respect to any Common Unit, whenever issued, and as to any Quarter beginning after September 30, 2008, the excess, if any, of (a) the Minimum Quarterly Distribution then in effect with respect to such
Common Unit over (b) the sum of all Available Cash distributed with respect to such Common Unit in respect of such Quarter pursuant to Section 5.4(i).






“

Conflicts Committee

” means a committee of the Board composed entirely of two or more directors who are not
(a) security holders, officers or employees of the General Partner, (b) officers, directors or employees of any Affiliate of the General Partner or (c) holders of any ownership interest in the Partnership Group other than Common Units
and who also meet the independence standards required of directors who serve on an audit committee of a board of directors established by the Exchange Act and the rules and regulations of the Commission thereunder and by the National Securities
Exchange on which the Common Units are listed or admitted to trading.






“

Contributed Property

” means each
property or other asset, in such form as may be permitted by the Delaware Act, but excluding cash, contributed to the Partnership. Once the Carrying Value of a Contributed Property is adjusted pursuant to Section 4.8(d), such property shall no
longer constitute a Contributed Property, but shall be deemed an Adjusted Property.






“

Cumulative Common Unit
Arrearage

” means, with respect to any Common Unit, whenever issued, and as of the end of any Quarter, the excess, if any, of (a) the sum resulting from adding together the Common Unit Arrearage as to a Common Unit for each of the
Quarters beginning after September 30, 2008 and ending on or






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before the last day of such Quarter over (b) the sum of any distributions theretofore made pursuant to Section 5.4(ii) with respect to such Common Unit (including any distributions
to be made in respect of the last of such Quarters).






“

Curative Allocation

” means any allocation of an
item of income, gain, deduction, loss or credit pursuant to the provisions of Section 5.1(d)(xi).






“

Current
Market Price

” as of any date of any class of Units listed or admitted to trading on any National Securities Exchange means the average of the daily Closing Prices per Unit of such class for the 20 consecutive Trading Days immediately prior
to such date.






“

Delaware Act

” means the Delaware Revised Uniform Limited Partnership Act, 6 Del C. §
17-101, et seq., as amended, supplemented or restated from time to time, and any successor to such statute.






“

Departing Partner

” means a former General Partner from and after the effective date of any withdrawal or removal of
such former General Partner pursuant to Section 13.1 or 13.2, including the Initial General Partner from and after the Initial Closing Date and the Withdrawing General Partner from and after the Second A&R Effective Date.






“

Depositary

” means with respect to any Units issued in book-entry form, The Depository Trust Company and its
successors and permitted assigns.




“

Economic Risk of Loss

” has the meaning set forth in Treasury Regulation
Section 1.752-2(a).



“

Effective Date

” has the meaning assigned to such term in the introductory paragraph.





“

Eligible Citizen

” means a Person qualified to own interests in real property in jurisdictions in which any Group
Member does business or proposes to do business from time to time, and whose status as a Limited Partner or Assignee does not or would not subject such Group Member to a significant risk of cancellation or forfeiture of any of its properties or any
interest therein.




“

Event of Withdrawal

” has the meaning assigned to such term in Section 13.1(a).





“

Exchange Act

” means the Securities Exchange act of 1934, as amended, supplemented or restated from time to time and
any successor to such statute.




“

First Liquidation Target Amount

” has the meaning assigned to such term in
Section 5.1(c)(i)(D).



“

First Target Distribution

” means $.1125 per Unit, subject to adjustment in accordance with
Sections 5.6.



“

General Partner

” has the meaning assigned to such term in the introductory paragraph.





“

General Partner Interest

” means the ownership interest of the General Partner in the Partnership (in its capacity as
a general partner without reference to any Limited Partner Interest held by it) which is evidenced by


General Partner Units and includes any and all benefits to which the General Partner is entitled as provided in this Agreement, together
with all obligations of the General Partner to comply with the terms and provisions of this Agreement.






“

General
Partner Unit

” means a Unit representing a fractional part of the General Partner Interest and having the rights and obligations specified with respect to the General Partner Interest.




“

Group

” means a Person that with or through any of its Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting (except voting pursuant to a





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revocable proxy or consent given to such Person in response to a proxy or consent solicitation made to 10 or more persons) or disposing of any Partnership Securities with any other Person that
beneficially owns, or whose Affiliates or Associates beneficially own, directly or indirectly, Partnership Interests.



“

Group
Member

” means a member of the Partnership Group.



“

Holder

” has the meaning assigned to such term in
Section 6.13(a).



“

includes

” means includes, without limitation, and “including” means including, without
limitation.



“

Indemnified Persons

” has the meaning assigned to such term in Section 6.13(c).





“

Indemnitee

” means (a) the General Partner, any Departing Partner, any Person who is or was an Affiliate of the
General Partner or any Departing Partner, (b) any Person who is or was an officer, director, partner, agent or trustee of the General Partner or any Departing Partner or any such Affiliate, (c) any Person the General Partner designates as
an Indemnitee for purposes of this Agreement or (d) any Person who is or was serving at the request of the General Partner or any Departing Partner or any such Affiliate as a director, officer, employee, partner, agent, fiduciary or trustee of
another Person; provided, that a Person shall not be an Indemnitee pursuant to this clause (d) by reason of providing, on a fee-for-services basis, trustee, fiduciary or custodial services.




“

Initial Closing Date

” means December 20, 1995.



“

Initial Common Units

” means the Common Units sold in the Initial Offering.



“

Initial General Partner

” means Star Gas Corporation, a Delaware corporation.





“

Initial Limited Partners

” means Star Gas, Silgas, Inc. and Silgas of Illinois, Inc. and the Initial Underwriters, in
each case admitted to the Partnership in accordance with Section 12.1.






“

Initial Offering

” means the
initial offering and sale of Common Units to the public on December 20, 1995, as described in the Initial Registration Statement.




“

Initial Overallotment Closing Date

” means January 18, 1996.





“

Initial Registration Statement

” means the Registration Statement on Form S-1 (Registration No. 33-98490), as
amended or supplemented from time to time, filed by the Partnership with the Commission under the Securities Act to register the offering and sale of the Initial Common Units in the Initial Offering.




“

Initial Underwriters

” means each person named as an underwriter in the Initial Offering.



“

Initial Unit Price

” means (a) with respect to each Common Unit and General Partner Unit, $2.25 or (b) with respect
to any other class or series of Units, the price per Unit at which such class or series of Units is initially sold by the Partnership, as determined by the General Partner, in each case adjusted as the General Partner determines to be appropriate to
give effect to any distribution, subdivision or combination of Units.





“

Interim Capital Transactions

” means the
following transactions if they occur prior to the Liquidation Date: (a) borrowings, refinancings, or refundings of indebtedness and sales of debt securities (other than Working Capital Borrowings and other than for items purchased on open
account in the ordinary course of business) by any Group Member; (b) sales of equity interests by any Group Member; and (c) sales or other voluntary or involuntary dispositions of any assets of any Group Member other than (x) sales or
other dispositions of inventory in the ordinary course of business, (y) sales or other dispositions of other current assets, including receivables and accounts in the ordinary course of business, and (z) sales or other dispositions of
assets as part of normal retirements or replacements.






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“

Limited Partner

” means, unless the context otherwise requires,
(a) the Organizational Limited Partner, each Initial Limited Partner, each Substituted Limited Partner, each Additional Limited Partner and any Departing Partner upon the change of its status from General Partner to Limited Partner pursuant to
Section 13.3; and (b) solely for purposes of Articles IV, V, VI and IX and Sections 14.3 and 14.4, each Assignee.






“

Limited Partner Interest

” means the ownership interest of a Limited Partner in the Partnership which is evidenced by
Common Units or other Partnership Securities and includes any and all benefits to which a Limited Partner is entitled as provided in this Agreement, together with all obligations of a Limited Partner to comply with the terms and provisions of this
Agreement.






“

Liquidation Date

” means (a) in the case of an event giving rise to the dissolution of
the Partnership of the type described in clauses (a) and (b) of the first sentence of Section 14.2, the date on which the applicable time period during which the holders of Outstanding Units have the right to elect to continue the
business of the Partnership has expired without such an election being made, and (b) in the case of any other event giving rise to the dissolution of the Partnership, the date on which such event occurs.






“

Liquidator

” means the General Partner or other Person approved pursuant to Section 14.3 who performs the
functions described therein.




“

Merger Agreement

” has the meaning assigned to such term in Section 16.1.





“

Minimum Quarterly Distribution

” means, (a) for the period from the Second A&R Effective Date through the
earlier of (i) September 30, 2008 or (ii) the last day of the Quarter preceding the Quarter in which the Partnership makes a distribution of Available Cash, $0.0 per Unit per Quarter, and (b) for each Quarter thereafter, $0.0675
per Unit per Quarter, subject to adjustment in accordance with Section 5.6.






“

National Securities
Exchange

” means an exchange registered with the Commission under Section 6(a) of the Exchange Act or the Nasdaq Stock Market or any successor thereto.




“

Net Agreed Value

” means, (a) in the case of any Contributed Property, the Agreed Value of such property reduced by any
liabilities either assumed by the Partnership upon such contribution or to which such property is subject when contributed, and (b) in the case of any property distributed to a Partner or Assignee by the Partnership, the Partnership’s
Carrying Value of such property (as adjusted pursuant to Section 4.8(d)(ii)) at the time such property is distributed, reduced by any indebtedness either assumed by such Partner or Assignee upon such distribution or to which such property is
subject at the time of distribution, in either case, as determined under Section 752 of the Code.





“

Net
Income

” means, for any taxable year, the excess, if any, of the Partnership’s items of income and gain (other than those items taken into account in the computation of Net Termination Gain or Net Termination Loss) for such taxable year
over the Partnership’s items of loss and deduction (other than those items taken into account in the computation of Net Termination Gain or Net Termination Loss) for such taxable year. The items included in the calculation of Net Income shall
be determined in accordance with Section 4.8(b) and shall not include any items specially allocated under Section 5.1(d); provided that the determination of the items that have been specially allocated under Section 5.1(d) shall be
made as if Section 5.1(d)(xii) were not in the Agreement.






“

Net Loss

” means, for any taxable year,
the excess, if any, of the Partnership’s items of loss and deduction (other than those items taken into account in the computation of Net Termination Gain or Net Termination Loss) for such taxable year over the Partnership’s items of
income and gain (other than those items taken into account in the computation of Net Termination Gain or Net Termination Loss) for such taxable year. The items included in the calculation of Net Loss shall be determined in accordance with
Section 4.8(b) and shall not include any items specially allocated under Section 5.1(d); provided that the determination of the items that have been specially allocated under Section 5.1(d) shall be made as if Section 5.1(d)(xii)
were not in the Agreement.






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“

Net Positive Adjustments

” means, with respect to any Partner, the
excess, if any, of the total positive adjustments over the total negative adjustments made to the Capital Account of such Partner pursuant to Book-Up and Book-Down Events.






“

Net Termination Gain

” means, for any taxable year, the sum, if positive, of all items of income, gain, loss or
deduction recognized by the Partnership after the Liquidation Date. The items included in the determination of Net Termination Gain shall be determined in accordance with Section 4.8(b) and shall not include any items of income, gain or loss
specially allocated under Section 5.1(d).






“

Net Termination Loss

” means, for any taxable period, the
sum, if negative, of all items of income, gain, loss or deduction recognized by the Partnership after the Liquidation Date. The items included in the determination of Net Termination Loss shall be determined in accordance with Section 4.8(b)
and shall not include any items of income, gain or loss specially allocated under Section 5.1(d).






“

Non-citizen Assignee

” means a Person whom the General Partner has determined in its sole discretion does not
constitute an Eligible Citizen and as to whose Partnership Interest the General Partner has become the Substituted Limited Partner, pursuant to Section 11.5.






“

Nonrecourse Built-in Gain

” means with respect to any Contributed Properties or Adjusted Properties that are subject
to a mortgage or pledge securing a Nonrecourse Liability, the amount of any taxable gain that would be allocated to the Partners pursuant to Sections 5.1(d) if the Partnership were taxed as a partnership for federal income tax purposes and if such
properties were disposed of in a taxable transaction in full satisfaction of such liabilities and for no other consideration.






“

Nonrecourse Deductions

” means any and all items of loss, deduction or expenditures (including, without limitation,
any expenditure described in Section 705(a)(2)(B) of the Code) that, in accordance with the principles of Treasury Regulation Section 1.704-2(b), are attributable to a Nonrecourse Liability.




“

Nonrecourse Liability

” has the meaning set forth in Treasury Regulation Section 1.752-1(a)(2).



“

Notice of Election to Purchase

” has the meaning assigned to such term in Section 17.1(b).



“

Old Subordinated Units

” means the Subordinated Units issued to the Initial General Partner on the Initial Closing Date.





“

Operating Expenditures

” means all Partnership Group expenditures, including taxes, reimbursements of the General
Partner, debt service payments, capital expenditures and all non-Pro Rata purchases of Outstanding Units (other than those made with the Proceeds of Interim Capital Transactions) subject to the following:




(a) Payments (including prepayments) of principal and premium on a debt shall not be an Operating Expenditure if the payment is
(i) required in connection with the sale or other disposition of assets or (ii) made in connection with the refinancing or refunding of indebtedness with the proceeds from new indebtedness or from the sale of equity interests. For purposes
of the foregoing, at the election and in the reasonable discretion of the General Partner, any payment of principal or premium shall be deemed to be refunded or refinanced by any indebtedness incurred or to be incurred by the Partnership Group
within 180 days before or after such payment to the extent of the principal amount of such indebtedness.



(b) Operating Expenditures shall
not include (i) capital expenditures made for Acquisitions or for Capital Improvements, (ii) payment of transaction expenses relating to Interim Capital Transactions, or (iii) distributions to Partners. Where capital expenditures are
made in part for Acquisitions or Capital Improvements and in part for other purposes, the General Partner’s good faith allocation between the amounts paid for each shall be conclusive.





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“

Operating Partnership

” means Star Gas Propane, L.P., a Delaware limited
partnership, and any successors thereto.



“

Operating Surplus

,” as to any period ending before the Liquidation Date, means



(a) the sum of (i) $22,000,000 plus all cash of the Partnership Group on hand on the Second A&R Effective Date, (ii) all
the cash receipts of the Partnership Group for the period beginning on the Second A&R Effective Date and ending with the last day of such period, other than cash receipts from Interim Capital Transactions (except to the extent specified in
Section 5.5) and (iii) all cash receipts of the Partnership Group after the end of such period but on or before the date of determination of Operating Surplus with respect to such period resulting from Working Capital Borrowings, less



(b) the sum of (i) Operating Expenditures for the period beginning on the Second A&R Effective Date and ending with the last day of
such period, and (ii) the amount of cash reserves that is necessary or advisable in the reasonable discretion of the General Partner to provide funds for future Operating Expenditures; provided, however, that disbursements made (including
contributions to a Group Member or disbursements on behalf of a Group Member) or cash reserves established, increased or reduced after the end of such period but on or before the date of determination of Available Cash with respect to such period
shall be deemed to have been made, established, increased or reduced, for purposes of determining Operating Surplus, within such period if the General Partner so determines.



Notwithstanding the foregoing, “Operating Surplus” with respect to the Quarter in which the Liquidation Date occurs and any subsequent Quarter shall
equal zero.





“

Opinion of Counsel

” means a written opinion of counsel (who may be regular counsel to the
Partnership, the General Partner or any of its Affiliates) acceptable to the General Partner in its reasonable discretion.






“

Organizational Limited Partner

” means William G. Powers, Jr., in his capacity as the organizational limited partner
of the Partnership.




“

Original Agreement

” has the meaning assigned to such term in the recitals to this
Agreement.





“

Outstanding

” means, with respect to Partnership Securities, all Partnership Securities that are
issued by the Partnership and reflected as outstanding on the Partnership’s books and records as of the date of determination.




“

Partner Nonrecourse Debt

” has the meaning set forth in Treasury Regulation Section 1.704-2(b)(4).



“

Partner Nonrecourse Debt Minimum Gain

” has the meaning set forth in Treasury Regulation Section 1.704-2(i)(2).





“

Partner Nonrecourse Deductions

” means any and all items of loss, deduction or expenditure (including, without
limitation, any expenditure described in Section 705(a)(2)(B) of the Code) that, in accordance with the principles of Treasury Regulation Section 1.704-2(i) applied as if the Partnership were taxed as a partnership for federal income tax
purposes, would be attributable to a Partner Nonrecourse Debt.




“

Partners

” means the General Partner and the
Limited Partners.



“

Partnership

” means Star Group, L.P., a Delaware limited partnership, and any successors thereto.



“

Partnership Group

” means the Partnership and any Subsidiary of such entity, treated as a single consolidated entity.





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“

Partnership Interest

” means an interest in the Partnership, which shall
include General Partner Interests and Limited Partner Interests.






“

Partnership Minimum Gain

” means that
amount determined in accordance with the principles of Treasury Regulation Section 1.704-2(d) applied as if the Partnership were taxed as a partnership for federal income tax purposes.






“

Partnership Security

” means any class or series of Unit, any option, right, warrant or appreciation rights relating
thereto, or any other type of equity interest that the Partnership may lawfully issue, or any unsecured or secured debt obligation of the Partnership that is convertible into any class or series of equity interests of the Partnership.






“

Percentage Interest

” means as of the date of such determination, (a) as to any Partner or Assignee holding
Units, the product of (i) 100% less the percentage applicable to paragraph (b) multiplied by (ii) the quotient of the number of Units held by such Partner or Assignee divided by the total number of all Outstanding Units, and
(b) as to the holders of additional Partnership Securities issued by the Partnership in accordance with Section 4.4, the percentage established as a part of such issuance.






“

Person

” means an individual or a corporation, limited liability company, partnership, joint venture, trust,
unincorporated organization, association or other entity.




“

Plan

” has the meaning assigned to such term in
Section 5.10.





“

Pro Rata

” means (a) when modifying Units or any class thereof, apportioned equally among all
designated Units in accordance with their respective Percentage Interests, and (b) when modifying Partners and Assignees or Record Holders, apportioned among all Partners and Assignees or Record Holders in accordance with their respective
Percentage Interests.






“

Proxy Statement

” means that certain proxy statement dated ●, 2017 sent to
Limited Partners in connection with the Tax Election.






“

Purchase Date

” means the date determined by the
General Partner as the date for purchase of all Outstanding Units of a certain class (other than Units owned by the General Partner and its Affiliates) pursuant to Article XVII.






“

Quarter

” means, unless the context requires otherwise, a three-month period of time ending on
March 31, June 30, September 30, or December 31.




“

Record Date

” means the date
established by the General Partner for determining (a) the identity of the Record Holders entitled to notice of, or to vote at, any meeting of Limited Partners or entitled to vote by ballot or give approval of Partnership action in writing
without a meeting or entitled to exercise rights in respect of any lawful action of Limited Partners or (b) the identity of Record Holders entitled to receive any report or distribution.





“

Record Holder

” means the Person in whose name a Common Unit is registered on the books of the Transfer Agent as of
the opening of business on a particular Business Day, or with respect to any other Partnership Security, the Person in whose name such other Partnership Security is registered on the books of the General Partner as of the opening of business on such
Business Day.






“

Redeemable Units

” means any Partnership Interests for which a redemption notice has been
given, and has not been withdrawn, pursuant to Section 11.6.






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“

Remaining Net Positive Adjustments

” means as of the end of any taxable
period, (i) with respect to the Limited Partners, as a class, the excess of (a) the Net Positive Adjustments of the Limited Partners as of the end of such period over (b) the sum of those Partners’ Share of Additional Book Basis
Derivative Items for each prior taxable period, and (ii) with respect to the General Partner, the excess of (a) the Net Positive Adjustments of the General Partner as of the end of such period over (b) the sum of the General
Partner’s Share of Additional Book Basis Derivative Items for each prior taxable period.






“

Required
Allocations

” means any allocation (or limitation imposed on any allocation) of an item of income, gain, deduction or loss pursuant to (a) Section 5.1(b)(v) or (b) Sections 5.1(d)(i), 5.1(d)(ii), 5.l(d)(iv), 5.1(d)(v),
5.1(d)(vi), 5.1(d)(vii) and 5.1(d)(ix), such allocations (or limitations thereon) that would be directly or indirectly required by the Treasury Regulations promulgated under Section 704(b) of the Code if the Partnership were taxed as a
partnership for federal income tax purposes.






“

Rights Agreement

” means that certain Amended and Restated
Rights Agreement, dated as of July 20, 2006, a copy of which was attached to the Second Amended and Restated Agreement as Exhibit B as the same may have been amended or supplemented from time to time. Prior to the date of this Third Amended and
Restated Agreement, the Rights Agreement expired by its terms and its provisions are no longer in effect. Any capitalized terms used in Section 15.3(f) that are not defined herein are defined in the Rights Agreement.




“

Second A&R Effective Date

” means April 28, 2006.



“

Second Amended and Restated Agreement

” has the meaning assigned to such term in the recitals.





“

Securities Act

” means the Securities Act of 1933, as amended, supplemented or restated from time to time and any
successor to such statute.




“

Share of Additional Book Basis Derivative Items

” means in connection with any
allocation of Additional Book Basis Derivative Items for any taxable period, (a) with respect to the Limited Partners, as a class, the amount that bears the same ratio to such Additional Book Basis Derivative Items as the Limited Partners’
Remaining Net Positive Adjustments as of the end of such period bears to the Aggregate Remaining Net Positive Adjustments as of that time, and (b) with respect to the General Partner, the amount that bears the same ratio to such Additional Book
Basis Derivative Items as the General Partner’s Remaining Net Positive Adjustments as of the end of such period bears to the Aggregate Remaining Net Positive Adjustments as of that time.



“

Special Approval

” means approval by the Conflicts Committee.



“

Star Gas

” means Star Gas Corporation, a Delaware corporation.





“

Subsidiary

” means, with respect to any Person, (a) a corporation of which more than 50% of the voting power of
shares entitled (without regard to the occurrence of any contingency) to vote in the election of directors or other governing


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Other recent filings from the company include the following:

Star Gas Partners insider just cashed-in 79,121 options - Oct. 22, 2020
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