<PAGE>
<PAGE>
CONFORMED COPY
________________________________________________________________________________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
.
COMMISSION FILE NUMBER: 1-11867
NATIONAL PROPANE PARTNERS, L.P.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 42-1453040
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
200 FIRST STREET S.E., SUITE 1700, 52401-1409
CEDAR RAPIDS, IA (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
</TABLE>
(319) 365-1550
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR,
IF CHANGED SINCE LAST REPORT)
------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the last 90 days. Yes __X__ No _______
There were 6,701,550 Common Units and 4,533,638 Subordinated Units
outstanding as of July 31, 1998.
________________________________________________________________________________
<PAGE>
<PAGE>
NATIONAL PROPANE PARTNERS, L.P.
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Part I -- Financial Information
Item 1 -- Financial Statements -- National Propane Partners, L.P.:
Condensed Consolidated Balance Sheets -- December 31, 1997 and June 30, 1998..................... 3
Condensed Consolidated Statements of Operations -- Three months ended June 30, 1997 and 1998 and
six months ended June 30, 1997 and 1998.......................................................... 4
Condensed Consolidated Statements of Cash Flows -- Six months ended June 30, 1997 and 1998....... 5
Notes to Condensed Consolidated Financial Statements............................................. 6
Item 2 -- Management's Discussion and Analysis of Financial Condition and Results of Operations....... 10
Part II -- Other Information
Item 6 -- Exhibits and Reports on Form 8-K............................................................ 15
Signatures............................................................................................ 16
</TABLE>
2
<PAGE>
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NATIONAL PROPANE PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1997(A) 1998
------------ --------
(IN THOUSANDS)
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents......................................................... $ 4,616 $ 2,770
Receivables, net.................................................................. 13,955 7,691
Finished goods inventories........................................................ 9,599 7,718
Note receivable from Triarc Companies, Inc........................................ -- 7,000
Other current assets.............................................................. 1,990 1,932
------------ --------
Total current assets......................................................... 30,160 27,111
Note receivable from Triarc Companies, Inc............................................. 40,700 33,700
Properties, net........................................................................ 80,346 78,222
Unamortized costs in excess of net assets of acquired companies........................ 17,616 17,124
Other assets........................................................................... 8,415 7,683
------------ --------
$177,237 $163,840
------------ --------
------------ --------
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Current portion of long-term debt................................................. $ 9,235 $ 7,106
Accounts payable.................................................................. 5,877 4,244
Accrued expenses.................................................................. 7,866 6,281
------------ --------
Total current liabilities.................................................... 22,978 17,631
Long-term debt......................................................................... 138,131 138,409
Customer deposits and other long-term liabilities...................................... 2,674 2,504
Partners' capital:
Common partners' capital.......................................................... 10,362 4,269
General partners' capital, including subordinated units........................... 3,092 1,027
------------ --------
Total partners' capital...................................................... 13,454 5,296
------------ --------
$177,237 $163,840
------------ --------
------------ --------
</TABLE>
- ------------
(A) Derived from the audited consolidated financial statements as of December
31, 1997.
See accompanying notes to condensed consolidated financial statements
3
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<PAGE>
NATIONAL PROPANE PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
------------------ ------------------
1997 1998 1997 1998
------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenues.............................................................. $29,503 $25,285 $88,687 $71,415
------- ------- ------- -------
Cost of sales:
Cost of product -- propane and appliances........................ 13,359 10,209 46,229 31,452
Other operating expenses applicable to revenues.................. 11,115 11,082 22,579 22,561
------- ------- ------- -------
24,474 21,291 68,808 54,013
------- ------- ------- -------
Gross profit................................................ 5,029 3,994 19,879 17,402
Selling, general and administrative expenses.......................... 5,218 6,342 11,597 12,829
------- ------- ------- -------
Operating income (loss)..................................... (189) (2,348) 8,282 4,573
Interest expense...................................................... (3,121) (3,236) (6,072) (6,511)
Interest income from Triarc Companies, Inc. .......................... 1,370 1,370 2,710 2,725
Other income, net..................................................... 417 170 735 753
------- ------- ------- -------
Income (loss) before income taxes........................... (1,523) (4,044) 5,655 1,540
Provision for income taxes............................................ (117) (46) (117) (96)
------- ------- ------- -------
Net income (loss)........................................... $(1,640) $(4,090) $ 5,538 $ 1,444
------- ------- ------- -------
------- ------- ------- -------
General partners' interest in net income (loss)....................... $ (65) $ (163) $ 222 $ 58
------- ------- ------- -------
------- ------- ------- -------
Unitholders' interest (common and subordinated) in net income
(loss).............................................................. $(1,575) $(3,927) $ 5,316 $ 1,386
------- ------- ------- -------
------- ------- ------- -------
Net income (loss) per unit............................................ $ (.14) $ (.35) $ .47 $ .12
------- ------- ------- -------
------- ------- ------- -------
Weighted average number of units outstanding.......................... 11,235 11,235 11,235 11,235
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
See accompanying notes to condensed consolidated financial statements
4
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<PAGE>
NATIONAL PROPANE PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
--------------------
1997 1998
-------- --------
(IN THOUSANDS)
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income........................................................................... $ 5,538 $ 1,444
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of properties..................................... 5,190 5,175
Amortization of costs in excess of net assets of acquired companies............. 395 659
Amortization of deferred financing costs........................................ 363 363
Other amortization.............................................................. 324 642
Provision for doubtful accounts................................................. 650 432
Gain on sale of assets, net..................................................... (181) (403)
Other, net...................................................................... 33 (190)
Changes in operating assets and liabilities:
Decrease in accounts receivable............................................ 13,479 5,862
Decrease in inventories.................................................... 1,609 1,883
Decrease in prepaid expenses and other current assets...................... 633 58
Decrease in accounts payable and accrued expenses.......................... (14,449) (3,218)
-------- --------
Net cash provided by operating activities....................................... 13,584 12,707
-------- --------
Cash flows from investing activities:
Capital expenditures................................................................. (2,897) (3,498)
Business acquisitions................................................................ (5,159) (362)
Proceeds from sale of properties..................................................... 469 965
-------- --------
Net cash used in investing activities........................................... (7,587) (2,895)
-------- --------
Cash flows from financing activities:
Proceeds from long-term debt......................................................... 7,138 1,000
Repayments of long-term debt......................................................... (6,306) (2,851)
Distributions........................................................................ (12,286) (9,807)
-------- --------
Net cash used in financing activities........................................... (11,454) (11,658)
-------- --------
Net decrease in cash...................................................................... (5,457) (1,846)
Cash and cash equivalents at beginning of period.......................................... 11,187 4,616
-------- --------
Cash and cash equivalents at end of period................................................ $ 5,730 $ 2,770
-------- --------
-------- --------
</TABLE>
See accompanying notes to condensed consolidated financial statements
5
<PAGE>
<PAGE>
NATIONAL PROPANE PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 -- ORGANIZATION
National Propane Partners, L.P. (the 'Partnership') has 6,701,550 common
units (the 'Common Units') outstanding in the Partnership including its
subsidiaries National Propane, L.P. (the 'Operating Partnership') and National
Sales & Service, Inc. ('NSSI') which, collectively with the Partnership and
Operating Partnership, are referred to as the 'Partnership Entities'. National
Propane Corporation (the 'Managing General Partner'), a wholly-owned subsidiary
of Triarc Companies, Inc. ('Triarc'), and its subsidiary, National Propane SGP
Inc., own general partner interests representing an aggregate 4% unsubordinated
general partners' interest (the 'General Partners' Interest') in the Partnership
Entities. In addition, the Managing General Partner owns 4,533,638 subordinated
units (the 'Subordinated Units') representing a 38.7% subordinated general
partner interest in the Partnership Entities. Certain statements in these notes
to the condensed consolidated financial statements constitute 'forward-looking
statements' under the Private Securities Litigation Reform Act of 1995. See
'Part II. Other Information'
NOTE 2 -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
the Partnership have been prepared in accordance with Rule 10-01 of Regulation
S-X promulgated by the Securities and Exchange Commission and, therefore, do not
include all information and footnotes necessary for a fair presentation of
financial position, results of operations and cash flows in conformity with
generally accepted accounting principles. In the opinion of the Partnership,
however, the accompanying condensed consolidated financial statements contain
all adjustments, consisting only of normal recurring adjustments, necessary to
present fairly the Partnership's financial position as of December 31, 1997 and
June 30, 1998, and its results of operations for the three-month and six-month
periods ended June 30, 1997 and 1998 and its cash flows for the six-month
periods ended June 30, 1997 and 1998. This information should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Partnership's Annual Report on Form 10-K for the year ended
December 31, 1997 (the 'Form 10-K').
NOTE 3 -- PROPERTIES
The following is a summary of the components of properties, net:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1997 1998
------------ --------
(IN THOUSANDS)
<S> <C> <C>
Properties, at cost................................................ $168,871 $171,289
Less accumulated depreciation...................................... 88,525 93,067
------------ --------
$ 80,346 $ 78,222
------------ --------
------------ --------
</TABLE>
NOTE 4 -- INCOME TAXES
Income taxes have been provided only on the pre-tax income of NSSI, which
is subject to Federal and state income taxes. Since the earnings attributed to
the Partnership and the Operating Partnership are included in the tax returns of
the individual partners and not those of the Partnership, no income taxes have
been provided thereon.
NOTE 5 -- CONTINGENCIES
The Partnership continues to have an environmental contingency of the same
nature and general magnitude as described in Note 17 to the consolidated
financial statements in the Form 10-K. The costs
6
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<PAGE>
NATIONAL PROPANE PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
of remediation and third party claims, if any, associated with this
environmental contingency may have a material adverse effect on the
Partnership's financial position, results of operations or its ability to make
distributions (the 'Distributions') to the holders of the Common Units, the
General Partners' Interest and the Subordinated Units.
The Partnership continues to have a contingency with respect to the Final
Rule for Continued Operation of the Present Propane Trucks (the 'Final Rule')
published by the U.S. Department of Transportation and resulting litigation of
the same nature as described in Note 17 to the consolidated financial statements
in the Form 10-K. The Partnership continues to be unable to determine the likely
outcome of the litigation or what the ultimate long-term cost of compliance with
the Final Rule will be.
The Partnership does not believe that contingencies for ordinary routine
claims, litigation and administrative proceedings and investigations incidental
to its business will have a material adverse effect on the Partnership's
consolidated financial condition or results of operations. However, any one or
all of these matters taken together may adversely affect the Partnership's
results of operations or limit the Partnership's ability to make Distributions.
NOTE 6 -- LONG-TERM DEBT AND QUARTERLY DISTRIBUTIONS
The Partnership maintains a bank facility (the 'Bank Facility') with a
group of banks which, as amended effective June 30, 1998, provides for a
$10,000,000 (a reduction from $15,000,000, subject to reinstatement under
certain limited conditions, in accordance with the amendment discussed below)
working capital facility (the 'Working Capital Facility') to be used for working
capital and other general partnership purposes of which $3,650,000 was available
as of June 30, 1998. Further, the banks' commitments under a previously existing
$20,000,000 acquisition facility (the 'Acquisition Facility') under the Bank
Facility, the use of which was restricted to business acquisitions and capital
expenditures for growth, were permanently reduced to the $12,997,000 of
outstanding borrowings as of June 30, 1998. In that connection, the Partnership
has agreed that it may not reborrow any amounts repaid under the Acquisition
Facility. The Working Capital Facility, the Acquisition Facility and the
$125,000,000 of 8.54% first mortgage notes due June 20, 2010 (the 'Mortgage
Notes') do not require any principal payments during the second half of 1998.
As of June 30, 1998 the Partnership was not in compliance with certain
covenants of its Bank Facility agreement (the 'Agreement'). Subsequently, the
Agreement was amended (the 'Agreement Amendment') retroactive to June 30, 1998
to, among other things, permit principal prepayments (the 'Triarc Note
Prepayments') of up to $10,000,000 by Triarc through February 14, 1999 on a
$40,700,000 note receivable from Triarc (the 'Triarc Note') and, to the extent
not utilized for distributions (see below), to permit any such prepayments to be
included in the determination of consolidated cash flow, as defined under the
Agreement ('Consolidated Cash Flow'), for purposes of compliance with certain
leverage and interest coverage ratio requirements for a period of twelve
consecutive months commencing June 30, 1998. Further, the Partnership must have
sufficient interest coverage through consolidated cash flow, as defined under
the indenture (the 'Indenture') pursuant to which the Mortgage Notes were
issued, in order to pay distributions. Effective June 30, 1998 the Indenture was
amended (the 'Indenture Amendment' and collectively with the Agreement
Amendment, the 'Amendments') to, among other things, (i) permit the Triarc Note
Prepayments, (ii) effectively permit up to $6,000,000 of any such prepayments to
be utilized to pay distributions to Common Unitholders with a proportionate
amount for the General Partners' Interest with respect to distributions for the
second, third and fourth quarters of 1998 only and (iii) amend the definition of
consolidated cash flow to include interest income received by the Partnership on
the Triarc Note through December 31, 1998 for interest coverage purposes thereby
facilitating the Partnership's ability to pay distributions. Based on these
amendments and current forecasts, the Partnership currently expects to remain in
compliance with its debt agreements at least through June 30, 1999. (See further
discussion below regarding the
7
<PAGE>
<PAGE>
NATIONAL PROPANE PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
Partnership's ability to pay distributions beyond the second quarter of 1998).
The Triarc Note was amended to, among other things, permit Triarc, at its
option, to make Triarc Note Prepayments up to $10,000,000 of the principal
thereof through February 14, 1999. Triarc has made no commitment to make Triarc
Note Prepayments other than the $7,000,000 prepaid on August 7, 1998 discussed
below. The remaining balance of the Triarc Note would then be payable according
to the original terms such that the remaining principal balance after any
prepayments would be repaid in eight equal annual installments commencing in
2003. The original terms of the Bank Facility, the Mortgage Notes and the Triarc
Note are further described in Notes 11 and 13, respectively, to the consolidated
financial statements contained in the Form 10-K.
The Partnership incurred fees of approximately $1,000,000 in connection
with executing the Amendments. Such fees will be amortized to interest expense
ratably over the third and fourth quarters of 1998.
On August 7, 1998 Triarc prepaid $7,000,000 of principal on the Triarc Note
of which $3,336,000 has been included as Consolidated Cash Flow under the
Agreement in order to retroactively cure the noncompliance with the Agreement
and $3,664,000 is being used to permit the Partnership to declare its
distribution for the quarter ended June 30, 1998 (see further discussion below).
Partnership distributions are made from available cash as defined in the
Partnership Agreement, the Agreement and the Indenture ('Available Cash') and as
amended by the Agreement Amendment and the Indenture Amendment. Under the
Agreement Amendment, Available Cash is supplemented by any Triarc Note
Prepayments and may be utilized to pay distributions to the extent ($3,336,000
as of June 30, 1998) such Triarc Note Prepayments are not required to be
included in Consolidated Cash Flow for the Partnership to be in compliance with
the Agreement. Under the Indenture Amendment, Available Cash is supplemented by
up to $6,000,000 of Triarc Note Prepayments. Available Cash generally means with
respect to any quarter of the Partnership, all cash on hand at the end of such
quarter less the amount of cash reserves that is necessary or appropriate in the
discretion of the Managing General Partner to (i) provide for the proper conduct
of the Partnership's business, (ii) comply with applicable law or any
Partnership debt instrument or other agreement, or (iii) provide funds for
distributions to Unitholders and the General Partners in respect of any one or
more of the next four quarters (see Note 5 to the December 31, 1997 audited
financial statements within the Form 10-K for a more detailed discussion of
Available Cash). On February 13, 1998, the Partnership paid a quarterly
distribution for the quarter ended December 31, 1997 of $0.525 per Common and
Subordinated Unit to Unitholders of record on February 5, 1998, with a
proportionate amount for the General Partners' Interest, or an aggregate of
$6,143,000, including $2,625,000 to the General Partners related to the
Subordinated Units and the General Partners' Interest. On May 15, 1998, the
Partnership paid a quarterly distribution for the quarter ended March 31, 1998
of $0.525 per Common Unit to Common Unitholders of record on May 8, 1998, with a
proportionate amount for the General Partners' Interest, or an aggregate of
$3,664,000, including $146,000 to the General Partners related to the General
Partners' Interest. On July 29, 1998, utilizing the aforementioned $3,664,000 of
the Triarc Note Prepayment, the Partnership declared a quarterly distribution
for the quarter ended June 30, 1998 of $0.525 per Common Unit to Common
Unitholders of record on August 7, 1998 payable August 14, 1998, with a
proportionate amount for the General Partners' Interest, or an aggregate of
$3,664,000 including $146,000 to the General Partners related to the General
Partners' Interest. No distributions were declared on the Subordinated Units
with respect to the quarters ending March 31, 1998 and June 30, 1998 since
subsequent to the distribution with respect to the quarter ended December 31,
1997, the Managing General Partner has agreed to forego any distributions on the
Subordinated Units in order to facilitate the Partnership's compliance with debt
covenant restrictions in the Agreement and, effective June 30, 1998 pursuant to
the Amendments, the Partnership agreed not to pay distributions on the
Subordinated Units with respect to the second, third and fourth quarters of
1998. The Partnership believes its ability to make a distribution to Common
8
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<PAGE>
NATIONAL PROPANE PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
Unitholders with a proportionate amount for the General Partners' Interest for
the quarter ended September 30, 1998 is contingent upon an additional $3,000,000
of Triarc Note Prepayments. Triarc has made no commitment to make any Triarc
Note Prepayments. Thereafter, the Partnership will pay distributions to the
Common Unitholders with a proportionate amount for the General Partners'
Interest only if the Partnership is able to generate sufficient Available Cash
through cash flows from operations, the Partnership achieves compliance with the
restrictions embodied in the covenants in the Amended Agreements and with
respect to the Subordinated Unitholders if the Partnership achieves compliance
with the original restrictions embodied in the covenants in the Agreement and
such payment would not impact compliance with such covenant restrictions
(although, as previously indicated, the Amendments prohibit any distributions on
the Subordinated Units with respect to the remainder of 1998). There can be no
assurance that the Partnership will be able to pay any such distributions.
NOTE 7 -- RELATED PARTY TRANSACTIONS
The Partnership continues to have related party transactions of the same
nature and general magnitude as those described in Note 19 to the consolidated
financial statements contained in the Form 10-K.
NOTE 8 -- STATEMENT OF PARTNERS' CAPITAL
The following is a summary of the changes in partners' capital:
<TABLE>
<CAPTION>
COMMON GENERAL TOTAL
PARTNERS' PARTNERS' PARTNERS'
CAPITAL CAPITAL CAPITAL
------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Balance at December 31, 1997........................................... $10,362 $ 3,092 $ 13,454
Net income............................................................. 827 617 1,444
Cash distributions paid................................................ (7,036 ) (2,771) (9,807)
Amortization of unearned compensation on below market unit options..... 116 89 205
------- --------- ---------
Balance at June 30, 1998............................................... $4,269 $ 1,027 $ 5,296
------- --------- ---------
------- --------- ---------
</TABLE>
9
<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
INTRODUCTION
This 'Management's Discussion and Analysis of Financial Condition and
Results of Operations' should be read in conjunction with 'Item 7, Management's
Discussion and Analysis of Financial Condition and Results of Operations' in the
Annual Report of Form 10-K for the year ended December 31, 1997 of the
Partnership. A general description of the Partnership's industry and a
discussion of recent trends affecting that industry are contained therein.
Certain statements under this caption may constitute 'forward-looking
statements' under the Private Securities Litigation Reform Act of 1995. See
'Part II. Other Information.'
The following discussion compares the results of operations for the six and
three months ended June 30, 1998 with the results of the Partnership for the six
and three months ended June 30, 1997, respectively.
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1998 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1997
Revenues decreased $17.3 million, or 19.5%, to $71.4 in the six months
ended June 30, 1998 as compared to $88.7 million for the six months ended June
30, 1997 with propane revenues decreasing $17.6 million, or 20.9%, to $66.7
million for the six months ended June 30, 1998 compared with $84.3 million in
1997 and revenues from appliance and other product lines increasing $0.3
million. The $17.6 million decrease in propane revenues is a result of decreased
average selling prices ($12.9 million) due to lower product costs along with
decreased volumes ($4.7 million) primarily as a result of warmer weather.
Propane retail gallons sold decreased 4.4 million gallons, or 5.6 %, to 73.7
million gallons in 1998, compared to 78.1 million gallons in 1997. This decrease
in gallons sold is primarily attributable to a decrease in sales to residential
customers for heating purposes due to the fact that the six months ended June
30, 1998 were 14.8% warmer than the same period in 1997 according to Degree Day
data published by the National Climatic Data Center as applied to the geographic
regions of the Partnership's operations.
Gross profit decreased $2.5 million, or 12.5%, to $17.4 million in the six
months ended June 30, 1998 as compared to $19.9 million in 1997 due to a $2.6
million decrease in propane gross profit partially offset by a $0.1 million
increase in gross profit related to higher equipment rental charges. Lower
propane sales volumes caused $2.2 million of the $2.6 million propane gross
profit decrease and a 1.3% decline in the average dollar margin per gallon
accounted for the remainder of the decrease. The increase in gross profit as a
percentage of sales, from 22.4% to 24.4%, is primarily the result of the average
dollar margin per gallon decreasing only 1.3% from period to period while the
average sales price per gallon decreased $0.18 per gallon, or 16.2%, due to
lower product costs.
Selling, general and administrative expenses increased $1.2 million, or
10.3%, to $12.8 million in the six months ended June 30, 1998, from $11.6
million in the 1997 period. The increase is primarily attributable to the
acquisitions of propane distributorships that the Partnership made in 1997 and,
to a lesser extent, increased professional fees and advertising expenses.
Interest expense increased $0.4 million, or 6.6%, to $6.5 million in the
six months ended June 30, 1998 due to higher average outstanding borrowings.
Interest income from Triarc was unchanged at $2.7 million.
Other income was unchanged at $0.8 million.
The provision for income taxes, which relates only to the pre-tax income of
NSSI, was unchanged at $0.1 million.
THREE MONTHS ENDED JUNE 30, 1998 COMPARED WITH THREE MONTHS ENDED JUNE 30, 1997
Revenues decreased $4.2 million, or 14.3%, to $25.3 million in the three
months ended June 30, 1998 as compared to $29.5 million for the three months
ended June 30, 1997 with propane revenues
10
<PAGE>
<PAGE>
decreasing $4.6 million, or 16.9% to $22.7 million for the three months ended
June 30, 1998 compared with $27.3 million in 1997 and revenues from appliance
and other product lines increasing $0.4 million. The $4.6 million decrease in
propane revenues is a result of decreased average selling prices ($3.1 million)
due to lower product costs along with decreased volumes ($1.5 million) primarily
as a result of the warmer weather. Propane retail gallons sold decreased 1.5
million gallons, or 5.5%, to 25.3 million gallons in 1998, compared to 26.8
million gallons in 1997. This decrease in gallons sold is primarily attributable
to a decrease in sales to residential customers for heating purposes due to the
fact that the three months ended June 30, 1998 were 28.5% warmer than the same
period in 1997 according to Degree Day data as applied to the geographic regions
of the Partnership's operations.
Gross profit decreased $1.0 million, or 20.6%, to $4.0 million in the three
months ended June 30, 1998 as compared to $5.0 million in the comparable three
months of 1997 due to a $1.3 million decrease in propane gross profit partially
offset by a $0.3 million increase in other gross profit. The decrease was caused
by the $0.8 million effect of lower propane sales volumes and the $0.5 million
effect of the 3.9% decline in the average dollar margin per gallon. The decrease
in gross profit as a percentage of sales, from 17.0%, to 15.8%, is primarily the
result of operating expenses applicable to revenues remaining constant while
sales prices declined.
Selling, general and administrative expenses increased $1.1 million, or
21.5%, to $6.3 million in the three months ended June 30, 1998 from $5.2 million
in 1997. The increase is primarily attributable to the acquisitions of propane
distributorships the Partnership made in 1997 and, to a lesser extent, increases
in professional fees and advertising expenses.
Interest expense was relatively unchanged at $3.2 million in the three
months ended June 30, 1998.
Interest income from Triarc was unchanged at $1.4 million.
Other income, net decreased $0.2 million to $0.2 million in the three
months ended June 30, 1998 as compared to $0.4 million during the same period in
1997 due primarily to non-recurring gains on the sales of certain properties in
the 1997 second quarter.
The provision for income taxes, which relates only to the pre-tax income of
NSSI, was relatively unchanged.
LIQUIDITY AND CAPITAL RESOURCES
The Partnership's cash and cash equivalents (collectively 'cash') decreased
$1.8 million during the six month period ended June 30, 1998. This decrease
reflected cash provided by operating activities of $12.7 million more than
offset by cash used in investing activities of $2.9 million and cash used in
financing activities of $11.6 million.
Cash flows provided by operating activities of $12.7 million in the 1998
period consisted of net income of $1.4 million, non-cash charges of $6.8
million, principally depreciation and amortization, and $4.5 million from
working capital sources. The change in working capital is primarily made up of
seasonal decreases in receivables of $5.9 million and inventories of $1.9
million, partially offset by a decrease of $3.2 million in accounts payable and
accrued expenses. Accounts payable decreased $1.6 million primarily due to the
seasonal nature of the propane industry and accrued expenses decreased $1.6
million primarily due to lower accrued payroll and payroll related expenses and
lower accrued property taxes due to the timing of related payments and lower
sales taxes payable due to decreased sales volume.
Cash used in investing activities during the six month period ended June
30, 1998 included capital expenditures of $3.5 million and business acquisitions
of $0.4 million. Of the capital expenditure amount for 1998, $1.3 million was
for recurring maintenance and $2.2 million was to support growth of operations.
The Partnership has forecasted maintenance capital expenditures and growth
capital expenditures for the remainder of 1998 of approximately $1.2 million and
$0.4 million, respectively, subject to the availability of cash and other
financing sources. The Partnership has outstanding commitments amounting to $0.8
million for such capital expenditures as of June 30, 1998 which consists of $0.4
million each for maintenance capital expenditures and growth capital
expenditures. During the first six months of 1998 the Partnership acquired the
assets of three propane distributors for an
11
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<PAGE>
aggregate $0.4 million in cash. As discussed below, effective June 30, 1998 the
Partnership effectively no longer has an acquisition facility and does not
expect to make acquisitions through at least the remainder of 1998.
Cash used in financing activities during the six month period ending June
30, 1998 reflects net repayments of $2.2 million on the Working Capital Facility
(see below), other debt repayments of $0.7 million and distributions to
Unitholders of $9.8 million, all partially reduced by borrowings of $1.0 million
on the Acquisition Facility (see below).
The Partnership maintains a bank facility (the 'Bank Facility') with a
group of banks which, as amended effective June 30, 1998, provides for a $10.0
million (a reduction from $15.0 million, subject to reinstatement under certain
limited conditions, in accordance with the amendment discussed below) working
capital facility (the 'Working Capital Facility') to be used for working capital
and other general partnership purposes of which $3.6 million was available as of
June 30, 1998. Further, the banks' commitments under a previously existing $20.0
million acquisition facility (the 'Acquisition Facility') under the Bank
Facility, the use of which was restricted to business acquisitions and capital
expenditures for growth, were permanently reduced to the $13.0 million of
outstanding borrowings as of June 30, 1998. In that connection, the Partnership
has agreed that it may not reborrow any amounts repaid under the Acquisition
Facility. The Working Capital Facility, the Acquisition Facility and the $125
million of 8.54% first mortgage notes due June 20, 2010 (the 'Mortgage Notes')
do not require any principal payments during the second half of 1998.
As of June 30, 1998 the Partnership was not in compliance with certain
covenants of its Bank Facility agreement (the 'Agreement'). Subsequently, the
Agreement was amended (the 'Agreement Amendment') retroactive to June 30, 1998
to, among other things, permit principal prepayments (the 'Triarc Note
Prepayments') of up to $10.0 million by Triarc through February 14, 1999 on a
$40.7 million note receivable from Triarc (the 'Triarc Note') and, to the extent
not utilized for distributions (see below), to permit any such prepayments to be
included in the determination of consolidated cash flow, as defined under the
Agreement ('Consolidated Cash Flow'), for purposes of compliance with certain
leverage and interest coverage ratio requirements for a period of twelve
consecutive months commencing June 30, 1998. Further, the Partnership must have
sufficient interest coverage through consolidated cash flow, as defined under
the indenture (the 'Indenture') pursuant to which the Mortgage Notes were
issued, in order to pay distributions. Effective June 30, 1998 the Indenture was
amended (the 'Indenture Amendment' and collectively with the Agreement
Amendment, the 'Amendments') to, among other things, (i) permit the Triarc Note
Prepayments, (ii) effectively permit up to $6.0 million of any such prepayments
to be utilized to pay distributions to Common Unitholders with a proportionate
amount for the General Partners' Interest with respect to distributions for the
second, third and fourth quarters of 1998 only and (iii) amend the definition of
consolidated cash flow to include interest income received by the Partnership on
the Triarc Note through December 31, 1998 for interest coverage purposes thereby
facilitating the Partnership's ability to pay distributions. Based on these
amendments and current forecasts, the Partnership currently expects to remain in
compliance with its debt agreements at least through June 30, 1999. (See further
discussion below regarding the Partnership's ability to pay distributions beyond
the second quarter of 1998). The Triarc Note was amended to, among other things,
permit Triarc, at its option, to make Triarc Note Prepayments up to $10.0
million of the principal thereof through February 14, 1999. Triarc has made no
commitment to make Triarc Note Prepayments other than the $7.0 million prepaid
on August 7, 1998 discussed below. The remaining balance of the Triarc Note
would then be payable according to the original terms such that the remaining
principal balance after any prepayments would be repaid in eight equal annual
installments commencing in 2003.
The Partnership incurred fees of approximately $1.0 million in connection
with executing the Amendments. Such fees will be amortized to interest expense
ratably over the third and fourth quarters of 1998.
On August 7, 1998 Triarc prepaid $7.0 million of principal on the Triarc
Note of which $3.3 million has been included as Consolidated Cash Flow under the
Agreement in order to retroactively cure the noncompliance with the Agreement
and $3.7 million is being used to permit the Partnership to declare its
distribution for the quarter ended June 30, 1998 (see further discussion below).
12
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Partnership distributions are made from available cash as defined in the
Partnership Agreement, the Agreement and the Indenture ('Available Cash') and as
amended by the Agreement Amendment and the Indenture Amendment. Under the
Agreement Amendment, Available Cash is supplemented by any Triarc Note
Prepayments and may be utilized to pay distributions to the extent ($3.3 million
as of June 30, 1998) such Triarc Note Prepayments are not required to be
included in Consolidated Cash Flow for the Partnership to be in compliance with
the Agreement. Under the Indenture Amendment, Available Cash is supplemented by
up to $6.0 million of Triarc Note Prepayments. Available Cash generally means
with respect to any quarter of the Partnership, all cash on hand at the end of
such quarter less the amount of cash reserves that is necessary or appropriate
in the discretion of the Managing General Partner to (i) provide for the proper
conduct of the Partnership's business, (ii) comply with applicable law or any
Partnership debt instrument or other agreement, or (iii) provide funds for
distributions to Unitholders and the General Partners in respect of any one or
more of the next four quarters (see Note 5 to the December 31, 1997 audited
financial statements within the Form 10-K for a more detailed discussion of
Available Cash). On February 13, 1998, the Partnership paid a quarterly
distribution for the quarter ended December 31, 1997 of $0.525 per Common and
Subordinated Unit to Unitholders of record on February 5, 1998, with a
proportionate amount for the General Partners' Interest, or an aggregate of $6.1
million, including $2.6 million to the General Partners related to the
Subordinated Units and the General Partners' Interest. On May 15, 1998, the
Partnership paid a quarterly distribution for the quarter ended March 31, 1998
of $0.525 per Common Unit to Common Unitholders of record on May 8, 1998, with a
proportionate amount for the General Partners' Interest, or an aggregate of $3.7
million, including $0.1 million to the General Partners related to the General
Partners' Interest. On July 29, 1998, utilizing the aforementioned $3.7 million
of the Triarc Note Prepayment, the Partnership declared a quarterly distribution
for the quarter ended June 30, 1998 of $0.525 per Common Unit to Common
Unitholders of record on August 7, 1998 payable August 14, 1998, with a
proportionate amount for the General Partners' Interest, or an aggregate of $3.7
million including $0.1 million to the General Partners related to the General
Partners' Interest. No distributions were declared on the Subordinated Units
with respect to the quarters ending March 31, 1998 and June 30, 1998 since
subsequent to the distribution with respect to the quarter ended December 31,
1997, the Managing General Partner has agreed to forego any distributions on the
Subordinated Units in order to facilitate the Partnership's compliance with debt
covenant restrictions in the Agreement and, effective June 30, 1998 pursuant to
the Amendments, the Partnership agreed not to pay distributions on the
Subordinated Units with respect to the second, third and fourth quarters of
1998. The Partnership believes its ability to make a distribution to Common
Unitholders with a proportionate amount for the General Partners' Interest for
the quarter ended September 30, 1998 is contingent upon an additional $3.0
million of Triarc Note Prepayments. Triarc has made no commitment to make any
Triarc Note Prepayments. Thereafter, the Partnership will pay distributions to
the Common Unitholders with a proportionate amount for the General Partners'
Interest only if the Partnership is able to generate sufficient Available Cash
through cash flows from operations, the Partnership achieves compliance with the
restrictions embodied in the covenants in the Amended Agreements and with
respect to the Subordinated Unitholders if the Partnership acheives compliance
with the original restrictions embodied in the covenants in the Agreement and
such payment would not impact compliance with such covenant restrictions
(although, as previously indicated the Amendments prohibit any distributions on
the Subordinated Units with respect to the remainder of 1998.) There can be no
assurance that the Partnership will be able to pay any such distributions.
Based on the Partnership's current cash on hand, borrowing availability
under the Bank Facility, cash flows from operations and the $7.0 million Triarc
Note Prepayment, the Partnership expects to be able to meet all of it's
remaining 1998 cash requirements, primarily the aforementioned capital
expenditures and distributions, except, as described above, for the distribution
with respect to the quarter ending September 30, 1998 which is payable during
the fourth quarter of 1998.
CONTINGENCIES
The Partnership continues to have an environmental contingency of the same
nature and general magnitude as described in Note 17 to the consolidated
financial statements in the Form 10-K. The costs
13
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<PAGE>
of remediation and third party claims, if any, associated with this
environmental contingency may have a material adverse effect on the
Partnership's financial position, results of operations or its ability to make
Distributions to the holders of the Common Units, the General Partners' Interest
and the Subordinated Units.
The Partnership continues to have a contingency with respect to the Final
Rule for Continued Operation of the Present Propane Trucks published by the U.S.
Department of Transportation and resulting litigation of the same nature as
described in Note 17 to the consolidated financial statements in the Form 10-K.
The Partnership continues to be unable to determine the likely outcome of the
litigation or what the ultimate long term costs of compliance with the Final
Rule will be.
The Partnership does not believe that contingencies for ordinary routine
claims, litigation and administrative proceedings and investigations incidental
to its business will have a material adverse effect on the Partnership's
consolidated financial position or results of operations. However, any one or
all of these matters taken together may adversely affect the Partnership's
results of operations or limit the Partnership's ability to make Distributions.
YEAR 2000
The Partnership has undertaken a study of its functional application
systems to determine their compliance with year 2000 issues and, to the extent
of noncompliance, the required remediation. As a result of such study, the
Partnership believes the majority of its systems are year 2000 compliant.
However, certain systems, which are significant to the Partnership, require
remediation. The Partnership currently estimates it will complete the required
remediation, including testing, by the end of the first half of 1999. To date,
expenses incurred by the Partnership in order to become year 2000 compliant have
been less than $0.1 million and the current estimated cost to complete such
remediation is expected to be less than $0.1 million. Such costs, other than
software, have been and will continue to be expensed as incurred.
An assessment of the readiness of year 2000 compliance of third party
entities with which the Partnership has relationships, such as its suppliers,
banking institutions, customers, payroll processors and others, is ongoing. The
Partnership has inquired, or is in the process of inquiring, of the significant
aforementioned third party entities as to their readiness with respect to year
2000 compliance and to date has received indications that many of them are
either compliant or in the process of remediation. The Partnership will continue
to monitor these third party entities to determine the impact on the business of
the Partnership and the actions the Partnership must take, if any, in the event
of non-compliance by any of these third parties. The Partnership's initial
assessment of compliance by third party entities is that there is not a material
business risk to the Partnership posed by any such non-compliance and, as such,
the Partnership has not yet developed any related contingency plans. The
Partnership believes there are multiple vendors of the goods and services it
receives from its suppliers and thus risk of non-compliance with year 2000 by
any of its suppliers appears to be somewhat mitigated by this factor. Also, no
single customer accounts for more than 10% of the Partnership's consolidated
revenues, thus mitigating the adverse risk to the Partnership's business if some
customers are not year 2000 compliant.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board (the 'FASB') issued
Statement of Financial Accounting Standards No. 133 ('SFAS 133') 'Accounting for
Derivative Instruments and Hedging Activities'. SFAS 133 provides a
comprehensive standard for the recognition and measurement of derivatives and
hedging activities. The standard requires all derivatives to be recorded on the
balance sheet at fair value and establishes special accounting for three types
of hedges. The accounting treatment for each of these three types of hedges is
unique but results in including the offsetting changes in fair values or cash
flows of both the hedge and hedged item in results of operations in the same
period. Changes in fair value of derivatives that do not meet the criteria of
one of the aforementioned categories of hedges are included in results of
operations. SFAS 133 is effective for the Partnership's fiscal year beginning
January 1, 2000. The provisions of SFAS 133 are complex and the Partnership is
only beginning its evaluation of the implementation requirements of SFAS 133
and, accordingly, is unable to determine at this time the impact it will have on
the Partnership's financial position and results of operations.
14
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PART II. OTHER INFORMATION
The statements in this Quarterly Report on Form 10-Q that are not
historical facts, including most importantly, information concerning possible or
assumed future results of operations of the Partnership and statements preceded
by, followed by, or that include the words 'may', 'believes', 'expects',
'anticipates' or the negation thereof, or similar expressions, constitute
'forward-looking statements'. All statements which address operating
performance, events or developments that are expected or anticipated to occur in
the future, including statements relating to volume and revenue growth, or
statements expressing general optimism about future operating results, are
forward-looking statements. Such forward-looking statements involve risks,
uncertainties and other factors which may cause actual results, performance or
achievements of the Partnership to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. For those statements, the Partnership claims the
protection of the safe harbor for forward-looking statements contained in the
Private Securities Litigation Reform Act of 1995. Such factors include, but are
not limited to, the following: changes in wholesale propane prices; regional
weather conditions; general economic conditions where the Partnership operates;
competition from other energy sources and within the propane industry; success
of operating initiatives; development and operating costs; advertising and
promotional efforts; the existence or absence of adverse publicity; changes in
business strategy or development plans; quality of management; availability,
terms and deployment of capital; business abilities and judgment of personnel;
availability of qualified personnel; labor and employee benefit costs;
unexpected costs associated with Year 2000 compliance or the business risk
associated with Year 2000 noncompliance by customers and/or suppliers; changes
in, or failure to comply with, government regulations; Triarc's not making any
additional prepayments under the Triarc Note; the costs, uncertainties and other
effects of legal and administrative proceedings; and other risks and
uncertainties detailed in the Partnership's Securities and Exchange Commission
filings. The Partnership will not undertake and specifically declines any
obligation to publicly release the result of any revisions which may be made to
any forward-looking statements to reflect events or circumstances after the date
of such statements or to reflect the occurrence of anticipated or unanticipated
events.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<S> <C>
10.1 -- Amendment No. 1 to Note Agreement and Limited Consent, dated as of June 30, 1998, among National Propane
Corporation, National Propane SGP, Inc., National Propane, L.P. and the holders of the Company's 8.54% First
Mortgage Notes.
10.2 -- Amendment No. 1 to 8.54% First Mortgage Notes, dated June 30, 1998, among National Propane, L.P. and the
holders of the Company's 8.54% First Mortgage Notes.
10.3 -- Fifth Amendment to National Propane Credit Agreement, dated June 30, 1998, among National Propane, L.P.,
the lenders (as defined therein), and BankBoston, N.A., as Administrative Agent and a lender.
10.4 -- Allonge Amendment dated as of June 30, 1998 attached to 13.5% Senior Secured Note, dated July 2, 1996,
issued by Triarc Companies, Inc., payable to the order of National Propane, L.P.
27.1 -- Financial Data Schedule for the six month period ended June 30, 1998 submitted to the Securities and
Exchange Commission in electronic format.
</TABLE>
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the three month period ended June
30, 1998.
15
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<PAGE>
NATIONAL PROPANE PARTNERS, L.P. AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Security Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NATIONAL PROPANE PARTNERS, L.P.
BY: NATIONAL PROPANE CORPORATION
as Managing General Partner
By /s/ R. BROOKS SHERMAN, JR.
...................................
R. BROOKS SHERMAN, JR.
VICE-PRESIDENT AND
CHIEF FINANCIAL OFFICER
(PRINCIPAL FINANCIAL OFFICER)
By /s/ STEVEN T. SCHURING
...................................
STEVEN T. SCHURING
CONTROLLER
(PRINCIPAL ACCOUNTING OFFICER)
Date: August 12, 1998
16
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<PAGE>
Exhibit 10.1
AMENDMENT NO. 1 TO NOTE AGREEMENT AND LIMITED CONSENT
Amendment No 1 to Note Agreement and Limited Consent (this
"Amendment"), dated as of June 30, 1998, among National Propane Corporation, a
Delaware corporation ("National Propane Corp."), National Propane SGP, Inc., a
Delaware corporation ("National Propane SGP"), National Propane, L.P., a
Delaware limited partnership (the "Company" and together with National Propane
Corp. and National Propane SGP, collectively "National Propane"), and the
holders (the "Holders") of the Company's 8.54% First Mortgage Notes due June 30,
2010 in the aggregate principal amount of $125,000,000, (the "Notes"), relating
to the separate Note Agreements (the "Note Agreement"), dated as of June 26,
1996, among National Propane and the purchasers of the Notes listed in the
Schedule of Purchasers attached thereto. Capitalized terms used herein without
definition shall have the respective meanings assigned thereto in the Note
Agreement.
The parties hereto have agreed, subject to the terms and conditions
hereof, to amend the Note Agreement as provided herein.
In consideration of the mutual agreements contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Amendments to Note Agreement.
(a) The first proviso in the definition of "Available
Cash" contained in Section 13 of the Note Agreement is hereby
amended to read in its entirety as follows:
"provided that Available Cash shall not include
<PAGE>
<PAGE>
amounts received as prepayments on the Partnership
Note other than (i) amounts scheduled to have been
received on or prior to the end of such calendar
quarter pursuant to the terms of Section 1 of the
Partnership Note or (ii) up to $6,000,000 principal
amount of the Partnership Note that is prepaid
pursuant to Section 4.1(f) of the Partnership Note;"
(b) Clause (b)(ii) of the definition of "Consolidated
Cash Flow" contained in Section 13 of the Note Agreement is
hereby amended to read in its entirety as follows:
"(ii) interest income received by the Company in
connection with the Partnership Note; provided
however, that in connection with any calculation
required pursuant to Section 10.4 with respect to the
fiscal quarters ended June 30, 1998, September 30,
1998 and December 31, 1998, respectively, interest
income actually received in cash by the Company in
connection with the Partnership Note shall be
included in such calculation."
2. Consent to Amendment of Partnership Note. The Holders of the Notes
(the "Holders") hereby consent to the amendments of the Partnership Note
effected by the Allonge Amendment attached hereto as Exhibit A.
3. Consent to Amendment of Bank Credit Facilities. To the extent
required by Section 19 of the Trust Agreement, the Holders hereby consent to the
amendments of the Bank Credit Facilities effected by the Amendment to Bank
Credit Facilities attached hereto as Exhibit B (the "Bank Amendment").
4. Representations and Warranties of the Company. The Company
represents and warrants that, as of the date hereof, (i) Triarc is not in
default in the payment of principal, interest or any other amount due and
payable on the Partnership Note and (ii) no Event of
2
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<PAGE>
Default or Potential Event of Default has occurred and is continuing under the
Note Agreement. In accordance with Section 17 of the Note Agreement, the
representations and warranties contained in this Section 4 are, and shall be
considered, representations and warranties of the Company under the Note
Agreement.
5. Subordinated Unit Distributions. The Company agrees that it will not
make any Restricted Payment on account of the Subordinated Units with respect to
the fiscal quarters ending June 30, 1998, September 30, 1998 and December 31,
1998. National Propane Corp. hereby agrees that it will not, directly or
indirectly, receive or accept any Restricted Payment from the Company or
National Propane Partners, L.P. ("NPP") on account of the Subordinated Units
with respect to the fiscal quarters ending June 30, 1998, September 30, 1998 and
December 31, 1998. As used herein, "Subordinated Units" shall mean the
subordinated units representing subordinated general partner interests in NPP.
6. Conditions Precedent. This Amendment shall become effective as of
June 30, 1998, upon the satisfaction of the following conditions precedent (the
"Effective Time"):
(a) Each of the Holders, or their special counsel,
shall have received counterparts of the Bank Amendment, duly
executed and delivered by each of the parties thereto, which
Bank Amendment shall be in full force and effect.
(b) This Amendment shall have been executed by the
Borrower and the Required Holders.
3
<PAGE>
<PAGE>
7. Continuing Effect: No Other Amendments. Except as expressly amended
hereby, all of the terms and provisions of the Note Agreement and the Notes are
and shall remain in full force and effect. The amendments contained herein shall
not constitute an amendment of any other provision of the Note Agreement or the
Notes.
8. Successors and Assigns. This Amendment shall be binding upon, inure
to the benefit of and be enforceable by the respective successors and assigns of
the parties hereto, whether so expressed or not, and, in particular, shall inure
to the benefit of and be enforceable by an holder or holders at the time of any
Notes.
9. GOVERNING LAW. THIS AMENDMENT HAS BEEN EXECUTED IN THE CITY OF NEW
YORK, STATE OF NEW YORK, UNITED STATES OF AMERICA AND SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
10. Expenses. The Borrower shall pay all reasonable out-of-pocket
expenses actually incurred by the Holders in connection with the preparation,
review, negotiation, execution, delivery and enforcement of this Amendment,
including, but not limited to, the reasonable fees and disbursements of counsel.
11. Fee. At the Effective Time, the Borrower shall pay to each Holder a
fee of .1475% of the outstanding principal amount of Notes held by such Holder
on such date.
12. Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall constitute an original, but all of which when
taken together
4
<PAGE>
<PAGE>
shall constitute but one agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their duly authorized officers, all as of the date first above
written.
NATIONAL PROPANE CORPORATION
By: Ronald R. Romineicki
-------------------------------
Ronald R. Rominiecki
President and Chief Operating Officer
NATIONAL PROPANE SGP, INC.,
By: Ronald R. Rominiecki
-------------------------------
Ronald R. Rominiecki
President and Chief Operating Officer
NATIONAL PROPANE, L.P.
By: NATIONAL PROPANE CORPORATION,
its managing general partner
By: Ronald R. Rominiecki
-------------------------------
Ronald R. Rominiecki
President and Chief Operating Officer
By: NATIONAL PROPANE SGP, INC.,
its special general partner
By: Ronald R. Rominiecki
-------------------------------
Ronald R. Rominiecki
President and Chief Operating Officer
5
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<PAGE>
CONNECTICUT GENERAL LIFE
INSURANCE COMPANY
By: CIGNA INVESTMENTS, INC.
By: James G. Schelling
-------------------------------
James G. Schelling
Managing Director
CONNECTICUT GENERAL LIFE
INSURANCE COMPANY, on behalf of
Separate Account 66
By: CIGNA INVESTMENTS, INC.
By: James G. Schelling
-------------------------------
James G. Schelling
Managing Director
LIFE INSURANCE COMPANY OF
NORTH AMERICA
By: CIGNA INVESTMENTS, INC.
By: James G. Schelling
-------------------------------
James G. Schelling
Managing Director
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
By: Gary A. Poliner
-------------------------------
Gary A. Poliner
Its Authorized Representative
6
<PAGE>
<PAGE>
PRINCIPAL MUTUAL LIFE
INSURANCE COMPANY
By: Clint Woods
-------------------------------
Clint Woods
Counsel
By: Christopher J. Henderson
-------------------------------
Christopher J. Henderson
Counsel
KEYPORT LIFE INSURANCE COMPANY
By: STEIN ROE & FARNHAM,
INCORPORATED, as agent
By: Richard A. Hegwood
------------------------------
Richard A. Hegwood
Senior Vice President
GENERAL AMERICAN LIFE
INSURANCE COMPANY
By: CONNING ASSET MANAGEMENT
By: Laura R. Caro
-------------------------------
Laura R. Caro
Senior Vice President, Conning Asset
Management Company
TMG LIFE INSURANCE COMPANY
By: THE MUTUAL GROUP (U.S.), INC.,
its agent
By: Constance L. Keller
-------------------------------
Constance L. Keller
Director, Private Placements
By: Michael J. Steppe
-------------------------------
Michael J. Steppe
Senior Vice President
7
<PAGE>
<PAGE>
SECURITY LIFE OF DENVER
INSURANCE COMPANY
By: ING INVESTMENT MANAGEMENT LLC,
its Agent
By: Fred C. Smith
-------------------------------
Fred C. Smith
SVP and Managing Director
MIDWESTERN UNITED LIFE
INSURANCE COMPANY
By: ING INVESTMENT MANAGEMENT LLC,
its Agent
By: Fred C. Smith
-------------------------------
Fred C. Smith
SVP and Managing Director
PEERLESS INSURANCE COMPANY
By: ING INVESTMENT MANAGEMENT LLC,
its Agent
By: Fred C. Smith
-------------------------------
Fred C. Smith
SVP and Managing Director
NORTHERN LIFE INSURANCE COMPANY
By: James V. Wittich
-------------------------------
James V. Wittich
Assistant Treasurer
8
<PAGE>
<PAGE>
RELIASTAR LIFE INSURANCE COMPANY
F/K/A
NORTHWESTERN NATIONAL LIFE
INSURANCE COMPANY
By: James V. Wittich
------------------------------
James V. Wittich
Authorized Representative
TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA
By: Loren S. Archibald
------------------------------
Loren S. Archibald
Managing Director, Private Placements
PACIFIC MUTUAL LIFE
INSURANCE COMPANY
By: Diane W. Dales
------------------------------
Diane W. Dales
Assistant Vice President
By: Peter S. Fiek
------------------------------
Peter S. Fiek
Assistant Secretary
JEFFERSON PILOT LIFE INSURANCE COMPANY
By: Robert E. Whalen, II
------------------------------
Robert E. Whalen, II
Second Vice President
9
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<PAGE>
THE LINCOLN NATIONAL LIFE
INSURANCE COMPANY
By: Lincoln Investment Management, Inc.,
Its Attorney In Fact
By: J. Steven Staggs
------------------------------
J. Steven Staggs
Vice President
LINCOLN LIFE & ANNUITY COMPANY
OF NEW YORK
By: Lincoln Investment Management, Inc.,
Its Attorney In Fact
By: J. Steven Staggs
------------------------------
J. Steven Staggs
Vice President
10
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<PAGE>
Exhibit 10.2
AMENDMENT NO. 1 TO 8.54% FIRST MORTGAGE NOTES
Amendment No. 1 (this "Amendment"), dated as of June 30, 1998, among
National Propane, L.P., a Delaware limited partnership (the "Company") and the
holders (the "Holders") of the Company's 8.54% First Mortgage Notes due June
30, 2010 in the aggregate principal amount of $125,000,000, (the "Notes"), to
the Notes issued pursuant to the separate Note Agreements (the "Note
Agreement"), dated as of June 26, 1996, as amended, among the Company, National
Propane SGP, Inc., National Propane Corporation and the purchasers of the Notes
listed in the Schedule of Purchasers attached thereto. Capitalized terms used
herein without definition shall have the respective meanings assigned thereto in
the Note Agreement.
The parties hereto have agreed, subject to the terms and conditions
hereof, to amend the Notes as provided herein.
In consideration of the mutual agreements contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Amendment to Notes. Each Note is hereby amended to provide that,
commencing on March 30, 1999, interest on the unpaid balance of the principal
amount of such Note shall be paid quarterly on each March 30, June 30, September
30 and December 30.
2. Conditions Precedent. This Amendment shall become effective as of
June 30, 1998, upon the satisfaction of the following conditions precedent (the
"Effective Time"):
<PAGE>
<PAGE>
(a) Each of the Holders, or their special counsel,
shall have received counterparts of the Amendment to the Bank
Credit Facilities (the "Bank Amendment") attached as Exhibit B
to Amendment No. 1 to Note Agreement and Limited Consent dated
as of June 30, 1998 ("Amendment No. 1 to Note Agreement"),
duly executed and delivered by each of the parties thereto,
which Bank Amendment shall be in full force and effect.
(b) The Amendment No. 1 to Note Agreement shall have
been executed by the Company and the Required Holders.
(c) This Amendment shall have been executed by the
Company and all of the Holders.
3. Continuing Effect: No Other Amendments. Except as expressly amended
hereby, all of the terms and provisions of the Notes are and shall remain in
full force and effect. The amendments contained herein shall not constitute an
amendment of any other provision of the Notes.
4. Successors and Assigns. This Amendment shall be binding upon, inure
to the benefit of and be enforceable by the respective successors and assigns of
the parties hereto, whether so expressed or not, and, in particular, shall inure
to the benefit of and be enforceable by an holder or holders at the time of any
Notes.
5. GOVERNING LAW. THIS AMENDMENT HAS BEEN EXECUTED IN THE CITY OF NEW
YORK, STATE OF NEW YORK, UNITED STATES OF AMERICA AND SHALL IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF
THE STATE OF
2
<PAGE>
<PAGE>
NEW YORK.
6. Expenses. The Company shall pay all reasonable out-of-pocket
expenses actually incurred by the Holders in connection with the preparation,
review, negotiation, execution, delivery and enforcement of this Amendment,
including, but not limited to, the reasonable fees and disbursements of counsel.
7. Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute but one agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their duly authorized officers, all as of the date first above
written.
NATIONAL PROPANE, L.P.
By: NATIONAL PROPANE CORPORATION,
its managing general partner
By: Ronald R. Rominiecki
--------------------
Ronald R. Rominiecki
President and Chief Operating Officer
By: NATIONAL PROPANE SGP, INC.,
its special general partner
By: Ronald R. Rominiecki
--------------------
Ronald R. Rominiecki
President and Chief Operating Officer
CONNECTICUT GENERAL LIFE
INSURANCE COMPANY
By: CIGNA INVESTMENTS, INC.
3
<PAGE>
<PAGE>
By: James G. Schelling
------------------
James G. Schelling
Managing Director
CONNECTICUT GENERAL LIFE
INSURANCE COMPANY, on behalf of
Separate Account 66
By: CIGNA INVESTMENTS, INC.
By: James G. Schelling
------------------
James G. Schelling
Managing Director
LIFE INSURANCE COMPANY OF
NORTH AMERICA
By: CIGNA INVESTMENTS, INC.
By: James G. Schelling
------------------
James G. Schelling
Managing Director
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
By: Gary A. Poliner
---------------
Gary A. Poliner
Its Authorized Representative
PRINCIPAL MUTUAL LIFE
INSURANCE COMPANY
By: Clint Woods
-----------
Clint Woods
Counsel
By: Christopher J. Henderson
------------------------
Christopher J. Henderson
Counsel
4
<PAGE>
<PAGE>
KEYPORT LIFE INSURANCE COMPANY
By: STEIN ROE & FARNHAM,
INCORPORATED, as agent
By: Richard A. Hegwood
----------------------------
Richard A. Hegwood
Senior Vice President
GENERAL AMERICAN LIFE
INSURANCE COMPANY
By: CONNING ASSET MANAGEMENT
By: Laura R. Caro
-------------
Laura R. Caro
Conning Asset Management Company
TMG LIFE INSURANCE COMPANY
By: THE MUTUAL GROUP (U.S.), INC.,
its agent
By: Constance L. Keller
-------------------
Constance L. Keller
Director, Private Placements
By: Michael J. Steppe
-----------------
Michael J. Steppe
Senior Vice President
SECURITY LIFE OF DENVER
INSURANCE COMPANY
By: ING INVESTMENT MANAGEMENT LLC,
its agent
By: Fred C. Smith
-------------
Fred C. Smith
SVP and Managing Director
5
<PAGE>
<PAGE>
MIDWESTERN UNITED LIFE
INSURANCE COMPANY
By: ING INVESTMENT MANAGEMENT LLC,
its agent
By: Fred C. Smith
-------------
Fred C. Smith
SVP and Managing Director
PEERLESS INSURANCE COMPANY
By: ING INVESTMENT MANAGEMENT LLC,
its agent
By: Fred C. Smith
-------------
Fred C. Smith
SVP and Managing Director
NORTHERN LIFE INSURANCE COMPANY
By: James V. Wittich
----------------
James V. Wittich
Assistant Treasurer
RELIASTAR LIFE INSURANCE COMPANY
F/K/A
NORTHWESTERN NATIONAL LIFE
INSURANCE COMPANY
By: James V. Wittich
----------------
James V Wittich
Authorized Representative
TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA
By: Loren S. Archibald
------------------
Loren S. Archibald
Managing Director, Private Placements
6
<PAGE>
<PAGE>
PACIFIC MUTUAL LIFE
INSURANCE COMPANY
By: Diane W. Dales
--------------
Diane W. Dales
Assistant Vice President
By: Peter S. Fiek
-------------
Peter S. Fiek
Assistant Secretary
JEFFERSON PILOT LIFE INSURANCE COMPANY
By: Robert E. Whalen, II
--------------------
Robert E. Whalen, II
Second Vice President
THE LINCOLN NATIONAL LIFE
INSURANCE COMPANY
By: Lincoln Investment Management, Inc.,
Its Attorney In Fact
By: J. Steven Staggs
----------------
J. Steven Staggs
Vice President
LINCOLN LIFE & ANNUITY COMPANY
OF NEW YORK
By: Lincoln Investment Management, Inc.,
Its Attorney In Fact
By: J. Steven Staggs
----------------
J. Steven Staggs
Vice President
7
<PAGE>
<PAGE>
Exhibit 10.3
FIFTH AMENDMENT TO CREDIT AGREEMENT
This Fifth Amendment to Credit Agreement is made as of the 30th day
of June, 1998 by and among
National Propane, L.P (the "Borrower")., a Delaware limited
partnership, with its principal executive offices at Suite 1700, IES
Tower, 200 1st Street, S.E., P.O. Box 2067, Cedar Rapids, Iowa
52401-2067
The lenders and other financial institutions which are now or may
hereafter become a party to the Credit Agreement (the "Lenders"),
BankBoston, N.A. (f/k/a The First National Bank of Boston), as
Administrative Agent for the Lenders (in such capacity, the
"Administrative Agent"), and
in consideration of the mutual covenants herein contained and benefits to be
derived herefrom.
WITNESSETH
WHEREAS, the Borrower, the Lenders, the Administrative Agent and
BancAmerica Robertson Stephens, as Syndication Agent have entered into a Credit
Agreement dated as of June 26, 1996 (as amended and in effect, the "Credit
Agreement"); and
WHEREAS, BancAmerica Robertson Stephens has resigned as Syndication
Agent; and
WHEREAS, the Borrower has requested that certain provisions of the
Credit Agreement be further amended as provided herein, and the Administrative
Agent and the Lenders are willing to do so.
NOW THEREFORE, it is hereby agreed as follows:
1. Definitions: All capitalized terms used herein and not
otherwise defined shall have the same meaning herein as in the Credit Agreement.
2. Amendment to Article I. The provisions of Section 1.01 of the Credit
Agreement are hereby amended
a. By amending the definition of "Available Cash" by adding the
words "and, for purposes of Section 6.04 only, except for
Permitted Triarc Prepayments" at the end of the second proviso
thereto on the 24th line of such definition.
b. By amending the definition of "Consolidated Cash Flow" as follows:
(i) by adding the words "other than, for purposes of
Sections 6.04 and 6.31 only, accrued interest
paid in cash as part of any Permitted Triarc
Prepayments" at the end of clause (iii) thereof;
and
(ii) by adding the following immediately after clause
(iv) as follows:
plus (v) for purposes of Sections 6.04 and
6.31 only, all cash proceeds received by the
Borrower on account of Permitted Triarc
Prepayments; plus (vi) for purposes of
Sections 6.04 and 6.31 only, and for
Reference Periods from and after June 30,
1998 only, an amount equal to the lesser of
(A) $1,200,000.00 or (B) the
<PAGE>
<PAGE>
actual bank, legal, consent and advisory
fees incurred by the Borrower in connection
with the Fifth Amendment to this Credit
Agreement, Amendment No. 1 to the Note
Agreement and Amendment No. 1 to the
Mortgage Notes, in each case which are
deducted in the determination of
Consolidated Net Income, less (vii) the
aggregate Restricted Payments made on the
Borrower's partnership interests or directly
or indirectly (through the Public
Partnership) to the holders of the common
units of the Public Partnership, in either
case from the cash proceeds received on
account of Permitted Triarc Prepayments. For
purposes of this clause (vii), payments made
on account of the Borrower's partnership
interests and to the holders of the common
units of the Public Partnership shall be
deemed made from, and to the extent of, the
cash proceeds received on account of
Permitted Triarc Prepayments.
c. By amending the definition of "Consolidated Interest Expense"
by adding the following after the words "Capital Lease
Obligations" in the fifth line thereof:
, but excluding, for purposes of Section
6.04 hereof, an amount equal to the lesser
of (A) $1,200,000.00 or (B) the actual bank,
legal, consent and advisory fees incurred by
the Borrower in connection with the Fifth
Amendment to this Credit Agreement,
Amendment No. 1 to the Note Agreement and
Amendment No. 1 to the Mortgage Notes, in
each case only to the extent accounted for
as interest expense in accordance with GAAP,
d. By amending the definition of "Net Working Capital" by adding
the following at the end of clause (a) thereof:
plus, for Reference Periods from and after June 30,
1998 only, an amount equal to the lesser of (i)
$1,200,000.00 or (ii) the actual bank, legal, consent
and advisory fees incurred by the Borrower in
connection with the Fifth Amendment to this Credit
Agreement, Amendment No. 1 to the Note Agreement and
Amendment No. 1 to the Mortgage Notes, in each case
which have been paid by the Borrower and only to the
extent deducted in the determination of Net Working
Capital.
e. By adding the following new definitions:
"Increased Market Cost Conditions": shall mean such
time as the average price of propane determined for
any ten (10) consecutive Business Days in the Conway,
Kansas or Mont Belvieu, Texas market, as published by
Oil Price Information Services (or, if such service
discontinues publication of such prices, by such
other service selected by the Borrower and reasonably
acceptable to the Administrative Agent) has increased
from the price so reflected as of the date of the
Fifth Amendment to this Credit Agreement by more than
thirty percent (30%).
"Permitted Triarc Prepayments": shall mean cash
payments received by the Borrower between June 30,
1998 and February 15, 1999 on account of the Triarc
Note consisting of (i) principal in an amount not to
exceed
2
<PAGE>
<PAGE>
$10,000,000.00 in the aggregate, and (ii) accrued
interest on the amount of any such principal
prepayments. For purposes of this Agreement, any
Permitted Triarc Prepayments received by the Borrower
on or before August 14, 1998 shall be deemed to have
been received on June 30, 1998.
"Reinstatement Event": shall mean such time as no
Default or Event of Default exists under the Credit
Agreement and other Loan Documents, provided that, in
making such determination, Consolidated Cash Flow
shall be calculated without regard to the provisions
of clause (v) of the definition thereof (i.e. the
amount of the Permitted Triarc Prepayments shall not
be included in the calculation thereof).
3. Amendments to Article II. The provisions of Article II of the Credit
Agreement are hereby amended as follows:
a. By adding the following subparagraphs to Section 2.09 of the
Credit Agreement:
(e) Effective June 30, 1998, the Tranche A Revolving
Credit Commitments shall be reduced to $10,000,000.00
in the aggregate. The Tranche A Revolving Credit
Commitments may be increased (i) to $15,000,000.00 in
the aggregate upon the occurrence of the
Reinstatement Event, or (ii) to an amount, if any,
determined by the Lenders, in their discretion, not
to exceed $15,000,000.00 in the aggregate upon the
occurrence of the Increased Market Cost Conditions.
The Lenders agree to negotiate in good faith for the
increase in the Tranche A Revolving Credit
Commitments upon the occurrence of the Increased
Market Cost Conditions (nothing contained herein
being deemed, however, the agreement of the
Administrative Agent or the Lenders to increase such
Tranche A Revolving Credit Commitments upon the
occurrence of the Increased Market Cost Conditions).
(f) Effective June 30, 1998, the Tranche B Revolving
Credit Commitments shall be reduced to $12,997,000.00
in the aggregate. The reduction of the Tranche B
Revolving Credit Commitments may not be reinstated.
b. By relettering subparagraph (e) of Section 2.09 as subparagraph (g).
4. Amendments to Article V. The provisions of Section 5.02(c) of the
Credit Agreement are hereby amended by deleting the words "together with the
delivery of financial statements pursuant to paragraphs (a) and (b) of this
Section 5.02" at the beginning thereof and substituting the words "monthly,
within 20 days at the end of each month" in its stead.
5. Amendments to Article VI. The provisions of Article VI of the Credit
Agreement are hereby amended as follows:
a. The provisions of Section 6.04 of the Credit Agreement are
hereby amended by adding the following after clause (d)
thereof:
and (e) no Restricted Payments shall be made on its
partnership interests or directly or indirectly
(through the Public Partnership) to the holders of
the common units of the Public Partnership from the
cash proceeds
3
<PAGE>
<PAGE>
received on account of Permitted Triarc Prepayments
except for Restricted Payments to such common unit
holders publicly announced and payable with respect
to the quarters ending June 30, 1998, September 30,
1998 and December 31, 1998.
b. The provisions of Section 6.31 of the Credit Agreement are
hereby amended by adding the following at the end thereof:
For purposes of calculating Consolidated Cash Flow
pursuant to this Section 6.31, there shall be
included all Permitted Triarc Prepayments (regardless
of whether the calculation is made under clause (i)
or (ii), above); however, each Permitted Triarc
Prepayment shall be included only for the twelve
month period after receipt of such payment by the
Borrower.
6. Consent to Other Amendments. The Lenders hereby consent to Amendment
No. 1 to the Note Agreement and Amendment No. 1 to the Mortgage Notes in the
form annexed hereto as Exhibit "A" and to the amendment of the Triarc Note in
the form annexed hereto as Exhibit "B" and waive any Defaults or Events of
Default which otherwise would have arisen from the execution and performance
thereof by the Borrower and Triarc.
7. Conditions to Effectiveness. This Fifth Amendment to Credit
Agreement shall not be effective until each of the following conditions
precedent have been fulfilled to the satisfaction of the Administrative Agent:
a. This Fifth Amendment to Credit Agreement shall have been duly
executed and delivered by the Borrower, the Administrative
Agent, the Syndication Agent and the Lenders, and shall be in
full force and effect. The Administrative Agent shall have
received a fully executed copy hereof and of each other
document required hereunder.
.
b. All action on the part of the Borrower necessary for the valid
execution, delivery and performance by the Borrower of this
Fifth Amendment shall have been duly and effectively taken and
shall be satisfactory in form and substance to the
Administrative Agent and its counsel.
c. The representations and warranties set forth in Sections 8b.
and 8c. hereof shall be true and correct.
d. The Administrative Agent shall have received an opinion of
counsel to the Borrower reasonably satisfactory to the
Administrative Agent and its counsel.
e. The Administrative Agent shall have received, for the account
of the Lenders, an amendment fee in an amount equal to the
greater of (i)$250,000.00 or (ii) (A) the same percentage fee
paid to the Noteholders to obtain their consent hereto and
amendment or waiver of the Note Agreement, multiplied by (B)
the aggregate of the Commitments, as reduced by this Fifth
Amendment.
f. The Borrower shall have paid to the Administrative Agent all
other fees and expenses then due and owing pursuant to the
Credit Agreement, as modified hereby, including, without
limitation, reasonable attorneys' fees incurred by the
Administrative Agent and the Lenders.
4
<PAGE>
<PAGE>
g. The Noteholders shall have consented to this Fifth Amendment
and shall have entered into Amendment No. 1 to the Note
Agreement and Amendment No. 1 to the Mortgage Notes in the
form annexed hereto as Exhibit "A".
h. The Triarc Note shall have been amended in the form annexed
hereto as Exhibit "B" and the Noteholders shall have consented
thereto.
i. Taking into account the amendments contained herein, no
Default or Event of Default shall have occurred and be
continuing.
j. The Borrower shall have provided such additional instruments
and documents to the Administrative Agent as the
Administrative Agent and its counsel may have reasonably
requested.
8. Miscellaneous.
a. Except as provided herein, all terms and conditions of the
Credit Agreement remain in full force and effect.
Except as herein provided, the amendments provided herein
shall not by implication or otherwise limit, constitute a
waiver of, or otherwise affect the rights and remedies of the
Lender, the Administrative Agent or the other Secured Parties
under the Credit Agreement or any other Loan Document, nor
shall they constitute a waiver of any Default or Event of
Default, nor shall they alter, modify, amend or in any way
affect any of the terms, conditions, obligations, covenants or
agreements contained in the Credit Agreement or any other Loan
Document. Each of the amendments provided herein shall apply
and be effective only with respect to the provisions of the
Credit Agreement specifically referred to by such amendment.
As used in the Credit Agreement, the terms "Agreement",
"herein", "hereinafter", "hereunder", "hereto", and words of
similar import shall mean the Credit Agreement as amended
hereby.
b. The Borrower hereby represents that, taking into account the
amendments contained herein, all of the representations,
warranties and covenants contained in the Credit Agreement and
other Loan Documents are true and correct in all material
respects (except to the extent that such representations and
warranties expressly relate to an earlier date, in which case,
such representations and warranties are true and correct in
all material respects on and as such earlier date).
c. The Borrower further represents that
(i) The execution, delivery and performance by the
Borrower of this Fifth Amendment will not (A)
violate (1) any provision of law, statute, rule
or regulation, (2) any provision of the agreement
of limited partnership of the Borrower, (3) any
order of any Governmental Authority, or (4)
subject to the approval of this Fifth Amendment
by the Required Holders under the Note Agreement,
the provision of any indenture, agreement or
other instrument to which the Borrower or any of
the Loan Parties is a party or which any of them
or their property may be bound, (B) subject to
the approval of this Fifth Amendment by the
Required Holders under the Note Agreement, be in
conflict with, result
5
<PAGE>
<PAGE>
in a breach of or constitute (alone or with
notice lapse of time or both) a default or give
rise to increased, additional, accelerated or
guaranteed rights of any person under any such
indenture, agreement or other instrument, or (C)
result in the creation or imposition of any Lien
upon or with respect to any property or assets
now owned or hereafter acquired by the Borrower
or any of the other Loan Parties.
(ii) The execution delivery and performance of this
Fifth Amendment have been duly authorized by the
Borrower.
(iii) On the date hereof and after giving effect
hereto, no Default or Event of Default has
occurred and is continuing.
(iv) This Fifth Amendment constitutes the legal, valid
and binding obligation of the Borrower,
enforceable against it in accordance with its
terms.
d. The Borrower further acknowledges and agrees that it does not
currently have any offsets, defenses, or counterclaims against
the Administrative Agent, the Syndication Agent or the Lenders
under the Credit Agreement or the other Loan Documents.
e. This Fifth Amendment may be executed in several counterparts
and by each party on a separate counterpart, each of which
when so executed and delivered, each shall be an original, and
all of which together shall constitute one instrument.
f. This Fifth Amendment expresses the entire understanding of the
parties with respect to the matters set forth herein and
supersedes all prior discussions or negotiations hereon or any
writings with respect to the subject matter hereof.
g. THIS FIFTH AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO ANY CONFLICTS OF LAWS PRINCIPLES OF SUCH STATE.
IN WITNESS WHEREOF, the parties hereto have caused this Fifth Amendment
to be executed and their seals to be hereto affixed as the date first above
written.
"Borrower"
NATIONAL PROPANE, L.P.
By: NATIONAL PROPANE
CORPORATION
its managing general partner
By: /s/ R. Brooks Sherman, Jr.
___________________________
Name: R. Brooks Sherman, Jr.
Title: Vice President and CFO
6
<PAGE>
<PAGE>
By: NATIONAL PROPANE SGP, INC.
its general partner
By: /s/ R. Brooks Sherman, Jr.
___________________________
Name: R. Brooks Sherman, Jr.
Title: Vice President and CFO
"Lenders"
BANKBOSTON, N.A.
By: /s/ Christopher Holmgren
___________________________
Name: Christopher Holmgren
Title: Director
BANK OF AMERICA NT & SA
By: /s/ Daryl S. Patterson
___________________________
Name: Daryl S. Patterson
Title: Vice President
UNION BANK OF CALIFORNIA
By: /s/ Walter M. Roth
___________________________
Name: Walter M. Roth
Title: Vice President
"Administrative Agent"
BANKBOSTON, N.A.
By: /s/ Christopher Holmgren
___________________________
Name: Christopher Holmgren
Title: Director
7
<PAGE>
<PAGE>
EXHIBIT 10.4
ALLONGE AMENDMENT
ALLONGE AMENDMENT attached to 13.5% Senior Secured
Note, dated July 2, 1996, issued by Triarc Companies, Inc.,
payable to the order of National Propane, L.P.
On July 2, 1996 Triarc Companies, Inc. (together with its successors and
permitted assigns, the "Borrower") issued a 13.5% Senior Secured Note, in the
original principal amount of $40,700,000 (the "Note"), payable to the order of
National Propane, L.P. (together with its successors and permitted assigns, the
"Lender"). Capitalized terms used herein and not otherwise defined have the
meanings set forth in the Note.
The Borrower and the Lender hereby agree that the Note shall be amended as
follows:
1. Amendments to the Note.
(a) The first sentence in the first paragraph of the Note is hereby
amended in its entirety to read as follows:
"FOR VALUE RECEIVED, the undersigned, Triarc Companies,
Inc., a Delaware corporation (together with its successors
and permitted assigns, the "Borrower"), hereby promises to
pay to the order of National Propane, L.P. (together with
its successors and permitted assigns, the "Lender"), at such
place as the Lender shall from time to time designate to the
Borrower in writing, the aggregate principal amount of FORTY
MILLION SEVEN HUNDRED THOUSAND DOLLARS ($40,700,000), in such
amounts and on such dates as determined according to Section
1 hereof, with daily interest on the outstanding principal
amount hereof from the date hereof to (but excluding) the
maturity of this Note (whether by acceleration or otherwise)
at the rate set forth in Section 2 hereof,
<PAGE>
<PAGE>
said interest being payable in quarterly installments in
arrears on the 30th day of March, June, September and
December in each year and at maturity."
(b) Section 4.1, Prepayment by Borrower, of the Note is hereby amended
by inserting new subsection (f), which shall read in its entirety as
follows:
"(f) Notwithstanding anything to the contrary contained
in this Section 4.1, at any time on or after July 20,
1998 but prior to February 15, 1999, the Borrower shall
have the right, at any time and from time-to-time, at
its sole option and election, to prepay, without premium
or penalty, up to an aggregate of $10,000,000 of the
outstanding principal amount of this Note, together with
accrued interest on the portion prepaid."
2. Confirmation of Terms of Note. Except to the extent amended by this
Allonge Amendment, the provisions of the Note are hereby confirmed and shall
remain in full force and effect.
3. Successors and Assigns. This Allonge Amendment shall be binding upon and
inure to the benefit of the parties hereto and their successors and permitted
assigns.
4. Governing Law. THIS ALLONGE AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO INSTRUMENTS
MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Allonge Amendment
as of the 30th day of June, 1998.
TRIARC COMPANIES, INC.
By: /s/ John L. Barnes, Jr.
---------------------------
Name: John L. Barnes, Jr.
Title: Executive Vice President
and Chief Financial Officer
NATIONAL PROPANE, L.P.
By: National Propane Corporation,
its managing general partner
By: /s/ Ronald R. Rominiecki
---------------------------
Name: Ronald R. Rominiecki
Title: President and
Chief Operating Officer
By: National Propane SGP, Inc.,
its special general partner
By: /s/ Ronald R. Rominiecki
---------------------------
Name: Ronald R. Rominiecki
Title: President and
Chief Operating Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
National Propane Partners, L.P. condensed consolidated Balance Sheet
as of June 30, 1998 and the condensed consolidated Statement of
Operations for the interim period January 1, 1998 through June 30, 1998
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 2,770
<SECURITIES> 0
<RECEIVABLES> 7,691
<ALLOWANCES> 0
<INVENTORY> 7,718
<CURRENT-ASSETS> 27,111
<PP&E> 171,289
<DEPRECIATION> 93,067
<TOTAL-ASSETS> 163,840
<CURRENT-LIABILITIES> 17,631
<BONDS> 138,409
<COMMON> 0
0
0
<OTHER-SE> 5,296
<TOTAL-LIABILITY-AND-EQUITY> 163,840
<SALES> 71,415
<TOTAL-REVENUES> 71,415
<CGS> 54,013
<TOTAL-COSTS> 54,013
<OTHER-EXPENSES> 12,829
<LOSS-PROVISION> 432
<INTEREST-EXPENSE> 6,511
<INCOME-PRETAX> 1,540
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,540
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,540
<EPS-PRIMARY> 0.12
<EPS-DILUTED> 0.12
<FN>
Allowances -- Receivables are shown net of an allowance of $822.
Total receivable balance is $8,513.
</FN>
</TABLE>
