United States Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year ended June 30, 1997
COMMISSION FILE NUMBER 1-6537
ALL STAR GAS CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
MISSOURI 43-1494323
(State or other jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
P.O. BOX 303, 1700 SOUTH JEFFERSON STREET, LEBANON, MISSOURI, 65536
(Address of Principal Executive Offices and Zip Code)
(417) 532-3103
(Registrant's Telephone Number, Including Area Code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
TITLE OF EACH CLASS
12-7/8% Senior Secured Notes Due 2004
9% Subordinated Debentures Due 2007
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part II of
this Form 10-K or any amendment to this Form 10-K. (X)
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 past 90 days.
Yes X No _
The aggregate market value of the voting stock held by non-affiliates of the
Registrant as of close of business on September 19, 1997 is: $116,480.
Shares of Common Stock, $0.001 par value, outstanding as of close of
business on September 19, 1997: 1,564,050.
Upon request, All Star Gas Corporation will furnish a copy of an exhibit
listed but not contained herein. A fee of $.05 per page, to cover the
Company's costs in furnishing exhibits requested will be charged. Please
direct all requests to: Corporate Secretary, 1700 South Jefferson, Lebanon,
Missouri 65536; Telephone (417) 532-3103.
PART 1
Items 1 and 2. Business and Properties
Introduction
All Star Gas Corporation ("All Star Gas" or the "Company") was
founded in 1963 and through its subsidiaries has been in operation for
over 34 years. The Company is engaged primarily in (a) the retail
marketing of propane to residential, agricultural, and commercial
customers, (b) the retail marketing of propane-related appliances,
supplies, and equipment, and (c) the rent of consumer propane storage
tanks to residential and commercial customers under various brand names,
including All Star, Empiregas, and the names of numerous predecessors.
During the fiscal year which ended June 30, 1997, All Star Gas supplied
propane to approximately 115,000 customers in 21 states from 130 retail
service centers and sold approximately 85 million gallons.
Propane, a hydrocarbon with properties similar to natural gas, is
separated from natural gas at gas processing plants and refined from
crude oil at refineries. It is stored and transported in a liquid state
and vaporizes into a clean-burning energy source that is recognized for
its transportability and ease of use relative to other forms of stand
alone energy. Residential and commercial uses include heating, cooking,
water heating, refrigeration, clothes drying, and incineration.
Commercial uses also include metal cutting, drying, container
pressurization and charring, as well as use as a fuel for internal
combustion engines, such as over-the-road vehicles, forklifts, and
stationary engines. Agricultural uses include brooder heating, stock tank
heating, crop drying, tobacco curing, and weed control, as well as use as
a motor fuel for farm equipment and vehicles.
Propane is recognized as a clean alternative transportation fuel
"ATF" by the Federal and state governments and is the most widely used
ATF in the United States. The Federal government has enacted certain
mandates for use of ATF's by government and private fleets under the
Clean Air Act of 1990 and Energy Policy Act of 1992. Federal and state
governments have also provided various economic incentives for use of
ATF's which will positively impact propane demand.
The retail propane business is a "margin-based" business in which
gross profits depend on the excess of sales price over propane supply
costs. Sales of propane to residential and commercial customers, which
account for the vast majority of the Company's revenue, have provided a
relatively stable source of revenue for the Company. Sales to residential
customers accounted for approximately 63.3% of the Company's aggregate
propane sales revenue and 72.0% of its aggregate gross margin from
propane sales in fiscal year 1997. Historically, this market has provided
higher margins than other retail propane sales. Based on fiscal year 1997
propane sales revenue, the customer base consisted of 23.5% commercial
and 13.2% agricultural and other customers. While commercial propane
sales are generally less profitable than residential retail sales, the
Company has traditionally relied on this customer base to provide a
steady, noncyclical source of revenues. No single customer accounts for
more than 1.3% of revenue from sales.
On June 30, 1994, the Company engaged in a series of transactions
(the "Transaction") including the transfer of all of the shares of common
stock of Empire Energy Corporation ("Energy") to the Company's former
chairman, Robert W. Plaster, and certain departing directors, officers,
and employees. Energy held the common stock of 136 subsidiaries of the
Company that carried on the business of the Company in ten states,
primarily in the Southeast. As part of the Transaction, the Company also
acquired the assets of PSNC Propane Corporation ("PSNC"). Except where
noted otherwise, all financial information in this report and the
financial statements included with this report include the results of
operations of Energy through June 30, 1994, and exclude the results of
operations of PSNC, but balance sheet data for June 30, 1994, and all
financial information from periods beginning thereafter exclude the
assets of Energy and include the assets of PSNC.
On August 15, 1995, the Company entered into a joint venture with
Northwestern Growth Corporation, a subsidiary of Northwestern Public
Service Corporation, to acquire the assets of Synergy Group Incorporated,
the nation's fifth largest LP gas distributor. The Company acquired, for
$30,000, 30% of the common stock of SYN, Inc. ("Synergy"), the
acquisition entity. The Company entered into a Management Agreement
pursuant to which the Company provides all management of the retail
facilities and accounting services at the central office. In exchange for
those services, the Company received a $500,000 annual base management
fee, an incentive management fee, and $3.25 million annual overhead cost
reimbursement (adjusted annually for inflation). Unless specifically
referenced, all information contained herein excludes information
pertaining to the Synergy operations.
On December 7, 1995, the Company entered into a joint venture with
Northwestern Growth Corporation, a subsidiary of Northwestern Public
Service Company to acquire the stock of Myers Propane Gas Company, a
large Ohio LP gas distributor. The Company acquired 49% of the common
stock of Myers Acquisition Company (Myers), the acquisition entity. The
Company entered into a Management Agreement pursuant to which the Company
provided all management and administrative services. In exchange for
those services, the Company was entitled to a management fee upon the
attainment of certain performance goals.
In December, 1996, the Company and Northwestern Growth Corporation
(NGC), completed an agreement for the sale of various interests of the
Company in Synergy and Myers and the modification and termination of
certain agreements between NGC, Synergy and Myers on the one hand and the
Company on the other hand. The agreement terminated the management
agreements pursuant to which the Company provided management activities
for Synergy and Myers effective December, 1996. The agreement resulted in
a payment of $18 million to the Company resulting in a gain reflected on
the Statement of Operations of $17 million which is net of transaction
and other costs and fees. The Company may be entitled to an additional
amount based on a third party's indemnification obligations to Synergy.
Sources of Supply. During 1997, approximately 90% of the Company's
propane purchases of its propane supply were on a contractual basis
(generally, one year agreements subject to annual renewal). The Company's
two largest suppliers provide 14.0% and 12.5% of the total supply
purchased by the Company. Supply contracts do not, generally, lock in
prices, but rather provide for pricing in accordance with posted prices
at the time of delivery or established by current major storage points,
such as Mont Belvieu, TX, and Conway, KS. The Company has established
relationships with a number of suppliers and believes it would have ample
sources of supply under comparable terms to draw upon to meet its propane
requirements if it were to discontinue purchasing from its two major
suppliers. The Company takes advantage of the spot market as appropriate.
The Company has not experienced a shortage that has prevented it from
satisfying its customer's needs and does not foresee any significant
shortage in the supply of propane.
Distribution. The Company purchases propane at refineries, gas
processing plants, underground storage facilities, and pipeline terminals
and transports the propane by railroad tank cars and tank trailer trucks
to the Company's retail service centers, each of which has bulk storage
capacity ranging from 16,000 to 180,000 gallons. The Company is a shipper
on all major interstate LPG pipeline systems. The retail service centers
have an aggregate storage capacity of approximately 8.24 million gallons
of propane, and each service center has equipment for transferring the
gas into and from the bulk storage tanks. The Company operates 11
over-the-road tractors and 17 transport trailers to deliver propane and
consumer tanks to its retail service centers and also relies on common
carriers to deliver propane to its retail service centers.
Deliveries to customers are made by means of 373 propane delivery
trucks owned by the Company. Propane is stored by the customers on their
premises in stationary steel tanks generally ranging in capacity from 25
to 1,000 gallons, with large users having tanks with a capacity of up to
30,000 gallons. Most of the propane storage tanks used by the Company's
residential and commercial customers are owned by the Company and leased,
rented, or loaned to customers.
Operations. The Company has organized its operations in a manner
that the Company believes enables it to provide excellent service to its
customers and to achieve maximum operating efficiencies. The Company's
retail propane distribution business is organized into 9 regions. Each
region is supervised by a Regional Manager. The regions are grouped into
two divisions, which are supervised by Senior Vice Presidents. Personnel
located at the retail service centers in the various regions are
primarily responsible for customer service and sales.
A number of functions are centralized at the Company's corporate
headquarters in order to achieve certain operating efficiencies as well
as to enable the personnel located in the retail service centers to focus
on customer service and sales. The corporate headquarters and the retail
service centers are linked via a computer system. Each of the Company's
primary retail service centers is equipped with a computer connected to
the central management information system in the Company's corporate
headquarters. This computer network system provides retail company
personnel with accurate and timely information on pricing, inventory, and
customer accounts. In addition, this system enables management to monitor
pricing, sales, delivery, and the general operations of its numerous
retail service centers and to plan accordingly to improve the operations
of the Company. The Company makes centralized purchases of propane
through its corporate headquarters for resale to the retail service
centers enabling the Company to achieve certain advantages, including
price advantages, because of its status as a large volume buyer. The
functions of cash management, accounting, taxes, payroll, permits,
licensing, asset control, employee benefits, human resources, and
strategic planning are also performed on a centralized basis.
Factors Influencing Demand. Because a substantial amount of propane
is sold for heating purposes, the severity of winter weather and
resulting residential and commercial heating usage have an important
impact on the Company's earnings. Approximately two-thirds of the
Company's retail propane sales usually occur during the five months of
November through March. Sales and profits are subject to variation from
month to month and from year to year, depending on temperature
fluctuations.
Competition. The Company encounters competition from a number of
other propane distributors in each geographic region in which it
operates. The Company competes with these distributors primarily on the
basis of service, stability of supply, availability of consumer storage
equipment, and price. Propane competes primarily with natural gas,
electricity and fuel oil principally on the basis of price, availability
and portability.
The Company also competes with suppliers of electricity. Generally
speaking, the cost of propane compares favorably to electricity allowing
the Company to enjoy a competitive advantage due to the higher costs of
electricity. Fuel oil does not present a significant competitive threat
in the Company's primary service areas due to the following factors: (i)
propane is a residue-free, cleaner energy source, (ii) environmental
concerns make fuel oil relatively unattractive, and (iii) fuel oil
appliances are not as efficient as propane appliances.
Although propane is generally more expensive than natural gas on an
equivalent BTU basis comparison, propane serves as an alternative to
natural gas in rural areas where natural gas is not available. Propane is
also utilized by natural gas customers on a stand-by basis during peak
demand periods. The costs involved in building or connecting to a natural
gas distribution system have tempered natural gas growth in most of the
Company's trade territory.
Risks of Business. The Company's propane operations are subject to
all the operating hazards and risks normally incident to handling,
storing, and transporting combustible liquids, such as the risk of
personal injury and property damages caused by accident or fire.
Effective July 1, 1997, the Company's comprehensive general, auto
and excess liability policy provides for losses of up to $101.0 million
with a $200,000 self insured retention for general and excess liability
losses. The company's combined auto and workers' compensation coverage
has a $250,000 deductible per occurrence.
The amounts on the comprehensive general, auto and worker's
compensation mean that the Company is effectively self insured up to
these amounts.
REGULATION
The Company's operations are subject to various federal, state, and
local laws governing the transportation, storage and distribution of
propane, occupational health and safety, and other matters. All states in
which the Company operates have adopted fire safety codes that regulate
the storage and distribution of propane. In some states these laws are
administered by state agencies, and in others they are administered on a
municipal level. Certain municipalities prohibit the below ground
installation of propane furnaces and appliances, and certain states are
considering the adoption of similar regulations. The Company cannot
predict the extent to which any such regulations might affect the
Company, but does not believe that any such effect would be material. It
is not anticipated that the Company will be required to expend material
amounts by reason of environmental and safety laws and regulations, but
inasmuch as such laws and regulations are constantly being changed, the
Company is unable to predict the ultimate cost to the Company of
complying with environmental and safety laws and regulations.
All Star Gas currently meets and exceeds Federal regulations
requiring that all persons employed in the handling of propane gas be
trained in proper handling and operating procedures. All employees have
participated, or will participate within 90 days of their employment
date, in hazardous materials training. The Company has established
ongoing training programs in all phases of product knowledge and safety
including participation in the National Propane Gas Association's
("NPGA") Certified Employee Training Program.
EMPLOYEES
As of September 15, 1997 the Company had approximately 600
employees, none of whom was represented by unions. The Company has never
experienced any significant work stoppage or other significant labor
problems and believes it has good relations with its employees.
ITEM 3. LEGAL PROCEEDINGS.
The Company and its subsidiaries are defendants in various routine
litigation incident to its business, none of which is expected to have a
material adverse effect on the Company's financial position or results of
operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Company held its annual shareholder meeting on July 23, 1997.
The only matter presented for a vote was the re-election of Paul S.
Lindsey, Jr., and Douglas A. Brown as directors. Mr. Lindsey and Mr.
Brown were re-elected with 1,564,050 votes cast in favor and no votes
cast against, withheld or abstaining. The term of office of the following
directors continued after the meeting: Paul S. Lindsey, Jr., Douglas A.
Brown, Kristin L. Lindsey, Jim J. Shoemake, and Bruce M. Withers, Jr.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
As of September 19, 1997, the Company's Common Stock was held of
record by 9 shareholders. There is currently no active trading market in
the Company's Common Stock.
As of September 19, 1997, there are outstanding warrants to
purchase 175,536 shares of the Company's Common Stock.
No dividends on the Common Stock of the Company were paid during
the Company's 1996 or 1997 fiscal years. The indenture relating to the 12
7/8% Senior Secured Notes due 2004 and the terms of the Company's
revolving credit facility each contain dividend restrictions that
prohibit the Company from paying common stock cash dividends. As a
result, the Company has no current intention of paying cash dividends on
the Common Stock.
ITEM 6. SELECTED FINANCIAL DATA.
The following table presents selected consolidated operating and
balance sheet data of All Star Gas as of and for each of the years in the
five-year period ended June 30, 1997. The financial data of the Company
as of and for each of the years in the five-year period ended June 30,
1997 were derived from the Company's audited consolidated financial
statements. The financial and other data set forth below should be read
in conjunction with the Company's consolidated financial statements,
including the notes thereto, included with this report. Because the
operating data for the period ending June 30, 1994 and 1993, do not take
into account the effects of the Transaction on the Company, the data for
that period are not comparable to the data for the year ended June 30,
1997.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-----------------------------------------------------------
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
(In thousands except ratios and per share amounts)
<S> <C> <C> <C> <C> <C>
Operating data:
Operating revenue $ 128,448 $ 124,452 $ 74,090 $ 82,702 $ 94,543
Gross profit (1) 68,246 66,532 38,478 39,384 41,468
Operating expenses 41,892 44,866 29,144 27,987 28,853
Depreciation & amortization 10,351 10,150 6,166 6,770 6,867
Operating income 16,003 11,516 3,168 4,627 5,748
Interest expense:
Cash interest 9,826 8,542 10,681 10,657 10,605
Amortization of debt discount 1,686 2,016 4,889 5,476 6,140
& expenses
Total interest expense 11,512 10,558 15,570 16,133 16,745
Net income (loss) before 2,228 (1,190) (8,726) (7,897) 2,222
extraordinary items (2)
Other operating data:
Capital expenditures 4,358 19,979 11,874 8,838 13,340
Cash from sale of retail service 1,088 366 2,956 6,177 5,478
centers and other assets
EBITDA (3) 26,307 21,566 8,784 11,002 13,347
Income (loss) per share before
extraordinary items $ 0.16 $ (0.08) $ (5.53) $ (5.00) $ 1.41
YEAR ENDED JUNE 30,
-----------------------------------------------------------
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
Balance sheet data:
Total assets $148,020 $104,644 $105,128 $102,002 107,832
Long-term debt (including 79,249 105,612 115,647 122,858 126,632
current maturities)
Stockholders' equity (deficit) 25,913 (28,220) (36,946) (44,843) (42,720)
</TABLE>
(1) Represents operating revenue less the cost of products sold.
(2) All Star Gas did not declare or pay dividends on its common stock
during the five-year period ending June 30, 1997.
(3) EBITDA consists of earnings before depreciation, amortization,
interest, income taxes, and other non-recurring expenses excluding
gains/losses on sales of assets. EBITDA is presented here because
it is a widely accepted financial indicator of a highly leveraged
company's ability to service and/or incur indebtedness. However,
EBITDA should not be construed as an alternative either (i) to
operating income (determined in accordance with generally accepted
accounting principles) or (ii) to cash flows from operating
activities (determined in accordance with generally accepted
accounting principles).
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis of the Company's results of
operations, financial condition and liquidity should be read in
conjunction with the historical consolidated financial statements of All
Star Gas and the notes thereto included in this Report.
RESULTS OF OPERATIONS
GENERAL
All Star Gas' primary source of revenue is retail propane sales,
which accounted for approximately 92% of its revenue in fiscal year 1997
as compared to 91% in fiscal 1996. Other sources of revenue include
service labor, sales of gas appliances and rental of customer tanks.
The Company's operating revenue is subject to both price and volume
fluctuations. Price fluctuations are generally caused by changes in the
wholesale cost of propane. The Company is not materially affected by
these price fluctuations, inasmuch as it can generally recover any cost
increase through corresponding increases in retail prices. Therefore, the
Company's gross profit per retail gallon is relatively stable from year
to year within each customer class. Gross profit per gallon also varies
by geographic region of the United States and the Company will continue
to focus expansion in high growth and high margin markets.
Volume fluctuations from year to year are generally caused by
variations in the winter weather from year to year. The severity of the
weather will affect the volume sold because a substantial amount of the
propane sold by the Company to residential and commercial customers is
used for heating. Volume fluctuations do materially affect the Company's
operations because lower volume produces less revenue to cover the
Company's fixed costs, including debt service costs.
The Company's expenses consist primarily of cost of products sold,
general and administrative expense and to a much lesser extent,
depreciation, amortization and interest expense. Purchases of propane
inventory account for the majority of the cost of products sold. The
Company's general and administrative expenses consist mainly of salaries
and related employee benefits, vehicle expenses and insurance. The
Company's interest expense consists primarily of interest on the 12.7/8%
Senior Secured Notes due 2004 (the "Senior Secured Notes") and on its
existing credit facility. Through 1999, a significant portion of interest
will be non-cash amortization of original issue discount.
Fiscal Years Ended June 30, 1997 and June 30, 1996
Operating Revenue. Operating revenue increased $11.8 million, or
14.3%, to $94.5 million in fiscal year 1997 as compared to $82.7 million
in fiscal year 1996. The increase was primarily due to an $11.8 million
increase in propane sales which was the result of 21% higher propane
sales prices and a 4.4% reduction in gallons sold. Propane prices
increased an average of 18 cents per gallon over fiscal 1996 which was
the result of higher wholesale prices which are discussed in the cost of
products sold section.
Cost of products sold. Cost of products sold increased $9.8
million, or 22.5%, to $53.1 million in fiscal year 1997 as compared to
$43.3 million in fiscal year 1996. This increase was due to the cost of
propane increase of $10.2 million due to higher wholesale propane costs
of 14 cents per gallon. The increase in wholesale propane costs were due
to low propane inventories, as reported by the major supply points for
the United States, compared to the five year historical average. The
increase of cost of products was offset by a reduction in refined fuel
costs of $200,000 due to the disposal of the locations selling refined
fuels and reduction in cost of gas systems and appliances of $200,000.
Gross profit. The Company's gross profit for the year increased
$2.1 million to $41.5 million in fiscal year 1997 as compared to $39.4
million in fiscal year 1996. This increase is primarily due to a $1.6
million improvement in propane sales gross profit to .427 cents per
gallon in fiscal 1997 as compared to .39 cents per gallon in fiscal 1996.
This increase represents an improvement of $.037 per gallon or 9.3% over
fiscal 1996, which is primarily due to the company's purchasing, hedging
and consumer pricing strategy of improved margins as a result of the
changes in geographic mix to higher margin areas and improvement of
customer base through the marketing focus of value added products and
services. Other improvements to gross profit are the result of increased
margins on gas system and appliance sales of $300,000 and increased
emphasis of selling value added services through a service labor increase
of $200,000.
General and administrative expense. General and administrative
expenses increased slightly by $100,000 to $27.6 million in fiscal 1997
compared to $27.5 million in fiscal 1996. Although general and
administrative expenses were flat from 1996 to 1997, there were
reductions in many categories due to the elimination of activities
required for the management of the Synergy properties in December, 1996.
The various reductions in the expense categories were offset by the
elimination of the reimbursement of overhead expenses from Synergy of
$2.4 million.
Insurance and related liability claims expense decreased
substantially by $900,000 or 36% to $1.7 million in fiscal 1997 as
compared to $2.6 million in fiscal 1996. The decrease is due primarily to
an improved claims record and the pooling of coverage with Synergy
resulting in reduced premiums.
The company self insures the first $250,000 for each and every
general liability incident, which is reduced from $500,000 per incident
in the prior year. Above this retention is a corridor deductible of
$750,000 per occurrence, $1.25 million in aggregate for the combined
companies compared to $1 million for the Company in the prior year. For
vehicle and worker's compensation programs, the Company has a $250,000
deductible per occurrence with a $2.0 million aggregate stop loss for the
combined companies. The Company obtains excess coverage on a claims-made
basis. Provisions for self-insured losses are recorded based upon the
Company's estimates of the aggregate self-insured liability for claims
incurred.
The Company and its subsidiaries are defendants in various lawsuits
related to the self- insurance program which are not expected to have a
material adverse effect on the Company's financial position or results of
operations.
Most other categories of general and administrative expenses were
reduced in fiscal 1997 from fiscal 1996 as a result of the elimination of
Synergy managment, as previously discussed, except for salaries which
remained fairly stable, decreasing only $200,000, or .9% from $15.8
million in fiscal 1996 to $15.6 million in fiscal 1997. The Company
strategically expanded its executive staff and middle management in
order to allow for improved succession planning which was offset by
the reduction in certain other staffing related to the elimination of
Synergy management.
Provision for doubtful accounts. The provision for doubtful
accounts decreased approximately $400,000, or 46%, from $900,000 in
fiscal 1996 to $500,000 in fiscal 1997. The decrease is a result of the
enhanced credit and collection efforts established in fiscal 1995 as well
as a reflection of the upgrade in customers during the same time frame.
The Company has also tied employees' incentive compensation to credit and
collection results.
Depreciation and Amortization. Depreciation and amortization
increased slightly by $100,000 to $6.9 million in fiscal 1997 from $6.8
million in fiscal 1996. The increase is primarily due to fixed asset
purchases through acquisitions and capital expenditures during fiscal
1997.
Interest Expense. Interest expense was relatively unchanged from
fiscal 1996 to 1997.
Fiscal Years Ended June 30, 1996 and June 30, 1995
Operating Revenue. Operating revenue increased $8.6 million, or
11.6%, to $82.7 million in fiscal year 1996 as compared to $74.1 million
in fiscal year 1995. The increase was due to a $9.2 million increase in
gas sales and the addition of the Synergy management fee of $400,000
(prorated for a 10 month period), offset by decreases of $500,000 in gas
systems and appliance sales, $200,000 in service labor, and $300,000 in
service charges. The increase in gas sales was due to an approximate $.06
per gallon increase in the average net sales price of propane and a net
increase of approximately 2.0 million gallons, or 2.3%. Taking into
account the acquisitions and disposals of stores in fiscal year 1996,
gallonage increased 6.5 million gallons, or 8.1% on a same store basis,
as a result of increased demand due to a colder winter than in fiscal
year 1995 and new customer growth. Decreases in gas systems and appliance
sales and the related service labor were due primarily to divestitures of
retail outlets. The decrease in service charges results from improved
collection efforts and more stringent credit policies and procedures.
Cost of products sold. Cost of products sold increased $7.7
million, or 21.7%, to $43.3 million in fiscal year 1996 as compared to
$35.6 million in fiscal year 1995. This increase was due to an increase
of approximately $8.0 million in cost of gas sales due to the net 2.0
million gallon volume increase and an approximate $.05 per gallon rise in
the wholesale cost of propane offset by a decrease of approximately
$300,000 in the cost of gas systems and appliance sales due to the
decrease in sales volume.
Gross profit. The Company's gross profit for the year increased
$900,000, or 2.3%, to $39.4 million in fiscal year 1996 as compared to
$38.5 million in fiscal year 1995. The Company's gross profit per gallon
increased approximately $.01 to approximately $.39 per gallon in fiscal
year 1996, as a result of the increase in sales price of approximately
$.06 per gallon offset by the $.05 increase in the cost of propane. The
resulting increase in gross profit of $1.2 million from gas sales was
offset by a decrease in gross profit of approximately $200,000 from gas
systems and appliances due to the decrease in sales volume and the
decrease in other revenues of approximately $100,000.
General and administrative expense. General and administrative
expenses decreased $1.1 million, or 3.8%, to $27.5 million in fiscal year
1996 compared to $28.6 million in fiscal year 1995. This decrease is due
primarily to a decrease in insurance and liability claims of $300,000, an
increase of $400,000 in rent and maintenance and the net effect of the
Management Agreement with SYN, Inc.
The decrease in insurance and liability claims was due to improved
claim history. The increase in rent and maintenance was due primarily to
the addition of new rental agreements entered into as a part of retail
service centers acquired during fiscal years 1995 and 1996 and increased
tank painting and building maintenance related both to the conversion to
a new identity for acquired retail service centers and as part of the
Company's modernization program.
The decrease that occurred because of the Synergy Management
Agreement is due to the impact of increased costs in the other general
and administrative cost centers offset by the annual overhead
reimbursement made, which was $2.8 million in fiscal year 1996, and an
additional one time $1.1 million payment related to the Synergy
acquisition. These reimbursements were made to offset the increased costs
required for the management of Synergy including additional home office
employee salaries and related other costs.
Provision for doubtful accounts. The provision for doubtful
accounts decreased approximately $250,000, or 22.0%, from approximately
$1.1 million in fiscal year 1995 to approximately $900,000 in fiscal year
1996. The decrease is due to the final determination of management
regarding an appropriate estimate for the allowance based on historical
trends, the aging of accounts receivable, and the enhanced credit and
collection efforts in place.
Depreciation and amortization. Depreciation and amortization
increased by $600,000 or 9.7%, to $6.8 million in fiscal year 1996 from
$6.2 million in fiscal year 1995. The increase is due to an increase in
amortization of approximately $100,000 due to newly acquired goodwill and
intangibles related to the acquisition of certain retail service centers.
The remaining increase of $500,000 is due to the effect of increasing
depreciable fixed assets through capital expenditures and acquisitions
while disposing of partially or fully depreciated assets through
disposals of retail service centers and other sales.
Interest expense. Interest expense was relatively unchanged from
fiscal year 1995 to 1996.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity requirements have arisen primarily from funding
its working capital needs, capital expenditures and debt service
obligations. Historically, the Company has met these requirements from
cash flows generated by operations and from borrowings under its working
capital facility. In fiscal year 1997, cash flows generated from
investing activities, specifically the sale of the Company's interests in
Synergy and Myers for $18 million, helped to fund the Company's liquidity
requirements.
Cash flow used in operating activities was $1.7 million in fiscal year
1997 as compared to the cash flow provided in fiscal year 1996, of
$300,000. This decrease is due primarily to the Company's ability to
reduce certain liabilities and accrued expenses while carrying higher
levels of inventory and accounts receivable due to the cash flow provided
by the Synergy/Myers transaction.
Cash flow provided by investing activities increased to $10.5 million as
compared to the cash flow used in fiscal year 1996, of $1.9 million. This
increase is due primarily to the $18.0 million provided by the
Synergy/Myers transaction discussed above as well as $5.5 million
collected from the sale of certain retail service centers. Although
expenditures for other property, plant and equipment in conjunction with
the Company's modernization plans remained stable at $7.7 million in
fiscal year 1997, as compared to $7.0 million in fiscal year 1996, cash
expended for retail service center acquisitions increased from $1.1
million in 1996 to $5.2 million in 1997.
Pursuant to the indenture for the 12-7/8% Senior Secured Notes, the
Company is required to make a $4.5 million, semi-annual interest payment
on each July 15 and January 15. Beginning in fiscal year 2000, the
semi-annual cash interest payment on the Senior Secured Notes will
increase to $8.2 million. The Company met the July 1997, interest payment
through the use of operating cash flows and available borrowings on its
working capital facility.
The Company's high degree of leverage makes it vulnerable to adverse
changes in the weather and could limit its ability to respond to market
conditions, to capitalize on business opportunities, and to meet its
contractual and financial obligations. Fluctuations in interest rates
will affect the Company's financial condition inasmuch as the Company's
working capital facility bears interest at a floating rate. The Company
believes that, based on current levels of operations and assuming winter
weather comparable to fiscal year 1997, it will be able to fund its debt
service obligations from funds generated from operations and funds
available under its working capital facility. The Company's credit
facility will mature on June 29, 1998, at which time the Company will
have to refinance or replace the facility, and may be required to pay
some portion of any outstanding balance. The credit facility will be
necessary to fund the Company's seasonal operations and debt service
requirements. There can be no assurance that the Company will be able to
refinance or replace the credit facility, or the terms upon which any
such financing may occur.
The seasonal nature of the Company's business will require it to rely on
borrowings under its $15.0 million credit facility as well as cash from
operations, particularly during the summer and fall months when the
Company is building its inventory in preparation for the winter heating
season. While approximately two-thirds of the Company's operating revenue
is earned in the second and third quarters of each year, certain expense
items such as general and administrative expense are recognized on a more
annualized basis. Interest expense also tends to be higher during the
summer and fall months because the Company relies in part on increased
borrowings on its revolving credit line to finance inventory purchases in
preparation for the Company's winter heating season.
The Company intends to fund its routine capital expenditures and the
purchase of assets for new retail service centers with cash from
operations, borrowings under its credit facility, or other bank financing
subject to borrowing availability covenants. The Company intends to fund
acquisitions through seller financing, to the extent allowable under the
Senior Secured Note agreement, and with cash from operations or bank
financing.
The Company's credit facility and the indenture for the Senior Secured
Notes impose restrictions on the Company's ability to incur additional
indebtedness. Such restrictions, together with the highly leveraged
position of the Company, could restrict the ability of the Company to
acquire financing for capital expenditures and other corporate
activities. These restrictions, as amended, restrict the acquisition
activity of the Company based on the availability of working capital
borrowing, earnings and certain proceeds less required debt service and
capital and certain other expenditures or approval from the lenders.
Acquisitions are further restricted to use no more than $15.0 million in
cash in a twelve-month period without prior approval.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
See the Consolidated Financial Statements included elsewhere herein.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The directors and executive officers of the Company are as follows:
POSITION HELD WITH THE COMPANY
NAME AGE AND PRINCIPAL OCCUPATION
---- --- ------------------------------
Paul S. Lindsey, Jr. 52 Chairman of the Board, Chief Executive
Officer, and President since June 1994;
previously Vice Chairman of the Board (since
February 1987) and Chief Operating Officer
(since March 1988); term as director expires
2000
Douglas A. Brown 37 Director since June 1994; Partner ZS Fund
since 4/97; previously member Holding
Capital Group, Inc. (since 1989); term as
director expires 2000
Kristin L. Lindsey 49 Director/Executive Vice President since Oct.
1996; previously Director/Vice President to
June 1994; previously pursued charitable and
other personal interest; term as director
expires 1999
Bruce M. Withers, Jr. 70 Director since June 1994; previously
Chairman and Chief Executive Officer of
Trident NGL Holding, Inc. (since August
1991) and President of the Transmission and
Processing Division of Mitchell Energy
Corporation (1979 to 1991); term as director
expires 1999
Jim J. Shoemake 59 Director since June 1994; partner of
Guilfoil, Petzall & Shoemake (since 1970);
term as director expires 1998
Valeria Schall 43 Executive Vice President since October,
1996, previously Vice President since 1992;
Corporate Secretary since 1985 and Assistant
to the Chairman since 1987
Richard M. Paul, Jr. 51 Vice President/Chief Operating Officer since
September 1, 1997, previously Senior
Regional Mgr. of Suburban Propane L.P. since
1990.
Mark Castaneda 33 Vice President Finance and Administration
since August 1995; previously Controller of
Skelgas Propane since 1991 and an accountant
at Deloitte & Touche since 1986
James M. Trickett 47 Sr. Vice President since September 1997;
Chief Operating Officer of All Star
Acquisition Co. since September 1997,
previously Divisional Manager since June
1996, and Regional Manager since August
1995. Divisional Manager with Synergy Gas
Corporation since 1990.
Robert C. Heagerty 50 Sr. Vice President since September 1997,
previously Divisional Vice President since
June 1993; previously Regional Manager since
December 1986.
Daniel P. Binning 40 Sr. Vice President since September 1997,
previously Divisional Vice President since
June 1996; previously Divisional Manager
since August 1995, and Marketing
Representative with Ferrell Gas Corporation
since December 1990.
Kenneth J. DePrinzio 50 Sr. Vice President-Corporate Development
since October 1996, previously Vice
President-Corporate Development since June
1996, previously Divisional Vice President
Since June 1993, and Regional Manager since
May 1992.
J. Greg House, Sr. 40 Vice President - Management Information
Systems since June, 1996; previously
Director-MIS since September 1994 and
Manager-MIS Paul Mueller Co. since 1987.
After expiration of the initial terms of directors as set forth
above, each director will serve for a term of three years. Officers of
the Company are elected by the Board of Directors of the Company and will
serve at the discretion of the Board, except for Mr. Lindsey who is
employed pursuant to an employment agreement that expires June 24, 1999
(subject to extension).
ITEM 11. EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
The following table provides compensation information for each of
the years ended June 30, 1997, 1996, and 1995 for (i) the Chief Executive
Officer of the Company, (ii) the four other executive officers of the
Company who are most highly compensated and whose total compensation
exceeded $100,000 for the most recent fiscal year (of which there was
only one) and (iii) those persons who are no longer executive officers of
the Company but were among the four most highly compensated and whose
total compensation exceeded $100,000 for the most recent year (of which
there were none)
SUMMARY COMPENSATION TABLE
Annual Compensation
<TABLE>
<CAPTION>
Name and Principal
Position at End of Fiscal Other Annual All Other
Fiscal Year 1997 Year Salary Bonus Compensation Compensation
- -------------------- ------ ------ ----- ------------ ------------
<S> <C> <C> <C> <C> <C>
Paul S. Lindsey, Jr. 1997 $350,000 $750,000 --- ---
Chief Executive 1996 $350,000 --- --- ---
Officer, Chairman 1995 $350,000 --- ---
of the Board
and President
Valeria Schall 1997 $71,000 $35,000 --- ---
Executive Vice 1996 $59,000 $32,500 --- ---
President 1995 $46,000 $27,500 --- ---
</TABLE>
EMPLOYMENT AGREEMENT
On June 24, 1994, the Company entered into an employment agreement
with Mr. Lindsey. The agreement has a five-year term and, as amended
beginning in fiscal year 1998, provides for the payment of an annual salary
of $400,000 and reimbursement for reasonable travel and business expenses.
The agreement requires Mr. Lindsey to devote substantially all of his time
to the Company's business. The agreement is for a term of five years, but
is automatically renewed for one year unless either party elects to
terminate the agreement at least four months prior to the end of the term
or any extension. The agreement may be terminated by Mr. Lindsey or the
Company, but if the agreement is terminated by the Company and without cause,
the Company must pay one year's salary as severance pay.
INCENTIVE STOCK OPTION PLAN
There were no options granted to the named officer nor exercised by
him during fiscal year 1997 and no unexercised options held by him as of
the end of the 1997 fiscal year.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
A compensation committee was formed in July 1994, consisting of
Messrs. Withers, Shoemake, and Brown. Mr. Lindsey makes the initial
recommendation concerning executive compensation for the executive
officers of the Company, other than recommendations concerning his own
and his wife's compensation, which are then approved by the compensation
committee. The compensation committee determines the compensation of Mr.
Lindsey's wife and, subject to the employment agreement described above,
Mr. Lindsey.
DIRECTOR COMPENSATION
During the last completed fiscal year, the directors of All Star
Gas received an annual fee of $25,000, payable quarterly, for their
services.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth information with respect to the
beneficial ownership of shares of Common Stock of the Company as of
September 19, 1997, by persons owning more than five percent of any
class, by all directors of the Company, by the individuals named in the
Summary Compensation Table owning shares, and by all directors and
executive officers of the Company as a group.
Number of Shares
Name of Beneficial Owner (1) Beneficially Owned Percent
- ---------------------------- ------------------ -------
Paul S. Lindsey, Jr. (2) 1,507,610 65.97
Kristin L. Lindsey (2) 753,805 32.99
Douglas A. Brown 144,530 6.3
Valeria Schall 79,603 3.5
Bruce M. Withers, Jr. 39,248 1.72
Jim J. Shoemake 39,248 1.72
All directors and executive
officers as a group (13 2,065,168 90.37
persons)(3)
- -----------------
(1) The address of each of the beneficial owners is c/o All Star Gas
Corporation, P.O. Box 303, 1700 South Jefferson Street, Lebanon,
Missouri 65536.
(2) Mr. Lindsey's shares consist of 753,805 shares owned by the Paul S.
Lindsey, Jr. Trust established January 24, 1992 and 753,805 shares
owned by the Kristin L. Lindsey Trust established January 24, 1992.
Mr. Lindsey has the power to vote and to dispose of the shares held
in the Kristin L. Lindsey Trust. Mrs. Lindsey's shares consist of
the shares owned by the Kristin L. Lindsey Trust. Mrs. Lindsey
disclaims ownership of the shares held by her husband in the Paul
S. Lindsey, Jr. Trust.
(3) The amounts shown include the shares beneficially owned by Mr.
Lindsey and Mrs. Lindsey as set forth above, and 254,929 shares
owned by other executive officers.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Mrs. Kristin L. Lindsey, who beneficially owns approximately 47.7%
of the Company's outstanding Common Stock and became a director of the
Company upon consummation of the Transaction, is the majority stockholder
in a company that supplies paint and labels to the Company. The Company's
purchases of paint and labels from this company totaled $285,637 in
fiscal year 1997 and $202,598 in fiscal year 1996.
The Company has entered into an agreement with each shareholder
(all of whom are directors or employees of the Company) providing the
Company with a right of first refusal with respect to the sale of any
shares by such shareholders. In addition, the Company has the right to
purchase from such shareholders all shares they hold at the time of their
termination of employment with the Company at the then current fair
market value of the shares. The fair market value is determined in the
first instance by the Board of Directors and by an independent appraisal
(the cost of which is split between the Company and the departing
shareholder) if the departing shareholder disputes the board's
determination.
In addition to purchased product at refineries, gas processing
plants, underground storage facilities, and pipeline terminals for use by
the Company, the Company also purchased product for use at the Synergy
retail locations and Myers Propane until December 30, 1996. From time to
time, the Company has also purchased product which has been sold to Red
Top Gas, a retail propane distributor owned by a party related to the
Chief Executive Officer of the Company. At June 30, 1997, the Company had
a receivable balance due from Red Top Gas in the amount of $113,000.
The Company entered into an operating lease with its Chief
Executive Officer to lease a jet aircraft for use in Company travel. The
lease requires $282,981 in annual payments for a term of 3 years
beginning in June, 1996, and had a requirement for a $200,000 deposit.
During July 1997, the Company advanced $250,000 to the Chief
Executive Officer for a period of six days against his annual salary of
$400,000.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) Financial Statements
Report of Independent Accountants
Consolidated Balance Sheets as of June 30, 1997 and 1996
Consolidated Statement of Operations for the Years Ended
June 30, 1997, 1996, and 1995
Consolidated Statements of the Stockholders' Equity
(Deficit) for the Years Ended June 30, 1997, 1996, and
1995
Consolidated Statements of Cash Flows for the Years Ended
June 30, 1997, 1996, and 1995
(a)(2) Financial Statement Schedules
Schedule II Valuation and qualifying accounts
(a)(3) Exhibits
EXHIBIT
NO. Description
- ------- -----------
3.1 Articles of Incorporation of the Company (incorporated herein
by reference to Exhibit 3.1 to the Company's Registration
Statement on Form S-1 (No. 33-53343)
3.2 Certificate of Amendment of the Certificate of Incorporation
of the Company, dated April 26, 1994, relating to the change
of name (incorporated herein by reference to Exhibit 3.2 to
the Company's Registration Statement on Form S-1 (No.
33-53343)
3.3 By-laws of the Company (incorporated herein by reference to
Exhibit 3.3 to the Company's Registration Statement on Form
S-1 (No. 33-53343)
4.1 Indenture between All Star Gas Corporation and J. Henry
Schroder Bank & Trust company, Trustee, relating to the 9%
Subordinated Debentures due December 31, 2007, and the form
of 9% Subordinated Debentures due December 31, 2007,
(incorporated herein by reference to Exhibit 4(a) to the All
Star Incorporated and Exco Acquisition Corp. (Commission File
No. 2-83683) Registration Statement on Form S- 14 with the
Commission on May 11, 1983); and First Supplemental Indenture
thereto between All Star Gas Corporation (now known as EGOC)
and IBJ Schroder Bank & Trust Co., dated as of December 13,
1989, (incorporated herein by reference to Exhibit 4(c) to
All Star Gas Corporation (now known as EGOC) Registration
Statement on Form 8-B filed with the Commission on February
1, 1990)
4.2 Indenture between the Company and Shawmut Bank Connecticut,
National Association, Trustee, relating to the 12-7/8% Senior
Secured Notes due 2004, including the 12-7/8% Senior Secured
Notes due 2004, the Guarantee and the Pledge Agreement
(incorporated herein by reference to Exhibit 4.2 to the
Registrant's Annual Report on Form 10-K for the year ended
June 30, 1994)
4.3 Warrant Agreement (incorporated herein by reference to
Exhibit 4.3 to the Registrant's Annual Report on Form 10-K
for the year ended June 30, 1994)
10.1 Shareholder Agreement, dated as of October 28, 1988, by and
among All Star Gas Acquisition Corporation and Robert W.
Plaster Trust, Robert W. Plaster, Trustee; Paul S. Lindsey,
Jr.; Stephen R. Plaster Trust, Lynn C. Hoover, Trustee;
Cheryl Plaster Schaefer Trust, Lynn C. Hoover, Trustee;
Robert L. Wooldridge; Gwendolyn B. VanDerhoef; Dwight Gilpin;
Luther Henry Gill; Valeria Schall; Floyd J. Waterman; Larry
W. Bisig; Larry Weis; Robert Heagerty; Murl J. Waterman; Earl
L. Noe; Thomas Flak; Michael Kent St. John; James E. Acreman;
Carolyn Rein; Dan Weatherly; Nina Irene Craighead; Joyce Sue
Kinnett; Edwin H. McMahon; Paul Stahlman; Ralph Wilson; Alan
Simer; Ferrell Stamper; and All Star Gas Corporation Employee
Stock Ownership Plan, Robert W. Plaster, Trustee
(incorporated herein by reference to Exhibit 10.1 to the
Company's Registration Statement on Form S-1 (No. 33-53343)
10.2 1995 Stock Option Plan of All Star Gas Company (incorporated
herein by reference to Exhibit 10.2 to the Registrant's
Annual Report on Form 10-K for the year ended June 30, 1995)
10.3 Credit Agreement between the Company and Continental Bank, as
agent (incorporated herein by reference to Exhibit 10.3 to
the Registrant's Annual Report on Form 10-K for the year
ended June 30, 1994)
10.4 Lease Agreement, dated May 7, 1994, between the Company and
Evergreen National Corporation (incorporated herein by
reference to Exhibit F of Exhibit 10.1 to the All Star Gas
Operating Corporation (Commission File No. 1-6537-3)
Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 1994)
10.5 Services Agreement, dated May 7, 1994, between the Company
and All Star Service Corporation (incorporated herein by
reference to Exhibit G of Exhibit 10.1 to the All Star Gas
Operating Corporation (Commission File No. 1-6537-3)
Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 1994)
10.6 Non-Competition Agreement, dated May 7, 1994, by and among
the Company, Energy, Robert W. Plaster, Stephen R. Plaster,
Joseph L. Schaefer, Paul S. Lindsey, Jr. (incorporated herein
by reference to Exhibit E of Exhibit 10.1 to the All Star Gas
Operating Corporation (Commission File No. 1-6537-3)
Quarterly Report on Form 10- Q for the fiscal quarter ended
March 31, 1994)
10.7 Employment Agreement between the Company and Paul S. Lindsey,
Jr. (incorporated herein by reference to Exhibit 10.7 to the
Company's Registration Statement on Form S-1 (No. 33-53343)
10.8 Asset Purchase Agreement by and among the Company, All Star
Gas, Inc. of North Carolina, PSNC Propane Corporation, and
Public Service Company of North Carolina, Incorporated
(incorporated herein by reference to Exhibit 10.8 to the
Company's Registration Statement on Form S-1 (No. 33-533343)
10.9 Indemnification Agreement between the Company and Douglas A.
Brown (incorporated herein by reference to Exhibit 10.9 to
the Company's Registration Statement on Form S-1 (No.
33-53343)
10.10 Tax Indemnification Agreement between the Company and Energy
(incorporated herein by reference to Exhibit 10.10 to the
Company's Registration Statement on Form S-1 (No. 33-53343)
10.11 Supply Contract No. 1, dated June 1, 1993, between EGOC and
Warren Petroleum Company (incorporated herein by reference to
Exhibit 10.11 to the Company's Registration Statement on Form
S-1 (No. 33-53343)
10.12 Supply Contract No. 2, dated June 1, 1993, between EGOC and
Warren Petroleum Company (incorporated herein by reference to
Exhibit 10.12 to the Company's Registration Statement on Form
S-1 (No. 33-53343)
10.13 Management Agreement between All Star Gas Company,
Northwestern Growth Corporation and SYN, Inc. dated May 17,
1995 (incorporated herein by reference to Exhibit 10.13 to
the Company's Annual Report on Form 10-K for the year ended
June 30, 1996)
10.14 Agreement Among Initial Stockholders and SYN, Inc. dated May
17, 1995 (incorporated herein by reference to Exhibit 10.14
to the Company's Annual Report on Form 10-K for the year
ended June 30, 1996)
10.15 Waiver Agreement dated April 29, 1995 by and among All Star
Gas Corporation, SYN, Inc., Paul S. Lindsey, Jr. Northwestern
Growth Corporation, All Star Energy Corporation, Robert W.
Plaster, and Stephen R. Plaster (incorporated herein by
reference to Exhibit 10.15 to the Registrant's Annual Report
on Form 10-K for the year ended June 30, 1995)
10.16+ Propane Sales Agreement dated August 24, 1995, between All
Star Gas Corporation and Warren Petroleum Company
(incorporated herein by reference to Exhibit 10.16 to the
Registrant's Annual Report on Form 10-K for the year ended
June 30, 1995)
10.17+ Supply Contract dated April 27, 1995, between All Star Gas
Corporation and Phillips 66 Company (incorporated herein by
reference to Exhibit 10.17 to the Registrant's Annual Report
on Form 10-K for the year ended June 30, 1995)
10.18+ Dealer Sale Contract dated January 20, 1995, between All Star
Gas Corporation and Conoco Inc. (incorporated herein by
reference to Exhibit 10.18 to the Registrant's Annual Report
on Form 10-K for the year ended June 30, 1995)
10.19+ Supply Contract dated April 24, 1995 between All Star Gas
Corporation and Enron Gas Liquids, Inc. (incorporated herein
by reference to Exhibit 10.19 to the Registrant's Annual
Report on Form 10-K for the year ended June 30, 1995)
10.20+ Amendment No. 1 to Supplement A to Loan and Securities
Agreement dated June 29, 1995 between All Star Gas
Corporation and Bank of America Illinois (incorporated herein
by reference to Exhibit 10.20 to the Registrant's Annual
Report on Form 10-K for the year ended June 30, 1995)
10.21 9/9/96 Waiver, Amendment No. 2 to Loan and Security Agreement
and Amendment No. 4 to Supplement A to Loan and Security
Agreement with Bank of America Illinois (incorporated herein
by reference to Exhibit 10.21 to the Company's Annual Report
on Form 10-K for the year ended June 30, 1996)
10.22 7/1/96 Agreement Amending Amended and Restated Agreement
Among Initial Stockholders and Syn Inc. (incorporated herein
by reference to Exhibit 10.22 to the Company's Annual Report
on Form 10-K for the year ended June 30, 1996)
10.23 5/15/96 Waiver between Bank of America Illinois and All Star
Gas Corporation (incorporated herein by reference to Exhibit
10.23 to the Company's Annual Report on Form 10-K for the
year ended June 30, 1996)
10.24 2/13/96 Amendment No. 3 to Supplement A to Loan and Security
Agreement with Bank of America Illinois (incorporated herein
by reference to Exhibit 10.24 to the Company's Annual Report
on Form 10-K for the year ended June 30, 1996)
10.25 11/3/95 Agreement Among Initial Stockholders and Mac Inc.
(incorporated herein by reference to Exhibit 10.25 to the
Company's Annual Report on Form 10-K for the year ended June
30, 1996)
10.26 11/3/95 Management Agreement between NWPS, Myers Acquisition
Company and Empire (incorporated herein by reference to
Exhibit 10.26 to the Company's Annual Report on Form 10-K for
the year ended June 30, 1996)
10.27 9/28/95 Amendment No. 1 to Loan and Security Agreement and
Amendment No. 2 to Supplement A to Loan and Security
Agreement with Bank of America Illinois (incorporated herein
by reference to Exhibit 10.27 to the Company's Annual Report
on Form 10-K for the year ended June 30, 1996)
10.28 7/31/95 Agreement Amending Management Agreement (incorporated
herein by reference to Exhibit 10.28 to the Company's Annual
Report on Form 10-K for the year ended June 30, 1996)
10.29 7/31/95 Agreement Amending and Reinstating Agreement Among
Initial Stockholders and Syn Inc. (incorporated herein by
reference to Exhibit 10.29 to the Company's Annual Report on
Form 10-K for the year ended June 30, 1996)
10.30+ Propane Sales Agreement dated April 9, 1996, between All Star
Gas Corporation and Warren Petroleum Company (incorporated
herein by reference to Exhibit 10.30 to the Company's Annual
Report on Form 10-K for the year ended June 30, 1996)
10.31+ Amendment to Supply Contract dated August 15, 1994, between
All Star Gas Corporation and Phillips 66 Company
(incorporated herein by reference to Exhibit 10.31 to the
Company's Annual Report on Form 10-K for the year ended June
30, 1996)
10.32+ Supply Contract dated April 1, 1996, between All Star Gas
Corporation and Conoco, Inc. (incorporated herein by
reference to Exhibit 10.32 to the Company's Annual Report on
Form 10-K for the year ended June 30, 1996)
10.33 June 1, 1996, Lease of Aircraft between Paul S. Lindsey,
Limited Liability Company and All Star Gas Corporation
(incorporated herein by reference to Exhibit 10.33 to the
Company's Annual Report on Form 10-K for the year ended June
30, 1996)
10.34+ Liquified Petroleum Gas Contract dated July 1, 1996 between
All Star Gas Corporation and Shell Anacortes Refining Company
10.35+ Liquified Petroleum Gas Contract dated July 1, 1996 between All
Star Gas Corporation and Shell Oil Company
10.36+ Propane Sales Agreements between All Star Gas Corporation and
Warren Petroleum Company
10.37+ Liquified Petroleum Gas Contract, dated, June 1, 1996, between
All Star Gas Corporation and Shell Oil Company
10.38 Amendment #3 dated 10/29/96 to Loan and Security Agreement and
Amendment #6 to Supplement A to Loan and Security Agreement
10.39 Amendment #4 to Loan and Security Agreement
21.1 Subsidiaries of the Company
27.1 Financial Data Schedules
+ Confidential treatment has been requested. The copy filed as
an exhibit omits the information subject to the confidentiality
request.
(b) Reports on Form 8-K
September 28, 1996
(c) Exhibits
See (a)(3) above.
(d) Financial Statements
See (a)(1) above.
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
All Star Gas Corporation
By: /s/ Paul S. Lindsey, Jr.
Paul S. Lindsey, Jr.
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
SIGNATURE Capacity in which Signed Date
--------- ------------------------ ----
/s/ Paul S. Lindsey, Jr. Chief Executive Officer September 26, 1997
- ------------------------- and Chairman of the
Paul S. Lindsey, Jr. Board of All Star Gas
Corporation (principal
executive officer)
/s/ Mark Castaneda Vice President Finance September 26, 1997
- ------------------------- and Administration
Mark Castaneda (principal financial/
accounting officer)
/s/ Douglas A. Brown Director of All Star Gas September 26, 1997
- ------------------------- Corporation
Douglas A. Brown
/s/ Kristin L. Lindsey Director of All Star Gas September 26, 1997
- ------------------------- Corporation
Kristin L. Lindsey
/s/ Bruce M. Withers, Jr. Director of All Star Gas September 26, 1997
- ------------------------- Corporation
Bruce M. Withers, Jr.
/s/ Jim J. Shoemake Director of All Star Gas September 26, 1997
- ------------------------- Corporation
Jim J. Shoemake
Independent Accountants' Report
Board of Directors and Stockholders
All Star Gas Corporation
Lebanon, Missouri
We have audited the accompanying consolidated balance sheets of ALL
STAR GAS CORPORATION as of June 30, 1997 and 1996, and the related
consolidated statements of operations, stockholders' equity (deficit) and
cash flows for each of the three years in the period ended June 30, 1997.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
ALL STAR GAS CORPORATION as of June 30, 1997 and 1996, and the results of
its operations and its cash flows for each of the three years in the period
ended June 30, 1997, in conformity with generally accepted accounting
principles.
/s/ Baird, Kurtz & Dobson
Springfield, Missouri
August 14, 1997
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
ALL STAR GAS CORPORATION
JUNE 30, 1997 AND 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
ASSETS
1997 1996
---- ----
CURRENT ASSETS
<S> <C> <C>
Cash $ 965 $ 898
Trade receivables, less allowance
for doubtful accounts; 1997 - $899, 1996 - $722 5,101 4,308
Receivable from sale of retail locations -- 2,390
Inventories 6,924 6,039
Prepaid expenses 401 276
Due from related parties 98 1,261
Refundable income taxes 630 --
Deferred income taxes -- 995
----------- -----------
Total Current Assets 14,119 16,167
----------- -----------
PROPERTY AND EQUIPMENT, AT COST
Land and buildings 9,887 8,868
Storage and consumer service facilities 70,984 66,336
Transportation, office and other equipment 24,473 22,203
----------- -----------
105,344 97,407
Less accumulated depreciation 32,118 29,497
----------- -----------
73,226 67,910
OTHER ASSETS
Debt acquisition costs, net of amortization 3,605 4,228
Excess of cost over fair value of net assets
acquired, at amortized cost 14,101 12,357
Other 2,781 1,340
----------- -----------
20,487 17,925
$ 107,832 $ 102,002
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
1997 1996
---- ----
CURRENT LIABILITIES
Checks in process of collection $ 1,366 $ 2,794
Current maturities of long-term debt 2,385 7,358
Accounts payable 2,477 2,715
Accrued salaries 1,517 1,051
Accrued interest 4,081 4,553
Accrued expenses 841 897
Customer prepayments 6,050 2,321
Income taxes payable -- 181
----------- -----------
Total Current Liabilities 18,717 21,870
----------- -----------
LONG-TERM DEBT 124,247 115,500
----------- -----------
DEFERRED INCOME TAXES 7,190 8,935
----------- -----------
ACCRUED SELF-INSURANCE LIABILITY 398 540
----------- -----------
STOCKHOLDERS' EQUITY (DEFICIT)
Common; $.001 par value; authorized
20,000,000 shares; issued June 30,
1997 and 1996 14,291,020 shares 14 14
Common stock purchase warrants 1,227 1,227
Additional paid-in capital 27,279 27,279
Retained earnings 16,834 14,612
----------- -----------
45,354 43,132
Treasury stock, at cost
June 30, 1997 - 12,726,970 shares and
June 30, 1996 - 12,711,795 shares (88,074) (87,975)
---------- ----------
(42,720) (44,843)
---------- ----------
$ 107,832 $ 102,002
=========== ===========
<TABLE>
<CAPTION>
ALL STAR GAS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED JUNE 30, 1997, 1996 AND 1995
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
OPERATING REVENUE $ 94,543 $ 82,702 $ 74,090
COST OF PRODUCT SOLD 53,075 43,318 35,612
------------ ------------ ------------
GROSS PROFIT 41,468 39,384 38,478
------------ ------------ ------------
OPERATING COSTS AND EXPENSES
Provision for doubtful accounts 483 889 1,136
General and administrative ` 27,638 27,493 28,558
Depreciation and amortization 6,867 6,770 6,166
(Gain) loss on sale of assets 732 (395) (550)
------------ ----------- -----------
35,720 34,757 35,310
------------ ------------ ------------
OPERATING INCOME 5,748 4,627 3,168
------------ ------------ ------------
OTHER INCOME (EXPENSE)
Interest expense (10,605) (10,657) (10,681)
Amortization of debt discount
and expense (6,140) (5,476) (4,889)
Gain on SYN/Myers Transaction 16,922 -- --
Restructuring proposal costs (1,903) -- --
Write off of carrying value of
underground storage facility
and closing costs -- (200) (924)
------------ ----------- -----------
(1,726) (16,333) (16,494)
------------ ----------- -----------
INCOME (LOSS) BEFORE EQUITY IN NET
INCOME OF AFFILIATES 4,022 (11,706) (13,326)
EQUITY IN NET INCOME OF AFFILIATES -- 59 --
------------ ------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES 4,022 (11,647) (13,326)
PROVISION (CREDIT) FOR
INCOME TAXES 1,800 (3,750) (4,600)
------------ ----------- -----------
NET INCOME (LOSS) $ 2,222 $ (7,897) $ (8,726)
============ =========== ===========
NET INCOME (LOSS) PER COMMON
SHARE $1.41 (5.00) (5.53)
==== ===== =====
</TABLE>
See Notes to Consolidated Financial Statements
<TABLE>
<CAPTION>
ALL STAR GAS CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
YEARS ENDED JUNE 30, 1997, 1996 AND 1995
(IN THOUSANDS)
Common Total
Stock Additional Stockholders'
Common Purchase Paid-In Retained Treasury Equity
Stock Warrants Capital Earnings Stock (Deficit)
<S> <C> <C> <C> <C> <C> <C>
BALANCE, JUNE 30, 1994 $14 $1,227 $27,279 $31,235 $(87,975) $ (28,220)
NET LOSS -- -- -- (8,726) -- (8,726)
-- -- -- -- -- --
---- ------- ------- ------- -------- --------
BALANCE, JUNE 30, 1995 14 1,227 27,279 22,509 (87,975) (36,946)
NET LOSS -- -- -- (7,897) -- (7,897)
-- -- -- -- -- --
---- ------- ------- ------- -------- --------
BALANCE, JUNE 30, 1996 14 1,227 27,279 14,612 (87,975) (44,843)
TREASURY STOCK
PURCHASE -- -- -- -- (99) (99)
NET INCOME -- -- -- 2,222 -- 2,222
---- ------- ------- ------- -------- --------
BALANCE, JUNE 30, 1997 $14 $1,227 $27,279 $16,834 $(88,074) $(42,720)
==== ======= ======= ======= ======== ========
</TABLE>
See Notes to Consolidated Financial Statements
<TABLE>
<CAPTION>
ALL STAR GAS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED JUNE 30, 1997, 1996 AND 1995
(IN THOUSANDS)
1997 1996 1995
---- ---- ----
CASH FLOWS FROM OPERATING
ACTIVITIES
<S> <C> <C> <C>
Net income (loss) $ 2,222 $ (7,897) $(8,726)
Items not requiring (providing) cash:
Depreciation 5,467 5,427 4,971
Amortization 7,540 6,819 6,084
Gain on sale of assets and
SYN/Myers transaction (16,190) (395) (550)
Loss on underground storage facility -- 200 924
Undistributed earnings of affiliate -- (59) --
Deferred income taxes (750) (3,850) (3,000)
Changes in:
Trade receivables (982) 191 1,075
Inventories (905) (896) (383)
Due from related parties 1,163 (599) --
Accounts payable and customer 2,392 508 289
prepayments
Accrued expenses and self insurance (1,015) 1,243 4,682
Prepaid expenses and other (644) (375) (2,262)
---------- ---------- -------
Net cash provided by (used in)
operating activities (1,702) 317 3,104
---------- ----------- -------
CASH FLOWS FROM INVESTING
ACTIVITIES
Proceeds from sales of retail service
centers and other assets 2,476 6,177 2,956
Receipts on sales of retail outlets
previously accrued 3,002 -- --
Proceeds from SYN/Myers transaction 18,000 -- --
Acquisition of retail service centers (5,248) (1,087) (7,047)
Purchases of property and equipment (7,733) (7,033) (4,154)
------- ------- -------
Net cash provided by (used in)
investing activities 10,497 (1,943) (8,245)
-------- ------- -------
CASH FLOWS FROM FINANCING
ACTIVITIES
Increase (decrease) in working capital
facility $ (5,839) $ 1,331 $ 5,058
Principal payments on purchase obligations (1,362) (837) (346)
Increase (decrease) in checks in process (1,428) 1,209 (1,677)
of collection
Purchase of treasury stock (99) -- --
---------- ---------- --------
Net cash provided by (used in) financing
activities (8,728) 1,703 3,035
---------- ---------- --------
INCREASE (DECREASE) IN CASH 67 77 (2,106)
CASH, BEGINNING OF YEAR 898 821 2,927
----------- ---------- -------
CASH, END OF YEAR $ 965 $ 898 $ 821
=========== =========== =======
</TABLE>
See Notes to Consolidated Financial Statements
ALL STAR GAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997
NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
NATURE OF OPERATIONS
The Company's principal operation is the sale of wholesale and retail
LP gas. Most of the Company's customers are owners of residential single or
multi-family dwellings who make periodic purchases on credit. Such
customers are located throughout the United States with the larger number
concentrated in the central and western states and along the Pacific coast.
ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of All Star
Gas Corporation and its subsidiaries. All significant intercompany
transactions and balances have been eliminated in consolidation.
REVENUE RECOGNITION POLICY
Sales and related cost of product sold are recognized upon delivery of
the product or service.
INVENTORIES
Inventories are valued at the lower of cost or market. Cost is
determined by the first-in, first-out method for retail operations and
specific identification method for wholesale operations. At June 30, the
inventories were:
<TABLE>
<CAPTION>
1997 1996
---- ----
(In Thousands)
<S> <C> <C>
Gas and other petroleum products $ 3,551 $ 2,835
Gas distribution parts, appliances and equipment 3,373 3,204
----------- -----------
$ 6,924 $ 6,039
=========== ===========
</TABLE>
PROPERTY AND EQUIPMENT
Depreciation is provided on all property and equipment on the
straight-line method over estimated useful lives of 3 to 33 years.
INCOME TAXES
Deferred tax liabilities and assets are recognized for the tax effects
of differences between the financial statement and tax bases of assets and
liabilities. A valuation allowance is established to reduce deferred tax
assets if it is more likely than not that a deferred tax asset will not be
realized.
AMORTIZATION
Debt acquisition costs are being amortized on a straight-line basis
over the terms of the debt to which the costs are related as follows: the
1994 senior secured note costs (originally $5,143,000) are amortized over
ten years; and the revolving credit facility costs (originally $341,000)
are amortized over three years.
Amortization of discounts on debentures and notes (Note 4) is on the
effective interest, bonds outstanding method.
The excess of cost over fair value of net assets acquired is being
amortized on the straight-line basis over 25 years for amounts originating
from the June 30, 1994, restructuring transaction. Excess of cost over fair
value of net assets on subsequent acquisitions is amortized on the
straight-line basis over 5 years.
INCOME (LOSS) PER COMMON SHARE
Income (loss) per common share is computed by dividing net income
(loss) by the weighted average number of common shares and, except where
anti-dilutive, common share equivalents outstanding, if any. The weighted
average number of common shares outstanding used in the computation of
earnings per share was 1,572,902, 1,579,225 and 1,579,225 for each of the
periods ended June 30, 1997, 1996 and 1995, respectively.
FUTURES CONTRACTS AND PURCHASE COMMITMENTS
The Company uses commodity futures contracts to reduce the risk of
future price fluctuations for LPG inventories and contracts. Gains and
losses on futures contracts purchased as hedges are deferred and recognized
in cost of sales as a component of the product cost for the related hedged
transaction. In the statement of cash flows, cash flows from qualifying
hedges are classified in the same category as the cash flows from the items
being hedged. The Company also routinely makes purchase commitments for the
delivery of LPG inventories, particularly during its peak winter selling
season. As of June 30, 1997, the Company's open positions on futures
contracts and outstanding purchase commitments are immaterial.
RECLASSIFICATION
Certain reclassifications have been made to the 1996 and 1995
financial statements to conform to the 1997 financial statement
presentation. These reclassifications had no effect on net earnings.
NOTE 2: RESTRUCTURING TRANSACTION
On June 30, 1994, the Company implemented a change in ownership and
management by repurchasing 12,004,430 shares of Company common stock from
its former principal shareholder (Former Shareholder) and certain other
departing officers in exchange for all of the shares of a subsidiary,
Empire Energy Corporation (Energy), that owned 133 retail service centers
located principally in the Southeast plus certain home office assets and
liabilities. Certain departing officers and employees received $7.00 per
share net of the stock option exercise price for the remaining 377,865
shares of common stock that they held. The Company retained ownership of
158 retail service centers located in 20 states plus certain home office
assets and liabilities.
In connection with the stock purchase, the Former Shareholder
terminated his employment with the Company as well as terminated certain
lease and use agreements with the Company (see Note 3). Following the stock
purchase, the Company's previous chief operating officer became the
Company's president, chairman of the board and principal shareholder
(Principal Shareholder).
The Company has received a private letter ruling from the Internal
Revenue Service which provides that, based on certain representations
contained in the ruling, neither income nor gain for federal income tax
purposes will be recognized by the Company as a result of the stock
purchase.
NOTE 3: RELATED-PARTY TRANSACTIONS
During 1997, 1996 and 1995, the Company has purchased $285,637,
$202,598 and $157,842, respectively, of paint from a corporation owned by
the spouse of the Principal Shareholder of the Company.
Beginning July 1, 1994, the Company entered into a seven-year services
agreement with a subsidiary of Energy to provide data processing and
management information services to the Company. The services agreement
provides for payments by the Company to be based on an allocation of the
subsidiary's actual costs based on the gallons of LP gas sold by the
Company as a percentage of the gallons of LP gas sold by the Company and
Energy. For the periods ended June 30, 1997, 1996 and 1995, total expenses
related to this services agreement were $500,000, $600,000 and $1.1
million, respectively.
Beginning July 1, 1994, the Company entered into a new lease agreement
with a corporation owned principally by the Former Shareholder to lease a
portion of its corporate office space. The lease requires annual payments
of $75,000 for a period of seven years, with two three-year renewal
options.
On August 15, 1995, the Company entered into a joint venture with
Northwestern Growth Corporation (NGC), a subsidiary of Northwestern Public
Service Corporation, to acquire the assets of Synergy Group, Incorporated
("Synergy"), the nation's fifth largest LP gas distributor at that time.
The Company acquired 30% of the common stock of SYN Inc., the acquisition
entity, and entered into a Management Agreement pursuant to which the
Company provided management services for SYN Inc.
During 1996, the Company acquired 49% of the common stock of Myers
Acquisition Company (Myers) through another joint venture with NGC. Myers
acquired the stock of a retail LP distributor in Ohio.
In December 1996, the Company and NGC completed an agreement for the
sale of the Company's interest in SYN Inc. and Myers and the modification
and termination of certain agreements between NGC, SYN Inc. and Myers. The
agreement resulted in the termination of the Management Agreement and a
payment of $18 million to the Company resulting in a gain reflected in the
statement of operations of $16.9 million which is net of transaction and other
costs and fees.
The Company received payments of $1.7 million and $3.3 million related
to management fees and overhead reimbursement from SYN Inc. for the periods
ended June 30, 1997 and 1996, respectively. In addition, $1.1 million was
reimbursed during 1996 to the Company for initial costs incurred related to
the Synergy acquisition.
During the periods ended June 30, 1997 and 1996, the Company purchased
$20.8 million and $42.0 million, respectively, of LP gas on behalf of SYN
Inc. and Myers which was transferred at cost.
In December 1996, the Company acquired a 10% ownership interest in
Propane Resources Transportation, Inc. (PRT). In December 1996, the Company
issued a long-term mortgage obligation of $1.1 million for the purchase of
certain transport equipment from SYN Inc. This equipment was then sold to
PRT for a $1.1 million long-term note receivable. PRT provided transport
services for a portion of the Company's propane delivery needs resulting in
freight charges paid to PRT during 1997 of $1.4 million.
During the period ended June 30, 1997, the Company acquired a 39%
interest in Propane Resources Supply and Marketing, LLC (PRSM) for
$262,500. The Company sells LP gas to PRSM on a regular basis. The Company
paid consulting fees of $117,000 to PRSM during 1997.
The Company also sells LP gas to Red Top Gas, a retail LP distributor
owned by a party related to the Principal Shareholder. At June 30, 1997,
the amount due from this related party was $113,000.
The Company has invested $73,500 along with certain key employees in
real estate partnerships as special limited partners for tax credit
allocation purposes.
In 1996 the Company entered into an operating lease with the Principal
Shareholder for a jet aircraft. The lease requires $282,981 in annual
payments for a term of three years beginning in June 1996. The lease also
requires a $200,000 deposit which was paid in June 1996. The Company also
leases from the Principal Shareholder certain real estate property at an
annual cost of $18,000.
NOTE 4: LONG-TERM DEBT
Long-term debt at June 30 consisted of (In Thousands):
1997 1996
---- ----
Working capital facility (A) $ 550 $ 6,389
12-7/8% Senior Secured Notes, due 2004 (B) 113,139 107,758
9% Subordinated Debentures, due 2007 (C) 5,334 5,203
Purchase contract obligations and capital
leases (D) 7,609 3,508
----------- -----------
126,632 122,858
Less current maturities 2,385 7,358
----------- -----------
$ 124,247 $ 115,500
=========== ===========
(A) The working capital facility was provided to the Company in June 1994 in
conjunction with the offering of the 12-7/8% Senior Secured Notes, due
2004. All of the Company's receivables and inventories are pledged to
the agreement which contains tangible net worth, capital expenditures,
interest coverage ratio, debt and certain dividend restrictions. These
dividend restrictions prohibit the Company from paying common stock cash
dividends. At June 30, 1996, the Company was not in compliance with the
original capital expenditures, tangible net worth and interest coverage
ratio covenants. The bank has waived and amended the covenants, and the
Company is in compliance with the amended covenants.
The facility provides for borrowings up to $15 million, subject to a
sufficient borrowing base. The borrowing base generally limits the
Company's total borrowings to 85% of eligible accounts receivable and
52% of eligible inventory. The facility bears interest at either 1.0%
over prime or 2.5% over the LIBOR rate. The agreement provides for a
commitment fee of .375% per annum of the unadvanced portion of the
commitment. The Company's available revolving credit line amounted to
$5.9 million at June 30, 1997, after considering $1.7 million of
outstanding letters of credit. The letters of credit are principally
related to the Company's self-insurance program (Note 6). The working
capital facility is due on June 29, 1998.
(B) The notes were issued June 1994 at a discount and require interest
payments at 7% through July 15, 1999, and at 12-7/8% thereafter. The
notes are redeemable at the Company's option. Prior to July 15, 1999,
only 35% of the original principal issued may be redeemed, as a whole
or in part, at 110% of the principal amount through July 15, 1997,
and at declining percentages thereafter. The notes are guaranteed by
the subsidiaries of the Company and secured by the common stock of
the subsidiaries of the Company.
The original principal amount of the notes issued ($127,200,000) was
adjusted ($27,980,000) to give effect for the original issue discount
and the common stock purchase warrants (effective interest rate of
13.0%). The discount on these notes is being amortized over the
remaining life of the notes using the effective interest, bonds
outstanding method. The face value of notes outstanding at June 30,
1997 and 1996, is $127,200,000.
The proceeds from this offering were used to repay existing debt;
fund an acquisition; repurchase Company stock and for working capital
as part of the Restructuring Transaction (Note 2).
Separate financial statements of the guarantor subsidiaries are not
included because such subsidiaries have jointly and severally
guaranteed the notes on a full and unconditional basis; the aggregate
assets and liabilities of the guarantor subsidiaries are
substantially equivalent to the assets and liabilities of the parent
on a consolidated basis; and the separate financial statements and
other disclosures concerning the subsidiary guarantors are not deemed
to be material.
The guarantor subsidiaries are restricted from paying dividends to
the Company during any periods of default under the respective debt
agreements.
(C) The debentures, issued June 1983, are redeemable at the Company's
option, as a whole or in part, at par value. A sinking fund payment
sufficient to retire $191,000 of principal outstanding is required on
December 31, 2005. In June 1994, the Company used proceeds from the
issuance of the 12-7/8% Senior Secured Notes, due 2004, to repurchase
$16,201,200 face value of these debentures at a discount which
resulted in an extraordinary charge.
The original principal amount of debentures issued ($27,313,000) was
adjusted to market at issuance (effective interest rate of 16.5%).
The remaining discount on these debentures is being amortized over
the remaining life of the debentures using the effective interest,
bonds outstanding method. The face value of debentures outstanding at
June 30, 1997 and 1996, is $23,215,000 of which $13,469,200 are
registered in the name of the Company.
(D) Purchase contract obligations arise from the purchase of operating
businesses and are collateralized by the equipment and real estate
acquired in the respective acquisitions. Capital leases include leases
covering data processing equipment expiring in 1998. At June 30, 1997
and 1996, these obligations carried interest rates from 7% to 11% and
are due periodically through 2006.
Aggregate annual debt service requirements (in thousands) of the
long-term debt outstanding at June 30, 1997, are:
Total
Principal Interest Debt Service
1998 $ 2,385 $ 10,316 $ 12,701
1999 1,444 10,185 11,629
2000 1,272 17,550 18,822
2001 1,074 17,456 18,530
2002 708 17,385 18,093
Thereafter 138,222 37,329 175,551
----------- ----------- -----------
$ 145,105 $ 110,221 $ 255,326
=========== =========== ===========
NOTE 5: INCOME TAXES
The provision for income taxes includes these components.
1997 1996 1995
---- ---- ----
(In Thousands)
Taxes currently payable
(refundable) $ 2,550 $ 100 $ (1,600)
Deferred income taxes (750) (3,850) (3,000)
---------- ---------- ----------
$ 1,800 $ (3,750) $ (4,600)
=========== ========== ==========
The tax effects of temporary differences at June 30 related to
deferred taxes were:
1997 1996
---- ----
(In Thousands)
Deferred Tax Assets
Allowance for doubtful accounts $ 330 $ 271
Accounts receivable advance collections 29 380
Self-insurance liabilities and 601 534
contingencies
Original issue discount 5,252 3,341
Net operating loss carryforwards -- 1,769
Alternative minimum tax credit 1,803 1,200
----------- --------
8,015 7,495
Deferred Tax Liability
Accumulated depreciation and tax cost
differences $ (15,205) $ (15,435)
Net deferred tax liability $ (7,190) $ (7,940)
========= =========
The above net deferred tax liability is presented on the June 30 balance
sheets as follows:
1997 1996
---- ----
(In Thousands)
Deferred Tax Assets (Liabilities)
Deferred tax asset - current $ -- $ 995
Deferred tax liability - long-term (7,190) (8,935)
-------- --------
Net deferred tax liability $(7,190) $ (7,940)
======== ========
<TABLE>
<CAPTION>
A reconciliation of income tax expense at the statutory rate to the
Company's actual income tax expense is shown below:
1997 1996 1995
---- ---- ----
(In Thousands)
<S> <C> <C> <C>
Computed at the statutory rate (34%) $ 1,367 $ (3,960) $ (4,531)
Increase (decrease) resulting from:
Amortization of excess of cost over
fair value of assets acquired 268 279 303
State income taxes - net of federal
tax benefit 90 (347) (411)
Nondeductible travel costs and other
expenses 87 112 39
Other (12) (84) --
Additional accruals -- 250 --
-------- -------- --------
Actual tax provision $ 1,800 $ (3,750) $ (4,600)
======== ======== ========
</TABLE>
At June 30, 1997, the Company had approximately $2.0 million of
alternative minimum tax credits available to offset future federal income
taxes.
NOTE 6: SELF-INSURANCE AND RELATED CONTINGENCIES
Under the Company's current insurance program, coverage for
comprehensive general liability, workers' compensation and vehicle
liability is obtained for catastrophic exposures as well as those risks
required to be insured by law or contract. The Company retains a portion of
certain expected losses related primarily to comprehensive general and
vehicle liability. Effective fiscal 1997, the Company and SYN Inc. pooled
their risks and acquired joint coverage. The Company self insures the first
$250,000 for each and every general liability incident, which is reduced
from $500,000 per incident in the prior year. Above this retention is a
corridor deductible of $750,000 per occurrence, $1.25 million in aggregate
for the combined companies compared to $1 million for the Company in the
prior year. For the vehicle and workers' compensation programs, the Company
has a $250,000 deductible per occurrence with a $2.0 million aggregate stop
loss for the combined companies. The Company obtains excess coverage on
claims-made basis policies. Provisions for self-insured losses are recorded
based upon the Company's estimates of the aggregate self-insured liability
for claims incurred.
For the fiscal year ended June 30, 1996, the Company's policy required
a $500,000 deductible for each and every general liability incident. Prior
to July 1, 1995, the Company's excess coverage for comprehensive general
liability provided a loss limitation that limits the Company's aggregate of
self-insured losses to $1 million per policy period. For the policy periods
prior to July 1, 1991 and July 1, 1992, through June 30, 1994, the Company has
provided for aggregate comprehensive general liability losses through the
policies' $1 million loss limit. Additional losses, if any, are insured by the
excess carrier and should not result in additional expense to the Company. As
of June 30, 1997, the Company estimates losses for the comprehensive general
liability policy periods July 1, 1991, through June 30, 1992; July l, 1994,
through June 30, 1995; and July 1, 1996, through June 30, 1997, will not
reach the loss limits and has provided accordingly.
Effective July 1, 1993, the Company self-insured the first $500,000 of
workers' compensation coverage (per incident). The Company purchased excess
coverage from carriers for workers' compensation claims in excess of the
self-insured coverage. Provisions for losses expected under this program
were recorded based upon the Company's estimates of the aggregate liability
for claims incurred. The Company provided letters of credit aggregating
approximately $2.3 million in connection with this program of which
$856,000 is outstanding at June 30, 1997. Effective July 16, 1994, the
Company changed its policy so that it will obtain workers' compensation
coverage from carriers and state insurance pools.
Provisions for self-insured losses are recorded based upon the
Company's estimates of the aggregate self-insured liability for claims
incurred. A summary of the self-insurance liability, general, vehicle and
workers' compensation liabilities (in thousands) for the periods ended June
30, 1997, 1996 and 1995 are:
Beginning Self- Ending
Self- Self- Insured Self-
Insurance Insurance Claims Insurance
Liability Expenses Paid Liability
June 30, 1995 $1,872 $668 $1,129 $1,411
June 30, 1996 $1,411 $252 $623 $1,040
June 30, 1997 $1,040 $(65) $77 $898
The ending accrued liability includes $150,000 for incurred but not
reported claims at June 30, 1997, $175,000 at June 30, 1996, and $350,000
at June 30, 1995. The current portion of the ending liability of $500,000
at June 30, 1997, and 1996, is included in accrued expenses in the
consolidated balance sheets. The noncurrent portion at the end of each
period is included in accrued self-insurance liability.
The Company and its subsidiaries are also defendants in various
lawsuits related to the self-insurance program and other business related
lawsuits which are not expected to have a material adverse effect on the
Company's financial position or results of operations.
The Company currently self insures health benefits provided to the
employees of the Company and its subsidiaries subject to a $75,000 cap per
claim. Provisions for losses expected under this program are recorded based
upon the Company's estimate of the aggregate liability for claims incurred.
The aggregate cost of providing the health benefits was $492,000, $547,000
and $240,000 for the periods ended June 30, 1997, 1996 and 1995,
respectively.
In conjunction with the restructuring transaction (Note 2), the
Company and Energy have agreed to share on a percentage basis the
self-insured liabilities and other business related lawsuits incurred prior
to June 30, 1994, including both reported and unreported claims. The
self-insured liabilities included under this agreement include general,
vehicle, workers' compensation and health insurance liabilities. Under the
agreement, the Company assumed 52.3% of the liability with Energy assuming
the remaining 47.7%.
NOTE 7: CONTINGENCIES
The state of Missouri has assessed the Company approximately
$1,400,000 for additional state income tax for the years ended June 30,
1992 and 1993. An amount approximating one-half of the above assessment
could be at issue for the year ended June 30, 1994. The Company has
protested these assessments and is currently waiting for a response from
the Missouri Department of Revenue. It is likely that this matter will have
to be settled in litigation. The Company believes that it has a strong
position on this matter and intends to vigorously contest the assessment.
In conjunction with the restructuring transaction, the Company and
Energy agreed to share on a percentage basis amounts incurred related to
federal and state tax audits for fiscal years June 30, 1994, and prior.
The Company and its subsidiaries are presently involved in other various
state tax audits which are not expected to have a material adverse effect on
the Company's financial position or results of operations.
NOTE 8: STOCK OPTIONS AND WARRANTS
STOCK OPTIONS
The Company has established a Stock Option Plan for the benefit of its
employees, consultants and directors. Stock options may be either incentive
stock options or nonqualified stock options, with an option price no less
than the fair value of the Company's common stock on the date of the grant.
Options are granted for no more than a ten-year term and are exercisable
based on a written agreement between the administrator and optionee.
The table below summarizes transactions under the Company's stock
option plan:
Number of Shares
Balance, June 30, 1994 0
Granted ($7.00 per share) 416,926
---------
Balance, June 30, 1995 and 1996 416,926
Granted ($7.00 per share) 276,200
Forfeited (21,000)
---------
Balance, June 30, 1997 672,126
=========
Options outstanding at June 30, 1997, have a weighted-average
remaining contractual life of approximately 8 years with 166,370 options
currently exercisable at a price of $7.00 per share.
In 1996, the Financial Accounting Standards Board adopted Financial
Accounting Standards No. 123 (FAS 123), "Accounting for Stock-Based
Compensation." This statement establishes an alternative fair value-based
method of accounting for stock-based compensation plans. The Company
applies APB Opinion 25 and related Interpretations in accounting for the
plan, and no compensation cost has been recognized. No fair value
disclosures with respect to stock options are presented because in the
opinion of management such values do not have a material effect.
COMMON STOCK PURCHASE WARRANTS
In connection with the Company's restructuring, the Company attached
warrants to purchase common stock to the new issuance of 12-7/8% Senior
Secured Notes, due 2004. Each warrant represents the right to purchase one
share of the Company's common stock for $.01 per warrant. The warrants are
exercisable after January 15, 1995, and will expire on July 15, 2004.
The table below summarizes warrant activity of the Company:
Number
of Shares Exercise Price
Issued 175,536 $.01
---------
Balance at June 30, 1997 and
1996 175,536 $.01
=========
NOTE 9: ADDITIONAL CASH FLOW INFORMATION (IN THOUSANDS)
1997 1996 1995
---- ---- ----
NONCASH INVESTING AND FINANCING
ACTIVITIES
Related party receivable from sale
of retail service center $-- $662 $--
Note receivable from sale of retail $-- $148 $--
service center
Receivable from sale of retail
service centers $-- $2,390 $--
Purchase contract obligations
incurred $(5,463) $(1,111) $(1,433)
Capitalization of leases $-- $(757) $--
ADDITIONAL CASH PAYMENT INFORMATION
Interest paid $11,156 $10,216 $7,196
Income taxes paid (refunded), net $(3,361) $(1,647) $(2,321)
NOTE 10: EMPLOYEE BENEFIT PLAN
The Company formed in fiscal year 1995 a defined contribution
retirement plan eligible to substantially all employees. Employees who
elect to participate may contribute a percentage of their salaries to the
plan. The Company may make contributions to the plan at the discretion of
its Board of Directors. No contributions to the plan were made by the
Company during the periods ended June 30, 1997, 1996 or 1995.
NOTE 11: OPERATING LEASES
Noncancellable operating leases for the Company expire in various
years through 2004. These leases generally contain renewal options for
periods ranging from 1 to 5 years and require the Company to pay all
executory costs (property taxes, maintenance and insurance).
Future minimum lease payments (in thousands) at June 30, 1997, were:
1998 $ 585
1999 527
2000 235
2001 207
2002 62
Thereafter 91
Future minimum lease payments $ 1,707
==========
NOTE 12: RESTRUCTURING PROPOSAL COSTS
During the year ended June 30, 1997, the Company was considering a
proposal to restructure the debt and equity of the Company. The Company
abandoned the proposal and expensed the related costs of $1.9 million.
NOTE 13: UNDERGROUND STORAGE FACILITY
The Company owned salt cavern LPG underground storage facilities which
are not in use and are subject to a consent agreement with the state of
Kansas. Under the agreement, the Company was to submit a plan to the state
for resuming use of the facilities or permanently closing them.
During 1996 and 1995, charges of $200,000 and $924,000, respectively,
were taken against earnings to accrue the costs of abandonment and to
reduce the carrying value of the facilities to zero. As of June 30, 1997,
the Company has materially completed the closing and abandonment of the
facilities.
NOTE 14: SIGNIFICANT ESTIMATES AND CONCENTRATIONS
Generally accepted accounting principles require disclosure of certain
significant estimates and current vulnerabilities due to certain
concentrations. Those matters include the following:
ESTIMATES
Significant estimates related to self-insurance, goodwill
amortization, litigation, collectibility of receivables and income tax
assessments are discussed in Notes 3, 6 and 7. Actual losses related to
these items could vary materially from amounts reflected in the financial
statements.
NOTE 15: FUTURE ACCOUNTING PRONOUNCEMENTS
IMPACT OF SFAS NO. 128
The Financial Accounting Standards Board recently adopted Statement of
Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share." The
Company must adopt this standard effective with periods ending after
December 15, 1997. The Company does not expect that the adoption of this
standard will have a material impact on its financial statements.
NOTE 16: DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
At June 30, 1997 and 1996, the Company's financial instruments consist
of cash, trade receivables and payables, receivables from related parties
and long-term debt. The following methods were used to estimate the fair
value of financial instruments:
RECEIVABLES FROM RELATED PARTIES
It was not practicable to estimate the fair value of receivables from
related parties. The amounts reflected in the balance sheet at June 30,
1997 and 1996, are short-term receivables generated from transactions
between the Company and various related parties.
LONG-TERM DEBT
Fair value of long-term debt is estimated based on the trading prices
of the Company's primary debt issuance. The fair value of the other debt
approximates carrying value as other debt consists of multiple mortgage
obligations and debentures with interest rates approximating rates
currently available to the Company.
The carrying amounts and fair values of these financial instruments at
June 30 are as follows (in thousands):
1997 1996
---- ----
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- ----- ------- -----
Financial Assets:
Cash $965 $965 $898 $898
Financial Liabilities:
Senior Secured
Notes due 2004 $113,139 $121,476 $107,758 $106,212
Other long-term debt $13,493 $13,493 $15,100 $15,100
NOTE 17: BUSINESS ACQUISITIONS
During the year ended June 30, 1997, the Company acquired six LPG
operations through five asset purchases, and one stock purchase transaction
for a total of $9.5 million, of which $5.2 million was paid in cash with
the remainder in mortgage obligations and the assumption of certain
liabilities. These acquisitions have been accounted for as a purchase by
recording the assets and, for the stock purchase, the liabilities assumed,
at their estimated market values at the acquisition date. Amounts paid
above these market values are recorded as excess of cost over fair value of
net assets acquired on the face of the balance sheets. The consolidated
operations of the Company include the operations of the acquirees from the
acquisition dates. Unaudited Pro Forma consolidated operations assuming the
purchases were made at the beginning of the previous and current years are
shown below:
1997 1996
---- ----
(In Millions)
Net sales $98.9 $89.4
Net income (loss) $2.6 $(7.4)
The Pro Forma results are not necessarily indicative of what would
have occurred had the acquisitions been on those dates, nor are they
necessarily indicative of future operations.
Independent Accountants' Report on Financial Statement Schedules
Board of Directors and Stockholders
All Star Gas Corporation
Lebanon, Missouri
In connection with our audit of the consolidated financial statements
of ALL STAR GAS CORPORATION for each of the three years in the period ended
June 30, 1997, we have also audited the following financial statement
schedules. These financial statement schedules are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these financial statement schedules based on our audits of the basic
financial statements. The schedules are presented for purposes of complying
with the Securities and Exchange Commission's rules and regulations and are
not a required part of the consolidated financial statements.
In our opinion, the financial statement schedules referred to above,
when considered in relation to the basic consolidated financial statements
taken as a whole, present fairly, in all material respects, the information
required to be included therein.
/s/ Baird, Kurtz & Dobson
Springfield, Missouri
August 14, 1997
<TABLE>
<CAPTION>
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED JUNE 30, 1997, 1996 AND 1995
(IN THOUSANDS)
Balance at Charges to Amount Balance at
Beginning Costs and Written End of
Description of Year Expenses Off Other Year
<S> <C> <C> <C> <C> <C>
Valuation accounts
deducted from assets
to which they apply
- - for doubtful
accounts receivable:
June 30, 1997 $722 $483 $369 $83(A) $899
$(20)(B)
June 30, 1996 $800 $889 $820 $(147)(B) $722
June 30, 1995 $1,620 $1,136 $1,973 $17(A) $800
</TABLE>
(A) Allowance for doubtful accounts receivable established with respect to
the acquisition of retail service centers.
(B) Related to accounts receivable which were sold in conjunction with the
disposition of retail service centers.
LIQUIFIED PETROLEUM GAS CONTRACT
THIS IS A CONTRACT effective July 1, 1996,
between SHELL ANACORTES REFINING COMPANY, P.O. Box 700,
Anacortes, WA 98221 ("Shell"), and EMPIRE GAS CORPORATION
("Buyer").
1. TERM. This Contract shall be in effect for a
term beginning on July 1, 1996, and ending on June 30,
1997.
2. PRODUCTS-QUANTITIES-QUALITY.
2.1 Products-Quantities. Shell shall sell and
deliver to Buyer, and Buyer shall purchase and accept
from Shell, "Shell" Commercial Grade Propane ("Product")
in such quantities as Buyer shall order from time to
time, but, during any calendar month, not less than 90%
nor more (except at Shell's option) than all of the
quantity specified for such month in the following
schedule (in thousands of gallons):
July 125 October 125 January 125 April 125
August 125 November 125 February 125 May 125
September 275 December 125 March 125 June 125
provided that Buyer shall order and accept deliveries in
quantities and at intervals approximately equal during
each month.
2.2 Quality - Warranty Disclaimer. The Product
shall meet Shell's own specifications in effect at the
time of delivery; but SHELL OTHERWISE MAKES NO WARRANTIES
OF QUALITY, MERCHANTABILITY OR FITNESS AS TO THE PRODUCT,
AND NONE SHALL BE IMPLIED.
2.3 Excess Quantities. Shell's sale and delivery
during any month of more of any product than the quantity
specified in the Schedule for that month, whether
resulting from Shell's voluntary act, Shell's compliance
with any allocation or other legal requirement, or any
other cause, shall not be deemed to increase or otherwise
amend such specified contract quantity as to any future
month unless expressly so agreed in writing by Shell and
Buyer.
2.4 Quantity Limitation. Shell may, at its option,
after the initial three months of the term, limit the
quantity of any Product to be supplied in any month to a
quantity which is the same percentage of contract
quantity for that month as the average percentage of
contract quantities actually delivered during the last
preceding three months.
3. PRICES.
3.1 Definitions. The price for the Product, F.O.B.
each place of delivery which is a destination of Buyer,
shall be Shell's established price for Buyer's class of
purchaser for such Product, in effect at the time of
shipment for the place and method of delivery; and the
price for the Product, F.O.B. each place of delivery
which is an origin of Shell, shall be Shell's established
price for Buyer's class of purchaser for such Product, in
effect at the time and for the place of delivery. Such
prices may be ascertained at Shell's offices first herein
specified or such other place as may be designated by
Shell.
3.2 Payments. Buyer shall pay for the Product
delivered on such terms as Shell shall prescribe, any of
which may be altered or revoked by Shell at any time by
notice to Buyer (which may be given by telephone or
regular mail). Payment shall be deemed made when
received by Shell.
4. DELIVERIES.
4.1 Places. The Product shall be delivered to
Buyer at Shell's origin(s) (including pipeline terminals)
at Anacortes. However, Shell shall have the right at any
time or times to change any place of delivery from origin
to Buyer's destination(s) or from Buyer's destination to
origin, and to change any origin either to another one
specified in this article 4.1 or to a new one designated
by Shell, by giving Buyer at least 15 days' prior notice
or such shorter notice as may be reasonable in emergency
situations. Such notice shall specify the new place of
delivery, the effective date of the change, and, for
Buyer's information, Shell's then-current price for the
Product, F.O.B. that place. If shell exercises this
right, Buyer may, within 15 days after Shell's notice,
terminate this Contract as to the Product and place of
delivery by giving Shell at least five days' notice.
4.2 Buyer's Orders. Buyer's orders and shipping
instructions shall be given to Shell in such manner as
Shell shall designate by telephone or regular mail from
time to time.
4.3 Origin Deliveries. All deliveries of Products
at Shell's origin(s) shall be into delivery equipment
(including any pipeline) selected by Buyer and acceptable
to Shell. Shell shall not be obligated to deliver the
Product in bulk in any quantity less than the maximum
full load delivery permitted by applicable law for the
type of delivery equipment (including any pipeline)
utilized, or outside of the usual business hours of
Shell's plant. All delivery equipment and transportation
shall comply with applicable laws, regulations, and
tariffs.
4.4 Measurements. Quantities of Product delivered
shall be determined (a) if into or by transport truck, by
meters, scale weight, or certified calibration, at
Shell's option, (b) if into or by tank car, by official
capacity table, or (c) if into pipeline, by the pipeline
meters. Every quantity, however determined, shall be
corrected to a temperature of 60 F in accordance with
Table 24 of the ASTM-IP Petroleum Measurement Tables in
effect at the time of determination.
4.5 Rail Cars. Each rail car in which Shell ships
Product during the period of this contract shall be
deemed in the possession and care of the Buyer when such
car is delivered to Buyer's siding at Anacortes by the
delivering railroad. With respect to any rail cars used
by Shell delivering Product to the Buyer's destination:
Buyer shall mail bills of lading for empty tank cars to
Shell immediately upon unloading, shall pay all the
railroad carrier's demurrage and miscellaneous charges,
and shall pay Shell the detention charges for delays in
unloading for each full or fractional calendar day during
which any car remains in the Buyer's possession beyond
the free time specified below:
CAR CAPACITY FREE TIME DAILY RATE
30,000 5 DAYS $50.00
4.5.1 Damage to Rail Cars. If any car is
damaged in any respect or defective when it enters
Buyer's possession, Buyer shall promptly give written
notice thereof to shell by letter, telegram or facsimile
and also to an authorized agent of the delivering
railroad. Buyer shall not undertake any repair of or
other work on the car without the prior written approval
of Shell. When possession of any car is surrendered by
the Buyer, it shall be in as good a condition as when
received by Buyer, excepting only reasonable wear and
tear, and damage or destruction not arising out of any
negligence or otherwise wrongful act of the Buyer or any
agent of the Buyer.
4.6 Title. Title to any Product delivered shall
pass to Buyer when it enters any equipment or facility
(including any pipeline) provided by or for the account
of Buyer to receive the same, or is otherwise placed in
Buyer's possession, at a place of delivery hereunder.
5. SHELL'S IDENTIFICATIONS. This Contract
does not grant to Buyer any right to use Shell's
trademarks, brand names, service marks or color schemes
in connection with the identification, advertising, sale,
transportation use or other disposition of the Product
purchased hereunder, or to represent to Buyer's customers
(actual or prospective) or to the public generally that
the Product was purchased from Shell.
6. ASSIGNABILITY. Neither this Contract nor
any claim against Shell arising directly or indirectly
out of or in connection with this Contract shall be
assignable by Buyer or by operation of law without the
prior written consent of Shell. Any assignment made in
violation of this article shall be null and void.
7. TAXES AND CHARGES. Buyer shall pay any
tax, duty, fee or other governmental charge, or any other
public or private fee, charge or assessment now or
hereafter levied on the product delivered hereunder, or
on any of its constituent materials, or on Shell, or
required to be paid or collected by Shell, by reason of
the purchase, receipt, importation or manufacture of such
Product or constituent materials by Shell, or levied on
or incurred in connection with or incidental to the sale,
transportation, storage, delivery or use of the Product,
insofar as the same is not expressly included in the
prices hereunder.
8. INDEMNITY - CLAIMS.
8.1 Indemnity. Buyer shall defend, indemnify and
hold harmless Shell, its directors, employees and agents,
to the fullest extent permitted by law, against all
claims, suits, liabilities, judgments, losses and
expenses (including attorneys' fees and other costs of
litigation) arising out of any bodily/personal injury,
disease or death of persons (including Buyer or Buyer's
employees) or damage to property (including Buyer's)
caused by or happening in connection with Buyer's
receipt, loading, transportation, unloading, storage,
handling, sale, use or other disposition of the Product
sold hereunder, or other activity of Buyer relating to
the Product, except to the extent caused (a) by the
negligence or fault of Shell, its directors, employees or
agents, or (b) by defects in the Product not caused or
contributed to by any negligence or fault of Buyer or
Buyer's employees, agents, or contractors. In addition,
Buyer shall defend, indemnify and hold harmful Shell, its
directors, employees and agents, against all consequences
resulting from Buyer's failure to comply with all laws,
rules and regulations relating to environmental
protection. Shell shall have the right, but not the
duty, to participate in the defense of any claim or
litigation with attorneys of Shell's selection without
relieving Buyer of any obligations hereunder. Buyer has
the obligation and duty to promptly notify Shell in
writing of any claim made against Buyer or any claim made
against Shell for which the Buyer has knowledge in
connection with the use, receipt, handling, loading,
transportation, storage, sale or other disposition of the
Product. Buyer's obligations hereunder shall survive any
termination of this Contract.
8.2 Claims. Shell shall have no liability to Buyer
for any defect in quality or shortage in quantity of the
Product delivered unless (a) Buyer gives Shell notice of
Buyer's claim within five days after delivery or such
product, or in the case of any latent defect in quality,
within five days after Buyer's discovery of such defect
but in no event later than 30 days after delivery of such
Product; (b) Shell is given reasonable opportunity to
inspect the Product and to take and test samples thereof,
and (c) in case of delivery by tank care, the claim, if
for anything other than latent defect in quality, is
allowed by Shell before the Product is unloaded from the
tank car and, if for shortage in quantity, is for an
amount in excess of 2% of the quantity shown on the bill
of lading. In any event, Shell shall not be liable for
any such claim in excess of the purchase price of the
Product or for any consequential commercial damages.
Every initial notice of claim shall set forth fully the
facts on which the claim is based and shall be formally
documented, in writing, to Shell within 60 days after
initial notice.
9. EXCUSES FOR NONPERFORMANCE. Either Shell
or Buyer will be excused from its obligations under this
Contract (except financial) to the extent that
performance is delayed or prevented by any circumstances
reasonably beyond its control; or by fire, explosion,
mechanical breakdown, strikes or other labor trouble,
plant shutdown, riots or other civil disturbances, or
voluntary or involuntary compliance with any law,
regulation or request of any governmental authority; or
by unavailability of or interference with Shell's usual
sources of the Product or crude oils or other constituent
materials, or the usual means of transporting any of the
same, or that shell cannot reasonably acquire access to
railroad delivery equipment to deliver Product at Buyer's
designation(s). If, due to any of the foregoing reasons,
there should be a shortage of any Product from any
source, Shell will not be obligated to purchase supplies
from any other than its usual sources or to divert
supplies in order to perform this Contract and may
apportion its available supplies among its contract and
non-contract customers and its own internal uses in such
manner as it finds fair and reasonable. Quantities of
Product consequentially undelivered will be deducted from
the applicable remaining quantity obligation unless the
parties agree otherwise in writing.
10. REMEDIES - WAIVER. In the event of
Buyer's breach of any provision of this Contract; or
Buyer's default in payment of any indebtedness to Shell,
whether under this Contract or otherwise; or initiation
of any bankruptcy, insolvency, receivership or other like
proceeding by or against Buyer; or Buyer's failure to
comply with any federal, state or municipal law,
ordinance, regulation, order, license or permit relating
to the operations of Buyer in connection with the
Product, Shell shall have the right, in addition to any
other rights or remedies it may have, to suspend
deliveries hereunder or to terminate this Contract by
giving Buyer notice. Shell's right to require strict
performance of Buyer's obligations hereunder shall not be
affected in any way by any previous waiver, forbearance,
course of dealing, or trade custom or usage.
11. NOTICES. Every notice hereunder (except
when otherwise specified and subject to any requirements
of law) shall be given by certified or registered letter,
telegram, facsimile (if Shell acknowledges receipt
thereof) or telex and shall be deemed given when the
letter is deposited in the U.S. mail or the telegram or
telex or facsimile is dispatched, postage or charges
prepaid, and directed to Shell or Buyer (as the case may
be) at its address first herein specified, or at such
other address as either may have substituted by notice so
given to the other.
12. ENTIRETY - RELEASE - EXECUTION. This
Contract, as of the beginning date of its term, contains
the complete and exclusive agreement of, and terminates
all prior contracts between Shell and Buyer concerning
the Product, and Shell and Buyer each release the other
from all claims arising in connection with any such prior
contract including any railroad lease agreements,
excepting however, claims of Shell against Buyer for
indebtedness, reimbursement or indemnification. Neither
this contract nor any subsequent agreement amending or
supplementing this Contract shall be binding on Shell
unless and until it has been signed for Shell by a duly
authorized representative, and commencement of
performance hereunder or under any such subsequent
agreement shall not constitute a waiver of this
requirement.
EXECUTED on the date(s) specified below.
EMPIRE GAS CORPORATION ("Buyer") SHELL OFFSHORE INC.
("Shell")
By /s/ Kris Lindsey /s/ W.R. Davenport, Jr.
Kris Lindsey W.R. Davenport, Jr.
(type or print name) (type or print name)
Vice President
__________________________ Manager NGL Marketing & Supply
(Title of Officer or Agent)
Date: June 6, 1996 Date: July 3, 1996
LIQUIFIED PETROLEUM GAS CONTRACT
THIS IS A CONTRACT effective July 1, 1996, between
SHELL OIL COMPANY, P.O. Box 576, Houston, TX 77001 ("Shell"), and
EMPIRE GAS CORPORATION ("Buyer").
1. TERM. This Contract shall be in effect for a term
beginning on July 1, 1996, and ending on June 30, 1997.
2. PRODUCTS-QUANTITIES-QUALITY. Reference Exhibits A and
B attached herewith.
2.2 Quality - Warranty Disclaimer. The Product shall
meet Shell's own specifications in effect at the time of
delivery; but SHELL OTHERWISE MAKES NO WARRANTIES OF QUALITY,
MERCHANTABILITY OR FITNESS AS TO THE PRODUCT, AND NONE SHALL BE
IMPLIED.
2.3 Excess Quantities. Shell's sale and delivery
during any month or more of any product than the quantity
specified in the Schedule for that month, whether resulting from
Shell's voluntary act, Shell's compliance with any allocation or
other legal requirement, or any other cause, shall not be deemed
to increase or otherwise amend such specified contract quantity
as to any future month unless expressly so agreed in writing by
Shell and Buyer.
2.4 Quantity Limitation. Shell may, at its option,
after the initial three months of the term, limit the quantity of
any Product to be supplied in any month to a quantity which is
the same percentage of contract quantity for that month as the
average percentage of contract quantities actually delivered
during the last preceding three months.
3. PRICES.
3.1 Definitions. Reference Exhibits A and B attached
herewith.
3.2 Payments. Buyer shall pay for the Product
delivered on such terms as Shell shall prescribe, any of which
may be altered or revoked by Shell at any time by notice to Buyer
(which may be given by telephone or regular mail). Payment shall
be deemed made when received by Shell.
4. DELIVERIES.
4.1 Places. Reference Exhibits A and B attached
herewith.
4.2 Buyer's Orders. Buyer's orders and shipping
instructions shall be given to Shell in such manner as Shell
shall designate by telephone or regular mail from time to time.
4.3 Destination Deliveries. All deliveries of Product
at Buyer's destination(s) shall be made by any means of
transportation, at such times and in any delivery equipment Shell
may select. Buyer shall not divert any delivery equipment from
its destination originally invoiced by Shell without Shell's
prior consent. Buyer shall provide facilities for unloading and
shall pay all of the carrier's demurrage and miscellaneous
charges. Buyer shall also be responsible for any additional
transportation expense and/or terminal charge for unloading
returned Product if Buyer fails for any reason other than Shell's
fault to accept all or any part of the delivery. Delivery in
tank cars at any plant of Buyer shall mean delivery at the
railroad siding designated by Buyer or, absent such designation,
the railroad delivery point nearest such plant.
4.4 Measurements. Quantities of Product delivered
shall be determined (a) if into or by transport truck, be meters,
scale weight, or certified calibration, at Shell's option, (b) if
into or by tank car, by official capacity table, or (c) if into
pipeline, by the pipeline meters. Every quantity, however
determined, shall be corrected to a temperature of 60 F in
accordance with Table 24 of the ASTM-IP Petroleum Measurement
Tables in effect at the time of determination.
4.5 Rail Cars. Each rail car in which Shell ships
Product during the period of this contract shall be deemed in the
possession and care of the Buyer when such car is delivered to
Buyer's various Florida Sidings, destinations by the delivering
railroad. With respect to any rail cars used by Shell delivering
Product to the Buyer's destination: Buyer shall mail bills of
lading for empty tank cars to Shell immediately upon unloading,
shall pay all the railroad carrier's demurrage and miscellaneous
charges, and shall pay Shell the detention charges for delays in
unloading for each full or fractional calendar day during which
any car remains in the Buyer's possession beyond the free time
specified below:
CAR CAPACITY FREE TIME DAILY RATE
30,000 5 Days $50.00
4.5.1 Damage to Rail Cars. If any car is damaged in any
respect or defective when it enters Buyer's possession, Buyer
shall promptly give written notice thereof to Shell by letter,
telegram or facsimile and also to an authorized agent of the
delivering railroad. Buyer shall not undertake any repair of or
other work on the car without the prior written approval of
Shell. When possession of any car is surrendered by the Buyer,
it shall be in as good a condition as when received by Buyer,
excepting only reasonable wear and tear, and damage or
destruction not arising out of any negligence or otherwise
wrongful act of the Buyer or any agent of the Buyer.
4.6 Title. Title to any Product delivered shall pass
to Buyer when it enters any equipment or facility (including any
pipeline) provided by or for the account of Buyer to receive the
same, or is otherwise placed in Buyer's possession, at a place of
delivery hereunder.
5. SHELL'S IDENTIFICATIONS. This Contract does not grant
to Buyer any right to use Shell's trademarks, brand names,
service marks or color schemes in connection with the
identification, advertising, sale, transportation use or other
disposition of the Product purchased hereunder, or to represent
to Buyer's customers (actual or prospective) or to the public
generally that the Product was purchased from Shell.
6. ASSIGNABILITY. Neither this Contract nor any claim
against Shell arising directly or indirectly out of or in
connection with this Contract shall be assignable by Buyer or by
operation of law without the prior written consent of Shell. Any
assignment made in violation of this article shall be null and
void.
7. TAXES AND CHARGES. Buyer shall pay any tax, duty, fee
or other governmental charge, or any other public or private fee,
charge or assessment now or hereafter levied on the product
delivered hereunder, or on any of its constituent materials, or
on Shell, or required to be paid or collected by Shell, by reason
of the purchase, receipt, importation or manufacture of such
Product or constituent materials by Shell, or levied on or
incurred in connection with or incidental to the sale,
transportation, storage, delivery or use of the Product, insofar
as the same is not expressly included in the prices hereunder.
8. INDEMNITY - CLAIMS.
8.1 Indemnity. Buyer shall defend, indemnify and hold
harmless Shell, its directors, employees and agents, to the
fullest extent permitted by law, against all claims, suits,
liabilities, judgments, losses and expenses (including attorneys'
fees and other costs of litigation) arising out of any
bodily/personal injury, disease or death of persons (including
Buyer or Buyer's employees) or damage to property (including
Buyer's) caused by or happening in connection with Buyer's
receipt, loading, transportation, unloading, storage, handling,
sale, use or other disposition of the Product sold hereunder, or
other activity of buyer relating to the Product, except to the
extent caused (a) by the negligence or fault of Shell, its
directors, employees or agents, or (b) by defects in the Product
not caused or contributed to by any negligence or fault of Buyer
or Buyer's employees, agents, or contractors. In addition,
Buyer shall defend, indemnify and hold harmless Shell, it-a
directors, employees and agents, against all consequences
resulting from Buyer's failure to comply with all laws, rules and
regulations relating to environmental protection. Shell shall
have the right, but not the duty, to participate in the defense
of any claim or litigation with attorneys of Shell's selection
without relieving Buyer of any obligations hereunder. Buyer
has the obligation and duty to immediately notify Shell in
writing of any claim made against Buyer or Shell in connection
with the use, receipt, handling, loading, transportation,
storage, sale or other disposition of the Product. Buyer's
obligations hereunder shall survive any termination of this
Contract.
8.2 Claims. Shell shall have no liability to Buyer
for any defect in quality or shortage in quantity of the Product
delivered unless (a) Buyer gives Shell notice of Buyer's claim
within five days after delivery of such product, or in the case
of any latent defect in quality, within five days after Buyer's
discovery of such defect but in no event later than 30 days after
delivery of such Product; (b) Shell is given reasonable
opportunity to inspect the Product and to take and test samples
thereof, and (c) in case of delivery by tank car, the claim, if
for anything other than latent defect in quality, is allowed by
Shell before the Product is unloaded from the tank car and, if
for shortage in quantity, is for an amount in excess of 2% of the
quantity shown on the bill of lading. In any event, Shell shall
not be liable for any such claim in excess of the purchase price
of the Product or for any consequential commercial damages.
Every initial notice of claim shall set forth fully the facts on
which the claim is based and shall be formally documented, in
writing, to Shell within 60 days after initial notice.
9. EXCUSES FOR NONPERFORMANCE. Either Shell or Buyer will
be excused from its obligations under this Contract (except
financial) to the extent that performance is delayed or prevented
by any circumstances reasonably beyond its control; or by fire,
explosion, mechanical breakdown, strikes or other labor trouble,
plant shutdown, riots or other civil disturbances, or voluntary
or involuntary compliance with any law, regulation or request of
any governmental authority; or by unavailability of or
interference with Shell's usual sources of the Product or crude
oils or other constituent materials, or the usual means of
transporting any of the same, or that Shell cannot reasonably
acquire access to railroad delivery equipment to deliver Product
at Buyer's designations). If, due to any of the foregoing
reasons, there should be a shortage of any Product from any
source, Shell will not be obligated to purchase supplies from any
other than its usual sources or to divert supplies in order to
perform this Contract and may apportion its available supplies
among its contract and non-contract customers and its own
internal uses in such manner as it finds fair and reasonable.
Quantities of Product consequentially undelivered will be
deducted from the applicable remaining quantity obligation unless
the parties agree otherwise in writing.
10. REMEDIES - WAIVER. In the event of Buyer's breach
of any provision of this Contract; or Buyer's default in payment
of any indebtedness to Shell, whether under this Contract or
otherwise; or initiation of any bankruptcy, insolvency,
receivership or other like proceeding by or against Buyer; or
Buyer's failure to comply with any federal, state or municipal
law, ordinance, regulation, order, license or permit relating to
the operations of Buyer in connection with the Product, Shell
shall have the right, in addition to any other rights or remedies
it may have, to suspend deliveries hereunder or to terminate this
Contract by giving Buyer notice. Shell's right to require strict
performance of Buyer's obligations hereunder shall not be
affected in any way by any previous waiver, forbearance, course
of dealing, or trade custom or usage.
11. NOTICES. Every notice hereunder (except when
otherwise specified and subject to any requirements of law) shall
be given by certified or registered letter, telegram, facsimile
(if Shell acknowledges receipt thereof) or telex and shall be
deemed given when the letter is deposited in the U.S. mail or the
telegram or telex or facsimile is dispatched, postage or charges
prepaid, and directed to Shell or Buyer (as the case may be) at
its address first herein specified, or at such other address as
either may have substituted by notice so given to the other.
12. ENTIRETY - RELEASE - EXECUTION. This Contract, as
of the beginning date of its term, contains the complete and
exclusive agreement of, and terminates all prior contracts
between Shell and Buyer concerning the Product, and Shell and
Buyer each release the other from all claims arising in
connection with any such prior contract including any railroad
lease agreements, excepting however, claims of Shell against
Buyer for indebtedness, reimbursement or indemnification.
Neither this Contract nor any subsequent agreement amending or
supplementing this Contract shall be binding on Shell unless and
until it has been signed for Shell by a duly authorized
representative, and commencement of performance hereunder or
under any such subsequent agreement shall not constitute a waiver
of this requirement.
EXECUTED on the date(s)
specified below.
EMPIRE GAS CORPORATION SHELL OIL COMPANY ("Shell")
("Buyer")
By: /s/ Kris Lindsey /s/ W.R. Davenport, Jr.
Kris Lindsey W. R. DAVENPORT, JR.
(Type or Print Name) (Type or Print Name)
Executive Vice President MANAGER NGL MARKETING &
(Title of Officer or Agent) SUPPLY
(Title of Officer or Agent)
Date: December 17, 1996 Date: 3/21, 1997
EXHIBIT A
2.1 Products-Quantities. Shell shall sell and deliver to
Buyer, and Buyer shall purchase and accept from Shell, "Shell"
Propane HD-5 ("Product") in such quantities as Buyer shall order
from time to time, but during any calendar month, not less than
90% nor more (except at Shell's option) than all of the quantity
specified for such month in the following schedule (in thousands
of gallons):
July 546 October 1,105 January 1,210 April 615
August 695 November 1,060 February 1,290 May 590
September 875 December 1,340 March 1,300 June 520
provided that Buyer shall order and accept deliveries in
quantities and at intervals approximately equal during each
month.
3. PRICES.
3.1 Definitions. The price for the Product, F.O.B. various
Florida destinations shall be determined by adding the mean (sum
of high/low OPIS prices divided by two) spot prices of propane at
Mont Belvieu (TET) as published by Oil Pricing Information
Service (OPIS/Petroscan) for the following weekly OPIS report
days: Thursday, Friday, Monday, Tuesday, and Wednesday and
dividing the sum by five (5). This average price will have 12.25
cents per gallon differential added for freight loading, margin
and car costs for the months of April September and 12.75 cpg for
the months of October - March. This calculation will be
completed by Shell on Thursday and Friday each week and is
effective for all product purchased beginning on the following
Monday through Sunday. In the event OPIS fails to publish a
price for any of these days, the day or days will be excluded
from the calculation.
4.1 Places. The Product shall be delivered to Buyer at
various Florida rail sidings. However, Shell shall have the
right at any time or times to change any place of delivery from
origin to Buyer's destinations) or from Buyer's destination to
origin, and to change any origin either to another one specified
in this article 4.1 or to a new one designated by Shell, by
giving Buyer at least 15 days' prior notice or such shorter
notice as may be reasonable in emergency situations. Such notice
shall specify the new place of delivery, the effective date of
the change, and, for Buyer's information, Shell's then-current
price for the Product, F.O.B. that place. If Shell exercises
this right, Buyer may, within 15 days after Shell's notice,
terminate this Contract as to the Product and place of delivery
by giving Shell at least five days' notice.
/s/ Kris Lindsey /s/ W.R. Davenport, Jr.
EMPIRE GAS ("Buyer") SHELL OFFSHORE INC.
EXHIBIT B
2.1 Products-Quantities. Shell shall sell and deliver to
Buyer, and Buyer shall purchase and accept from Shell, "Shell"
Propane HD-5 ('Product') in such quantities as Buyer shall order
from time to time, but, during any calendar month, not less than
90% nor more (except at Shell's option) than all of the quantity
specified for such month in the following schedule (in thousands
of gallons):
July 210 October 210 January 210 April 210
August 210 November 210 February 210 May 210
September 210 December 210 March 210 June 210
provided that Buyer shall order and accept deliveries in
quantities and at intervals approximately equal during each
month.
3. PRICES.
3.1 Definitions. The price for the product FOB Mt.
Belvieu shall be the mean (sum of the high plus the low divided
by two) spot price of propane at Texas Eastern Pipeline Terminal
(TET) Mt. Belvieu as reported by Oil Pricing Information Service
(OPIS/Petroscan) for all reporting days of the month plus the
following respective monthly differentials: April - September
1.74; October and March 2.24; November - February 2.49. Should
Shell be unable to deliver any portion of the above portions at
Grangeville, then that portion of the undeliverable volume will
be made available at Hattiesburg in-line at an additional charge
of .88 cents per gallon.
4. DELIVERIES.
4.1 Places. The Product shall be delivered to Buyer at
Shell's origin at the Grangeville Dixie Pipeline Injection Point.
However, Shell shall have the right at any time or times to
change any place of delivery from origin to Buyer's destinations)
or from Buyer's destination to origin, and to change any origin
either to another one specified in this article 4.1 or to a new
one designated by Shell, by giving Buyer at least 15 days' prior
notice or such shorter notice as may be reasonable in emergency
situations. Such notice shall specify the new place of delivery,
the effective date of the change, and, for Buyer's information,
Shell's then-current price for the Product, F.O.B. that place.
If Shell exercises this right, Buyer may, within 15 days after
Shell's notice, terminate this Contract as to the Product and
place of delivery by giving Shell at least five days' notice.
/s/ Kris Lindsey /s/ W.R. Davenport, Jr.
EMPIRE GAS ("Buyer") SHELL OFFSHORE INC.
Warren Petroleum Company Propane Sales Agreement
A Division of Chevron U.S.A. Inc.
P.O. Box 1589, Tulsa, OK 74102 * Phone (918) 560-4000
Prepare in original and five copies
Purchaser Confirming Arrangements Made With
Empire Gas Corporation Marty Lerum
Address Arrangements Made By Date
P.O. Box 303 R. E. Siedell August 23, 1995
City, State, Zip Warren No. Purchaser No.
Lebanon, MO 65536 25076
1. Term: Warren will sell the following during period from September
01, 1995 ( ) Expires on__________________
(X) Until May 31, 1996 and continuing month to month thereafter
unless and until canceled at the end of any month by either party giving
the other not less than 60 days written notice prior to the proposed
termination date.
Product
Approx. Unit Meas. Del. Price
Vol. of Basis Location Method
(net @ Measure (see 2) (see 2) Cents/
60 Gallon
degrees
F)
-------------------------------------------------------------------------
Propane GPA See Gallons T Pascagoula, MS T Posted
Specifications Attch. price at
A time of
lifting
-------------------------------------------------------------------------
2. Measurement/Delivery Method V - Volumetric per API Tables 23 and 24
(see above) or 23A and 24A or 5A and 6A
T. Trucks Other M - Mass per GPA 8182
____________ O - Origin D - Destination
____________
C. Tank Cars ____________
____________
______
-------------------------------------------------------------------------
3. Product: (X) Stenched ( ) Unstenched
-------------------------------------------------------------------------
WARNING
It is important that you periodically remind your customers and employees
that even though ethyl mercaptan has been recognized as the best available
odorant for propane, no odorant is effective 100% of the time. The odor
of the gas may, under some circumstances, be reduced or lost if put into a
tank that is new or that has been exposed to the air for extended periods.
Electronic gas detectors (that emit a shrill sound in the presence of gas)
should be recommended to your customers as an additional safety measure for
detecting leaks. Your customers should be familiar with the smell of the
odorant and their ability to smell it. Inform them that colds, allergies,
smoking, alcohol, age, competing odors and simply "getting used to" the
odor can cause them not to detect escaping gas. Familiarize yourself, your
employees and your customers with the potential limitations of the odorant
and the alleged phenomenon of "odor fade". Warren's Odorization Bulletins,
Safety Guide and other safety materials are available to help with this
familiarization. If you need additional information or materials to
properly educate your employees and customers, please contact the NPGA,
your state organization, or Warren Petroleum Company.
------------------------------------------------------------------------
4. Seller send statements, invoices and shipping documentation to:
Ms. Gwen Hogan
Empire Gas Corporation
P.O. Box 303
Lebanon, MO 65536
------------------------------------------------------------------------
5. Terms of Payment:
1% EFT 14 days.
------------------------------------------------------------------------
6. Special Provisions:
------------------------------------------------------------------------
7. In addition to the above terms and conditions, the General Provisions of
this Product Sales Agreement and all Attachments are incorporated herein
by reference and made a part of this Agreement. If you are in agreement
with the foregoing terms and conditions including the indemnity
provision, please so indicate by signing below and returning one copy of
the Agreement to Warren.
------------------------------------------------------------------------
Accepted and Agreed to: Warren Petroleum Company
Empire Gas Corporation A Division of Chevron U.S.A. Inc.
By /s/ Kris Lindsey By /s/ R.E. Siedell
Title V.P. Date Title
9/5/95 District Manager
------------------------------------------------------------------------
Distribution: Buyer for File Distribution Section, Tulsa
Buyer for acceptance and Marketing Department, Tulsa
return to Warren's Tulsa Retained by Originator
Office
Accounting Division, Tulsa
GENERAL PROVISIONS PROPANE SALES
1. DELIVERIES
A. When delivery is point of origin, delivery shall be deemed to have
been completed:
1. To tank tricks when the product has actually been delivered into
the trust;
2. To tank cars when the carrier accepts the same for shipment;
3. To pipelines upon metering of the product;
B. When delivery is point of destination, delivery shall be deemed to
have been completed:
1. From tank trucks when truck has been placed at buyer's facilities
for unloading;
2. From tank cars when carrier delivers same at the destination;
C. Seller shall not be liable to Buyer for quantity or quality of
product, after completion of delivery. Buyer agrees that the
handling, care or use of product shall thereafter be at Buyer's
sole risk and expense.
2. MEASUREMENT - Measurement shall be done in the manner customarily
utilized at the point of delivery in accordance with one of the
following alternatives.
A. On all deliveries into/out of tank cars, the quantity shall be
determined by official tank car capacity tables, meters with no
vapor return, or by weighing, in accordance with GPA Publication
8162,8173 and all revisions thereof.
B. On all deliveries into/out of transport and tank truck equipment,
quantities shall be determined by meter with no vapor return, slip
tube, rotary gauging device or weighing, in accordance with GPA
Publication 8162, all appropriate GPA and API standards and all
revisions thereof.
C. On all deliveries into/out of pipeline, quantity shall be
determined by turbine or positive displacement pipeline meter in
accordance with API Manual of Petroleum Measurement Standards.
D. All quantities shall be corrected to 60 degrees Fahrenheit and
equilibrium vapor pressure at 60 degrees Fahrenheit.
E. Volume and compressibility correction factors shall be determined
from referenced API tables or computer programs used to generate
these tables.
3. PASSAGE OF TITLE AND WARRANTY OF TITLE - Title to the product and risk
of loss shall pass to Buyer upon delivery. Seller warrants to Buyer
that it has title to the product(s) delivered by it hereunder and the
right to deliver same, and agrees to indemnify, defend and hold the
Buyer harmless from and gains any loss, claim or demand by reason of
any failure of such title or breach of this warranty. SELLER MAKES NO
OTHER WARRANTY WITH RESPECT TO THE PRODUCT OR OTHERWISE, INCLUDING,
WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR
A PARTICULAR PURPOSE.
4. TAXES - Any tax, fee, or other exaction, now or hereafter, levied or
assessed by any governmental authority upon, or as a result of the
transaction herein provided for, or the goods or source materials
thereof which ar the subject matter of this Agreement, shall, if
payable by Seller, be paid by Buyer on demand by Seller. Any personal
property taxes levied or assessed by any governmental authority upon
the products covered by this Agreement shall be paid by the party
having title thereto at the time of such assessment. Buyer shall
furnish Seller proper exemption certificate where tax exemption is
claimed on any product(s) delivered hereunder.
5. GOVERNMENT REGULATIONS & LAW - Seller warrants that the product it
delivers hereunder will be produced and delivered in full compliance
with all applicable federal and state laws and regulations and all
Presidential Proclamations which may be applicable. This agreement
shall be subject to the jurisdiction of, governed by and construed in
accordance with the laws of the State of Oklahoma including the
Uniform Commercial Code. Seller agrees to comply with the provisions
contained in Exhibit "A" if attached hereto, to the extent that such
provisions are legally applicable to Seller.
6. FORCE MAJEURE - If either party is rendered unable, wholly or in part,
to perform its obligations under this Agreement (other than to make
payments due hereunder) due to force majeure, defined herein as any
cause or causes beyond its control, then in any such event, it is
agreed that the affected party shall give prompt notice and full
particulars of such force majeure to the other party. The obligations
of the affected party shall be suspended for the duration of such
inability to perform but for no longer period and such cause shall, so
far as possible, be remedied with all reasonable dispatch.
7. ASSIGNMENT - This Agreement shall extend to and be binding upon the
parties thereto, their heirs, successors and assigns; but it is
expressly agreed that neither party shall voluntarily assign this
Agreement without the prior written consent to the other.
8. NOTICE - Any notice hereunder shall be in writing and shall be
delivered personally, by mail, by fax, by telex, or by telegram to the
address set forth on the attached agreement, unless changed by notice.
such notice shall be deemed to have been given on the date of the
delivery thereof.
9. WAIVER - The waiver by either party of the breach of any provision
hereof by the other party shall not be a waiver of the breach of any
other provision or provisions hereof or of any subsequent or
continuing breach of such provision or provisions.
10. ALTERATIONS - No oral promises, agreements or warranties shall be
deemed a part hereof, nor shall nay alteration or amendment of this
Agreement, or waiver of any of its provisions, be binding upon either
party hereto unless the same be in writing, signed by the party
charged.
11. INVOICES AND TERMS OF PAYMENT - Invoices will be prepared by Seller
and transmitted to the Buyer from time to time during the month.
Unless otherwise specified, payment is due within ten (10) days after
receipt of invoice. If payment is not made within the time allowed
under this Agreement, then Seller may charge interest on the unpaid
balance at the lesser of 11/2% per month or the highest rate permitted
by Oklahoma law and Seller shall be entitled to recover its reasonable
costs of collection, including attorney's fee.
12. FINANCIAL RESPONSIBILITY - If in the judgment of Seller the financial
responsibility of Buyer becomes impaired or unsatisfactory, advance
cash payments or acceptable security (including, but not limited to a
letter of credit form a financial institution acceptable to Seller)
may be required by Seller, and if Buyer fails to provide such, Seller
may without waiving any rights or remedies, withhold further
deliveries until such payment or security is received. Buyer's duty
to provide the hereinabove credit assurance shall be a condition
precedent to Seller's obligation to perform under this agreement.
13. CONFLICTS OF INTEREST - No director, employee or agent of either party
shall give or receive any commission, fee, rebate, gift or
entertainment of significant cost or value in connection with this
Agreement. Any representative(s) authorized by either party may audit
the applicable records of the other party solely for the purpose of
determining whether there has been compliance with this paragraph.
14. AUDIT - Each party and its authorized representatives shall have
access to the accounting records and other documents maintained by the
other party which relate to the product being sold to the other party
under this Agreement and shall have the right to audit such records
once a year a any reasonable time or times during the term of this
Agreement and for two years after the year in which this Agreement
terminates. Neither party shall make claim on the other for any
adjustment after said two-year period.
15. TANK CARS - If Seller's tank cars are used and they are not unloaded
and returned to railroad, Buyer shall be liable to Seller for rental
at the rate of $50.00 for each day or fraction thereof in excess of 7
days. Tank cars shall not be diverted without Seller's written
consent.
16. QUALITY - All products delivered under this Agreement shall meet the
latest GPA specifications for that product and contain no deleterious
substances. Product delivered under this agreement shall not contain
concentrations of any contaminations that may make it or its
components commercially unacceptable in general industry application.
Any requirements of buyer pertaining to potential contaminants and/or
specific hydrocarbon composition not listed in the product
specification must be identified by buyer and allowable concentrations
agreed to in writing by both parties prior to delivery.
17. SHORTAGE OF PRODUCTS - Due to uncertainties in the supply/demand
situation, Warren may not have sufficient supplies of product to be
delivered hereunder to meet the full requirements of all of its
customers, contract or otherwise. whenever that situation exists,
Warren shall have, in addition to any other rights Warren may have
under this Agreement, the right to reduce deliveries of such product
on any basis which in Warren's opinion is equitable, allowing for such
priorities to such priorities to such classes of customers as Warren
deems appropriate. If any such reduction occurs, Buyer shall have the
option to terminate this Agreement as to any or all products by
fifteen (15) day's notice, given within thirty (3) days of the notice
of reduction.
18. BRAND NAMES - Unless otherwise specifically agreed, Buyer shall not
represent or permit any other person to represent, that the product
delivered hereunder is the product of Warren. All products delivered
to Buyer hereunder shall be used or sold under Buyer's own brand names
or under brand names approved by Warren, and Buyer shall not authorize
or permit said product to be used or sold under any other brand names.
19. CONDUCT OF BUYER'S BUSINESS - Buyer in the performance of this
Agreement is engaged in an independent business and nothing herein
contained shall be construed as giving Warren any right to control
Buyer in any way in its performance of its business. Warren has no
right to exercise control over any Buyer's employees. All employees
of Buyer shall be entirely under the control and direction of Buyer
who shall be responsible for their actions. and omissions
20. INDEMNITY - If Warren provides adequate documentation of the
odorization required by this contract, buyer agrees to define and hold
Warren harmless from all expenses (including attorney's fees) or
liability arising from any claims of whatever kind due to injuries or
damages which occur after delivery to Buyer in connection with the
transportation, use or handling of product covered hereunder. BUYER'S
INDEMNITY OBLIGATION SHALL BE APPLICABLE EVEN IF SUCH DAMAGES ARE
DETERMINED TO HAVE BEEN PARTLY CAUSED BY THE FAULT OF SELLER OR IF
LIABILITY WITHOUT FAULT IS IMPOSED ON SELLER, THE ONLY EXCEPTION TO
SUCH OBLIGATION BEING WHERE THE FAULT OF SELLER IS DETERMINED TO BE
THE SOLE CAUSE OF SUCH DAMAGES.
21. PRICES - Prices hereunder may be changed at any time by Warren upon
notice given either electronically (i.e. fax, DTN or phone) or by U.S.
Mail, effective when sent. If any such notice shall increase Warren's
price to Buyer at any shipping point or destination above Warren's
price for such product or freight in effect during the elapsed portion
of the calendar year in which Warren's notice is effective, Buyer may
by written notice to Warren given and effective within fifteen (15)
days the date of Warren's notice, terminate this contract with respect
to such shipping ponit or destination.
22. ODORIZATION - Unless otherwise specifically agreed in writing, Buyer
hereby requests that the propane sold hereunder be odorize with not
less than 1.0 lb. of ethyl mercaptan per 10,000 gallons. Buyer
warrants that compliance with its request will satisfy all applicable
legal requirements.
23. PRODUCT HAZARDS - Buyer acknowledges receipt of Warren's Safety
Bulletin for odorized propane and is knowledgeable of the hazards or
risks in handling or using the product. Buyer agrees that Buyer shall
inform its employees, contractors and customers of any hazards or
risks associated with the product. Warren will make available to
Buyer Warning Decals that are intended to be placed on consumer tanks
or equipment and copies of its Safety Guide. Buyer agrees to supply
its customers with these materials or other reasonably equivalent
safety material to warn them of the potential hazards or risks in
using odorized propane.
24. INCIDENT - Buyer shall notify Warren as soon as possible after it
becomes aware of any fires or explosions occurring at locations
propane purchase hereunder is used. Buyer will inform Warren if said
product is involved and will fully cooperate with Warren in obtaining
a propane sample and any other investigation Warren deems necessary.
Buyers Initials __________
ATTACHMENT A TO
PROPANE SALES AGREEMENT NO. 25076
1. TRADEMARK. Buyer acknowledges that the CHEVRON and WARRENGAS
Trademarks are valuable property rights belonging to Chevron
Corporation and its subsidiaries, including Chevron U.S.A. inc. and
that any use thereof by Buyer in connection with this agreement is
solely for the purposes of advertising products obtained from such
subsidiaries. Upon termination of this agreement, Buyer agrees that
it will make no further use of such trademarks or any other mark, name
or designs confusingly similar therewith.
2. QUANTITY. During the term hereof, Buyer agreed to buy the product
herein specified in monthly quantities of not less than the minimum
set forth below and Warren agrees to sell said quantities to Buyer.
Buyer shall purchase such entities as evenly as possible during each
month. If during any period of this agreement the quantity of product
Warren is obligate to deliver to Buyer is prescribed by government
rules, regulations or orders, then the quantity of product covered by
this agreement shall be the quantity so prescribed for such period and
Buyer agrees to buy and Warren agrees to sell such Quantity.
VOLUME (IN THOUSAND OF GALLONS)
EST. VOL. EST. VOL.
April 36 October 36
May 36 November 45
June 18 December 45
July 18 January 54
August 27 February 45
September 36 March 36
For the purpose of determining compliance with the above quantity schedule,
purchase of product shall be allocated to the month in which shipment is
made. Should either party fail to comply in any amount with the above
schedule, the other party may elect to terminate this agreement by mailing
notice of such termination on or before the 20th day of the succeeding
month. If the Buyer fails to purchase 100% of the above specified minimum
monthly quantities during any month or months and Warren does not elect to
terminate this agreement, Warren shall not be obligated hereunder to sell
to Buyer in any of the succeeding six months more than one and one half
times the average monthly quantity which Buyer actually purchased during
the preceding six-month period.
When delivery is into tank trucks furnished by Buyer, the delivery ticket
showing the quantity delivered shall be signed by the loader as the agent
of Warren and by the truck driver as the agent of the Buyer; such
quantities shall be conclusively presumed to have been delivered to Buyer.
On or before the 1st day of each month Buyer shall inform Warren of
quantities required during such month, delivery dates, and when applicable,
destinations of each shipment. Warren shall not be obligated to ship less
than a tank car or tank truck load.
3. Method of Delivery: _X_ By tank truck furnished by Buyer.
By tank truck furnished by Warren.
By tank truck furnished by _____ with a
capacity of _____ gallons each.
PRICE INFORMATION
Prices in effect as of August 24, 1995
Sales based on (X) Shipping point price or ( ) Destination price
SHIPPING OR
PRICING PRICE IN FREIGHT
POINTS DESTINATIONS PRODUCTS CENTS/GALLONS CHARGES
--------------------------------------------------------------------------
Pascagoula, Various Propane 33.75 N/A
MS
------------------------
Warren Petroleum Company Propane Sales Agreement
A Division of Chevron U.S.A. Inc.
P.O. Box 1589, Tulsa, OK 74102 * Phone (918) 560-4000
Prepare in original and five copies
- -----------------------------------------------------------------------------
Purchaser Confirming Arrangements Made With
Empire Gas Corporation Marty Lerum
- -----------------------------------------------------------------------------
Address Arrangements Made By Date
P.O. Box 303 R. E. Siedell August 24, 1995
- -----------------------------------------------------------------------------
City, State, Zip Warren No. Purchaser No.
Lebanon, MO 65536 25078
- -----------------------------------------------------------------------------
1. Term: Warren will sell the following during period from September 01,
1995 |_| Expires on__________________
|X| Until May 31, 1996 and continuing month to month thereafter unless
and until canceled at the end of any month by either party giving the
other not less than 60 days written notice prior to the proposed
termination date.
- -----------------------------------------------------------------------------
Product
Approx. Vol. Unit of Meas. Del. Price
(net @ Measure Basis Location Method Cents/
60(degree)F) (see 2) (see 2) Gallon
- -----------------------------------------------------------------------------
Propane GPA See Attch. Gallons T Greenville, MS T Posted
Specifications A price
at time
of
lifting
- -----------------------------------------------------------------------------
2. Measurement/Delivery Method (see above) V - Volumetric per API Tables 23
T. Trucks__________ Other _____________ and 24 or 23A and 24A or 5A
C. Tank______________________________ and 6A
M - Mass per GPA 8182
O - OriD - Destination
- -----------------------------------------------------------------------------
3. Product: |X| |_| Unstenched
- -----------------------------------------------------------------------------
WARNING
It is important that you periodically remind your customers and employees
that even though ethyl mercaptan has been recognized as the best available
odorant for propane, no odorant is effective 100% of the time. the odor of
the gas may, under some circumstances, be reduced or lost if put into a
tank that is new or that has been exposed to the air for extended periods.
Electronic gas detectors (that emit a shrill sound in the presence of gas)
should be recommended to your customers as an additional safety measure
for detecting leaks. Your customers should be familiar with the smell of
the odorant and their ability to smell it. Inform them that colds,
allergies, smoking, alcohol, age, competing odors and simply "getting used
to" the odor can cause them not to detect escaping gas. Familiarize
yourself, your employees and your customers with the potential limitations
of the odorant and the alleged phenomenon of "odor fade". Warren's
Odorization Bulletins, Safety Guide and other safety materials are
available to help with this familiarization. If you need additional
information or materials to properly educate your employees and customers,
please contact the NPGA, your state organization, or Warren Petroleum
Company.
- -----------------------------------------------------------------------------
4. Seller send statements, invoices and shipping documentation to:
Ms. Gwen Hogan
Empire Gas Corporation
P.O. Box 303
Lebanon, MO 65536
- -----------------------------------------------------------------------------
5. Terms of Payment:
1% EFT 14 days.
- -----------------------------------------------------------------------------
6. Special Provisions:
- -----------------------------------------------------------------------------
7. In addition to the above terms and conditions, the General Provisions of
this Product Sales Agreement and all Attachments are incorporated herein
by reference and made a part of this Agreement. If you are in agreement
with the foregoing terms and conditions including the indemnity provision,
please so indicate by signing below and returning one copy of the
Agreement to Warren.
- -----------------------------------------------------------------------------
Accepted and Agreed to: Warren Petroleum Company
Empire Gas Corporation A Division of Chevron U.S.A. Inc.
- -----------------------------------------------------------------------------
By /s/ Kris Lindsey By /s/ R.E. Siedell
- -----------------------------------------------------------------------------
Title V.P. Date Title
9/05/95 District Manager
- -----------------------------------------------------------------------------
Distribution: Buyer for File Distribution Section, Tulsa
Buyer for acceptance Marketing Department, Tulsa
and return to Warren Retained by Originator
Accounting Division, Tulsa
GENERAL PROVISIONS PROPANE SALES
1. DELIVERIES
A. When delivery is point of origin, delivery shall be deemed to have
been completed:
1. To tank tricks when the product has actually been delivered into
the trust;
2. To tank cars when the carrier accepts the same for shipment;
3. To pipelines upon metering of the product;
B. When delivery is point of destination, delivery shall be deemed to
have been completed:
1. From tank trucks when truck has been placed at buyer's facilities
for unloading;
2. From tank cars when carrier delivers same at the destination;
C. Seller shall not be liable to Buyer for quantity or quality of product,
after completion of delivery. Buyer agrees that the handling, care or
use of product shall thereafter be at Buyer's sole risk and expense.
2. MEASUREMENT - Measurement shall be done in the manner customarily utilized
at the point of delivery in accordance with one of the following
alternatives.
A. On all deliveries into/out of tank cars, the quantity shall be
determined by official tank car capacity tables, meters with no vapor
return, or by weighing, in accordance with GPA Publication 8162,8173
and all revisions thereof.
B. On all deliveries into/out of transport and tank truck equipment,
quantities shall be determined by meter with no vapor return, slip
tube, rotary gauging device or weighing, in accordance with GPA
Publication 8162, all appropriate GPA and API standards and all
revisions thereof.
C. On all deliveries into/out of pipeline, quantity shall be determined
by turbine or positive displacement pipeline meter in accordance with
API Manual of Petroleum Measurement Standards.
D. All quantities shall be corrected to 60 degrees Fahrenheit and
equilibrium vapor pressure at 60 degrees Fahrenheit.
E. Volume and compressibility correction factors shall be determined from
referenced API tables or computer programs used to generate these
tables.
3. PASSAGE OF TITLE AND WARRANTY OF TITLE - Title to the product and risk of
loss shall pass to Buyer upon delivery. Seller warrants to Buyer that it
has title to the product(s) delivered by it hereunder and the right to
deliver same, and agrees to indemnify, defend and hold the Buyer harmless
from and gains any loss, claim or demand by reason of any failure of such
title or breach of this warranty. SELLER MAKES NO OTHER WARRANTY WITH
RESPECT TO THE PRODUCT OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, ANY
WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE.
4. TAXES - Any tax, fee, or other exaction, now or hereafter, levied or
assessed by any governmental authority upon, or as a result of the
transaction herein provided for, or the goods or source materials thereof
which ar the subject matter of this Agreement, shall, if payable by
Seller, be paid by Buyer on demand by Seller. Any personal property taxes
levied or assessed by any governmental authority upon the products covered
by this Agreement shall be paid by the party having title thereto at the
time of such assessment. Buyer shall furnish Seller proper exemption
certificate where tax exemption is claimed on any product(s) delivered
hereunder.
5. GOVERNMENT REGULATIONS & LAW - Seller warrants that the product it
delivers hereunder will be produced and delivered in full compliance
with all applicable federal and state laws and regulations and all
Presidential Proclamations which may be applicable. This agreement shall
be subject to the jurisdiction of, governed by and construed in
accordance with the laws of the State of Oklahoma including the Uniform
Commercial Code. Seller agrees to comply with the provisions contained
in Exhibit "A" if attached hereto, to the extent that such provisions
are legally applicable to Seller.
6. FORCE MAJEURE - If either party is rendered unable, wholly or in part,
to perform its obligations under this Agreement (other than to make
payments due hereunder) due to force majeure, defined herein as any
cause or causes beyond its control, then in any such event, it is agreed
that the affected party shall give prompt notice and full particulars of
such force majeure to the other party. The obligations of the affected
party shall be suspended for the duration of such inability to perform
but for no longer period and such cause shall, so far as possible, be
remedied with all reasonable dispatch.
7. ASSIGNMENT - This Agreement shall extend to and be binding upon the
parties thereto, their heirs, successors and assigns; but it is
expressly agreed that neither party shall voluntarily assign this
Agreement without the prior written consent to the other.
8. NOTICE - Any notice hereunder shall be in writing and shall be delivered
personally, by mail, by fax, by telex, or by telegram to the address set
forth on the attached agreement, unless changed by notice. such notice
shall be deemed to have been given on the date of the delivery thereof.
9. WAIVER - The waiver by either party of the breach of any provision
hereof by the other party shall not be a waiver of the breach of any
other provision or provisions hereof or of any subsequent or continuing
breach of such provision or provisions.
10.ALTERATIONS - No oral promises, agreements or warranties shall be deemed
a part hereof, nor shall nay alteration or amendment of this Agreement,
or waiver of any of its provisions, be binding upon either party hereto
unless the same be in writing, signed by the party charged.
11.INVOICES AND TERMS OF PAYMENT - Invoices will be prepared by Seller and
transmitted to the Buyer from time to time during the month. Unless
otherwise specified, payment is due within ten (10) days after receipt
of invoice. If payment is not made within the time allowed under this
Agreement, then Seller may charge interest on the unpaid balance at the
lesser of 1 1/2% per month or the highest rate permitted by Oklahoma law
and Seller shall be entitled to recover its reasonable costs of
collection, including attorney's fee.
12.FINANCIAL RESPONSIBILITY - If in the judgment of Seller the financial
responsibility of Buyer becomes impaired or unsatisfactory, advance cash
payments or acceptable security (including, but not limited to a letter
of credit form a financial institution acceptable to Seller) may be
required by Seller, and if Buyer fails to provide such, Seller may
without waiving any rights or remedies, withhold further deliveries
until such payment or security is received. Buyer's duty to provide the
hereinabove credit assurance shall be a condition precedent to Seller's
obligation to perform under this agreement.
13.CONFLICTS OF INTEREST - No director, employee or agent of either party
shall give or receive any commission, fee, rebate, gift or entertainment
of significant cost or value in connection with this Agreement. Any
representative(s) authorized by either party may audit the applicable
records of the other party solely for the purpose of determining whether
there has been compliance with this paragraph.
14.AUDIT - Each party and its authorized representatives shall have access
to the accounting records and other documents maintained by the other
party which relate to the product being sold to the other party under
this Agreement and shall have the right to audit such records once a year
a any reasonable time or times during the term of this Agreement and for
two years after the year in which this Agreement terminates. Neither party
shall make claim on the other for any adjustment after said two-year
period.
15.TANK CARS - If Seller's tank cars are used and they are not unloaded and
returned to railroad, Buyer shall be liable to Seller for rental at the
rate of $50.00 for each day or fraction thereof in excess of 7 days. Tank
cars shall not be diverted without Seller's written consent.
16.QUALITY - All products delivered under this Agreement shall meet the
latest GPA specifications for that product and contain no deleterious
substances. Product delivered under this agreement shall not contain
concentrations of any contaminations that may make it or its components
commercially unacceptable in general industry application. Any
requirements of buyer pertaining to potential contaminants and/or
specific hydrocarbon composition not listed in the product specification
must be identified by buyer and allowable concentrations agreed to in
writing by both parties prior to delivery.
17.SHORTAGE OF PRODUCTS - Due to uncertainties in the supply/demand
situation, Warren may not have sufficient supplies of product to be
delivered hereunder to meet the full requirements of all of its
customers, contract or otherwise. whenever that situation exists, Warren
shall have, in addition to any other rights Warren may have under this
Agreement, the right to reduce deliveries of such product on any basis
which in Warren's opinion is equitable, allowing for such priorities to
such priorities to such classes of customers as Warren deems
appropriate. If any such reduction occurs, Buyer shall have the option
to terminate this Agreement as to any or all products by fifteen (15)
day's notice, given within thirty (3) days of the notice of reduction.
18.BRAND NAMES - Unless otherwise specifically agreed, Buyer shall not
represent or permit any other person to represent, that the product
delivered hereunder is the product of Warren. All products delivered to
Buyer hereunder shall be used or sold under Buyer's own brand names or
under brand names approved by Warren, and Buyer shall not authorize or
permit said product to be used or sold under any other brand names.
19.CONDUCT OF BUYER'S BUSINESS - Buyer in the performance of this Agreement
is engaged in an independent business and nothing herein contained shall
be construed as giving Warren any right to control Buyer in any way in
its performance of its business. Warren has no right to exercise control
over any Buyer's employees. All employees of Buyer shall be entirely
under the control and direction of Buyer who shall be responsible for
their actions. and omissions
20.INDEMNITY - If Warren provides adequate documentation of the odorization
required by this contract, buyer agrees to define and hold Warren
harmless from all expenses (including attorney's fees) or liability
arising from any claims of whatever kind due to injuries or damages
which occur after delivery to Buyer in connection with the
transportation, use or handling of product covered hereunder. BUYER'S
INDEMNITY OBLIGATION SHALL BE APPLICABLE EVEN IF SUCH DAMAGES ARE
DETERMINED TO HAVE BEEN PARTLY CAUSED BY THE FAULT OF SELLER OR IF
LIABILITY WITHOUT FAULT IS IMPOSED ON SELLER, THE ONLY EXCEPTION TO SUCH
OBLIGATION BEING WHERE THE FAULT OF SELLER IS DETERMINED TO BE THE SOLE
CAUSE OF SUCH DAMAGES.
21.PRICES - Prices hereunder may be changed at any time by Warren upon
notice given either electronically (i.e. fax, DTN or phone) or by U.S.
Mail, effective when sent. If any such notice shall increase Warren's
price to Buyer at any shipping point or destination above Warren's price
for such product or freight in effect during the elapsed portion of the
calendar year in which Warren's notice is effective, Buyer may by
written notice to Warren given and effective within fifteen (15) days
the date of Warren's notice, terminate this contract with respect to
such shipping ponit or destination.
22.ODORIZATION - Unless otherwise specifically agreed in writing, Buyer
hereby requests that the propane sold hereunder be odorize with not less
than 1.0 lb. of ethyl mercaptan per 10,000 gallons. Buyer warrants that
compliance with its request will satisfy all applicable legal
requirements.
23.PRODUCT HAZARDS - Buyer acknowledges receipt of Warren's Safety Bulletin
for odorized propane and is knowledge- able of the hazards or risks in
handling or using the product. Buyer agrees that Buyer shall inform its
employees, contractors and customers of any hazards or risks associated
with the product. Warren will make available to Buyer Warning Decals
that are intended to be placed on consumer tanks or equipment and copies
of its Safety Guide. Buyer agrees to supply its customers with these
materials or other reasonably equivalent safety material to warn them of
the potential hazards or risks in using odorized propane.
24.INCIDENT - Buyer shall notify Warren as soon as possible after it becomes
aware of any fires or explosions occurring at locations propane purchase
hereunder is used. Buyer will inform Warren if said product is involved
and will fully cooperate with Warren in obtaining a propane sample and any
other investigation Warren deems necessary.
Buyers Initials __________
ATTACHMENT A TO
PROPANE SALES AGREEMENT NO. 25078
1. TRADEMARK. Buyer acknowledges that the CHEVRON and WARRENGAS Trademarks
are valuable property rights belonging to Chevron Corporation and its
subsidiaries, including Chevron U.S.A. inc. and that any use thereof by
Buyer in connection with this agreement is solely for the purposes of
advertising products obtained from such subsidiaries. Upon termination of
this agreement, Buyer agrees that it will make no further use of such
trademarks or any other mark, name or designs confusingly similar
therewith.
2. QUANTITY. During the term hereof, Buyer agreed to buy the product herein
specified in monthly quantities of not less than the minimum set forth
below and Warren agrees to sell said quantities to Buyer. Buyer shall
purchase such entities as evenly as possible during each month. If during
any period of this agreement the quantity of product Warren is obligate
to deliver to Buyer is prescribed by government rules, regulations or
orders, then the quantity of product covered by this agreement shall be
the quantity so prescribed for such period and Buyer agrees to buy and
Warren agrees to sell such Quantity.
VOLUME (IN THOUSAND OF GALLONS)
EST. VOL. EST. VOL.
April 0 October 320
-------- -------- --------- --------
May 0 November 400
-------- -------- --------- --------
June 0 December 420
-------- -------- --------- --------
July 0 January 520
-------- -------- --------- --------
August 0 February 400
-------- -------- --------- --------
September 0 March 350
-------- -------- --------- --------
For the purpose of determining compliance with the above quantity schedule,
purchase of product shall be allocated to the month in which shipment is
made. Should either party fail to comply in any amount with the above
schedule, the other party may elect to terminate this agreement by mailing
notice of such termination on or before the 20th day of the succeeding
month. If the Buyer fails to purchase 100% of the above specified minimum
monthly quantities during any month or months and Warren does not elect to
terminate this agreement, Warren shall not be obligated hereunder to sell
to Buyer in any of the succeeding six months more than one and one half
times the average monthly quantity which Buyer actually purchased during
the preceding six-month period.
When delivery is into tank trucks furnished by Buyer, the delivery ticket
showing the quantity delivered shall be signed by the loader as the agent
of Warren and by the truck driver as the agent of the Buyer; such
quantities shall be conclusively presumed to have been delivered to Buyer.
On or before the 1st day of each month Buyer shall inform Warren of
quantities required during such month, delivery dates, and when applicable,
destinations of each shipment. Warren shall not be obligated to ship less
than a tank car or tank truck load.
3. Method of Delivery X By tank truck furnished by Buyer.
XX By tank truck furnished by Warren.
_________ By tank truck furnished by ____________
with a capacity of __________ gallons
each.
PRICE INFORMATION
Prices in effect as of August 24, 1995
Sales based on |X| Shipping point price or |_| Destination price
SHIPPING OR PRICE IN FREIGHT
PRICING POINTS DESTINATIONS PRODUCTS CENTS/GALLONS CHARGES
- ----------------- ------------ -------- ------------- -------
* Greenville, MS Various Propane 37.25 n/a
** Greenville, MS Various Propane 37.25 As applicable
based upon
destinations
------------------------
Warren Petroleum Company Propane Sales Agreement
A Division of Chevron U.S.A. Inc.
P.O. Box 1589, Tulsa, OK 74102 * Phone (918) 560-4000
Prepare in original and five copies
Purchaser Confirming Arrangements Made With
Empire Gas Corporation Marty Lerum
Address Arrangements Made By Date
P.O. Box 303 R. E. Siedell August 24, 1995
City, State, Zip Warren No. Purchaser No.
Lebanon, MO 65536 25079
1. Term: Warren will sell the following during period from September 01,
1995 ( ) Expires on__________________
(X) Until May 31, 1996 and continuing month to month thereafter
unless and until canceled at the end of any month by either party giving
the other not less than 60 days written notice prior to the proposed
termination date.
Product
Approx. Unit Meas. Del. Price
Vol. of Basis Method Cents/
(net @ Measure (See 2) Location (see 2) Gallon
60
degrees F)
-------------------------------------------------------------------------
Propane GPA See Gallons T Breaux Bridge, T Posted
Specifications Attch. Eunice, price at
A Napoleonville, T time of
Norco, lifting
Riverside, T
Tebone, Toca,
LA
-------------------------------------------------------------------------
2. Measurement/Delivery Method V - Volumetric per API Tables 23 and
(see above) 24 or 23A and 24A or 5A and 6A
T. Trucks Other M - Mass per GPA 8182
____________ O - Origin D - Destination
____________
C. Tank Cars
____________
____________
-------------------------------------------------------------------------
3. Product: (X) Stenched ( ) Unstenched
-------------------------------------------------------------------------
WARNING
It is important that you periodically remind your customers and employees
that even though ethyl mercaptan has been recognized as the best available
odorant for propane, no odorant is effective 100% of the time. the odor of
the gas may, under some circumstances, be reduced or lost if put into a
tank that is new or that has been exposed to the air for extended periods.
Electronic gas detectors (that emit a shrill sound in the presence of gas)
should be recommended to your customers as an additional safety measure
for detecting leaks. Your customers should be familiar with the smell of
the odorant and their ability to smell it. Inform them that colds,
allergies, smoking, alcohol, age, competing odors and simply "getting used
to" the odor can cause them not to detect escaping gas. Familiarize
yourself, your employees and your customers with the potential limitations
of the odorant and the alleged phenomenon of "odor fade". Warren's
Odorization Bulletins, Safety Guide and other safety materials are
available to help with this familiarization. If you need additional
information or materials to properly educate your employees and customers,
please contact the NPGA, your state organization, or Warren Petroleum
Company.
------------------------------------------------------------------------
4. Seller send statements, invoices and shipping documentation to:
Ms. Gwen Hogan
Empire Gas Corporation
P.O. Box 303
Lebanon, MO 65536
------------------------------------------------------------------------
5. Terms of Payment:
1% EFT 14 days.
------------------------------------------------------------------------
6. Special Provisions:
1. This Agreement cancels and supersedes Warren's PSA 59146 dated
September 01, 1994.
------------------------------------------------------------------------
7. In addition to the above terms and conditions, the General Provisions
of this Product Sales Agreement and all Attachments are incorporated
herein by reference and made a part of this Agreement. If you are in
agreement with the foregoing terms and conditions including the
indemnity provision, please so indicate by signing below and returning
one copy of the Agreement to Warren.
Accepted and Agreed to: Warren Petroleum Company
Empire Gas Corporation A Division of Chevron U.S.A. Inc.
By /s/ Kris Lindsey By /s/ R.E. Siedell
Title V.P. Date Title
9/05/95 District Manager
Distribution: Buyer for File Distribution Section, Tulsa
Buyer for acceptance and Marketing Department, Tulsa
return to Warren's Tulsa Retained by Originator
Office
Accounting Division, Tulsa
GENERAL PROVISIONS PROPANE SALES
1. DELIVERIES
A. When delivery is point of origin, delivery shall be deemed to have
been completed:
1. To tank tricks when the product has actually been delivered into
the trust;
2. To tank cars when the carrier accepts the same for shipment;
3. To pipelines upon metering of the product;
B. When delivery is point of destination, delivery shall be deemed to
have been completed:
1. From tank trucks when truck has been placed at buyer's facilities
for unloading;
2. From tank cars when carrier delivers same at the destination;
C. Seller shall not be liable to Buyer for quantity or quality of
product, after completion of delivery. Buyer agrees that the
handling, care or use of product shall thereafter be at Buyer's
sole risk and expense.
2. MEASUREMENT - Measurement shall be done in the manner customarily
utilized at the point of delivery in accordance with one of the
following alternatives.
A. On all deliveries into/out of tank cars, the quantity shall be
determined by official tank car capacity tables, meters with no
vapor return, or by weighing, in accordance with GPA Publication
8162,8173 and all revisions thereof.
B. On all deliveries into/out of transport and tank truck equipment,
quantities shall be determined by meter with no vapor return, slip
tube, rotary gauging device or weighing, in accordance with GPA
Publication 8162, all appropriate GPA and API standards and all
revisions thereof.
C. On all deliveries into/out of pipeline, quantity shall be
determined by turbine or positive displacement pipeline meter in
accordance with API Manual of Petroleum Measurement Standards.
D. All quantities shall be corrected to 60 degrees Fahrenheit and
equilibrium vapor pressure at 60 degrees Fahrenheit.
E. Volume and compressibility correction factors shall be determined
from referenced API tables or computer programs used to generate
these tables.
3. PASSAGE OF TITLE AND WARRANTY OF TITLE - Title to the product and risk
of loss shall pass to Buyer upon delivery. Seller warrants to Buyer
that it has title to the product(s) delivered by it hereunder and the
right to deliver same, and agrees to indemnify, defend and hold the
Buyer harmless from and gains any loss, claim or demand by reason of
any failure of such title or breach of this warranty. SELLER MAKES NO
OTHER WARRANTY WITH RESPECT TO THE PRODUCT OR OTHERWISE, INCLUDING,
WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR
A PARTICULAR PURPOSE.
4. TAXES - Any tax, fee, or other exaction, now or hereafter, levied or
assessed by any governmental authority upon, or as a result of the
transaction herein provided for, or the goods or source materials
thereof which ar the subject matter of this Agreement, shall, if
payable by Seller, be paid by Buyer on demand by Seller. Any personal
property taxes levied or assessed by any governmental authority upon
the products covered by this Agreement shall be paid by the party
having title thereto at the time of such assessment. Buyer shall
furnish Seller proper exemption certificate where tax exemption is
claimed on any product(s) delivered hereunder.
5. GOVERNMENT REGULATIONS & LAW - Seller warrants that the product it
delivers hereunder will be produced and delivered in full compliance
with all applicable federal and state laws and regulations and all
Presidential Proclamations which may be applicable. This agreement
shall be subject to the jurisdiction of, governed by and construed in
accordance with the laws of the State of Oklahoma including the
Uniform Commercial Code. Seller agrees to comply with the provisions
contained in Exhibit "A" if attached hereto, to the extent that such
provisions are legally applicable to Seller.
6. FORCE MAJEURE - If either party is rendered unable, wholly or in part,
to perform its obligations under this Agreement (other than to make
payments due hereunder) due to force majeure, defined herein as any
cause or causes beyond its control, then in any such event, it is
agreed that the affected party shall give prompt notice and full
particulars of such force majeure to the other party. The obligations
of the affected party shall be suspended for the duration of such
inability to perform but for no longer period and such cause shall, so
far as possible, be remedied with all reasonable dispatch.
7. ASSIGNMENT - This Agreement shall extend to and be binding upon the
parties thereto, their heirs, successors and assigns; but it is
expressly agreed that neither party shall voluntarily assign this
Agreement without the prior written consent to the other.
8. NOTICE - Any notice hereunder shall be in writing and shall be
delivered personally, by mail, by fax, by telex, or by telegram to the
address set forth on the attached agreement, unless changed by notice.
such notice shall be deemed to have been given on the date of the
delivery thereof.
9. WAIVER - The waiver by either party of the breach of any provision
hereof by the other party shall not be a waiver of the breach of any
other provision or provisions hereof or of any subsequent or
continuing breach of such provision or provisions.
10. ALTERATIONS - No oral promises, agreements or warranties shall be
deemed a part hereof, nor shall nay alteration or amendment of this
Agreement, or waiver of any of its provisions, be binding upon either
party hereto unless the same be in writing, signed by the party
charged.
11. INVOICES AND TERMS OF PAYMENT - Invoices will be prepared by Seller
and transmitted to the Buyer from time to time during the month.
Unless otherwise specified, payment is due within ten (10) days after
receipt of invoice. If payment is not made within the time allowed
under this Agreement, then Seller may charge interest on the unpaid
balance at the lesser of 11/2% per month or the highest rate permitted
by Oklahoma law and Seller shall be entitled to recover its reasonable
costs of collection, including attorney's fee.
12. FINANCIAL RESPONSIBILITY - If in the judgment of Seller the financial
responsibility of Buyer becomes impaired or unsatisfactory, advance
cash payments or acceptable security (including, but not limited to a
letter of credit form a financial institution acceptable to Seller)
may be required by Seller, and if Buyer fails to provide such, Seller
may without waiving any rights or remedies, withhold further
deliveries until such payment or security is received. Buyer's duty
to provide the hereinabove credit assurance shall be a condition
precedent to Seller's obligation to perform under this agreement.
13. CONFLICTS OF INTEREST - No director, employee or agent of either party
shall give or receive any commission, fee, rebate, gift or
entertainment of significant cost or value in connection with this
Agreement. Any representative(s) authorized by either party may audit
the applicable records of the other party solely for the purpose of
determining whether there has been compliance with this paragraph.
14. AUDIT - Each party and its authorized representatives shall have
access to the accounting records and other documents maintained by the
other party which relate to the product being sold to the other party
under this Agreement and shall have the right to audit such records
once a year a any reasonable time or times during the term of this
Agreement and for two years after the year in which this Agreement
terminates. Neither party shall make claim on the other for any
adjustment after said two-year period.
15. TANK CARS - If Seller's tank cars are used and they are not unloaded
and returned to railroad, Buyer shall be liable to Seller for rental
at the rate of $50.00 for each day or fraction thereof in excess of 7
days. Tank cars shall not be diverted without Seller's written
consent.
16. QUALITY - All products delivered under this Agreement shall meet the
latest GPA specifications for that product and contain no deleterious
substances. Product delivered under this agreement shall not contain
concentrations of any contaminations that may make it or its
components commercially unacceptable in general industry application.
Any requirements of buyer pertaining to potential contaminants and/or
specific hydrocarbon composition not listed in the product
specification must be identified by buyer and allowable concentrations
agreed to in writing by both parties prior to delivery.
17. SHORTAGE OF PRODUCTS - Due to uncertainties in the supply/demand
situation, Warren may not have sufficient supplies of product to be
delivered hereunder to meet the full requirements of all of its
customers, contract or otherwise. whenever that situation exists,
Warren shall have, in addition to any other rights Warren may have
under this Agreement, the right to reduce deliveries of such product
on any basis which in Warren's opinion is equitable, allowing for such
priorities to such priorities to such classes of customers as Warren
deems appropriate. If any such reduction occurs, Buyer shall have the
option to terminate this Agreement as to any or all products by
fifteen (15) day's notice, given within thirty (3) days of the notice
of reduction.
18. BRAND NAMES - Unless otherwise specifically agreed, Buyer shall not
represent or permit any other person to represent, that the product
delivered hereunder is the product of Warren. All products delivered
to Buyer hereunder shall be used or sold under Buyer's own brand names
or under brand names approved by Warren, and Buyer shall not authorize
or permit said product to be used or sold under any other brand names.
19. CONDUCT OF BUYER'S BUSINESS - Buyer in the performance of this
Agreement is engaged in an independent business and nothing herein
contained shall be construed as giving Warren any right to control
Buyer in any way in its performance of its business. Warren has no
right to exercise control over any Buyer's employees. All employees
of Buyer shall be entirely under the control and direction of Buyer
who shall be responsible for their actions. and omissions
20. INDEMNITY - If Warren provides adequate documentation of the
odorization required by this contract, buyer agrees to define and hold
Warren harmless from all expenses (including attorney's fees) or
liability arising from any claims of whatever kind due to injuries or
damages which occur after delivery to Buyer in connection with the
transportation, use or handling of product covered hereunder. BUYER'S
INDEMNITY OBLIGATION SHALL BE APPLICABLE EVEN IF SUCH DAMAGES ARE
DETERMINED TO HAVE BEEN PARTLY CAUSED BY THE FAULT OF SELLER OR IF
LIABILITY WITHOUT FAULT IS IMPOSED ON SELLER, THE ONLY EXCEPTION TO
SUCH OBLIGATION BEING WHERE THE FAULT OF SELLER IS DETERMINED TO BE
THE SOLE CAUSE OF SUCH DAMAGES.
21. PRICES - Prices hereunder may be changed at any time by Warren upon
notice given either electronically (i.e. fax, DTN or phone) or by U.S.
Mail, effective when sent. If any such notice shall increase Warren's
price to Buyer at any shipping point or destination above Warren's
price for such product or freight in effect during the elapsed portion
of the calendar year in which Warren's notice is effective, Buyer may
by written notice to Warren given and effective within fifteen (15)
days the date of Warren's notice, terminate this contract with respect
to such shipping ponit or destination.
22. ODORIZATION - Unless otherwise specifically agreed in writing, Buyer
hereby requests that the propane sold hereunder be odorize with not
less than 1.0 lb. of ethyl mercaptan per 10,000 gallons. Buyer
warrants that compliance with its request will satisfy all applicable
legal requirements.
23. PRODUCT HAZARDS - Buyer acknowledges receipt of Warren's Safety
Bulletin for odorized propane and is knowledgeable of the hazards or
risks in handling or using the product. Buyer agrees that Buyer shall
inform its employees, contractors and customers of any hazards or
risks associated with the product. Warren will make available to
Buyer Warning Decals that are intended to be placed on consumer tanks
or equipment and copies of its Safety Guide. Buyer agrees to supply
its customers with these materials or other reasonably equivalent
safety material to warn them of the potential hazards or risks in
using odorized propane.
24. INCIDENT - Buyer shall notify Warren as soon as possible after it
becomes aware of any fires or explosions occurring at locations
propane purchase hereunder is used. Buyer will inform Warren if said
product is involved and will fully cooperate with Warren in obtaining
a propane sample and any other investigation Warren deems necessary.
Buyers Initials __________
ATTACHMENT A TO
PROPANE SALES AGREEMENT NO. 25079
1. TRADEMARK. Buyer acknowledges that the CHEVRON and WARRENGAS
Trademarks are valuable property rights belonging to Chevron
Corporation and its subsidiaries, including Chevron U.S.A. inc. and
that any use thereof by Buyer in connection with this agreement is
solely for the purposes of advertising products obtained from such
subsidiaries. Upon termination of this agreement, Buyer agrees that
it will make no further use of such trademarks or any other mark, name
or designs confusingly similar therewith.
2. QUANTITY. During the term hereof, Buyer agreed to buy the product
herein specified in monthly quantities of not less than the minimum
set forth below and Warren agrees to sell said quantities to Buyer.
Buyer shall purchase such entities as evenly as possible during each
month. If during any period of this agreement the quantity of product
Warren is obligate to deliver to Buyer is prescribed by government
rules, regulations or orders, then the quantity of product covered by
this agreement shall be the quantity so prescribed for such period and
Buyer agrees to buy and Warren agrees to sell such Quantity.
VOLUME (IN THOUSAND OF GALLONS)
EST. VOL. EST. VOL.
April 120 October 150
May 130 November 210
June 90 December 200
July 130 January 240
August 200 February 180
September 170 March 170
For the purpose of determining compliance with the above quantity schedule,
purchase of product shall be allocated to the month in which shipment is
made. Should either party fail to comply in any amount with the above
schedule, the other party may elect to terminate this agreement by mailing
notice of such termination on or before the 20th day of the succeeding
month. If the Buyer fails to purchase 100% of the above specified minimum
monthly quantities during any month or months and Warren does not elect to
terminate this agreement, Warren shall not be obligated hereunder to sell
to Buyer in any of the succeeding six months more than one and one half
times the average monthly quantity which Buyer actually purchased during
the preceding six-month period.
When delivery is into tank trucks furnished by Buyer, the delivery ticket
showing the quantity delivered shall be signed by the loader as the agent
of Warren and by the truck driver as the agent of the Buyer; such
quantities shall be conclusively presumed to have been delivered to Buyer.
On or before the 1st day of each month Buyer shall inform Warren of
quantities required during such month, delivery dates, and when applicable,
destinations of each shipment. Warren shall not be obligated to ship less
than a tank car or tank truck load.
3. Method of Delivery: X By tank truck furnished by Buyer.
By tank truck furnished by Warren.
By tank truck furnished by _____ with
a capacity of _____ gallons each.
PRICE INFORMATION
Prices in effect as of August 24 , 19 95
Sales based on (X) Shipping point price or ( ) Destination price
SHIPPING OR
PRICING PRICE IN FREIGHT
POINTS DESTINATIONS PRODUCTS CENTS/GALLONS CHARGES
Breaux Bridge, LA Various Propane 32.25 N/A
Eunice, LA Various Propane * N/A
Napoleonville, LA Various Propane 31.75 N/A
Norco, LA Various Propane 31.75 N/A
Riverside, LA Various Propane 31.75 N/A
Tebone, LA Various Propane 31.75 N/A
Toca, LA Various Propane 31.75 N/A
* Not available at present
------------------------
Warren Petroleum Company Propane Sales Agreement
A Division of Chevron U.S.A. Inc.
P.O. Box 1589, Tulsa, OK 74102 * Phone (918) 560-4000
Prepare in original and five copies
Purchaser Confirming Arrangements Made With
Empire Gas Corporation Ms. Kris Lindsey
Address Arrangements Made By Date
P.O. Box 303 Mike Tracey 8/01/95
City, State, Zip Warren No. Purchaser
Lebanon, MO 65536 23064 No.
-------------------------------------------------------------------------
1. Term: Warren will sell the following during period from August 1,
1995 ( ) Expires on__________________
(X) Until December 31, 1995 and continuing month to month thereafter
unless and until canceled at the end of any month by either party giving
the other not less than 60 days written notice prior to the proposed
termination date.
Product
Product Approx. Unit Meas. Del. Price
Description Vol. of Basis Method Cents/
and (net @ Measure (See 2) Location (see 2) Gallon
Specifications 60
degrees F)
-------------------------------------------------------------------------
Propane per GPA 2500 B Fashing, TX; El T Posted
Specifications BPM Paso, TX; O Price
at
Mont Belvieu, Date of
TX; Monument, NM O Lifting
Dubach, LA O
TX-42000 AR-
03000 NM-30000 D
-------------------------------------------------------------------------
2. Measurement/Delivery Method V - Volumetric per API Tables 23 and
(see above) 24 or 23A and 24A or 5A and 6A
T. Trucks Other M - Mass per GPA 8182
O - Origin D - Destination
C. Tank Cars
_____________
---------------------------------------------------------------------------
3. Product: (X) Stenched ( ) Unstenched
---------------------------------------------------------------------------
WARNING
It is important that you periodically remind your customers and employees
that even though ethyl mercaptan has been recognized as the best available
odorant for propane, no odorant is effective 100% of the time. the odor of
the gas may, under some circumstances, be reduced or lost if put into a tank
that is new or that has been exposed to the air for extended periods.
Electronic gas detectors (that emit a shrill sound in the presence of gas)
should be recommended to your customers as an additional safety measure for
detecting leaks. Your customers should be familiar with the smell of the
odorant and their ability to smell it. Inform them that colds, allergies,
smoking, alcohol, age, competing odors and simply "getting used to" the odor
can cause them not to detect escaping gas. Familiarize yourself, your
employees and your customers with the potential limitations of the odorant
and the alleged phenomenon of "odor fade". Warren's Odorization Bulletins,
Safety Guide and other safety materials are available to help with this
familiarization. If you need additional information or materials to properly
educate your employees and customers, please contact the NPGA, your state
organization, or Warren Petroleum Company.
---------------------------------------------------------------------------
4. Seller send statements, invoices and shipping documentation to:
Same as above.
---------------------------------------------------------------------------
5. Terms of Payment:
1% 10 Days, Net 15 Days
---------------------------------------------------------------------------
6. Special Provisions:
I. This Sales Agreement cancels and supercedes SA No. 41033 dated
6/01/86.
II. Thee will be a 2.00 cpg surcharge on any trucks loaded with less
than 3500 gallons.
III. Texas odorization fee will be billed as mandated by Texas law
unless proper exemption forms are provided.
---------------------------------------------------------------------------
7. In addition to the above terms and conditions, the General Provisions of
this Product Sales Agreement and all Attachments are incorporated herein
by reference and made a part of this Agreement. If you are in agreement
with the foregoing terms and conditions including the indemnity
provision, please so indicate by signing below and returning one copy of
the Agreement to Warren.
Accepted and Agreed to: Warren Petroleum Company
Empire Gas Corporation A Division of Chevron U.S.A. Inc.
By /s/ Kris Lindsey By /s/ M.T. Tracey
Title Kris Lindsey Date Title M.T. Tracey, Manager
Vice President 8/31/ Southwest District
95
Distribution: Buyer for File Distribution Section, Tulsa
Buyer for acceptance and Marketing Department, Tulsa
return to Warren's Tulsa Retained by Originator
Office
Accounting Division, Tulsa
GENERAL PROVISIONS PROPANE SALES
1. DELIVERIES
A. When delivery is point of origin, delivery shall be deemed to have
been completed:
1. To tank tricks when the product has actually been delivered into
the trust;
2. To tank cars when the carrier accepts the same for shipment;
3. To pipelines upon metering of the product;
B. When delivery is point of destination, delivery shall be deemed to
have been completed:
1. From tank trucks when truck has been placed at buyer's facilities
for unloading;
2. From tank cars when carrier delivers same at the destination;
C. Seller shall not be liable to Buyer for quantity or quality of
product, after completion of delivery. Buyer agrees that the
handling, care or use of product shall thereafter be at Buyer's
sole risk and expense.
2. MEASUREMENT - Measurement shall be done in the manner customarily
utilized at the point of delivery in accordance with one of the
following alternatives.
A. On all deliveries into/out of tank cars, the quantity shall be
determined by official tank car capacity tables, meters with no
vapor return, or by weighing, in accordance with GPA Publication
8162,8173 and all revisions thereof.
B. On all deliveries into/out of transport and tank truck equipment,
quantities shall be determined by meter with no vapor return, slip
tube, rotary gauging device or weighing, in accordance with GPA
Publication 8162, all appropriate GPA and API standards and all
revisions thereof.
C. On all deliveries into/out of pipeline, quantity shall be
determined by turbine or positive displacement pipeline meter in
accordance with API Manual of Petroleum Measurement Standards.
D. All quantities shall be corrected to 60 degrees Fahrenheit and
equilibrium vapor pressure at 60 degrees Fahrenheit.
E. Volume and compressibility correction factors shall be determined
from referenced API tables or computer programs used to generate
these tables.
3. PASSAGE OF TITLE AND WARRANTY OF TITLE - Title to the product and risk
of loss shall pass to Buyer upon delivery. Seller warrants to Buyer
that it has title to the product(s) delivered by it hereunder and the
right to deliver same, and agrees to indemnify, defend and hold the
Buyer harmless from and gains any loss, claim or demand by reason of
any failure of such title or breach of this warranty. SELLER MAKES NO
OTHER WARRANTY WITH RESPECT TO THE PRODUCT OR OTHERWISE, INCLUDING,
WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR
A PARTICULAR PURPOSE.
4. TAXES - Any tax, fee, or other exaction, now or hereafter, levied or
assessed by any governmental authority upon, or as a result of the
transaction herein provided for, or the goods or source materials
thereof which ar the subject matter of this Agreement, shall, if
payable by Seller, be paid by Buyer on demand by Seller. Any personal
property taxes levied or assessed by any governmental authority upon
the products covered by this Agreement shall be paid by the party
having title thereto at the time of such assessment. Buyer shall
furnish Seller proper exemption certificate where tax exemption is
claimed on any product(s) delivered hereunder.
5. GOVERNMENT REGULATIONS & LAW - Seller warrants that the product it
delivers hereunder will be produced and delivered in full compliance
with all applicable federal and state laws and regulations and all
Presidential Proclamations which may be applicable. This agreement
shall be subject to the jurisdiction of, governed by and construed in
accordance with the laws of the State of Oklahoma including the
Uniform Commercial Code. Seller agrees to comply with the provisions
contained in Exhibit "A" if attached hereto, to the extent that such
provisions are legally applicable to Seller.
6. FORCE MAJEURE - If either party is rendered unable, wholly or in part,
to perform its obligations under this Agreement (other than to make
payments due hereunder) due to force majeure, defined herein as any
cause or causes beyond its control, then in any such event, it is
agreed that the affected party shall give prompt notice and full
particulars of such force majeure to the other party. The obligations
of the affected party shall be suspended for the duration of such
inability to perform but for no longer period and such cause shall, so
far as possible, be remedied with all reasonable dispatch.
7. ASSIGNMENT - This Agreement shall extend to and be binding upon the
parties thereto, their heirs, successors and assigns; but it is
expressly agreed that neither party shall voluntarily assign this
Agreement without the prior written consent to the other.
8. NOTICE - Any notice hereunder shall be in writing and shall be
delivered personally, by mail, by fax, by telex, or by telegram to the
address set forth on the attached agreement, unless changed by notice.
such notice shall be deemed to have been given on the date of the
delivery thereof.
9. WAIVER - The waiver by either party of the breach of any provision
hereof by the other party shall not be a waiver of the breach of any
other provision or provisions hereof or of any subsequent or
continuing breach of such provision or provisions.
10. ALTERATIONS - No oral promises, agreements or warranties shall be
deemed a part hereof, nor shall nay alteration or amendment of this
Agreement, or waiver of any of its provisions, be binding upon either
party hereto unless the same be in writing, signed by the party
charged.
11. INVOICES AND TERMS OF PAYMENT - Invoices will be prepared by Seller
and transmitted to the Buyer from time to time during the month.
Unless otherwise specified, payment is due within ten (10) days after
receipt of invoice. If payment is not made within the time allowed
under this Agreement, then Seller may charge interest on the unpaid
balance at the lesser of 11/2% per month or the highest rate permitted
by Oklahoma law and Seller shall be entitled to recover its reasonable
costs of collection, including attorney's fee.
12. FINANCIAL RESPONSIBILITY - If in the judgment of Seller the financial
responsibility of Buyer becomes impaired or unsatisfactory, advance
cash payments or acceptable security (including, but not limited to a
letter of credit form a financial institution acceptable to Seller)
may be required by Seller, and if Buyer fails to provide such, Seller
may without waiving any rights or remedies, withhold further
deliveries until such payment or security is received. Buyer's duty
to provide the hereinabove credit assurance shall be a condition
precedent to Seller's obligation to perform under this agreement.
13. CONFLICTS OF INTEREST - No director, employee or agent of either party
shall give or receive any commission, fee, rebate, gift or
entertainment of significant cost or value in connection with this
Agreement. Any representative(s) authorized by either party may audit
the applicable records of the other party solely for the purpose of
determining whether there has been compliance with this paragraph.
14. AUDIT - Each party and its authorized representatives shall have
access to the accounting records and other documents maintained by the
other party which relate to the product being sold to the other party
under this Agreement and shall have the right to audit such records
once a year a any reasonable time or times during the term of this
Agreement and for two years after the year in which this Agreement
terminates. Neither party shall make claim on the other for any
adjustment after said two-year period.
15. TANK CARS - If Seller's tank cars are used and they are not unloaded
and returned to railroad, Buyer shall be liable to Seller for rental
at the rate of $50.00 for each day or fraction thereof in excess of 7
days. Tank cars shall not be diverted without Seller's written
consent.
16. QUALITY - All products delivered under this Agreement shall meet the
latest GPA specifications for that product and contain no deleterious
substances. Product delivered under this agreement shall not contain
concentrations of any contaminations that may make it or its
components commercially unacceptable in general industry application.
Any requirements of buyer pertaining to potential contaminants and/or
specific hydrocarbon composition not listed in the product
specification must be identified by buyer and allowable concentrations
agreed to in writing by both parties prior to delivery.
17. SHORTAGE OF PRODUCTS - Due to uncertainties in the supply/demand
situation, Warren may not have sufficient supplies of product to be
delivered hereunder to meet the full requirements of all of its
customers, contract or otherwise. whenever that situation exists,
Warren shall have, in addition to any other rights Warren may have
under this Agreement, the right to reduce deliveries of such product
on any basis which in Warren's opinion is equitable, allowing for such
priorities to such priorities to such classes of customers as Warren
deems appropriate. If any such reduction occurs, Buyer shall have the
option to terminate this Agreement as to any or all products by
fifteen (15) day's notice, given within thirty (3) days of the notice
of reduction.
18. BRAND NAMES - Unless otherwise specifically agreed, Buyer shall not
represent or permit any other person to represent, that the product
delivered hereunder is the product of Warren. All products delivered
to Buyer hereunder shall be used or sold under Buyer's own brand names
or under brand names approved by Warren, and Buyer shall not authorize
or permit said product to be used or sold under any other brand names.
19. CONDUCT OF BUYER'S BUSINESS - Buyer in the performance of this
Agreement is engaged in an independent business and nothing herein
contained shall be construed as giving Warren any right to control
Buyer in any way in its performance of its business. Warren has no
right to exercise control over any Buyer's employees. All employees
of Buyer shall be entirely under the control and direction of Buyer
who shall be responsible for their actions. and omissions
20. INDEMNITY - If Warren provides adequate documentation of the
odorization required by this contract, buyer agrees to define and hold
Warren harmless from all expenses (including attorney's fees) or
liability arising from any claims of whatever kind due to injuries or
damages which occur after delivery to Buyer in connection with the
transportation, use or handling of product covered hereunder. BUYER'S
INDEMNITY OBLIGATION SHALL BE APPLICABLE EVEN IF SUCH DAMAGES ARE
DETERMINED TO HAVE BEEN PARTLY CAUSED BY THE FAULT OF SELLER OR IF
LIABILITY WITHOUT FAULT IS IMPOSED ON SELLER, THE ONLY EXCEPTION TO
SUCH OBLIGATION BEING WHERE THE FAULT OF SELLER IS DETERMINED TO BE
THE SOLE CAUSE OF SUCH DAMAGES.
21. PRICES - Prices hereunder may be changed at any time by Warren upon
notice given either electronically (i.e. fax, DTN or phone) or by U.S.
Mail, effective when sent. If any such notice shall increase Warren's
price to Buyer at any shipping point or destination above Warren's
price for such product or freight in effect during the elapsed portion
of the calendar year in which Warren's notice is effective, Buyer may
by written notice to Warren given and effective within fifteen (15)
days the date of Warren's notice, terminate this contract with respect
to such shipping ponit or destination.
22. ODORIZATION - Unless otherwise specifically agreed in writing, Buyer
hereby requests that the propane sold hereunder be odorize with not
less than 1.0 lb. of ethyl mercaptan per 10,000 gallons. Buyer
warrants that compliance with its request will satisfy all applicable
legal requirements.
23. PRODUCT HAZARDS - Buyer acknowledges receipt of Warren's Safety
Bulletin for odorized propane and is knowledgeable of the hazards or
risks in handling or using the product. Buyer agrees that Buyer shall
inform its employees, contractors and customers of any hazards or
risks associated with the product. Warren will make available to
Buyer Warning Decals that are intended to be placed on consumer tanks
or equipment and copies of its Safety Guide. Buyer agrees to supply
its customers with these materials or other reasonably equivalent
safety material to warn them of the potential hazards or risks in
using odorized propane.
24. INCIDENT - Buyer shall notify Warren as soon as possible after it
becomes aware of any fires or explosions occurring at locations
propane purchase hereunder is used. Buyer will inform Warren if said
product is involved and will fully cooperate with Warren in obtaining
a propane sample and any other investigation Warren deems necessary.
Buyers Initials __________
------------------------
Warren Petroleum Company Propane Sales Agreement
A Division of Chevron U.S.A. Inc.
P.O. Box 1589, Tulsa, OK 74102 * Phone (918) 560-4000
Prepare in original and five copies
Purchaser Confirming Arrangements Made With
Empire Gas Corporation Marty Larem
Address Arrangements Made By Date 5/1/96
P.O. Box 303 J. K. Nelson
City, State, Zip Warren No. 27023 Purchaser No.
Lebanon, MO 65536
1. Term: Warren will sell the following during period from MAY 1, 1996
( ) Expires on__________________
(X) Until April 30, 1997 and continuing month to month thereafter
unless and until canceled at the end of any month by either party giving
the other not less than 60 days written notice prior to the proposed
termination date.
Product
Product Approx. Unit Meas. Del. Price
Description Vol. of Basis Method Cents/
and (net @ Measure (See 2) Location (see 2) /Gallon
Specifications 60
degrees F)
---------------------------------------------------------------------------
COMMERCIAL * ** T FLORIDA BASE T *
PROPANE
*SEE ATTACHMENT A
**SEE GENERAL *SEE GENERAL
PROVISIONS PROVISIONS
PROPANE (2) PROPANE SALES (21)
---------------------------------------------------------------------------
2. Measurement/Delivery Method V - Volumetric per API Tables 23 and 24
(see above) or 23A and 24A or 5A and 6A
T. Trucks Other M - Mass per GPA 8182
O - Origin D - Destination
C. Tank Cars
---------------------------------------------------------------------------
3. Product: (X) Stenched ( ) Unstenched
---------------------------------------------------------------------------
WARNING
It is important that you periodically remind your customers and employees
that even though ethyl mercaptan has been recognized as the best available
odorant for propane, no odorant is effective 100% of the time. the odor of
the gas may, under some circumstances, be reduced or lost if put into a tank
that is new or that has been exposed to the air for extended periods.
Electronic gas detectors (that emit a shrill sound in the presence of gas)
should be recommended to your customers as an additional safety measure for
detecting leaks. Your customers should be familiar with the smell of the
odorant and their ability to smell it. Inform them that colds, allergies,
smoking, alcohol, age, competing odors and simply "getting used to" the odor
can cause them not to detect escaping gas. Familiarize yourself, your
employees and your customers with the potential limitations of the odorant
and the alleged phenomenon of "odor fade". Warren's Odorization Bulletins,
Safety Guide and other safety materials are available to help with this
familiarization. If you need additional information or materials to properly
educate your employees and customers, please contact the NPGA, your state
organization, or Warren Petroleum Company.
---------------------------------------------------------------------------
4. Seller send statements, invoices and shipping documentation to:
Empire Gas Corporation
Gwen Hogan
P.O. Box 303
Lebanon, MO 65536
---------------------------------------------------------------------------
5. Terms of Payment:
1% EFT 14 days.
---------------------------------------------------------------------------
6. Special Provisions:
---------------------------------------------------------------------------
7. In addition to the above terms and conditions, the General Provisions of
this Product Sales Agreement and all Attachments are incorporated herein
by reference and made a part of this Agreement. If you are in agreement
with the foregoing terms and conditions including the indemnity
provision, please so indicate by signing below and returning one copy of
the Agreement to Warren.
Accepted and Agreed to: Warren Petroleum Company
Empire Gas Corporation A Division of Chevron U.S.A. Inc.
By /s/ Kris Lindsey By /s/ John K. Nelson
Title Vice President Date Title
5/13/96 Southeast District Manager 4/16/96
Distribution: Buyer for File Distribution Section, Tulsa
Buyer for acceptance and Marketing Department, Tulsa
return to Warren's Tulsa Retained by Originator
Office
Accounting Division, Tulsa
GENERAL PROVISIONS PROPANE SALES
1. DELIVERIES
A. When delivery is point of origin, delivery shall be deemed to have
been completed:
1. To tank tricks when the product has actually been delivered into
the trust;
2. To tank cars when the carrier accepts the same for shipment;
3. To pipelines upon metering of the product;
B. When delivery is point of destination, delivery shall be deemed to
have been completed:
1. From tank trucks when truck has been placed at buyer's facilities
for unloading;
2. From tank cars when carrier delivers same at the destination;
C. Seller shall not be liable to Buyer for quantity or quality of
product, after completion of delivery. Buyer agrees that the
handling, care or use of product shall thereafter be at Buyer's
sole risk and expense.
2. MEASUREMENT - Measurement shall be done in the manner customarily
utilized at the point of delivery in accordance with one of the
following alternatives.
A. On all deliveries into/out of tank cars, the quantity shall be
determined by official tank car capacity tables, meters with no
vapor return, or by weighing, in accordance with GPA Publication
8162,8173 and all revisions thereof.
B. On all deliveries into/out of transport and tank truck equipment,
quantities shall be determined by meter with no vapor return, slip
tube, rotary gauging device or weighing, in accordance with GPA
Publication 8162, all appropriate GPA and API standards and all
revisions thereof.
C. On all deliveries into/out of pipeline, quantity shall be
determined by turbine or positive displacement pipeline meter in
accordance with API Manual of Petroleum Measurement Standards.
D. All quantities shall be corrected to 60 degrees Fahrenheit and
equilibrium vapor pressure at 60 degrees Fahrenheit.
E. Volume and compressibility correction factors shall be determined
from referenced API tables or computer programs used to generate
these tables.
3. PASSAGE OF TITLE AND WARRANTY OF TITLE - Title to the product and risk
of loss shall pass to Buyer upon delivery. Seller warrants to Buyer
that it has title to the product(s) delivered by it hereunder and the
right to deliver same, and agrees to indemnify, defend and hold the
Buyer harmless from and gains any loss, claim or demand by reason of
any failure of such title or breach of this warranty. SELLER MAKES NO
OTHER WARRANTY WITH RESPECT TO THE PRODUCT OR OTHERWISE, INCLUDING,
WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR
A PARTICULAR PURPOSE.
4. TAXES - Any tax, fee, or other exaction, now or hereafter, levied or
assessed by any governmental authority upon, or as a result of the
transaction herein provided for, or the goods or source materials
thereof which ar the subject matter of this Agreement, shall, if
payable by Seller, be paid by Buyer on demand by Seller. Any personal
property taxes levied or assessed by any governmental authority upon
the products covered by this Agreement shall be paid by the party
having title thereto at the time of such assessment. Buyer shall
furnish Seller proper exemption certificate where tax exemption is
claimed on any product(s) delivered hereunder.
5. GOVERNMENT REGULATIONS & LAW - Seller warrants that the product it
delivers hereunder will be produced and delivered in full compliance
with all applicable federal and state laws and regulations and all
Presidential Proclamations which may be applicable. This agreement
shall be subject to the jurisdiction of, governed by and construed in
accordance with the laws of the State of Oklahoma including the
Uniform Commercial Code. Seller agrees to comply with the provisions
contained in Exhibit "A" if attached hereto, to the extent that such
provisions are legally applicable to Seller.
6. FORCE MAJEURE - If either party is rendered unable, wholly or in part,
to perform its obligations under this Agreement (other than to make
payments due hereunder) due to force majeure, defined herein as any
cause or causes beyond its control, then in any such event, it is
agreed that the affected party shall give prompt notice and full
particulars of such force majeure to the other party. The obligations
of the affected party shall be suspended for the duration of such
inability to perform but for no longer period and such cause shall, so
far as possible, be remedied with all reasonable dispatch.
7. ASSIGNMENT - This Agreement shall extend to and be binding upon the
parties thereto, their heirs, successors and assigns; but it is
expressly agreed that neither party shall voluntarily assign this
Agreement without the prior written consent to the other.
8. NOTICE - Any notice hereunder shall be in writing and shall be
delivered personally, by mail, by fax, by telex, or by telegram to the
address set forth on the attached agreement, unless changed by notice.
such notice shall be deemed to have been given on the date of the
delivery thereof.
9. WAIVER - The waiver by either party of the breach of any provision
hereof by the other party shall not be a waiver of the breach of any
other provision or provisions hereof or of any subsequent or
continuing breach of such provision or provisions.
10. ALTERATIONS - No oral promises, agreements or warranties shall be
deemed a part hereof, nor shall nay alteration or amendment of this
Agreement, or waiver of any of its provisions, be binding upon either
party hereto unless the same be in writing, signed by the party
charged.
11. INVOICES AND TERMS OF PAYMENT - Invoices will be prepared by Seller
and transmitted to the Buyer from time to time during the month.
Unless otherwise specified, payment is due within ten (10) days after
receipt of invoice. If payment is not made within the time allowed
under this Agreement, then Seller may charge interest on the unpaid
balance at the lesser of 11/2% per month or the highest rate permitted
by Oklahoma law and Seller shall be entitled to recover its reasonable
costs of collection, including attorney's fee.
12. FINANCIAL RESPONSIBILITY - If in the judgment of Seller the financial
responsibility of Buyer becomes impaired or unsatisfactory, advance
cash payments or acceptable security (including, but not limited to a
letter of credit form a financial institution acceptable to Seller)
may be required by Seller, and if Buyer fails to provide such, Seller
may without waiving any rights or remedies, withhold further
deliveries until such payment or security is received. Buyer's duty
to provide the hereinabove credit assurance shall be a condition
precedent to Seller's obligation to perform under this agreement.
13. CONFLICTS OF INTEREST - No director, employee or agent of either party
shall give or receive any commission, fee, rebate, gift or
entertainment of significant cost or value in connection with this
Agreement. Any representative(s) authorized by either party may audit
the applicable records of the other party solely for the purpose of
determining whether there has been compliance with this paragraph.
14. AUDIT - Each party and its authorized representatives shall have
access to the accounting records and other documents maintained by the
other party which relate to the product being sold to the other party
under this Agreement and shall have the right to audit such records
once a year a any reasonable time or times during the term of this
Agreement and for two years after the year in which this Agreement
terminates. Neither party shall make claim on the other for any
adjustment after said two-year period.
15. TANK CARS - If Seller's tank cars are used and they are not unloaded
and returned to railroad, Buyer shall be liable to Seller for rental
at the rate of $50.00 for each day or fraction thereof in excess of 7
days. Tank cars shall not be diverted without Seller's written
consent.
16. QUALITY - All products delivered under this Agreement shall meet the
latest GPA specifications for that product and contain no deleterious
substances. Product delivered under this agreement shall not contain
concentrations of any contaminations that may make it or its
components commercially unacceptable in general industry application.
Any requirements of buyer pertaining to potential contaminants and/or
specific hydrocarbon composition not listed in the product
specification must be identified by buyer and allowable concentrations
agreed to in writing by both parties prior to delivery.
17. SHORTAGE OF PRODUCTS - Due to uncertainties in the supply/demand
situation, Warren may not have sufficient supplies of product to be
delivered hereunder to meet the full requirements of all of its
customers, contract or otherwise. whenever that situation exists,
Warren shall have, in addition to any other rights Warren may have
under this Agreement, the right to reduce deliveries of such product
on any basis which in Warren's opinion is equitable, allowing for such
priorities to such priorities to such classes of customers as Warren
deems appropriate. If any such reduction occurs, Buyer shall have the
option to terminate this Agreement as to any or all products by
fifteen (15) day's notice, given within thirty (3) days of the notice
of reduction.
18. BRAND NAMES - Unless otherwise specifically agreed, Buyer shall not
represent or permit any other person to represent, that the product
delivered hereunder is the product of Warren. All products delivered
to Buyer hereunder shall be used or sold under Buyer's own brand names
or under brand names approved by Warren, and Buyer shall not authorize
or permit said product to be used or sold under any other brand names.
19. CONDUCT OF BUYER'S BUSINESS - Buyer in the performance of this
Agreement is engaged in an independent business and nothing herein
contained shall be construed as giving Warren any right to control
Buyer in any way in its performance of its business. Warren has no
right to exercise control over any Buyer's employees. All employees
of Buyer shall be entirely under the control and direction of Buyer
who shall be responsible for their actions. and omissions
20. INDEMNITY - If Warren provides adequate documentation of the
odorization required by this contract, buyer agrees to define and hold
Warren harmless from all expenses (including attorney's fees) or
liability arising from any claims of whatever kind due to injuries or
damages which occur after delivery to Buyer in connection with the
transportation, use or handling of product covered hereunder. BUYER'S
INDEMNITY OBLIGATION SHALL BE APPLICABLE EVEN IF SUCH DAMAGES ARE
DETERMINED TO HAVE BEEN PARTLY CAUSED BY THE FAULT OF SELLER OR IF
LIABILITY WITHOUT FAULT IS IMPOSED ON SELLER, THE ONLY EXCEPTION TO
SUCH OBLIGATION BEING WHERE THE FAULT OF SELLER IS DETERMINED TO BE
THE SOLE CAUSE OF SUCH DAMAGES.
21. PRICES - Prices hereunder may be changed at any time by Warren upon
notice given either electronically (i.e. fax, DTN or phone) or by U.S.
Mail, effective when sent. If any such notice shall increase Warren's
price to Buyer at any shipping point or destination above Warren's
price for such product or freight in effect during the elapsed portion
of the calendar year in which Warren's notice is effective, Buyer may
by written notice to Warren given and effective within fifteen (15)
days the date of Warren's notice, terminate this contract with respect
to such shipping ponit or destination.
22. ODORIZATION - Unless otherwise specifically agreed in writing, Buyer
hereby requests that the propane sold hereunder be odorize with not
less than 1.0 lb. of ethyl mercaptan per 10,000 gallons. Buyer
warrants that compliance with its request will satisfy all applicable
legal requirements.
23. PRODUCT HAZARDS - Buyer acknowledges receipt of Warren's Safety
Bulletin for odorized propane and is knowledgeable of the hazards or
risks in handling or using the product. Buyer agrees that Buyer shall
inform its employees, contractors and customers of any hazards or
risks associated with the product. Warren will make available to
Buyer Warning Decals that are intended to be placed on consumer tanks
or equipment and copies of its Safety Guide. Buyer agrees to supply
its customers with these materials or other reasonably equivalent
safety material to warn them of the potential hazards or risks in
using odorized propane.
24. INCIDENT - Buyer shall notify Warren as soon as possible after it
becomes aware of any fires or explosions occurring at locations
propane purchase hereunder is used. Buyer will inform Warren if said
product is involved and will fully cooperate with Warren in obtaining
a propane sample and any other investigation Warren deems necessary.
Buyers Initials __________
ATTACHMENT A TO
PROPANE SALES AGREEMENT NO. 27023
DATED: MAY 1, 1996
1. TRADEMARK. Buyer acknowledges that the CHEVRON and WARRENGAS
Trademarks are valuable property rights belonging to Chevron
Corporation and its subsidiaries, including Chevron U.S.A. inc. and
that any use thereof by Buyer in connection with this agreement is
solely for the purposes of advertising products obtained from such
subsidiaries. Upon termination of this agreement, Buyer agrees that
it will make no further use of such trademarks or any other mark, name
or designs confusingly similar therewith.
2. QUANTITY. During the term hereof, Buyer agreed to buy the product
herein specified in monthly quantities of not less than the minimum
set forth below and Warren agrees to sell said quantities to Buyer.
Buyer shall purchase such entities as evenly as possible during each
month. If during any period of this agreement the quantity of product
Warren is obligate to deliver to Buyer is prescribed by government
rules, regulations or orders, then the quantity of product covered by
this agreement shall be the quantity so prescribed for such period and
Buyer agrees to buy and Warren agrees to sell such Quantity.
VOLUME (IN THOUSAND OF GALLONS)
MINIMUM MAXIMUM MINIMUM MAXIMUM
April 468 572 October 429 525
May 399 487 November 560 684
June 416 509 December 750 916
July 370 452 January 812 992
August 346 422 February 616 752
September 376 460 March 533 651
For the purpose of determining compliance with the above quantity schedule,
purchase of product shall be allocated to the month in which shipment is
made. Should either party fail to comply in any amount with the above
schedule, the other party may elect to terminate this agreement by mailing
notice of such termination on or before the 20th day of the succeeding
month. If the Buyer fails to purchase 100% of the above specified minimum
monthly quantities during any month or months and Warren does not elect to
terminate this agreement, Warren shall not be obligated hereunder to sell
to Buyer in any of the succeeding six months more than one and one half
times the average monthly quantity which Buyer actually purchased during
the preceding six-month period.
When delivery is into tank trucks furnished by Buyer, the delivery ticket
showing the quantity delivered shall be signed by the loader as the agent
of Warren and by the truck driver as the agent of the Buyer; such
quantities shall be conclusively presumed to have been delivered to Buyer.
On or before the 1st day of each month Buyer shall inform Warren of
quantities required during such month, delivery dates, and when applicable,
destinations of each shipment. Warren shall not be obligated to ship less
than a tank car or tank truck load.
3. Method of Delivery: XXXXXXXXXX By tank truck furnished by Buyer.
XXXXXXXXXX By tank truck furnished by Warren.
By tank truck furnished by
with a
capacity of gallons each.
PRICE INFORMATION
Prices in effect as of APRIL 16 , 19 96
Sales based on (X) Shipping point price or ( ) Destination price
PRICING PRICE IN FREIGHT
POINTS DESTINATIONS PRODUCTS CENTS/GALLONS CHARGES
FLORIDA BASE * COMMERCIAL * N/A
PROPANE
*SEE ATTACHMENT
NO. 1 DATED 5/1/96
ATTACHMENT NO. 1
TO PSA 27023
DATED: MAY 1, 1996
SHIPPING DESTINATION DESTINATION* FREIGHT
POINT PRICE ALLOWANCE
Tampa Arcadia 49.319 3.054
Tampa Ft. Myers 49.648 3.889
Tampa Ft. Pierce 49.695 4.790
Tampa Indiantown 49.648 5.263
Tampa N. Ft. Myers 49.648 3.790
Tampa Okeechobee 49.648 4.325
Tampa Orlando 49.084 2.960
Tampa Palmetto 49.084 1.730
Tampa Plymouth 48.990 3.330
Tampa Pt. St. Luice 49.789 4.830
Tampa S. Ft. Myers 49.648 4.489
Pt. Ever. Boca Raton 49.836 1.344
Pt. Ever. Davie 49.836 1.331
Pt. Ever. Deerfield 49.836 1.343
Pt. Ever. Delray Beach 49.836 1.532
Pt. Ever. Green Acres 49.789 1.704
Pt. Ever. Hollywood 49.836 1.181
Pt. Ever. Indiantown 49.648 2.577
Pt. Ever. Medley 49.977 1.532
Pt. Ever. Miami 49.977 1.477
Pt. Ever. Pompano Beach 49.836 1.331
Pt. Ever. South Bay 49.695 2.333
Pt. Ever. West Palm Beach 49.789 1.806
Taft Arcadia 49.319 3.530
Taft Ft. Pierce 49.695 3.650
Taft Indiantown 49.648 4.300
Taft Okeechobee 49.648 3.400
Taft Orlando 49.084 1.245
Taft Plymouth 48.990 1.540
Taft Pt. St. Lucie 49.789 4.210
Freight allowance subject to change.
*Prices as of 4/16/96 and are subject to change.
LIQUIFIED PETROLEUM GAS CONTRACT
THIS IS A CONTRACT effective June 1, 1996,
between SHELL OIL COMPANY, P.O. Box 576, Houston, TX
77001 ("Shell"), and EMPIRE GAS CORPORATION ("Buyer").
1. TERM. This Contract shall be in effect for a
term beginning on June 1, 1996, and ending on May 31,
1997.
2. PRODUCTS-QUANTITIES-QUALITY.
2.1 Products-Quantities. Shell shall sell and
deliver to Buyer, and Buyer shall purchase and accept
from Shell, "Shell" Odorized HD-5 ("Product") in such
quantities as Buyer shall order from time to time, but,
during any calendar month, not less than 90% nor more
(except at Shell's option) than all of the quantity
specified for such month in the following schedule (in
thousands of gallons):
June 250 September 275 December 275 March 250
July 250 October 275 January 275 April 250
August 275 November 275 February 275 May 250
provided that Buyer shall order and accept deliveries in
quantities and at intervals approximately equal during
each month.
2.2 Quality - Warranty Disclaimer. The Product
shall meet Shell's own specifications in effect at the
time of delivery; but SHELL OTHERWISE MAKES NO WARRANTIES
OF QUALITY, MERCHANTABILITY OR FITNESS AS TO THE PRODUCT,
AND NONE SHALL BE IMPLIED.
2.3 Excess Quantities. Shell's sale and delivery
during any month of more of any product than the quantity
specified in the Schedule for that month, whether
resulting from Shell's voluntary act, Shell's compliance
with any allocation or other legal requirement, or any
other cause, shall not be deemed to increase or otherwise
amend such specified contract quantity as to any future
month unless expressly so agreed in writing by Shell and
Buyer.
3. PRICES.
3.1 Definitions. The price for the Product during
July, August, September, April, May, June, F.O.B. Shell's
Wood River Manufacturing Complex, shall be determined by
adding the mean (sum of high/low OPIS prices divided by
two) spot prices of propane at Mapco 140 as published by
Oil Pricing Information Service (OPIS/Petroscan) for the
following weekly OPIS report days: Thursday, Friday,
Monday, Tuesday, and Wednesday and dividing the sum by
five (5). This average price will have 2.25 cents per
gallon differential added to produce the final selling
price. During October, November, December, January,
February, and March, the average price will have 3.25
cents per gallon differential added to produce the final
selling price. This calculation will be completed by
Shell on Thursday and Friday each week and effective for
all product purchased beginning on the following Monday
through Sunday. In the event OPIS fails to publish a
price for any of these days, the day or days will be
excluded from the calculation.
3.2 Quantity Limitation. Shell may, at its option,
after the initial three months of the term, limit the
quantity of any Product to be supplied in any month to a
quantity which is the same percentage of contract
quantity for that month as the average percentage of
contract quantities actually delivered during the last
preceding three months.
3.3 Payments. Buyer shall pay for the Product
delivered on such terms as Shell shall prescribe, any of
which may be altered or revoked by Shell at any time by
notice to Buyer (which may be given by telephone or
regular mail). Payment shall be deemed made when
received by Shell.
4. DELIVERIES.
4.1 Places. The Product shall be delivered to
Buyer at Shell's origin(s) (including pipeline terminals)
at Wood River. However, Shell shall have the right at
any time or times to change any place of delivery from
origin to Buyer's destination(s) or from Buyer's
destination to origin, and to change any origin either to
another one specified in this article 4.1 or to a new one
designated by Shell, by giving Buyer at least 15 days'
prior notice or such shorter notice as may be reasonable
in emergency situations. Such notice shall specify the
new place of delivery, the effective date of the change,
and, for Buyer's information, Shell's then-current price
for the Product, F.O.B. that place. If Shell exercises
this right, Buyer may, within 15 days after Shell's
notice, terminate this Contract as to the Product and
place of delivery by giving Shell at least five days'
notice.
4.2 Buyer's Orders. Buyer's orders and shipping
instructions shall be given to Shell in such manner as
Shell shall designate by telephone or regular mail from
time to time.
4.3 Origin Deliveries. All deliveries of Products
at Shell's origin(s) shall be into delivery equipment
(including any pipeline) selected by Buyer and acceptable
to Shell. Shell shall not be obligated to deliver the
Product in bulk in any quantity less than the maximum
full load delivery permitted by applicable law for the
type of delivery equipment (including any pipeline)
utilized, or outside of the usual business hours of
Shell's plant. All delivery equipment and transportation
shall comply with applicable laws, regulations, and
tariffs.
4.4 Measurements. Quantities of Product delivered
shall be determined (a) if into or by transport truck, by
meters, scale weight, or certified calibration, at
Shell's option, (b) if into or by tank car, by official
capacity table, or (c) if into pipeline, by the pipeline
meters. Every quantity, however determined, shall be
corrected to a temperature of 60 F in accordance with
Table 24 of the ASTM-IP Petroleum Measurement Tables in
effect at the time of determination.
4.5 Rail Cars. Each rail car in which Shell ships
Product during the period of this contract shall be
deemed in the possession and care of the Buyer when such
car is delivered to Buyer's siding at Wood River by the
delivering railroad. With respect to any rail car used
by Shell delivering Product to the Buyer's destination:
Buyer shall mail bills of lading for empty tank cars to
Shell immediately upon unloading, shall pay all the
railroad carrier's demurrage and miscellaneous charges,
and shall pay Shell the detention charges for delays in
unloading for each full or fractional calendar day during
which any car remains in the Buyer's possession beyond
the free time specified below:
CAR CAPACITY FREE TIME DAILY RATE
30,000 5 DAYS $50.00
4.5.1 Damage to Rail Cars. If any car is
damaged in any respect or defective when it enters
Buyer's possession, Buyer shall promptly give written
notice thereof to Shell by letter, telegram or facsimile
and also to an authorized agent of the delivering
railroad. Buyer shall not undertake any repair of or
other work on the car without the prior written approval
of Shell. When possession of any car is surrendered by
the Buyer, it shall be in as good a condition as when
received by Buyer, excepting only reasonable wear and
tear, and damage or destruction not arising out of any
negligence or otherwise wrongful act of the Buyer or any
agent of the Buyer.
4.6 Title. Title to any Product delivered shall
pass to Buyer when it enters any equipment or facility
(including any pipeline) provided by or for the account
of Buyer to receive the same, or is otherwise placed in
Buyer's possession, at a place of delivery hereunder.
5. SHELL'S IDENTIFICATIONS. This Contract
does not grant to Buyer any right to use Shell's
trademarks, brand names, service marks or color schemes
in connection with the identification, advertising, sale,
transportation use or other disposition of the Product
purchased hereunder, or to represent to Buyer's customers
(actual or prospective) or to the public generally that
the Product was purchased from Shell.
6. ASSIGNABILITY. Neither this Contract nor
any claim against Shell arising directly or indirectly
out of or in connection with this Contract shall be
assignable by Buyer or by operation of law without the
prior written consent of Shell. Any assignment made in
violation of this article shall be null and void.
7. TAXES AND CHARGES. Buyer shall pay any
tax, duty, fee or other governmental charge, or any other
public or private fee, charge or assessment now or
hereafter levied on the product delivered hereunder, or
on any of its constituent materials, or on Shell, or
required to be paid or collected by Shell, by reason of
the purchase, receipt, importation or manufacture of such
Product or constituent materials by Shell, or levied on
or incurred in connection with or incidental to the sale,
transportation, storage, delivery or use of the Product,
insofar as the same is not expressly included in the
prices hereunder.
8. INDEMNITY - CLAIMS.
8.1 Indemnity. Buyer shall defend, indemnify and
hold harmless Shell, its directors, employees and agents,
to the fullest extent permitted by law, against all
claims, suits, liabilities, judgments, losses and
expenses (including attorneys' fees and other costs of
litigation) arising out of any bodily/personal injury,
disease or death of persons (including Buyer or Buyer's
employees) or damage to property (including Buyer's)
caused by or happening in connection with Buyer's
receipt, loading, transportation, unloading, storage,
handling, sale, use or other disposition of the Product
sold hereunder, or other activity of Buyer relating to
the Product, except to the extent caused (a) by the
negligence or fault of Shell, its directors, employees or
agents, or (b) by defects in the Product not caused or
contributed to by any negligence or fault of Buyer or
Buyer's employees, agents, or contractors. In addition,
Buyer shall defend, indemnify and hold harmless Shell,
its directors, employees and agents, against all
consequences resulting from Buyer's failure to comply
with all laws, rules and regulations relating to
environmental protection. Shell shall have the right,
but not the duty, to participate in the defense of any
claim or litigation with attorneys of Shell's selection
without relieving Buyer of any obligations hereunder.
Buyer has the obligation and duty to immediately notify
Shell in writing of any claim made against Buyer or Shell
in connection with the use, receipt, handling, loading,
transportation, storage, sale or other disposition of the
Product. Buyer's obligations hereunder shall survive any
termination of this Contract.
8.2 Claims. Shell shall have no liability to Buyer
for any defect in quality or shortage in quantity of the
Product delivered unless (a) Buyer gives Shell notice of
Buyer's claim within five days after delivery of such
product, or in the case of any latent defect in quality,
within five days after Buyer's discovery of such defect
but in no event later than 30 days after delivery of such
Product; (b) Shell is given reasonable opportunity to
inspect the Product and to take and test samples thereof,
and (c) in case of delivery by tank car, the claim, if
for anything other than latent defect in quality, is
allowed by Shell before the Product is unloaded from the
tank car and, if for shortage in quantity, is for an
amount in excess of 2% of the quantity shown on the bill
of lading. In any event, Shell shall not be liable for
any such claim in excess of the purchase price of the
Product or for any consequential commercial damages.
Every initial notice of claim shall set forth fully the
facts on which the claim is based and shall be formally
documented, in writing, to Shell within 60 days after
initial notice.
9. EXCUSES FOR NONPERFORMANCE. Either Shell
or Buyer will be excused from its obligations under this
Contract (except financial) to the extent that
performance is delayed or prevented by any circumstances
reasonably beyond its control; or by fire, explosion,
mechanical breakdown, strikes or other labor trouble,
plant shutdown, riots or other civil disturbances, or
voluntary or involuntary compliance with any law,
regulation or request of any governmental authority; or
by unavailability of or interference with Shell's usual
sources of the Product or crude oils or other constituent
materials, or the usual means of transporting any of the
same, or that Shell cannot reasonably acquire access to
railroad delivery equipment to deliver Product at Buyer's
designation(s). If, due to any of the foregoing reasons,
there should be a shortage of any Product from any
source, Shell will not be obligated to purchase supplies
from any other than its usual sources or to divert
supplies in order to perform this Contract and may
apportion its available supplies among its contract and
non-contract customers and its own internal uses in such
manner as it finds fair and reasonable. Quantities of
Product consequentially undelivered will be deducted from
the applicable remaining quantity obligation unless the
parties agree otherwise in writing.
10. REMEDIES - WAIVER. In the event of
Buyer's breach of any provision of this Contract; or
Buyer's default in payment of any indebtedness to Shell,
whether under this Contract or otherwise; or initiation
of any bankruptcy, insolvency, receivership or other like
proceeding by or against Buyer; or Buyer's failure to
comply with any federal, state or municipal law,
ordinance, regulation, order, license or permit relating
to the operations of Buyer in connection with the
Product, Shell shall have the right, in addition to any
other rights or remedies it may have, to suspend
deliveries hereunder or to terminate this Contract by
giving Buyer notice. Shell's right to require strict
performance of Buyer's obligations hereunder shall not be
affected in any way by any previous waiver, forbearance,
course of dealing, or trade custom or usage.
11. NOTICES. Every notice hereunder (except
when otherwise specified and subject to any requirements
of law) shall be given by certified or registered letter,
telegram, facsimile (if Shell acknowledges receipt
thereof) or telex and shall be deemed given when the
letter is deposited in the U.S. mail or the telegram or
telex or facsimile is dispatched, postage or charges
prepaid, and directed to Shell or Buyer (as the case may
be) at its address first herein specified, or at such
other address as either may have substituted by notice so
given to the other.
12. ENTIRETY - RELEASE - EXECUTION. This
Contract, as of the beginning date of its term, contains
the complete and exclusive agreement of, and terminates
all prior contracts between Shell and Buyer concerning
the Product, and Shell and Buyer each release the other
from all claims arising in connection with any such prior
contract including any railroad lease agreements,
excepting however, claims of Shell against Buyer for
indebtedness, reimbursement or indemnification. Neither
this Contract nor any subsequent agreement amending or
supplementing this Contract shall be binding on Shell
unless and until it has been signed for Shell by a duly
authorized representative, and commencement of
performance hereunder or under any such subsequent
agreement shall not constitute a waiver of this
requirement.
EXECUTED on the date(s) specified below.
EMPIRE GAS CORPORATION SHELL OFFSHORE INC.
("Buyer") ("Shell")
By /s/ Kris Lindsey /s/ W. R. Davenport, Jr.
Kris Lindsey W. R. Davenport, Jr.
(Type or Print Name) (Type or Print Name)
Vice President Manager NGL Marketing & Supply
(Title of Officer or Agent) (Title of Officer or Agent)
Date: July 15 , 1996 Date: 8/20/ , 1996
AMENDMENT NO. 3 TO LOAN AND SECURITY AGREEMENT
AND AMENDMENT NO. 6 TO SUPPLEMENT A TO
LOAN AND SECURITY AGREEMENT
October 29, 1996
All Star Gas Corporation, f/k/a
Empire Gas Corporation
1700 South Jefferson Street
Lebanon, Missouri 65536
Attention: Ms. Valeria Schall
Ladies and Gentlemen:
Reference is made to the Loan and Security Agree-
ment dated as of June 29, 1994, among Empire Gas Corporation
("Borrower"), the Lenders party thereto ("Lenders") and Bank
of America Illinois, f/k/a Continental Bank, f/k/a Continen-
tal Bank N.A., as a Lender and as Agent for the Lenders, as
amended through the date hereof (the "Loan Agreement").
Unless otherwise defined herein, capitalized terms used
herein shall have the meaning ascribed to such terms in the
Loan Agreement.
Borrower has informed Agent that effective October
1, 1996, Borrower has changed its name to "All Star Gas
Corporation" and hereby requests that Agent and Lenders
address all correspondence to Borrower under that name.
Borrower has further requested that Requisite
Lenders agree to amend the Loan Agreement in certain re-
spects, including without limitation, to extend the Termina-
tion Date thereunder and to provide for certain interest
rate reductions upon the achievement by Borrower of certain
financial benchmarks. Requisite Lenders have agreed to the
foregoing, on terms and conditions contained herein.
Therefore, the parties hereto agree as follows:
1. Amendments to Loan Agreement. Section 1.1 of
the Loan Agreement is hereby amended as follows:
(a) The formula contained in the definition of the
term "LIBOR Rate" contained in Section 1.1 of the Loan
Agreement is hereby amended and restated in its entire-
ty, as follows:
"LIBOR Rate = Applicable LIBOR Margin plus
LIBOR Base Rate "
1-Eurocurrency Reserve Requirement
(b) Clause (c) of the definition of the term "Permit-
ted Acquisition" contained in Section 1.1 of the Loan
Agreement is hereby amended and restated in its entire-
ty, as follows:
"(c) immediately prior to, and immediately after,
consummation of such Acquisition, the Revolving
Credit Amount exceeds the outstanding principal
balance of the Revolving Loans plus the Letter of
Credit Obligations by at least (i) $500,000 at all
times prior to the occurrence of a Payment Event
and (ii) $1,500,000 at all times on and after the
occurrence of a Payment Event."
(c) The definition of the term "Termination Date"
contained in Section 1.1 of the Loan Agreement is
hereby amended by deleting therefrom the date "June 29,
1997" and inserting in its place the date "June 29,
1998."
(d) Section 1.1 of the Loan Agreement is hereby fur-
ther amended by inserting therein, in proper alphabeti-
cal order, the following new definitions:
"'Applicable LIBOR Margin' means a percentage
equal to 3.00% on the date hereof, which will be
adjusted on a fiscal quarterly basis hereafter,
commencing on September 30, 1996, depending on the
amount of EBITDA for the 12-month period ending on
the last day of such fiscal quarter, as follows:
Applicable LIBOR
EBITDA Margin
Less than $15,500,000 3.00%
Greater than or equal to $15,500,000 2.50%
and less than $20,000,000
Greater than or equal to $20,000,000 2.00%
The calculation of EBITDA for each fiscal quarter shall
be based on the financial statements delivered by
Borrower to Agent pursuant to Section 5.1.1. Each
adjustment to the Applicable LIBOR Margin shall be
effective prospectively 5 Banking Days after the date
of delivery of the applicable financial statements.
"'Applicable Reference Margin' means a per-
centage equal to 1.50% on the date hereof, which will
be adjusted on a fiscal quarterly basis hereafter,
commencing on September 30,1 996, depending on the
amount of EBITDA for the 12-month period ending on the
last day of such fiscal quarter, as follows:
Applicable Reference
EBITDA Margin
Less than $15,500,000 1.50%
Greater than or equal to $15,500,000 1.00%
and less than $20,000,000
Greater than or equal to $20,000,000 .50%
The calculation of EBITDA for each fiscal quarter shall
be based on the financial statements delivered by
Borrower to Agent pursuant to Section 5.1.1. Each
adjustment to the Applicable Reference Margin shall be
effective prospectively 5 Banking Days after the date
of delivery of the applicable financial statements.
"'EBITDA' means, for any period, net earnings
before interest expense, income tax expense, deprecia-
tion and amortization, all determined by Borrower and
its Subsidiaries on a consolidated basis and in accor-
dance with GAAP."
"Payment Event" means the initial receipt by
Borrower of any amount under the certain Termination
Agreement dated September 28, 1996, among Borrower,
Northwestern Growth Corporation and SYN Inc., as the
same may be amended, modified or revised from time to
time."
2. Amendment to Supplement A. Subsection (a) of
Section 3.1.1 of Supplement A is hereby amended by deleting
therefrom the percentage "1.00%" and inserting in its place
the phrase "Applicable Reference Margin."
3. Scope. This Amendment No. 3 to Loan and
Security Agreement and Amendment No. 6 to Supplement A to
Loan and Security Agreement (the "Amendment") shall have the
effect of amending the Loan Agreement, Supplement A and the
Related agreements as appropriate to express the agreements
contained herein. In all other respects, the Loan Agree-
ment, Supplement A and the Related Agreements shall remain
in full force and effect in accordance with their respective
terms.
4. Conditions to Effectiveness. This Amendment
shall be effective immediately upon the execution of this
Amendment by Agent, on behalf of the Requisite Lenders,
acceptance hereof by Borrower and each other Obligor, and
delivery hereof to BAI at 231 South LaSalle Street, Chicago,
Illinois 60697, Attention: Mr. Mark Cordes, on or prior to
October 28, 1996, together with the following:
1. Fully executed copies of (a) the certain
Termination Agreement dated September 28, 1996, among
Borrower, Northwestern Growth Corporation and SYN Inc.,
(b) the certain Purchase and Sale Agreement dated as of
May 17, 1995, referred to therein, (c) the certain
Management Agreement dated as of May 17, 1995, referred
to therein and (d) the certain Agreement Among Initial
Shareholders dated as of May 17, 1995, referred to
therein.
2. A. $37,500 extension and amendment fee pay-
able to Agent for its own account.
3. Copies of documents evidencing the change of
Borrower's name to "All Star Gas Corporation," certi-
fied by the Secretary of State of Missouri and the
Secretary of State of each other State in which Borrow-
er is qualified to do business.
Very truly yours,
BANK OF AMERICA ILLINOIS,
f/k/a/ CONTINENTAL BANK,
f/k/a/ CONTINENTAL BANK N.A.,
AS AGENT ON BEHALF OF REQUISITE
LENDERS
By____________________________________
Its__________________________________
Acknowledged and agreed to this
29th day of October 1996.
ALL STAR GAS CORPORATION f/k/a
EMPIRE GAS CORPORATION
By /s/ Mark Castaneda
Its Vice President
Acknowledgment and Acceptance of Guarantors
Each of the undersigned is a party to the Master
Corporate Guaranty dated June 29, 1994, in favor of BAI, as
Agent for itself and Lenders (the "Guaranty"), pursuant to
which each of the undersigned has guaranteed the Obligations
of Borrower under the Loan Agreement. Each of the under-
signed hereby acknowledges receipt of the foregoing Amend-
ment, accepts and agrees to be bound by the terms thereof,
ratifiers and confirms all of its obligations under the
Guaranty, and agrees that the Guaranty shall continue in
full force and effect as to it, notwithstanding such Amend-
ment.
Acknowledged and Agreed to this
31st day of October, 1996.
EACH OF THE SUBSIDIARIES OF
ALL STAR GAS CORPORATION f/k/a
EMPIRE GAS CORPORATION LISTED
ON EXHIBIT A ATTACHED HERETO
By /s/ Valeria Schall
Vice President of each Subsidiary
EXHIBIT A
List of Subsidiaries
AMENDMENT NO. 4 TO
LOAN AND SECURITY AGREEMENT
December __, 1996
All Star Gas Corporation, f/k/a
Empire Gas Corporation
1700 South Jefferson Street
Lebanon, Missouri 65536
Attention: Ms. Valeria Schall
Ladies and Gentlemen:
Reference is made to the Loan and Security
Agreement dated as of June 29, 1994 among All Star Gas
Corporation, f/k/a Empire Gas Corporation ("Borrower"),
the Lenders party thereto ("Lenders") and Bank of America
Illinois, f/k/a Continental Bank, f/k/a Continental Bank
N.A., as Lender and as Agent for the Lenders ("BAI"), as
amended through the date hereof (the "Loan Agreement").
Unless otherwise defined herein, capitalized terms used
herein shall have the meanings ascribed to such terms in
the Loan Agreement.
Borrower has requested that Requisite Lenders
agree to amend the Loan Agreement in order to increase
the maximum amount of aggregate cash consideration that
may be paid in any twelve month period in connection with
Permitted Acquisitions. Requisite Lenders have agreed to
do so, on the terms and conditions contained herein.
Therefore, the parties hereto agree as follows:
1. Amendment to Loan Agreement. Clause (b)
of the definition of the term "Permitted Acquisition"
contained in Section 1.1 of the Loan Agreement is hereby
amended and restated in its entirety, as follows:
"(b) total cash consideration paid for
such Acquisition, together with the cash
consideration paid for all other Permitted
Acquisitions consummated in the immediately
preceding twelve month period, does not exceed
$6,000,000 in the aggregate;"
2. Scope. This Amendment No. 4 to Loan and
Security Agreement (the "Amendment") shall have the
effect of amending the Loan Agreement, Supplement A and
the Related Agreements as appropriate to express the
agreements contained herein. In all other respects, the
Loan Agreement, Supplement A and the Related Agreements
shall remain in full force and effect in accordance with
their respective terms.
3. Conditions to Effectiveness. This
Amendment shall be effective immediately upon the
execution of this Amendment by BAI, on behalf of the
Requisite Lenders, acceptance hereof by Borrower and each
other Obligor, and delivery hereof to BAI at 231 South
LaSalle Street, Chicago, Illinois 60697, Attention: Mr.
Mark Cordes, on or prior to December __, 1996.
Very truly yours,
BANK OF AMERICA ILLINOIS,
f/k/a CONTINENTAL BANK,
f/k/a CONTINENTAL BANK
N.A., AS AGENT ON BEHALF OF
REQUISITE LENDERS
By_________________________
Its______________________
Acknowledges and agreed to this
____ day of December, 1996
ALL STAR GAS CORPORATION, f/k/a
EMPIRE GAS CORPORATION
By /s/ Mark Castaneda
Its V.P. Finance
Acknowledgment and Acceptance of Guarantors
Each of the undersigned is a party to the
Master Corporate Guaranty dated June 29, 1994 in favor of
BAI, as Agent for itself and Lenders (the "Guaranty"),
pursuant to which each of the undersigned has guaranteed
the Obligations of Borrower under the Loan Agreement.
Each of the undersigned hereby acknowledges receipt of
the foregoing Amendment, accepts and agrees to be bound
by the terms thereof, ratifies and confirms all of its
obligations under the Guaranty, and agrees that the
Guaranty shall continue in full force and effect as to
it, notwithstanding such Amendment.
Acknowledged and Agreed to
this ____ day of December, 1996.
EACH OF THE SUBSIDIARIES OF ALL
STAR GAS CORPORATION f/k/a
EMPIRE GAS CORPORATION, LISTED
ON EXHIBIT A ATTACHED HERETO
By /s/ Valeria Schall
Vice President of each
Subsidiary
Subsidiaries of All Star Gas Corporation
All Star Gas Inc. of Arizona Arizona
All Star Gas Inc. of Arkansas Arkansas
All Star Gas Inc. of California California
All Star Gas Inc. of Elsinore California
All Star Gas Inc. of Escondido California
All Star Gas Inc. of Los Angeles California
All Star Gas Inc. of Modesto California
All Star Gas Inc. of Placerville California
All Star Gas Inc. of Pomona California
All Star Gas Inc. of Sacramento California
All Star Gas Inc. of Susanville California
All Star Gas Inc. of Yucca Valley California
Empiregas Equipment Corporation California
All Star Gas Inc. of Colorado Colorado
Salgas Inc. of Crested Butte Colorado
All Star Gas Inc. of Jacksonville Delaware
All Star Gas Inc. of Boise Idaho
All Star Gas Inc. of Indiana Indiana
All Star Gas Inc. of Arma Kansas
Empire Underground Storage Inc. Kansas
All Star Gas Inc. of Louisiana Louisiana
All Star Gas Inc. of Michigan Michigan
All Star Gas Inc. of Missouri Delaware
All Star Transports Inc. - Missouri Delaware
Utility Collection Corporation Delaware
All Star Gas Field Services Corporation Delaware
All Star Gas Airlines, Inc. Delaware
All Star Gas Inc. of Nevada Nevada
All Star Gas Inc. of North Carolina N. Carolina
All Star Gas Inc. of Ohio Ohio
All Star Gas Inc. of Oklahoma, Inc. Oklahoma
All Star Marketing Corporation Oklahoma
All Star Gas Inc. of Oregon Oregon
All Star Gas Transports Inc. - Oregon Oregon
All Star Gas Inc. of South Carolina S. Carolina
All Star Gas Inc. of Texas Texas
All Star Gas Inc. of Utah Utah
All Star Gas Inc. of Washington Washington
All Star Gas Inc. of Wyoming Wyoming
All Star Acquisition Co. Missouri
All Star Development LLC Missouri
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<CASH> 965,000
<SECURITIES> 0
<RECEIVABLES> 6,000,000
<ALLOWANCES> 899,000
<INVENTORY> 6,924,000
<CURRENT-ASSETS> 14,119,000
<PP&E> 105,344,000
<DEPRECIATION> 32,118,000
<TOTAL-ASSETS> 107,832,000
<CURRENT-LIABILITIES> 18,717,000
<BONDS> 124,247,000
<COMMON> 14,000
0
0
<OTHER-SE> (42,734,000)
<TOTAL-LIABILITY-AND-EQUITY> 107,832,000
<SALES> 90,575,000
<TOTAL-REVENUES> 94,543,000
<CGS> 53,075,000
<TOTAL-COSTS> 53,075,000
<OTHER-EXPENSES> 0
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<INTEREST-EXPENSE> 16,745,000
<INCOME-PRETAX> 4,022,000
<INCOME-TAX> 1,800,000
<INCOME-CONTINUING> 2,222,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,222,000)
<EPS-PRIMARY> 1.41
<EPS-DILUTED> 1.41
</TABLE>
