<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-13692
AMERIGAS PARTNERS, L.P.
AMERIGAS FINANCE CORP.
(Exact name of registrants as specified in their charters)
Delaware 23-2787918
Delaware 23-2800532
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
460 North Gulph Road, King of Prussia, PA
(Address of principal executive offices)
19406
(Zip Code)
(610) 337-7000
(Registrants' telephone number, including area code)
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
------ -----
At January 31, 1997, the registrants had units and shares of common
stock outstanding as follows:
AmeriGas Partners, L.P. - 21,949,272 Common Units
19,782,146 Subordinated Units
AmeriGas Finance Corp. - 100 shares
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AMERIGAS PARTNERS, L.P.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGES
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<S> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
AmeriGas Partners, L.P.
-----------------------
Condensed Consolidated Balance Sheets as of December 31, 1996,
September 30, 1996 and December 31, 1995 1
Condensed Consolidated Statements of Operations for the three
months ended December 31, 1996 and 1995 2
Condensed Consolidated Statements of Cash Flows for the three months
ended December 31, 1996 and 1995 3
Condensed Consolidated Statement of Partners' Capital for the
three months ended December 31, 1996 4
Notes to Condensed Consolidated Financial Statements 5 - 7
AmeriGas Finance Corp.
----------------------
Balance Sheets as of December 31, 1996 and September 30, 1996 8
Note to Balance Sheets 9
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 10 - 13
PART II OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
</TABLE>
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AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(Thousands of dollars)
<TABLE>
<CAPTION>
December 31, September 30, December 31,
1996 1996 1995
-------------- --------------- --------------
ASSETS
- ------
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 23,689 $ 2,122 $ 7,583
Accounts receivable (less allowances for doubtful accounts
of $7,265, $6,579 and $5,614, respectively) 152,313 85,926 124,086
Inventories 93,767 82,957 66,387
Prepaid expenses and other current assets 24,465 29,375 6,739
------------ ------------ ------------
Total current assets 294,234 200,380 204,795
Property, plant and equipment (less accumulated depreciation and
amortization of $147,455, $138,850 and $113,890, respectively) 451,343 454,112 458,584
Intangible assets (less accumulated amortization of $98,343,
$94,785 and $80,566, respectively) 685,959 691,688 735,270
Other assets 26,154 26,043 38,652
------------ ------------ ------------
Total assets $ 1,457,690 $ 1,372,223 $ 1,437,301
============ ============ ============
LIABILITIES AND PARTNERS' CAPITAL
- ---------------------------------
Current liabilities:
Current maturities of long-term debt $ 7,098 $ 5,150 $ 5,006
Bank loans 70,000 15,000 18,000
Accounts payable - trade 79,590 46,891 52,046
Accounts payable - related parties 3,200 2,552 437
Other current liabilities 82,407 108,667 59,358
------------ ------------ ------------
Total current liabilities 242,295 178,260 134,847
Long-term debt 691,074 687,303 660,788
Other noncurrent liabilities 59,624 58,927 79,361
Minority interest 5,694 5,497 6,677
Partners' capital 459,003 442,236 555,628
------------ ------------ ------------
Total liabilities and partners' capital $ 1,457,690 $ 1,372,223 $ 1,437,301
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE> 4
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(Thousands of dollars, except per unit)
<TABLE>
<CAPTION>
Three Months Ended
December 31,
--------------------------------
1996 1995
--------------- -------------
<S> <C> <C>
Revenues:
Propane $ 331,894 $ 256,649
Other 28,222 29,147
--------------- -------------
360,116 285,796
--------------- -------------
Costs and expenses:
Cost of sales-propane 191,925 148,060
Cost of sales-other 12,783 14,660
Operating and administrative expenses 83,607 76,920
Depreciation and amortization 15,500 15,472
Miscellaneous income, net (1,398) (2,844)
--------------- -------------
302,417 252,268
--------------- -------------
Operating income 57,699 33,528
Interest expense (16,706) (15,563)
--------------- -------------
Income before income taxes 40,993 17,965
Income taxes (608) (334)
Minority interest (434) (204)
--------------- -------------
Net income $ 39,951 $ 17,427
=============== =============
General partner's interest in net income $ 400 $ 174
=============== =============
Limited partners' interest in net income $ 39,551 $ 17,253
=============== =============
Income per limited partner unit $ .95 $ .41
=============== =============
Average limited partner units outstanding (thousands) 41,731 41,723
=============== =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE> 5
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(Thousands of dollars)
<TABLE>
<CAPTION>
Three Months Ended
December 31,
-----------------------------
1996 1995
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 39,951 $ 17,427
Adjustments to reconcile net income to net
cash used by operating activities:
Depreciation and amortization 15,500 15,472
Other, net 1,570 846
------------- ------------
57,021 33,745
Net change in:
Accounts receivable (67,743) (62,603)
Inventories (10,593) 13,073
Accounts payable 33,345 15,698
Other current assets and liabilities (21,597) (23,387)
------------- ------------
Net cash used by operating activities (9,567) (23,474)
------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for property, plant and equipment (6,553) (7,201)
Proceeds from disposals of assets 743 1,217
Decrease in short-term investments - 9,000
Acquisitions of businesses, net of cash acquired (918) (523)
------------- ------------
Net cash provided (used) by investing activities (6,728) 2,493
------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions (23,184) (23,175)
Minority interest activity (237) (236)
Increase in bank loans 55,000 18,000
Issuance of long-term debt 7,000 8
Repayment of long-term debt (717) (850)
Capital contribution from General Partner - 8
------------- ------------
Net cash provided (used) by financing activities 37,862 (6,245)
------------- ------------
PARTNERSHIP FORMATION TRANSACTIONS:
Fees and expenses - (4,758)
------------- ------------
Cash and cash equivalents increase (decrease) $ 21,567 $ (31,984)
============= ============
CASH AND CASH EQUIVALENTS:
End of period $ 23,689 $ 7,583
Beginning of period 2,122 39,567
============= ============
Increase (decrease) $ 21,567 $ (31,984)
============= ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE> 6
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
(unaudited)
(Thousands, except unit data)
<TABLE>
<CAPTION>
Number of units Total
--------------- General partners'
Common Subordinated Common Subordinated partner capital
------------ ------------- ----------- ------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SEPTEMBER 30, 1996 21,949,272 19,782,146 $ 230,376 $ 207,439 $ 4,421 $ 442,236
Net income 20,802 18,749 400 39,951
Distributions (12,072) (10,880) (232) (23,184)
------------- ----------- -------------- ---------------- ------------- -------------
BALANCE DECEMBER 31, 1996 21,949,272 19,782,146 $ 239,106 $ 215,308 $ 4,589 $ 459,003
============= =========== ============== ================ ============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE> 7
AMERIGAS PARTNERS, L.P.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(Thousands of dollars, except per unit)
1. BASIS OF PRESENTATION
AmeriGas Partners, L.P. (AmeriGas Partners), through its subsidiary
AmeriGas Propane L.P. (the "Operating Partnership"), is the largest
retail propane distributor in the United States serving residential,
commercial, industrial, motor fuel and agricultural customers from
locations in 44 states, including Alaska and Hawaii. AmeriGas
Partners and the Operating Partnership are Delaware limited
partnerships. AmeriGas Propane, Inc. (the "General Partner") serves
as the general partner of AmeriGas Partners and the Operating
Partnership. The General Partner holds a 1% general partner interest
in AmeriGas Partners and a 1.01% general partner interest in the
Operating Partnership. In addition, the General Partner and certain
of its wholly owned subsidiaries own an effective 56.7% limited
partner interest in the Operating Partnership.
The condensed consolidated financial statements include the accounts
of AmeriGas Partners, the Operating Partnership and their
subsidiaries, collectively referred to herein as the Partnership. The
General Partner's 1.01% interest in the Operating Partnership is
accounted for in the condensed consolidated financial statements as a
minority interest. The accompanying condensed consolidated financial
statements are unaudited and have been prepared in accordance with the
rules and regulations of the U.S. Securities and Exchange Commission.
They include all adjustments which the Partnership considers necessary
for a fair statement of the results for the interim periods presented.
Such adjustments consisted only of normal recurring items unless
otherwise disclosed. These financial statements should be read in
conjunction with the financial statements and notes thereto included
in the Partnership's Report on Form 10-K for the year ended September
30, 1996. Due to the seasonal nature of the Partnership's propane
business, the results of operations for interim periods are not
necessarily indicative of the results to be expected for a full year.
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, the disclosure of contingent assets and liabilities at
the date of the financial statements, and revenues and expenses during
the reporting period. Actual results could differ from these
estimates.
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<PAGE> 8
AMERIGAS PARTNERS, L.P.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(unaudited)
(Thousands of dollars, except per unit)
2. DISTRIBUTIONS OF AVAILABLE CASH
A distribution of 55 cents per limited partner unit (the "Minimum
Quarterly Distribution" or "MQD") for the quarter ended September 30,
1996 was paid on November 18, 1996 on all Common and Subordinated
units. On January 27, 1997, the Partnership declared the MQD on all
Common and Subordinated units for the quarter ended December 31, 1996,
payable February 18, 1997 to holders of record on February 7, 1997.
3. RELATED PARTY TRANSACTIONS
In accordance with the Amended and Restated Agreement of Limited
Partnership of AmeriGas Partners, the General Partner is entitled to
reimbursement of all direct and indirect expenses incurred or payments
it makes on behalf of the Partnership, and all other necessary or
appropriate expenses allocable to the Partnership or otherwise
reasonably incurred by the General Partner in connection with the
Partnership's business. These costs totaled $47,301 and $47,561
during the three months ended December 31, 1996 and 1995,
respectively. In addition, UGI provides certain financial and
administrative services to the General Partner. UGI bills the General
Partner for these direct and indirect corporate expenses and the
General Partner is reimbursed by the Partnership for these expenses.
During the three months ended December 31, 1996 and 1995, such
corporate expenses totaled $1,481 and $2,074, respectively.
4. COMMITMENTS AND CONTINGENCIES
The Partnership has succeeded to the lease guarantee obligations of
Petrolane Incorporated (Petrolane), a predecessor company of the
Partnership, relating to Petrolane's divestiture of nonpropane
operations prior to its 1989 acquisition by QFB Partners. These
leases are currently estimated to aggregate approximately $88,000
(subject to reduction in certain circumstances). The leases expire
through 2010 and some of them are currently in default. Under certain
circumstances such lease obligations may be reduced by the earnings of
such divested operations. The Partnership has succeeded to the
indemnity agreement of Petrolane by which Texas Eastern Corporation
(Texas Eastern), a prior owner of Petrolane, agreed to indemnify
Petrolane against any liabilities arising out of the conduct of
businesses that do not relate to, and are not a part of, the propane
business, including lease guarantees. To date, Texas Eastern has
directly satisfied its obligations without the Partnership's having to
honor its guarantee.
In addition, the Partnership has succeeded to Petrolane's agreement to
indemnify Shell Petroleum N.V. (Shell) for various scheduled claims
that were pending against Tropigas de Puerto Rico (Tropigas). This
indemnification agreement had been entered into by Petrolane in
conjunction with Petrolane's sale of the international operations of
Tropigas
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<PAGE> 9
AMERIGAS PARTNERS, L.P.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(unaudited)
(Thousands of dollars, except per unit)
to Shell in 1989. The Partnership also succeeded to Petrolane's right
to seek indemnity on these claims first from International Controls
Corp., which sold Tropigas to Petrolane, and then from Texas Eastern.
To date, neither the Partnership nor Petrolane has paid any sums under
this indemnity, but several claims by Shell, including claims related
to certain antitrust actions aggregating at least $68,000, remain
pending.
The Partnership has identified environmental contamination at several
of its properties. The Partnership's policy is to accrue
environmental investigation and cleanup costs when it is probable that
a liability exists and the amount or range of amounts is reasonably
estimable. However, in many circumstances future expenditures cannot
be reasonably quantified because of a number of factors, including
various costs associated with potential remedial alternatives, the
unknown number of other potentially responsible parties involved and
their ability to contribute to the costs of investigation and
remediation, and changing environmental laws and regulations. The
Partnership intends to pursue recovery of any incurred costs through
all appropriate means, although such recovery cannot be assured.
In addition to these environmental matters, there are various other
pending claims and legal actions arising out of the normal conduct of
the Partnership's business. The final results of environmental and
other matters cannot be predicted with certainty. However, it is
reasonably possible that some of them could be resolved unfavorably to
the Partnership. Management believes, after consultation with
counsel, that damages or settlements, if any, recovered by the
plaintiffs in such claims or actions will not have a material adverse
effect on the Partnership's financial position but could be material
to operating results and cash flows in future periods depending on the
nature and timing of future developments with respect to these matters
and the amounts of future operating results and cash flows.
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<PAGE> 10
AMERIGAS FINANCE CORP.
(a wholly owned subsidiary of AmeriGas Partners, L.P.)
BALANCE SHEETS
(unaudited)
<TABLE>
<CAPTION>
December 31, September 30,
ASSETS 1996 1996
- ------ ------------ -------------
<S> <C> <C>
Cash $ 1,000 $ 1,000
============ ============
STOCKHOLDER'S EQUITY
- ---------------------
Common stock, $.01 par value; 100 shares authorized,
issued and outstanding $ 1 $ 1
Additional paid-in capital 999 999
------------ ------------
Total stockholder's equity $ 1,000 $ 1,000
============ ============
</TABLE>
The accompanying note is an integral part of these financial statements.
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<PAGE> 11
AMERIGAS FINANCE CORP.
(A WHOLLY OWNED SUBSIDIARY OF AMERIGAS PARTNERS, L.P.)
NOTE TO BALANCE SHEETS
AmeriGas Finance Corp. (AmeriGas Finance), a Delaware corporation, was formed
on March 13, 1995 and is a wholly owned subsidiary of AmeriGas Partners, L.P.
(AmeriGas Partners). AmeriGas Partners was formed on November 2, 1994 as a
Delaware limited partnership. AmeriGas Partners was formed to acquire and
operate the propane businesses and assets of AmeriGas Propane, Inc., a Delaware
corporation (AmeriGas Propane), AmeriGas Propane-2, Inc. (AGP-2) and Petrolane
Incorporated (Petrolane) through AmeriGas Propane, L.P. (the "Operating
Partnership"). AmeriGas Partners holds a 98.99% limited partner interest in
the Operating Partnership and AmeriGas Propane, Inc., a Pennsylvania
corporation and the general partner of AmeriGas Partners (the "General
Partner"), holds a 1.01% general partner interest. On April 19, 1995, (i)
pursuant to a Merger and Contribution Agreement dated as of April 19, 1995,
AmeriGas Propane and certain of its operating subsidiaries and AGP-2 merged
into the Operating Partnership (the "Formation Merger"), and (ii) pursuant to a
Conveyance and Contribution Agreement dated as of April 19, 1995, Petrolane
conveyed substantially all of its assets and liabilities to the Operating
Partnership (the "Petrolane Conveyance"). As a result of the Formation Merger
and the Petrolane Conveyance, the General Partner and Petrolane received
limited partner interests in the Operating Partnership and the Operating
Partnership owns substantially all of the assets and assumed substantially all
of the liabilities of AmeriGas Propane, AGP-2 and Petrolane. AmeriGas Propane
conveyed its limited partner interest in the Operating Partnership to AmeriGas
Partners in exchange for 2,922,235 Common Units and 13,350,146 Subordinated
Units of AmeriGas Partners and Petrolane conveyed its limited partner interest
in the Operating Partnership to AmeriGas Partners in exchange for 1,407,911
Common Units and 6,432,000 Subordinated Units of AmeriGas Partners. Both
Common and Subordinated units represent limited partner interests in AmeriGas
Partners.
On April 19, 1995, AmeriGas Partners issued $100,000,000 face value of 10.125%
Senior Notes due April 2007. AmeriGas Finance serves as a co-obligor of these
notes.
AmeriGas Partners owns all 100 shares of AmeriGas Finance Common Stock
outstanding.
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<PAGE> 12
AMERIGAS PARTNERS, L.P.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ANALYSIS OF RESULTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 1996 COMPARED WITH THREE MONTHS ENDED
DECEMBER 31, 1995
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Increase
Three Months Ended December 31, 1996 1995 (Decrease)
- ---------------------------------------------------------------------------------------------------------------------
(Millions, except per gallon and percentages)
<S> <C> <C> <C> <C>
Gallons sold:
Retail 251.7 244.3 7.4 3.0%
Wholesale 68.6 119.2 (50.6) (42.4)%
-------- -------- --------
320.3 363.5 (43.2) (11.9)%
======== ======== ========
Degree days - % colder (warmer)
than normal (a) (1.6)% 2.3% - -
Revenues:
Retail propane $285.9 $209.9 $ 76.0 36.2%
Wholesale propane 46.0 46.8 (.8) (1.7)%
Other 28.2 29.1 (.9) (3.1)%
-------- -------- --------
$360.1 $285.8 $ 74.3 26.0%
======== ======== ========
Total margin (b) $155.4 $123.1 $ 32.3 26.2%
EBITDA (c) $ 73.2 $ 49.0 $ 24.2 49.4%
Operating income $ 57.7 $ 33.5 $ 24.2 72.2%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Based on the weighted average deviation from average degree days
during the 30-year period 1961-1990, as contained in the National
Weather Service Climate Analysis Center database, for geographic areas
in which AmeriGas Partners operates.
(b) Total revenues less total cost of sales.
(c) EBITDA (earnings before interest, income taxes, depreciation and
amortization) should not be considered as an alternative to net income
(as an indicator of operating performance) or as an alternative to
cash flow (as a measure of liquidity or ability to service debt
obligations).
- ------------
Retail volumes of propane sold increased in the three months ended December 31,
1996, notwithstanding the warmer weather, reflecting the effects of
acquisitions, an increase in sales of
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<PAGE> 13
AMERIGAS PARTNERS, L.P.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
propane used for crop drying due to wet weather in much of the farm belt, and
volume growth. Wholesale volumes of propane sold were lower in the three
months ended December 31, 1996 reflecting reduced low-margin sales of storage
inventories.
Total revenues increased significantly in the three months ended December 31,
1996 as a result of higher average selling prices, reflecting higher propane
product costs, and, to a much lesser extent, the greater retail volumes. Propane
supply costs were significantly higher in the three months ended December 31,
1996 due in part to historically low U.S. propane inventory levels caused by a
number of factors including increased petrochemical demand for propane use as a
feedstock, an extended cold 1995/1996 winter in the eastern United States,
increased off-shore demand for propane resulting from colder weather in Europe,
and the impact of a midsummer explosion at a gas processing facility in Mexico.
The spot price of propane at Mont Belvieu, Texas, a major U.S. storage and
distribution hub, increased dramatically during the three months ended December
31, 1996 rising to a quarterly high of 70.5 cents per gallon on December 16,
1996. Propane spot market prices began to decline late in the quarter. This
general trend of decline has continued into the beginning of the second quarter
of fiscal 1997.
Total propane margin was significantly greater in the three months ended
December 31, 1996 reflecting the impact of higher average retail unit margins
and higher retail volumes. Although the Partnership's propane product costs
increased, such product cost increase was partially mitigated by favorable
fixed-price supply commitments and financial contracts entered into by the
Partnership as part of its overall propane supply strategy. In addition, the
higher 1996 average retail unit margin reflects the fact that retail unit
margins in the prior-year period were adversely impacted by certain sales and
marketing programs initiated by the Partnership.
The increase in operating income and EBITDA during the three months ended
December 31, 1996 reflects the impact of the higher total margin partially
offset by higher operating expenses and a decrease in miscellaneous income.
The increase in operating expenses includes higher customer equipment repairs
and maintenance expenses, higher distribution expenses due in large part to
higher fuel costs, and incremental costs associated with acquisitions and new
district locations. Miscellaneous income in the prior-year period was higher
than in 1996 principally due to $1.4 million of income from the early
settlement of propane supply contracts.
Interest expense was $16.7 million in the three months ended December 31, 1996
compared with $15.6 million in the prior-year period reflecting increased
interest expense on the Partnership's Revolving Credit and Acquisition
facilities principally as a result of higher amounts outstanding.
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<PAGE> 14
AMERIGAS PARTNERS, L.P.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
FINANCIAL CONDITION AND LIQUIDITY
FINANCIAL CONDITION
AmeriGas Partners' debt outstanding at December 31, 1996 totaled $768.2 million
compared with $707.5 million at September 30, 1996. The increase is
principally a result of a $55 million seasonal increase in borrowings under the
Operating Partnership's Revolving Credit Facility and $7 million of borrowings
under its Acquisition Facility.
Effective October 28, 1996, the Operating Partnership has a revolving credit
agreement with the General Partner under which it may borrow up to $20 million
to fund working capital, capital expenditures, and interest and distribution
payments. This agreement is coterminous with the Operating Partnership's
Revolving Credit Facility. Borrowings under the General Partner Facility will
be unsecured and subordinated to all senior debt of the Partnership. Interest
rates on borrowings and facility fees will be determined generally on the same
basis as the Revolving Credit Facility's interest rates and fees. UGI has
agreed to contribute on an as needed basis through its subsidiaries up to $20
million to the General Partner to fund such borrowings. Also effective October
28, 1996, the Operating Partnership's Bank Credit Agreement was amended to
include a revolving $15 million sublimit under its Special Purpose Facility
which can be used to fund working capital, capital expenditures, and interest
and distribution payments. This sublimit is scheduled to expire April 12,
1998. At December 31, 1996, there were no borrowings under the General Partner
Facility or the sublimit under the Special Purpose Facility.
During the three months ended December 31, 1996, the Partnership declared and
paid the MQD of 55 cents on all units for the quarter ended September 30, 1996.
The MQD for the quarter ended December 31, 1996 will be made on February 18,
1997 to holders of record on February 7, 1997 of all Common and Subordinated
units.
CASH FLOWS
Cash and cash equivalents totaled $23.7 million at December 31, 1996 compared
with $2.1 million at September 30, 1996. The higher balance at December 31,
1996 is a result of short-term borrowings made in anticipation of certain
working capital payments. Due to the seasonal nature of the propane business,
cash flows from operating activities are generally strongest during the second
and third fiscal quarters of the Partnership when customers pay for propane
purchased during the heating season and are typically at their lowest levels
during the first and fourth fiscal quarters. Accordingly, cash flows from
operations during the three months ended December 31, 1996 are not necessarily
indicative of cash flows to be expected for a full year.
OPERATING ACTIVITIES. Cash used by operating activities was $(9.6) million
during the three months ended December 31, 1996 compared with $(23.5) million
in the comparable prior-year period. Cash flows from operations before changes
in working capital were $57.0 million in the three months ended
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<PAGE> 15
AMERIGAS PARTNERS, L.P.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
December 31, 1996 compared with $33.7 million during the three months ended
December 31, 1995 reflecting a significant improvement in AmeriGas Partners'
operating performance. Changes in operating working capital during the three
months ended December 31, 1996 required $66.6 million of operating cash flow
principally from a $67.7 million seasonal increase in accounts receivable, a
$10.6 million increase in inventories, and a $23.3 million net use of cash from
changes in accruals for interest and employee benefits partially offset by a
$33.3 million increase in accounts payable. During the three months ended
December 31, 1995, changes in operating working capital required $57.2 million
of operating cash flow.
INVESTING ACTIVITIES. Cash expenditures for property, plant and equipment
totaled $6.6 million (including maintenance capital expenditures of $2.7
million) during the three months ended December 31, 1996 compared with $7.2
million (including maintenance capital expenditures of $1.9 million) in the
prior-year period. Maturing short-term investments increased cash flows from
investing activities by $9.0 million during the 1995 period.
FINANCING ACTIVITIES. During each of the three-month periods ended December
31, 1996 and 1995, AmeriGas Partners made distributions to its unitholders and
the General Partner of $23.2 million. These amounts represented the MQD on all
units for each of the quarters ended September 30, 1996 and 1995. In addition,
during each of the three-month periods ended December 31, 1996 and 1995, the
Operating Partnership distributed $.2 million to the General Partner in respect
of the General Partner's 1.0101% interest in the Operating Partnership. In
order to meet seasonal working capital needs, during the three months ended
December 31, 1996 the Operating Partnership borrowed $55 million under its
Revolving Credit Facility compared with $18 million during the same period in
the prior-year. Seasonal borrowing requirements in the prior-year period were
lower due to the existence of significant cash balances at the beginning of
such period. The Partnership also borrowed $7 million under its Acquisition
Facility during the three months ended December 31, 1996 relating to
acquisitions made prior to fiscal 1997. There were no borrowings under the
Acquisition Facility during the same period last year.
PARTNERSHIP FORMATION TRANSACTIONS. Cash paid for Partnership formation
transactions during the three months ended December 31, 1995 represents the
reimbursement by the Partnership of fees and expenses previously paid by
AmeriGas, Inc. relating to the formation of the Partnership.
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<PAGE> 16
AMERIGAS PARTNERS, L.P.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Commercial Row Cases, Judicial Council of California, Coordination Proceeding
No. 3096. Beginning in June 1994, twenty-one complaints were filed against
AmeriGas Propane, Inc., a Delaware corporation ("API") and a predecessor of
AmeriGas Propane, L.P., in the Superior Court of California, arising from an
explosion which occurred in Truckee, California on November 30, 1993. The
explosion is alleged to have occurred as the result of the escape of propane
gas from a fractured fitting in an underground supply line. The complaints
sought relief for alleged personal injuries and/or property damage and named as
defendants the manufacturer and the distributor of the fitting, in addition to
API. The cases were consolidated by the Judicial Council of California as the
Commercial Row Cases, Judicial Council Coordination Proceeding No. 3096. All
of the complaints requested damages in unspecified amounts; some of the
complaints sought punitive damages as well as compensatory damages. All but
three of the claims have been settled; all such settlements were fully insured,
subject to a $500,000 self-insured retention. Although trial of the remaining
claims is scheduled to begin on February 24, 1997, the remaining claimants'
demands, in the aggregate, are immaterial to the Partnership.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) List of Exhibits
10.1 AmeriGas Propane, Inc. Executive Employee Severance Plan.
10.2 Form of Change of Control Agreement between AmeriGas Propane,
Inc. and Ms. D. L. Carter, and each of Messrs. E. V. N.
Bissell, R. P. Grady, W. D. Katz, R. H. Knauss, G. E. Regan
and D. C. Riggan.
27 Financial Data Schedule
(b) AmeriGas Partners, L.P. filed a Current Report on Form 8-K dated
November 19, 1996, reporting factors affecting forward-looking
statements under Item 5.
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<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrants have duly caused this report to be signed on their behalf by
the undersigned thereunto duly authorized.
AmeriGas Partners, L.P.
--------------------------------------
(Registrant)
By: AmeriGas Propane, Inc.,
as General Partner
Date: February 13, 1997 By: D. C. Riggan
- ------------------------ ----------------------------------------------
D. C. Riggan
Vice President - Finance & Accounting
AmeriGas Finance Corp.
-------------------------------------
(Registrant)
Date: February 13, 1997 By: D. C. Riggan
- ------------------------ ----------------------------------------------
D. C. Riggan
Vice President - Finance & Accounting
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<PAGE> 18
AMERIGAS PARTNERS, L.P.
EXHIBIT INDEX
10.1 AmeriGas Propane, Inc. Executive Employee Severance Plan
10.2 Form of Change of Control Agreement between AmeriGas Propane, Inc.,
and Ms. D. L. Carter and each of Messrs. E. V. N. Bissell,
R. P. Grady, W. D. Katz, R. H. Knauss, G. E. Regan and D. C. Riggan.
27 Financial Data Schedule
<PAGE> 1
AMERIGAS PROPANE, INC.
EXECUTIVE EMPLOYEE
SEVERANCE PAY PLAN
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Article No. Page No.
<S> <C>
I. Purpose and Term of Plan..................................................... 2
II. Definitions.................................................................. 3
III. Participation and Eligibility for Benefits................................... 5
IV. Benefit...................................................................... 6
V. Method and Duration of Benefit Payments...................................... 9
VI. Administration............................................................... 10
VII. Amendment and Termination.................................................... 12
VIII. Duties of the Company........................................................ 12
IX. Claims Procedures............................................................ 12
X. Miscellaneous................................................................ 14
Signatures.......................................................................... 16
</TABLE>
<PAGE> 3
ARTICLE I
PURPOSE AND TERM OF PLAN
Section 1.01 Purpose of the Plan. The AmeriGas Propane,
Inc. Executive Employee Severance Pay Plan (the "Plan"), as set forth herein,
is intended to alleviate, in part or in full, financial hardships which may be
experienced by certain of those employees of the Company whose employment is
terminated without fault in recognition of their past service to the Company.
In essence, benefits under the Plan are intended to be additional compensation
for past services or for the continuation of specified fringe benefits for a
transitional period. The amount or kind of benefit to be provided is to be
based on the Executive Employee's Compensation, as defined in Section 2.09
hereof, or the fringe benefit programs applicable to the Participant, at the
Participant's Employment Termination Date, as defined in Section 2.11 hereof.
The Plan is not intended to be included in the definitions of "employee pension
benefit plan" and "pension plan" set forth under Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). Rather, this Plan
is intended to meet the descriptive requirements of a plan constituting a
"severance pay plan" within the meaning of regulations published by the
Secretary of Labor at Title 29, Code of Federal Regulations, ss. 2510.3-2(b).
Accordingly, the benefits paid by the Plan are not deferred compensation.
Section 1.02 Term of the Plan. The Plan will continue
until such time as the Company, acting in its sole discretion, elects to
modify, supersede or terminate it in accordance with the further provisions
hereof.
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<PAGE> 4
ARTICLE II
DEFINITIONS
Section 2.01 "Affiliate" shall have the meaning ascribed
to such term in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange of 1934, as amended.
Section 2.02 "Benefit" or "Benefits" shall mean any or
all of the benefits that a Participant is entitled to receive pursuant to
Article IV of the Plan.
Section 2.03 "Board of Directors" shall mean the Board
of Directors of AmeriGas Propane, Inc., or any successor thereto.
Section 2.04 "Chairman of the Board" shall mean the
individual serving as the Chairman of the Board of Directors of AmeriGas
Propane, Inc. as of the date of reference.
Section 2.05 "Change of Control" shall mean a change of
control as defined in the form of the AmeriGas Propane, Inc. Change of Control
Agreement set forth in Appendix A hereto and as amended.
Section 2.06 "Chief Executive Officer" shall mean the
individual serving as the Chief Executive Officer of AmeriGas Propane, Inc. as
of the date of reference.
Section 2.07 "Committee" shall mean the administrative
committee designated pursuant to Article VI of the Plan to administer the Plan
in accordance with its terms.
Section 2.08 "Company" shall mean AmeriGas Propane,
Inc., a Pennsylvania corporation. The term "Company" shall include any
successor to AmeriGas Propane, Inc. or any subsidiary or Affiliate, which has
adopted the Plan, or a corporation succeeding to the business of AmeriGas
Propane, Inc., or any subsidiary or Affiliate, by merger, consolidation or
liquidation or purchase of assets or stock or similar transaction.
Section 2.09 "Compensation" shall mean the Participant's
annual base salary and applicable target annual bonus amount, if any, in effect
on the first day of the calendar quarter immediately preceding the
Participant's Employment Termination Date.
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<PAGE> 5
Section 2.10 "Employment Commencement Date" shall mean
the most recent day on which a Participant became an employee of the Company,
any Affiliate of the Company, or any entity whose business or assets have been
acquired by the Company, its Affiliates or by any predecessor of such entities,
unless the Committee determines to give credit for prior service, if any.
Section 2.11 "Employment Termination Date" shall mean
the date on which the current employment relationship between the Participant
and the Company is terminated.
Section 2.12 "ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as amended.
Section 2.13 "Executive Employee" shall mean any
individual employed by the Company at grade level thirty-six (36) or higher.
Section 2.14 "Just Cause" shall mean dismissal due to
misappropriation of funds, substance abuse, habitual insobriety, conviction of
a crime involving moral turpitude, or gross negligence in the performance of
duties, which gross negligence has had a material adverse effect on the
business, operations, assets, properties or financial condition of the Company
and its subsidiaries and Affiliates taken as a whole. Disputes with respect to
whether Just Cause exists shall be resolved in accordance with Article IX.
Section 2.15 "Participant" shall mean any Executive
Employee.
Section 2.16 "Plan" shall mean the AmeriGas Propane,
Inc. Executive Employee Severance Pay Plan, as set forth herein, and as the
same may from time to time be amended.
Section 2.17 "Plan Year" shall mean each fiscal year of
the Company during which this Plan is in effect.
Section 2.18 "Salary Continuation Period" shall equal
one business day for each month which is included in the Participant's Years of
Service plus the number of months of paid notice under Section 4.01(c) to a
maximum of fifteen (15) months (eighteen (18) months in the case of the Chief
Executive Officer).
Section 2.19 "Year of Service" shall mean each
twelve-month period (or part thereof) beginning on the Executive Employee's
Employment Commencement Date and ending on each anniversary thereof. Additional
Years
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<PAGE> 6
of Service based on earlier employment with the Company, any Affiliate of the
Company or any entity whose business or assets have been acquired by the
Company, its Affiliates or by any predecessor of such entities, shall be
counted only if permitted by the Committee.
ARTICLE III
PARTICIPATION
AND ELIGIBILITY FOR BENEFITS
Section 3.01 General Eligibility Requirement. In order
to receive a Benefit under this Plan, a Participant's employment must have been
terminated by the Company other than for Just Cause, death, or continuous
illness, injury or incapacity for a period of six consecutive months.
Section 3.02 Substantially Comparable Employment. In
the absence of a Change of Control, notwithstanding anything herein to the
contrary, no Benefits shall be due hereunder in connection with the disposition
of a business, division, or Affiliate by the Company or an Affiliate if
substantially comparable terms of employment, as determined by the Committee,
have been offered by the transferee; provided, however, that the Committee, in
such situation, may determine to have the Company provide any of the Benefits.
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<PAGE> 7
ARTICLE IV
BENEFIT
Section 4.01 Amount of Immediate Cash Benefit. The cash
amount to be paid to a Participant eligible to receive Benefits under Section
3.01 hereof, shall be paid in a lump sum as provided in Section 5.01 hereof and
shall equal the sum of the following, except that any payment under paragraph
(b) below that is based on annual financial performance will be excluded from
the lump sum payment and paid separately as provided below:
(a) An amount equal to the Participant's vacation
entitlement, including banked vacation time, and personal
holidays through the end of the Participant's Salary
Continuation Period;
(b) An amount equal to the Participant's annual
target bonus amount under the applicable annual bonus
plan (or its successor) for the current Plan Year
multiplied by the number of months elapsed in the current
Plan Year to his or her Employment Termination Date and
divided by twelve (12), together with any amounts
previously deferred by the Participant under such plan
(with interest thereon at the rate prescribed by such
plan) as well as any amounts due from the prior year
under such plan but not yet paid, provided, however, that
if the Employment Termination Date occurs in the last two
(2) months of the fiscal year, in lieu of the payment
described above, the amount to be paid pursuant to this
clause (b) shall be determined and paid after the end of
the fiscal year in accordance with the terms and
conditions of the applicable annual bonus plan as though
the Participant were still an Employee, except that the
weighting to be applied to the Participant's
business/financial performance goals under the annual
bonus plan will be deemed to be 100%; provided further,
however, that in the discretion of the Chief Executive
Officer, the amount payable pursuant to this paragraph
(b) may be computed in all cases for Employment
Termination Dates occurring during the first ten (10)
months of the fiscal year;
(c) In the case of the Chief Executive Officer, an
amount of paid notice equal to one hundred thirty (130)
times a fraction the numerator of which is the Chief
Executive Officer's Compensation and the denominator of
which is two hundred
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<PAGE> 8
sixty (260), and in the case of all other Participants,
paid notice calculated as an amount equal to sixty-five
(65) times a fraction the numerator of which is the
Participant's Compensation and the denominator of which
is two-hundred sixty (260);
(d) An amount equal to the number of the
Participant's Years of Service multiplied by twelve (12)
times a fraction the numerator of which is the
Participant's Compensation and the denominator of which
is two-hundred sixty (260); provided, however, that such
amount shall not exceed 100% of the Participant's
Compensation; and
(e) An amount equal to the Participant's
Distribution Equivalent under the AmeriGas Propane, Inc.
1997 Long-term Incentive Plan accrued through the Salary
Continuation Period.
Notwithstanding the foregoing language, the minimum payment pursuant to this
Plan shall not be less than six (6) months of base salary at the level in
effect on the beginning of the quarter immediately preceding the Employment
Termination Date, without regard for target bonus, for Participants in
employment grades 36-39 and one (1) year's base salary in effect on the
beginning of the quarter immediately preceding the Employment Termination Date,
without regard for target bonus, for Participants in employment grades 40 and
higher.
Section 4.02 Executive Benefits. The Participant shall
continue to be entitled, through the end of the Participant's Salary
Continuation Period, to those employee benefits and executive perquisites
listed below, and as in effect from time to time during the Salary Continuation
Period, if any, based upon the amount of coverage or benefit provided at the
Participant's Employment Termination Date:
(a) Basic Life Insurance;
(b) Supplemental Life Insurance;
(c) Medical Plan and Dental
Assistance Plan, including COBRA
continuation coverage;
(d) AmeriGas Propane, Inc. Supplemental Executive
Retirement Plan; and
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<PAGE> 9
(e) UGI Corporation Senior Executive Retirement
Plan, to the extent applicable.
In each case, when contributions are required of all Executive Employees at the
time of the Participant's Employment Termination Date, or thereafter, if
required of all other Executive Employees, the Participant shall be responsible
for making the required contributions, on an after-tax basis only, during the
Salary Continuation Period in order to be eligible for the coverage.
Notwithstanding the foregoing language, the Participant shall not be entitled
to make any Flexible Spending Account (child care or medical) contributions
during the Salary Continuation Period. In lieu of any or all of the coverages
provided under any of clauses (a) through (c) above, the Company may pay to the
Participant, at the time payment is otherwise to be made of cash Benefits
pursuant to Section 5.01 hereof, a single lump sum payment equal to the then
present value of the cost of such coverages. Notwithstanding anything herein to
the contrary, any such coverages shall be discontinued if, and at the time, the
Participant obtains other employment and becomes eligible to participate in the
plan of, or is provided similar coverage by, a new employer; provided, however,
that the Participant shall not be required to refund any sum to the Company
should a lump sum have been paid pursuant to the preceding sentence. Any
applicable conversion rights shall be provided to the Participant at the time
coverage ceases. The Committee shall determine to what extent, if any, any
other perquisites or benefit coverage such as tax preparation services, etc.
shall continue to be provided during the Salary Continuation Period and whether
the Participant shall be entitled to outplacement services or to receive title
to the Participant's Company-supplied automobile, if any, in which case the
value of the Participant's cash Benefit under Section 4.01 hereof shall be
increased accordingly, exclusive of sales tax.
Section 4.03 Retirement Plans. This Plan shall not
govern and shall in no way affect the Participant's interest in, or entitlement
to benefits under, any of the Company's "qualified" retirement plans, and any
payments received under any such plan shall not affect a Participant's right to
any Benefit hereunder.
Section 4.04 Effect on Other Benefits. There shall not
be drawn from the continued provision by the Company of any of the
aforementioned Benefits any implication of continued employment or of continued
right to accrual of retirement benefits under the Company's "qualified"
retirement plans or the AmeriGas Propane, Inc. 1997 Long-Term Incentive Plan,
and a Terminated Employee shall not, except as provided in Section 4.01 (a)
hereof, accrue vacation days, paid holidays, paid sick days or other similar
benefits normally associated with employment for any part of the Salary
Continuation Period during which benefits are payable under this Plan. The
benefits payable under this Plan shall
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<PAGE> 10
be in addition to and not in lieu of any payments or benefits due to the
Participant under any other plan, policy, or program of the Company, and its
subsidiaries, or Affiliates.
ARTICLE V
METHOD AND DURATION OF BENEFIT PAYMENTS
Section 5.01 Method of Payment. The cash Benefits to
which a Participant is entitled, as determined pursuant to Article IV hereof,
shall be paid in a lump sum. Payment shall be made by mailing to the last
address provided by the Participant to the Company. Payment shall be made
within thirty (30) days after the Participant's Employment Termination Date,
except as otherwise provided in Section 4.01 (b).
Section 5.02 Conditions to Entitlement to Benefit. In
order to be eligible to receive any Benefits hereunder, after the Participant's
Employment Termination Date, a Participant must be reasonably available to the
Company and cooperate in any reasonable manner (so as not to interfere
unreasonably with subsequent employment) in providing assistance to the Company
in conducting any matters which are pending at such time, and shall execute a
release and discharge of the Company and its subsidiaries and Affiliates from
any and all claims, demands or causes of action other than as to amounts or
benefits due to the Participant under any plan, program or contract provided
by, or entered into with, the Company. Such release and discharge shall be in
such form as is prescribed by the Committee and counsel for the Company and
shall be executed prior to the payment of any benefits due hereunder. In
addition, no benefits due hereunder shall be paid to a Participant who is
required by Company policy or practice to execute an agreement governing the
assignment of patents or a confidentiality or post-employment agreement unless
executed copies of such agreements are on file with the Company.
Section 5.03 Payments to Beneficiary(ies). Each
Participant shall designate a beneficiary(ies) to receive any Benefits due
hereunder in the event of the Participant's death prior to the receipt of all
such Benefits. Such beneficiary designation shall be made in the manner, and at
the time, prescribed by the Committee in its sole discretion. In the absence of
an effective beneficiary designation hereunder, the Participant's estate shall
be deemed to be the Participant's designated beneficiary.
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<PAGE> 11
ARTICLE VI
ADMINISTRATION
Section 6.01 Appointment. The Committee shall consist
of one (1) or more persons appointed by the Chairman of the Board. Committee
members may be, but need not be, employees of the Company, including the
Chairman of the Board and the Chief Executive Officer, whether or not they are
one and the same person.
Section 6.02 Tenure. Committee members shall serve at
the pleasure of the Chairman of the Board. Committee members may resign at any
time on ten (10) days' written notice, and Committee members may be discharged,
with or without cause, at any time by the Chairman of the Board.
Section 6.03 Authority and Duties. It shall be the duty
of the Committee, on the basis of information supplied to it by the Company, to
determine the eligibility of each Participant for Benefits under the Plan, to
determine the amount of Benefit to which each such Participant may be entitled,
and to determine the manner and time of payment of the Benefit consistent with
the provisions hereof. The Company shall make such payments as are certified to
it by the Committee to be due to Participants. The Committee shall have the
full power and authority to construe, interpret and administer the Plan, to
correct deficiencies therein, and to supply omissions. All decisions, actions,
and interpretations of the Committee shall be final, binding, and conclusive
upon the parties.
Section 6.04 Action by the Committee. A majority of the
members of the Committee shall constitute a quorum for the transaction of
business at a meeting of the Committee. Any action of the Committee may be
taken upon the affirmative vote of a majority of the members of the Committee
at a meeting, or at the direction of the Chairperson, without a meeting, by
mail, telegraph, telephone, or electronic communication device; provided that
all of the members of the Committee are informed of their right to vote on the
matter before the Committee and of the outcome of the vote thereon.
Section 6.05 Officers of the Committee. The Chairman of
the Board shall designate one of the members of the Committee to serve as
Chairperson thereof. The Chairman of the Board shall also designate a person to
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<PAGE> 12
serve as Secretary of the Committee, which person may be, but need not be, a
member of the Committee.
Section 6.06 Compensation of the Committee. Members of
the Committee shall receive no compensation for their services as such.
However, all reasonable expenses of the Committee shall be paid or reimbursed
by the Company upon proper documentation. The Company shall indemnify members
of the Committee against personal liability for actions taken in good faith in
the discharge of their respective duties as members of the Committee.
Section 6.07 Records, Reporting, and Disclosure. The
Committee shall keep all individual and group records relating to Participants
and former Participants and all other records necessary for the proper
operation of the Plan. Such records shall be made available to the Company and
to each Participant for examination during business hours except that a
Participant shall examine only such records as pertain exclusively to the
examining Participant and to the Plan. The Committee shall prepare and shall
file as required by law or regulation all reports, forms, documents and other
items required by ERISA, the Internal Revenue Code, and every other relevant
statute, each as amended, and all regulations thereunder (except that the
Company, as payor of the Benefits, shall prepare and distribute to the proper
recipients all forms relating to withholding of income or wage taxes, Social
Security taxes, and other amounts which may be similarly reportable).
Section 6.08 Actions of the Committee. Whenever a
determination is required of the Committee under the Plan, such determination
shall be made solely at the discretion of the Committee. In addition, the
exercise of discretion by the Committee need not be uniformly applied to
similarly situated Participants and shall be final and binding on each
Participant or beneficiary(ies) to whom the determination is directed.
Section 6.09 Benefits of the Chief Executive Officer.
Whenever a determination is required of the Committee under the Plan, the
individual then serving as the Chairman of the Board of Directors of UGI
Corporation shall be substituted for the Committee, and shall make the
determination with respect to, the Chief Executive Officer as to any matter
that directly pertains to, or affects, the Chief Executive Officer.
Section 6.10 Bonding. The Committee shall arrange any
bonding that may be required by law, but no amount in excess of the amount
required by law, if any, shall be required by the Plan.
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<PAGE> 13
ARTICLE VII
AMENDMENT AND TERMINATION
Section 7.01 Amendment, Suspension, and Termination.
The Company retains the right, at any time and from time to time, to amend,
suspend, or terminate the Plan in whole or in part, for any reason, and without
either the consent of or prior notification to any Participant. No such
amendment shall give the Company the right to recover any amount paid to a
Participant prior to the date of such amendment or to cause the cessation and
discontinuance of payments of Benefits to any person or persons under the Plan
already receiving Benefits.
ARTICLE VIII
DUTIES OF THE COMPANY
Section 8.01 Records. The Company shall supply to the
Committee all records and information necessary to the performance of the
Committee's duties.
Section 8.02 Payment. The Company shall make payments
from its general assets to Participants in accordance with the terms of the
Plan, as directed by the Committee.
ARTICLE IX
CLAIMS PROCEDURES
Section 9.01 Application for Benefits. Participants who
believe they are eligible for benefits under this Plan may apply for such
benefits by completing and filing with the Committee an application for
benefits on a form supplied by the Committee. Before the date on which benefit
payments commence, each such application must be supported by such information
as the Committee deems relevant and appropriate.
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<PAGE> 14
Section 9.02 Appeals of Denied Claims for Benefits. In
the event that any claim for benefits is denied in whole or in part, the
Participant (or beneficiary, if applicable) whose claim has been so denied
shall be notified of such denial in writing by the Committee. The notice
advising of the denial shall specify the reason or reasons for denial, make
specific reference to pertinent Plan provisions, describe any additional
material or information necessary for the claimant to perfect the claim
(explaining why such material or information is needed), and shall advise the
Participant of the procedure for the appeal of such denial. All appeals shall
be made by the following procedure:
(a) The Participant whose claim has been denied
shall file with the Committee a notice of desire to
appeal the denial. Such notice shall be filed within
sixty (60) days of notification by the Committee of claim
denial, shall be made in writing, and shall set forth all
of the facts upon which the appeal is based. Appeals not
timely filed shall be barred.
(b) The Committee shall, within thirty (30) days
of receipt of the Participant's notice of appeal,
establish a hearing date on which the Participant may
make an oral presentation to the Committee in support of
the Participant's appeal. The Participant shall be given
not fewer than ten (10) days' notice of the date set for
the hearing.
(c) The Committee shall consider the merits of
the claimant's written and oral presentations, the merits
of any facts or evidence in support of the denial of
benefits, and such other facts and circumstances as the
Committee shall deem relevant. If the claimant elects not
to make an oral presentation, such election shall not be
deemed adverse to the claimant's interest, and the
Committee shall proceed as set forth below as though an
oral presentation of the contents of the claimant's
written presentation had been made.
(d) The Committee shall render a determination
upon the appealed claim, within sixty (60) days of the
hearing date, which determination shall be accompanied by
a written statement as to the reasons therefor. The
determination so rendered shall be binding upon all
parties.
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<PAGE> 15
ARTICLE X
MISCELLANEOUS
Section 10.01 Nonalienation of Benefits. None of the
payments, benefits or rights of any Participant shall be subject to any claim
of any creditor, and, in particular, to the fullest extent permitted by law,
all such payments, benefits and rights shall be free from attachment,
garnishment, trustee's process, or any other legal or equitable process
available to any creditor of such Participant. No Participant shall have the
right to alienate, anticipate, commute, pledge, encumber or assign any of the
benefits or payments which the Participant may expect to receive, contingently
or otherwise, under this Plan.
Section 10.02 No Contract of Employment. Neither the
establishment of the Plan, nor any modification thereof, nor the creation of
any fund, trust or account, nor the payment of any benefits shall be construed
as giving any Participant, or any person whosoever, the right to be retained in
the service of the Company, and all Participants shall remain subject to
discharge to the same extent as if the Plan had never been adopted.
Section 10.03 Severability of Provisions. If any
provision of this Plan shall be held invalid or unenforceable, such invalidity
or unenforceability shall not affect any other provisions hereof, and this Plan
shall be construed and enforced as if such provisions had not been included.
Section 10.04 Successors, Heirs, Assigns, and Personal
Representatives. This Plan shall be binding upon the heirs, executors,
administrators, successors and assigns of the parties, including each
Participant, present and future. Unless the Committee directs otherwise, the
Company shall require any successor or successors (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company, or a division or Affiliate thereof,
(i) to acknowledge expressly that this Plan is binding upon and enforceable
against the Company in accordance with the terms hereof, (ii) to become jointly
and severally obligated with the Company to perform the obligations under this
Plan, and (iii) to agree not to amend or terminate the plan for a period of
three (3) years after the date of succession without the consent of the
affected Participant.
Section 10.05 Headings and Captions. The headings and
captions herein are provided for reference and convenience only, shall not be
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<PAGE> 16
considered part of the Plan, and shall not be employed in the construction of
the Plan.
Section 10.06 Gender and Number. Except where otherwise
clearly indicated by context, the masculine and the neuter shall include the
feminine and the neuter, the singular shall include the plural, and vice-versa.
Section 10.07 Unfunded Plan. The Plan shall not be
funded. The Company may, but shall not be required to, set aside or designate
an amount necessary to provide the Benefits specified herein (including the
establishment of trusts). In any event, no Participant shall have any right to,
or interest in, any assets of the Company which may be applied by the Company
to the payment of Benefits.
Section 10.08 Payments to Incompetent Persons, Etc. Any
benefit payable to or for the benefit of a minor, an incompetent person, or
other person incapable of receipting therefor shall be deemed paid when paid to
such person's guardian or to the party providing or reasonably appearing to
provide for the care of such person, and such payment shall fully discharge the
Company, the Committee and all other parties with respect thereto.
Section 10.09 Lost Payees. A benefit shall be deemed
forfeited if the Committee is unable to locate a Participant to whom a Benefit
is due. Such Benefit shall be reinstated if application is made by the
Participant for the forfeited Benefit while this Plan is in operation.
Section 10.10 Controlling Law. This Plan shall be
construed and enforced according to the laws of the Commonwealth of
Pennsylvania, to the extent not preempted by Federal law, without giving effect
to any Pennsylvania choice of law provisions.
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<PAGE> 17
IN WITNESS WHEREOF, the Company has caused the Plan to be
executed by its duly authorized officer and its corporate seal to be affixed
hereto as of the 27th day of January, 1997.
AMERIGAS PROPANE, INC.
Attest:
By:
- ------------------------ ------------------------------
Robert H. Knauss Diane L. Carter
Secretary Vice President - Human Resources
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FORM OF AMERIGAS PROPANE, INC.
CHANGE OF CONTROL AGREEMENT
A-1
(See Exhibit 10.2)
<PAGE> 1
AMERIGAS PROPANE, INC.
CHANGE OF CONTROL AGREEMENT
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
PAGE NO.
<S> <C>
Agreement........................................................................... 1
Introduction........................................................................ 1
Section 1. Definitions............................................................. 2
Section 2. Notice of Termination................................................... 11
Section 3. Severance Compensation upon Termination................................. 12
Section 4. Other Payments.......................................................... 13
Section 5. Trust Fund.............................................................. 13
Section 6. Enforcement............................................................. 13
Section 7. No Mitigation........................................................... 14
Section 8. Non-exclusivity of Rights............................................... 14
Section 9. No Set-Off.............................................................. 14
Section 10. Taxes.................................................................. 15
Section 11. Certain Reduction of Payments.......................................... 15
Section 12. Term of Agreement...................................................... 17
Section 13. Successor Company...................................................... 18
Section 14. Notice................................................................. 19
Section 15. Governing Law.......................................................... 20
Section 16. Contents of Agreement, Amendment, and Assignment....................... 20
Section 17. No Right to Continued Employment....................................... 20
Section 18. Successors and Assigns................................................. 20
Section 19. Severability........................................................... 21
Section 20. Remedies Cumulative; No Waiver......................................... 21
Section 21. Miscellaneous.......................................................... 21
Section 22. Arbitration............................................................ 22
Signatures.......................................................................... 23
</TABLE>
(i)
<PAGE> 3
AGREEMENT
Agreement made as of the 27th day of January, 1997, between AmeriGas
Propane, Inc., a Pennsylvania corporation (the "Company"), and
___________________________________ (the "Employee").
INTRODUCTION
The Employee is presently employed by the Company as its
___________________________________. The Company is an indirect wholly owned
subsidiary of UGI Corporation, a Pennsylvania corporation ("UGI"), and is the
General Partner of AmeriGas Partners, L.P. and AmeriGas Propane, L.P., Delaware
limited partnerships (the "Public Partnership" and the "Operating Partnership,"
respectively).
The Company considers it essential to foster the employment
of well qualified key management personnel, and, in this regard, the board of
directors of the Company recognizes that, as is the case with many legal
entities with publicly held securities, the possibility of a change in control
affecting UGI or the Company may exist and that such possibility, and the
uncertainty and questions which it may raise among management, may result in
the departure or distraction of key management personnel to the detriment of
the Company.
The board of directors of the Company has determined that
appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of key members of the Company's management to their
assigned duties without distraction in the face of potentially disturbing
circumstances arising from the possibility of a change in control of the
Company, although no such change is now contemplated.
<PAGE> 4
In order to induce the Employee to remain in the employ of
the Company, the Company agrees that the Employee shall receive the
compensation set forth in this Agreement in the event the Employee's employment
with the Company is terminated subsequent to a "Change of Control" (as defined
in Section 1 hereof) of the Company as a cushion against the financial and
career impact on the Employee of any such Change of Control.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements hereinafter set forth and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Definitions. For all purposes of this Agreement,
the following terms shall have the meanings specified in this Section unless
the context clearly otherwise requires:
(a) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
(b) "Base Compensation" shall mean the average of the total
cash remuneration received by the Employee in all capacities with the Company,
and its Subsidiaries or Affiliates, as reported for Federal income tax purposes
on Form W-2, together with any amounts the payment of which has been deferred
by the Employee under any deferred compensation plan of the Company, and its
Subsidiaries or Affiliates, or otherwise and any and all salary reduction
authorized amounts under any of the benefit plans or programs of the Company,
and its Subsidiaries or Affiliates, but excluding any amounts attributable to
the exercise of stock options granted to the Employee under any UGI Stock
Option and Dividend
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Equivalent Plan, UGI's 1992 Non-qualified Stock Option Plan, or grants of Units
made under the AmeriGas Propane, Inc. Long-term Incentive Plan, or their
successors, for the five (5) calendar years (or such number of actual full
calendar years of employment, if less than five (5)) immediately preceding the
calendar year in which occurs a Change of Control or the Employee's Termination
Date, whichever period produces the higher amount.
(c) A Person shall be deemed the "Beneficial Owner" of any
securities: (i) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether such
right is exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding (whether or not in writing) or upon
the exercise of conversion rights, exchange rights, rights, warrants or
options, or otherwise; provided, however, that a Person shall not be deemed the
"Beneficial Owner" of securities tendered pursuant to a tender or exchange
offer made by such Person or any of such Person's Affiliates or Associates
until such tendered securities are accepted for payment, purchase or exchange;
(ii) that such Person or any of such Person's Affiliates or Associates,
directly or indirectly, has the right to vote or dispose of or has "beneficial
ownership" of (as determined pursuant to Rule 13d-3 of the General Rules and
Regulations under the Exchange Act), including without limitation pursuant to
any agreement, arrangement or understanding, whether or not in writing;
provided, however, that a Person shall not be deemed the "Beneficial Owner" of
any security under this clause (ii) as a result of an oral or written
agreement, arrangement or understanding to vote such security if such
agreement, arrangement or understanding (A) arises solely from a revocable
proxy given in response to a public proxy or consent solicitation made
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pursuant to, and in accordance with, the applicable provisions of the General
Rules and Regulations under the Exchange Act, and (B) is not then reportable by
such Person on Schedule 13D under the Exchange Act (or any comparable or
successor report); or (iii) that are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate thereof) with
which such Person (or any of such Person's Affiliates or Associates) has any
agreement, arrangement or understanding (whether or not in writing) for the
purpose of acquiring, holding, voting (except pursuant to a revocable proxy as
described in the proviso to clause (ii) above) or disposing of any securities;
provided, however, that nothing in this Section 1(c) shall cause a Person
engaged in business as an underwriter of securities to be the "Beneficial
Owner" of any securities acquired through such Person's participation in good
faith in a firm commitment underwriting until the expiration of forty (40) days
after the date of such acquisition.
(d) "Board" shall mean the board of directors of the
Company.
(e) "Cause" shall mean 1) misappropriation of
funds, 2) substance abuse or habitual insobriety, 3) conviction of a crime
involving moral turpitude, or 4) gross negligence in the performance of
duties, which gross negligence has had a material adverse effect on the
business, operations, assets, properties or financial condition of the
Company or the Public or Operating Partnerships.
(f) "Change of Control" shall mean:
i. Any Person (except the Employee, his
Affiliates and Associates, UGI, any Subsidiary of UGI, any employee benefit
plan of UGI or of any Subsidiary of UGI, or
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any Person or entity organized, appointed or established by UGI for or pursuant
to the terms of any such employee benefit plan), together with all Affiliates
and Associates of such Person, becomes the Beneficial Owner in the aggregate of
twenty percent (20%) or more of either (i) the then outstanding shares of
common stock of UGI (the "Outstanding UGI Common Stock") or (ii) the combined
voting power of the then outstanding voting securities of UGI entitled to vote
generally in the election of directors (the "UGI Voting Securities"), in either
case unless the members of the Board in office immediately prior to such
acquisition determine within five (5) business days of the receipt of actual
notice of such acquisition that the circumstances do not warrant the
implementation of the provisions of this Agreement; or
ii. Individuals who, as of the beginning of
any twenty-four (24) month period, constitute the UGI Board (the "Incumbent
UGI Board") cease for any reason to constitute at least a majority of the
Incumbent UGI Board, provided that any individual becoming a director of UGI
subsequent to the beginning of such period whose election or nomination for
election by the UGI stockholders was approved by a vote of at least a majority
of the directors then comprising the Incumbent UGI Board shall be considered as
though such individual were a member of the Incumbent UGI Board, but excluding,
for this purpose, any such individual whose initial assumption of office is in
connection with an actual or threatened election contest relating to the
election of the Directors of UGI (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act), unless the members of the
Board in office immediately before such cessation determine that the
circumstances do not warrant the implementation of the provisions of this
Agreement; or
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iii. Completion by UGI of a reorganization,
merger or consolidation (a "Business Combination"), in each case, with
respect to which all or substantially all of the individuals and entities who
were the respective Beneficial Owners of the Outstanding UGI Common Stock and
UGI Voting Securities immediately prior to such Business Combination do not,
following such Business Combination, Beneficially Own, directly or indirectly,
more than fifty percent (50%) of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination in
substantially the same proportion as their ownership immediately prior to such
Business Combination of the Outstanding UGI Common Stock and UGI Voting
Securities, as the case may be, in any such case unless the members of the
Board in office immediately prior to such Business Combination determine at the
time of such Business Combination that the circumstances do not warrant the
implementation of the provisions of this Agreement; or
iv. (a) Completion of a complete liquidation or
dissolution of UGI or (b) sale or other disposition of all or substantially
all of the assets of UGI other than to a corporation with respect to which,
following such sale or disposition, more than fifty percent (50%) of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors is then owned beneficially, directly or
indirectly, by all or substantially all of the individuals and entities who
were the Beneficial Owners, respectively, of the Outstanding UGI Common Stock
and UGI Voting Securities immediately prior to such sale or disposition in
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substantially the same proportion as their ownership of the Outstanding UGI
Common Stock and UGI Voting Securities, as the case may be, immediately prior
to such sale or disposition, in any such case unless the members of the Board
in office immediately prior to such sale or disposition determine at the time
of such sale or disposition that the circumstances do not warrant the
implementation of the provisions of this Agreement; or
v. Completion by the Company, Public
Partnership or the Operating Partnership of a reorganization, merger or
consolidation (a "Propane Business Combination"), in each case, with respect to
which all or substantially all of the individuals and entities who were the
respective Beneficial Owners of the Company's voting securities or of the
outstanding units of AmeriGas Partners, L.P. ("Outstanding Units") immediately
prior to such Propane Business Combination do not, following such Propane
Business Combination, Beneficially Own, directly or indirectly, (a) if the
entity resulting from such Propane Business Combination is a corporation, more
than fifty percent (50%) of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the case
may be, of such corporation in substantially the same proportion as their
ownership immediately prior to such Combination of the Company's voting
securities or the Outstanding Units, as the case may be, or, (b) if the entity
resulting from such Propane Business Combination is a partnership, more than
fifty percent (50%) of the then outstanding common units of such partnership in
substantially the same proportion as their ownership immediately prior to such
Propane Business Combination of the Company's voting securities or the
Outstanding Units, as the case may be,
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unless, in any case, the members of the Board in office immediately prior to
such Combination determine at the time of such Combination that the
circumstances do not warrant the implementation of the provisions of this
Agreement; or
vi. (a) Completion of a complete liquidation or
dissolution of the Company, the Public Partnership or the Operating
Partnership or (b) sale or other disposition of all or substantially all of the
assets of the Company, the Public Partnership or the Operating Partnership
other than to an entity with respect to which, following such sale or
disposition, (I) if such entity is a corporation, more than fifty percent (50%)
of, respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors is then owned beneficially, directly or
indirectly, by all or substantially all of the individuals and entities who
were the Beneficial Owners, respectively, of the Company's voting securities or
of the Outstanding Units, as the case may be, immediately prior to such sale or
disposition in substantially the same proportion as their ownership of the
Company's voting securities or of the Outstanding Units, as the case may be,
immediately prior to such sale or disposition, or, (II) if such entity is a
partnership, more than fifty percent (50%) of the then outstanding common units
is then owned beneficially, directly or indirectly, by all or substantially all
of the individuals and entities who were the Beneficial Owners, respectively,
of the Company's voting securities or of the Outstanding Units, as the case may
be, immediately prior to such sale or disposition in substantially the same
proportion as their ownership of the Company's voting securities or of the
Outstanding Units immediately prior to such sale or disposition, unless, in any
case, the members of the Board in office
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immediately prior to such sale or disposition determine at the time of such
sale or disposition that the circumstances do not warrant the implementation of
the provisions of this Agreement; or
vii. UGI and its Subsidiaries fail to own more
than fifty percent (50%) of the then outstanding general partnership interests
of the Public Partnership or the Operating Partnership, unless, in any case,
the members of the Board in office immediately prior to such failure determine
at the time of such failure that the circumstances do not warrant the
implementation of the provisions of this Agreement; or
viii. UGI and its Subsidiaries fail to own more
than fifty percent (50%) of the then outstanding shares of common stock of the
Company or more than fifty percent (50%) of the combined voting power of the
then outstanding voting securities of the Company entitled to vote generally in
the election of directors, unless, in any case, the members of the Board in
office immediately prior to such failure determine at the time of such failure
that the circumstances do not warrant the implementation of the provisions of
this Agreement; or
ix. The Company is removed as the general
partner of the Public Partnership by vote of the limited partners of the
Public Partnership, or is removed as the general partner of the Public
Partnership or the Operating Partnership as a result of judicial or
administrative proceedings involving the Company, the Public Partnership or the
Operating Partnership.
(g) "Fair Market Value" of Common Units shall mean the
average of the closing sales price thereof on the New York Stock Exchange for
the five (5) trading days preceding the
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Change of Control as reported on the Composite Tape for transactions on the New
York Stock Exchange.
(h) "Good Reason Termination" shall mean a Termination of
Employment initiated by the Employee upon one or more of the following
occurrences:
(i) any failure of the Company to comply with
and satisfy any of the terms of this Agreement;
(ii) any significant involuntary reduction
of the authority, duties or responsibilities held by
the Employee immediately prior to the Change of Control;
(iii) any involuntary removal of the Employee from
the employment grade, compensation level, or officer
positions which the Employee holds with the Company or, if
the Employee is employed by a Subsidiary, with a Subsidiary,
held by him immediately prior to the Change of Control,
except in connection with promotions to higher office;
(iv) any involuntary reduction in the Employee's
target level of annual and long-term compensation as in
effect immediately prior to the Change of Control;
(v) any transfer of the Employee, without his
express written consent, to a location which is outside the
King of Prussia, Pennsylvania area (or the general area in
which his principal place of business immediately preceding
the Change of Control may be located at such time if other
than King of Prussia,
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Pennsylvania) by more than fifty miles, other than on a
temporary basis (less than twelve (12) months); and
(vi) the Employee's being required to undertake
business travel to an extent substantially greater than the
Employee's business travel obligations immediately prior to
the Change of Control.
(i) "Person" shall mean an individual or a corporation,
partnership, trust, unincorporated organization, association, or other entity.
(j) "Subsidiary" shall mean any corporation in which UGI or
the Company, as applicable, directly or indirectly, owns at least a fifty
percent (50%) interest or an unincorporated entity of which UGI or the Company,
as applicable, directly or indirectly, owns at least fifty percent (50%) of the
profits or capital interests.
(k) "Termination Date" shall mean the date of receipt of the
Notice of Termination described in Section 2 hereof or any later date specified
therein, as the case may be.
(l) "Termination of Employment" shall mean the termination of
the Employee's actual employment relationship with the Company and its
Subsidiaries or Affiliates.
(m) "UGI Board" shall mean the Board of Directors of
UGI.
2. Notice of Termination. Any Termination of Employment
following a Change of Control shall be communicated by a Notice of Termination
to the other party hereto given in accordance with Section 14 hereof. For
purposes of this Agreement, a "Notice of Termination" means a written notice
which (i) indicates the specific provision in this Agreement relied upon, (ii)
briefly summarizes the facts and circumstances deemed to provide a basis for
the
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Employee's Termination of Employment under the provision so indicated, and
(iii) if the Termination Date is other than the date of receipt of such notice,
specifies the Termination Date (which date shall not be more than fifteen (15)
days after the giving of such notice).
3. Severance Compensation upon Termination.
(a) Subject to the provisions of Section 11 hereof, in the
event of the Employee's involuntary Termination of Employment for any reason
other than Cause or in the event of a Good Reason Termination, in either event
within three (3) years after a Change of Control, the Company shall pay to the
Employee, upon the execution of a release, in the form required by the Company
of its terminating executives prior to the Change of Control, within fifteen
(15) days after the Termination Date (or as soon as possible thereafter in the
event that the procedures set forth in Section 11(b) hereof cannot be completed
within fifteen (15) days), (i) an amount in cash equal to one (1.0) times the
Employee's Base Compensation, and (ii) unless payment shall already have been
made pursuant to the AmeriGas Propane, Inc. 1997 Long-term Incentive Plan, an
amount equal to 110% of the Fair Market Value, as of the date of the Change of
Control, of the Common Units subject to a grant which the Participant was
awarded pursuant to the Plan, provided, however, that if the Change of Control
occurs on or after October 1, 2000, the percentage of the Fair Market Value of
Common Units to be used to calculate the amount payable pursuant to this clause
(ii) shall be 50%, in each case multiplied by a fraction not to exceed one (1)
the numerator of which is the number of months commencing with the later of
October 1, 1996 or the Employee's date of hire and continuing through the
Salary Continuation
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Period and the denominator of which is thirty-six (36), subject to customary
employment taxes and deductions.
(b) In the event the Employee's 65th birthday would occur
prior to twelve (12) months after the Termination Date, the aggregate cash
amount determined as set forth in (a) above shall be reduced by multiplying it
by a fraction, the numerator of which shall be the number of days from the
Termination Date to the Employee's 65th birthday and the denominator of which
shall be 365 days. No payment under (a) above shall be made to the Employee if
the Termination Date occurs on or after the Employee's 65th birthday.
4. Other Payments. The payment due under Section 3
hereof shall be in addition to and not in lieu of any payments or benefits
due to the Employee under any other plan, policy, or program of the
Company, and its Subsidiaries or Affiliates, in effect at the time of the
Change of Control.
5. Trust Fund. The Company sponsors an irrevocable trust
fund pursuant to a trust agreement to hold assets to satisfy its obligations
to employees under this Agreement. Funding of such trust fund shall occur as
set forth in the agreement pursuant to which the fund has been established.
6. Enforcement.
(a) In the event that the Company shall fail or refuse to
make payment of any amounts due the Employee under Sections 3 and 4 hereof
within the respective time periods provided therein, the Company shall pay to
the Employee, in addition to the payment of any other sums provided in this
Agreement, interest, compounded daily, on any amount remaining
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unpaid from the date payment is required under Section 3 or 4, as appropriate,
until paid to the Employee, at the rate from time to time announced by Mellon
Bank, N.A. as its "prime rate" plus one percent (1%), each change in such rate
to take effect on the effective date of the change in such prime rate.
(b) It is the intent of the parties that the Employee not be
required to incur any expenses associated with the enforcement of his rights
under this Agreement by arbitration, litigation, or other legal action because
the cost and expense thereof would substantially detract from the benefits
intended to be extended to the Employee hereunder. Accordingly, the Company
shall pay the Employee on demand the amount necessary to reimburse the Employee
in full for all reasonable expenses (including all attorneys' fees and legal
expenses) incurred by the Employee in enforcing any of the obligations of the
Company under this Agreement.
7. No Mitigation. The Employee shall not be required to
mitigate the amount of any payment or benefit provided for in this Agreement by
seeking other employment or otherwise, nor shall the amount of any payment or
benefit provided for herein be reduced by any compensation earned by other
employment or otherwise.
8. Non-exclusivity of Rights. Nothing in this Agreement shall
prevent or limit the Employee's continuing or future participation in or rights
under any benefit, bonus, incentive, or other plan or program provided by the
Company, or any of its Subsidiaries or Affiliates, and for which the Employee
may qualify.
9. No Set-Off. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by
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any circumstances, including, without limitation, any set-off, counterclaim,
recoupment, defense, or other right which the Company may have against the
Employee or others.
10. Taxes. Any payment required under this Agreement
shall be subject to all requirements of the law with regard to the withholding
of taxes, filing, making of reports and the like, and the Company shall use
its best efforts to satisfy promptly all such requirements.
11. Certain Reduction of Payments.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event that it shall be determined that any payment or
distribution by the Company to or for the benefit of the Employee, whether paid
or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise (a "Payment"), would constitute an "excess parachute
payment" within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), the aggregate present value of amounts payable
or distributable to or for the benefit of the Employee pursuant to this
Agreement (such payments or distributions pursuant to this Agreement are
hereinafter referred to as "Agreement Payments") shall be reduced (but not
below zero) to the Reduced Amount. The "Reduced Amount" shall be an amount
expressed in present value which maximizes the aggregate present value of
Agreement Payments without causing any Payment to be subject to the taxation
under Section 4999 of the Code. For purposes of this Section 11, present value
shall be determined in accordance with Section 280G(d)(4) of the Code, as it
may be amended, or the successor section, in effect at the time of the
determination.
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(b) All determinations to be made under this Section 11 shall
be made by Coopers & Lybrand (or the Company's independent public accountant
immediately prior to the Change of Control if other than Coopers & Lybrand and
Coopers & Lybrand declines or is unable to serve (the "Accounting Firm")),
which firm shall provide its determinations and any supporting calculations
both to the Company and the Employee within ten (10) days of the Termination
Date. Any such determination by the Accounting Firm shall be binding upon the
Company and the Employee. The Employee shall then have the right to determine
which of the Agreement Payments shall be eliminated or reduced in order to
produce the Reduced Amount in accordance with the requirements of this Section.
Within five (5) days after this determination, the Company shall pay (or cause
to be paid) or distribute (or cause to be distributed) to or for the benefit of
the Employee such amounts as are then due to the Employee under this Agreement.
(c) As a result of the uncertainty in the application of
Section 280G of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Agreement Payments, as the case
may be, will have been made by the Company which should not have been made
("Overpayment") or that additional Agreement Payments which have not been made
by the Company could have been made ("Underpayment"), in each case, consistent
with the calculations required to be made hereunder. Within two (2) years after
the Termination of Employment, the Accounting Firm shall review the
determination made by it pursuant to the preceding paragraph and the Company
shall cooperate and provide all information necessary for such review. In the
event that the Accounting Firm determines that an Overpayment has been
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made, any such Overpayment shall be treated for all purposes as a loan to the
Employee which the Employee shall repay to the Company together with interest
from the date of payment under this Agreement at the applicable Federal rate
provided for in Section 7872(f)(2) of the Code (the "Federal Rate"); provided,
however, that no amount shall be payable by the Employee to the Company if and
to the extent such payment would not reduce the amount which is subject to
taxation under Section 4999 of the Code. In the event that the Accounting Firm
determines that an Underpayment has occurred, any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Employee together
with interest from the date of payment under this Agreement at the Federal
Rate.
(d) All of the fees and expenses of the Accounting Firm in
performing the determinations referred to in subsections (b) and (c) above
shall be borne solely by the Company. The Company agrees to indemnify and hold
harmless the Accounting Firm of and from any and all claims, damages and
expenses resulting from or relating to its determinations pursuant to
subsections (b) and (c) above, except for claims, damages or expenses resulting
from the gross negligence or willful misconduct of the Accounting Firm.
12. Term of Agreement. The term of this Agreement shall be
for five (5) years from the date hereof and shall be automatically renewed for
successive one (1) year periods unless the Company notifies the Employee in
writing that this Agreement will not be renewed at least sixty (60) days prior
to the end of the current term; provided, however, that (i) after a Change of
Control during the term of this Agreement, this Agreement shall remain in
effect until all of the obligations of the parties hereunder are satisfied or
have expired, and (ii) this
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Agreement shall terminate if, prior to a Change of Control, the employment of
the Employee with the Company or any of its Subsidiaries, as the case may be,
shall terminate for any reason.
13. Successor Company. The Company shall require any
successor or successors (whether direct or indirect, by purchase, merger or
otherwise) to all or substantially all of the business and/or assets of the
Company, by agreement in form and substance satisfactory to the Employee, to
acknowledge expressly that this Agreement is binding upon and enforceable
against the Company in accordance with the terms hereof, and to become jointly
and severally obligated with the Company to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform if
no such succession or successions had taken place. Failure of the Company to
notify the Employee in writing as to such successorship, to provide the
Employee the opportunity to review and agree to the successor's assumption of
this Agreement or to obtain such agreement prior to the effectiveness of any
such succession shall be a breach of this Agreement. As used in this Agreement,
the Company shall mean the Company as hereinbefore defined and any such
successor or successors to its business and/or assets, jointly and severally.
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14. Notice. All notices and other communications
required or permitted hereunder or necessary or convenient in connection
herewith shall be in writing and shall be delivered personally or mailed by
registered or certified mail, return receipt requested, or by overnight express
courier service, as follows:
If to the Company, to:
AmeriGas Propane, Inc.
460 North Gulph Road
King of Prussia, PA 19406
Attention: Corporate Secretary
If to the Employee, to:
or to such other names or addresses as the Company or the Employee, as the case
may be, shall designate by notice to the other party hereto in the manner
specified in this Section; provided, however, that if no such notice is given
by the Company following a Change of Control, notice at the last address of the
Company or to any successor pursuant to Section 13 hereof shall be deemed
sufficient for the purposes hereof. Any such notice shall be deemed delivered
and effective when received in the case of personal delivery, five (5) days
after deposit, postage prepaid, with the U.S. Postal Service in the case of
registered or certified mail, or on the next business day in the case of
overnight express courier service.
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15. Governing Law. This Agreement shall be governed by
and interpreted under the laws of the Commonwealth of Pennsylvania without
giving effect to any conflict of laws provisions.
16. Contents of Agreement, Amendment, and Assignment. This
Agreement supersedes all prior agreements, sets forth the entire understanding
between the parties hereto with respect to the subject matter hereof and cannot
be changed, modified, extended or terminated except upon written amendment
executed by the Employee and the Company's Chief Executive Officer. The
provisions of this Agreement may require a variance from the terms and
conditions of certain compensation or bonus plans under circumstances where
such plans would not provide for payment thereof in order to obtain the maximum
benefits for the Employee. It is the specific intention of the parties that the
provisions of this Agreement shall supersede any provisions to the contrary in
such plans, and such plans shall be deemed to have been amended to correspond
with this Agreement without further action by the Company or the Board.
17. No Right to Continued Employment. Nothing in this
Agreement shall be construed as giving the Employee any right to be retained
in the employ of the Company and its Affiliates.
18. Successors and Assigns. All of the terms and provisions
of this Agreement shall be binding upon and inure to the benefit of and be
enforceable by the respective heirs, representatives, successors and assigns of
the parties hereto, except that the duties and responsibilities of the Employee
and the Company hereunder shall not be assignable in whole or in part.
-20-
<PAGE> 23
19. Severability. If any provision of this Agreement or
application thereof to anyone or under any circumstances shall be determined to
be invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions or applications of this Agreement which can be
given effect without the invalid or unenforceable provision or application.
20. Remedies Cumulative; No Waiver. No right conferred upon
the Employee by this Agreement is intended to be exclusive of any other right
or remedy, and each and every such right or remedy shall be cumulative and
shall be in addition to any other right or remedy given hereunder or now or
hereafter existing at law or in equity. No delay or omission by the Employee in
exercising any right, remedy or power hereunder or existing at law or in equity
shall be construed as a waiver thereof.
21. Miscellaneous. All section headings are for
convenience only. This Agreement may be executed in several counterparts,
each of which is an original. It shall not be necessary in making proof of
this Agreement or any counterpart hereof to produce or account for any of the
other counterparts.
-21-
<PAGE> 24
22. Arbitration. In the event of any dispute under the
provisions of this Agreement other than a dispute in which the sole relief
sought is an equitable remedy such as an injunction, the parties shall be
required to have the dispute, controversy or claim settled by arbitration in
King of Prussia, Pennsylvania, or such other location as the parties mutually
agree, in accordance with the commercial arbitration rules then in effect of
the American Arbitration Association, before one arbitrator who shall be an
executive officer or former executive officer of a publicly traded corporation,
selected by the parties. The arbitrator shall prepare a written opinion
containing the reasons and basis supporting his decision. Any award entered by
the arbitrator shall be final, binding and nonappealable and judgment may be
entered thereon by either party in accordance with applicable law in any court
of competent jurisdiction. This arbitration provision shall be specifically
enforceable. The arbitrator shall have no authority to modify any provision of
this Agreement or to award a remedy for a dispute involving this Agreement
other than a benefit specifically provided under or by virtue of the Agreement.
The Company shall be responsible for all of the fees of the American
Arbitration Association and the arbitrator and any expenses relating to the
conduct of the arbitration (including reasonable attorneys' fees and expenses).
-22-
<PAGE> 25
IN WITNESS WHEREOF, the undersigned, intending to be legally
bound, have executed this Agreement as of the date first above written.
ATTEST:
[Seal] AMERIGAS PROPANE, INC.
By
- ----------------------- -------------------------
Robert H. Knauss Lon R. Greenberg
Secretary Its: Chariman, President and
Chief Executive Officer
- ----------------------- ---------------------------
Witness Employee
-23-
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Condensed Consolidated Balance Sheet and Statement of Operations of Amerigas
Partners L.P. as of and for the three months ended December 31, 1996 and is
qualified in its entirety by reference to such financial statements included
in Amerigas Partners' Quarterly Report on Form 10-Q for the quarter ended
December 31, 1996.
</LEGEND>
<CIK> 0000932628
<NAME> AMERIGAS PARTNERS, L.P.
[CIK] 0000945792
[NAME] AMERIGAS FINANCE CORP.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 23,689
<SECURITIES> 0
<RECEIVABLES> 159,578
<ALLOWANCES> 7,265
<INVENTORY> 93,767
<CURRENT-ASSETS> 294,234
<PP&E> 598,798
<DEPRECIATION> 147,455
<TOTAL-ASSETS> 1,457,690
<CURRENT-LIABILITIES> 242,295
<BONDS> 691,074
0
0
<COMMON> 0
<OTHER-SE> 459,003
<TOTAL-LIABILITY-AND-EQUITY> 1,457,690
<SALES> 360,116
<TOTAL-REVENUES> 360,116
<CGS> 204,708
<TOTAL-COSTS> 204,708
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 16,706
<INCOME-PRETAX> 40,993
<INCOME-TAX> 608
<INCOME-CONTINUING> 39,951
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 39,951
<EPS-PRIMARY> .95
<EPS-DILUTED> .95
</TABLE>
