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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1997
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 IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
460 North Gulph Road, King of Prussia, PA 19406 (ADDRESS OF
PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(610) 337-7000
(REGISTRANTS' TELEPHONE NUMBER, INCLUDING AREA CODE)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
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NAME OF EACH EXCHANGE
TITLE OF CLASS ON WHICH REGISTERED
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Common Units representing New York Stock Exchange,Inc.
limited partner interests
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SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None
INDICATE BY CHECK MARK WHETHER EACH 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 [ ].
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405
OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K. [X]
The aggregate market value of AmeriGas Partners, L.P. Common Units held by
nonaffiliates of AmeriGas Partners, L.P. on December 1, 1997 was approximately
$460,122,910. At December 1, 1997 there were outstanding 22,060,407 Common Units
and 19,782,146 Subordinated Units, each representing limited partner interests.
DOCUMENTS INCORPORATED BY REFERENCE: Portions of the AmeriGas Partners, L.P.
Annual Report for the year ended September 30, 1997 are incorporated by
reference in Part II of this Form 10-K.
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TABLE OF CONTENTS
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PART I BUSINESS PAGE
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Items 1 and 2 Business and Properties.......................... 1
Item 3 Legal Proceedings................................ 11
Item 4 Submission of Matters to a Vote of
Security Holders................................. 12
PART II SECURITIES AND FINANCIAL INFORMATION
Item 5 Market for Registrant's Common Equity
and Related Security Holder Matters.............. 12
Item 6 Selected Financial Data.......................... 14
Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations.............. 17
Item 8 Financial Statements and Supplementary
Data............................................. 29
Item 9 Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure........... 29
PART III MANAGEMENT AND SECURITY HOLDERS
Item 10 Directors and Executive Officers of the
General Partner.................................. 29
Item 11 Executive Compensation........................... 33
Item 12 Security Ownership of Certain Beneficial
Owners and Management............................ 47
Item 13 Certain Relationships and Related
Transactions..................................... 50
PART IV ADDITIONAL EXHIBITS, SCHEDULES AND REPORTS
Item 14 Exhibits, Financial Statement Schedules
and Reports on Form 8-K.......................... 51
Signatures....................................... 58
Index to Financial Statements
and Financial Statement Schedules............... F-2
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PART I: BUSINESS
ITEMS 1 AND 2. BUSINESS AND PROPERTIES
GENERAL
AmeriGas Partners, L.P. ("AmeriGas Partners") is a publicly traded
Delaware limited partnership formed on November 2, 1994. AmeriGas Partners
conducts its business principally through its subsidiary, AmeriGas Propane, L.P.
(the "Operating Partnership"), a Delaware limited partnership. AmeriGas Partners
and the Operating Partnership are referred to collectively as the "Partnership."
On April 19, 1995, the Operating Partnership acquired the propane distribution
businesses and assets of AmeriGas Propane, Inc., a Delaware corporation,
AmeriGas Propane-2, Inc. (collectively, "AGP" or "AmeriGas Propane") and
Petrolane Incorporated, a California corporation ("Petrolane," and together with
AGP, the "Predecessors") (the "Partnership Formation") in connection with a
concurrent initial public offering of common units by AmeriGas Partners. Unless
the context otherwise requires, references to "AmeriGas Partners" and the
"Partnership" include the Operating Partnership, its Predecessors and its
subsidiaries.
AmeriGas Propane, Inc. (the "General Partner"), a Pennsylvania corporation
and an indirect, wholly owned subsidiary of UGI Corporation ("UGI"), serves as
the sole general partner of AmeriGas Partners and the Operating Partnership. In
addition to its aggregate 2% general partner interest in the Partnership, the
General Partner and its affiliates own an aggregate 56.5% limited partner
interest in the Partnership. The General Partner is responsible for managing and
operating the Partnership. The common units of AmeriGas Partners, which
represent limited partner interests, are traded on the New York Stock Exchange
under the symbol "APU. "
The Partnership is the largest retail propane distributor in the United
States, serving approximately 956,000 residential, commercial, industrial,
agricultural and motor fuel customers from over 600 district locations in 45
states, as of September 30, 1997. The Partnership's operations are located
primarily in the Northeast, Southeast, Great Lakes and West Coast regions of the
United States and are conducted principally under the trade name AmeriGas. The
retail propane sales volume of the Partnership was approximately 807 million
gallons during the twelve months ended September 30, 1997. Based on the most
recent information supplied by the American Petroleum Institute, management
believes that the Partnership's sales volume in fiscal year 1997 constituted
approximately 9% of the domestic retail market for propane (sales for other than
chemical uses). The Partnership's executive offices are located at 460 North
Gulph Road, King of Prussia, Pennsylvania 19406, and its telephone number is
(610) 337-7000.
AmeriGas Finance Corp. ("AmeriGas Finance"), a Delaware corporation, was
formed on March 13, 1995, and is a wholly owned subsidiary of AmeriGas Partners.
AmeriGas Finance serves as co-obligor for certain debt securities of the
Partnership. It has nominal assets and does not conduct any operations.
Accordingly, a discussion of the results of operations, liquidity and capital
resources of AmeriGas Finance is not presented. Its executive offices are
located at 460
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North Gulph Road, King of Prussia, Pennsylvania 19406, and its telephone number
is (610) 337-7000.
BUSINESS STRATEGY
The Partnership's strategy is to continue to expand its operations and
increase its market share both through the acquisition of local and regional
propane distributors and through internal growth, including the opening of new
district locations. These new district locations are known as "scratch-starts."
Although less costly than acquisitions of existing businesses, scratch-starts
typically do not reach target sales and profitability levels for a number of
years. Acquisitions will be a principal element of growth for the Partnership,
as the demand for propane is expected to remain relatively constant for the
foreseeable future, with year-to-year industry volumes being affected primarily
by weather patterns. According to the American Petroleum Institute, the domestic
retail market for propane (annual sales for other than chemical uses) in 1995
was approximately 9.3 billion gallons. Based on this market estimate, and
information published by LP-Gas Magazine, the General Partner believes there are
numerous potential acquisition candidates because the propane industry is highly
fragmented, with the ten largest retailers comprising approximately 35% of
domestic sales.
In fiscal year 1997, the Partnership acquired a total of fourteen propane
operations with aggregate annual retail sales of approximately 8.9 million
gallons. It also opened 9 scratch-starts. In October 1997, the Partnership
acquired two propane businesses with combined annual sales volume of
approximately 2.6 million gallons. The increase in the number of publicly traded
master limited partnerships engaged in the propane distribution business has
intensified acquisition and expansion activity in the industry. There can be no
assurance that the Partnership will find attractive acquisition candidates in
the future, or that the Partnership will be able to acquire such candidates on
economically acceptable terms
Management of the General Partner believes there are opportunities for
limited growth in the Partnership's existing business arising from, among other
things, marketing programs designed to increase propane consumption, new
construction and commercial growth in the territories served by the Partnership,
and conversions to propane by potential customers currently using electricity or
fuel oil.
HISTORY OF THE PARTNERSHIP'S OPERATIONS
AmeriGas, Inc. ("AmeriGas"), the parent of AGP and a wholly owned
subsidiary of UGI, began propane distribution operations in 1959. In the ten
fiscal years preceding the Partnership's formation, AGP experienced significant
growth through the acquisition of over 30 propane companies, including Cal Gas
Corporation ("Cal Gas"), which was a major national propane distributor. In
July, 1993, AmeriGas purchased a significant equity interest in Petrolane. At
the time they were acquired, Cal Gas and Petrolane had annual revenues from
propane sales that were approximately three times and one and one-half times,
respectively, those of AGP.
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GENERAL INDUSTRY INFORMATION
Propane is separated from crude oil during the refining process and also
extracted from natural gas or oil wellhead gas at processing plants. Propane is
normally transported and stored in a liquid state under moderate pressure or
refrigeration for economy and ease of handling in shipping and distribution.
When the pressure is released or the temperature is increased, it is usable as a
flammable gas. Propane is colorless and odorless; an odorant is added to allow
its detection. Propane is clean burning, producing negligible amounts of
pollutants when properly consumed.
The primary customers for propane are residential, commercial,
agricultural, engine fuel and industrial users to whom natural gas is not
readily available. Customers use propane primarily for home heating, water
heating, cooking, engine fuel and process applications. Propane is typically
more expensive than natural gas, competitive with fuel oil when operating
efficiencies are taken into account and, in most areas, cheaper than electricity
on an equivalent energy basis. Several states have adopted or are considering
proposals that would substantially deregulate the electric utility industry and
thereby permit retail electric customers to choose their electric supplier.
While proponents of electric utility deregulation believe that competition will
ultimately reduce the cost of electricity, the Partnership is unable to predict
the extent to which the price of electricity may drop. Therefore, the
Partnership cannot predict the ultimate impact that electric utility
deregulation may have on propane's competitive price advantage over electricity.
PRODUCTS, SERVICES AND MARKETING
As of September 30, 1997, the Partnership distributed propane to
approximately 956,000 customers from over 600 district locations in 45 states.
The Partnership's operations are located primarily in the Northeast, Southeast,
Great Lakes and West Coast regions of the United States. From many of its
district locations, the Partnership also sells, installs and services equipment
related to its propane distribution business, including heating and cooking
appliances and, at some locations, propane fuel systems for motor vehicles.
Typically, district locations are found in suburban and rural areas where
natural gas is not available. Districts generally consist of an office,
appliance showroom, warehouse and service facilities, with one or more 18,000 to
30,000 gallon storage tanks on the premises. The Partnership also engages in the
business of delivering liquefied petroleum gases by truck as a common carrier.
As part of its overall transportation and distribution infrastructure, the
Partnership operates as an interstate carrier in 48 states throughout the United
States. It is also licensed as a carrier in Canada.
The Partnership sells propane primarily to five markets: residential,
commercial/industrial, engine fuel, agricultural and wholesale. Approximately
79% of the Partnership's 1997 fiscal year sales (based on gallons sold) were to
retail accounts (32% to residential customers, 29% to industrial/commercial
customers, 11% to motor fuel customers and 7% to agricultural customers), and
approximately 21% were to wholesale customers. Sales to residential customers
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in fiscal 1997 represented approximately 41% of retail gallons sold and 53% of
the Partnership's total propane margin. No single customer accounts for 1% or
more of the Partnership's consolidated revenues.
In the residential market, which includes both conventional and mobile
homes, propane is used primarily for home heating, water heating and cooking
purposes. Commercial users, which include motels, hotels, restaurants and retail
stores, generally use propane for the same purposes as residential customers. As
an engine fuel, propane is burned in internal combustion engines that power
over-the-road vehicles, forklifts and stationary engines. Industrial customers
use propane to fire furnaces, as a cutting gas and in other process
applications. Other industrial customers are large-scale heating accounts and
local gas utility customers who use propane as a supplemental fuel to meet peak
load deliverability requirements. Agricultural uses include tobacco curing, crop
drying and poultry brooding.
Retail deliveries of propane are usually made to customers by means of
bobtail and rack trucks. Propane is pumped from the bobtail truck, which
generally holds 2,400 to 2,600 gallons of propane, into a stationary storage
tank on the customer's premises. The Partnership owns most of these storage
tanks and leases them to its customers. The capacity of these tanks ranges from
approximately 100 gallons to approximately 1,200 gallons. The Partnership also
delivers propane to retail customers in portable cylinders, which typically have
a capacity of 5 to 30 gallons. When these cylinders are delivered to customers,
empty cylinders are picked up for replenishment at district locations or are
filled in place. In its wholesale operations, the Partnership principally sells
propane to large industrial end-users and other propane distributors.
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PROPANE SUPPLY AND STORAGE
Supplies of propane from the Partnership's sources historically have been
readily available. In the year ended September 30, 1997, the Partnership
purchased over half of its propane from 10 suppliers, including the Amoco
companies (Amoco Canada and Amoco Oil Company, approximately 15%) and Warren Gas
Liquids (formerly, Warren Petroleum Company), approximately 11%. Management
believes that if supplies from either source were interrupted, it would be able
to secure adequate propane supplies from other sources without a material
disruption of its operations; however, the cost of procuring replacement
supplies might be materially higher, and at least on a short-term basis, margins
could be affected. Aside from Amoco and Warren, no single supplier provided more
than 10% of the Partnership's total domestic propane supply in the fiscal year
ended September 30, 1997. In certain market areas, however, some suppliers
provide 70% to 80% of the Partnership's requirements. Disruptions in supply in
these areas could also have an adverse impact on the Partnership's margins.
The Partnership has over 300 sources of supply, and it also makes
purchases on the spot market. The Partnership purchases its propane supplies
from domestic and international suppliers. Approximately 70% of propane
purchases by the Partnership in the 1997 fiscal year were on a contractual basis
under one-year agreements subject to annual renewal. More than half of the
supply contracts provide for pricing based upon posted prices at the time of
delivery or the current prices established at major storage points such as Mont
Belvieu, Texas, or Conway, Kansas. In addition, some agreements provide maximum
and minimum seasonal purchase volume guidelines. The percentage of contract
purchases, and the amount of supply contracted for at fixed prices will vary
from year to year as determined by the General Partner. The Partnership uses a
number of interstate pipelines, as well as railroad tank cars, delivery trucks
and barges to transport propane from suppliers to storage and distribution
facilities. The Partnership stores propane at facilities in Arizona, Rhode
Island and several other locations.
Because the Partnership's profitability is sensitive to changes in
wholesale propane costs, the Partnership generally seeks to pass on increases in
the cost of propane to customers. There is no assurance, however, that the
Partnership will always be able to pass on product cost increases fully,
particularly when product costs rise rapidly. In fiscal year 1997, when the
average Mont Belvieu price per gallon of propane more than doubled between April
1, 1996 ($.34625) and December 16, 1996 ($.75), the Partnership was able to
maintain its profitability through the use of hedging techniques designed to
control product costs, as well as by passing on product cost increases. Product
cost declined in 1997 and is now at more normal historic levels.
The Partnership expects to be able to secure adequate supplies for its
customers during fiscal year 1998, however, periods of severe cold weather,
supply interruptions, or other unforeseen events, could result in rapid
increases in product cost. The General Partner is gradually expanding its
product price risk management activities to reduce the effect of price
volatility on its product costs. Current strategies include the use of summer
storage, prepaid
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contracts for future product delivery and, to some extent, derivative commodity
instruments such as options and propane price swaps.
The following graph shows the average quarterly prices of propane on the
propane spot market during the last five fiscal years at Mont Belvieu, Texas and
Conway, Kansas, two major storage areas.
AVERAGE PROPANE SPOT MARKET PRICES
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Mont Belvieu Conway
(Cents per Gallon)
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Oct-92 35.5455 30.8693
Nov-92 32.6842 33.2171
Dec-92 31.0536 35.8452
Jan-93 33.8875 44.175
Feb-93 33.0921 34.7763
Mar-93 34.4565 34.9185
Apr-93 34.6488 32.9762
May-93 32.7813 32.3635
Jun-93 32.7216 33.9659
Jul-93 31.494 32.6845
Aug-93 30.7727 33.4943
Sep-93 30.1667 34.5179
Oct-93 29.5655 33.8214
Nov-93 27.7625 32.1375
Dec-93 24.7262 25.994
Jan-94 26.6131 25.7083
Feb-94 29.3487 27.7237
Mar-94 28.4674 26.875
Apr-94 28.8188 28.7875
May-94 29.619 28.7321
Jun-94 28.7898 27.9432
Jul-94 29.2438 27.9813
Aug-94 30.0598 29.462
Sep-94 30.1131 29.8333
Oct-94 32.5952 29.5298
Nov-94 34.6063 30.6938
Dec-94 33.4345 30.1607
Jan-95 32.8338 29.551
Feb-95 31.8687 28.9253
Mar-95 32.8372 30.0111
Apr-95 32.3126 30.0405
May-95 32.7534 31.2293
Jun-95 31.842 31.4955
Jul-95 30.8108 31.3834
Aug-95 31.3433 33.1724
Sep-95 31.3608 32.4765
Oct-95 30.946 32.7784
Nov-95 30.9531 32.7406
Dec-95 35.3219 38.1719
Jan-96 36 36.2415
Feb-96 40.8563 37.7688
Mar-96 37.2292 36.0119
Apr-96 35.5744 34.1071
May-96 34.9233 34.4773
Jun-96 34.925 36.3531
Jul-96 35.6339 37.2679
Aug-96 38.4403 37.9773
Sep-96 47.0156 44.7844
Oct-96 51.5734 51.5272
Nov-96 58.0493 63.4112
Dec-96 61.0446 84.2917
Jan-97 47.4545 63.392
Feb-97 38.7105 39.0197
Mar-97 38.5 37.2563
Apr-97 34.875 35.2614
May-97 35.3095 36.4762
Jun-97 34.4286 35.8631
Jul-97 34.9063 34.6278
Aug-97 37.0268 36.5268
Sep-97 38.6786 37.9524
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COMPETITION
Propane is sold in competition with other sources of energy, some of which
are less costly for equivalent energy value. Propane distributors compete for
customers against suppliers of electricity, fuel oil and natural gas,
principally on the basis of price, availability and portability. Electricity is
a major competitor of propane, but propane generally enjoys a competitive price
advantage over electricity for space heating, water heating and cooking. As
previously stated, the Partnership is unable to predict the ultimate impact that
electric utility deregulation may have on propane's current competitive price
advantage. In the last two decades, many new homes were built to use electrical
heating systems and appliances. Fuel oil is also a major competitor of propane
and is generally less expensive than propane. Operating efficiencies and other
factors such as air quality and environmental advantages, however, generally
make propane competitive with fuel oil as a heating source. Furnaces and
appliances that burn propane will not operate on
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fuel oil, and vice versa, and, therefore, a conversion from one fuel to the
other requires the installation of new equipment. Propane serves as an
alternative to natural gas in rural and suburban areas where natural gas is
unavailable or portability of product is required. Natural gas is generally a
less expensive source of energy than propane, although in areas where natural
gas is available, propane is used for certain industrial and commercial
applications and as a standby fuel during interruptions in natural gas service.
The gradual expansion of the nation's natural gas distribution systems has
resulted in the availability of natural gas in some areas that previously
depended upon propane. However, natural gas pipelines are not present in many
regions of the country where propane is sold for heating and cooking purposes.
The domestic propane retail distribution business is highly competitive.
The Partnership competes in this business with other large propane marketers,
including other full-service marketers, and thousands of small independent
operators. Based on the most recent information supplied by the American
Petroleum Institute, the 1995 domestic retail market for propane (annual sales
for other than chemical uses) was approximately 9.3 billion gallons and, based
on LP-GAS magazine rankings, the ten largest propane companies (including
AmeriGas Partners) comprise approximately 35% of domestic sales. The
Partnership's retail volume of approximately 807 million gallons in fiscal year
1997 represented approximately 9% of 1995 total domestic retail sales. The
ability to compete effectively depends on reliability of service, responsiveness
to customers and maintaining competitive retail prices.
Competition can intensify in response to a variety of factors, including
significantly warmer-than-normal weather, higher prices resulting from
extraordinary increases in the cost of propane, and recessionary economic
factors. The Partnership has experienced greater than normal customer losses in
certain years when competitive conditions reflected these factors.
In the engine fuel market, propane competes with gasoline and diesel fuel.
When gasoline prices are high relative to propane, propane competes effectively.
The wholesale propane business is highly competitive. Propane sales to other
retail distributors and large-volume, direct-shipment industrial end users are
price sensitive and frequently involve a competitive bidding process.
PROPERTIES
As of September 30, 1997, the Partnership owned approximately 60% of its
district locations. In addition, the Partnership subleases three one-million
barrel underground storage caverns in Arizona to store propane and butane for
itself and third parties. The Partnership also leases a 600,000 barrel
refrigerated, above-ground storage facility in California, which could be used
in connection with waterborne imports or exports of propane or butane. The
California facility, which the Partnership operates, is currently subleased to
several refiners for the storage of butane. The Partnership leases a 400,000
barrel storage facility in Rhode Island, which is owned by a third party. The
Rhode Island facility is used to import propane.
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The transportation of propane requires specialized equipment. The trucks
and railroad tank cars utilized for this purpose carry specialized steel tanks
that maintain the propane in a liquefied state. The Partnership has a fleet of
approximately 385 transport trucks and 680 railroad tank cars, most of which are
leased. In addition, the Partnership utilizes over 2,300 bobtail and rack
trucks, and over 1,900 other delivery and service vehicles. More than 50% of
these vehicles are owned. As of September 30, 1997, the Partnership owned more
than 800,000 stationary storage tanks with typical capacities of 100 to 1,000
gallons and approximately 900,000 portable propane cylinders with typical
capacities of 5 to 100 gallons. In addition, the Partnership owns over 2,000
large volume tanks which are used for its own storage requirements. Most of the
Partnership's debt is secured by liens and mortgages on the Partnership's real
and personal property.
TRADE NAMES; TRADE AND SERVICE MARKS
The Partnership markets propane principally under the "AmeriGas" and
"America's Propane Company" trade name and related service marks. UGI owns,
directly or indirectly, all the right, title and interest in the "AmeriGas" and
"Petrolane" trade names and related trade and service marks. The Partnership has
an exclusive (except for use by AmeriGas and the General Partner), royalty-free
license to use these names and trade and service marks. UGI, Petrolane and the
General Partner each have the option to terminate their respective license
agreements on 12 months' prior notice, or immediately in the case of the General
Partner, without penalty if the General Partner is removed as general partner of
the Partnership other than for cause. If the General Partner ceases to serve as
the general partner of the Partnership for cause, UGI, Petrolane and the General
Partner will each have the option to terminate the license agreements
immediately upon payment of a fee equal to the fair market value of the licensed
trade names.
The General Partner has discontinued widespread use of the "Petrolane"
trade name and conducts Partnership operations almost exclusively under the
"AmeriGas" and "America's Propane Company" trade names. The General Partner has
filed applications with the United States Patent and Trademark Office to
register the mark "PPX-Prefilled Propane Xchange" for use in connection with the
Partnership's cylinder exchange business.
SEASONALITY
The Partnership's retail sales volume is seasonal, with approximately 56%
of the Partnership's fiscal year 1997 retail sales volume and approximately 83%
of its earnings before interest, taxes, depreciation and amortization occurring
during the five-month peak heating season from November through March, because
many customers use propane for heating purposes. As a result of this
seasonality, sales are concentrated in the Partnership's first and second fiscal
quarters
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(October 1 through March 31), and cash receipts are greatest during the
second and third fiscal quarters when customers pay for propane purchased during
the winter heating season.
Sales volume for the Partnership traditionally fluctuates from year to
year in response to variations in weather, prices, competition, customer mix and
other factors, such as conservation efforts and general economic conditions.
Long-term, historic weather data from the National Weather Service Climate
Analysis Center indicate that average annual temperatures have remained
relatively constant over the last 30 years with fluctuations occurring on a
year-to-year basis only. Actual weather conditions in the Partnership's various
service territories, however, can vary substantially from historical averages.
For information concerning average annual variations in weather across the
Partnership's service territories, see "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
GOVERNMENT REGULATION
The Partnership is subject to various federal, state and local
environmental, safety and transportation laws and regulations governing the
storage, distribution and transportation of propane. These laws include, among
others, the Resource Conservation and Recovery Act, the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), the Clean Air
Act, the Occupational Safety and Health Act, the Emergency Planning and
Community Right to Know Act, the Clean Water Act and comparable state statutes.
CERCLA, also known as the "Superfund" law, imposes joint and several liability
without regard to fault or the legality of the original conduct on certain
classes of persons considered to have contributed to the release or threatened
release of a "hazardous substance" into the environment. Propane is not a
hazardous substance within the meaning of federal and state environmental laws.
However, the Partnership owns and operates real property where such hazardous
substances may exist. See Note 9 to the Partnership's Consolidated Financial
Statements.
All states in which the Partnership operates have adopted fire safety
codes that regulate the storage and distribution of propane. In some states
these laws are administered by state agencies, and in others they are
administered on a municipal level. The Partnership conducts training programs to
help ensure that its operations are in compliance with applicable governmental
regulations. The Partnership maintains various permits under environmental laws
that are necessary to operate certain of its facilities, some of which may be
material to the operations of the Partnership. Management believes that the
procedures currently in effect at all of its facilities for the handling,
storage and distribution of propane are consistent with industry standards and
are in compliance in all material respects with applicable environmental, health
and safety laws.
With respect to the transportation of propane by truck, the Partnership is
subject to regulations promulgated under the Federal Motor Carrier Safety Act.
These regulations cover the transportation of hazardous materials and are
administered by the United States Department of
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Transportation ("DOT"). With respect to general operations, National Fire
Protection Association Pamphlets No. 54 and No. 58, which establish a set of
rules and procedures governing the safe handling of propane, or comparable
regulations, have been adopted as the industry standard in a majority of the
states in which the Partnership operates.
The Natural Gas Safety Act of 1968 required the DOT to develop and enforce
minimum safety regulations for the transportation of gases by pipeline. The
DOT's pipeline safety code applies to, among other things, a propane gas system
which supplies 10 or more customers from a single source, and a propane system,
any portion of which is located in a public place. The code requires operators
of all gas systems to provide training and written instructions for employees,
establish written procedures to minimize the hazards resulting from gas pipeline
emergencies, and keep records of inspections and testing.
On December 13, 1996, the Research and Special Programs Administration
("RSPA"), a division of the DOT, issued an advisory notice that alerted persons
involved in the design, manufacture, assembly, maintenance or transportation of
hazardous materials in certain cargo tank motor vehicles, including the type of
vehicles used by the Partnership, of a problem with emergency discharge systems.
On February 19, 1997, RSPA issued an emergency interim final rule indicating
that the emergency discharge control systems on the affected vehicles may not
function as required by federal regulations under all operating conditions. The
interim final rule specified the conditions under which the affected vehicles
could continue to be operated. On August 18, 1997, after conducting a series of
public hearings and workshops, RSPA issued a final rule which sets forth the
requirements that must be satisfied to continue operating such vehicles. The
final rule requires, among other things, that in the event of an unintentional
release of product, the person attending the unloading operation must be able to
promptly activate the internal self-closing stop valve on the motor vehicle and
shut down all motive and auxiliary power equipment. The final rule provides
alternative ways to comply with this requirement and permits the use of
radio-controlled systems that are capable of stopping the transfer of propane by
use of a transmitter carried by a qualified person who also satisfies the
attendance requirements contained in the regulations. The Partnership is in the
process of testing a radio-controlled system and plans to equip its bobtail
vehicles with such a system unless the regulation is modified as a result of the
pending administrative and legal proceedings. The Partnership filed an
administrative appeal requesting reconsideration and a partial stay of the final
rule which was denied on December 5, 1997. See "Legal Proceedings. "
EMPLOYEES
The Partnership does not directly employ any persons responsible for
managing or operating the Partnership. The General Partner provides these
services and is reimbursed for its direct and indirect costs and expenses,
including all compensation and benefit costs. At September 30, 1997, the General
Partner had 5,131 employees, including 303 temporary and part-time employees.
UGI also performs certain financial and administrative services for the General
-10-
<PAGE> 13
Partner on behalf of the Partnership and is reimbursed by the Partnership for
its direct and indirect costs.
Approximately one percent of the General Partner's employees are
represented by nine local labor unions which are affiliated with the
International Brotherhood of Teamsters (8), and the Warehouse, Processing and
Distribution Workers Union of the International Longshoremen's and
Warehousemen's Union, AFL-CIO (1).
ITEM 3. LEGAL PROCEEDINGS
There are no material legal proceedings pending involving the Partnership,
any of its subsidiaries or any of their properties, and no such proceedings are
known to be contemplated by governmental authorities other than claims arising
in the ordinary course of the Partnership's business and the matter set forth
below.
U.S. Department of Transportation Administrative Proceeding. On or about
September 17, 1997, the Operating Partnership and five other major interstate
propane marketers jointly filed a Petition for Reconsideration and a Request for
Partial Stay of Final Rule HM-225 (more commonly known as 49 C.F.R. Section
171.5, the "Final Rule") published by the Research and Special Programs
Administration, a division of the U.S. Department of Transportation (the "DOT")
on August 18, 1997. While the other marketers subsequently withdrew their
petition and filed suit in federal court against the DOT, the Operating
Partnership continued its administrative appeal. The appeal relates to the
provisions of the Final Rule requiring passive emergency discharge control
systems on cargo tank motor vehicles (also known as bobtails) or alternatively,
the installation of radio-controlled systems on bobtails or the use of multiple
attendants on such vehicles. On December 5, 1997, the appeal was denied.
Management of the Operating Partnership is considering an appeal of the DOT
decision.
The Operating Partnership is also monitoring the pending litigation on the
Final Rule brought by other major marketers and parallel litigation by the
propane industry's national trade association, the National Propane Gas
Association. See "BUSINESS AND PROPERTIES - Government Regulation."
-11-
<PAGE> 14
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the last
fiscal quarter of the 1997 fiscal year.
PART II: SECURITIES AND FINANCIAL INFORMATION
ITEM 5. MARKET FOR REGISTRANT'S COMMON UNITS
AND RELATED SECURITY HOLDER MATTERS
The common units representing limited partner interests ("Common Units")
are listed on the New York Stock Exchange, which is the principal trading market
for such securities, under the symbol "APU." The following table sets forth, for
the periods indicated, the high and low sale prices per Common Unit, as reported
on the New York Stock Exchange Composite Transactions tape, and the amount of
cash distributions paid per Common Unit.
<TABLE>
<CAPTION>
PRICE RANGE CASH
1997 FISCAL YEAR HIGH LOW DISTRIBUTION
<S> <C> <C> <C>
Fourth Quarter $27.250 $24.125 $0.55
Third Quarter $24.875 $22.250 0.55
Second Quarter $25.000 $22.250 0.55
First Quarter $25.125 $20.750 0.55
</TABLE>
<TABLE>
<CAPTION>
PRICE RANGE CASH
1996 FISCAL YEAR HIGH LOW DISTRIBUTION
<S> <C> <C> <C>
Fourth Quarter $24.875 $22.750 $0.55
Third Quarter 24.625 22.375 0.55
Second Quarter 25.250 22.000 0.55
First Quarter 24.625 22.000 0.55
</TABLE>
As of December 1, 1997, there were 1,113 record holders of the
Partnership's Common Units. There is no established public trading market for
the Partnership's subordinated units, representing limited partner interests
("Subordinated Units"). The Partnership makes quarterly distributions to its
partners in an aggregate amount equal to its Available Cash (as defined) for
such quarter. Available Cash generally means, with respect to any fiscal quarter
of the
-12-
<PAGE> 15
Partnership, all cash on hand at the end of such quarter, plus all additional
cash on hand as of the date of determination resulting from borrowings
subsequent to the end of such quarter, less the amount of cash reserves
established by the General Partner in its reasonable discretion for future cash
requirements. Certain reserves are maintained to provide for the payment of
principal and interest under the terms of the Partnership's debt agreements and
other reserves may be maintained to provide for the proper conduct of the
Partnership's business, and to provide funds for distribution during the next
four fiscal quarters. The full definition of Available Cash is set forth in the
Amended and Restated Agreement of Limited Partnership of AmeriGas Partners,
L.P., which is filed as an exhibit to this Report. The information concerning
restrictions on distributions required by Item 5 is incorporated herein by
reference to Notes 3 and 4 to the Partnership's Consolidated Financial
Statements which are incorporated herein by reference. Distributions of
Available Cash to the Subordinated Unitholders are subject to the prior rights
of the Common Unitholders to receive the Minimum Quarterly Distribution ("MQD")
for each quarter during the subordination period, and to receive any arrearages
in the distribution of the MQD on the Common Units for prior quarters during the
subordination period. The subordination period will not end earlier than April
1, 2000. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
-13-
<PAGE> 16
ITEM 6. SELECTED FINANCIAL DATA
The following tables provide selected financial data for AmeriGas Partners and
the Predecessors.
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
(Thousands of dollars, except per unit)
<TABLE>
<CAPTION>
Year Ended April 19
September 30, to
------------------------------------- September 30,
1997 1996 1995
----------------- ------------------ -----------------
<S> <C> <C> <C>
FOR THE PERIOD:
Income statement data:
Revenues $ 1,077,825 $ 1,013,225 $ 269,500
Operating income (loss) 110,373 72,866 (20,088)
Income (loss) before income taxes 44,715 10,084 (47,400)
Net income (loss) 43,980 10,238 (47,107)
Limited partners' interest in net income (loss) 43,540 10,136 (46,636)
Income (loss) per limited partner unit 1.04 .24 (1.12)
Cash distributions declared 2.20 2.20 .446
AT PERIOD END:
Balance sheet data:
Current assets $ 183,091 $ 199,452 (b) $ 199,438 (b)
Total assets 1,318,661 1,360,292 (b) 1,423,615 (b)
Current liabilities (excluding debt) 146,449 157,182 (b) 126,270 (b)
Total debt 718,728 707,453 657,726
Minority interest 5,043 5,497 6,704
Partners' capital 397,537 442,236 560,959
OTHER DATA:
EBITDA (a) $ 172,377 $ 134,497 $ 6,497
Capital expenditures $ 24,470 $ 21,908 $ 11,282
Retail propane gallons sold (millions) 807.4 855.4 243.6
</TABLE>
(a) EBITDA (earnings before interest expense, income taxes, depreciation and
amortization) should not be considered as an alternative to net income
(loss) (as an indicator of operating performance) or as an alternative to
cash flow (as a measure of liquidity or ability to service debt
obligations) and is not a measure of performance or financial condition
under generally accepted accounting principles.
(b) Reclassified.
14
<PAGE> 17
ITEM 6. SELECTED FINANCIAL DATA (CONTINUED)
AMERIGAS PROPANE / AGP - 2 (PREDECESSOR)
(Thousands of dollars)
<TABLE>
<CAPTION>
Twelve Nine
September 24, Year Months Months
1994 to Ended Ended Ended
April 19, September 23, September 23, September 23,
1995 1994 1993 1993 (a)
------------- --------------- ------------- --------------
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA (FOR THE PERIOD):
Revenues $242,185 $367,120 $376,380 $258,271
Operating income 32,382 46,433 42,729 24,323
Income (loss) before extraordinary loss and
accounting change 2,922 9,659 5,864 (48)
Net income (loss) (10,620) 9,659 5,864 (48)
BALANCE SHEET DATA (AT PERIOD END):
Current assets $ (x) $103,825 $108,826 $108,826
Total assets (x) 510,981 526,717 526,717
Current liabilities (excluding debt) (x) 63,292 69,696 69,696
Total debt (x) 210,272 210,177 210,177
Common stockholders' equity (x) 186,599 195,543 195,543
OTHER DATA:
EBITDA (b) $ 45,971 $ 69,521 $ 63,977 $ 39,884
Capital expenditures (c) $ 5,605 $ 8,948 $ 6,420 $ 5,052
Retail propane gallons sold (millions) 225.0 332.4 332.1 231.3
--------------------------------------------------
</TABLE>
(a) On April 27, 1993, AmeriGas Propane changed its fiscal year end to
September 23. Previously, AmeriGas Propane's fiscal year ended December
23. As a result of the change in fiscal year, the Selected Financial Data
include data as of and for the nine-month transition period ended
September 23, 1993.
(b) EBITDA (earnings before interest expense, 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) and is
not a measure of performance or financial condition under generally
accepted accounting principles.
(c) Excludes capital lease obligations.
(x) Not applicable.
-15-
<PAGE> 18
ITEM 6. SELECTED FINANCIAL DATA (CONTINUED)
PETROLANE (PREDECESSOR)
(Thousands of dollars, except per share)
<TABLE>
<CAPTION>
QFB
Partners (b)
September 24, Year ------------
1994 to Ended July 16 to January 1
April 19, September 23, September 23, to July 15,
1995 1994 1993 (a) 1993
------------- -------------- -------------- ------------
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA (FOR THE PERIOD):
Revenues $372,088 $589,709 $ 88,094 $354,116
Operating income (loss) 41,469 56,887 (4,694) (22,009)
Income (loss) before extraordinary item and accounting change 1,390 (2,309) (10,334) (59,172)
Net income (loss) 485 (2,309) (10,334) 328,042
Income (loss) per common share (c) .05 (.22) (.98)
BALANCE SHEET DATA (AT PERIOD END):
Current assets $ (x) $126,436 $132,948 $108,791
Total assets (x) 914,212 947,669 929,667
Current liabilities (excluding debt) (x) 114,518 96,699 86,904
Total debt (x) 625,883 663,464 640,798
Common stockholders' equity (x) 93,113 95,422 105,756
OTHER DATA:
EBITDA (d) $ 68,867 $102,922 $ 3,479 $ 11,639(e)
Capital expenditures (f) $ 7,291 $ 22,077 $ 1,719 $ 3,480
Retail propane gallons sold (millions) 319.4 496.9 72.2 274.6
--------------------------------------------------
</TABLE>
(a) On July 26, 1993, Petrolane changed its fiscal year end to September 23.
Previously, Petrolane's fiscal year ended December 31. As a result of the
change in fiscal year and the adoption of "Fresh Start Accounting", the
Selected Financial Data include data for the periods January 1 to July 15,
1993 and July 16 to September 23, 1993.
(b) Represents data of QFB Partners prior to its reorganization on July 15,
1993. Due to the application of "Fresh Start Accounting" effective on July
15, 1993, the consolidated financial data of Petrolane are generally not
comparable to those of QFB Partners and are separated by a vertical black
line.
(c) Per share results for periods prior to July 16, 1993 are not presented
because there were no publicly held shares of stock outstanding.
(d) EBITDA (earnings before interest expense, 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) and is
not a measure of performance or financial condition under generally
accepted accounting principles.
(e) Includes a charge of $16,600,000 related to environmental matters and a
$5,600,000 charge related to an adjustment of taxes other than income
taxes associated with prior years.
(f) Excludes capital lease obligations.
(x) Not applicable.
-16-
<PAGE> 19
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
ANALYSIS OF RESULTS OF OPERATIONS
The following analysis compares the Partnership's results of operations for (1)
the year ended September 30, 1997 ("Fiscal 1997") with the year ended September
30, 1996 ("Fiscal 1996") and (2) Fiscal 1996 with the 53 weeks ended September
30, 1995 ("Pro Forma Fiscal 1995"). Pro Forma Fiscal 1995 includes an additional
week of results (i.e. the period September 24 to September 30, 1994) due to the
difference in the Partnership's and the Predecessors' year ends.
The Pro Forma Fiscal 1995 statement of operations data was derived from the
historical statements of operations of the Predecessors for the period September
24, 1994 to April 19, 1995 and the statement of operations of the Partnership
from April 19, 1995 to September 30, 1995. The Fiscal 1995 pro forma statement
of operations was prepared to reflect the effects of the Partnership Formation
as if it had been completed as of September 24, 1994.
The Pro Forma Fiscal 1995 statement of operations data do not purport to present
the results of operations of the Partnership had the formation of the
Partnership actually been completed as of September 24, 1994. In addition, the
Pro Forma Fiscal 1995 statement of operations data should be read in conjunction
with the consolidated financial statements of the Partnership, the consolidated
financial statements of Petrolane, and the combined financial statements of
AmeriGas Propane, and the related notes thereto, appearing elsewhere in this
Annual Report on Form 10-K. Significant pro forma adjustments reflected in the
data include (a) the elimination of income taxes as a result of operating in a
partnership structure; (b) an adjustment to interest expense resulting from the
retirement of approximately $377 million of Petrolane term loans, the
restructuring of Petrolane and AmeriGas Propane senior debt, and the issuance of
an aggregate $210 million face value of notes of AmeriGas Partners and the
Operating Partnership; (c) the elimination of management fees previously charged
to Petrolane by UGI; (d) a net reduction in amortization expense resulting from
the longer-term (40-year) amortization of the excess purchase price over fair
value of 65% of the net identifiable assets of Petrolane, compared with the
amortization of 65% of Petrolane's excess reorganization value over 20 years;
and (e) the elimination of intercompany revenues and expenses.
-17-
<PAGE> 20
The following tables provide gallon, weather and certain financial information
for the Partnership, AmeriGas Propane and Petrolane.
AMERIGAS PARTNERS, L.P.
(Millions, except per gallon and percentages)
<TABLE>
<CAPTION>
Pro
Forma
Year Year 53 Weeks April 19,
Ended Ended Ended 1995 to
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1997 1996 1995 (a) 1995
----------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
Gallons sold:
Retail 807.4 855.4 788.0 243.6
Wholesale 218.6 309.7 198.0 65.6
---------- ----------- ---------- -----------
1,026.0 1,165.1 986.0 309.2
========== =========== ========== ===========
Revenues:
Retail propane $ 868.2 $ 786.9 $ 692.7 $ 205.7
Wholesale propane 126.0 137.9 86.5 27.9
Other 83.6 88.4 99.4 35.9
---------- ----------- ---------- -----------
$ 1,077.8 $ 1,013.2 $ 878.6 $ 269.5
========== =========== ========== ===========
Total propane margin (b) $ 430.2 $ 398.6 $ 373.5 $ 110.2
Total margin (b) $ 477.4 $ 443.5 $ 419.6 $ 127.8
EBITDA (c) $ 172.4 $ 134.5 $ 126.0 $ 6.5
Operating income (loss) $ 110.4 $ 72.9 $ 63.7 $ (20.1)
Degree days - % (warmer) colder
than normal (d) (5.2)% 1.4% (12.1)% N.M.
</TABLE>
(a) Reflects unaudited pro forma information for the Partnership as if the
Partnership Formation had occurred as of the beginning of the period
presented.
(b) Revenues less related cost of sales.
(c) EBITDA (earnings before interest expense, 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) and is
not a measure of performance or financial condition under generally
accepted accounting principles.
(d) 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. Due to the seasonality of the propane business favoring
the winter heating season, degree days for the period April 19 to
September 30, 1995 are not meaningful.
-18-
<PAGE> 21
AMERIGAS PROPANE
(Millions, except per gallon and percentages)
<TABLE>
<CAPTION>
Nine
Sept. 24, Sept. 24, Year Months
1994 to 1993 to Ended Ended
April 19, April 23, Sept. 23, Sept. 23,
1995 1994 1994 1993 (a)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Gallons sold:
Retail 225.0 242.4 332.4 231.3
Wholesale 32.5 53.3 74.3 43.6
----------- ----------- ----------- -----------
257.5 295.7 406.7 274.9
=========== =========== =========== ===========
Revenues:
Retail propane $ 203.3 $ 222.9 $ 302.4 $ 217.7
Wholesale propane 14.8 20.1 28.1 18.8
Other 24.1 23.4 36.6 21.8
----------- ----------- ----------- -----------
$ 242.2 $ 266.4 $ 367.1 $ 258.3
=========== =========== =========== ===========
Total propane margin (b) $ 111.5 $ 126.5 $ 171.7 $ 118.5
Total margin (b) $ 122.9 $ 138.3 $ 190.3 $ 130.7
EBITDA (c) $ 46.0 $ 61.6 $ 69.5 $ 39.9
Operating income $ 32.4 $ 48.2 $ 46.4 $ 24.3
Degree days - % (warmer)
colder than normal (d) (12.9)% (2.9)% (3.5)% (6.9)%
</TABLE>
(a) On April 27, 1993, AmeriGas Propane changed its fiscal year end to
September 23. Previously, AmeriGas Propane's fiscal year ended on December
23. As a result of the change in fiscal year, the amounts above include
data as of and for the nine month transition period ended September 23,
1993.
(b) Revenues less related cost of sales.
(c) EBITDA (earnings before interest expense, 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) and is
not a measure of performance or financial condition under generally
accepted accounting principles.
(d) Based on the weighted average deviation from average degree days during
the 30-year period 1951-1980 for the nine month period ended September 23,
1993, and the 30-year period 1961-1990 for the twelve month period ended
September 23, 1994, the period September 24, 1993 to April 23, 1994 and
the period September 24, 1994 to April 19, 1995, as contained in the
National Weather Service Climate Analysis Center database, for geographic
areas in which AmeriGas Propane operates.
-19-
<PAGE> 22
PETROLANE
(Millions, except per gallon and percentages)
<TABLE>
<CAPTION>
Nine
Months
Sept. 24, Sept. 24, Year Ended
1994 to 1993 to Ended Sept. 23,
April 19, April 23, Sept. 23, 1993
1995 1994 1994 (38 weeks) (a)
--------- ---------- ---------- ---------------
<S> <C> <C> <C> <C>
Gallons sold:
Retail 319.4 356.9 496.9 346.7
Wholesale 99.9 132.8 185.5 151.5
-------- --------- ---------- ----------
419.3 489.7 682.4 498.2
======== ========= ========== ==========
Revenues:
Retail propane $ 283.7 $ 317.2 $ 437.0 $ 314.1
Wholesale propane 43.8 53.9 75.1 66.5
Other 44.6 49.8 77.6 61.6
-------- --------- ---------- ----------
$ 372.1 $ 420.9 $ 589.7 $ 442.2
======== ========= ========== ==========
Total propane margin (b) $ 151.8 $ 178.7 $ 243.1 $ 164.3
Total margin (b) $ 168.9 $ 196.6 $ 270.7 $ 183.3
EBITDA (c) $ 68.9 $ 89.3 $ 102.9 $ 15.1 (d)
Operating income (loss) $ 41.5 $ 62.5 $ 56.9 $ (26.7)(d,e)
Degree days - % (warmer)
colder than normal (f) (12.6)% (4.2)% (3.2)% (3.8)%
</TABLE>
(a) On July 26, 1993, Petrolane changed its fiscal year end to September 23.
Previously, Petrolane's fiscal year ended December 31. As a result of the
change in fiscal year, the amounts above include combined amounts for the
pre-reorganization accounting period January 1 to July 15, 1993 and the
post-reorganization accounting period July 16 to September 23, 1993.
(b) Revenues less related cost of sales.
(c) EBITDA (earnings before interest expense, 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) and is
not a measure of performance or financial condition under generally
accepted accounting principles.
(d) Includes a charge of $16.6 million related to environmental matters and a
charge of $5.6 million related to an adjustment of taxes other than income
taxes.
(e) Due to the effects of "Fresh Start Accounting," these amounts are not
meaningful for comparative purposes.
(f) Based on the weighted average deviation from average degree days during
the 30-year period 1951-1980 for the 38 week period ended September 23,
1993, and the 30-year period 1961-1990, for the twelve month period ended
September 23, 1994, the period September 24, 1993 to April 23, 1994 and
the period September 24, 1994 to April 19, 1995, as contained in the
National Weather Service Climate Analysis Center database, for geographic
areas in which Petrolane operates.
-20-
<PAGE> 23
PARTNERSHIP RESULTS OF OPERATIONS
FISCAL 1997 COMPARED WITH FISCAL 1996
Retail sales of propane decreased in Fiscal 1997 reflecting, in part, the
effects of warmer heating-season weather. In addition, significantly higher and
more volatile propane market prices during the first half of the Fiscal 1997
heating season resulted in customer conservation efforts. Wholesale volumes of
propane sold were lower in Fiscal 1997 principally due to reduced low-margin
sales of storage inventories.
Total revenues from retail propane sales increased $81.3 million reflecting a
$125.5 million increase as a result of higher average retail propane selling
prices partially offset by a $44.2 million decrease as a result of the lower
volumes sold. The higher prices resulted principally from higher propane product
costs experienced by the Partnership early in Fiscal 1997. The spot price of
propane at Mont Belvieu, Texas, a major U.S. storage and distribution hub,
increased dramatically during much of the last quarter of Fiscal 1996 and the
first quarter of Fiscal 1997, rising to a high of 75 cents a gallon on December
16, 1996. Wholesale propane revenues decreased $11.9 million reflecting the
lower wholesale volumes sold partially offset by higher average wholesale
prices. Other revenues decreased $4.8 million primarily as a result of lower
hauling and appliance sales and service revenues.
Total propane margin was greater in Fiscal 1997 because of higher average retail
unit margins partially offset by lower volumes of propane sold. Although the
Partnership's propane product costs were significantly higher in Fiscal 1997,
the Partnership benefited from favorable fixed-price supply arrangements and, to
a lesser extent, derivative commodity contracts entered into as part of its 1997
propane supply strategy. The higher Fiscal 1997 average retail unit margin also
reflects the fact that retail unit margins in the prior-year period were
adversely impacted by certain sales and marketing programs.
The increase in Fiscal 1997 operating income and earnings before interest
expense, income taxes, depreciation and amortization (EBITDA) is the result of
higher total margin, greater miscellaneous income, and a decrease in operating
expenses. Total operating expenses were $316.4 million in Fiscal 1997 compared
with $317.4 million in Fiscal 1996. The Fiscal 1996 operating expenses are net
of $4.4 million from a refund of insurance premium deposits and $3.3 million
from a reduction in accrued environmental costs. Excluding the impact of these
items in Fiscal 1996, operating expenses declined $8.7 million reflecting in
large part lower expenses related to sales and marketing programs and lower
required accruals for general and automobile liability and workers' compensation
costs. Miscellaneous income increased $2.9 million in Fiscal 1997 reflecting
$4.7 million of income from the sale of the Partnership's 50% interest in
Atlantic Energy, Inc. (Atlantic Energy), which owns and operates a liquefied
petroleum gas storage terminal in Chesapeake, Virginia. The Partnership sold its
interest in Atlantic Energy after determining that it was not a strategic asset.
-21-
<PAGE> 24
Interest expense was $65.7 million in Fiscal 1997 compared with $62.8 million in
Fiscal 1996 reflecting increased interest expense on the Partnership's Revolving
Credit and Acquisition facilities principally as a result of higher amounts
outstanding.
FISCAL 1996 COMPARED WITH PRO FORMA FISCAL 1995
Retail volumes of propane sold increased 67.4 million gallons in Fiscal 1996
reflecting the effects of colder weather, acquisitions and volume growth.
Regional temperature differences in Fiscal 1996 were significant with the
western U.S. experiencing substantially warmer than normal temperatures and
lower retail sales, and the eastern and midwestern U.S. experiencing colder than
normal temperatures and higher retail sales. Wholesale volumes of propane sold
were significantly higher reflecting an increase in sales of low-margin excess
storage inventories.
Total revenues from retail propane sales increased $94.2 million reflecting a
$59.2 million increase from the greater volumes sold and a $35.0 million
increase as a result of higher average retail propane selling prices. Total cost
of sales increased $110.7 million as a result of the higher volumes of propane
sold and higher average propane product costs. The Partnership's propane product
cost averaged approximately five cents a gallon higher in Fiscal 1996 than in
Pro Forma Fiscal 1995. The spot price of propane at Mont Belvieu, Texas
increased dramatically in August and September 1996, rising to 50.5 cents per
gallon on September 30, 1996 compared to 31.63 cents per gallon a year earlier.
Total propane margin was higher in Fiscal 1996 as a result of the greater
volumes of propane sold. However, average retail unit margins in Fiscal 1996
were slightly lower than in Pro Forma Fiscal 1995, notwithstanding an increase
in average retail selling price, reflecting the impact of higher average propane
product costs which were not completely passed through to customers.
The increases in Fiscal 1996 operating income and EBITDA reflect principally the
increase in total propane margin partially offset by higher operating and
administrative expenses. Operating expenses in Fiscal 1996 are net of $4.4
million from a refund of insurance premium deposits and $3.3 million from a
reduction in accrued environmental costs recorded in the quarter ended March 31.
Operating expenses in Pro Forma Fiscal 1995 include $4.3 million in accruals for
management reorganization activities. Operating expenses, exclusive of these
items, increased $27.8 million reflecting higher payroll and employee
compensation expenses associated with the Partnership's new management
structure; higher vehicle and distribution expenses due in part to the higher
retail volumes and severe eastern U.S. winter weather; higher expenses
associated with sales and marketing programs; increased customer equipment
repair and maintenance expenses; and incremental costs associated with
acquisitions and new district locations.
-22-
<PAGE> 25
FINANCIAL CONDITION AND LIQUIDITY
CAPITALIZATION AND LIQUIDITY
The Partnership's principal sources of funds are those generated by its
operations and borrowings under the Operating Partnership's Bank Credit
Agreement. Cash generated by operating activities in 1997 was sufficient to fund
maintenance capital expenditures (which represent capital expenditures to
maintain the operating capacity of the capital assets of the Partnership) and
the Minimum Quarterly Distribution (MQD) of $.55 for each quarter on all
Partnership units.
Effective September 15, 1997, the Operating Partnership amended and restated its
Bank Credit Agreement. The Bank Credit Agreement consists of a Revolving Credit
Facility and an Acquisition Facility. Obligations under the Bank Credit
Agreement are collateralized by substantially all of the Operating Partnership's
assets. The Revolving Credit Facility provides for borrowings of up to $100
million (including a $35 million sublimit for letters of credit). The Revolving
Credit Facility may be used to fund working capital, capital expenditures, and
interest and distribution payments. The Revolving Credit Facility expires
September 15, 2002 but may, under certain conditions, be extended. The Operating
Partnership's bank loans outstanding totaled $28 million at September 30, 1997
compared with $15 million at September 30, 1996.
The Bank Credit Agreement also includes a $75 million Acquisition Facility to
finance propane business acquisitions. This facility operates as a revolving
facility through September 15, 2000 at which time amounts then outstanding will
convert to a quarterly amortizing four-year term loan. At September 30, 1997,
borrowings under the Acquisition Facility totaled $37 million.
The ability of the Operating Partnership to borrow under the Bank Credit
Agreement is subject to provisions which require, among other things, minimum
interest coverage and maximum debt to EBITDA ratios, as defined. Based upon the
calculation of such ratios as of September 30, 1997, the Operating Partnership
had the ability to borrow the maximum amount available (See Note 4 to the
Partnership's Consolidated Financial Statements).
The Operating Partnership also 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. The General
Partner Credit Facility is coterminous with, and generally comparable to, the
Revolving Credit Facility except that borrowings under the General Partner
Facility are unsecured and subordinated to all senior debt of the Operating
Partnership. 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.
Management believes that cash flow from operations as well as available
borrowings under its credit facilities will be sufficient to meet the
Partnership's liquidity needs for the foreseeable future.
-23-
<PAGE> 26
The Partnership has assumed certain lease guarantees and scheduled claim
obligations relating to certain former businesses of Petrolane, a predecessor
company of the Partnership. The Partnership succeeded to Petrolane's agreements
with third parties for payment indemnification relating to such obligations. At
September 30, 1997, the lease guarantee obligations totaled approximately $67
million and scheduled claims of at least $68 million were pending. To date, the
Partnership has not paid any amounts under the lease guarantee and scheduled
claim obligations (See Note 9 to the Partnership's Consolidated Financial
Statements).
-24-
<PAGE> 27
PARTNERSHIP DISTRIBUTIONS
The Partnership makes distributions to its partners approximately 45 days after
the end of each fiscal quarter in an amount equal to its Available Cash (as
defined in the Amended and Restated Agreement of Limited Partnership) for such
quarter, subject to limitations under its loan agreements. (For a description of
Available Cash and the priority of its distribution to unitholders, see Note 3
to the Partnership's Consolidated Financial Statements). During 1997, 1996 and
1995, the Partnership paid the MQD of $.55 on all limited partner units
outstanding. The amount of Available Cash needed during Fiscal 1997 to
distribute the MQD on all such units as well as the 2% general partner interest
was approximately $93.9 million ($48.5 million for the Common Units; $43.5
million for the Subordinated Units; and $1.9 million for the general partner
interests). A reasonable proxy for the amount of distributable cash actually
generated by the Partnership can be determined by subtracting cash interest
expense and maintenance capital expenditures from the Partnership's EBITDA.
Distributable cash as calculated for the Partnership's full fiscal years since
its inception is as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
Year Ended September 30, 1997 1996
- -------------------------------------------------------------------------
(Millions of dollars)
<S> <C> <C>
EBITDA $ 172.4 $134.5
Cash interest expense (66.8) (63.6)
Maintenance capital expenditures (10.0) (7.9)
- -------------------------------------------------------------------------
Distributable cash flow $ 95.6 $63.0
- -------------------------------------------------------------------------
</TABLE>
Although the level of distributable cash generated in 1996 was less than the
full MQD, the Partnership had cash and short-term investment balances of $48.6
million at the beginning of the year. Due to the seasonal nature of its
operating cash flows and working capital needs, the Partnership has used the
Revolving Credit Facility on a short-term basis to fund a portion of
distribution payments. The ability of the Partnership to continue to pay the
full MQD on its Subordinated Units will depend upon a number of factors
including the level of Partnership earnings, the cash needs of the Partnership's
operations (including cash needed for maintenance and growth capital), and the
Partnership's ability to finance externally such cash needs. Some of these
factors are affected by conditions such as weather, competition in the markets
served by the Partnership, and the cost of propane, which are beyond the control
of the Partnership.
As further described in Note 3 to the Partnership's Consolidated Financial
Statements, the Subordinated Units' period of subordination will generally
extend until the first day of any quarter beginning on or after April 1, 2000 in
respect of which certain cash performance and distribution measurements are
attained. In addition, if the Partnership attains certain cash performance and
distribution measurements, 4.9 million Subordinated Units may convert to Common
Units on or after March 31, 1998 and an additional 4.9 million Subordinated
Units may convert on or after
-25-
<PAGE> 28
March 31, 1999. Based upon such cash performance measurements to date, it is
unlikely that the cash performance measurements required for conversion will be
attained during fiscal 1998.
CASH FLOWS
OPERATING ACTIVITIES. Cash flow from operating activities was $110.2 million in
Fiscal 1997 compared with $48.4 million in Fiscal 1996. Cash flow from
operations before changes in working capital was $109.9 million in Fiscal 1997
compared with $68.4 million in Fiscal 1996 reflecting a significant improvement
in the Partnership's operating performance. Changes in operating working capital
during Fiscal 1997 provided $.2 million of operating cash flow. During Fiscal
1996, changes in operating working capital required $20.1 million of operating
cash flow principally from an increase in accounts receivable partially offset
by an increase in accounts payable.
INVESTING ACTIVITIES. Cash expenditures for property, plant and equipment
totaled $24.5 million (including maintenance capital expenditures of $10.0
million) in Fiscal 1997 compared with $21.9 million (including maintenance
capital expenditures of $7.9 million) in Fiscal 1996. Proceeds from disposals of
assets totaled $10.6 million in Fiscal 1997 compared with $5.4 million in Fiscal
1996. Fiscal 1997 proceeds include the sale of the Partnership's 50% interest in
Atlantic Energy. Maturing short-term investments increased cash flows from
investing activities by $9.0 million in Fiscal 1996. During Fiscal 1997, the
Partnership acquired several propane businesses for $11.6 million in cash
compared with $20.9 million for acquisitions in Fiscal 1996. In conjunction with
one acquisition during Fiscal 1997, the Partnership issued 111,135 Common Units
having a fair value of $2.6 million.
FINANCING ACTIVITIES. During Fiscal 1997, the Partnership declared and paid the
MQD on all units and the General Partner's interest totaling $92.9 million. In
addition, during each of Fiscal 1997 and Fiscal 1996, the Operating Partnership
distributed $1.0 million to the General Partner in respect of the General
Partner's 1.0101% interest in the Operating Partnership. During Fiscal 1997, net
borrowings under the Operating Partnership's Revolving Credit Facility totaled
$6 million compared with $15 million in Fiscal 1996. At September 30, 1997, the
Partnership had $72 million available under the Revolving Credit Facility. The
Partnership's cash needs are typically greatest during the first fiscal quarter
due to increased working capital needs and interest and distribution payments.
The Partnership also borrowed $7 million under its Acquisition Facility during
Fiscal 1997. There were borrowings of $30 million under the Acquisition Facility
and $7 million under the Special Purpose Facility during Fiscal 1996. During
Fiscal 1997, the Partnership made long-term debt repayments of $3.0 million
compared with repayments of $10.9 million in Fiscal 1996. Debt repayments in
Fiscal 1996 included $8.4 million associated with UGI's contribution of the net
assets of Oahu Gas Service, Inc.
Cash paid for Partnership formation fees and expenses during Fiscal 1996
represents the reimbursement by the Partnership of fees and expenses previously
paid by AmeriGas, Inc. relating to the formation of the Partnership.
-26-
<PAGE> 29
YEAR 2000 MATTERS
The Partnership has a number of information system improvement initiatives under
way that will require increased expenditures during the next several years.
These initiatives include the modification of certain computer software systems
to be Year 2000 compliant. Although final cost estimates to modify current
systems have yet to be determined, the Partnership does not expect such costs,
which will be expensed when incurred, will have a material effect on the
Partnership's results of operations.
IMPACT OF INFLATION
Inflation affects the prices the Partnership pays for operating and
administrative services and, to some extent, propane gas. Competitive pressures
may limit the Partnership's ability to recover fully propane product cost
increases. The Partnership attempts to limit the effects of inflation on its
results of operations through cost control efforts and productivity
improvements.
ACCOUNTING PRINCIPLES NOT YET ADOPTED
The Financial Accounting Standards Board recently issued Statement of Financial
Accounting Standards (SFAS) No. 128, "Earnings Per Share" (SFAS 128) and SFAS
No. 130, "Reporting Comprehensive Income" (SFAS 130). SFAS 128 establishes
standards for computing and presenting earnings per share and simplifies the
previous standards for computing earnings per share found in Accounting
Principles Board Opinion No. 15. SFAS 128 is effective for financial statements
issued for periods ending after December 15, 1997. SFAS 130 establishes
standards for reporting and displaying comprehensive income and its components
in financial statements. SFAS 130 is effective for fiscal years beginning after
December 15, 1997. In addition, the American Institute of Certified Public
Accountants issued Statement of Position No. 96-1, "Environmental Remediation
Liabilities" (SOP 96-1) in October 1996. SOP 96-1 provides guidance on the
recognition, measurement, display and disclosure of environmental remediation
liabilities. SOP 96-1 is effective for fiscal years beginning after December 15,
1996. The adoption of these standards is not expected to have a material effect
on the Partnership's financial position or results of operations.
-27-
<PAGE> 30
FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking statements that are
subject to risks and uncertainties. The factors that could cause actual results
to differ materially include those discussed herein as well as those listed in
Exhibit 99. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this Annual
Report on Form 10-K. The General Partner undertakes no obligation to publicly
release any revision to these forward-looking statements to reflect events or
circumstances after the date of this Annual Report on Form 10-K.
-28-
<PAGE> 31
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and financial statement schedules referred to in
the index contained on pages F-2 through F-4 of this Report are incorporated
herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III: MANAGEMENT AND SECURITY HOLDERS
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE GENERAL PARTNER
The Partnership does not directly employ any persons responsible for
managing or operating the Partnership. The General Partner and UGI provide such
services and are reimbursed for direct and indirect costs and expenses including
all compensation and benefit costs. See "Certain Relationships and Related
Transactions" and Note 10 to the Partnership's Consolidated Financial
Statements.
The Board of Directors of the General Partner established a committee (the
"Audit Committee") consisting of two individuals, currently, Messrs. Donovan and
Van Dyck, who are neither officers nor employees of the General Partner or any
affiliate of the General Partner. The Audit Committee has the authority to
review, at the request of the General Partner, specific matters as to which the
General Partner believes there may be a conflict of interest, in order to
determine if the resolution of such conflict is fair and reasonable to the
Partnership. In addition, the Audit Committee has the authority and
responsibility for selecting the Partnership's independent public accountants,
reviewing the Partnership's annual audit, and resolving accounting policy
questions.
-29-
<PAGE> 32
DIRECTORS AND EXECUTIVE OFFICERS OF THE GENERAL PARTNER
The following table sets forth certain information with respect to the
directors and executive officers of the General Partner. Directors are elected
annually by AmeriGas, Inc., a wholly owned subsidiary of UGI, as the sole
shareholder of the General Partner. Executive officers are elected for one-year
terms. There are no family relationships between any of the directors or any of
the executive officers or between any of the executive officers and any of the
directors.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE GENERAL PARTNER
<S> <C> <C>
Lon R. Greenberg 47 Chairman, Director, President and
Chief Executive Officer
Thomas F. Donovan 64 Director
Robert C. Forney 70 Director
James W. Stratton 61 Director
Stephen A. Van Dyck 54 Director
David I. J. Wang 65 Director
Brendan P. Bovaird 49 Vice President and General Counsel
Eugene V. N. Bissell 44 Vice President-Sales and Operations
Diane L. Carter 49 Vice President-Human Resources
R. Paul Grady 44 Vice President-Sales and Operations
William D. Katz 44 Vice President-Corporate Development
Robert H. Knauss 44 Vice President-Law and
Associate General Counsel and
Corporate Secretary
Charles L. Ladner 59 Vice President-Finance and Accounting
Gordon E. Regan, Jr. 45 Vice President-Purchasing and
Transportation
</TABLE>
-30-
<PAGE> 33
Mr. Greenberg is a Director (since October 1994) and Chairman (since
August 1996), and President and Chief Executive Officer (since July 1996) of the
General Partner. Mr. Greenberg is also Director (since 1994), Chairman (since
August 1996), Chief Executive Officer (since August 1995) and President (since
July 1994) of UGI, having been Senior Vice President - Legal and Corporate
Development of UGI (since July 1989). Mr. Greenberg previously served as Vice
President and General Counsel of AmeriGas, Inc. (1984 to 1994). He also serves
as a Director of Mellon PSFS Advisory Board.
Mr. Donovan was elected a Director of the General Partner on April 25,
1995. He retired as Vice Chairman of Mellon Bank on December 31, 1996, a
position held since 1988. He continues to serve as a consultant and an advisory
board member to Mellon Bank Corp. He also serves as a Director of Nuclear
Electric Insurance Co. and Merrill Lynch International Bank, Inc.
Dr. Forney was elected a Director of the General Partner on April 25,
1995. Dr. Forney is retired, having formerly served as Executive Vice President
(1981 to 1989) and Director (1979 to 1989) of E. I. duPont de Nemours & Co.,
Inc. (chemicals and petroleum products). He is a Director of UGI Corporation,
UGI Utilities, Inc., Wilmington Trust Corporation, Wilmington Trust Company and
Wilmington Trust of Pennsylvania.
Mr. Stratton was elected a Director of the General Partner on April 25,
1995. He is President and Director of Stratton Management Company (investment
advisory and financial consulting firm) since 1972, and Chairman and Chief
Executive Officer of FinDaTex (financial services firm). Mr. Stratton is a
Director of UGI Corporation, UGI Utilities, Inc., Stratton Growth Fund, Stratton
Monthly Dividend Shares, Inc., Stratton Small-Cap Yield Fund, Teleflex, Inc. and
Unisource Worldwide, Inc.
Mr. Van Dyck was elected a Director of the General Partner on June 15,
1995. He is Chairman of the Board and Chief Executive Officer of Maritrans Inc.
(since 1987), the nations largest independent marine transporter of petroleum.
He also serves as Chairman of the Board of West of England Mutual Insurance
Association, and as a Director of Mellon PSFS Advisory Board.
Mr. Wang was elected a Director of the General Partner on April 25,
1995. Mr. Wang is retired, having formerly served as Executive Vice President -
Timber and Specialty Products and a Director of International Paper Company
(1987 to 1991). He is a Director of UGI Corporation, UGI Utilities, Inc., and
Weirton Steel Corp.
Mr. Bissell is Vice President-Sales and Operations (since December
1995) of the General Partner. Previously, Mr. Bissell was Vice President -
Distributors and Fabrication, BOC Gases (August to December 1995), having been
Vice President - National Sales (1993 to 1995) and Regional Vice President
Southern Region for Distributor and Cylinder Gases Division, BOC Gases (1989 to
1993).
-31-
<PAGE> 34
Mr. Bovaird is Vice President and General Counsel of the General
Partner (since April 1995). He is also Vice President and General Counsel of UGI
Corporation, UGI Utilities, Inc. and AmeriGas, Inc. (since April 1995). Mr.
Bovaird previously served as Division Counsel and Member of the Executive and
Operations Committees of Wyeth-Ayerst International Inc. (1992 to 1995) and
Senior Vice President, General Counsel and Secretary of Orion Pictures
Corporation (1990 to 1991). Mr. Bovaird also engaged in private practice from
1991 to 1992.
Ms. Carter was elected Vice President - Human Resources of the General
Partner effective January 15, 1996. Prior to her election, Ms. Carter was Vice
President - Human Resources of Sisters of Mercy Health System, St. Louis,
Missouri (1994 to 1996). Previously, she was President and founding principal of
the Touchstone Partnership, Ltd., an organization and management consulting firm
based in Philadelphia (1991 to 1994).
Mr. Grady is Vice President - Sales and Operations (since August 1995)
of the General Partner. Mr. Grady was Vice President - Corporate Development of
UGI (March 1994 to August 1995), having been Director, Corporate Development
(September 1990 to March 1994). Previously, he was Director, Corporate
Development Services of Campbell Soup Company (1985 to August 1990).
Mr. Katz was elected Vice President - Corporate Development of the
General Partner effective October 1, 1996. Previously, he served as Vice
President - Corporate Development of UGI (1995 to 1996). Prior to joining UGI,
Mr. Katz was Director of Corporate Development with Campbell Soup Company for
over five years. Previously, he practiced law for approximately 10 years, first
with the firm of Jones, Day Reavis & Pogue, and later in the Legal Department at
Campbell Soup Company.
Mr. Knauss was elected to the additional position of Vice President-Law
and Associate General Counsel of the General Partner effective October 1, 1996,
having served as Corporate Secretary since 1994. Previously, he served as Group
Counsel - Propane (1989 to 1996) of UGI, having joined UGI as Associate Counsel
in 1985. Before joining UGI, he was an associate at the firm of Ballard, Spahr,
Andrews & Ingersoll in Philadelphia.
Mr. Ladner was elected Vice President - Finance and Accounting
effective April 28, 1997. He is also Senior Vice President - Finance of UGI
Corporation (since 1978).
Mr. Regan is Vice President-Purchasing and Transportation of the
General Partner (since May 1996). Prior to joining the General Partner, Mr.
Regan was President of the Chemical Division of DSI Transports, Inc. (1995 to
1996). Previously, he served Conoco, Inc. for over 20 years, most recently as
General Manager Business Support, Downstream-North America.
-32-
<PAGE> 35
ITEM 11. EXECUTIVE COMPENSATION
The following table shows cash and other compensation paid or accrued
to the General Partner's Chief Executive Officer and each of its four other most
highly compensated executive officers, (collectively, the "Named Executives")
for the last three fiscal years.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
- -----------------------------------------------------------------------------------------------------------------------------------
Long-Term Compensation
Annual Compensation
Awards Payouts
- -----------------------------------------------------------------------------------------------------------------------------------
Securities
Other Underlying Long- All
Annual Options/SARs Term Other
Name and Year Salary Bonus Compensation Granted Incentive Compensation
Principal Position ($) ($) (1) ($) (2) (#) ($) ($) (3)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Lon R. Greenberg (4) 1997 $509,827 $425,000 $ 7,671 200,000 (5) $0 $ 14,233
President, Chairman, 1996 $465,000 $122,760 $ 7,359 0 $0 $ 10,462
and Chief Executive 1995 $381,923 $ 0 $ 7,365 14,167 (6) $0 $ 11,439
Officer
- -----------------------------------------------------------------------------------------------------------------------------------
Charles L. Ladner (4) 1997 $254,762 $136,216 $ 8,235 75,000 (5) $0 $ 6,923
Vice President- 1996 $245,000 $ 52,920 $ 8,881 0 $0 $ 6,480
Finance and 1995 $245,000 $ 42,998 $ 8,851 0 $0 $ 8,219
Accounting
- -----------------------------------------------------------------------------------------------------------------------------------
Eugene V.N. Bissell (7) 1997 $169,931 $ 74,812 $50,027 0 $0 $21,876
Vice President-Sales 1996 $123,750 $ 0 $ 0 5,000 (6) $0 $ 0
and Operations
- -----------------------------------------------------------------------------------------------------------------------------------
R. Paul Grady (7) 1997 $166,603 $ 73,353 $ 3,281 0 $0 $23,544
Vice President-Sales 1996 $158,704 $ 0 $ 7,508 0 $0 $14,292
and Operations 1995 $139,174 $ 15,566 $ 5,126 0 $0 $ 5,298
- -----------------------------------------------------------------------------------------------------------------------------------
Brendan P. Bovaird (4) 1997 $164,653 $ 64,449 $ 3,769 30,000 (5) $0 $ 4,196
Vice President and 1996 $149,999 $ 21,853 $ 1,299 0 $0 $ 1,363
General Counsel 1995 $ 66,346 $ 8,663 $ 0 10,000 (6) $0 $ 0
===================================================================================================================================
</TABLE>
(1) Messrs. Greenberg, Ladner and Bovaird participate in the UGI Annual
Bonus Plan. All other Named Executives participate in the AmeriGas
Partners Annual Bonus Plan. Awards under both Plans are for the year
reported, regardless of the year paid. Awards under both Plans are
based on the achievement of pre-determined business and/or financial
performance objectives which support business plans and goals. Bonus
opportunities vary by position and currently range from 0% to 148% of
base salary for Mr. Greenberg, 0% to 102% of base salary for Mr.
Ladner, 0% to 65% of base salary for Mr. Bovaird, and for the other
Named Executives, from 0 to an amount limited only by the Partnership's
profitability.
-33-
<PAGE> 36
(2) Amounts represent tax payment reimbursements for certain benefits,
except for Mr. Bissell. In addition to a tax payment reimbursement of
$7,563, Mr. Bissell received a $39,765 reimbursement of relocation
expenses and other perquisites available to executive officers
generally.
(3) The amounts represent contributions by the General Partner or UGI in
accordance with the provisions of the AmeriGas Propane, Inc. Pension
Plan ("APIPP"), the AmeriGas Propane, Inc. Employee Savings Plan (the
"AmeriGas Employee Savings Plan"), the UGI Utilities, Inc. Employee
Savings Plan (the "UGI Employee Savings Plan"), allocations under the
UGI Corporation Senior Executive Retirement Plan (the "UGI Executive
Retirement Plan"), and/or allocations under the AmeriGas Propane, Inc.
Supplemental Executive Retirement Plan (the "AmeriGas Executive
Retirement Plan". During fiscal 1997, 1996 and 1995, the following
contributions were made to the Named Executives: (i) under the AmeriGas
Employee Savings Plan: Mr. Bissell, $4,902, $0 and $0; Mr. Grady,
$7,048, $458 and $0; (ii) under the UGI Employee Savings Plan: Messrs.
Greenberg and Ladner, $3,375, $3,375 and $3,375; Mr. Grady, $0, $0 and
$2,962; and Mr. Bovaird, $3,375, $1,363 and $0; (iii) under the APIPP:
Mr. Grady, $0, $11,875 and $1,526; (iv) under the UGI Executive
Retirement Plan: Mr. Greenberg, $10,858, $7,087 and $8,064; Mr. Ladner,
$3,548, $3,105 and $4,844; Mr. Grady, $0, $2,427 and $352; and Mr.
Bovaird, $821, $0 and $0; (v) under the AmeriGas Executive Retirement
Plan: Mr. Bissell, $16,974, $0 and $0; and Mr. Grady, $16,496, $0 and
$0.
(4) Compensation reported for Messrs. Greenberg, Ladner and Bovaird is
attributable to their respective positions of Chairman, President and
Chief Executive Officer, Senior Vice President - Finance, and Vice
President and General Counsel of UGI Corporation. Compensation for
these individuals is also reported in the UGI Proxy Statement for the
1998 Annual Meeting of Shareholders and is not additive. None of them
receives compensation from the General Partner.
(5) Non-qualified stock options granted under the UGI Corporation 1997
Stock Option and Dividend Equivalent Plan. The 1997 Plan consists of
non-qualified stock option grants and the opportunity for participants
to earn an amount equivalent to the dividends paid on shares covered by
options, subject to a comparison of the total return realizable on a
share of UGI Common Stock ( the "UGI Return") with the total return
achieved by each member of a group of comparable peer companies ( the
"SODEP Peer Group") over a three-year period beginning January 1, 1997
and ending December 31, 1999. Total return encompasses both changes in
the per share market price and dividends paid on a share of UGI Common
Stock.
(6) Non-qualified stock options granted under the UGI Corporation 1992
Non-Qualified Stock Option Plan.
-34-
<PAGE> 37
(7) Effective October 1, 1996, the General Partner made grants to Messrs.
Bissell and Grady under the AmeriGas Propane, Inc. Long-Term Incentive
Plan ("LTIP"). Each grant represents the right to receive a like number
of Common Units of the Partnership or their cash equivalent, in the
discretion of the Compensation/Pension Committee of the Board of
Directors, together with a cash payment equal to the distributions
which would have been paid on a Common Unit during the performance
period if a performance contingency is met. No portion of any LTIP
grant will be paid if the performance contingency is not met by
September 30, 2001. See the "Long-Term Incentive Plan - Awards in Last
Fiscal Year" table for a description of the performance contingency. As
of September 30, 1997, Mr. Bissell's LTIP grant represented 10,000
Common Units with a market value of $260,000 and Mr. Grady's LTIP grant
represented 10,000 Common Units with a market value of $260,000. Market
values are based on the September 30, 1997 closing price for the Common
Units on the New York Stock Exchange.
-35-
<PAGE> 38
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
OPTION GRANTS IN LAST FISCAL YEAR
- ---------------------------------------------------------------------------------------------------------------------------------
Individual Grants
- ---------------------------------------------------------------------------------------------------------------------------------
Number of % of Total
Securities Options
Underlying Granted to Exercise or Grant Date
Options Employees Base Price Expiration Present
Name Granted (1) (2) ($/Share) Date Value (3)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Lon R. Greenberg 200,000 66% $22.625 12/9/06 $486,000
- ---------------------------------------------------------------------------------------------------------------------------------
Charles L. Ladner 75,000 25% $22.625 12/9/06 $182,250
- ---------------------------------------------------------------------------------------------------------------------------------
Eugene V.N. Bissell 0 0 - - -
- ---------------------------------------------------------------------------------------------------------------------------------
R. Paul Grady 0 0 - - -
- ---------------------------------------------------------------------------------------------------------------------------------
Brendan P. Bovaird 30,000 10% $22.625 12/9/06 $72,900
=================================================================================================================================
</TABLE>
(1) Non-qualified stock options granted on December 10, 1996 under the UGI
Corporation 1997 Stock Option and Dividend Equivalent Plan (the "1997
SODEP"). This grant also includes the opportunity to earn an amount
equivalent to the dividends paid during a three year performance period
on shares covered by options. The option exercise price is not less
than the fair market value of UGI's Common Stock on the date of the
grant. These options were fully vested on the date of grant. Options
granted under the Plan are nontransferable and are generally
exercisable only while the optionee is employed by UGI or a subsidiary.
Options are subject to adjustment in the event of recapitalization,
stock splits, mergers, and other similar corporate transactions
affecting UGI's Common Stock.
(2) A total of 305,000 stock options were granted to employees and
executive officers of the General Partner during fiscal year 1997 under
the 1997 SODEP.
-36-
<PAGE> 39
(3) Based on the Black-Scholes option pricing model. The assumptions used
in calculating the grant date present value are as follows:
o Three years of closing monthly stock price
observations were used to calculate the stock
volatility and dividend yield assumptions
o Stock volatility - .1676
o Stock's dividend yield - 6.54%
o Length of option term - 10 years
o Annualized risk-free interest rate - 6.36%
o Discount for risk of forfeiture - 0%
All options were granted at fair market value. The actual value, if
any, the executive may realize will depend on the excess of the stock
price on the date the option is exercised over the exercise price.
There is no assurance that the value realized by the executive will be
at or near the value estimated by the Black-Scholes model.
-37-
<PAGE> 40
<TABLE>
<CAPTION>
==================================================================================================================================
OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
- ----------------------------------------------------------------------------------------------------------------------------------
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money Options at Fiscal
Shares Options at Fiscal Year End Year End ($)
Acquired (#)
on Value
Exercise (#) Realized
Name ($) Exercisable Unexercisable Exercisable Unexercisable
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
143,959 (1) -0- $1,079,693 (2) $0
Lon R. Greenberg -0- $0 200,000 (3) -0- $1,000,000 (4) $0
- ----------------------------------------------------------------------------------------------------------------------------------
Charles L. Ladner 87,500 $527,595 75,000 (3) -0- $ 375,000 (4) $0
- ----------------------------------------------------------------------------------------------------------------------------------
Eugene V.N. Bissell -0- $0 1,000 (5) 4,000 (5) $ 7,000 (6) $28,000 (6)
- ----------------------------------------------------------------------------------------------------------------------------------
17,000 (1) -0- $ 127,500 (2) $0
R. Paul Grady -0- $0 2,000 (5) -0- $ 15,000 (7) $0
- ----------------------------------------------------------------------------------------------------------------------------------
10,000 (1) $ 75,000 (2) $0
Brendan P. Bovaird -0- $0 30,000 (3) -0- $150,000 (4) $0
==================================================================================================================================
</TABLE>
(1) Options granted under the 1992 Stock Option and Dividend Equivalent
Plan.
(2) Value based on comparison of price per share at September 30, 1997
(fair market value $27.625) to 1992 Stock Option and Dividend
Equivalent Plan option price ($20.125).
(3) Options granted under the 1997 Stock Option and Dividend Equivalent
Plan.
(4) Value based on comparison of price per share at September 30, 1997
(fair market value $27.625) to 1997 Stock Option and Dividend
Equivalent Plan option price ($22.625).
(5) Options granted under the 1992 Non-Qualified Stock Option Plan.
(6) Value based on comparison of price per share at September 30, 1997
(fair market value $27.625) to option grant price at December 18, 1995
(fair market value $20.625) under the terms of the 1992 Non-Qualified
Stock Option Plan.
(7) Value based on comparison of price per share at September 30, 1997
(fair market value $27.625) to option grant price at January 2, 1992
(fair market value $20.125) under the terms of the 1992 Non-Qualified
Stock Option Plan.
-38-
<PAGE> 41
The General Partner adopted a Long-Term Incentive Plan for key
executives effective October 1, 1996. Grants made under the Plan to the Named
Executives are shown in the table below.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
- ----------------------------------------------------------------------------------------------------------------------------------
Estimated Future Payouts
under Non-Stock Price-Based Plans
Number of Performance
Shares, Units or or Other Period
Other Rights until Maturation Target (2) Maximum (3)
Name (1) or Payout (# and $) (# and $)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Lon R. Greenberg 0 N/A N/A N/A
- ----------------------------------------------------------------------------------------------------------------------------------
Charles L. Ladner 0 N/A N/A N/A
- ----------------------------------------------------------------------------------------------------------------------------------
Eugene V. N. Bissell 10,000 3 to 5 years 11,000 Common 15,000 Common
Units; and Units; and
$96,800 $99,000
- ----------------------------------------------------------------------------------------------------------------------------------
R. Paul Grady 10,000 3 to 5 years 11,000 Common 15,000 Common
Units; and Units; and
$96,800 $99,000
- ----------------------------------------------------------------------------------------------------------------------------------
Brendan P. Bovaird 0 N/A N/A N/A
==================================================================================================================================
</TABLE>
(1) Grants made under the Plan are subject to achievement of a performance
contingency. Each grant represents the right to receive a like number
of Common Units of the Partnership (or their cash equivalent, at the
discretion of the Compensation/Pension Committee of the Board of
Directors of the General Partner), together with the opportunity to
receive a cash payment equal to distributions made on an equivalent
number of Common Units during a performance period of up to five years.
The performance contingency is Partnership financial and operating
performance over a minimum of twelve consecutive calendar quarters
ending no later than September 30, 2001, such that the Partnership's
Subordinated Units convert to Common Units in accordance with the
Partnership Agreement. See Note 3 to the Partnership's Consolidated
Financial Statements for a summary of the conditions necessary for
conversion of the Subordinated Units. No portion of any grant will be
paid if the performance contingency is not met by September 30, 2001.
Depending on the date of achievement of the contingency, payouts will
range from 50% to 150% of the size of the awards shown above. In the
event of a change of control, a portion of the grants may become
payable pursuant to Agreements between the General Partner and Messrs.
Bissell and Grady.
-39-
<PAGE> 42
(2) Achievement of the performance contingency by September 30, 2000
results in payment of 110% of the grant.
(3) Achievement of the performance contingency by September 30, 1999
results in payment of 150% of the grant.
-40-
<PAGE> 43
RETIREMENT BENEFITS
The following table shows the annual benefits upon retirement at age 65
in 1997 without regard to statutory maximums, for various combinations of final
average earnings and lengths of service which may be payable to Messrs.
Greenberg, Ladner and Bovaird under the Retirement Income Plan for Employees of
UGI Utilities, Inc. and participating employers (the "UGI Retirement Plan") and
the UGI Supplemental Executive Retirement Plan.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
PENSION PLAN BENEFITS
- ---------------------------------------------------------------------------------------------------------------------------------
Final 5-Year
Average Annual Benefit for Years of Credited Service Shown (1)
Annual
Earnings (2) 15 Years 20 Years 25 Years 30 Years 35 Years 40 Years
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$200,000 $57,000 $76,000 $95,000 $114,000 $133,000 $136,800(3)
- ---------------------------------------------------------------------------------------------------------------------------------
$300,000 $85,500 $114,000 $142,500 $171,000 $199,500 $205,200(3)
- ---------------------------------------------------------------------------------------------------------------------------------
$400,000 $114,000 $152,000 $190,000 $228,000 $266,000 $273,600(3)
- ---------------------------------------------------------------------------------------------------------------------------------
$500,000 $142,500 $190,000 $237,500 $285,000 $332,500 $342,000(3)
- ---------------------------------------------------------------------------------------------------------------------------------
$600,000 $171,000 $228,000 $285,000 $342,000 $399,000 $410,400(3)
- ---------------------------------------------------------------------------------------------------------------------------------
$700,000 $199,500 $266,000 $332,500 $399,000 $465,500 $478,800(3)
- ---------------------------------------------------------------------------------------------------------------------------------
$800,000 $228,000 $304,000 $380,000 $456,000 $532,000 $547,200(3)
- ---------------------------------------------------------------------------------------------------------------------------------
$900,000 $256,500 $342,000 $427,500 $513,000 $598,500 $615,600(3)
- ---------------------------------------------------------------------------------------------------------------------------------
$1,000,000 $285,000 $380,000 $475,000 $570,000 $665,000 $684,000(3)
- ---------------------------------------------------------------------------------------------------------------------------------
$1,200,000 $342,000 $456,000 $570,000 $684,000 $798,000 $820,800(3)
- ---------------------------------------------------------------------------------------------------------------------------------
$1,400,000 $399,000 $532,000 $665,000 $798,000 $931,000 $957,600(3)
=================================================================================================================================
</TABLE>
(1) Annual benefits are computed on the basis of straight life annuity
amounts. These amounts include pension benefits, if any, to which a
participant may be entitled as a result of participation in a pension
plan of a UGI subsidiary during previous periods of employment. The
amounts shown do not take into account exclusion of up to 35% of the
estimated primary Social Security benefit. The UGI Retirement Plan
provides a minimum benefit equal to 25% of a participant's final 12
months' earnings, reduced proportionately for less than 15 years of
credited service at retirement. The minimum UGI Retirement Plan Benefit
is not subject to Social Security offset. Messrs. Greenberg, Ladner and
Bovaird had 17, 23 and 2 years of estimated credited service,
respectively, at September 30, 1997. Mr. Grady previously accumulated
more than 4 years of credited service in the UGI Retirement Plan before
joining the General Partner in 1995. Mr. Bissell previously
-41-
<PAGE> 44
accumulated more than 5 years of credited service with UGI and its
subsidiaries before joining the General Partner in 1995.
(2) Consists of (i) base salary, commissions and cash payments under the
UGI Annual Bonus Plan, and (ii) deferrals thereof permitted under the
Internal Revenue Code.
(3) The maximum benefit under the UGI Retirement Plan and the UGI
Supplemental Executive Retirement Plan is equal to 60% of a
participant's highest consecutive 12 months' earnings during the last
120 months.
SEVERANCE PAY PLAN FOR SENIOR EXECUTIVE EMPLOYEES
Named Executives Employed by UGI Corporation. The UGI Corporation
Senior Executive Employee Severance Pay Plan (the "UGI Severance Plan") assists
certain senior level employees of UGI, including Messrs. Greenberg, Bovaird and
Ladner in the event their employment is terminated without fault on their part.
Specified benefits are payable to a senior executive covered by the UGI
Severance Plan if the senior executive's employment is involuntarily terminated
for any reason other than for cause or as a result of the senior executive's
death or disability.
Benefits payable include a lump sum cash payment in an amount
approximately equal to the sum of (i) three months of compensation (18 months in
the case of Mr. Greenberg), (ii) a pro rata portion of the senior executive's
annual target bonus under the Annual Bonus Plan for the current year, provided
that the employment termination date occurs during the first ten months of the
fiscal year, or, if the employment termination date occurs during the last two
months of the fiscal year, and the Chief Executive Officer determines not to use
his discretion to pay a pro-rata portion of the executive's annual target bonus,
the full bonus payable after the end of the fiscal year, assuming that (x) the
weighting to be applied to the business/financial performance goals is 100%, and
(y) the employee served the entire fiscal year, and (iii) separation pay
determined in a manner consistent with that payable to employees generally, not
exceeding 12 months of compensation. Certain employee benefits are continued for
a specified period (the "Employee Benefit Period") not exceeding 15 months (30
months in the case of Mr. Greenberg) after termination, or the senior executive
may be paid a lump sum equal to the present value of such benefits.
In order to receive benefits under the UGI Severance Plan, a senior
executive is required to execute a release which discharges UGI and its
subsidiaries from liability for any claims the senior executive may have against
any of them, other than claims for amounts or benefits due to the executive
under any plan, program or contract provided by or entered into with UGI or its
subsidiaries. The senior executive is also required to cooperate in attending to
matters pending at the time of his or her termination of employment.
-42-
<PAGE> 45
Named Executives Employed by AmeriGas Propane. The AmeriGas Propane,
Inc. Executive Employee Severance Pay Plan (the "AmeriGas Severance Plan")
assists certain senior level employees of the General Partner including Messrs.
Bissell and Grady in the event their employment is terminated without fault on
their part. Specified benefits are payable to a senior executive covered by the
AmeriGas Severance Plan if the senior executive's employment is involuntarily
terminated for any reason other than for cause or as a result of the senior
executive's death or disability.
Benefits payable include a lump sum cash payment in an amount
approximately equal to the sum of (i) three months of compensation (6 months in
the case of the Chief Executive Officer), (ii) a pro rata portion of the senior
executive's annual target bonus under the Annual Bonus Plan for the current
year, provided that the employment termination date occurs during the first ten
months of the fiscal year, or, if the employment termination date occurs during
the last two months of the fiscal year, and the Chief Executive Officer
determines not to use his discretion to pay a pro-rata portion of the
executive's annual target bonus, the full bonus payable after the end of the
fiscal year, assuming that (x) the weighting to be applied to the
business/financial performance goals is 100%, and (y) the employee served the
entire fiscal year, and (iii) separation pay determined in a manner consistent
with that payable to employees generally, not exceeding 12 months of
compensation (including target bonus). Minimum separation pay ranges from six to
twelve month's base salary, depending on the executive's employment grade.
Certain employee benefits are continued for a specified period (the "Employee
Benefit Period") not exceeding 15 months (30 months in the case of the Chief
Executive Officer) after termination, or the senior executive may be paid a lump
sum equal to the present value of such benefits. The AmeriGas Severance Plan
also provides for payment in cash of an amount approximately equal to all
distribution equivalents credited (including those that would be credited during
the Employee Benefit Period) under the AmeriGas Propane, Inc. 1997 Long-Term
Incentive Plan and successor plans.
In order to receive benefits under the AmeriGas Severance Plan, a
senior executive is required to execute a release which discharges the General
Partner and its affiliates from liability for any claims the senior executive
may have against any of them, other than claims for amounts or benefits due to
the executive under any plan, program or contract provided by or entered into
with the General Partner or its affiliates. The senior executive is also
required to cooperate in attending to matters pending at the time of his or her
termination of employment.
CHANGE OF CONTROL ARRANGEMENTS
Named Executives Employed By UGI Corporation. Messrs. Greenberg, Ladner
and Bovaird each have an agreement with UGI Corporation (the "Agreement") which
provides certain benefits in the event of a change of control. The Agreements
operate independently of the UGI Severance Plan, continue through July 2002, and
are automatically extended in one-year increments thereafter unless, prior to a
change of control, UGI terminates an Agreement. In the
-43-
<PAGE> 46
absence of a change of control, each Agreement will terminate when, for any
reason, the executive terminates his employment with UGI or its subsidiaries.
A change of control is generally deemed to occur if: (i) any person
(other than the executive, his affiliates and associates, UGI or any of its
subsidiaries, any employee benefit plan of UGI or any of its subsidiaries, or
any person or entity organized, appointed, or established by UGI or its
subsidiaries for or pursuant to the terms of any such employee benefit plan),
together with all affiliates and associates of such person, acquires securities
representing 20% or more of either (x) the then outstanding shares of common
stock of UGI or (y) the combined voting power of UGI's then outstanding voting
securities, in either case unless the members of the Executive Committee of the
Board of Directors in office immediately prior to such acquisition (the
"Executive Committee") determine that the circumstances do not warrant the
implementation of the provisions of the Agreement; (ii) individuals who at the
beginning of any 24-month period constitute the Board of Directors (the
"Incumbent Board") and any new director whose election by the Board, or
nomination for election by UGI's shareholders, was approved by a vote of at
least a majority of the Incumbent Board, cease for any reason to constitute a
majority thereof; (iii) UGI is reorganized, merged or consolidated with or into,
or sells all or substantially all of its assets to, another corporation in a
transaction in which former shareholders of UGI do not own more than 50% of the
outstanding common stock and the combined voting power, respectively, of the
then outstanding voting securities of the surviving or acquiring corporation
after the transaction, in any such case, unless the Executive Committee
determines at the time of such transaction that the circumstances do not warrant
the implementation of the provisions of the Agreement; or (iv) UGI is liquidated
or dissolved.
Severance benefits are payable under the Agreements if there is a
termination of the executive's employment without cause at any time within three
years after a change of control. In addition, following a change of control, the
executive may elect to terminate his or her employment without loss of severance
benefits in certain specified contingencies, including termination of officer
status; a significant adverse change in authority, duties, responsibilities or
compensation; the failure of UGI to comply with and satisfy any of the terms of
the Agreement; or a substantial relocation or excessive travel requirements.
An executive who is terminated with rights to severance compensation
under an Agreement will be entitled to receive an amount equal to 1.0 or 1.5
(2.5 in the case of Mr. Greenberg) times his average total cash remuneration for
the preceding five calendar years. If the severance compensation payable under
the Agreement, either alone or together with other payments to an executive,
would constitute "excess parachute payments," as defined in Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"), the executive will
receive an additional amount, such that the net amount retained after payment of
applicable taxes is equal to the total severance compensation payable.
-44-
<PAGE> 47
Named Executives Employed by the General Partner. Messrs. Bissell and
Grady each have an agreement with the General Partner (the "Agreement") which
provides certain benefits in the event of a change of control. The Agreements
operate independently of the AmeriGas Severance Plan, continue through
July 2002, and are automatically extended in one-year increments thereafter
unless, prior to a change of control, the General Partner terminates an
Agreement. In the absence of a change of control, each Agreement will terminate
when, for any reason, the executive terminates his employment with the General
Partner or any of its subsidiaries.
A change of control is generally deemed to occur if : (i) a change of
control of UGI, as defined above, occurs, (ii) the General Partner, AmeriGas
Partners or the Operating Partnership is reorganized, merged or consolidated
with or into, or sells all or substantially all of its assets to, another
corporation or partnership in a transaction in which the former shareholders of
the General Partner, or former limited partners, as the case may be, do not own
more than 50% of the outstanding common stock and combined voting power, or the
outstanding common units of such partnership, after the transaction, unless the
Executive Committee of the Board of Directors of the General Partner determines
at the time of such transaction that the circumstances do not warrant the
implementation of the provisions of the Agreement, (iii) the General Partner,
AmeriGas Partners or the Operating Partnership is liquidated or dissolved, (iv)
UGI and its subsidiaries fail to own fifty-one percent (51%) of the general
partnership interests of AmeriGas Partners or the Operating Partnership, (unless
the Executive Committee determines otherwise), (v) UGI and its subsidiaries fail
to own fifty-one percent (51%) of the combined voting power of the General
Partner's then outstanding voting securities, (unless the Executive Committee
determines otherwise), (vi) AmeriGas Propane, Inc. is removed as the general
partner of AmeriGas Partners by vote of the limited partners, or AmeriGas
Propane, Inc. is removed as the general partner of AmeriGas Partners or the
Operating Partnership as a result of judicial or administrative proceedings.
Severance benefits are payable under the Agreements if there is a
termination of the executive's employment without cause at any time within three
years after a change of control. In addition, following a change of control, the
executive may elect to terminate his or her employment without loss of severance
benefits in certain specified contingencies, including termination of officer
status; a significant adverse change in authority, duties, responsibilities or
compensation; the failure of the General Partner to comply with and satisfy any
of the terms of the Agreement; or a substantial relocation or excessive travel
requirements.
An executive who is terminated with rights to severance compensation
under an Agreement will be entitled to receive an amount equal to 1.0 times his
average total cash remuneration for the preceding five calendar years, and,
unless payment shall already have been made pursuant to the AmeriGas Propane,
Inc. 1997 Long-Term Incentive Plan ("LTIP"), an additional amount representing
up to 110% (based on length of service) of the fair market value of the Common
Units underlying grants made to the executive under the LTIP. If the severance
compensation payable under the Agreement, either alone or together with other
payments to an
-45-
<PAGE> 48
executive, would constitute "excess parachute payments," as defined in Section
280G of the Code, the executive will receive an additional amount, such that the
net amount retained after payment of applicable taxes is equal to the total
severance compensation payable.
BOARD OF DIRECTORS
Officers of the General Partner receive no additional compensation for
service on the Board of Directors or on any Committee of the Board. The General
Partner pays an annual retainer of $22,000 to all other directors and an
attendance fee of $1,000 for each Board meeting. For service on Committees, the
General Partner pays an annual retainer of $2,000 to each Committee Chairman and
an attendance fee of $1,000 for each Committee meeting attended. The General
Partner reimburses directors for expenses incurred by them (such as travel
expenses) in serving on the Board and Committees. The General Partner determines
all expenses allocable to the Partnership, including expenses allocable to the
services of directors.
COMPENSATION/PENSION COMMITTEE
The members of the General Partner's Compensation/Pension Committee are
Robert C. Forney (Chairman), Thomas F. Donovan and David I. J. Wang.
-46-
<PAGE> 49
ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
OWNERSHIP OF LIMITED PARTNERSHIP UNITS BY CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding each
person known by the Partnership to have been the beneficial owner of more than
5% of the Partnership's voting securities representing limited partner interests
as of December 1, 1997. AmeriGas Propane, Inc.
is the sole general partner of the Partnership.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS (5) BENEFICIAL PERCENT
TITLE OF CLASS OF BENEFICIAL OWNER OWNERSHIP OF CLASS
- -------------- ------------------- --------- --------
<S> <C> <C> <C>
Common Units UGI Corporation 4,347,272 (1) 19.7%
AmeriGas, Inc. 4,347,272 (2) 19.7%
AmeriGas Propane, Inc. 4,347,272 (3) 19.7%
Petrolane Incorporated 1,407,911 (4) 6.4%
Subordinated Units UGI Corporation 19,782,146 (1) 100.0%
AmeriGas, Inc. 19,782,146 (2) 100.0%
AmeriGas Propane, Inc. 19,782,146 (6) 100.0%
Petrolane Incorporated 6,432,000 (7) 33.0%
</TABLE>
- ----------------------
(1) Based on the number of units held by its indirect wholly owned
subsidiaries, Petrolane Incorporated ("Petrolane") and AmeriGas
Propane, Inc.
(2) Based on the number of units held by its direct and indirect wholly
owned subsidiaries mentioned in footnote (1).
(3) Includes 2,939,361 Common Units for which AmeriGas Propane, Inc. has
sole voting and investment power, and 1,407,911 Common Units held by
its subsidiary, Petrolane.
(4) Petrolane has sole voting and investment power.
(5) The address of each of UGI, AmeriGas, Inc., AmeriGas Propane, Inc. and
Petrolane is 460 North Gulph Road, King of Prussia, PA 19406.
(6) Includes 13,350,146 Subordinated Units for which AmeriGas Propane, Inc.
has sole voting and investment power, and 6,432,000 Subordinated Units
held by its subsidiary, Petrolane.
(7) Petrolane has sole voting and investment power.
-47-
<PAGE> 50
OWNERSHIP OF PARTNERSHIP COMMON UNITS BY THE DIRECTORS AND EXECUTIVE OFFICERS
OF THE GENERAL PARTNER
The table below sets forth as of December 1, 1997 the beneficial
ownership of Partnership Common Units by each director and each of the Named
Executives currently serving the General Partner, as well as by the directors
and all of the executive officers of the General Partner as a group. No
director, Named Executive or executive officer beneficially owns (i) any
Subordinated Units, or (ii) more than 1% of the Partnership's Common Units. The
total number of Common Units beneficially owned by the directors and executive
officers of the General Partner as a group represents less than 1% of the
Partnership's outstanding Common Units.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1)
- ------------------------ -----------------------
<S> <C>
Lon R. Greenberg 1,500 (2)
Thomas F. Donovan 1,000
Robert C. Forney 1,600
James W. Stratton 1,000
Stephen A. Van Dyck 1,000
David I. J. Wang 5,000
Eugene V.N. Bissell 1,500
Brendan P. Bovaird 200
Charles L. Ladner 1,000
R. Paul Grady 2,300
Directors and executive officers as a group (14 persons) 16,100
</TABLE>
(1) Sole voting and investment power unless otherwise specified.
(2) 1,000 Units are owned by Mr. Greenberg's adult children; 500 Units are
held by Mr. Greenberg as custodian for a dependent child.
-48-
<PAGE> 51
The General Partner is a wholly owned subsidiary of AmeriGas, Inc.
which is a wholly owned subsidiary of UGI. The table below sets forth, as of
December 9, 1997, the beneficial ownership of UGI Common Stock by each director
and each of the Named Executives, as well as by the directors and the executive
officers of the General Partner as a group. Mr. Greenberg is the beneficial
owner of approximately 1.2% of UGI's Common Stock. All other directors, Named
Executives and executive officers own less than 1% of UGI's outstanding shares.
The total number of shares beneficially owned by the directors and executive
officers as a group (including 428,959 shares subject to options exercisable
within 60 days), represents approximately 2% of UGI's outstanding shares.
<TABLE>
<CAPTION>
NUMBER OF
SHARES AND
NATURE OF
BENEFICIAL NUMBER
OWNERSHIP OF
EXCLUDING STOCK
NAME OF BENEFICIAL OWNER OPTIONS (1)(2) OPTIONS TOTAL
- ------------------------ -------------- ------- -----
<S> <C> <C> <C>
Lon R. Greenberg 90,360 293,959 384,319
Thomas F. Donovan 0 0 0
Robert C. Forney 12,186 4,000 16,186
James W. Stratton 8,779 5,000 13,779
Stephen A. Van Dyck 0 0 0
David I. J. Wang 20,894 5,000 25,894
Eugene V.N. Bissell 5,397 1,000 6,397
Brendan P. Bovaird 8,147 (3) 40,000 48,147
R. Paul Grady 7,373 19,000 26,373
Charles L. Ladner 47,607 (3) 50,000 97,607
Directors and executive officers
as a group (14 persons) 219,637 (3) 428,959 648,596
</TABLE>
(1) This column shows shares held in the individual's name individually or
jointly with others, or in the name of a bank, broker or nominee for
the individual's account.
(2) Included in the number of shares shown above are Deferred Units
("Units") acquired through the UGI Corporation 1997 Directors' Equity
Compensation Plan. Units are neither actual shares nor other
securities, but each Unit will be converted to one share of common
stock and paid out to directors upon their retirement or termination of
service. The number of Units included for the respective directors is
as follows: Messrs. Stratton (7,351 Units), Forney (7,358 Units) and
Wang (6,466).
-49-
<PAGE> 52
(3) Includes the number of shares represented by units held in the UGI
Stock Fund of the 401(k) Employee Savings Plan based on September 30,
1997 Savings Plan statements.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The General Partner employs persons responsible for managing and
operating the Partnership. The Partnership reimburses the General Partner for
the direct and indirect costs of providing these services, including all
compensation and benefit costs.
The Operating Partnership has a revolving line of credit up to a
maximum of $20 million from the General Partner available until September 15,
2002, the termination date of the Revolving Credit Facility. Any loans under
this agreement will be unsecured and subordinated to all senior debt of the
Operating Partnership. The facility fees for this line of credit are computed on
the same basis as the facility fees under the Revolving Credit Facility, and
totaled $68,800 in fiscal year 1997. Interest rates are based on one-month
offshore interbank borrowing rates. The interest rate for a recent Revolving
Credit Facility borrowing from November 18, 1997 to December 18, 1997 is
6.1875%, representing a 5.6875% one-month Offshore Rate, plus an Applicable
Margin of .50%. See Note 4 to the Partnership's Consolidated Financial
Statements, which are filed as an exhibit to this Report.
The Partnership and the General Partner also have extensive ongoing
relationships with UGI and its affiliates. UGI performs certain financial and
administrative services for the General Partner on behalf of the Partnership.
UGI does not receive a fee for such services, but is reimbursed for all direct
and indirect expenses incurred in connection therewith, including all
compensation and benefit costs. A wholly owned subsidiary of UGI provides the
Partnership with general liability, automobile and workers' compensation
insurance for up to $500,000 over the Partnership's self-insured retention.
Another wholly owned subsidiary of UGI leases office space to the General
Partner for its headquarters staff. In addition, a UGI master policy provides
accidental death and business travel and accident insurance coverage for
employees of the General Partner. The General Partner is billed directly by the
insurer for this coverage. As discussed under "Business -- Trade Names; Trade
and Service Marks," UGI, Petrolane and the General Partner have licensed the
trade names "AmeriGas," "America's Propane Company" and "Petrolane" and the
related service marks and trademark to the Partnership on a royalty-free basis.
Finally, the Partnership obtains management information services from the
General Partner, and reimburses the General Partner for its direct and indirect
expenses related to those services. The rental payments and insurance premiums
charged to the Partnership by UGI and its affiliates are comparable to amounts
charged by unaffiliated parties. In fiscal year 1997, the Partnership paid UGI
and its affiliates $12,033,835 for the services and expense reimbursements
referred to in this paragraph.
-50-
<PAGE> 53
PART IV: ADDITIONAL EXHIBITS, SCHEDULES AND REPORTS
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
AND REPORTS ON FORM 8-K
(a) DOCUMENTS FILED AS PART OF THIS REPORT:
(1) and (2) FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
The financial statements and financial statement schedules incorporated
by reference or included in this Report are listed in the accompanying Index to
Financial Statements and Financial Statement Schedules set forth on pages F-2
through F-4 of this Report, which is incorporated herein by reference.
(3) LIST OF EXHIBITS:
The exhibits filed as part of this Report are as follows (exhibits
incorporated by reference are set forth with the name of the
registrant, the type of report and registration number or last date of
the period for which it was filed, and the exhibit number in such
filing):
<TABLE>
<CAPTION>
===================================================================================================================================
INCORPORATION BY REFERENCE
===================================================================================================================================
Exhibit No. Exhibit Registrant Filing Exhibit
===================================================================================================================================
<S> <C> <C> <C> <C>
2.1 Merger and Contribution Agreement AmeriGas Registration 10.21
among AmeriGas Partners, L.P., Partners, L.P. Statement on
AmeriGas Propane, L.P., New AmeriGas Form S-4
Propane, Inc., AmeriGas Propane, Inc., (No. 33-92734)
AmeriGas Propane-2, Inc., Cal Gas
Corporation of America, Propane
Transport, Inc. and NORCO
Transportation Company
2.2 Conveyance and Contribution Agreement among AmeriGas Registration 10.22
AmeriGas Partners, L.P., AmeriGas Propane, L.P. Partners, L.P. Statement on
and Petrolane Incorporated Form S-4
(No. 33-92734)
===================================================================================================================================
3.1 Amended and Restated Agreement of Limited AmeriGas Partners, Form 10-K 3.1
Partnership of AmeriGas Partners, L.P. dated as L.P. (9/30/95)
of September 18, 1995
===================================================================================================================================
</TABLE>
-51-
<PAGE> 54
<TABLE>
<CAPTION>
===================================================================================================================================
INCORPORATION BY REFERENCE
===================================================================================================================================
Exhibit No. Exhibit Registrant Filing Exhibit
===================================================================================================================================
<S> <C> <C> <C> <C>
3.2 Certificate of Incorporation of AmeriGas Registration 3.3
AmeriGas Finance Corp. Partners, L.P. Statement on
Form S-4
(No. 33-92734)
3.3 Bylaws of AmeriGas Finance Corp. AmeriGas Registration 3.4
Partners, L.P. Statement on
Form S-4
(No. 33-92734)
- -----------------------------------------------------------------------------------------------------------------------------------
4.1 Indenture dated as of April 19, 1995 AmeriGas Form 10-Q 4.1
among AmeriGas Partners, L.P., Partners, L.P. (3/31/95)
AmeriGas Finance Corp., and First
Union National Bank (formerly, First
Fidelity Bank, National Association) as
Trustee
4.2 Specimen Certificate of Notes AmeriGas Form 10-Q 4.2
Partners, L.P. (3/31/95)
4.3 Registration Rights Agreement dated as AmeriGas Form 10-Q 4.3
of April 19, 1995 among Donaldson, Partners, L.P. (3/31/95)
Lufkin & Jenrette Securities Corporation,
Smith Barney, Inc., AmeriGas Partners,
L.P. and AmeriGas Finance Corp.
4.4 Note Agreement dated as of April 12, AmeriGas Form 10-Q 10.8
1995 among The Prudential Insurance Partners, L.P. (3/31/95)
Company of America, Metropolitan Life
Insurance Company, and certain other
institutional investors and AmeriGas
Propane, L.P., New AmeriGas Propane,
Inc. and Petrolane Incorporated
*4.5 First Amendment dated as of September
12, 1997 to Note Agreement dated as of
April 12, 1995
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-52-
<PAGE> 55
<TABLE>
<CAPTION>
==============================================================================================================================-----
INCORPORATION BY REFERENCE
==============================================================================================================================-----
Exhibit No. Exhibit Registrant Filing Exhibit
===================================================================================================================================
<S> <C> <C> <C> <C>
*10.1 Amended and Restated Credit
Agreement dated as of September 15,
1997 among AmeriGas Propane, L.P.,
AmeriGas Propane, Inc., Petrolane
Incorporated, Bank of America National
Trust and Savings Association, as Agent,
First Union National Bank, as
Syndication Agent and certain banks
*10.2 Agreement dated as of May 1, 1996 between
TE Products Pipeline Company, L.P., and AmeriGas
Propane, L.P.
10.3 Intercreditor and Agency Agreement AmeriGas Form 10-Q 10.2
dated as of April 19, 1995 among Partners, L.P. (3/31/95)
AmeriGas Propane, Inc., Petrolane Incorporated,
AmeriGas Propane, L.P., Bank of America National
Trust and Savings Association ("Bank of America")
as Agent, Mellon Bank, N.A. as Cash Collateral
Sub-Agent, Bank of America as Collateral
Agent and certain creditors of AmeriGas Propane,
L.P.
10.4 General Security Agreement dated as of AmeriGas Form 10-Q 10.3
April 19, 1995 among AmeriGas Partners, L.P. (3/31/95)
Propane, L.P., Bank of America National
Trust and Savings Association and
Mellon Bank, N.A.
10.5 Subsidiary Security Agreement dated as AmeriGas Form 10-Q 10.4
of April 19, 1995 among AmeriGas Partners, L.P. (3/31/95)
Propane, L.P., Bank of America National
Trust and Savings Association as
Collateral Agent and Mellon Bank, N.A.
as Cash Collateral Agent
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-53-
<PAGE> 56
<TABLE>
<CAPTION>
===================================================================================================================================
INCORPORATION BY REFERENCE
===================================================================================================================================
Exhibit No. Exhibit Registrant Filing Exhibit
===================================================================================================================================
<S> <C> <C> <C> <C>
10.6 Restricted Subsidiary Guarantee dated as AmeriGas Form 10-Q 10.5
of April 19, 1995 by AmeriGas Propane, Partners, L.P. (3/31/95)
L.P. for the benefit of Bank of America
National Trust and Savings Association,
as Collateral Agent
10.7 Trademark License Agreement dated AmeriGas Form 10-Q 10.6
April 19, 1995 among UGI Corporation, Partners, L.P. (3/31/95)
AmeriGas, Inc., AmeriGas Propane, Inc.,
AmeriGas Partners, L.P. and AmeriGas
Propane, L.P.
10.8 Trademark License Agreement dated AmeriGas Form 10-Q 10.7
April 19, 1995 among AmeriGas Partners, L.P. (3/31/95)
Propane, Inc., AmeriGas Partners, L.P.
and AmeriGas Propane, L.P.
10.9 Stock Purchase Agreement dated May Petrolane Registration on 10.16(a)
27, 1989, as amended and restated July Incorporated/ Form S-1
31, 1989, between Texas Eastern AmeriGas, Inc. (No. 33-69450)
Corporation and QFB Partners
10.10 Amended and Restated Sublease UGI Form 10-K 10.35
Agreement dated April 1, 1988, between Corporation (9/30/94)
Southwest Salt Co. and AP Propane, Inc.
(the "Southwest Salt Co. Agreement")
10.11 Letter dated September 26, 1994 UGI Form 10-K 10.36
pursuant to Article 1, Section 1.2 of the Corporation (9/30/94)
Southwest Salt Co. Agreement re option
to renew for period of June 1, 1995 to
May 31, 2000
*10.12 Financing Agreement dated as of
November 5, 1997 between AmeriGas
Propane, Inc. and AmeriGas Propane,
L.P.
===================================================================================================================================
</TABLE>
-54-
<PAGE> 57
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
INCORPORATION BY REFERENCE
- -----------------------------------------------------------------------------------------------------------------------------------
Exhibit No. Exhibit Registrant Filing Exhibit
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
10.13 Agreement by Petrolane Incorporated Petrolane Form 10-K 10.13
and certain of its subsidiaries parties Incorporated (9/23/94)
thereto ("Subsidiaries") for the Sale of
the Subsidiaries' Inventory and Assets to
the Goodyear Tire & Rubber Company and
D.C.H., Inc., as Purchaser, dated as of
December 18, 1985
10.14** UGI Corporation 1992 Stock Option and UGI Form 10-Q 10(ee.)
Dividend Equivalent Plan, as amended Corporation (6/30/92)
May 19, 1992
10.15** UGI Corporation Annual Bonus Plan UGI Form 10-Q 10.4
dated March 8, 1996 Corporation (6/30/96)
10.16** AmeriGas Partners, L.P. Annual Bonus AmeriGas Form 10-Q 10.1
Plan dated March 8, 1996 Partners, L.P. (6/30/96)
10.17** 1997 Stock Purchase Loan Plan UGI Form 10-K 10.16
Corporation (9/30/97)
10.18** UGI Corporation Senior Executive UGI Form 10-K 10.12
Employee Severance Pay Plan effective Corporation (9/30/97)
January 1, 1997
10.19** AmeriGas Propane, Inc. Executive AmeriGas Form 10-Q 10.1
Employee Severance Pay Plan effective Partners, L.P. (12/31/96)
January 1, 1997
10.20** UGI Corporation 1992 Non-Qualified AmeriGas Form 10-K 10.19
Stock Option Plan Partners, L.P. (9/30/95)
10.21** Amendment No. 1 to the UGI UGI Utilities, Form 10-Q 10
Corporation 1992 Non-Qualified Stock Inc. (6/30/97)
Option Plan
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-55-
<PAGE> 58
<TABLE>
<CAPTION>
===================================================================================================================================
INCORPORATION BY REFERENCE
===================================================================================================================================
Exhibit No. Exhibit Registrant Filing Exhibit
===================================================================================================================================
<S> <C> <C> <C> <C>
10.22** Form of Change of Control Agreement UGI Form 10-K 10.13
between UGI Corporation and Corporation (9/30/97)
Lon R. Greenberg
10.23** Form of Change of Control Agreement UGI Form 10-K 10.14
between UGI Corporation and Corporation (9/30/97)
Charles L. Ladner
10.24** Form of Change of Control Agreement UGI Form 10-K 10.15
between UGI Corporation and Corporation (9/30/97)
Mr. Bovaird
*10.25** Form of Change of Control Agreement
between AmeriGas Propane, Inc. and
Messrs. Bissell and Grady
*10.26** AmeriGas Propane, Inc. 1997 Long-
Term Incentive Plan effective October 1,
1996
*10.27** AmeriGas Propane, Inc. Supplemental
Executive Retirement Plan effective
October 1, 1996
10.28** UGI Corporation 1997 Stock Option and UGI Form 10-Q 10.2
Dividend Equivalent Plan Corporation (3/31/97)
===================================================================================================================================
</TABLE>
-56-
<PAGE> 59
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
INCORPORATION BY REFERENCE
- -----------------------------------------------------------------------------------------------------------------------------------
Exhibit No. Exhibit Registrant Filing Exhibit
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
*13 Pages 10 through 23 of the AmeriGas
Partners, L.P. Annual Report for the year
ended September 30, 1997
*21 Subsidiaries of AmeriGas Partners, L.P.
*27.1 Financial Data Schedule of AmeriGas
Partners, L.P.
*27.2 Financial Data Schedule of AmeriGas
Finance Corp.
*99 Cautionary Statements Affecting
Forward-looking Information
===================================================================================================================================
</TABLE>
* Filed herewith.
** As required by Item 14(a)(3), this exhibit is identified as a
compensatory plan or arrangement.
(b) Reports on Form 8-K.
During the last quarter of the 1997 fiscal year, neither the
Partnership nor AmeriGas Finance Corp. filed any Current Reports on Form 8-K.
-57-
<PAGE> 60
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
AMERIGAS PARTNERS, L.P.
Date: December 15, 1997 By: AmeriGas Propane, Inc.
its General Partner
By: Charles L. Ladner
------------------------------
Charles L. Ladner
Vice President -
Finance and Accounting
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below on December 15, 1997 by the following persons
on behalf of the Registrant and in the capacities with AmeriGas Propane, Inc.,
General Partner, indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
Lon R. Greenberg President, Chairman and Chief
- ----------------------------- Executive Officer
Lon R. Greenberg (Principal Executive
Officer) and Director
Charles L. Ladner Vice President -
- ----------------------------- Finance and Accounting
Charles L. Ladner (Principal Financial Officer
and Principal Accounting Officer)
</TABLE>
-58-
<PAGE> 61
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
Thomas F. Donovan Director
- -----------------------------
Thomas F. Donovan
Stephen A. Van Dyck Director
- -----------------------------
Stephen A. Van Dyck
Robert C. Forney Director
- -----------------------------
Robert C. Forney
James W. Stratton Director
- -----------------------------
James W. Stratton
David I. J. Wang Director
- -----------------------------
David I. J. Wang
</TABLE>
-59-
<PAGE> 62
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
AMERIGAS FINANCE CORP.
Date: December 15, 1997 By: Charles L. Ladner
--------------------------
Charles L. Ladner
Vice President -
Finance and Accounting
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below on December 15, 1997 by the following persons
on behalf of the Registrant and in the capacities indicated.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
Lon R. Greenberg President (Principal Executive
- ------------------------ Officer) and Director
Lon R. Greenberg
Charles L. Ladner Vice President -
- ------------------------ Finance and Accounting
Charles L. Ladner (Principal Financial
Officer and Principal
Accounting Officer) and
Director
Brendan P. Bovaird Director
- ------------------------
Brendan P. Bovaird
</TABLE>
-60-
<PAGE> 63
AMERIGAS PARTNERS, L.P.
AMERIGAS FINANCE CORP.
FINANCIAL INFORMATION
FOR INCLUSION IN ANNUAL REPORT ON
FORM 10-K FOR THE FISCAL
YEAR ENDED SEPTEMBER 30, 1997
F-1
<PAGE> 64
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
The consolidated financial statements of AmeriGas Partners, L.P. and
subsidiaries, together with the report thereon of Arthur Andersen dated November
14, 1997, listed in the following index, are included in AmeriGas Partners' 1997
Annual Report to Unitholders and are incorporated herein by reference. With the
exception of the pages listed in this index and information incorporated in
Items 5 and 8, the 1997 Annual Report to Unitholders is not to be deemed filed
as part of this Report.
<TABLE>
<CAPTION>
Annual Report
Form 10-K to Unitholders
(page) (page)
------ ------
<S> <C> <C>
AmeriGas Partners, L.P. and Subsidiaries
- ----------------------------------------
Financial Statements:
Report of Independent Public Accountants Exhibit 13 23
Consolidated Balance Sheets as of September 30,
1997 and 1996 Exhibit 13 10
Consolidated Statements of Operations for the years ended
September 30, 1997 and 1996 and the period April 19,
1995 to September 30, 1995 Exhibit 13 11
Consolidated Statements of Cash Flows for the years ended
September 30, 1997 and 1996 and the period April 19,
1995 to September 30, 1995 Exhibit 13 12
Consolidated Statements of Partners' Capital for the years
ended September 30, 1997 and 1996 and the period April
19, 1995 to September 30, 1995 Exhibit 13 13
Notes to Consolidated Financial Statements Exhibit 13 14-22
Financial Statement Schedules:
I - Condensed Financial Information of Registrant
(Parent Company) S-1 to S-3
II - Valuation and Qualifying Accounts S-4 to S-5
Report of Independent Public Accountants
on Financial Statement Schedules S-6
</TABLE>
F-2
<PAGE> 65
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES (continued)
<TABLE>
<CAPTION>
Form 10-K
(page)
------
<S> <C>
AmeriGas Finance Corp.
- ----------------------
Financial Statements:
Report of Independent Public Accountants F-6
Balance Sheets as of September 30, 1997 and 1996 F-7
Statements of Stockholder's Equity for the years ended September 30,
1997 and 1996 and the period March 13, 1995 to September 30, 1995 F-8
Note to Financial Statements F-9
AmeriGas Propane, Inc./AmeriGas Propane-2, Inc. (Predecessor of AmeriGas
- ------------------------------------------------------------------------
Partners, L.P.)
- -------------------
Financial Statements:
Report of Independent Public Accountants F-11
Combined Statement of Income for the period September 24, 1994 to April
19, 1995 F-12
Combined Statement of Cash Flows for the period September 24, 1994 to
April 19, 1995 F-13
Combined Statement of Stockholder's Equity for the period September 24,
1994 to April 19, 1995 F-14
Notes to Combined Financial Statements F-15 to F-25
</TABLE>
F-3
<PAGE> 66
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES (continued)
<TABLE>
<CAPTION>
Form 10-K
(page)
------
<S> <C>
Petrolane Incorporated and Subsidiaries (Predecessor of
- -------------------------------------------------------
AmeriGas Partners, L.P.)
- ----------------------------
Financial Statements:
Report of Independent Public Accountants F-27
Consolidated Statement of Operations for the period
September 24, 1994 to April 19, 1995 F-28
Consolidated Statement of Cash Flows for the period
September 24, 1994 to April 19, 1995 F-29
Consolidated Statement of Stockholders' Equity for the
period September 24, 1994 to April 19, 1995 F-30
Notes to Consolidated Financial Statements F-31 to F-41
</TABLE>
All other financial statement schedules are omitted because the required
information is not present or not present in amounts sufficient to require
submission of the schedule or because the information required is included
elsewhere in the respective financial statements or notes thereto contained
herein.
F-4
<PAGE> 67
AMERIGAS FINANCE CORP.
FINANCIAL STATEMENTS
for the years ended September 30, 1997 and 1996 and the period
March 13, 1995 (date of incorporation)
to September 30, 1995
F-5
<PAGE> 68
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To AmeriGas Finance Corp.:
We have audited the accompanying balance sheets of AmeriGas Finance Corp. (a
Delaware corporation and a wholly owned subsidiary of AmeriGas Partners, L.P.)
as of September 30, 1997 and 1996, and the related statements of stockholder's
equity for the years ended September 30, 1997 and 1996 and the period March 13,
1995 to September 30, 1995. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the balance sheets and statements of stockholder's equity
referred to above present fairly, in all material respects, the financial
position of AmeriGas Finance Corp. as of September 30, 1997 and 1996, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
November 14, 1997
F-6
<PAGE> 69
AMERIGAS FINANCE CORP.
(A WHOLLY OWNED SUBSIDIARY OF AMERIGAS PARTNERS, L.P.)
BALANCE SHEETS
<TABLE>
<CAPTION>
September 30,
--------------------------
ASSETS 1997 1996
- ------ ----------- -----------
<S> <C> <C>
Cash $1,000 $1,000
------ ------
Total assets $1,000 $1,000
====== ======
STOCKHOLDER'S EQUITY
- ---------------------
Common stock, $.01 par value; 100 shares authorized;
100 shares 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.
F-7
<PAGE> 70
AMERIGAS FINANCE CORP.
(A WHOLLY OWNED SUBSIDIARY OF AMERIGAS PARTNERS, L.P.)
STATEMENTS OF STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
Additional
Common Paid-in Retained
Stock Capital Earnings
-------------- -------------- --------------
<S> <C> <C> <C>
BALANCE MARCH 13, 1995 $ -- $ -- $ --
Subscription for AmeriGas Finance
Corp. Common Stock 1 999
------------- -------------- --------------
BALANCE SEPTEMBER 30, 1995 1 999 --
------------- -------------- --------------
BALANCE SEPTEMBER 30, 1996 1 999 --
------------- -------------- --------------
BALANCE SEPTEMBER 30, 1997 $ 1 $ 999 $ --
============= ============== ==============
</TABLE>
The accompanying note is an integral part of these financial statements.
F-8
<PAGE> 71
AMERIGAS FINANCE CORP.
(A WHOLLY OWNED SUBSIDIARY OF AMERIGAS PARTNERS, L.P.)
NOTE TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997 AND 1996
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.
F-9
<PAGE> 72
AMERIGAS PROPANE, INC./AMERIGAS PROPANE-2, INC.
(Predecessor of AmeriGas Partners, L.P.)
COMBINED FINANCIAL STATEMENTS
for the period September 24, 1994,
to April 19, 1995 and the
year ended September 23, 1994
F-10
<PAGE> 73
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of AmeriGas Partners, L.P.
and The Board of Directors of AmeriGas Propane, Inc.:
We have audited the accompanying combined statement of income, stockholder's
equity and cash flows of AmeriGas Propane, Inc. and subsidiaries and AmeriGas
Propane-2, Inc. (Predecessor) (collectively, the "Company") for the period
September 24, 1994 to April 19, 1995. These financial statements are the
responsibility of the management of AmeriGas Propane, Inc. Our responsibility is
to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the results of operations and cash flows of
AmeriGas Propane, Inc. and subsidiaries and AmeriGas Propane-2, Inc.
(Predecessor) for the period September 24, 1994 to April 19, 1995, in conformity
with generally accepted accounting principles.
As discussed in Note 4 to the financial statements, effective September 24,
1994, the Company changed its method of accounting for postemployment benefits.
ARTHUR ANDERSEN LLP
Chicago, Illinois
December 4, 1995
F-11
<PAGE> 74
AMERIGAS PROPANE, INC. / AMERIGAS PROPANE - 2, INC.
COMBINED STATEMENT OF INCOME
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
September 24,
1994 to
April 19, 1995
--------------
<S> <C>
Revenues (note 1):
Propane $ 218,078
Other 24,107
---------
242,185
---------
Costs and expenses:
Cost of sales - propane 106,596
Cost of sales - other 12,693
Operating and administrative expenses 62,706
Operating and administrative expenses - related parties (note 6) 22,440
Depreciation and amortization (note 1) 13,589
Miscellaneous income - related parties (note 6) (6,512)
Miscellaneous income, net (note 7) (1,709)
---------
209,803
---------
Operating income 32,382
Interest expense 14,569
---------
Income before income taxes 17,813
Income taxes (notes 1 and 3) 14,891
---------
Income before extraordinary loss and accounting change 2,922
Extraordinary loss - debt restructuring (note 2) (11,892)
Change in accounting for postemployment benefits (note 4) (1,650)
---------
Net loss $ (10,620)
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-12
<PAGE> 75
AMERIGAS PROPANE, INC. / AMERIGAS PROPANE - 2, INC.
COMBINED STATEMENT OF CASH FLOWS
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
September 24,
1994 to
April 19, 1995
--------------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (10,620)
Adjustments to reconcile net loss to net
cash provided by continuing operating activities:
Depreciation and amortization 13,589
Deferred income taxes, net 5,538
Provision for uncollectible accounts 1,202
Extraordinary loss - debt restructuring 11,892
Change in accounting for postemployment benefits 1,650
Gain on sale of property, plant and equipment (363)
Other, net (772)
------------
22,116
Net change in:
Accounts receivable (5,998)
Inventories 7,152
Accounts payable (3,903)
Receivable from / payable to related parties, net 4,641
Other current assets and liabilities 5,963
------------
Net cash provided by operating activities 29,971
------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for property, plant and equipment (5,605)
Proceeds from disposals of property, plant and equipment 1,098
Acquisitions of businesses, net of cash acquired (156)
------------
Net cash used by investing activities (4,663)
------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of dividends (5,286)
Repayment of long-term debt (852)
------------
Net cash used by financing activities (6,138)
------------
Cash and cash equivalents increase $ 19,170
============
CASH AND CASH EQUIVALENTS:
End of period $ 37,743
Beginning of period 18,573
------------
Increase $ 19,170
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-13
<PAGE> 76
AMERIGAS PROPANE, INC. / AMERIGAS PROPANE - 2, INC.
COMBINED STATEMENT OF STOCKHOLDER'S EQUITY
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
Additional
Common Paid-in Accumulated
Stock Capital Deficit
------------ ------------ ------------
<S> <C> <C> <C>
Balance September 23, 1994 $ - $ 192,794 $ (6,195)
Net loss (10,620)
Dividends - cash (5,286)
------------ ------------ ------------
Balance April 19, 1995 $ - $ 187,508 $ (16,815)
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-14
<PAGE> 77
AMERIGAS PROPANE, INC./AMERIGAS PROPANE-2, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
(Thousands of dollars)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
AmeriGas Propane, Inc., a Delaware corporation (AmeriGas Propane), and
AmeriGas Propane-2, Inc., a Pennsylvania corporation incorporated on
January 5, 1994 ("AGP-2", and together with AmeriGas Propane, "the
Company"), are wholly owned subsidiaries of AmeriGas, Inc. (AmeriGas)
engaged in the distribution of propane and related equipment and
supplies. On April 19, 1995, pursuant to a Merger and Contribution
Agreement, AmeriGas Propane and certain of its operating subsidiaries,
and AGP-2 were merged into AmeriGas Propane, L.P., (the "Operating
Partnership"), a Delaware limited partnership formed to acquire and
operate the propane business and assets of the Company and Petrolane
Incorporated (Petrolane) (see Note 2).
COMBINATION AND CONSOLIDATION PRINCIPLES
The combined financial statements include the consolidated accounts of
AmeriGas Propane and its subsidiaries and the accounts of AGP-2. All
significant intercompany accounts and transactions have been
eliminated. The combined financial statements include the results of
operations and cash flows of the Company through April 19, 1995, the
date of the Merger and Contribution Agreement.
COMBINED STATEMENTS OF CASH FLOWS
Cash equivalents include all highly liquid investments with maturities
of three months or less when purchased and are recorded at cost plus
accrued interest which approximates market value.
Interest paid during the period September 24, 1994 to April 19, 1995
(the 1995 seven-month period) was $14,525. Income taxes paid during the
1995 seven-month period were $5,341.
REVENUE RECOGNITION
Revenues from the sale of propane are recognized principally as product
is shipped or delivered to customers.
F-15
<PAGE> 78
AMERIGAS PROPANE, INC./AMERIGAS PROPANE-2, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(Thousands of dollars)
INVENTORIES
Inventories are stated at the lower of cost or market. Cost is
determined using an average cost method for propane inventories,
specific identification for appliances, and the first-in, first-out
(FIFO) method for all other inventories.
PROPERTY, PLANT AND EQUIPMENT AND RELATED DEPRECIATION
Property, plant and equipment is stated at cost. Amounts assigned to
property, plant and equipment of acquired businesses are based upon
estimated fair value at date of acquisition. When plant and equipment
are retired or otherwise disposed of, any gains or losses are recorded
in operations.
Depreciation of property, plant and equipment is computed using the
straight-line method over estimated service lives ranging from two to
40 years.
GOODWILL AND OTHER INTANGIBLES
Goodwill recognized as a result of business combinations accounted for
as purchases is amortized on a straight-line basis over 40 years. Other
intangibles consisting principally of covenants not to compete, are
amortized over the estimated periods of benefit which do not exceed
seven years. Amortization expense during the 1995 seven-month period
was $5,262.
It is the Company's policy to review goodwill and other intangible
assets for possible impairment whenever events or changes in
circumstances indicate that the carrying amount of such assets may not
be recoverable. If such a review should indicate that the carrying
amount of goodwill and other intangible assets is not recoverable, it
is the Company's policy to reduce the carrying amount of such assets to
fair value.
INCOME TAXES
Income taxes are provided based upon the provisions of Statement of
Financial Accounting Standards (SFAS) No. 109, "Accounting for Income
Taxes" (SFAS 109), which requires recognition of deferred income tax
liabilities and assets for the expected future tax consequences of
events that have been included in the financial statements or tax
returns. Under this method, deferred income tax liabilities and assets
are determined based on the differences between the financial statement
and tax bases of assets and liabilities using enacted tax rates in
effect for the year in which the differences are expected to reverse.
F-16
<PAGE> 79
AMERIGAS PROPANE, INC./AMERIGAS PROPANE-2, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(Thousands of dollars)
The Company joined with AmeriGas and its parent, UGI Corporation (UGI)
in filing a consolidated federal income tax return. The Company was
allocated tax assets, liabilities, expense, benefits and credits
resulting from the effect of its transactions in the consolidated
income tax provision determined in accordance with SFAS 109, including
giving effect to all intercompany transactions. The result of this
allocation was not materially different from income taxes calculated on
a separate return basis.
2. MERGER WITH AMERIGAS PROPANE, L.P.
On April 19, 1995, a subsidiary of AmeriGas acquired by merger (the
"Petrolane Merger") the approximately 65% of Petrolane common shares
outstanding not already owned by UGI or AmeriGas. Immediately after the
Petrolane Merger, AmeriGas Propane and certain of its operating
subsidiaries, and AGP-2 merged into the Operating Partnership (the
"Formation Merger"), a subsidiary of AmeriGas Partners, a Delaware
limited partnership formed to acquire and operate these businesses
(collectively, "the Partnership"). Also on April 19, 1995, Petrolane
conveyed substantially all of its assets and liabilities to the
Operating Partnership. In addition, certain senior indebtedness of
AmeriGas Propane assumed by the Operating Partnership with a face value
of $208,000 was exchanged for First Mortgage Notes of the Operating
Partnership and certain senior indebtedness of Petrolane with a face
value of $200,000 was also exchanged for such First Mortgage Notes.
Following these transactions, on April 19, 1995, AmeriGas Partners
completed its initial public offering of 15,452,000 Common Units.
As a result of the exchange of certain of the Company's indebtedness
for First Mortgage Notes of the Operating Partnership, the Company
recorded an extraordinary loss of $19,673 pre-tax ($11,892 after-tax).
In addition, the Company expensed $5,916 of deferred tax benefits
representing the Company's deferred tax benefits no longer realizable
as a result of the Formation Merger.
F-17
<PAGE> 80
AMERIGAS PROPANE, INC./AMERIGAS PROPANE-2, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(Thousands of dollars)
3. INCOME TAXES
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
September 24, 1994
to April 19,
1995
--------------------------------------------------------------------------------------------------------
<S> <C>
Current:
Federal $ 8,155
State 1,198
--------------------------------------------------------------------------------------------------------
9,353
Deferred 5,538
--------------------------------------------------------------------------------------------------------
Total income taxes $14,891
--------------------------------------------------------------------------------------------------------
</TABLE>
A reconciliation from the statutory federal tax rate to the effective
tax rate is as follows:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
September 24, 1994
to April 19,
1995
--------------------------------------------------------------------------------------------------------
<S> <C>
Statutory federal tax rate 35.0%
Difference in tax rate due
to:
State income taxes, net of federal
income tax benefit 5.8
Nondeductible amortization of
goodwill 9.6
Adjustment to deferred taxes as a
result of the Formation Merger 33.2
---------------------------------------------------------------------------------------------------------
Effective tax rate 83.6%
---------------------------------------------------------------------------------------------------------
</TABLE>
4. PENSION PLAN AND OTHER POSTEMPLOYMENT BENEFITS
Employees of the Company participated in the AmeriGas Propane, Inc.
Pension Plan (AmeriGas Propane Plan), a noncontributory defined
contribution pension plan. Company contributions to the AmeriGas
Propane Plan represented a percentage of each covered employee's
salary. AmeriGas Propane also sponsored a 401(k) savings plan, the
AmeriGas Propane, Inc. Savings Plan (Savings Plan), for its employees.
Generally, participants could
F-18
<PAGE> 81
AMERIGAS PROPANE, INC./AMERIGAS PROPANE-2, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(Thousands of dollars)
contribute up to 6% of their compensation on a before-tax basis. The
Company could, at its discretion, match a portion of employees'
contributions to the Savings Plan. The cost of benefits under the
AmeriGas Propane Plan and the Savings Plan for the 1995 seven-month
period totaled $1,105.
The Company provided health care benefits to certain retirees and a
limited number of active employees meeting certain age and service
requirements as of January 1, 1989. The Company also provided limited
life insurance benefits to substantially all active and retired
employees.
The components of net periodic postretirement benefit cost are as
follows:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
September 24, 1994
to April 19,
1995
--------------------------------------------------------------------------------------------------------
<S> <C>
Service cost-benefits earned during
the period $ 6
Interest cost on accumulated
postretirement benefit
obligation 153
Amortization of transition
obligation 118
--------------------------------------------------------------------------------------------------------
Net periodic postretirement benefit
cost $277
--------------------------------------------------------------------------------------------------------
</TABLE>
F-19
<PAGE> 82
AMERIGAS PROPANE, INC./AMERIGAS PROPANE-2, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(Thousands of dollars)
The major actuarial assumptions used in determining the net periodic
postretirement benefit cost for the period covered by the financial
statements is as follows:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
September 24, 1994
to April 19,
1995
----------------------------------------------------------------------------------------------------------
<S> <C>
Discount rate 8.7%
Health care cost trend rate 10.0-5.5
----------------------------------------------------------------------------------------------------------
</TABLE>
Increasing the health care cost trend rate one percent increases the
net periodic postretirement benefit cost for the 1995 seven-month
period by approximately $11.
Effective September 24, 1994, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 112, "Employers'
Accounting for Postemployment Benefits" (SFAS 112). SFAS 112 requires,
among other things, the accrual of benefits provided to former or
inactive employees (who are not retirees) and to their beneficiaries
and covered dependents. Prior to the adoption of SFAS 112, the Company
accounted for these postemployment benefits on a pay-as-you-go basis.
The cumulative effect of SFAS 112 on the Company's results of
operations for periods prior to September 24, 1994 of $2,730 pre-tax
($1,650 after-tax) has been reflected in the Combined Statement of
Income for the 1995 seven-month period as "Change in accounting for
postemployment benefits".
5. COMMITMENTS AND CONTINGENCIES
The Company leased various buildings and transportation, data
processing and office equipment under operating leases. Certain of the
leases contained renewal and purchase options and also contained
escalation clauses. The aggregate rental expense for such leases was
approximately $7,310 for the 1995 seven-month period.
Prior to April 19, 1995, the Company was defending various claims and
legal actions arising in the ordinary course of business the final
results of which could not be predicted with certainty. However, it is
reasonably possible that some of them could be resolved unfavorably to
the Company. 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
Company'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. As a result of the merger of
the Company with the Operating
F-20
<PAGE> 83
AMERIGAS PROPANE, INC./AMERIGAS PROPANE-2, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(Thousands of dollars)
Partnership on April 19, 1995 pursuant to the Merger and Contribution
Agreement, these contingent liabilities were assumed by the Operating
Partnership.
6. RELATED PARTY TRANSACTIONS
During the period July 16, 1993 through April 19, 1995, AmeriGas
Management Company (AMC) and AmeriGas Transportation Management Company
(ATMC), first-tier subsidiaries of UGI, provided general management,
supervisory, administrative and transportation services to the Company
and Petrolane pursuant to management services agreements. As
consideration for the services provided to the Company under the AMC
Management Services Agreement (AMC Agreement) and the ATMC Management
Services Agreement (ATMC Agreement), the Company was charged a monthly
fee determined by multiplying the overhead expenses of AMC and ATMC by
a percentage which represented the Company's share of AMC's and ATMC's
total overhead expenses. The percentage was 55% during the 1995
seven-month period. For the 1995 seven-month period, the Company
recorded combined management fee expense of $10,368 pursuant to the AMC
and ATMC Agreements which amounts are included in operating and
administrative expenses - related parties.
Pursuant to the AMC Agreement, AMC arranged for AmeriGas Propane to
purchase substantially all of Petrolane's propane supply needs for
which Petrolane was charged AmeriGas Propane's costs. Such costs
totaled $171,609 during the 1995 seven-month period.
Effective July 1993 through April 19, 1995, the Company leased and
subleased certain furniture and equipment to AMC. Income resulting from
these leases and subleases totaled $1,205 for the 1995 seven-month
period and is classified as miscellaneous income - related parties.
In order to achieve cost reductions and operational efficiencies in
overlapping geographical markets, during the year ended September 23,
1994 AmeriGas Propane and Petrolane closed certain district locations
and entered into a customer services agreement (Customer Services
Agreement). Pursuant to the Customer Services Agreement, AmeriGas
Propane served customers of closed Petrolane districts, and Petrolane
served customers of closed AmeriGas Propane districts. Fees under the
Customer Services Agreement generally represented a percentage, based
upon retail gallon sales, of district operating expenses. Fees billed
by Petrolane to AmeriGas Propane under the Customer Services Agreement
totaled $6,879 for the 1995 seven-month period and are reflected in
operating and administrative expenses related parties. Fees billed to
Petrolane under the
F-21
<PAGE> 84
AMERIGAS PROPANE, INC./AMERIGAS PROPANE-2, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(Thousands of dollars)
Customer Services Agreement totaled $5,307 for the 1995 seven-month
period and are reflected in miscellaneous income - related parties.
Prior to April 19, 1995, UGI provided certain management services to
the Company for a fee under a management services agreement. The fee
was based upon a specified rate per retail gallon of propane sold.
Under this agreement, management fee expense was $5,193 for the 1995
seven-month period and is included in operating and administrative
expenses - related parties. The Company also reimbursed AmeriGas and
UGI for certain costs incurred on its behalf for third party services,
primarily legal and insurance.
F-22
<PAGE> 85
AMERIGAS PROPANE, INC./AMERIGAS PROPANE-2, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(Thousands of dollars)
7. MISCELLANEOUS INCOME
Miscellaneous income comprises the following:
<TABLE>
<CAPTION>
----------------------------------------------------------------------
September 24, 1994
to April 19,
1995
----------------------------------------------------------------------
<S> <C>
Interest income $ 509
Gain on sale of fixed assets 363
Finance charges 564
Rental income 97
Other 176
----------------------------------------------------------------------
$1,709
----------------------------------------------------------------------
</TABLE>
F-23
<PAGE> 86
AMERIGAS PROPANE, INC./AMERIGAS PROPANE-2, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(Thousands of dollars)
8. SUPPLEMENTAL FINANCIAL INFORMATION (UNAUDITED)
In order to provide comparative financial information, the following
table includes unaudited results of operations and cash flows for the
period September 24, 1993 to April 23, 1994:
<TABLE>
<CAPTION>
September 24, 1993
to
April 23, 1994
------------------
(Unaudited)
<S> <C>
Statement of Income
Revenues:
Propane $242,973
Other 23,443
--------
266,416
--------
Costs and expenses:
Cost of sales - propane 116,491
Cost of sales - other 11,639
Operating and administrative expenses 83,992
Depreciation and amortization 13,491
Miscellaneous (income) (7,348)
--------
218,265
--------
Operating income 48,151
Interest expense 15,067
Income taxes 16,363
--------
Net income $ 16,721
========
</TABLE>
F-24
<PAGE> 87
AMERIGAS PROPANE, INC./AMERIGAS PROPANE-2, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(Thousands of dollars)
<TABLE>
<CAPTION>
September 24, 1993
to
April 23, 1994
------------------
(Unaudited)
<S> <C>
STATEMENT OF CASH FLOWS
Cash Flows From Operating Activities:
Net income $ 16,721
Adjustments to reconcile to cash provided by operating
activities:
Depreciation and amortization 13,491
Deferred income taxes (2,216)
Other 313
Change in operating working capital 2,006
--------
Net cash provided by operating activities 30,315
--------
Cash Flows From Investing Activities:
Expenditures for property, plant and equipment (4,336)
Acquisitions of businesses (4,300)
Other 1,214
--------
Net cash used by investing activities (7,422)
--------
Cash Flows From Financing Activities:
Payment of dividends (12,987)
Repayment of long-term debt (574)
Capital contribution from AmeriGas 5,001
--------
Net cash used by financing activities (8,560)
--------
Cash and cash equivalents increase $ 14,333
========
</TABLE>
F-25
<PAGE> 88
PETROLANE INCORPORATED AND SUBSIDIARIES
(Predecessor of AmeriGas Partners, L.P.)
CONSOLIDATED FINANCIAL STATEMENTS
for the period September 24, 1994
to April 19, 1995
F-26
<PAGE> 89
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of AmeriGas Partners, L.P. and
The Board of Directors of AmeriGas Propane, Inc.:
We have audited the accompanying consolidated statement of operations,
stockholders' equity and cash flows of Petrolane Incorporated (Predecessor) and
subsidiaries for the period September 24, 1994 to April 19, 1995. These
financial statements are the responsibility of the management of AmeriGas
Propane, Inc. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the results of operations and cash flows of
Petrolane Incorporated (Predecessor) and subsidiaries for the period September
24, 1994 to April 19, 1995, in conformity with generally accepted accounting
principles.
As discussed in Note 4 to the consolidated financial statements, effective
September 24, 1994, the Company changed its method of accounting for
postemployment benefits.
ARTHUR ANDERSEN LLP
Chicago, Illinois
December 4, 1995
F-27
<PAGE> 90
PETROLANE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
September 24,
1994 to
April 19, 1995
---------------
<S> <C>
Revenues (note 2):
Propane $ 327,479
Other 44,609
--------------
372,088
--------------
Costs and expenses:
Cost of sales - propane (note 6) 175,690
Cost of sales - other 27,463
Selling, general and administrative expenses 79,838
Selling, general and administrative
expenses - related parties (note 6) 20,469
Depreciation and amortization (note 2) 27,398
Taxes - other than income taxes 8,491
Miscellaneous (income) - related parties (note 6) (6,879)
Miscellaneous (income) expense, net (1,851)
--------------
330,619
--------------
Operating income 41,469
Interest expense 29,966
--------------
Income before income taxes and change in accounting 11,503
Income taxes (note 3) 10,113
--------------
Income before change in accounting 1,390
Change in accounting for postemployment benefits (note 4) (905)
--------------
Net income $ 485
==============
Earnings per common share (note 2):
Earnings before accounting change $ 0.13
Change in accounting for postemployment benefits (.08)
--------------
Net income per share $ 0.05
==============
Average shares outstanding (thousands) 10,501
==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-28
<PAGE> 91
PETROLANE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
September 24,
1994 to
April 19, 1995
--------------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 485
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 27,398
Deferred income taxes 6,610
Amortization of debt premium and interest
rate swap premiums (3,035)
Provision for uncollectible accounts 1,876
Other, net (1,942)
--------
31,392
Net change in:
Accounts receivable 431
Inventories 6,851
Prepayments and other current assets 2,878
Accounts payable and other current liabilities (19,597)
--------
Net cash provided by operating activities 21,955
--------
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for property, plant and equipment (7,291)
Proceeds from disposals of property, plant and equipment 2,881
Acquisitions of businesses, net of cash acquired (2,840)
--------
Net cash used by investing activities (7,250)
--------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term debt (12,507)
Increase in working capital loans 7,000
Other (1,304)
--------
Net cash used by financing activities (6,811)
--------
Cash and cash equivalents increase $ 7,894
========
CASH AND CASH EQUIVALENTS:
End of period $ 18,671
Beginning of period 10,777
--------
Increase $ 7,894
========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-29
<PAGE> 92
PETROLANE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
Common Stock
-----------------------------------------------
Class A Class B Additional
---------------------- ----------------------- paid-in Accumulated
Shares Amount Shares Amount capital deficit
---------- -------- ----------- -------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance - September 23, 1994 3,150,240 $ 32 7,350,562 $ 74 $ 105,650 $ (12,643)
Net income 485
---------- -------- ----------- -------- ---------- -------------
Balance - April 19, 1995 3,150,240 $ 32 7,350,562 $ 74 $ 105,650 $ (12,158)
========== ======== =========== ======== ========== =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-30
<PAGE> 93
PETROLANE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND BASIS OF PRESENTATION
REORGANIZATION AND EMERGENCE FROM CHAPTER 11 BANKRUPTCY
On May 21, 1993 (Petition Date), QFB Partners (QFB), Petrolane Gas
Service Limited Partnership (Pet Gas), Petrolane Incorporated
(Petrolane), Petrolane Finance Corp. (Pet Finance) and certain
affiliated and related entities (collectively, the "Debtors") commenced
cases seeking reorganization under Chapter 11 of the United States
Bankruptcy Code in the United States Bankruptcy Court for the Southern
District of New York (the "Bankruptcy Court"). On the Petition Date,
the Debtors also filed a joint plan of reorganization (Plan) for which
the Debtors had solicited and received prepetition acceptances. The
Plan was confirmed by the Bankruptcy Court on June 25, 1993 and
substantially completed (the "Closing") on July 15, 1993 (Closing
Date). Prior to the substantial completion of the Plan, QFB was owned
by QJV Corp. (QJV) and FB Pet, L.P. (FB Pet), affiliates of Quantum
Chemical Corporation (Quantum) and The First Boston Corporation,
respectively.
Pursuant to the Plan, on the Closing Date, AmeriGas, Inc. (AmeriGas), a
Pennsylvania corporation and a wholly owned subsidiary of UGI
Corporation (UGI), received 1,050,000 shares of Petrolane Class A
Common Stock (Class A Stock) representing 10% of the outstanding common
stock of Petrolane and $19.4 million in cash. The holders of Pet Gas's
$375 million principal amount of 13 1/4 Senior Subordinated Debentures
due 2001 (Old Subordinated Debentures) received, through a series of
transactions, 9,450,000 shares of Petrolane Class B Common Stock (Class
B Stock), representing 90% of the common stock of Petrolane, and
1,250,000 warrants to purchase, in certain circumstances from June 30,
1996 to March 31, 1998, UGI Common Stock at an exercise price of $24
per share (UGI Warrants), subject to adjustment. On the Closing Date,
all of the Old Subordinated Debentures were cancelled. As of December
23, 1993, AmeriGas had acquired 2,023,530 shares of Class B Stock at a
price of $24.45 per share pursuant to the exercise of Put Rights issued
under the Put Rights Agreement (Put Rights Agreement) entered into by
AmeriGas, Petrolane and Continental Bank (as Put Rights Agent) pursuant
to the Plan. As provided in Petrolane's Amended and Restated Articles
of Incorporation, the shares of Class B Stock so acquired by AmeriGas
were automatically converted into 2,023,530 shares of Class A Stock. In
addition, pursuant to the exercise of Put Rights, on December 27, 1993,
AmeriGas acquired an additional 75,908 shares of Class B Stock at a
price of $24.45 per share (which shares were automatically converted
into a like number of shares of Class A Stock). Because 562 of the
2,100,000 Put Rights issued under the Put Rights Agreement were not
exercised, on January 24, 1994, Petrolane's Board of Directors, acting
in accordance with the Plan, authorized the issuance and sale of 802
shares of Class A Stock to AmeriGas.
F-31
<PAGE> 94
PETROLANE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Holders of Class B Stock were given the right, from January 1, 1997 (or
earlier in certain circumstances) to December 31, 2001, to exchange all
or a portion of their Class B Stock for AmeriGas Common Stock
constituting up to an aggregate of 26% of the shares of AmeriGas Common
Stock outstanding on the Closing Date, and AmeriGas was given the
right, from January 1, 1998 to December 31, 2002, to require such
exchange. Prior to the time the holders of Class B Stock could exchange
their Class B Stock for AmeriGas Common Stock, they were entitled to
receive certain payments equal to the difference between (i) the result
obtained by dividing (x) the amount of the dividend paid by AmeriGas on
18,690,000 shares of AmeriGas Common Stock by (y) .89, and (ii) the
amount of the dividends paid by AmeriGas on 18,690,000 shares of
AmeriGas Common Stock. AmeriGas agreed to finance these payments
through subordinated loans to Petrolane or, in certain circumstances,
to make such payments directly.
Also pursuant to the Plan, the senior secured debt of the Debtors was
restructured which, among other things, resulted in amendments to the
amortization schedules and covenants contained in the agreements
governing such senior debt, and a new revolving credit facility
(Revolving Credit Agreement) in an initial amount of $73 million was
made available to Petrolane by certain of its senior secured lenders.
AmeriGas guaranteed up to $45 million of such senior debt which
guarantee was, subject to certain conditions, to decrease to $20
million over time. In addition, on the Closing Date affiliates of
AmeriGas began providing Petrolane with management and administrative
services. Petrolane entered into management services agreements with
UGI and its subsidiaries AmeriGas Management Company (AMC) and AmeriGas
Transportation Management Company (ATMC).
ACQUISITION OF 100% OF PETROLANE BY AMERIGAS AND TRANSFER OF ASSETS TO
MASTER LIMITED PARTNERSHIP
On April 19, 1995, a subsidiary of AmeriGas acquired by merger (the
"Petrolane Merger") the approximately 65% of Petrolane common shares
outstanding not already owned by UGI or AmeriGas and combined the
propane business and assets of Petrolane, AmeriGas Propane, Inc., a
Delaware Corporation (AmeriGas Propane), and AmeriGas Propane-2, Inc.
(the "Partnership Formation"). Under the terms of the Petrolane Merger
approved by the Company's Class B shareholders (other than UGI) on
April 12, 1995, 6,850,562 shares of the Company's Class B Common Stock
not held by UGI were converted into the right to receive $16.00 per
share in cash and all other rights associated with such shares expired.
The Petrolane Merger consideration of approximately $109.6 million was
financed with the proceeds of a private placement of $110 million of
First Mortgage Notes of the Operating Partnership. Immediately after
the Petrolane Merger, Petrolane, pursuant to a Conveyance and
Contribution Agreement, conveyed (the "Petrolane Conveyance")
substantially all of its assets and liabilities to AmeriGas Propane,
L.P. (the "Operating Partnership"), a Delaware limited partnership and
subsidiary of AmeriGas Partners, L.P. (AmeriGas Partners), a Delaware
limited partnership and AmeriGas Propane and AmeriGas Propane-2, Inc.
(AGP-2) merged into the Operating Partnership (the
F-32
<PAGE> 95
PETROLANE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
"Formation Merger"). As a result of the Formation Merger and the
Petrolane Conveyance, AmeriGas Propane, Inc., a Pennsylvania
corporation and the general partner of AmeriGas Partners (the "General
Partner"), and Petrolane each received a limited partner interest in
the Operating Partnership, and the Operating Partnership received
substantially all of the assets and assumed substantially all of the
liabilities of AmeriGas Propane, AmeriGas Propane-2, Inc., Petrolane
and their respective operating subsidiaries. The net book value of the
assets contributed by Petrolane to the Operating Partnership exceeded
the liabilities assumed by $77.4 million. Immediately after the
Petrolane Conveyance, 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.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION PRINCIPLES
The accompanying consolidated financial statements include the results
of operations and cash flows of the Company for the period September
24, 1994 to April 19, 1995 (the 1995 seven-month period). All
significant intercompany accounts and transactions have been eliminated
in consolidation.
FRESH START ACCOUNTING
Effective with the Closing on July 15, 1993, the Company adopted the
provisions of the American Institute of Certified Public Accountants'
Statement of Position 90-7 "Financial Reporting by Entities in
Reorganization Under the Bankruptcy Code" (Fresh Start Accounting).
Pursuant to such principles, the Company's assets were stated at
reorganization value which is generally described as the value of the
Company before considering liabilities on a going-concern basis
following the completion of the Plan. The reorganization value of the
Company was determined by reference to the remaining liabilities plus
the value of the common shareholders' equity indicated by the
consideration paid by AmeriGas for 30% of the outstanding shares of the
Company's common stock. The reorganization value was allocated to the
assets of the Company in conformity with the procedures specified by
Accounting Principles Board Opinion No. 16, "Business Combinations",
for transactions reported on the basis of the purchase method of
accounting. In this allocation, identifiable assets were valued at
estimated fair value and the reorganization value in excess of
identifiable assets was recorded as "reorganization value in excess of
amounts allocable to identifiable assets" (excess reorganization
value). Deferred taxes were provided as of the Closing Date in
accordance with Statement of Financial Accounting Standards (SFAS) No.
109, "Accounting for Income Taxes" (SFAS 109).
F-33
<PAGE> 96
PETROLANE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Fresh Start Accounting is applicable because pre-reorganization
shareholders received less than 50% of the Company's common stock and
the reorganization value of the Company was less than the total
postpetition liabilities and allowed claims.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash equivalents include all highly liquid investments with maturities
of three months or less when purchased and are recorded at cost plus
accrued interest which approximates market value.
Interest paid for the 1995 seven-month period was $33.9 million. Income
taxes paid for the 1995 seven-month period were $3.6 million.
REVENUE RECOGNITION
Revenues from the sale of propane are recognized principally when
product is shipped or delivered to customers.
INVENTORIES
Inventories are stated at the lower of cost or market. Cost is
determined using an average cost method for propane, specific cost for
appliances and the first-in, first-out (FIFO) method for parts and
fittings.
PROPERTY, PLANT AND EQUIPMENT AND RELATED DEPRECIATION
Property, plant and equipment is stated at cost. When plant and
equipment are retired or otherwise disposed of, any gains or losses are
reflected in operations.
Depreciation of property, plant and equipment acquired by the Company
subsequent to the Closing is computed using the straight-line method
over estimated service lives ranging from two to 40 years.
F-34
<PAGE> 97
PETROLANE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
REORGANIZATION VALUE IN EXCESS OF AMOUNTS ALLOCABLE TO IDENTIFIABLE
ASSETS
Reorganization value in excess of amounts allocable to identifiable
assets resulting from the application of Fresh Start Accounting is
amortized on a straight-line basis over 20 years. Amortization expense
during the 1995 seven-month period was $14.2 million.
It is the Company's policy to review intangible assets, including
excess reorganization value, for impairment whenever events or changes
in circumstances indicate that the carrying amount of such assets may
not be recoverable. If such a review should indicate that the carrying
amount of intangible assets, including excess reorganization value, is
not recoverable, it is the Company's policy to reduce the carrying
amount of such assets to fair value.
INCOME TAXES
Income taxes for the 1995 seven-month period were provided based upon
the provisions of SFAS 109. SFAS 109 requires recognition of deferred
income tax liabilities and assets for the expected future tax
consequences of events that have been included in the financial
statements or tax returns. Under this method, deferred income tax
liabilities and assets are determined based on the differences between
the financial statement and tax bases of assets and liabilities using
enacted tax rates in effect for the year in which the differences are
expected to reverse.
NET EARNINGS PER SHARE
Net earnings per share for the 1995 seven-month period is based on the
weighted average number of shares of Class A and Class B common stock
outstanding during those periods.
F-35
<PAGE> 98
PETROLANE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. INCOME TAXES
The Company's provision for income taxes for the 1995 seven-month
period consists of the following:
<TABLE>
<CAPTION>
---------------------------------------------------------------------
September 24, 1994
to
April 19, 1995
---------------------------------------------------------------------
(Thousands)
<S> <C>
Current:
Federal $ 2,936
State 567
---------------------------------------------------------------------
3,503
Deferred 6,610
---------------------------------------------------------------------
Total income tax expense $10,113
---------------------------------------------------------------------
</TABLE>
A reconciliation from the statutory federal tax rate to the effective
tax rate is as follows:
<TABLE>
<CAPTION>
---------------------------------------------------------------------
September 24, 1994
to
April 19, 1995
---------------------------------------------------------------------
(Thousands)
<S> <C>
Statutory federal tax rate 35.0%
Difference in tax rate due to:
State income taxes, net
of federal income tax benefit 9.3
Nondeductible
amortization of excess
reorganization value 43.4
Other nondeductible
expenses .5
Other (.3)
---------------------------------------------------------------------
Effective tax rate 87.9%
---------------------------------------------------------------------
</TABLE>
F-36
<PAGE> 99
PETROLANE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. PENSION PLAN AND POSTEMPLOYMENT BENEFITS
Concurrent with the Partnership Formation, employees of the Company
became employees of the General Partner and the Partnership assumed the
Company's employee-related liabilities including liabilities related to
employee benefit plans. Prior to the Partnership Formation, employees
of the Company participated in the Petrolane Incorporated Pension Plan
(Pension Plan), a noncontributory defined contribution pension plan
established on the Closing Date. Company contributions to the Pension
Plan represented a percentage of each covered employee's salary. The
Company also sponsored a 401(k) savings plan, the Petrolane Savings and
Stock Ownership Plan (Savings Plan), for eligible employees. Under the
Savings Plan, participants could contribute a percentage of their
compensation on a before-tax basis. The Savings Plan also provided for
discretionary employer matching contributions. The combined cost of
benefits under the Pension Plan and the Savings Plan was $1.7 million
for the 1995 seven-month period.
Effective September 24, 1994, the Company adopted the provisions of
SFAS No. 112, "Employers' Accounting for Postemployment Benefits" (SFAS
112). SFAS 112 requires, among other things, the accrual of benefits
provided to former or inactive employees (who are not retirees) and to
their beneficiaries and covered dependents. Prior to the adoption of
SFAS 112, the Company accounted for these postemployment benefits on a
pay-as-you-go basis. The cumulative effect of SFAS 112 on the results
of operations for periods prior to September 24, 1994 of $1.5 million
pre-tax ($905,000 after-tax) has been reflected in the Consolidated
Statement of Operations for the 1995 seven-month period as "Change in
accounting for postemployment benefits."
5. COMMITMENTS AND CONTINGENCIES
The Company utilized leased assets under both capital and operating
leases. The aggregate operating lease rental expense charged to
operations for the 1995 seven-month period was $3.2 million.
Petrolane, in connection with its divestiture of nonpropane operations
prior to its acquisition by QFB, guaranteed certain lease obligations
for retail and distribution facilities, which at April 19, 1995 were
estimated to aggregate approximately $109 million. In addition,
Petrolane has guaranteed other obligations. Petrolane has been
indemnified by Texas Eastern 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 these lease guarantees. In a June 15, 1993
Stipulation and Order entered in Petrolane's bankruptcy, Texas Eastern
confirmed its obligation to indemnify and hold harmless Petrolane from
and against certain liabilities and losses of discontinued businesses
including lease obligations. To date, Texas Eastern has directly
satisfied defaulted lease obligations without the Company's having to
honor its guarantee.
F-37
<PAGE> 100
PETROLANE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
In addition, in connection with its sale of the international
operations of Tropigas de Puerto Rico (Tropigas) to Shell Petroleum
N.V. in 1989, Petrolane agreed to indemnify Shell for various scheduled
claims that were pending against Tropigas. In turn, Petrolane has a
right to seek indemnity on these claims first from International
Controls Corp. (ICC), which sold Tropigas to Petrolane, and then from
Texas Eastern. To date, Petrolane has not paid any sums under this
indemnity, but several claims by Shell, including claims related to
certain antitrust actions aggregating at least $68 million, remain
pending. In the above referenced Stipulation and Order, Texas Eastern
confirmed its obligation to indemnify and hold harmless Petrolane from
and against the liabilities discussed in this paragraph, but only to
the extent that Petrolane, despite the exercise of its best efforts, is
not indemnified by a third party, including ICC.
The Company has identified environmental contamination at several
properties it owned or operated. The Company's policy is to accrue
environmental investigation and cleanup costs when it is probable that
a liability exists and the amount can be reasonably estimated. 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 Company intends to pursue
recovery of any incurred costs through all appropriate means.
In addition to these environmental matters, there are various other
pending claims and legal actions arising in the normal course of the
Company'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
Company. 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
Company'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.
The commitments and contingencies discussed herein were transferred on
April 19, 1995, to AmeriGas Propane, L.P. pursuant to the Conveyance
and Contribution Agreement.
F-38
<PAGE> 101
PETROLANE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. RELATED PARTY TRANSACTIONS
Pursuant to its management agreement with UGI (UGI Management
Agreement), UGI provided to the Company certain financial, accounting,
human resources, risk management, insurance, legal, corporate
communications, investor relations, treasury and corporate development
services. For such services, UGI received a quarterly fee from
Petrolane which was adjusted annually for inflation. During the 1995
seven-month period, the Company recorded management fee expense under
the UGI Management Agreement of $6.8 million which is included in
selling, general and administrative expenses - related parties.
The Company also entered into a management services agreement with AMC
(AMC Agreement) and a transportation services agreement with ATMC (ATMC
Agreement). AMC and ATMC provided general management, supervisory,
administrative and transportation services to Petrolane and AmeriGas's
wholly owned subsidiaries, AmeriGas Propane and AGP-2. In consideration
for such services provided to the Company, the Company paid AMC and
ATMC monthly fees based upon a percentage of AMC's and ATMC's monthly
overhead expenses. This percentage generally represented the proportion
of incremental costs incurred by AMC and ATMC to provide such services
to the Company and was subject to adjustment under certain
circumstances. For the 1995 seven-month period, the Company recorded
total management fee expense under the AMC and ATMC agreements of $8.3
million which is included in selling, general and administrative
expenses related parties.
Pursuant to the AMC Agreement, AMC was required to arrange the supply
and delivery of the Company's propane requirements on terms that were
at least as favorable as the arrangements made for AmeriGas Propane in
the same geographical areas. Subsequent to the Closing, AMC arranged
for AmeriGas Propane to purchase substantially all of the Company's
propane requirements from various suppliers and AmeriGas Propane has
charged the Company for such propane at AmeriGas Propane's cost. Such
purchases from AmeriGas Propane totaled approximately $171.6 million
for the 1995 seven-month period.
In order to achieve cost reductions and operational efficiencies in
overlapping geographical markets served by the Company and AmeriGas
Propane, the Company and AmeriGas Propane closed certain district
locations and entered into a customer services agreement (Customer
Services Agreement). Pursuant to the Customer Services Agreement, the
Company served customers of closed AmeriGas Propane districts, and
AmeriGas Propane served customers of closed Company districts. Fees
incurred by the Company under the Customer Services Agreement totaled
$5.3 million for the 1995 seven-month period and are included in
selling, general and administrative expenses - related parties. Fees
billed to AmeriGas Propane under the Customer Services Agreement
totaled $6.9 million for the 1995 seven-month period and are included
in miscellaneous income - related parties.
F-39
<PAGE> 102
PETROLANE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. SUPPLEMENTAL FINANCIAL INFORMATION (UNAUDITED)
In order to provide comparative financial information, the following
table includes unaudited results of operations and cash flows for the
period September 24, 1993 to April 23, 1994:
<TABLE>
<CAPTION>
September 24, 1993
to April 23,
1994
----
(Thousands)
Statement of Income
<S> <C>
Revenues:
Propane $371,133
Other 49,816
--------
420,949
--------
Costs and expenses:
Cost of sales - propane 192,440
Cost of sales - other 31,862
Selling, general and administrative expenses 105,713
Depreciation and amortization 26,814
Taxes - other than income taxes 8,349
Miscellaneous (income) (6,683)
--------
358,495
Operating income 62,454
Interest expense 26,918
Income taxes 32,843
--------
Net income $ 2,693
========
</TABLE>
F-40
<PAGE> 103
PETROLANE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
September 24, 1993
to April 23,
1994
----
(Thousands)
<S> <C>
STATEMENT OF CASH FLOWS
Cash Flows From Operating Activities:
Net income $ 2,693
Adjustments to reconcile to cash provided by
operating activities:
Depreciation and amortization 26,814
Deferred income taxes 26,222
Other (3,958)
Change in operating working capital 1,870
--------
Net cash provided by operating activities 53,641
--------
Cash Flows From Investing Activities:
Expenditures for property, plant and
equipment (6,887)
Other 439
--------
Net cash used by investing activities (6,448)
--------
Cash Flows From Financing Activities:
Repayment of long-term debt (7,355)
Change in working capital loans (35,000)
--------
Net cash used by financing activities (42,355)
--------
Cash and cash equivalents increase $ 4,838
========
</TABLE>
F-41
<PAGE> 104
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY)
BALANCE SHEETS
(Thousands of dollars)
<TABLE>
<CAPTION>
September 30,
-----------------------
1997 1996
-------- --------
<S> <C> <C>
ASSETS
Accounts receivable $ 5,063 $ 5,063
Investment in AmeriGas Propane, L.P. 494,233 538,664
Deferred charges 2,911 3,217
-------- --------
Total assets $502,207 $546,944
======== ========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 29 $ 67
Accrued interest 4,641 4,641
-------- --------
Total current liabilities 4,670 4,708
Long-term debt 100,000 100,000
Partners' capital:
Common unitholders 208,253 230,376
Subordinated unitholders 185,310 207,439
General partner 3,974 4,421
-------- --------
Total partners' capital 397,537 442,236
-------- --------
Total liabilities and partners' capital $502,207 $546,944
======== ========
</TABLE>
S-1
<PAGE> 105
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY)
STATEMENTS OF OPERATIONS
(Thousands of dollars)
<TABLE>
<CAPTION>
Year
Ended April 19
September 30, to
---------------------- September 30,
1997 1996 1995
-------- -------- -------------
<S> <C> <C> <C>
Operating expenses $ (29) $ (36) $ --
Equity in income (loss) of AmeriGas Propane, L.P. 54,439 20,676 (42,414)
Interest expense (10,430) (10,402) (4,693)
-------- -------- --------
Net income (loss) $ 43,980 $ 10,238 $(47,107)
======== ======== ========
</TABLE>
S-2
<PAGE> 106
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
CC SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY)
STATEMENTS OF CASH FLOWS
(Thousands of dollars)
<TABLE>
<CAPTION>
Year
Ended April 19
September 30, to
----------------------------- September 30,
1997 1996 1995
-------------- ------------ --------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 43,980 $ 10,238 $ (47,107)
Reconciliation of net income (loss) to net cash from
operating activities:
Equity in (income) loss of AmeriGas Propane, L.P. (54,438) (20,676) 42,414
Increase in accounts receivable -- (113) --
Increase (decrease) in accounts payable (37) 35 --
Increase in accrued interest -- 85 4,556
Amortization of deferred debt issuance costs 306 305 137
---------- --------- ----------
Net cash used by operating activities (10,189) (10,126) --
---------- --------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Contribution to AmeriGas Propane, L.P. (26) -- (447,433)
Distributions from AmeriGas Propane, L.P. 103,050 102,853 18,797
Net proceeds from issuance of Common Units -- -- 349,751
---------- --------- ----------
Net cash provided (used) by investing activities 103,024 102,853 (78,885)
----------- --------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions (92,861) (92,727) (18,797)
Capital contribution from General Partner 26 -- 432
Issuance of long-term debt associated with
Partnership Formation -- -- 97,250
---------- -------- -----------
Net cash provided (used) by financing activities (92,835) (92,727) 78,885
---------- -------- ----------
Cash and cash equivalents increase $ -- $ -- $ --
========== ======== ==========
CASH AND CASH EQUIVALENTS:
End of period $ -- $ -- --
Beginning of period $ -- $ -- $ --
---------- -------- ----------
Increase $ -- $ -- $ --
========== ======== ==========
</TABLE>
Supplemental disclosure of non-cash investing activities:
Effective April 19, 1995, substantially all of the assets and liabilities
of AmeriGas Propane, Inc., AmeriGas Propane-2, Inc. and Petrolane
Incorporated and their respective operating subsidiaries were contributed
at historical cost to AmeriGas Propane, L.P., a subsidiary of AmeriGas
Partners, L.P. The net assets contributed of $286,956 are net of the
following liabilities: accounts payable - $40,304; long-term debt -
$929,828; other liabilities - $171,667.
S-3
<PAGE> 107
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(Thousands of dollars)
<TABLE>
<CAPTION>
Charged
Balance at (credited) Balance at
beginning to costs and end of
of period expenses Other period
---------- ------------ ----------- ----------
<S> <C> <C> <C> <C>
YEAR ENDED SEPTEMBER 30, 1997
Reserves deducted from assets in the consolidated balance sheet:
Allowance for doubtful accounts $ 6,579 $ 6,986 $( 5,690)(1) $ 7,875
======== ========
Allowance for amortization of other
deferred costs $ 244 $ 170 $ -- $ 414
======== ========
Allowance for amortization of deferred
financing costs $ 2,238 $ 1,553 $ -- $ 3,791
======== ========
Other reserves:
Self-insured property and casualty liability $ 42,332 $ 9,421 $ (9,897)(2) $ 41,856
======== ========
Insured property and casualty liability $ 19,024 $ 3,345 $(20,568)(2) $ 1,801
======== ========
Environmental and other $ 15,629 $ 4,565 $ (1,126)(2) $ 19,133
======== ========
65 (4)
YEAR ENDED SEPTEMBER 30, 1996
Reserves deducted from assets in the consolidated balance sheet:
Allowance for doubtful accounts $ 4,647 $ 5,568 $( 3,636)(1) $ 6,579
======== ========
Allowance for amortization of other
deferred costs $ 74 $ 170 $ -- $ 244
======== ========
Allowance for amortization of deferred
financing costs $ 690 $ 1,548 $ -- $ 2,238
======== ========
Other reserves:
Self-insured property and casualty liability $ 43,908 $ 12,401 $(13,977)(2) $ 42,332
======== ========
Insured property and casualty liability $ 12,246 $ 6,778 $ -- $ 19,024
======== ========
Environmental and other $ 25,591 $( 7,127) $( 2,645)(2) $ 15,629
======== ========
(190)(4)
</TABLE>
S-4
<PAGE> 108
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (continued)
(Thousands of dollars)
<TABLE>
<CAPTION>
Charged
Balance at (credited) Balance at
beginning to costs and end of
of period expenses Other period
--------- ------------ --------- ----------
<S> <C> <C> <C> <C>
APRIL 19, 1995 TO SEPTEMBER 30, 1995
Reserves deducted from assets in the consolidated balance sheet:
Allowance for doubtful accounts $ 7,257 $ 778 $(3,388)(1) $ 4,647
======== ========
Allowance for amortization of other
deferred costs $ 417 $ 191 $ (534)(4) $ 74
======== ========
Allowance for amortization of deferred
financing costs $ -- $ 690 $ -- $ 690
======== ========
Other reserves:
Self-insured property and casualty liability $ 43,849 $5,901 $(6,081)(2) $ 43,908
======== ========
239 (4)
Insured property and casualty liability $ 7,800 $6,546 $(2,100)(2) $ 12,246
======== ========
Environmental and other $ 32,282 $ 242 $(3,081)(2) $ 25,591
======== ========
(3,852)(4)
</TABLE>
(1) Uncollectible accounts written off, net of recoveries.
(2) Payments.
(3) Represents amounts for Petrolane Incorporated (Petrolane) as a result
of the purchase on April 19, 1995 of the 65% of the common stock of
Petrolane not already owned by UGI or its subsidiary AmeriGas, Inc.
(4) Other adjustments.
S-5
<PAGE> 109
[ARTHUR ANDERSEN LLP LETTERHEAD]
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
We have audited, in accordance with generally accepted auditing standards, the
consolidated financial statements included in the AmeriGas Partners, L.P.
annual report to unitholders for the year ended September 30, 1997,
incorporated by reference in this Form 10-K, and have issued our report thereon
dated November 14, 1997. Our audits were made for the purpose of forming an
opinion on those consolidated financial statements taken as a whole. The
schedules listed in the index on page F-2 are the reponsibility of the
management of AmeriGas Propane, Inc. and are presented for purposes of
complying with the Securities and Exchange Commission's rules and are not part
of the basic financial statements. These schedules have been subjected to the
auditing procedures applied in the audits of the basic financial statements
and, in our opinion, fairly state in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
/s/ Arthur Andersen LLP
- ------------------------
ARTHUR ANDERSEN LLP
Chicago, Illinois
November 14, 1997
S-6
<PAGE> 110
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
4.5 First Amendment dated as of September 12, 1997 to Note Agreement
dated as of April 12, 1995
10.1 Amended and Restated Credit Agreement dated as of September 15, 1997
among AmeriGas Propane, L.P., AmeriGas Propane, Inc., Petrolane
Incorporated, Bank of America National Trust and Savings Association, as
Agent, First Union National Bank, as Syndication Agent and certain banks
10.2 Agreement dated as of May 1, 1996 between TE Products
Pipeline Company, L.P., and AmeriGas Propane, L.P.
10.12 Financing Agreement dated as of November 5, 1997 between AmeriGas
Propane, Inc. and AmeriGas Propane, L.P.
10.25 Form of Change of Control Agreement between AmeriGas Propane, Inc.
and Messrs. Bissell and Grady
10.26 AmeriGas Propane, Inc. 1997 Long-Term Incentive Plan
10.27 AmeriGas Propane, Inc. Supplemental Executive Retirement Plan effective
October 1, 1996
13 Pages 10 through 23 of the AmeriGas Partners, L.P. Annual Report for the
year ended September 30, 1997.
21 Subsidiaries of AmeriGas Partners, L.P.
27.1 Financial Data Schedule of AmeriGas Partners, L.P.
27.2 Financial Data Schedule of AmeriGas Finance Corp.
99 Cautionary Statements Affecting Forward-looking Information
</TABLE>
<PAGE> 1
EXHIBIT 4.5
FIRST AMENDMENT dated as of September 12, 1997 (the "First Amendment") to
the NOTE AGREEMENT dated as of April 12, 1995 (the "Agreement") by and among
AMERIGAS PROPANE, L.P., a Delaware limited partnership (the "Company"), AMERIGAS
PROPANE, INC., a Pennsylvania corporation formerly known as New AmeriGas
Propane, Inc. (the "General Partner"), PETROLANE INCORPORATED, a Pennsylvania
corporation and successor by merger to Petrolane Incorporated, a California
corporation ("Petrolane"; the Company, the General Partner and Petrolane being
hereinafter collectively referred to as the "Obligors"), and each of the
noteholders listed in Schedule I to the Agreement as amended hereby (the
"holders").
WHEREAS, the parties hereto desire to amend the Agreement as set forth
below;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows.
1. Amendments to the Agreement. Effective as of the Effective
Date (as hereinafter defined), the Agreement is hereby amended as follows:
1.1. Amendments to Section 10.1.
(a) Section 10.1 of the Agreement is hereby amended by
deleting the first sentence thereof in its entirety and by inserting in lieu
thereof the following new sentence:
"The Company will not permit the ratio of Total
Debt of the Company and its Restricted Subsidiaries to EBITDA
as at any fiscal quarter end to exceed 5.25 to 1.00. For
purposes of determining compliance with the ratio of Total
Debt to EBITDA, as set forth above, (A) EBITDA shall be
determined as at the end of each fiscal quarter for (I) the
four fiscal quarters then ended or (II) the eight fiscal
quarters then ended and divided by 2, whichever is greater,
and (B) Total Debt shall be determined as at the end of each
fiscal quarter."
(b) Section 10.1(e) of the Agreement is hereby amended to
read in its entirety as follows:
"(e) The Company may become and remain liable with
respect to Indebtedness incurred for any purpose permitted by
the Revolving Credit Facility, and any Indebtedness incurred
for any such permitted purpose which replaces, extends,
renews, refunds or refinances any such Indebtedness, in whole
or in part, in an aggregate principal amount at any time not
in excess of $175,000,000 less the aggregate principal amount
outstanding under the Acquisition Facility;"
(c) Section 10.1(f) of the Agreement is hereby amended to
read in its entirety as follows:
"(f) the Company may become and remain liable with
respect to Indebtedness, in addition to that otherwise
permitted by the foregoing subdivisions of this Section 10.1,
if on the date the Company becomes liable with respect to any
such additional Indebtedness and immediately after giving
<PAGE> 2
effect thereto and to the substantially concurrent repayment
of any other Indebtedness (i) the ratio of Consolidated Cash
Flow to Consolidated Pro Forma Debt Service is equal to or
greater than 2.50 to 1.0, (ii) the ratio of Consolidated Cash
Flow to Average Consolidated Pro Forma Debt Service is equal
to or greater than 1.25 to 1.0, and (iii) if such Indebtedness
is incurred other than for the purposes described in clause
(A) below, the Company would not be permitted to incur any
additional Indebtedness pursuant to Section 10.1(e) under the
Revolving Credit Facility or any extension, renewal,
refunding, replacement or refinancing thereof; provided that
if such Indebtedness (A) is incurred by the Company (x) to
finance the making of expenditures for the improvement or
repair of (to the extent such improvements and repairs may be
capitalized on the books of the Company in accordance with
GAAP) or additions to (including additions by way of
acquisitions or capital contributions of businesses and
related assets) the General Collateral, or (y) by assumption
in connection with additions (including additions by way of
acquisitions or capital contributions of businesses and
related assets) to the General Collateral and (B) is to be
secured under the Security Documents as provided in Section
10.2(m), then the Company may become liable with respect to
any such additional Indebtedness only if the Company would not
be permitted to incur any additional Indebtedness under
Section 10.1(b);"
1.2. Amendment to Section 10.2(l). Section 10.2(l) of the
Agreement is hereby amended by deleting the words "or the Special Purpose
Facility" from such Section.
1.3. Amendments to Section 10.22. Section 10.22 of the Agreement is
hereby amended by deleting subsection (e) thereof in its entirety and by
redesignating subsection (f) thereof (and any internal references thereto) as
subsection (e) thereof.
1.4. Amendment to Section 13.1.
(a) Section 13.1 of the Agreement is hereby amended by
deleting the definition of "Consolidated Adjusted Gross Worth" in its entirety.
(b) Section 13.1 of the Agreement is hereby amended further by
deleting the definition of "Consolidated Gross Worth" in its entirety.
(c) Section 13.1 of the Agreement is hereby amended further by
adding thereto the following additional defined terms in alphabetical order:
EBIT means, for any period, the Company's and its Restricted Subsidiaries'
consolidated net income (not including extraordinary gains or losses) plus
interest charges and income tax expense in each case for such period, as
determined in accordance with GAAP.
EBITDA means, for any period, EBIT plus the Company's and its Restricted
Subsidiaries' depreciation and amortization of property, plant and equipment and
intangible assets, in each case as taken into account in calculating
Consolidated Net Income, in each case for such period, as determined in
accordance with GAAP.
-2-
<PAGE> 3
For the purpose of calculating EBITDA for any period (the "Applicable
Period"), EBITDA shall be adjusted by the addition of the EBITDA of any Asset
Acquisitions made during the Applicable Period, as if such Asset Acquisitions
occurred on the first day of the Applicable Period plus the addition of the
"Savings Factor".
The "Savings Factor" shall equal, with respect to any Asset Acquisition,
an amount equal to 50% of the difference between (a) Actual Acquisition Expense
minus (b) Pro Forma Acquisition Expense. "Actual Acquisition Expense" means an
amount equal to the personnel expenses and non personnel costs and expenses
(which would be deducted from gross profits in calculating costs and EBITDA)
related to the operation of any Asset Acquisition from the beginning of the
Applicable Period to the date of the purchase of the Asset Acquisition. "Pro
Forma Acquisition Expense" means an amount equal to the personnel and non
personnel costs and expenses (which would be deducted from gross profits in
calculating costs and EBITDA) that would have been incurred with respect to the
operation of any Asset Acquisition for the period from the beginning of the
Applicable Period to the date of purchase of the Asset Acquisition, on the
assumption that the ongoing personnel and non personnel cost and expense savings
realized as of the date of the Asset Acquisition had been realized on the first
day of the Applicable Period. In no event shall the aggregate Savings Factor for
any Applicable Period exceed 10% of EBITDA for the Company and its Restricted
Subsidiaries for such Applicable Period.
(d) Section 13.1 of the Agreement is hereby further amended by
deleting from the defined term "Credit Agreement" the words "and the Special
Purpose Facility", and by inserting the word "and" in lieu of the comma
immediately prior to the words "the Revolving Credit Facility."
2. Conditions to Effectiveness of this First Amendment. This First
Amendment shall become effective only upon the satisfaction in full (or waiver
by the Required Holders) of the following conditions precedent (the first date
upon which each such condition shall have been so satisfied or waived being
herein referred to as the "Effective Date"):
(a) No Defaults. On the Effective Date (after giving
effect to this First Amendment), no Default or Event of Default shall have
occurred and be continuing.
(b) Credit Agreement. The Credit Agreement shall have been
amended to delete the first sentence of Section 8.1 thereof and by adding a
covenant thereto substantially the same as the covenant added as Section 10.1(i)
of the Agreement by this First Amendment. The covenants and events of default
set forth in the Credit Agreement shall not have been otherwise amended in any
material respect.
(c) First Amendment. Each of the Obligors and the Required
Holders shall have executed this First Amendment, and counterparts hereof
bearing the signatures of the Obligors shall have been delivered to the holders
together with a notice from the Company to each holder as to the satisfaction of
this condition and the condition specified in clause (b) of this Section 2.
(d) Fees. Without limiting the provisions of Section 16.1 of
the Agreement, special counsel to the holders shall have received its reasonable
fees, charges and disbursements to the extent reflected in a statement of such
special counsel rendered to the Company.
-3-
<PAGE> 4
3. Agreement; Terms. Except as expressly amended hereby, the
Agreement shall continue in full force and effect in accordance with the
provisions thereof on the date hereof, and this First Amendment shall not be
deemed to waive or amend any provision of the Agreement except as expressly set
forth herein. As used in the Agreement, the terms "this Agreement," "herein,"
"hereinafter," "hereunder," "hereto" and words of similar import shall mean and
refer to, from and after the Effective Date, unless the context otherwise
specifically requires, the Agreement as amended by this First Amendment.
Capitalized terms used and not defined herein shall have the meanings assigned
to such terms in the Agreement.
4. Headings. Section headings in this First Amendment are
included herein for convenience of reference only and shall not define, limit
or otherwise affect any of the terms or provisions hereof.
5. Counterparts. This First Amendment may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument, and all signatures need not appear on any one
counterpart.
6. Expenses. The Company agrees to pay all reasonable out-of-pocket
expenses incurred by the holders in connection with the preparation of this
First Amendment, including, but not limited to, the reasonable fees, charges and
disbursements of counsel for the holders as provided for in Section 16.1 of the
Agreement.
7. Governing Law. This First Amendment shall be governed by,
and construed in accordance with, the laws of the State of New York (other
than any conflicts of law rule which might result in the application of the
laws of any other jurisdiction).
8. Ratification and Confirmation of Security Documents. The
Company hereby ratifies and confirms the provisions of the Security Documents
for the benefit from time to time of the holders of the Notes.
-4-
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to be executed as of the date first above written.
AMERIGAS PROPANE, L.P.
By: AmeriGas Propane, Inc.,
its general partner
By: s/Charles L. Ladner
--------------------------------------
Charles L. Ladner
Vice President - Finance and
Accounting
AMERIGAS PROPANE, INC.
By: s/Charles L. Ladner
--------------------------------------
Charles L. Ladner
Vice President - Finance and
Accounting
PETROLANE INCORPORATED
By: s/Brendan P. Bovaird
--------------------------------------
Brendan P. Bovaird
Vice President
THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA
By: s/Robert G. Gwin
--------------------------------------
Robert G. Gwin
Vice President
PRUCO LIFE INSURANCE COMPANY
By: s/Randall M. Kob
--------------------------------------
Randall M. Kob
Vice President
METROPOLITAN LIFE INSURANCE COMPANY
By: s/James A. Wiviott
--------------------------------------
James A. Wiviott
Assistant Vice President
-5-
<PAGE> 6
THE EQUITABLE LIFE INSURANCE SOCIETY OF
THE UNITED STATES
By:
--------------------------------------
Name:
Title:
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
By: CIGNA INVESTMENTS, INC.
By: s/James G. Schelling
--------------------------------------
James G. Schelling
Managing Director
CIGNA PROPERTY AND CASUALTY INSURANCE
COMPANY
By: CIGNA INVESTMENTS, INC.
By: s/James G. Schelling
--------------------------------------
James G. Schelling
Managing Director
CENTURY INDEMNITY COMPANY
By: CIGNA INVESTMENTS, INC.
By: s/James G. Schelling
--------------------------------------
James G. Schelling
Managing Director
LIFE INSURANCE COMPANY OF NORTH AMERICA
By: CIGNA INVESTMENTS, INC.
By: s/James G. Schelling
--------------------------------------
James G. Schelling
Managing Director
-6-
<PAGE> 7
TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA
By: s/Thomas E. Solano
--------------------------------------
Thomas E. Solano
Director Private Placements
THE TRAVELERS INSURANCE COMPANY
By: s/Robert M. Mills
--------------------------------------
Robert M. Mills
Investment Officer
-7-
<PAGE> 1
EXHIBIT 10.1
EXECUTION COPY
- --------------------------------------------------------------------------------
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of September 15, 1997
among
AMERIGAS PROPANE, L.P.,
AMERIGAS PROPANE, INC.,
PETROLANE INCORPORATED,
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
as Agent,
FIRST UNION NATIONAL BANK
as Syndication Agent,
and
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
Arranged by
BANCAMERICA SECURITIES, INC.
- --------------------------------------------------------------------------------
Florida documentary stamp tax in the full amount required by law has been paid
on the mortgages recorded in Florida that secure this Amended and Restated
Credit Agreement.
<PAGE> 2
ARTICLE I DEFINITIONS........................................................2
1.1 Certain Defined Terms..............................................2
1.2 Other Interpretive Provisions.....................................29
1.3 Accounting Principles.............................................30
ARTICLE II THE CREDITS......................................................31
2.1 Amounts and Terms of Commitments..................................31
(a) The Acquisition Credit......................................31
(b) The Revolving Credit........................................31
2.2 Loan Accounts.....................................................32
2.3 Procedure for Borrowing...........................................32
2.4 Conversion and Continuation Elections.............................33
2.5 Voluntary Termination or Reduction of Commitments.................34
2.6 Optional Prepayments..............................................35
2.7 Mandatory Prepayments of Loans; Mandatory Commitment
Reductions......................................................35
(a) Asset Sales.................................................35
(b) Excess Outstandings.........................................35
(c) Other Prepayments...........................................36
2.8 Repayment.........................................................36
(a) The Acquisition Credit.....................................36
(b) The Revolving Credit........................................36
(c) Swingline Loans.............................................36
2.9 Interest..........................................................36
2.10 Fees.............................................................37
(a) Arrangement, Agency Fees....................................37
(b) Facility Fees...............................................37
2.11 Computation of Fees and Interest.................................38
2.12 Payments by the Borrowers........................................38
2.13 Payments by the Banks to the Agent, etc..........................38
2.14 Sharing of Payments, etc.........................................39
2.15 Revolving Termination Date.......................................40
2.16 Swingline Loans..................................................41
ARTICLE III THE LETTERS OF CREDIT...........................................42
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<PAGE> 3
3.1 The Letter of Credit Subfacility..................................42
3.2 Issuance, Amendment and Renewal of Letters of Credit..............43
3.3 Risk Participations, Drawings and Reimbursements..................45
3.4 Repayment of Participations.......................................46
3.5 Role of the Issuing Bank..........................................47
3.6 Obligations Absolute..............................................47
3.7 Cash Collateral Pledge............................................48
3.8 Letter of Credit Fees.............................................49
3.9 Uniform Customs and Practice......................................49
ARTICLE IV TAXES, YIELD PROTECTION AND ILLEGALITY...........................49
4.1 Taxes.............................................................49
4.2 Illegality........................................................50
4.3 Increased Costs and Reduction of Return...........................51
4.4 Funding Losses....................................................52
4.5 Inability to Determine Rates......................................53
4.6 Certificates of Banks.............................................53
4.7 Substitution of Banks.............................................54
4.8 Survival..........................................................54
ARTICLE V CONDITIONS PRECEDENT..............................................54
5.1 Conditions of Initial Credit Extension............................54
(a) Credit Agreement and any Notes..............................54
(b) Resolutions; Incumbency.....................................54
(c) Organization Documents; Good Standing.......................54
(d) Legal Opinions..............................................55
(e) Amendments to Selected Mortgages............................55
(f) Title Policies..............................................55
(g) Recordation.................................................55
(h) Insurance...................................................55
(i) Payment of Fees.............................................55
(j) Ownership...................................................56
(k) Certificate.................................................56
(l) Payments under Existing Credit Agreement....................56
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<PAGE> 4
(m) Consent of Holders of First Mortgage Notes................56
(n) Other Documents.............................................56
5.2 Conditions to All Borrowings......................................57
(a) Notice of Borrowing.........................................57
(b) Continuation of Representations and Warranties..............57
(c) No Existing Default.........................................57
ARTICLE VI REPRESENTATIONS AND WARRANTIES...................................57
6.1 Organization, Standing, etc.......................................57
6.2 Partnership Interests and Subsidiaries............................58
6.3 Qualification; Corporate or Partnership Authorization.............58
6.4 Financial Statements..............................................59
6.5 Changes, etc......................................................59
6.6 Tax Returns and Payments..........................................59
6.7 Indebtedness......................................................59
6.8 Transfer of Assets and Business...................................60
6.9 Litigation, etc...................................................61
6.10 Compliance with Other Instruments, etc...........................61
6.11 Governmental Consent.............................................61
6.12 Investment Company Act...........................................62
6.13 Public Utility Holding Company Act...............................62
6.14 Chief Executive Office...........................................62
6.15 Matters Relating to Petrolane....................................62
6.16 Matters Relating to the General Partner..........................62
6.17 ERISA Compliance.................................................62
6.18 Use of Proceeds; Margin Regulations..............................63
6.19 Environmental Warranties.........................................63
6.20 Copyrights, Patents, Trademarks and Licenses, etc................64
6.21 Insurance........................................................65
6.22 Full Disclosure..................................................65
6.23 Solvency.........................................................65
ARTICLE VII AFFIRMATIVE COVENANTS...........................................65
7.1 Financial Statements..............................................65
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<PAGE> 5
7.2 Reserved..........................................................69
7.3 Adequate Reserves.................................................69
7.4 Partnership or Corporate Existence; Business;
Compliance with Laws............................................69
7.5 Payment of Taxes and Claims.......................................69
7.6 Maintenance of Properties: Insurance..............................70
7.7 License Agreements................................................70
7.8 Chief Executive Office............................................70
7.9 Subsidiary Guarantors.............................................70
7.10 New Mortgages; Recordation.......................................70
7.11 Further Assurances...............................................71
7.12 Covenant to Secure Notes Equally.................................71
7.13 Designations With Respect to Subsidiaries........................71
7.14 Covenants of the General Partner and Petrolane...................72
7.15 Books and Records................................................73
7.16 Environmental Covenant...........................................73
ARTICLE VIII NEGATIVE COVENANTS.............................................74
8.1 Indebtedness......................................................74
8.2 Minimum Interest Coverage.........................................76
8.3 Liens, etc........................................................76
8.4 Investments, Contingent Obligations, etc..........................79
8.5 Restricted Payments...............................................81
8.6 Transactions with Affiliates......................................82
8.7 Subsidiary Stock and Indebtedness.................................82
8.8 Consolidation, Merger, Sale of Assets, etc........................83
8.9 Use of Proceeds...................................................86
8.10 Change in Business...............................................87
8.11 Accounting Changes...............................................87
8.12 Clean Down.......................................................87
8.13 Receivables......................................................87
8.14 Leverage Ratio...................................................88
ARTICLE IX EVENTS OF DEFAULT................................................88
9.1 Event of Default..................................................88
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<PAGE> 6
(a) Non-Payment.......................................................88
(b) Representation or Warranty........................................88
(c) Specific Defaults.................................................88
(d) Other Defaults....................................................88
(e) Cross-Default.....................................................89
(f) Insolvency Voluntary Proceedings..................................89
(g) Involuntary Proceedings...........................................90
(h) Judgments.........................................................90
(i) Pension Plans.....................................................90
(j) Change of Control.................................................90
(k) Impairment of Security, etc.......................................90
9.2 Remedies..........................................................91
9.3 Rights Not Exclusive..............................................91
ARTICLE X THE AGENT.........................................................91
10.1 Appointment and Authorization....................................91
10.2 Delegation of Duties.............................................92
10.3 Liability of Agent...............................................92
10.4 Reliance by Agent................................................92
10.5 Notice of Default................................................93
10.6 Credit Decision..................................................93
10.7 Indemnification..................................................94
10.8 Agent in Individual Capacity.....................................94
10.9 Successor Agent..................................................94
10.10 Withholding Tax.................................................95
10.11 Collateral Agency Agreement.....................................96
ARTICLE XI MISCELLANEOUS....................................................96
11.1 Amendments and Waivers...........................................96
11.2 Notices..........................................................97
11.3 No Waiver; Cumulative Remedies...................................98
11.4 Costs and Expenses...............................................98
11.5 Indemnity........................................................99
11.6 Joint and Several Liability.....................................100
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<PAGE> 7
11.7 Payments Set Aside..............................................101
11.8 Successors and Assigns..........................................101
11.9 Assignments, Participations. etc................................101
11.10 Changes of Commitments.........................................103
11.11 Confidentiality................................................105
11.12 Set-off........................................................105
11.13 Notification of Addresses; etc.................................106
11.14 Counterparts...................................................106
11.15 Severability...................................................106
11.16 No Third Parties Benefited.....................................106
11.17 Governing Law and Jurisdiction.................................106
11.18 Waiver of Jury Trial...........................................107
11.19 Entire Agreement...............................................107
11.20 Collateral Agency Agreement....................................107
11.21 Ratification and Confirmation of the Security
Documents......................................................107
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<PAGE> 8
CREDIT AGREEMENT
This AMENDED AND RESTATED CREDIT AGREEMENT (as the same may be
amended, supplemented or otherwise modified from time to time in accordance with
the terms hereof, this "Agreement") is entered into as of September 15, 1997,
among AMERIGAS PROPANE, L.P., a Delaware limited partnership (the "Company"),
AMERIGAS PROPANE, INC., a Pennsylvania corporation (the "General Partner"),
PETROLANE INCORPORATED, a Pennsylvania corporation ("Petrolane"; the Company,
the General Partner and Petrolane are, on a joint and several basis, the
"Borrowers"), the several financial institutions from time to time party to this
Agreement (collectively, the "Banks"; individually, a "Bank"), BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION, as agent for the Banks, and FIRST UNION
NATIONAL BANK, as Syndication Agent.
WHEREAS, AmeriGas Propane, Inc. ("AmeriGas"), a Delaware
corporation, AmeriGas Propane-2, Inc. ("AGP-2"), a Pennsylvania corporation, and
Petrolane Incorporated, a California corporation ("California Petrolane"), were
engaged in the business (the "Business") of wholesale and retail sales,
distribution and storage of propane gas and related petroleum derivative
products and the retail sale of propane related supplies and equipment,
including home appliances;
WHEREAS, AmeriGas and AGP-2 were indirect wholly-owned subsidiaries
of UGI Corporation, a Pennsylvania corporation ("UGI");
WHEREAS, UGI directly or indirectly owned approximately 35% of the
outstanding equity interests of California Petrolane;
WHEREAS, the Company was formed to acquire and operate the Business;
WHEREAS, by virtue of a series of mergers and asset transfers
involving AmeriGas, AGP-2, California Petrolane and their respective
Subsidiaries (the "Formation Transactions"), California Petrolane retained
certain assets (the "Retained Assets") and liabilities, and the Company acquired
(either directly or indirectly through asset acquisitions or the acquisition of
stock of Subsidiaries of AmeriGas and California Petrolane), substantially all
the assets of AmeriGas, AGP-2, California Petrolane (other than the Retained
Assets), and their respective Subsidiaries used in the conduct of the Business
(the "Assets");
WHEREAS, immediately after giving effect to the Formation
Transactions, (a) New AmeriGas Propane, Inc., a newly formed Pennsylvania
corporation which was an indirect wholly-owned subsidiary of UGI and assumed the
name AmeriGas Propane, Inc. on the Original Closing Date (as defined below), was
the sole general partner of the Company, (b) AmeriGas Partners, L.P., a Delaware
limited partnership (the "Public Partnership"), was the sole limited partner of
the Company, and (c) the General Partner was the owner of all the outstanding
shares of California Petrolane;
WHEREAS, Petrolane is successor by merger to California Petrolane;
<PAGE> 9
WHEREAS, the Borrowers, the Banks and the Agent are parties to the
Existing Credit Agreement (as defined below), pursuant to which the Banks have
(a) made revolving credit loans to the Borrowers and have issued or participated
in letters of credit for the account of the Borrowers, in each case for working
capital and general corporate purposes in an aggregate principal amount of up to
$70,000,000 at any one time outstanding, (b) made revolving credit and term
loans to the Borrowers to finance acquisitions in an aggregate principal amount
of up to $75,000,000 at any one time outstanding and (c) made term loans to
Borrowers solely for certain special purposes in an aggregate principal amount
of up to $30,000,000;
WHEREAS, the Borrowers have requested that (i) the $70,000,000 of
Revolving Commitments and $30,000,000 of Special Purpose Commitments under (and
as defined in) the Existing Credit Agreement and the related Revolving Loans and
Special Purpose Loans outstanding under (and as defined in) the Existing Credit
Agreement be refinanced and converted into $100,000,000 of Revolving Commitments
and Revolving Loans under this Agreement, the proceeds of which are to be used
by the Borrowers for working capital and general corporate purposes, (ii) the
$75,000,000 of Acquisition Commitments under (and as defined in) the Existing
Credit Agreement and the related Acquisition Loans outstanding under (and as
defined in) the Existing Credit Agreement be refinanced and converted into
$75,000,000 of Acquisition Commitments and Acquisition Loans under this
Agreement, the proceeds of which are to be used by the Borrowers to finance
acquisitions and (iii) the Existing Credit Agreement otherwise be amended and
restated in its entirety as set forth below in this Agreement; and
WHEREAS, the Banks are willing, on the terms and subject to the
conditions set forth in this Agreement, to amend and restate the terms of the
Existing Credit Agreement and to extend credit under this Agreement as more
particularly hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained herein, the parties agree to amend and
restate the Existing Credit Agreement as follows:
ARTICLE I
DEFINITIONS
1.1 Certain Defined Terms. The following terms have the following
meanings:
"Acquired Debt" means with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person
merged with or into or became a Subsidiary of such specified Person,
including Indebtedness incurred in connection with, or in contemplation
of, such other Person merging with or into or becoming a Subsidiary of
such specified Person and (ii) Indebtedness encumbering any asset acquired
by such specified Person.
"Acquired Portion" has the meaning specified in Section 11.10(a).
"Acquisition Commitment" has the meaning specified in Section
2.1(a).
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<PAGE> 10
"Acquisition Commitment Percentage" has the meaning specified in
Section 11.10(a).
"Acquisition Loan" has the meaning specified in Section 2.1(a).
"Acquisition Loan Termination Date" means the earlier to occur of:
(a) September 15, 2000; and
(b) the date on which the Acquisition Commitments terminate in
accordance with the provisions of this Agreement.
"Affected Bank" has the meaning specified in Section 4.7.
"Affiliate" means, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person. A Person shall be deemed to control
another Person if the controlling Person possesses, directly or
indirectly, the power to direct or cause the direction of the management
and policies of the other Person, whether through the ownership of voting
securities, by contract, or otherwise.
"Agent" means BofA in its capacity as agent for the Banks hereunder,
and any successor agent arising under Section 10.9.
"Agent-Related Persons" means BofA in its capacity as Agent and any
successor agent arising under Section 10.9, together with their respective
Affiliates (including, in the case of BofA in its capacity as Agent, the
Arranger), and the officers, directors, employees, agents and
attorneys-in-fact of such Persons and Affiliates.
"Agent's Payment Office" means the address for payments set forth on
the signature page hereto in relation to the Agent, or such other address
as the Agent may from time to time specify by notice to the Borrowers and
the Banks.
"AGP-2" has the meaning specified in the recitals hereto.
"Agreement" has the meaning specified in the introductory clause
hereto.
"Annual Limit" has the meaning specified in Section 8.4.
"Applicable Margin" means
(i) with respect to Base Rate Loans, 0%; and
(ii) with respect to Offshore Rate Loans,
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<PAGE> 11
the applicable margin set forth below at such time as a
Pricing Tier (the "Pricing Tier") set forth below is applicable:
Pricing Tier Funded Debt Ratio Margin
------------ ----------------- ------
I <1.75x 0.2000%
II =>1.75 x but 0.2500%
<2.75x
III =>2.75 x but 0.3500%
<3.25x
IV =>3.25 x but 0.5000%
<3.75x
V =>3.75x but 0.6250%
<4.25x
VI =>4.25x but 0.8250%
<4.75
VII =>4.75 1.0000%
For the purpose of determining the applicable Pricing Tier above, EBITDA
shall be determined as at the end of each fiscal quarter for the four
fiscal quarters then ending and Funded Debt shall be determined as at the
end of each fiscal quarter. Pricing changes shall be effective on the
later of (i) 45 days after the end of each of the first three fiscal
quarters of each fiscal year and 90 days after each fiscal year end and
(ii) the Agent's receipt of financial statements hereunder for such fiscal
quarter or fiscal year. For the period from the date hereof through
December 29, 1997, Pricing Tier IV shall be deemed applicable.
"Arranger" means BancAmerica Securities, Inc., a Delaware
corporation.
"Asset Acquisition" means (a) an Investment by the Company or any
Restricted Subsidiary in any other Person pursuant to which such Person
shall become a Restricted Subsidiary or shall be merged with or into the
Company or any Restricted Subsidiary, (b) the acquisition by the Company
or any Restricted Subsidiary of the assets of any Person (other than a
Restricted Subsidiary) which constitute all or substantially all of the
assets of such Person or (c) the acquisition by the Company or any
Restricted Subsidiary of any division or line of business of any Person
(other than a Restricted Subsidiary).
"Asset Sale" has the meaning specified in Section 8.8(c).
"Assets" has the meaning specified in the recitals hereto.
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"Assignee" has the meaning specified in Section 11.9(a).
"Attorney Costs" means and includes all reasonable fees and
disbursements of any law firm or other external counsel, the reasonable
allocated cost of internal legal services and all reasonable disbursements
of internal counsel.
"Available Cash" as to any calendar quarter means
(a) the sum of (i) all cash of the Company and the Restricted
Subsidiaries on hand at the end of such quarter and (ii) all
additional cash of the Company and the Restricted Subsidiaries on
hand on the date of determination of Available Cash with respect to
such quarter resulting from borrowings subsequent to the end of such
quarter, less
(b) the amount of cash reserves that is necessary or
appropriate in the reasonable discretion of the General Partner to
(i) provide for the proper conduct of the business of the Company
and the Restricted Subsidiaries (including reserves for future
capital expenditures) subsequent to such quarter, (ii) provide funds
for distributions under Sections 5.3(a), (b) and (c) or 5.4(a) of
the partnership agreement of the Public Partnership (such Sections
as in effect on the Restatement Effective Date, together with all
related definitions, being hereby incorporated herein in the form
included in such partnership agreement on the Restatement Effective
Date and without regard to any subsequent amendments or waivers of
the provisions of, or any termination of, such partnership
agreement) in respect of any one or more of the next four quarters,
or (iii) comply with applicable law or any debt instrument or other
agreement or obligation to which the Company or any Restricted
Subsidiary is a party or its assets are subject; provided, however,
that Available Cash attributable to any Restricted Subsidiary shall
be excluded to the extent dividends or distributions of such
Available Cash by such Restricted Subsidiary are not at the date of
determination permitted by the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or
other regulation.
In addition, without limiting the foregoing, Available Cash shall
reflect a reserve equal to 50% of the interest to be paid on the Mortgage
Notes and the Acquisition Loans in the next fiscal quarter and, beginning
with a date three fiscal quarters before a scheduled principal payment
date on the Mortgage Notes, the Revolving Loans or the Acquisition Loans,
25% of the aggregate principal amount thereof due on any such payment date
in the third succeeding fiscal quarter, 50% of the aggregate principal
amount due on any such quarterly payment date in the second succeeding
fiscal quarter and 75% of the aggregate principal amount due on any
quarterly payment date in the next succeeding fiscal quarter on such notes
and facilities. The foregoing reserves for principal amounts to be paid
shall be reduced by the aggregate amount of advances available to the
Company from responsible financial institutions under binding, irrevocable
credit facility commitments (and which are subject to no conditions which
the Company is unable to meet) and letters of credit to be used to
refinance such principal (so long as no
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reimbursement obligation with respect to any such letter of credit would
come due within three quarters).
"Average Consolidated Pro Forma Debt Service" means as of any date
of determination, the average amount payable by the Company and the
Restricted Subsidiaries on a consolidated basis during all periods of four
consecutive calendar quarters, commencing with the calendar quarter in
which such date of determination occurs and ending June 30, 2010, in
respect of scheduled principal and interest payments with respect to all
Indebtedness of the Company and the Restricted Subsidiaries outstanding on
such date of determination, after giving effect to any Indebtedness
proposed on such date to be incurred and to the substantially concurrent
repayment of any other Indebtedness (a) including actual payments of
Capitalized Lease Liabilities, (b) assuming, in the case of Indebtedness
(other than Indebtedness referred to in clause (c) below)) bearing
interest at fluctuating interest rates which cannot be determined in
advance, that the rate actually in effect on such date will remain in
effect throughout such period, (c) including only actual interest (but not
principal) payments associated with the Indebtedness incurred pursuant to
Section 8.1(e) during the most recent four consecutive calendar quarters,
and (d) treating the principal amount of all Indebtedness outstanding as
of such date of determination under a revolving credit or similar
agreement (other than the Indebtedness incurred pursuant to Section
8.1(e)) as maturing and becoming due and payable on the scheduled maturity
date or dates thereof (including the maturity of any payment required by
any commitment reduction or similar amortization provision), without
regard to any provision permitting such maturity date to be extended
(except for such extensions as may be made in the sole discretion of the
borrower thereunder and without any conditions that remain to be fulfilled
by the borrower or waived by the lender thereunder).
"Bank" has the meaning specified in the introductory clause hereto.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978,
as amended (11 U.S.C. Section 101, et seq.).
"Base Rate" means, for any day, the higher of: (a) 0.50% per annum
above the latest Federal Funds Rate; and (b) the rate of interest in
effect for such day as publicly announced from time to time by BofA in San
Francisco, California, as its "reference rate" (The "reference rate" is a
rate set by BofA based upon various factors including BofA's costs and
desired return, general economic conditions and other factors, and is used
as a reference point for pricing some loans, which may be priced at,
above, or below such announced rate.)
Any change in the reference rate announced by BofA shall take effect
at the opening of business on the day specified in the public announcement
of such change.
"Base Rate Loan" means a Loan that bears interest based on the Base
Rate.
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"BofA" means Bank of America National Trust and Savings Association,
a national banking association.
"Borrowers" has the meaning specified in the introductory clause
hereto.
"Borrowing" means a borrowing hereunder consisting of Loans of the
same Type made to the Borrowers on the same day by the Banks (or in the
case of Swingline Loans, by BofA) and, in the case of Offshore Rate Loans,
having the same Interest Period, in either case under Article II.
"Borrowing Date" means any date on which a Borrowing occurs under
Section 2.3.
"Business" has the meaning specified in the recitals hereto.
"Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks in New York City, Philadelphia or San
Francisco are authorized or required by law to close and, if the
applicable Business Day relates to any Offshore Rate Loan, means such a
day on which dealings are carried on in the applicable offshore dollar
interbank market.
"California Petrolane" has the meaning specified in the recitals
hereto.
"Capital Adequacy Regulation" means any guideline, request or
directive of any central bank or other Governmental Authority, or any
other law, rule or regulation, whether or not having the force of law, in
each case, regarding capital adequacy of any bank or of any corporation
controlling a bank.
"Capital Stock" means with respect to any Person, any and all
shares, interests, participations, rights in or other equivalents (however
designated) of such Person's capital stock, including, with respect to
partnerships, partnership interests (whether general or limited) and any
other interest or participation that confers upon a Person the right to
receive a share of the profits and losses of, or distributions of assets
of, such partnership, and any rights (other than debt securities
convertible into capital stock), warrants or options exchangeable for or
convertible into such capital stock.
"Capitalized Lease Liabilities" means all monetary obligations of
the Company or any of its Restricted Subsidiaries under any leasing or
similar arrangement which, in accordance with GAAP, would be classified as
capitalized leases, and, for purposes of this Agreement and each other
Loan Document, the amount of such obligations shall be the principal
components thereof.
"Cash Collateralize" means to pledge and deposit with or deliver to
the Agent, for the benefit of the Agent, the Issuing Bank and the Banks,
as additional collateral for the L/C Obligations, cash or deposit account
balances pursuant to documentation in form and substance reasonably
satisfactory to the Agent and the Issuing Bank (which documents are
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<PAGE> 15
hereby consented to by the Banks). Derivatives of such term shall have
corresponding meanings.
"Cash Equivalents" has the meaning specified in Section 8.4(a).
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.
"Change of Control" means (i) UGI shall fail to own directly or
indirectly 100% of the general partnership interests in the Company, or,
if the Company shall have been converted to a corporate form, at least 51%
of the voting shares of the Company; or (ii) UGI shall fail to own
directly or indirectly at least a 30% ownership interest in the Company.
"Code" means the Internal Revenue Code of 1986, as amended, and
regulations promulgated thereunder, in each case as in effect from time to
time.
"Collateral Agency Agreement" means the Intercreditor and Agency
Agreement dated as of April 19, 1995 among the Borrowers, the Restricted
Subsidiaries, the Agent, the holders of the Mortgage Notes and the
Collateral Agent, as the same may be amended, supplemented or otherwise
modified from time to time.
"Collateral Agent" means BofA, in its capacity as Collateral Agent
under the Collateral Agency Agreement.
"Commitment", as to each Bank, means its Revolving Commitment and
its Acquisition Commitment.
"Commitment Letter" shall mean that certain letter, dated as of
August 8, 1997, among the Borrowers, the Agent and the Arranger.
"Commitment Termination Date Extension Request" means a request
substantially in the form of Exhibit C.
"Company" has the meaning specified in the introductory clause
hereto.
"Compliance Certificate" means a certificate substantially in the
form of Exhibit D.
"Consolidated Cash Flow" means with respect to the Company and the
Restricted Subsidiaries for any period, (1) the sum of, without
duplication, the amounts for such period, taken as a single accounting
period, of (a) Consolidated Net Income, (b) Consolidated Non-Cash Charges,
(c) Consolidated Interest Expense and (d) Consolidated Income Tax Expense
less (2) any non-cash items increasing Consolidated Net Income for such
period that had previously been added to Consolidated Net Income when
incurred as a Consolidated Non-Cash Charge. Consolidated Cash Flow shall
be calculated after giving effect, on a pro forma basis for the four full
fiscal quarters immediately preceding the date of the transaction giving
rise to the need to calculate Consolidated Cash Flow, to,
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<PAGE> 16
without duplication, any Asset Sales or Asset Acquisitions (including
without limitation any Asset Acquisition giving rise to the need to make
such calculation as a result of the Company or one of its Restricted
Subsidiaries (including any Person who becomes a Restricted Subsidiary as
a result of the Asset Acquisition) incurring, assuming or otherwise being
liable for Acquired Debt) occurring during the period commencing on the
first day of such period to and including the date of the transaction (the
"Reference Period"), as if such Asset Sale or Asset Acquisition occurred
on the first day of the Reference Period; provided, however, that
Consolidated Cash Flow generated by an acquired business or asset shall be
determined by the actual gross profit (revenues minus cost of goods sold)
of such acquired business or asset during the immediately preceding four
full fiscal quarters in the Reference Period minus the pro forma expenses
that would have been incurred by the Company and the Restricted
Subsidiaries in the operation of such acquired business or asset during
such period computed on the basis of personnel expenses for employees
retained or to be retained by the Company and the Restricted Subsidiaries
in the operation of such acquired business or asset and non-personnel
costs and expenses incurred by the Company and the Restricted Subsidiaries
in the operation of the Company's business at similarly situated Company
facilities or Restricted Subsidiary facilities.
"Consolidated Income Tax Expense" means with respect to the Company
and the Restricted Subsidiaries for any period, the provision for federal,
state, local and foreign income taxes of the Company and the Restricted
Subsidiaries for such period as determined on a consolidated basis in
accordance with GAAP.
"Consolidated Interest Expense" means, with respect to the Company
and the Restricted Subsidiaries for any period, without duplication, the
sum of (i) the interest expenses of the Company and the Restricted
Subsidiaries for such period as determined on a consolidated basis in
accordance with GAAP, including without limitation (a) any amortization of
debt discount, (b) the net cost under Interest Rate Agreements, (c) the
interest portion of any deferred payment obligation, (d) all commissions,
discounts and other fees and charges owed with respect to letters of
credit and bankers' acceptance financing and (e) all accrued interest plus
(ii) the interest component of capital leases paid, accrued or scheduled
to be paid or accrued by the Company and the Restricted Subsidiaries
during such period as determined on a consolidated basis in accordance
with GAAP.
"Consolidated Net Income" means the net income of the Company and
the Restricted Subsidiaries, as determined on a consolidated basis in
accordance with GAAP and as adjusted to exclude (i) net after-tax
extraordinary gains or losses, (ii) net after-tax gains or losses
attributable to Asset Sales, (iii) the net income or loss of any Person
which is not a Restricted Subsidiary and which is accounted for by the
equity method of accounting, provided that Consolidated Net Income shall
include the amount of dividends or distributions actually paid to the
Company or any Restricted Subsidiary, (iv) the net income or loss prior to
the date of acquisition of any Person combined with the Company or any
Restricted Subsidiary in a pooling of interest, (v) the net income of any
Restricted
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<PAGE> 17
Subsidiary to the extent that dividends or distributions of such net
income are not at the date of determination permitted by the terms of its
charter or any agreement, instrument, judgment, decree, order, statute,
rule or other regulation and (vi) the cumulative effect of any changes in
accounting principles.
"Consolidated Net Worth" means, of any Person, at any date of
determination, the total partners' equity (in the case of a partnership)
or stockholders' equity (in the case of a corporation) of such Person at
such date, as would be shown on a balance sheet (consolidated, if
applicable) of such Person and, if applicable, its Subsidiaries
(Restricted Subsidiaries in the case of the Company) prepared in
accordance with GAAP (less, in the case of the Company, the Net Amount of
Unrestricted Investment as of such date).
"Consolidated Non-Cash Charges" means, with respect to the Company
and the Restricted Subsidiaries for any period, the aggregate
depreciation, amortization and any other non-cash charges resulting in
write downs in non-current assets, in each case reducing Consolidated Net
Income of the Company and the Restricted Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP.
"Consolidated Pro Forma Debt Service" means as of any date of
determination, the total amount payable by the Company and the Restricted
Subsidiaries on a consolidated basis during the four consecutive calendar
quarters next succeeding the date of determination, in respect of
scheduled principal and interest payments with respect to Indebtedness of
the Company and the Restricted Subsidiaries outstanding on such date of
determination, after giving effect to any Indebtedness proposed on such
date to be incurred and to the substantially concurrent repayment of any
other Indebtedness (a) including actual payments of Capitalized Lease
Liabilities, (b) assuming, in the case of Indebtedness (other than
Indebtedness referred to in clause (c) below) bearing interest at
fluctuating interest rates which cannot be determined in advance, that the
rate actually in effect on such date will remain in effect throughout such
period, (c) including only actual interest (but not principal) payments
associated with the Indebtedness incurred pursuant to Section 8.1(e)
during the most recent four consecutive calendar quarters, and (d)
treating the principal amount of all Indebtedness outstanding as of such
date of determination under a revolving credit or similar agreement (other
than the Indebtedness incurred pursuant to Section 8.1(e)) as maturing and
becoming due and payable on the scheduled maturity date or dates thereof
(including the maturity of any payment required by any commitment
reduction or similar amortization provision), without regard to any
provision permitting such maturity date to be extended (except for such
extensions as may be made in the sole discretion of the borrower
thereunder and without any conditions that remain to be fulfilled by the
borrower or waived by the lender thereunder).
"Contingent Obligation" means, as to any Person, any direct or
indirect liability of that Person, whether or not contingent, with or
without recourse (otherwise than for collection or deposit in the ordinary
course of business), (a) with respect to any Indebtedness, lease,
dividend, letter of credit or other obligation (the "primary obligations)
of another Person (the "primary obligor"), including any obligation of
that Person (i) to purchase, repurchase or otherwise acquire such primary
obligations or any security
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<PAGE> 18
therefor, (ii) to advance or provide funds for the payment or discharge of
any such primary obligation, or to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet item, level of income or financial condition
of the primary obligor, (iii) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such
primary obligation, or (iv) otherwise to assure or hold harmless the
holder of any such primary obligation against loss in respect thereof
(each, a "Guaranty Obligation"); (b) with respect to any Surety Instrument
(other than any Letter of Credit) issued for the account of that Person or
as to which that Person is otherwise liable for reimbursement of drawings
or payments; (c) to purchase any materials, supplies or other property
from, or to obtain the services of, another Person if the relevant
contract or other related document or obligation requires that payment for
such materials, supplies or other property, or for such services, shall be
made regardless of whether delivery of such materials, supplies or other
property is ever made or tendered, or such services are ever performed or
tendered, or (d) in respect of any Swap Contract. The amount of any
Contingent Obligation shall, in the case of Guaranty Obligations, be
deemed equal to the stated or determinable amount of the primary
obligation in respect of which such Guaranty Obligation is made or, if not
stated or if indeterminable, the maximum reasonably anticipated liability
in respect thereof, and in the case of other Contingent Obligations, shall
be equal to the maximum reasonably anticipated liability in respect
thereof.
"Control Affiliate" means UGI, the Public Partnership, the General
Partner and any Person controlling or controlled by, or under common
control with, UGI, the Public Partnership or the General Partner (other
than the Company or any of its Subsidiaries).
"Conversion/Continuation Date" means any date on which, under
Section 2.4, any Borrower (a) converts Loans of one Type to the other
Type, or (b) continues as Offshore Rate Loans, but with a new Interest
Period, Offshore Rate Loans having Interest Periods expiring on such date.
"Covered Persons" shall have the meaning specified in the definition
of Restricted Payment.
"Credit Extension" means and includes (a) the making of any Loan
hereunder, and (b) the Issuance of any Letters of Credit hereunder.
"Decreasing Bank" has the meaning specified in Section 11.10.
"Default" means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would (if not cured or otherwise
remedied during such time) constitute an Event of Default.
"Designation Amounts" has the meaning specified in Section 7.13.
"Designee" has the meaning specified in Section 7.13.
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"Disinterested Directors" means, with respect to any transaction or
series of transactions with Affiliates, a member of the Board of Directors
of the General Partner who has no financial interest, and whose employer
has no financial interest, in such transaction or series of transactions.
"Dollars", "dollars" and "$" each mean lawful money of the United
States.
"EBIT" means, for any period, the Company's and its Restricted
Subsidiaries' consolidated net income (not including extraordinary gains
or losses) plus interest charges and income tax expense in each case for
such period, as determined in accordance with GAAP.
"EBITDA" means, for any period, EBIT plus the Company's and its
Restricted Subsidiaries' depreciation and amortization of property, plant
and equipment and intangible assets, in each case as taken into account in
calculating Consolidated Net Income, in each case for such period, as
determined in accordance with GAAP.
For the purposes of calculating the Applicable Margin, the rate of
the facility fees payable pursuant to Section 2.10(b) and the Leverage
Ratio, EBITDA for any period (the "Applicable Period") shall be adjusted
by the addition of the EBITDA of any Asset Acquisitions made during the
Applicable Period, as if such Asset Acquisitions occurred on the first day
of the Applicable Period, plus the addition of the "Savings Factor";
provided, however, that in the case of calculating the Applicable Margin
or the rate of the facility fees payable pursuant to Section 2.10(b), the
Savings Factor shall be added only for the purpose of causing the Pricing
Tier to remain the same (or to limit its increase) and not to decrease it,
i.e. the Savings Factor may be used to maintain pricing or limit any
increase in pricing, not to decrease pricing.
The "Savings Factor" shall equal, with respect to any Asset
Acquisition, an amount equal to 50% of the difference between (a) Actual
Acquisition Expense minus (b) Pro Forma Acquisition Expense. "Actual
Acquisition Expense" means an amount equal to the personnel expenses and
non personnel costs and expenses (which would be deducted from gross
profits in calculating costs and EBITDA) related to the operation of any
Asset Acquisition from the beginning of the Applicable Period to the date
of the purchase of the Asset Acquisition. "Pro Forma Acquisition Expense"
means an amount equal to the personnel and non-personnel costs and
expenses (which would be deducted from gross profits in calculating costs
and EBITDA) that would have been incurred with respect to the operation of
any Asset Acquisition for the period from the beginning of the Applicable
Period to the date of purchase of the Asset Acquisition, on the assumption
that the ongoing personnel and non personnel cost and expense savings
realized as of the date of the Asset Acquisition had been realized on the
first day of the Applicable Period. In no event shall the aggregate
Savings Factor for any Applicable Period exceed 10% of EBITDA for the
Company and its Restricted Subsidiaries for such Applicable Period.
"Effective Amount" means: (a) with respect to any Loans on any date,
the aggregate outstanding principal amount thereof after giving effect to
any Borrowings and
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<PAGE> 20
prepayments or repayments of Loans occurring on such date; and (b) with
respect to any outstanding L/C Obligations on any date, the amount of such
L/C Obligations on such date after giving effect to any Issuances of
Letters of Credit occurring on such date and any other changes in the
aggregate amount of the L/C Obligations as of such date, including as a
result of any reimbursements of outstanding unpaid drawings under any
Letters of Credit or any reductions in the maximum amount available for
drawing under Letters of Credit taking effect on such date.
"Eligible Assignee" means (i) a commercial bank organized under the
laws of the United States, or any state thereof, and having a combined
capital and surplus of at least $100,000,000; and (ii) a commercial bank
organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development (the "OECD"), or a
political subdivision of any such country, and having a combined capital
and surplus of at least $100,000,000, provided that such bank is acting
through a branch or agency located in the United States.
"Environmental Laws" means all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative orders, directed duties, requests,
licenses, authorizations and permits of, and agreements with, any
Governmental Authorities, in each case relating to environmental matters.
"ERISA" means the Employee Retirement Income Security Act of 1974
and the regulations thereunder. References to sections of ERISA also refer
to any successor sections.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Company within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code
for purposes of provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with respect to a Pension
Plan; (b) the failure to make a required contribution to a Pension Plan if
such failure is sufficient to give rise to a Lien under Section 302(f) of
ERISA; (c) a withdrawal by the Company or any ERISA Affiliate from a
Pension Plan subject to Section 4063 of ERISA during a plan year in which
it was a substantial employer (as defined in Section 4001(a)(2) of ERISA)
or a cessation of operations which is treated as such a withdrawal under
Section 4062(e) of ERISA; (d) a complete or partial withdrawal by the
Company or any ERISA Affiliate from a Multiemployer Plan or notification
that a Multiemployer Plan is in reorganization; (e) the filing of a notice
of intent to terminate, the treatment of a Plan amendment as a termination
under Section 4041 or 4041A of ERISA, or the commencement of proceedings
by the PBGC to terminate a Pension Plan or Multiemployer Plan; (f) an
event or condition which might reasonably be expected to constitute
grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan or Multiemployer
Plan; or (g) the imposition of any liability under Title IV of ERISA,
other than PBGC premiums due but not delinquent under Section 4007 of
ERISA, upon the Company or any ERISA Affiliate.
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"Eurodollar Reserve Percentage" has the meaning specified in the
definition of "Offshore Rate".
"Event of Default" has the meaning specified in Section 9.1.
"Excess Sale Proceeds" has the meaning specified in Section
8.8(c)(ii)(B).
"Exchange Act" means the Securities Exchange Act of 1934, and
regulations promulgated thereunder.
"Existing Acquisition Commitment Percentage" has the meaning
specified in Section 11.10(a).
"Existing Credit Agreement" means that certain Credit Agreement,
dated as of April 12, 1995, among AmeriGas Propane, L.P., AmeriGas
Propane, Inc., Petrolane Incorporated, the financial institutions party
thereto and Bank of America National Trust and Savings Association, as
Agent, as amended up to but not including the Restatement Effective Date.
"Existing Revolving Commitment Percentage" has the meaning
specified in Section 11.10(a).
"FDIC" means the Federal Deposit Insurance Corporation, and any
Governmental Authority succeeding to any of its principal functions.
"Federal Funds Rate" means, for any day, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including
any such successor, "H.15(519)") on the preceding Business Day opposite
the caption "Federal Funds (Effective)"; or, if for any relevant day such
rate is not so published on any such preceding Business Day, the rate for
such day will be the arithmetic mean as determined by the Agent of the
rates for the last transaction in overnight Federal funds arranged prior
to 9:00 a.m. (New York City time) on that day by each of three leading
brokers of Federal funds transactions in New York City selected by the
Agent.
"Fee Letter" has the meaning specified in Section 2.10(a).
"Foreign Bank" means a Bank that is organized under the laws of any
jurisdiction other than the United States or a State or a political
subdivision thereof.
"Formation Transactions" has the meaning specified in the
recitals hereto.
"FRB" means the Board of Governors of the Federal Reserve System,
and any Governmental Authority succeeding to any of its principal
functions.
"Funded Debt" means, as of any date of determination, (i)
indebtedness of the Company and/or its Restricted Subsidiaries for
borrowed money or for the deferred
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<PAGE> 22
purchase price of property or services, other than indebtedness for trade
payables and non-recourse indebtedness which is not required by GAAP to be
classified as a liability on the balance sheet of the debtor, (ii)
Capitalized Lease Liabilities, and (iii) Contingent Obligations. For
purposes of this definition, undrawn letters of credit shall not
constitute Funded Debt.
"Funded Debt Ratio" means the ratio of (a) Funded Debt to (b)
EBITDA.
"GAAP" has the meaning specified in Section 1.3.
"General Collateral" means, collectively, the Mortgaged Property,
and the properties referred to as the "Collateral" in the General Security
Agreement and each Subsidiary Security Agreement and as the "Security" in
the Collateral Agency Agreement.
"General Partner" has the meaning specified in the introductory
clause hereto.
"General Security Agreement" means the General Security Agreement,
dated as of April 19, 1995, among the Borrower, the Collateral Agent, and
Mellon Bank, N.A., as Cash Collateral Sub-Agent, as the same may be
amended, supplemented or otherwise modified from time to time.
"Governmental Authority" means any nation or government, any state
or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions
of or pertaining to government, and any corporation or other entity owned
or controlled, through stock or capital ownership or otherwise, by any of
the foregoing.
"Guaranty Obligation" has the meaning specified in the definition
of "Contingent Obligation".
"Hazardous Material" means
(a) any "hazardous substance", as defined by CERCLA;
(b) any "hazardous waste", as defined by the Resource Conservation
and Recovery Act, as amended;
(c) any petroleum product other than propane; or
(d) any pollutant or contaminant or hazardous, dangerous or toxic
chemical, material or substance within the meaning of any other applicable
federal, state or local law, regulation, ordinance or requirement
(including consent decrees and administrative orders) relating to or
imposing liability or standards of conduct concerning any hazardous, toxic
or dangerous waste, substance or material, all as amended or hereafter
amended.
"Honor Date" has the meaning specified in Section 3.3(b).
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<PAGE> 23
"Increasing Bank" has the meaning specified in Section 11.10.
"Indebtedness" of any Person means, without duplication, (a) all
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (other than
trade payables and accrued expenses arising in the ordinary course of
business on ordinary terms); (c) all non-contingent reimbursement or
payment obligations with respect to Surety Instruments; (d) all
obligations evidenced by notes, bonds, debentures or similar instruments,
including obligations so evidenced incurred in connection with the
acquisition of property, assets or businesses; (e) all indebtedness
created or arising under any conditional sale or other title retention
agreement, or incurred as financing, in either case with respect to
property acquired by the Person (even though the rights and remedies of
the seller or bank under such agreement in the event of default are
limited to repossession or sale of such property); (f) all Capitalized
Lease Liabilities; (g) all net obligations with respect to Swap Contracts;
(h) all indebtedness referred to in clauses (a) through (g) above secured
by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in property
(including accounts and contracts rights) owned by such Person, even
though such Person has not assumed or become liable for the payment of
such Indebtedness; (i) all Redeemable Capital Stock of such Person valued
at the greater of its voluntary or involuntary maximum fixed repurchase
price plus accrued dividends; (j) any Preferred Stock of any Subsidiary of
such Person valued at the sum of the liquidation preference thereof or any
mandatory redemption payment obligations in respect thereof plus, in
either case, accrued dividends thereon and (k) all Guaranty Obligations in
respect of indebtedness or obligations of others of the kinds referred to
in clauses (a) through (j) above.
For purposes hereof, the "maximum fixed repurchase price" of any
Redeemable Capital Stock which does not have a fixed repurchase price
shall be calculated in accordance with the terms of such Redeemable
Capital Stock as if such Redeemable Capital Stock were purchased on any
date on which Indebtedness shall be required to be determined pursuant to
this Agreement and if such price is based upon, or measured by, the fair
market value of such Redeemable Capital Stock, such fair market value
shall be determined in good faith by the board of directors or a similar
governing body of the issuer of such Redeemable Capital Stock. For
purposes of this definition, undrawn letters of credit shall not
constitute Indebtedness.
"Indemnified Liabilities" has the meaning specified in Section 11.5.
"Indemnified Parties" has the meaning specified in Section 11.5.
"Insolvency Proceeding" means (a) any case, action or proceeding
before any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution,
winding-up or relief of debtors, or (b) any general assignment for the
benefit of creditors, composition, marshaling of assets for creditors, or
other, similar arrangement in respect of a Person's creditors generally or
any substantial
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<PAGE> 24
portion of a Person's creditors; in each case undertaken under U.S.
Federal, state or foreign law, including in each case the Bankruptcy Code.
"Interest Payment Date" means, as to any Offshore Rate Loan, the
last day of each Interest Period applicable to such Loan and, as to any
Base Rate Loan, the last Business Day of each calendar quarter; provided,
however, that if any Interest Period for an Offshore Rate Loan exceeds
three months, the date that falls three months after the beginning of such
Interest Period is also an Interest Payment Date.
"Interest Period" means, as to any Offshore Rate Loan, the period
commencing on the Borrowing Date of such Loan or on the
Conversion/Continuation Date on which the Loan is converted into or
continued as an Offshore Rate Loan, and ending on the date one, two, three
or six months thereafter as selected by the Borrowers in their Notice of
Borrowing or Notice of Conversion/Continuation;
provided that:
(i) if any Interest Period would otherwise end on a day that is not
a Business Day, that Interest Period shall be extended to the following
Business Day unless the result of such extension would be to carry such
Interest Period into another calendar month, in which event such Interest
Period shall end on the preceding Business Day;
(ii) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month at the
end of such Interest Period;
(iii) no Interest Period for any Loan shall extend beyond its
Maturity Date; and
(iv) no Interest Period applicable to an Acquisition Loan or portion
thereof shall extend beyond any date upon which is due any scheduled
principal payment in respect of Acquisition Loans unless the aggregate
principal amount of Acquisition Loans represented by Base Rate Loans or
Offshore Rate Loans having Interest Periods that will expire on or before
such date, equals or exceeds the amount of such principal payment.
"Interest Rate Agreement" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other
similar agreement or arrangement designed to protect the Company against
fluctuations in interest rates on Parity Debt.
"Investment" means, as applied to any Person, any direct or indirect
purchase or other acquisition by such Person of stock or other securities
of any other Person, or any direct or indirect loan, advance or capital
contribution by such Person to any other Person, and any other item which
would be classified as an "investment" on a balance sheet of such Person
prepared in accordance with GAAP, including without limitation any direct
or indirect contribution of such Person of property or assets to a joint
venture, partnership or other business entity in which such Person retains
an interest (it being understood that a
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<PAGE> 25
direct or indirect purchase or other acquisition by such Person of assets
of any other Person (other than stock or other securities) shall not
constitute an "Investment" for purposes of this Agreement). For purposes
of Section 8.4(c), the amount involved in Investments made during any
period shall be the aggregate cost to the Company and its Restricted
Subsidiaries of all such Investments made during such period, determined
in accordance with GAAP, but without regard to unrealized increases or
decreases in value, or write-ups, write-downs or write-offs, of such
Investments and without regard to the existence of any undistributed
earnings or accrued interest with respect thereto accrued after the
respective dates on which such Investments were made, less any net return
of capital realized during such period upon the sale, repayment or other
liquidation of such Investments (determined in accordance with GAAP, but
without regard to any amounts received during such period as earnings (in
the form of dividends not constituting a return of capital, interest or
otherwise) on such Investments or as loans from any Person in whom such
Investments have been made).
"Investment Limit" has the meaning specified in Section 8.4.
"IRS" means the Internal Revenue Service, and any Governmental
Authority succeeding to any of its principal functions under the Code.
"Issuance Date" has the meaning specified in Section 3.1(a).
"Issue" means, with respect to any Letter of Credit, to issue or to
extend the expiry of, or to renew or increase the amount of, such Letter
of Credit; and the terms Issued, Issuing and Issuance have corresponding
meanings.
"Issuing Bank" means BofA in its capacity as issuer of one or more
Letters of Credit hereunder, together with any replacement letter of
credit issuer arising under Section 10.l(b) or Section 10.9.
"L/C Advance" means each Bank's participation in any L/C Borrowing
in accordance with its Pro Rata Share.
"L/C Amendment Application" means an application form for amendment
or renewal of outstanding standby letters of credit as shall at any time
be in use at the Issuing Bank, as the Issuing Bank shall request.
"L/C Application" means an application form for issuances of standby
letters of credit as shall at any time be in use at the Issuing Bank, as
the Issuing Bank shall request.
"L/C Borrowing" means an extension of credit resulting from a
drawing under any Letter of Credit which shall not have been reimbursed on
the date when made or converted into a Borrowing of Revolving Loans under
Section 3.3(c).
"L/C Commitment" means the commitment of the Issuing Bank to Issue,
and the commitment of the Banks severally to participate in, Letters of
Credit from time to time
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<PAGE> 26
Issued or outstanding under Article III, in an aggregate amount not to
exceed on any date the amount of the Revolving Commitment, it being
understood that the L/C Commitment is a part of the Revolving Commitments
rather than a separate, independent commitment.
"L/C Obligations" means at any time the sum of (a) the aggregate
undrawn amount of all Letters of Credit then outstanding, plus (b) the
amount of all outstanding L/C Borrowings.
"L/C-Related Documents" means the Letters of Credit, the L/C
Applications, the L/C Amendment Applications and any other document
executed by a Borrower relating to any Letter of Credit, including any of
the Issuing Bank's standard form documents for letter of credit issuances,
as the same may be amended, supplemented or otherwise modified from time
to time.
"Lending Office" means, as to any Bank, the office or offices of
such Bank specified as its "Lending Office" or "Domestic Lending Office"
or "Offshore Lending Office", as the case may be, on Schedule 11.2, or
such other office or offices as such Bank may from time to time notify the
Company and the Agent.
"Letters of Credit" means any standby letters of credit issued by
the Issuing Bank pursuant to Article III.
"Leverage Ratio" means, as of any date of determination, the ratio
of (i) Total Debt to (ii) EBITDA.
"License Agreements" means, collectively, (a) the Software License
Agreement, dated April 19, 1995, by and among the General Partner, the
Public Partnership, and the Company relating to the FAST and Stars I and
II proprietary software systems, (b) the Trademark License Agreement,
dated April 19, 1995, by and among Petrolane, the General Partner, the
Public Partnership and the Company, (c) the Trademark License Agreement,
dated April 19, 1995, by and among UGI, AmeriGas, Inc., the General
Partner, the Public Partnership and the Company and (d) the Trademark
License Agreement, dated April 19, 1995, by and among the General Partner,
the Public Partnership and the Company, as the same may be amended,
modified or supplemented from time to time.
"Lien" means any security interest, mortgage, deed of trust, pledge,
hypothecation, assignment, charge or deposit arrangement, encumbrance,
lien (statutory or other) or preferential arrangement of any kind or
nature whatsoever in respect of any property (including those created by,
arising under or evidenced by any conditional sale or other title
retention agreement, the interest of a lessor under a capital lease, any
financing lease having substantially the same economic effect as any of
the foregoing, or the filing of any financing statement naming the owner
of the asset to which such lien relates as debtor, under the Uniform
Commercial Code or any comparable law) and any contingent or other
agreement to provide any of the foregoing, but not including the interest
of a lessor under an operating lease.
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<PAGE> 27
"Loan" means an extension of credit by a Bank to the Borrowers under
Article II, and may be a Base Rate Loan or an Offshore Rate Loan (each, a
"Type" of Loan), and includes any Revolving Loan, Acquisition Loan or
Swingline Loan; provided, that no Swingline Loan may be an Offshore Rate
Loan.
"Loan Documents" means this Agreement, any Notes, the Fee Letter,
the Security Documents and the L/C Related Documents.
"Long Term Funded Debt" means, as applied to any Person, all
Indebtedness of such Person which by its terms or by the terms of any
instrument or agreement relating thereto matures one year or more from the
date of execution of the instruments governing any such Indebtedness or,
if applicable, the execution of any instrument extending the maturity date
of such Indebtedness, provided that Long Term Funded Debt shall include
any Indebtedness which does not otherwise come within the foregoing
definition but which is directly or indirectly renewable or extendible at
the option of the debtor to a date one year or more (including an option
of the debtor under a revolving credit or similar agreement obligating the
lender or lenders to extend credit over a period of one year or more) from
the date of execution of the instruments governing any such Indebtedness
or, if applicable, the execution of any instrument extending the maturity
date of such Indebtedness.
"Margin Stock" means "margin stock" as such term is defined in
Regulation G, T, U or X of the FRB.
"Material Adverse Effect" means (a) a material adverse effect on the
business, assets or financial condition of the Company and its Restricted
Subsidiaries taken as a whole; (b) a material impairment of the ability of
the Company or any Restricted Subsidiary to perform any of its obligations
under this Agreement, the Notes or the Security Documents to which it is a
party; or (c) a material impairment of the legal, valid, binding and
enforceable nature of the Security Documents or of the validity and
priority of the Liens created thereby on the General Collateral.
"Maturity Date" means the Revolving Termination Date, in respect of
the Revolving Loans, and the last scheduled principal installment date for
Acquisition Loans, in respect of the Acquisition Loans.
"Mortgage Notes" mean the First Mortgage Notes of the Borrowers,
dated as of April 12, 1995, in the aggregate original principal amount of
$518,000,000, as the same may be amended, supplemented or otherwise
modified.
"Mortgaged Property" means the real properties referred to as the
"Mortgaged Property" in the granting clauses of the Mortgages.
"Mortgages" shall have the meaning specified in the definition of
Security Documents.
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<PAGE> 28
"Multiemployer Plan" means a "multiemployer plan", within the
meaning of Section 4001(a)(3) of ERISA, with respect to which the Company
or any ERISA Affiliate may have any liability.
"Net Amount of Unrestricted Investment" means the sum of, without
duplication, (x) the aggregate amount of all Investments made after the
date hereof pursuant to Section 8.4(h) (computed as provided in the last
sentence of the definition of Investment) and (y) the aggregate of all
Designation Amounts in connection with the designation of Unrestricted
Subsidiaries pursuant to the provisions of Section 7.13 less all
Designation Amounts in respect of Unrestricted Subsidiaries which have
been designated as Restricted Subsidiaries in accordance with the
provisions of Section 7.13 and otherwise reduced in a manner consistent
with the provisions of the last sentence of the definition of Investment.
"Net Proceeds" means with respect to any Asset Sale, the proceeds
thereof in the form of cash or Cash Equivalents including payments in
respect of deferred payment obligations when received in the form of cash
or Cash Equivalents net of (i) brokerage commissions and other fees and
expenses (including without limitation fees and expenses of legal counsel
and accountants and fees, expenses and discounts or commissions of
underwriters, placement agents and investment bankers) related to such
Asset Sale, (ii) provisions for all taxes payable as a result of such
Asset Sale, (iii) amounts required to be paid to any Person (other than
the Company or any Restricted Subsidiary) owning a beneficial interest in
the assets subject to such Asset Sale, (iv) appropriate amounts to be
provided by the Company or any Restricted Subsidiary, as the case may be,
as a reserve required in accordance with GAAP against any liabilities
associated with such Asset Sale and retained by the Company or any
Restricted Subsidiary, as the case may be, after such Asset Sale,
including, without limitation, pension and other post-employment benefit
liabilities, liabilities related to environmental matters and liabilities
under any indemnification obligations associated with such Asset Sale and
(v) amounts required to be applied to the repayment of Indebtedness (other
than the Notes and the Parity Debt) secured by a Lien on the asset or
assets sold in such Asset Sale.
"New Banks" shall have the meaning specified in Section 2.15(b).
"Note" means a promissory note executed by the Borrowers in favor of
a Bank pursuant to Section 2.2(b), substantially in the form of Exhibit
G-1 (in the case of Acquisition Loans) or Exhibit G-2 (in the case of
Revolving Loans), as the same may be amended, supplemented or otherwise
modified from time to time in accordance with the terms hereof.
"Note Agreements" means the separate Note Agreements, each dated as
of April 12, 1995, among the Borrowers and the holders of the Mortgage
Notes, as the same may be amended, supplemented or otherwise modified from
time to time.
"Notice Date" shall have the meaning specified in Section 2.15.
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"Notice of Borrowing" means a notice in substantially the form of
Exhibit A-1, in the case of a Swingline Loan, and Exhibit A-2 in the case
of any other Loan.
"Notice of Conversion/Continuation" means a notice in
substantially the form of Exhibit B.
"Obligations" means all advances, debts, liabilities, obligations,
covenants and duties arising under any Loan Document owing by any or all
of the Borrowers or other Obligors to any Bank, the Agent, or any
Indemnified Party, whether direct or indirect (including those acquired by
assignment), absolute or contingent, due or to become due, now existing or
hereafter arising.
"Obligor" means any Borrower or any other Person (other than the
Agent or any Bank) obligated under any Loan Document.
"Officers' Certificate" means as to any corporation, a certificate
executed on its behalf by the Chairman of the Board of Directors (if an
officer) or its President or one of its Vice Presidents, and its
Treasurer, or Controller, or one of its Assistant Treasurers or Assistant
Controllers, and, as to any partnership, a certificate executed on behalf
of such partnership by its general partner in a manner which would qualify
such certificate (a) if such general partner is a corporation, as an
Officers' Certificate of such general partner hereunder or (b) if such
general partner is a partnership or other entity, as a certificate
executed on its behalf by Persons authorized to do so pursuant to the
constituting documents of such partnership or other entity.
"Offshore Rate" means, for any Interest Period, with respect to
Offshore Rate Loans comprising part of the same Borrowing, the rate of
interest per annum (rounded upward to the next 1/16th of 1%) determined by
the Agent as follows:
IBOR
Offshore Rate = -----------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means for any day for any
Interest Period the maximum reserve percentage (expressed as a
decimal, rounded upward to the next 1/100th of 1%) in effect on such
day (whether or not applicable to any Bank) under regulations issued
from time to time by the FRB for determining the maximum reserve
requirement (including any emergency, supplemental or other marginal
reserve requirement) with respect to Eurocurrency funding (currently
referred to as "Eurocurrency liabilities); and
"IBOR" means the rate of interest per annum (rounded upward to
the next 1/16 of 1%, if necessary) determined by the Agent as the
rate at which dollar deposits in the approximate amount of BofA's
Offshore Rate Loan for such Interest Period would be offered by
BofA's Grand Cayman Branch, Grand
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<PAGE> 30
Cayman B.W.I. (or such other office as may be designated for such
purpose by BofA), to major banks in the offshore dollar interbank
market at their request at approximately 10:00 a.m. (New York City
time) two Business Days prior to the commencement of such Interest
Period.
The Offshore Rate shall be adjusted automatically as to all Offshore
Rate Loans then outstanding as of the effective date of any change in the
Eurodollar Reserve Percentage.
"Offshore Rate Loan" means a Loan that bears interest based on the
Offshore Rate.
"Organization Documents" means, for any corporation, the certificate
or articles of incorporation, the bylaws, any certificate of determination
or instrument relating to the rights of preferred shareholders of such
corporation, any shareholder rights agreement, and all applicable
resolutions of the board of directors (or any committee thereof) of such
corporation and as to any partnership, its partnership agreement,
certificate of partnership and related agreements, as the same may be
amended, supplemented or otherwise modified from time to time.
"Original Closing Date" means April 19, 1995.
"Other Taxes" means (i) any present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies
which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement
or any other Loan Documents and (ii) any nonrecurring intangible personal
property taxes payable under Sections 199 and 201 of the Florida Statutes.
"Parity Debt" means the Mortgage Notes and other Indebtedness of the
Company (other than Indebtedness hereunder) incurred in accordance with
Sections 8.1(a), (b), (e) and (f) and secured by the respective Liens of
the Security Documents in accordance with Sections 8.3(j), (k), (l) and
(m).
"Participant" has the meaning specified in Section 11.9(d).
"Partnership Agreement" means the Amended and Restated Agreement of
Limited Partnership of the Company, as in effect on the Restatement
Effective Date, and as the same may from time to time be amended,
supplemented or otherwise modified.
"Partnership Unrestricted Subsidiaries" means the Unrestricted
Subsidiaries of the Public Partnership as defined in the Public
Partnership Indenture as in effect on the Restatement Effective Date.
"PBGC" means the Pension Benefit Guaranty Corporation, or any
Governmental Authority succeeding to any of its principal functions under
ERISA.
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<PAGE> 31
"Pension Plan" means a "pension plan", as such term is defined in
section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a
multiemployer plan as defined in section 4001(a)(3) of ERISA) with respect
to which the Company or any ERISA Affiliates may have any liability.
"Permitted Banks" has the meaning specified in Section 8.4.
"Permitted Insurers" means (a) insurers with ratings of A or better
according to Best's Insurance Reports, or with comparable ratings from a
comparable rating agency for insurance companies whose principal offices
are located outside of the United States and Canada, and with assets of no
less than $500 million and (b) the underwriters at Lloyd's, London.
"Person" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint
venture or Governmental Authority or other entity.
"Petrolane" has the meaning specified in the introductory clause
hereto.
"Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which the Company sponsors or maintains or to which the Company
makes, is making, or is obligated to make contributions and includes any
Pension Plan.
"Preferred Stock", as applied to the Capital Stock of any Person,
means Capital Stock of any class or classes (however designated), which is
preferred as to the payment of distributions or dividends, or upon any
voluntary or involuntary liquidation or dissolution of such Person, over
shares or units of Capital Stock of any other class of such Person.
"Pricing Tier" has the meaning specified in the definition of
"Applicable Margin."
"Pro Rata Share" means, as to any Bank at any time, the percentage
equivalent (expressed as a decimal, rounded to the ninth decimal place) at
such time of such Bank's Commitment divided by the combined Commitments of
all Banks.
"Public Partnership" has the meaning specified in the recitals
hereto.
"Public Partnership Indenture" means the Indenture among the Public
Partnership, AmeriGas Finance Corp., and First Fidelity Bank, National
Association, as trustee, with respect to the Public Partnership Notes, as
the same may be amended, supplemented or otherwise modified from time to
time.
"Public Partnership Notes" means the notes issued on April 19, 1995,
jointly and severally, by the Public Partnership and AmeriGas Finance
Corp., in the aggregate principal amount of $100 million, as the same may
be amended, supplemented or otherwise modified from time to time.
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<PAGE> 32
"Purchase Money Lien" has the meaning specified in Section 8.3(n).
"Redeemable Capital Stock" means any shares of any class or series
of Capital Stock, that, either by the terms thereof, by the terms of any
security into which it is convertible or exchangeable or by contract or
otherwise, is or upon the happening of an event or passage of time would
be, required to be redeemed prior to the date of the last scheduled
payment of any Loan then outstanding or is redeemable at the option of the
holder thereof at any time prior to such date, or is convertible into or
exchangeable for Indebtedness at any time prior to such date.
"Reference Period" shall have the meaning specified in the
definition of Consolidated Cash Flow.
"Replacement Bank" has the meaning specified in Section 4.7.
"Reportable Event" means, any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder, other than any such event
for which the 30-day notice requirement under ERISA has been waived in
regulations issued by the PBGC.
"Required Banks" means at any time Banks then holding at least
66-2/3% of the then aggregate unpaid principal amount of the Loans
(assuming that any outstanding Swingline Loans were converted into
Revolving Loans or participated in by the Banks pursuant to Section 2.16)
and L/C Borrowings and risk participations in outstanding Letters of
Credit (or in the case of the Issuing Bank, the amount of the outstanding
Letters of Credit minus risk participations of the other Banks therein),
or, if no amounts are outstanding, Banks then having at least 66-2/3% of
the aggregate amount of the Commitments.
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or
of a Governmental Authority, in each case applicable to or binding upon
the Person or any of its property or to which the Person or any of its
property is subject.
"Resource Conservation and Recovery Act" means the Resource
Conservation and Recovery Act, 42 U.S.C. Section 690, et seq., as in
effect from time to time.
"Responsible Officer" means the chief executive officer or the
president of the Company, or any other officer having substantially the
same authority and responsibility; or, with respect to compliance with
financial covenants, the chief financial officer or the treasurer of the
Company, or any other officer having substantially the same authority and
responsibility.
"Restatement Effective Date" means the date on which all conditions
precedent set forth in Section 5.1 are satisfied or waived by the Banks
(or, in the case of Section 5.1(i), waived by the Person entitled to
receive such payment).
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<PAGE> 33
"Restricted Payment" means with respect to each of the Company and
its Restricted Subsidiaries (the "Covered Persons"), (a) in the case of
any Covered Person that is a partnership, (i) any payment or other
distribution, direct or indirect, in respect of any partnership interest
in such Covered Person, except a distribution payable solely in additional
partnership interests in such Covered Person, and (ii) any payment, direct
or indirect, by such Covered Person on account of the redemption,
retirement, purchase or other acquisition of any partnership interest in
such Covered Person, except to the extent that such payment consists of
additional partnership interests in such Covered Person; or (b) in the
case of any Covered Person that is a corporation, (i) any dividend or
other distribution, direct or indirect, on account of any shares of any
class of stock of such Covered Person then outstanding, except a dividend
payable solely in shares of stock of such Covered Person, and (ii) any
payment, direct or indirect, by such Covered Person on account of the
redemption, retirement, purchase or other acquisition of any shares of any
class of stock of such Covered Person then outstanding, or of any
warrants, rights or options, to acquire any such shares, except to the
extent that such payment consists of shares of Capital Stock of such
Covered Person.
"Restricted Subsidiary" means any Subsidiary of the Company
organized under the laws of the United States or any state thereof or
Canada or any province thereof or the District of Columbia, none of the
Capital Stock or ownership interests of which is owned by Unrestricted
Subsidiaries and substantially all of the operating assets of which are
located in, and substantially all of the business of which is conducted
within, the United States or Canada and which is designated as a
Restricted Subsidiary in Schedule 6.2 or which shall be designated as a
Restricted Subsidiary by the General Partner at a subsequent date as
provided in Section 7.13; provided, however, that (a) to the extent a
newly formed or acquired Subsidiary is not declared either a Restricted
Subsidiary or an Unrestricted Subsidiary within 90 days of its formation
or acquisition, such Subsidiary shall be deemed a Restricted Subsidiary
and (b) a Restricted Subsidiary may be designated as an Unrestricted
Subsidiary in accordance with the provisions of Section 7.13.
"Retained Assets" has the meaning specified in the recitals hereto.
"Revolving Commitment" has the meaning specified in Section 2.1.
"Revolving Commitment Percentage" has the meaning specified in
Section 11.10(a).
"Revolving Loan" has the meaning specified in Section 2.1.
"Revolving Termination Date" means the earlier to occur of:
(a) September 15, 2002, as such date may be extended pursuant
to Section 2.15 hereof; and
(b) the date on which the Revolving Commitments terminate in
accordance with the provisions of this Agreement.
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<PAGE> 34
"Routine Permits" has the meaning specified in Section 6.8(a).
"Sale and Lease-Back Transaction" of a Person (a "Transferor") means
any arrangement (other than between the Company and a Wholly-Owned
Restricted Subsidiary or between Wholly-Owned Restricted Subsidiaries)
whereby (a) property (the "Subject Property") has been or is to be
disposed of by such Transferor to any other Person with the intention on
the part of such Transferor of taking back a lease of such Subject
Property pursuant to which the rental payments are calculated to amortize
the purchase price of such Subject Property substantially over the useful
life of such Subject Property, and (b) such Subject Property is in fact so
leased by such Transferor or an Affiliate of such Transferor.
"SEC" means the Securities and Exchange Commission, or any
Governmental Authority succeeding to any of its principal functions.
"Security Documents" means (a) the Collateral Agency Agreement, (b)
each of (i) the mortgage, assignment of leases and rents, security
agreement, financing statement and fixture filings made by the Company in
favor of the Collateral Agent, and (ii) the deed of trust, assignment of
leases and rents, security agreement, financing statement and fixture
filings made by the Company in favor of the Collateral Agent, each dated
as of the Original Closing Date and covering one or more of the Mortgaged
Properties located in the counties listed on Schedule 6.8(b), those
executed after the Original Closing Date by the Company as required by
Section 7.10 and those executed by Restricted Subsidiaries after the
Original Closing Date as required by Section 7.9, in each case
substantially in the form of Exhibit E (as each of the same may be
amended, supplemented or otherwise modified from time to time,
collectively, the "Mortgages"), (c) the General Security Agreement, (d)
the Subsidiary Security Agreement and (e) the Subsidiary Guarantee.
"Senior Indebtedness" means the Obligations, the obligations of the
Borrowers under the Mortgage Notes and obligations of the Company with
respect to Parity Debt.
"Significant Subsidiary Group" means any Subsidiary of the Company
which is, or any group of Subsidiaries of the Company all of which are, at
any time of determination, subject to one or more of the proceedings or
conditions described in subdivision (f) or (g) of Section 9.1 and which
Subsidiary or group of Subsidiaries accounted for (or in the case of a
recently formed or acquired Subsidiary would have so accounted for on a
pro forma basis) more than 1% of consolidated operating revenues of the
Company for the fiscal year most recently ended or more than 1% of
consolidated total assets of the Company as of the end of the most
recently ended fiscal quarter, in each case computed in accordance with
GAAP.
"Specified Mortgage" means any Mortgage covering the Mortgaged
Property identified on Schedule 9.1(d).
"Subject Property" shall have the meaning specified in the
definition of Sale and Lease-Back Transaction.
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"Subsidiary" means, with respect to any Person, any corporation,
limited liability company, partnership, joint venture, association, trust
or other entity of which (or in which) more than 50% of (a) the issued and
outstanding Capital Stock having ordinary voting power to elect a majority
of the board of directors of such corporation (irrespective of whether at
the time Capital Stock of any other class or classes of such corporation
shall or might have voting power upon the occurrence of any contingency),
(b) the interests in the capital or profits of such partnership, limited
liability company, joint venture or association with ordinary voting power
to elect a majority of the board of directors (or Persons performing
similar functions) of such partnership, limited liability company, joint
venture or association, or (c) the beneficial interests in such trust or
other entity with ordinary voting power to elect a majority of the board
of trustees (or Persons performing similar functions) of such trust or
other entity, is at the time directly or indirectly owned or controlled by
such Person, by such Person and one or more of its other Subsidiaries, or
by one or more of such Person's other Subsidiaries.
"Subsidiary Guarantee" means that certain Restricted Subsidiary
Guarantee, dated as of April 19, 1995, by all of the Restricted
Subsidiaries for the benefit of the Collateral Agent as the same may be
amended, supplemented or otherwise modified from time to time.
"Subsidiary Security Agreement" means that certain Subsidiary
Security Agreement, dated as of April 19, 1995, among all of the
Restricted Subsidiaries, the Collateral Agent and Mellon Bank, N.A., as
Cash Collateral Sub-Agent, as the same may be amended, supplemented or
otherwise modified from time to time.
"Surety Instruments" means all letters of credit (including standby
and commercial), bankers acceptances, bank guaranties, shipside bonds,
surety bonds and similar instruments.
"Swap Contract" means any agreement (including any master agreement
and any agreement, whether or not in writing, relating to any single
transaction) that is an interest rate swap agreement, basis swap, forward
rate agreement, commodity swap, commodity option, equity or equity index
swap or option, bond option, interest rate option, forward foreign
exchange agreement, rate cap, collar or floor agreement, currency swap
agreement, cross-currency rate swap agreement, swaption, currency option
or any other, similar agreement (including any option to enter into any of
the foregoing).
"Swingline Loan" has the meaning specified in Section 2.16.
"Syndication Agent" has the meaning specified in the introductory
clause hereto.
"Taxes" means any and all present or future taxes, levies, imposts
or withholdings, and all penalties, interest and additions to taxes with
respect thereto, excluding, in the case of each Bank and the Agent, such
taxes (including income taxes or franchise taxes) as are imposed on or
measured by each Bank's net income or capital by the jurisdiction (or any
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political subdivision thereof) under the laws of which such Bank or the
Agent, as the case may be, is organized or maintains a lending office.
"Total Assets" means as of any date of determination, the
consolidated total assets of the Company and the Restricted Subsidiaries
as would be shown on a consolidated balance sheet of the Company and the
Restricted Subsidiaries prepared in accordance with GAAP as of that date.
"Transferor" shall have the meaning specified in the definition
of Sale and Lease-Back Transaction.
"Total Debt" means as of any date of determination, the aggregate
principal amount of all Indebtedness of the Company and the Restricted
Subsidiaries at the time outstanding (other than Indebtedness permitted by
Section 8.1(c)). For purposes of computing the Leverage Ratio pursuant to
Section 8.14, Total Debt shall also include the obligations described in
clause (c) of the definition of "Contingent Obligation."
"Type" has the meaning specified in the definition of "Loan."
"UGI" has the meaning specified in the recitals hereto.
"United States" and "U.S." each means the United States of America.
"Unrestricted Subsidiary" means a Subsidiary of the Company which
is not a Restricted Subsidiary.
"Wholly-Owned Restricted Subsidiary" means any Restricted Subsidiary
that is also a Wholly-Owned Subsidiary of the Company.
"Wholly-Owned Subsidiary" means, as applied to any Subsidiary of any
Person, a Subsidiary in which (other than directors' qualifying shares
required by law) 100% of the Capital Stock of each class having ordinary
voting power, and 100% of the Capital Stock of every other class, in each
case, at the time as of which any determination is being made, is owned,
beneficially and of record, by such Person, or by one or more of such
Person's other Wholly-Owned Subsidiaries, or both.
1.2 Other Interpretive Provisions. (a) The meanings of defined terms
are equally applicable to the singular and plural forms of the defined terms.
(b) The words "hereof", "herein", "hereunder" and similar words
refer to this Agreement as a whole and not to any particular provision of this
Agreement; and subsection, Section, Schedule and Exhibit references are to this
Agreement unless otherwise specified.
(c) (i) The term "including" is not limiting and means "including
without limitation."
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(ii) In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and
including"; the words "to" and "until" each mean "to but excluding",
and the word "through" means "to and including."
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document, and (ii) references to any statute or regulation
are to be construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting the statute or
regulation.
(e) The captions and headings of this Agreement are for convenience
of reference only and shall not affect the interpretation of this Agreement.
(f) This Agreement and other Loan Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are independent and shall
each be performed in accordance with their terms.
(g) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Agent, the Company
and the other parties, and are the products of all parties. Accordingly, they
shall not be construed against the Banks or the Agent merely because of the
Agent's or Banks' involvement in their preparation.
1.3 Accounting Principles. (a) Unless otherwise specified, all
accounting terms used herein or in any other Loan Document shall be interpreted,
all accounting determinations and computations hereunder or thereunder shall be
made, and all financial statements required to be delivered hereunder or
thereunder shall be prepared in accordance with, those generally accepted
accounting principles in effect in the United States of America from time to
time ("GAAP"). Notwithstanding the foregoing, if the Borrowers, the Required
Banks or the Agent determines that a change in GAAP from that in effect on the
date hereof has altered the treatment of certain financial data to its detriment
under this Agreement, such party may seek of the others a renegotiation of any
financial covenant affected thereby. If the Borrowers, the Required Banks and
Agent cannot agree on renegotiated covenants, then, for the purposes of this
Agreement, GAAP will refer to generally accepted accounting principles on the
date just prior to the date on which the change that gave rise to the
renegotiation occurred.
(b) References herein to "fiscal year" and "fiscal quarter" refer to
such fiscal periods of the Company.
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ARTICLE II
THE CREDITS
2.1 Amounts and Terms of Commitments.
(a) The Acquisition Credit. Each Bank severally agrees, on the terms
and conditions set forth herein, to make loans to the Borrowers (each such loan,
an "Acquisition Loan") from time to time on any Business Day during the period
from the Restatement Effective Date to the Acquisition Loan Termination Date in
an aggregate principal amount not to exceed at any time outstanding the amount
set forth opposite such Bank's name on Schedule 2.1 (such amount as the same may
be reduced under Section 2.5 or Section 2.7 or as reduced or increased as a
result of one or more assignments under Section 11.9, the Bank's "Acquisition
Commitment"). Within the limits of each Bank's Acquisition Commitment, and
subject to the other terms and conditions hereof, the Borrowers may borrow under
this Section 2.1(a), prepay under Section 2.6 and reborrow under this Section
2.1(a). On the Restatement Effective Date, the aggregate outstanding principal
amount of the Acquisition Loans under (and as defined in) the Existing Credit
Agreement shall be (i) automatically deemed to be Acquisition Loans under this
Agreement for all purposes of this Agreement and the other Loan Documents and
(ii) continued as Base Rate Loans or Offshore Rate Loans under this Agreement,
as the case may be; provided, that any Offshore Rate Loan so continued shall be
continued only until the last day of the applicable Interest Period for such
Loan.
(b) The Revolving Credit. Each Bank severally agrees, on the terms
and conditions set forth herein, to make loans to the Borrowers (each such loan,
a "Revolving Loan") from time to time on any Business Day during the period from
the Restatement Effective Date to the Revolving Termination Date, in an
aggregate principal amount not to exceed at any time outstanding the amount set
forth opposite such Bank's name on Schedule 2.1 (such amount as the same may be
reduced under Section 2.5 or Section 2.7 or reduced or increased as a result of
one or more assignments under Section 11.9, the Bank's "Revolving Commitment");
provided, that after giving effect to any Borrowing of Revolving Loans, the
Effective Amount of all outstanding Revolving Loans plus the Effective Amount of
all L/C Obligations plus the Effective Amount of all Swingline Loans shall not
exceed the Revolving Commitments. On the Restatement Effective Date, the
aggregate outstanding principal amount of the Revolving Loans and Special
Purpose Loans under (and as defined in) the Existing Credit Agreement shall be
(i) automatically deemed to be Revolving Loans under this Agreement for all
purposes of this Agreement and the other Loan Documents and (ii) continued as
Base Rate Loans or Offshore Rate Loans under this Agreement, as the case may be;
provided, that any Offshore Rate Loan so continued shall be continued only until
the last day of the applicable Interest Period for such Loan. Within the limits
of each Bank's Revolving Commitment, and subject to the other terms and
conditions hereof, the Borrowers may borrow under this Section 2.1(b), prepay
under Section 2.6 and reborrow under this Section 2.1(b). As a subfacility of
the Banks' Revolving Commitments, the Borrowers may request the Issuing Bank to
Issue Letters of Credit from time to time pursuant to Article III. In addition,
the Borrowers may request BofA to make Swingline Loans to the Borrowers from
time to time pursuant to Section 2.16.
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2.2 Loan Accounts. (a) The Loans made by each Bank shall be evidenced by
one or more loan accounts or records maintained by such Bank in the ordinary
course of business. The loan accounts or records maintained by the Agent and
each Bank shall be rebuttable presumptive evidence of the amount of the Loans
made by the Banks to the Borrowers and the interest and principal payments
thereof. Any failure so to record or any error in doing so shall not, however,
limit or otherwise affect the obligation of the Borrowers hereunder to pay any
amount owing with respect to the Loans. In case of a discrepancy between the
entries in the Agent's books and any Bank's books, such Bank's books shall be
rebuttably presumptively correct.
(b) Upon the request of any Bank made through the Agent, the Loans
made by such Bank may be evidenced by one or more Notes, instead of loan
accounts. Each such Bank shall endorse on the schedules annexed to its Note(s)
the date, amount and maturity of each Loan made by it and the amount of each
payment of principal made by the Borrowers with respect thereto. Each such Bank
is irrevocably authorized by the Borrowers to so endorse its Note(s) and each
Bank's record shall be rebuttable presumptive evidence of the amount of the
Loans made by such Bank to the Borrowers and the interest and principal payments
thereof; provided, however, that the failure of a Bank to make, or an error in
making, a notation thereon with respect to any Loan shall not limit or otherwise
affect the obligations of the Borrowers hereunder or under any such Note to pay
any amount owing with respect to the Loans made by such Bank.
(c) Each Bank represents that at no time shall any part of the funds
used to make any Loan constitute, or deemed under ERISA, the Code or any other
applicable law, or any ruling or regulation issued thereunder, or any court
decision, to constitute, the assets of any employee benefit plan (as defined in
section 3(3) of ERISA) or any plan (as defined in section 4975(e)(1) of the
Code).
2.3 Procedure for Borrowing. (a) Each Borrowing of Loans (other than
Swingline Loans) shall be made upon the Borrowers' irrevocable written notice
delivered to the Agent in the form of a Notice of Borrowing (which notice must
be received by the Agent prior to 12:00 noon) (New York City time) (i) three
Business Days prior to the requested Borrowing Date, in the case of Offshore
Rate Loans; and (ii) one Business Day prior to the requested Borrowing Date, in
the case of Base Rate Loans, specifying:
(A) the amount of the Borrowing, which shall be in an
aggregate minimum amount of $5,000,000 in the case of Offshore Rate Loans
or $1,000,000 in the case of Base Rate Loans, or any multiple of
$1,000,000 in excess thereof; provided, however, that the Borrowers may
request (x) up to two Borrowings of Base Rate Loans in a minimum amount of
$500,000 in any fiscal quarter and (y) Borrowings of Base Rate Loans in
such amount as is necessary to pay to the Agent the amounts required by
the last sentence of Section 2.13(a);
(B) the requested Borrowing Date, which shall be a Business
Day;
(C) the Type of Loans comprising the Borrowing;
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(D) whether the Loans comprising the Borrowing shall be
Acquisition Loans or Revolving Loans; and
(E) the duration of the Interest Period applicable to the
Loans included in such notice. If the Notice of Borrowing fails to specify
the duration of the Interest Period for any Borrowing comprised of
Offshore Rate Loans, such Interest Period shall be three months.
(b) The Agent will promptly notify each Bank of its receipt of any
Notice of Borrowing (or a deemed notice of Borrowing under Section 2.16(b))and
of the amount of such Bank's Pro Rata Share of that Borrowing.
(c) Each Bank will make the amount of its Pro Rata Share of each
Borrowing available to the Agent for the account of the Borrowers at the Agent's
Payment Office by 1:00 p.m. (New York City time) on the Borrowing Date requested
by the Borrowers in funds immediately available to the Agent. The proceeds of
all such Loans will then be made available to the Borrowers by the Agent on the
Borrowing Date by wire transfer in accordance with written instructions provided
to the Agent by such Borrowers of like funds as received by the Agent.
(d) After giving effect to any Borrowing, there may not be more than
ten different Interest Periods in effect.
2.4 Conversion and Continuation Elections. (a) The Borrowers may, upon
irrevocable written notice to the Agent in accordance with Section 2.4(b):
(i) elect, as of any Business Day, in the case of Base Rate
Loans, or as of the last day of the applicable Interest Period, in the
case of Offshore Rate Loans, to convert any such Loans (or any part
thereof in an amount not less than $5,000,000 in the case of a conversion
to an Offshore Rate Loan or $1,000,000 in the case of a conversion to a
Base Rate Loan, or that is in an integral multiple of $1,000,000 in excess
thereof) into Loans of the other Type; or
(ii) elect, as of the last day of the applicable Interest
Period, to continue as Offshore Rate Loans any Offshore Rate Loans having
Interest Periods expiring on such day (or any part thereof in an amount
not less than $5,000,000, or that is in an integral multiple of $1,000,000
in excess thereof);
provided, that if at any time the aggregate amount of Offshore Rate Loans in
respect of any Borrowing is reduced, by payment, prepayment, or conversion of
part thereof to be less than $5,000,000, such Offshore Rate Loans shall
automatically convert into Base Rate Loans, and on and after such date the right
of the Borrowers to continue such Loans as, and convert such Loans into,
Offshore Rate Loans shall terminate.
(b) The Borrowers shall deliver a Notice of Conversion/Continuation
to be received by the Agent not later than 12:00 noon (New York City time) (i)
three Business Days in advance of the Conversion/Continuation Date, if the Loans
are to be converted into or continued
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as Offshore Rate Loans; and (ii) one Business Day in advance of the
Conversion/Continuation Date, if the Loans are to be converted into Base Rate
Loans, specifying:
(A) the proposed Conversion/Continuation Date;
(B) the aggregate amount of Loans to be converted or
continued;
(C) the Type of Loans resulting from the proposed conversion
or continuation; and
(D) other than in the case of conversions into Base Rate
Loans, the duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period the Borrowers have
failed to select timely a new Interest Period to be applicable to the Offshore
Rate Loans having the expired Interest Period or if any Default or Event of
Default then exists, the Borrowers shall be deemed to have elected to convert
such Offshore Rate Loans into Base Rate Loans effective as of the expiration
date of such Interest Period.
(d) The Agent will promptly notify each Bank of its receipt of a
Notice of Conversion/Continuation, or, if no timely notice is provided by the
Borrowers, the Agent will promptly notify each Bank of the details of any
automatic conversion. All conversions and continuations shall be made ratably
according to the respective outstanding principal amounts of the Loans with
respect to which the notice was given held by each Bank.
(e) Unless the Required Banks otherwise agree, during the existence
of a Default or unless all the Banks otherwise agree, during the existence of an
Event of Default, the Borrowers may not elect to have a Loan converted into or
continued as an Offshore Rate Loan.
(f) After giving effect to any conversion or continuation of Loans,
there may not be more than ten different Interest Periods in effect.
2.5 Voluntary Termination or Reduction of Commitments. The Borrowers may,
upon prior notice to the Agent and the Banks no later than 11:00 a.m. (New York
City time) two Business Days' prior to a proposed termination, terminate the
Revolving Commitments or the Acquisition Commitments, or permanently reduce the
Commitments by an aggregate minimum amount of $3,000,000 or any multiple of
$1,000,000 in excess thereof; unless, after giving effect thereto and to any
prepayments of Loans made on the effective date thereof subject to Sections 2.6
and 4.4, (a) the then Effective Amount of all Revolving Loans and Swingline
Loans plus the then Effective Amount of all L/C Obligations would exceed the
amount of the Revolving Commitments then in effect or (b) the then Effective
Amount of all outstanding Acquisition Loans would exceed the amount of the
Acquisition Commitments then in effect. Once reduced in accordance with this
Section 2.5, the Commitments may not be increased. Any reduction of the
Commitments shall be applied to each Bank according to its Pro Rata Share. All
accrued facility fees to, but not including, the effective date of any reduction
or termination of Commitments,
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shall be paid on the last day of each calendar quarter and the effective date of
any such termination.
2.6 Optional Prepayments. Subject to Section 4.4, the Borrowers may, at
any time or from time to time, upon not less than three Business Days' prior
notice to the Agent, in the case of Offshore Rate Loans, or one Business Day's
prior notice to the Agent, in the case of Base Rate Loans, prepay Loans in whole
or in part. Such notice of prepayment shall be irrevocable and specify the date
and amount of such prepayment and the Type(s) of Loans to be prepaid and whether
the Loans to be prepaid are Acquisition Loans, Revolving Loans or Swingline
Loans. The Agent will promptly notify each Bank of its receipt of any such
notice, and of such Bank's Pro Rata Share of such prepayment. If such notice is
given by the Borrowers, the Borrowers shall make such prepayment and the payment
amount specified in such notice shall be due and payable on the date specified
therein, together with, in the case of Offshore Rate Loans, accrued interest to
such date on the amount prepaid and any amounts required pursuant to Section
4.4. Optional prepayments of Acquisition Loans after the Acquisition Loan
Termination Date shall be applied to the installments thereof pro rata among the
remaining maturities.
2.7 Mandatory Prepayments of Loans; Mandatory Commitment Reductions.
(a) Asset Sales. In the event that any Asset Sale results in Excess
Sale Proceeds which are not applied as provided in Section 8.8 (c)(ii)(B)(x),
such Excess Sale Proceeds shall be applied to the prepayment of Senior
Indebtedness on a pro rata basis based upon the aggregate principal amount of
Senior Indebtedness then outstanding (assuming, with respect to revolving debt,
that the maximum commitment amount is outstanding); provided, however, that the
amounts that would be applicable to payments to the Banks hereunder shall be
applied first to outstanding amounts under the Acquisition Commitments (and if
after the Acquisition Loan Termination Date, applied to the remaining
installments of the Acquisition Loans pro rata), then to outstanding amounts
under the Revolving Commitments. Such prepayments shall be allocated among the
Banks according to their respective Pro Rata Shares. The Acquisition Commitments
and Revolving Commitments shall be reduced by the amount of such prepayments
applied to outstanding principal amounts thereunder, and any such reduction
shall be applied to each Bank according to its Pro Rata Share. If the amount of
such Excess Sale Proceeds applicable to payment to the Banks hereunder exceeds
the amount of the outstandings under the Commitments, the Commitments shall be
reduced by such excess, by reduction, first to the Acquisition Commitments (if
prior to the Acquisition Loan Termination Date) and then to the Revolving
Commitments, and any such reduction shall be applied to each Bank in accordance
with its Pro Rata Share.
(b) Excess Outstandings. If on any date the Effective Amount of L/C
Obligations exceeds the L/C Commitment, the Borrowers shall Cash Collateralize
on such date the outstanding Letters of Credit in an amount equal to the excess
of the maximum amount then available to be drawn under the Letters of Credit
over the L/C Commitment. Subject to Section 4.4, if on any date after giving
effect to any Cash Collateralization made on such date pursuant to the preceding
sentence, the Effective Amount of all Revolving Loans and L/C Obligations
exceeds the Revolving Commitments, the Borrowers shall immediately, and without
notice or demand,
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prepay the outstanding principal amount of the Revolving Loans and/or L/C
Advances by an amount equal to such excess.
(c) Other Prepayments. In the event of a prepayment or mandatory
repurchase of the Mortgage Notes or other Parity Debt not governed by Section
2.7(a) after the Acquisition Loan Termination Date, the Loans shall be prepaid
in a pro rata amount, such pro rata amount based upon the maximum commitment
amount of Mortgage Notes and Parity Debt plus the Commitments hereunder. Such
prepayment shall be applied first to the installments of the Acquisition Loans
then to the Revolving Loans (with a concurrent reduction of the Revolving
Commitments).
2.8 Repayment. (a) The Acquisition Credit. The Borrowers shall repay to
the Banks the Acquisition Loans in equal quarterly payments at each fiscal
quarter end commencing with the first fiscal quarter end after the Acquisition
Loan Termination Date and ending on a date 4 years after the Acquisition Loan
Termination Date.
(b) The Revolving Credit. The Borrowers shall repay to the Banks in
full on the Revolving Termination Date the aggregate principal amount of
Revolving Loans outstanding on such date, together with all accrued and unpaid
interest thereon.
(c) Swingline Loans. The Borrowers shall repay to BofA in full the
aggregate principal amount of each Swingline Loan, together with all accrued and
unpaid interest thereon, upon the earlier of (a) 5 calendar days following the
date on which such Swingline Loan was funded by BofA and (b) the Revolving
Termination Date.
2.9 Interest. (a) Each Loan shall bear interest on the outstanding
principal amount thereof from the applicable Borrowing Date at a rate per annum
equal to the Offshore Rate (other than with respect to Swingline Loans) or the
Base Rate, as the case may be (and subject to the Borrowers' right to convert to
the other Type of Loan under Section 2.4), plus the Applicable Margin.
(b) Interest on each Loan shall be paid in arrears on each Interest
Payment Date. Interest shall also be paid on the date of any prepayment of
Offshore Rate Loans under Section 2.6 or 2.7 for the portion of the Loans so
prepaid and upon payment (including prepayment) in full thereof and, during the
existence of any Event of Default, interest shall be paid on demand of the Agent
at the request or with the consent of the Required Banks. Interest on each
Swingline Loan shall be for the sole account of BofA (except to the extent the
other Banks have funded the purchase of participations therein pursuant to
subsection 2.16(b)).
(c) Notwithstanding subsection (a) of this Section, if any amount of
principal of or interest on any Loan, or any other amount payable hereunder or
under any other Loan Document is not paid in full when due (whether at stated
maturity, by acceleration, demand or otherwise), the Borrowers agree to pay
interest on such unpaid principal or other amount, from the date such amount
becomes due to the date such amount is paid in full, and after as well as before
any entry of judgment thereon to the extent permitted by law, payable on demand
(but not
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more frequently than once per week), at a fluctuating rate per annum equal to
the Base Rate plus 2%.
(d) Anything herein to the contrary notwithstanding, the obligations
of the Borrowers to any Bank hereunder shall be subject to the limitation that
payments of interest shall not be required for any period for which interest is
computed hereunder, to the extent (but only to the extent) that contracting for
or receiving such payment by such Bank would be contrary to the provisions of
any law applicable to such Bank limiting the highest rate of interest that may
be lawfully contracted for, charged or received by such Bank, and in such event
the Borrowers shall pay such Bank interest for such period at the highest rate
permitted by applicable law.
2.10 Fees. (a) Arrangement, Agency Fees. The Borrowers shall pay a
transaction fee to the Arranger for the Arranger's own account, and shall pay an
agency fee to the Agent for the Agent's own account, as required by the letter
agreement ("Fee Letter") among the Company, the Agent and the Arranger dated
August 8, 1997.
(b) Facility Fees. The Company shall pay on the last day of each
calendar quarter to the Agent for the account of each Bank a facility fee on the
daily average amount of (i) such Bank's Revolving Commitment (whether or not
used) from the date hereof until the Revolving Termination Date and (ii) such
Bank's Acquisition Commitment (whether or not used) from the date hereof until
the Acquisition Loan Termination Date, in each case at the rate per annum set
forth below for each Pricing Tier as such Pricing Tier is applicable:
Pricing Tier Funded Debt Ratio Facility Fee Rate
------------ ----------------- -----------------
I <1.75x 0.1000%
II (greater than or equal to) 1.75x but <2.75x 0.1250%
III (greater than or equal to) 2.75x but <3.25x 0.1500%
IV (greater than or equal to) 3.25x but <3.75x 0.2000%
V (greater than or equal to) 3.75x but <4.25x 0.2500%
VI (greater than or equal to) 4.25x but <4.75x 0.3000%
VII (greater than or equal to) 4.75x 0.3750%
For the purpose of determining the applicable Pricing Tier pursuant to this
Section 2.10(b), EBITDA shall be determined as at the end of each fiscal quarter
for the four fiscal quarters then ending and Funded Debt shall be determined as
at the end of each fiscal quarter. Pricing changes shall be effective on the
later of (i) 45 days after the end of each of the first three fiscal quarters of
each fiscal year and 90 days after each fiscal year end and (ii) the Agent's
receipt of financial
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statements hereunder for such fiscal quarter or fiscal year. For the period from
the date hereof through December 29, 1997, Pricing Tier IV shall be deemed
applicable.
(c) Upfront Fees. On or prior to the Restatement Effective Date, the
Borrowers shall pay to the Agent for the account of each Bank an upfront fee in
the amount of 0.05% multiplied by such Bank's Commitment (whether or not used).
Such upfront fees are for the credit facilities committed by each Bank under
this Agreement and are fully earned when paid. The upfront fees paid to each
Bank are solely for its own account and are nonrefundable.
2.11 Computation of Fees and Interest. (a) All computations of fees and
interest shall be made on the basis of a 360-day year and actual days elapsed.
Interest and fees shall accrue during each period during which interest or such
fees are computed from the first day thereof to the last day thereof.
(b) Each determination of an interest rate by the Agent shall
be conclusive and binding on the Borrowers and the Banks in the absence of
manifest error.
2.12 Payments by the Borrowers. (a) All payments to be made by the
Borrowers shall be made without set-off, recoupment or counterclaim. Except as
otherwise expressly provided herein, all payments by the Borrowers shall be made
to the Agent for the account of the Banks at the Agent's Payment Office, and
shall be made in dollars and in immediately available funds, no later than 1:00
p.m. (New York City time) on the date specified herein. The Agent will promptly
distribute to each Bank its Pro Rata Share (or other applicable share as
expressly provided herein) of such payment in like funds as received. Any
payment received by the Agent later than 1:00 p.m. (New York City time) shall be
deemed to have been received on the following Business Day and any applicable
interest or fee shall continue to accrue to such Business Day.
(b) Subject to the provisions set forth in the definition of
"Interest Period" herein, whenever any payment is due on a day other than a
Business Day, such payment shall be made on the following Business Day, and such
extension of time shall in such case be included in the computation of interest
or fees, as the case may be.
(c) Unless the Agent receives notice from the Borrowers prior to the
date on which any payment is due to the Banks that the Borrowers will not make
such payment in full as and when required, the Agent may assume that the
Borrowers have made such payment in full to the Agent on such date in
immediately available funds and the Agent may (but shall not be so required), in
reliance upon such assumption, distribute to each Bank on such due date an
amount equal to the amount then due such Bank. If and to the extent the
Borrowers have not made such payment in full to the Agent, each Bank shall repay
to the Agent on demand such amount distributed to such Bank, together with
interest thereon at the Federal Funds Rate for each day from the date such
amount is distributed to such Bank until the date repaid.
2.13 Payments by the Banks to the Agent, etc. (a) Unless the Agent
receives notice from a Bank on or prior to the Restatement Effective Date or,
with respect to any Borrowing after the Restatement Effective Date, at least one
Business Day prior to the date of such Borrowing, that such Bank will not make
available as and when required hereunder to the Agent
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for the account of the Borrowers the amount of that Bank's Pro Rata Share of the
Borrowing, the Agent may assume that each Bank has made such amount available to
the Agent in immediately available funds on the Borrowing Date and the Agent may
(but shall not be so required), in reliance upon such assumption, make available
to the Borrowers on such date a corresponding amount. If and to the extent any
Bank shall not have made the full amount of its Pro Rata Share of any Borrowing
available to the Agent in immediately available funds and the Agent in such
circumstances has made available to the Borrowers such amount, that Bank shall
on the Business Day following such Borrowing Date make such amount available to
the Agent, together with interest at the Federal Funds Rate for each day during
such period. A notice of the Agent submitted to any Bank with respect to amounts
owing under this subsection (a) shall be conclusive, absent manifest error. If
such amount is so made available, such payment to the Agent shall constitute
such Bank's Loan on the date of Borrowing for all purposes of this Agreement. If
such amount is not made available to the Agent on the Business Day following the
Borrowing Date, the Agent will notify the Borrowers of such failure to fund and,
upon demand by the Agent, the Borrowers shall pay such amount to the Agent for
the Agent's account, together with interest thereon for each day elapsed since
the date of such Borrowing, at a rate per annum equal to the interest rate
applicable at the time to the Loans comprising such Borrowing.
(b) The failure of any Bank to make any Loan on any Borrowing Date
shall not relieve any other Bank of any obligation hereunder to make a Loan on
such Borrowing Date, but no Bank shall be responsible for the failure of any
other Bank to make the Loan to be made by such other Bank on any Borrowing Date.
No Bank shall be entitled to take any action to protect or enforce its rights
arising out of any Loan Document without the prior written consent of the
Required Banks, including the exercise, or attempt to exercise, any right of
set-off, banker's lien, or any similar such action, against any deposit account
or property of the Borrowers held by any such Bank.
2.14 Sharing of Payments, etc. If, other than as expressly provided
elsewhere herein, including with respect to Swingline Loans, any Bank shall
obtain on account of the Loans made by it any payment (whether voluntary,
involuntary, through the exercise of any right of set-off, or otherwise, except
pursuant to Sections 2.15, 4.7, 11.1, and 11.9) in excess of its Pro Rata Share,
such Bank shall immediately (a) notify the Agent of such fact, and (b) purchase
from the other Banks such participations in the Loans made by them as shall be
necessary to cause such purchasing Bank to share the excess payment pro rata
with each of them; provided, that if all or any portion of such excess payment
is thereafter recovered from the purchasing Bank, such purchase shall to that
extent be rescinded and each other Bank shall repay to the purchasing Bank the
purchase price paid therefor, together with an amount equal to such paying
Bank's ratable share (according to the proportion of (i) the amount of such
paying Bank's required repayment to (ii) the total amount so recovered from the
purchasing Bank) of any interest or other amount paid or payable by the
purchasing Bank in respect of the total amount so recovered. The Borrowers agree
that any Bank so purchasing a participation from another Bank may, to the
fullest extent permitted by law, exercise all its rights of payment (including
the right of set-off, but subject to Section 11.12) with respect to such
participation as fully as if such Bank were the direct creditor of the Borrowers
in the amount of such participation. The Agent will keep records (which shall
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be conclusive and binding in the absence of manifest error) of participations
purchased under this Section and will in each case notify the Banks following
any such purchases or repayments.
2.15 Revolving Termination Date. (a) The Revolving Commitments shall
terminate and each Bank shall be relieved of its obligations to make any
Revolving Loan on the Revolving Termination Date. The Borrowers may from time to
time request an extension of the Revolving Termination Date for an additional
one-year period by executing and delivering to the Agent a Commitment
Termination Date Extension Request at least 60 but not more than 90 days prior
to the then scheduled Revolving Termination Date. The Revolving Termination Date
shall be so extended if the Agent shall have received from each Bank on or prior
to the 30th day preceding the then scheduled Revolving Termination Date a duly
executed counterpart of such Commitment Termination Date Extension Request. Each
Bank may in its sole and absolute discretion withhold its consent to any such
Commitment Termination Date Extension Request.
(b) Notwithstanding the foregoing, if the Agent shall have received
duly executed counterparts of a Commitment Termination Date Extension Request
from Banks representing, in the aggregate, 80% or more of the Revolving
Commitments, but less than 100% of the Revolving Commitments, on or prior to the
30th day preceding the then scheduled Revolving Termination Date, the Agent
shall so notify (the date of such notice being the "Notice Date") the Borrowers
and the Borrowers shall have the right to seek a substitute bank or banks (the
"New Banks") which New Banks would meet the requirements to be Eligible
Assignees, acceptable to the Agent and the Borrowers (which may be one or more
of the Banks) to replace the Bank or Banks which have not delivered a
counterpart of such Commitment Termination Date Extension Request by such time;
provided that such New Banks shall replace such nonrenewing Banks on all such
nonrenewing Banks' Commitments, Loans, L/C Obligations and L/C Advances, so the
Pro Rata Share of any New Bank of the Acquisition Commitments, Revolving
Commitments, Loans, L/C Obligations and L/C Advances shall be the same. If any
Revolving Termination Date shall not have been extended pursuant to clause (a)
above, the Borrowers shall elect, by delivering to the Agent at least four
Business Days' prior to the then scheduled Revolving Termination Date a written
notice of election, either (i) not to extend such Revolving Termination Date, in
which case such Revolving Termination Date shall not be so extended for any Bank
irrespective of whether such Bank has or has not sent its duly executed
counterpart of the Commitment Termination Date Extension Request or (ii) if the
aggregate Revolving Commitments of the Banks who have delivered duly executed
counterparts of a Commitment Termination Date Extension Request represent at
least 80% of the Revolving Commitments, to extend such current Revolving
Termination Date, in which case (x) the Revolving Termination Date shall be
extended for an additional period of one year from the then scheduled Revolving
Termination Date, and (y) the Revolving Commitments shall be reduced on the then
scheduled Revolving Termination Date to an amount equal to the aggregate of the
Revolving Commitments of the Banks who had delivered duly executed counterparts
of a Commitment Termination Date Extension Request on or prior to the 30th day
preceding the then scheduled Revolving Termination Date, plus the aggregate
Revolving Commitments of the New Banks and (z) the Commitments shall be reduced
on the then scheduled Revolving Termination Date to an amount equal to (1) the
aggregate of the Commitments of the Banks who have delivered executed
counterparts of a Commitment Termination Date Extension Request on or prior to
the 30th day
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preceding the then scheduled Revolving Termination Date plus (2) the aggregate
Commitments of the New Banks, and the Borrowers shall pay (such payment to be
made on such Revolving Termination Date) in full all Revolving Loans and
Acquisition Loans plus all accrued interest and fees (including any amounts owed
under Section 4.4) owing to each such non-renewing Bank and each such
non-renewing Bank (to the extent that such Loans have not been acquired by the
new Banks) shall no longer have any Commitment for purposes of this Agreement
and each other Loan Document. If the Borrowers shall not have delivered such a
written notice of election to the Agent on or prior to the then scheduled
Revolving Termination Date, such Revolving Termination Date shall not be
extended.
2.16 Swingline Loans.
(a) Subject to the satisfaction of each of the conditions set
forth in Section 5.2 and in this Section 2.16, BofA agrees, at the request of
the Borrowers made through the Agent as set forth below, from time to time
during the period from the Restatement Effective Date to the Revolving
Termination Date, to make short-term loans to the Borrowers not to exceed in the
aggregate at any one time outstanding the principal sum of $15,000,000, to be
used for working capital purposes and general purposes of the Company and the
Restricted Subsidiaries (each such loan, a "Swingline Loan"). The availability
of Swingline Loans is conditioned on the satisfaction of each of the following
conditions (in addition to those contained in Section 5.2): (i) each Swingline
Loan shall bear interest from the time made until the time repaid, or until the
time, if any, that such Swingline Loan is converted into a Base Rate Loan as
provided below, at the rate(s) from time to time applicable to Base Rate Loans
hereunder; (ii) at the time of making of any Swingline Loan, the sum of the
Effective Amount of all outstanding Swingline Loans plus the Effective Amount of
all outstanding Revolving Loans plus the Effective Amount of all L/C
Obligations, without duplication, shall not exceed the aggregate Revolving
Commitments; (iii) each Swingline Loan, when made, all interest accrued thereon,
and all reimbursable costs and expenses incurred or payable in connection
therewith, shall constitute an Obligation of Borrowers hereunder; and (iv) each
request for a Swingline Loan from BofA pursuant to this Section 2.16 shall be
made by the Borrowers to the Agent, shall be funded by BofA through the Agent,
and shall be repaid by the Borrowers through the Agent (in order that the Agent
may keep an accurate record of the outstanding balance at any time of Swingline
Loans so as to monitor compliance with the terms and provisions hereof). Each
Swingline Loan shall be made upon the Borrowers' irrevocable written notice
delivered to the Agent substantially in the form of a Notice of Borrowing (which
notice must be received by the Agent prior to 1:00 p.m. (New York City time) on
the requested date of such Swingline Loan), specifying:
(i) the amount of the Swingline Loan, which shall be in
a minimum amount of $1,000,000 or any multiple of $1,000,000 in
excess thereof; and
(ii) the requested date of such Swingline Loan, which
shall be a Business Day.
(b) If any Swingline Loan made pursuant to this Section 2.16, and in
compliance with the conditions set forth in the immediately preceding paragraph
of this Section 2.16, is not repaid by the Borrowers on or before the fifth
calendar day following the day
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that it was funded by BofA, the Borrower shall be deemed to have given notice of
a Borrowing of a Revolving Loan in the amount of such Swingline Loan on such
fifth calendar day to automatically (unless an Insolvency Proceeding has been
commenced with respect to any Borrower on or prior to such date) effect a
conversion of such Swingline Loan into a Revolving Loan which is a Base Rate
Loan, and each Bank shall fund to the Agent, for the account of BofA, such
Bank's ratable share of such Revolving Loan, based on such Bank's Pro Rata
Share; provided, that if any Insolvency Proceeding has been commenced with
respect to any Borrower on or prior to the date on which such Swingline Loan is
so converted, and in lieu of funding its Pro Rata Share of a Revolving Loan,
each Bank shall be deemed to, and hereby irrevocably and unconditionally agrees
to, purchase from BofA a participation in such Swingline Loan equal to the
product of such Bank's Pro Rata Share times the amount of such Swingline Loan.
(c) Each Bank's obligation in accordance with this Agreement to make
Revolving Loans upon the failure of a Swingline Loan to be repaid in full when
due, or to purchase participations in such Swingline Loans, shall, in each case,
be absolute and unconditional and without recourse to BofA and shall not be
affected by any circumstance, including (i) any set-off, counterclaim,
recoupment, defense or other right which such Bank may have against BofA, the
Borrowers or any other Person for any reason whatsoever; (ii) the occurrence or
continuance of a Default, an Event of Default or a Material Adverse Effect; or
(iii) any other circumstance, happening or event whatsoever, whether or not
similar to any of the foregoing.
ARTICLE III
THE LETTERS OF CREDIT
3.1 The Letter of Credit Subfacility. (a) On the terms and conditions set
forth herein (i) the Issuing Bank agrees, (A) from time to time on any Business
Day during the period from the Restatement Effective Date to the Revolving
Termination Date to issue Letters of Credit for the account of the Borrowers,
and to amend or renew, extend the expiration of or increase the amount of
Letters of Credit previously issued by it, in accordance with Sections 3.2(c)
and 3.2(d), and (B) to honor drafts under the Letters of Credit; and (ii) the
Banks severally agree to participate in Letters of Credit Issued for the account
of the Borrowers; provided, that the Issuing Bank shall not be obligated to
Issue, and no Bank shall be obligated to participate in, any Letter of Credit if
as of the date of Issuance of such Letter of Credit (the "Issuance Date") (x)
the Effective Amount of all L/C Obligations plus the Effective Amount of all
Revolving Loans plus the Effective Amount of all Swingline Loans exceeds the
amount of the Revolving Commitment or (y) the Effective Amount of all L/C
Obligations exceeds $35,000,000. Within the foregoing limits, and subject to the
other terms and conditions hereof, the Borrowers' ability to obtain Letters of
Credit shall be fully revolving, and, accordingly, the Borrowers may, during the
foregoing period, obtain Letters of Credit to replace Letters of Credit which
have expired or which have been drawn upon and reimbursed.
(b) The Issuing Bank shall not Issue any Letter of Credit if:
(i) any order, judgment or decree of any Governmental
Authority or arbitrator shall by its terms purport to enjoin or
restrain the Issuing Bank from
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Issuing such Letter of Credit, or any Requirement of Law applicable
to the Issuing Bank or any request or directive (whether or not
having the force of law) from any Governmental Authority with
jurisdiction over the Issuing Bank shall prohibit, or request that
the Issuing Bank refrain from, the Issuance of letters of credit
generally or such Letter of Credit in particular or shall impose
upon the Issuing Bank with respect to such Letter of Credit any
restriction, reserve or capital requirement (for which the Issuing
Bank is not otherwise compensated hereunder) not in effect on the
Restatement Effective Date, or shall impose upon the Issuing Bank
any unreimbursed loss, cost or expense which was not applicable on
the Restatement Effective Date and which the Issuing Bank in good
faith deems material to it;
(ii) the Issuing Bank has received written notice from any
Bank, the Agent or the Company, on or prior to the Business Day
prior to the requested date of Issuance of such Letter of Credit,
that one or more of the applicable conditions contained in Article V
is not then satisfied;
(iii) the expiry date of any requested Letter of Credit is (A)
more than 360 days after the date of Issuance, unless the Required
Banks have approved such expiry date in writing, or (B) after the
Revolving Termination Date, unless all of the Banks have approved
such expiry date in writing;
(iv) any requested Letter of Credit is now otherwise in form
and substance acceptable to the Issuing Bank, or the Issuance of a
Letter of Credit shall violate any applicable policies of the
Issuing Bank;
(v) such Letter of Credit is in a face amount less than
$500,000 or to be denominated in a currency other than Dollars.
3.2 Issuance, Amendment and Renewal of Letters of Credit. (a) Each Letter
of Credit shall be issued upon the irrevocable written request of the Borrowers
received by the Issuing Bank (with a copy sent by the Borrowers to the Agent) at
least three Business Days (or such shorter time as the Issuing Bank may agree in
a particular instance in its sole discretion) prior to the proposed date of
issuance. Each such request for issuance of a Letter of Credit shall be by
facsimile, confirmed promptly in an original writing, in the form of an L/C
Application, and shall specify in form and detail satisfactory to the Issuing
Bank: (i) the proposed date of issuance of the Letter of Credit (which shall be
a Business Day); (ii) the face amount of the Letter of Credit; (iii) the expiry
date of the Letter of Credit; (iv) the name and address of the beneficiary
thereof; (v) the documents to be presented by the beneficiary of the Letter of
Credit in case of any drawing thereunder; (vi) the full text of any certificate
to be presented by the beneficiary in case of any drawing thereunder; and (vii)
such other matters as the Issuing Bank may require.
(b) At least one Business Day prior to the Issuance of any Letter of
Credit, the Issuing Bank will confirm with the Agent (by telephone or in
writing) that the Agent has received a copy of the L/C Application or L/C
Amendment Application from the Borrowers and, if not, the Issuing Bank will
provide the Agent with a copy thereof. Unless the Issuing Bank has received,
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on or before the Business Day immediately preceding the date the Issuing Bank is
to issue a requested Letter of Credit, (A) notice from the Agent directing the
Issuing Bank not to issue such Letter of Credit because such issuance is not
then permitted under Section 3.1(a) as a result of the limitations set forth in
the proviso contained in the first sentence thereof or (B) a notice described in
Section 3.1(b)(ii), then, subject to the terms and conditions hereof, the
Issuing Bank shall, on the requested date, issue a Letter of Credit for the
account of the Borrowers in accordance with the Issuing Bank's usual and
customary business practices.
(c) From time to time while a Letter of Credit is outstanding and
prior to the Revolving Termination Date, the Issuing Bank will, upon the written
request of the Borrowers received by the Issuing Bank (with a copy sent by the
Borrowers to the Agent) at least three Business Days (or such shorter time as
the Issuing Bank may agree in a particular instance in its sole discretion)
prior to the proposed date of amendment, amend any Letter of Credit issued by
it. Each such request for amendment of a Letter of Credit shall be made by
facsimile made in the form of an L/C Amendment Application and shall specify in
form and detail satisfactory to the Issuing Bank: (i) the Letter of Credit to be
amended; (ii) the proposed date of amendment of the Letter of Credit (which
shall be a Business Day); (iii) the nature of the proposed amendment; and (iv)
such other matters as the Issuing Bank may reasonably require. The Issuing Bank
shall not amend any Letter of Credit if: (A) the Issuing Bank would have no
obligation at such time to issue such Letter of Credit in its amended form under
the terms of this Agreement; or (B) the beneficiary of any such Letter of Credit
does not accept the proposed amendment to the Letter of Credit. The Agent will
promptly notify the Banks of the receipt by it of any L/C Application or L/C
Amendment Application.
(d) The Issuing Bank and the Banks agree that, while a Letter of
Credit is outstanding and prior to the Revolving Termination Date, at the option
of the Borrowers and upon the written request of the Borrowers received by the
Issuing Bank (with a copy sent by the Borrowers to the Agent) at least three
Business Days (or such shorter time as the Issuing Bank may agree in a
particular instance in its sole discretion) prior to the proposed date of
notification of renewal, the Issuing Bank shall authorize the automatic renewal
of any Letter of Credit issued by it. Each such request for renewal of a Letter
of Credit shall be made by facsimile, confirmed promptly in an original writing,
in the form of an L/C Amendment Application, and shall specify in form and
detail satisfactory to the Issuing Bank: (i) the Letter of Credit to be renewed;
(ii) the proposed date of notification of renewal of the Letter of Credit (which
shall be a Business Day); (iii) the revised expiry date of the Letter of Credit;
and (iv) such other matters as the Issuing Lender may reasonably require. The
Issuing Bank shall not renew any Letter of Credit if: (A) the Issuing Bank would
have no obligation at such time to issue or amend such Letter of Credit in its
renewed form under the terms of this Agreement; or (B) the beneficiary of such
Letter of Credit does not accept the proposed renewal of the Letter of Credit.
If any outstanding Letter of Credit shall provide that it shall be automatically
renewed in accordance with its terms unless the beneficiary thereof receives
notice from the Issuing Bank that such Letter of Credit shall not be renewed,
and if at the time of renewal the Issuing Bank would be required to authorize
the automatic renewal of such Letter of Credit in accordance with this Section
3.2(d) upon the request of the Borrowers but the Issuing Bank shall not have
received any L/C Amendment Application from the Borrowers with respect to such
renewal or other written direction by the
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Borrowers with respect thereto, the Issuing Bank shall nonetheless be permitted
to allow such Letter of Credit to renew, and the Borrowers and the Banks hereby
authorize such renewal, and, accordingly, the Issuing Bank shall be deemed to
have received an L/C Amendment Application from the Borrowers requesting such
renewal.
(e) The Issuing Bank may, at its election (or as required by the
Agent at the direction of the Required Banks), deliver any notices of
termination or other communications to any Letter of Credit beneficiary or
transferee, and take any other action as necessary or appropriate, at any time
and from time to time, in order to cause the expiry date of such Letter of
Credit to be a date not later than the Revolving Termination Date.
(f) This Agreement shall control in the event of any conflict with
any L/C-Related Document (other than any Letter of Credit).
(g) The Issuing Bank will also deliver to the Agent, concurrently or
promptly following its delivery of a Letter of Credit, or amendment to or
renewal of a Letter of Credit, to an advising bank or a beneficiary, a true and
complete copy of each such Letter of Credit or amendment to or renewal of a
Letter of Credit.
3.3 Risk Participations, Drawings and Reimbursements.
(a) Immediately upon the Issuance of each Letter of Credit, each
Bank shall be deemed to, and hereby irrevocably and unconditionally agrees to,
purchase from the Issuing Bank a participation in such Letter of Credit and each
drawing thereunder in an amount equal to the product of (i) the Pro Rata Share
of such Bank times (ii) the maximum amount available to be drawn under such
Letter of Credit and the amount of each such drawing, respectively.
(b) In the event of any request for a drawing under a Letter of
Credit by the beneficiary or transferee thereof, the Issuing Bank will promptly
notify the Company. The Borrowers shall reimburse the Issuing Bank prior to 1:00
p.m. (New York City time), on each date that any amount is paid by the Issuing
Bank under any Letter of Credit (each such date, an "Honor Date"), in an amount
equal to the amount so paid by the Issuing Bank. In the event the Borrowers fail
to reimburse the Issuing Bank for the full amount of any drawing under any
Letter of Credit by 1:00 p.m. (New York City time) on the Honor Date, the
Issuing Bank will promptly notify the Agent and the Agent will promptly notify
each Bank thereof, and the Borrowers shall be deemed to have requested that Base
Rate Loans be made by the Banks to be disbursed on the Honor Date under such
Letter of Credit, subject to the amount of the unutilized portion of the
Revolving Commitment and subject to the conditions set forth in Section 5.2. Any
notice given by the Issuing Bank or the Agent pursuant to this Section 3.3(b)
may be oral if immediately confirmed in writing (including by facsimile);
provided that the lack of such an immediate confirmation. shall not affect the
conclusiveness or binding effect of such notice.
(c) Each Bank shall upon any notice pursuant to Section 3.3(b) make
available to the Agent for the account of the Issuing Bank an amount in Dollars
and in immediately available funds equal to its Pro Rata Share of the amount of
the drawing, whereupon the participating Banks shall (subject to Section 3.3(e))
each be deemed to have made a Revolving
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Loan consisting of a Base Rate Loan to the Borrowers in that amount. If any Bank
so notified fails to make available to the Agent for the account of the Issuing
Bank the amount of such Bank's Pro Rata Share of the amount of the drawing by no
later than 3:00 p.m. (New York City time) on the Honor Date, then interest shall
accrue on such Bank's obligation to make such payment, from the Honor Date to
the date such Bank makes such payment, at a rate per annum equal to the Federal
Funds Rate in effect from time to time during such period. The Agent will
promptly give notice of the occurrence of the Honor Date, but failure of the
Agent to give any such notice in sufficient time to enable any Bank to effect
such payment on such date shall not relieve such Bank from its obligations under
this Section 3.3 (other than the obligation to pay interest for the period prior
to the notice).
(d) With respect to any unreimbursed drawing that is not converted
into Revolving Loans consisting of Base Rate Loans to the Borrowers in whole or
in part, because of the Borrowers' failure to satisfy the conditions set forth
in Section 5.2 or for any other reason, the Borrowers shall be deemed to have
incurred from the Issuing Bank an L/C Borrowing in the amount of such drawing,
which L/C Borrowing shall be due and payable on demand (together with interest)
and shall bear interest at a rate per annum equal to the Base Rate plus 2%, and
each Bank's payment to the Issuing Bank pursuant to Section 3.3(c) shall be
deemed payment in respect of its participation in such L/C Borrowing and shall
constitute an L/C Advance from such Bank in satisfaction of its participation
obligation under this Section 3.3.
(e) Each Bank's obligation in accordance with this Agreement to make
Revolving Loans or L/C Advances, as contemplated by this Section 3.3, as a
result of a drawing under a Letter of Credit, shall be absolute and
unconditional and without recourse to the Issuing Bank and shall not be affected
by any circumstance, including (i) any set-off, counterclaim, recoupment,
defense or other right which such Bank may have against the Issuing Bank, the
Borrowers or any other Person for any reason whatsoever; (ii) the occurrence or
continuance of a Default, an Event of Default or a Material Adverse Effect; or
(iii) any other circumstance, happening or event whatsoever, whether or not
similar to any of the foregoing; provided, however, that each Bank's obligation
to make Revolving Loans under this Section 3.3 is subject to the conditions set
forth in Section 5.2.
3.4 Repayment of Participations. (a) Upon (and only upon) receipt by the
Agent for the account of the Issuing Bank of immediately available funds from
the Borrowers (i) in reimbursement of any payment made by the Issuing Bank under
the Letter of Credit with respect to which any Bank has paid the Agent for the
account of the Issuing Bank for such Bank's participation in the Letter of
Credit pursuant to Section 3.3 or (ii) in payment of interest thereon, the Agent
will pay to each Bank, in the same funds as those received by the Agent for the
account of the Issuing Bank, the amount of such Bank's Pro Rata Share of such
funds, and the Issuing Bank shall receive the amount of the Pro Rata Share of
such funds of any Bank that did not so pay the Agent for the account of the
Issuing Bank.
(b) If the Agent or the Issuing Bank is required at any time to
return to the Borrowers, or to a trustee, receiver, liquidator, custodian, or
any official in any Insolvency Proceeding, any portion of the payments made by
the Borrowers to the Agent for the account of the Issuing Bank pursuant to
Section 3.4(a) in reimbursement of a payment made under any
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Letter of Credit or interest or fee thereon, each Bank shall, on demand of the
Agent, forthwith return to the Agent or the Issuing Bank the amount of its Pro
Rata Share of any amounts so returned by the Agent or the Issuing Bank plus
interest thereon from the date such demand is made to the date such amounts are
returned by such Bank to the Agent or the Issuing Bank, at a rate per annum
equal to the Federal Funds Rate in effect from time to time.
3.5 Role of the Issuing Bank. (a) Each Bank and the Borrowers agree that,
in paying any drawing under a Letter of Credit, the Issuing Bank shall not have
any responsibility to obtain any document (other than any sight draft and
certificates expressly required by the Letter of Credit) or to ascertain or
inquire as to the validity or accuracy of any such document or the authority of
the Person executing or delivering any such document.
(b) No Agent-Related Person nor any of the respective
correspondents, participants or assignees of the Issuing Bank shall be liable to
any Bank for: (i) any action taken or omitted in connection herewith at the
request or with the approval of the Banks (including the Required Banks, as
applicable); (ii) any action taken or omitted in the absence of negligence or
willful misconduct; or (iii) the due execution, effectiveness, validity or
enforceability of any L/C-Related Document.
(c) Except as otherwise provided in this clause (c), the Borrowers
hereby assume all risks of the acts or omissions of any beneficiary or
transferee with respect to its use of any Letter of Credit; provided that this
assumption is not intended to, and shall not, preclude the Borrowers' pursuing
such rights and remedies as they may have against the beneficiary or transferee
at law or under any other agreement. No Agent-Related Person, nor any of the
respective correspondents, participants or assignees of the Issuing Bank, shall
be liable or responsible for any of the matters described in clauses (i) through
(vii) of Section 3.6; provided that, anything in such clauses to the contrary
notwithstanding, the Borrowers may have a claim against the Issuing Bank, and
the Issuing Bank may be liable to the Borrowers, to the extent, but only to the
extent, of any direct, as opposed to consequential or exemplary, damages
suffered by the Borrowers which the Borrowers prove were caused by the Issuing
Bank's willful misconduct or gross negligence or the Issuing Bank's willful
failure to pay under any Letter of Credit after the presentation to it by the
beneficiary of a sight draft and certificate(s) strictly complying with the
terms and conditions of a Letter of Credit. In furtherance and not in limitation
of the foregoing: (i) the Issuing Bank may accept documents that appear on their
face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary; and (ii) the Issuing
Bank shall not be responsible for the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign a Letter of Credit
or the rights or benefits thereunder or proceeds thereof, in whole or in part,
which may prove to be invalid or ineffective for any reason.
3.6 Obligations Absolute. Subject to the proviso contained in the second
sentence of Section 3.5(c), the obligations of the Borrowers under this
Agreement and any L/C-Related Document to reimburse the Issuing Bank for a
drawing under a Letter of Credit, and to repay any L/C Borrowing and any drawing
under a Letter of Credit converted into Revolving Loans, shall be unconditional
and irrevocable, and shall be paid strictly in accordance with the terms of this
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Agreement and each such other L/C-Related Document under all circumstances,
including the following:
(i) any lack of validity or enforceability of this Agreement or any
L/C-Related Document;
(ii) any change in the time, manner or place of payment of, or in
any other term of, all or any of the obligations of the Borrowers in respect of
any Letter of Credit or any other amendment or waiver of or any consent to
departure from all or any of the L/C-Related Documents;
(iii) the existence of any claim, set-off, defense or other right
that the Borrowers may have at any time against any beneficiary or any
transferee of any Letter of Credit (or any Person for whom any such beneficiary
or any such transferee may be acting), the Issuing Bank or any other Person,
whether in connection with this Agreement, the transactions contemplated hereby
or by the L/C-Related Documents or any unrelated transaction;
(iv) any draft, demand, certificate or other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate
in any respect; or any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under any Letter of Credit;
(v) any payment by the Issuing Bank under any Letter of Credit
against presentation of a draft or certificate that does not strictly comply
with the terms of any Letter of Credit; or any payment made by the Issuing Bank
under any Letter of Credit to any Person purporting to be a trustee in
bankruptcy, debtor-in-possession, assignee for the benefit of creditors,
liquidator, receiver or other representative of or successor to any beneficiary
or any transferee of any Letter of Credit, including any arising in connection
with any Insolvency Proceeding;
(vi) any exchange, release or non-perfection of any collateral, or
any release or amendment or waiver of or consent to departure from any other
guarantee, for all or any of the obligations of the Borrowers in respect of any
Letter of Credit; or
(vii) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, including any other circumstance that might
otherwise constitute a defense available to, or a discharge of, any Borrower or
a guarantor.
3.7 Cash Collateral Pledge. Upon notice from the Agent or the Required
Banks, if, as of the Revolving Termination Date, or upon the occurrence of an
Event of Default, any Letters of Credit may for any reason remain outstanding
and partially or wholly undrawn, the Borrowers shall, unless waived by the
Required Banks, immediately Cash Collateralize the L/C Obligations in an amount
equal to the L/C Obligations.
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3.8 Letter of Credit Fees. (a) The Borrowers shall pay to the Agent for
the account of each of the Banks a letter of credit fee with respect to the
Letters of Credit at a percentage rate per annum equal to the Applicable Margin
for Revolving Loans consisting of Offshore Rate Loans (as in effect from time to
time) on the average daily maximum amount available to be drawn of the
outstanding Letters of Credit, computed on a quarterly basis in arrears on the
last Business Day of each calendar quarter based upon Letters of Credit
outstanding for that quarter as calculated by the Agent.
(b) The Borrowers shall pay to the Issuing Bank a letter of credit
fronting fee for each Letter of Credit Issued by the Issuing Bank equal to
0.125% per annum of the face amount (or increased face amount, as the case may
be) of such Letter of Credit, as computed by the Agent.
(c) The letter of credit fees payable under Section 3.8(a) and the
fronting fees payable under Section 3.8(b) shall be due and payable quarterly in
arrears on the last Business Day of each calendar quarter during which Letters
of Credit are outstanding, commencing on the first such quarterly date to occur
after the Restatement Effective Date, through the Revolving Termination Date (or
such later date upon which the outstanding Letters of Credit shall expire), with
the final payment to be made on the Revolving Termination Date (or such later
expiration date).
(d) The Borrowers shall pay to the Issuing Bank from time to time on
demand the normal issuance, presentation, amendment and other processing fees,
and other standard costs and charges, of the Issuing Bank relating to letters of
credit as from time to time in effect.
3.9 Uniform Customs and Practice. The Uniform Customs and Practice for
Documentary Credits as published by the International Chamber of Commerce most
recently at the time of issuance of any Letter of Credit shall (unless otherwise
expressly provided in the Letters of Credit) apply to all Letters of Credit.
ARTICLE IV
TAXES, YIELD PROTECTION AND ILLEGALITY
4.1 Taxes. (a) Except as provided in Section 4.1(c), any and all payments
by the Borrowers to each Bank or the Agent under this Agreement and any other
Loan Document shall be made free and clear of, and without deduction or
withholding for any Taxes. In addition, the Borrowers shall pay all Other Taxes.
(b) The Borrowers agree to indemnify and hold harmless each Bank and
the Agent for the full amount of Taxes or Other Taxes including any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this Section
paid by the Bank or the Agent and any liability (including penalties, interest,
additions to tax and expenses arising therefrom or with respect thereto, whether
or not such Taxes or Other Taxes were correctly or legally asserted). Payment
under this indemnification shall be made within 30 days after the date the Bank
or the Agent provides written proof of payment of the related Taxes or Other
Taxes to the Borrowers.
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(c) If the Borrowers shall be required by law to deduct or withhold
any Taxes or Other Taxes from or in respect of any sum payable hereunder to any
Bank or the Agent, then:
(i) the sum payable shall be increased as necessary so that
after making all required deductions and withholdings (including
deductions and withholdings applicable to additional sums payable under
this Section) such Bank or the Agent, as the case may be, receives an
amount equal to the sum it would have received had no such deductions or
withholdings been made;
(ii) the Borrowers shall make such deductions and
withholdings;
(iii) the Borrowers shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in accordance
with applicable law; and
(iv) the Borrowers shall also pay to each Bank or the Agent
for the account of such Bank, at the time interest is paid, all additional
amounts which the respective Bank specifies as necessary to preserve the
after-tax yield the Bank would have received if such Taxes or Other Taxes
had not been imposed.
(d) Within 30 days after their receipt of a written request therefor
by Agent, the Borrowers shall furnish the Agent the original or a certified copy
of a receipt evidencing any payment by the Borrowers of Taxes or Other Taxes, or
other evidence of payment satisfactory to the Agent.
(e) If the Borrowers are required to pay additional amounts to any
Bank or the Agent pursuant to subsection (c) of this Section, then such Bank
shall use reasonable efforts (consistent with legal and regulatory restrictions)
to change the jurisdiction of its Lending Office so as to eliminate any such
additional payment by the Borrowers which may thereafter accrue, if such change
in the judgment of such Bank is not otherwise disadvantageous to such Bank.
(f) No Foreign Bank shall be entitled to claim that the provisions
of this Section 4.1 apply to it with respect to Taxes unless such Foreign Bank
shall have delivered to the Borrowers, prior to the time that any payments are
to be made under this Agreement to such Foreign Bank, a properly completed (i)
Treasury Form 4224, specifying that the payments to be received by such Foreign
Bank pursuant to this Agreement are effectively connected with the conduct of a
United States trade or business or (ii) Treasury Form 1001, specifying that the
payments to be received by such Foreign Bank pursuant to this Agreement are
wholly exempt from United States federal income tax pursuant to the provisions
of an applicable income tax treaty with the United States and, in either case,
has otherwise complied with Section 10.10 hereof. Each Foreign Bank that shall
have provided a Form 4224 or a Form 1001 to the Borrowers, if permitted by law,
shall be required to provide the Borrowers with a new form (also showing no
withholding) no later than 3 years from the date that it provided the original
form to the Borrowers in order to claim advantage of this Section 4.1 from and
after such time.
4.2 Illegality. (a) If the introduction after the date hereof of any
Requirement of Law, or any change after the Restatement Effective Date in any
Requirement of Law, or in the
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interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has asserted
after the Restatement Effective Closing Date that it is unlawful, for any Bank
or its applicable Lending Office to make Offshore Rate Loans, then, on notice
thereof by the Bank to the Borrowers through the Agent, any obligation of that
Bank to make Offshore Rate Loans shall be suspended until the Bank notifies the
Agent and the Borrowers that the circumstances giving rise to such determination
no longer exist.
(b) If it is unlawful for any Bank to maintain any Offshore Rate
Loan, the Borrowers shall, upon receipt by the Company of notice of such fact
and demand from such Bank (with a copy to the Agent), prepay in full such
Offshore Rate Loans of that Bank then outstanding, together with interest
accrued thereon, either on the last day of the Interest Period thereof, if the
Bank may lawfully continue to maintain such Offshore Rate Loans to such day, or
immediately, if the Bank may not lawfully continue to maintain such Offshore
Rate Loan. If the Borrowers are required to so prepay any Offshore Rate Loan,
then concurrently with such prepayment, the Borrowers shall borrow from the
affected Bank, in the amount of such prepayment, a Base Rate Loan.
(c) If the obligation of any Bank to make or maintain Offshore Rate
Loans has been so terminated or suspended, the Borrowers may elect, by giving
notice to the Bank through the Agent that all Loans which would otherwise be
made by the Bank as Offshore Rate Loans shall be instead Base Rate Loans.
(d) Before giving any notice to the Agent under this Section, the
affected Bank shall designate a different Lending Office with respect to its
Offshore Rate Loans if such designation will avoid the need for giving such
notice or making such demand and will not, in the judgment of the Bank, be
illegal or otherwise disadvantageous to the Bank.
4.3 Increased Costs and Reduction of Return. (a) If, due to either (i) the
introduction after the date hereof of, or any change after the date hereof
(other than any change by way of imposition of or increase in reserve
requirements included in the calculation of the Offshore Rate or in respect of
the assessment rate payable by any Bank to the FDIC for insuring U.S. deposits)
in or in the interpretation of any law or regulation applicable to any Bank
(other than any such introduction or change announced prior to the date hereof)
or (ii) the compliance by any Bank with any guideline or request from any
central bank or other Governmental Authority (whether or not having the force of
law) not in effect prior to the date hereof, there shall be any increase in the
cost to such Bank of agreeing to make or making, funding or maintaining any
Offshore Rate Loans, or participating in Letters of Credit, or, in the case of
the Issuing Bank, any increase in the cost to the Issuing Bank of agreeing to
issue, issuing or maintaining any Letter of Credit or of agreeing to make or
making, funding or maintaining any unpaid drawing under any Letter of Credit,
then the Borrowers shall be liable for, and shall from time to time, upon demand
(with a copy of such demand to be sent to the Agent), pay to the Agent for the
account of such Bank or the Issuing Bank, as the case may be, additional amounts
as are sufficient to compensate such Bank or the Issuing Bank, as the case may
be, for such increased costs.
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(b) If (i) the introduction of any Capital Adequacy Regulation, (ii)
any change in any Capital Adequacy Regulation, (iii) any change in the
interpretation or administration of any Capital Adequacy Regulation by any
central bank or other Governmental Authority charged with the interpretation or
administration thereof, or (iv) compliance by any Bank (or its Lending Office)
or any corporation controlling the Bank with any Capital Adequacy Regulation, in
each case occurring after the date hereof, affects or would affect the amount of
capital required or expected to be maintained by the Bank or any corporation
controlling the Bank and (taking into consideration such Bank's or such
corporation's commercially reasonable policies with respect to capital adequacy
and such Bank's or such corporation's desired return on capital) the amount of
such capital is increased as a consequence of its Commitment, loans, credits or
obligations under this Agreement, then, upon written demand of such Bank to the
Borrowers through the Agent, the Borrowers shall pay to the Bank, from time to
time as specified by the Bank or such controlling corporation, additional
amounts sufficient to compensate the Bank for such increase.
4.4 Funding Losses. Excluding losses or expenses incurred by a Bank
pursuant to Section 4.2, the Borrowers shall reimburse each Bank and hold each
Bank harmless from any loss or expense (but excluding in any event all
consequential or exemplary damages) which the Bank may sustain or incur as a
consequence of:
(a) the failure of the Borrowers to make on a timely basis any
payment of principal of any Offshore Rate Loan;
(b) the failure of the Borrowers to borrow, continue or convert into
an Offshore Rate Loan after the Borrowers have given (or are deemed to have
given) a Notice of Borrowing or a Notice of Conversion/Continuation (except as a
result of a breach by a Bank of its obligations hereunder);
(c) the failure of the Borrowers to make any prepayment in
accordance with any notice delivered under Section 2.6;
(d) the repayment or prepayment (including pursuant to Section 2.7)
or other payment (including after acceleration thereof) of an Offshore Rate Loan
on a day that is not the last day of the relevant Interest Period; or
(e) the automatic conversion under Section 2.4 of any Offshore Rate
Loan to a Base Rate Loan on a day that is not the last day of the relevant
Interest Period;
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its Offshore Rate Loans or from fees payable
to terminate the deposits from which such funds were obtained. For purposes of
calculating amounts payable by the Borrowers to the Banks under this Section and
under Section 4.3(a), each Offshore Rate Loan made by a Bank (and each related
reserve, special deposit or similar requirement) shall be conclusively deemed to
have been funded at the IBOR used in determining the Offshore Rate for such
Offshore Rate Loan by matching deposit or other borrowing in the interbank
eurodollar market for a comparable amount and for a comparable period, whether
or not such Offshore Rate Loan is in fact so funded. Each Bank shall exercise
its reasonable efforts to minimize such losses, costs and
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expenses, except that each Bank shall not be obligated to take any action to
reduce net balances due to its non-U.S. offices from its U.S. offices.
4.5 Inability to Determine Rates. If the Agent or the Required Banks
determine that for any reason adequate and reasonable means do not exist for
determining the Offshore Rate for any requested Interest Period with respect to
a proposed Offshore Rate Loan, or that the Offshore Rate applicable pursuant to
Section 2.9(a) for any requested Interest Period with respect to a proposed
Offshore Rate Loan does not adequately and fairly reflect the cost to the Banks
of funding such Loan, the Agent will promptly so notify the Borrowers and each
Bank. Thereafter, the obligation of the Banks to make or maintain Offshore Rate
Loans hereunder shall be suspended until the Agent upon the instruction of the
Required Banks revokes such notice in writing. Upon receipt of such notice, the
Borrowers may revoke any Notice of Borrowing or Notice of
Conversion/Continuation then submitted by it. If the Borrowers do not revoke
such Notice, the Banks shall make, convert or continue the Loans, as proposed by
the Borrowers, in the amount specified in the applicable notice submitted by the
Borrowers, but such Loans shall be made, converted or continued as Base Rate
Loans instead of Offshore Rate Loans.
4.6 Certificates of Banks. Except as specifically provided in Section 4.1,
any Bank claiming reimbursement or compensation under this Article IV shall
deliver to the Borrowers (with a copy to the Agent) a certificate setting forth
in reasonable detail the amount payable to the Bank hereunder and the
circumstances giving rise to such claim, and such certificate shall be prima
facie evidence of the correctness thereof. Each Bank agrees to deliver such
certificate to the Borrowers within reasonable time after it determines the
additional amount required to be paid under this Article IV; provided, however,
that in no event shall any Bank deliver such Certificate to the Borrowers more
than 180 days after any vice-president of such Bank knows, or upon the discharge
of such vice-president's duties in the ordinary course should have known, of the
occurrence of an event giving rise to the additional amount required to be paid
in respect of this Article IV and if it fails to deliver such Certificate within
such 180 day period, the Borrowers will not be obligated for any costs incurred
prior to 180 days before such notice. The Borrowers shall pay such Bank the
amount shown as due on any such certificate timely delivered in accordance with
the foregoing within ten days after its receipt of the same; provided, however,
that the Borrowers shall not be required to pay any amounts (other than with
respect to Taxes under Section 4.1) which were due for any period occurring more
than 90 days prior to the Borrowers' receipt of such certificate (other than
periods with respect to which such costs or expenses are retroactively imposed).
This Article IV shall survive termination of this Agreement and payment of the
outstanding Notes. Notwithstanding the foregoing provisions of this Article IV,
the Borrowers shall not be liable for any increased cost pursuant to this
Article IV if and to the extent that such increased cost results from the change
in any Bank's Lending Office and such change (x) is made solely in the
discretion of such Bank and not required by any applicable Requirement of Law or
Governmental Authority, (y) is made for such Bank's benefit and without any
benefit to the Borrowers, and (z) results, at the time of such change, in an
increased cost greater than that which would have been incurred had the Bank not
so changed its Lending Office. Each Bank shall use its reasonable efforts to
avoid or minimize increased costs under this Article IV unless, in the sole
opinion of such Bank, such action would adversely affect it.
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4.7 Substitution of Banks. Upon the receipt by the Borrowers from any Bank
(an "Affected Bank") of a claim for compensation under Section 4.3, the
Borrowers may: (i) request the Affected Bank to use its best efforts to obtain a
replacement bank or financial institution satisfactory to the Borrowers to
acquire and assume all or a ratable part of all of such Affected Bank's Loans
and Commitments (a "Replacement Bank"); (ii) request one or more of the other
Banks to acquire and assume all or part of such Affected Bank's Loans and
Commitments; or (iii) designate a Replacement Bank. Any such designation of a
Replacement Bank under clause (i) or (iii) shall be subject to the prior written
consent of the Agent (which consent shall not be unreasonably withheld);
provided, that any Replacement Bank shall meet the requirements to be an
Eligible Assignee and shall purchase the same pro rata share of the Loans, L/C
Obligations, L/C Borrowings and the Acquisition Commitment and the Revolving
Commitment and the replacement shall be made pursuant to an assignment subject
to the provisions of Section 11.9.
4.8 Survival. The agreements and obligations of the Borrowers, the Agent
and the Banks in this Article IV shall survive the payment of all other
Obligations.
ARTICLE V
CONDITIONS PRECEDENT
5.1 Conditions of Initial Credit Extension. The effectiveness of the
amendment and restatement of the Existing Credit Agreement is subject to the
condition that the Agent shall have received all of the following, in form and
substance satisfactory to the Agent and each Bank, and in sufficient copies for
each Bank:
(a) Credit Agreement and any Notes. This Agreement and any Notes
requested by the Banks pursuant to Section 2.2(b), duly executed by each party
thereto;
(b) Resolutions; Incumbency.
(i) Copies of partnership authorizations for the Company and
resolutions of the board of directors of each of the General Partner,
Petrolane and the Restricted Subsidiaries authorizing the transactions
contemplated hereby to which it is a party, certified as of the
Restatement Effective Date by the Secretary or an Assistant Secretary of
such Person;
(ii) A certificate of the Secretary or Assistant Secretary of
each of the General Partner, Petrolane and the Restricted Subsidiaries
certifying the names and true signatures of its officers authorized to
execute, deliver and perform, as applicable, on behalf of such Person the
Loan Documents to which it is a party;
(c) Organization Documents; Good Standing. Each of the following
documents:
(i) the articles or certificate of incorporation and the
bylaws of the General Partner and Petrolane and the Certificate of Limited
Partnership and the
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Partnership Agreement of the Company, in each case as in effect on the
Restatement Effective Date, certified by the Secretary or an Assistant
Secretary of the General Partner or Petrolane, as applicable, as of the
Restatement Effective Date; and
(ii) a good standing certificate for each of Petrolane and the
General Partner (and where available, the Company) from the Secretary of
State (or similar, applicable Governmental Authority) of its state of
incorporation or organization, as applicable, and each other state where
the applicable Person is qualified to do business as a foreign
corporation, in each case as of a recent date;
(d) Legal Opinions. An opinion of Morgan, Lewis & Bockius LLP,
special counsel for the Obligors, in form and substance reasonably satisfactory
to the Banks;
(e) Amendments to Selected Mortgages. Amendments to the Mortgages
recorded in Arizona, Connecticut, Florida, Georgia, Hawaii and New Jersey as to
which Mortgagee's title insurance has been obtained in form and substance
satisfactory to each Bank, duly executed and delivered by the Company and each
Restricted Subsidiary, as applicable.
(f) Title Policies. Title endorsements or their equivalents with
respect to the title insurance policies issued in connection with the Mortgages
to insure the obligations of the Borrowers to the Banks under this Agreement and
the Mortgage Notes shall have been issued in form and substance reasonably
satisfactory to Collateral Agent.
In addition, the Borrowers shall have paid or made arrangements to
pay to the title companies all expenses and premiums of the title companies in
connection with the issuance of such endorsements and all recording and stamp
taxes payable in connection with recording each amendment to the Mortgages in
the appropriate offices.
(g) Recordation. The amendments to the Mortgages described in
subsection (e) above, fully executed and delivered to the Collateral Agent in a
form suitable for being duly recorded, published, registered and filed. The
Borrowers shall have paid, or shall have made arrangements to pay, all taxes,
fees and other governmental charges due in connection with the execution,
delivery, recording, publishing, registration and filing of such documents or
instruments.
(h) Insurance. Insurance complying with the provisions of the
Collateral Agency Agreement shall be in full force and effect and the Agent
shall have received a certificate to that effect from independent insurance
brokers or consultants as shall be reasonably satisfactory to the Required
Banks, dated the Restatement Effective Date.
(i) Payment of Fees. Evidence of payment by the Borrowers of all
accrued and unpaid fees, costs and expenses to the extent due and payable
hereunder (subject to the limitations set forth in Section 11.4) on the
Restatement Effective Date to the Agent, the Arranger and the Banks, together
with Attorney Costs of the Agent to the extent invoiced prior to or on the
Restatement Effective Date, plus such additional amounts of Attorney Costs as
shall constitute the Agent's reasonable estimate by category of Attorney Costs
incurred or to be incurred by it
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through the closing proceedings (provided that such estimate shall not
thereafter preclude final settling of accounts between the Borrowers and the
Agent) including any such costs, fees and expenses arising under or referenced
in Sections 2.10 and 11.4.
(j) Ownership. UGI shall own indirectly at least 56% of the limited
partnership interests of the Company.
(k) Certificate. A certificate signed by a Responsible Officer,
dated as of the Restatement Effective Date, stating that:
(i) the representations and warranties contained in Article VI are
true and correct in all material respects on and as of such date, as though made
on and as of such date except (x) as affected by the completion of the
transactions referred to herein and (y) to the extent that such representations
and warranties expressly relate to an earlier time or date, in which case such
representations and warranties shall have been true and correct in all material
respects as of such earlier time or date;
(ii) there has occurred since June 30, 1997, no event or
circumstance that has resulted in or presents a reasonable likelihood of having,
a Material Adverse Effect; and
(iii) the condition set forth in clause (j) above shall have been
completed.
(l) Payments under Existing Credit Agreement. All interest and fees
accrued to but not including the Restatement Effective Date, and all other
amounts payable, under the Existing Credit Agreement, that have been invoiced by
the Agent at least three days prior to the Restatement Effective Date, (i) in
the case of each bank party to the Existing Credit Agreement which is not a Bank
under this Agreement, shall have been paid by the Borrowers to each such Bank on
or prior to the Restatement Effective Date and (ii) in the case of each bank
party to the Existing Credit Agreement which is a Bank under this Agreement,
shall be paid on (x) the first Interest Payment Date to occur after the
Restatement Effective Date, in the case of interest or (y) the last Business Day
of the calendar quarter containing the Restatement Effective Date, in the case
of fees and all other amounts payable under the Existing Credit Agreement.
(m) Consent of Holders of First Mortgage Notes. Evidence that each
of the Borrowers and the Required Holders (as defined in the Note Agreements)
has consented to amending each of the Note Agreements by deleting the financial
covenant contained in the first sentence of Section 10.1 of the Note Agreements
and inserting in its place the financial covenant contained in Section 8.14
hereof.
(n) Other Documents. Such other approvals, opinions, documents or
materials as the Agent or any Bank may reasonably request.
At the request of the Borrowers or any Bank, the Agent will confirm
in writing to the Banks, with a copy to the Borrowers, whether, and to what
extent, the above conditions have been fulfilled.
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5.2 Conditions to All Borrowings. The obligation of each Bank to make any
Loan (including its initial Loan), the obligation of the Issuing Bank to Issue
any Letter of Credit (including the initial Letter of Credit) and the obligation
of BofA to make any Swingline Loan (including the initial Swingline Loan) is
subject to the satisfaction of the following conditions precedent on or prior to
the relevant Borrowing Date or Issuance Date:
(a) Notice of Borrowing. The Agent shall have received a Notice of
Borrowing; or in the case of any Issuance of any Letter of Credit, the Issuing
Bank and the Agent shall have received an L/C Application or L/C Amendment
Application, as required under Section 3.2.
(b) Continuation of Representations and Warranties. The
representations and warranties in Article VI shall be true and correct in all
material respects on and as of such Borrowing Date or Issuance Date, with the
same effect as if made on and as of such Borrowing Date or Issuance Date (except
to the extent such representations and warranties expressly relate to an earlier
time or date, in which case they shall have been true and correct in all
material respects as of such earlier time or date); and
(c) No Existing Default. No Default or Event of Default shall exist
or shall result from such Borrowing or Issuance.
Each Notice of Borrowing, L/C Application or L/C Amendment
Application submitted or deemed submitted by the Borrowers hereunder shall
constitute a representation and warranty by the Borrowers hereunder, as of the
date of each such notice and as of each Borrowing Date and Issuance Date that
the conditions in Section 5.2 are satisfied.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Agent and each Bank as
set forth below in Sections 6.1 through 6.14 and Sections 6.17 through 6.23,
Petrolane represents and warrants to the Agent and each Bank as set forth below
in Section 6.15, and the General Partner represents and warrants to the Agent
and each Bank as set forth below in Section 6.16 that:
6.1 Organization, Standing, etc. The Company is a limited partnership duly
organized, validly existing and in good standing under the Delaware Revised
Uniform Limited Partnership Act and has all requisite partnership power and
authority to own and operate its properties (including without limitation the
Assets owned and operated by it), to conduct its business, to enter into this
Agreement and such other Loan Documents to which it is a party and to carry out
the terms of this Agreement and such other Loan Documents. The General Partner
is a corporation duly organized, validly existing and in good standing under the
laws of the Commonwealth of Pennsylvania and has all requisite corporate power
and authority to own and operate its properties, to act as the sole general
partner of the Company and to execute and deliver in its individual capacity and
in its capacity as the sole general partner of the Company this Agreement and
such other Loan Documents to which the Borrowers or the General Partner is a
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party and to carry out the terms of this Agreement and such other Loan
Documents. Petrolane is a corporation duly organized, validly existing and in
good standing under the laws of the Commonwealth of Pennsylvania, has succeeded
to all assets and liabilities of California Petrolane by merger and has all
requisite corporate power and authority to own and operate its properties, to
conduct its business and to execute and deliver the Loan Documents to which
Petrolane is a party and to carry out the terms of this Agreement and such other
Loan Documents. Each Restricted Subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of its state of
incorporation and has all requisite corporate power and authority to own and
operate its properties (including without limitation the Assets owned and
operated by it), to conduct its business and to execute and deliver the Security
Documents to which such Restricted Subsidiary is a party and to carry out the
terms of this Agreement and such other Security Documents.
6.2 Partnership Interests and Subsidiaries. The sole general partner of
the Company is the General Partner, which on the Restatement Effective Date owns
a 1.0101% general partnership interest in the Company and is an indirect
Wholly-Owned Subsidiary of UGI. On the Restatement Effective Date (a) the only
limited partner of the Company is the Public Partnership, which owns a 98.9899%
limited partnership interest in the Company, and (b) the Company does not have
any partners other than the General Partner and the Public Partnership. As of
the Restatement Effective Date, the Company does not have any Subsidiary other
than as set forth on Schedule 6.2 or any Investments in any Person (other than
as set forth on Schedule 6.2 or Investments of the types described in Section
8.4(a)).
6.3 Qualification; Corporate or Partnership Authorization. The Company is
duly qualified or registered and is in good standing as a foreign limited
partnership for the transaction of business, and each of the General Partner,
Petrolane and the Restricted Subsidiaries is qualified or registered and is in
good standing as a foreign corporation for the transaction of business, in the
states listed in Schedule 6.3, which are the only jurisdictions in which the
nature of their respective activities or the character of the properties they
own, lease or use makes such qualification or registration necessary as of the
Restatement Effective Date and in which the failure so to qualify or to be so
registered as of the Restatement Effective Date would have a Material Adverse
Effect. Each of the Company, the General Partner and Petrolane has taken all
necessary partnership action or corporate action, as the case may be, to
authorize the execution, delivery and performance by it of this Agreement and
each of the other Loan Documents to which it is a party. Each Restricted
Subsidiary has taken all necessary corporate action to authorize the execution,
delivery and performance by it of each of the Security Documents to which it is
a party. Each of the Company, the General Partner and Petrolane has duly
executed and delivered each of this Agreement and the other Loan Documents to
which it is a party, and each of them constitutes the Company's, the General
Partner's or Petrolane's, as the case may be, legal, valid and binding
obligation enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium or similar
laws affecting creditors' rights generally. Each Restricted Subsidiary has duly
executed and delivered each of the Security Documents to which it is a party,
and each of them constitutes such Restricted Subsidiary's legal, valid and
binding obligation enforceable against it in accordance with its terms,
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except as such enforceability may be limited by bankruptcy, insolvency,
moratorium or similar laws affecting creditors' rights generally.
6.4 Financial Statements. The audited consolidated financial statements of
the Company and its consolidated Subsidiaries for the fiscal year ended
September 30, 1996 and the period April 19, 1995 to September 30, 1995, and the
unaudited balance sheet, statement of operations, statement of cash flows and
statement of partners capital of the Company and its consolidated Subsidiaries
for the fiscal period ended June 30, 1997, have been prepared in accordance with
GAAP applied on a consistent basis throughout the periods specified (except as
described in the footnotes thereto) and present fairly, in all material
respects, the financial position of the Company as of the respective dates
specified (except for the absence of footnotes and subject to changes resulting
from normal year-end audit adjustments, in the case of unaudited financial
statements).
6.5 Changes, etc. Except as contemplated by this Agreement or the other
Loan Documents, (a) for the period from June 30, 1997 to and including the
Restatement Effective Date, none of the Company and any of its Restricted
Subsidiaries has incurred any material liabilities or obligations, direct or
contingent, nor entered into any material transaction, in each case other than
in the ordinary course of its business, and (b) since the date of the last
financial statements delivered pursuant to Section 6.4 or 7.1 there has not been
any material adverse change in or effect on the financial condition or prospects
of the Company or in the Business or Assets. Since June 30, 1997, no Restricted
Payment of any kind has been declared, paid or made by the Company other than
Restricted Payments permitted by Section 8.5.
6.6 Tax Returns and Payments. Each of the Company, the General Partner,
Petrolane and the Restricted Subsidiaries has filed all material tax returns
required by law to be filed by it or has properly filed for extensions of time
for the filing thereof, and has paid all material taxes, assessments and other
governmental charges levied upon it or any of its properties, assets, income or
franchises which are shown to be due on such returns, other than those which are
not past due or are presently being contested in good faith by appropriate
proceedings diligently conducted for which such reserves or other appropriate
provisions, if any, as shall be required by GAAP have been made. The Company is
a limited partnership and so long as it is a limited partnership it will be
treated as a pass-through entity for U.S. federal income tax purposes and as of
the Restatement Effective Date is not subject to taxation with respect to its
income or gross receipts under applicable state (other than Hawaii, Illinois,
Michigan, New Hampshire, Tennessee and Wisconsin) laws.
6.7 Indebtedness. As of the Restatement Effective Date, none of the
Company, the General Partner, Petrolane and their respective Subsidiaries has
any secured or unsecured Indebtedness outstanding, except as set forth in
Schedule 6.7 and other than the Indebtedness represented by this Agreement, the
other Loan Documents and the Mortgage Notes. As of the Restatement Effective
Date, no instrument or agreement to which the Company or any of its Subsidiaries
is a party or by which the Company or any such Subsidiary is bound (other than
this Agreement and the agreements governing the Mortgage Notes and other than as
indicated in Schedule 6.7) contains any restriction on the incurrence by the
Company or any of its Subsidiaries of additional Indebtedness.
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6.8 Transfer of Assets and Business. (a) As of the Restatement Effective
Date, except as set forth in Schedule 6.8(a), each of the Company and its
Subsidiaries is in possession of, and operating in compliance in all material
respects with, all franchises, grants, authorizations, approvals, licenses,
permits (other than permits required by Environmental Laws), easements,
rights-of-way, consents, certificates and orders (collectively, the "Permits")
required (i) to own, lease or use its properties (including without limitation
to own, lease or use the Assets owned, leased or used by it) and (ii)
considering all such Permits in the possession of, and complied with by, the
General Partner, Petrolane, the Company and its Subsidiaries taken together, to
permit the conduct of the Business as now conducted and proposed to be
conducted, except for those Permits (collectively, the "Routine Permits") (x)
which are routine or administrative in nature and are expected in the reasonable
judgment of the Company to be obtained or given in the ordinary course of
business after the Restatement Effective Date, or (y) which, if not obtained or
given, would not, individually or in the aggregate, present a reasonable
likelihood of having a Material Adverse Effect. Schedule 6.8(a) sets forth a
list of substantially all of the consents that may be required to transfer those
Permits (other than Routine Permits) constituting an interest in Assets which
have not been obtained as of the date hereof, and each of the Company and the
General Partner has requested the consent of all parties listed thereon for the
transfer of such Permits.
(b) On the Restatement Effective Date, each of the Company and its
Subsidiaries has (i) good and marketable title to substantially all of the
Assets constituting real property and (ii) good and sufficient title to
substantially all of the Assets constituting personal property for the use and
operation of such personal property as it is used on the date hereof, in each
case subject to no Liens except such as are permitted by Section 8.3. Schedule
6.8(b) contains a list of, as of the date hereof, (x) counties where the Assets
are located and (y) each Mortgaged Property with the address of each such
Mortgaged Property. The Assets owned by the Company and its Subsidiaries on the
Restatement Effective Date are substantially all of the assets and properties
necessary to enable the Company and its Subsidiaries to conduct the Business.
Subject to such exceptions as would not, individually or in the aggregate,
present a reasonable likelihood of having a Material Adverse Effect, (A) on the
date hereof the Company and its Subsidiaries enjoy peaceful and undisturbed
possession under all leases and subleases necessary in any material respect for
the conduct of the Business, and (B) as of the Restatement Effective Date, all
such leases and subleases are valid and subsisting and are in full force and
effect. Except to perfect, preserve and protect Liens permitted by Section 8.3
and Liens which will be discharged on the Restatement Effective Date, as of the
Restatement Effective Date, (x) no presently effective financing statements
under the Uniform Commercial Code which name any of the Company, the General
Partner, Petrolane or their respective Subsidiaries as debtor, and which
individually or in the aggregate relate to any material part of the Assets, are
on file in any jurisdiction in which any of the Assets are (or have been)
located or the Company, the General Partner, Petrolane or any such Subsidiary is
organized or has its principal place of business and (y) none of the Company,
the General Partner, Petrolane and any such Subsidiary has signed, or authorized
the filing by or on behalf of any secured party of, any presently effective
financing statements which individually or in the aggregate relate to any
material part of the Assets.
6.9 Litigation, etc. As of the date hereof and the Restatement Effective
Date, there is no action, proceeding or investigation pending or, to the
knowledge of the Company upon
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reasonable inquiry, threatened against the Company, Petrolane, the Public
Partnership, the General Partner or any of their respective Subsidiaries, and
there is no action proceeding or investigation pending or, to the knowledge of
the Company upon reasonable inquiry, threatened against the Company or its
Restricted Subsidiaries, (a) which questions the validity or enforceability of
this Agreement, the other Loan Documents or any action taken or to be taken
pursuant to this Agreement or the other Loan Documents, or (b) except as set
forth in Schedule 6.9, which would present a reasonable likelihood of having,
either in any case or in the aggregate, a Material Adverse Effect.
6.10 Compliance with Other Instruments, etc. (a) On the Restatement
Effective Date, none of the Company, the General Partner, Petrolane or any of
their respective Subsidiaries will be in violation of (i) any provision of its
certificate or articles of incorporation or other Organization Documents, (ii)
any provision of any agreement or instrument to which it is a party or by which
any of its properties is bound or (iii) any applicable law, ordinance, rule or
regulation of any Governmental Authority or any applicable order, judgment or
decree of any court, arbitrator or Governmental Authority, except (in the case
of clauses (ii) and (iii) above only) for such violations which would not,
individually or in the aggregate, present a reasonable likelihood of having a
Material Adverse Effect. Neither the General Partner nor the Public Partnership
is in violation of any provision of the Partnership Agreement.
(b) The execution, delivery and performance by each of the Company, the
General Partner, Petrolane and the Restricted Subsidiaries of this Agreement and
the other Loan Documents to which it is a party, and the completion of the
transactions contemplated by this Agreement will not (i) violate (x) any
provision of the Partnership Agreement or the certificate or articles of
incorporation or other Organization Documents of the Company, the General
Partner, Petrolane or any of their respective Subsidiaries, (y) any applicable
law, ordinance, rule or regulation of any Governmental Authority or any
applicable order, judgment or decree of any court, arbitrator or Governmental
Authority, or (z) any provision of any agreement or instrument to which the
Company, the General Partner, Petrolane or any of their respective Subsidiaries
is a party or by which any of its properties is bound, except (in the case of
clauses (y) and (z) above) for such violations which would not, individually or
in the aggregate, present a reasonable likelihood of having a Material Adverse
Effect, or (ii) result in the creation of (or impose any express obligation on
the part of the Borrowers to create) any Lien not permitted by Section 8.3.
6.11 Governmental Consent. Except as expressly contemplated by this
Agreement and the other Loan Documents, and except for Routine Permits, (i) no
consent, approval or authorization of, or declaration or filing with, any
Governmental Authority is required for the valid execution, delivery and
performance of this Agreement or the other Loan Documents to which the Company
or any of the Restricted Subsidiaries, Petrolane or the General Partner is a
party, and (ii) no such consent, approval, authorization, declaration or filing
is required for the making of Loans or Issuing Letters of Credit pursuant to
this Agreement.
6.12 Investment Company Act. None of the Company, Petrolane or the General
Partner is an "investment company", or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended.
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6.13 Public Utility Holding Company Act. None of the Company, Petrolane
or the General Partner is a "holding company" within the meaning of Section
2(a)(7)(A) of the Public Utility Holding Company Act of 1935, as amended (the
"PUHCA"). Each of the Company, Petrolane and the General Partner is a
"subsidiary company" of a "holding company", within the meaning of the PUHCA,
but each of UGI (the "holding company"), the Company, Petrolane and the General
Partner is exempt from all the provisions of the PUHCA and the rules thereunder
other than Section 9(a)(2) thereof, based upon the filing by UGI with the
Commission of an exemption statement on Form U-3A-2 dated February 28, 1997
pursuant to Rule 2 under PUHCA (17 C.F.R. Section 250.2).
6.14 Chief Executive Office. As of the Restatement Effective Date, the
chief executive office of the Company and the office where it maintains its
records relating to the transactions contemplated by this Agreement and the
other Loan Documents is located at 460 North Gulph Road, King of Prussia, PA
19406.
6.15 Matters Relating to Petrolane. (a) As of the Restatement Effective
Date, Petrolane is a Wholly-Owned Subsidiary of the General Partner, has no
Subsidiaries and owns an approximate 18.50% limited partnership interest in the
Public Partnership.
(b) Schedule 6.15 includes a complete description of the
business and activities carried on by Petrolane and of its assets and
liabilities as of the Restatement Effective Date.
6.16 Matters Relating to the General Partner. (a) As of the Restatement
Effective Date, the General Partner is a Wholly-Owned Subsidiary of AmeriGas,
Inc., a Pennsylvania corporation, and owns, in addition to the interest in the
Company described in Section 6.2, (i) a 1% general partnership interest in the
Public Partnership, (ii) all of the outstanding shares of Capital Stock of
Petrolane and (iii) an approximate 38.30% limited partnership interest in the
Public Partnership. Other than AmeriGas Technology Group, Inc. and Diamond
Acquisition, Inc., the General Partner has no other Subsidiaries as of the
Restatement Effective Date.
(b) Schedule 6.16 includes a complete description of the
business and activities carried on by the General Partner and of its assets and
liabilities as of the Restatement Effective Date.
6.17 ERISA Compliance. Except to the extent that any of the following
would not, either alone or together, present a reasonable likelihood of having a
Material Adverse Effect: (i) during the twelve-consecutive-month period prior to
the date of the execution and delivery of this Agreement and prior to the date
of any Borrowing hereunder, no steps have been taken to terminate any Pension
Plan sponsored or maintained by any Borrower or any ERISA Affiliate of any
Borrower, (ii) no contribution failure has occurred with respect to any Pension
Plan sponsored or maintained by any Borrower or any ERISA Affiliate of any
Borrower sufficient to give rise to a Lien under section 302(f) of ERISA and
(iii) with respect to each Pension Plan sponsored or maintained by any Borrower
or any ERISA Affiliate of any Borrower, none of the following events has
occurred: termination of the plan, failure to make a required contribution to
the plan, failure to satisfy the minimum funding standard for a year, request
for a waiver of the minimum funding standard for any year, withdrawal from a
multiple employer plan, adoption of an
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amendment which results in a funded current liability percentage of less than 60
percent, engaging in one or more prohibited transactions, failure to comply with
reporting and disclosure requirements or engaging in any breach of fiduciary
responsibility.
6.18 Use of Proceeds; Margin Regulations. The proceeds of the Loans are
to be used solely for the purposes set forth in and permitted by Section 8.9.
None of the Borrowers and their Subsidiaries is generally engaged in the
business of purchasing or selling Margin Stock or extending credit for the
purpose of purchasing or carrying Margin Stock.
6.19 Environmental Warranties. (a) Except as disclosed on Schedule 6.19
or where non-compliance would not present a reasonable likelihood of having a
Material Adverse Effect, as of the date hereof each of the Company and its
Subsidiaries is in compliance with all Environmental Laws applicable to it and
to the Business or Assets. Except as disclosed on Schedule 6.19 or where a
reasonable likelihood of having a Material Adverse Effect would not be
presented, as of the Restatement Effective Date the Company and its Subsidiaries
have obtained and are in compliance with all permits, licenses and approvals
required by Environmental Law. Except as disclosed in Schedule 6.19 or where the
failure to timely and properly reapply would not present a reasonable likelihood
of having a Material Adverse Effect, as of the date hereof, the Company and its
Subsidiaries have submitted timely and complete applications to renew any
expired or expiring Permits required by Environmental Law. Schedule 6.19 lists
all notices from Federal, state or local Governmental Authorities or other
Persons received within the last five years of the date hereof by the Company
and its Subsidiaries, alleging or threatening any liability on the part of the
Company or any of its Subsidiaries, pursuant to any Environmental Law, that
present a reasonable likelihood of having a Material Adverse Effect. As of the
date hereof, all reports, documents, or other submissions required by
Environmental Laws to be submitted by the Company to any Governmental Authority
or Person have been filed by the Company, except where the failure to file would
not present a reasonable likelihood of having a Material Adverse Effect.
(b) Except as disclosed in Schedule 6.19 or where a reasonable
likelihood of having a Material Adverse Effect would not be presented, as of the
date hereof: (i) there is no Hazardous Substance present at any of the real
property currently owned or leased by the Company or any of its Subsidiaries,
and to the knowledge of the Company, there was no Hazardous Substance present at
any of the real property formerly owned or leased by the Company or any of its
Subsidiaries during the period of ownership or leasing by such Person; and (ii)
with respect to such real property and subject to the same knowledge and
temporal qualifiers concerning Hazardous Substances with respect to formerly
owned or leased real properties, there has not occurred (x) any release, or to
the knowledge of the Company, any threatened release of a Hazardous Substance,
or (y) any discharge or, to the knowledge of the Company, threatened discharge
of any Hazardous Substance into the ground, surface, or navigable waters which
violates any Federal, state, local or foreign laws, rules or regulations
concerning water pollution.
(c) Except as set forth in Schedule 6.19 or where a reasonable
likelihood of having a Material Adverse Effect would not be presented, as of the
date hereof, none of the Company and its Subsidiaries has disposed of,
transported, or arranged for the transportation or
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disposal of any Hazardous Substance where such disposal, transportation, or
arrangement would give rise to liability pursuant to CERCLA or any analogous
state statute.
(d) Except as set forth in Schedule 6.19 or where a reasonable
likelihood of having a Material Adverse Effect would not be presented, as of the
date hereof: (1) no lien has been asserted by any Governmental Authority or
person resulting from the use, spill, discharge, removal, or remediation of any
Hazardous Substance with respect to any real property currently owned or leased
by the Company or any of its Subsidiaries, and (2) to the knowledge of the
Company, no such lien was asserted with respect to any of the real property
formerly owned or leased by the Company or any its Subsidiaries during the
period of ownership or leasing of the real property by such Person.
(e) Except as set forth in Schedule 6.19 or where a reasonable
likelihood of having a Material Adverse Effect would not be presented as of the
date hereof, (1) there are no underground storage tanks, asbestos-containing
materials, polychlorinated biphenyls, or urea formaldehyde insulation at any of
the real property currently owned or leased by the Company or any of its
Subsidiaries in violation of Environmental Law and (2) to the knowledge of the
Company, there were no underground storage tanks, asbestos-containing materials,
polychlorinated biphenyls, or urea formaldehyde insulation at any of the real
property formerly owned or leased by the Company or any of its Subsidiaries in
violation of Environmental Law during the period of ownership or leasing of such
real property by such Person.
(f) Except as set forth in Schedule 6.19 or where a reasonable
likelihood of having a Material Adverse Effect would not be presented, propane
has been used, handled and stored by the Company and its Subsidiaries during the
five year period ending on the Restatement Effective Date in compliance with
Environmental Laws.
6.20 Copyrights, Patents, Trademarks and Licenses, etc. Except to the
extent that the failure to do so would not present a reasonable likelihood of
having a Material Adverse Effect, the Company and the Restricted Subsidiaries
own or are licensed or otherwise have the right to use all of the patents,
trademarks, service marks, trade names, copyrights, contractual franchises,
authorizations and other rights that are reasonably necessary for the operation
of the Business, without conflict with the rights of any other Person. To the
best knowledge of the Company, no slogan or other advertising device, product,
process, method, substance, part or other material now employed, or now
contemplated to be employed, by the Company or any Restricted Subsidiary
infringes upon any rights held by any other Person, where such infringement
would present a reasonable likelihood of having a Material Adverse Effect.
Except as specifically disclosed in Schedule 6.20, as of the date hereof no
claim or litigation regarding any of the foregoing is pending or to the
knowledge of the Company threatened, and no patent, invention, device,
application, principle or any statute, law, rule, regulation, standard or code
is pending or, to the knowledge of the Company, proposed, which, in either case,
would present a reasonable likelihood of having a Material Adverse Effect.
6.21 Insurance. On the Restatement Effective Date, the Company and each
of its Subsidiaries are in compliance with the terms and conditions contained in
Sections 20 and 21 of the Collateral Agency Agreement.
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6.22 Full Disclosure. None of the representations or warranties made by
any Borrower or the Restricted Subsidiaries in the Loan Documents as of the date
such representations and warranties are made or deemed made, and none of the
statements contained in any document, certificate or instrument furnished by or
on behalf of any Borrower in connection with the Loan Documents, as of the date
of such document, instrument or certificate, contains any untrue statement of a
material fact or omits any material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which they are made, not misleading.
6.23 Solvency. As of the Restatement Effective Date, none of the
Borrowers nor any of the Restricted Subsidiaries:
(i) was insolvent;
(ii) was engaged in business, or was about to engage in
business or a transaction, for which any property remaining with said Borrower
or Restricted Subsidiary was an unreasonably small capital; or
(iii) intended to incur, or believed that it would incur,
debts that would be beyond its ability to pay as such debts matured.
ARTICLE VII
AFFIRMATIVE COVENANTS
So long as any Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, or any Letters of Credit
shall remain outstanding unless the Required Banks waive compliance in writing:
7.1 Financial Statements. The Company will maintain, and will cause
each of its Subsidiaries to maintain, a system of accounting established and
administered in accordance with GAAP, and will accrue, and will cause each of
its Subsidiaries to accrue, all such liabilities as shall be required by GAAP.
The Company will deliver to Agent and the Banks:
(a) as soon as practicable, but in any event within 45 days
after the end of each of the first three quarterly fiscal periods in each fiscal
year of the Company, consolidated and consolidating balance sheets of the
Company and its Subsidiaries (except, as to consolidating balance sheets only,
for inactive Subsidiaries) as at the end of such period and the related
consolidated (and, as to statements of income, consolidating, except for
inactive Subsidiaries) statements of income, partners' capital and cash flows of
the Company and its Subsidiaries for such period and (in the case of the second
and third quarterly periods) for the period from the beginning of the current
fiscal year to the end of such quarterly period, setting forth in each case in
comparative form the consolidated and, where applicable, consolidating figures
for the corresponding periods of the previous fiscal year, all in reasonable
detail and certified by the principal financial officer of the General Partner
as presenting fairly, in all material respects, the information contained
therein (except for the absence of footnotes and subject to changes
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resulting from normal year-end adjustments), in accordance with GAAP applied on
a basis consistent with prior fiscal periods (other than fiscal periods ending
prior to the Original Closing Date) except for inconsistencies resulting from
changes in accounting principles and methods agreed to by the Company's
independent accountants;
(b) as soon as practicable, but in any event within 90 days
after the end of each fiscal year of the Company, consolidated and consolidating
balance sheets of the Company and its Subsidiaries (except, as to consolidating
balance sheets only, for inactive Subsidiaries) as at the end of such year and
the related consolidated (and, as to statements of income, consolidating except
for inactive Subsidiaries) statements of income, partners' capital and cash
flows of the Company and its Subsidiaries for such fiscal year, setting forth in
each case with respect to financial statements delivered as of any date and for
any period after September 30, 1996 in comparative form the consolidated and,
where applicable, consolidating figures for the previous fiscal year, all in
reasonable detail and (i) in the case of such consolidated financial statements,
accompanied by a report thereon of Arthur Andersen LLP or other independent
public accountants of recognized national standing selected by the Company,
which report shall state that such consolidated financial statements present
fairly, in all material respects, the financial position of the Company and its
Subsidiaries as at the dates indicated and the results of their operations and
cash flows for the periods indicated in conformity with GAAP unless otherwise
disclosed, applied on a basis consistent with prior years (other than fiscal
years ending prior to the Original Closing Date), and that the audit by such
accountants in connection with such consolidated financial statements has been
made in accordance with generally accepted auditing standards then in effect in
the United States, and (ii) in the case of such consolidated and consolidating
financial statements, certified by the principal financial officer of the
General Partner as presenting fairly, in all material respects, the information
contained therein (except, in the case of such consolidating financial
statements, for the absence of footnotes), in accordance with GAAP;
(c) together with each delivery of financial statements of the
Company pursuant to subdivisions (a) and (b) of this Section 7.1, a Compliance
Certificate of the Company (i) stating that the signers have reviewed the terms
of this Agreement and the other Loan Documents and have made, or caused to be
made under their supervision, a review in reasonable detail of the transactions
and condition of the Company and its Subsidiaries during the accounting period
covered by such financial statements, and that the signers do not have knowledge
of the existence and continuance as at the date of such Compliance Certificate
of any Default or Event of Default, or, if any of the signers have knowledge
that any Default or Event of Default then exists, specifying the nature and
approximate period of existence thereof and what action the Company has taken or
is taking or proposes to take with respect thereto, (ii) specifying the amount
available at the end of such accounting period for Restricted Payments in
compliance with Section 8.5 and showing in reasonable detail all calculations
required in arriving at such amount, (iii) demonstrating in reasonable detail
compliance at the end of such accounting period with the restrictions contained
in Section 7.14(d), Sections 8.1(b), (d), (e), and (f), Section 8.2, Section
8.4(c), Section 8.4(h), Section 8.5, Section 8.8(a)(ii), Section 8.8(a)(iii),
Section 8.8(c)(ii) (calculation of any Excess Sale Proceeds), Section 8.13, and
Section 8.14 (first sentence), (iv) calculating the applicable Pricing Tier, (v)
if not specified in the related financial statements being
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delivered pursuant to subdivisions (a) and (b) above, specifying the aggregate
amount of interest paid or accrued by, and aggregate rental expenses of, the
Company and its Subsidiaries, and the aggregate amount of depreciation,
depletion and amortization charged on the books of the Company and its
Subsidiaries, during the fiscal period covered by such financial statements, and
(vi) if at the time of the delivery of such financial statements the Company
shall have any Unrestricted Subsidiaries, setting forth therein (or in an
accompanying schedule) the adjustments required to be made to indicate the
consolidated financial position, cash flows and results of operations of the
Company and the Restricted Subsidiaries without regard to the financial
position, cash flows or results of operations of such Unrestricted Subsidiaries;
(d) together with each delivery of consolidated financial
statements of the Company pursuant to subdivision (b) of this Section 7.1, a
written statement by the independent public accountants giving the report
thereon stating that they have reviewed the terms of this Agreement and the
Notes and that, in making the audit necessary for the certification of such
financial statements, they have obtained no knowledge of the existence and
continuance as at the date of such written statement of any Default or Event of
Default, or, if they have obtained knowledge that any Default or Event of
Default then exists, specifying, to the extent possible, the nature and
approximate period of the existence thereof (such accountants, however, shall
not be liable to anyone by reason of their failure to obtain knowledge of any
Default or Event of Default which would not be disclosed in the course of an
audit conducted in accordance with generally accepted auditing standards then in
effect in the United States);
(e) promptly following the receipt and timely review thereof
by the Company, copies of all reports submitted to the Company by independent
public accountants in connection with each special, annual or interim audit of
the books of the Company or any Subsidiary thereof made by such accountants,
including without limitation the comment letter submitted by each such
accountant to management in connection with their annual audit;
(f) promptly upon their becoming publicly available, copies of
(i) all financial statements, reports, notices and proxy statements sent or made
available by the Company or the Public Partnership to any of its security
holders in compliance with the Exchange Act, or any comparable Federal or state
laws relating to the disclosure by any Person of information to its security
holders, (ii) all regular and periodic reports and all registration statements
and prospectuses filed by the Company or the Public Partnership with any
securities exchange or with the Securities and Exchange Commission or any
governmental authority succeeding to any of its functions (other than
registration statements on Form S-8 and Annual Reports on Form 10-R), (iii) all
press releases and other similar written statements made available by the
Company or the Public Partnership to the public concerning material developments
in the business of the Company or the Public Partnership, as the case may be and
(iv) all reports, notices and other similar written statements sent or made
available by the Company or the Public Partnership to any holder of its
Indebtedness pursuant to the terms of any agreement, indenture or other
instrument evidencing such Indebtedness, including without limitation the
Mortgage Notes and the Public Partnership Indenture, except to the extent the
same substantive information is already being sent to the Agent and the Banks;
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(g) as soon as reasonably practicable, and in any event within
five Business Days after a Responsible Officer obtains knowledge that any
Default or Event of Default has occurred, a written statement of such
Responsible Officer setting forth details of such Default or Event of Default
and the action which the Company has taken, is taking and proposes to take with
respect thereto;
(h) as soon as reasonably practicable, and in any event within
five Business Days after a Responsible Officer obtains knowledge of (i) the
occurrence of an adverse development with respect to any litigation or
proceeding involving the Company or any of its Subsidiaries which in the
reasonable judgment of the Company presents a reasonable likelihood of having a
Material Adverse Effect or (ii) the commencement of any litigation or proceeding
involving the Company or any of its Subsidiaries which in the reasonable
judgment of the Company presents a reasonable likelihood of having a Material
Adverse Effect, a written notice of such Responsible Officer describing in
reasonable detail such commencement of, or adverse development with respect to,
such litigation or proceeding;
(i) as soon as reasonably practicable, and in any event within
five Business Days after a responsible officer of a Borrower becomes aware of
the occurrence or existence of any of the events or conditions specified below,
and such event or condition has resulted in, or in the opinion of the principal
financial officer of the General Partner might reasonably be expected to result
in, a Material Adverse Effect: (i) the institution of any steps by a Borrower or
any other Person to terminate any Pension Plan sponsored or maintained by a
Borrower or any ERISA Affiliate of any Borrower, or (ii) the failure to make a
required contribution to any Pension Plan sponsored or maintained by a Borrower
if such failure is sufficient to give rise to a Lien under section 302(f) of
ERISA, or (iii) if any of the subsequently listed events have occurred with
respect to any Pension Plan sponsored or maintained by any Borrower or any ERISA
Affiliate of any Borrower: the occurrence of termination of the plan, failure to
make a required contribution to the plan, failure to satisfy the minimum funding
standard for a year, request for a waiver of the minimum funding standard for
any year, withdrawal from a multiple employer plan, adoption of an amendment
which results in a funded current liability percentage of less than 60 percent,
engaging in one or more prohibited transactions, failure to comply with
reporting and disclosure requirements or engaging in any breach of fiduciary
responsibility, notice thereof and copies of all documentation relating thereto;
(j) within 15 days after being approved by the governing body
of the Company, and in any event no later than the last day of each fiscal year
(if then available), an annual operating forecast for the next fiscal year;
(k) as soon as reasonably practicable, and in any event within
five Business Days after a Responsible Officer obtains knowledge of a violation
or alleged violation of Environmental Law or the presence or release of any
Hazardous Substance within, on, from, relating to or affecting any property,
which in the reasonable judgment of the Company presents a reasonable likelihood
of having a Material Adverse Effect, provide notice thereof, and upon request,
copies of relevant documentation, provided, however, no such notice is required
with respect to matters disclosed in Schedule 6.19 or matters with respect to
which notice has previously been provided pursuant to this Section 7.1(k); and
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(l) with reasonable promptness, such other information and
data (financial or other) with respect to the Borrowers or any of their
Subsidiaries as from time to time may be reasonably requested by the Agent or
any Bank.
7.2 Reserved.
7.3 Adequate Reserves. The Company will, and will cause each of its
Restricted Subsidiaries to maintain, overall reserves on their respective books
and records in accordance with GAAP, which overall reserves shall be adequate in
the opinion of the management of the Company and each Restricted Subsidiary for
the purposes for which they were established.
7.4 Partnership or Corporate Existence; Business; Compliance with Laws.
(a) Except as otherwise expressly permitted in accordance with Section 8.7 or
8.8, (i) the Company will at all times preserve and keep in full force and
effect its partnership existence and its status as a partnership not taxable as
a corporation, (ii) the Company will cause each of the Restricted Subsidiaries
to keep in full force and effect its partnership or corporate existence and
(iii) the Company will, and will cause each Restricted Subsidiary to, at all
times preserve and keep in full force and effect all of its material rights and
franchises; provided, however, that the partnership or corporate existence of
any Restricted Subsidiary, and any right or franchise of the Company or any
Restricted Subsidiary, may be terminated notwithstanding this Section 7.4 if, in
the good faith judgment of the Company, such termination (x) is in the best
interest of the Company and the Restricted Subsidiaries, (y) is not
disadvantageous to the Banks in any material respect and (z) would not have a
reasonable likelihood of having a Material Adverse Effect.
(b) The Company will, and will cause each of its Subsidiaries to, at
all times comply with all laws, regulations and statutes (including without
limitation any zoning or building ordinances) applicable to it, except for
failures to so comply which, individually or in the aggregate, would not present
a reasonable likelihood of having a Material Adverse Effect.
(c) The Company will not, and will not permit any Restricted Subsidiary
to, engage in any lines of business other than its current Business as defined
in this Agreement and other activities incidental or related to the Business.
7.5 Payment of Taxes and Claims. The Company will, and will cause each
of its Subsidiaries to, pay all material Taxes, Other Taxes, assessments and
other governmental charges imposed upon it or any of its Subsidiaries, or any of
its or its Subsidiaries' properties or assets or in respect of any of its or any
of its Subsidiaries' franchises, business, income or profits when the same
becomes due and payable, and all claims (including without limitation claims for
labor, services, materials and supplies) for sums which have become due and
payable and which by law have or might become a Lien upon any of its or any of
its Subsidiaries' properties or assets, and promptly reimburse the Banks for any
such Taxes, Other Taxes, assessments, charges or claims paid by them; provided
that no such Tax, Other Tax, assessment, charge or claim need be paid or
reimbursed if it is being contested in good faith by appropriate proceedings
promptly initiated and diligently conducted and if such reserves or other
appropriate provision, if any, as shall be required by GAAP shall have been made
therefor and be adequate in the good faith judgment of the General Partner.
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7.6 Maintenance of Properties: Insurance. (a) The Company will maintain
or cause to be maintained in good repair, working order and condition all
properties used or useful in the business of the Company and the Restricted
Subsidiaries and from time to time will make or cause to be made all appropriate
repairs, renewals and replacements thereof. (b) The Company will maintain or
cause to be maintained, with Permitted Insurers to the extent available on
commercially reasonable terms from Permitted Insurers and otherwise with
financially sound and reputable insurers, insurance with respect to its
properties and business and the properties and business of the Restricted
Subsidiaries of the types and in the amounts specified in Sections 20 and 21 of
the Collateral Agency Agreement and the Collateral Agent shall be named as an
additional insured party on each insurance policy maintained pursuant to this
Section 7.6(b).
7.7 License Agreements. The Company will perform and comply with all of
its obligations under each of the License Agreements to which it is a party,
will enforce each such License Agreement against each other party thereto and
will not accept the termination of any such License Agreement or any amendment
or supplement thereof or modification or waiver thereunder, unless any such
failure to perform, comply or enforce or any such acceptance would not,
individually or in the aggregate, present a reasonable likelihood of having a
Material Adverse Effect.
7.8 Chief Executive Office. The Company will not move its chief
executive office and the office at which it maintains its records relating to
the transactions contemplated by this Agreement and the Loan Documents unless
not less than 45 days' prior written notice of its intention to do so clearly
describing the new location, shall have been given to the Collateral Agent and
each Bank.
7.9 Subsidiary Guarantors. Promptly upon any Person becoming a
Restricted Subsidiary of the Company, the Company will cause such Restricted
Subsidiary to execute and deliver to the Collateral Agent such appropriate
documents to become (a) a guarantor under the Subsidiary Guarantee and an
assignor under the Subsidiary Security Agreement and (b) bound by the terms and
provisions of the Collateral Agency Agreement. If any Restricted Subsidiary then
or thereafter shall have any interests in real property, the Company will,
subject to and if required by the provisions of Section 7.10, cause such
Restricted Subsidiary to execute and deliver to the Collateral Agent a Mortgage
in substantially the form of Exhibit E with such changes, mutatis mutandis, so
as to make such instrument applicable to such Restricted Subsidiary and its
interests in real property, and cause the same to be recorded, published,
registered and filed as provided in Section 7.10.
7.10 New Mortgages; Recordation. From and after the Original Closing
Date, the Company and its Restricted Subsidiaries, if applicable, will execute
and deliver a Mortgage covering each district location owned or hereafter
acquired by it and any other real property hereafter acquired by it which has an
individual value in excess of $100,000 or which has an aggregate value in excess
of $500,000 (in each case as determined in good faith by the General Partner)
and which is not already subject to the Lien of a Mortgage. The Company will
cause to be duly recorded, published, registered and filed all the documents set
forth in paragraph (b) of the definition of Security Documents (or documents or
instruments in respect thereof), in such manner and in such places as is
required by law to establish, and if applicable, perfect and preserve
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the rights and security interests of the parties thereto and their respective
successors and assigns in the General Collateral. The Company will obtain and
deliver to the Agent an ALTA loan policy (10-17-92 form), or its equivalent in
any state, of title insurance for real property hereafter acquired by it which
has an individual value in excess of $1,000,000 (as determined in good faith by
the General Partner) showing the Lien of a Mortgage as a first priority Lien.
The Company will pay or cause to be paid all taxes, fees and other governmental
charges in connection with the execution, delivery, recording, publishing,
registration and filing of such documents or instruments in such places,
together with all expenses and premiums of the title companies in connection
with the issuance of any title policies or endorsements thereto.
7.11 Further Assurances. At any time and from time to time promptly,
the Company shall, at its expense, execute and deliver to the Agent and each
Bank and to the Collateral Agent such further instruments and documents, and
take such further action, as the Agent or any Bank may from time to time
reasonably request, in order to further carry out the intent and purpose of this
Agreement and the other Loan Documents and to establish, perfect, preserve and
protect the rights, interests and remedies created, or intended to be created,
in favor of the Banks and the Collateral Agent hereunder and thereunder,
including without limitation the execution, delivery, recordation and filing of
financing statements and continuation statements under the Uniform Commercial
Code of any applicable jurisdiction, and the delivery of satisfactory opinions
of counsel as to the recording, registration or filing of the Security Documents
(or documents in respect thereof) and the legal, valid, binding and enforceable
nature thereof and the validity of the Liens created thereby on the General
Collateral.
7.12 Covenant to Secure Notes Equally. The Company covenants that, if
it or any Restricted Subsidiary shall create or assume any Lien upon any of its
property or assets, whether now owned or hereafter acquired, other than Liens
permitted by the provisions of Section 8.3 (unless prior written consent to the
creation or assumption thereof shall have been obtained pursuant to Section
11.1) it will make or cause to be made effective provision whereby the Loans
will be secured by such Lien equally and ratably with any and all other
Indebtedness thereby secured so long as any such other Indebtedness shall be so
secured, it being understood that the provision of such equal and ratable
security shall not constitute a cure or waiver of any related Event of Default.
7.13 Designations With Respect to Subsidiaries. (a) The Company may
designate any Restricted Subsidiary or newly acquired or formed Subsidiary as an
Unrestricted Subsidiary or any Unrestricted Subsidiary as a Restricted
Subsidiary, in each case subject to satisfaction of the following conditions:
(i) immediately before and after giving effect to
such designation, no Default or Event of Default shall exist
and be continuing; and
(ii) after giving effect to such designation, the
Company would be permitted to incur at least $1 of additional
Indebtedness in accordance with the provisions of clauses (i)
and (ii) of Section 8.1(f); and
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(iii) in the case of a designation of a Restricted
Subsidiary or a newly acquired or formed Subsidiary as an
Unrestricted Subsidiary, the conditions set forth in
subdivision (ii)(A) of Section 8.8(c) (the "Sale Condition")
and Section 8.4(h) (the "Investment Condition") would be
satisfied, assuming for this purpose that such designation
(and all prior designations of Restricted Subsidiaries or
newly acquired or formed Subsidiaries as Unrestricted
Subsidiaries during the current fiscal year) constitutes a
sale by the Company of (in the case of the Sale Condition),
and an Investment by the Company in an amount equal to (in the
case of the Investment Condition), all the assets of the
Subsidiary so designated, in each case for an amount equal to
(x) the net book value of such assets in the case of a
Restricted Subsidiary and (y) the cost of acquisition or
formation in the case of a newly acquired or formed Subsidiary
(such amounts being herein referred to as "Designation
Amounts" and deemed to constitute Net Proceeds for the
purposes of the Sale Condition).
(b) A Subsidiary that has twice previously been designated an
Unrestricted Subsidiary may not thereafter be designated as a Restricted
Subsidiary.
(c) The Company shall deliver to the Agent and each Bank,
within 20 Business Days after any such designation, an Officer's Certificate
stating the effective date of such designation and stating that the foregoing
conditions contained in this Section 7.13 have been satisfied. Such certificate
shall be accompanied by a schedule setting forth in reasonable detail the
calculations demonstrating compliance with such conditions, where appropriate.
(d) All Investments, Indebtedness, Liens, Guaranty Obligations
and other obligations that an Unrestricted Subsidiary (the "Designee") has at
the time of being designated a Restricted Subsidiary hereunder shall be deemed
to have been acquired, made or incurred, as the case may be, at the time of such
designation and in anticipation of such Designee becoming a Subsidiary and of
acquiring its assets (except as otherwise specifically provided in Section
8.1(i) or (j) or Section 8.3(m)).
7.14 Covenants of the General Partner and Petrolane. (a) Petrolane
covenants that it will engage only in the business and activities described in
Schedule 6.16, and each of the General Partner and Petrolane covenants that it
will not create any Liens on the general partnership interests in the Company or
the Public Partnership or dispose of any assets or properties covered by the
terms of any License Agreement and will maintain and keep in effect its
corporate existence and franchises.
(b) Each of the General Partner and Petrolane will deliver to
the Agent and each Bank (i) financial statements as to itself of the same
character described in, and at the times specified in, Sections 7.1(a) and
7.1(b) with respect to the Company ("the Company Financials"), in each case
certified and reported on in the same manner as the Company Financials (except
that the financial statements of Petrolane need not be audited), and (ii) with
reasonable promptness, such other information and data (financial or other) with
respect to the General Partner or Petrolane, as the case may be, as may from
time to time be reasonably requested by the Agent or any Bank.
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(c) The General Partner will perform and comply with all of
its obligations under the Partnership Agreement and each of the License
Agreements to which it is a party, will enforce the Partnership Agreement and
each such License Agreement against each other party thereto and will not accept
the termination of the Partnership Agreement or any such License Agreement or
any amendment or supplement thereof or modification or waiver thereunder, unless
any such failure to perform, comply or enforce or any such acceptance would not,
individually or in the aggregate, present a reasonable likelihood of having a
Material Adverse Effect.
(d) Section 6.5 of the Partnership Agreement (the
"Incorporated Covenant") as in effect on the date hereof, together with all
related definitions, is hereby incorporated herein in the form included in the
Partnership Agreement on the Original Closing Date and without regard to any
subsequent amendments or waivers of the provisions of, or any termination of,
the Partnership Agreement. The General Partner agrees to fully perform and
comply with the Incorporated Covenant.
7.15 Books and Records. The Company will, and will cause each of its
Restricted Subsidiaries to, keep books and records which accurately reflect all
of its business affairs and transactions and permit the Agent and each Bank or
any of their respective representatives, at reasonable times and intervals, to
visit all of its offices, to discuss its financial matters with its officers and
to examine (and, at the expense of the Company, photocopy extracts from) any of
its books or other Company records. Upon the occurrence and during the
continuance of any Default or Event of Default the Company hereby authorizes its
independent public accountant to discuss the Company's financial matters with
the Agent and each Bank or any of their respective representatives provided that
a representative of the Company is present. The Borrowers shall pay any fees of
such independent public accountant incurred in connection with the Agent's or
any Bank's exercise of its rights pursuant to this Section.
7.16 Environmental Covenant. The Company will, and will cause each of
the Restricted Subsidiaries to:
(a) comply with all applicable Environmental Laws and any
permit, license, or approval required under any Environmental Law, except for
failures to so comply which would not present a reasonable likelihood of having
a Material Adverse Effect;
(b) store, use, release, or dispose of any Hazardous Substance
in compliance with Environmental Laws at any property owned or leased by the
Company or any of its Restricted Subsidiaries, except where such non-compliance
would not present a reasonable likelihood of having a Material Adverse Effect;
(c) avoid committing any act or omission which would cause any
Lien to be asserted against any property owned by the Company or any of its
Restricted Subsidiaries pursuant to any Environmental Law, except where such
Lien would not present a reasonable likelihood of having a Material Adverse
Effect;
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(d) use, handle or store propane in compliance with
Environmental Laws, except where such non-compliance would not present a
reasonable likelihood of having a Material Adverse Effect;
(e) take all steps required by Environmental Law to cure any
violation thereof disclosed in Schedule 6.19; and
(f) provide such information and certificates which the Agent
or any Bank may reasonably request from time to time to evidence compliance with
this Section 7.16.
7.17 Northwest LPG Supply, Ltd. The Company will designate Northwest
LPG Supply, Ltd. as an Unrestricted Subsidiary within 30 days after the
Restatement Effective Date in accordance with Section 7.13.
ARTICLE VIII
NEGATIVE COVENANTS
So long as any Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, or any Letters of Credit
shall remain outstanding, unless the Required Banks waive compliance in writing:
8.1 Indebtedness. The Company will not, and will not permit any
Restricted Subsidiary to, create, incur, assume or otherwise become or remain
directly or indirectly liable with respect to, any Indebtedness, except that:
(a) the Company may become and remain liable with respect to
the Indebtedness evidenced by the Mortgage Notes and Long Term Funded Debt
incurred in connection with any extension, renewal, refunding or refinancing of
Indebtedness evidenced by the Mortgage Notes, provided that the principal amount
of such Long Term Funded Debt shall not exceed the principal amount of such
Indebtedness evidenced by the Mortgage Notes, together with any accrued interest
and prepayment charges with respect thereto, being extended, renewed, refunded
or refinanced;
(b) the Company may become and remain liable with respect to
Indebtedness incurred by the Company (i) to finance the making of expenditures
for the improvement or repair (to the extent such improvements and repairs may
be capitalized on the books of the Company in accordance with GAAP) of or
additions (including additions by way of acquisitions or capital contributions
of businesses and related assets) to the General Collateral or (ii) by
assumption in connection with additions (including additions by way of
acquisitions or capital contributions of businesses and related assets) to the
General Collateral, including borrowings under the Acquisition Commitment, or to
extend, renew, refund or refinance any such Indebtedness, provided that the
aggregate principal amount of Indebtedness (including, without limitation,
Acquisition Loans) incurred under this Section 8.1(b) and outstanding at any
time shall not exceed the sum of (1) $75,000,000 plus (2) an amount equal to the
aggregate net cash proceeds received by the Company from time to time as a
capital contribution or as consideration for the issuance by
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the Company of additional partnership interests, in each case for the sole
purpose of financing such expenditures;
(c) subject to Section 8.4(c) any Restricted Subsidiary may
become and remain liable with respect to Indebtedness of such Restricted
Subsidiary owing to the Company or to a Wholly-Owned Restricted Subsidiary, and
the Company may become and remain liable with respect to Indebtedness owing to a
Wholly-Owned Restricted Subsidiary provided it is subordinated to the Loans and
the Parity Debt at least to the extent provided in the subordination provisions
in form satisfactory to the Banks;
(d) the Company may become and remain liable with respect to
unsecured Indebtedness of the Company owing to the General Partner or an
Affiliate of the General Partner, provided that (i) the aggregate principal
amount of such Indebtedness outstanding at any time shall not be in excess of
$50,000,000 and (ii) such Indebtedness is created and is outstanding under an
agreement or instrument pursuant to which such Indebtedness is subordinated to
the Loans and the Parity Debt at least to the extent provided in the
subordination provisions in form satisfactory to the Banks;
(e) the Company may become and remain liable with respect to
Indebtedness incurred for any purpose permitted by the Revolving Commitment
(including outstanding Loans under the Revolving Commitment and Swingline
Loans), and any Indebtedness incurred for any such permitted purpose which
replaces, extends, renews, refunds or refinances any such Indebtedness, in whole
or in part, in an aggregate principal amount outstanding at any time not in
excess of $100,000,000;
(f) the Company may become and remain liable with respect to
Indebtedness, in addition to that otherwise permitted by the foregoing
subdivisions of this Section 8.1, if on the date the Company becomes liable with
respect to any such additional Indebtedness and immediately after giving effect
thereto and to the substantially concurrent repayment of any other Indebtedness
(i) the ratio of Consolidated Cash Flow to Consolidated Pro Forma Debt Service
is equal to or greater than 2.50 to 1.0, (ii) the ratio of Consolidated Cash
Flow to Average Consolidated Pro Forma Debt Service is equal to or greater than
1.25 to 1.0 and (iii) if such Indebtedness is incurred other than for the
purposes described in clause (A) below, the Company would not be permitted to
incur any additional Indebtedness pursuant to Section 8.1(e) under the Revolving
Commitment or any extension, renewal, refunding, replacement or refinancing
thereof; provided that if such Indebtedness (A) is incurred by the Company (x)
to finance the making of expenditures for the improvement or repair of (to the
extent such improvements and repairs may be capitalized on the books of the
Company in accordance with GAAP) or additions (including additions by way of
acquisitions of businesses and related assets) to the General Collateral, or (y)
by assumption in connection with additions (including additions by way of
acquisitions or capital contributions of businesses and related assets) to the
General Collateral and (B) is to be secured under the Security Documents as
provided in Section 8.3(m), then the Company may become liable with respect to
any such additional Indebtedness only if the Company would not be permitted to
incur any additional Indebtedness under Section 8.1(b);
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(g) the Company and its Restricted Subsidiaries may become and
remain liable with respect to the Indebtedness described on Schedule 6.7;
(h) the Company may become and remain liable with respect to
obligations under Interest Rate Agreements entered into to hedge interest rate
risk;
(i) any Person that after the Restatement Effective Date
becomes a Restricted Subsidiary may become and remain liable with respect to any
Indebtedness to the extent such Indebtedness existed at the time such Person
became a Subsidiary (and was not incurred in anticipation of such Person
becoming a Subsidiary); provided that immediately after giving effect to such
Person becoming a Restricted Subsidiary, the Company could incur at least $1 of
additional Indebtedness in compliance with clauses (i) and (ii) of Section
8.1(f);
(j) the Company and any Restricted Subsidiary may become and
remain liable with respect to Indebtedness relating to any business acquired by
or contributed to the Company or such Restricted Subsidiary or which is secured
by a Lien on any property or assets acquired by or contributed to the Company or
such Restricted Subsidiary to the extent such Indebtedness existed at the time
such business or property or assets were so acquired or contributed (and was not
incurred in anticipation thereof) and if such Indebtedness is secured by such
property or assets, such security interest does not extend to or cover any other
property of the Company or any of the Restricted Subsidiaries, provided that
immediately after giving effect to such acquisition or contribution, the Company
could incur at least $1 of additional Indebtedness in compliance with clauses
(i) and (ii) of Section 8.1(f) ; and
(k) Capitalized Lease Liabilities not in excess of $10,000,000
at any time outstanding.
8.2 Minimum Interest Coverage. The Company will not permit the ratio of
EBITDA to Consolidated Interest Expense as at any fiscal quarter end for the
four fiscal quarters then ending to be less than 2.25 to 1.0.
8.3 Liens, etc. The Company will not, and will not permit any
Restricted Subsidiary to, directly or indirectly create, incur, assume or permit
to exist any Lien on or with respect to any property or asset (including any
document or instrument in respect of goods or accounts receivable) of the
Company or any Restricted Subsidiary, whether now owned or hereafter acquired,
or any income or profits therefrom (whether or not provision is made for the
equal and ratable securing of the Obligations in accordance with the provisions
of Section 7.12), except:
(a) Liens for taxes, assessments or other governmental charges
the payment of which is not yet due and payable or which is being contested in
compliance with Section 7.5 and Section 1.18 of the Mortgages;
(b) Liens of lessors, landlords and carriers, vendors,
warehousemen, mechanics, materialmen, repairmen and other like Liens incurred in
the ordinary course of business for sums not yet due or the payment of which is
being contested in compliance with Section 7.5 and Section 1.18 of the
Mortgages, in each case (i) not incurred or made in
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connection with the borrowing of money, the obtaining of advances or credit or
the payment of the deferred purchase price of property or (ii) incurred in the
ordinary course of business securing the unpaid purchase price of property or
services constituting current accounts payable; and precautionary Liens in favor
of lessors under capital leases and leases of equipment in the ordinary course
of business;
(c) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business (i) in connection with workers'
compensation, unemployment insurance and other types of social security, or (ii)
to secure (or to obtain letters of credit that secure) the performance of
tenders, statutory obligations, surety and appeal bonds, bids, leases,
performance bonds, purchase, construction or sales contracts and other similar
obligations, in each case not incurred or made in connection with the borrowing
of money;
(d) other deposits made to secure liability to insurance
carriers under insurance or self-insurance arrangements;
(e) Liens securing reimbursement obligations under letters of
credit, provided in each case that such Liens cover only the title documents and
related goods (and any proceeds thereof) covered by the related letter of
credit;
(f) any attachment or judgment Lien, unless the judgment it
secures shall not, within 60 days after the entry thereof, have been discharged
or execution thereof stayed pending appeal or review, or shall not have been
discharged within 60 days after expiration of any such stay;
(g) leases or subleases granted to others, easements,
rights-of-way, restrictions and other similar charges or encumbrances, which, in
each case either (i) are granted, entered into or created in the ordinary course
of the business of the Company or any Restricted Subsidiary or (ii) do not,
individually or in the aggregate, present a reasonable likelihood of having a
Material Adverse Effect;
(h) Liens on property or assets of any Restricted Subsidiary
securing Indebtedness of such Restricted Subsidiary owing to the Company or a
Wholly-Owned Restricted Subsidiary;
(i) [Intentionally omitted];
(j) Liens created by any of the Security Documents securing
Indebtedness evidenced by the Mortgage Notes (or any extension, renewal,
refunding, replacement or refinancing of any such Indebtedness) in accordance
with Section 8.1(a);
(k) Liens created by any of the Security Documents securing
the Indebtedness incurred under the Acquisition Commitment (or any extension,
renewal, refunding, replacement-or refinancing of any such Indebtedness) in
accordance with Section 8.1(c);
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(l) Liens created by any of the Security Documents securing
the Indebtedness, or Letters of Credit, incurred under the Revolving Commitment
(or any extension, renewal, refunding, replacement or refinancing of any such
Indebtedness) in accordance with Section 8.1(e);
(m) Liens (other than the Liens referred to in clauses (k) and
(l) above) securing Indebtedness incurred in accordance with Section 8.1(b) or
8.1(e) or, to the extent incurred (i) to finance the making of expenditures for
the improvement or repair (to the extent such improvements and repairs may be
capitalized on the books of the Company and the Restricted Subsidiaries in
accordance with GAAP) of or additions (including additions by way of
acquisitions of businesses or capital contributions of businesses and related
assets) to the General Collateral, or (ii) by assumption in connection with
additions (including additions by way of acquisitions or capital contributions
of businesses and related assets) to the General Collateral, in accordance with
Section 8.1(f), provided that (1) such Liens are effected through an amendment
to the Security Documents to the extent necessary to provide the holders of such
Indebtedness equal and ratable security in the property and assets subject to
the Security Documents with the Banks and holders of the other Indebtedness
secured under the Security Documents, (2) in the case of Indebtedness incurred
in accordance with Section 8.1(b) or Section 8.1(f) to finance the making of
additions to the General Collateral, the Company has delivered to the Collateral
Agent an Officers' Certificate demonstrating that the principal amount of such
Indebtedness does not exceed the lesser of the cost to the Company and the
Restricted Subsidiaries of such additional property or assets and the fair
market value of such additional property or assets at the time of the
acquisition thereof (as determined in good faith by the General Partner), and
(3) the Company has delivered to the Collateral Agent an opinion of counsel
reasonably satisfactory to the Collateral Agent to the effect that the Lien of
the Security Documents has attached and is perfected with respect to such
additional property and assets;
(n) Liens existing on any property of any Person at the time
it becomes a Subsidiary of the Company, or existing at the time of acquisition
upon any property acquired by the Company or any such Subsidiary through
purchase, merger or consolidation or otherwise, whether or not assumed by the
Company or such Subsidiary, or created to secure Indebtedness incurred under
Section 8.1(f) to pay all or any part of the purchase price (a "Purchase Money
Lien") of property (including without limitation Capital Stock and other
securities) acquired by the Company or a Restricted Subsidiary, provided that
(i) any such Lien shall be confined solely to such item or items of property
and, if required by the terms of the instrument originally creating such Lien,
other property which is an improvement to or is acquired for use specifically in
connection with such acquired property, (ii) such item or items of property so
acquired are not required to become part of the General Collateral under the
terms of the Security Documents, (iii) in the case of a Purchase Money Lien, the
principal amount of the Indebtedness secured by such Purchase Money Lien shall
at no time exceed an amount equal to the lesser of (A) the cost to the Company
and the Restricted Subsidiaries of such property and (B) the fair market value
of such property at the time of the acquisition thereof (as determined in good
faith by the General Partner), (iv) any such Purchase Money Lien shall be
created not later than 30 days after the acquisition of such property and (v)
any such Lien (other than a Purchase Money Lien) shall not
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have been created or assumed in contemplation of such Person's becoming a
Subsidiary of the Company or such acquisition of property by the Company or any
Subsidiary;
(o) easements, exceptions or reservations in any property of
the Company or any Restricted Subsidiary granted or reserved for the purpose of
pipelines, roads, the removal of oil, gas, coal or other minerals, and other
like purposes, or for the joint or common use of real property, facilities and
equipment, which are incidental to, and do not materially interfere with, the
ordinary conduct of the business of the Company or any Restricted Subsidiary;
(p) Liens arising from or constituting Permitted Encumbrances
as defined under the Security Documents; and
(q) any Lien renewing or extending any Lien permitted by
subdivision (h), (i), (j), (k), (l), (m) or (n) of this Section 8.3, provided
that (i) the principal amount of the Indebtedness secured by any such Lien shall
not exceed the principal amount of such Indebtedness outstanding immediately
prior to the renewal or extension of such Lien (together with, in the case of
Indebtedness permitted by Section 8.1(a), any accrued interest thereon and
prepayment charges with respect thereto), and (ii) no assets encumbered by any
such Lien other than the assets encumbered immediately prior to such renewal or
extension shall be encumbered thereby.
8.4 Investments, Contingent Obligations, etc. The Company will not, and
will not permit any Restricted Subsidiary to, directly or indirectly (i) make or
own any Investment in any Person (including an Investment in a Subsidiary of the
Company), (ii) create or become liable with respect to any Contingent Obligation
with respect to any Indebtedness of a Control Affiliate, or (iii) create or
become liable with respect to any Contingent Obligation (provided, however, that
nothing contained in this Section 8.4, except clause (ii) above, is intended to
limit the making of any Contingent Obligation which would be permitted as
Indebtedness under Section 8.1), except:
(a) the Company or any Restricted Subsidiary may make and own
Investments in (collectively, "Cash Equivalents")
(i) marketable obligations issued or unconditionally
guaranteed by the United States of America, or issued by any agency
thereof and backed by the full faith and credit of the United States,
in each case maturing one year or less from the date of acquisition
thereof,
(ii) marketable direct obligations issued by any
state of the United States of America or any political subdivision of
any such state or any public instrumentality thereof maturing within
one year from the date of acquisition thereof and having as at such
date the highest rating obtainable from either Standard & Poor's Rating
Group or Moody's Investors Service, Inc.,
(iii) commercial paper maturing no more than 270 days
from the date of creation thereof and having as at the date of
acquisition thereof one of the two highest ratings obtainable from
either Standard & Poor's Rating Group or Moody's Investors Service,
Inc.,
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(iv) certificates of deposit maturing one year or
less from the date of acquisition thereof issued by commercial banks
incorporated under the laws of the United States of America or any
state thereof or the District of Columbia or Canada, (A) the commercial
paper or other short term unsecured debt obligations of which are as at
such date rated either A-2 or better (or comparably if the rating
system is changed) by Standard & Poor's Rating Group or Prime-2 or
better (or comparably if the rating system is changed) by Moody's
Investors Service, Inc. or (B) the long-term debt obligations of which
are as at such date rated either A or better (or comparably if the
rating system is changed) by either Standard & Poor's Rating Group or
A-2 or better or comparably if the rating system is changed by Moody's
Investors Service, Inc. ("Permitted Banks"),
(v) Eurodollar time deposits having a maturity of
less than 270 days from the date of acquisition thereof purchased
directly from any Permitted Bank,
(vi) bankers' acceptances eligible for rediscount
under requirements of The Board of Governors of the Federal Reserve
System and accepted by Permitted Banks, and
(vii) obligations of the type described in clause
(i), (ii), (iii), (iv) or (v) above purchased from a securities dealer
designated as a "primary dealer" by the Federal Reserve Bank of New
York or from a Permitted Bank as counterparty to a written repurchase
agreement obligating such counterparty to repurchase such obligations
not later than 14 days after the purchase thereof and which provides
that the obligations which are the subject thereof are held for the
benefit of the Company or a Restricted Subsidiary by a custodian which
is a Permitted Bank and which is not a counterparty to the repurchase
agreement in question;
(b) the Company or any Restricted Subsidiary may acquire
Capital Stock or other ownership interests, whether in a single transaction or a
series of related transactions, of a Person (i) located in the United States or
Canada, (ii) incorporated or otherwise formed pursuant to the laws of the United
States or Canada or any state or province thereof or the District of Columbia
and (iii) engaged in substantially the same business as the Company such that,
upon the completion of such transaction or series of transactions, such Person
becomes a Restricted Subsidiary;
(c) subject to the provisions of subdivision (h) below, the
Company or any Restricted Subsidiary may make and own Investments (in addition
to Investments permitted by subdivisions (a), (b), (d), (e), (f) and (g) of this
Section 8.4 in any Person incorporated or otherwise formed pursuant to the laws
of the United States or Canada or any state or province thereof or the District
of Columbia which is engaged in the United States or Canada in substantially the
same business as the Company; provided that (i) the aggregate amount of all such
Investments made by the Company and its Restricted Subsidiaries following the
Original Closing Date (including without limitation the transactions
contemplated by this Agreement) and outstanding pursuant to this subdivision (c)
and subdivision (h) below shall not at any date of determination exceed 10% of
Total Assets (the "Investment Limit"), provided that, in addition to Investments
that would be permitted under the Investment Limit, during any fiscal year the
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Company and its Restricted Subsidiaries may invest up to $25,000,000 (the
"Annual Limit") pursuant to the provisions of this subdivision (c), but the
unused amount of the Annual Limit shall not be carried over to any future years,
(ii) such Investments shall become part of the General Collateral and shall be
subjected to the Lien of the Security Documents and (iii) such Investments shall
not be made in Capital Stock or Indebtedness of the Public Partnership or any of
its Subsidiaries (other than the Company and the Restricted Subsidiaries);
(d) the Company or any Restricted Subsidiary may make and own
Investments (x) arising out of loans and advances to employees incurred in the
ordinary course of business not in excess of $1,000,000 at any time outstanding,
(y) arising out of extensions of trade credit or advances to third parties in
the ordinary course of business and (z) acquired by reason of the exercise of
customary creditors' rights upon default or pursuant to the bankruptcy,
insolvency or reorganization of a debtor;
(e) the Company and any Restricted Subsidiary may create or
become liable with respect to any Contingent Obligation constituting an
obligation, warranty or indemnity, not guaranteeing Indebtedness of any Person,
which is undertaken or made in the ordinary course of business;
(f) the Company may create and become liable with respect to
any Interest Rate Agreements;
(g) any Restricted Subsidiary may make Investments in the
Company; and
(h) the Company or any Restricted Subsidiary may make or own
Investments in Unrestricted Subsidiaries, provided that the Net Amount of
Unrestricted Investment shall not at any time exceed $5,000,000 (and subject to
the limitations specified in subdivision (c) above).
The foregoing notwithstanding, the Company may have
outstanding undrawn letters of credit (including Letters of Credit) not in
excess of $35,000,000.
8.5 Restricted Payments. The Company will not directly or indirectly
declare, order, pay, make or set apart any sum for any Restricted Payment,
except that the Company may declare or order, and make, pay or set apart, once
during each calendar quarter a Restricted Payment if (a) such Restricted Payment
is in an amount not exceeding Available Cash for the immediately preceding
calendar quarter, and (b) immediately after giving effect to any such proposed
action no Event of Default (or Default under Sections 9.1(a), (f) or (g)) shall
exist and be continuing. The Company will comply with, and accrue on its books,
the reserve provisions required under the definition of Available Cash. The
Company will not, in any event, directly or indirectly declare, order, pay or
make any Restricted Payment except in cash. The Company will not permit any
Restricted Subsidiary to declare, order, pay or make any Restricted Payment or
to set apart any sum or property for any such purpose (it being understood that
nothing in this Section 8.5 shall prohibit any such Restricted Subsidiary from
declaring, ordering, paying, making, or setting apart any sum or property for,
any payment or other distribution or dividend to (i) the Company or any
Wholly-Owned Restricted Subsidiary and (ii) so long as no Default or Event of
Default shall occur and be continuing, all holders of Capital Stock of such
Restricted Subsidiary on a pro rata
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basis) (with any such distribution or dividend to a Control Affiliate being
subject to the limitation of the first sentence of this Section 8.5).
8.6 Transactions with Affiliates. The Company will not, and will not
permit any Restricted Subsidiary to, directly or indirectly, engage in any
transaction with any Affiliate, including without limitation the purchase,
transfer, disposition, sale, lease or exchange of assets or the rendering of any
service, unless (1)(a) such transaction or series of related transactions is on
fair and reasonable terms that are no less favorable to the Company or such
Restricted Subsidiary, as the case may be, than those which would be obtained in
an arm's-length transaction at the time such transaction is agreed upon between
Persons which are not Affiliates, and (b) with respect to a transaction or
series of transactions involving aggregate payments or value equal to or greater
than $15 million, the Company shall have delivered an Officers' Certificate to
the Agent certifying that such transaction or series of transactions complies
with the preceding clause (a) and that such transaction or series of
transactions has been approved by a majority of the Board of Directors of the
General Partner (including a majority of the Disinterested Directors), or (2)
such transaction or series of related transactions is between the Company and
any Wholly-Owned Restricted Subsidiary or between two Wholly-Owned Restricted
Subsidiaries, provided, however, that this Section 8.6 will not restrict the
Company, any Restricted Subsidiary or the General Partner from entering into (i)
any employment agreement, stock option agreement, restricted stock agreement or
other similar agreement or arrangement in the ordinary course of business, (ii)
transactions permitted by Section 8.5 and (iii) transactions in the ordinary
course of business in connection with reinsuring the self-insurance programs or
other similar forms of retained insurable risks of the retail propane business
operated by the Company, its Subsidiaries and its Affiliates.
8.7 Subsidiary Stock and Indebtedness. The Company will not:
(a) directly or indirectly sell, assign, pledge or otherwise
dispose of any Indebtedness of or any shares of stock or similar interests of
(or warrants, rights or options to acquire stock or similar interests of) any
Restricted Subsidiary, except to a Wholly-Owned Restricted Subsidiary;
(b) permit any Restricted Subsidiary directly or indirectly to
sell, assign, pledge or otherwise dispose of any Indebtedness of the Company or
any other Restricted Subsidiary, or any shares of stock or similar interests of
(or warrants, rights or options to acquire stock or similar interests of) any
other Restricted Subsidiary, except to the Company or a Wholly-Owned Restricted
Subsidiary;
(c) permit any Restricted Subsidiary to have outstanding any
shares of stock or similar interests which are preferred over any other shares
of stock or similar interests in such Restricted Subsidiary owned by the Company
or a Wholly-Owned Restricted Subsidiary unless such shares of preferred stock or
similar interests are owned by the Company or a Wholly-Owned Restricted
Subsidiary; or
(d) permit any Restricted Subsidiary directly or indirectly to
issue or sell (including without limitation in connection with a merger or
consolidation of such Subsidiary otherwise permitted by Section 8.8(a)) any
shares of its stock or similar interests (or warrants,
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rights or options to acquire its stock or similar interests) except to the
Company or a Wholly-Owned Restricted Subsidiary;
provided that, (i) any Restricted Subsidiary may sell, assign or otherwise
dispose of Indebtedness of the Company if, assuming such Indebtedness were
incurred immediately after such sale, assignment or disposition, such
Indebtedness would be permitted under Section 8.1 (other than Section 8.1(c))
(in which case such Indebtedness need not be subject to the subordination
provisions required by Section 8.1(c)) and (ii) subject to compliance with
Section 8.8(c), all Indebtedness and shares of stock or partnership interests of
any Restricted Subsidiary owned by the Company or any other Restricted
Subsidiary may be simultaneously sold as an entirety for an aggregate
consideration at least equal to the fair value thereof (as determined in good
faith by the General Partner) at the time of such sale if (x) such Restricted
Subsidiary does not at the time own (A) any Indebtedness of the Company or any
other Restricted Subsidiary (other than Indebtedness which, if incurred
immediately after such transaction, would be permitted under Section 8.1, other
than Section 8.1(c)) (in which case such Indebtedness need not be subject to the
subordination provisions required by Section 8.1(c)) or (B) any stock or other
interest in any other Restricted Subsidiary which is not also being
simultaneously sold as an entirety in compliance with this proviso or Section
8.8(b)(ii) and (y) at the time of such transaction and immediately after giving
effect thereto, the Company could incur at least $1 of additional Indebtedness
in compliance with clauses (i) and (ii) of Section 8.1(f).
8.8 Consolidation, Merger, Sale of Assets, etc. The Company will not,
and will not permit any Restricted Subsidiary to, directly or indirectly,
(a) consolidate with or merge into any other Person or permit
any other Person to consolidate with or merge into it, except that:
(i) any Restricted Subsidiary may consolidate with or
merge into the Company or a Wholly-Owned Restricted Subsidiary if the
Company or a Wholly-Owned Restricted Subsidiary, as the case may be,
shall be the surviving Person and if, immediately after giving effect
to such transaction, no Default or Event of Default shall exist and be
continuing; and
(ii) any entity (other than a Restricted Subsidiary)
may consolidate with or merge into the Company or a Wholly-Owned
Restricted Subsidiary if the Company or a Wholly-Owned Restricted
Subsidiary, as the case may be, shall be the surviving Person and if,
immediately after giving effect to such transaction, (x) the Company
(1) shall not have a Consolidated Net Worth, determined in accordance
with GAAP applied on a basis consistent with the consolidated financial
statements of the Company most recently delivered pursuant to Section
7.1 (b), of less than the Consolidated Net Worth of the Company
immediately prior to the effectiveness of such transaction,
satisfaction of this requirement to be set forth in reasonable detail
in an Officers' Certificate delivered to the Agent at the time of such
transaction, (2) shall not be liable with respect to any Indebtedness
or allow its property to be subject to any Lien which it could not
become liable with respect to or allow its property to become subject
to under this Agreement (including without limitation under Section 8.1
or 8.3) on the date of such transaction, and
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(3) could incur at least $1 of additional Indebtedness in compliance
with clauses (i) and (ii) of Section 8.1(f), (y) substantially all of
the assets of the Company and its Restricted Subsidiaries shall be
located and substantially all of their business shall be conducted
within the United States and Canada and (z) no Default or Event of
Default shall exist and be continuing; and
(iii) subject to compliance with Section 11.1, the
Company may consolidate with or merge into any other entity if (w) the
surviving entity is a corporation or limited partnership organized and
existing under the laws of the United States of America or any state
thereof or the District of Columbia or Canada, with substantially all
of its properties located and its business conducted (without giving
effect to the properties owned by, and the business conducted by,
Unrestricted Subsidiaries) within the United States and Canada, (x)
such corporation or limited partnership expressly and unconditionally
assumes the obligations of the Company under this Agreement, and the
other Loan Documents and License Agreements to which the Company is a
party, and delivers to the Agent an opinion of counsel reasonably
satisfactory to the Required Banks with respect to the due
authorization and execution of the related agreement of assumption and
the enforceability of such agreement against such corporation or
partnership and the continued effectiveness and priority of the Liens
of the Security Documents, (y) immediately after giving effect to such
transaction, such corporation or limited partnership (1) shall not have
(without giving effect to Unrestricted Subsidiaries) a Consolidated Net
Worth, determined in accordance with GAAP applied on a basis consistent
with the consolidated financial statements of the Company most recently
delivered pursuant to Section 7.1(b), of less than the Consolidated Net
Worth of the Company immediately prior to the effectiveness of such
transaction, satisfaction of this requirement to be set forth in
reasonable detail in an Officers' Certificate delivered to the Agent at
the time of such transaction, (2) shall not be liable with respect to
any Indebtedness or allow its property to be subject to any Lien which
it could not become liable with respect to or allow its property to
become subject to under this Agreement (including without limitation
under Section 8.1 or 8.3) on the date of such transaction and (3) could
incur at least $1 of additional Indebtedness in compliance with clauses
(i) and (ii) of Section 8.1(f), and (z) immediately after giving effect
to such transaction no Default or Event of Default shall exist and be
continuing; or
(b) sell, lease, abandon or otherwise dispose of all or
substantially all its assets, except that:
(i) any Restricted Subsidiary may sell, lease or
otherwise dispose of all or substantially all its assets to the Company
or to a Wholly-Owned Restricted Subsidiary; and
(ii) subject to compliance with clause (c) of this
Section 8.8, any Restricted Subsidiary may sell, lease or otherwise
dispose of all or substantially all its assets as an entirety for an
aggregate consideration at least equal to the fair value thereof (as
determined in good faith by the General Partner) at the time of such
sale if (x) the assets being sold, leased or otherwise disposed of do
not include (A) any Indebtedness of
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the Company or any other Restricted Subsidiary (other than Indebtedness
which, if incurred immediately after such transaction, would be
permitted under Section 8.1 (other than Section 8.1(c) so long as such
Indebtedness is held by a Person other than the Company or a Restricted
Subsidiary), in which case such Indebtedness need not be subject to the
subordination provisions required by Section 8.1(c) or (B) any stock of
or other equity interest in any other Restricted Subsidiary which is
not also being simultaneously sold as an entirety in compliance with
this subdivision (b)(ii) or the proviso of Section 8.7 and (y) at the
time of such transaction and immediately after giving effect thereto,
the Company could incur at least $1 of additional Indebtedness in
compliance with clauses (i) and (ii) of Section 8.1(f); and
(iii) the Company may sell, lease or otherwise
dispose of all or substantially all its assets to any corporation or
limited partnership into which the Company could be consolidated or
merged in compliance with subdivision (a)(iii) of this Section 8.8,
provided that each of the conditions set forth in such subdivision
(a)(iii) shall have been fulfilled; or
(c) (1) sell, lease, convey, abandon or otherwise dispose of
any of its assets (except in a transaction permitted by subdivision (a)(i),
(a)(iii), (b)(i) or (b)(iii) of this Section 8.8 or sales of inventory in the
ordinary course of business consistent with past practice), including by way of
a Sale and Lease-Back Transaction, or (2) issue or sell Capital Stock of the
Company or any Subsidiary (other than to the Company or a Wholly-Owned
Restricted Subsidiary), in the case of either clause (1) or (2) above, whether
in a single transaction or a series of related transactions (each of the
foregoing non-excepted transactions, an "Asset Sale"), unless:
(i) immediately after giving effect to such proposed
disposition, no Default or Event of Default shall exist and be
continuing; and
(ii) one of the following two conditions shall be
satisfied:
(A) the aggregate Net Proceeds of all assets
so disposed of (whether or not leased back) by the
Company and its Restricted Subsidiaries during the
current fiscal year (including (x) amounts deemed to
be proceeds in connection with designations of
Restricted Subsidiaries as Unrestricted Subsidiaries
during such fiscal year under Section 7.13, (y) Net
Proceeds of dispositions of shares pursuant to
Section 8.7 or sales of assets pursuant to Section
8.8(b)), less the amount of all Net Proceeds of prior
dispositions of assets during such fiscal year
previously applied in accordance with subdivision
(ii)(B) of this Section 8.8(c), shall not exceed
$10,000,000 during such fiscal year; or
(B) in the event that such Net Proceeds
(less the amount thereof previously applied in
accordance with this subdivision (ii)(B) during the
current fiscal year exceed $10,000,000 (such excess
Net Proceeds actually realized being herein called
"Excess Sale Proceeds"), the Company shall within 360
days of the date of the disposal of the assets giving
rise to such proceeds, cause an amount equal to such
Excess Sale Proceeds to be applied (with the
designation of an
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Unrestricted Subsidiary as a Restricted Subsidiary
being deemed to be such an application to the extent
of the fair value of such Restricted Subsidiary as
determined in good faith by the General Partner) (x)
to the acquisition of assets in replacement of the
assets so disposed of or of assets which may be
productively used in the United States or Canada in
the conduct of the Business (and such newly acquired
assets shall become part of the General Collateral
and shall be subjected to the Lien of the Security
Documents), or (y) to the extent not applied pursuant
to the immediately preceding clause (x), to the
prepayment of the Obligations and Parity Debt, if
any, pursuant to Section 2.7(a) hereof, all as
provided in Section 4(c) of the Collateral Agency
Agreement and such Section 2.7(a); and
(iii) (A) the consideration received for such assets
is at least equal to their aggregate fair market value (as determined
in good faith by the Board of Directors of the General Partner) at the
time of such disposition and that such consideration has been applied
or is being held for application in accordance with the terms of this
Agreement and (B) at least 80% of the consideration therefor received
is in the form of cash; provided, however, that the amount of (1) any
liabilities (as shown on the Company's or such Restricted Subsidiary's
most recent balance sheet or in the notes thereto) of the Company or
any Restricted Subsidiary (other than liabilities that are by their
terms subordinated in right of payment to the Loans) that are assumed
by the transferee of any such assets and (2) any notes or other
obligations received by the Company or any such Restricted Subsidiary
from such transferee that are immediately converted by the Company or
such Restricted Subsidiary into cash (to the extent of the cash
received), shall be deemed to be cash for purposes of this clause (B);
and provided further, that the 80% limitation referred to in this
clause (B) shall not apply to any Asset Sale in which the cash portion
of the consideration received therefrom, determined in accordance with
the foregoing proviso, is equal to or greater than what the after-tax
proceeds would have been had such Asset Sale complied with the
aforementioned 80% limitation.
Notwithstanding the foregoing, Asset Sales shall not be deemed to include (1)
any transfer of assets or issuance or sale of Capital Stock by the Company or
any Restricted Subsidiary to the Company or a Wholly-Owned Restricted
Subsidiary, (2) any transfer of assets or issuance or sale of Capital Stock by
the Company or any Restricted Subsidiary to any Person in exchange for other
assets used in a line of business permitted under Section 7.4(c) and having a
fair market value (as determined in good faith by the General Partner) not less
than that of the assets so transferred or Capital Stock so issued or sold (so
long as such assets shall become part of the General Collateral and shall be
subjected to the Lien of the Security Documents) and (3) any transfer of assets
pursuant to an Investment permitted by Section 8.4.
8.9 Use of Proceeds. (a) The Borrowers will not, and will not suffer or
permit any Subsidiary to, use any portion of the Loan proceeds or any Letter of
Credit, directly or indirectly, (i) to purchase or carry Margin Stock, (ii) to
repay or otherwise refinance Indebtedness of the Company or others incurred to
purchase or carry Margin Stock, (iii) to extend credit for the
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purpose of purchasing or carrying any Margin Stock, or (iv) to acquire any
security in any transaction that is subject to Section 13 or 14 of the Exchange
Act.
(b) The Borrowers will not, directly or indirectly, use any
portion of the Loan proceeds or any Letter of Credit (i) knowingly to purchase
Ineligible Securities from the Arranger during any period in which the Arranger
makes a market in such Ineligible Securities, (ii) knowingly to purchase during
the underwriting or placement period Ineligible Securities being underwritten or
privately placed by the Arranger, or (iii) to make payments of principal or
interest on Ineligible Securities underwritten or privately placed by the
Arranger and issued by or for the benefit of the Company or any Affiliate of the
Company. The Arranger is a registered broker-dealer and permitted to underwrite
and deal in certain Ineligible Securities; and "Ineligible Securities" means
securities which may not be underwritten or dealt in by member banks of the
Federal Reserve System under Section 16 of the Banking Act of 1933 (12 U.S.C.
Section 24, Seventh), as amended.
(c) The proceeds of the Revolving Loans will be used for
working capital purposes and general purposes of the Company and its Restricted
Subsidiaries.
(d) The proceeds of the Acquisition Loans will be used for the
acquisition by the Company of companies or assets in businesses similar to the
Business, and may be used, without limitation, for the payment of related fees
and expended and the retirement, repayment or refinancing of any Indebtedness
incurred as part of such acquisition, including any Indebtedness assumed by the
Company in connection with an addition of assets by way of capital contribution.
(e) The proceeds of the Swingline Loans will be used for
working capital purposes and general purposes of the Company and its Restricted
Subsidiaries.
8.10 Change in Business. The Company will not, and will not suffer or
permit any Restricted Subsidiary to, engage in any material line of business
substantially different from the Business.
8.11 Accounting Changes. The Company will not, and will not suffer or
permit any Restricted Subsidiary to, make any significant change in accounting
treatment or reporting practices, except as required by GAAP, or change the
fiscal year of the Company or of any Subsidiary.
8.12 Clean Down. The Borrowers will not permit the outstanding
Revolving Loans to exceed $30,000,000 for a period of 30 consecutive days during
each fiscal year.
8.13 Receivables. The Company will not, and will not permit any
Restricted Subsidiary to, discount, pledge or sell (with or without recourse)
any of its accounts or notes receivable, except for sales of receivables (i)
made in the ordinary course of business with a face amount not to exceed
$500,000 in the aggregate which have been sold and remain unpaid by the account
debtors, (ii) without recourse which are seriously past due and which have been
substantially written off as uncollectible or collectible only after extended
delays, (iii) from a Restricted
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Subsidiary to the Company or (iv) made in connection with the sale of a business
but only with respect to the receivables directly generated by the business so
sold.
8.14 Leverage Ratio. The Company will not permit the Leverage Ratio at
any time to exceed 5.25 to 1.00. For purposes of this Section 8.14, the Company
may elect whether to calculate EBITDA (i) as at the end of any fiscal quarter
for the four full consecutive fiscal quarters most recently ended or (ii) as at
the end of any fiscal quarter for the eight full consecutive fiscal quarters
most recently ended (in which case EBITDA shall be divided by two).
ARTICLE IX
EVENTS OF DEFAULT
9.1 Event of Default. Any of the following shall constitute an "Event
of Default":
(a) Non-Payment. The Borrowers fail to pay the Agent or any
Bank or the Issuing Bank, (i) when and as required to be paid herein, any amount
of principal of any Loan or L/C Borrowing, or (ii) within 5 days after the same
becomes due, any interest, fee, or any other amount payable to the Agent or the
Banks hereunder or under any other Loan Document; or
(b) Representation or Warranty. Any representation or warranty
made in writing by any Borrower or any Restricted Subsidiary made or deemed made
herein, in any other Loan Document, or in any License Agreements, or which is
contained in any certificate, financial statement or other document of such
Borrower or such Restricted Subsidiary required to be delivered hereunder,
furnished at any time under this Agreement, or in or under any other Loan
Document, is incorrect in any material respect on or as of the date made or
deemed made; or
(c) Specific Defaults. There shall be a default in the
performance of, or compliance with, any term contained in Section 7.1(g) or any
of Sections 8.1 through 8.8, inclusive, 7.4(a)(i) and 8.14 (and, in the case of
the first sentence of Section 8.14, such default shall continue unremedied for
30 days), provided, however, that with respect to (i) incurrence of Indebtedness
in violation of Section 8.1 in an aggregate outstanding principal amount which
is less than $5,000,000, (ii) incurrence of a Lien in violation of Section 8.3
which secures Indebtedness which is in an aggregate outstanding principal amount
of less than $5,000,000, (iii) transactions with an Affiliate in violation of
Section 8.6 involving an aggregate amount of less than $2,000,000, (iv) the
making of any Investment or creation of a Contingent Obligation in violation of
Section 8.4 involving an aggregate amount of less than $2,000,000, or (v) the
entering into of any transaction in violation of Section 8.7 involving an
aggregate amount of less than $2,000,000, there shall be no Event of Default
hereunder unless the aggregate amount of all violations under clauses (i)
through (v) exceeds $8,000,000 on any date of determination or any such
violation shall remain uncured for 30 days after a Responsible Officer becomes
aware of any such violation; or
(d) Other Defaults. Any Borrower or any Restricted Subsidiary
fails to perform or observe any other term or covenant contained in this
Agreement, any other Loan Document, or in any License Agreements, and such
default shall continue unremedied for a period of 30 days
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after the date upon which written notice thereof is given to the Borrowers by
the Agent or the Required Banks; provided, however, that defaults under any
Mortgage (other than under any Specified Mortgage) shall not constitute an Event
of Default under this subdivision (d) unless such default shall not have been
remedied within the applicable 30-day period and when aggregated with all other
defaults described in this proviso (w) applies to at least 17 Mortgages, or (x)
applies to Mortgages covering Mortgaged Property having an aggregate fair market
value at the time of at least $1,000,000, or (y) would cost in excess of
$1,000,000 to cure or would present a reasonable likelihood of resulting in
liability to the Company or the Restricted Subsidiaries in excess of $1,000,000
or (z) would result in a Material Adverse Effect; or
(e) Cross-Default. The Company, any Restricted Subsidiary, the
General Partner, any of its Subsidiaries or the Public Partnership or any of its
Subsidiaries (other than the Partnership Unrestricted Subsidiaries) (as
principal or guarantor or other surety) shall default in the payment of any
amount of principal of or premium or interest on any Parity Debt or any other
Indebtedness, other than the Obligations (regardless of whether or not such
payment default shall have been waived by the holders of such Indebtedness); or
any event shall occur or condition shall exist in respect of any Indebtedness of
the Company, any Restricted Subsidiary, the General Partner, any of its
Subsidiaries or the Public Partnership or any of its Subsidiaries (other than
the Partnership Unrestricted Subsidiaries) or under any evidence of any such
Indebtedness or under any mortgage, indenture or other agreement relating
thereto, and the effect of such event or condition is to cause (or to permit one
or more Persons to cause) such Indebtedness to become due or be repurchased or
repaid before its stated maturity or before its regularly scheduled dates of
payment (other than pursuant to mandatory prepayment provisions pursuant to a
(1) Change of Control or similar transaction or (2) prepayment under
circumstances and on terms substantially identical to, and not inconsistent
with, Section 9.3(b) of the agreements governing the Mortgage Notes to the
extent it relates to Excess Taking Proceeds, as defined therein, or Section
8.8(c)(ii) to the extent it relates to Excess Sale Proceeds, in each case not
involving a default) or to permit the holders thereof to cause the Company, any
Restricted Subsidiary, the General Partner, any of its Subsidiaries or the
Public Partnership or any of its Subsidiaries (other than the Partnership
Unrestricted Subsidiaries) to repurchase or repay such Indebtedness (other than
pursuant to mandatory prepayment provisions pursuant to a (1) Change of Control
or similar transaction or (2) prepayment under circumstances and on terms
substantially identical to, and not inconsistent with, Section 9.3(b) of the
agreements governing the Mortgage Notes to the extent it related to Excess
Taking Proceeds, as defined therein, or Section 8.3(c)(ii) to the extent it
relates to Excess Sale Proceeds, in each case not involving a default), and such
default, event or condition shall continue for more than the period of grace, if
any, specified therein (regardless of whether or not such default, event or
condition shall have been waived by the holders of such Indebtedness); provided
that the aggregate principal amount of all Indebtedness as to which such a
default (payment or other), event or condition shall occur or exist exceeds
$7,500,000; or
(f) Insolvency Voluntary Proceedings. Any Borrower or any
Significant Subsidiary Group (i) ceases or fails to be solvent, or admits in
writing its inability to pay its debts as they become due, subject to applicable
grace periods, if any, whether at stated maturity or otherwise; (ii) voluntarily
ceases to conduct its business in the ordinary course; (iii) commences
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any Insolvency Proceeding with respect to itself; or (iv) takes any action to
effectuate or authorize any of the foregoing; or
(g) Involuntary Proceedings. (i) Any involuntary Insolvency
Proceeding is commenced or filed against any Borrower or any Significant
Subsidiary Group, or any writ, judgment, warrant of attachment, execution or
similar process, is issued or levied against a substantial part of any
Borrower's or any such Significant Subsidiary Group's properties, and any such
proceeding or petition shall not be dismissed, or such writ, judgment, warrant
of attachment, execution or similar process shall not be released, vacated or
fully bonded within 60 days after commencement, filing or levy; (ii) any
Borrower or any such Significant Subsidiary Group admits the material
allegations of a petition against it in any Insolvency Proceeding, or an order
for relief (or similar order under non-U.S. law) is ordered in any Insolvency
Proceeding; or (iii) any Borrower or any such Significant Subsidiary Group
acquiesces in the appointment of a receiver, trustee, custodian, conservator,
liquidator, mortgagee in possession (or agent therefor), or other similar Person
for itself or a substantial portion of its property or business; or
(h) Judgments. Any judgment or order for the payment of money
in excess of $9,000,000 and not covered by insurance shall be rendered against
any of the Borrowers or any Significant Subsidiary Group, and either
(a) enforcement proceedings shall have been commenced
by any creditor upon such judgment or order; or
(b) there shall be any period of 60 consecutive days
during which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect and prior to the expiration
of such 60-day period, the judgment shall not have been discharged.
(i) Pension Plans. Any of the following events shall occur
with respect to any Pension Plan and such events, either alone or together,
present a reasonable likelihood of having a Material Adverse Effect:
(a) the institution of any steps by any Borrower or
any other Person to terminate a Pension Plan maintained or sponsored by any
Borrower or any Subsidiary of a Borrower; or
(b) an ERISA Event.
(j) Change of Control. There occurs any Change of Control; or
(k) Impairment of Security, etc. Any Loan Document or any Lien
granted thereunder shall (except in accordance with its terms) in whole or in
part, cease to be effective or cease to be the legally valid, binding and
enforceable obligation of any Obligor party thereto, except to the extent that
the assets of the Company or any of its Restricted Subsidiaries which are
secured by the Liens which are terminated, no longer effective or no longer
enforceable obligations of such Obligor are not, individually or in the
aggregate, material to the business of the
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Company and its Restricted Subsidiaries taken as a whole; any Borrower or any
other Obligor shall, directly or indirectly, contest in any manner such
effectiveness, validity, binding nature or enforceability or any Lien on
property material to the business of the Company and its Restricted Subsidiaries
taken as a whole securing any Obligations shall, in whole or in part, cease to
be a perfected first priority Lien except as permitted by this Agreement.
9.2 Remedies. If any Event of Default occurs and is continuing, the
Agent shall, at the request of the Required Banks,
(a) declare the commitment of each Bank to make Loans and any
obligation of the Issuing Bank to Issue Letters of Credit to be terminated,
whereupon such commitments shall be terminated;
(b) declare an amount equal to the maximum aggregate amount
that is or at any time thereafter may become available for drawing under any
outstanding Letters of Credit (whether or not any beneficiary shall have
presented, or shall be entitled at such time to present, the drafts or other
documents required to draw under such Letters of Credit) to be immediately due
and payable, and declare the unpaid principal amount of all outstanding Loans,
all interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by each of the Borrowers; and/or
(c) exercise on behalf of itself and the Banks all rights and
remedies available to it and the Banks under the Loan Documents or applicable
law;
provided, however, that upon the occurrence of any event specified in subsection
(f) or (g) of Section 9.1 (in the case of clause (i) of subsection (g) upon the
expiration of the 60-day period mentioned therein), the obligation of each Bank
to make Loans and any obligation of the Issuing Bank to Issue Letters of Credit
shall automatically terminate and the unpaid principal amount of all outstanding
Loans and all interest and other amounts as aforesaid shall automatically become
due and payable without further act of the Agent or any Bank.
9.3 Rights Not Exclusive. The rights provided for in this Agreement and
the other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other instrument, document or agreement now existing or hereafter arising.
ARTICLE X
THE AGENT
10.1 Appointment and Authorization. (a) Each Bank hereby irrevocably
(subject to Section 10.9) appoints, designates and authorizes the Agent to take
such action on its behalf under the provisions of this Agreement and each other
Loan Document and to exercise such powers and perform such duties as are
expressly delegated to it by the terms of this Agreement or
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any other Loan Document, together with such powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary contained elsewhere in
this Agreement or in any other Loan Document, the Agent shall not have any
duties or responsibilities, except those expressly set forth herein, nor shall
the Agent have or be deemed to have any fiduciary relationship with any Bank,
and no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Agent.
(b) The Issuing Bank shall act on behalf of the Banks with
respect to any Letters of Credit Issued by it and the documents associated
therewith until such time and except for so long as the Agent may agree at the
request of the Required Lenders to act for such Issuing Bank with respect
thereto; provided, however, that the Issuing Bank shall have all of the benefits
and immunities (i) provided to the Agent in this Article X with respect to any
acts taken or omissions suffered by the Issuing Bank in connection with Letters
of Credit Issued by it or proposed to be Issued by it and the application and
agreements for letters of credit pertaining to the Letters of Credit as fully as
if the term "Agent", as used in this Article X, included the Issuing Bank with
respect to such acts or omissions, and (ii) as additionally provided in this
Agreement with respect to the Issuing Bank.
10.2 Delegation of Duties. The Agent may execute any of its duties
under this Agreement or any other Loan Document by or through agents, employees
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects with
reasonable care.
10.3 Liability of Agent. None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Banks for any recital,
statement, representation or warranty made by any of the Borrowers or any
Subsidiary or Affiliate of any of the Borrowers, or any officer thereof,
contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection with, this Agreement or any
other Loan Document, or the validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or any other Loan Document, or for any failure
of any of the Borrowers or any other party to any Loan Document other than the
Agent to perform its obligations hereunder or thereunder. No Agent-Related
Person shall be under any obligation to any Bank to ascertain or to inquire as
to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the
properties, books or records of the Borrowers or any of the Borrowers'
Subsidiaries or Affiliates.
10.4 Reliance by Agent. (a) The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex, written
statement or other document believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons, and upon advice and
statements of legal counsel (including counsel to the Borrowers), independent
accountants
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and other experts selected by the Agent. The Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other Loan
Document not expressly delegated to the Agent under a Loan Document unless it
shall first receive such advice or concurrence of the Required Banks as it deems
appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by the Banks against any and all liability and expense which may be
incurred by it by reason of taking or continuing to take any such action. The
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other Loan Document in accordance with a
request or consent of the Required Banks and such request and any action taken
or failure to act pursuant thereto shall be binding upon all of the Banks.
(b) For purposes of determining compliance with the conditions
specified in Section 5.l, each Bank that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by the Agent to such Bank for consent,
approval, acceptance or satisfaction, or required thereunder to be consented to
or approved by or acceptable or satisfactory to the Bank.
10.5 Notice of Default. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default, except with
respect to defaults in the payment of principal, interest and fees required to
be paid to the Agent for the account of the Banks, unless the Agent shall have
received written notice from a Bank or the Borrowers referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a Notice of default. The Agent will notify the Banks of its receipt of
any such notice. The Agent shall take such action with respect to such Default
or Event of Default as may be requested by the Required Banks in accordance with
Article IX; provided, however, that unless and until the Agent has received any
such request, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable or in the best interest of the Banks.
10.6 Credit Decision. Each Bank acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by the Agent hereafter taken, including any review of the affairs of the
Borrowers and their Subsidiaries, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Bank. Each Bank
represents to the Agent that it has, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Borrowers and their Subsidiaries, and all applicable
bank regulatory laws relating to the transactions contemplated hereby, and made
its own decision to enter into this Agreement and to extend credit to the
Borrowers hereunder. Each Bank also represents that it will, independently and
without reliance upon any Agent-Related Person and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigations as
it deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of the Borrowers.
Except for notices, reports and other documents expressly herein required to be
furnished to the Banks by the Agent, the Agent shall not have any duty or
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responsibility to provide any Bank with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of the Borrowers which may come into the
possession of any of the Agent-Related Persons.
10.7 Indemnification. Whether or not the transactions contemplated
hereby are consummated, the Banks shall indemnify upon demand the Agent-Related
Persons (to the extent not reimbursed by or on behalf of the Borrowers and
without limiting the obligation of the Borrowers to do so), pro rata, from and
against any and all Indemnified Liabilities; provided, however, that no Bank
shall be liable for the payment to the Agent-Related Persons of any portion of
such Indemnified Liabilities resulting from such Person's gross negligence or
willful misconduct. Without limitation of the foregoing, each Bank shall
reimburse the Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including Attorney Costs) incurred by the Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that the Agent is not
reimbursed for such expenses by or on behalf of the Borrowers. The undertaking
in this Section shall survive the payment of all Obligations hereunder and the
resignation or replacement of the Agent.
10.8 Agent in Individual Capacity. BofA and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with the Borrowers and their
Subsidiaries and Affiliates as though BofA were not the Agent hereunder and
without notice to or consent (except as otherwise required hereby) of the Banks.
The Banks acknowledge that, pursuant to such activities, BofA or its Affiliates
may receive information regarding the Borrowers or its Affiliates (including
information that may be subject to confidentiality obligations in favor of the
Borrowers or such Subsidiary) and acknowledge that the Agent shall be under no
obligation to provide such information to them. With respect to its Loans, BofA
shall have the same rights and powers under this Agreement as any other Bank and
may exercise the same as though it were not the Agent, and the terms "Bank" and
"Banks" include BofA in its individual capacity.
10.9 Successor Agent. The Agent may, and at the request of the Required
Banks shall, resign as Agent upon 30 days' prior written notice to the Banks and
the Borrowers. If the Agent resigns under this Agreement, the Required Banks
shall appoint from among the Banks a successor agent for the Banks which
successor agent shall be approved by the Company. If no successor agent is
appointed prior to the effective date of the resignation of the Agent, the Agent
may appoint, after consulting with the Banks and the Company, a successor agent
from among the Banks. Upon the acceptance of its appointment as successor agent
hereunder, such successor agent shall succeed to all the rights, powers and
duties of the retiring Agent and the term "Agent" shall mean such successor
agent and the retiring Agent's appointment, powers and duties as Agent shall be
terminated. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Article X and Sections 11.4 and 11.5 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement. If no successor agent
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has accepted appointment as Agent by the date which is 30 days following a
retiring Agent's notice of resignation, the retiring Agent's resignation shall
nevertheless thereupon become effective and the Banks shall perform all of the
duties of the Agent hereunder until such time, if any, as the Required Banks
appoint a successor agent as provided for above. Notwithstanding the foregoing,
however, BofA may not be removed as the Agent at the request of the Required
Banks unless BofA or any Affiliate of BofA acting as Issuing Bank shall also be
simultaneously replaced as Issuing Bank, pursuant to documentation in form and
substance reasonably satisfactory to BofA and any such Affiliate.
10.10 Withholding Tax. (a) If any Bank is a Foreign Bank and such Bank
claims exemption from, or a reduction of, U.S. withholding tax under Sections
1441 or 1442 of the Code, such Bank agrees with and in favor of the Agent and
the Borrowers, to deliver to the Agent and the Borrowers:
(i) if such Bank claims an exemption from, or a
reduction of, withholding tax under a United States tax treaty,
properly completed IRS Form 1001 before the payment of any interest in
the first calendar year and before the payment of any interest in each
third succeeding calendar year during which interest may be paid under
this Agreement;
(ii) if such Bank claims that interest paid under
this Agreement is exempt from United States withholding tax because it
is effectively connected with a United States trade or business of such
Bank, two properly completed and executed copies of IRS Form 4224
before the payment of any interest is due in the first taxable year of
such Bank and in each succeeding taxable year of such Bank during which
interest may be paid under this Agreement; and
(iii) such other form or forms as may be required
under the Code or other laws of the United States as a condition to
exemption from, or reduction of, United States withholding tax.
Such Bank agrees to promptly notify the Agent and the Borrowers of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
(b) If any Bank claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form 1001 and
such Bank sells, assigns, grants a participation in, or otherwise transfers all
or part of the Obligations of the Borrowers to such Bank, such Bank agrees to
notify the Agent of the percentage amount in which it is no longer the
beneficial owner of Obligations of the Borrowers to such Bank. To the extent of
such percentage amount, the Agent will treat such Bank's IRS Form 1001 as no
longer valid.
(c) If any Bank claiming exemption from United States
withholding tax by filing IRS Form 4224 with the Agent sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations of the
Borrowers to such Bank, such Bank agrees to undertake sole responsibility for
complying with the withholding tax requirements imposed by Sections 1441 and
1442 of the Code.
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(d) If any Bank is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to such Bank
an amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by subsection (a)
of this Section are not delivered to the Agent, then the Borrowers and the Agent
may withhold from any interest payment to such Bank not providing such forms or
other documentation an amount equivalent to the applicable withholding tax.
(e) If the IRS or any other Governmental Authority of the
United States or other jurisdiction asserts a claim that the Agent did not
properly withhold tax from amounts paid to or for the account of any Foreign
Bank (because the appropriate form was not delivered, was not properly executed,
or because such Bank failed to notify the Agent of a change in circumstances
which rendered the exemption from, or reduction of, withholding tax ineffective,
or for any other reason) such Bank shall indemnify the Borrowers and the Agent
fully for all amounts paid, directly or indirectly, by the Agent or any Borrower
as tax or otherwise, including penalties and interest, and including any taxes
imposed by any jurisdiction on the amounts payable to the Agent or any Borrower
under this Section, together with all costs and expenses (including Attorney
Costs). The obligation of the Banks under this subsection shall survive the
payment of all Obligations and the resignation or replacement of the Agent.
10.11 Collateral Agency Agreement. The Banks hereby authorize the Agent
to enter into the Collateral Agency Agreement and agree to be bound by the terms
thereof.
ARTICLE XI
MISCELLANEOUS
11.1 Amendments and Waivers. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by the Borrowers therefrom, shall be effective unless the same shall
be in writing and signed by the Required Banks (or by the Agent at the written
request of the Required Banks) and the Borrowers and acknowledged by the Agent,
and then any such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided, however, that
no such waiver, amendment, or consent shall, unless in writing and signed by all
the Banks and the Borrowers do any of the following:
(a) increase or extend the Commitment of any Bank (or
reinstate any Commitment terminated pursuant to Section 9.2);
(b) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, interest, fees or other
amounts due to the Banks (or any of them) hereunder or under any other Loan
Document
(c) reduce the principal of, or the rate of interest specified
herein on any Loan, or (subject to clause (ii) below) any fees or other amounts
payable hereunder or under any other Loan Document;
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(d) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Loans which is required for the Banks
or any of them to take any action hereunder; or
(e) amend this Section, or Section 2.14, or any provision
herein providing for consent or other action by all Banks; or
(f) release all or substantially all the collateral securing
the Obligations;
and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the Agent in addition to the Required Banks or all the
Banks, as the case may be, affect the rights or duties of the Agent under this
Agreement or any other Loan Document, (ii) no amendment, waiver or consent
shall, unless in writing and signed by the Issuing Bank in addition to the
Required Banks or all the Banks, as the case may be, affect the rights or duties
of the Issuing Bank under this Agreement or any L/C-Related Documents relating
to any Letter of Credit Issued or to be Issued by it, and (iii) the Fee Letters
may be amended, or rights or privileges thereunder waived, in a writing executed
by the parties thereto.
In connection with a proposed merger, consolidation or sale of all or
substantially all of the assets of the Company in accordance with Section
8.8(a)(iii) or (b)(iii) to a corporation, the parties agree (i) to effect,
simultaneously with such transaction, all necessary and appropriate
modifications to the terms and conditions of this Agreement and the other Loan
Documents and License Agreements to which it is a party (including without
limitation the ability of the Company to make payments under Section 8.5, taking
into account the effect of any change in the tax status of the Company on its
financial condition and the applicable financial covenants) to reflect the
corporate existence of such successor corporation and any other matters in form
acceptable to the Required Banks, provided that such modified terms and
conditions convey to the parties substantially the same rights and obligations
provided under the Loan Documents and License Agreements to which it is a party
immediately prior to such transaction, and (ii) that any Default described in
Section 9.1(j) which would result from such transaction shall not be asserted by
the Agent or any Bank if after giving effect to such transaction UGI shall own
directly or indirectly at least 51% of the voting shares of the corporation that
is the successor to the Company.
In the event a Bank or Participant (as hereinafter defined) shall refuse to
enter into or consent to any amendment, waiver or other modification of any
provision of this Agreement or any other Loan Document, and such Bank's or
Participant's consent is necessary for such amendment, waiver or modification to
become effective, the Borrowers may pay Obligations (including, with respect to
Letter of Credit, cash collateralization of an interest therein) outstanding to
any such nonconsenting Bank or to any originating Bank having participated
interests to any such nonconsenting Participant and reduce or eliminate any such
Bank's Commitment; provided, that the Borrowers may take such action only if
Banks representing at least 80% of the outstanding Commitments necessary
therefor have entered into or consented to such amendment, waiver or
modification and no Default or Event of Default then exists.
11.2 Notices. (a) All notices, requests and other communications shall
be in writing and mailed, faxed, provided that any matter transmitted by the
Borrowers by facsimile shall be
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promptly confirmed by a telephone call to the recipient at the number specified
on Schedule 11.2 or such other telephone number as shall be designated by such
party in a written notice to the other parties, or delivered, to the address or
facsimile number specified for notices on Schedule 11.2; or, as directed to the
Borrowers or the Agent, to such other address or facsimile number as shall be
designated by such party in a written notice to the other parties, and as
directed to any other party, at such other address as shall be designated by
such party in a written notice to the Borrowers and the Agent.
(b) All such notices, requests and communications shall, when
delivered by overnight delivery, be effective the Business Day after when
delivered for overnight (next-day) delivery; or, if faxed, when transmitted in
legible form by facsimile machine; or if mailed, upon the third Business Day
after the date deposited into the U.S. mail; or if delivered, upon delivery;
except that notices pursuant to Article II or X shall not be effective until
actually received by the Agent.
(c) Any agreement of the Agent and the Banks herein to receive
certain notices by telephone or facsimile is solely for the convenience and at
the request of the Borrowers. The Agent and the Banks shall be entitled to rely
on the authority of any Person purporting to be a Person authorized by the
Borrowers to give such notice and the Agent and the Banks shall not have any
liability to the Borrowers or other Person on account of any action taken by the
Agent or the Banks in reliance upon such telephonic or facsimile notice absent
gross negligence or willful misconduct. The obligation of the Borrowers to repay
the Loans shall not be affected in any way or to any extent by any failure by
the Agent and the Banks to receive written confirmation of any telephonic or
facsimile notice or the receipt by the Agent and the Banks of a confirmation
which is at variance with the terms understood by the Agent and the Banks to be
contained in the telephonic or facsimile notice.
11.3 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Agent or any Bank, any right, remedy,
power or privilege hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege.
11.4 Costs and Expenses. The Borrowers shall:
(a) whether or not the transactions contemplated hereby are
consummated, pay or reimburse BofA (including in its capacity as Agent) within
five Business Days after demand and receipt by the Borrowers of reasonable
supporting documentation (subject to Section 5.1(d)) for all reasonable costs
and expenses incurred by BofA (including in its capacity as Agent) in connection
with the development, preparation, delivery, administration and execution of
this Agreement, any Loan Document and any other documents prepared in connection
herewith or therewith, and the consummation of the transactions contemplated
hereby and thereby, including Attorney Costs (excluding allocated costs of
internal legal counsel) incurred by BofA (including in its capacity as Agent)
with respect thereto; provided, that the limitations contained in the Fee Letter
with respect to the amount of the fees of Orrick, Herrington & Sutcliffe LLP
shall remain effective notwithstanding the termination of the Fee Letter; and
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(b) pay or reimburse the Agent within five Business Days after
demand and receipt by the Borrowers of reasonable supporting documentation for
all reasonable costs and expenses incurred by the Agent in connection with any
amendment, supplement, waiver or modification to (in each case, whether or not
consummated), this Agreement, any Loan Document and any other documents prepared
in connection herewith or therewith, and the consummation of the transactions
contemplated hereby and thereby, including Attorney Costs incurred by the Agent
with respect thereto (provided, that the fees of any law firm or other external
counsel, and the allocated costs of internal legal services, shall not both be
reimbursed with respect to any amendment, supplement, waiver or modification
relating to the same or any substantially similar matter); and
(c) pay or reimburse the Agent, the Arranger and each Bank
within five Business Days after demand and receipt by the Borrowers of
reasonable supporting documentation (subject to Section 5.1(d)) for all
reasonable costs and expenses (including Attorney Costs) incurred by them in
connection with the enforcement, attempted enforcement, or preservation of any
rights or remedies under this Agreement or any other Loan Document during the
existence of an Event of Default or after acceleration of the Loans (including
in connection with any "workout" or restructuring regarding the Loans, and
including in any Insolvency Proceeding or appellate proceeding).
11.5 Indemnity. Whether or not the transactions contemplated hereby are
consummated, the Borrowers shall indemnify and hold harmless each of the Agent
and each Bank, and their respective directors, officers, employees, affiliates
and agents (collectively, the "Indemnified Parties") from and against any and
all losses, claims, damages (other than consequential or exemplary damages),
liabilities and reasonable out-of-pocket expenses (including, without
limitation, reasonable fees and disbursements of counsel, amounts paid in
settlement and court costs) (collectively, the "Indemnified Liabilities") which
may be incurred by any such Indemnified Party as a result of a claim by a third
party or asserted by a third party against any such Indemnified Party, in each
case, in connection with or arising out of or in any way relating to or
resulting from any transaction or proposed transaction (whether or not
consummated) contemplated to be financed with the proceeds of any Loan or other
financial accommodation contemplated hereby, and the Borrowers hereby agree to
reimburse each such Indemnified Party for any Attorneys' Costs or other
out-of-pocket expenses incurred in connection with investigating, defending or
participating in any action or proceeding (whether or not such Indemnified Party
is a party to such action or proceeding) out of which any such losses, claims,
damages, liabilities or expenses may arise; provided, however, that the
Borrowers shall not be required to reimburse the expenses of more than one
counsel for all Indemnified Parties except to the extent that different
Indemnified Parties shall have conflicting interests. Notwithstanding anything
herein to the contrary, the Borrowers shall not be liable or responsible for
losses, claims, damages, costs and expenses incurred by any Indemnified Party
arising out of or relating to such Indemnified Party's own gross negligence or
willful misconduct. If for any reason the indemnification provided for herein is
unavailable to any Indemnified Party or insufficient to hold it harmless as and
to the extent contemplated hereby, then the Borrowers hereby agree to contribute
to the amount paid or payable by such Indemnified Party as a result of such
loss, claim, damage, liability or expense in such proportion as is appropriate
to reflect the relative benefits
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received by the Borrowers, on the one hand, and such Indemnified Party, on the
other hand, and also the respective fault of the Borrowers, on the one hand, and
such Indemnified Party, on the other hand, as the case may be, as well as any
other relevant equitable considerations. This Section 11.5 shall survive the
termination of this Agreement.
11.6 Joint and Several Liability. (a) The obligations of the Borrowers
hereunder are joint and several.
(b) The liability of each Borrower hereunder and under the
Loan Documents shall be absolute, unconditional and irrevocable irrespective of:
(i) any lack of validity, legality or enforceability
of this Agreement, any Note or any other Loan Document as to any other
Borrower;
(ii) the failure of any Bank
(A) to enforce any right or remedy against
any Borrower or any other Person (including any guarantor or
other Borrower) under the provisions of this Agreement, the
Note, any other Loan Document or otherwise, or
(B) to exercise any right or remedy against
any guarantor of, or collateral securing, any Obligations;
(iii) any change in the time, manner or place of
payment of, or in any other term of, all or any of the Obligations, or
any other extension, compromise or renewal of any Obligations;
(iv) any reduction, limitation, impairment or
termination of any Obligations with respect to any other Borrower for
any reason including any claim of waiver, release, surrender,
alteration or compromise, and shall not be subject to (and each
Borrower hereby waives any right to or claim of) any defense or setoff,
counterclaim, recoupment or termination whatsoever by reason of the
invalidity, illegality, nongenuineness, irregularity, compromise,
unenforceability of, or any other event or occurrence affecting, any
Obligations with respect to any other Borrower;
(v) any addition, exchange, release, surrender or
nonperfection of any collateral, or any amendment to or waiver or
release or addition of, or consent to departure from, any guaranty,
held by any Bank securing any of the Obligations; or
(vi) any other circumstance which might otherwise
constitute a defense available to, or a legal or equitable discharge
of, any other Borrower, any surety or any guarantor.
Each Borrower agrees that its joint and several liability hereunder shall
continue to be effective or be reinstated, as the case may be, if at any time
any payment (in whole or in part) of any of the Obligations is rescinded or must
be restored by any Bank, upon the insolvency, bankruptcy or reorganization of
any Borrower as though such payment had not been made.
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Each Borrower hereby expressly waives: (a) notice of the Banks' acceptance of
this Agreement; (b) notice of the existence or creation or non-payment of all or
any of the Obligations; (c) presentment, demand, notice of dishonor, protest,
and all other notices whatsoever other than notices expressly provided for in
this Agreement and (d) all diligence in collection or protection of or
realization upon the Obligations or any thereof any obligation hereunder, or any
security for or guaranty of any of the foregoing.
No delay on any of the Banks' part in the exercise of any right or remedy shall
operate as a waiver thereof, and no single or partial exercise by any of the
Banks of any right or remedy, shall preclude other or further exercise thereof
or the exercise of any other right or remedy. No action of any of the Banks
permitted hereunder shall in any way affect or impair any such Banks' rights or
Borrower's obligations under this Agreement.
Each Borrower hereby represents and warrants to each of the Banks that it now
has and will continue to have independent means of obtaining information
concerning the other Borrowers' affairs, financial condition and business. The
Banks shall not have any duty or responsibility to provide any Borrower with any
credit or other information concerning the other Borrowers' affairs, financial
condition or business which may come into the Banks' possession.
Each of the Borrowers agrees that any action or notice which is required or
authorized to be taken or given or received under this Agreement or any of the
Loan Documents shall be taken, given or received by the Company acting on behalf
of the other Borrowers (and not by Petrolane or the General Partner), and the
other Borrowers agree to be bound by, and authorizes the Agent and each Bank to
rely upon, any such action or notice as if fully authorized by each of the
Borrowers.
11.7 Payments Set Aside. To the extent that the Borrowers make a
payment to the Agent or the Banks, or the Agent or the Banks exercise their
right of set-off, and such payment or the proceeds of such set-off or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside or required (including pursuant to any settlement entered into by the
Agent or such Bank in its discretion) to be repaid to a trustee, receiver or any
other party, in connection with any Insolvency Proceeding or otherwise, then (a)
to the extent of such recovery the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such set-off had not occurred, and (b)
each Bank severally agrees to pay to the Agent upon demand its pro rata share of
any amount so recovered from or repaid by the Agent.
11.8 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that no Borrower may assign or transfer any of
its rights or obligations under this Agreement without the prior written consent
of the Agent and each Bank. Any attempted assignment in violation of this
provision shall be null and void.
11.9 Assignments, Participations. etc. (a) Any Bank may, with the
written consent of the Company, the Agent and the Issuing Bank, which consent of
the Company shall not be unreasonably withheld, at any time assign and delegate
to one or more Eligible Assignees
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(provided that no written consent of the Company or the Agent shall be required
in connection with any assignment and delegation by a Bank to an Eligible
Assignee that is an Affiliate of such Bank) (each an "Assignee") all, or any
ratable part of all, of the Loans, the Commitments and the other rights and
obligations of such Bank hereunder, in a minimum amount of $5,000,000; provided,
however, that the Borrowers and the Agent may continue to deal solely and
directly with such Bank in connection with the interest so assigned to an
Assignee until (i) written notice of such assignment, together with payment
instructions, addresses and related information with respect to the Assignee,
shall have been given to the Company and the Agent by such Bank and the
Assignee; (ii) such Bank and its Assignee shall have delivered to the Borrowers
and the Agent an Assignment and Acceptance in the form of Exhibit F ("Assignment
and Acceptance") and (iii) the assignor Bank or Assignee has paid to the Agent a
processing fee in the amount of $3,000; and provided further, each Bank's Pro
Rata Share shall be the same in each type of Commitment.
(b) From and after the date that the Agent notifies the
assignor Bank that it has received (and the Company and the Agent have provided
their consent with respect to) an executed Assignment and Acceptance and payment
of the above-referenced processing fee, (i) the Assignee thereunder shall be a
party hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, shall have the rights
and obligations of a Bank under the Loan Documents, and (ii) the assignor Bank
shall, to the extent that rights and obligations hereunder and under the other
Loan Documents have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations under the
Loan Documents.
(c) Within five Business Days after its receipt of notice by
the Agent that it has received an executed Assignment and Acceptance and payment
of the processing fee (and provided that the Company consents to such assignment
in accordance with Section 11.9(a)), the Borrowers shall execute and deliver to
the Agent new Notes evidencing such Assignee's assigned Loans and Commitments
and, if the assignor Bank has retained a portion of its Loans and its
Commitment, replacement Notes in the principal amount of the Loans and
Commitments retained by the assignor Bank (such Notes to be in exchange for, but
not in payment of, the Notes held by such Bank) and the assignor Bank shall
deliver its Note or Notes marked "exchanged" or "cancelled," as applicable, to
the Agent. Immediately upon payment of the processing fee payment under the
Assignment and Acceptance, this Agreement shall be deemed to be amended to the
extent, but only to the extent, necessary to reflect the addition of the
Assignee and the resulting adjustment of the Commitments arising therefrom. The
Commitment allocated to each Assignee shall reduce such Commitments of the
assigning Bank pro tanto.
(d) Any Bank may at any time sell to one or more commercial
banks or other Persons not Affiliates of the Company (a "Participant")
participating interests in any Loans, the Commitment of that Bank and the other
interests of that Bank (the "originating Bank") hereunder and under the other
Loan Documents; provided, however, that (i) the originating Bank's obligations
under this Agreement shall remain unchanged, (ii) the originating Bank shall
remain solely responsible for the performance of such obligations, (iii) the
Borrowers and the Agent shall continue to deal solely and directly with the
originating Bank in connection with the originating Bank's rights and
obligations under this Agreement and the other Loan Documents, and (iv) no
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Bank shall transfer or grant any participating interest under which the
Participant has rights to approve any amendment to, or any consent or waiver
with respect to, this Agreement or any other Loan Document, except to the extent
such amendment, consent or waiver would require unanimous consent of the Banks
as described in the first proviso to Section 11.1. In the case of any such
participation, the Participant shall be entitled to the benefit of Sections 4.1,
4.3 and 11.5 as though it were also a Bank hereunder (but not in any greater
amounts than would have been payable to the Bank selling the participation if no
participation were sold), and not have any rights under this Agreement, or any
of the other Loan Documents, and all amounts payable by the Company hereunder
shall be determined as if such Bank had not sold such participation; except
that, if amounts outstanding under this Agreement are due and unpaid, or shall
have been declared or shall have become due and payable upon the occurrence of
an Event of Default, each Participant shall be deemed to have the right of
set-off in respect of its participating interest in amounts owing under this
Agreement to the same extent as if the amount of its participating interest were
owing directly to it as a Bank under this Agreement
(e) Nothing contained in this Agreement shall prevent a Bank
from pledging its interest in its Loans to a Federal Reserve Bank in the Federal
Reserve System of the United States in accordance with applicable law.
(f) After payment in full of, and satisfaction of all
Obligations under, any Note, the Bank or other party holding such Note agrees to
promptly return such Note marked "Paid in Full" to the Company.
(g) Notwithstanding the foregoing provisions of this Section
11.9, no assignment or participation may be made if such assignment or
participation involves, or could involve, the use of assets that constitute, or
may be deemed under ERISA, the Code or any other applicable law, or any ruling
or regulation issued thereunder, or any court decision, to constitute the assets
of any employee benefit plan (as defined in section 3(3) of ERISA) or any plan
as defined in section 4975(e)(1) of the Code).
11.10 Changes of Commitments. (a) On the Restatement Effective Date,
each of the Banks which either (i) has a Revolving Commitment Percentage or
Acquisition Commitment Percentage on the Restatement Effective Date that is less
than its Existing Revolving Commitment Percentage or Existing Acquisition
Commitment Percentage, as the case may be, immediately prior to such date or
(ii) had a commitment under the Existing Credit Agreement immediately prior to
the Restatement Effective Date but has no corresponding Revolving Commitment as
of the Restatement Effective Date (each such Bank, a "Decreasing Bank") shall
irrevocably assign, without recourse or warranty of any kind whatsoever (except
that each Decreasing Bank warrants that it is the legal and beneficial owner of
the Loans assigned by it under this Section 11.10 and that such Loans are held
by such Decreasing Bank free and clear of adverse claims), to each of the Banks
which has a Revolving Commitment Percentage or Acquisition Commitment
Percentage, as the case may be, on the Restatement Effective Date that is
greater than its Existing Revolving Commitment Percentage or Existing
Acquisition Commitment Percentage, as the case may be, immediately prior to such
date (each such Bank, an "Increasing Bank"), and each of the Increasing Banks
shall irrevocably acquire from the Decreasing Banks, a portion of the principal
amount of the Revolving Loans, Acquisition Loans or Special Purpose Loans, as
the case may be,
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of each of the Decreasing Banks (collectively, the "Acquired Portion")
outstanding on the Restatement Effective Date (before giving effect to any new
Revolving Loans made on such date) in an amount such that the principal amount
of the Revolving Loans held by each of the Increasing Banks and each of the
Decreasing Banks as of the Restatement Effective Date shall be held in
accordance with each such Bank's Revolving Commitment Percentage and Acquisition
Commitment Percentage (if any) as of such date. Such assignment and acquisition
shall be effective on the Restatement Effective Date automatically and without
any action required on the part of any party other than the payment by the
Increasing Banks to the Agent for the account of the Decreasing Banks of an
amount equal to the Acquired Portion, which amount shall be allocated to the
Decreasing Banks pro rata based upon the respective reductions in the principal
amount of the Revolving Loans and Acquisition Loans, as applicable, held by such
Banks on the Restatement Effective Date (before giving effect to any new
Revolving Loans made on such date). Each of the Agent and the Banks shall adjust
its records accordingly to reflect the payment of the Acquired Portion and the
changes in the Bank's Revolving Commitments and Acquisition Commitments. The
payment to be made in respect of the Acquired Portion shall be made by the
Increasing Banks to the Agent in Dollars in immediately available funds at or
before 2:00 p.m. (New York City time) on the Restatement Effective Date, such
payment to be made by the Increasing Banks pro rata based upon the respective
increases in the principal amount of the Revolving Loans and Acquisition Loans
held by such Banks on the Restatement Effective Date (before giving effect to
any new Revolving Loans made on such date). For purposes of this Section
11.10(a), (1) "Existing Revolving Commitment Percentage" means, with respect to
any Bank, the ratio of (i) the amount of the Revolving Commitment of such Bank
under the Existing Credit Agreement plus the amount of the Special Purpose
Commitment of such Bank under the Existing Credit Agreement to (ii) the
aggregate amount of the Revolving Commitments plus the aggregate amount of the
Special Purpose Commitments of all of the Banks under the Existing Credit
Agreement, (2) "Existing Acquisition Commitment Percentage" means, with respect
to any Bank, the ratio of (i) the amount of the Acquisition Commitment of such
Bank under the Existing Credit Agreement to (ii) the aggregate amount of the
Acquisition Commitments of all of the Banks under the Existing Credit Agreement,
(3) "Revolving Commitment Percentage" means, with respect to any Bank, the ratio
of (i) the amount of the Revolving Commitment of such Bank to (ii) the aggregate
amount of the Revolving Commitments of all of the Banks and (4) "Acquisition
Commitment Percentage" means, with respect to any Bank, the ratio of (i) the
amount of the Acquisition Commitment of such Bank to (ii) the aggregate amount
of the Acquisition Commitments of all of the Banks.
(b) To the extent any of the Revolving Loans acquired by the
Increasing Banks from the Decreasing Banks pursuant to Section 11.10(a) above
are Offshore Rate Loans and the Restatement Effective Date is not the last day
of an Interest Period for such Loans, the Decreasing Banks shall be entitled to
compensation from the Borrowers as provided in Section 4.4 of the Existing
Credit Agreement (as if the Borrowers had prepaid such Loans in an amount equal
to the Acquired Portion on the Restatement Effective Date). The payment made by
the Increasing Banks in respect of the Acquired Portion shall constitute a Loan
made by the Increasing Banks on the Restatement Effective Date, and to the
extent any Loan acquired by the Increasing Banks on the Restatement Effective
Date is an Offshore Rate Loan and such date is not the last day of an Interest
Period for such Loan, such Loan shall accrue interest at the rate
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then applicable to such Loan until such last day; provided however that the
Borrowers shall compensate the Increasing Banks for an amount equal to the
amount, if any, by which the cost to the Increasing Banks of funding the amount
of each such Loan in the respective market for the period from such date to the
last day of the then Interest Period for such Loan exceeds such applicable rate.
11.11 Confidentiality. Each Bank agrees to take and to cause its
Affiliates to take normal and reasonable precautions and exercise due care to
maintain the confidentiality of all information provided to it by the Borrowers
or any Subsidiary of a Borrower, or by the Agent on such Borrower's or
Subsidiary's behalf, under this Agreement or any other Loan Document, and
neither it nor any of its Affiliates shall use any such information other than
in connection with or in enforcement of this Agreement and the other Loan
Documents or in connection with other business now or hereafter existing or
contemplated with the Borrowers or any Subsidiary; except to the extent such
information (i) was or becomes generally available to the public other than as a
result of permitted disclosure by the Bank, or (ii) was or becomes available on
a non-confidential basis from a source other than the Borrowers, provided that
such source is not bound by a confidentiality agreement with the Borrowers known
to the Bank; provided, however, that any Bank may disclose such information (A)
at the request or pursuant to any requirement of any Governmental Authority to
which the Bank is subject or in connection with an examination of such Bank by
any such authority; (B) pursuant to subpoena or other court process; (C) when
required to do so in accordance with the provisions of any applicable
Requirement of Law; (D) to the extent reasonably required in connection with any
litigation or proceeding to which the Agent, any Bank or their respective
Affiliates may be party; (E) to the extent reasonably required in connection
with the exercise of any remedy hereunder or under any other Loan Document; (F)
to such Bank's independent auditors and other professional advisors (who shall
be advised of such Bank's confidentiality obligations hereunder); (G) to any
Participant or Assignee, actual or potential, provided that such Person agrees
in writing to keep such information confidential to the same extent required of
the Banks hereunder; (H) as to any Bank or its Affiliate, as expressly permitted
under the terms of any other document or agreement regarding confidentiality to
which the Borrowers or any Subsidiary is party or is deemed party with such Bank
or such Affiliate; and (I) to its Affiliates. The Agent, any Bank or Participant
will promptly notify the Company of its receipt of any subpoena or other
requirement of a Governmental Authority, or other similar process or authority,
unless such notice is prohibited by the issuing authority.
11.12 Set-off. In addition to any rights and remedies of the Banks
provided by law, if an Event of Default exists or the Loans have been
accelerated, each Bank is authorized at any time and from time to time, without
prior notice to the Borrowers, any such notice being waived by the Borrowers to
the fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held by,
and other indebtedness at any time owing by, such Bank to or for the credit or
the account of any Borrower against any and all Obligations owing to such Bank,
now or hereafter existing, irrespective of whether or not the Agent or such Bank
shall have made demand under this Agreement or any Loan Document and although
such Obligations may be contingent or unmatured. Each Bank agrees promptly to
notify the Borrowers and the Agent after any such set-off and application made
by such Bank; provided,
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<PAGE> 113
however, that the failure to give such notice shall not affect the validity of
such set-off and application.
11.13 Notification of Addresses; etc. Each Bank shall notify the Agent
in writing of any changes in the address to which notices to the Bank should be
directed, of addresses of any Lending Office, of payment instructions in respect
of all payments to be made to it hereunder and of such other administrative
information as the Agent shall reasonably request.
11.14 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument.
11.15 Severability. The illegality or unenforceability of any provision
of this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
11.16 No Third Parties Benefited. This Agreement is made and entered
into for the sole protection and legal benefit of the Borrowers, the Banks, the
Agent and the Agent-Related Persons, and their permitted successors and assigns,
and no other Person shall be a direct or indirect legal beneficiary of, or have
any direct or indirect cause of action or claim in connection with, this
Agreement or any of the other Loan Documents.
11.17 Governing Law and Jurisdiction. (a) THIS AGREEMENT AND THE NOTES
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK; PROVIDED THAT THE AGENT AND THE BANKS SHALL RETAIN ALL RIGHTS ARISING
UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE
OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE BORROWERS, THE AGENT
AND THE BANKS CONSENTS, TO THE EXTENT PERMITTED BY APPLICABLE LAW, FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE
COURTS. EACH OF THE BORROWERS, THE AGENT AND THE BANKS IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE BORROWERS, THE AGENT AND THE BANKS
EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH
MAY BE MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW.
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<PAGE> 114
11.18 Waiver of Jury Trial. THE BORROWERS, THE BANKS AND THE AGENT EACH
WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST
ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER
WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE BORROWERS, THE
BANKS AND THE AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE
TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE
PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED
BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF
THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF.
THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
11.19 Entire Agreement. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the Borrowers,
the Banks and the Agent, and supersedes all prior or contemporaneous agreements
and understandings of such Persons, verbal or written, relating to the subject
matter hereof and thereof.
11.20 Collateral Agency Agreement. THIS AGREEMENT IS SUBJECT TO THE
TERMS AND CONDITIONS CONTAINED IN THE COLLATERAL AGENCY AGREEMENT (AS DEFINED IN
THIS AGREEMENT), WHICH COLLATERAL AGENCY AGREEMENT, AMONG OTHER THINGS,
ESTABLISHES CERTAIN RIGHTS WITH RESPECT TO THE SECURITY FOR THIS AGREEMENT AND
THE SHARING OF PROCEEDS THEREOF WITH CERTAIN OTHER SECURED CREDITORS (AS DEFINED
IN THE COLLATERAL AGENCY AGREEMENT). COPIES OF SUCH COLLATERAL AGENCY AGREEMENT
WILL BE FURNISHED TO ANY BANK UPON REQUEST TO THE COMPANY.
11.21 Ratification and Confirmation of the Security Documents. Except
as specifically amended by this Agreement, and the documents executed and
delivered in connection herewith, each of the Security Documents, including
without limitation the General Security Agreement, shall remain in full force
and effect and are hereby ratified and confirmed.
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<PAGE> 115
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in New York by their proper and duly authorized
officers as of the day and year first above written.
AMERIGAS PROPANE, L.P.
By: AMERIGAS PROPANE, INC.,
as General Partner
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
AMERIGAS PROPANE, INC.
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
PETROLANE INCORPORATED
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Agent
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
<PAGE> 116
FIRST UNION NATIONAL BANK, as Syndication
Agent
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as a Bank and an
Issuing Bank
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
FIRST UNION NATIONAL BANK
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
THE BANK OF NEW YORK
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
<PAGE> 117
CORESTATES BANK, N.A.
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
MELLON BANK, N.A.
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
THE FIRST NATIONAL BANK OF MARYLAND
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
THE BANK OF TOKYO - MITSUBISHI LTD.,
NEW YORK BRANCH
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
<PAGE> 118
PNC BANK, NATIONAL ASSOCIATION
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
UNION BANK OF CALIFORNIA, N.A.
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
Each of the undersigned hereby acknowledges and agrees to the foregoing Amended
and Restated Credit Agreement and confirms that its Subsidiary Guarantee and its
Subsidiary Security Agreement shall remain in full force and effect
notwithstanding the execution of such Amended and Restated Credit Agreement and
the consummation of the transactions described or otherwise contemplated
therein.
Date:________________
NORTHWEST LPG SUPPLY, LTD.
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
AMERIGAS PROPANE PARTS & SERVICE, INC.
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
<PAGE> 1
EXHIBIT 10.2
LPG TERMINALING AGREEMENT
THIS AGREEMENT, ("Agreement"), dated as of May 1, 1996, by and between
TE PRODUCTS PIPELINE COMPANY, LIMITED PARTNERSHIP, a Delaware limited
partnership (hereinafter referred to as "TEPPCO") and Amerigas Propane, L.P., a
Delaware limited partnership (hereinafter referred to as "Amerigas").
RECITALS
A. TEPPCO is the owner and operator of a tidewater refrigerated
LPG terminal situated at Providence, Rhode Island, suitable for providing the
service of terminaling and handling of Propane; and
B. Amerigas will have quantities of Propane available by tankship
during the term of this Agreement which it desires to throughput through
TEPPCO's Providence Terminal.
WITNESSETH:
NOW, THEREFORE, for, and in consideration of, the mutual benefits and
advantages to each party, and of the mutual covenants and agreements herein
contained, and intending to be legally bound hereby the parties do covenant and
agree, each with the other, as follows:
<PAGE> 2
SECTION 1
DEFINITIONS: CONSTRUCTION OF REFERENCES
In this Agreement, unless the context otherwise requires:
1.1 All references to designated Sections and other subdivisions
are designated Sections and other subdivisions of this Agreement, and the words
"herein," "hereof" and "hereunder" and other words of similar import refer to
this instrument as a whole and not to any particular Section or other
subdivision.
1.2 The terms defined in Section 1.4 or elsewhere in this
Agreement shall, for purposes of this Agreement, have the meanings assigned to
them in Section 1.4 or elsewhere and include the plural as well as the
singular.
1.3 Except as otherwise indicated, all the agreements or
instruments herein defined shall mean such agreements or instruments as the
same may from time-to-time be supplemented or amended or the terms thereof
waived or modified to the extent permitted by, and in accordance with, the
terms thereof.
1.4 The following terms shall have the following meanings for all
purposes of this Agreement:
a. "Actual Degree Days" shall be the summation of each
calendar day's reported degree day value for the months of October through
March as such degree days are reported in the Heating Degree Day Monthly
Summary as published by the National Oceanic and Atmospheric Administration's
Climate Analysis Center for Providence, Rhode Island.
b. "Barrel" shall mean forty-two (42) U.S. Gallons.
2
<PAGE> 3
c. "Contract Year" shall mean 365 days (366 days in
years having a February 29) from May 1 through April 30 during the term of this
Agreement.
d. "CPI-U Index" shall mean the Consumers Price Index
for "All Items, All Urban Consumers" published in the Survey of Current
Business by the United States Department of Commerce Economics and Statistics
Administration/Bureau of Economic Analysis (1982 - 1984 = 100).
e. "Day" shall mean a period of twenty-four (24)
consecutive hours.
f. "Effective Date" shall mean May 1, 1996.
g. "Gallon" shall mean a U.S. gallon having 231 cubic
inches of liquid at sixty (60) degrees Fahrenheit at the vapor pressure of the
liquid.
h. "Heel" shall mean that volume of Propane which must
remain in the storage tank at the Terminal to maintain its refrigerated
integrity. This quantity shall be the last two feet (2') remaining in the
storage tank or additional quantity as may be mutually agreed by the parties.
i. "Metric Ton" shall mean the international unit of
weight, equivalent to 2,240.6 U.S. pounds.
j. "Month" shall mean a calendar month, commencing on
the first day thereof.
k. "Normal Degree Days" shall be the most recent thirty
(30) year average of Actual Degree Days.
l. "Notice of Readiness" shall mean the advice from the
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<PAGE> 4
tankship's master that the tankship under his command has arrived at the
location from which the pilot normally embarks, is ready to proceed to the
Terminal in accordance with tankship travel regulations in effect at that time,
and is in a suitable condition to commence the discharge of Propane.
m. "Propane" shall mean propane HD-5, conforming to
current Gas Processors Association's ("GPA") published specifications or any
later revision thereof. GPA specifications are attached hereto as Exhibit
1.4(m).
n. "Summer Rate" shall mean the rate or rates for
Receipt Charges in effect during a Contract Year in the Months of April through
September, as set forth in Section 9.1.
o. "Terminal" shall mean TEPPCO's refrigerated LPG
tidewater terminal located in Providence, Rhode Island and all associated
facilities.
p. "Terminaling" shall mean the delivery into storage,
the holding in storage, and the delivery out of storage of Propane at the
Terminal.
q. "Winter Rate" shall mean the rate or rates for
Receipt Charges in effect during a Contract Year in the Months of October
through March, as set forth in Section 9.1.
SECTION 2
TERM
2.1 Except as is set forth in Section 2.2, this Agreement shall
be, and remain, in full force and effect from May 1, 1996
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<PAGE> 5
through and including April 30, 2001 ("Primary Term") unless sooner terminated
pursuant to other provisions of this Agreement. Thereafter, this Agreement
shall continue from Contract Year to Contract Year ("Renewal Term") unless
written notice of termination is given by either party to the other party at
least three (3) months prior to the end of the Primary Term or any Renewal Term
whereupon this Agreement shall terminate at the end of such Primary Term or
Renewal Term, as the case may be. Such notice of termination may be given by
either party as a matter of right and need not be for cause.
2.2 TEPPCO may notify Amerigas in writing on or before the first
day of March of any year during the Primary Term or Renewal Term of its
intention to perform an internal inspection of the tank at the Terminal during
the months of May, June, July or August of that calendar year. In the event
TEPPCO, in its sole judgment, determines that modifications or repairs to said
tank or other facilities at the Terminal ("Tank") are required, TEPPCO shall
notify Amerigas of the proposed modifications or repairs to the Tank and the
parties shall negotiate in good faith to determine a revised fee structure to
allow TEPPCO to recover the costs (and a rate of return) of such modifications
or repairs. If the parties are unable to reach agreement on a revised fee
structure on or before March 31 of the next calendar year, this Agreement will
terminate thirty (30) days thereafter (April 30).
5
<PAGE> 6
SECTION 3
MATERIALS AND QUANTITIES
3.1 TEPPCO shall provide facilities suitable for unloading Propane
at the Terminal from tankships nominated by Amerigas and the delivery of
Propane at the Terminal into tank trucks provided or caused to be provided by
Amerigas.
3.2 TEPPCO will accept tankships within the size range that pilots
bring alongside the Terminal on a regular basis, and the Terminal shall provide
a berth to, at and from which tankships can approach, lie and depart always
safely afloat; provided however, notwithstanding anything in this Agreement to
the contrary, TEPPCO does not represent, warrant or guarantee that the Terminal
shall accommodate tankships of greater draft or length overall than specified
in Section 4.1 below.
3.3 TEPPCO shall provide an LPG-rated loading arm and pipelines in
good working order and of sufficient reasonable capacity to accommodate
tankships described in Section 4.1. Amerigas shall ensure that all tankships
are equipped with adapters and all other items required to mate to TEPPCO's ten
inch (10") diameter ANSI 150 flange.
3.4 Amerigas warrants that it shall nominate only reputable
tankships and shall require by contract or otherwise that all owners or
operators of such tankships warrant that (i) the master of the tankship shall
at all times exercise due diligence while approaching, lying and or departing
from the Terminal, (ii) the tankship shall be in compliance with United States
Coast Guard
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<PAGE> 7
regulations and inspections, shall carry all required documents and shall be in
compliance with all applicable port authority requirements and TEPPCO's safety
and security procedures and (iii) the tankship shall be suitable for the
discharging of Propane.
3.5 Amerigas shall arrange for the tankship to carry and make
available to TEPPCO upon request, a copy of each of the following documents:
(a) Bill of Lading or Letter of Indemnity.
(b) Certificate of Origin.
(c) Tankship's Ullage Report.
(d) Tankship's Time Log.
(e) An Inspector's Certificate of quantity and quality of
Propane loaded on board the tankship at the loading port.
SECTION 4
DELIVERY OF PROPANE
4.1 (a) TEPPCO can accept tankships at its Terminal berth up
to the following maximum dimensions:
Overall length - 750 feet
Width - 110 feet
The maximum water depth at the Terminal is approximately thirty-five (35) feet
at mean low water.
(b) The tankship's cargo manifold height above the water line
shall not exceed forty (40) feet when the tankship is unloaded, and the
distance of the manifold from the tankship rail shall not exceed ten (10) feet,
unless waived in writing by TEPPCO.
(c) Tankships shall discharge at TEPPCO's connection at rates
7
<PAGE> 8
specified in this Section 4.1(c) and at a pressure of not less than 90 pounds
per square inch gauge ("psig") and a maximum discharge pressure to be
determined by TEPPCO at the time of delivery. Tankships shall be equipped and
prepared to deliver Propane at a temperature of no warmer than minus forty (40)
degrees Fahrenheit. Tankships shall have aboard unloading pumps and allied
equipment capable of pumping Propane at a minimum of five thousand six hundred
(5,600) Barrels per hour.
4.2 Prior to departure from a customary anchorage at Providence,
Amerigas shall cause a Notice of Readiness to be tendered to TEPPCO.
4.3 Prior to receipt of tankship for unloading and as soon as
available, Amerigas will mail to TEPPCO the following by registered airmail,
return receipt requested:
a. three (3) copies of Certificate of Origin.
b. three (3) copies of tankship's Ullage Report and time
log.
c. three (3) copies of Certificate of Quantity and
Quality.
d. three (3) copies of Bills of Lading or Letter of
Indemnity.
SECTION 5
LAYTIME AND DEMURRAGE
5.1 TEPPCO shall not be responsible for any laytime or demurrage
charges incurred by Amerigas in utilization of the
8
<PAGE> 9
Terminal facilities during the term of this Agreement except as specified
herein below. If allowed laytime is exceeded because of TEPPCO's inability to
receive cargo due to TEPPCO's fault, then TEPPCO shall pay for such excess
laytime. Such laytime demurrage rate shall be as stated in Amerigas' notice to
TEPPCO as provided in Section 6.2 and shall be that amount which Amerigas is
required to pay under the terms of its charter party agreement with the
tankship owner. All demurrage claims shall be presented within ninety (90)
days after the date of completion of discharge, or such claims shall be barred
for recovery by Amerigas from TEPPCO.
5.2 a. Laytime shall commence at the time when a tankship
("Vessel") is securely moored at the Terminal. Notice of Readiness shall be
tendered upon arrival at the customary anchorage point for the Terminal.
b. Laytime shall cease upon the final disconnection of
the Vessel's discharge hose(s) following the discharge of the cargo.
c. Time spent by the Vessel on inward passage or in
handling ballast or slops (to the extent total time spent is affected by such
handling of ballast or slops) or time lost through any suspension of discharge
due to fault or failure of the Vessel or for ship's purposes, shall not count
against laytime.
d. None of the following shall count as used laytime:
(i) time used in moving the Vessel from
anchorage to berth;
(ii) time lost due to any delay in the Vessel
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<PAGE> 10
clearing her berth, caused by
conditions not within TEPPCO's control;
(iii) time lost if any agency or authority
having jurisdiction over the port of
the Terminal prohibits the discharge
of the Propane at any time;
(iv) time lost in awaiting U.S. Coast Guard
Customs and immigration clearance and
pratique;
(v) any time lost or delay caused by
port restriction imposed by any
agency or authority having
jurisdiction over the port or the
Terminal, such as restrictions
relating to tides, dark hours,
minimum safety visibility, and like
conditions;
(vi) any time lost due to the Vessel's
conditions or due to breakdown of
the Vessel's facilities or due to
the inability of the Vessel in
normal operation to discharge
Propane at least at the rate of
5,600 Barrels per hour; and
(vii) time lost or delay caused by strike,
lockout, stoppage or restraint of
labor for master, officers and crew
of the
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<PAGE> 11
Vessel.
e. If a Vessel is unable to tender Notice of Readiness
because of its failure to pass Coast Guard or other required inspection or
because of other problems with the Vessel and if the Vessel is subsequently
delayed in proceeding to the Terminal because another Vessel is then using the
Terminal, the time consumed by such delay will not count as used laytime.
SECTION 6
NOMINATIONS
6.1 Unless otherwise specified, Amerigas shall give TEPPCO at
least forty-five (45) days written notice, prior to the beginning of each
calendar quarter, of its estimated delivery schedule for the immediate
forthcoming calendar quarter, including cargo quantities and the best estimate
then available of the three (3) Day range within which Amerigas desires to have
the tankship discharge.
6.2 Not later than thirty (30) days prior to a tankship's expected
arrival at the Terminal, Amerigas, or its agent, shall advise TEPPCO by telex
or other suitable means of the name of the tankship, if available, and the
overall length, width and freshwater draft of the tankship, the approximate
quantity of Propane to be unloaded, the estimated loading dates, the expected
date of the tankship's arrival at the Terminal, and excess laytime demurrage
rates. TEPPCO shall have seventy-two (72) hours after receipt of such advice
within which to accept or reject the
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<PAGE> 12
nomination made by Amerigas; provided that, TEPPCO may reject any such
nomination only for the following:
a. The docking berths at the Terminal will not be
available at the requested time.
b. The Port of Providence is or will be closed at the
requested time.
c. The Propane to be delivered does not meet appropriate
specifications required under this Agreement or is
otherwise unacceptable to TEPPCO.
d. The tankship nominated by Amerigas poses an
unacceptable environmental or safety risk.
TEPPCO shall notify Amerigas in accordance with Section 15.12 of this
Agreement, of acceptance or rejection of a nomination. Upon giving reasonable
advance written notice to TEPPCO, Amerigas may substitute for a nominated
tankship previously accepted by TEPPCO, another tankship of a similar size and
meeting the requirements set forth herein. The scheduled arrival date of any
tankship thus substituted shall not, without the prior written consent of
TEPPCO, differ from the latest accepted date of the tankship for which the
substitution is made. All tankships nominated or substituted by Amerigas shall
be suitable for discharging at the Terminal without alteration or modification
of the Terminal.
6.3 Upon completion of the loading of the tankship destined for
the Terminal, Amerigas, or its agent, shall telex to TEPPCO the following
information.
(a) Name of tankship.
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<PAGE> 13
(b) Quantity of Propane to be delivered to the Terminal.
(c) Estimated time of arrival.
(d) Length of tankship overall.
(e) Width of tankship overall.
(f) Arrival freshwater draft.
(g) Location above water line of liquid cargo connection,
in from rail, and distance from stern.
(h) Liquid cargo connection size and pressure rating and
all flanges, fittings, adapters, and attachments
necessary for TEPPCO to make connection to the
tankship's manifold flanges.
(i) Cargo pump rating, volume and pressure.
(j) Necessity for a complete inspection by Coast Guard,
if required.
(k) Number of tanks loaded with Propane.
(l) Rated discharge capacity.
(m) Cargo:
(1) Product specifications
(2) Temperature
(3) Total volume
(4) Analysis of cargo, if available:
(a) Corrosion
(b) Product composition
(n) Local customs broker or tankship's local agent.
6.4 The tankship shall report to TEPPCO at discharging port
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<PAGE> 14
seventy-two (72), forty-eight (48) and twenty-four (24) hours in advance of
arrival, stating the expected date and hour of arrival. The notices provided
for under this Section shall not alter the nominated arrival date as
established in Section 6.2. For purposes of this Agreement, the discharging
port shall be the Port of Providence, Rhode Island.
6.5 Prior to tankship's departure from customary anchorage at
discharging port, Amerigas shall cause a Notice of Readiness to be tendered to
TEPPCO. When the Terminal becomes available, TEPPCO shall give the tankship
notice to proceed to the Terminal. The tankship shall not proceed to the
Terminal until it has received such notice which shall not be unreasonably
withheld.
SECTION 7
MEASUREMENT, SAMPLING AND ANALYSIS
7.1 The quality of Propane and hydrocarbon components contained in
the Propane delivered hereunder shall be determined by a recognized and
reputable outside petroleum inspection firm selected by TEPPCO and Amerigas,
with all costs of such firm to be borne equally between Amerigas and TEPPCO.
The inspector's determination as to quality, quantity and components shall be
conclusive and binding upon both parties. Representative samples of the
Propane shall be taken from the tankship's tanks prior to unloading at the
delivery point or if agreed to by TEPPCO, from line sampling devices from the
onshore receiving lines if samples from the tankship's tanks are not available.
TEPPCO shall have the
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<PAGE> 15
right to require the tankship's master to have the Propane recirculated on
board in advance of unloading and prior to the time samples are taken. The
tankship shall have a sampling connection in the recirculation piping of each
tank. Tests to determine quality shall be made from such samples and shall be
made in accordance with the latest standards or testing methods of the American
Society for Testing Materials or Gas Processors Association Publication
2140-86. Chromatographic analysis or other analytical procedure as may be
agreed to by the parties shall be made of the samples to determine the presence
of contaminants and the liquid volume percentages of ethane, propane, normal
butane, isobutane and pentanes plus components (including but not limited to
natural gasoline) of the Propane. The quantity of Propane delivered from the
tankship shall be determined on a volumetric basis by shore tank gauges or
meters at the delivery point in accordance with the API Manual of Petroleum
Measurement Standards in effect on date of delivery. All volumes of Propane
delivered hereunder shall be corrected to net standard volume (at standard
conditions at sixty (60) degrees Fahrenheit in accordance with the ASTM-1250
and API 2540 Petroleum Measurement Tables, in effect on date of delivery).
7.2 Any requirement of Amerigas pertaining to potential
contaminants and/or specific hydrocarbon composition not listed in TEPPCO's
Propane specification must be identified by Amerigas and the allowable
concentrations agreed to in writing by both parties prior to delivery of such
Propane.
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<PAGE> 16
7.3 Except as otherwise provided in Section 14.2 hereof or any
arrangements agreed to by the parties hereto, TEPPCO agrees not to accept into
terminal storage any Propane that does not conform to the specifications
attached hereto as Exhibit 1.4(m).
SECTION 8
REDELIVERY OF PROPANE
8.1 TEPPCO will redeliver odorized Propane to Amerigas at the
truck racks located at the Terminal.
8.2 TEPPCO shall provide Amerigas with a daily report on receipt,
deliveries and inventories of Amerigas' Propane.
8.3 Volume measurement of Amerigas' Propane delivered into trucks
shall be by meters provided by TEPPCO. TEPPCO shall, at least twelve times
each Contract Year, verify the accuracy of its meters (i) by comparing meter
readings with truck weights, or (ii) by any other industry accepted procedure.
Amerigas shall have the right to witness such tests. In that regard, Amerigas,
or its representatives, shall have access at all reasonable times to the
metering equipment used and described herein, including all instruments used by
TEPPCO, or its representative, in determining the quantity and quality of
Propane delivered hereunder, but the reading, metering and testing thereof
shall be done only by TEPPCO, or its representative. However, Amerigas, at its
sole cost, expense and liability and subject to any health, safety or other
requirements by TEPPCO, may conduct twice each Contract Year an
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<PAGE> 17
independent analysis and inspection of TEPPCO's metering system at the Terminal
in accordance with standard industry practices and procedures. Amerigas shall
send TEPPCO a copy of the results of such inspection as soon as reasonably
possible.
8.4 Notwithstanding anything in this Agreement to the contrary for
so long as Amerigas has the exclusive use of the Terminal TEPPCO shall not be
responsible or liable for redelivering Propane to Amerigas pursuant to this
Agreement that fails to meet or conform to the specifications in Exhibit 1.4(m)
attached hereto; provided that, TEPPCO can reasonably demonstrate that it is
redelivering Propane that was received from Amerigas and that such Propane has
not been commingled with any Propane other than Propane previously delivered
into the Terminal by or on behalf of or pursuant to instructions of Amerigas
and that the odorant added to such Propane meets or conforms to the
specifications in Exhibit 8.4, which exhibit may be modified at any time and
from time-to-time based on changes in the odorant specifications of TEPPCO's
odorant suppliers.
8.5 TEPPCO shall have the right to use for its Terminal operation
purposes only and without cost to TEPPCO, Amerigas' Propane in storage at the
Terminal. Usage of such fee free Propane by TEPPCO shall not exceed five
thousand (5,000) Barrels annually.
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SECTION 9
FEES, PAYMENT AND EXCLUSIVE USE
9.1 In consideration for the receipt of services provided pursuant
to this Agreement, Amerigas shall pay the following "Receipt Charge" for
Propane received into the Terminal from tankships nominated by or on behalf of
Amerigas:
(a) On the first 1,650,000 Barrels of Propane from
Amerigas received into the Terminal during a Contract
Year, the Winter Rate shall be 3.90 cents per Gallon
and the Summer Rate shall be 2.90 cents per Gallon.
(b) On all Barrels of Propane in excess of 1,650,000
Barrels up to and including 1,950,000 Barrels
received into the Terminal from Amerigas during a
Contract Year, the Winter Rate shall be 4.05 cents
per Gallon and the Summer Rate shall be 3.05 cents
per Gallon.
(c) On all Barrels of Propane in excess of 1,950,000
Barrels received into the Terminal from Amerigas
during a Contract Year, the Winter Rate shall be 4.30
cents per Gallon and the Summer Rate shall be 3.30
cents per Gallon.
It is understood and agreed that the Winter Rate and Summer Rate as set forth
in item (c) directly above may be reduced at TEPPCO's sole discretion at any
time and from time to time whenever Amerigas submits in writing a request for a
reduction in such rates and the
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reasons for such reduction.
9.2 In consideration for the delivery services provided by TEPPCO
to Amerigas or for Amerigas' account pursuant to this Agreement, Amerigas shall
pay a separate "Loading Charge" of 0.5 cents ($0.005) per Gallon on all Propane
delivered to Amerigas or for Amerigas' account from the Terminal. Amerigas'
existing inventory of Propane in the Terminal as of the Effective Date shall be
subject to the Loading Charge set forth in this Section 9.2.
9.3 In addition to the above charges, TEPPCO shall invoice
Amerigas 0.17 cents ($0.0017) for each Gallon of Propane odorized by TEPPCO at
the Terminal, which is delivered to Amerigas or its agents. The charge for
this odorization service is subject to change hereunder on thirty (30) days
written notice from TEPPCO to Amerigas.
9.4 Amerigas shall be invoiced for (i) Receipt Charges upon the
completion of the unloading of Propane and (ii) for all other charges and
payments from time to time, but not less often than once a Month. Payment of
all fees, charges (including but not by way of limitation Demand Payments as
set forth in Section 10.2) under this Agreement shall be made within ten (10)
days after receipt of any such invoice.
9.5 Notwithstanding anything in this Agreement to the contrary,
Amerigas shall have the exclusive use of the Terminal during the Primary Term.
If Amerigas is unable to fully utilize its allowed right of receipt, storage
and delivery during the Primary Term (it being understood this requirement
shall be met if
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Amerigas meets its Minimum Annual Volume requirements as set forth in Section
10.1 and 10.3 of this Agreement), Amerigas shall immediately inform TEPPCO of
such inability to utilize such unused portions in order to allow TEPPCO to
fully utilize such unused portions of the Terminal.
9.6 In the event Amerigas at any future time shall no longer
retain the exclusive use of the Terminal, TEPPCO agrees to purchase from
Amerigas that volume of Propane in the Heel. The purchase price for the volume
of Propane constituting the Heel shall be the average TET Propane price at Mont
Belvieu as published by the Oil Price Information Service for the Month prior
to such purchase, plus 8 cents per Gallon.
9.7 At any time TEPPCO receives written notice from either the
City of Providence or the Port of Providence of any actual increases in fees or
charges of any nature whatsoever ("Increases") that are in any way applicable
to the Terminal or the services provided by TEPPCO at the Terminal, TEPPCO
shall promptly notify Amerigas in writing of such Increases. Upon receipt of
such notice, Amerigas and TEPPCO shall negotiate in good faith to enable the
parties to reach an agreement as to the appropriate mechanism to reflect the
increases in the Receipt Charges set forth in or determined pursuant to this
Section 9. If the parties reach an agreement with respect thereto, this
Agreement shall be amended to reflect such agreement which amendment shall be
effective as of the first day of the Contract Year following the Contract Year
TEPPCO received notice of the Increases. If the parties are unable to
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reach agreement after a reasonable time period for good faith negotiations
which time period shall in no event extend beyond February 15 of the
then-current Contract Year or exceed sixty (60) days following the commencement
of negotiations, whichever is longer, then TEPPCO may terminate this Agreement
if such Increases by the City of Providence or Port of Providence render this
Agreement, in the reasonable judgment of TEPPCO, financially unattractive for
the continued exclusive use of the Terminal by Amerigas.
9.8 The Summer Rates and Winter Rates as set forth in Section 9.1
above shall be increased or decreased effective May 1 of each Contract Year
following the initial Contract Year by an amount determined by multiplying one
cent by the percentage increase or decrease in the CPI-U Index between March
1996 and March of the prior Contract Year. By way of example to clarify the
prior sentence, the calculation for the Contract Year commencing on May 1,
1997, would use the CPI-U Indexes for March 1996 and March 1997. Assuming a
Winter Rate of 3.90 cents and a Summer Rate of 2.90 cents, a 3% increase in the
CPI-U Index from March 1996 to March 1997 would result in the Winter and Summer
Rates changing to 3.93 cents and 2.93 cents, respectively, commencing May 1,
1997. There shall be no adjustment in rates pursuant to this Section 9.7 below
those initial rates set forth in Section 9.1. If the CPI-U Index should cease
to be published the parties shall negotiate in good faith to determine a
suitable index or indices in lieu thereof. If the parties are unable to
determine a suitable index or indices
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within sixty (60) days of the commencement of negotiations the determination of
such shall be submitted to binding arbitration to be held in accordance with
the practices and procedures of the American Arbitration Association.
SECTION 10
VOLUME OBLIGATION AND DEMAND PAYMENT
10.1 In order to induce TEPPCO to provide the exclusive use of the
Terminal to Amerigas during the Primary Term of this Agreement, Amerigas agrees
to deliver through the Terminal 1,450,000 Barrels of Propane each Contract Year
("Minimum Annual Volume").
10.2 If the volume of Propane delivered through the Terminal for
Amerigas during any Contract Year is less than the Minimum Annual Volume, as
described in Section 10.1 above or as modified pursuant to Section 10.3,
Amerigas shall pay TEPPCO an amount ("Demand Payment") equal to 3.57 cents
times the number of Gallons that Amerigas is deficient ("Deficient Volume")
provided, however, that the Deficient Volume shall be reduced to the extent
that Amerigas is rendered unable by reason of force majeure, as defined in
Section 15.4, to make deliveries through the Terminal.
10.3 The Minimum Annual Volume shall be reduced for a Contract Year
whenever the Normal Degree Days are greater than the Actual Degree Days for the
months of October through March for such Contract Year. Any such reduction of
the Minimum Annual Volume shall be based on the following formula:
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ND-AD
(---------)x600,000=R
ND
ND = Normal Degree Days
AD = Actual Degree Days
R = Number of Barrels to be subtracted from
1,450,000 to determine the adjusted
Minimum Annual Volume
SECTION 11
TAX
11.1 The term "Tax" or "Taxes" as used in this Section shall mean
any valid tax, license fee, or charge now or hereafter levied, assessed or made
by any governmental authority on the Propane or on the act, right, or privilege
of transportation, handling, exchange, receipt or delivery of such Propane
which is measured by the volume or value of the Propane; provided, however,
that the term "Tax" shall not be deemed to include any general gross receipts
tax, general gross income tax, general occupational or license tax or general
franchise tax.
11.2 Amerigas represents to TEPPCO that it is a marketer of
Propane, and it is hereby agreed that when permitted by law, Amerigas shall
assume and be responsible to the appropriate governmental unit for any and all
federal, state and municipal Taxes, fees and other assessments that may be
levied on Amerigas' Propane or any part thereof while in the custody of TEPPCO.
It is agreed that TEPPCO shall have the right to pay such Taxes, fees, or other
assessments on Amerigas' behalf, and Amerigas shall reimburse TEPPCO for any
such Taxes, fees, or other assessment so paid by
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<PAGE> 24
TEPPCO on Amerigas' behalf.
11.3 All duties, Taxes, import fees and dues of every description
imposed on Amerigas' Propane or its freight at the discharging port shall be
paid by Amerigas, together with all costs of bringing such Propane through U.S.
Customs.
11.4 Any Taxes, fees or other assessments imposed on TEPPCO with
respect to Propane redelivered to Amerigas shall be paid by Amerigas.
11.5 If, at any time or from time-to-time hereafter, any new or
additional tax, duties, rentals, or fees for which Amerigas or TEPPCO is liable
hereunder are imposed in such an amount so as to materially render this
transaction unprofitable to Amerigas or TEPPCO, then either party shall have
the right, on not less than sixty (60) Days written notice to the other, to
terminate this Agreement. During such 60-day period the parties shall enter
into good faith negotiations to attempt to resolve any matters that are the
basis of the notice of termination. In that regard, if the party receiving the
notification elects to pay or otherwise be fully responsible for the matter,
which the party sending the notice claims has made this transaction materially
unprofitable, this Agreement shall not be terminated and shall be modified to
reflect such agreement.
SECTION 12
BUSINESS PRACTICES
12.1 Each party hereto agrees to comply with all laws and
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lawful regulations applicable to any activities carried out in the name, or on
behalf, of the other party under the provisions of this Agreement and/or any
amendments hereto.
12.2 Each party hereto agrees that all financial settlements,
billings and reports rendered to the other party, as provided for in this
Agreement and/or any amendment hereto, will, to the best of its knowledge and
belief, reflect properly the facts about all activities and transactions
related to this Agreement, which data may be relied upon as being complete and
accurate in any further recording and reporting made by such other party for
whatever purpose.
12.3 Each party hereto agrees to notify the other party promptly
upon discovery of any instance where the notifying party fails to comply with
Section 12.1, or where the notifying party has reason to believe data covered
by Section 12.2 is no longer accurate and complete.
SECTION 13
TITLE, RESPONSIBILITY AND LIABILITY
13.1 Title to Propane received from Amerigas at the Terminal shall
be and shall at all times remain in Amerigas' name.
13.2 Responsibility and liability for the safe handling and storage
of Propane shall pass from Amerigas to TEPPCO at the connecting flange of a
tankship's discharge hose to TEPPCO's Terminal shore facilities.
Responsibility and liability for the safe handling and storage of Propane shall
pass from TEPPCO to
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Amerigas when the Propane has passed the loading arm connection of the truck
loading facility during delivery into tank trucks furnished or caused to be
furnished by Amerigas, or its consignee.
SECTION 14
WARRANTY AND INDEMNIFICATION
14.1 Amerigas warrants that it has title to the Propane delivered
by it hereunder and that it has the right to deliver same and that such Propane
is free and clear of all liens and encumbrances of any nature. Delivery of
Propane encumbered by liens or other charges by either party hereto may be
refused by the other party. Amerigas shall be the importer of record of any
Propane delivered for its account to the Terminal under this Agreement.
14.2 Propane tendered for delivery to TEPPCO shall meet the
specifications set forth in Exhibit 1.4(m) of this Agreement as such may be
modified at any time and from time-to-time. Should any Propane tendered for
delivery to TEPPCO at the Terminal fail to meet the specifications, TEPPCO
shall immediately notify Amerigas and the parties shall in good faith attempt
to work out a mutually acceptable solution to the problem; provided, however,
that TEPPCO at its option may have Amerigas' tankship vacate the berth at no
expense to TEPPCO until such time as TEPPCO and Amerigas agree as to a course
of action. Subject to the provisions of Section 5, any time elapsing from the
time of TEPPCO's notification to Amerigas and while the parties agree upon a
course of action for the off-
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specification Propane to the time the tankship is cleared for unloading cargo
shall not count as laytime or as demurrage to TEPPCO, if the tankship goes on
or has been on demurrage.
14.3 Except as otherwise provided in Section 14.2 hereof or any
arrangement agreed to by the parties hereto, Propane delivered by TEPPCO
hereunder to Amerigas shall conform to the specifications for Propane in effect
under this Agreement on the date of delivery; the foregoing is exclusive and is
in lieu of all other warranties, whether written or oral, or implied in fact or
in law, and whether based on statute, contract, tort, strict liability or
otherwise. ANY WARRANTY OF MERCHANTABILITY AND ANY WARRANTY FOR FITNESS FOR
PARTICULAR PURPOSE IS EXPRESSLY EXCLUDED AND DISCLAIMED BY TEPPCO AS TO THE
DELIVERY AND QUALITY OF PROPANE DELIVERED TO AMERIGAS HEREUNDER. Amerigas'
exclusive remedy for any loss of Propane or failure of Propane to conform with
such specifications shall be limited, at Amerigas' discretion, to refund of the
purchase price or replacement of all Propane lost or shown to be otherwise than
specified and TEPPCO shall not be liable for any special, incidental,
consequential, punitive, or exemplary damages or any other damages of any
nature whatsoever.
14.4 Except as expressly provided to the contrary elsewhere in this
Agreement, the parties agree as follows:
(a) Amerigas shall indemnify and hold harmless TEPPCO,
their heirs, successors, employees, agents, assigns
and personal representatives from all damages,
losses, deficiencies, liabilities, costs and
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expenses resulting from any negligence, willful
misconduct, misrepresentation, breach of warranty or
non-fulfillment of any agreement or covenant under
this Agreement on the part of Amerigas, or Amerigas'
subsidiaries, affiliates, subcontractors or
independent contractors or any of their employees,
workmen, servants or agents. Amerigas will also
indemnify and hold harmless TEPPCO from any and all
actions, suits, proceedings, demands, assessments,
judgments, costs (including attorneys' fees) and
other expenses incident to any of the foregoing. The
provisions of this section shall not apply if any of
the above should result from the negligence, willful
misconduct, or the failure of TEPPCO, or TEPPCO's
affiliates, subcontractors or independent contractors
or any of their employees, workmen, servants or
agents to perform any obligation of this Agreement.
TEPPCO shall give prompt written notice to Amerigas
of any claim asserted against TEPPCO which may result
in liability to Amerigas hereunder.
(b) TEPPCO shall indemnify and hold harmless Amerigas,
its parents, affiliates, successors and assigns,
officers, employees and agents from all damages,
losses, deficiencies, liabilities, costs and expenses
resulting from any negligence, willful
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misconduct, misrepresentation, breach of warranty or
non-fulfillment of any agreement or covenant under
this Agreement on the part of TEPPCO, or TEPPCO's
subsidiaries, affiliates, subcontractors or
independent contractors or any of their employees,
workmen, servants or agents. TEPPCO will also
indemnify and hold harmless Amerigas from any and all
actions, suits, proceedings, demands, assessments,
judgments, costs (including attorneys' fees) and
other expenses incident to any of the foregoing. The
provisions of this Section shall not apply if any of
the above should result from the negligence, willful
misconduct, or the failure of Amerigas or Amerigas'
affiliates, subcontractors or independent contractors
or any of their employees, workmen, servants or
agents to perform any obligation under this
Agreement. Amerigas shall give prompt written notice
to TEPPCO of any claim asserted against Amerigas
which may result in liability to TEPPCO hereunder.
SECTION 15
GENERAL TERMS AND CONDITIONS
15.1 Regulatory Law
This Agreement is subject to all valid and applicable federal,
state and local laws, rules, orders, regulations, and
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directives of any governmental authority, agency, commission, or regulatory
body having jurisdiction in connection with any and all matters and things
incident to this Agreement, including but not limited to the Equal Employment
Opportunity Act and other nondiscrimination laws and regulations covered by
Executive Orders 11246, 11598, 11625 and 11701, as they may be modified or
amended, and the Rehabilitation Act of 1973 (Public Law 99-112) and regulations
issued thereunder in Title 20, Chapter VI, Subchapter C, Part 741 of the Code
of Federal Regulations and the United States Environmental Protection Agency
regulations adopted pursuant to Executive Order No. 11738, as they may be
modified or amended.
15.2 Oil Spills - Clean Seas
(i) Amerigas shall take all appropriate actions and
precautions to see that the tankships furnished by Amerigas avoid oily
pollution at the Terminal. Amerigas agrees to nominate only tankships
that have adequate oil spill liability coverage. In the event a
tankship nominated by Amerigas shall discharge oil in the area of the
Terminal (land or water) in violation of any applicable law, TEPPCO
agrees to immediately (but not later than 2 hours) notify Amerigas by
telephone or facsimile transmission upon TEPPCO's receiving notice of
such discharge, so that Amerigas may give appropriate notification to
and/or make arrangements with the responsible tankship owner or its
carrier for the remediation or mitigation of the affected area(s).
TEPPCO shall not be liable for any expenses associated with
remediation or mitigation resulting from such
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discharge and Amerigas shall reimburse TEPPCO therefor. Amerigas
understands that the Terminal has no facilities for handling ballast
water or any other materials, other than Propane, carried aboard a
tankship.
(ii) The tankship nominated by Amerigas shall maintain the
strictest compliance with all fire, safety, environmental protection
and other laws, rules, regulations and directives of any federal,
state or local governments; the applicable port authority; and the
U.S. Coast Guard and any other governmental agency; and TEPPCO shall
not be liable for any fine or occurrence which results from failure to
comply therewith. In addition, should Amerigas' tankship fail to
remedy such non-compliance in the fastest possible time after being
advised thereof, TEPPCO may (1) refuse berthing of the tankship, (2)
terminate the tankship's discharge until such non-compliance is
remedied, or (3) order, at its sole discretion, the tankship to vacate
the berth.
(iii) In addition to the foregoing, tankships nominated by
Amerigas shall be in compliance with the U.S. Federal Water Pollution
Control Act, as amended, and will have secured and shall carry aboard
the tankship a current U.S. Federal Maritime Commission certificate of
financial responsibility. TEPPCO shall not be liable for demurrage or
other expenses for or during any time lost as a result of failure to
obtain the certificate.
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15.3 Odorization
PROPANE DELIVERED BY AMERIGAS INTO THE TERMINAL FACILITIES SHALL NOT
BE ODORIZED. PROPANE DELIVERED INTO TANK TRUCKS BY TEPPCO TO AMERIGAS OR TO
AMERIGAS' DESIGNEE FOR AMERIGAS' ACCOUNT HEREUNDER SHALL BE ODORIZED IN THE
ABSENCE OF A SEPARATE WRITTEN AGREEMENT AUTHORIZING DELIVERY OF UNODORIZED
PRODUCT INTO TANK TRUCKS. SUBJECT TO THE PROVISIONS OF ANY TERMINAL ACCESS
AGREEMENT BETWEEN THE PARTIES, TEPPCO SHALL ODORIZE SUCH PROPANE BY INJECTING
ETHYL MERCAPTAN ODORANT IN AN AMOUNT AT LEAST SUFFICIENT IN QUANTITY TO BE IN
ACCORDANCE WITH (I) NFPA 58, OR (II) ANY APPLICABLE LAWS, RULES, DIRECTIVES OR
ORDERS OF ANY GOVERNMENT, GOVERNMENTAL BODY OR GOVERNMENTAL AGENCY, WHICHEVER
STANDARD OF AMOUNT IS HIGHER. AMERIGAS SHALL HAVE THE RIGHT TO SPECIFY ANOTHER
ODORANT OR METHOD OF ODORIZATION SUBJECT ONLY TO THE ABILITY OF THE FACILITIES
AT THE TERMINAL TO MEET SUCH REQUEST. AMERIGAS REPRESENTS THAT IT IS FAMILIAR
WITH THE GENERAL PHYSICAL CHARACTERISTICS AND POSSIBLE HAZARDS OF PROPANE AND
ISSUES RELATIVE TO ODORANTS, ODORIZATION AND ODORANT FADE AND HAS TAKEN THOSE
STEPS NECESSARY IN ITS JUDGMENT TO WARN CONSUMERS OF THE POSSIBLE HAZARDS OF
PROPANE, PROPANE'S PHYSICAL PROPERTIES AND ODOR AS WELL AS THE POTENTIAL FOR
ODORANT FADE.
15.4 Force Majeure
In the event either party is rendered unable by reason of "force
majeure" as that term is hereafter defined, to carry out in whole or in part
any of its obligations under this Agreement, other than the obligation to make
payments of monies due hereunder, then
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such party shall give notice and make full particulars of such force majeure in
writing or by telegraph or telex or facsimile transmission to the other party
as soon as reasonably possible after the occurrences of said force majeure and
the determination of the cause relied upon, and upon the giving of such notice,
the obligations of such party shall, only insofar as they are affected by such
force majeure, be suspended during the continuance of any inability so caused,
but for no longer period; and such cause shall, insofar as reasonably possible,
be remedied with reasonable dispatch. The term "Force Majeure" shall include
strikes, lockouts, or other industrial disturbances, wars, blockages,
insurrections, or acts of the public enemy; epidemics, landslides, lightning,
earthquakes, fires, storms, floods, washouts, or other acts of God; arrests and
restraints of governments and people; federal, state or local laws, rules or
regulations; acts, orders, directives, requisitions, or request of any official
or agency of the federal, state, or local government; rationing of, shortages
of, or inability to obtain or to use any material or equipment; riots or civil
disturbances, fires, explosions, failures, disruptions, breakdowns, or
accidents to machinery, pumps, facilities or necessary lines of pipe
(regardless of the ownership or operation thereof); the necessity of making
repairs, alterations, enlargements or connections to machinery, pumps,
facilities, or lines of pipe (regardless of the ownership or operation
thereof); failure of any third party pipeline, through no fault of the parties
hereto, to accept the products that are the
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subject of this Agreement for transportation; embargoes, priorities, or
expropriations by government or governmental authorities, interference by civil
or military authorities, legal or de facto whether purporting to act under some
constitution, decree, law or otherwise, which is not reasonably within the
control of the party claiming suspensions and which such party is unable to
prevent or overcome by the exercise of reasonable diligence. Such term shall
likewise include (a) delays in acquiring or inability to acquire at reasonable
cost and after exercising reasonable diligence, any servitudes, rights-of-way,
permits or licenses necessary to enable a party to fulfill its obligations
hereunder; (b) the inability of a party to acquire, or delays on the part of
such party in acquiring, at reasonable cost and after the exercise of
reasonable diligence, such materials or supplies or governmental permits or
permissions as are necessary to enable such party to fulfill its obligations
hereunder; and (c) the internal inspection of the Tank and any modifications or
repairs to the Tank as a result of such inspection as provided in Section 2.2.
It is understood and agreed that the settlement of strikes or lockouts shall be
entirely within the discretion of the party having the difficulty, and that the
requirement that any force majeure shall be remedied with all reasonable
dispatch shall not require the settlement of strikes or lockouts by acceding to
the demands of the opposing party when such course is inadvisable in the sole
discretion of the party having the difficulty.
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15.5 Assignment
Neither this Agreement nor any rights, benefits or obligations
hereunder may be assigned or in any way transferred directly or indirectly by
operation of law, merger, stock purchase or otherwise, by any party hereto
without the prior written consent of the other party, except that an assignment
or delegation (i) to an entity which is the parent company of the assigning
party or wholly-owned by the assigning party or (ii) to an entity which is the
successor to all or substantially all of such party's properties shall not
require approval. Any attempted assignment or transfer of this Agreement,
other than in compliance with the provisions of this Section 15.5, shall be
void and the non-assigning party shall not recognize the prohibited and invalid
assignment or transfer. Except as expressly provided herein, nothing in this
Agreement is intended to confer upon any person or entity other than the
parties hereto and their respective permitted successors and permitted assigns,
any rights, benefits or obligations hereunder. No assignment shall have the
affect of relieving the assigning party of any liabilities hereunder past,
present or future, unless agreed to in writing by the non-assigning party.
TEPPCO shall at Amerigas' request and for Amerigas' account make a custody
transfer and delivery of Amerigas' Propane out of storage to any third party
designee named by Amerigas provided that such designee has made prior
arrangements for the immediate physical receipt of the Propane.
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15.6 Conflict of Interest
No officer, director, employee, or agent of either party shall give or
receive any commission, fee, rebate, gift, or entertainment of significant cost
or value in connection with this Agreement. Any representative(s) authorized
by either party may audit the applicable records of the other party solely for
the purpose of determining whether there has been compliance with this Section
15.6.
15.7 Audit
Each party and its duly authorized representative shall have access to
the accounting records and other documents maintained by the other party which
relate to materials being delivered to the other party under this Agreement,
and shall have the right to audit such records at any reasonable time or times
during the term of this Agreement and within two (2) years after the
termination of this Agreement.
15.8 Liens
TEPPCO shall have a right to place a lien on the Propane deliverable
by TEPPCO to Amerigas hereunder to insure the payment of all fees, damages,
demurrage charges or other payments which may be due TEPPCO hereunder.
However, TEPPCO shall not place a lien upon any Propane after delivery of same
to Amerigas or its designees.
15.9 Toxic Substances Control Act ("TSCA")
Amerigas certifies that all chemical substances in its shipment shall
comply with all applicable rules or orders under
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TSCA and that Amerigas will not offer a chemical substance for entry in
violation of TSCA or any applicable rule or order thereunder.
15.10 Charges to Amerigas
All charges whatsoever for inspection fees, import duty and permits at
the discharging port shall be the responsibility of Amerigas. Amerigas shall
be responsible for any charges attributable to its tankship, including without
limitation, pilots, tugs, light and port dues, line handlers and agents.
15.11 Waivers
No waiver by either party hereto of any term, condition or obligation
contained herein shall be deemed a waiver of the same term, condition or
obligation in the future, nor shall a waiver by either party hereto of any
breach of this Agreement be deemed a waiver of subsequent breaches of the same
or other nature.
15.12 Notices
All notices or other communications required or permitted to be given
under this Agreement shall be sufficiently given for all purposes hereunder if
in writing and personally delivered, delivered by recognized courier service
(such as Federal Express) or certified United States mail, return receipt
requested, or sent by facsimile communication to the appropriate address or
number as set forth below. Notices shall be effective upon receipt by the
party to be notified. The addresses for notice are as follows:
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If to TEPPCO under Sections 4 and 6:
TEXAS EASTERN PRODUCTS PIPELINE COMPANY
P. O. Box 2254
Providence, Rhode Island 02905
Attention: Area Supervisor
Facsimile No.: (401) 461-6460
If to TEPPCO under any Section other than Sections 4 and 6:
TEXAS EASTERN PRODUCTS PIPELINE COMPANY
P. O. Box 2521
Houston, Texas 77252-2521
Attention: Vice President, LPG Services
Facsimile No.: (713) 759-3645
If to Amerigas:
AMERIGAS PROPANE, INC.
P. O. Box 965
Valley Forge, PA 19482
Attention: Vice President Purchasing
and Transportation
Facsimile No.: (610) 768-7664
and
AMERIGAS PROPANE, INC.
11757 Katy Freeway, Suite 143
Houston, TX 77079
Attention: Providence Terminal Representative
Facsimile No.: (713) 496-6209
15.13 Applicable Law
EXCEPT TO THE EXTENT THAT THE GENERAL MARITIME LAWS OF THE UNITED
STATES MAY BE APPLICABLE, THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF RHODE ISLAND, WITHOUT GIVING AFFECT TO
THE PRINCIPLES OF CONFLICT OF LAWS THEREOF.
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15.14 Provision of Ancillary Facilities
During the term of this Agreement, TEPPCO agrees to provide the
following for the benefit of Amerigas:
a. Space at and access to the Terminal to allow Amerigas
to park its transport trucks that operate from the
Terminal.
b. A room and necessary facilities (including bathroom
facilities) at the Terminal for Amerigas' transport
truck drivers to be utilized in connection with their
job duties. Such facilities shall include a phone to
be paid for by Amerigas.
c. All necessary documentation, paperwork and timely
communications to permit Amerigas to prudently
operate its business in connection with Amerigas'
usage of the Terminal. Such documentation, paperwork
and communications shall be those previously made
available to Amerigas by TEPPCO prior to the
Effective Date.
Notwithstanding anything herein to the contrary, Amerigas hereby agrees to
protect, defend, indemnify and hold TEPPCO, its general partner, limited
partner, affiliates, independent contractors; and employees, officers and
directors of each and every one of them, harmless from and against any and all
claims, demands, and causes of action of every kind and character brought by
any party hereto, any party acquiring an interest hereunder, any of their
agents and employees, any governmental agency and/or any third or other party
39
<PAGE> 40
whomsoever, arising out of, incident to or in connection with the provision to
Amerigas, its employees and agents of the benefits set forth in items a, b, and
c of this Section 15.14.
15.15 Default
If Amerigas shall default in the payment of any sum due hereunder as
the same becomes due and payable, or shall be in default under any of the
provisions of this Agreement and shall remain in default, upon the fifteenth
(15th) day following written notification of said default from TEPPCO to
Amerigas, TEPPCO may, at its option and in addition to any other remedies that
may be available to it, declare this Agreement terminated by reason of
Amerigas' default without further liability or obligation on the part of TEPPCO
except for payment of any sums due under this Agreement. If TEPPCO shall be in
default upon the fifteenth (15th) day following written notification of said
default from Amerigas to TEPPCO, Amerigas may, at its option and in addition to
any other remedies that may be available to it, declare this Agreement
terminated by reason of TEPPCO's default without further liability or
obligation on the part of Amerigas except the payment of any sums due under
this Agreement.
15.16 Revision and Modification
This Agreement constitutes the complete understanding of the parties
with respect to the matters contained herein and there are no understandings
nor commitments not expressly set forth herein. No revision, modification or
amendment hereof shall be effective unless in writing and signed by the parties
hereto. The LPG
40
<PAGE> 41
Terminaling Agreement dated May 1, 1992 between the parties hereto is hereby
terminated effective upon the execution of this Agreement by both parties
hereto.
41
<PAGE> 42
EXECUTED as of the date first set forth above.
TE PRODUCTS PIPELINE COMPANY,
LIMITED PARTNERSHIP, by
TEXAS EASTERN PRODUCTS PIPELINE
COMPANY, general partner
------------------------------
Title:
-----------------------
AMERIGAS PROPANE, INC.
By:
--------------------------
Title:
-----------------------
5802d.kha
42
<PAGE> 43
GPA LIQUEFIED PETROLEUM GAS SPECIFICATIONS
<TABLE>
<CAPTION>
PRODUCT DESIGNATION
- ------------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL COMMERCIAL COMMERCIAL PROPANE TEST
PRODUCT CHARACTERISTICS PROPANE BUTANE B-P HD-5 METHODS
MIXTURES
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Composition............................... Predominately Predominantly Predominantly not less than 90 ASTIM D-2163-87
propane and/or butanes and/or mixtures of liquid volume per
propylene butylenes. butanes and/or cent propane; not
butylenes with more than 5 liquid
propane and/or volume percent
propylene. propylene.
- ------------------------------------------------------------------------------------------------------------------------------------
Vapor pressure at 100 F.degree psig, max.. 208 degrees 70 degrees 208 degrees 208 degrees ASTM D-1267-84
- ------------------------------------------------------------------------------------------------------------------------------------
Volatile residue:
temperature at 95% evaporation,
deg. F, max............................ -37 degrees 36 degrees 38 degrees -37 degrees ASTM D-1837-86
or
butane and heavier, liquid volume
percent max......................... 2.5 -- -- 2.5 ASTM D-2163-87
pentane and heavier, liquid volume
percent max......................... -- 2.0 2.0 -- ASTM D-2163-87
- ------------------------------------------------------------------------------------------------------------------------------------
Residual matter:
residue on evaporation of 100 ml, max.
oil stain observation.................. 0.05 ml -- -- 0.05ML ASTM D-2158-85
pass(1) -- -- pass (1) ASTM D-2158-85
- ------------------------------------------------------------------------------------------------------------------------------------
Corrosion, copper strip, max. ............ No. 1 No. 1 No. 1 No. 1 ASTM D-1838-84
(Note A)
- ------------------------------------------------------------------------------------------------------------------------------------
Total sulfur, ppmw. ...................... 185 140 140 123 ASTM D-2784-80
- ------------------------------------------------------------------------------------------------------------------------------------
Moisture content ......................... pass -- -- pass GPA Propane
Dryness Test
(Cobalt
Bromide)
or
D-2713-86
- ------------------------------------------------------------------------------------------------------------------------------------
Free water content........................ -- none none -- --
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) An acceptable product shall not yield a persistent oil ring when 0.3ml of
solvent residue mixture is added to a filler paper in 0.1 increments and
examined in daylignt after 2 minutes as described in ASTM D-2158.
NOTA A: This method may not accurately determine the corrosivity of the Equalied
petroleum gas if the sample contains corrosion inhibitors or other
chemicals which diminish the corrosivity of the sample to the copper
strip. Therefore, the addition of such compounds for the sole purpose
of biasing the test is prohibited.
*Metric Equivalents 208 psig=1434 kPa gauge 70 psig=483 gauge - 37 degrees
F=-38.3 degrees C 36 Degrees F=2.2 degrees C 100 degrees F=37.8 degrees C
<PAGE> 44
[PHILLIPS CHEMICAL COMPANY LOGO] PHILLIPS CHEMICAL COMPANY
A DIVISION OF PHILLIPS PETROLEUM COMPANY
BARTLESVILLE, OKLAHOMA 74004 918 661-6600
SPECIALTY CHEMICALS
SCENTINEL* A GAS ODORANT
<TABLE>
<CAPTION>
Property Typical Value ** Specification Test Method
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Distillation Range, Deg F @ ASTM D 86
760 mm Hg
Initial Boiling Point 93
50% 95
90% 96
Dry Point 97
Specific Gravity @ 60/60 F 0.845 0.842 -0.848 ASTM D 891
Density of Liquid @ 60 F. 7.03 ASTM D 1250
lbs/gal
Reid Vapor Pressure @ 100 F. 16.2 (1) Calculated
psia
Cloud Point. Deg. F less than -25 less than -20 PPCo BB01 CH
Freezing Point, Deg. F. less than -100 PPCo BB01 CH
Flash Point, Deg F. -55 Open Cup. Est.
Sulfur Content, Wt% 51 (2) Calculated
Color, APHA 15 30 Max. ASTM D 1209
Composition, Wt% Chromatography
Ethyl Mercaptan 99+ 98 Min.
Isopropyl Mercaptan Trace
Other Mercaptans and Trace
Sulfides
Appearance Clear with No Clear with No Visual
Of Product Particulate Particulate
Matter Matter
1/2 Doctor Test Sweet ASTM D 235
</TABLE>
* Denotes Registered Trademark
(1) Literature Value.
(2) From chromatograph composition
Notice: Since the conditions of handling and use are beyond our control we make
no guarantee of results: nor is any of the above information to be taken as a
license to operate under, or recommendation to infringe, any patent.
** Note 1 - The information contained herein is, to the best of our knowledge
and belief, accurate, but we assume no liability for damages or penalties
resulting from use of or reliance on this information.
SC0100 -- Reissued on 11/30/93 by EJH
<PAGE> 1
EXHIBIT 10.12
FINANCING AGREEMENT
This FINANCING AGREEMENT, dated as of November 5, 1997 (the
"Agreement"), is between AmeriGas Propane, Inc., a Pennsylvania corporation
("AGP"), and AmeriGas Propane, L.P., a Delaware limited partnership ("APLP").
BACKGROUND
A. AGP is the sole general partner of APLP.
B. AGP has agreed to make available to APLP a revolving credit
facility, upon the terms and conditions set forth in this Agreement, to finance
APLP's working capital, capital expenditures and interest and distribution
expenses.
C. Capitalized terms used herein and not otherwise defined
shall have the respective meanings assigned to them in that certain Amended and
Restated Credit Agreement dated as of September 15, 1997 among AGP, APLP,
Petrolane Incorporated, Bank of America National Trust and Savings Association,
as Agent, First Union Capital Markets Corp., as Syndication Agent, and the other
financial institutions party thereto (the "Credit Agreement").
NOW, THEREFORE, in consideration of the premises and covenants
contained herein, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. Credit Line Terms.
(a) Credit Limit. AGP agrees, on the terms and
conditions set forth herein, to make loans ("Loans") to APLP from time to time
on any Business Day during the period from the date hereof to the Revolving
Termination Date, in an aggregate principal amount not to exceed at anytime
outstanding of $20,000,000 (the "Commitment"). Subject to the other terms and
conditions hereof, APLP may borrow under this Section 1(a), prepay under Section
1(d) and reborrow under this Section 1(a). The Commitment shall automatically be
terminated (i) upon the occurrence of an Event of Default (as defined in Section
4 below) unless waived in writing by AGP or (ii) if AGP is no longer the sole
general partner of APLP. Upon the termination of the Commitment, subject to the
provisions of Section 15 below, APLP shall pay to AGP all amounts owing or
payable under this Agreement, without presentment, demand, protest or any other
notice of any kind, all of which are expressly waived by APLP.
<PAGE> 2
(b) Procedure for Borrowing. Each borrowing by APLP
pursuant to Section 1(a) shall be made upon APLP's written notice delivered to
AGP one Business Day prior to the requested borrowing date specifying the
requested borrowing amount and date. All advances by AGP hereunder shall be
noted on the Master Promissory Note provided for in Section 3 hereof.
(c) Voluntary Termination or Reduction of Commitment.
APLP may, upon prior written notice to AGP, terminate the Commitment or
permanently reduce the Commitment by an aggregate minimum amount of $1,000,000
or any multiple of $1,000,000 in excess thereof. At no time shall the amount of
outstanding Loans exceed the amount of the Commitment.
(d) Optional Prepayment. APLP may at anytime, upon
prior notice to AGP, prepay Loans, together with all accrued and unpaid interest
thereon, in whole or in part.
(e) Repayment. APLP shall repay to AGP on the
Revolving Termination Date the aggregate principal amount of Loans outstanding
on such date, together with all accrued and unpaid interest thereon.
(f) Interest. Each Loan shall bear interest on the
outstanding principal amount thereof from the applicable borrowing date to the
one month anniversary of the borrowing date at a rate per annum equal to the
Offshore Rate, with an Interest Period of one month, on such borrowing date,
plus the Applicable Margin for Offshore Rate Loans - Revolving Loans (the
"Interest Rate"). On each one month anniversary of any Loan (the "Reset Date"),
such Loan shall bear interest on the outstanding principal amount thereof until
the next one month anniversary date at a rate per annum equal to the Interest
Rate on the Reset Date. The Interest Rate shall change during any Interest
Period as a result of changes in the Applicable Margin. Interest on each Loan
shall be paid in arrears on the last day of each month and on the Revolving
Termination Date.
(g) Default Interest. During the existence of any
Event of Default, interest shall be paid upon demand by AGP. The foregoing
notwithstanding, if any amount of principal of or interest on any Loan, or any
other amount payable hereunder, is not paid in full when due, APLP agrees to pay
interest on such unpaid amount, from the date such amount becomes due to the
date such amount is paid in full, and after as well as before any entry of
judgment thereon to the extent permitted by law, payable on demand (but not more
frequently than once per week), at a fluctuating rate per annum equal to the
Base Rate plus 2%.
-2-
<PAGE> 3
(h) Facility Fees. APLP shall pay to AGP on the last
day of each calendar quarter a facility fee from the date hereof through the
Revolving Termination Date, on the daily average amount of the Commitment
(whether or not used), at the rate per annum set forth below for each pricing
tier as such pricing tier is applicable.
<TABLE>
<CAPTION>
Pricing Tier Funded Debt/EBITDA Facility Fee Rate
- ------------ ------------------ -----------------
<S> <C> <C>
I (less than) 1.75 x 0.1000%
II (greater than or equal to) 1.75 x but 0.1250%
(less than) 2.75 x
III (greater than or equal to) 2.75 x but 0.1500%
(less than) 3.25 x
IV (greater than or equal to) 3.25 x but 0.2000%
(less than) 3.75 x
V (greater than or equal to) 3.75 x but 0.2500%
(less than) 4.25 x
VI (greater than or equal to) 4.25 but
(less than) 4.75 x 0.3000%
VII (greater than or equal to) 4.75 x 0.3750%
</TABLE>
For the purpose of determining the applicable pricing tier, EBITDA shall be
determined as at the end of each fiscal quarter for the four fiscal quarters
then ending and Funded Debt shall be determined as at the end of each fiscal
quarter. Pricing changes shall be effective forty-five (45) days after the end
of each of the first three fiscal quarters of the fiscal year and ninety (90)
days after each fiscal year end.
(i) Payments by APLP. All payments by APLP shall be
made without set-off, recoupment or counterclaim. Any payment due on a day other
than a Business Day shall be made on the following Business Day, and such
extension of time shall in such case be included in the computation of interest
or fees, as the case may be.
(j) Waivers of Notices, Etc. APLP hereby waives
presentment, demand, protest, notice of default, and any and all other notices
or demands in connection with the delivery, acceptance, performance or
enforcement of this Agreement.
-3-
<PAGE> 4
(k) Computation of Fees and Interest. All
computations of fees and interest shall be made on the basis of a 360-day year
and actual days elapsed. Interest and fees shall accrue during each period
during which interest on such fees are computed from the first day thereof to
the last day thereof.
2. Lending Authority. The President, any Vice President, the
Treasurer and any other officer of AGP shall have the authority hereunder on
behalf of AGP to receive requests for advances from, to lend funds to, and to
give notices to, APLP, and to take such other steps on behalf of AGP as are
reasonable and necessary to carry out the terms of this Agreement. The
President, any Vice President, the Treasurer and any other officer of AGP shall
have the authority hereunder on behalf of APLP to request advances and to borrow
funds from, and to give notices and confirmations to, AGP, to make repayments of
any amounts due hereunder, and to take such other steps on behalf of APLP as are
reasonable and necessary to carry out the terms of this Agreement.
3. Master Promissory Note. Concurrent with the signing of this
Agreement, APLP shall deliver to AGP a properly completed and duly executed
Master Promissory Note, substantially in the form attached hereto as Exhibit A;
provided, however, that notwithstanding the face amount of the Master Promissory
Note, APLP's liability thereunder shall be limited at all times to APLP's actual
indebtedness (principal and interest) then outstanding to AGP hereunder.
4. Events of Default. It shall be an "Event of Default" under
this Agreement if (a) APLP shall fail to pay to AGP any amount of principal of
any Loan or, within ten (10) days after the same becomes due, any interest, fee
or other amount payable to AGP hereunder, or (b) an Event of Default as
described in Section 9.1 of the Credit Agreement shall occur and be continuing.
If an Event of Default occurs and is continuing, APLP may, subject to
the provisions of Section 15 hereof:
(a) declare all amounts owing or payable under this
Agreement due and payable, without presentment, demand, protest or other notice
of any kind, all of which are expressly waived by APLP; and/or
(b) exercise all rights and remedies available under
this Agreement or applicable law;
provided, however, that upon the occurrence of any event specified in subsection
(f) or (g) of Section 9.1 of the Credit Agreement (in the
-4-
<PAGE> 5
case of clause (i) of subsection (g) upon the expiration of the sixty (60) day
period mentioned therein), the unpaid principal amount of all Loans and all
interest and other amounts shall automatically become due and payable without
further act of AGP.
The rights provided in this Agreement are cumulative and are not exclusive of
any other rights, powers, privileges or remedies provided by law or in equity,
or under any other instrument, document or Agreement now existing or hereafter
arising.
5. Payment of Expenses. APLP shall bear all expenses incurred
by either party hereto in connection with the preparation of this Agreement and
the consummation of the transactions contemplated hereby.
6. Further Assurances. Each party shall from time to time at
the request of the other execute, acknowledge and deliver any and all such
further papers, documents, powers of attorney, notices or other instruments that
may reasonably be required to give full force and effect to the provisions and
intent of this Agreement.
7. Assignment. None of the rights or obligations of APLP under
this Agreement shall be assignable by APLP. AGP shall not sell, pledge, assign
or otherwise transfer any of its rights hereunder without giving APLP written
notice thereof.
8. Notices. Except where oral notice is specifically permitted
by this Agreement and other than as set forth below, any notice to AGP or APLP
hereunder shall be in writing and sent to the following addresses, unless and
until either party notifies the other in writing to the contrary:
If to AmeriGas Propane, Inc., to Box 965, Valley Forge, PA
19482, Attention: Treasurer.
If to AmeriGas Propane, L. P., to Box 965, Valley Forge, PA
19482, Attention: Treasurer.
9. Governing Law. This Agreement, and all documents issued or
delivered pursuant hereto, shall be deemed to have been signed, accepted,
completed and issued at the office of AGP at King of Prussia, Pennsylvania, and
shall be governed by, and construed and enforced in accordance with, the laws of
the Commonwealth of Pennsylvania.
10. Binding Effect. This Agreement shall inure to the benefit
of, and be binding upon and enforceable by, the parties hereto and their
respective successors and assigns.
-5-
<PAGE> 6
11. Entire Agreement; Amendments. This Agreement, together
with the Exhibit referred to herein, sets forth the entire agreement of the
parties hereto with respect to the subject matter hereof. Any prior agreements
or understandings between the parties hereto regarding the subject matter
hereof, whether written or oral, are superseded by this Agreement. This
Agreement may not be amended or modified except by a written instrument duly
executed by each of the parties hereto.
12. Waiver. Any term or provision of this Agreement may be
waived at any time by the party entitled to the benefit thereof by a written
instrument duly executed by such party, and such waiver shall not constitute a
waiver of any other provision of this Agreement or a further waiver of the
provision waived.
13. Section Headings; Gender; Number. All section headings,
and the use of a particular gender or number (plural or singular), are for
convenience only and shall in no way modify or restrict any of the terms or
provisions hereof.
14. Counterparts. This Agreement may be executed in two
counterparts, each of which shall be deemed an original, and both of which taken
together shall constitute but one and the same instrument. This Agreement shall
become binding only when each party hereto has executed and delivered to the
other party one or more counterparts.
15. Subordination. (a) The indebtedness ("Subordinated Debt")
evidenced by this Agreement is subordinate and junior in right of payment to all
Senior Debt (as defined in subdivision (b) hereof) of APLP to the extent
provided herein.
(b) For all purposes of these subordination provisions the
term "Senior Debt" shall mean all principal of and Make Whole Amount, if any,
and interest on (i) APLP's First Mortgage Notes, Series A through C, originally
issued in the aggregate principal amount of $518,000,000, pursuant to separate
Note Agreements, dated as of April 12, 1995 as amended, between APLP, AmeriGas
Propane, Inc., a Pennsylvania corporation and Petrolane Incorporated, a
California corporation and the institutional investors listed on Schedule I
thereto (and any notes issued in substitution therefor), (ii) those obligations
outstanding under the Credit Agreement, and (iii) all other indebtedness of APLP
for borrowed money unless, under the instrument evidencing the same or under
which the same is outstanding, it is expressly provided that such other
indebtedness is junior and subordinate to other indebtedness and obligations of
APLP. The Senior Debt shall continue to be Senior Debt and entitled to the
-6-
<PAGE> 7
benefits of these subordination provisions irrespective of any amendment,
modification or waiver of any term of or extension or renewal of the Senior
Debt.
(c) Upon the happening of an event of default with respect to
any Senior Debt, as defined therein or in the instrument under which the same is
outstanding, which occurs at the maturity thereof or which automatically
accelerates or permits the holders thereof to accelerate the maturity thereof,
then, unless and until such event of default shall have been remedied or waived
or shall have ceased to exist, no direct or indirect payment (in cash, property
or securities or by set-off or otherwise) other than Permitted Payments shall be
made on account of the principal of, or premium, if any, or interest on any
Subordinated Debt, or as a sinking fund for the Subordinated Debt, or in respect
of any redemption, retirement, purchase or other acquisition of any of the
Subordinated Debt. For purposes of these subordination provisions, "Permitted
Payments" shall mean (i) payments of in-kind interest and (ii) payments of
Permitted Securities (as defined below) pursuant to paragraph (d) below.
(d) In the event of
(i) any insolvency, bankruptcy, receivership,
liquidation, reorganization, readjustment,
composition or other similar proceeding relating to
APLP, its creditors as such or its property,
(ii) any proceeding for the liquidation, dissolution or
other winding-up of APLP, voluntary or involuntary,
whether or not involving insolvency or bankruptcy
proceedings,
(iii) any assignment by APLP for the benefit of creditors,
or
(iv) any other marshalling of the assets of APLP,
all Senior Debt (including any interest thereon accruing at the legal rate after
the commencement of any such proceedings and any additional interest that would
have accrued thereon but for the commencement of such proceedings) shall first
be paid in full before any payment or distribution, whether in cash, securities
or other property (other than Permitted Payments), shall be made to any holder
of any Subordinated Debt on account of any Subordinated Debt. Any payment or
distribution, whether in cash, securities or other property (other than
securities ("Permitted Securities") of APLP or any other entity provided for by
a plan of reorganization or readjustment the payment of which is subordinate, at
least to the
-7-
<PAGE> 8
extent provided in these subordination provisions with respect to Subordinated
Debt, to the payment of all Senior Debt at the time outstanding and to any
securities issued in respect thereof under any such plan of reorganization or
readjustment), which would otherwise (but for these subordination provisions) be
payable or deliverable in respect of this Subordinated Debt shall be paid or
delivered directly to the holders of Senior Debt in accordance with the
priorities then existing among such holders until all Senior Debt (including any
interest thereon accruing at the legal rate after the commencement of any such
proceedings and any additional interest that would have accrued thereon but for
the commencement of such proceedings) shall have been paid in full.
(e) In the event that any holder of Subordinated Debt shall
have the right to declare any Subordinated Debt due and payable as a result of
the occurrence of any one or more defaults in respect thereof, under
circumstances when the terms of subdivision (d) above are not applicable, such
holder shall not declare such Subordinated Debt due and payable or otherwise to
be in default and, solely in its capacity as a holder of such Subordinated Debt,
shall take no action at law or in equity in respect of any such default unless
and until all Senior Debt shall have been paid in full.
(f) If any payment or distribution of any character or any
security, whether in cash, securities or other property (other than Permitted
Payments), shall be received by a holder of Subordinated Debt in contravention
of any of the terms hereof before all the Senior Debt shall have been paid in
full, such payment or distribution or security shall be received in trust for
the benefit of, and shall be paid over or delivered and transferred to, the
holders of the Senior Debt at the time outstanding in accordance with the
priorities then existing among such holders for application to the payment of
all Senior Debt remaining unpaid, to the extent necessary to pay all such Senior
Debt in full. In the event of the failure of any holder of any Subordinated Debt
to endorse or assign any such payment, distribution or security, each holder of
Senior Debt is hereby irrevocably authorized to endorse or assign the same.
(g) No present or future holder of any Senior Debt shall be
prejudiced in the right to enforce subordination of Subordinated Debt by any act
or failure to act on the part of APLP. Nothing contained herein shall impair, as
between APLP and the holder of this Subordinated Debt, the obligation of APLP to
pay to the holder hereof the principal hereof and interest hereon as and when
the same shall become due and payable in accordance with the terms hereof, or
prevent the holder of any Subordinated Debt from exercising all rights, powers
and remedies otherwise permitted by applicable law or hereunder upon a default
or event of default hereunder, all subject
-8-
<PAGE> 9
to the rights of the holders of the Senior Debt to receive cash, securities or
other property (other than Permitted Payments) otherwise payable or deliverable
to the holders of Subordinated Debt.
(h) Upon the payment in full of all Senior Debt, the holders
of Subordinated Debt shall be subrogated to all rights of any holders of Senior
Debt to receive any further payments or distributions applicable to the Senior
Debt until the Subordinated Debt shall have been paid in full, and, for purposes
of such subrogation, no payment or distribution received by the holders of
Senior Debt of cash, securities or other property to which the holders of the
Subordinated Debt would have been entitled except for these subordination
provisions shall, as between APLP and its creditors other than the holders of
Subordinated Debt, on the one hand, and the holders of Subordinated Debt, on the
other, be deemed to be a payment or distribution by APLP to or on account of
Senior Debt.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
AMERIGAS PROPANE, INC.
By:____________________________________
Charles L. Ladner
Vice President-Finance & Accounting
AMERIGAS PROPANE, L.P.
BY: AMERIGAS PROPANE, INC.
AS GENERAL PARTNER
By:___________________________
Michael J. Cuzzolina
Treasurer
-9-
<PAGE> 10
FORM OF
MASTER PROMISSORY NOTE
Maximum Principal Amount: $20,000,000 Date: November __, 1997
FOR VALUE RECEIVED, AmeriGas Propane, L.P., a Delaware limited
partnership (the "Borrower"), hereby promises to pay to AmeriGas Propane, Inc.,
a Pennsylvania corporation (the "Lender"), the principal amount of each advance
made to the Borrower under the Financing Agreement referred to below on such
dates as may be determined in accordance with such Agreement. The aggregate
principal amount of such advances outstanding at any one time shall not exceed
the amount set forth above.
This Master Promissory Note is issued under, and subject to the terms
and conditions of, the Financing Agreement, dated as of November 5, 1997 (the
"Agreement"), between the Borrower and the Lender.
Interest on the outstanding principal amount of each advance evidenced
by this Master Promissory Note shall accrue and be payable in accordance with
the terms of the Agreement.
The Agreement provides for optional prepayment by the Borrower of the
advances evidenced by this Master Promissory Note. The Agreement also provides
that this Master Promissory Note is subject to subordination terms as provided
in paragraph 15 thereof.
This Master Promissory Note is being made and delivered in the
Commonwealth of Pennsylvania and shall be governed by, and construed and
enforced in accordance with, the laws of such Commonwealth.
IN WITNESS WHEREOF, the Borrower has caused this Master Promissory Note
to be duly executed and delivered as of the date first above written.
AMERIGAS PROPANE, L.P.
BY: AMERIGAS PROPANE, INC.
AS GENERAL PARTNER
By:___________________
NAME:
TITLE:
-10-
<PAGE> 11
Master Promissory Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
Amount Amount of Unpaid
Quoted of Principal Principal Notation
Date Rate Loan Repaid Balance Made By
- ----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------
- ----------------------------------------------------------------
- ----------------------------------------------------------------
- ----------------------------------------------------------------
- ----------------------------------------------------------------
- ----------------------------------------------------------------
- ----------------------------------------------------------------
- ----------------------------------------------------------------
- ----------------------------------------------------------------
- ----------------------------------------------------------------
- ----------------------------------------------------------------
- ----------------------------------------------------------------
- ----------------------------------------------------------------
- ----------------------------------------------------------------
- ----------------------------------------------------------------
- ----------------------------------------------------------------
- ----------------------------------------------------------------
- ----------------------------------------------------------------
- ----------------------------------------------------------------
</TABLE>
-11-
<PAGE> 1
EXHIBIT 10.25
AMERIGAS PROPANE, INC.
CHANGE OF CONTROL AGREEMENT
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
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 Increase in Payments............................................... 15
Section 12. Term of Agreement.......................................................... 17
Section 13. Successor Company.......................................................... 17
Section 14. Notice..................................................................... 18
Section 15. Governing Law.............................................................. 19
Section 16. Contents of Agreement, Amendment, and Assignment........................... 19
Section 17. No Right to Continued Employment........................................... 19
Section 18. Successors and Assigns..................................................... 19
Section 19. Severability............................................................... 20
Section 20. Remedies Cumulative; No Waiver............................................. 20
Section 21. Miscellaneous.............................................................. 20
Section 22. Arbitration................................................................ 20
Signatures.............................................................................. 21
</TABLE>
(i)
<PAGE> 3
AMENDED AGREEMENT
Amended Agreement made as of the 28th day of July, 1997, between
AmeriGas Propane, Inc., a Pennsylvania corporation (the "Company"), and Eugene
V. N. Bissell (the "Employee").
INTRODUCTION
The Company and the Employee entered into an Agreement as of
January 27, 1997, to provide for certain payments to be made to the Employee in
the event of a change of control of the Company; and
The Company and the Employee now wish to amend the Agreement, as
permitted by Section 16 of the Agreement, to provide that the Company will also
assist the Employee with taxes that may become due if payments are made under
the Agreement; and
The Employee is presently employed by the Company as its Vice
President - Sales & Operations. 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.
<PAGE> 4
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.
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 that the Amended Agreement shall read 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,
2
<PAGE> 5
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
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
3
<PAGE> 6
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 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.
4
<PAGE> 7
(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 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
5
<PAGE> 8
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
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
6
<PAGE> 9
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 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
7
<PAGE> 10
ownership immediately prior to such Propane Business Combination of the
Company's voting securities or the Outstanding Units, as the case may be,
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
8
<PAGE> 11
Outstanding Units immediately prior to such sale or disposition, unless, in any
case, 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
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
9
<PAGE> 12
days preceding the 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, Pennsylvania) by more than fifty miles, other than on a
temporary basis (less than twelve (12) months); and
10
<PAGE> 13
(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 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,
11
<PAGE> 14
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 Period and the denominator of which is thirty-six (36), subject to
customary employment taxes and deductions.
12
<PAGE> 15
(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 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
13
<PAGE> 16
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 any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense, or other right which
the Company may have against the Employee or others.
14
<PAGE> 17
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 Increase in 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 Employee shall be paid an additional amount
(the "Gross-Up Payment") such that the net amount retained by the Employee after
deduction of any excise tax imposed under Section 4999 of the Code, and any
federal, state and local income and employment tax and excise tax imposed upon
the Gross-Up Payment shall be equal to the Payment. For purposes of determining
the amount of the Gross-Up Payment, the Employee shall be deemed to pay federal
income tax and employment taxes at the highest marginal rate of federal income
and employment taxation in the calendar year in which the Gross-Up Payment is to
be made and state and local income taxes at the highest marginal rate of
taxation in the state and locality of the Employee's residence on the
Termination Date, net of the maximum reduction in federal income taxes that may
be obtained from the deduction of such state and local taxes..
(b) All determinations to be made under this Section 11
shall be made by Coopers & Lybrand (or, at the Company's option, the Company's
independent
15
<PAGE> 18
public accountant immediately prior to the Change of Control (the "Accounting
Firm")), which firm shall provide its determinations and any supporting
calculations both to the Company and the Employee within 10 days of the
Termination Date. Any such determination by the Accounting Firm shall be binding
upon the Company and the Employee. Within five days after the Accounting Firm's
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) In the event that upon any audit by the Internal
Revenue Service, or by a state or local taxing authority, of the Payment or
Gross-Up Payment, a change is finally determined to be required in the amount of
taxes paid by the Employee, appropriate adjustments shall be made under this
Agreement such that the net amount which is payable to the Employee after taking
into account the provisions of Section 4999 of the Code shall reflect the intent
of the parties as expressed in subsection (a) above, in the manner determined by
the Accounting Firm.
(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 wilful misconduct of the Accounting Firm, which
firm shall provide its determinations and any supporting calculations both to
the Company and the Employee within 10 days of the Termination
16
<PAGE> 19
Date. Any such determination by the Accounting Firm shall be binding upon the
Company and the Employee.
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 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
17
<PAGE> 20
the Company as hereinbefore defined and any such successor or successors to its
business and/or assets, jointly and severally.
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:
1400 Beaumont Drive
Gladwyne, PA 19035
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.
18
<PAGE> 21
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.
19
<PAGE> 22
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.
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
20
<PAGE> 23
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).
IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
have executed this Amended Agreement as of the date first above written.
ATTEST:
[Seal] AMERIGAS PROPANE, INC.
_______________________ By ________________________________
Corporate Secretary Lon R. Greenberg
Its: Chairman, President and
Chief Executive Officer
_______________________ ________________________________
Witness Eugene V. N. Bissell
21
<PAGE> 1
EXHIBIT 10.26
AMERIGAS PROPANE, INC.
1997 LONG-TERM INCENTIVE PLAN
ON BEHALF OF AMERIGAS PARTNERS, L.P.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section No. Page No.
<S> <C>
1. Purpose and Design...................................................................... 1
2. Definitions............................................................................. 1
3. Number and Source of Units Available for Grants; Maximum Allotment...................... 6
4. Duration of the Plan.................................................................... 6
5. Administration.......................................................................... 6
6. Eligibility............................................................................. 7
7. Grants: Payment and Performance Leverage............................................... 7
8. Distribution Equivalents................................................................ 8
9. Delivery of Units and Unitholder Privileges............................................. 8
10. Non-Transferability of Grants........................................................... 9
11. Termination of Employment............................................................... 9
12. Adjustment of Grants.................................................................... 9
13. Limitation of Rights.................................................................... 9
14. Amendment or Termination of Plan........................................................ 10
15. Tax Withholding......................................................................... 10
16. Governmental Approval................................................................... 10
17. Effective Date of Plan.................................................................. 10
18. Successors ............................................................................. 11
19. Headings and Captions................................................................... 11
20. Gender and Number....................................................................... 11
21. Governing Law........................................................................... 11
Signatures ............................................................................. 11
</TABLE>
(i)
<PAGE> 3
AMERIGAS PROPANE, INC.
1997 LONG-TERM INCENTIVE PLAN
ON BEHALF OF AMERIGAS PARTNERS, L.P.
1. PURPOSE AND DESIGN
The purpose of this Plan is to assist the Company in its capacity as
General Partner of APLP in securing and retaining key corporate executives of
outstanding ability who are in a position to participate significantly in the
development and implementation of the General Partner's strategic plans and
thereby to contribute materially to the long-term growth, development, and
profitability of APLP. The Plan is designed to align directly long-term
executive compensation with tangible, direct and identifiable benefits realized
by APLP unitholders, and it is hereby adopted by the Company to make available
Grants to such executives in order that they might receive Units upon the
attainment of financial criteria described in the Plan.
2. DEFINITIONS
Whenever used in this Plan, the following terms will have the
respective meanings set forth below:
2.01 "Adjusted Operating Surplus" for any period means Operating
Surplus generated during such period as adjusted to (a) exclude Operating
Surplus attributable to (i) any net increase in working capital borrowings
during such period and (ii) any net reduction in cash reserves during such
period, and (b) include any net increases in reserves to provide funds for
distributions resulting from Operating Surplus generated during such period.
Adjusted Operating Surplus does not include that portion of Operating Surplus
included in clause (a)(i) of the definition of Operating Surplus.
2.02 "Affiliate" shall have the meaning ascribed to such term in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act.
2.03 "APLP" means AmeriGas Partners, L.P., a Delaware limited
partnership.
2.04 "APLP Partnership Agreement" means the Amended and Restated
Agreement of Limited Partnership of AmeriGas Partners, L.P., dated as of
September 18, 1995, as amended from time to time.
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<PAGE> 4
2.05 "Arrearage Balance" means, as to each Common Unit as of the
end of a Quarter, the excess of the sum of the Minimum Quarterly Distribution
for a Common Unit for each prior Quarter over the sum of the amounts distributed
to unitholders for such prior Quarter and all prior Quarters in respect of such
an Initial Common Unit; except that all Arrearage Balances shall in all events
be zero if the General Partner is removed as general partner of APLP upon the
requisite vote by Limited Partners under circumstances where Cause does not
exist.
2.06 "Board" means the Company's Board of Directors as constituted
from time to time, provided that whenever in this Plan Board approval is
required, such approval shall require the affirmative vote of a majority of
members of the Board who are not participants in the Plan.
2.07 "Cause" means a court of competent jurisdiction has entered a
final, non-appealable judgment finding the General Partner liable for actual
fraud, gross negligence or willful or wanton misconduct in its capacity as
general partner of the Partnership.
2.08 "Closing Date" means April 19, 1995.
2.09 "Committee" means the Compensation and Pension Committee, or
its successor, of the Board.
2.10 "Common Unit" means a Common Unit of APLP.
2.11 "Company" means AmeriGas Propane, Inc., a Pennsylvania
corporation, and any successor thereto that is the General Partner.
2.12 "Date of Award" means the date the Committee awards a Unit
and Distribution Equivalent Grant.
2.13 "Distribution Equivalent" means an amount determined by
multiplying the number of Units subject to a Grant by the per-Unit cash
distribution, or the per-Unit fair market value (as determined by the Committee)
of any distribution in consideration other than cash, paid by APLP on its Units
on a distribution payment date.
2.14 "Employee" means a regular full-time salaried employee
(including officers and directors who are also employees) of the Company (i)
whose terms and conditions of employment are not determined through collective
bargaining with a third party or (ii) who is not characterized as an independent
contractor by the Company no matter how characterized by a court or government
agency, and no retroactive characterization of an individual's status for any
other purpose shall make an individual an "Employee" for purposes hereof unless
specifically determined otherwise by the Company for the purposes of this Plan.
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<PAGE> 5
2.15 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
2.16 "Fair Market Value" of a Unit means the average, rounded to
the next highest one-eighth of a point (.125), of the highest and lowest sales
prices thereof on the New York Stock Exchange on the day on which Fair Market
Value is being determined, as reported on the Composite Tape for transactions on
the New York Stock Exchange. In the event that there are no Unit transactions on
the New York Stock Exchange on such day, the Fair Market Value will be
determined as of the immediately preceding day on which there were Unit
transactions on that exchange.
2.17 "General Partner" means AmeriGas Propane, Inc., its successor
as general partner of APLP, or its transferee, all as provided in Section 6.4(c)
of the APLP Partnership Agreement.
2.18 "Grant" means the right to receive Units or an amount of cash
equal to the Fair Market Value of the Units and Distribution Equivalent
according to the terms of the Plan.
2.19 "Group Member" means a member of the Partnership Group.
2.20 "Interim Capital Transactions" means the following
transactions if they occur prior to the liquidation date of APLP: (i)
borrowings, refinancings or refundings of indebtedness and sales of debt
securities (other than for working capital purposes and other than for items
purchased on open account in the ordinary course of business) by any Group
Member; (ii) sales of equity interests by any Group Member; and (iii) sales or
other voluntary or involuntary dispositions of any assets of any Group Member
other than (a) sales or other dispositions of inventory in the ordinary course
of business, (b) sales or other dispositions of other current assets, including
receivables and accounts, and (c) sales or other dispositions of assets as part
of normal retirements or replacements.
2.21 "Minimum Quarterly Distribution" means $.55 per Unit.
2.22 "Operating Expenditures" means all Partnership Group
expenditures, including taxes, reimbursements of the General Partner, debt
service payments, and capital expenditures, subject to the following:
(a) Payments (including prepayments) of principal and
premium on a debt shall not be an Operating Expenditure if the payment is (i)
required in connection with the sale or other disposition of assets or (ii) made
in connection with the refinancing or refunding of indebtedness with the
proceeds from new indebtedness or from the sale of equity interests. For
purposes of the foregoing, at the election and in the reasonable discretion of
the General Partner,
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<PAGE> 6
any payment of principal or premium shall be deemed to be refunded or refinanced
by any indebtedness incurred or to be incurred by the Partnership Group within
one hundred eighty (180) days before or after such payment to the extent of the
principal amount of such indebtedness.
(b) Operating Expenditures shall not include (i)
capital expenditures made for acquisitions or for capital improvements or (ii)
payment of transaction expenses relating to Interim Capital Transactions. Where
capital expenditures are made in part for acquisitions or capital improvements
and in part for other purposes, the General Partner's good faith allocation
between the amounts paid for each shall be conclusive.
2.23 "Operating Partnership" means AmeriGas Propane, L.P., a
Delaware limited partnership.
2.24 "Operating Surplus," as to any Quarter ending before the
liquidation date of APLP, means:
(a) the sum of (i) $40 million plus all cash of the
Partnership Group on hand as of the close of business on April 19, 1995 and (ii)
all the cash receipts of the Partnership Group for the period beginning on April
19, 1995 and ending with the last day of such Quarter, other than cash receipts
from Interim Capital Transactions, less
(b) the sum of (i) Operating Expenditures for the
period beginning on April 19, 1995 and ending with the last day of such Quarter,
(ii) all distributions made pursuant to Sections 5.3 and 5.4 of the APLP
Partnership Agreement in respect of all prior Quarters, and (iii) the amount of
cash reserves that is necessary or advisable in the reasonable discretion of the
General Partner to provide funds for future Operating Expenditures.
2.25 "Participant" means an Employee designated by the Committee
to participate in the Plan.
2.26 "Partnership Group" means APLP, AmeriGas Propane, L.P., and
any partnership subsidiary of either such entity, treated as a single
consolidated partnership.
2.27 "Partnership Interest" means an interest in APLP, which shall
include general partner interests, Common Units, Subordinated Units or other
Partnership Securities, or a combination thereof or interest therein, as the
case may be.
2.28 "Partnership Security" means any class or series of Unit, any
option, right, warrant or appreciation rights relating thereto, or any other
type of equity interest that APLP may lawfully issue, or any unsecured or
secured debt obligation of APLP that is convertible into any class or series of
equity interests of APLP.
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<PAGE> 7
2.29 "Performance Contingency" means financial and operating
performance by APLP such that:
(a) for each of three, consecutive, non-overlapping, four-Quarter
periods, distributions have been made to unitholders of APLP at least equal to
the sum of the Minimum Quarterly Distributions for each Quarter on all
Outstanding Common Units and Subordinated Units during such period;
(b) the Adjusted Operating Surplus generated during the
immediately preceding twelve-Quarter period at least equals the sum of the
Minimum Quarterly Distributions for each Quarter on all Outstanding Common Units
and Subordinated Units during such period;
(c) the Arrearages Balances on the Common Units are zero;
(d) the General Partner has made a good faith estimate (in
connection with which the General Partner shall be entitled to make such
assumptions as in its sole discretion it believes are reasonable) that APLP
will, with respect to the four-Quarter period commencing immediately after the
applicable twelve-Quarter period, generate Adjusted Operating Surplus in an
amount at least equal to the sum of the Minimum Quarterly Distributions on all
Outstanding Common Units and Subordinated Units; and
(e) the General Partner shall have obtained approval from the
Audit Committee of the Board that it has complied with the provisions of the
immediately preceding Section (d), provided, however, that the Performance
Contingency will not be satisfied unless Subordinated Units are convertible to
Common Units pursuant to the "early conversion" provisions of Section 4.6(a) of
the APLP Partnership Agreement.
2.30 "Person" means an individual or a corporation, partnership,
trust, unincorporated organization, association or other entity.
2.31 "Plan" means the AmeriGas Propane, Inc. 1997 Long-term
Incentive Plan on behalf of AmeriGas Partners, L.P. as stated herein, including
any amendments or modifications thereto.
2.32 "Quarter" means, unless the context requires otherwise, a
three-month period of time ending on March 31, June 30, September 30, or
December 31.
2.33 "Subordinated Unit" means a Subordinated Unit in APLP.
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<PAGE> 8
2.34 "UGI" means UGI Corporation, a Pennsylvania corporation, and
any successor thereto.
2.35 "Unit" means a Common Unit of APLP or such other Partnership
Security of APLP as may be substituted for Units or such other securities
pursuant to Section 12.
3. NUMBER AND SOURCE OF UNITS AVAILABLE FOR GRANTS; MAXIMUM ALLOTMENT
The number of Units which may be made the subject of Grants under this
Plan at any one time may not exceed 500,000 in the aggregate, including Units
acquired by Participants under this Plan, subject, however, to the adjustment
provisions of Section 12 below. The maximum number of Units which may be the
subject of Grants to any one individual in any calendar year shall be 100,000.
Units which are the subject of Grants may be (i) previously issued and
outstanding Units, (ii) newly issued Units, (iii) Units held by the Company, any
of its Affiliates, or any Group Member, or (iv) partly of each.
4. DURATION OF THE PLAN
The Plan will expire on September 30, 2001, provided however, that the
payment terms of the Plan shall remain in effect until all obligations under the
Plan have been fulfilled.
5. ADMINISTRATION
The Plan will be administered by the Committee. Subject to the express
provisions of the Plan, the Committee will have authority, in its complete
discretion, to determine the Employees to whom, and the time or times at which,
Grants will be awarded and the number of Units to be subject to each Grant. In
making such determinations, the Committee may take into account the nature of
the services rendered by an Employee, the present and potential contributions of
the Employee to the Partnership Group's success and such other factors as the
Committee in its discretion deems relevant. Subject to the express provisions of
the Plan, the Committee will also have authority to construe and interpret the
Plan, to prescribe, amend and rescind rules and regulations relating to it, to
determine the terms and provisions of the respective Grants (which need not be
identical), and to make all other determinations (including factual
determinations) necessary or advisable for the orderly administration of the
Plan. Any discretion, actions or interpretations to be made under the Plan by
the Committee on behalf of the Company shall be made in its sole discretion, not
acting in a fiduciary capacity, need not be uniformly applied to similarly
situated individuals, and shall be final, binding and conclusive upon the
parties. It is the intent of the Company that the Plan should comply in all
applicable respects with Rule 16b-3 under the Exchange Act so that transactions
relating to any Units awarded to a Participant who is subject to Section 16 of
the Exchange Act shall be exempt under Rule 16b-3. Accordingly, if any
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<PAGE> 9
provision of the Plan or any agreement relating to a Grant does not comply with
the requirements of Rule 16b-3 as then applicable to any such Participant, such
provision shall be construed or deemed amended to the extent necessary to
conform to such requirements with respect to such Participant. Any other
provision of the Plan notwithstanding, the Board may perform any function of the
Committee under the Plan, including without limitation for the purpose of
ensuring that transactions under the Plan by Participants who are subject to
Section 16 of the Exchange Act in respect of APLP are exempt under Rule 16b-3.
In any case in which the Board is performing a function of the Committee under
the Plan, each reference to the Committee herein shall be deemed to refer to the
Board (unless the context shall otherwise require).
6. ELIGIBILITY
Grants may be awarded only to Employees at salary grade level 36 or
higher determined in accordance with the Company's personnel policies (including
directors who are also Employees of the Company) who, in the sole judgment of
the Committee, are individuals in a position to participate significantly in the
development and implementation of the General Partner's strategic plans and
thereby to contribute materially to the continued growth and development of APLP
and to its future financial success.
7. GRANTS: PAYMENT AND PERFORMANCE LEVERAGE
7.1 Payment. No payment of any kind shall be made under this Plan
pursuant to any Grant until the Performance Contingency has been satisfied. The
General Partner shall seek approval from the Audit Committee pursuant to Section
2.29(e) as soon as practicable after the conditions in section 2.29(a) through
(d) have been satisfied. Units shall be delivered (or their Fair Market Value
shall be paid in cash, as determined by the Committee) and Distribution
Equivalents shall be paid to Participants as soon as practicable.
Notwithstanding the foregoing, the Committee may accelerate the payment of any
or all outstanding Grants at any time for any reason.
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<PAGE> 10
7.2 Performance Leverage. The Performance Contingency will be leveraged
according to the following table:
<TABLE>
<CAPTION>
Performance Contingency Leverage Applied
Satisfied by: to Grant:
<S> <C>
September 30, 1999 150%
December 31, 1999 140%
March 31, 2000 130%
June 30, 2000 120%
September 30, 2000 110%
December 31, 2000 95%
March 31, 2001 80%
June 30, 2001 65%
September 30, 2001 50%
After September 30, 2001 0%
</TABLE>
8. DISTRIBUTION EQUIVALENTS
8.1 Amount of Distribution Equivalents Credited. From the Date of Award
of a Grant to a Participant until the earlier of payment, if any, of the Grant
pursuant to Section 7.1 or termination of the Grant, the Company shall keep
records for such Participant and shall credit on each payment date after
November 18, 1996 for the payment of a distribution made by APLP on its Units an
amount equal to the Distribution Equivalent associated with the Units subject to
such Grant. Notwithstanding the foregoing, a Participant may not accrue during
any calendar year Distribution Equivalents in excess of $300,000. No interest
shall be credited to any such Dividend Equivalent.
8.2 Form of Payment for Distribution Equivalents. Payment of
Distribution Equivalents shall be solely in cash.
9. DELIVERY OF UNITS AND UNITHOLDER PRIVILEGES
9.1 Delivery of Units. If Units are to be delivered pursuant to the
Plan, then the General Partner will, without stock transfer taxes to the
Participant or to any other person entitled to payment of Units pursuant to this
Plan, deliver or cause the delivery in certificate form to, or credit
electronically on behalf of, the Participant, the Participant's designee or such
other person the requisite number of Units.
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<PAGE> 11
9.2 Privileges of a Unitholder. A Participant or any other person
awarded a Grant under this Plan will have no rights as a unitholder with respect
to any Units covered by the Grant until the Units are received by the
Participant.
10. NON-TRANSFERABILITY OF GRANTS
Grants or other Participant's rights under the Plan are not
transferable, and a Grant may be paid, during the lifetime of the Participant,
only to the Participant.
11. TERMINATION OF EMPLOYMENT
Each Grant, to the extent that it has not previously been paid, will
terminate when the Participant awarded such Grant ceases to be an Employee of
the Company, unless the Committee shall, in its sole discretion, determine
otherwise as to all or any portion of such Grant.
12. ADJUSTMENT OF GRANTS
Notwithstanding anything to the contrary in this Plan, in the event (a)
any recapitalization, reorganization, merger, consolidation, spin-off,
combination, repurchase, exchange of Common or Subordinated Units or other
securities of APLP; security split or reverse split, extraordinary distribution,
liquidation, dissolution, significant corporate or partnership transaction
(whether relating to assets, partnership units, or stock) involving APLP, or
other extraordinary transaction or event affects Units such that an adjustment
is determined by the Committee to be appropriate in order to prevent dilution or
enlargement of Participants' rights under the Plan or (b) a Participant's salary
grade changes to grade 35 or lower, then the Committee may adjust (i) any or all
of the number of Units reserved for issuance under the Plan, (ii) the maximum
number of Units which may be the subject of Grants to any one individual in any
calendar year, (iii) the number of Units to be subject to Grants thereafter
awarded under the Plan, (iv) the number of Units payable pursuant to outstanding
Grants, (v) the form of payment of Grants, including without limitation, the
payment of cash value equivalents of Units instead of Units themselves, (vi) the
amount of Dividend Equivalents, and/or (vii) the terms and conditions applicable
to Distribution Equivalents, provided that the number of Units subject to any
Grant will always be a whole number. Any such determination of adjustments by
the Committee will be conclusive for all purposes of the Plan and of each Grant.
13. LIMITATION OF RIGHTS
Nothing contained in this Plan shall be construed to give an Employee
any right to be awarded a Grant except as may be authorized in the discretion of
the Committee. The awarding of a Grant under this Plan shall not constitute or
be evidence of any agreement or understanding,
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<PAGE> 12
expressed or implied, that the Company will employ a Participant for any
specified period of time, in any specific position, or at any particular rate of
remuneration.
14. AMENDMENT OR TERMINATION OF PLAN
Subject to Board approval, the Committee may at any time, and from time
to time, alter, amend, suspend or terminate this Plan without the consent of the
Company's shareholders, APLP's unitholders, or Participants, except that any
such alteration, amendment, suspension or termination shall be subject to the
provisions of the APLP Partnership Agreement and to the approval of APLP's
unitholders within one year after such Committee and Board action if such
unitholder approval is required by any federal or state law or regulation or the
rules of any stock exchange or automated quotation system on which the Units are
then listed or quoted, or if the Committee in its discretion determines that
obtaining such unitholder approval is for any reason advisable. No termination
or amendment of this Plan may, without the consent of a Participant to whom any
Grant has previously been awarded, adversely affect the rights of such
Participant under such Grant. Notwithstanding the foregoing, the Committee may
make minor amendments to this Plan which do not materially affect the rights of
Participants or significantly increase the cost to the Partnership Group or to
the Company.
15. TAX WITHHOLDING
Upon payment of any Grant under this Plan, the Company will require the
recipient of the payment to remit to the Company an amount sufficient to satisfy
federal, state and local withholding tax requirements. However, to the extent
authorized by the Committee, the Company may withhold or receive Units and make
cash payments in respect thereof in satisfaction of a recipient's tax
obligations, including tax obligations in excess of mandatory withholding
requirements.
16. GOVERNMENTAL APPROVAL
Each Grant will be subject to the requirement that if at any time the
listing, registration or qualification of the Units covered thereby upon any
securities exchange, or under any state or federal law, or the consent or
approval of any governmental regulatory body, is necessary or desirable as a
condition of or in connection with the awarding of such Grant or payment of
Units and a Dividend Equivalent thereunder, then no such Grant may be paid in
whole or in part unless and until such listing, registration, qualification,
consent or approval has been effected or obtained free of any conditions not
acceptable to the Board.
17. EFFECTIVE DATE OF PLAN
This Plan will become effective as of October 1, 1996.
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<PAGE> 13
18. SUCCESSORS
This Plan shall be binding upon and inure to the benefit of APLP, the
General Partner, their successors and assigns and the Participant and his heirs,
executors, administrators and legal representatives.
19. HEADINGS AND CAPTIONS
The headings and captions herein are provided for reference and
convenience only, shall not be considered part of the Plan, and shall not be
employed in the construction of the Plan.
20. GENDER AND NUMBER
Except where otherwise clearly indicated by the context, the masculine
and neuter shall include the feminine and the neuter, the singular shall include
the plural, and vice-versa.
21. GOVERNING LAW
The validity, construction, interpretation and effect of the Plan and
Grants under the Plan shall be governed exclusively by and determined in
accordance with the law of the Commonwealth of Pennsylvania, exclusive of any
choice of law provisions thereof.
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 ____ day of _________ , 1997.
AMERIGAS PROPANE, INC.,
on behalf of
AMERIGAS PARTNERS, L.P.
Attest:
_____________________________ By: ______________________________
Robert H. Knauss Lon R. Greenberg
Secretary Chairman of the Board
of Directors and Chief
Executive Officer
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<PAGE> 1
EXHIBIT 10.27
AMERIGAS PROPANE, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT 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 Vesting........................... 5
IV. Benefits............................................ 5
V. Form and Timing of Benefit Distribution............. 6
VI. Funding of Benefits................................. 6
VII. The Committee....................................... 7
VIII. Amendment and Termination........................... 9
IX. Miscellaneous Provisions............................ 10
SIGNATURES................................................ 11
</TABLE>
(i)
<PAGE> 3
ARTICLE I
STATEMENT OF PURPOSE
Sec. 1.01 Purpose. The purpose of the AGP SERP is to provide a fair and
competitive level of retirement benefits to certain management and other highly
compensated employees and thereby to attract and retain the highest quality
executives to the General Partner of AmeriGas Partners, L.P. and AmeriGas
Propane, L.P. In addition, the benefits under the AGP SERP are also designed to
compensate certain terminated employees by taking into account in determining
their pension benefits periods of time during which payments are made under the
AmeriGas Propane, Inc. Executive Severance Pay Plan. To address these purposes,
certain Employees of AmeriGas Propane, Inc. (those designated as "Participants")
will be provided with supplemental retirement benefits.
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<PAGE> 4
ARTICLE II
DEFINITIONS
Sec. 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
Act of 1934, as amended.
Sec. 2.02 "AGP" shall mean AmeriGas Propane, Inc. and its Subsidiaries
and Affiliates.
Sec. 2.03 "AGP SERP" shall mean the AmeriGas Propane, Inc. Supplemental
Executive Retirement Plan as set forth herein and as the same may be hereafter
amended.
Sec. 2.04 "Board" shall mean the Board of Directors of AGP.
Sec. 2.05 "Committee" shall mean the administrative committee
designated pursuant to Article VII of the Plan to administer the Plan in
accordance with its terms.
Sec. 2.06 "Compensation" shall mean actual base salary earned plus the
amount of annual bonus payable under the applicable bonus or severance plan in
each Plan year, including Deferred Compensation, whether or not paid in that
Plan year. Compensation shall be pro-rated for all partial fiscal years during
which the Employee is a Participant.
Sec. 2.07 "Deferred Compensation" shall mean so much of an Employee's
compensation payable under the applicable annual bonus plan as would otherwise
be payable to a Participant except for an election by the Employee to have such
compensation deferred to and paid in a subsequent year, excluding compensation
payable under the applicable annual bonus plan for years beginning prior to the
Effective Date.
Sec. 2.08 "Effective Date" shall mean October 1, 1996.
Sec. 2.09 "Employee" shall mean any person in the employ of AGP or any
successor employer other than a person (i) whose terms and conditions of
employment are determined through collective bargaining with a third party or
(ii) who is characterized as an independent contractor by AGP no matter how
characterized by a court or government agency and no retroactive
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<PAGE> 5
characterization of an individual's status for any other purpose shall make an
individual an "Employee" for purposes hereof unless specifically determined
otherwise by AGP for the purposes of this Plan.
Sec. 2.10 "Employment Commencement Date" shall mean the first day on
which a Participant became an employee of AGP, any Subsidiary or Affiliate of
AGP, or any entity whose business or assets have been acquired by AGP, its
Subsidiary or Affiliate or by any predecessor of such entities. If any
interruption of employment occurred after the date described in the preceding
sentence, then the "Reemployment Commencement Date" shall be the first day on
which the Participant became an Employee after the most recent such interruption
of the employment relationship between the Employee and AGP or any of its
Subsidiaries or Affiliates, unless the Committee determines otherwise.
Sec. 2.11 "Participant" shall mean an Employee of AGP who is
compensated on a salaried basis at grade level 36 or higher or such other level
as the Committee may designate.
Sec. 2.12 "Subsidiary" shall mean any corporation in which AGP,
directly or indirectly, owns at least a fifty percent (50%) interest or an
unincorporated entity of which AGP, directly or indirectly, owns at least fifty
percent (50%) of the profits or capital interests.
Sec. 2.13 "Termination for Cause" shall mean termination of employment
by reason of misappropriation of funds, habitual insobriety, substance abuse,
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 AGP,
AmeriGas Partners, L.P., AmeriGas Propane, L.P., or their Subsidiaries and
Affiliates, taken as a whole.
-4-
<PAGE> 6
ARTICLE III
PARTICIPATION AND VESTING
Sec. 3.01 Vesting. Benefits under this Plan shall vest on the fifth
anniversary of a Participant's Employment Commencement Date, unless the
Committee determines that a Participant's benefits should vest, in whole or in
part, sooner.
ARTICLE IV
BENEFITS
Sec. 4.01 Amount. AGP shall establish for each Participant an account
to which shall be credited annually an amount equal to 5% of the Participant's
maximum recognizable compensation under 26 U.S.C. Sec. 401(a)(17) and 10% of the
Participant's Compensation, if any, in excess of said maximum recognizable
compensation.
Sec. 4.02 Timing of Credits. Amounts shall first be credited to a
Participant's account as of September 30, 1997, and annually thereafter as soon
as benefits can be calculated.
Sec. 4.03 Benefit Interest. Amounts credited to a Participant's account
shall accrue interest from the effective date they are so credited until the
date they are paid to the Participant. Such interest shall be credited annually
on the opening balance of a Participant's account as of each September 30 after
1997. The rate of interest shall be equal to the total year-to-date rate of
return on the trust portfolio for the Retirement Income Plan for Employees of
UGI Utilities, Inc. (the "RIP"); except that the rate of interest in any fiscal
year may not exceed the rate of return assumed in determining the annual cost of
the RIP for that year plus one percent or be less than zero.
Sec. 4.04 Divesture. Each Participant shall be divested of, and shall
immediately forfeit, any benefit to which the Participant is otherwise entitled
under the AGP SERP if the Participant's employment is Terminated for Cause.
-5-
<PAGE> 7
ARTICLE V
FORM AND TIMING OF BENEFIT DISTRIBUTION
Sec. 5.01 Form of Benefit Distributions. Benefits payable under the AGP
SERP shall be paid in a lump sum to the Participant, the Participant's
designated beneficiary, or the Participant's estate.
Sec. 5.02 Timing of Benefit Distributions. Benefits payable under the
AGP SERP shall be paid as soon as practicable after a Participant's retirement
or termination for a reason other than cause; in no event shall such payment be
made later than the later of (i) ninety (90) days after a Participant's
retirement or Termination for a reason other than Cause, or (ii) December 31 of
the year in which such retirement or termination occurs.
ARTICLE VI
FUNDING OF BENEFITS
Sec. 6.01 Source of Funds. The Board may, but shall not be required to,
authorize the establishment of a funding vehicle for the benefits described
herein. In any event, AGP's obligation hereunder shall constitute a general,
unsecured obligation, payable solely out of its general assets, and no
Participant shall have any right to any specific assets of AGP or any such
vehicle.
Sec. 6.02 Participant Contributions. There shall be no contributions
made by Participants under the AGP SERP.
-6-
<PAGE> 8
ARTICLE VII
THE COMMITTEE
Sec. 7.01 Appointment and Tenure of Committee Members. The Committee
shall consist of one or more persons who shall be appointed by and serve at the
pleasure of the Chief Executive Officer of AGP (the "CEO"). Any Committee member
may resign by delivering his or her written resignation to the CEO. Vacancies
arising by the death, resignation or removal of a Committee member may be filled
by the CEO.
Sec. 7.02 Meetings; Majority Rule. Any and all acts of the Committee
taken at a meeting shall be by a majority of all members of the Committee. The
Committee may act by vote taken in a meeting (at which a majority of members
shall constitute a quorum). The Committee may also act by unanimous consent in
writing without the formality of convening a meeting.
Sec. 7.03 Delegation. The Committee may, by majority decision, delegate
to each or any one of its number, authority to sign any documents on its behalf,
or to perform ministerial acts, but no person to whom such authority is
delegated shall perform any act involving the exercise of any discretion without
first obtaining the concurrence of a majority of the members of the Committee,
even though such person alone may sign any document required by third parties.
The Committee shall elect one of its number to serve as Chairperson. The
Chairperson shall preside at all meetings of the Committee or shall delegate
such responsibility to another Committee member. The Committee shall elect one
person to serve as Secretary to the Committee. All third parties may rely on any
communication signed by the Secretary, acting as such, as an official
communication from the Committee.
Sec. 7.04 Authority and Responsibility of the Committee. The Committee
shall have only such authority and responsibilities as are delegated to it by
the CEO or specifically under this Plan. Among those delegable authorities and
responsibilities are:
(a) maintenance and preservation of records relating
to Participants, former Participants, and their beneficiaries;
(b) preparation and distribution to Participants of
all information and notices required under federal law or the
provisions of the AGP SERP;
-7-
<PAGE> 9
(c) preparation and filing of all governmental
reports and other information required under law to be filed or
published;
(d) construction of the provisions of the AGP SERP,
to correct defects therein and to supply omissions thereto;
(e) engagement of assistants and professional
advisers;
(f) arrangement for bonding, if required by law; and
(g) promulgation of procedures for determination of
claims for benefits.
Sec. 7.05 Compensation of Committee Members. The members of the
Committee shall serve without compensation for their services as such, but all
expenses of the Committee shall be paid or reimbursed by AGP.
Sec. 7.06 Committee Discretion. Any discretion, actions or
interpretations to be made under the Plan by the Committee on behalf of AGP
shall be made in its sole discretion, not acting in a fiduciary capacity, need
not be uniformly applied to similarly situated individuals, and shall be final,
binding and conclusive upon the parties.
Sec. 7.07 Indemnification of the Committee. Each member of the
Committee shall be indemnified by AGP against costs, expenses and liabilities
(other than amounts paid in settlement to which AGP does not consent) reasonably
incurred by the member in connection with any action to which the member may be
a party by reason of the member's service on the Committee, except in relation
to matters as to which the member shall be adjudged in such action to be
personally guilty of gross negligence or willful misconduct in the performance
of the member's duties. The foregoing right to indemnification shall be in
addition to such other rights as the Committee member may enjoy as a matter of
law or by reason of insurance coverage of any kind, but shall not extend to
costs, expenses and/or liabilities otherwise covered by insurance or that would
be so covered by any insurance then in force if such insurance contained a
waiver of subrogation. Rights granted hereunder shall be in addition to and not
in lieu of any rights to indemnification to which the Committee member may be
entitled pursuant to the by-laws of AGP. Service on the Committee shall be
deemed in partial fulfillment of the Committee member's function as an employee,
officer, director of AGP, if the Committee member also serves in that capacity.
-8-
<PAGE> 10
ARTICLE VIII
AMENDMENT AND TERMINATION
Sec. 8.01 Amendment. The provisions of the AGP SERP may be amended at
any time and from time to time by a resolution of the Board; provided, however,
that no such amendment shall serve to reduce the benefit that has accrued on
behalf of a Participant as of the effective date of the amendment, and, provided
further, however, that the Committee may make such amendments as are necessary
to keep the AGP SERP in compliance with applicable law and minor amendments
which do not materially affect the rights of the Participants or significantly
increase the cost to AGP, AmeriGas Partners, L.P. or AmeriGas Propane, L.P.
Sec. 8.02 Plan Termination. While it is AGP's intention to continue the
AGP SERP indefinitely in operation, the right is, nevertheless, reserved to
terminate the AGP SERP in whole or in part at any time; provided, however, that
no such termination shall serve to reduce the benefit that has accrued on behalf
of a Participant as of the effective date of the termination.
-9-
<PAGE> 11
ARTICLE IX
MISCELLANEOUS PROVISIONS
Sec. 9.01 Nonalienation of Benefits. None of the payments, benefits or
rights of any Participant under the AGP SERP 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 he or she may expect to receive, contingently or otherwise, under the AGP
SERP, except any right to designate a beneficiary or beneficiaries in connection
with any form of benefit payment providing benefits after the Participant's
death.
Sec. 9.02 No Contract of Employment. Neither the establishment of the
AGP SERP, 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 Employee, or any person whomsoever, the right to be retained in
the service of AGP, and all Participants and other Employees shall remain
subject to discharge to the same extent as if the AGP SERP had never been
adopted.
Sec. 9.03 Severability of Provisions. If any provision of the AGP SERP
shall be held invalid or unenforceable, such invalidity or unenforceability
shall not affect any other provisions hereof, and the AGP SERP shall be
construed and enforced as if such provision had not been included.
Sec. 9.04 Heirs, Assigns and Personal Representatives. The AGP SERP
shall be binding upon the heirs, executors, administrators, successors and
assigns of the parties, including each Participant, present and future.
Sec. 9.05 Headings and Captions. The headings and captions herein are
provided for reference and convenience only, shall not be considered part of the
AGP SERP, and shall not be employed in the construction of the AGP SERP.
Sec. 9.06 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.
-10-
<PAGE> 12
Sec. 9.07 Controlling Law. The AGP SERP shall be construed and enforced
according to the laws of the Commonwealth of Pennsylvania to the extent not
preempted by federal law, which shall otherwise control, and exclusive of any
Pennsylvania choice of law provisions.
Sec. 9.08 Payments to Minors, 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 AGP, the Board, the Committee and
all other parties with respect thereto.
Sec. 9.09 Lost Payees. A benefit (including accrued interest) shall be
deemed forfeited if the Board or the Committee is unable to locate a Participant
to whom payment is due; provided, however, that such benefit shall be reinstated
if a claim is made by the proper payee for the forfeited benefit.
IN WITNESS WHEREOF, and as evidence of its adoption of the Plan, AGP
has caused the same to be executed by its duly authorized officer and its
corporate seal to be affixed hereto as of the _____ day of ___________, 1997.
Attest: AMERIGAS PROPANE, INC.
_________________________ By: ________________________________
Robert H. Knauss Lon R. Greenberg
Secretary Chairman of the Board of Directors
and Chief Executive Officer
-11-
<PAGE> 1
EXHIBIT 13
CONSOLIDATED BALANCE SHEETS
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
SEPTEMBER 30,
1997 1996
---------- ----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents (note 2) $ 4,069 $ 2,122
Accounts receivable (less allowances for doubtful accounts of $7,875
and $6,579, respectively) 78,341 85,926
Insurance indemnification receivable 3,168 19,024
Inventories (notes 2 and 6) 64,933 69,688
Prepaid propane purchases (note 2) 21,700 13,269
Prepaid expenses and other current assets 10,880 9,423
---------- ----------
Total current assets 183,091 199,452
Property, plant and equipment (less accumulated depreciation and
amortization of $167,385 and $138,850, respectively) (notes 2 and 7) 444,677 454,112
Intangible assets (less accumulated amortization of $116,557 and
$94,785, respectively) (note 2) 677,116 691,688
Other assets (note 2) 13,777 15,040
---------- ----------
Total assets $1,318,661 $1,360,292
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Current maturities of long-term debt (note 4) $ 6,420 $ 5,150
Bank loans (note 4) 28,000 15,000
Accounts payable -- trade 50,055 46,891
Accounts payable -- related parties (note 10) 4,533 2,552
Employee compensation and benefits accrued 17,776 22,983
Interest accrued 27,700 28,037
Refunds and deposits 20,314 13,545
Other current liabilities (note 11) 26,071 43,174
---------- ----------
Total current liabilities 180,869 177,332
Long-term debt (note 4) 684,308 687,303
Other noncurrent liabilities 50,904 47,924
Commitments and contingencies (note 9)
Minority interest (note 2) 5,043 5,497
Partners' capital (note 8):
Common Unitholders (units issued -- 22,060,407 and
21,949,272, respectively) 208,253 230,376
Subordinated Unitholders (units issued -- 19,782,146) 185,310 207,439
General Partner 3,974 4,421
---------- ----------
Total partners' capital 397,537 442,236
---------- ----------
Total liabilities and partners' capital $1,318,661 $1,360,292
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
AmeriGas Partners, L.P. 1997 Annual Report
10
<PAGE> 2
CONSOLIDATED STATEMENTS OF OPERATIONS
(THOUSANDS OF DOLLARS, EXCEPT PER UNIT)
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, APRIL 19 TO
------------------------ SEPTEMBER 30,
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Revenues (note 2):
Propane $ 994,200 $ 924,810 $ 233,610
Other 83,625 88,415 35,890
----------- ----------- -----------
1,077,825 1,013,225 269,500
----------- ----------- -----------
Costs and expenses:
Cost of sales -- propane 563,959 526,255 123,414
Cost of sales -- other 36,413 43,472 18,319
Operating and administrative expenses (note 10) 316,392 317,396 124,473
Depreciation and amortization (note 2) 62,004 61,631 26,585
Miscellaneous income, net (note 14) (11,316) (8,395) (3,203)
----------- ----------- -----------
967,452 940,359 289,588
----------- ----------- -----------
Operating income (loss) 110,373 72,866 (20,088)
Interest expense (65,658) (62,782) (27,312)
----------- ----------- -----------
Income (loss) before income taxes 44,715 10,084 (47,400)
Income tax (expense) benefit (note 2) (180) 365 (140)
Minority interest (note 2) (555) (211) 433
----------- ----------- -----------
Net income (loss) $ 43,980 $ 10,238 $ (47,107)
=========== =========== ===========
General partner's interest in net income (loss) $ 440 $ 102 $ (471)
=========== =========== ===========
Limited partners' interest in net income (loss) $ 43,540 $ 10,136 $ (46,636)
=========== =========== ===========
Income (loss) per limited partner unit $ 1.04 $ .24 $ (1.12)
=========== =========== ===========
Average limited partner units outstanding (thousands) 41,799 41,729 41,714
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
AmeriGas Partners, L.P. 1997 Annual Report
11
<PAGE> 3
CONSOLIDATED STATEMENTS OF CASH FLOWS
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
APRIL 19 TO
YEAR ENDED SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 43,980 $ 10,238 $ (47,107)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 62,004 61,631 26,585
Other, net 3,939 (3,438) (938)
--------- --------- ---------
109,923 68,431 (21,460)
Net change in:
Accounts receivable 1,511 (27,802) 13,712
Inventories and prepaid propane purchases (3,110) (3,192) (24,153)
Accounts payable 5,101 12,708 2,761
Other current assets and liabilities (3,259) (1,767) 36,271
--------- --------- ---------
Net cash provided by operating activities 110,166 48,378 7,131
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures for property, plant and equipment (24,470) (21,908) (11,282)
Proceeds from disposals of assets 10,613 5,423 1,210
Payment to General Partner for purchase of
Petrolane Class B shares -- -- (109,609)
(Increase) decrease in short-term investments -- 9,000 (9,000)
Acquisitions of businesses, net of cash acquired (11,627) (20,909) (3,978)
--------- --------- ---------
Net cash used by investing activities (25,484) (28,394) (132,659)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions (92,861) (92,727) (18,797)
Minority interest activity (1,024) (1,042) (242)
Increase in bank loans 6,000 15,000 --
Issuance of long-term debt 8,131 37,009 --
Repayment of long-term debt (3,007) (10,911) (1,294)
Net proceeds from issuance of Common Units -- -- 346,414
Capital contribution from General Partner 26 -- 872
Issuance of long-term debt associated with
Partnership Formation -- -- 208,454
Cash transfers from predecessor companies -- -- 56,414
Repayment of long-term debt and related interest
associated with Partnership Formation -- -- (417,057)
Partnership Formation fees and expenses -- (4,758) (9,669)
--------- --------- ---------
Net cash provided (used) by financing activities (82,735) (57,429) 165,095
--------- --------- ---------
Cash and cash equivalents increase (decrease) $ 1,947 $ (37,445) $ 39,567
========= ========= =========
CASH AND CASH EQUIVALENTS
End of period $ 4,069 $ 2,122 $ 39,567
Beginning of period 2,122 39,567 --
--------- --------- ---------
Increase (decrease) $ 1,947 $ (37,445) $ 39,567
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
AmeriGas Partners, L.P. 1997 Annual Report
12
<PAGE> 4
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
(THOUSANDS OF DOLLARS, 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 April 19, 1995 -- -- $ -- $ -- $ -- $ --
Contributions of net assets of
predecessor companies
(notes 1 and 2) 4,330,146 19,782,146 147,857 133,361 2,840 284,058
Issuance of units
to public (note 1) 17,602,000 178,492 160,994 3,429 342,915
Cash contribution
by General Partner 449 405 9 863
Effect of contribution
of net proceeds of
Senior Notes to
AmeriGas Propane, L.P. (506) (457) (10) (973)
Net loss (24,520) (22,116) (471) (47,107)
Distributions (note 3) (9,784) (8,825) (188) (18,797)
---------- ---------- --------- --------- --------- ---------
Balance September 30, 1995 21,932,146 19,782,146 291,988 263,362 5,609 560,959
---------- ---------- --------- --------- --------- ---------
Net income 5,332 4,804 102 10,238
Distributions (note 3) (48,279) (43,521) (927) (92,727)
Issuance of Common
Units in connection
with acquisition (note 10) 17,126 413 4 417
Adjustments to net assets
contributed (note 2) (19,078) (17,206) (367) (36,651)
---------- ---------- --------- --------- --------- ---------
Balance September 30, 1996 21,949,272 19,782,146 230,376 207,439 4,421 442,236
---------- ---------- --------- --------- --------- ---------
Net income 22,857 20,683 440 43,980
Distributions (note 3) (48,411) (43,521) (929) (92,861)
Issuance of Common Units
in connection with
acquisition 111,135 2,645 27 2,672
Capital contribution from
General Partner 786 709 15 1,510
---------- ---------- --------- --------- --------- ---------
Balance September 30, 1997 22,060,407 19,782,146 $ 208,253 $ 185,310 $ 3,974 $ 397,537
========== ========== ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
AmeriGas Partners, L.P. 1997 Annual Report
13
<PAGE> 5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(THOUSANDS OF DOLLARS, EXCEPT PER UNIT)
1. PARTNERSHIP ORGANIZATION AND FORMATION
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
3. QUARTERLY DISTRIBUTIONS OF AVAILABLE CASH
4. DEBT
5. PENSION PLANS AND OTHER POSTEMPLOYMENT
BENEFITS
6. INVENTORIES
7. PROPERTY, PLANT AND EQUIPMENT
8. PARTNERS' CAPITAL AND INCENTIVE COMPENSATION PLAN
9. COMMITMENTS AND CONTINGENCIES
10. RELATED PARTY TRANSACTIONS
11. OTHER CURRENT LIABILITIES
12. UNAUDITED PRO FORMA FINANCIAL INFORMATION
13. FINANCIAL INSTRUMENTS
14. MISCELLANEOUS INCOME
15. QUARTERLY DATA (UNAUDITED)
1. PARTNERSHIP ORGANIZATION AND FORMATION
AmeriGas Partners, L.P. (AmeriGas Partners) was formed on November 2, 1994 as
a Delaware limited partnership. AmeriGas Partners and its subsidiary AmeriGas
Propane, L.P., a Delaware limited partnership (the "Operating Partnership"),
were formed to acquire and operate the propane businesses and assets of AmeriGas
Propane, Inc., a Delaware corporation, and AmeriGas Propane-2, Inc.
(collectively, "AmeriGas Propane"), wholly owned subsidiaries of AmeriGas, Inc.
(AmeriGas), and Petrolane Incorporated (Petrolane). AmeriGas Propane and
Petrolane are collectively referred to herein as the "Predecessor Companies."
The Operating Partnership is, and the Predecessor Companies were, engaged in the
distribution of propane and related equipment and supplies. 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 45 states, including Alaska and Hawaii.
On April 19, 1995, AmeriGas Propane and certain of its operating subsidiaries
merged into the Operating Partnership (the "Formation Merger"), and 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, AmeriGas Propane, Inc., a Pennsylvania corporation
and the general partner of AmeriGas Partners (the "General Partner"), and
Petrolane each received a limited partner interest in the Operating Partnership.
Immediately after the Formation Merger and the Petrolane Conveyance, the
General Partner 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. The General Partner also has a 1% general partner interest
in AmeriGas Partners and a 1.01% general partner interest in the Operating
Partnership, or an effective 2% general partner interest in the Operating
Partnership.
Following these transactions, on April 19, 1995, AmeriGas Partners completed
an initial public offering of 15,452,000 Common Units (the "IPO") at a price to
the public of $21.25 a unit. The net proceeds of approximately $307,000 from the
IPO and the net proceeds from the issuance of $100,000 face value of AmeriGas
Partners' 10.125% Senior Notes, along with existing cash balances of the
Predecessor Companies, were used on April 19, 1995 to repay Petrolane's
revolving credit loan, term loans and related accrued interest and fees which
were assumed by the Operating Partnership. In addition, certain senior
indebtedness of Petrolane and AmeriGas Propane with a combined face value of
$408,000 was assumed by the Operating Partnership and immediately exchanged for
First Mortgage Notes of the Operating Partnership. The Operating Partnership
also issued $110,000 face value of First Mortgage Notes, the proceeds of which
were used by an AmeriGas subsidiary to acquire by merger (the "Petrolane
Merger") the 65% of Petrolane common shares not already owned by AmeriGas'
parent company, UGI Corporation (UGI), or its subsidiaries. On May 11, 1995, the
underwriters of the IPO exercised their overallotment option in the amount of
2,150,000 Common Units. These Common Units were issued on May 17, 1995 at a
price of $21.25 a unit.
AmeriGas Partners and the Operating Partnership have no employees. The
General Partner conducts, directs and manages all activities of AmeriGas
Partners and the Operating Partnership and is reimbursed on a monthly basis for
all direct and indirect expenses it incurs on their behalf.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION PRINCIPLES. The consolidated financial statements include the
accounts of AmeriGas Partners, the Operating Partnership and their subsidiaries,
collectively referred to herein as "the Partnership." All significant
intercompany accounts and transactions have been eliminated in consolidation.
The General Partner's 1.01% interest in the Operating Partnership is accounted
for in the consolidated financial statements as a minority interest.
RECLASSIFICATIONS. Certain prior-period balances have been reclassified to
conform with the current period presentation.
USE OF ESTIMATES. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, 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.
FISCAL YEAR. The Partnership's fiscal year ends on September 30. Accordingly,
the accompanying consolidated results of operations of the Partnership are for
the fiscal years ended September 30, 1997 and 1996, and the period April 19,
1995 (date of inception) to September 30, 1995. Previously, the Predecessor
Companies' fiscal periods ended on the 23rd of the month. For
AmeriGas Partners, L.P. 1997 Annual Report
14
<PAGE> 6
comparative purposes, Note 12 to the Consolidated Financial Statements includes
unaudited pro forma consolidated results of operations data for the 53-week
period September 24, 1994 to September 30, 1995. Combined revenues of the
Predecessor Companies for the period September 24 to September 30, 1994 were
approximately $12,700.
REVENUE RECOGNITION. Revenues from the sale of propane are recognized
principally as product is shipped or delivered to customers.
INVENTORIES AND PREPAID PROPANE PURCHASES. Inventories are stated at the
lower of cost or market. Cost is determined using an average cost method for
propane, specific identification for appliances, and the first-in, first-out
(FIFO) method for all other inventories. The Partnership also enters into
contracts with certain of its suppliers under which it prepays the purchase
price of a fixed volume of propane for future delivery. The amount of such
prepayments is included in the consolidated balance sheets as "prepaid propane
purchases."
PROPERTY, PLANT AND EQUIPMENT AND RELATED DEPRECIATION. Property, plant and
equipment is stated at cost. Amounts assigned to property, plant and equipment
of acquired businesses are based upon estimated fair value at date of
acquisition. When plant and equipment are retired or otherwise disposed of, any
gains or losses are reflected in results of operations.
Depreciation of property, plant and equipment is computed using the
straight-line method over estimated service lives ranging from two to 40 years.
Depreciation expense during the years ended September 30, 1997 and 1996, and the
period April 19, 1995 to September 30, 1995, was $37,366, $36,910 and $15,500,
respectively.
INTANGIBLE ASSETS. Intangible assets comprise the following at September 30:
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Goodwill (less accumulated amortization of $79,265 and $64,007, respectively).. $537,396 $545,353
Excess reorganization value (less accumulated amortization of $35,939 and
$27,398, respectively) .................................................... 135,128 143,426
Other (less accumulated amortization of $1,353 and $3,380, respectively) ...... 4,592 2,909
-------- --------
Total intangible assets ....................................................... $677,116 $691,688
======== ========
</TABLE>
Goodwill recognized as a result of business combinations accounted for as
purchases, including goodwill resulting from the Petrolane Merger, is being
amortized on a straight-line basis over 40 years. Excess reorganization value
(which represents reorganization value in excess of amounts allocable to
identifiable assets of Petrolane resulting from Petrolane's July 15, 1993
reorganization under Chapter 11 of the United States Bankruptcy Code) is being
amortized on a straight-line basis over the 20-year period commencing July 15,
1993. Other intangible assets are being amortized over the estimated periods of
benefit which do not exceed ten years. Amortization expense of intangible assets
during the years ended September 30, 1997 and 1996, and the period April 19,
1995 through September 30, 1995, was $24,469, $24,551 and $10,492, respectively.
The Partnership evaluates the impairment of long-lived assets, including
intangibles, whenever events or changes in circumstances indicate that the
carrying amount of such assets may not be recoverable. Recoverability is
evaluated based upon undiscounted future cash flows expected to be generated by
such assets.
OTHER ASSETS. Included in other assets at September 30, 1997 and 1996 are net
deferred financing costs of $12,456 and $13,698, respectively. These costs are
being amortized over the term of the related debt.
INCOME TAXES. AmeriGas Partners and the Operating Partnership are not
directly subject to federal and state income taxes. Instead, their taxable
income or loss is allocated to the individual partners. The Operating
Partnership does, however, have certain subsidiaries which operate in corporate
form and are subject to federal and state income taxes.
UNIT-BASED COMPENSATION. The Partnership adopted Statement of Financial
Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation"
(SFAS 123) in 1997. SFAS 123 encourages, but does not require, companies to
recognize compensation expense for grants of stock, stock options, and other
equity instruments to employees based upon fair value or, alternatively, permits
them to continue to apply the existing accounting rules contained in Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB
25). Companies choosing not to adopt the expense recognition provisions of SFAS
123 are required to disclose pro forma net income and earnings per share data as
if such provisions had been applied. The Partnership has elected to continue to
account for unit-based compensation in accordance with APB 25.
NET INCOME (LOSS) PER UNIT. Net income (loss) per unit is computed by
dividing net income (loss), after deducting the General Partner's 1% interest,
by the weighted average number of outstanding Common and Subordinated units.
Common Units issued on May 17, 1995 pursuant to the exercise of the
underwriters' overallotment option are considered to have been issued, for
purposes of the calculation of net income (loss) per unit, as of April 19, 1995.
ACCOUNTING FOR DERIVATIVE INSTRUMENTS. The Partnership utilizes derivative
commodity instruments, including price swap agreements, call and put option
contracts, and futures contracts to manage market risk associated with a portion
of its anticipated propane supply requirements, principally during the heating
season.
Gains or losses on derivative commodity instruments associated with
forecasted transactions are recognized when such forecasted transactions affect
earnings. If a derivative instrument is terminated early because it is probable
that a transaction or forecasted transaction will not occur, any gain or loss as
of such date is immediately recognized in earnings. If such derivative
AmeriGas Partners, L.P. 1997 Annual Report
15
<PAGE> 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(THOUSANDS OF DOLLARS, EXCEPT PER UNIT)
instrument is terminated early for other economic reasons, any gain or loss as
of the termination date is deferred and recorded when the associated transaction
or forecasted transaction affects earnings.
CONSOLIDATED STATEMENTS OF CASH FLOWS. Cash equivalents include all highly
liquid investments with maturities of three months or less when purchased and
are recorded at cost plus accrued interest, which approximates market value.
Interest paid during the years ended September 30, 1997 and 1996, and the period
April 19, 1995 to September 30, 1995, totaled $67,103, $62,846 and $404,
respectively.
The combined net assets contributed to the Operating Partnership pursuant to
the Formation Merger and the Petrolane Conveyance, adjusted for the effects of
the tax basis reallocation described below, are as follows:
<TABLE>
<CAPTION>
APRIL 19, 1995
--------------
<S> <C>
Current assets ...................................... $ 192,905
Property, plant and equipment, net .................. 456,128
Goodwill and other intangibles, net ................. 556,782
Excess reorganization value, net .................... 155,687
Other assets ........................................ 30,228
----------
Total assets contributed ......................... 1,391,730
----------
Current liabilities ................................. 133,227
Long-term debt ...................................... 929,828
Other noncurrent liabilities ........................ 78,744
----------
Total liabilities assumed ........................ 1,141,799
----------
Net assets contributed to the Operating Partnership.. $ 249,931
==========
</TABLE>
In February 1996, the General Partner completed AmeriGas Partners' and the
Operating Partnership's federal income tax returns for the Partnership's initial
period of operation. As a part of this process, a final determination was made
as to how to allocate the tax basis of certain of the assets contributed to the
Partnership by the Predecessor Companies. The completion of the allocation
process resulted in reductions in the deferred income tax liabilities of the
General Partner and Petrolane existing at April 19, 1995, which had been
recorded in connection with the Petrolane Merger and the formation of the
Partnership. It also resulted in a reduction to the net assets contributed by
the General Partner and Petrolane to the Operating Partnership in conjunction
with the Partnership Formation, which adjustment was recorded by the Partnership
during the year ended September 30, 1996 as a $37,025 reduction in goodwill, a
$36,651 reduction in partners' capital, and a $374 reduction in minority
interest. Additional adjustments may be required to reflect the resolution of
other tax issues of Petrolane existing at the date of the Partnership Formation.
3. QUARTERLY DISTRIBUTIONS OF AVAILABLE CASH
The Partnership makes distributions to its partners approximately 45 days
after the end of each fiscal quarter in an aggregate amount equal to its
Available Cash for such quarter. Available Cash generally means, with respect to
any fiscal quarter of the Partnership, all cash on hand at the end of such
quarter plus all additional cash on hand as of the date of determination
resulting from borrowings after the end of such quarter less the amount of cash
reserves established by the General Partner in its reasonable discretion. These
reserves may be retained for the proper conduct of the Partnership's business
and for distributions during the next four quarters. In addition, reserves for
the payment of debt principal and interest are required under the provisions of
certain of the Partnership's debt agreements.
Distributions in an amount equal to 100% of the Partnership's Available Cash
will generally be made 98% to the Common and Subordinated unitholders and 2% to
the General Partner, subject to the payment of incentive distributions in the
event Available Cash exceeds the Minimum Quarterly Distribution (MQD) of $.55 on
all units. To the extent there is sufficient Available Cash, the holders of
Common Units have the right to receive the MQD, plus any arrearages, prior to
the distribution of Available Cash to holders of Subordinated Units. Common
Units will not accrue arrearages for any quarter after the Subordination Period
(as defined below), and Subordinated Units will not accrue any arrearages for
any quarter.
The Subordination Period will generally extend until the first day of any
quarter beginning on or after April 1, 2000 in respect of which (a)
distributions of Available Cash from Operating Surplus (generally defined as
$40,000 plus $42,879 of cash on hand as of April 19, 1995 plus all operating
cash receipts less all operating cash expenditures and cash reserves) equal or
exceed the MQD on each of the outstanding Common and Subordinated units for each
of the four consecutive four-quarter periods immediately preceding such date;
(b) the Adjusted Operating Surplus (generally defined as Operating Surplus
adjusted to exclude working capital borrowings, reductions in cash reserves and
$40,000 plus $42,879 of cash on hand as of April 19, 1995 and to include
increases in reserves to provide for distributions resulting from Operating
Surplus generated during such period) generated during both (i) each of the two
immediately preceding four-quarter periods and (ii) the immediately preceding
sixteen-quarter period, equals or exceeds the MQD on each of the Common and
Subordinated units outstanding during those periods; and (c) there are no
arrearages on the Common Units.
AmeriGas Partners, L.P. 1997 Annual Report
16
<PAGE> 8
Prior to the end of the Subordination Period but not before March 31, 1998,
4,945,537 Subordinated Units will convert into Common Units for any quarter
ending on or after March 31, 1998, and an additional 4,945,537 Subordinated
Units will convert into Common Units for any quarter ending on or after March
31, 1999, if (a) distributions of Available Cash from Operating Surplus on each
of the outstanding Common and Subordinated Units equal or exceed the MQD for
each of the three consecutive four-quarter periods immediately preceding such
date; (b) the Adjusted Operating Surplus generated during the immediately
preceding twelve-quarter period equals or exceeds the MQD on all of the Common
and Subordinated units outstanding during that period; (c) the General Partner
makes a good faith determination that the Partnership will, with respect to the
four-quarter period commencing with such date, generate Adjusted Operating
Surplus in an amount equal to or exceeding the MQD on all of the outstanding
Common and Subordinated units; and (d) there are no arrearages on the Common
Units.
4. DEBT
Long-term debt comprises the following at September 30:
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
First Mortgage Notes:
Series A, 9.34%-11.71%, due April 2000 through April 2009 (including
unamortized premium of $14,785 and $15,952,
respectively, calculated at an 8.91% effective rate) .................... $ 222,785 $ 223,952
Series B, 10.07%, due April 2001 through April 2005
(including unamortized premium of $11,557 and $13,130,
respectively, calculated at an 8.74% effective rate) .................... 211,557 213,130
Series C, 8.83%, due April 2003 through April 2010 ........................ 110,000 110,000
AmeriGas Partners Senior Notes, 10.125%, due April 2007 ...................... 100,000 100,000
Acquisition Facility ......................................................... 37,000 30,000
Special Purpose Facility ..................................................... -- 7,000
Other (including capital lease obligations of $2,145 and $2,349, respectively) 9,386 8,371
--------- ---------
Total long-term debt ......................................................... 690,728 692,453
Less current maturities ...................................................... (6,420) (5,150)
--------- ---------
Total long-term debt due after one year ...................................... $ 684,308 $ 687,303
========= =========
</TABLE>
Scheduled repayments of long-term debt for each of the next five fiscal years
ending September 30 are as follows: 1998 - $6,420; 1999 - $5,551; 2000 -
$16,580; 2001 - $71,232; 2002 - $72,606.
The 10.125% Senior Notes of AmeriGas Partners contain covenants which
restrict the ability of the Partnership to, among other things, incur additional
indebtedness, incur liens, issue preferred interests, and effect mergers,
consolidations and sales of assets. The Senior Notes are not redeemable prior to
April 15, 2000. Thereafter, AmeriGas Partners has the option to redeem the
Senior Notes, in whole or in part, at a premium. In addition, AmeriGas Partners
may, under certain circumstances following the disposition of assets, be
required to prepay the Senior Notes. Pursuant to the Indenture under which the
Senior Notes were issued, AmeriGas Partners is generally permitted to make cash
distributions in an amount equal to available cash, as defined, as of the end of
the immediately preceding quarter, as long as no event of default exists or
would exist upon making such distributions and if the Partnership's consolidated
fixed charge coverage ratio, as defined, is at least 1.75-to-1. If such ratio is
not met, cash distributions may be made in an aggregate amount not to exceed
$24,000 less the aggregate of all distributions made during the immediately
preceding 16 fiscal quarters. At September 30, 1997, such ratio was 2.57-to-1.
The Operating Partnership's obligations under the First Mortgage Notes, as
amended, are collateralized by substantially all of its assets. The General
Partner and Petrolane are co-obligors of the First Mortgage Notes. The Operating
Partnership may, at its option, and under certain circumstances following the
disposition of assets be required to, prepay the First Mortgage Notes, in whole
or in part. Certain of these prepayments will be at a premium.
Effective September 15, 1997, the Operating Partnership amended and restated
its bank credit agreement (Bank Credit Agreement). At September 30, 1997, the
credit facilities under the Bank Credit Agreement consist of a Revolving Credit
Facility and an Acquisition Facility. The Operating Partnership's obligations
under the Bank Credit Agreement are collateralized by substantially all of its
assets. The General Partner and Petrolane are co-obligors of the bank credit
facilities.
The Revolving Credit Facility provides for borrowings of up to $100,000
(including a $35,000 sublimit for letters of credit). The Revolving Credit
Facility expires September 15, 2002, but may be extended, upon timely notice,
for additional one-year periods with the consent of the participating banks
representing at least 80% of the commitments thereunder. The Revolving Credit
Facility permits the Operating Partnership to borrow at the Base Rate, defined
as the higher of the Federal Funds Rate plus .50% per annum or the agent bank's
reference rate (6.31% and 8.50%, respectively, at September 30, 1997), or at
prevailing one-, two-,
AmeriGas Partners, L.P. 1997 Annual Report
17
<PAGE> 9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(THOUSANDS OF DOLLARS, EXCEPT PER UNIT)
three-, or six-month offshore interbank borrowing rates, plus a margin (.50% per
annum as of September 30, 1997). The applicable margin on such offshore
interbank borrowing rates, and the Revolving Credit Facility commitment fee rate
(.20% per annum as of September 30, 1997), are dependent upon the Operating
Partnership's ratio of funded debt to earnings before interest, income taxes,
depreciation and amortization (EBITDA), each as defined in the Bank Credit
Agreement. The Operating Partnership is also required to pay letter of credit
fees on the undrawn amount of outstanding letters of credit equal to the
applicable margin on offshore interbank borrowings under the Revolving Credit
Facility and on the face amount of outstanding letters of credit equal to .125%
per annum. At September 30, 1997 and 1996, borrowings under the Revolving Credit
Facility totaled $28,000 and $15,000, respectively, and are classified as bank
loans. The weighted-average interest rates on the Operating Partnership's bank
loans outstanding as of September 30, 1997 and 1996 were 6.44% and 6.00%,
respectively. Issued outstanding letters of credit under the Revolving Credit
Facility totaled $2,305 at September 30, 1996. There were no issued outstanding
letters of credit under the Revolving Credit Facility at September 30, 1997.
The Acquisition Facility provides the Operating Partnership with the ability
to borrow up to $75,000 to finance propane business acquisitions. The
Acquisition Facility operates as a revolving facility through September 15,
2000, at which time any amount then outstanding will convert to a quarterly
amortizing four-year term loan. The Acquisition Facility permits the Operating
Partnership to borrow at the Base Rate or prevailing one-, two-, three-, or
six-month offshore interbank borrowing rates, plus a margin (.50% as of
September 30, 1997). The applicable margin on such offshore interbank borrowing
rates, and the Acquisition Facility commitment fee rate (.20% per annum at
September 30, 1997), are dependent upon the Operating Partnership's ratio of
funded debt to EBITDA, as defined. The weighted-average interest rates on the
Operating Partnership's acquisition loans outstanding as of September 30, 1997
and 1996 were 6.32% and 6.34%, respectively.
Prior to September 15, 1997, the Bank Credit Agreement included a Special
Purpose Facility comprising a $30,000 nonrevolving line of credit to be used for
the payment of certain liabilities of the Operating Partnership. On September
15, 1997, borrowings under the Special Purpose Facility of $7,000 were converted
to borrowings under the Revolving Credit Facility.
The Bank Credit Agreement and the First Mortgage Notes contain restrictive
covenants which include restrictions on the incurrence of additional
indebtedness and restrictions on certain liens, guarantees, loans and advances,
payments, mergers, consolidations, sales of assets and other transactions. They
also require the ratio of total indebtedness, as defined, to EBITDA, as defined
(and as calculated on a rolling four-quarter basis or eight-quarter basis
divided by two), to be less than or equal to 5.25-to-1. In addition, the Bank
Credit Agreement requires that the Operating Partnership maintain a ratio of
EBITDA to interest expense, as defined, of at least 2.25-to-1 on a rolling
four-quarter basis. Generally, as long as no default exists or would result, the
Operating Partnership is permitted to make cash distributions not more
frequently than quarterly in an amount not to exceed available cash, as defined,
for the immediately preceding calendar quarter.
The Operating Partnership also has a revolving credit agreement with the
General Partner under which it may borrow up to $20,000 to fund working capital,
capital expenditures, and interest and distribution payments. This agreement is
coterminous with, and generally comparable to, the Operating Partnership's
Revolving Credit Facility except that borrowings under the General Partner
Facility are unsecured and subordinated to all senior debt of the Partnership.
Interest rates on borrowings are based upon one-month offshore interbank
borrowing rates. Facility fees are determined in the same manner as fees under
the Revolving Credit Facility. UGI has agreed to contribute on an as needed
basis through its subsidiaries up to $20,000 to the General Partner to fund such
borrowings.
5. PENSION PLANS AND OTHER POSTEMPLOYMENT BENEFITS
During the years ended September 30, 1997 and 1996, and the period April 19,
1995 to September 30, 1995, the General Partner sponsored 401(k) savings plans
for eligible employees. Generally, participants in these plans could contribute
a portion of their compensation on a pre-tax basis. Effective October 1, 1996,
the General Partner provides a dollar-for-dollar match of participants'
contributions up to 5% of eligible compensation. Prior to October 1, 1996, the
General Partner, at its discretion, could match a portion of participants'
contributions. In addition, during the year ended September 30, 1996 and the
period April 19, 1995 to September 30, 1995, substantially all eligible
employees of the General Partner were also covered by noncontributory defined
contribution pension plans. Contributions to the pension plans represented a
percentage of each covered employee's salary. Effective October 1, 1996, the
General Partner ceased to contribute to the pension plans and the assets were
merged into the savings plans. The cost of benefits under the pension and
savings plans for the years ended September 30, 1997 and 1996, and the period
April 19, 1995 to September 30, 1995, was $4,762, $4,943 and $2,614,
respectively.
The General Partner provides postretirement health care benefits to a closed
group of retired employees of the Predecessor Companies and also provides
limited life insurance benefits to substantially all active employees of the
General Partner and certain retired employees of the General Partner and the
Predecessor Companies. The cost of postretirement medical and life insurance
benefits for the years ended September 30, 1997 and 1996, and the period April
19, 1995 to September 30, 1995, and the accumulated benefit obligations as of
the end of such periods, were not material.
AmeriGas Partners, L.P. 1997 Annual Report
18
<PAGE> 10
6. INVENTORIES
Inventories comprise the following at September 30:
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Propane gas ................. $47,641 $47,861
Materials, supplies and other 12,519 15,539
Appliances for sale ......... 4,773 6,288
------- -------
$64,933 $69,688
======= =======
</TABLE>
In addition to inventories on hand, the Partnership also enters into
contracts to purchase propane to meet a portion of its supply requirements.
Generally, such contracts have terms of less than one year and call for payment
based on either fixed prices or market prices at date of delivery.
7. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment comprise the following at September 30:
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Land ......................................... $ 52,849 $ 51,672
Buildings and improvements ................... 50,566 48,079
Transportation equipment ..................... 53,284 53,612
Storage facilities ........................... 58,200 55,432
Equipment, primarily cylinders and tanks ..... 387,554 372,805
Capital leases ............................... 5,211 8,457
Other ........................................ 4,398 2,905
--------- ---------
612,062 592,962
Less accumulated depreciation and amortization (167,385) (138,850)
--------- ---------
Net property, plant and equipment ............ $ 444,677 $ 454,112
========= =========
</TABLE>
8. PARTNERS' CAPITAL AND INCENTIVE COMPENSATION PLAN
Partners' capital consists of 22,060,407 Common Units representing a 52.2%
limited partner interest, 19,782,146 Subordinated Units representing a 46.8%
limited partner interest, and a 1% general partner interest.
During the Subordination Period, the Partnership may issue up to 9,400,000
additional Common Units (excluding Common Units issued in connection with (i)
employee benefit plans and (ii) the conversion of Subordinated Units into Common
Units) or an equivalent number of securities ranking on a parity with the Common
Units without the approval of a majority of the Common Unitholders. The
Partnership may issue an unlimited number of additional Common Units or parity
securities without Common Unitholder approval if such issuance occurs in
connection with acquisitions, including, in certain circumstances, the repayment
of debt incurred in connection with an acquisition. In addition, under certain
conditions, the Partnership may issue, without Common Unitholder approval, an
unlimited number of Common Units or parity securities for the repayment of up to
$150,000 of long-term indebtedness of the Partnership. After the Subordination
Period, the General Partner may cause the Partnership to issue an unlimited
number of additional limited partner interests and other equity securities of
the Partnership for such consideration and on such terms and conditions as shall
be established by the General Partner in its sole discretion.
On October 28, 1996, the General Partner adopted the AmeriGas Propane, Inc.
1997 Long-Term Incentive Plan (1997 Propane Plan), effective October 1, 1996.
Under the 1997 Propane Plan, the General Partner may grant to key employees the
right to receive Common Units, or cash generally equivalent to the fair market
value of such Common Units, on the payment date. In addition, the 1997 Propane
Plan provides for the crediting of distribution equivalents to participants'
accounts from the grant date through the date of payment. Distribution
equivalents will be paid in cash, and such payment may, at the participant's
request, be deferred. The number of Common Units which may be made the subject
of grants under the 1997 Propane Plan may not exceed 500,000. Generally, each
grant, to the extent it has not previously been paid, will terminate when the
participant ceases to be employed by the General Partner.
The actual number of Common Units (or their cash equivalent) that may be
delivered pursuant to the 1997 Propane Plan, as well as the amount of the
distribution equivalent, are contingent upon the date on which the requirements
for early conversion of Subordinated Units are met. If the requirements for
early conversion are not met by September 30, 2001, no payments under the 1997
Propane Plan will be made. During the year ended September 30, 1997, 84,500
Common Units were made the subject of grants under the 1997 Propane Plan. At
September 30, 1997, 415,500 Common Units were available for future grants.
Compensation expense for the year ended September 30, 1997 associated with
the 1997 Propane Plan was $1,560. Compensation expense as determined under the
provisions of SFAS 123 is the same.
AmeriGas Partners, L.P. 1997 Annual Report
19
<PAGE> 11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(THOUSANDS OF DOLLARS, EXCEPT PER UNIT)
9. COMMITMENTS AND CONTINGENCIES
The Partnership leases various buildings and transportation, data processing
and office equipment under operating leases. Certain of the leases contain
renewal and purchase options and also contain escalation clauses. The aggregate
rental expense for such leases for the years ended September 30, 1997 and 1996,
and the period April 19, 1995 through September 30, 1995, was $23,481, $23,090
and $8,866, respectively.
Minimum future payments under noncancelable capital and operating leases are
as follows:
<TABLE>
<CAPTION>
CAPITAL LEASES OPERATING LEASES
============== ================
<S> <C> <C>
Year ending September 30,
1998...................................... $1,417 $21,604
1999...................................... 926 17,743
2000...................................... 7 13,963
2001...................................... - 11,121
2002...................................... - 7,396
Thereafter................................ - 20,419
------ --------
2,350 $ 92,246
========
Less imputed interest (205)
------
Present value of capital lease obligations $2,145
======
</TABLE>
The Partnership has succeeded to the lease guarantee obligations of Petrolane
relating to Petrolane's divestiture of nonpropane operations prior to its 1989
acquisition by QFB Partners. These leases are currently estimated to aggregate
approximately $67,000. The leases expire through 2010, and some of them are
currently in default. 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 defaulted lease obligations without the Partnership's having
to honor its guarantee. The Partnership believes the probability that it will be
required to directly satisfy such lease obligations is remote.
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 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 can be reasonably estimated. 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.
10. RELATED PARTY TRANSACTIONS
Pursuant to the Amended and Restated Agreement of Limited Partnership, 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, which totaled $177,210, $176,425 and $72,648 for the
years ended September 30, 1997 and 1996, and the period April 19, 1995 to
September 30, 1995, respectively, include employee compensation and benefit
expenses of employees of the General Partner and general and administrative
expenses. 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
AmeriGas Partners, L.P. 1997 Annual Report
20
<PAGE> 12
reimbursed by the Partnership for these expenses. For the years ended September
30, 1997 and 1996, and the period April 19, 1995 to September 30, 1995, such
corporate expenses totaled $6,557, $7,786 and $4,116, respectively. In addition,
UGI and certain of its subsidiaries provide office space and general liability,
automobile and workers' compensation insurance to the Partnership. For the years
ended September 30, 1997 and 1996, and the period April 19, 1995 to September
30, 1995, expenses associated with these items totaled $3,009, $3,189, and
$1,207, respectively.
On November 16, 1995, a wholly owned subsidiary of the General Partner,
Diamond Acquisition, Inc. (Diamond), contributed to the Partnership the net
assets (including acquisition debt payable to UGI relating thereto) of Oahu Gas
Service, Inc. (Oahu), a Hawaii corporation acquired by Diamond on October 31,
1995. In consideration of the retention of certain income tax liabilities
relating to Oahu, AmeriGas Partners issued 17,126 Common Units to Diamond having
a fair value of $413.
11. OTHER CURRENT LIABILITIES
Other current liabilities comprise the following at September 30:
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Self-insured property and casualty liability..... $ 10,969 $ 12,429
Insured property and casualty liability.......... 1,801 19,024
Taxes other than income taxes.................... 9,981 5,198
Other............................................ 3,320 6,523
-------- --------
$ 26,071 $ 43,174
======== ========
</TABLE>
12. UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma consolidated statement of operations for
the 53 weeks ended September 30, 1995 was derived from the historical statements
of operations of the Predecessor Companies for the period September 24, 1994 to
April 19, 1995 and the statement of operations of the Partnership for the period
April 19, 1995 to September 30, 1995. The pro forma consolidated statement of
operations was prepared to reflect the effects of the Partnership Formation as
if the formation had been completed in its entirety as of September 24, 1994.
The pro forma consolidated statement of operations does not purport to
present the results of operations of the Partnership had the Partnership
Formation actually been completed as of September 24, 1994. In addition, the pro
forma consolidated statement of operations is not necessarily indicative of the
results of future operations of the Partnership and should be read in
conjunction with the consolidated financial statements of the Partnership and
the Predecessor Companies appearing in the Partnership's Annual Report on Form
10-K.
<TABLE>
<CAPTION>
53 WEEKS ENDED
SEPTEMBER 30, 1995
(Unaudited)
------------------
<S> <C>
Revenues:
Propane.................................... $ 779,167
Other...................................... 99,421
---------
878,588
---------
Costs and expenses:
Cost of sales.............................. 458,990
Depreciation and amortization.............. 62,259
Operating expenses......................... 301,570
Miscellaneous income, net.................. (7,968)
---------
814,851
---------
Operating income.............................. 63,737
Interest expense.............................. (62,823)
Income taxes.................................. (140)
Minority interest............................. (115)
---------
Net income $ 659
=========
Net income per limited partner unit $ .02
=========
</TABLE>
Significant pro forma adjustments reflected in the data above include (a) the
elimination of income taxes as a result of operating
AmeriGas Partners, L.P. 1997 Annual Report
21
<PAGE> 13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(THOUSANDS OF DOLLARS, EXCEPT PER UNIT)
in a partnership structure; (b) an adjustment to interest expense resulting from
the retirement of approximately $377,000 of Petrolane term loans, the
restructuring of Petrolane and AmeriGas Propane senior debt, and the issuance of
an aggregate $210,000 face value of notes of AmeriGas Partners and the Operating
Partnership; (c) the elimination of management fees previously charged to
Petrolane by UGI; (d) a net reduction in amortization expense resulting from the
longer-term (40-year) amortization of the excess purchase price over fair value
of 65% of the net identifiable assets of Petrolane, compared with the
amortization of 65% of Petrolane's excess reorganization value over 20 years;
and (e) the elimination of intercompany revenues and expenses.
13. FINANCIAL INSTRUMENTS
The carrying amounts reported in the consolidated balance sheets for cash and
cash equivalents, accounts receivable, accounts payable and bank loans
approximate fair value because of the immediate or short-term maturity of these
financial instruments. Based upon current market prices and discounted present
value methods calculated using borrowing rates currently available for debt with
similar credit ratings, terms and maturities, the fair values of total long-term
debt outstanding at September 30, 1997 and 1996 are estimated to be $737,000 and
$720,000, respectively.
Financial instruments which potentially subject the Partnership to
concentrations of credit risk consist principally of trade accounts receivable.
The risk associated with trade accounts receivable is limited due to the
Partnership's large customer base and its dispersion across many different U.S.
markets. At September 30, 1997 and 1996, the Partnership had no significant
concentrations of credit risk.
14. MISCELLANEOUS INCOME
Miscellaneous income comprises the following:
<TABLE>
<CAPTION>
APRIL 19 TO
YEAR ENDED SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1995
-------- ------- --------------
<S> <C> <C> <C>
Interest income.......................... $ 1,475 $ 1,278 $ 1,795
Gain on sale of Atlantic Energy, Inc..... 4,700 - -
Gain on sale of fixed assets............. 1,001 1,855 366
Other.................................... 4,140 5,262 1,042
----- ----- -----
$ 11,316 $ 8,395 $ 3,203
======== ======= =======
</TABLE>
15. QUARTERLY DATA (UNAUDITED)
The following quarterly data includes all adjustments (consisting only of
normal recurring adjustments with the exception of those listed below) which the
Partnership considers necessary for a fair presentation of such information.
Quarterly results fluctuate because of the seasonal nature of the Partnership's
propane business.
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30,
1996 1995 1997(a) 1996(b) 1997 1996 1997 1996
---- ---- ------- ------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $360,116 $285,796 $371,149 $374,768 $ 177,666 $ 175,552 $ 168,894 $ 177,109
Operating
income (loss) 57,699 33,528 65,794 67,144 593 (6,929) (13,713) (20,877)
Net income (loss) 39,951 17,427 48,508 51,298 (15,152) (22,146) (29,327) (36,341)
Net income (loss) per
limited partner unit .95 .41 1.15 1.22 (.36) (.53) (.69) (.86)
</TABLE>
(a) Includes gain from the sale of the Partnership's 50% equity interest in
Atlantic Energy, Inc., which owns and operates a liquefied petroleum gas
storage terminal in Chesapeake, Virginia. The gain increased operating
income by $4,700 and net income by $4,652 or $.11 per limited partner
unit.
(b) Includes reduction in operating expenses of $4,356 from the refund of
insurance premium deposits and $3,312 from a reduction in accrued
environmental costs which increased operating income by $7,668 and net
income by $7,590 or $.18 per limited partner unit.
AmeriGas Partners, L.P. 1997 Annual Report
22
<PAGE> 14
GENERAL PARTNER'S REPORT
The Partnership's consolidated financial statements and other financial
information contained in this Annual Report are prepared by management of the
General Partner, AmeriGas Propane, Inc., which is responsible for their
fairness, integrity and objectivity. The consolidated financial statements and
related information were prepared in accordance with generally accepted
accounting principles and include amounts that are based on management's best
judgments and estimates.
The General Partner has established a system of internal controls. Management
of the General Partner believes the system provides reasonable assurance that
assets are safeguarded and that transactions are executed in accordance with
management's authorization and are properly recorded to permit the preparation
of reliable financial information. There are limits in all systems of internal
control, based on the recognition that the cost of the system should not exceed
the benefits to be derived. We believe that the internal control system is cost
effective and provides reasonable assurance that material errors or
irregularities will be prevented or detected within a timely period. The
internal control system and compliance therewith are monitored by UGI
Corporation's internal audit staff.
The Audit Committee of the Board of Directors of the General Partner is
composed of two members, neither of whom is an employee of the Company. This
Committee is responsible, among other things, for reviewing the adequacy of
corporate financial reporting and accounting systems and controls, for
overseeing the external and internal auditing functions and for recommending to
the Board of Directors the independent public accountants to conduct the annual
audit of the Partnership's consolidated financial statements. The Committee
maintains direct channels of communication between the Board of Directors and
both the independent public accountants and internal auditors.
The independent public accountants, who are appointed by the Board of
Directors of the General Partner, perform certain procedures, including an
evaluation of internal controls to the extent required by generally accepted
auditing standards, in order to express an opinion on the consolidated financial
statements and to obtain reasonable assurance that such financial statements are
free of material misstatement.
/s/ Lon R. Greenberg /s/ Charles L. Ladner
- ------------------------------------ --------------------------------------
Lon R. Greenberg Charles L. Ladner
Chairman and Chief Executive Officer Chief Financial and Accounting Officer
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of AmeriGas Partners, L.P. and
the Board of Directors of AmeriGas Propane, Inc.:
We have audited the accompanying consolidated balance sheets of AmeriGas
Partners, L.P. and subsidiaries as of September 30, 1997 and 1996 and the
related consolidated statements of operations, partners' capital and cash flows
for the years ended September 30, 1997 and 1996, and the period April 19, 1995
to September 30, 1995. These financial statements are the responsibility of the
management of AmeriGas Propane, Inc. Our responsibility is to express an opinion
on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
AmeriGas Partners, L.P. and subsidiaries as of September 30, 1997 and 1996 and
the results of their operations and their cash flows for the years ended
September 30, 1997 and 1996, and the period April 19, 1995 to September 30,
1995, in conformity with generally accepted accounting principles.
/s/ Arthur Andersen
- --------------------------------------
Chicago, Illinois
November 14, 1997
AmeriGas Partners, L.P. 1997 Annual Report
23
<PAGE> 1
EXHIBIT 21
<TABLE>
<CAPTION>
========================================================================================
AMERIGAS PARTNERS, L.P. SUBSIDIARIES
========================================================================================
STATE
OF
SUBSIDIARY ORGANIZATION/ OWNERSHIP
INCORPORATION
========================================================================================
<S> <C> <C>
AMERIGAS PARTNERS, L.P. DE
AmeriGas Finance Corp. DE 100%
AmeriGas Propane, L.P. DE *
AmeriGas Propane Parts & PA 100%
Service, Inc.
Northwest LPG Supply Ltd. Canada 100%
Petrolane Offshore Limited Bermuda 100%
========================================================================================
</TABLE>
* AmeriGas Partners, L.P. owns 98.9899% of AmeriGas Propane, L.P.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND STATEMENT OF OPERATIONS OF AMERIGAS PARTNERS,
L.P. AND SUBSIDIARIES AS OF AND FOR THE YEAR ENDED SEPTEMBER 30, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS INCLUDED IN
AMERIGAS PARTNERS' ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED SEPTEMBER 30,
1997.
</LEGEND>
<CIK> 0000932628
<NAME> AMERIGAS PARTNERS, L.P.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> SEP-30-1997
<CASH> 4,069
<SECURITIES> 0
<RECEIVABLES> 86,216
<ALLOWANCES> 7,875
<INVENTORY> 64,933
<CURRENT-ASSETS> 183,091
<PP&E> 612,062
<DEPRECIATION> 167,385
<TOTAL-ASSETS> 1,318,661
<CURRENT-LIABILITIES> 180,869
<BONDS> 684,308
0
0
<COMMON> 0
<OTHER-SE> 397,537
<TOTAL-LIABILITY-AND-EQUITY> 1,318,661
<SALES> 1,077,825
<TOTAL-REVENUES> 1,077,825
<CGS> 600,372
<TOTAL-COSTS> 600,372
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 65,658
<INCOME-PRETAX> 44,715
<INCOME-TAX> 180
<INCOME-CONTINUING> 43,980
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 43,980
<EPS-PRIMARY> 1.04
<EPS-DILUTED> 1.04
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET OF AMERIGAS FINANCE CORP. AS OF SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENT INCLUDED IN AMERIGAS PARTNERS'
ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED SEPTEMBER 30, 1997.
</LEGEND>
<CIK> 0000945792
<NAME> AMERIGAS FINANCE CORP.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> SEP-30-1997
<CASH> 1,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,000
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,000
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 1
<OTHER-SE> 999
<TOTAL-LIABILITY-AND-EQUITY> 1,000
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<PAGE> 1
EXHIBIT 99
FORWARD-LOOKING STATEMENTS
In connection with the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, AmeriGas Partners, L.P. ("AmeriGas
Partners") is hereby filing cautionary statements identifying important factors
that could cause AmeriGas Partners' actual results to differ materially from
those projected in forward-looking statements of AmeriGas Partners made by or on
behalf of AmeriGas Partners.
RISK FACTORS
The financial and operating performance of AmeriGas Partners is
subject to risks and uncertainties, all of which are difficult to predict, and
many of which are beyond the control of management. Forward-looking statements
concerning AmeriGas Partners' performance may differ materially from actual
results because of these risks and uncertainties. They include, but are not
limited to:
1. Weather conditions;
2. price and availability of propane, and the capacity to
transport to market areas;
3. governmental legislation and regulations;
4. local economic conditions;
5. labor relations;
6. environmental claims;
7. competition from the same and alternative energy sources;
8. operating hazards and other risks incidental to transporting,
storing, and distributing propane;
9. energy efficiency and technology trends;
10. interest rates; and
11. large customer defaults.
