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EXHIBIT 10.12
UGI CORPORATION
SENIOR EXECUTIVE EMPLOYEE
SEVERANCE PAY PLAN
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TABLE OF CONTENTS
Article No. Page No.
I. Background, Purpose and Term of Plan......................................... 1
II. Definitions.................................................................. 2
III. Participation and Eligibility for Benefits................................... 4
IV. Benefit...................................................................... 5
V. Method and Duration of Benefit Payments...................................... 7
VI. Administration............................................................... 8
VII. Amendment and Termination.................................................... 10
VIII. Duties of the Company........................................................ 11
IX. Claims Procedures............................................................ 11
X. Miscellaneous................................................................ 12
Signatures.......................................................................... 14
Appendix A.......................................................................... A-1
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ARTICLE I
BACKGROUND, PURPOSE AND TERM OF PLAN
Section 1.01 Background. This Plan was amended and restated
in its entirety on April 30, 1993 to reflect sponsorship by a new entity
following the April 10, 1992 reorganization of UGI Utilities, Inc. (formerly,
UGI Corporation). As of January 1, 1997 the Company adopted the 1997 Stock
Option and Dividend Equivalent Plan. For this reason and others, certain Plan
changes are desirable. Accordingly, pursuant to the authority granted under
Section 7.01, the Plan is amended and restated in its entirety effective as of
January 1, 1997, with all changes effective as of that date.
Section 1.02 Purpose of the Plan. The Plan is intended to
alleviate, in part or in full, financial hardships which may be experienced by
certain of those employees of the Company whose employment is terminated without
fault in recognition of their past service to the Company. In essence, benefits
under the Plan are intended to be additional compensation for past services or
for the continuation of specified fringe benefits for a transitional period. The
amount or kind of benefit to be provided is to be based on the Participant's
Compensation, and the fringe benefit programs applicable to him or her, at his
or her Employment Termination Date. The Plan is not intended to be included in
the definitions of "employee pension benefit plan" and "pension plan" set forth
under Section 3(2) of ERISA. Rather, this Plan is intended to meet the
descriptive requirements of a plan constituting a "severance pay plan" within
the meaning of regulations published by the Secretary of Labor at Title 29, Code
of Federal Regulations, Section 2510.3-2(b). Accordingly, the benefits paid by
the Plan are not deferred compensation.
Section 1.03 Term of the Plan. This amendment and
restatement is a continuation of the Company's existing Plan. The Plan will
continue until such time as UGI Corporation ("UGI"), acting in its sole
discretion, elects to modify, supersede or terminate it in accordance with the
further provisions hereof.
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ARTICLE II
DEFINITIONS
Section 2.01 "Affiliate" shall have the meaning ascribed to
such term in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended.
Section 2.02 "Benefit" or "Benefits" shall mean any or all
of the benefits that a Participant is entitled to receive pursuant to Article IV
of the Plan.
Section 2.03 "Board of Directors" shall mean the Board of
Directors of UGI Corporation, or any successor thereto.
Section 2.04 "Chairman of the Board" shall mean the
individual serving as the Chairman of the Board of Directors of UGI Corporation
as of the date of reference.
Section 2.05 "Change of Control" shall mean a change of
control as defined in the form of the UGI Corporation Change of Control
Agreement set forth in Appendix A hereto and as amended.
Section 2.06 "Chief Executive Officer" shall mean the
individual serving as the Chief Executive Officer of UGI Corporation as of the
date of reference.
Section 2.07 "Committee" shall mean the administrative
committee designated pursuant to Article VI of the Plan to administer the Plan
in accordance with its terms.
Section 2.08 "Company" shall mean UGI Corporation, a
Pennsylvania corporation and its subsidiaries and Affiliates, exclusive of
AmeriGas Propane, Inc. The term "Company" shall include any successor to UGI
Corporation or any subsidiary or Affiliate, exclusive of AmeriGas Propane, Inc.,
or a corporation succeeding to the business of UGI Corporation by merger,
consolidation or liquidation or purchase of assets or stock or similar
transaction.
Section 2.09 "Compensation" shall mean the Participant's
annual base salary and applicable target annual bonus amount (if any) in effect
on the first day of the calendar quarter immediately preceding the Participant's
Employment Termination Date.
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Section 2.10 "Employment Commencement Date" shall mean the
most recent day on which a Participant became an employee of the Company, any
Affiliate of the Company, or any entity whose business or assets have been
acquired by the Company, its Affiliates or by any predecessor of such entities,
unless the Committee determines to give credit for prior service, if any.
Section 2.11 "Employment Termination Date" shall mean the
date on which the employment relationship between the Participant and the
Company is terminated.
Section 2.12 "ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as amended.
Section 2.13 "Just Cause" shall mean dismissal due to
misappropriation of funds, substance abuse, habitual insobriety, conviction of a
crime involving moral turpitude, or gross negligence in the performance of
duties, which gross negligence has had a material adverse effect on the
business, operations, assets, properties or financial condition of the Company
and its subsidiaries and Affiliates taken as a whole. Disputes with respect to
whether Just Cause exists shall be resolved in accordance with Article IX.
Section 2.14 "Participant" shall mean any individual
employed by the Company who has been designated by the Company as a participant
in SODEP.
Section 2.15 "Plan" shall mean the UGI Corporation Senior
Executive Employee Severance Pay Plan, as set forth herein, and as the same may
from time to time be amended.
Section 2.16 "Plan Year" shall mean each fiscal year of the
Company during which this Plan is in effect.
Section 2.17 "Salary Continuation Period" shall equal one
business day for each month which is included in the Participant's Years of
Service plus the number of months of paid notice under Section 4.01(c) to a
maximum of fifteen (15) months (thirty (30) months in the case of the Chief
Executive Officer).
Section 2.18 "SODEP" shall mean the Company's 1997 Stock
Option and Dividend Equivalent Plan (or its successor, as applicable).
Section 2.19 "Year of Service" shall mean each twelve-month
period (or part thereof) beginning on the Participant's Employment
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Commencement Date and ending on each anniversary thereof. Additional Years of
Service based on earlier employment with the Company, any Affiliate of the
Company or any entity whose business or assets have been acquired by the
Company, its Affiliates or by any predecessor of such entities, shall be counted
only if permitted by the Committee.
ARTICLE III
PARTICIPATION
AND ELIGIBILITY FOR BENEFITS
Section 3.01 General Eligibility Requirement. In order to
receive a Benefit under this Plan, a Participant's employment must have been
terminated by the Company other than for Just Cause, death, or continuous
illness, injury or incapacity for a period of six consecutive months.
Section 3.02 Substantially Comparable Employment. In the
absence of a Change of Control, notwithstanding anything herein to the contrary,
no Benefits shall be due hereunder in connection with the disposition of a
business or division or Affiliate by the Company or an Affiliate if
substantially comparable terms of employment, as determined by the Committee,
have been offered by the transferee; provided, however, that the Committee, in
such situation, may determine to have the Company provide any of the Benefits.
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ARTICLE IV
BENEFIT
Section 4.01 Amount of Immediate Cash Benefit. The cash
amount to be paid to a Participant eligible to receive Benefits under Section
3.01 hereof, shall be paid in a lump sum as provided in Section 5.01 hereof and
shall equal the sum of the following; except that any payment under paragraph
(b) below that is based on annual financial performance will be excluded from
the lump sum payment and paid separately as provided below:
(a) An amount equal to the Participant's earned and
accrued vacation entitlement, including banked vacation
time, and personal holidays through the end of the
Participant's Salary Continuation Period;
(b) An amount equal to the Participant's annual target
bonus amount under the applicable annual bonus plan (or its
successor) for the current Plan Year multiplied by the
number of months elapsed in the current Plan Year to his or
her Employment Termination Date and divided by twelve (12),
together with any amounts previously deferred by the
Participant under such plan (with interest thereon at the
rate prescribed by such plan) as well as any amounts due
from the prior year under such plan but not yet paid,
provided, however, that if the Employment Termination Date
occurs in the last two (2) months of the fiscal year, the
amount of the current Plan Year target bonus to be paid
pursuant to this paragraph (b) shall be determined and paid
after the end of the fiscal year in accordance with the
terms and conditions of the applicable annual bonus plan as
though the Participant were still an Employee, except that
the weighting to be applied to the Participant's
business/financial performance goals under the annual bonus
plan will be deemed to be 100%; provided further, however,
that the Chief Executive Officer may, in his sole
discretion, determine that the amount payable pursuant to
this paragraph (b) for Employment Termination Dates
occurring in the last two (2) months of the fiscal year may
be computed in the same manner provided for Employment
Termination Dates occurring during the first ten (10) months
of the fiscal year;
(c) In the case of the Chief Executive Officer, an
amount of paid notice equal to eighteen (18) times a
fraction the numerator
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of which is his or her Compensation and the denominator of
which is twelve (12), and in the case of all other
Participants, an amount of paid notice equal to sixty-five
(65) times a fraction the numerator of which is the
Participant's Compensation and the denominator of which is
two-hundred sixty (260); and
(d) An amount equal to the number of the Participant's
Years of Service multiplied by twelve (12) times a fraction
the numerator of which is the Participant's Compensation and
the denominator of which is two-hundred sixty (260);
provided, however, that such amount shall not exceed 100% of
the Participant's Compensation.
Section 4.02 Executive Benefits. The Participant shall
continue to be entitled, through the end of the Participant's Salary
Continuation Period, to those employee benefits and executive perquisites listed
below (but only if they are in effect from time to time during the Salary
Continuation Period) based upon the amount of coverage or benefit provided at
the Participant's Employment Termination Date:
(a) Basic Life Insurance;
(b) Supplemental Life Insurance; and
(c) Medical Plan and Dental
Assistance Plan including COBRA
continuation coverage; and
(d) Executive Retirement Plan
In each case, when contributions are required of all executive employees at the
time of the Participant's Employment Termination Date, or thereafter, if
required of all other executive employees, the Participant shall be responsible
for making the required contributions, on an after-tax basis only, during the
Salary Continuation Period in order to be eligible for the coverage. In lieu of
any or all of the coverages provided under any of clauses (a) through (c) above,
the Company may pay to the Participant, at the time payment is otherwise to be
made of cash Benefits pursuant to Section 5.01 hereof, a single lump sum payment
equal to the then present value of the cost of such coverages. Notwithstanding
anything herein to the contrary, any such coverages shall be discontinued if,
and at the time, the Participant obtains other employment and becomes eligible
to participate in the plan of, or is provided similar coverage by,
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a new employer; provided, however, that the Participant shall not be required to
refund any sum to the Company should a lump sum have been paid pursuant to the
preceding sentence. Any applicable conversion rights shall be provided to the
Participant at the time coverage ceases. The Committee shall determine to what
extent, if any, any other perquisites or benefit coverage such as tax
preparation services, etc. shall continue to be provided during the Salary
Continuation Period and whether the Participant shall be entitled to
outplacement services or to receive title to the Participant's Company-supplied
automobile, if any, in which case the value of the Participant's cash Benefit
under Section 4.01 hereof shall be increased accordingly. The Participant shall
be responsible for the payment of sales tax on such automobile, if any.
Section 4.03 Retirement Plans. This Plan shall not govern
and shall in no way affect the Participant's interest in, or entitlement to
benefits under, any of the Company's "qualified" retirement plans and any
payments received under any such plan shall not affect a Participant's right to
any Benefit hereunder.
Section 4.04 Effect on Other Benefits. There shall not be
drawn from the continued provision by the Company of any of the aforementioned
Benefits any implication of continued employment or of continued right to
accrual of benefits under the Company's "qualified" retirement plans or the 1997
Stock Option and Dividend Equivalent Plan, and a Terminated Employee shall not,
except as provided in Section 4.01 (a) hereof, accrue vacation days, paid
holidays, paid sick days or other similar benefits normally associated with
employment for any part of the Salary Continuation Period during which benefits
are payable under this Plan. The benefits payable under this Plan shall be in
addition to and not in lieu of any payments or benefits due to the Participant
under any other plan, policy, or program of the Company.
ARTICLE V
METHOD AND DURATION OF BENEFIT PAYMENTS
Section 5.01 Method of Payment. The cash Benefits to which a
Participant is entitled, as determined pursuant to Article IV hereof, shall be
paid in a lump sum. Payment shall be made by mailing to the last address
provided by the Participant to the Company. Payment shall be made within thirty
(30) days after the Participant's Employment Termination Date, except as
otherwise provided in Section 4.01 (b).
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Section 5.02 Conditions to Entitlement to Benefit. In order
to be eligible to receive any Benefits hereunder, after the Participant's
Employment Termination Date, a Participant must be reasonably available to the
Company and cooperate in any reasonable manner (so as not to interfere
unreasonably with subsequent employment) in providing assistance to the Company
in conducting any matters which are pending at such time, and shall execute a
release and discharge of the Company from any and all claims, demands or causes
of action other than as to amounts or benefits due to the Participant under any
plan, program or contract provided by, or entered into with, the Company. Such
release and discharge shall be in such form as is prescribed by the Committee
and counsel for the Company and shall be executed prior to the payment of any
benefits due hereunder. In addition, no benefits due hereunder shall be paid to
a Participant who is required by Company policy or practice to execute an
agreement governing the assignment of patents or a confidentiality or
post-employment agreement unless executed copies of such agreements are on file
with the Company.
Section 5.03 Payments to Beneficiary(ies). Each Participant
shall designate a beneficiary(ies) to receive any Benefits due hereunder in the
event of the Participant's death prior to the receipt of all such Benefits. Such
beneficiary designation shall be made in the manner, and at the time, prescribed
by the Committee in its sole discretion. In the absence of an effective
beneficiary designation hereunder, the Participant's estate shall be deemed to
be the Participant's designated beneficiary.
ARTICLE VI
ADMINISTRATION
Section 6.01 Appointment. The Committee shall consist of one
(1) or more persons appointed by the Chairman of the Board. Committee members
may be, but need not be, employees of the Company, including the Chairman of the
Board and the Chief Executive Officer, whether or not they are one and the same
person.
Section 6.02 Tenure. Committee members shall serve at the
pleasure of the Chairman of the Board. Committee members may resign at any time
on ten (10) days' written notice, and Committee members may be discharged, with
or without cause, at any time by the Chairman of the Board.
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Section 6.03 Authority and Duties. It shall be the duty of
the Committee, on the basis of information supplied to it by the Company, to
determine the eligibility of each Participant for Benefits under the Plan, to
determine the amount of Benefit to which each such Participant may be entitled,
and to determine the manner and time of payment of the Benefit consistent with
the provisions hereof. The Company shall make such payments as are certified to
it by the Committee to be due to Participants. The Committee shall have the full
power and authority to construe, interpret and administer the Plan, to correct
deficiencies therein, and to supply omissions. All decisions, actions, and
interpretations of the Committee shall be final, binding, and conclusive upon
the parties.
Section 6.04 Action by the Committee. A majority of the
members of the Committee shall constitute a quorum for the transaction of
business at a meeting of the Committee. Any action of the Committee may be taken
upon the affirmative vote of a majority of the members of the Committee at a
meeting, or at the direction of the Chairperson, without a meeting, by mail,
telegraph, telephone, or electronic communication device; provided that all of
the members of the Committee are informed of their right to vote on the matter
before the Committee and of the outcome of the vote thereon.
Section 6.05 Officers of the Committee. The Chairman of the
Board shall designate one of the members of the Committee to serve as
Chairperson thereof. The Chairman of the Board shall also designate a person to
serve as Secretary of the Committee, which person may be, but need not be, a
member of the Committee.
Section 6.06 Compensation of the Committee. Members of the
Committee shall receive no compensation for their services as such. However, all
reasonable expenses of the Committee shall be paid or reimbursed by the Company
upon proper documentation. The Company shall indemnify members of the Committee
against personal liability for actions taken in good faith in the discharge of
their respective duties as members of the Committee.
Section 6.07 Records, Reporting, and Disclosure. The
Committee shall keep all individual and group records relating to Participants
and former Participants and all other records necessary for the proper operation
of the Plan. Such records shall be made available to the Company and to each
Participant for examination during business hours except that a Participant
shall examine only such records as pertain exclusively to the examining
Participant and to the Plan. The Committee shall prepare and shall file as
required by law or regulation all reports, forms, documents and other items
required by ERISA,
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the Internal Revenue Code, and every other relevant statute, each as amended,
and all regulations thereunder (except that UGI Corporation, as payor of the
Benefits, shall prepare and distribute to the proper recipients all forms
relating to withholding of income or wage taxes, Social Security taxes, and
other amounts which may be similarly reportable).
Section 6.08 Actions of the Committee. Whenever a
determination is required of the Committee under the Plan, such determination
shall be made solely at the discretion of the Committee. In addition, the
exercise of discretion by the Committee need not be uniformly applied to
similarly situated Participants and shall be final and binding on each
Participant or beneficiary(ies) to whom the determination is directed.
Section 6.09 Benefits of the Chief Executive Officer.
Whenever a determination is required of the Chief Executive Officer under the
Plan, the individual then serving as the Chairman of the Compensation and
Management Development Committee of the Board of Directors shall be substituted
for, and shall make the determination with respect to, the Chief Executive
Officer as to any matter that directly pertains to, or affects, the Chief
Executive Officer.
Section 6.10 Bonding. The Committee shall arrange any
bonding that may be required by law, but no amount in excess of the amount
required by law (if any) shall be required by the Plan.
ARTICLE VII
AMENDMENT AND TERMINATION
Section 7.01 Amendment, Suspension and Termination. The
Company retains the right, at any time and from time to time, to amend, suspend
or terminate the Plan in whole or in part, for any reason, and without either
the consent of or the prior notification to any Participant. No such amendment
shall give the Company the right to recover any amount paid to a Participant
prior to the date of such amendment or to cause the cessation and discontinuance
of payments of Benefits to any person or persons under the Plan already
receiving Benefits.
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ARTICLE VIII
DUTIES OF THE COMPANY
Section 8.01 Records. The Company shall supply to the
Committee all records and information necessary to the performance of the
Committee's duties.
Section 8.02 Payment. UGI Corporation shall make payments
from its general assets to Participants in accordance with the terms of the
Plan, as directed by the Committee.
ARTICLE IX
CLAIMS PROCEDURES
Section 9.01 Application for Benefits. Participants who
believe they are eligible for benefits under this Plan may apply for such
benefits by completing and filing with the Committee an application for
benefits. Before the date on which benefit payments commence, each such
application must be supported by such information as the Committee deems
relevant and appropriate.
Section 9.02 Appeals of Denied Claims for Benefits. In the
event that any claim for benefits is denied in whole or in part, the Participant
(or beneficiary, if applicable) whose claim has been so denied shall be notified
of such denial in writing by the Committee. The notice advising of the denial
shall specify the reason or reasons for denial, make specific reference to
pertinent Plan provisions, describe any additional material or information
necessary for the claimant to perfect the claim (explaining why such material or
information is needed), and shall advise the Participant of the procedure for
the appeal of such denial. All appeals shall be made by the following procedure:
(a) The Participant whose claim has been denied shall
file with the Committee a notice of desire to appeal the
denial. Such notice shall be filed within sixty (60) days of
notification by the Committee of claim denial, shall be made
in writing, and shall
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set forth all of the facts upon which the appeal is based.
Appeals not timely filed shall be barred.
(b) The Committee shall, within thirty (30) days of
receipt of the Participant's notice of appeal, establish a
hearing date on which the Participant may make an oral
presentation to the Committee in support of the
Participant's appeal. The Participant shall be given not
fewer than ten (10) days' notice of the date set for the
hearing.
(c) The Committee shall consider the merits of the
claimant's written and oral presentations, the merits of any
facts or evidence in support of the denial of benefits, and
such other facts and circumstances as the Committee shall
deem relevant. If the claimant elects not to make an oral
presentation, such election shall not be deemed adverse to
the claimant's interest, and the Committee shall proceed as
set forth below as though an oral presentation of the
contents of the claimant's written presentation had been
made.
(d) The Committee shall render a determination upon the
appealed claim, within sixty (60) days of the hearing date,
which determination shall be accompanied by a written
statement as to the reasons therefor. The determination so
rendered shall be binding upon all parties.
ARTICLE X
MISCELLANEOUS
Section 10.01 Nonalienation of Benefits. None of the
payments, benefits or rights of any Participant shall be subject to any claim of
any creditor, and, in particular, to the fullest extent permitted by law, all
such payments, benefits and rights shall be free from attachment, garnishment,
trustee's process, or any other legal or equitable process available to any
creditor of such Participant. No Participant shall have the right to alienate,
anticipate, commute, pledge, encumber or assign any of the benefits or payments
which the Participant may expect to receive, contingently or otherwise, under
this Plan.
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Section 10.02 No Contract of Employment. Neither the
establishment of the Plan, nor any modification thereof, nor the creation of any
fund, trust or account, nor the payment of any benefits shall be construed as
giving any Participant, or any person whosoever, the right to be retained in the
service of the Company, and all Participants shall remain subject to discharge
to the same extent as if the Plan had never been adopted.
Section 10.03 Severability of Provisions. If any provision
of this Plan shall be held invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provisions hereof, and this Plan
shall be construed and enforced as if such provisions had not been included.
Section 10.04 Successors, Heirs, Assigns, and Personal
Representatives. This Plan shall be binding upon the heirs, executors,
administrators, successors and assigns of the parties, including each
Participant, present and future. Unless the Committee directs otherwise, UGI
Corporation shall require any successor or successors (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of UGI Corporation, or a
division or Affiliate thereof, (i) to acknowledge expressly that this Plan is
binding upon and enforceable against such successor in accordance with the terms
hereof, (ii) to become jointly and severally obligated with UGI Corporation to
perform the obligations under this Plan, and (iii) to agree not to amend or
terminate the plan for a period of three (3) years after the date of succession
without the consent of the affected Participant.
Section 10.05 Headings and Captions. The headings and
captions herein are provided for reference and convenience only, shall not be
considered part of the Plan, and shall not be employed in the construction of
the Plan.
Section 10.06 Gender and Number. Except where otherwise
clearly indicated by context, the masculine and the neuter shall include the
feminine and the neuter, the singular shall include the plural, and vice-versa.
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Section 10.07 Unfunded Plan. The Plan shall not be funded.
The Company may, but shall not be required to, set aside or designate an amount
necessary to provide the Benefits specified herein (including the establishment
of trusts). In any event, no Participant shall have any right to, or interest
in, any assets of the Company which may be applied by the Company to the payment
of Benefits.
Section 10.08 Payments to Incompetent Persons, Etc. Any
benefit payable to or for the benefit of a minor, an incompetent person, or
other person incapable of receipting therefor shall be deemed paid when paid to
such person's guardian or to the party providing or reasonably appearing to
provide for the care of such person, and such payment shall fully discharge the
Company, the Committee and all other parties with respect thereto.
Section 10.09 Lost Payees. A benefit shall be deemed
forfeited if the Committee is unable to locate a Participant to whom a Benefit
is due. Such Benefit shall be reinstated if application is made by the
Participant for the forfeited Benefit while this Plan is in operation.
Section 10.10 Controlling Law. This Plan shall be construed
and enforced according to the laws of the Commonwealth of Pennsylvania, to the
extent not preempted by Federal law, without giving effect to any Pennsylvania
choice of law provisions.
IN WITNESS WHEREOF, UGI Corporation 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.
UGI CORPORATION
Attest:
_________________________ By: _______________________________
Barton D. Whitman Brendan P. Bovaird
Secretary Vice President & General Counsel
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APPENDIX A
UGI CORPORATION
CHANGE OF CONTROL AGREEMENT
Agreement made as of the ____ day of June, 1996, between UGI
Corporation, a Pennsylvania corporation (the "Company"), and (the "Employee").
WHEREAS, the Employee is presently employed by the Company, as
its President and Chief Executive Officer; and
WHEREAS, 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
publicly held corporations, the possibility of a change in control of 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;
WHEREAS, 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
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circumstances arising from the possibility of a change in control of the
Company, although no such change is now contemplated; and
WHEREAS, 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 his employment with the
Company is terminated subsequent to a "Change of Control" (as defined in Section
1 hereof) of the Company as a cushion against the financial and career impact on
the Employee of any such Change of Control;
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements hereinafter set forth and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Definitions. For all purposes of this Agreement, the
following terms shall have the meanings specified in this Section unless the
context clearly otherwise requires:
(a) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
(b) "Base Compensation" shall mean the average of the total
cash remuneration received by the Employee in all capacities with the Company,
and its Subsidiaries or Affiliates, as reported for Federal income tax purposes
on Form
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W-2, together with any amounts the payment of which has been deferred by
the Employee under any deferred compensation plan of the Company, and its
Subsidiaries or Affiliates, or otherwise and any and all salary reduction
authorized amounts under any of the benefit plans or programs of the Company,
and its Subsidiaries or Affiliates, but excluding any amounts attributable to
the exercise of stock options granted to the Employee under the Company's Stock
Option and Dividend Equivalent Plan or its successor, for the five calendar
years (or such number of actual full calendar years of employment, if less than
five) 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
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Person's Affiliates or Associates until such tendered securities are accepted
for payment, purchase or exchange; (ii) that such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the right to vote or
dispose of or has "beneficial ownership" of (as determined pursuant to Rule
13d-3 of the General Rules and Regulations under the Exchange Act), including
without limitation pursuant to any agreement, arrangement or understanding,
whether or not in writing; provided, however, that a Person shall not be deemed
the "Beneficial Owner" of any security under this clause (ii) as a result of an
oral or written agreement, arrangement or understanding to vote such security if
such agreement, arrangement or understanding (A) arises solely from a revocable
proxy given in response to a public proxy or consent solicitation made 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 voting securities of the Company;
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
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21
acquired through such Person's participation in good faith in a firm commitment
underwriting until the expiration of forty days after the date of such
acquisition.
(d) "Board" shall mean the board of directors of the Company.
(e) "Change of Control" shall mean:
Any Person (except the Employee, his Affiliates and Associates, the Company,
any Subsidiary of the Company, any employee benefit plan of the Company or of
any Subsidiary of the Company, or any Person or entity organized, appointed or
established by the Company 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 20% or more of either (i) the
then outstanding shares of common stock of the Company (the "Outstanding Company
Common Stock") or (ii) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the "Company Voting Securities"), in either case unless the members
of the Company's Executive Committee in office immediately prior to such
acquisition determine within five 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
Individuals who, as of the beginning of any twenty-four month period,
constitute the Board (the "Incumbent Board") cease for any reason to constitute
at
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least a majority of the Board, provided that any individual becoming a director
subsequent to the beginning of such period whose election or nomination for
election by the Company's stockholders was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent 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 the Company (as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act); or
Consummation by the Company 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 Company Common Stock and Company Voting
Securities immediately prior to such Business Combination do not, following such
Business Combination, Beneficially Own, directly or indirectly, more than 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
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Company Common Stock and Company Voting Securities, as the case may be, in any
such case unless the members of the Company's Executive Committee 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 (i) Consummation of a complete liquidation
or dissolution of the Company or (ii) sale or other disposition of all or
substantially all of the assets of the Company other than to a corporation with
respect to which, following such sale or disposition, more than 50% of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors is then owned beneficially, directly or
indirectly, by all or substantially all of the individuals and entities who were
the Beneficial Owners, respectively, of the Outstanding Company Common Stock and
Company Voting Securities immediately prior to such sale or disposition in
substantially the same proportion as their ownership of the Outstanding Company
Common Stock and Company Voting Securities, as the case may be, immediately
prior to such sale or disposition, in any such case unless the members of the
Company's Executive Committee in office immediately prior to such sale or
disposition determine at the time of such sale or disposition that
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the circumstances do not warrant the implementation of the provisions of this
Agreement.
(f) "Cause" shall mean 1) misappropriation of funds, 2)
habitual insobriety or substance abuse, 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.
(g) "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 the 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;
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(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 12 months); and
(vi) the Employee 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.
(h) "Normal Retirement Date" shall mean the first day of the
calendar month coincident with or next following the Employee's 62nd birthday.
(i) "Subsidiary" shall mean any corporation in which the
Company, directly or indirectly, owns at least a 50% interest or an
unincorporated entity of which the Company, directly or indirectly, owns at
least 50% of the profits or capital interests.
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26
(j) "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.
(k) "Termination of Employment" shall mean the termination of
the Employee's actual employment relationship with the Company.
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,
specifies the Termination Date (which date shall not be more than 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 years after a Change of Control, the Company shall pay to the
Employee, upon
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27
the execution of a release, in the form required by the Company of its
terminating executives prior to the Change of Control, within 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 15
days), an amount in cash equal to 2.5 times the Employee's Base Compensation,
subject to customary employment taxes and deductions.
(b) In the event the Employee's Normal Retirement Date would
occur prior to 30 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 Normal Retirement Date and the denominator of
which shall be 913 days.
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.
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 be subject to
the
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28
discretion of the Company's Executive Committee, 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 time announced by Mellon Bank, N.A. as its "prime rate"
plus 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
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29
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.
10. Taxes. Any payment required under this Agreement shall be
subject to all requirements of the law with regard to the withholding of taxes,
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30
filing, making of reports and the like, and the Company shall use its best
efforts to satisfy promptly all such requirements.
11. Certain Reduction of Payments.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event that it shall be determined that any payment or
distribution by the Company to or for the benefit of the Employee, whether paid
or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise (a "Payment"), would constitute an "excess parachute
payment" within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), the aggregate present value of amounts payable or
distributable to or for the benefit of the Employee pursuant to this Agreement
(such payments or distributions pursuant to this Agreement are hereinafter
referred to as "Agreement Payments") shall be reduced (but not below zero) to
the Reduced Amount. The "Reduced Amount" shall be an amount expressed in present
value which maximizes the aggregate present value of Agreement Payments without
causing any Payment to be subject to the taxation under Section 4999 of the
Code. For purposes of this Section 11, present value shall be determined in
accordance with Section 280G(d)(4) of the Code.
(b) All determinations to be made under this Section 11 shall
be made by Coopers & Lybrand (or the Company's independent public accountant
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31
immediately prior to the Change of Control if other than Coopers & Lybrand (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. The Employee shall then have the
right to determine which of the Agreement Payments shall be eliminated or
reduced in order to produce the Reduced Amount in accordance with the
requirements of this Section. Within five days after this determination, the
Company shall pay (or cause to be paid) or distribute (or cause to be
distributed) to or for the benefit of the Employee such amounts as are then due
to the Employee under this Agreement.
(c) As a result of the uncertainty in the application of
Section 280G of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Agreement Payments, as the case
may be, will have been made by the Company which should not have been made
("Overpayment") or that additional Agreement Payments which have not been made
by the Company could have been made ("Underpayment"), in each case, consistent
with the calculations required to be made hereunder. Within two years after the
Termination of Employment, the Accounting Firm shall review the determination
made by it pursuant to the preceding paragraph and the Company shall cooperate
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32
and provide all information necessary for such review. In the event that the
Accounting Firm determines that an Overpayment has been made, any such
Overpayment shall be treated for all purposes as a loan to the Employee which
the Employee shall repay to the Company together with interest from the date of
payment under this Agreement at the applicable Federal rate provided for in
Section 7872(f)(2) of the Code (the "Federal Rate"); provided, however, that no
amount shall be payable by the Employee to the Company if and to the extent such
payment would not reduce the amount which is subject to taxation under Section
4999 of the Code. In the event that the Accounting Firm determines that an
Underpayment has occurred, any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Employee together with interest from the
date of payment under this Agreement at the Federal Rate.
(d) All of the fees and expenses of the Accounting Firm in
performing the determinations referred to in subsections (b) and (c) above shall
be borne solely by the Company. The Company agrees to indemnify and hold
harmless the Accounting Firm of and from any and all claims, damages and
expenses resulting from or relating to its determinations pursuant to
subsections (b) and (c) above, except for claims, damages or expenses resulting
from the gross negligence or willful misconduct of the Accounting Firm.
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33
12. Term of Agreement. The term of this Agreement shall be for
five years from the date hereof and shall be automatically renewed for
successive one-year periods unless the Company notifies the Employee in writing
that this Agreement will not be renewed at least sixty 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
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34
the opportunity to review and agree to the successor's assumption of this
Agreement or to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement. As used in this Agreement, the
Company shall mean the Company as hereinbefore defined and any such successor or
successors to its business and/or assets, jointly and severally.
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:
UGI Corporation
460 North Gulph Road
King of Prussia, PA 19406
Attention: Corporate Secretary
If to the Employee, to:
or to such other names or addresses as the Company or the Employee, as the case
may be, shall designate by notice to the other party hereto in the manner
specified in this Section; provided, however, that if no such notice is given by
the Company
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35
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 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.
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 Chair of the Executive Committee. 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
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36
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.
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. 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
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37
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, 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. 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
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relating to the conduct of the arbitration (including reasonable attorneys' fees
and expenses).
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IN WITNESS WHEREOF, the undersigned, intending to be legally
bound, have executed this Agreement as of the date first above written.
ATTEST:
[Seal] UGI CORPORATION
_______________________ By_________________________
Secretary
_______________________ __________________________
Witness
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