-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, K9DztyPUxdh9UeQ47PKeyZVqvHDOTFFL86Z1+e4jTJGwwrP1ic+zly4hIGNirguF HQzjs5YVh15PHrQvp2qqUg== 0000893220-05-001071.txt : 20050506 0000893220-05-001071.hdr.sgml : 20050506 20050506163739 ACCESSION NUMBER: 0000893220-05-001071 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20050331 FILED AS OF DATE: 20050506 DATE AS OF CHANGE: 20050506 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERIGAS PARTNERS LP CENTRAL INDEX KEY: 0000932628 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-RETAIL STORES, NEC [5990] IRS NUMBER: 232787918 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-13692 FILM NUMBER: 05808540 BUSINESS ADDRESS: STREET 1: 460 N GULPH RD STREET 2: BOX 965 CITY: VALLEY FORGE STATE: PA ZIP: 19406 BUSINESS PHONE: 6103377000 MAIL ADDRESS: STREET 1: 460 NORTH GULPH ROAD CITY: KING OF PRUSSIA STATE: PA ZIP: 19406 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERIGAS EAGLE FINANCE CORP CENTRAL INDEX KEY: 0001161869 IRS NUMBER: 000000000 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-72986-02 FILM NUMBER: 05808541 BUSINESS ADDRESS: STREET 1: P O BOX 965 CITY: VALLEY FORGE STATE: PA ZIP: 19482 BUSINESS PHONE: 6103371000 MAIL ADDRESS: STREET 1: P O BOX 965 CITY: VALLEY FORGE STATE: PA ZIP: 19482 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AP EAGLE FINANCE CORP CENTRAL INDEX KEY: 0001161868 IRS NUMBER: 000000000 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-72986-01 FILM NUMBER: 05808542 BUSINESS ADDRESS: STREET 1: P O BOX 965 CITY: VALLEY FORGE STATE: PA ZIP: 19482 BUSINESS PHONE: 6103371000 MAIL ADDRESS: STREET 1: P O BOX 965 CITY: VALLEY FORGE STATE: PA ZIP: 19482 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERIGAS FINANCE CORP CENTRAL INDEX KEY: 0000945792 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-RETAIL STORES, NEC [5990] IRS NUMBER: 232800532 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-92734-01 FILM NUMBER: 05808543 BUSINESS ADDRESS: STREET 1: 460 N GULPH RD CITY: KING OF PRUSSIA STATE: PA ZIP: 19406 BUSINESS PHONE: 6103371000 MAIL ADDRESS: STREET 1: 460 NORTH GULPH ROAD CITY: KING OF PRUSSIA STATE: PA ZIP: 19406 10-Q 1 w07598e10vq.txt FORM 10-Q AMERIGAS PARTNERS, L.P. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2005 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission file number 1-13692 Commission file number 33-92734-01 Commission file number 333-72986-02 Commission file number 333-72986-01 AMERIGAS PARTNERS, L.P. AMERIGAS FINANCE CORP. AMERIGAS EAGLE FINANCE CORP. AP EAGLE FINANCE CORP. (Exact name of registrants as specified in their charters) Delaware 23-2787918 Delaware 23-2800532 Delaware 23-3074434 Delaware 23-3077318 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 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) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ] At April 30, 2005, the registrants had units and shares of common stock outstanding as follows: AmeriGas Partners, L.P. - 54,492,605 Common Units AmeriGas Finance Corp. - 100 shares AmeriGas Eagle Finance Corp. - 100 shares AP Eagle Finance Corp. - 100 shares AMERIGAS PARTNERS, L.P. TABLE OF CONTENTS
PAGES ----- PART I FINANCIAL INFORMATION Item 1. Financial Statements AmeriGas Partners, L.P. Condensed Consolidated Balance Sheets as of March 31, 2005, September 30, 2004 and March 31, 2004 1 Condensed Consolidated Statements of Operations for the three and six months ended March 31, 2005 and 2004 2 Condensed Consolidated Statements of Cash Flows for the six months ended March 31, 2005 and 2004 3 Condensed Consolidated Statement of Partners' Capital for the six months ended March 31, 2005 4 Notes to Condensed Consolidated Financial Statements 5 - 13 AmeriGas Finance Corp. Balance Sheets as of March 31, 2005 and September 30, 2004 14 Note to Balance Sheets 15 AmeriGas Eagle Finance Corp. Balance Sheets as of March 31, 2005 and September 30, 2004 16 Note to Balance Sheets 17 AP Eagle Finance Corp. Balance Sheets as of March 31, 2005 and September 30, 2004 18 Note to Balance Sheets 19 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 20 - 28 Item 3. Quantitative and Qualitative Disclosures About Market Risk 28 - 29 Item 4. Controls and Procedures 29 PART II OTHER INFORMATION Item 1. Legal Proceedings 30 Item 6. Exhibits 30 Signatures 31 - 32
i AMERIGAS PARTNERS, L.P. CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (Thousands of dollars)
March 31, September 30, March 31, 2005 2004 2004 ----------- ------------ ----------- ASSETS Current assets: Cash and cash equivalents $ 10,992 $ 40,583 $ 13,073 Accounts receivable (less allowances for doubtful accounts of $16,889, $11,964 and $14,901, respectively) 250,519 141,709 222,086 Accounts receivable - related parties 2,483 5,137 2,010 Inventories 75,953 84,753 67,548 Prepaid expenses and other current assets 12,119 25,934 16,870 ----------- ----------- ----------- Total current assets 352,066 298,116 321,587 Property, plant and equipment (less accumulated depreciation and amortization of $549,648, $520,447 and $505,553, respectively) 592,423 592,353 608,834 Goodwill and excess reorganization value 617,006 609,058 606,621 Intangible assets (less accumulated amortization of $18,511, $16,158 and $14,053, respectively) 30,469 28,612 28,403 Other assets 17,207 22,088 20,918 ----------- ----------- ----------- Total assets $ 1,609,171 $ 1,550,227 $ 1,586,363 =========== =========== =========== LIABILITIES AND PARTNERS' CAPITAL Current liabilities: Current maturities of long-term debt $ 59,106 $ 60,068 $ 58,949 Bank loans 12,000 - 3,000 Accounts payable - trade 135,061 112,315 119,735 Accounts payable - related parties 2,336 1,309 512 Customer deposits and advances 31,673 78,907 28,493 Employee compensation and benefits accrued 27,577 30,023 26,637 Interest accrued 30,671 30,675 32,056 Other current liabilities 41,414 39,173 34,554 ----------- ----------- ----------- Total current liabilities 339,838 352,470 303,936 Long-term debt 840,395 841,283 866,763 Other noncurrent liabilities 61,267 59,687 59,903 Commitments and contingencies (note 6) Minority interests 8,447 7,749 7,969 Partners' capital 359,224 289,038 347,792 ----------- ----------- ----------- Total liabilities and partners' capital $ 1,609,171 $ 1,550,227 $ 1,586,363 =========== =========== ===========
See accompanying notes to condensed consolidated financial statements. - 1 - AMERIGAS PARTNERS, L.P. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (Thousands of dollars, except per unit)
Three Months Ended Six Months Ended March 31, March 31, -------------------------- ---------------------------- 2005 2004 2005 2004 ---------- ----------- ------------- ----------- Revenues: Propane $ 663,677 $ 654,142 $ 1,181,128 $1,077,403 Other 34,591 33,568 73,356 70,505 --------- --------- ----------- ---------- 698,268 687,710 1,254,484 1,147,908 --------- --------- ----------- ---------- Costs and expenses: Cost of sales - propane 416,741 392,297 752,050 631,419 Cost of sales - other 13,017 12,899 28,852 28,280 Operating and administrative expenses 137,094 139,395 267,713 263,158 Depreciation and amortization 18,430 19,816 37,748 39,471 Other income, net (4,907) (4,656) (17,456) (7,938) --------- --------- ----------- ---------- 580,375 559,751 1,068,907 954,390 --------- --------- ----------- ---------- Operating income 117,893 127,959 185,577 193,518 Interest expense (20,733) (21,167) (41,236) (42,302) --------- --------- ----------- ---------- Income before income taxes and minority interests 97,160 106,792 144,341 151,216 Income tax benefit (expense) 182 79 (2,133) (628) Minority interests (1,120) (1,221) (1,695) (1,789) --------- --------- ----------- ---------- Net income $ 96,222 $ 105,650 $ 140,513 $ 148,799 ========= ========= =========== ========== General partner's interest in net income $ 15,076 $ 17,681 $ 17,568 $ 20,219 ========= ========= =========== ========== Limited partners' interest in net income $ 81,146 $ 87,969 $ 122,945 $ 128,580 ========= ========= =========== ========== Net income per limited partner unit: Basic $ 1.49 $ 1.68 $ 2.26 $ 2.46 ========= ========= =========== ========== Diluted $ 1.49 $ 1.68 $ 2.25 $ 2.45 ========= ========= =========== ========== Average limited partner units outstanding (thousands): Basic 54,493 52,373 54,485 52,360 ========= ========= =========== ========== Diluted 54,533 52,431 54,542 52,436 ========= ========= =========== ==========
See accompanying notes to condensed consolidated financial statements. - 2 - AMERIGAS PARTNERS, L.P. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (Thousands of dollars)
Six Months Ended March 31, ----------------------- 2005 2004 ---------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 140,513 $ 148,799 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 37,748 39,471 Gain on sale of Atlantic Energy (9,135) - Other, net 7,766 7,560 Net change in: Accounts receivable (112,683) (108,588) Inventories 9,011 5,917 Accounts payable 23,773 29,570 Other current assets and liabilities (42,855) (39,709) --------- --------- Net cash provided by operating activities 54,138 83,020 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Expenditures for property, plant and equipment (35,069) (31,064) Proceeds from disposals of assets 10,406 5,479 Net proceeds from sale of Atlantic Energy 11,504 - Acquisitions of businesses, net of cash acquired (18,626) (33,122) --------- --------- Net cash used by investing activities (31,785) (58,707) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Distributions (60,539) (58,178) Minority interest activity (824) (787) Increase in bank loans 12,000 3,000 Repayment of long-term debt (2,581) (1,147) --------- --------- Net cash used by financing activities (51,944) (57,112) --------- --------- Cash and cash equivalents decrease $ (29,591) $ (32,799) ========= ========= CASH AND CASH EQUIVALENTS: End of period $ 10,992 $ 13,073 Beginning of period 40,583 45,872 --------- --------- Decrease $ (29,591) $ (32,799) ========= =========
See accompanying notes to condensed consolidated financial statements. - 3 - AMERIGAS PARTNERS, L.P. CONDENSED CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL (unaudited) (Thousands, except unit data)
Accumulated Number of other Total Common General comprehensive partners' Units Common partner income (loss) capital ---------- --------- -------- -------------- ----------- BALANCE SEPTEMBER 30, 2004 54,473,272 $ 276,887 $ 2,783 $ 9,368 $ 289,038 Net income 122,945 17,568 140,513 Net losses on derivative instruments (17,896) (17,896) Reclassification of net gains on derivative instruments 7,529 7,529 --------- -------- -------- --------- Comprehensive income 122,945 17,568 (10,367) 130,146 Distributions (59,934) (605) (60,539) Common Units issued in connection with incentive compensation plan 19,333 579 579 ---------- --------- -------- -------- --------- BALANCE MARCH 31, 2005 54,492,605 $ 340,477 $ 19,746 $ (999) $ 359,224 ========== ========= ======== ======== =========
See accompanying notes to condensed consolidated financial statements. - 4 - AMERIGAS PARTNERS, L.P. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Thousands of dollars, except per unit) 1. BASIS OF PRESENTATION The condensed consolidated financial statements include the accounts of AmeriGas Partners, L.P. ("AmeriGas Partners") and its principal operating subsidiaries AmeriGas Propane, L.P. ("AmeriGas OLP") and AmeriGas OLP's subsidiary, AmeriGas Eagle Propane, L.P. ("Eagle OLP"). AmeriGas Partners, AmeriGas OLP and Eagle OLP are Delaware limited partnerships. AmeriGas OLP and Eagle OLP are collectively referred to herein as "the Operating Partnerships," and AmeriGas Partners, the Operating Partnerships and all of their subsidiaries are collectively referred to herein as "the Partnership" or "we." We eliminate all significant intercompany accounts and transactions when we consolidate. We account for AmeriGas Propane, Inc.'s (the "General Partner's") 1.01% interest in AmeriGas OLP and an unrelated third party's approximate 0.1% limited partner interest in Eagle OLP as minority interests in the condensed consolidated financial statements. The Partnership's 50% ownership interest in Atlantic Energy, Inc. ("Atlantic Energy") was accounted for by the equity method (see Note 3). Atlantic Energy's principal asset is a propane storage terminal located in Chesapeake, Virginia. The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). They include all adjustments which we consider necessary for a fair statement of the results for the interim periods presented. Such adjustments consisted only of normal recurring items unless otherwise disclosed. The September 30, 2004 condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. These financial statements should be read in conjunction with the financial statements and related notes included in our Annual Report on Form 10-K for the year ended September 30, 2004 ("2004 Annual Report"). Weather significantly impacts demand for propane and profitability because many customers use propane for heating purposes. Due to the seasonal nature of the Partnership's propane business, the results of operations for interim periods are not necessarily indicative of the results to be expected for a full year. NET INCOME PER UNIT. Net income per unit is computed by dividing net income, after deducting the General Partner's interest in AmeriGas Partners, by the weighted average number of limited partner units outstanding. Effective April 2004, the Partnership adopted Emerging Issues Task Force Issue No. 03-6, "Participating Securities and the Two-Class Method under FASB Statement No. 128" ("EITF 03-6"), which results in the calculation of net income per limited partner unit for each period according to distributions declared and participation rights in undistributed earnings, as if all of the earnings for the period had been distributed. In periods with undistributed earnings above certain levels, the calculation according to the two-class method results in an increased allocation of undistributed earnings to the General Partner -5- AMERIGAS PARTNERS, L.P. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Thousands of dollars, except per unit) and a dilution of the earnings to the limited partners. Due to the seasonality of the propane business, the dilutive effect of EITF 03-6 on net income per limited partner unit will typically impact our first three fiscal quarters. EITF 03-6 is not expected to impact net income per limited partner unit for the fiscal year. The dilutive effect of EITF 03-6 on net income per diluted limited partner unit was $(0.26) and $(0.30) for the three and six months ended March 31, 2005, respectively, and $(0.31) and $(0.36) for the three and six months ended March 31, 2004, respectively. Prior-period basic and diluted income per limited partner unit amounts have been recalculated in accordance with EITF 03-6. Potentially dilutive Common Units included in the diluted limited partner units outstanding computation reflect the effects of restricted Common Unit awards granted under AmeriGas Propane, Inc. incentive compensation plans. COMPREHENSIVE INCOME. The following table presents the components of comprehensive income for the three and six months ended March 31, 2005 and 2004:
Three Months Ended Six Months Ended March 31, March 31, ------------------- -------------------- 2005 2004 2005 2004 -------- -------- --------- -------- Net income $ 96,222 $105,650 $140,513 $148,799 Other comprehensive income (loss) 15,775 (11,738) (10,367) 2,398 -------- -------- -------- -------- Comprehensive income $111,997 $93,912 $130,146 $151,197 -------- -------- -------- --------
Other comprehensive income (loss) is principally the result of changes in the fair value of propane commodity derivative instruments and interest rate protection agreements, net of reclassifications of net gains and losses to net income. UNIT-BASED COMPENSATION. As permitted by Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), we apply the provisions of Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"), in recording compensation expense for grants of equity instruments to employees. -6- AMERIGAS PARTNERS, L.P. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Thousands of dollars, except per unit) We use the intrinsic value method prescribed by APB 25 for our unit-based employee compensation plans. We recorded unit-based compensation expense (benefit) of $391 and $(104) during the three and six months ended March 31, 2005, respectively, and $664 and $484 during the three and six months ended March 31, 2004, respectively. The forfeiture of restricted units in fiscal 2005 resulted in the reversal of previously recognized expense. If we had determined unit-based compensation expense under the fair value method prescribed by SFAS 123, net income and basic and diluted income per limited partner unit for the three and six months ended March 31, 2005 and 2004 would have been as follows:
Three Months Ended Six Months Ended March 31, March 31, ----------------------- ------------------------ 2005 2004 2005 2004 -------- --------- ----------- --------- Net income as reported $ 96,222 $105,650 $ 140,513 $ 148,799 Add (deduct): Unit-based employee compensation expense (benefit) included in reported net income 391 664 (104) 484 Deduct: Total stock and unit-based employee compensation expense determined under the fair value method for all awards (517) (807) (167) (725) -------- -------- --------- --------- Pro forma net income $ 96,096 $105,507 $ 140,242 $ 148,558 -------- -------- --------- --------- Basic income per limited partner unit: As reported $ 1.49 $ 1.68 $ 2.26 $ 2.46 Pro forma $ 1.49 $ 1.68 $ 2.25 $ 2.45 Diluted income per limited partner unit: As reported $ 1.49 $ 1.68 $ 2.25 $ 2.45 Pro forma $ 1.49 $ 1.68 $ 2.25 $ 2.45
RECLASSIFICATIONS. We have reclassified certain prior year balances to conform to the current period presentation. USE OF ESTIMATES. We make estimates and assumptions when preparing financial statements in conformity with accounting principles generally accepted in the United States of America. These estimates and assumptions affect the reported amounts of assets and liabilities, revenues and expenses, as well as the disclosure of contingent assets and liabilities. Actual results could differ from these estimates. 2. ACQUISITIONS During the six months ended March 31, 2005, AmeriGas OLP acquired several retail propane distribution businesses for total cash consideration of $18,626. The operating results of these businesses have been included in our operating results from their -7- AMERIGAS PARTNERS, L.P. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Thousands of dollars, except per unit) respective dates of acquisition. The pro forma effects of these transactions were not material to the Partnership's results of operations. 3. SALE OF OWNERSHIP INTEREST IN ATLANTIC ENERGY, INC. In November 2004, the Partnership sold its 50% ownership interest in Atlantic Energy consisting of 3,500 shares of common stock ("Shares") pursuant to a Stock Purchase Agreement ("Agreement") by and between AmerE Holdings, Inc. ("AmerE"), an indirect wholly owned subsidiary of AmeriGas OLP, and UGI Asset Management, Inc., an indirect wholly owned subsidiary of UGI Corporation ("UGI"). UGI Asset Management, Inc. purchased AmerE's Shares for $11,504 in cash, which is net of post-closing adjustments, as defined in the Agreement. The Partnership recognized a pre-tax gain on the sale totaling $9,135 ($7,107 net of tax), which amount is included in "Other income, net" in the Condensed Consolidated Statement of Operations for the six months ended March 31, 2005. 4. INTANGIBLE ASSETS The Partnership's intangible assets comprise the following:
March 31, September 30, 2005 2004 ------------ ------------- Subject to amortization: Customer relationships and noncompete agreements $ 48,980 $ 44,770 Accumulated amortization (18,511) (16,158) ------------ --------- $ 30,469 $ 28,612 ------------ --------- Not subject to amortization: Goodwill $ 523,686 $ 515,738 Excess reorganization value 93,320 93,320 ------------ --------- $ 617,006 $ 609,058 ------------ ---------
The increases in intangible assets during the six months ended March 31, 2005 resulted from Partnership business acquisitions. Amortization expense of intangible assets was $1,187 and $2,353 for the three and six months ended March 31, 2005, respectively, and $1,031 and $2,119 for the three and six months ended March 31, 2004, respectively. Our expected aggregate amortization expense of intangible assets for the next five fiscal years is as follows: Fiscal 2005 - $4,541; Fiscal 2006 - $4,213; Fiscal 2007 - $3,575; Fiscal 2008 - $3,299; Fiscal 2009 - $2,978. -8- AMERIGAS PARTNERS, L.P. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Thousands of dollars, except per unit) 5. RELATED PARTY TRANSACTIONS Pursuant to the Partnership Agreement and a Management Services Agreement among AmeriGas Eagle Holdings, Inc., the general partner of Eagle OLP, and the General Partner, the General Partner is entitled to reimbursement for all direct and indirect expenses incurred or payments it makes on behalf of the Partnership. These costs, which totaled $80,735 and $159,429 during the three and six months ended March 31, 2005, respectively, and $85,183 and $163,437 during the three and six months ended March 31, 2004, 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 all direct and indirect corporate expenses incurred in connection with providing these services and the General Partner is reimbursed by the Partnership for these expenses. Such corporate expenses totaled $2,521 and $5,754 during the three and six months ended March 31, 2005, respectively, and $2,370 and $5,532 during the three and six months ended March 31, 2004, respectively. In addition, UGI and certain of its subsidiaries provide office space, automobile liability insurance, and, during the three months ended March 31, 2005, sold propane, to the Partnership. These costs totaled $1,157 and $2,154 during the three and six months ended March 31, 2005, respectively, and $779 and $1,240 during the three and six months ended March 31, 2004, respectively. Subsequent to the acquisition of Columbia Propane and prior to the November 2004 sale of our 50% ownership interest in Atlantic Energy, we purchased propane on behalf of Atlantic Energy. Atlantic Energy reimbursed AmeriGas OLP for its purchases plus interest as Atlantic Energy sold such propane to third parties or to AmeriGas OLP itself. The total dollar value of propane purchased on behalf of Atlantic Energy was $2,420 during the six months ended March 31, 2005, all of which occurred prior to the sale of our ownership interests. The total dollar value of propane purchased on behalf of Atlantic Energy was $14,979 and $21,232 during the three and six months ended March 31, 2004, respectively. Purchases of propane by AmeriGas OLP from Atlantic Energy during the three and six months ended March 31, 2005 totaled $11,558 and $20,064, respectively, and during the three and six months ended March 31, 2004 totaled $14,354 and $22,034, respectively. In November 2004, in conjunction with the sale of our 50% ownership interest in Atlantic Energy, UGI Asset Management, Inc. and AmeriGas OLP entered into a Product Sales Agreement whereby UGI Asset Management, Inc. has agreed to sell and AmeriGas OLP has agreed to purchase a specified amount of propane annually at the Atlantic Energy terminal in Chesapeake, Virginia. The Product Sales Agreement took effect on April 1, 2005 and will continue for a primary term of five years with an option to extend the agreement for up to an additional five years. The price to be paid for product purchased -9- AMERIGAS PARTNERS, L.P. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Thousands of dollars, except per unit) under the agreement will be determined annually using a contractual formula that takes into account published index prices and the locational value of deliveries at the Atlantic Energy terminal. Prior to the sale of Atlantic Energy, the General Partner also provided it with other services including accounting, insurance and other administrative services and was reimbursed for the related costs. Such costs were not material during the three and six months ended March 31, 2005 and 2004. In addition, AmeriGas OLP entered into product cost hedging contracts on behalf of Atlantic Energy. When these contracts were settled, AmeriGas OLP was reimbursed the cost of any losses by, or distributed the proceeds of any gains to, Atlantic Energy. Amounts due from Atlantic Energy at March 31, 2005 and September 30, 2004 totaled $18 and $2,906, respectively. Amounts due to Atlantic Energy totaled $400 at March 31, 2004. Amounts due from/to Atlantic Energy are included in accounts receivable - related parties and accounts payable - related parties in the Condensed Consolidated Balance Sheets. 6. COMMITMENTS AND CONTINGENCIES The Partnership has succeeded to certain lease guarantee obligations of Petrolane relating to Petrolane's divestiture of non-propane operations before its 1989 acquisition by QFB Partners. Future lease payments under these leases total approximately $11,000 at March 31, 2005. 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. In March 1999, Texas Eastern filed for dissolution under the Delaware General Corporation Law. PanEnergy Corporation ("PanEnergy"), Texas Eastern's sole stockholder, subsequently assumed all of Texas Eastern's liabilities as of December 20, 2002, to the extent of the value of Texas Eastern's assets transferred to PanEnergy as of that date (which was estimated to exceed $94,000), and to the extent that such liabilities arise within ten years from Texas Eastern's date of dissolution. Notwithstanding the dissolution proceeding, and based on Texas Eastern previously having satisfied directly defaulted lease obligations without the Partnership's having to honor its guarantee, we believe that the probability that the Partnership will be required to directly satisfy the lease obligations subject to the indemnification agreement is remote. On August 21, 2001, AmeriGas Partners, through AmeriGas OLP, acquired the propane distribution businesses of Columbia Energy Group (the "2001 Acquisition") pursuant to the terms of a purchase agreement (the "2001 Acquisition Agreement") by and among Columbia Energy Group ("CEG"), Columbia Propane Corporation ("Columbia Propane"), Columbia Propane, L.P. ("CPLP"), CP Holdings, Inc. ("CPH," and together with Columbia Propane and CPLP, the "Company Parties"), AmeriGas Partners, -10- AMERIGAS PARTNERS, L.P. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Thousands of dollars, except per unit) AmeriGas OLP and the General Partner (together with AmeriGas Partners and AmeriGas OLP, the "Buyer Parties"). As a result of the 2001 Acquisition, AmeriGas OLP acquired all of the stock of Columbia Propane and CPH and substantially all of the partnership interests of CPLP. Under the terms of an earlier acquisition agreement (the "1999 Acquisition Agreement"), the Company Parties agreed to indemnify the former general partners of National Propane Partners, L.P. (a predecessor company of the Columbia Propane businesses) and an affiliate (collectively, "National General Partners") against certain income tax and other losses that they may sustain as a result of the 1999 acquisition by CPLP of National Propane Partners, L.P. (the "1999 Acquisition") or the operation of the business after the 1999 Acquisition ("National Claims"). At March 31, 2005, the potential amount payable under this indemnity by the Company Parties was approximately $58,000. These indemnity obligations will expire on the date that CPH acquires the remaining outstanding partnership interest of CPLP, which is expected to occur on or after July 19, 2009. Under the terms of the 2001 Acquisition Agreement, CEG agreed to indemnify the Buyer Parties and the Company Parties against any losses that they sustain under the 1999 Acquisition Agreement and related agreements ("Losses"), including National Claims, to the extent such claims are based on acts or omissions of CEG or the Company Parties prior to the 2001 Acquisition. The Buyer Parties agreed to indemnify CEG against Losses, including National Claims, to the extent such claims are based on acts or omissions of the Buyer Parties or the Company Parties after the 2001 Acquisition. CEG and the Buyer Parties have agreed to apportion certain losses resulting from National Claims to the extent such losses result from the 2001 Acquisition itself. Samuel and Brenda Swiger and their son (the "Swigers") sustained personal injuries and property damage as a result of a fire that occurred when propane that leaked from an underground line ignited. In July 1998, the Swigers filed a class action lawsuit against AmeriGas Propane, L.P. (named incorrectly as "UGI/AmeriGas, Inc."), in the Circuit Court of Monongalia County, West Virginia, in which they sought to recover an unspecified amount of compensatory and punitive damages and attorney's fees, for themselves and on behalf of persons in West Virginia for whom the defendants had installed propane gas lines, allegedly resulting from the defendants' failure to install underground propane lines at depths required by applicable safety standards. In 2004, the court granted the plaintiffs' motion to include customers acquired from Columbia Propane in August 2001 as additional potential class members and to amend their complaint to name additional parties consistent with such ruling. In 2003, we settled the individual personal injury and property damage claims of the Swigers. Class counsel has indicated that the class is seeking compensatory damages in excess of $12,000 plus punitive damages, civil penalties and attorneys' fees. We believe we have good defenses to the claims of the class members and intend to vigorously defend against the remaining claims in this lawsuit. -11- AMERIGAS PARTNERS, L.P. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Thousands of dollars, except per unit) We also have other contingent liabilities, pending claims and legal action arising in the normal course of our business. We cannot predict with certainty the final results of these and the aforementioned matters. However, it is reasonably possible that some of them could be resolved unfavorably to us. Although management currently 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 our financial position, damages or settlements could be material to our operating results or cash flows in future periods depending on the nature and timing of future developments with respect to these matters and the amount of future operating results and cash flows. 7. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS In December 2004, the Financial Accounting Standards Board ("FASB") issued SFAS No. 123 (revised 2004), "Share-Based Payment" ("SFAS 123R"). SFAS 123R replaces SFAS 123 and supersedes APB 25. SFAS 123, as originally issued in 1995, established as preferable a fair-value-based method of accounting for share-based payment transactions with employees. However, SFAS 123 permitted entities the option of continuing to apply the guidance in APB 25, as long as the footnotes to financial statements disclosed what net income would have been had the preferable fair-value-based method been used. SFAS 123R requires that the compensation cost relating to share-based payment transactions be recognized in the financial statements. The cost is required to be measured based on the fair value of the equity or liability instruments issued. SFAS 123R covers a wide range of share-based compensation arrangements including share options, restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans. SFAS 123R is effective for our fiscal year ending September 30, 2006. Under all of the transition methods, unrecognized compensation expense for awards that are not vested on the adoption date will be recognized in the Partnership's statements of operations through the end of the requisite service period. The Partnership does not believe that the adoption of SFAS 123R will have a material impact on its results of operations or financial position. In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary Assets - An Amendment of APB Opinion No. 29, Accounting for Nonmonetary Transactions" ("SFAS 153"). SFAS 153 eliminates the exception from fair value measurement for nonmonetary exchanges of similar productive assets in paragraph 21(b) of APB Opinion No. 29, "Accounting for Nonmonetary Transactions," and replaces it with an exception for exchanges that lack commercial substance. SFAS 153 specifies that a nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. SFAS 153 is effective for interim periods beginning after June 15, 2005. The Partnership does not believe that the adoption of SFAS 153 will have a material effect on its consolidated results of operations or financial position. -12- AMERIGAS PARTNERS, L.P. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (Thousands of dollars, except per unit) 8. SUBSEQUENT EVENTS - LONG-TERM DEBT REFINANCING AND DISTRIBUTION INCREASE In April 2005, the Partnership repaid $53,750 of maturing AmeriGas OLP First Mortgage Notes with the proceeds from a $35,000 term loan maturing on October 1, 2006, borrowings under its revolving credit facility and existing cash balances. In April 2005, the General Partner declared an increase in the Partnership's regular quarterly distribution to $0.56 per limited partner unit payable May 18, 2005 to unitholders of record May 10, 2005. The annualized distribution rate after the increase will be $2.24 per limited partner unit. In May 2005, the Partnership refinanced $373,360 of its outstanding 8.875% Series B Senior Notes due 2011 through the issuance of $415,000 of 7.25% Senior Notes due 2015. In connection with the refinancing, the Partnership incurred a loss on early extinguishment of debt totaling $33,496. The loss will be recognized in the third quarter of fiscal 2005. -13- AMERIGAS FINANCE CORP. (a wholly owned subsidiary of AmeriGas Partners, L.P.) BALANCE SHEETS (unaudited)
March 31, September 30, 2005 2004 --------- ------------- ASSETS Cash $ 1,000 $ 1,000 ------- ------- Total assets $ 1,000 $ 1,000 ======= ======= STOCKHOLDER'S EQUITY Common stock, without par value; 100 shares authorized, issued and outstanding $ - $ - Additional paid-in capital 1,000 1,000 ------- ------- Total stockholder's equity $ 1,000 $ 1,000 ======= =======
See accompanying notes to balance sheets. -14- AMERIGAS FINANCE CORP. (A WHOLLY OWNED SUBSIDIARY OF AMERIGAS PARTNERS, L.P.) NOTE TO BALANCE SHEETS (unaudited) 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"). As of November 21, 2003, AmeriGas Partners and AmeriGas Finance have an effective unallocated shelf registration statement with the Securities and Exchange Commission under the Securities Act of 1933 under which AmeriGas Partners may issue up to $446,219,000 of debt or equity securities. AmeriGas Finance will be the co-obligor of the debt securities, if any, issued pursuant to the registration statement. In May 2005, AmeriGas Partners and AmeriGas Finance jointly and severally issued $415,000,000 face amount of 7.25% Senior Notes due 2015. AmeriGas Partners used the proceeds to repay principal and premium on $373,360,000 of 8.875% Senior Notes due 2011. AmeriGas Partners owns all 100 shares of AmeriGas Finance common stock outstanding. -15- AMERIGAS EAGLE FINANCE CORP. (a wholly owned subsidiary of AmeriGas Partners, L.P.) BALANCE SHEETS (unaudited)
March 31, September 30, 2005 2004 --------- ------------- ASSETS Cash $ 1,000 $ 1,000 ------- ------- Total assets $ 1,000 $ 1,000 ======= ======= STOCKHOLDER'S EQUITY Common stock, without par value; 100 shares authorized, issued and outstanding $ - $ - Additional paid-in capital 1,000 1,000 ------- ------- Total stockholder's equity $ 1,000 $ 1,000 ======= =======
See accompanying notes to balance sheets. -16- AMERIGAS EAGLE FINANCE CORP. (A WHOLLY OWNED SUBSIDIARY OF AMERIGAS PARTNERS, L.P.) NOTE TO BALANCE SHEETS (unaudited) AmeriGas Eagle Finance Corp. ("Eagle Finance"), a Delaware corporation, was formed on February 22, 2001 and is a wholly owned subsidiary of AmeriGas Partners, L.P. ("AmeriGas Partners"). On April 4, 2001, AmeriGas Partners and Eagle Finance jointly and severally issued $60,000,000 face amount of 10% Senior Notes due April 2006. AmeriGas Partners owns all 100 shares of Eagle Finance common stock outstanding. -17- AP EAGLE FINANCE CORP. (a wholly owned subsidiary of AmeriGas Partners, L.P.) BALANCE SHEETS (unaudited)
March 31, September 30, 2005 2004 --------- ------------- ASSETS Cash $ 1,000 $ 1,000 ------- ------- Total assets $ 1,000 $ 1,000 ======= ======= STOCKHOLDER'S EQUITY Common stock, without par value; 100 shares authorized, issued and outstanding $ - $ - Additional paid-in capital 1,000 1,000 ------- ------- Total stockholder's equity $ 1,000 $ 1,000 ======= =======
See accompanying notes to balance sheets. -18- AP EAGLE FINANCE CORP. (A WHOLLY OWNED SUBSIDIARY OF AMERIGAS PARTNERS, L.P.) NOTE TO BALANCE SHEETS (unaudited) AP Eagle Finance Corp. ("AP Eagle Finance"), a Delaware corporation, was formed on April 12, 2001 and is a wholly owned subsidiary of AmeriGas Partners, L.P. ("AmeriGas Partners"). On August 21, 2001, AmeriGas Partners and AP Eagle Finance jointly and severally issued $200,000,000 face amount of 8.875% Series A Senior Notes due May 2011. On December 20, 2001, AmeriGas Partners and AP Eagle Finance exchanged $199,985,000 face amount of 8.875% Series A Senior Notes due May 2011 for a like amount of AmeriGas Partners and AP Eagle Finance 8.875% Series B Senior Notes due May 2011 pursuant to a registered exchange offer. On May 3, 2002, AmeriGas Partners and AP Eagle Finance jointly and severally issued $40,000,000 face amount of 8.875% Series B Senior Notes due May 2011. On December 3, 2002, AmeriGas Partners and AP Eagle Finance jointly and severally issued $88,000,000 face amount of 8.875% Senior Notes due May 2011. On April 4, 2003, AmeriGas Partners and AP Eagle Finance exchanged (1) $15,000 face amount of 8.875% Series A Senior Notes due May 2011 and (2) $88,000,000 face amount of 8.875% Senior Notes due May 2011 for like amounts of AmeriGas Partners and AP Eagle Finance 8.875% Series B Senior Notes due May 2011 pursuant to a registered exchange offer. In April 2003, AmeriGas Partners and AP Eagle Finance jointly and severally issued $32,000,000 face amount of 8.875% Series B Senior Notes due May 2011. In April 2004, AmeriGas Partners and AP Eagle Finance jointly and severally issued $28,000,000 face amount of 8.875% Series B Senior Notes due May 2011. In May 2005, AmeriGas Partners repaid $373,360,000 face amount of 8.875% Series B Senior Notes due 2011 and related premium through the issuance of $415,000,000 face amount of 7.25% Senior Notes due 2015. AmeriGas Partners owns all 100 shares of AP Eagle Finance common stock outstanding. -19- AMERIGAS PARTNERS, L.P. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FORWARD-LOOKING STATEMENTS Information contained in this Management's Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this Quarterly Report may contain forward-looking statements. Such statements use forward-looking words such as "believe," "plan," "anticipate," "continue," "estimate," "expect," "may," "will," or other similar words. These statements discuss plans, strategies, events or developments that we expect or anticipate will or may occur in the future. A forward-looking statement may include a statement of the assumptions or bases underlying the forward-looking statement. We believe that we have chosen these assumptions or bases in good faith and that they are reasonable. However, we caution you that actual results almost always vary from assumed facts or bases, and the differences between actual results and assumed facts or bases can be material, depending on the circumstances. When considering forward-looking statements, you should keep in mind the following important factors which could affect our future results and could cause those results to differ materially from those expressed in our forward-looking statements: (1) adverse weather conditions resulting in reduced demand; (2) cost volatility and availability of propane, and the capacity to transport propane to our market areas; (3) changes in laws and regulations, including safety, tax and accounting matters; (4) large supplier, counterparty or customer defaults; (5) competitive pressures from the same and alternative energy sources; (6) failure to acquire new customers thereby reducing or limiting any increase in revenues; (7) liability for environmental claims; (8) customer conservation measures and improvements in energy efficiency and technology resulting in reduced demand; (9) adverse labor relations; (10) inability to make business acquisitions on economically acceptable terms resulting in failure to acquire new customers thereby limiting any increase in revenues; (11) liability in excess of insurance coverage for personal injury and property damage arising from explosions and other catastrophic events, including acts of terrorism, resulting from operating hazards and risks incidental to transporting, storing and distributing propane, butane and ammonia; (12) political, regulatory and economic conditions in the United States and in foreign countries; and (13) interest rate fluctuations and other capital market conditions. These factors are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors could also have material adverse effects on future results. We undertake no obligation to update publicly any forward-looking statement whether as a result of new information or future events except as required by Federal securities laws. -20- AMERIGAS PARTNERS, L.P. ANALYSIS OF RESULTS OF OPERATIONS The following analyses compare the Partnership's results of operations for (1) the three months ended March 31, 2005 ("2005 three-month period") with the three months ended March 31, 2004 ("2004 three-month period") and (2) the six months ended March 31, 2005 ("2005 six-month period") with the six months ended March 31, 2004 ("2004 six-month period"). AmeriGas Finance Corp., AmeriGas Eagle Finance Corp. and AP Eagle Finance Corp. have nominal assets and do not conduct any operations. Their sole purpose is to serve as co-obligors for debt securities issued by AmeriGas Partners, L.P. Accordingly, discussions of the results of operations and financial condition and liquidity of these entities are not presented. EXECUTIVE OVERVIEW The Partnership reported net income of $140.5 million and net income per diluted limited partner unit of $2.25 for the first half of fiscal 2005, which includes an after-tax gain of $7.1 million ($0.13 per limited partner unit) in connection with the sale of its 50% ownership interest in Atlantic Energy, Inc. The Partnership's results were adversely affected by (1) the negative effects of customer conservation resulting from higher propane selling prices due to significantly higher propane product costs and (2) weather that was approximately 6% warmer than normal and 2% warmer than last year. The combination of these factors resulted in an approximate 5% decrease in retail propane volumes sold compared to the first half of fiscal 2004. The Partnership was able to reduce its operating and administrative expenses during the second quarter through the implementation of warm weather action plans in an effort to lessen the negative effects of warmer than normal winter weather and price-induced customer conservation on volumes sold. These action plans are expected to remain in place for the remainder of the fiscal year. In May 2005, the Partnership issued $415 million of 7.25% Senior Notes due 2015 in connection with the refinancing of $373.4 million of its 8.875% Series B Senior Notes due 2011. The refinancing resulted in a loss on early extinguishment of debt totaling $33.5 million, but will lower annual interest expense meaningfully and extend the maturity of the debt by several years. The loss on early extinguishment will be recognized during the third quarter of fiscal 2005. -21- AMERIGAS PARTNERS, L.P. 2005 THREE-MONTH PERIOD COMPARED WITH 2004 THREE-MONTH PERIOD
Increase Three Months Ended March 31, 2005 2004 (Decrease) (millions of dollars) ------- ------- -------------------- Gallons sold (millions): Retail 378.8 403.9 (25.1) (6.2)% Wholesale 59.4 112.2 (52.8) (47.1)% ------- ------- ------- 438.2 516.1 (77.9) (15.1)% ======= ======= ======= Revenues: Retail propane $ 610.6 $ 573.8 $ 36.8 6.4 % Wholesale propane 53.0 80.4 (27.4) (34.1)% Other 34.7 33.5 1.2 3.6 % ------- ------- ------- $ 698.3 $ 687.7 $ 10.6 1.5 % ======= ======= ======= Total margin (a) $ 268.5 $ 282.5 $ (14.0) (5.0)% EBITDA (b) $ 135.2 $ 146.6 $ (11.4) (7.8)% Operating income $ 117.9 $ 128.0 $ (10.1) (7.9)% Net income $ 96.2 $ 105.7 $ (9.5) (9.0)% Heating degree days - % warmer than normal (c) (4.9) (1.5) - -
(a) Total margin represents total revenues less cost of sales - propane and cost of sales - other. (b) EBITDA (earnings before interest expense, income taxes, and 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 accounting principles generally accepted in the United States of America ("GAAP"). Management believes EBITDA is a meaningful non-GAAP financial measure used by investors to compare the Partnership's operating performance with that of other companies within the propane industry. The Partnership's definition of EBITDA may be different from that used by other companies. Weather significantly impacts demand for propane and profitability because many customers use propane for heating purposes. Due to the seasonal nature of the Partnership's propane business, EBITDA for interim periods is not necessarily indicative of amounts to be expected for a full year. The following table includes reconciliations of net income to EBITDA for the periods presented:
Three Months Ended March 31, ------------------------- 2005 2004 -------- ------- Net income $ 96.2 $ 105.7 Income tax benefit (0.1) (0.1) Interest expense 20.7 21.2 Depreciation 17.0 18.6 Amortization 1.4 1.2 ------- ------- EBITDA $ 135.2 $ 146.6 ======= =======
(c) Deviation from average heating degree days based upon national weather statistics provided by the National Oceanic and Atmospheric Administration ("NOAA") for 335 airports in the United States, excluding Alaska. -22- AMERIGAS PARTNERS, L.P. Based upon national heating degree day data, temperatures were 4.9% warmer than normal during the 2005 three-month period compared to temperatures that were 1.5% warmer than normal during the 2004 three-month period. Retail propane volumes sold decreased 6.2% due to the combination of warmer than normal winter weather and the negative effects of customer conservation resulting from record-high propane prices. Retail propane revenues increased $36.8 million reflecting a $72.5 million increase due to higher average selling prices partially offset by a $35.7 million decrease due to the lower retail volumes sold. Wholesale propane revenues decreased $27.4 million reflecting a $37.8 million decrease due to lower volumes sold partially offset by a $10.4 million increase resulting from higher average selling prices. The higher average retail and wholesale selling prices per gallon reflect the continuance of significantly higher propane product costs principally resulting from higher crude oil prices. The average wholesale cost per gallon at Mont Belvieu, one of the major propane supply points in the United States, was approximately 17% greater than the average cost per gallon during the 2004 three-month period. Notwithstanding the lower propane volumes sold, total cost of sales increased $24.6 million primarily reflecting the increase in propane product costs. Total margin decreased $14.0 million compared to the 2004 three-month period due to the lower retail volumes sold partially offset by slightly higher average retail propane margins per gallon and higher margin from ancillary sales and services. EBITDA during the 2005 three-month period was $135.2 million compared to $146.6 million during the 2004 three-month period. The $11.4 million decline in EBITDA reflects the aforementioned decrease in total margin partially offset by lower operating and administrative expenses. In conjunction with the Partnership's warm weather action plans, operating and administrative expenses decreased $2.3 million reflecting lower employee compensation and benefit costs and vehicle repair expenses partially offset by higher vehicle fuel and vehicle lease expenses. Operating income decreased $10.1 million reflecting the decrease in EBITDA slightly offset by lower depreciation expense. Net income in the 2005 three-month period decreased $9.5 million reflecting the lower operating income and slightly lower interest expense. -23- AMERIGAS PARTNERS, L.P. 2005 SIX-MONTH PERIOD COMPARED WITH 2004 SIX-MONTH PERIOD
Increase Six Months Ended March 31, 2005 2004 (Decrease) (millions of dollars) --------- --------- -------------------- Gallons sold (millions): Retail 675.6 708.4 (32.8) (4.6)% Wholesale 103.8 145.3 (41.5) (28.6)% --------- --------- -------- 779.4 853.7 (74.3) (8.7)% ========= ========= ======== Revenues: Retail propane $ 1,086.1 $ 973.9 $ 112.2 11.5 % Wholesale propane 95.0 103.5 (8.5) (8.2)% Other 73.4 70.5 2.9 4.1 % --------- --------- -------- $ 1,254.5 $ 1,147.9 $ 106.6 9.3 % ========= ========= ======== Total margin $ 473.6 $ 488.2 $ (14.6) (3.0)% EBITDA (a) $ 221.6 $ 231.2 $ (9.6) (4.2)% Operating income $ 185.6 $ 193.5 $ (7.9) (4.1)% Net income $ 140.5 $ 148.8 $ (8.3) (5.6)% Heating degree days - % warmer than normal (6.2) (4.1) - -
(a) The following table includes reconciliations of net income to EBITDA for the periods presented:
Six Months Ended March 31, ------------------------- 2005 2004 ---------- ---------- Net income $ 140.5 $ 148.8 Income tax expense 2.2 0.6 Interest expense 41.2 42.3 Depreciation 34.9 36.9 Amortization 2.8 2.6 ------- ------- EBITDA $ 221.6 $ 231.2 ======= =======
Temperatures during the 2005 six-month period were 6.2% warmer than normal compared to temperatures that were 4.1% warmer than normal during the 2004 six-month period. Retail propane volumes sold decreased nearly 5% principally due to the warmer than normal winter weather and the negative effects of customer conservation driven by record-high propane selling prices. Retail propane revenues increased $112.2 million reflecting a $157.3 million increase due to higher average selling prices partially offset by a $45.1 million decrease due to the lower retail volumes sold. Wholesale propane revenues decreased $8.5 million reflecting a $29.6 million decrease due to lower volumes sold partially offset by a $21.1 million increase due to higher average selling prices. The higher average retail and wholesale selling prices per gallon reflect significantly higher propane product costs principally resulting from higher crude oil prices. The average wholesale cost per gallon of propane at Mont Belvieu was approximately 31% greater than the average cost per gallon during the 2004 six-month period. Total cost of sales increased -24- AMERIGAS PARTNERS, L.P. $121.2 million reflecting the higher propane product costs. Total margin decreased $14.6 million principally due to the lower retail volumes sold partially offset by slightly higher average retail propane margins per gallon and higher margin from ancillary sales and services. Notwithstanding a $9.1 million pre-tax gain recognized on the Partnership's sale of its 50% ownership interest in Atlantic Energy, Inc. ("Atlantic Energy"), EBITDA during the 2005 six-month period decreased $9.6 million compared to the 2004 six-month period as a result of the aforementioned decrease in total margin and a $4.6 million increase in operating and administrative expenses. The increase in operating and administrative expenses principally resulted from higher vehicle fuel costs, vehicle lease expense, general insurance and uncollectible accounts expense. These increases were partially offset principally by lower employee compensation and benefit costs and lower vehicle repairs and maintenance expenses. Operating income decreased $7.9 million reflecting the decrease in EBITDA slightly offset by lower depreciation expense. Net income in the 2005 six-month period decreased $8.3 million reflecting the lower operating income and increased income taxes resulting from the Partnership's gain on the sale of its ownership interest in Atlantic Energy partially offset by lower interest expense. FINANCIAL CONDITION AND LIQUIDITY FINANCIAL CONDITION The Partnership's long-term debt outstanding at March 31, 2005 totaled $899.5 million (including current maturities of $59.1 million) compared to $901.4 million (including current maturities of $60.1 million) at September 30, 2004. In April 2005, the Partnership repaid $53.8 million of maturing AmeriGas OLP First Mortgage Notes with the proceeds from a $35 million term loan maturing October 1, 2006, borrowings under its revolving credit facility and existing cash balances. In May 2005, the Partnership refinanced $373.4 million of its outstanding 8.875% Series B Senior Notes due 2011 through the issuance of $415.0 million of 7.25% Senior Notes due 2015. In connection with the refinancing, the Partnership incurred a loss on early extinguishment of debt totaling $33.5 million which will be recognized in the third quarter of fiscal 2005. AmeriGas OLP's Credit Agreement expires on October 15, 2008 and consists of (1) a $100 million Revolving Credit Facility and (2) a $75 million Acquisition Facility. The Revolving Credit Facility may be used for working capital and general purposes of AmeriGas OLP. The Acquisition Facility provides AmeriGas OLP with the ability to borrow up to $75 million to finance the purchase of propane businesses or propane business assets or, to the extent it is not so used, for working capital and general purposes, subject to restrictions in the AmeriGas Partners Senior Notes indentures. At March 31, 2005, there were $12.0 million of borrowings outstanding under the Credit Agreement, which are classified as bank loans. AmeriGas OLP's short-term borrowing needs are seasonal and are typically greatest during the fall and winter heating season months due to the need to fund higher levels of working capital. Issued and outstanding letters of credit under the Revolving Credit Facility, which reduce the amount of available borrowing capacity, totaled $54.4 million at March 31, 2005. -25- AMERIGAS PARTNERS, L.P. AmeriGas OLP also has a credit agreement with the General Partner to borrow up to $20 million on an unsecured, subordinated basis, for working capital and general purposes. UGI has agreed to contribute up to $20 million to the General Partner to fund such borrowings. AmeriGas Partners periodically issues debt and equity securities and expects to continue issuing securities in the future. It has issued debt securities and Common Units in underwritten public offerings in each of the last three fiscal years. Most recently, it issued debt securities through a private placement in May 2005 and Common Units in May 2004 in an underwritten public offering. Proceeds of the offerings are used to refinance indebtedness and for general Partnership purposes, including funding acquisitions. The Partnership has effective debt and equity shelf registration statements with the SEC under which it may issue up to an additional (1) 1.4 million AmeriGas Partners Common Units and (2) up to $446.2 million of debt or equity securities pursuant to an unallocated shelf registration statement. During the six months ended March 31, 2005, the Partnership declared and paid the minimum quarterly distribution of $0.55 (the "MQD") on all limited partner units for the quarters ended September 30, 2004 and December 31, 2004. On April 26, 2005, the Partnership declared an increase in the regular quarterly distribution to $0.56 per limited partnership unit ($2.24 on an annual basis). The quarterly distribution of $0.56 for the quarter ended March 31, 2005 will be paid on May 18, 2005 to holders of record on May 10, 2005. The ability of the Partnership to declare and pay the quarterly distribution on its Common Units in the future depends upon a number of factors. These factors include (1) the level of Partnership earnings; (2) the cash needs of the Partnership's operations (including cash needed for maintaining and increasing operating capacity); (3) changes in operating working capital; and (4) the Partnership's ability to borrow under its Credit Agreement, to refinance maturing debt, and to increase its long-term debt. Some of these factors are affected by conditions beyond our control including weather, competition in markets we serve, the cost of propane and changes in capital market conditions. CASH FLOWS OPERATING ACTIVITIES. The Partnership had cash and cash equivalents totaling $11.0 million at March 31, 2005 compared to $40.6 million at September 30, 2004. Due to the seasonal nature of the propane business, cash flows from operating activities are generally strongest during the second and third fiscal quarters when customers pay for propane purchased during the heating season months. Conversely, operating cash flows are generally at their lowest levels during the first and fourth fiscal quarters when the Partnership's investment in working capital, principally accounts receivable and inventories, is generally greatest. Accordingly, cash flows from operating activities during the six months ended March 31, 2005 are not necessarily indicative of cash flows to be expected for a full year. The Partnership uses its Credit Agreement to satisfy its seasonal cash flow needs. Cash flow provided by operating activities was $54.1 million during the 2005 six-month period compared to $83.0 million during the 2004 six-month period. Cash flow from operating activities before changes in working capital was $176.9 million in the 2005 six-month period compared to $195.8 million in the prior-year six-month period. These decreases reflect the negative effects of customer conservation resulting from significantly higher propane selling prices and greater cash required to fund changes in working capital. Cash required to fund changes in operating working capital during the 2005 six-month period totaled $122.8 million compared to the $112.8 million required in the prior-year six-month period -26- AMERIGAS PARTNERS, L.P. reflecting the effects of the higher selling prices on accounts receivable and higher propane costs on inventories and accounts payable. INVESTING ACTIVITIES. We spent $35.1 million for property, plant and equipment (including maintenance capital expenditures of $11.6 million and growth capital expenditures of $23.5 million) during the six months ended March 31, 2005 compared to $31.1 million (including maintenance capital expenditures of $11.6 million and growth capital expenditures of $19.5 million) during the prior-year six-month period. The significant increase is due to greater expenditures relating to growth initiatives. The increase in proceeds received from disposals of assets reflects the sale of seven district locations during the 2005 six-month period compared to three district locations in the 2004 six-month period. During the 2005 six-month period, the Partnership sold its 50% ownership interest in Atlantic Energy for $11.5 million. The Partnership acquired several retail propane businesses for $18.6 million during the 2005 six-month period and $33.1 million during the 2004 three-month period. FINANCING ACTIVITIES. Cash flow used by financing activities was $51.9 million in the 2005 six-month period compared to $57.1 million in the prior-year period. The Partnership's financing activities are typically the result of repayments and issuances of long-term debt, borrowings under our Credit Agreement, issuances of Common Units and distributions on partnership interests. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS In December 2004, the Financial Accounting Standards Board ("FASB") issued SFAS No. 123 (revised 2004), "Share-Based Payment" ("SFAS 123R"). SFAS 123R replaces SFAS 123 and supersedes APB 25. SFAS 123, as originally issued in 1995, established as preferable a fair-value-based method of accounting for share-based payment transactions with employees. However, SFAS 123 permitted entities the option of continuing to apply the guidance in APB 25, as long as the footnotes to financial statements disclosed what net income would have been had the preferable fair-value-based method been used. SFAS 123R requires that the compensation cost relating to share-based payment transactions be recognized in the financial statements. The cost is required to be measured based on the fair value of the equity or liability instruments issued. SFAS 123R covers a wide range of share-based compensation arrangements including share options, restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans. SFAS 123R is effective for our fiscal year ending September 30, 2006. Under all of the transition methods, unrecognized compensation expense for awards that are not vested on the adoption date will be recognized in the Partnership's statements of operations through the end of the requisite service period. The Partnership does not believe that the adoption of SFAS 123R will have a material impact on its results of operations or financial position as detailed in Note 1 to the Condensed Consolidated Financial Statements. In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary Assets - - An Amendment of APB Opinion No. 29, Accounting for Nonmonetary Transactions" ("SFAS 153"). SFAS 153 eliminates the exception from fair value measurement for nonmonetary exchanges of similar productive assets in paragraph 21(b) of APB Opinion No. 29, "Accounting for Nonmonetary Transactions," and replaces it with an exception for exchanges that lack commercial substance. SFAS 153 specifies that a nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of -27- AMERIGAS PARTNERS, L.P. the exchange. SFAS 153 is effective for interim periods beginning after June 15, 2005. The Partnership does not believe that the adoption of SFAS 153 will have a material effect on its consolidated results of operations or financial position. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Our primary financial market risks include commodity prices for propane and interest rates on borrowings. The risk associated with fluctuations in the prices the Partnership pays for propane is principally a result of market forces reflecting changes in supply and demand for propane and other energy commodities. The Partnership's profitability is sensitive to changes in propane supply costs, and the Partnership generally attempts to pass on increases in such costs to customers. The Partnership may not, however, always be able to pass through product cost increases fully, particularly when product costs rise rapidly. In order to reduce volatility of the Partnership's propane market price risk, we use contracts for the forward purchase or sale of propane, propane fixed-price supply agreements, and over-the-counter derivative commodity instruments including price swap and option contracts. Over-the-counter derivative commodity instruments utilized by the Partnership are generally settled at expiration of the contract. In order to minimize credit risk associated with derivative commodity contracts, we monitor established credit limits with the contract counterparties. Although we use derivative financial and commodity instruments to reduce market price risk associated with forecasted transactions, we do not use derivative financial and commodity instruments for speculative or trading purposes. The Partnership has both fixed-rate and variable-rate debt. Changes in interest rates impact the cash flows of variable-rate debt but generally do not impact its fair value. Conversely, changes in interest rates impact the fair value of fixed-rate debt but do not impact its cash flows. Our variable rate debt includes borrowings under AmeriGas OLP's Credit Agreement. This agreement has interest rates that are generally indexed to short-term market interest rates. Our long-term debt is typically issued at fixed rates of interest based upon market rates for debt having similar terms and credit ratings. As these long-term debt issues mature, we may refinance such debt with new debt having interest rates reflecting then-current market conditions. This debt may have an interest rate that is more or less than the refinanced debt. In order to reduce interest rate risk associated with near-term forecasted issuances of fixed-rate debt, from time to time we enter into interest rate protection agreements. -28- AMERIGAS PARTNERS, L.P. The following table summarizes the fair values of unsettled market risk sensitive derivative instruments held at March 31, 2005. Fair values reflect the estimated amounts that we would receive or (pay) to terminate the contracts at the reporting date based upon quoted market prices of comparable contracts at March 31, 2005. The table also includes the changes in fair value that would result if there were an adverse change of ten percent in (1) the market price of propane and (2) interest rates on ten-year U.S. treasury notes:
Fair Change in Value Fair Value ---------------------- (Millions of dollars) March 31, 2005: Propane commodity price risk $ 1.2 $ (0.9) Interest rate risk (2.2) (3.6)
Because the Partnership's derivative instruments generally qualify as hedges under SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," we expect that changes in the fair value of derivative instruments used to manage propane price or interest rate risk would be substantially offset by gains or losses on the associated underlying transactions. ITEM 4. CONTROLS AND PROCEDURES (a) Evaluation of Disclosure Controls and Procedures The Partnership's management, with the participation of the Partnership's Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Partnership's disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Partnership's disclosure controls and procedures as of the end of the period covered by this report were designed and functioning effectively to provide reasonable assurance that the information required to be disclosed by the Partnership in reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. The Partnership believes that a controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. (b) Change in Internal Control over Financial Reporting No change in the Partnership's internal control over financial reporting occurred during the Partnership's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Partnership's internal control over financial reporting. -29- AMERIGAS PARTNERS, L.P. PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS South Coast Air Quality Management District Matter. On February 21, 2005, AmeriGas Propane, L.P. ("AmeriGas OLP"), a principal operating subsidiary of AmeriGas Partners, L.P. ("AmeriGas Partners"), received notice from the South Coast (of California) Air Quality Management District ("SCAQMD") that it intended to seek civil penalties totaling $0.1 million for five (5) violations of air emissions regulations at AmeriGas OLP's LPG terminal in San Pedro, California. After an inspection of the San Pedro terminal by SCAQMD on April 15, 2005, AmeriGas Partners expects SCAQMD to issue additional notices of violation of regulations related to the installation of emission reduction equipment at the facility that may involve monetary penalties of $0.1 million or more. AmeriGas Partners is working with SCAQMD to assure that the facility is in compliance with applicable regulations and believes the resolution of this matter will not have a material effect on the results of operations or financial condition of AmeriGas Partners. ITEM 6. EXHIBITS 10.1 AmeriGas Propane, Inc. Supplemental Executive Retirement Plan Amended and Restated as of March 1, 2005. 10.2 Purchase Agreement dated April 13, 2005 among AmeriGas Partners, L.P. (the "Partnership"), AmeriGas Finance Corp., ("Finance Corp.," and together with the Partnership, the "Issuers"), AmeriGas Propane, L.P., AmeriGas Eagle Propane, L.P., a Delaware limited partnership, and AmeriGas Eagle Holdings, Inc., and Credit Suisse First Boston LLC, as representative of the several purchasers, relating to the offering and sale by the Issuers of $415.0 million principal amount of 7.25% Senior Notes due 2015 in accordance with Rule 144A and Regulation S. 10.3 Form of Confidentiality and Post-Employment Activities Agreement between AmeriGas and each of Messrs. Bissell, Katz and Knauss. 31.1 Certification by the Chief Executive Officer relating to the Registrants' Report on Form 10-Q for the quarter ended March 31, 2005, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification by the Chief Financial Officer relating to the Registrants' Report on Form 10-Q for the quarter ended March 31, 2005, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32 Certification by the Chief Executive Officer and the Chief Financial Officer relating to the Registrant's Report on Form 10-Q for the quarter ended March 31, 2005, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. -30- AMERIGAS PARTNERS, L.P. Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized. AmeriGas Partners, L.P. ------------------------------------ (Registrant) By: AmeriGas Propane, Inc., as General Partner Date: May 6, 2005 By: /s/ Michael J. Cuzzolina ----------------------------------- Michael J. Cuzzolina Vice President - Finance and Chief Financial Officer By: /s/ William J. Stanczak ----------------------------------- William J. Stanczak Controller and Chief Accounting Officer AmeriGas Finance Corp. ------------------------------------ (Registrant) Date: May 6, 2005 By: /s/ Michael J. Cuzzolina ----------------------------------- Michael J. Cuzzolina Vice President - Finance and Chief Financial Officer By: /s/ William J. Stanczak ----------------------------------- William J. Stanczak Controller and Chief Accounting Officer AmeriGas Eagle Finance Corp. ------------------------------------ (Registrant) Date: May 6, 2005 By: /s/ Michael J. Cuzzolina ----------------------------------- Michael J. Cuzzolina Vice President - Finance and Chief Financial Officer By: /s/ William J. Stanczak ----------------------------------- William J. Stanczak Controller and Chief Accounting Officer -31- AMERIGAS PARTNERS, L.P. AP Eagle Finance Corp. ----------------------------------- (Registrant) Date: May 6, 2005 By: /s/ Michael J. Cuzzolina ----------------------------------- Michael J. Cuzzolina Vice President - Finance and Chief Financial Officer By: /s/ William J. Stanczak ----------------------------------- William J. Stanczak Controller and Chief Accounting Officer -32- AMERIGAS PARTNERS, L.P. EXHIBIT INDEX 10.1 AmeriGas Propane, Inc. Supplemental Executive Retirement Plan Amended and Restated as of March 1, 2005. 10.2 Purchase Agreement dated April 13, 2005 among AmeriGas Partners, L.P. (the "Partnership"), AmeriGas Finance Corp., ("Finance Corp.," and together with the Partnership, the "Issuers"), AmeriGas Propane, L.P., AmeriGas Eagle Propane, L.P., a Delaware limited partnership, and AmeriGas Eagle Holdings, Inc., and Credit Suisse First Boston LLC, as representative of the several purchasers, relating to the offering and sale by the Issuers of $415.0 million principal amount of 7.25% Senior Notes due 2015 in accordance with Rule 144A and Regulation S. 10.3 Form of Confidentiality and Post-Employment Activities Agreement between AmeriGas and each of Messrs. Bissell, Katz and Knauss. 31.1 Certification by the Chief Executive Officer relating to the Registrants' Report on Form 10-Q for the quarter ended March 31, 2005, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification by the Chief Financial Officer relating to the Registrants' Report on Form 10-Q for the quarter ended March 31, 2005, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32 Certification by the Chief Executive Officer and the Chief Financial Officer relating to the Registrant's Report on Form 10-Q for the quarter ended March 31, 2005, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. EX-10.1 2 w07598exv10w1.txt AMERIGAS PROPANE, INC. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN AMENDED EXHIBIT 10.1 AMERIGAS PROPANE, INC. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN (amended and restated as of March 1, 2005) TABLE OF CONTENTS PAGE ---- Article I Statement of Purpose................................ 2 Article II Definitions......................................... 2 Article III Participation and Vesting........................... 4 Article IV Benefits............................................ 4 Article V Form and Timing of Benefit Distribution............. 5 Article VI Funding of Benefits................................. 5 Article VII The Committees...................................... 6 Article VIII Amendment and Termination........................... 7 Article IX Claims Procedures................................... 8 Article X Miscellaneous Provisions............................ 9 i 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. This amendment and restatement of the AGP SERP shall be effective as of March 1, 2005. It is intended that benefits that are earned and vested under the AGP SERP as of December 31, 2004 shall be considered "grandfathered" benefits for purposes of section 409A of the Internal Revenue Code. ARTICLE I DEFINITIONS Sec. 2.01 "Administrative Committee" shall mean the administrative committee designated pursuant to Article VII of the AGP SERP to administer the AGP SERP in accordance with its terms. Sec. 2.02 "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. 2.03 "AGP" shall mean AmeriGas Propane, Inc. Sec. 2.04 "AGP 401(k) Plan" shall mean the AmeriGas Propane, Inc. 401(k) Savings Plan. Sec. 2.05 "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. 2.06 "Board" shall mean the Board of Directors of AGP. Sec. 2.07 "Compensation/Pension Committee" shall mean the Compensation/Pension Committee of the Board or such other committee designated by the Board of AGP to perform certain functions with respect to the AGP SERP. Sec. 2.08 "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 (October 1 - September 30), including Deferred Compensation, whether or not paid in that plan year. Compensation shall be prorated for all partial fiscal years during which the Employee is a Participant. Sec. 2.09 "Deferred Compensation" shall mean the amount 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 bonus plan for years beginning prior to the Effective Date. Sec. 2.10 "Effective Date" shall mean October 1, 1996. Sec. 2.11 "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. 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 AGP for the purposes of this AGP SERP. Sec. 2.12 "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, the "Reemployment Commencement Date" shall be the first day on which the Participant became an employee as described in the preceding sentence after the most recent such interruption of the employment relationship between the Employee and AGP or any of its Subsidiaries or Affiliates, unless the Administrative Committee determines otherwise. Sec. 2.13 "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended. Sec. 2.14 "Grandfathered Benefits" shall mean those benefits that are earned and vested under the AGP SERP as of December 31, 2004 and that are not subject to the requirements of section 409A of the Internal Revenue Code. Sec. 2.15 "Internal Revenue Code" shall mean the Internal Revenue Code of 1986, as amended. Sec. 2.16 "Key Employee" shall mean (i) an officer of AGP or its Affiliates having annual compensation greater than $130,000 (as adjusted for inflation pursuant to section 416(i) of the Internal Revenue Code, and limited to 50 employees), (ii) a five percent owner of AGP and its Affiliates, or (iii) a one percent owner of AGP and its Affiliates who has annual compensation from AGP and its Affiliates greater than $150,000, as determined by the Administrative Committee in a manner consistent with the regulations issued under section 409A of the Internal Revenue Code. Sec. 2.17 "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 Compensation/Pension Committee may designate. 3 Sec. 2.18 "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. 2.19 "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 gross 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. ARTICLE III PARTICIPATION AND VESTING Sec. 3.01 VESTING. Benefits under this AGP SERP shall vest on the fifth anniversary of a Participant's Employment Commencement Date, unless the Compensation/Pension 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 section 401(a)(17) of the Internal Revenue Code and 10% of the Participant's Compensation, if any, in excess of such maximum recognizable compensation. In addition, effective for amounts forfeited in 2005 and subsequent years, in the event that any portion of the employer matching contribution allocated to a Participant under the AGP 401(k) Plan with respect to a prior plan year is forfeited to satisfy the nondiscrimination requirements of section 401(k), 401(m) or 401(a)(4) of the Internal Revenue Code, AGP shall credit to the Participant's account under the AGP SERP, in the year in which the forfeiture occurs, an amount that is equal to the forfeited employer matching contributions, adjusted for earnings and losses as provided under the AGP 401(k) Plan to the date forfeited. 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 as of which 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. The Administrative Committee shall make appropriate adjustments to interest credited with respect to any amounts that are credited to the AGP SERP during the year pursuant 4 to Section 4.01 and with respect to Participants who receive a distribution from the Plan during the year. Sec. 4.04 DIVESTITURE. 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. 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. Except as otherwise required by Section 5.03 below, 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 Termination for Cause; in no event shall such payment be made later than the later of (i) 90 days after a Participant's retirement or termination for a reason other than Termination for Cause, or (ii) December 31 of the year in which such retirement or termination occurs. Sec. 5.03 KEY EMPLOYEES. If required by section 409A of the Internal Revenue Code, and applicable regulations or other guidance, any benefit payable under the AGP SERP that is not a Grandfathered Benefit and that is payable to a Key Employee may not be paid before the date that is six months after the date of the Key Employee's retirement or other termination of employment. 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. ARTICLE VII THE COMMITTEES Sec. 7.01 APPOINTMENT AND TENURE OF ADMINISTRATIVE COMMITTEE MEMBERS. The Administrative Committee shall consist of one or more persons who shall be appointed by and serve at the pleasure of the Compensation/Pension 5 Committee. Any Administrative Committee member may resign by delivering his or her written resignation to the Compensation/Pension Committee. Vacancies arising by the death, resignation or removal of an Administrative Committee member may be filled by the Compensation/Pension Committee. Sec. 7.02 MEETINGS; MAJORITY RULE. Any and all acts of the Administrative Committee taken at a meeting shall be by a majority of all members of the Administrative Committee. The Administrative Committee may act by vote taken in a meeting (at which a majority of members shall constitute a quorum). The Administrative Committee may also act by unanimous consent in writing without the formality of convening a meeting. Sec. 7.03 DELEGATION. The Administrative Committee may, by majority decision, delegate to each or any one of its members, 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 Administrative Committee, even though such person alone may sign any document required by third parties. The Administrative Committee shall elect one of its number to serve as Chairperson. The Chairperson shall preside at all meetings of the Administrative Committee or shall delegate such responsibility to another Administrative Committee member. The Administrative Committee shall elect one person to serve as Secretary to the Administrative Committee. All third parties may rely on any communication signed by the Secretary, acting as such, as an official communication from the Administrative Committee. Sec. 7.04 AUTHORITY AND RESPONSIBILITY OF THE ADMINISTRATIVE COMMITTEE. The Administrative Committee shall have only such authority and responsibilities as are delegated to it by the Compensation/Pension Committee or specifically under this AGP SERP. 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; (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 ADMINISTRATIVE COMMITTEE MEMBERS. The members of the Administrative Committee shall serve without compensation for their services as such, but all expenses of the Administrative Committee shall be paid or reimbursed by AGP. 6 Sec. 7.06 COMMITTEE DISCRETION. Any discretion, actions or interpretations to be made under the AGP SERP by the Administrative Committee or by the Compensation/Pension 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 COMMITTEES. Each member of the Administrative Committee and each member of the Compensation/Pension 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 applicable 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 Administrative Committee member or the Compensation/Pension 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 Administrative Committee member or the Compensation/Pension Committee member may be entitled pursuant to the by-laws of AGP. Service on the Administrative Committee or the Compensation/Pension Committee shall be deemed in partial fulfillment of the applicable Committee member's function as an employee, officer, or director of AGP, if the Committee member also serves in that capacity. 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 Compensation/Pension 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 AGP SERP 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. 7 ARTICLE IX CLAIMS PROCEDURES Sec. 9.01 CLAIM. Any person or entity claiming a benefit, requesting an interpretation or ruling under the AGP SERP (hereinafter referred to as "claimant"), or requesting information under the AGP SERP shall present the request in writing to the Administrative Committee, which shall respond in writing or electronically. The notice advising of the denial shall be furnished to the claimant within 90 days of receipt of the benefit claim by the Administrative Committee, unless special circumstances require an extension of time to process the claim. If an extension is required, the Administrative Committee shall provide notice of the extension prior to the termination of the 90 day period. In no event may the extension exceed a total of 180 days from the date of the original receipt of the claim. Sec. 9.02 DENIAL OF CLAIM. If the claim or request is denied, the written or electronic notice of denial shall state: (a) The reason(s) for denial; (b) Reference to the specific AGP SERP provisions on which the denial is based; (c) A description of any additional material or information required and an explanation of why it is necessary; and (d) An explanation of the AGP SERP's claims review procedures and the time limits applicable to such procedures, including the right to bring a civil action under section 502(a) of ERISA. Sec. 9.03 FINAL DECISION. The decision on review shall normally be made within 60 days after the Administrative Committee's receipt of claimant's claim or request. If an extension of time is required for a hearing or other special circumstances, the claimant shall be notified and the time limit shall be 120 days. The decision shall be in writing or in electronic form and shall: (a) State the specific reason(s) for the denial; (b) Reference the relevant AGP SERP provisions; (c) State that the claimant is entitled to receive, upon request and free of charge, and have reasonable access to and copies of all documents, records and other information relevant to the claim for benefits; and (d) State that the claimant may bring an action under section 502(a) of ERISA. All decisions on review shall be final and bind all parties concerned. Sec. 9.04 REVIEW OF CLAIM. Any claimant whose claim or request is denied or who has not received a response within 60 days may request a review by notice given in writing or 8 electronic form to the Administrative Committee. Such request must be made within 60 days after receipt by the claimant of the written or electronic notice of denial, or in the event the claimant has not received a response, 60 days after receipt by the Administrative Committee of the claimant's claim or request. The claim or request shall be reviewed by the Administrative Committee which may, but shall not be required to, grant the claimant a hearing. On review, the claimant may have representation, examine pertinent documents, and submit issues and comments in writing. ARTICLE X MISCELLANEOUS PROVISIONS Sec. 10.01 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. 10.02 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. 10.03 SEVERABILITY OF PROVISIONS. If any provision of the AGP SERP shall be held invalid or unenforceable, such validity 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. 10.04 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. 10.05 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. 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. Sec. 10.07 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. 9 Sec. 10.08 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 Administrative Committee, the Compensation/Pension Committee and all other parties with respect thereto. Sec. 10.09 LOST PAYEES. A benefit (including accrued interest) shall be deemed forfeited if the Board or the Administrative 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. Sec. 10.10 SECTION 409A. The AGP SERP is intended to comply with the applicable requirements of section 409A of the Internal Revenue Code, and shall be administered in accordance with section 409A to the extent section 409A applies to the AGP SERP. Notwithstanding anything in the AGP SERP to the contrary, with respect to benefits that are not Grandfathered Benefits, distributions may only be made under the AGP SERP upon an event and in a manner permitted by section 409A. To the extent that any provision of the AGP SERP would cause a conflict with the requirements of section 409A of the Internal Revenue Code, or would cause the administration of the AGP SERP to fail to satisfy the requirements of section 409A, such provision shall be deemed null and void to the extent permitted by applicable law. IN WITNESS WHEREOF, and as evidence of its adoption of the AGP SERP, AGP has caused the same to be executed by its duly authorized officer and its corporate seal to be affixed hereto as of the 1st day of March 2005. Attest: AMERIGAS PROPANE, INC. ___________________________________ By: _________________________________ Robert H. Knauss Eugene V.N. Bissell Secretary President and Chief Executive Officer Date: March 15, 2005 10 EX-10.2 3 w07598exv10w2.txt PURCHASE AGREEMENT DATED APRIL 13, 2005 EXHIBIT 10.2 EXECUTION VERSION $415,000,000 AMERIGAS PARTNERS, L.P. AMERIGAS FINANCE CORP. 7.25% SENIOR NOTES DUE 2015 PURCHASE AGREEMENT April 13, 2005 CREDIT SUISSE FIRST BOSTON LLC, As Representative of the Several Purchasers, Eleven Madison Avenue, New York, N.Y. 10010-3629 Ladies and Gentlemen: AmeriGas Partners, L.P., a Delaware limited partnership (the "PARTNERSHIP"), and AmeriGas Finance Corp., a Delaware corporation and a wholly-owned subsidiary of the Partnership ("FINANCE CORP." and, together with the Partnership, the "ISSUERS"), propose, subject to the terms and conditions stated herein, to issue and sell to the several initial purchasers named in Schedule A hereto (the "PURCHASERS") U.S. $415,000,000 principal amount of their 7.25% Senior Notes due 2015 (the "OFFERED SECURITIES") to be issued under an indenture (the "INDENTURE"), among the Issuers and Wachovia Bank, National Association, as trustee (the "TRUSTEE"), to be dated as of the Closing Date, as defined below. Finance Corp., the Partnership, along with its operating partnership, AmeriGas Propane, L.P., a Delaware limited partnership ("AMERIGAS PROPANE"), AmeriGas Eagle Propane, L.P. a Delaware limited partnership ("AMERIGAS EAGLE," and together with AmeriGas Propane, the "OPERATING PARTNERSHIPS"), AmeriGas Propane, Inc., a Pennsylvania corporation and general partner of both the Partnership and AmeriGas Propane (the "GENERAL PARTNER") and AmeriGas Eagle Holdings, Inc., a Delaware corporation and general partner of AmeriGas Eagle (the "EAGLE GENERAL PARTNER," and together with the General Partner, the "GENERAL PARTNERS") are collectively referred to herein as the "PARTNERSHIP ENTITIES." The United States Securities Act of 1933, as amended, is herein referred to as the "SECURITIES ACT." The holders of the Offered Securities will be entitled to the benefits of a Registration Rights Agreement to be dated as of the Closing Date among the Issuers and the Purchasers (the "REGISTRATION RIGHTS AGREEMENT"), pursuant to which the Issuers agree to file one or more registration statements with the Securities and Exchange Commission (the "COMMISSION") providing for the registration of the Offered Securities under the Securities Act. The Issuers, Operating Partnerships and the General Partners hereby agree with the several Purchasers as follows: 1. Issuance of the Offered Securities. The Offered Securities will be offered and sold to the Purchasers pursuant to an exemption from the registration requirements under the Securities Act. The Issuers have prepared a preliminary offering circular, dated April 12, 2005 (the "PRELIMINARY OFFERING CIRCULAR"), 1 and a final offering circular, dated April 14, 2005 (the "OFFERING CIRCULAR") relating to the Offered Securities. The Preliminary Offering Circular, Offering Circular and all documents incorporated by reference therein are hereinafter referred to as the "OFFERING DOCUMENT." 2. Representations and Warranties of the Issuers, the Operating Partnerships and the General Partners. The Issuers, the Operating Partnerships and the General Partners jointly and severally represent and warrant to, and agree with, the several Purchasers that: (a) On the date of this Agreement, the Offering Document does not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, misleading. The preceding sentence does not apply to statements in or omissions from the Offering Document based upon written information furnished to the Issuers or the General Partners by any Purchaser through Credit Suisse First Boston LLC ("CSFB") specifically for use therein, it being understood and agreed that the only such information is that described as such in Section 7(c) hereof. Such documents, when they were filed with the Commission, conformed in all material respects to the requirements of the Securities Exchange Act of 1934 (the "EXCHANGE ACT") and the rules and regulations of the Commission thereunder. (b) Each of the Partnership and the Operating Partnerships have been duly formed and is validly existing as a limited partnership under the Delaware Revised Uniform Limited Partnership Act (the "DELAWARE ACT") with full partnership power and authority to own, lease and operate their respective properties and to conduct their respective businesses in all material respects as described in the Offering Circular, and each of the Partnership and the Operating Partnerships is duly registered or qualified to conduct its business and is in good standing in each jurisdiction or place where the nature of its properties or the conduct of its business requires such registration or qualification, except where the failure to so register or qualify does not have a material adverse effect on the financial condition, business, properties, results of operations, or prospects ("MATERIAL ADVERSE EFFECT") of the Issuers and the Operating Partnerships taken as a whole. (c) Finance Corp. is a corporation duly incorporated, validly existing and in good standing under the Delaware General Corporation Law (the "DGCL"), with full corporate power and authority to own, lease and operate its properties and to conduct its business in all material respects as described in the Offering Circular, and Finance Corp. is duly registered or qualified to conduct its business and is in good standing in each jurisdiction or place where the nature of its properties or the conduct of its business requires such registration or qualification, except where the failure to so register or qualify does not have a Material Adverse Effect on the Issuers and the Operating Partnerships, taken as a whole. (d) The General Partner is a corporation duly incorporated and presently subsisting under the laws of the Commonwealth of Pennsylvania, with full corporate power and authority to own, lease and operate its properties and to conduct its business and to act as general partner of the Partnership and of AmeriGas Propane, in each case in all material respects as described in the Offering Circular, and the General Partner is duly registered or qualified to conduct its business and is in good standing in each jurisdiction or place where the nature of its properties or the conduct of its business requires such registration or qualification, except where the failure to so register or qualify (i) does not have a Material Adverse Effect on the Issuers and the Operating Partnerships, taken as a whole, or (ii) would not subject the limited partners that are unitholders of the Partnership to any material liability or disability. (e) The Eagle General Partner is a corporation duly incorporated, validly existing and in good standing under the DGCL, with full corporate power and authority to own, lease and operate its properties and to conduct its business and to act as general partner of AmeriGas Eagle, in all 2 material respects as described in the Offering Circular, and the Eagle General Partner is duly registered or qualified to conduct its business and is in good standing in each jurisdiction or place where the nature of its properties or the conduct of its business requires such registration or qualification, except where the failure to so register or qualify does not have a Material Adverse Effect on the Issuers and the Operating Partnerships, taken as a whole, or the Eagle General Partner. (f) None of the General Partners, the Partnership nor the Operating Partnerships has any subsidiaries, other than the Partnership and the Operating Partnerships themselves and Petrolane Incorporated, a Pennsylvania corporation ("PETROLANE"), which would be deemed to be a significant subsidiary (as such term is defined in Section 1-02 of Regulation S-X). (g) None of the Issuers, the Operating Partnerships or the General Partners is in violation of its partnership agreement, certificate or articles of incorporation or by-laws, or other organizational documents. None of the Issuers, the Operating Partnerships or the General Partners is in violation of any law, ordinance, administrative or governmental rule or regulation applicable to the Issuers, the Operating Partnerships, or the General Partners, as applicable, or of any decree or any court or governmental agency or body having jurisdiction over the Issuers, the Operating Partnerships and the General Partners, which violation would, if continued, have a Material Adverse Effect on the Issuers and the Operating Partnerships, taken as a whole. None of the Issuers, the Operating Partnerships or the General Partners is in breach, default or violation in the performance of any obligation, agreement or condition contained in any bond, debenture, note or any other evidence of indebtedness or in any material agreement, indenture, lease or other instrument to which the Issuers, the Operating Partnerships or the General Partners is a party or by which any of them or any of their respective properties may be bound which breach, default or violation would, if continued, have a Material Adverse Effect on the Issuers and the Operating Partnerships, taken as a whole. (h) None of the offering, issuance and sale of the Offered Securities, the execution, delivery or performance of this Agreement by the Issuers, the Operating Partnerships or the General Partners, the execution, delivery and performance of the Indenture and the Registration Rights Agreement by the Issuers or the consummation by the Issuers, the Operating Partnerships or the General Partners of the transactions contemplated hereby (A) requires any permit, consent, approval, authorization or other order of or registration or filing with, any court, regulatory body, administrative agency or other governmental body, agency or official which has not been obtained or (B) conflicts or will conflict with or constitutes or will constitute a violation of the agreement of limited partnership, certificate or articles of incorporation or by-laws or other organizational documents of either of the Issuers or any of their respective subsidiaries, the Operating Partnerships or the General Partners or (C) conflicts or will conflict with or constitutes or will constitute a breach or violation of, or a default under, any agreement, indenture, lease or other instrument to which either of the Issuers or any of their respective subsidiaries, the Operating Partnerships or the General Partners is a party or by which any of them or any of their respective properties may be bound other than as described in the Offering Circular, or (D) violates or will violate any statute, law, regulation or filing or judgment, injunction, order or decree applicable to either of the Issuers or any of their respective subsidiaries, the Operating Partnerships or the General Partners or any of their respective properties, or (E) will result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of either of the Issuers or any of their respective subsidiaries, the Operating Partnerships or the General Partners pursuant to the terms of any agreement or instrument to which any of them is a party or by which any of them may be bound or to which any of the property or assets of any of them is subject (other than as described in the Offering Circular) which conflict, breach, violation or default would, if continued, have a Material Adverse Effect on the Issuers and the Operating Partnerships, taken as a whole, or the General Partners except for such as have been obtained and made (or, in the case of 3 the Registration Rights Agreement, will be obtained and made) under the Securities Act, the Trust Indenture Act of 1939, as amended (the "TRUST INDENTURE ACT"), and state securities or Blue Sky laws and regulations or such as may be required by the National Association of Securities Dealers ("NASD"), or which, if not obtained, would not, individually or in the aggregate, have a Material Adverse Effect on the Issuers and the Operating Partnerships, taken as a whole. (i) No registration under the Securities Act of the Offered Securities is required for the sale of the Offered Securities to the Purchasers as contemplated hereby or for the offer of the Offered Securities (the "EXEMPT RESALES") assuming (i) that the purchasers who buy the Offered Securities in the Exempt Resales are either "qualified institutional buyers" ("QIBS"), as defined in Rule 144A of the Securities Act ("RULE 144A"), or persons permitted under Regulation S of the Securities Act ("REGULATION S") to purchase the Offered Securities in offshore transactions ("REGULATION S PURCHASERS") and (ii) the accuracy of the Purchasers' representations regarding the absence of a general solicitation in connection with the sale of the Offered Securities to the Purchasers and the Exempt Resales contained herein. No form of general solicitation or general advertising was used by either of the Issuers or the General Partners or their affiliates in connection with the offer and sale of any of the Offered Securities or in connection with Exempt Resales, including, but not limited to, articles, notices or other communications published in any newspaper, magazine, or similar medium or broadcast over television or radio, or any seminar or meeting whose attendees have been invited by any general solicitation or general advertising. No securities of the same class as the Offered Securities have been issued and sold by the Issuers within the six-month period immediately prior to the date hereof. None of the Issuers, the Operating Partnerships or the General Partners has distributed or, prior to the later to occur of (i) the Closing Date and (ii) completion of the distribution of the Offered Securities, will distribute, any prospectus in connection with the sale of the Offered Securities other than the Preliminary Offering Circular and the Offering Circular, or other material, if any, permitted by the Securities Act, including Rule 134(c) of the general rules and regulations promulgated thereunder. The Issuers, the Operating Partnerships or the General Partners and their affiliates have complied and will comply with the offering restrictions requirement of Regulation S. The Issuers, Operating Partnerships or the General Partners have not entered and will not enter into any contractual arrangement with respect to the distribution of the Offered Securities except for this Agreement. (j) Except as disclosed in the Preliminary Offering Circular or the Offering Circular (or any amendment or supplement thereto), subsequent to the respective dates as of which such information is given in the Preliminary Offering Circular or the Offering Circular (or any amendment or supplement thereto), none of the Issuers, the Operating Partnerships or the General Partners has incurred any liability or obligation, direct or contingent, or entered into any transaction, not in the ordinary course of business, that is material to the Issuers and the Operating Partnerships, taken as a whole. (k) Each of the Issuers, the Operating Partnerships and the General Partners has filed all material tax returns required to be filed, and has timely paid all taxes shown to be due pursuant to said returns, other than those (i) which, if not paid, would not have a Material Adverse Effect on the Partnership and the Operating Partnerships, taken as a whole or (ii) which are being contested in good faith. (l) None of the Partnership, the Operating Partnerships nor the General Partners has sustained since the date of the latest audited financial statements included or incorporated by reference in the Offering Circular any material loss or interference with its business from fire, explosion, flood or other calamity, not covered by insurance, or from any labor dispute or court or governmental action, order or decree; and, except as described in the Offering Circular, and, since the respective dates as of which information is given in the Offering Circular, and except for changes in accumulated other comprehensive income (loss) attributable to the Operating 4 Partnerships' derivative instruments, there has not been any material adverse change in the partners' equity or capital stock or long-term debt of the Partnership, the Operating Partnerships or the General Partners other than the partnership distribution on February 18, 2005 and there has not been any material adverse change in or affecting the financial condition, business, properties, results of operations or prospects of the Partnership and the Operating Partnerships, taken as a whole (any such event in this paragraph being termed a "MATERIAL ADVERSE CHANGE"). (m) The accountants, PricewaterhouseCoopers LLP, who have certified the consolidated financial statements of the Partnership incorporated by reference in the Preliminary Offering Circular and the Offering Circular (or any amendment or supplement thereto) are independent public accountants as required by the Securities Act. (n) The audited and unaudited consolidated balance sheets of the Partnership incorporated by reference in the Offering Circular present fairly in all material respects the financial position of the Partnership as of the dates indicated; the historical information of the Partnership set forth in the Offering Circular under the captions "Summary Historical Financial and Other Data" and "Selected Historical Financial and Other Data" is fairly stated in all material respects in relation to the audited and unaudited historical consolidated financial statements from which it has been derived; and the audited and unaudited consolidated financial statements of the Partnership included in, or incorporated by reference into, the Offering Circular have been prepared in all material respects in conformity with generally accepted accounting principles applied on a substantially consistent basis, except to the extent disclosed therein. (o) The Partnership maintains a system of internal accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management's general or specific authorization; (ii) transactions are recorded as necessary: (x) to permit preparation of financial statements in conformity with generally accepted accounting principles or any other criteria applicable to such statements as contemplated by Section 13(b)(2)(B) of the Exchange Act, and (y) to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management's general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. (p) The General Partner is the sole general partner of the Partnership and AmeriGas Propane with a general partner interest in the Partnership of 1.0% pursuant to the Third Amended and Restated Agreement of Limited Partnership of the Partnership (as it may be amended or restated at or prior to the Closing Date, the "PARTNERSHIP AGREEMENT") and a general partner interest in AmeriGas Propane of 1.0101% pursuant to the Second Amended and Restated Agreement of Limited Partnership of AmeriGas Propane (as it may be amended or restated at or prior to the Closing Date, the "AMERIGAS PROPANE PARTNERSHIP AGREEMENT"). (q) As of the Closing Date, the General Partner and its consolidated subsidiaries will continue to own limited partner interests in the Partnership represented by 24,525,004 Units (as defined in the Partnership Agreement). (r) As of the Closing Date, the Partnership will continue to be the sole limited partner of AmeriGas Propane, with a limited partner interest of 98.9899%, and will own such limited partner interest in AmeriGas Propane free and clear of all liens, encumbrances, charges or claims other than those arising pursuant to the AmeriGas Propane Partnership Agreement. (s) The Eagle General Partner is the sole general partner of AmeriGas Eagle with a general partner interest in AmeriGas Eagle of less than 1.0% pursuant to the Amended and 5 Restated Agreement of Limited Partnership of AmeriGas Eagle Propane, L.P., dated as of July 19, 1999. (t) AmeriGas Propane is a limited partner of AmeriGas Eagle with a limited partner interest of more than 98% in AmeriGas Eagle, and, except for security interests on the interests in AmeriGas Eagle as described in Exhibits 10.7, 10.8, 10.9, 10.10, 10.10(a), 10.11, 10.12 and 10.12(a) to the Annual Report on Form 10-K filed by the Partnership for the fiscal year ended September 30, 2004, AmeriGas Propane owns such limited partner interest in AmeriGas Eagle free and clear of all liens, encumbrances, charges or claims. An unaffiliated third party is a special limited partner of AmeriGas Eagle with a special limited partner interest of less than 1.0%. (u) All of the issued shares of capital stock of the General Partner have been duly authorized and validly issued and are fully paid and non-assessable; and all of the issued shares of capital stock of the General Partner are held directly or indirectly by UGI Corporation, free and clear of all liens, encumbrances, equities or claims, except as set forth in the Offering Circular. (v) All of the issued shares of capital stock of the Eagle General Partner have been duly authorized and validly issued and are fully paid and non-assessable; except as set forth in the Offering Circular and except for security interests on the stock of the Eagle General Partner as described in Exhibits 10.7, 10.8, 10.9, 10.10, 10.10(a), 10.11, 10.12 and 10.12(a) to the Annual Report on Form 10-K filed by the Partnership for the fiscal year ended September 30, 2004, all of the issued shares of capital stock of the Eagle General Partner are held directly or indirectly by AmeriGas Propane, free and clear of all liens, encumbrances, equities or claims. (w) Each of the Issuers, the Operating Partnerships and the General Partners have all requisite corporate or partnership power and authority to execute, deliver and perform its obligations under this Agreement and, to the extent applicable, the Indenture, the Registration Rights Agreement and the Offered Securities (the Indenture, the Registration Rights Agreement and the Offered Securities are referred to as the "OPERATIVE DOCUMENTS") to which it is a party and to consummate the transactions contemplated hereby and thereby, including, without limitation, with respect to the Partnership, the partnership power and authority to issue, sell and deliver the Offered Securities as provided herein and therein, and with respect to Finance Corp., the corporate power and authority to issue, sell and deliver the Offered Securities as provided herein and therein. (x) This Agreement has been duly and validly authorized, executed and delivered by each of the Issuers, the Operating Partnerships and the General Partners. (y) At or before the Closing Date, (i) the Issuers shall issue $415.0 million of the Offered Securities pursuant to the terms of the Offering Circular, and (ii) the Partnership shall use such proceeds as set forth in the Offering Circular. (z) Each of the Partnership and the Operating Partnerships have all necessary consents, approvals, authorizations, orders, registrations and qualifications of or with any court or governmental agency or body having jurisdiction over it or any of its properties or of or with any other person to conduct its business as set forth or contemplated in the Offering Circular, except such consents, approvals, authorizations, orders, registrations or qualifications which, if not obtained, would not, individually or in the aggregate, have a Material Adverse Effect upon the Issuers and the Operating Partnerships, taken as a whole. (aa) Except as described in the Offering Circular, there is (i) no action, suit or proceeding before or by any court, arbitrator or governmental agency, body or official, domestic or foreign, now pending or, to the knowledge of any of the Issuers, the Operating Partnerships or the General 6 Partners, threatened, to which any of the Issuers, the Operating Partnerships or the General Partners, or any of their respective subsidiaries is or may be a party or to which the business or property of any of the Issuers, the Operating Partnerships or the General Partners, or any of their respective subsidiaries is or may be subject, (ii) no statute, rule, regulation or order that has been enacted, adopted or issued by any governmental agency or that has been proposed by any governmental body and (iii) no injunction, restraining order or order of any nature by a federal or state court or foreign court of competent jurisdiction to which any of the Issuers, the Operating Partnerships or the General Partners, or any of their respective subsidiaries is or may be subject that is reasonably expected to (x) individually or in the aggregate, have a Material Adverse Effect on the Issuers and the Operating Partnerships, taken as a whole, or the General Partners, (y) prevent or result in the suspension of the issuance of the Offered Securities or (z) in any manner draw into question the validity of this Agreement and the Operative Documents. (bb) None of the Issuers, the Operating Partnerships or the General Partners (i) have violated any environmental, safety, health or similar law or regulation applicable to its business relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants ("ENVIRONMENTAL LAWS"), which violation would have a Material Adverse Effect on the Issuers and the Operating Partnerships, taken as a whole, (ii) lacks any permits, licenses or other approvals required of them under applicable Environmental Laws to own, lease or operate their properties and conduct their business as described in the Offering Circular, or (iii) is violating any terms and conditions of any such permit, license or approval, which, in the case of clause (ii) or (iii), would have a Material Adverse Effect on the Issuers and the Operating Partnerships, taken as a whole. (cc) The Issuers, the Operating Partnerships and the General Partners maintain insurance covering their respective properties, operations, personnel and businesses. In the General Partners' reasonable judgment, such insurance insures against such losses and risks as are adequate to protect the Issuers, the Operating Partnerships and the General Partners and their businesses. None of the Issuers, the Operating Partnerships or the General Partners has received notice from any respective insurer or agent of such insurer that substantial capital improvements or other expenditures will have to be made in order to continue such insurance. All such insurance is outstanding and duly in force on the date hereof and will be outstanding and duly in force on the Closing Date. (dd) The Indenture has been duly and validly authorized by each of the Issuers and, when duly executed and delivered by each Issuer and the Trustee, will be the legally valid and binding obligation of each Issuer, enforceable against each Issuer in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles and except that rights to indemnification thereunder may be limited by federal or state securities laws or policy relating thereto. The Indenture, when executed and delivered, will conform in all material respects to the description thereof in the Offering Circular. (ee) The Offered Securities have been duly and validly authorized for issuance and sale to you by each of the Issuers pursuant to this Agreement and, when issued and authenticated in accordance with the terms of the Indenture and delivered against payment therefor in accordance with the terms hereof, will be the legally valid and binding obligations of the Issuers, enforceable against the Issuers in accordance with their terms and entitled to the benefits of the Indenture, except as the enforceability thereof may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. The Offered Securities, when executed and delivered, will conform in all material respects to the description thereof in the Offering Circular. 7 (ff) The Registration Rights Agreement has been duly and validly authorized by each of the Issuers and, when duly executed and delivered by each Issuer, will be the legal, valid and binding obligation of each such person, enforceable against each such person in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and by general equity principles and except that rights to indemnification and contribution thereunder may be limited by federal or state securities laws or public policy relating thereto. The Registration Rights Agreement, when executed and delivered, will conform in all material respects to the description thereof in the Offering Circular. (gg) The Offered Securities have been duly and validly authorized for issuance by each of the Issuers, and when issued and authenticated in accordance with the terms of the Indenture and the Registration Rights Agreement, will be the legally valid and binding obligations of each of the Issuers, enforceable against each of the Issuers in accordance with their terms and entitled to the benefits of the Indenture, except as the enforceability thereof may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. (hh) None of the Issuers, the Operating Partnerships or the General Partners is and, after giving effect to the offering and sale of the Offered Securities and the application of the proceeds thereof as described in the Offering Circular, will be an "investment company" or be "controlled by" an "investment company" as those terms are defined in the Investment Company Act of 1940, as amended. (ii) None of the Issuers, the Operating Partnerships, the General Partners or any of their affiliates does business with the government of Cuba or with any person or affiliate located in Cuba within the meaning of Section 517.075, Florida Statutes, and each of the Issuers, the Operating Partnerships and the General Partners agrees to comply with such Section if prior to the completion of the distribution of the Notes it commences doing such business. (jj) When the Offered Securities are issued and delivered pursuant to this Agreement, none of the Offered Securities will be of the same class (within the meaning of Rule 144A) as securities of the Issuers that are listed on a national securities exchange registered under Section 6 of the Exchange Act or that are quoted in a United States automated interdealer quotation system. (kk) No form of general solicitation or general advertising (as defined in Regulation D under the Securities Act) was used by the Issuers, the General Partners or the Operating Partnerships or their affiliates in connection with the offer and sale of the Offered Securities contemplated hereby. (ll) None of the Issuers, the General Partners, the Operating Partnerships or any of their respective affiliates or any person acting on its or their behalf (other than the Purchasers, as to whom the Issuers, the General Partners and the Operating Partnerships make no representation) has engaged or will engage in any directed selling efforts within the meaning of Regulation S with respect to the Offered Securities. (mm) The Issuers will furnish the Purchasers, without charge, as many copies of the Preliminary Offering Circular and the Offering Circular, and any amendments or supplements thereto, as the Purchasers may reasonably request. The Issuers consent to the use of the Preliminary Offering Circular and the Offering Circular, and any amendments and supplements thereto, by the Purchasers in connection with Exempt Resales. 8 Each of the Issuers, the Operating Partnerships and the General Partners acknowledge that the Purchasers and, for purposes of the opinions to be delivered to the Purchasers pursuant to Section 6 hereof, counsel to the Issuers, the Operating Partnerships and the General Partners and counsel to the Purchasers will rely upon the accuracy and truth of the foregoing representations and hereby consent to such reliance. 3. Purchase, Sale and Delivery of Offered Securities. On the basis of the representations, warranties and agreements herein contained, but subject to the terms and conditions herein set forth, the Issuers agree to sell to the Purchasers, and the Purchasers agree, severally and not jointly, to purchase from the Issuers, at a purchase price of 99.04% of the principal amount thereof in the respective principal amounts of the Offered Securities as set forth opposite the names of the several Purchasers in Schedule A hereto. The Issuers will deliver against payment of the purchase price the Offered Securities in the form of one or more permanent global securities in definitive form (the "GLOBAL SECURITIES") deposited with the Trustee as custodian for The Depository Trust Issuers ("DTC") and registered in the name of Cede & Co., as nominee for DTC. Interests in any permanent global Securities will be held only in book-entry form through DTC, except in the limited circumstances described in the Offering Document. Payment for the Offered Securities shall be made by the Purchasers by wire transfer of immediately available funds to an account designated by the General Partner at 9:00 A.M. (New York City time), on May 3, 2005, at the offices of Shearman & Sterling LLP, 599 Lexington Avenue, New York, New York 10022, or at such other time or place as CSFB and the Issuers may determine, such time being herein referred to as the "CLOSING DATE", against delivery to the Trustee as custodian for DTC of the Global Securities representing all of the Offered Securities. The Global Securities will be made available for inspection by the Purchasers and their counsel at the above offices at least 24 hours prior to the Closing Date. 4. Representations by Purchasers; Resale by Purchasers. Each Purchaser severally represents and warrants to the Issuers, the Operating Partnerships and the General Partners and agrees that: (a) Each Purchaser is an "accredited investor" within the meaning of Regulation D of the Securities Act. (b) Each Purchaser severally acknowledges that the Offered Securities have not been registered under the Securities Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except in accordance with Regulation S or pursuant to an exemption from the registration requirements of the Securities Act. Each Purchaser severally represents and agrees that it has offered and sold the Offered Securities, and will only offer and sell the Offered Securities (i) as part of its distribution at any time and (ii) otherwise until 40 days after the later of the commencement of the offering and the Closing Date, in accordance with Rule 903 or Rule 144A under the Securities Act. Accordingly, neither such Purchaser nor its affiliates, nor any persons acting on its or their behalf, have engaged or will engage in any directed selling efforts with respect to the Offered Securities, and such Purchaser, its affiliates and all persons acting on its or their behalf have complied and will comply with the offering restrictions requirement of Regulation S. Each Purchaser severally agrees that, at or prior to confirmation of sale of the Offered Securities, other than a sale pursuant to Rule 144A, such Purchaser will have sent to each distributor, dealer or person receiving a selling concession, fee or other remuneration that purchases the Offered Securities from it during the restricted period a confirmation or notice to substantially the following effect: "THE SECURITIES COVERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS (I) AS PART OF THEIR DISTRIBUTION AT ANY TIME OR (II) OTHERWISE UNTIL 40 DAYS AFTER THE LATER OF THE DATE OF THE COMMENCEMENT OF THE OFFERING AND THE CLOSING DATE, 9 EXCEPT IN EITHER CASE IN ACCORDANCE WITH REGULATION S (OR RULE 144A IF AVAILABLE) UNDER THE SECURITIES ACT. TERMS USED ABOVE HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S." Terms used in this subsection (b) have the meanings given to them by Regulation S. (c) Each Purchaser severally agrees that it and each of its affiliates has not entered and will not enter into any contractual arrangement with respect to the distribution of the Offered Securities except for any such arrangements with the other Purchasers or affiliates of the other Purchasers or with the prior written consent of the Issuers. (d) Each Purchaser severally agrees that it and each of its affiliates has not, and will not, offer or sell the Offered Securities in the United States by means of any form of general solicitation or general advertising within the meaning of Rule 502(c) under the Securities Act, including, but not limited to (i) any advertisement, article, notice or other communication published on the internet or in any newspaper, magazine or similar media or broadcast over television or radio, or (ii) any seminar or meeting whose attendees have been invited by any general solicitation or general advertising. Each Purchaser severally agrees, with respect to resales made in reliance on Rule 144A of any of the Offered Securities, to deliver either with the confirmation of such resale or otherwise prior to settlement of such resale a notice to the effect that the resale of such Offered Securities has been made in reliance upon the exemption from the registration requirements of the Securities Act provided by Rule 144A. (e) Each Purchaser severally represents and agrees that (i) it has not offered or sold and prior to the expiry of a period of six months from the closing date, will not offer or sell any Offered Securities to persons in the United Kingdom except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995; (ii) it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000 (the "FSMA")) received by it in connection with the issue or sale of any Offered Securities in circumstances in which section 21(1) of the FSMA does not apply to the Issuers; and (iii) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Offered Securities in, from or otherwise involving the United Kingdom. (f) Each Purchaser severally agrees that, prior to or simultaneously with the confirmation of sale by each of the Purchasers to any purchaser of any of the Offered Securities purchased by the Purchasers from the Issuers pursuant hereto, provided that the Issuers have complied with their obligations under Section 2(mm) hereof, the Purchasers shall furnish to such purchaser a copy of the Offering Circular (and any amendment thereof or supplement thereto that the Issuers shall have furnished to the Purchasers prior to the date of such confirmation of sale). (g) Such Purchasers also understand that the Issuers, the General Partner and, for purposes of the opinions to be delivered to you pursuant to Section 6 hereof, counsel to the Issuers and the General Partner and counsel to the Purchasers will rely upon the accuracy and truth of the foregoing representations and hereby consent to such reliance. 5. Certain Agreements of the Issuers, the Operating Partnerships and the General Partners. The Issuers agree with the several Purchasers that: 10 (a) The Issuers will advise CSFB promptly and, if requested by CSFB, confirm such advice in writing, (i) of any proposal to amend or supplement the Offering Circular and will not effect such amendment or supplementation to the extent that CSFB reasonably objects to such amendment or supplementation after receiving a final draft copy thereof from the Issuers, (ii) of the occurrence of any event that makes any statement of a material fact made in the Offering Circular (or any supplement or amendment thereto) untrue or that requires the making of any additions to or changes in the Offering Circular (or any supplement or amendment thereto) in order to make the statements therein, in light of the circumstances under which they are made, not misleading. The Issuers, the Operating Partnerships and the General Partners shall use their best efforts to prevent the issuance of any stop order or order suspending the qualification or exemption of any of the Offered Securities under any state securities or Blue Sky laws and, if at any time any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption of any of the Offered Securities under any state securities or Blue Sky laws, the Issuers, the Operating Partnerships and the General Partners shall use their best efforts to obtain the withdrawal or lifting of such order at the earliest possible time. (b) The Issuers will furnish to CSFB copies of any Preliminary Offering Circular, the Offering Circular and all amendments and supplements to such documents, in each case as soon as available and in such quantities as CSFB may reasonably request. At any time when the Issuers are not subject to Section 13 or 15(d) of the Exchange Act, the Issuers will promptly furnish or cause to be furnished to CSFB (and, upon request, to each of the other Purchasers) and, upon request of holders and prospective purchasers of the Offered Securities, to such holders and purchasers, copies of the information required to be delivered to holders and prospective purchasers of the Offered Securities pursuant to Rule 144A(d)(4) under the Securities Act (or any successor provision thereto) in order to permit compliance with Rule 144A in connection with resales by such holders of the Offered Securities. The Issuers will pay the expenses of printing and distributing to the Purchasers all such documents. (c) The Issuers will arrange for the qualification of the Offered Securities for sale and the determination of their eligibility for investment under the laws of such jurisdictions in the United States and Canada as CSFB designates and will continue such qualifications in effect so long as required for the resale of the Offered Securities by the Purchasers, provided that the Issuers will not be required to qualify as a foreign corporation or to file a general consent to service of process in any such state. (d) During the period of two years after the Closing Date, the Issuers will, upon request, furnish to CSFB, each of the other Purchasers and any holder of Offered Securities a copy of the restrictions on transfer applicable to the Offered Securities. (e) During the period of two years after the Closing Date, the Issuers will not, and will not permit any of their affiliates (as defined in Rule 144) to, resell any of the Offered Securities that have been reacquired by any of them. (f) Whether or not the transactions contemplated by this Agreement are consummated or this Agreement becomes effective or is terminated, to pay all costs, expenses, fees and taxes incident to and in connection with: (i) the preparation, printing, filing and distribution of the Preliminary Offering Circular and the Offering Circular (including, without limitation, financial statements and exhibits) and all amendments and supplements thereto, (ii) the printing (or reproduction) and delivery of this Agreement and the Operative Documents and all preliminary and final Blue Sky memoranda and all other agreements, memoranda, correspondence and other documents prepared and delivered in connection herewith and with the Exempt Resales, (iii) the issuance and delivery by the Issuers of the Offered Securities, (iv) the registration or qualification 11 of the Offered Securities for offer and sale under the securities or Blue Sky laws of the several states (including, without limitation, the reasonable fees up to $3,000 and disbursements of your counsel relating to such registration or qualification), (v) furnishing such copies of the Preliminary Offering Circular and the Offering Circular and all amendments and supplements thereto, as may be reasonably requested for use in connection with Exempt Resales, (vi) the preparation and authentication of certificates for the Offered Securities, (vii) the fees, disbursements and expenses of the Issuers', the Operating Partnerships', and the General Partner's counsel and accountants, (viii) all expenses and listing fees in connection with the application for quotation of the Offered Securities in the National Association of Securities Dealers, Inc. ("NASD") Automated Quotation System -- PORTAL(SM) ("PORTAL"), (ix) all fees and expenses (including fees and expenses of counsel) of the Issuers and the General Partner in connection with approval of the Offered Securities by DTC for "book-entry" transfer, (x) the performance by the Issuers, the Operating Partnerships and the General Partners of their other obligations under this Agreement and the other Operative Documents and (xi) the transportation and other expenses incurred by or on behalf of officers and employees of the General Partner, in connection with presentations to prospective QIBs and Regulation S Purchasers (collectively, "ELIGIBLE PURCHASERS") of the Offered Securities. It is understood that, except as otherwise provided in this Agreement, the Purchasers will pay all their own costs and expenses, including the fees of their counsel, transfer taxes on any Exempt Resales of the Offered Securities by the Purchasers and any advertising expenses connected with any offer they make and the transportation and other expenses incurred by the Purchasers in connection with presentations to prospective Eligible Purchasers of the Offered Securites. (g) In connection with the offering, until CSFB shall have notified the Issuers and the other Purchasers of the completion of the resale of the Offered Securities, neither the Issuers nor any of their affiliates has or will, either alone or with one or more other persons, bid for or purchase for any account in which it or any of its affiliates has a beneficial interest any Offered Securities or attempt to induce any person to purchase any Offered Securities; and neither it nor any of its affiliates will make bids or purchases for the purpose of creating actual, or apparent, active trading in, or of raising the price of, the Offered Securities. (h) To use the proceeds from the sale of the Offered Securities in the manner described in the Offering Circular (and any supplements or amendments thereto) under the caption "Use of Proceeds." (i) Not to claim voluntarily the benefit of any usury laws against the holders of any Offered Securities. (j) To do and perform all things required to be done and performed under this Agreement by them prior to or after the Closing Date and to satisfy all conditions precedent on their part to the delivery of the Offered Securities. (k) Not to sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in the Securities Act) that would be integrated with the sale of the Offered Securities in a manner that would require the registration under the Securities Act of the sale to you or the Eligible Purchasers of the Offered Securities. (l) For so long as any of the Offered Securities remain outstanding and during any period in which the Issuers are not subject to Section 13 or 15(d) of the Exchange Act, to make available to any QIB or beneficial owner of Offered Securities in connection with any sale thereof and any prospective purchaser of such Offered Securities from such QIB or beneficial owner, the information required by Rule 144A(d)(4) under the Securities Act. 12 (m) During the period beginning on the date hereof and continuing to and including the Closing Date, not to offer, sell, contract to sell or otherwise transfer or dispose of any debt securities of the Issuers or any warrants, rights or options to purchase or otherwise acquire debt securities of the Issuers substantially similar to the Offered Securities (other than the Offered Securities), without the prior written consent of the Purchasers. (n) To comply with all of its agreements set forth in the Registration Rights Agreement, and all agreements set forth in the representation letter of the Issuers to DTC relating to the approval of the Offered Securities by DTC for "book-entry" transfer. (o) To use reasonable efforts to assist the Purchasers in effecting the inclusion of the Offered Securities in PORTAL. (p) During a period of two years following the date of this Agreement, to deliver to each of you promptly upon their becoming available, from time to time such publicly available and released information concerning the Issuers, the Operating Partnerships and the General Partners (the "PUBLIC INFORMATION") as you may reasonably request. For purposes of this Section 5(p), the availability of the Public Information on the Commission's Electronic Data Gathering Analysis and Retrieval ("EDGAR") system or any national news-wire system shall be deemed delivery to each of you of such Public Information. (q) If this Agreement shall be terminated pursuant to any of the provisions hereof (other than by reason of a default by a Purchaser or by notice given by you terminating this Agreement pursuant to Section 9) or if for any reason the Issuers shall be unable or unwilling to consummate this offering, to reimburse the Purchasers for the fees and expenses to be paid or reimbursed pursuant to Section 4(f) above, and to reimburse the Purchasers for all reasonable out-of-pocket expenses (including the reasonable fees and expenses of counsel to the Purchasers) incurred by the Purchasers in connection with (i) the preparation of the Preliminary Offering Circular, the Offering Circular and the Operative Documents and (ii) the offering and sale of the Offered Securities. Notwithstanding any termination of this Agreement, the Issuers and the General Partner shall be liable for all expenses which they have agreed to pay pursuant to Section 4(f) hereof. (r) Not to distribute prior to the Closing Date any prospectus (as defined under the Securities Act) in connection with the offering and sale of the Offered Securities other than the Preliminary Offering Circular and the Offering Circular, or other material, if any, permitted by the Securities Act, including Rule 134 of the general rules and regulations promulgated thereunder. 6. Conditions of the Obligations of the Purchasers. The obligations of the several Purchasers to purchase and pay for the Offered Securities will be subject to the accuracy of the representations and warranties on the part of the Issuers, Operating Partnerships and the General Partners contained herein, to the accuracy of the statements of officers of the Issuers, the Operating Partnerships and the General Partners made pursuant to the provisions hereof, to the performance by the Issuers, the Operating Partnerships and the General Partner of their obligations hereunder and to each of the following additional conditions precedent: (a) All of the representations and warranties of the Issuers, the Operating Partnerships and the General Partners contained in this Agreement shall be true and correct on the date hereof and on the Closing Date with the same force and effect as if made on and as of the date hereof and the Closing Date, respectively. The Issuers, the Operating Partnerships and the General Partners shall have in all material respects performed or complied with all of the agreements herein contained and required to be performed or complied with by them at or prior to the Closing Date. 13 (b) The Offering Circular shall have been finalized not later than 6:00 p.m., New York City time, two business days before the Closing Date, and on the Closing Date no stop order suspending the qualification or exemption from qualification of any of the Offered Securities in any jurisdiction referred to in Section 4(f) shall have been issued and no proceeding for that purpose shall have been commenced or to the knowledge or the Issuers, the Operating Partnerships, or the General Partners shall be pending or threatened. (c) No action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any governmental agency which would, as of the Closing Date, prevent the issuance of any of the Offered Securities. (d) On or after the date hereof, (i) there shall not have occurred any downgrading, suspension or withdrawal of, nor shall any notice have been given of any potential or intended downgrading, suspension or withdrawal of, or any review (or of any potential or intended review) for a possible change that does not indicate the direction of the possible change in, any rating of the Issuers, the General Partners or the Operating Partnerships or any securities of the Issuers, the General Partners or the Operating Partnerships (including, without limitation, the placing of any of the foregoing ratings on credit watch with negative or developing implications or under review with an uncertain direction) by any "nationally recognized statistical rating organization" as such term is defined for purposes of Rule 436(g)(2) under the Act, (ii) there shall not have occurred any change, nor shall any notice have been given of any potential or intended change, in the outlook for any rating of the Issuers, the General Partners or the Operating Partnerships or any securities of the Issuers, the General Partners or the Operating Partnerships by any such rating organization and (iii) no such rating organization shall have given notice that it has assigned (or is considering assigning) a lower rating to the Offered Securities than that on which the Offered Securities were marketed. (e) Since the dates as of which information is given in the Offering Circular, other than as set forth in the Offering Circular (exclusive of any amendments or supplements thereto subsequent to the date of this Agreement) (i) there shall not have occurred any material adverse change in the partners' capital or capital stock of either of the Issuers, the Operating Partnerships or the General Partners, as the case may be, nor any material increase in the long-term debt of either of the Issuers, the Operating Partnerships, the General Partners (ii) there shall not have been any material adverse change or development involving a prospective change in or affecting the financial condition, business, properties, results of operations or prospects of the Issuers and the Operating Partnerships taken as a whole, the General Partners, and (iii) none of the Issuers, the General Partner or the Operating Partnerships shall have incurred any liability or obligation, direct or contingent, the effect of which, in any such case described in this paragraph 6(e), in your judgment, is material and adverse and, in your judgment, makes it impracticable to market the Offered Securities on the terms and in the manner contemplated in the Offering Circular. (f) You shall have received certificates, dated the Closing Date, signed by (i) the President or any Vice President and (ii) a principal financial or accounting officer of the Finance Corp. and of the General Partners confirming, as of the Closing Date, the matters set forth in paragraphs (a), (b), (c) and (d) of this Section 6. (g) (A) You shall have received an opinion, dated the Closing Date and addressed to you, of Morgan, Lewis & Bockius LLP, special counsel to the Issuers, the Operating Partnerships and the General Partners to the effect that: (i) Finance Corp. is a corporation validly existing and in good standing under the laws of the jurisdiction of its organization, with all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted; 14 (ii) The General Partner is a corporation duly incorporated and presently subsisting under the laws of the jurisdiction of its organization, with all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted and to act as general partner of the Partnership and AmeriGas Propane; (iii) Eagle General Partner is a corporation duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its organization, with all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted and to act as general partner of AmeriGas Eagle; (iv) Each of the Partnership and the Operating Partnerships has been duly formed and each of the Partnership and the Operating Partnerships is validly existing as a limited partnership under the Delaware Act, with full partnership power and authority to own or lease, as the case may be, and to operate its properties and conduct its respective businesses as described in the Offering Circular; (v) The Issuers, the Operating Partnerships and the General Partners have all requisite corporate and partnership power and authority to execute, deliver and perform their respective obligations under this Agreement and the Indenture, and to consummate the transactions contemplated herein and therein, including, without limitation, the corporate or partnership power to issue, sell and deliver the Offered Securities as provided herein; (vi) Assuming (A) that each of the Eligible Purchasers is a QIB or a Regulation S Purchaser, (B) the accuracy of your representations regarding the absence of general solicitation in connection with the sale of the Offered Securities to you and the Exempt Resales contained herein and (C) the accuracy of the Purchasers' representations contained herein, it is not necessary in connection with the offer, sale and delivery of the Offered Securities to the Purchasers or in connection with the initial resale of such Offered Securities by the Purchasers, in each case in the manner contemplated by this Agreement and the Offering Circular, to register the Offered Securities under the Securities Act or to qualify the Indenture under the Trust Indenture Act, it being understood that no opinion is expressed as to any subsequent resale of the Offered Securities; (vii) The statements in the Offering Circular under the caption "Description of the Senior Notes," insofar as they constitute descriptions of the Indenture, the Offered Securities and the Registration Rights Agreement or refer to statements of law or legal conclusions under New York, Delaware corporate or partnership or federal law (except for the Federal Motor Carrier Safety Act and any state or municipal fire safety codes, as to which such counsel need not express any opinion), constitute fair summaries thereof in all material respects; (viii) No consent, approval, waiver, license or authorization, or other action by any New York, Delaware or federal governmental authority is required in connection with the issuance and sale of the Offered Securities by the Issuers or for the consummation by each of the Issuers, the Operating Partnerships and the General Partners of their obligations under this Agreement, the Indenture, the Offered Securities or the Registration Rights Agreement, except in each case such consents, approvals, waivers, licenses and other actions (1) as may be required under federal or state securities or Blue Sky laws (as to which, such counsel need not express any opinion), or (2) which, if not obtained, would not have a material adverse effect upon the financial condition, business or results of operations of the Issuers and the Operating Partnerships, taken as a whole, or the General Partners; (ix) This Agreement has been duly authorized and validly executed and delivered by each of the Partnership Entities; 15 (x) None of the Issuers, or the Operating Partnerships or the General Partners is an "investment company" or a company "controlled by" an "investment company" as such terms are defined in the Investment Company Act of 1940, as amended; (xi) The execution and delivery of this Agreement by Finance Corp. and the consummation by the Issuers, the Operating Partnerships and the General Partners of the transactions contemplated hereby will not conflict with, constitute a default under or violate (i) any of the terms, conditions or provisions of the certificate of incorporation or bylaws of Finance Corp., (ii) any of the terms, conditions or provisions of any document, agreement or other instrument known to such counsel to which either of the Issuers, the Operating Partnerships or the General Partners is a party or by which any of such entities is bound (other than as described in the Offering Circular and except for documents, agreements or other instruments that will be extinguished on the Closing Date), (iii) any New York, Delaware corporate or partnership or federal law or regulation (assuming compliance with all applicable federal and state securities or Blue Sky laws and assuming the receipt of all consents, approvals, waivers, licenses and other actions referred to in clause (2) of Section 6(g)(A)(viii) above, as to which such counsel need not express any opinion) or (iv) any judgment, writ, injunction, decree, order or ruling known to such counsel applicable to either of the Issuers, the Operating Partnerships or the General Partners, except for such conflicts, breaches and defaults which would not have a material adverse effect on the financial condition, business, properties or results of operations of the Partnership and the Operating Partnerships, taken as a whole; (xii) The Indenture has been duly and validly authorized, executed and delivered by each of the Issuers and (assuming the due authorization, execution and delivery thereof by the Trustee) and constitutes the legal, valid and binding obligation of each such person, enforceable against each such person in accordance with its terms, subject (A) to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws relating to or affecting creditors' rights and remedies generally and (B) as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing, regardless of whether enforcement is sought in a proceeding at law or in equity, and except (x) to the extent that a waiver of rights under any usury laws may be unenforceable and (y) that rights to indemnification and contribution thereunder may be limited by federal or state securities laws or public policy relating thereto; (xiii) The issuance and sale of the Offered Securities have been duly and validly authorized by each of the Issuers and, when issued and authenticated in accordance with the terms of the Indenture by the Issuers and paid for by the Purchasers in accordance with the provisions of the Agreement and the Offering Circular and authenticated by the Trustee, will constitute the legal, valid and binding obligations of the Issuers, enforceable against the Issuers in accordance with their terms and entitled to the benefits of the Indenture, subject (A) to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws relating to or affecting creditors' rights and remedies generally and (B) as to enforceability to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing, regardless of whether enforcement is sought in a proceeding at law or in equity, and except to the extent that a waiver of rights under any usury laws may be unenforceable; (xiv) The Registration Rights Agreement has been duly and validly authorized by each of the Issuers and, when duly executed and delivered by each of the Issuers, will constitute the legal, valid and binding obligation of each such person enforceable against each of the Issuers in accordance with its terms, subject (A) to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws relating to or affecting creditors' rights and remedies generally and (B) as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing, regardless of whether 16 enforcement is sought in a proceeding at law or in equity, and except (x) to the extent that a waiver of rights under any usury laws may be unenforceable and (y) that rights to indemnification and contribution thereunder may be limited by federal or state securities laws or public policy relating thereto; (xv) Neither the execution and delivery of this Agreement by the General Partner nor the consummation by the General Partner of any of the transactions contemplated hereby, will conflict with, constitute a default under or violate any of the terms, conditions or provisions of the articles of incorporation or by-laws of the General Partner; and (xvi) To the knowledge of such counsel, there is no pending or threatened action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Partnership Entities or any of their property of a character required to be disclosed in the Offering Circular, and, to the knowledge of such counsel, there is no contract or other document of a character required to be described in the Offering Circular, or to be filed as an exhibit thereto, which is not described or filed as required; and the statements in the Partnership's Annual Report on Form 10-K for its fiscal year ended September 30, 2004 under the heading "Business - Government Regulation," which are incorporated by reference in the Offering Circular, insofar as such statements summarize legal matters, agreements, documents or proceedings discussed therein, are accurate and fair summaries of such legal matters, agreements, documents or proceedings as of the filing date of the Partnership's Annual Report on Form 10-K for its fiscal year ended September 30, 2004, and, to the knowledge of such counsel, such summaries are accurate and fair summaries as of the Closing Date in all material respects, except with respect to the Federal Motor Carrier Safety Act and any state or municipal fire safety codes, as to which such counsel need not express any opinion. In addition, such counsel shall state that it has participated in conferences with directors, officers and other representatives of the General Partner and Finance Corp. and representatives of the independent public accountants for each of the Issuers, the Operating Partnerships and the General Partners at which conferences the contents of the Preliminary Offering Circular and the Offering Circular and related matters were discussed, and that, although such counsel has not independently verified and need not pass upon, or assume responsibility for, the accuracy, completeness or fairness of the statements contained in the Preliminary Offering Circular and the Offering Circular (except to the extent specified in the foregoing opinion), no facts have come to such counsel's attention which lead such counsel to believe that the Preliminary Offering Circular, on the date thereof, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements contained therein not misleading or that the Offering Circular, on the date thereof or on the date of such opinion, contained or contains an untrue statement of a material fact or omitted or omits to state a material fact required to be stated therein or necessary to make the statements contained therein, in light of the circumstances under which they were made, not misleading (it being understood that such counsel need not express any view with respect to the financial statements and related notes, the financial statement schedules and the other financial, statistical and accounting data included in, or incorporated by reference into, the Preliminary Offering Circular and the Offering Circular). In rendering their opinions as aforesaid, such counsel may rely upon an opinion or opinions, each dated the Closing Date, of other counsel retained by them or either of the Issuers, the Operating Partnerships or the General Partners as to laws of any jurisdiction other than the United States or the States of New York and Delaware; provided that (1) each such local counsel is reasonably acceptable to you and (2) such reliance is expressly authorized by each opinion so relied upon and a copy of each such opinion is delivered to you and is, in form and substance, reasonably satisfactory to you and your counsel. In rendering such opinion, such counsel may (A) rely in respect of matters of fact upon certificates (original counterparts of which shall be furnished to you) of the Partnership and the Operating Partnerships 17 and of officers and employees of the Partnership, Finance Corp., and the General Partners and upon information obtained from public officials, (B) rely wholly upon (without independent investigation) opinions of other counsel issued in connection with the Transactions, (C) state that their opinion is limited to federal laws, New York law, Pennsylvania law, the Delaware Act and the Delaware General Corporation Law, (D) assume that all documents submitted to them as originals are authentic, that all copies submitted to them conform to the originals thereof, and that the signatures on all documents examined by such counsel are genuine, (E) state that they express no opinion with respect to the title of any of the General Partners, the Partnership, the Operating Partnerships or any of their affiliates to any real or personal property transferred by or to them and (F) state that they express no opinion with respect to state or local taxes or tax statutes to which any of the limited partners of the Partnership or the Operating Partnerships may be subject; (h) You shall have received an opinion, dated the Closing Date, of Shearman & Sterling LLP, your counsel, in form and substance reasonably satisfactory to you, covering such matters as are customarily covered in such opinions. (i) At the time this Agreement is executed and delivered by the Issuers, the Operating Partnerships and the General Partners, and on the Closing Date, you shall have received letters, substantially in the form previously approved by you, from PricewaterhouseCoopers LLP, independent public accountants, substantially in the forms heretofore approved by you. (j) Prior to the Closing Date, the Issuers, the Operating Partnerships and the General Partners shall have furnished to you such further information, customary certificates and documents as you may reasonably request. (k) The Issuers and the Trustee shall have entered into the Indenture and you shall have received counterparts, conformed as executed, thereof. (l) The Issuers shall have entered into the Registration Rights Agreement and you shall have received counterparts, conformed as executed, thereof. All opinions, certificates, letters and other documents required by this Section 6 to be delivered by the Issuers, the Operating Partnerships and the General Partners will be in compliance with the provisions hereof only if they are reasonably satisfactory in form and substance to you. The Issuers will furnish you with such conformed copies of such opinions, certificates, letters and other documents as you shall reasonably request. Any certificate or document signed by any officer of either of the Issuers, the Operating Partnerships or the General Partners and delivered to you or to your counsel, shall be deemed a representation and warranty by either of the Issuers, the Operating Partnerships or the General Partners to you as to the statements made therein. 7. Indemnification and Contribution. (a) The Issuers, the Operating Partnerships and the General Partners, jointly and severally, agree to indemnify and hold harmless (i) each of the Purchasers and (ii) each person, if any, who controls (within the meaning of Section 15 of the Act or Section 20 of the Exchange Act) the Purchasers (any of the persons referred to in this clause (ii) being hereinafter referred to as a "CONTROLLING PERSON") and (iii) the respective officers, directors, partners, employees, representatives and agents of each of the Purchasers or any controlling person (any person referred to in clause (i), (ii) or (iii) may hereinafter be referred to as an "INDEMNIFIED PERSON") to the fullest extent lawful, from and against any and all losses, claims, damages, liabilities, judgments, actions and reasonable expenses (including without limitation and as incurred, reimbursement of all reasonable costs of investigating, preparing, pursuing or defending any claim or action, or any investigation or proceeding by any governmental agency or body, commenced or threatened, including the reasonable fees and expenses of counsel to any Indemnified Person) directly or indirectly caused by, related to, based upon, arising out of or in connection with any untrue statement or alleged untrue statement of a material fact contained in the 18 Preliminary Offering Circular or the Offering Circular, or any amendment or supplement thereto, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages, liabilities or expenses are caused by an untrue statement or omission or alleged untrue statement or omission that is made in reliance upon and in conformity with information furnished in writing to the Issuers or the General Partner by or on behalf of such Purchaser expressly for use therein, it being understood that the only information heretofore furnished by or on behalf of the Purchasers consists of the information described as such in the second paragraph of subsection (c) below and provided, further, that with respect to any untrue statement or omission of material fact made in the Preliminary Offering Circular, the indemnity agreement contained in this Section 7(a) shall not inure to the benefit of the Purchasers from whom the person asserting any such loss, claim, damage or liability purchased the Offered Securities concerned, to the extent that any such loss, claim, damage or liability of such Purchaser occurs under the circumstance where it shall have been determined by a court of competent jurisdiction that (A) the Issuers had previously furnished copies of the Offering Circular to such Purchaser, (B) delivery of the Offering Circular was required by the Securities Act to be made to such person, (C) the untrue statement or omission of a material fact contained in the Preliminary Offering Circular was corrected in the Offering Circular and (D) there was not sent or given to such person, at or prior to the written confirmation of the sale of such securities to such person, a copy of the Offering Circular. The Issuers, the General Partners and the Operating Partnerships shall notify you promptly of the institution, threat or assertion of any claim, proceeding (including any governmental investigation) or litigation in connection with the matters addressed by this Agreement which involves the Issuers, the General Partners, the Operating Partnerships or an Indemnified Person. (b) In case any action or proceeding (including any governmental investigation) shall be brought or asserted against any of the Indemnified Persons with respect to which indemnity may be sought against the Issuers, the General Partners or the Operating Partnerships, such Indemnified Person shall promptly notify the Issuers, the Operating Partnerships and the General Partners in writing (provided, that the failure to give such notice shall not relieve the Issuers, the General Partners or the Operating Partnerships of their obligations pursuant to this Agreement unless each of the Issuers, the Operating Partnerships and the General Partners is foreclosed by reason of such failure from asserting a defense otherwise available to it). Such Indemnified Person shall have the right to employ separate counsel in any such action, suit or proceeding and to participate in (but not control) the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person, rather than the Issuers, the Operating Partnerships or the General Partners, as the case may be, unless (i) the Partnership has agreed in writing to pay such fees and expenses, (ii) the Issuers, the Operating Partnerships and the General Partners have failed to assume the defense and employ counsel or (iii) the named parties to any such action, suit or proceeding (including any impleaded parties) include both such Indemnified Person and the Issuers, the Operating Partnerships or the General Partners, and such Indemnified Person shall have been advised by its counsel that representation of such Indemnified Person and the Issuers, the Operating Partnerships or the General Partners, as the case may be, by the same counsel would be inappropriate under applicable standards of professional conduct (whether or not such representation by the same counsel has been proposed) due to actual or potential differing interests between them (in which case the Issuers, the Operating Partnerships or the General Partners shall not have the right to assume the defense of such action, suit or proceeding on behalf of such Indemnified Person). The Issuers, the Operating Partnerships and the General Partners shall not, in connection with any one such action or proceeding or separate but substantially similar or related actions or proceedings in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) at any time for the Indemnified Persons, which firm shall be designated by CSFB. The Issuers, the Operating Partnerships and the General Partners shall be liable for any settlement of any such action or proceeding effected with the prior written consent of the Issuers, the Operating Partnerships and the General Partners, and the Issuers, the Operating Partnerships and the General Partners, jointly and severally, agree to indemnify and hold harmless any Indemnified Person from and against any loss, claim, damage, liability or expense by reason of any settlement of any action effected with the written consent of the Issuers, the Operating Partnerships and the General Partners. 19 Notwithstanding the immediately preceding sentence, if at any time an Indemnified Person shall have requested an indemnifying party to reimburse the Indemnified Person for fees and expenses of counsel as contemplated by the second sentence of this paragraph, the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected without its written consent (unless such consent has been reasonably withheld) if (i) such settlement is entered into more than twenty business days after receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have reimbursed the Indemnified Person in accordance with such request prior to the date of such settlement (unless the right to such reimbursement shall have been previously disputed in good faith). The Issuers, the Operating Partnerships and the General Partners shall not, without the prior written consent of an Indemnified Person, settle or compromise or consent to the entry of judgment in or otherwise seek to terminate any pending or threatened action, claim, litigation or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not any Indemnified Person is a party thereto), unless such settlement, compromise, consent or termination includes a release of such Indemnified Person from all liability arising out of such action, claim, litigation or proceeding to at least the same extent as any release of the Issuers, the Operating Partnerships or the General Partners obtained in connection with such settlement. (c) Each of the Purchasers agrees, severally and not jointly, to indemnify and hold harmless the Issuers, the Operating Partnerships and the General Partners, and their respective directors, officers, partners, employees or representatives and any person controlling (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) the Issuers, the Operating Partnerships or the General Partners, and the respective officers, directors, partners, employees, representatives and agents of each such person, to the same extent as the foregoing indemnity from the Issuers, the Operating Partnerships and the General Partners to each of the Indemnified Persons, but only with respect to claims and actions based on information furnished in writing by or on behalf of such Purchaser to the Issuers and the General Partners expressly for use in the Offering Circular. The names of the Purchasers on the cover page of the Offering Circular, the first paragraph on page ii of the Offering Circular (regarding stabilization and over-allotment by the Purchasers) and the first, second, third, fifth, seventh and eighth paragraphs under the caption "Plan of Distribution" (regarding the terms of the offering by the Purchasers) constitute the only information heretofore furnished to the Issuers and the General Partner in writing by any Purchaser expressly for use in the Preliminary Offering Circular or the Offering Circular, or any amendment or supplement thereto. (d) If the indemnification provided for in this Section 7 is unavailable to an indemnified party in respect of any losses, claims, damages, liabilities or expenses referred to herein, then each indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities and expenses (i) in such proportion as is appropriate to reflect the relative benefits received by the indemnifying party on the one hand and the indemnified party on the other hand from the offering of the Offered Securities or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the indemnifying party and the indemnified party, as well as any other relevant equitable considerations. The relative benefits received by the Issuers, the Operating Partnerships and the General Partners, on the one hand, and the Purchasers, on the other hand, shall be deemed to be in the same proportion as the total proceeds from the offering of the Offered Securities (net of commissions but before deducting expenses) received by the Issuers and the total discounts and commissions received by the Purchasers bear to the total price of the Offered Securities, in each case as set forth on the cover page of the Offering Circular. The relative fault of the Issuers, the Operating Partnerships and the General Partners, on the one hand, and the Purchasers, on the other hand, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact related to information supplied by the Issuers, the Operating Partnerships or the General Partners, on the one hand, and the Purchasers, on the other hand, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The indemnity set forth 20 herein shall be in addition to any liability or obligation the Issuers, the Operating Partnerships and the General Partners may otherwise have to any Indemnified Person. The Issuers, the Operating Partnerships, the General Partners and the Purchasers agree that it would not be just and equitable if contribution pursuant to this Section 7(d) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities or expenses referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 7, neither the Purchasers nor the related Indemnified Persons shall be required to contribute, in the aggregate, any amount in excess of the amount by which the total discounts and commissions received by the Purchasers with respect to the Offered Securities exceeds the amount of any damages which the Purchasers have otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. (e) The Issuers, the Operating Partnerships and the General Partners hereby designate Corporation Service Company, 80 State Street, Albany, New York as their authorized agent upon whom process may be served in any action, suit or proceeding that may be instituted in any state or federal court in the State of New York by a Purchaser or any person controlling the Purchaser asserting a claim for indemnification or contribution under or pursuant to this Section 7, and the Issuers, the Operating Partnerships and the General Partners will accept the jurisdiction of such court in such action, and waive, to the fullest extent permitted by applicable law, any defense based upon lack of personal jurisdiction or venue. A copy of any such process shall be sent or given to the Issuers, the Operating Partnerships and the General Partners at the address for notices specified in Section 10 hereof. 8. Default of Purchasers. If, on the Closing Date, any of the Purchasers shall fail or refuse to purchase Offered Securities that it has agreed to purchase hereunder on such date, and the aggregate principal amount of such Offered Securities that such defaulting Purchaser agreed but failed or refused to purchase does not exceed 10% of the total principal amount of such Offered Securities that the Purchasers are obligated to purchase on such Closing Date, the non-defaulting Purchaser shall be obligated to purchase the amount of such Offered Securities that such defaulting Purchaser agreed but failed or refused to purchase. If, on the Closing Date, a Purchaser shall fail or refuse to purchase the Offered Securities in an aggregate principal amount that exceeds 10% of such total principal amount and arrangements satisfactory to the other Purchaser or Purchasers and the Issuers for the purchase of such Offered Securities are not made within 48 hours after such default, this Agreement shall terminate without liability on the part of the non-defaulting Purchaser or the Issuers and the General Partner, except as otherwise provided in Section 9. In any such case that does not result in termination of this Agreement, the Purchasers or the Issuers may postpone the Closing Date for not longer than seven (7) days, in order that the required changes, if any, in the Offering Circular or any other documents or arrangements may be effected. Any action taken under this paragraph shall not relieve a defaulting Purchaser from liability in respect of any default by any such Purchaser under this Agreement. 9. Effective Date of Agreement and Termination. This Agreement shall become effective upon the execution hereof. This Agreement may be terminated at any time on or prior to the Closing Date by you by notice to the Issuers if any of the following has occurred: (i) any outbreak or escalation of hostilities or other national or international or domestic calamity or crisis or material adverse change in the financial markets of the United States, or any other substantial national or international calamity or emergency if the effect of such outbreak, escalation, calamity, crisis, material adverse change or emergency would, in your judgment, 21 make it impracticable or inadvisable to market any of the Offered Securities or to enforce contracts for the sale of any of the Offered Securities, in either case on the terms and in the manner contemplated in the Offering Circular, (ii) any suspension or limitation of trading generally in securities on the New York Stock Exchange or the PORTAL market or any setting of minimum prices for trading on such exchange or market, (iii) the suspension of trading of any securities of the Partnership in any exchange or in the over-the-counter market, (iv) any declaration of a general moratorium by either federal or New York authorities, (v) the taking of any action by any federal or state government or agency in respect of its monetary or fiscal affairs that in your judgment has a material adverse effect on the financial markets in the United States, and would, in your judgment, make it impracticable or inadvisable to market any of the Offered Securities or to enforce contracts for the sale of any of the Offered Securities or (vi) the enactment, publication, decree or other promulgation of any federal or state statute, regulation, rule or order of any court or other federal or state governmental authority which, in your judgment, would have a Material Adverse Effect on the Issuers and the Operating Partnerships, taken as a whole, or the General Partners. The indemnities and contribution provisions and the other agreements, representations and warranties of the Issuers, the Operating Partnerships and the General Partners, their respective officers and directors and of the Purchasers set forth in or made pursuant to this Agreement shall remain operative and in full force and effect, and will survive delivery of and payment for the Offered Securities, regardless of (i) any investigation, or statement as to the results thereof, made by or on behalf of any of the Purchasers or by or on behalf of the Issuers, the Operating Partnerships and the General Partners, the officers or directors of either of the Issuers, the Operating Partnerships or the General Partners or controlling person of any of the Issuers, the Operating Partnerships or the General Partners, (ii) acceptance of the Offered Securities and payment for them hereunder and (iii) termination of this Agreement. Except as otherwise provided, this Agreement has been and is made solely for the benefit of and shall be binding upon the Issuers, the Operating Partnerships, the General Partners, the Purchasers, any Indemnified Person referred to herein and their respective successors and assigns, all as and to the extent provided in this Agreement, and no other person shall acquire or have any right under or by virtue of this Agreement. The term "successors and assigns" shall not include a purchaser of any of the Offered Securities from any of the Purchasers merely because of such purchase. 10. Notices. All communications hereunder will be in writing and, if sent to the Purchasers will be mailed, delivered or telegraphed and confirmed to the Purchasers c/o Credit Suisse First Boston LLC, Eleven Madison Avenue, New York, NY 10010-3629, Attention: Transaction Advisory Group; with a copy to Shearman & Sterling LLP, 599 Lexington Avenue, New York, NY 10022, Attention: Marwan Elaraby, or, if sent to the Issuers, the Operating Partnerships or the General Partners, will be mailed, delivered or telegraphed and confirmed to it at the office of the Partnership at 460 North Gulph Road, King of Prussia, PA 19406, Attention: Robert H. Knauss, Vice President and General Counsel; with a copy to Morgan, Lewis & Bockius LLP, 1111 Pennsylvania Avenue, NW, Washington, DC 20004, Attention: Linda Griggs; provided, however, that any notice to a Purchaser pursuant to Section 7 will be mailed, delivered or telegraphed and confirmed to such Purchaser. 11. Successors. This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and the controlling persons referred to in Section 7, and no other person will have any right or obligation hereunder, except that holders of Offered Securities shall be entitled to enforce the agreements for their benefit contained in the second and third sentences of Section 5(b) hereof against the Issuers as if such holders were parties thereto. 12. Representation of Purchasers. You will act for the several Purchasers in connection with this purchase, and any action under this Agreement taken by you jointly or by CSFB will be binding upon all the Purchasers. 22 13. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same Agreement. 14. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. [Remainder of Page Left Intentionally Blank] 23 If the foregoing is in accordance with the Purchasers' understanding of our agreement, kindly sign and return to us one of the counterparts hereof, whereupon it will become a binding agreement between the Issuers and the several Purchasers in accordance with its terms. Very truly yours, AMERIGAS PARTNERS, L.P. By: AmeriGas Propane, Inc., its general partner By:_______________________________ Name: Robert W. Krick Title: Treasurer AMERIGAS FINANCE CORP. By:_______________________________ Name: Robert W. Krick Title: Treasurer AMERIGAS PROPANE, INC. By:_______________________________ Name: Robert W. Krick Title: Treasurer AMERIGAS PROPANE, L.P. By: AmeriGas Propane, Inc., its general partner By:_______________________________ Name: Robert W. Krick Title: Treasurer AMERIGAS EAGLE PROPANE, L.P. By: AmeriGas Eagle Holdings, Inc., its general partner By:_______________________________ Name: Robert W. Krick Title: Treasurer AMERIGAS EAGLE HOLDINGS, INC. By:_______________________________ Name: Robert W. Krick Title: Treasurer The foregoing Purchase Agreement is hereby confirmed and accepted as of the date first above written. CREDIT SUISSE FIRST BOSTON LLC Acting on behalf of itself and as the Representative of the several Purchasers By CREDIT SUISSE FIRST BOSTON LLC By:_____________________________ Name: Title: SCHEDULE A
PRINCIPAL AMOUNT OF MANAGER OFFERED SECURITIES ------- ------------------- Credit Suisse First Boston LLC........................................ $ 290,500,000 Citigroup Global Markets Inc.......................................... $ 62,250,000 Wachovia Capital Markets, LLC......................................... $ 62,250,000 ------------------- Total....................................... $ 415,000,000 ===================
EX-10.3 4 w07598exv10w3.txt FORM OF CONFIDENTIALITY AND POST-EMPLOYMENT ACTIVITIES AGREEMENT FORM OF CONFIDENTIALITY AND POST-EMPLOYMIENT ACTIVITIES AGREEMENT A. I, _______________, the undersigned employee, have been hired/promoted into the newly created position of ______________________________ of AmeriGas Propane, Inc., a Pennsylvania corporation, which is the general partner of AmeriGas Partners, L.P. As such, I will be responsible for ___________________ of AmeriGas Partners, L.P., and its subsidiaries, partnerships and affiliates (collectively "AmeriGas") throughout the United States. During the course of my employment, I understand that AmeriGas will put me in a position of trust and confidence by placing me in charge of _____________________ throughout the United States and by disclosing to me, as well as having me develop Confidential Information about its business and B. I am also a member of AmeriGas's Senior Management Team. As a member of AmeriGas's Senior Management Team, I routinely participate in important strategic reporting and planning meetings where highly Confidential Information and plans are disclosed, discussed and developed by the senior officers and managers of AmeriGas. C. Accordingly, in consideration for my employment in this __________________________ position and the compensation and employee benefits that I will receive for serving in such a position, I agree to the terms of this Confidentiality and Post-Employment Activities Agreement as follows: 1. Recitals. The recitals contained in the lettered paragraphs above are hereby incorporated and made a part of this Agreement. 2. Definitions. a. The term "Confidential Information" includes, but is not limited to, information, whether in tangible form or otherwise, concerning business and marketing plans; past, present and prospective customer identities, lists, credit information and gas usage patterns; pricing and marketing policies and practices; financial information; acquisition and strategic plans; and other operating policies and practices. b. The term "Territory" refers to each of the 50 states of the United States and such U.S. territories and foreign nations in which Americas distributes propane or otherwise sells goods or services during the one year period preceding the termination of my employment. 3. Confidential Information and AmeriGas Property. a. I will protect the Confidential Information of AmeriGas and its predecessors and affiliates from disclosure and will not divulge it during or after my employment to any other person or entity not associated with AmeriGas. b. All reports, manuals, memoranda, computer disks and tapes and other materials made available to me by AmeriGas during the performance of my duties are the property of AmeriGas, and I will use all such property exclusively for AmeriGas's benefit and will return it, including copies, to AmeriGas at the termination of my employment. 4. Prohibited Post-Employment Activities. For a period of two years after the termination of my employment with AmeriGas for any reason: a. I will not directly or indirectly solicit or service the business of any AmeriGas customer within my Territory. b. Except as provided in paragraphs 4(c) and 4(d) below, I will not directly or indirectly: (i) own or operate; (ii) acquire an equity or partnership interest or a controlling interest of any other kind in; (iii) accept employment from; or (iv) serve as a director, officer, partner, consultant, or advisor of or to, any business that distributes propane in my Territory or that sells goods or provides services that compete with goods sold or services provided by AmeriGas in my Territory as of the date of the termination of my employment without first obtaining the written consent of the President of 2 AmeriGas Propane, Inc. Notwithstanding anything to the contrary herein, in the event that my employment is terminated by AmeriGas based upon my failure to meet the performance or financial objectives established for my position and AmeriGas, in its sole discretion, determines that such failure on my part was not deliberate, the term of enforcement for this Noncompete Provision shall be calculated in the following manner: for every twenty (20) days of severance payment that I receive, the term of enforcement for this Noncompete Provision shall equal one (1) calendar month; provided, however, that in no event will the term of enforcement for the Noncompete Provision be less than six (6) months. It is further understood and agreed that the Noncompete Provision will not prevent me from accepting employment with a business that distributes alternative energy (i.e., electricity, natural gas or fuel oil) or that sells goods or provides services in the alternative energy market. c. Nothing in paragraph 4(b) above shall prohibit me from passively investing in a publicly held business that competes with AmeriGas provided my investment is less than 1 % of the outstanding stock or market value of the business and I do not otherwise violate paragraph 3 of this Agreement. d. Nothing in paragraph 4(b) above shall prohibit me from accepting employment with a business that competes with AmeriGas in my Territory provided that I can demonstrate through clear and convincing evidence that: (i) my compensation is not based either directly or indirectly on the business operations, sales or financial performance of the competing business within my Territory, (ii) my responsibilities do not include the performance or oversight of any sales or business activities of the competing business within my Territory, and (iii) my duties with the competing business will not otherwise result in a breach of paragraph 3 of this Agreement. e. I will not, nor will I induce any other person or entity to employ, or offer employment, in a competing business, to any employee of AmeriGas over whom I had direct or 3 indirect supervisory responsibility or with whom I worked, or who was employed by AmeriGas within my Territory during the two-year period prior to the termination of my employment. Furthermore, I shall not induce or attempt to induce any employee to terminate his or her employment with AmeriGas. 5. Remedies. a. I understand that if I violate this Agreement, AmeriGas will suffer irreparable harm; therefore, in addition to any other remedies available to it, AmeriGas will be entitled to seek and obtain injunctive or equitable relief, including orders prohibiting violations of this Agreement. b. In any legal proceeding in which AmeriGas obtains injunctive or equitable relief or damages against me arising out of my violation of this Agreement, AmeriGas shall be entitled to recover from me its reasonable attorneys' fees and costs. c. The failure by AmeriGas to insist on my compliance with this Agreement or to enforce it in any particular circumstance will not constitute a waiver by AmeriGas of its rights to seek relief for any other or subsequent breach of this Agreement. 6. Additional Provisions. a. This Agreement shall continue to be in full force and effect without reexecution in the event that: (i) I am employed by AmeriGas in another position or transferred to another territory; (ii) I take a leave of absence; or (iii) there are periods between active employment during which I do not perform services for AmeriGas. b. This Agreement was, and shall be deemed to have been, made in the State of Pennsylvania. It shall be governed by the laws of the State of Pennsylvania without regard to that State's choice of law provisions. 4 c. The Court of Common Pleas of Montgomery County and the Federal District Court for the Eastern District of Pennsylvania (hereafter the designated courts) shall have exclusive jurisdiction over disputes arising out of or relating to this Agreement except: (i) if I or AmeriGas desire to add a necessary party to the action over whom the designated courts would not have personal jurisdiction; or (ii) it is necessary for me or AmeriGas to file an action or motion in another jurisdiction in order to enforce any judgment or relief obtained from the designated courts. Accordingly, both AmeriGas and I agree to submit to the jurisdiction and venue of the designated courts arid, subject to the above stated exceptions, each of us agrees to waive any right to contest personal jurisdiction and venue before such courts or to seek to transfer or otherwise object to or challenge the forums designated herein. d. I will disclose the existence of this Agreement to all of my prospective and actual employers. I authorize AmeriGas to disclose the existence of this Agreement and to provide a copy of this Agreement to any prospective and actual employer. e. I have read and understood this Agreement, believe it to be reasonable, and am signing it voluntarily. I acknowledge that my obligations under this Agreement will not impose an unreasonable economic hardship on me. I further recognize that this Agreement may be enforced against me by a court of law or equity. I also understand that the execution of this Agreement is a requirement of my employment with AmeriGas and that AmeriGas will expect me to adhere strictly to the terms of this Agreement. f. The provisions of this Confidentiality and Post-Employment Activities Agreement constitute the entire Agreement between myself and AmeriGas regarding AmeriGas's Confidential Information and my post-employment obligations, which Agreement cannot be varied except by a writing signed by me and the President of AmeriGas Propane, Inc. Notwithstanding the foregoing, the provisions of this Agreement are in addition to, and not a limitation or substitution of, 5 nor do they supersede the provisions of the "Agreement and Understanding" booklet or AmeriGas's Human Resources Policies. g. I hereby consent to AmeriGas's assignment of this Agreement to any entity that acquires through purchase, merger or otherwise, the assets or stock of, or any interest in, AmeriGas Propane or AmeriGas Partners, L.P., and its subsidiaries, partnerships and affiliates. h. If any provision of this Agreement shall be determined to be invalid or unenforceable to any extent, the parties to this Agreement authorize the court to modify it to the extent necessary to make the provision enforceable. If any provision of this Agreement shall be determined to be invalid or unenforceable to any extent, such invalidity shall not impair the operation of or affect the remaining provisions hereof. Dated this ____ day of ____________ 1996. Witness Name AmeriGas Propane, Inc., in its own right and as general partner of AmeriGas Partners, L.P. and their respective subsidiaries, partnerships and affiliates By: ____________________________ _______________________________ Witness Name 6 EX-31.1 5 w07598exv31w1.txt CERTIFICATION BY THE CHIEF EXECUTIVE OFFICER EXHIBIT 31.1 CERTIFICATION BY THE CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Eugene V. N. Bissell, certify that: 1. I have reviewed this interim report on Form 10-Q of AmeriGas Partners, L.P., AmeriGas Finance Corp., AmeriGas Eagle Finance Corp. and AP Eagle Finance Corp.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrants as of, and for, the periods presented in this report; 4. The registrants' other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrants and have: (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrants, including their consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) evaluated the effectiveness of the registrants' disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) disclosed in this report any change in the registrants' internal control over financial reporting that occurred during the registrants' most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants' internal control over financial reporting; and 5. The registrants' other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants' auditors and the audit committee of the registrants' board of directors (or persons performing the equivalent functions): (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants' ability to record, process, summarize and report financial information; and EXHIBIT 31.1 (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants' internal control over financial reporting. Date: May 6, 2005 /s/ Eugene V. N. Bissell -------------------------------------- Eugene V. N. Bissell President and Chief Executive Officer AmeriGas Propane, Inc. AmeriGas Finance Corp. AmeriGas Eagle Finance Corp. AP Eagle Finance Corp. EX-31.2 6 w07598exv31w2.txt CERTIFICATION BY THE CHIEF FINANCIAL OFFICER EXHIBIT 31.2 CERTIFICATION BY THE CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Michael J. Cuzzolina, certify that: 1. I have reviewed this interim report on Form 10-Q of AmeriGas Partners, L.P., AmeriGas Finance Corp., AmeriGas Eagle Finance Corp. and AP Eagle Finance Corp.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrants as of, and for, the periods presented in this report; 4. The registrants' other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrants and have: (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrants, including their consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) evaluated the effectiveness of the registrants' disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) disclosed in this report any change in the registrants' internal control over financial reporting that occurred during the registrants' most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants' internal control over financial reporting; and 5. The registrants' other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants' auditors and the audit committee of the registrants' board of directors (or persons performing the equivalent functions): (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants' ability to record, process, summarize and report financial information; and EXHIBIT 31.2 (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants' internal control over financial reporting. Date: May 6, 2005 /s/ Michael J. Cuzzolina ---------------------------------------------------- Michael J. Cuzzolina Vice President - Finance and Chief Financial Officer AmeriGas Propane, Inc. AmeriGas Finance Corp. AmeriGas Eagle Finance Corp. AP Eagle Finance Corp. EX-32 7 w07598exv32.txt CERTIFICATION BY THE CEO AND CFO PURSUANT TO SECTION 906 EXHIBIT 32 CERTIFICATION BY THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER RELATING TO A PERIODIC REPORT CONTAINING FINANCIAL STATEMENTS I, Eugene V. N. Bissell, Chief Executive Officer, and I, Michael J. Cuzzolina, Chief Financial Officer, of each of AmeriGas Propane, Inc., a Pennsylvania corporation and the General Partner of AmeriGas Partners, L.P., a Delaware limited partnership (the "Partnership"), AmeriGas Finance Corp. ("Finance Corp."), AmeriGas Eagle Finance Corp. ("Eagle Finance Corp.") and AP Eagle Finance Corp. ("AP Finance Corp." and collectively with the Partnership, Finance Corp. and Eagle Finance Corp., the "Registrant") hereby certify that to our knowledge: (1) The Registrant's periodic report on Form 10-Q for the period ended March 31, 2005 (the "Form 10-Q") fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended; and (2) The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Registrant. * * * CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICER /s/ Eugene V. N. Bissell /s/ Michael J. Cuzzolina - --------------------------- ------------------------- Eugene V. N. Bissell Michael J. Cuzzolina Date: May 6, 2005 Date: May 6, 2005 -----END PRIVACY-ENHANCED MESSAGE-----