EXHIBIT 10.22
CHANGE OF CONTROL AGREEMENT
Agreement made as of <> between UGI Utilities, Inc., a
Pennsylvania corporation (the "Company"), and <> <> (the
"Employee").
WHEREAS, the Employee is presently employed by the Company, as
its<>; and
WHEREAS, the Company considers it essential to ▇▇▇▇▇▇ the employment of
well qualified key management personnel, and, in this regard, the board of
directors of the Company recognizes that, as is the case with many corporations,
the possibility of a change in control of the Company may exist and that such
possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of key management
personnel to the detriment of the Company; and
WHEREAS, the board of directors of the Company has determined that
appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of key members of the Company's management to their
assigned duties without distraction in the face of potentially disturbing
circumstances arising from the possibility of a change in control of the
Company, although no such change is now contemplated; and
WHEREAS, in order to induce the Employee to remain in the employ of the
Company, the Company agrees that the Employee shall receive the compensation set
forth in this Agreement in the event his employment with the Company is
terminated subsequent to a "Change of Control," (as defined in Section 1 hereof)
of the Company as a cushion against the financial and career impact on the
Employee of any such Change of Control;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter set forth and intending to be legally bound
hereby, the parties hereto agree as follows:
1. Definitions. For all purposes of this Agreement, the following
terms shall have the meanings specified in this Section unless the context
clearly otherwise requires:
(a) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
(b) "Base Compensation" shall mean the average of the total cash
remuneration received by the Employee in all capacities with the Company, and
its Subsidiaries or Affiliates, as reported for Federal income tax purposes on
Form W-2, together with any amounts the payment of which has been deferred by
the Employee under any deferred compensation plan of the Company, and its
Subsidiaries or Affiliates, or otherwise and any and all salary reduction
authorized amounts under any of the benefit plans or programs of the Company,
and its Subsidiaries or Affiliates, but excluding any amounts attributable to
the exercise of stock options granted to the Employee under UGI's Stock Option
and Dividend Equivalent Plan or its successor, for the five calendar years (or
such number of actual full calendar years of employment, if less than five)
immediately preceding the calendar year in which occurs a Change of Control or
the Employee's Termination Date, whichever period produces the higher amount.
(c) A Person shall be deemed the "Beneficial Owner" of any
securities: (i) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly,
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has the right to acquire (whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or upon the exercise of conversion
rights, exchange rights, rights, warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the "Beneficial Owner" of securities
tendered pursuant to a tender or exchange offer made by such Person or any of
such Person's Affiliates or Associates until such tendered securities are
accepted for payment, purchase or exchange; (ii) that such Person or any of such
Person's Affiliates or Associates, directly or indirectly, has the right to vote
or dispose of or has "beneficial ownership" of (as determined pursuant to Rule
13d-3 of the General Rules and Regulations under the Exchange Act), including
without limitation pursuant to any agreement, arrangement or understanding,
whether or not in writing; provided, however, that a Person shall not be deemed
the "Beneficial Owner" of any security under this clause (ii) as a result of an
oral or written agreement, arrangement or understanding to vote such security if
such agreement, arrangement or understanding (A) arises solely from a revocable
proxy given in response to a public proxy or consent solicitation made pursuant
to, and in accordance with, the applicable provisions of the General Rules and
Regulations under the Exchange Act, and (B) is not then reportable by such
Person on Schedule 13D under the Exchange Act (or any comparable or successor
report); or (iii) that are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with which such Person (or
any of such Person's Affiliates or Associates) has any agreement, arrangement or
understanding (whether or not in writing) for the purpose of acquiring, holding,
voting (except pursuant to a revocable proxy as described in the proviso to
clause (ii) above) or disposing of any voting securities of UGI
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or the Company; provided, however, that nothing in this Section 1(c) shall cause
a Person engaged in business as an underwriter of securities to be the
"Beneficial Owner" of any securities acquired through such Person's
participation in good faith in a firm commitment underwriting until the
expiration of forty days after the date of such acquisition.
(d) "Board" shall mean the board of directors of the Company.
(e) "Change of Control" shall mean:
(i) Any Person (except the Employee, his Affiliates and
Associates, UGI, any Subsidiary of UGI, any employee benefit plan of UGI or of
any Subsidiary of UGI, or any Person or entity organized, appointed or
established by UGI or any Subsidiary of UGI for or pursuant to the terms of any
such employee benefit plan), together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner in the aggregate of 20% or more of either
(i) the then outstanding shares of common stock of UGI (the "Outstanding UGI
Common Stock") or (ii) the combined voting power of the then outstanding voting
securities of UGI entitled to vote generally in the election of directors (the
"UGI Voting Securities"); or
(ii) Individuals who, as of the beginning of any
twenty-four month period, constitute the UGI Board (the "Incumbent UGI Board")
cease for any reason to constitute at least a majority of the Incumbent UGI
Board, provided that any individual becoming a director of UGI subsequent to the
beginning of such period whose election or nomination for election by the UGI
stockholders was approved by a vote of at least a majority of the directors then
comprising the Incumbent UGI Board shall be considered as though such individual
were a member of the Incumbent UGI Board, but excluding, for
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this purpose, any such individual whose initial assumption of office is in
connection with an actual or threatened election contest relating to the
election of the Directors of UGI (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act); or
(iii) Completion by UGI of a reorganization, merger or
consolidation (a "Business Combination"), in each case, with respect to which
all or substantially all of the individuals and entities who were the respective
Beneficial Owners of the Outstanding UGI Common Stock and UGI Voting Securities
immediately prior to such Business Combination do not, following such Business
Combination, Beneficially Own, directly or indirectly, more than fifty percent
(50%) of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination in substantially the same proportion as
their ownership immediately prior to such Business Combination of the
Outstanding UGI Common Stock and UGI Voting Securities, as the case may be; or
(iv) (a) Completion of a complete liquidation or dissolution
of UGI or (b) sale or other disposition of all or substantially all of the
assets of UGI other than to a corporation with respect to which, following such
sale or disposition, more than fifty percent (50%) of, respectively, the then
outstanding shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors is then owned beneficially, directly or indirectly, by all or
substantially all of the individuals and entities who were the Beneficial
Owners,
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respectively, of the Outstanding UGI Common Stock and UGI Voting Securities
immediately prior to such sale or disposition in substantially the same
proportion as their ownership of the Outstanding UGI Common Stock and UGI Voting
Securities, as the case may be, immediately prior to such sale or disposition;
or
(v) UGI and its Subsidiaries fail to own more than fifty
percent (50%) of the then outstanding shares of common stock of the Company or
more than fifty percent (50%) of the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the
election of directors; or
(vi) Completion by the Company of a reorganization, merger or
consolidation (a "Business Combination"), in each case, with respect to which
all or substantially all of the individuals and entities who were the respective
Beneficial Owners of the Company's outstanding common stock and voting
securities immediately prior to such Business Combination do not, following such
Business Combination, Beneficially Own, directly or indirectly, more than 50%
of, respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination in substantially the same proportion as
their ownership immediately prior to such Business Combination of the Company's
outstanding common stock and voting securities, as the case may be; or
(vii) Completion of a complete liquidation or dissolution of
the Company or sale or other disposition of all or substantially all of the
assets of the Company other than to a corporation with respect to which,
following such sale or disposition, more than 50% of, respectively, the then
outstanding shares of common stock
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and the combined voting power of the then outstanding voting securities entitled
to vote generally in the election of directors is then owned beneficially,
directly or indirectly, by all or substantially all of the individuals and
entities who were the Beneficial Owners, respectively, of the Company's
outstanding common stock and voting securities immediately prior to such sale or
disposition in substantially the same proportion as their ownership of the
Company's outstanding common stock and voting securities, as the case may be,
immediately prior to such sale or disposition.
(f) "Cause" shall mean 1) misappropriation of funds, 2) habitual
insobriety or substance abuse, 3) conviction of a crime involving moral
turpitude, or 4) gross negligence in the performance of duties, which gross
negligence has had a material adverse effect on the business, operations,
assets, properties or financial condition of the Company.
(g) "Good Reason Termination" shall mean a Termination of
Employment initiated by the Employee upon one or more of the following
occurrences:
(i) any failure of the Company to comply with and satisfy
any of the terms of this Agreement;
(ii) any significant involuntary reduction of the
authority, duties or responsibilities held by the Employee immediately
prior to the Change of Control;
(iii) any involuntary removal of the Employee from the
employment grade, compensation level or officer positions which the
Employee holds with the Company or, if the Employee is employed by a
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Subsidiary, with a Subsidiary, held by him immediately prior to the
Change of Control, except in connection with promotions to higher
office;
(iv) any involuntary reduction in the Employee's target
level of annual and long-term compensation as in effect immediately
prior to the Change of Control;
(v) any transfer of the Employee, without his express
written consent, to a location which is outside the general area in
which his principal place of business immediately preceding the Change
of Control may be located at such time by more than fifty miles, other
than on a temporary basis (less than 12 months); and
(vi) the Employee being required to undertake business
travel to an extent substantially greater than the Employee's business
travel obligations immediately prior to the Change of Control.
(h) "Normal Retirement Date" shall mean the first day of the
calendar month coincident with or next following the Employee's 62nd birthday.
(i) "Subsidiary" shall mean any corporation in which the Company,
directly or indirectly, owns at least a 50% interest or an unincorporated entity
of which the Company, directly or indirectly, owns at least 50% of the profits
or capital interests.
(j) "Termination Date" shall mean the date of receipt of the
Notice of Termination described in Section 2 hereof or any later date specified
therein, as the case may be.
(k) "Termination of Employment" shall mean the termination of the
Employee's actual employment relationship with the Company.
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2. Notice of Termination. Any Termination of Employment following
a Change of Control shall be communicated by a Notice of Termination to the
other party hereto given in accordance with Section 14 hereof. For purposes of
this Agreement, a "Notice of Termination" means a written notice which (i)
indicates the specific provision in this Agreement relied upon, (ii) briefly
summarizes the facts and circumstances deemed to provide a basis for the
Employee's Termination of Employment under the provision so indicated, and (iii)
if the Termination Date is other than the date of receipt of such notice,
specifies the Termination Date (which date shall not be more than 15 days after
the giving of such notice).
3. Severance Compensation upon Termination.
(a) Subject to the provisions of Section 11 hereof, in the event
of the Employee's involuntary Termination of Employment for any reason other
than Cause or in the event of a Good Reason Termination, in either event within
three years after a Change of Control, the Company shall pay to the Employee,
upon the execution of a release, in the form required by the Company of its
terminating executives prior to the Change of Control, within 15 days after the
Termination Date (or as soon as possible thereafter in the event that the
procedures set forth in Section 11(b) hereof cannot be completed within 15
days), an amount in cash equal to <> times the Employee's Base
Compensation, subject to customary employment taxes and deductions.
(b) In the event the Employee's Normal Retirement Date would occur
prior to <> months after the Termination Date, the aggregate
cash amount determined as set forth in (a) above shall be reduced by multiplying
it by a fraction, the numerator of which shall be the number of days from the
Termination Date
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to the Employee's Normal Retirement Date and the denominator of which shall be
<> days.
4. Other Payments.
The payments due under Section 3 hereof shall be in addition
to and not in lieu of any payments or benefits due to the Employee under any
other plan, policy or program of the Company, and its Subsidiaries or
Affiliates.
5. Trust Fund. UGI sponsors an irrevocable trust fund pursuant to
a trust agreement to hold assets to satisfy obligations under this Agreement.
Funding of such trust fund shall be subject to the discretion of the UGI Board
of Directors or the Executive Committee of the UGI Board of Directors, as set
forth in the agreement pursuant to which the fund has been established.
6. Enforcement.
(a) In the event that the Company shall fail or refuse to make
payment of any amounts due the Employee under Section 3 hereof within the
respective time periods provided therein, the Company shall pay to the Employee,
in addition to the payment of any other sums provided in this Agreement,
interest, compounded daily, on any amount remaining unpaid, from the date
payment is required under Section 3 until paid to the Employee, at the rate from
time to time announced by Mellon Bank, N.A. as its "prime rate" plus 1%, each
change in such rate to take effect on the effective date of the change in such
prime rate.
(b) It is the intent of the parties that the Employee not be
required to incur any expenses associated with the enforcement of his rights
under this Agreement by arbitration, litigation or other legal action because
the cost and expense thereof would
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substantially detract from the benefits intended to be extended to the Employee
hereunder. Accordingly, the Company shall pay the Employee on demand the amount
necessary to reimburse the Employee in full for all reasonable expenses
(including all attorneys' fees and legal expenses) incurred by the Employee in
enforcing any of the obligations of the Company under this Agreement.
7. No Mitigation. The Employee shall not be required to mitigate
the amount of any payment or benefit provided for in this Agreement by seeking
other employment or otherwise, nor shall the amount of any payment or benefit
provided for herein be reduced by any compensation earned by other employment or
otherwise.
8. Non-exclusivity of Rights. Nothing in this Agreement shall
prevent or limit the Employee's continuing or future participation in or rights
under any benefit, bonus, incentive or other plan or program provided by the
Company, or any of its Subsidiaries or Affiliates, and for which the Employee
may qualify.
9. No Set-Off. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company may have against the Employee or others.
10. Taxes. Any payment required under this Agreement shall be
subject to all requirements of the law with regard to the withholding of taxes,
filing, making of reports and the like, and the Company shall use its best
efforts to satisfy promptly all such requirements.
11. Certain Increase in Payments.
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(a) Anything in this Agreement to the contrary notwithstanding, in
the event that it shall be determined that any payment or distribution by the
Company to or for the benefit of the Employee, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise (a "Payment"), would constitute an "excess parachute payment" within
the meaning of Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code"), the Employee shall be paid an additional amount (the "Gross-Up
Payment") such that the net amount retained by the Employee after deduction of
any excise tax imposed under Section 4999 of the Code, and any federal, state
and local income and employment tax and excise tax imposed upon the Gross-Up
Payment shall be equal to the Payment. For purposes of determining the amount of
the Gross-Up Payment, the Employee shall be deemed to pay federal income tax and
employment taxes at the highest marginal rate of federal income and employment
taxation in the calendar year in which the Gross-Up Payment is to be made and
state and local income taxes at the highest marginal rate of taxation in the
state and locality of the Employee's residence on the Termination Date, net of
the maximum reduction in federal income taxes that may be obtained from the
deduction of such state and local taxes.
(b) All determinations to be made under this Section 11 shall be
made by Coopers & ▇▇▇▇▇▇▇ (or, at the Company's option, the Company's
independent public accountant immediately prior to the Change of Control (the
"Accounting Firm")), which firm shall provide its determinations and any
supporting calculations both to the Company and the Employee within 10 days of
either (i) the Change of Control or (ii) the Termination Date, as the case may
be. Any such determination by the Accounting Firm shall be binding upon the
Company and the Employee. Within five days after the
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Accounting Firm's determination, the Company shall pay (or cause to be paid) or
distribute (or cause to be distributed) to or for the benefit of the Employee
such amounts as are then due to the Employee under this Agreement.
(c) In the event that upon any audit by the Internal Revenue
Service, or by a state or local taxing authority, of the Payment or Gross-Up
Payment, a change is finally determined to be required in the amount of taxes
paid by the Employee, appropriate adjustments shall be made under this Agreement
such that the net amount which is payable to the Employee after taking into
account the provisions of Section 4999 of the Code shall reflect the intent of
the parties as expressed in subsection (a) above, in the manner determined by
the Accounting Firm.
(d) All of the fees and expenses of the Accounting Firm in
performing the determinations referred to in subsections (b) and (c) above shall
be borne solely by the Company. The Company agrees to indemnify and hold
harmless the Accounting Firm of and from any and all claims, damages and
expenses resulting from or relating to its determinations pursuant to
subsections (b) and (c) above, except for claims, damages or expenses resulting
from the gross negligence or wilful misconduct of the Accounting Firm, which
firm shall provide its determinations and any supporting calculations both to
the Company and the Employee within 10 days of either (i) the Change of Control
or (ii) the Termination Date, as the case may be. Any such determination by the
Accounting Firm shall be binding upon the Company and the Employee.
12. Term of Agreement. The term of this Agreement shall be for
five years from the date hereof and shall be automatically renewed for
successive one-year periods unless the Company notifies the Employee in writing
that this Agreement will not
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be renewed at least sixty days prior to the end of the current term; provided,
however, that (i) after a Change of Control during the term of this Agreement,
this Agreement shall remain in effect until all of the obligations of the
parties hereunder are satisfied or have expired, and (ii) this Agreement shall
terminate if, prior to a Change of Control, the employment of the Employee with
the Company or any of its Subsidiaries, as the case may be, shall terminate for
any reason.
13. Successor Company. The Company shall require any successor or
successors (whether direct or indirect, by purchase, merger or otherwise) to all
or substantially all of the business and/or assets of the Company, by agreement
in form and substance satisfactory to the Employee, to acknowledge expressly
that this Agreement is binding upon and enforceable against the Company in
accordance with the terms hereof, and to become jointly and severally obligated
with the Company to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform if no such succession or
successions had taken place. Failure of the Company to notify the Employee in
writing as to such successorship, to provide the Employee the opportunity to
review and agree to the successor's assumption of this Agreement or to obtain
such agreement prior to the effectiveness of any such succession shall be a
breach of this Agreement. As used in this Agreement, the Company shall mean the
Company as hereinbefore defined and any such successor or successors to its
business and/or assets, jointly and severally.
14. Notice. All notices and other communications required or
permitted hereunder or necessary or convenient in connection herewith shall be
in writing
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and shall be delivered personally or mailed by registered or certified mail,
return receipt requested, or by overnight express courier service, as follows:
If to the Company, to:
UGI Utilities, Inc.
Green Hills Corporate Center
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Secretary
If to the Employee, to:
<>
<>, <> <>
or to such other names or addresses as the Company or the Employee, as the case
may be, shall designate by notice to the other party hereto in the manner
specified in this Section; provided, however, that if no such notice is given by
the Company following a Change of Control, notice at the last address of the
Company or to any successor pursuant to Section 13 hereof shall be deemed
sufficient for the purposes hereof. Any such notice shall be deemed delivered
and effective when received in the case of personal delivery, five days after
deposit, postage prepaid, with the U.S. Postal Service in the case of registered
or certified mail, or on the next business day in the case of overnight express
courier service.
15. Governing Law. This Agreement shall be governed by and
interpreted under the laws of the Commonwealth of Pennsylvania without giving
effect to any conflict of laws provisions.
16. Contents of Agreement, Amendment and Assignment. This
Agreement supersedes all prior agreements, sets forth the entire understanding
between the parties hereto with respect to the subject matter hereof and cannot
be changed,
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modified, extended or terminated except upon written amendment executed by the
Employee and the Chairman of the Company. The provisions of this Agreement may
require a variance from the terms and conditions of certain compensation or
bonus plans under circumstances where such plans would not provide for payment
thereof in order to obtain the maximum benefits for the Employee. It is the
specific intention of the parties that the provisions of this Agreement shall
supersede any provisions to the contrary in such plans, and such plans shall be
deemed to have been amended to correspond with this Agreement without further
action by the Company or the Board.
17. No Right to Continued Employment. Nothing in this Agreement
shall be construed as giving the Employee any right to be retained in the employ
of the Company.
18. Successors and Assigns. All of the terms and provisions of
this Agreement shall be binding upon and inure to the benefit of and be
enforceable by the respective heirs, representatives, successors and assigns of
the parties hereto, except that the duties and responsibilities of the Employee
and the Company hereunder shall not be assignable in whole or in part.
19. Severability. If any provision of this Agreement or
application thereof to anyone or under any circumstances shall be determined to
be invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions or applications of this Agreement which can be given
effect without the invalid or unenforceable provision or application.
20. Remedies Cumulative; No Waiver. No right conferred upon the
Employee by this Agreement is intended to be exclusive of any other right or
remedy, and
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each and every such right or remedy shall be cumulative and shall be in addition
to any other right or remedy given hereunder or now or hereafter existing at law
or in equity. No delay or omission by the Employee in exercising any right,
remedy or power hereunder or existing at law or in equity shall be construed as
a waiver thereof.
21. Miscellaneous. All section headings are for convenience only.
This Agreement may be executed in several counterparts, each of which is an
original. It shall not be necessary in making proof of this Agreement or any
counterpart hereof to produce or account for any of the other counterparts.
22. Arbitration. In the event of any dispute under the provisions
of this Agreement other than a dispute in which the sole relief sought is an
equitable remedy such as an injunction, the parties shall be required to have
the dispute, controversy or claim settled by arbitration in
<>, <>, in accordance with the commercial
arbitration rules then in effect of the American Arbitration Association, before
one arbitrator who shall be an executive officer or former executive officer of
a publicly traded corporation, selected by the parties. Any award entered by the
arbitrator shall be final, binding and nonappealable and judgment may be entered
thereon by either party in accordance with applicable law in any court of
competent jurisdiction. This arbitration provision shall be specifically
enforceable. The arbitrator shall have no authority to modify any provision of
this Agreement or to award a remedy for a dispute involving this Agreement other
than a benefit specifically provided under or by virtue of the Agreement. The
Company shall be responsible for all of the fees of the American Arbitration
Association and the arbitrator and any expenses relating to the conduct of the
arbitration (including reasonable attorneys' fees and expenses).
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IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
have executed this Agreement as of the date first above written.
ATTEST:
[Seal] UGI UTILITIES, INC.
______________________________ By_________________________
Corporate Secretary ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Chairman
______________________________ ___________________________
Witness <> <>
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