EXHIBIT 10.2
SUBURBAN PROPANE, L.P.
SEVERANCE PROTECTION PLAN
As Adopted in September 1996 and Amended in January 2008 and January 2009
The Board of Supervisors of Suburban Propane Partners, L.P. (the “Partnership”),
Suburban Propane, L.P. (“Suburban”), and all direct or indirect subsidiaries of
Suburban, has adopted a program (referred to herein as the “Severance Protection
Plan” or the “Plan”) designed to protect certain key employees from the effects
of an actual or possible Change in Control (as defined below), and thereby to
enable Suburban to obtain the continued availability of such key employees’
services, managerial skills and business experience upon the threat or actual
occurrence of a Change in Control.
An employee of Suburban or any of its subsidiaries who (a) received an unvested
2003 Long Term Incentive Plan (together with any successor plan thereto, the
“LTIP”) award during the fiscal year in which the Change in Control occurred, or
(b), alternatively, if the Change in Control occurs on the first day of
Suburban’s fiscal year, received an unvested LTIP award during the fiscal year
immediately preceding the fiscal year in which the Change in Control occurred,
or (c) Suburban agreed in writing would receive an unvested LTIP award at the
commencement of the Suburban fiscal year immediately following the Change in
Control, or (d), alternatively, if the Change in Control occurs on the first day
of Suburban’s fiscal year, Suburban agreed in writing would receive an unvested
LTIP award at the commencement of the Suburban fiscal year in which the Change
in Control occurred is eligible for benefits under this Severance Protection
Plan unless otherwise provided by written agreement between such employee and
Suburban.
An employee who is eligible for benefits under this Plan will become entitled to
benefits under the Plan if there is a loss of his or her employment within one
year following a Change in Control. In such event, the employee will be entitled
to receive (in lieu of any other severance benefits to which he or she may be
entitled) a lump-sum benefit equal to the product of sixty-five (65) times 1/52
of the sum of the employee’s base annual salary and Target Cash Bonus, defined
as the percentage (established by Suburban as of the later of the start of the
fiscal year or commencement of employment) of the employee’s annual base salary
that would be paid as a cash bonus to the employee if, for that fiscal year,
actual EBITDA equals the Partnership’s budgeted EBITDA, without regard to
whether the Target Cash Bonus was earned or paid, as of the date of the Change
in Control (but not lower than the highest sum of such amounts at any time
during the period beginning one year prior to the Change in Control and ending
on the employee’s termination date). The benefit shall be paid within 30 days
following the employee’s termination of employment.
Each employee who becomes entitled to receive benefits under this Plan shall
also receive payment for (a) all annual incentive bonus awards earned but unpaid
for all fiscal years completed prior to the Change in Control and for all fiscal
years completed prior to the employee’s termination of employment, plus (b) for
any partially completed fiscal year during which the employee’s termination of
employment occurred, a payment equal to his or her then current Target Cash
Bonus, multiplied by a factor equal to a numerator representing the number of
full and partial months of service during the partially completed fiscal year
and a denominator of twelve. Any amounts payable under this paragraph shall be
paid within 30 days following the employee’s termination of employment.

 

 

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For purposes of this Plan, an employee shall be deemed to have lost his or her
employment if (a) the employee’s employment is terminated by Suburban or its
successor (unless such termination is due to willful malfeasance in office as
that term is defined below), or (b) the employee’s employment is terminated by
the employee subsequent to one of the following events (each a “Good Reason”):
(i) a material diminution of the employee’s authority, duties, responsibilities
or status; (ii) a material diminution in the authority, duties, responsibilities
or status of the supervisor to whom the employee is required to report,
including, but not limited to, a requirement that the employee report to a
company officer (or subordinate employee) instead of directly to the Board of
Supervisors; (iii) a reduction of 5% or greater in the employee’s base annual
salary, or a failure to provide the employee with the opportunity to
participate, on terms no less favorable than those existing immediately prior to
the Change in Control, in any incentive bonus, savings, pension or other
employee benefit plan of Suburban in effect immediately prior to the Change in
Control (or successor plans and benefits which are, in the aggregate, no less
favorable to the employee than those plans and benefits available to the
employee immediately prior to the Change in Control); or (iv) a requirement,
without the employee’s consent, that the employee be based more than 35 miles
from his or her present office location if, and only if, the new location is
farther from the employee’s place of residence than the office in which the
employee performed services for Suburban or its affiliates prior to the Change
in Control. The term “willful malfeasance in office” shall require a finding
with respect to the circumstances under consideration that the employee did not
act in a manner he or she reasonably believed to be in, or not opposed to, the
best interests of Suburban.
Prior to voluntary termination of employment for any of the four Good Reasons
listed in subsection (b) of the preceding paragraph, and within 90 days of first
becoming aware that one or more such Good Reasons has occurred, the employee
must notify the Vice President or other highest ranking individual in charge of
Human Resources, by certified mail, of such event, informing him or her that
Suburban or, if applicable, a successor entity has 30 business days (the “Cure
Period”) from the date on which the notification was mailed to remedy such Good
Reason.
If, for any reason, the twelve month anniversary of the Change in Control event
occurs on, or within 30 days following, the date the foregoing notification was
mailed to the Vice President or other highest ranking individual in charge of
Human Resources, then the twelve-month severance protection period provided
under this Plan shall be extended until the expiration of ten business days
beyond the conclusion of the Cure Period.
“Change of Control” shall mean:
(a) the date (which must be a date subsequent to the Effective Date) on which
any Person (including the Partnership’s general partner) or More than One Person
Acting as a Group (other than the Partnership and/or its Subsidiaries) acquires,
during the 12 month period ending on the date of the most recent acquisition,
Common Units or other voting equity interests eligible to vote for the election
of Supervisors (or of any entity, including the Partnership’s general partner,
that has the same authority as the Board to manage the affairs of the
Partnership) (“Voting Securities”) representing thirty percent 30% or more of
the combined voting power of the Partnership’s then outstanding Voting
Securities; provided, however, that in determining whether a Change of Control
has occurred, Voting Securities which have been acquired in a “Non-Control
Acquisition” shall be excluded from the numerator. A “Non-Control Acquisition”
shall mean an acquisition of Voting Securities (x) by the Partnership, any of
its Subsidiaries and/or an employee benefit plan (or a trust forming a part
thereof) maintained by any one or more of them, or (y) in connection with a
“Non-Control Transaction”; or
(b) the date of approval by the limited partners of the Partnership, of (w) a
merger, consolidation or reorganization involving the Partnership, unless
(A) the holders of the Voting Securities of the Partnership immediately before
such merger, consolidation or reorganization own, directly or indirectly,
immediately following such merger, consolidation or reorganization, at least
fifty percent (50%) of the combined voting power of the outstanding Voting
Securities of the entity resulting from such merger, consolidation or
reorganization (the “Surviving Entity”) in substantially the same proportion as
their ownership of the Voting Securities of the Partnership immediately before
such merger, consolidation or reorganization, and (B) no person or entity (other
than the Partnership, any Subsidiary, any employee benefit plan (or any trust
forming a part thereof) maintained by the Partnership, any Subsidiary, the
Surviving Entity, or any Person who, immediately prior to such merger,
consolidation or reorganization, had Beneficial Ownership of more than twenty
five percent (25%) of then outstanding Voting Securities of the Partnership),
has Beneficial Ownership of more than twenty five percent (25%) of the combined
voting power of the Surviving Entity’s then outstanding Voting Securities; (x) a
complete liquidation or dissolution of the Partnership; or (y) the sale or other
disposition of forty percent (40%) of the total gross fair market value of all
the assets of the Partnership to any Person or More than One Person Acting as a
Group (other than a transfer to a Subsidiary). For this purpose, gross fair
market value means the value of the assets of the Partnership, or the value of
the assets being disposed of, determined without regard to any liability
associated with such assets. A transaction described in clause (A) or (B) of
subsection (w) hereof shall be referred to as a “Non-Control Transaction;” or

 

 

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(c) the date a majority of the members of the Board is replaced during any
twelve-month period by the action of the Board taken when a majority of the
Supervisors who are then members of the Board are not Continuing Supervisors
(for purposes of this section, the term “Continuing Supervisor” means a
Supervisor who was either (A) first elected or appointed as a Supervisor prior
to the Effective Date; or (B) subsequently elected or appointed as a Supervisor
if such Supervisor was nominated or appointed by at least a majority of the then
Continuing Supervisors);
Notwithstanding the foregoing, a Change of Control shall not be deemed to occur
solely because any Person (the “Subject Person”) acquired Beneficial Ownership
of more than the permitted amount of the outstanding Voting Securities as a
result of the acquisition of Voting Securities by the Partnership which, by
reducing the number of Voting Securities outstanding, increases the proportional
number of Voting Securities Beneficially Owned by the Subject Person, provided
that if a Change of Control would occur (but for the operation of this sentence)
as a result of the acquisition of Voting Securities by the Partnership, and
after such acquisition of Voting Securities by the Partnership, the Subject
Person becomes the Beneficial Owner of any additional Voting Securities which
increases the percentage of the then outstanding Voting Securities Beneficially
Owned by the Subject Person, then a Change of Control shall occur.
For purposes of the foregoing definition of Change in Control, “Person” and
“Beneficial Ownership” have the meanings used for purposes of Section 13(d) or
14(d) of the Securities Exchange Act of 1934, as amended, and “More than one
Person Acting as a Group” has the same meaning as set forth in Treasury
Regulation 1.409A-3(i)(5)(v)(B).
Suburban shall also pay all legal fees and expenses incurred by an employee or
former employee, as the case may be, as a result of such employee’s or former
employee’s enforcement of any right or benefit under this Plan, unless a court
or arbitrator finds that such employee’s or former employee’s challenge was
frivolous, in which case, Suburban and such employee or former employee shall
each bear their respective costs and expenses.
The administrator of this Plan shall be the Compensation Committee (the
“Committee”) of the Board of Supervisors of the Partnership. The Committee shall
have absolute discretionary authority to determine eligibility for benefits
under the Plan and to otherwise construe the terms of the Plan. All benefits
under the Plan shall be paid out of the general assets of Suburban, and no
eligible employee shall have any interest in any specific asset of Suburban as a
result of participation in the Plan. The receipt of a benefit hereunder shall
not cause an eligible employee to be treated as an employee of the Company for
any purpose beyond the date of the eligible employee’s actual termination of
employment.
This Plan may be amended, modified or terminated by the Committee, except that
any termination and any amendment or modification of this Plan adverse to the
interests of employees eligible for benefits hereunder shall not be effective
for a period of one year after written notice thereof has been circulated
generally to the participants in the Plan at the time of such termination or
amendment. If Suburban shall merge with or consolidate with another entity, or
transfer, sell or lease all or substantially all of its assets to another
entity, Suburban will require that such successor entity assume the obligations
of Suburban hereunder, and this Plan shall be binding upon such entity whether
or not expressly assumed by such entity.