Document:

Filed by Bowne Pure Compliance

 

Exhibit 10.5

UGI UTILITIES, INC.

EXECUTIVE
ANNUAL BONUS PLAN

(Effective as of October 1, 2006)

I. Purpose.
The purpose of the UGI Utilities, Inc. Executive Annual Bonus Plan (the
“Plan”) is to provide a means whereby UGI Utilities, Inc. (the
“Company”) may provide incentive compensation to its eligible
employees to serve as an incentive for employee performance and retention. The
Plan is intended to encourage eligible employees to contribute to the overall
success of the Company. The Plan is part of a total compensation structure
under which a meaningful portion of eligible employees’ total
compensation is based on achievement of performance goals relating to the
eligible employees’ business and/or area of responsibility. The Plan is
effective as of October 1, 2006.

II. Definitions. Whenever
used in this Plan, the following terms will have the respective meanings set
forth below:

2.1
“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.

2.2
“Board” means the board of directors of the Company as
constituted from time to time.

2.3
“Code” means the Internal Revenue Code of 1986, as amended.

2.4
“Committee” means (i) for Senior Management, the
Compensation and Management Development Committee of the Board or its successor
and (ii) for eligible employees who are not members of Senior Management,
the Chief Executive Officer of the Company or his designee.

2.5
“Company” means UGI Utilities, Inc., a Pennsylvania
corporation, or any successor thereto.

2.6
“Employer” means the Company and its Subsidiaries.

2.7
“Participant” means an eligible employee or other individual
who provides services to the Company or its Subsidiaries and who is described
in Section III as a participant in the Plan.

2.8
“Plan” means this UGI Utilities, Inc. Executive Annual Bonus
Plan, as in effect from time to time.

 

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2.9 “Senior
Management” means those employees who are designated as executive
officers by the Board pursuant to Rule 3b-7 of the rules promulgated
pursuant to the Securities Exchange Act of 1934, as amended.

2.10
“Subsidiary” means any corporation or partnership, at least
20% of the outstanding voting stock, voting power or partnership interest of
which is owned, directly or indirectly, by the Company.

III.
Participation. All salaried employees of the Company and its
Subsidiaries in grade level 34 or above shall be eligible to participate in the
Plan for each fiscal year. The Company’s fiscal year begins on October 1.
The Committee may also designate in writing that one or more senior level
employees of a Subsidiary shall be Participants in the Plan for a fiscal year,
in its sole discretion.

IV. Annual
Bonus.

4.1 Target Bonus.
At the beginning of each fiscal year, the Committee shall establish target
bonuses as a percentage of each Participant’s salary for the fiscal year.
Each Participant shall be eligible to receive an annual bonus for the fiscal
year based on the achievement of business/financial performance goals, and the
Participant’s individual performance goals, if applicable, during the
fiscal year. The amount actually paid to a Participant may be more or less than
the target bonus amount, depending on the extent to which the performance goals
are satisfied.

4.2 Performance
Goals.

(a) Business/Financial Goals. At the beginning of each
fiscal year, the Committee shall establish the business/financial performance
goals for the fiscal year and leverage tables that apply to the performance
goals.

(b) Individual
Goals. The Committee shall determine which Participants shall have
individual performance goals as part of their bonus calculation. At the
beginning of each fiscal year, the Committee shall establish each
Participant’s individual performance goals for the year, if applicable,
and shall set leverage tables that will apply to individual performance goals.
The portion of the target bonus attributable to individual performance will be
payable only if the business/financial performance goals are achieved at the
threshold level of performance.

(c) Weighting. At the time the Committee establishes
performance goals for each fiscal year, the Committee will determine the
weighting for each Participant with respect to the business/financial goals and
the individual goals. The weighting of the two types of goals need not be
uniform as to all Participants.

(d) Communication of Goals. The Committee shall
provide for the communication of the performance goals and corresponding
leverage tables to the Participants.

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4.3 Determination
and Approval of Bonus Payments.

(a) At the end of
the fiscal year, the Committee shall determine the amount of each
Participant’s bonus, if any, based on the achievement of the
business/financial performance goals and, if applicable, the achievement of the
individual performance goals. The Committee shall have sole discretion to
determine whether and to what extent the performance goals have been met. The
Committee may adjust the performance results for extraordinary items or other
events, as the Committee deems appropriate.

(b) If the
threshold level of business/financial performance is not achieved, no bonuses
will be paid.

(c) With respect
to Participants whose annual bonus under the Plan is based solely on the
achievement of business/financial performance goals, the Committee shall have
discretion to increase or decrease the amount of the annual bonus by 50% more
or less than the amount otherwise determined, based on the Participant’s
contribution to the achievement of the business/financial performance goals,
other contributions that have a significant impact on Company performance, or
other factors.

4.4 Newly Hired
Employees, Promotions and Transfers. Employees who are newly hired or who
are promoted or transferred into a position eligible to participate in the Plan
during the fiscal year may be eligible to receive a prorated bonus award
calculated in whole months based on the relative time spent in the eligible
position during the fiscal year, as determined by the Committee. If a
Participant is transferred to an Affiliate of the Company (or into a position
with a different annual bonus target percentage) during the fiscal year, the
Participant’s performance goals may be adjusted to reflect the change in
Employer or position. If a Participant is transferred into a position that is
not eligible to participate in the Plan during the fiscal year, the Participant
may be eligible to receive a prorated award calculated in whole months based on
the relative time spent in the eligible position during the fiscal year, as
determined by the Committee.

4.5 Payment of
Annual Bonus. Each annual bonus for a fiscal year shall be paid in cash to
the Participant in a single lump sum payment between September 30 and
December 31 of the calendar year in which the fiscal year ends, except as
provided below.

4.6 Withholding
Tax. Each Employer shall withhold from each bonus payment an amount
sufficient to satisfy all federal, state and local tax withholding requirements
relating to the bonus.

V. Termination of
Employment. Except as provided below, a Participant must be employed by
the Employer or an Affiliate of the Company on the last day of the fiscal year
for which the bonus is earned in order to receive a bonus for the year. If a
Participant’s employment terminates on account of retirement, death or
disability, as determined by the Committee, the Committee may determine in its
sole discretion that a pro rata portion of the Participant’s target
annual award will be paid, calculated in whole months based on the relative
time spent in the eligible position during the fiscal year. The bonus, if any,
shall be paid within 90 days following the Participant’s termination
of employment on account of retirement, death or disability.

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VI. Administration. The Committee
administers the Plan. The Committee shall have full power and discretionary
authority to interpret and administer the Plan, to make all determinations,
including all participation and bonus determinations, and to prescribe, amend
and rescind any rules, forms or procedures as the Committee deems necessary or
appropriate for the proper administration of the Plan and to make any other
determinations and take such other actions as the Committee deems necessary or
advisable in carrying out its duties under the Plan. Any action required of the
Committee under the Plan shall be made in the Committee’s sole discretion
and not in a fiduciary capacity. All decisions and determinations by the
Committee shall be final, conclusive and binding on the Company, the
Participants, and any other persons having or claiming an interest hereunder.
All bonuses shall be awarded conditional upon the Participant’s
acknowledgement, by continuing in employment with the Employer, that all
decisions and determinations of the Committee shall be final and binding on the
Participant, his or her beneficiaries and any other person having or claiming
an interest in such bonus.

VII. General
Provisions.

7.1
Transferability. No bonus under this Plan shall be transferred,
assigned, pledged or encumbered by the Participant nor shall it 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. In the event of a
Participant’s death, any amounts payable under this Plan, as determined
by the Committee, shall be paid to the Participant’s estate.

7.2 Unfunded
Arrangement. The Plan is an unfunded incentive compensation arrangement.
Nothing contained in the Plan, and no action taken pursuant to the Plan, shall
create or be construed to create a trust of any kind. Each Participant’s
right to receive a bonus shall be no greater than the right of an unsecured
general creditor of the Employer. All bonuses shall be paid from the general
funds of the Employer, and no special or separate fund shall be established and
no segregation of assets shall be made to assure payment of bonuses.

7.3 No Rights to
Employment. Nothing in the Plan, and no action taken pursuant hereto, shall
confer upon a Participant the right to continue in the employ of the Employer,
or affect the right of the Employer to terminate a Participant’s
employment at any time for cause or for no cause whatsoever.

7.4
Section 409A. The Plan is intended to comply with the short-term
deferral rule set forth in the regulations under section 409A of the Code, in
order to avoid application of section 409A to the Plan. If and to the extent
that any payment under this Plan is deemed to be deferred compensation subject
to the requirements of section 409A, this Plan shall be administered so that
such payments are made in accordance with the requirements of section 409A.

7.5 Termination and
Amendment of the Plan. The Compensation and Management Development
Committee may amend or terminate the Plan at any time.

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7.6 Successors.
The Plan shall be binding upon and inure to the benefit of the Company, its
successors and assigns, and each Participant and his or her heirs, executors,
administrators and legal representatives.

7.7 Applicable Law.
The Plan shall be construed and governed in accordance with the laws of the
Commonwealth of Pennsylvania.

5

5Exhibit 10.1

    

      

      

      AGREEMENT
        AND FOURTH AMENDMENT TO CREDIT AGREEMENT

      

      

      THIS
        AGREEMENT
        AND FOURTH AMENDMENT TO CREDIT AGREEMENT
        (this
“Amendment”),
        dated
        as of November 30, 2007, is made and entered into by and among LUFKIN
        INDUSTRIES, INC., a
        Texas
        corporation (the “Borrower”)
        and
JPMORGAN
        CHASE BANK, NATIONAL ASSOCIATION (“JPMCB”),
        as
        the Lender, as the Issuing Bank, and as the Administrative Agent under the
        Credit Agreement referred to below (JPMCB, in all such capacities, the
“Bank”).
        The
        Borrower and the Bank are herein sometimes called the “Parties”.
        

      

      Preliminary
        Statements.

      

      The
        Parties entered into a Credit Agreement dated as of December 30, 2002, an
        Agreement and First Amendment to Credit Agreement dated as of June 30, 2004,
        an
        Agreement and Second Amendment to Credit Agreement dated as of February 1,
        2005,
        and an Agreement and Third Amendment to Credit Agreement dated as of December
        30, 2005 (such Credit Agreement, as so amended, the “Credit
        Agreement”).
        Unless defined herein, terms used herein which are defined in the Credit
        Agreement shall have the meanings therein ascribed to them. The Borrower
        has
        asked the Bank (i) to increase to $40,000,000 the amount of credit available
        under the Note and (ii) to extend the Maturity Date as defined in the Credit
        Agreement and the final date as of which Letters of Credit under the Credit
        Agreement may be requested. The Bank is willing to grant that increase and
        those
        extensions, all upon the terms and conditions set forth in this Amendment.
        

       

      Agreements.

      

      NOW,
        THEREFORE, in consideration of the premises and for other good and valuable
        consideration, the receipt and sufficiency of which are acknowledged by the
        Parties, the Parties agree as follows:

      

      1.  Commitments.
        The
        aggregate amount of the Lenders' Commitments as of the date of this Amendment
        is
        $40,000,000, all of which is the Commitment of JPMCB.

       

      2.  Amendment
        of Definitions.
        The
        definition of “Maturity Date” set forth in Section
        1.01
        of the
        Credit Agreement is hereby amended to provide in its entirety as follows:
        

       

      “"Maturity
        Date"
        means
        the first to occur of (a) the date the Obligations become due pursuant to
        Article
        VII
        and (b)
        December 31, 2010.” 

       

      3.  Amendment
        of Section 2.04(c).
        The
        first sentence of Section 2.04(c) is hereby amended to provide in its entirety
        as follows:

       

      “Each
        Letter of Credit shall expire at or prior to the close of business on December
        31, 2012.”

       

      4.  Conditions
        Precedent.
        This
        Amendment shall be effective as of the date set forth above, subject to the
        satisfaction, in a manner satisfactory to the Bank, of each of the following
        conditions precedent:

       

      (a)  The
        Bank
        shall have received counterparts of this Amendment, duly executed by each
        of the
        Parties.

       

      (b)  The
        Bank
        shall have received a promissory note of the Borrower, signed by an authorized
        representative of the Borrower, payable to the order of JPMCB in the amount
        of
        JPMCB’s Commitment.

       

      (c)  The
        Bank
        shall have received such documents, resolutions, and certificates as the
        Bank
        may reasonably request relating to the organization, existence and good standing
        of the Borrower, the authorization of the Transactions and any other legal
        matters relating to the Borrower, this Agreement, the other Loan Documents,
        or
        the Transactions, all in form and substance satisfactory to the
        Bank.

       

      (d)  The
        Bank
        shall have received a certificate signed by a Financial Officer of the Borrower
        certifying that 

       

      (i)  Since
        December 31, 2006, there has been no material adverse change in the assets,
        liabilities, financial condition, business or affairs of the Borrower other
        than
        as disclosed in writing to the Administrative Agent before the execution
        of this
        Amendment. Each such written disclosure shall be included in the definition
        of
“Disclosed Matter” for purposes of the Credit Agreement and this Amendment.
        Since December 31, 2006, there has occurred no change, event, circumstance,
        or
        condition in or with respect to the assets, liabilities, financial condition,
        business or affairs or the Parent Company and its Subsidiaries, taken as
        a
        whole, which, individually or in the aggregate with all other such changes,
        events, circumstances and conditions occurring since September 30, 2005,
        could
        reasonably be expected to result in a Material Adverse Effect, except for
        Disclosed Matters;

       

      (ii)  The
        representations and warranties of the Borrower set forth in the Credit Agreement
        are true and correct (except to the extent such representations and warranties
        expressly relate solely to an earlier date);

       

      (iii)  The
        Borrower has no material domestic Subsidiary that has not executed and delivered
        to the Bank a Guaranty; 

       

      (iv)  The
        Borrower has no material international Subsidiary that has not executed and
        delivered to the Bank a Guaranty; and

       

      (v)  No
        Default has occurred and is continuing.

       

      (e)  No
        Legal Bar.
        The
        effectiveness of this Amendment shall not violate any Legal Requirement
        applicable to the Bank.

       

      5.  Representations
        True; No Default.
        The
        Borrower represents and warrants to the Bank that 

       

      (a)  the
        representations and warranties contained in the Credit Agreement are true
        and
        correct on and as of the date of this Amendment as though made on and as
        of such
        date (except to the extent such representations and warranties expressly
        relate
        solely to an earlier date);

       

      (b)  no
        event
        has occurred and is continuing which consti-tutes a Default under the Credit
        Agreement;

       

      (c)  the
        execution, delivery and performance of this Amendment have
        been
        duly authorized by all necessary corporate action on the part of the Borrower;
        

       

      (d)  this
        Amendment has been duly executed and delivered by the Borrower and constitutes
        the legal, valid and binding obligations of the Borrower, enforceable in
        accordance with its terms, subject to applicable bankruptcy, insolvency,
        reorganization, moratorium or other laws affecting creditors' rights generally
        and subject to general principles of equity, regardless of whether considered
        in
        a proceeding in equity or at law;
        and

       

      (e)  there
        are
        no actions, suits or proceedings by or before any arbitrator or Governmental
        Authority pending against or, to the knowledge of the Borrower, threatened
        against or affecting the Borrower or any of its consolidated Subsidiaries
        (i) as to which there is a reasonable possi-bility of an adverse
        determination and that, if adversely deter-mined, could reasonably be expected,
        individually or in the aggregate, to result in a Material Adverse Effect
        (other
        than the Disclosed Matters), or (ii) that involve this Agreement, any of
        the other Loan Documents, any Collateral, or the Transactions.

       

      6.  Ratification.
        Except
        as expressly amended (or, in the case of the Note, superseded) hereby, the
        Credit Agreement, as hereby amended, and the other Loan Do-cuments are in
        all
        respects ratified and confirmed and are, and shall continue to be, in full
        force
        and effect. The Borrower hereby agrees and acknowledges that all of its
        liabilities and obligations under the Credit Agreement and the other Loan
        Documents remain in full force and effect as of the date of this Amendment
        and
        after giving effect to it. 

       

      7.  Definitions
        and References.
        Unless
        otherwise defined herein, terms used herein which are defined in the Credit
        Agreement shall have the meanings therein ascribed to them. The term “Agreement”
as used in the Credit Agreement and the term “Credit Agreement” as used in the
        other Loan Documents or any other instrument, document or writing furnished
        to
        the Bank by or on behalf of the Borrower shall mean the Credit Agreement
        as
        hereby amended.

       

      8.  Expenses;
        Additional Information.
        The
        Borrower shall pay to the Bank on demand all expenses (including reasonable
        counsel's fees) incurred in connection with the preparation, reproduction,
        execution and delivery of this Amendment. 

       

      9.  Severability.
        If any
        term or provision of this Amendment or the application thereof to any person
        or
        circumstances shall, to any extent, be deemed invalid or unenforceable, the
        remainder of this Amendment, or the application of such term or provision
        to
        persons or circumstances other than those as to which it is held invalid
        or
        unenforceable, shall not be affected thereby and this Amendment shall be
        valid
        and enforced to the fullest extent permitted by applicable law. Any provision
        of
        this Amendment that is prohibited or unenforceable in any jurisdiction shall,
        as
        to such jurisdiction, be ineffective to the extent of such prohibition or
        unenforceability without invalidating the remaining portions thereof or
        affecting the validity or enforceability of such provision in any other
        jurisdiction and, to this end, the provisions of this Amendment are
        severable.

       

      10.  Miscellaneous.
        This
        Amendment (a) shall be binding upon and inure to the benefit of the Parties
        and their respective successors, assigns, receivers and trustees (however,
        the
        Borrower may not assign its rights hereunder without the express prior written
        consent of the Bank); (b) may be modified or amended only by a writing
        signed by each of the Parties; (c) SHALL
        BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
        TEXAS
        (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES) AND OF THE UNITED
        STATES OF AMERICA;
        (d) may be executed and delivered by facsimile or other electronic
        transmission, and may be executed in several counterparts, and by the Parties
        on
        separate counter-parts, and each counterpart, when so executed and delivered,
        shall constitute an original agreement, and all such separate counterparts
        shall
        constitute but one and the same agreement, (e) embodies the entire agreement
        and
        under-standing among the Parties with respect to the subject matter hereof
        and
        supersedes all prior agreements, consents and understandings relating to
        such
        subject matter, and (f) is a Loan Document. The headings herein shall be
        accorded no significance in inter-preting this Amendment.

       

      11.  ENTIRE
        AGREEMENT.

       

      THIS
        AMENDMENT REPRESENTS THE FINAL AGREEMENT AMONG THE PARTIES AS TO THE SUBJECT
        MATTER HEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS
        OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
        AGREEMENTS AMONG THE PARTIES.

      

      

      IN
        WITNESS WHEREOF, the Parties have caused this Amendment to be executed by
        their
        respective duly authorized officers effective as of the date written
        above.

       

      
        

        
          	 	
                  LUFKIN
                    INDUSTRIES, INC.,
                    a
                    Texas corporation

                
	 	 	 
	 	
                  By:

                	
                  /s/
                    R. D. Leslie

                
	 	
                  Name:

                	
                  R.
                    D. Leslie

                
	 	
                  Title:

                	
                  Vice
                    President/Treasurer/Chief Financial
                    Officer

                

        

        

        

        
          	 	
                  JPMORGAN
                    CHASE BANK, N.A.,
                    as Lender, as Issuing Bank, and as Administrative Agent under
                    the Credit
                    Agreement

                
	 	 	 
	 	
                  By:

                	
                  /s/
                    Paul Bedford

                
	 	
                  Name:

                	
                  Paul
                    Bedford

                
	 	
                  Title:

                	
                  Senior
                    Vice President

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