Document:

exv10w5

 

Exhibit 10.5

BIOCRYST PHARMACEUTICALS, INC.

2190 PARKWAY LAKE DRIVE

BIRMINGHAM, AL 35244

205-444-4600 205-444-4640 FAX

www.biocryst.com

April 2, 2007

David S. McCullough

101 Salford Court

Cary, NC 27512

Dear Mr. McCullough:

On behalf of BioCryst Pharmaceuticals, Inc., a Delaware corporation (the “BioCryst” or the
“Company”), we are very excited to offer you the position of Vice President Strategy and
Commercialization. We, along with the other members of the Company’s Board of Directors (the
“Board”), and the Company’s management team, are all very impressed with you and what you will
bring to the Company. We believe that with your background, you will make significant
contributions to the success of the Company.

This letter agreement (the “Agreement”) will serve to confirm our agreement with respect to
the terms and conditions of your employment.

1.    Term of Employment. Subject to the terms and conditions of this Agreement, BioCryst hereby
employs David McCullough (the “Employee”), effective April 2, 2007, as Vice President Strategy and
Commercialization of BioCryst, and Employee hereby accepts such employment. The Employee shall
not, during the term of his employment, engage in any other business activity that would interfere
with, or prevent him from carrying out, his duties and responsibilities under this Agreement.
BioCryst hereby agrees and acknowledges that any compensation which the Employee receives from
participation in such allowable activities shall be outside the scope of this Agreement and in
addition to any compensation received hereunder. The term of employment of Employee under this
Agreement shall commence as of April 2, 2007, and shall terminate on April 1, 2008, unless earlier
terminated in accordance with the provisions of paragraph 4 hereof. Company shall notify Employee
not later than February 1, 2008 if it does not intend to continue his employment past April 1,
2008. In the event Employee is retained by the Company as Vice President Strategy and
Commercialization past April 1, 2008, the terms of his employment shall continue to be governed by
this Agreement unless otherwise provided by the Board.

	2.	 	Basic Full-Time Compensation and Benefits.

(a) As basic compensation for services rendered under this Agreement, Employee shall be
entitled to receive from BioCryst, a salary of $17,917 per month ($215,000 per annum)
payable on the first business day of each month during the term of this Agreement, beginning
on May 1, 2007. This salary will be reviewed annually by the Board of Directors and may be
raised at the discretion of the Board.

(b) In addition to the basic compensation set forth in (a) above, Employee shall be
eligible to earn a cash bonus, payable as soon as reasonably practicable in calendar year
2008, based on the Company’s achievement of performance related goals proposed by management
and approved by the Board for the Company’s fiscal year ending December 31, 2007 (the “2007
Fiscal Year”). The bonus actually earned, if any, shall be based on a target amount equal
to 30% of the base compensation earned by executive during the 2007

 

 

 

Fiscal Year (the “Target Amount”), and shall be pro-rated based on the degree to which
the performance goals have been achieved, subject to a minimum level of achievement proposed
by management and approved by the Board. The Board may, in its discretion, approve a bonus
in excess of the Target Amount if the performance goals have been exceeded. Employee must be
employed through April 1, 2008 in order to receive the annual bonus. In the event Employee
remains in the employ of the Company past April 1, 2008, the Company shall provide Employee
with similar future annual bonus opportunities.

(c) In addition to the basic compensation set forth in (a) and (b) above, Employee
shall be entitled to receive such other benefits and perquisites provided to other executive
officers of BioCryst which benefits may include, without limitation, reasonable vacation
(currently 4 weeks), sick leave, medical benefits, life insurance, and participation in
profit sharing or retirement plans.

(d) In addition to the compensation set forth in paragraphs 2(a), (b) and (c) above,
the Board of Directors of BioCryst may from time to time, in its discretion, also grant such
other cash or stock bonuses to the Employee either as an award or as an incentive as it
shall deem desirable or appropriate.

	3.	 	Initial Equity Awards. In connection with Employee’s execution of this Agreement, Employee
shall be issued initial equity incentive awards as follows:

(a) The Company shall grant to Employee an option to purchase 150,000 shares of the
Company’s common stock (“Common Stock”), with an exercise price equal to the fair market
value of the Common Stock on the date of the grant, which option shall vest and become
exercisable in accordance with paragraph 3(c) below. The option will be an “incentive stock
option” up to the lesser of (i) 40,000 shares, or (ii) the maximum number of shares that may
be covered under an incentive stock option pursuant to the tax code.

(b) The Company shall grant to Employee 10,000 shares of its Common Stock, which shall
vest in accordance with paragraph 3(c) below. Employee understands and acknowledges that
prior to vesting, the shares may not be transferred and will be subject to forfeiture.

(c) The awards set forth in paragraphs 3(a) and (b) above will vest, contingent on
Employee’s continued provision of services to the Company on each respective vesting date,
over a period of 4 years as follows: one year after Employee’s start date, 25% of the
awards will vest; thereafter, the remaining shares will vest on a monthly schedule of 1/48
of the total number of shares subject to the grants upon the completion of each month of
service.

(d) To the extent the stock option award set forth in paragraph 3(a) above is an
“incentive stock option,” it shall be granted under and subject to the terms of the BioCryst
Pharmaceuticals, Inc. Stock Incentive Plan (the “Stock Incentive Plan”). All remaining
awards shall be issued outside of the Stock Incentive Plan as a material inducement for
Employee to accept employment with the Company. All awards shall be subject to the terms of
specific award agreements between the Employee and the Company, which Employee will be
required to execute as a condition of the grants.

	4.	 	Termination.

(a) If Employee’s employment is terminated as a result of (i) the expiration of the
stated term of this Agreement, (ii) the Employee’s resignation, (iii) the Employee’s death,
(iv) by the Company for Cause, or (v) by the Company as a result of Disability, Employee
will receive base salary, as well as any accrued but unused vacation (if applicable) and
other compensation, earned through the effective termination date, and no additional
compensation.

For all purposes under this Agreement, a termination for “Cause” shall mean a
determination by the Board that Employee’s employment be terminated for any of the following
reasons: (i) failure or refusal to comply in any material respect with lawful policies,
standards or regulations of Company; (ii) a violation of a federal or state law or
regulation applicable to the business of the Company; (iii) conviction or plea of no contest
to a felony under the laws of the United States or any State; (iv) fraud or misappropriation
of property belonging to the Company or its affiliates; (v) a breach in any material respect
of the terms of any
confidentiality, invention assignment or proprietary information agreement with the
Company or with a former employer, (vi) failure to satisfactorily perform Employee’s duties
after having received written notice of such failure and at least thirty (30) days to cure
such failure, or (vii) misconduct or gross negligence in connection with the performance of
Employee’s duties.

 

 

 

“Disability” shall mean the inability of Employee to perform his duties hereunder by
reason of physical or mental incapacity for ninety (90) days, whether consecutive or not,
during any consecutive twelve (12) month period.

(b) If the Company terminates Employee’s employment without Cause, it shall provide
written notice of termination to Employee, along with any base salary and accrued but unused
vacation or other compensation earned through the effective termination date, and,
conditioned on Employee (a) signing and not revoking a release of any and all claims, in a
form prescribed by the Company, and (b) returning to the Company all of its property and
confidential information that is in Employee’s possession, Employee will receive the
following: (i) continuation of base salary for 1 year beyond the effective termination date,
payable in accordance with the regular payroll practices of the Company, provided that these
payments will be terminated as of the date Employee commences employment with, or provide
services as a consultant to, any entity other than the Company; and (ii) if Employee elects
to continue health insurance coverage under the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended (“COBRA”) following termination of employment, the Company shall pay
the monthly premium under COBRA until the earlier of (x) 6 months following the effective
termination date, or (y) the date upon which Employee commences employment with an entity
other than the Company. Employee will notify the Company in writing within 5 days of your
receipt of an offer of employment or a consulting position with any entity other than the
Company, and will accordingly identify the date upon which you will commence employment or
consulting services in such writing. The parties agree that salary continuance under this
paragraph is meant to be provided while Employee actively seeks future employment and as
noted will cease once Employee has secured such employment or consulting service.

(c) If, during Employee’s employment with the Company, there is a Change of Control,
all equity awards granted to Employee under paragraph 3 and otherwise shall vest in full.
In addition, if the Company terminates Employee’s employment without Cause or Employee is
Constructively Terminated within 6 months of the Change in Control, then Employee will be
eligible to receive the benefits provided in paragraph 4(b), under the terms and conditions
set forth in that paragraph.

“Change of Control” shall be defined as (i) a merger or consolidation in which the
Company is not the surviving entity, except for a transaction the principal purpose of which
is to change the State of the Company’s incorporation, (ii) the sale, transfer or other
disposition of all or substantially all of the assets of the Company in liquidation or
dissolution of the Company, (iii) any reverse merger in which the Company is the surviving
entity but in which securities possessing more than fifty percent (50%) of the total
combined voting power of the Company’s outstanding securities are transferred to a person or
persons different from the persons holding those securities immediately prior to such
merger, (iv) any person or related group of persons (other than the Company or a person
that directly or indirectly controls, is controlled by, or is under common control with, the
Company) directly or indirectly acquires beneficial ownership (within the meaning of Rule
13d-3 of the 1934 Act) of securities possessing more than fifty percent (50%) of the total
combined voting power of the Company’s outstanding securities pursuant to a tender or
exchange offer made directly to the Company’s stockholders; or (iv) a change in the
composition of the Board over a period of twenty-four (24) consecutive months or less such
that a majority of the Board members (rounded up to the next whole number) ceases, by reason
of one or more contested elections for Board membership, to be comprised of individuals who
either (A) have been Board members continuously since the beginning of such period or (B)
have been elected or nominated for election as Board members during such period by at least
two-thirds of the Board members described in clause (A) who were still in office at the time
such election or nomination was approved by the Board.

“Constructive Termination” shall mean a resignation of employment within 30 days of the
occurrence of any of the following events which occurs within 6 months following a Change of
Control: (i) a material reduction in Employee’s responsibilities; (ii) a material reduction
in Employee’s base salary, unless such reduction is comparable in percentage to, and is part
of, a reduction in the base salary of all executive officers
of the Company; or (iii) a relocation of Employee’s principal office to a location more
than 50 miles from the location of Employee’s principal office immediately preceding a
Change of Control.

 

 

 

(d) In the event (i) any payments described in paragraphs 4(b) or (c) above would be
“deferred compensation” subject to Section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”), and (ii) Employee is a “specified employee” (as defined in Code
Section 409A(2)(B)(i)), such payments shall, to the extent required by Code Section 409A, be
delayed for the minimum period and in the minimum manner necessary to avoid the imposition
of the tax required by Code Section 409A.

	5.	 	Non-Competition; Proprietary Information and Inventions.

(a) Proprietary Information and Inventions Agreement. As a condition precedent
to the employment of Employee by the Company, Employee shall execute the Company’s standard
Proprietary Information and Inventions Agreement, attached hereto as Exhibit A.

(b) Non-Competition Agreement. The Employee agrees that for one (1) year
following the termination of this Agreement by reason of the voluntary termination by the
Employee, without cause on the part of BioCryst, the Employee shall not become the Chief
Executive Officer or become a key executive of another for-profit business enterprise whose
activities are at such time directly competitive with BioCryst.

(c) Equitable Remedies. Employee acknowledges and recognizes that a violation
of this paragraph by Employee may cause irreparable and substantial damage and harm to
BioCryst or its affiliates, could constitute a failure of consideration, and that money
damages will not provide a full remedy for BioCryst for such violations. Employee agrees
that in the event of his breach of this paragraph, BioCryst will be entitled, if it so
elects, to institute and prosecute proceedings at law or in equity to obtain damages with
respect to such breach, to enforce the specific performance of this paragraph by Employee,
and to enjoin Employee from engaging in any activity in violation hereof.

6.    Golden Parachute Provisions. If it is determined that any payment or benefit provided 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, including, by example and not
by way of limitation, acceleration by the Company or otherwise of the date of vesting or payment
under any plan, program, arrangement or agreement of the Company would be subject to the excise tax
imposed by Code section 4999 or any interest or penalties with respect to such excise tax (such
excise tax together with any such interest and penalties, shall be referred to as the “Excise
Tax”), then the Company shall first make a calculation under which such payments or benefits
provided to the Employee are reduced to the extent necessary so that no portion thereof shall be
subject to the Excise Tax (the “4999 Limit”). The Company shall then compare (a) the Employee’s
Net After-Tax Benefit (as defined below) assuming application of the 4999 Limit with (b) the
Employee’s Net After-Tax Benefit without application of the 4999 Limit. The Employee shall be
entitled to the greater of (a) or (b). “Net After-Tax Benefit” shall mean the sum of (i) all
payments that Employee receives or is entitled to receive that are contingent on a change in the
ownership or effective control of the Company or in the ownership of a substantial portion of the
assets of the Company within the meaning of Code section 280G(b)(2), less (ii) the amount of
federal, state, local, employment, and Excise Tax (if any) imposed with respect to such payments.
If the Employee is required to reduce payments to which he is otherwise entitled such that no
portion thereof is subject to the Excise Tax, the Employee shall choose which payments shall be
reduced and the amount of the reduction of each payment.

	7.	 	Miscellaneous.

(a) Entire Agreement. This Agreement, including the exhibits hereto,
constitutes the entire agreement between the parties relating to the employment of the
Employee by BioCryst and there are no terms relating to such employment other than those
contained in this Agreement. No modification or variation hereof shall be deemed valid
unless in writing and signed by the parties hereto. No waiver by either party of any
provision or condition of this Agreement shall be deemed a waiver of similar or dissimilar
provisions or conditions at any time.

(b) Assignability. This Agreement may not be assigned without prior written
consent of the parties hereto. To the extent allowable pursuant to this Agreement, this
Agreement shall be binding upon and
shall inure to the benefit of each of the parties hereto and their respective
executors, administrators, personal representatives, heirs, successors and assigns.

 

 

 

(c) Notices. Any notice or other communication given or rendered hereunder by
any party hereto shall be in writing and delivered personally or sent by registered or
certified mail, postage prepaid, at the respective addresses of the parties hereto as set
forth below.

(d) Captions. The section headings contained herein are inserted only as a
matter of convenience and reference and in no way define, limit or describe the scope of
this Agreement or the intent of any provision hereof.

(e) Taxes. All amounts to be paid to Employee hereunder are in the nature of
compensation for Employee’s employment by BioCryst, and shall be subject to withholding,
income, occupation and payroll taxes and other charges applicable to such compensation.

(f) Governing Law. This Agreement is made and shall be governed by and
construed in accordance with the laws of the State of Alabama without respect to its
conflicts of law principles.

(g) Date. This Agreement is dated as of April 2, 2007.

If the foregoing correctly sets forth our understanding, please signify your acceptance of
such terms by executing this Agreement, thereby signifying your assent, as indicated below.

	 	 	 	 	 
	 	 	Yours very truly,
	 
	 	 	 	 
	 	 	BIOCRYST PHARMACEUTICALS, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Jon Stonehouse
	 

	 	 	 	Jon Stonehouse
	 

	 	 	 	Chief Executive Officer
	 
	 	 	 	 
	 	 	Address:
	 
	 	 	 	 
	 	 	2190 Parkway Lake Drive
	 	 	Birmingham, Alabama 35244

AGREED AND ACCEPTED, as of this 2nd day of April, 2007.

	 	 	 
	 

	 	/s/ David McCullough
	 

	 	David McCullough
	 
	 	 
	 

	 	Address:
	 

	 	101 Salford Court
	 

	 	Cary, NC 27512Filed by Bowne Pure Compliance

 

Exhibit
10.1

AMERIGAS PROPANE, INC.

NONQUALIFIED DEFERRED COMPENSATION PLAN

 

 

 

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. In recognition of the services provided to AmeriGas Propane, Inc.
(“AGP”) by certain senior management and highly compensated employees, AGP maintains the AmeriGas
Propane, Inc. Non-Qualified Deferred Compensation Plan (the “Plan”) to provide such employees with
retirement benefits that would otherwise be unavailable because of the nondiscrimination tests and
deferral limitations to the AmeriGas Propane, Inc. 401(k) Savings Plan (the “AGP 401(k) Plan”)
mandated under the Internal Revenue Code. The Plan is effective February 1, 2007, under the terms
and conditions hereinafter set forth.

ARTICLE II

DEFINITIONS

Sec. 2.01 “Account” shall mean the account or accounts maintained on the books of AGP used
solely to calculate the amount payable to each Participant under this Plan and shall not constitute
a separate fund of assets.

Sec. 2.02 “Administrative Committee” shall mean the administrative committee designated
pursuant to Article VII of the Plan to administer the Plan in accordance with its terms.

Sec. 2.03 “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. 2.04 “AGP” shall mean AmeriGas Propane, Inc.

Sec. 2.05 “AGP 401(k) Plan” shall mean the AmeriGas Propane, Inc. 401(k) Savings Plan.

Sec. 2.06 “Beneficiary” shall mean the person or entity designated by a Participant, in a
written instrument submitted to the Administrative Committee. In the event the Participant fails
to properly designate a Beneficiary or in the event that the Participant is predeceased by all
designated primary and secondary Beneficiaries, the death benefit shall be payable to the
Participant surviving-spouse or, if none, to the Participant’s estate.

Sec. 2.07 “Board” shall mean the Board of Directors of AGP.

Sec. 2.08 “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 Plan.

Sec. 2.09 “Compensation” shall mean, for any Plan Year, the total remuneration paid by the
Employer to or on behalf of the Participant during the Plan Year, exclusive of compensation paid or
accrued with respect to service performed prior to the date on which the Employee became a
Participant. Compensation shall include basic salary or wages, annual incentive bonuses,
commissions and all other direct current money compensation (other than long-term incentive plan
payments and severance pay), amounts paid in reimbursement of, or in lieu of, expenses
incurred by the Participant in the performance of his duties, and the value of non-money awards or
gifts made by the Employer; provided, however, that Compensation shall be determined prior to
giving effect to any salary reduction election made pursuant to the terms of any plan.

 

 

 

Sec. 2.10 “Effective Date” shall mean February 1, 2007.

Sec. 2.11 “Eligible Employee” shall mean an Employee who is eligible to participate in the
Plan for a particular Plan Year as designated and approved by the Administrative Committee in its
sole discretion; provided, however, that to qualify as an “Eligible Employee” for purposes of the
Plan, the Employee must be a member of a “select group of management or highly compensated
employees” within the meaning of sections 201, 301 and 401 of ERISA, as determined by the
Administrative Committee.

Sec. 2.12 “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 Plan.

Sec. 2.13 “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

Sec. 2.14 “Internal Revenue Code” shall mean the Internal Revenue Code of 1986, as amended.

Sec. 2.15 “Key Employee” shall mean an employee who, at any time during the 12-month period
ending on the identification date (defined below), is (i) an officer of AGP or a member of its
controlled group (as determined for purposes of section 416(i) of the Internal Revenue Code) who
has annual compensation greater than $135,000 (or such other amount as may be in effect under
section 416(i)(1) of the Internal Revenue Code), (ii) a 5% owner of AGP or (iii) a 1% owner of AGP
who has annual compensation greater than $150,000. The identification date shall be each December
31, and the determination of Key Employees as of such identification date shall apply for the
12-month period following April 1 after the identification date. The determination of Key
Employees, including the number and identity of persons considered officers, shall be made by the
Administrative Committee in accordance with the provisions of sections 416(i) and 409A of the
Internal Revenue Code and the regulations issued thereunder.

Sec. 2.16 “Participant” shall mean any Eligible Employee who is designated and approved by the
Administrative Committee to participate in this Plan. Such Eligible Employee shall remain a
Participant in this Plan until such time as all benefits payable under this Plan have been paid in
accordance with the provisions hereof.

Sec. 2.17 “Plan Year” shall mean the period beginning on February 1, 2007 and ending on
December 31, 2007, and thereafter, each calendar year.

 

3

 

Sec. 2.18 “Plan” shall mean the AmeriGas Propane, Inc. Non-Qualified Deferred Compensation
Plan as set forth herein, and as the same may from time-to-time hereafter be amended.

Sec. 2.19 “Postponement Period” shall mean, for a Key Employee, the period of six months after
separation from service (or such other period as may be required by Section 409A of the Internal
Revenue Code), during which Plan benefits may not be paid to the Key Employee under Section 409A of
the Internal Revenue Code.

Sec. 2.20 “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. 2.21 “Valuation Date” shall mean the last day of the Plan Year and each other interim
date during the Plan Year or dates determined by the Administrative Committee.

ARTICLE III

PARTICIPATION AND VESTING

Sec. 3.01 Participation. The Administrative Committee shall be authorized to
designate who, from among the Eligible Employees, shall be a Participant for purposes of the Plan.

Sec. 3.02 Vesting. A Participant, at all times, shall have a fully (100%) vested and
nonforfeitable interest in his Account under the Plan.

Sec. 3.03 Rehired Employees. An Eligible Employee who terminates employment with AGP
and is rehired in the same Plan Year may not commence contributions under the Plan until the next
Plan Year; provided, however, he must make an election to reduce his Compensation prior to the
start of the Plan Year, in a manner prescribed by the Administrative Committee, and his resumption
of participation must be approved by the Administrative Committee. If an employee is rehired after
the beginning of a subsequent Plan Year, he may become a Participant in the Plan, if his resumption
of participation in the Plan is approved by the Administrative Committee, by making an election to
reduce Compensation, as soon as practicable, but, in any event, the election must be made within
thirty (30) days of the rehire date. Any election made according to this Section 3.03 will become
effective the first day of the month following thirty (30) days after the rehire date.
Notwithstanding the foregoing, however, any election by a Participant, pursuant to this Section, to
make an election to reduce Compensation shall apply only to Compensation earned after the date on
which such election becomes effective.

Sec. 3.04 Newly Hired Employees. Any newly hired Eligible Employees, who has been
designated as a Participant by the Administrative Committee, may make an election to reduce
Compensation, as soon as practicable, but, in any event, the election must be made within thirty
(30) days of the date of such designation. Any election made according to this Section 3.04 will
become effective the first day of the month following thirty (30) days after the hire date.

 

4

 

ARTICLE IV

BENEFITS

Sec. 4.01 Amount. For each Plan Year, a Participant’s Account shall be credited by
AGP with an amount equal to the amount of the Participant’s Compensation by which each Participant
elects, in the manner prescribed by the Administrative Committee, to reduce his Compensation
through payroll reductions, on and after the effective date of the election, from one percent (1%)
to twenty-five percent (25%), in whole percentages, of his Compensation. The maximum annual amount
by which the Participant may reduce his Compensation under the Plan is $10,000. Notwithstanding
the foregoing, a Participant who takes a hardship withdrawal from the AGP 401(k) Plan shall have
his payroll reductions and corresponding credit to his Account automatically suspended for a period
of six months, to the extent required by final Treasury Regulations governing such hardship
withdrawals and for such longer period as may be required by section 409A of the Code and the
Treasury Regulations promulgated thereunder. A Participant whose payroll reductions have been
suspended due to a hardship withdrawal from the AGP 401(k) Plan may recommence participation in the
Plan (assuming such Participant continues to be eligible to participate) in a subsequent Plan Year
by making an Compensation reduction election, in the manner prescribed by the Administrative
Committee, prior to the beginning of the applicable Plan Year; provided, however, that any such
subsequent election to reduce Compensation through payroll reductions will not become effective in
the subsequent Plan Year until the applicable suspension period has expired as determined by the
Administrative Committee.

Sec. 4.02 Investment of Account.

(a) For purposes of measuring the investment returns of his Account, a Participant may select,
from the investment funds selected by the Administrative Committee, the investment funds in which
all or part of his Account shall be deemed to be invested.

(b) A Participant shall make an investment designation by means of Fidelity’s netBenefits
WebPage which shall remain effective until another valid direction has been made by the
Participant. The Participant may amend his investment designation at such time or times as
permitted by the Administrative Committee in its sole discretion, and in accordance with such
procedures as may be established by the Administrative Committee.

(c) The investment funds deemed to be made available to the Participant, and any limitation on
the maximum or minimum percentages of the Participant’s Account that may be deemed to be invested
in any particular fund, shall be the same as from time-to-time communicated to the Participant by
the Administrative Committee.

(d) In the absence of any Participant election directing the investment of his Account, a
Participant shall be deemed to have elected that his Account be invested in the manner selected by
the Administrative Committee for such circumstance.

(e) The Administrative Committee shall provide a statement at least annually to the
Participant showing such information as is appropriate, including the aggregate amount in his
Account as of a reasonably current date.

 

5

 

Sec. 4.03 Valuation of Account.

(a) AGP shall establish a bookkeeping Account for each Participant to which will be credited
amounts described in Section 3.01 at such times and in accordance with such procedures as may be
prescribed by the Administrative Committee. The Account shall be reduced to reflect any
distributions from such Account. Such reductions shall be charged to the Account as of the date
such distributions are made.

(b) As of each Valuation Date, income, gain and loss equivalents (determined as if the Account
was invested in the manner set forth under Section 4.03, hereof) attributable to the period
following the next preceding Valuation Date shall be credited to and/or deducted from the
Participant’s Account.

ARTICLE V

FORM AND TIMING OF BENEFIT DISTRIBUTION

Sec. 5.01 Form of Benefit Distributions. Benefits payable under the Plan shall be
paid in a lump sum to the Participant or, in the event of death, the Participant’s Beneficiary.

Sec. 5.02 Timing of Benefit Distributions. Except as otherwise required by Section
5.04 below, benefits payable under the Plan shall be paid as soon as practicable after the earliest
of a Participant’s (a) retirement, (b) termination of employment with AGP and Subsidiaries and
Affiliates, or (c) disability, within the meaning of section 409A of the Internal Revenue Code. In
no event shall such payment be made later than the later of (i) 90 days after a Participant
experiences such retirement, termination of employment or disability, as the case may be, or (ii)
December 31 of the year in which such a retirement, termination of employment or disability, as the
case may be, occurs.

Sec. 5.03 Death Benefit. Upon the death of a Participant prior to the payment of
benefits under this Plan, AGP shall pay to the Participant’s Beneficiary an amount equal to the
Participant’s Account balance in the form of a lump-sum payment.

Sec. 5.04 Key Employees. If required by section 409A of the Internal Revenue Code, no
benefits shall be paid to a Participant who is a Key Employee during the Postponement Period. If a
Participant is a Key Employee and payment of benefits under the Plan is required to be delayed for
the Postponement Period, the accumulated amounts withheld on account of section 409A of the
Internal Revenue Code shall be paid in a lump-sum payment within 30 days after the end of the
Postponement Period. If the Participant dies during the Postponement Period prior to the payment
of benefits, the amounts withheld on account of section 409A of the Internal Revenue Code shall be
paid to the Participant’s surviving spouse within 60 days after the Participant’s death.

 

6

 

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 rabbi trust 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.

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 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 members 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 Plan. 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 Plan;

 

7

 

(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 Plan, 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.

Sec. 7.06 Committee Discretion. Any discretion, actions or interpretations to be made
under the Plan 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 Plan 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 Plan 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.

 

8

 

Sec. 8.02 Plan Termination. While it is AGP’s intention to continue the Plan
indefinitely in operation, the right is, nevertheless, reserved to terminate the Plan in whole or
in part at any time for any reason without either the consent of or prior notice to any
Participant. No such termination shall reduce the benefit that has accrued on behalf of a
Participant as of the effective date of the termination, but AGP may immediately distribute all
accrued benefits upon termination of the Plan in accordance with section 409A of the Internal
Revenue Code.

ARTICLE IX

CLAIMS PROCEDURES

Sec. 9.01 Claim. Any person or entity claiming a benefit, requesting an
interpretation or ruling under the Plan (hereinafter referred to as “claimant”), or requesting
information under the Plan 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 Plan 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 Plan’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 Plan provisions;

 

9

 

(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
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 Plan 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 Plan, 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 Plan, nor any
modification thereof, nor the creation of any fund, trust or account, nor the payment of any
benefits shall be construed as giving any Participant or 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 Plan had never been adopted.

Sec. 10.03 Severability of Provisions. If any provision of the Plan shall be held
invalid or unenforceable, such validity or unenforceability shall not affect any other provisions
hereof, and the Plan shall be construed and enforced as if such provision had not been included.

Sec. 10.04 Heirs, Assigns and Personal Representatives. The Plan 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 Plan, and shall not be employed
in the construction of the Plan.

 

10

 

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 Plan 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.

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 Obligations of AGP. If a Participant becomes entitled to a distribution of
benefits under the Plan, and if at such time the Participant has outstanding any debt, obligation,
or other liability representing an amount owing to AGP, then AGP may offset such amount owed to it
against the amount of benefits otherwise distributable. Such determination shall be made by the
Administrative Committee.

Sec. 10.11 Withholding. AGP shall withhold from any payment made pursuant to this
Plan any taxes required to be withheld from such payments under local, state or Federal law.

Sec. 10.12 Section 409A. The Plan is intended to comply with the requirements of
section 409A of the Internal Revenue Code. Notwithstanding anything in the Plan to the contrary,
allocations to the Plan shall be made consistent with section 409A, and distributions may only be
made under the Plan upon an event and in a manner permitted by section 409A of the Internal Revenue
Code. All payments under the Plan shall be subject to applicable tax withholding.

IN WITNESS WHEREOF, and as evidence of its adoption of the Plan, AGP has caused the same to be
executed by its duly authorized officer and its corporate seal to be affixed hereto as of the ___day of _________, 2007.

	 	 	 	 	 
	Attest:	 	AMERIGAS PROPANE, INC.
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	Robert H. Knauss

	 	 	 	President and Chief Executive Officer
	Secretary
	 	 	 	 
	 	 	Date: ____ __, 2007

 

11

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