FORM ECNA AMENDED AND RESTATED EMPLOYMENT CONTINUATION AND NONCOMPETITION AGREEMENT
Exhibit 10.1
FORM ECNA
AMENDED AND RESTATED
EMPLOYMENT CONTINUATION AND
NONCOMPETITION AGREEMENT
EMPLOYMENT CONTINUATION AND
NONCOMPETITION AGREEMENT
THIS AGREEMENT between [subsidiary corporation], a [state] corporation (the “Company”),
NATIONAL FUEL GAS COMPANY, a New Jersey corporation (“National”), and (the “Executive”),
dated as of the day of , , and amended and restated as of the day of
, .
W I T N E S S E T H :
WHEREAS, the Company and National wish to attract and retain well-qualified executive and key
personnel and to assure continuity of management, which will be essential to its ability to
evaluate and respond to any actual or threatened Change in Control (as defined below) in the best
interests of shareholders;
WHEREAS, the Executive is a valuable employee of the Company, an integral part of its
management team and a key participant in the decision making process relative to short-term and
long-term planning and policy for the Company;
WHEREAS, the Company and National understand that any actual or threatened Change in Control
will present significant concerns for the Executive with respect to his financial and job security;
WHEREAS, the Company and National wish to encourage the Executive to continue his career and
services with the Company for the period during and after an actual or threatened Change in Control
and to assure to the Company the Executive’s services during the period in which such a Change in
Control is threatened, and to provide the Executive certain financial assurances to enable the
Executive to perform the responsibilities of his position without undue distraction and to exercise
his judgment without bias due to his personal
circumstances; and
WHEREAS, the Board of Directors of National has determined that it would be in the best
interests of National and its shareholders to assure continuity in the management of National in
the event of a Change in Control by entering into an employment continuation and noncompete
agreement with Executive;
WHEREAS, to achieve these objectives, the Company, National and the Executive desire to enter
into an agreement providing the Company and the Executive with certain rights and obligations upon
the occurrence of a Change in Control or Potential Change in Control (as defined in Section 2).
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NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, it is
hereby agreed by and between the Company, National and the Executive as follows:
1. Operation of Agreement. (a) Effective Date. The effective date of this Agreement shall be
the date on which a Change in Control occurs (the “Effective Date”), provided that, except as
provided in Section 1(b), if the Executive is not employed by the Company, National or any of their
subsidiaries on the Effective Date, this Agreement shall be void and without effect.
(b) Termination of Employment Following a Potential Change in Control. Notwithstanding Section
1(a), if (i) the Executive’s employment is terminated by the Company Without Cause (as defined in
Section 6(c)) after the occurrence of a Potential Change in Control and prior to the occurrence of
a Change in Control and (ii) a Change in Control, which also constitutes a “change in control
event” for purposes of Section 409A of the Code, occurs within two years of such termination, the
Executive shall be deemed, solely for purposes of determining his rights under this Agreement, to
have remained employed until the date such Change in Control occurs and to have been terminated by
the Company without Cause immediately after the Change in Control. For this purpose, a Change in
Control shall also be a change of control event for purposes of Section 409A of the Code if it is a
change in the ownership or effective control of the Company, or a change in the ownership of a
substantial portion of the assets of the Company, as such terms are defined in Treas. Reg.
§ 1.409A-3(i)(5) (or any successor provision).
2. Definitions. (a) Change in Control. For the purposes of this Agreement, a “Change in
Control” shall be deemed to have occurred if any of the following have occurred:
(i) either (a) the Company or National shall receive a report on Schedule 13D, or an amendment
to such a report, filed with the Securities and Exchange Commission pursuant to Section 13(d) of
the Securities Exchange Act of 1934 (the “1934 Act”) disclosing that any person (as such term is
used in Section 13(d) of the 1934 Act) (“Person”), is the beneficial owner, directly or indirectly,
of twenty (20) percent or more of the outstanding stock of National or (b) the Company or National
has actual knowledge of facts which would require any Person to file such a report on Schedule 13D,
or to make an amendment to such a report, with the SEC (or would be required to file such a report
or amendment upon the lapse of the applicable period of time specified in Section 13(d) of the ▇▇▇▇
▇▇▇) disclosing that such Person is the beneficial owner, directly or indirectly, of twenty (20)
percent or more of the outstanding stock of National;
(ii) purchase by any Person, other than National or a wholly-owned subsidiary of National or
an employee benefit plan sponsored or maintained by National or a wholly-owned subsidiary of
National, of shares pursuant to a tender or exchange offer to acquire any stock of
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National (or securities convertible into stock) for cash, securities or any other consideration
provided that, after consummation of the offer, such Person is the beneficial owner (as defined in
Rule 13d-3 under the 1934 Act), directly or indirectly, of twenty (20) percent or more of the
outstanding stock of National (calculated as provided in paragraph (d) of Rule 13d-3 under the 1934
Act in the case of rights to acquire stock);
(iii) approval by the shareholders of National of (a) any consolidation or merger of National
in which National is not the continuing or surviving corporation or pursuant to which shares of
stock of National would be converted into cash, securities or other property, other than a
consolidation or merger of National in which holders of its stock immediately prior to the
consolidation or merger have substantially the same proportionate ownership of common stock of the
surviving corporation immediately after the consolidation or merger as immediately before, or (b)
any consolidation or merger in which National is the continuing or surviving corporation but in
which the common shareholders of National immediately prior to the consolidation or merger do not
hold at least a majority of the outstanding common stock of the continuing or surviving corporation
(except where such holders of common stock hold at least a majority of the common stock of the
corporation which owns all of the common stock of National), or (c) any sale, lease, exchange or
other transfer (in one transaction or a series of related transactions) of all or substantially all
the assets of National; or
(iv) a change in the majority of the members of the Board of Directors of National (the
“Board”) within a 24-month period unless the election or nomination for election by National’s
shareholders of each new director was approved by the vote of at least two-thirds of the directors
then still in office who were in office at the beginning of the 24-month period.
(b) Potential Change in Control. For the purposes of this Agreement, a Potential Change in
Control shall be deemed to have occurred if:
(i) a Person commences a tender offer (with adequate financing) for securities representing at
least twenty (20) percent of the outstanding stock of National (calculated as provided in paragraph
(d) of Rule 13d-3 under the 1934 Act in the case of rights to acquire stock);
(ii) National enters into an agreement the consummation of which would constitute a Change in
Control;
(iii) proxies for the election of directors of National are solicited by anyone other than
National; or
(iv) any other event occurs which is deemed to be a Potential Change in Control by the Board.
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3. Employment Period. Subject to Section 6 of this Agreement, the Company agrees to continue
the Executive in its employ, and the Executive agrees to remain in the employ of the Company, for
the period (the “Employment Period”) commencing on the Effective Date and ending on the earlier to
occur of (i) the third anniversary of the Effective Date and (ii) the date on which the Executive
attains age 65.
4. Position and Duties. During the Employment Period, the Executive’s position (including
titles), authority and responsibilities shall be at least commensurate with those held, exercised
and assigned immediately prior to the Effective Date. It is understood that, for purposes of this
Agreement, such position, authority and responsibilities shall not be regarded as not commensurate
merely by virtue of the fact that a successor shall have acquired all or substantially all of the
business and/or assets of the Company as contemplated by Section 12(b) of this Agreement. The
Executive’s services shall be performed in the United States and within 30 miles of the location
where the Executive was employed immediately preceding the Effective Date.
5. Compensation. (a) Base Salary. During the Employment Period, the Executive shall receive a
base salary at a monthly rate at least equal to the monthly salary paid to the Executive by the
Company and any of its affiliated companies immediately prior to the Effective Date. The base
salary shall be reviewed at least once each year after the Effective Date, and shall be increased
annually at a rate at least equal to the greater of (i) the average percentage increase for the
same period in the compensation of salaried employees of National and its subsidiaries who are not
executives and (ii) the percentage increase in the national Consumer Price Index for the last
completed calendar year. The Executive’s base salary, as it shall be increased from time to time,
shall hereafter be referred to as “Base Salary”. Neither the Base Salary nor any increase in Base
Salary after the Effective Date shall serve to limit or reduce any other obligation of the Company
hereunder.
(b) Annual Bonus. During the Employment Period, in addition to the Base Salary, for each
fiscal year of the Company ending during the Employment Period, the Executive shall be afforded the
opportunity to receive an annual bonus on terms and conditions no less favorable to the Executive
(taking into account reasonable changes in the Company’s goals and objectives) than the annual
bonus opportunity that had been made available to the Executive for the fiscal year ended
immediately prior to the Effective Date (the “Annual Bonus Opportunity”). Any amount payable in
respect of the Annual Bonus Opportunity shall be paid as soon as practicable following the year for
which the amount (or prorated portion) is earned or awarded, unless electively deferred by the
Executive pursuant to any deferral programs or arrangements that the Company may make available to
the Executive.
(c) Long-term Incentive Compensation Programs. During the Employment Period, the Executive
shall participate in all long-term incentive compensation programs for key executives at a level
that is
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commensurate with the Executive’s participation in such plans immediately prior to the Effective
Date, or, if more favorable to the Executive, at the level made available to the Executive or other
similarly situated officers at any time thereafter.
(d) Benefit Plans. During the Employment Period, the Executive (and, to the extent applicable,
his dependents) shall be entitled to participate in or be covered under all pension, retirement,
deferred compensation, savings, medical, dental, health, disability, group life, accidental death
and travel accident insurance plans and programs of the Company and its affiliated companies at a
level that is commensurate with the Executive’s participation in such plans immediately prior to
the Effective Date, or, if more favorable to the Executive, at the level made available to the
Executive or other similarly situated officers at any time thereafter.
(e) Expenses. During the Employment Period, the Executive shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the Executive in accordance with the policies
and procedures of the Company as in effect immediately prior to the Effective Date. Notwithstanding
the foregoing, the Company may apply the policies and procedures in effect after the Effective Date
to the Executive, if such policies and procedures are not less favorable to the Executive than
those in effect immediately prior to the Effective Date.
(f) Vacation and Fringe Benefits. During the Employment Period, the Executive shall be
entitled to paid vacation and fringe benefits at a level that is commensurate with the paid
vacation and fringe benefits available to the Executive immediately prior to the Effective Date,
or, if more favorable to the Executive, at the level made available from time to time to the
Executive or other similarly situated officers at any time thereafter.
(g) Indemnification. During and after the Employment Period, National and the Company shall
indemnify the Executive and hold the Executive harmless from and against any claim, loss or cause
of action arising from or out of the Executive’s performance as an officer, director or employee
of National or the Company or any of their subsidiaries or in any other capacity, including any
fiduciary capacity, in which the Executive serves at the request of National or the Company to the
maximum extent permitted by applicable law and the Company’s Certificate of Incorporation and
By-Laws (the “Governing Documents”), provided that in no event shall the protection afforded to the
Executive hereunder be less than that afforded under the Governing Documents as in effect
immediately prior to the Effective Date.
6. Termination. (a) Death, Disability or Retirement. Subject to the provisions of Section 1
hereof, this Agreement shall terminate automatically upon the Executive’s death, termination due to
“Disability” (as defined below) or voluntary retirement under any of the Company’s retirement plans
as in effect from time to time. For purposes of this Agreement, Disability shall mean the
Executive’s
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inability to perform the duties of his position, as determined in accordance with the policies and
procedures applicable with respect to the Company’s long-term disability plan, as in effect
immediately prior to the Effective Date.
(b) Voluntary Termination. Notwithstanding anything in this Agreement to the contrary,
following a Change in Control the Executive may, upon not less than 30 days’ written notice to the
Company, voluntarily terminate employment for any reason (including early retirement under the
terms of any of the Company’s retirement plans as in effect from time to time), provided that any
termination by the Executive pursuant to Section 6(d) on account of Good Reason (as defined
therein) shall not be treated as a voluntary termination
under this Section 6(b).
(c) Cause. The Company may terminate the Executive’s employment for Cause. For purposes of
this Agreement, “Cause” means the Executive’s gross misconduct, fraud or dishonesty, which has
resulted or is likely to result in material economic damage to the Company or National, as
determined in good faith by a vote of at least two-thirds of the non-employee directors of
National at a meeting of the Board at which the Executive is provided an opportunity to be heard
(with representation by counsel of his choosing, should he so desire).
(d) Good Reason. Following the occurrence of a Change in Control, the Executive may terminate
his employment for Good Reason. For purposes of this Agreement, “Good Reason” means the occurrence
of any of the following, without the express written consent of the Executive, after the occurrence
of a Change in Control:
(i) a material diminution in (A) the Executive’s authority, duties, or responsibilities,
(B) the Executive’s base compensation or (C) the budget over which the Executive retains
authority;
(ii) a material diminution in the authority, duties, or responsibilities of the supervisor
to whom the Executive is required to report, including a requirement that the Executive
report to a corporate officer or employee instead of reporting directly to the board of
directors of a corporation; or
(iii) the Company’s requiring the Executive to be based at any office or location outside
of the United States and/or more than 30 miles from that location at which he performed his
services specified under the provisions of Section 4 immediately prior to the Change in
Control, except for travel reasonably required in the performance of the Executive’s
responsibilities; or
(iv) any other action or inaction that constitutes a material breach by the Company of this
Agreement;
provided, however, that to constitute Good Reason the Company shall have a period of 30
days to cure any acts which would
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otherwise give Executive the right to terminate his employment for Good Reason. Such
30-day period shall commence as of the date of receipt by the Company of the Notice of
Termination.
In no event shall the mere occurrence of a Change in Control, absent any further impact on the
Executive, be deemed to constitute Good Reason. In the event that the Executive shall in good faith
give a Notice of Termination for Good Reason and it shall thereafter be determined that Good Reason
did not exist, the Executive shall, unless the Company and the Executive shall otherwise mutually
agree, return to employment with the Company within 5 business days of such decision, without any
impairment or other limitation of his rights hereunder, except that he shall not be paid his base
salary for any period he did not perform services and his annual bonus opportunity for such year
may be reduced to reflect his period of absence.
(e) Notice of Termination. Any termination by the Company for Cause or by the Executive for
Good Reason shall be communicated by Notice of Termination given in accordance with Section 13(e).
For purposes of this Agreement, a “Notice of Termination” means a written notice given, in the case
of a termination for Cause, within 30 business days of the Company’s having actual knowledge of the
events giving rise to such termination, and in the case of a termination for Good Reason, within 90
days of the Executive’s having actual knowledge of the events giving rise to such termination, and
which (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets
forth in reasonable detail the facts and circumstances claimed to provide a basis for termination
of the Executive’s employment under the provision so indicated, and (iii) specifies the date the
Executive’s employment shall terminate (which date shall be not less than 30 nor more than 60 days
after the giving of such notice). The failure by the Executive to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing of Good Reason shall not waive
any right of the Executive hereunder or preclude the Executive from asserting such fact or
circumstance in enforcing his rights hereunder.
(f) Date of Termination. For the purpose of this Agreement, the term “Date of Termination”
means (i) in the case of a termination for which a Notice of Termination is required, the date of
receipt of such Notice of Termination or, if later, the date specified therein, as the case may
be, and (ii) in all other cases, the actual date on which the Executive’s employment terminates
during the Employment Period. For the avoidance of doubt, if the Executive ceases to be an employee
but continues to provide services to the Company or any of its affiliates following his Date of
Termination, or is reasonably expected (at such Date of Termination) to provide such services
within 12 months of such Date of Termination, the term Date of Termination (or termination of
employment or any other similar terms used in this Agreement) shall be deemed to refer to the date
at which the Executive incurs a “separation from service” from the Company within the meaning of
Section 409A of the Code and the regulations promulgated thereunder. This means that rather than
being entitled to receive any payments or benefits
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hereunder upon, or at a specified time following, the Date of Termination (or termination of
employment or any other similar terms used in the Agreement), such a continuing Executive shall be
entitled to receive such payments or benefits upon, or at a specified time following, such a
separation from service.
7. Obligations of the Company upon Termination. (a) Death or Disability. If the Executive’s
employment is terminated during the Employment Period by reason of the Executive’s death or
Disability, this Agreement shall terminate without further obligations to the Executive or the
Executive’s legal representatives under this Agreement other than those obligations accrued
hereunder at the Date of Termination, and the Company shall pay to the Executive (or his
beneficiary or estate) (i) the Executive’s full Base Salary through the Date of Termination (the
“Earned Salary”), (ii) any vested amounts or benefits owing to the Executive under the Company’s
otherwise applicable employee benefit plans and programs, including any compensation previously
deferred by the Executive (together with any accrued earnings thereon) and not yet paid by the
Company and any amounts payable pursuant any individual agreement with Executive (the “Accrued
Obligations”), and (iii) any other benefits payable due to the Executive’s death or Disability
under the Company’s plans, policies or programs (the “Additional Benefits”).
Any Earned Salary shall be paid in cash in a single lump sum as soon as practicable, but in no
event more than 15 days (or at such earlier date required by law), following the Date of
Termination. Accrued Obligations and Additional Benefits shall be paid in accordance with the terms
of the applicable plan, program or arrangement.
(b) Cause and Voluntary Termination. If, during the Employment Period, the Executive’s
employment shall be terminated for Cause or voluntarily terminated by the Executive (other than on
account of Good Reason following a Change in Control), the Company shall pay the Executive (i) the
Earned Salary in cash in a single lump sum as soon as practicable, but in no event more than 10
days, following the Date of Termination, and (ii) the Accrued Obligations in accordance with the
terms of the applicable plan, program or arrangement.
(c) Termination by the Company other than for Cause and Termination by the Executive for Good
Reason. Subject to Section 7(f) below, if, during the Employment Period, the Company terminates the
Executive’s employment other than for Cause, or the Executive terminates his employment for Good
Reason, the Company shall pay to the Executive the following amounts:
(i) Severance Benefits. The Executive shall be paid the following:
(A) the Executive’s Earned Salary;
(B) a cash amount (the “Severance Amount”) equal to
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(1) 1.99; times
(2) the sum of
(i) the Executive’s annual Base Salary; and
(ii) the average of the annual at risk compensation incentive program bonuses
or other bonuses (excluding sign-on bonuses) payable to the Executive
(including, for the purposes of this calculation, any amount of such bonuses
paid in the form of restricted stock (in lieu of cash), to be valued at the
date of grant) for the two fiscal years of the Company ending immediately prior
to the Effective Date (the “Average Bonus”); and
(C) the Accrued Obligations.
The Earned Salary and Severance Amount shall be paid in cash in a single lump sum as soon as
practicable, but in no event more than 10 days (or at such earlier date required by law), following
the Date of Termination; provided however that if the date payment would otherwise be due hereunder
is after September 30, payment of the Severance Amount shall be paid on the first business day in
the following January.
Accrued Obligations shall be paid in accordance with the terms of the applicable plan, program or
arrangement.
(ii) Continuation of Welfare Benefits. If, during the Employment Period, the Company
terminates the Executive’s employment other than for Cause, or following a Change in Control the
Executive terminates his employment for Good Reason, the Executive (and, to the extent applicable,
his dependents) shall be entitled, after the Date of Termination until the earlier of (1) the
eighteen month anniversary of the Date of Termination (the “End Date”) and (2) the date the
Executive becomes eligible for comparable benefits under a similar plan, policy or program of a
subsequent employer, to continue participation in all of the Company’s employee and executive
welfare and fringe benefit plans, excluding further vacation pay (the “Benefit Plans”). To the
extent any such benefits cannot be provided under the terms of the applicable plan, policy or
program, the Company shall provide a comparable benefit under another plan or from the Company’s
general assets. The Executive’s participation in the Benefit Plans will be on the same terms and
conditions that would have applied had the Executive continued to be employed by the Company
through the End Date.
(iii) Qualification for Early Retirement. If the Executive is at least age 52 at his Date of
Termination, the Executive shall be deemed to have earned, and to have become vested in, the
retirement benefits (including, without limitation, any early retirement subsidy or supplement,
retiree life coverage or retiree medical benefits) that would have been payable or made available
to the Executive under any employee benefit plan sponsored or maintained by the Company or any of
its subsidiaries for which the Executive was eligible at the Date of Termination had he continued
in service for three additional years
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after the Date of Termination. The purpose and intent of this provision is to provide the Executive
with vesting and to bridge any gap of three or fewer years of service to qualify for any additional
benefits available for an early retiree (such as the benefits under the Executive Retirement Plan
(“ERP”) or the benefits available under the Retirement Plan (“RP”) including the so-called Rule of
90), and not to increase the service taken into account for purpose of determining the amount of
benefits payable to the Executive beyond his actual period of service through the Date of
Termination.
The operation of this provision is illustrated by the following examples:
Example 1: Assume that, at the Executive’s Date of Termination, the Executive is exactly 53
years old, and has exactly 4 years of service for purposes of the ERP. Assume further that the
relevant RP and ERP provisions have not changed since the date of the execution of this Agreement.
The Executive would receive a benefit (in the form of a single life annuity) under the RP and ERP
in the aggregate in the form of a benefit beginning at age 56, equal to 4/5 times what he would
otherwise have received under a combination of those plans beginning at age 56. (Or, he could elect
commencement of benefits at age 55 in reduced amounts per the terms of the relevant plans.) Five is
used in the denominator because the current ERP vesting policy is attainment of age 55 and at least
5 years of service.
Example 2: The assumptions are the same as in example 1, except that the Executive has exactly
32 years of service (instead of 4). By reason of the additional credit provided under this
Agreement, the Executive would receive a benefit calculated as though payable under the RP (in the
form of a single life annuity), under the RP’s “Rule of 90,” that would begin at age 55-1/2 and
would equal [(53 + 32)/90] times what he would otherwise have received under the RP under the Rule
of 90 beginning at age 55-1/2 (the earliest date at which he otherwise could have retired and
commenced receiving benefits determined under the Rule of 90).
In both examples, (i) any portion of the incremental benefit that could not be paid under the
RP will be paid from the ERP or the Company’s general assets, (ii) final average salaries would be
determined under those plans as of the Executive’s Date of Termination and (iii) the Executive
would be entitled to elect forms of benefit other than the single life annuity.
Other fact patterns, and examples respecting other post-retirement benefits, would use similar
principles, but might use different math. For example, the current provisions concerning an
executive’s vesting in early retirement benefits under the RP, and concerning retiree medical
benefit vesting, have years of service requirements in excess of five years.
(d) Discharge of the Company’s Obligations. Except as expressly provided in the last
sentence of this Section 7(d), the
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amounts payable to the Executive pursuant to this Section 7 (whether or not reduced pursuant to
Section 7(e)) following termination of his employment shall be in full and complete satisfaction of
the Executive’s rights under this Agreement and any other claims he may have in respect of his
employment by the Company or any of its subsidiaries. Such amounts shall constitute liquidated
damages with respect to any and all such rights and claims and, upon the Executive’s receipt of
such amounts, the Company shall be released and discharged from any and all liability to the
Executive in connection with this Agreement or otherwise in connection with the Executive’s
employment with the Company and its subsidiaries. Nothing in this Section 7(d) shall be construed
to release the Company from its commitment to indemnify the Executive and hold the Executive
harmless from and against any claim, loss or cause of action arising from or out
of the Executive’s performance as an officer, director or employee of the Company or any of its subsidiaries or in any other capacity, including any fiduciary capacity, in which the Executive served at the request of the Company to the maximum extent permitted by applicable law and the Governing Documents.
of the Executive’s performance as an officer, director or employee of the Company or any of its subsidiaries or in any other capacity, including any fiduciary capacity, in which the Executive served at the request of the Company to the maximum extent permitted by applicable law and the Governing Documents.
(e) Limit on Payments by the Company.
(i) Application of Section 7(e). In the event that any amount or benefit paid or
distributed to the Executive pursuant to this Agreement, taken together with any amounts or
benefits otherwise paid or distributed to the Executive by the Company or any affiliated
company (collectively, the “Covered Payments”), would be an “excess parachute payment” as
defined in Section 280G of the Code and would thereby subject the Executive to the tax (the
“Excise Tax”) imposed under Section 4999 of the Code (or any similar tax that may hereafter
be imposed), the provisions of this Section 7(e) shall apply to determine the amounts
payable to the Executive pursuant to this Agreement.
(ii) Calculation of Benefits. Immediately following delivery of any Notice of
Termination, the Company shall notify the Executive of the aggregate present value of all
termination benefits to which he would be entitled under this Agreement and any other plan,
program or arrangement as of the projected Date of Termination, together with the projected
maximum payments, determined as of such projected Date of Termination that could be paid
without the Executive being subject to the Excise Tax.
(iii) Imposition of Payment Cap. If
(x) the aggregate value of all compensation payments or benefits to be paid or
provided to the Executive under this Agreement and any other plan, agreement or
arrangement with the Company exceeds the amount which can be paid to the Executive
without the Executive incurring an Excise Tax, and
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(y) the net-after tax amount (taking into account all applicable taxes payable
by the Executive, including any Excise Tax) that the Executive would receive if the
limitation contained in this Section 7(e)(iii) were not imposed does not exceed the
net-after tax benefit the Executive would receive if such limitation were imposed
by more than $25,000, then the amounts payable to the Executive under this Section
7 shall be reduced (but not below zero) to the maximum amount which may be paid
hereunder without the Executive becoming subject to such an Excise Tax (such
reduced payments to be referred to as the “Payment Cap”). In the event that the
Executive receives reduced payments and benefits hereunder, such payments and
benefits shall be reduced in connection with the application of the Payment Cap in
the following manner: first the Executive’s Severance Amount shall be reduced,
followed by, to the extent necessary and in order, the continuation of welfare
benefits, any early retirement benefits the Executive becomes vested in under the
Agreement, the Average Bonus and finally the Accrued Obligations.
(iv) Application of Section 280G. For purposes of determining whether any of the
Covered Payments will be subject to the Excise Tax and the amount of such Excise Tax,
(A) such Covered Payments will be treated as “parachute payments” within the
meaning of Section 280G of the Code, and all “parachute payments” in excess of the
“base amount” (as defined under Section 280G(b)(3) of the Code) shall be treated as
subject to the Excise Tax, unless, and except to the extent that, in the good faith
judgment of the Company’s independent certified public accountants appointed prior
to the Effective Date or tax counsel selected by such Accountants (the
“Accountants”), the Company as a reasonable basis to conclude that such Covered
Payments (in whole or in part) either do not constitute “parachute payments” or
represent reasonable compensation for personal services actually rendered (within
the meaning of Section 280G(b)(4)(B) of the Code) in excess of the portion of the
“base amount” allocable to such Covered Payments, or such “parachute payments” are
otherwise not subject to such Excise Tax, and
(B) the value of any noncash benefits or any deferred payment or benefit shall
be determined by the Accountants in accordance with the principles of Section 280G
of the Code.
(v) Applicable Tax Rates. For purposes of determining whether the Executive would
receive a greater net after-tax benefit were the amounts payable under this Agreement
reduced in accordance with Paragraph 7(e)(iii), the Executive shall be deemed to pay:
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(A) Federal income taxes at the highest applicable marginal rate of Federal income
taxation for the calendar year in which the first amounts are to be paid hereunder,
and
(B) any applicable state and local income taxes at the highest applicable marginal
rate of taxation for such calendar year, net of the maximum reduction in Federal
incomes taxes which could be obtained from the deduction of such state or local
taxes if paid in such year;
provided, however, that the Executive may request that such determination be made based on his
individual tax circumstances, which shall govern such determination so long as the Executive
provides to the Accountants such information and documents as the Accountants shall reasonably
request to determine such individual circumstances.
(vi) Adjustments in Respect of the Payment Cap. If the Executive receives reduced payments and
benefits under this Section 7(e) (or this Section 7(e) is determined not to be applicable to the
Executive because the Accountants conclude that the Executive is not subject to any Excise Tax) and
it is established pursuant to a final determination of a court or an Internal Revenue Service
proceeding (a “Final Determination”) that, notwithstanding the good faith of the Executive and the
Company in applying the terms of this Agreement, the aggregate “parachute payments” within the
meaning of Section 280G of the Code paid to the Executive or for his benefit are in an amount that
would result in the Executive being subject an Excise Tax, then the amount equal to such excess
parachute payments shall be deemed for all purposes to be a loan to the Executive made on the date
of receipt of such excess payments, which the Executive shall have an obligation to repay to the
Company on demand, together with interest on such amount at the applicable Federal rate (as
defined in Section 1274(d) of the Code) from the date of the payment hereunder to the date of
repayment by the Executive. If this Section 7(e) is not applied to reduce the Executive’s
entitlement under this Section 7 because the Accountants determine that the Executive would not
receive a greater net-after tax benefit by applying this Section 7(e) and it is established
pursuant to a Final Determination that, notwithstanding the good faith of the Executive and the
Company in applying the terms of this Agreement, the Executive would have received a greater net
after tax benefit by subjecting his payments and benefits hereunder to the Payment Cap, then the
aggregate “parachute payments” paid to the Executive or for his benefit in excess of the Payment
Cap shall be deemed for all purposes a loan to the Executive made on the date of receipt of such
excess payments, which the Executive shall have an obligation to repay to the Company on demand,
together with interest on such amount at the applicable Federal rate (as defined in Section 1274(d)
of the Code) from the date of the payment hereunder to the date of repayment by the Executive. If
the Executive receives reduced payments and benefits by reason of this Section 7(e) and it is
established pursuant to a Final Determination that the Executive could have received a greater
amount without exceeding the Payment Cap, then the Company shall promptly
13
thereafter pay the Executive the aggregate additional amount which could have been paid without
exceeding the Payment Cap, together with interest on such amount at the applicable Federal rate (as
defined in Section 1274(d) of the Code) from the original payment due date to the date of actual
payment by the Company.
(f) If Termination of Employment Occurs After the Executive Has Reached Age 62.
Notwithstanding anything else to the contrary contained in this Section 7, if the Executive’s
employment with the Company terminates at any time during the 3 year period ending on the first day
of the month following the Executive’s sixty-fifth birthday (the “Normal Retirement Date”), and the
Executive would be entitled to receive severance benefits under paragraphs 7(c), then (i) the
multiplier in paragraph 7(c)(i)(B) shall not be 1.99, but shall be a number equal to 1.99 times
(x/1095), where x equals the number of days remaining until the Executive’s Normal Retirement Date,
and (ii) the End Date described in Section 7(c)(ii) shall not be the third anniversary of the Date
of Termination, but shall be the Executive’s Normal Retirement Date.
8. Non-exclusivity of Rights. Except as expressly provided herein, nothing in this Agreement
shall prevent or limit the Executive’s continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by the Company or any of its affiliated companies and
for which the Executive may qualify, nor shall anything herein limit or otherwise prejudice such
rights as the Executive may have under any other agreements with the Company or any of its
affiliated companies, including employment agreements or stock option agreements. Amounts which are
vested benefits or which the Executive is otherwise entitled to receive under any plan or program
of the Company or any of its affiliated companies at or subsequent to the Date of Termination shall
be payable in accordance with such plan or program.
9. No Offset. 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 Executive or others whether by reason of the subsequent employment
of the Executive or otherwise.
10. Non-Competition and Non-Solicitation. (a) Noncompete. Unless the Executive otherwise
elects by written notice to the Company prior to his Date of Termination (or in the case of a
Company initiated termination, within 5 business days of receipt of a Notice of Termination, if
such period extends beyond the Date of Termination) not to be bound by the provisions of this
Section 10(a), during the one year period following the Executive’s Date of Termination for any
reason (the “Restriction Period”), Executive shall not, directly or indirectly, engage in, become
employed by, serve as an agent or consultant to, or become a partner, principal or stockholder
(other than a holder of less than 1% of the outstanding voting shares of any
14
publicly held company) of any business or entity that is engaged in any activity which is
competitive with the business of the Company, National and their respective subsidiaries or
affiliates in any geographic area in which the Company, National and/or any of their respective
subsidiaries or affiliates is engaged in such competitive business.
(b) Non-Solicitation of Employees. Regardless of whether the Executive has elected to be bound
by Section 10(a), during the Restriction Period, the Executive shall not, directly or indirectly,
for his own account or for the account of any other person or entity with which he is or shall
become associated in any capacity, solicit for employment, employ or otherwise interfere with the
relationship of Employer with any person who at any time during the six months preceding such
solicitation, employment or interference is or was employed by or otherwise engaged to perform
services for Employer other than any such solicitation or employment during the Executive’s
employment with Employer on behalf of Employer.
(c) Confidential Information. Regardless of whether the Executive has elected to be bound by
Section 10(a), the Executive shall hold in a fiduciary capacity for the benefit of National and the
Company all secret or confidential information, knowledge or data relating to National, the
Company or any of their affiliated companies, and their respective businesses, (i) obtained by the
Executive during his employment by the Company or any of its affiliated companies and (ii) not
otherwise public knowledge (other than by reason of an unauthorized act by the Executive). After
termination of the Executive’s employment with the Company, the Executive shall not, without the
prior written consent of the Company, unless compelled pursuant to an order of a court or other
body having jurisdiction over such matter, communicate or divulge any such information, knowledge
or data to anyone other than the Company and those designated by it.
(d) Non-disparagement. Regardless of whether the Executive has elected to be bound by Section
10(a), the Executive shall not publicly or privately disparage National or the Company, or any of
their subsidiaries or affiliates, including any aspect of their respective business, products,
employees, management or Board of Directors, in any manner which could adversely effect the
business of National, the Company or such subsidiaries or affiliates. Furthermore, the Executive
shall not, directly or indirectly, take any action or fail to take any action with the purpose of
interfering with, damaging or disrupting the assets or business operations or affairs of National
or the Company or any of their respective subsidiaries or affiliates.
National and the Company shall not publicly or privately disparage the Executive, either
personally or professionally. Nothing in this paragraph shall be construed to prevent any officer
of National or the Company from discussing the Executive’s performance internally in the ordinary
course of business.
15
(e) Company Property. Except as expressly provided herein, promptly following the Executive’s
termination of employment, the Executive shall return to the Company all property of National and
the Company and all copies thereof in the Executive’s possession or under his control.
(f) Additional Payment. Unless the Executive has elected not to be bound by Section 10(a), the
Company shall make an additional lump sum payment to the Executive within 30 days following the
Executive’s Date of Termination equal to one times the sum of (i) the Executive’s annual Base
Salary and (ii) the Executive’s Average Bonus as compensation for the covenant contained in Section
10(a).
11. Injunctive Relief and Other Remedies with Respect to Covenants. The Executive acknowledges
and agrees that the covenants and obligations of the Executive set forth in Section 10 relate to
special, unique and extraordinary matters and that a violation of any of the terms of such
covenants and obligations will cause the Company irreparable injury for which adequate remedies are
not available at law. Therefore, the Executive agrees that the Company shall be entitled to an
injunction, restraining order or such other equitable relief (without the requirement to post bond)
restraining the Executive from committing any violation of the covenants and obligations contained
in Section 10 These remedies are cumulative and are in addition to any other rights and remedies
the Company may have at law or in equity. In no event shall an asserted violation of the provisions
of Section 10 constitute a basis for deferring or withholding any amounts otherwise payable to the
Executive under this Agreement.
12. Successors. (a) This Agreement is personal to the Executive and, without the prior
written consent of the Company, shall not be assignable by the Executive otherwise than by will or
the laws of descent and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive’s legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the Company and its
successors. The Company shall require any successor to all or substantially all of the business
and/or assets of the Company, whether direct or indirect, by purchase, merger, consolidation,
acquisition of stock, or otherwise, by an agreement in form and substance satisfactory to the
Executive, expressly to assume and agree to perform this Agreement in the same manner and to the
same extent as the Company would be required to perform if no such succession had taken place.
(c) In the event the Executive ceases to be employed by the Company as a result of the
transfer of the Executive’s employment to National or to another wholly owned subsidiary of
National, for purposes of this Agreement, National or such other subsidiary, as the case may be,
will automatically be deemed to be the Company from and after the date of such transfer and shall
have the same rights, duties and obligations hereunder as the Company had immediately prior to such
transfer.
16
13. Miscellaneous. (a) Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, applied without reference to principles of
conflict of laws.
(b) Arbitration. Except to the extent provided in Section 11, in the event that any dispute,
controversy or claim arises between the Company or National and the Executive with respect to the
subject matter of this Agreement and the enforcement of rights hereunder, such dispute, controversy
or claim shall be resolved by binding arbitration before a panel of three arbitrators selected in
accordance with the American Arbitration Association (the “AAA”). The arbitration shall be
conducted in accordance with the Expedited Employment Arbitration Rules of the American Arbitration
Association then in effect at the time of the arbitration (or such other rules as the parties may
agree to in writing), and otherwise in accordance with principles which would be applied by a court
of law or equity. The determination reached in such arbitration shall be final and binding on both
parties without any right of appeal or further dispute. Execution of the determination by such
arbitration panel may be sought in any court of competent jurisdiction. The arbitrators shall not
be bound by judicial formalities and may abstain from following the strict rules of evidence and
shall interpret this Agreement as an honorable engagement and not merely as a legal obligation.
Unless otherwise agreed by the parties, any such arbitration shall take place in a location
selected by the Company which is a convenient forum for such arbitration (taking into account the
availability of a sufficient pool of experienced arbitrators) and not more than 100 miles from the
Executive’s principal place of employment at the Effective Date (or at such other location as may
be agreed upon by the parties), and shall be conducted in accordance with the Rules of the AAA. In
the event of the occurrence of any proceeding (including the appeal of an arbitration decision)
between the Company or National and the Executive with respect to the subject matter of this
Agreement and the enforcement of rights hereunder, the Company or National shall reimburse the
Executive for all reasonable costs and expenses relating to such proceeding, including reasonable
attorneys’ fees and expenses, regardless of the final outcome, unless the arbitration panel
determines that recovery by the Executive of all or a part of such fees, costs and expenses would
be unjust. In no event shall the Executive reimburse the Company for any of the costs and expenses
relating to such litigation or other proceeding.
(c) Amendments. This Agreement may not be amended or modified otherwise than by a written
agreement executed by the parties hereto or their respective successors and legal representatives.
(d) Entire Agreement. This Agreement constitutes the entire agreement between the parties
hereto with respect to the matters referred to herein, provided, however, that this Agreement is
not intended to impair any rights of the Executive under any prior written agreement, any employee
benefit plan of the Company or a Subsidiary or
17
any written policy, program or procedure of the Company or a Subsidiary unless and to the extent
specifically provided herein. No other agreement relating to the terms of the Executive’s
employment by the Company, oral or otherwise, shall be binding between the parties unless it is in
writing and signed by the party against whom enforcement is sought. There are no promises,
representations, inducements or statements between the parties other than those that are expressly
contained herein. The Executive acknowledges that he is entering into this Agreement of his own
free will and accord, and with no duress, that he has read this Agreement and that he understands
it and its legal consequences.
(e) Notices. All notices and other communications hereunder shall be in writing and shall be
given by hand-delivery to the other party or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive:
at the home address of the Executive noted
on the records of the Company
If to the Company:
[subsidiary corporation]
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Secretary
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Secretary
If to National:
or to such other address as either party shall have furnished to the other in writing in accordance
herewith. Notice and communications shall be effective when actually received by the addressee.
(f) Source of Payments. All payments to be made hereunder shall be paid in cash from the
general funds of the Company; provided, however, that such payments shall be reduced by the amount
of any payments made to the Executive or his dependents, beneficiaries or estate from any trust or
special or separate fund established by the Company or National to assure such payments. To the
extent that the Company does not pay any such amount when due, National shall, or shall cause the
Company, to make such payment. The Company or National shall not be required to establish a special
or separate fund or other segregation of assets to assure such payments, and, if the Company or
National shall make any investments to aid it in meeting its obligations hereunder, the Executive
shall have no right, title or interest whatever in or to any such investments except as may
otherwise be expressly provided in a separate written instrument relating to
18
such investments. Nothing contained in this Agreement, and no action taken pursuant to its
provisions, shall create or be construed to create a trust of any kind or a fiduciary relationship,
between the Company or National and the Executive or any other person. To the extent that any
person acquires a right to receive payments from the Company or National such right shall be no
greater than the right of an unsecured creditor of the Company or National.
(g) Tax Withholding;409A. The Company shall withhold from any
amounts payable under this Agreement such Federal, state or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation. To the extent that any payments hereunder
are subject to the provisions of Section 409A of the Code, the Company intends that the amounts
payable under this Agreement shall be administered in compliance with the requirements of that
Section.
(h) Severability; Reformation. In the event that one or more of the provisions of this
Agreement shall become invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein shall not be affected thereby. In
the event that any of the provisions of any of Section 10 are not enforceable in accordance with
its terms, the Executive and the Company agree that such Section shall be reformed to make such
Section enforceable in a manner which provides the Company the maximum rights permitted at law.
(i) Waiver. Waiver by any party hereto of any breach or default by the other party of any of
the terms of this Agreement shall not operate as a waiver of any other breach or default, whether
similar to or different from the breach or default waived. No waiver of any provision of this
Agreement shall be implied from any course of dealing between the parties hereto or from any
failure by either party hereto to assert its or the Executive’s rights hereunder on any occasion or
series of occasions.
(j) Counterparts. This Agreement may be executed in counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same instrument.
(k) Captions. The captions of this Agreement are not part of the provisions hereof and shall
have no force or effect.
19
IN WITNESS WHEREOF, the Executive has hereunto set his hand
and the Company has caused this Agreement to be executed in its name on its behalf, and its
corporate seal to be hereunto affixed and attested by its Secretary, all as of the day and year
first above written.
| [SUBSIDIARY CORPORATION] | ||||||
Attest: /s/
|
By: | |||||
| NATIONAL FUEL GAS COMPANY | ||||||
Attest: /s/
|
By: | |||||
| EXECUTIVE: | ||||||
20
NATIONAL FUEL GAS COMPANY
AMENDED AND RESTATED
EMPLOYMENT CONTINUATION
EMPLOYMENT CONTINUATION
AND
NONCOMPETITION AGREEMENT
TABLE OF CONTENTS
Page
1. Operation of Agreement |
2 | |||
a. Effective Date |
2 | |||
b. Termination of Employment Following a Potential
Change in Control |
2 | |||
2. Definitions |
2 | |||
a. Change in Control |
2 | |||
b. Potential Change in Control |
3 | |||
3. Employment Period |
4 | |||
4. Position and Duties |
4 | |||
5. Compensation |
4 | |||
a. Base Salary |
4 | |||
b. Annual Bonus |
4 | |||
c. Long-term Incentive Compensation Programs |
4 | |||
d. Benefit Plans |
5 | |||
e. Expenses |
5 | |||
f. Vacation and Fringe Benefits |
5 | |||
g. Indemnification |
5 | |||
6. Termination |
5 | |||
a. Death, Disability or Retirement |
5 | |||
b. Voluntary Termination |
6 | |||
c. Cause |
6 | |||
d. Good Reason |
6 | |||
e. Notice of Termination |
7 | |||
f. Date of Termination |
7 | |||
7. Obligations of the Company upon Termination |
8 | |||
a. Death or Disability |
8 | |||
b. Cause and Voluntary Termination |
8 | |||
c. Termination by the Company other than for Cause
and Termination by the Executive for Good
Reason |
8 | |||
▇. ▇▇▇▇▇▇▇▇▇ Benefits |
8 | |||
ii. Continuation of Welfare Benefits |
9 |
21
Page
iii. Qualification for Early Retirement |
9 | |||
d. Discharge of the Company’s Obligations |
10 | |||
e. Limit on Payments by the Company |
11 | |||
i. Application of Section 7(e) |
11 | |||
ii. Calculation of Benefits |
11 | |||
iii. Imposition of Payment Cap |
11 | |||
iv. Application of Section 280G |
12 | |||
v. Applicable Tax Rates |
12 | |||
vi. Adjustments in Respect of the Payment Cap |
13 | |||
f. If Termination of Employment Occurs After the Executive
Has Reached Age 62 |
14 | |||
8. Non-exclusivity of Rights |
14 | |||
9. No Offset |
14 | |||
10. Non-Competition and Non-Solicitation |
14 | |||
a. Noncompete |
14 | |||
b. Non-Solicitation of Employees |
15 | |||
c. Confidential Information |
15 | |||
d. Non-disparagement |
15 | |||
e. Company Property |
16 | |||
f. Additional Payment |
16 | |||
11. Injunctive Relief and Other Remedies with Respect to
Covenants |
16 | |||
12. Successors |
16 | |||
13. Miscellaneous |
17 | |||
a. Applicable Law |
17 | |||
b. Arbitration |
17 | |||
c. Amendments |
17 | |||
d. Entire Agreement |
17 | |||
e. Notices |
18 | |||
f. Source of Payments |
18 | |||
g. Tax Withholding |
19 | |||
h. Severability; Reformation |
19 | |||
i. Waiver |
19 | |||
j. Counterparts |
19 | |||
k. Captions |
19 | |||
Signature Page |
20 |
22