Exhibit 10.2
CHANGE OF CONTROL AGREEMENT
THIS AGREEMENT (the "Agreement") dated as of the 1st day of July,
1998 (the "Effective Date") by and between EQUITABLE RESOURCES, INC., a
Pennsylvania corporation with its principal place of business at Pittsburgh,
Pennsylvania (the "Company"), and XXXXX X. XXXXXX, an individual and resident of
Houston, Texas (the "Employee");
WHEREAS, the Board of Directors of the Company (the "Board"), has
determined that it is in the best interest of the Company and its shareholders
to assure that the Company will have the continued dedication of the Employee,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company. The Board believes it is imperative to diminish
the inevitable distraction of the Employee by virtue of the personal
uncertainties and risks created by a pending or threatened Change of Control and
to encourage the Employee's full attention and dedication to the Company
currently and in the event of any threatened or pending Change of Control, and
to provide the Employee with compensation and benefits arrangements upon a
Change of Control which ensure that the compensation and benefits expectations
of the Employee will be satisfied and which are competitive with those of other
corporations in the industry in which the Company's principal business activity
is conducted. Therefore, in order to accomplish these objectives, the Board has
caused the Company to enter into this Agreement.
NOW THEREFORE, in consideration of the premises and mutual
covenants contained herein, and intending to be legally bound hereby, the
parties hereto agree as follows:
Section 1. Term.
The term of this Agreement shall commence on the Effective Date hereof and shall
terminate on the last day of the 36th calendar month after the Effective Date,
unless automatically extended as follows: commencing on the last day of the
first full calendar month after the Effective Date and on the last day of each
succeeding calendar month, the term of this Agreement shall be automatically
extended without further action by either party (but not beyond the Executive's
65th birthday) for one additional calendar month unless one party notifies the
other in writing that such party does not wish to extend the term of this
Agreement. In the event that such notice shall have been delivered, the term
hereof shall no longer be subject to automatic extension and the term hereof
shall expire on the date which is 36 calendar months after the last day of the
month in which such written notice is received. The last day of the calendar
month in which the term hereof, as may be extended from time to time, shall end
is hereinafter referred to as the "Expiration Date". Notwithstanding the
foregoing, the Employee shall serve in said office(s) at the pleasure of the
Board, and the Employee may be removed from said office(s) at any time with or
without Cause (as hereinafter defined); provided, that such removal shall be
without prejudice to any rights the Employee may have to Salary and Benefits
Continuation (as hereinafter defined) hereunder.
Section 2. Change of Control.
Change of Control shall mean any of the following events (each of such events
being herein referred to as a "Change of Control"):
(a) The sale or other disposition by the Company of all or
substantially all of its assets to a single purchaser or to a
group of purchasers, other than to a corporation with respect to
which, following such sale or disposition, more than eighty
percent (80%) of, respectively, the then outstanding shares of
Company common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the
election of the Board of Directors is then owned beneficially,
directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners,
respectively, of the outstanding Company common stock and the
combined voting power of the then outstanding voting securities
immediately prior to such sale or disposition in substantially
the same proportion as their ownership of the outstanding Company
common stock and voting power immediately prior to such sale or
disposition;
(b) The acquisition in one or more transactions by any
person or group, directly or indirectly, of beneficial ownership
of twenty percent (20%) or more of the outstanding shares of
Company common stock or the combined voting power of the then
outstanding voting securities of the Company entitled to vote
generally in the election of the Board of Directors; provided,
however, that any acquisition by (x) the Company or any of its
subsidiaries, or any employee benefit plan (or related trust)
sponsored or maintained by the Company or any of its subsidiaries
or (y) any person that is eligible, pursuant to Rule 13d-1(b)
under the Exchange Act (as such rule is in effect as of November
1, 1995), to file a statement on Schedule 13G with respect to its
beneficial ownership of Company common stock and other voting
securities whether or not such person shall have filed a
statement on Schedule 13G, unless such person shall have filed a
statement on Schedule 13D with respect to beneficial ownership of
fifteen percent (15%) or more of the Company's voting securities,
shall not constitute a Change of Control;
(c) The Company's termination of its business and
liquidation of its assets;
(d) The reorganization, merger or consolidation of the
Company into or with another person or entity, by which
reorganization, merger or consolidation the persons who held one
hundred percent (100%) of the voting securities of the Company
prior to such reorganization, merger or consolidation receive or
continue to hold less than sixty percent (60%) of the outstanding
voting shares of the new or continuing corporation; or
(e) If, during any two-year period, less than a majority
of the members of the Board of Directors are persons who were
either (i) nominated or recommended for election by at least
two-thirds vote of the persons who were members of the Board of
Directors or Nominating Committee of the Board of Directors at
the beginning of the period, or (ii) elected by at least a
two-thirds vote of the persons who were members of the Board of
Directors at the beginning of the period.
Section 3. Salary and Benefits Continuation.
"Salary and Benefits Continuation" shall be defined to mean the following: (i)
payment of sum equal to Employee's base salary for a twelve (12) month period;
(ii) payment of an amount of cash equal to two (2) times the average Short-Term
Incentive Compensation Plan Benefit (as defined in the Employment Agreement)
earned over the prior three year period; (iii) immediate vesting of all
previously unvested stock options and grants; (iv) immediate delivery of an
amount of cash equal to two (2) times the average value (measured as the
difference between the applicable strike price and the Fair Market Value as
defined in the Company's Long-Term Incentive Plan on the date the change in
control is consummated) of the average number of stock options granted to
Employee over the preceding three (3) years under the applicable Company
Long-Term Incentive Plan; (v) provision to Employee and his eligible dependents
of medical, disability, dental and life insurance coverage (to the extent such
coverage was in effect immediately prior to the Change of Control) for 24
months; and (vi) reimbursement to Employee of reasonable costs (not to exceed
20% of base salary) incurred by Employee for outplacement services following
termination of Employee's employment in connection with a Change of Control. If
the Agreement has not been in effect two (2) years, the length of the
Executive's employment is used when provisions call for an average. In such
event, the sum of the benefits is placed in the numerator and the actual length
of service in months capped at 24 is placed in the denominator.
All amounts payable by the Company to the Employee in cash
pursuant to Section 3(i), (ii), (iii) and (iv) shall be made in a lump sum
unless the Employee otherwise elects and notifies the Company in writing prior
to the termination of his employment of his desire to have all payments made in
accordance with the Company's regular salary and benefit payment practices,
provided that the lump sum payment or first payment is made within thirty (30)
days after the Employee's termination hereunder. All other amounts payable by
the Company to the Employee pursuant to Section 3 shall be paid or provided in
accordance with the Company's standard payroll and reimbursement procedures, as
in effect immediately prior to the Change of Control. In the event that medical,
disability, dental and life insurance benefits cannot be provided under
appropriate Company group insurance policies, an amount equal to the premium
necessary for the Employee to purchase directly the same level of coverage in
effect immediately prior to the Change of Control shall be added to the
Company's salary payments to Employee.
If there is a Change of Control as defined above, the Company
will provide Salary and Benefits Continuation if at any time during the first
twenty-four (24) months following the consummation of a Change of Control,
either (i) the Company terminates the Employee's employment other than for Cause
as defined in Section 4 below or (ii) the Employee terminates his employment for
"Good Reason." The exception to this provision is the immediate vesting of all
unvested stock options and grants upon a Change of Control as defined above. It
is not necessary for the Company to terminate the Executive or for the Executive
to terminate employment.
For purposes of this Agreement, "Good Reason" is defined as:
(a) Removal of the Employee from the position he held
immediately prior to the Change of Control (by reason other than
death, disability or Cause), or any other material breach by the
Company of its obligations contained in this Agreement;
(b) The assignment to the Employee of any duties
inconsistent with those performed by the Employee immediately
prior to the Change of Control or a substantial alteration in the
nature or status of the Employee's responsibilities which renders
the Employee's position to be of less dignity, responsibility or
scope;
(c) A reduction by the Company in the Employee's annual
base salary as in effect on the date hereof or as the same may be
increased from time to time, except for proportional
across-the-board salary reductions similarly affecting all
executives of the Company and all executives of any person in
control of the Company, provided, however, that in no event shall
the Employee's annual base salary be reduced by an amount equal
to ten percent or more of the Employee's annual base salary as of
the end of the calendar year immediately preceding the year in
which the Change of Control occurs, without the Employee's
consent;
(d) The failure to grant the Employee an annual salary
increase reasonably necessary to maintain such salary as
reasonably comparable to salaries of senior executives holding
positions equivalent to the Employee's in the industry in which
the Company's then principal business activity is conducted;
(e) The Company requiring the Employee to be based
anywhere other than the Company's principal executive offices in
the city in which the Employee is principally located immediately
prior to the Change of Control, except for required travel on the
Company's business to an extent substantially consistent with the
Employee's present business travel obligations;
(f) Any material reduction by the Company of the benefits
enjoyed by the Employee under any of the Company's pension,
retirement, profit sharing, savings, life insurance, medical,
health and accident, disability or other employee benefit plans,
programs or arrangements, the taking of any action by the Company
which would directly or indirectly materially reduce any of such
benefits or deprive the Employee of any material fringe benefits,
or the failure by the Company to provide the Employee with the
number of paid vacation days to which he is entitled on the basis
of years of service with the Company in accordance with the
Company's normal vacation policy, provided that this paragraph
(f) shall not apply to any proportional across-the-board
reduction or action similarly affecting all executives of the
Company and all executives of any person in control of the
Company; or
(g) The failure of the Company to obtain a satisfactory
agreement from any successor to assume and agree to perform this
Agreement, as contemplated in Section 14 hereof.
The Employee's right to Salary and Benefits Continuation shall accrue upon the
occurrence of either (i) the Company terminates the Employee's employment other
than for Cause as defined in Section 4 below or (ii) the Employee terminates his
employment for "Good Reason" and shall continue as provided, notwithstanding the
subsequent expiration of this Agreement pursuant to Section 1 hereof. The
Employee's subsequent employment, death or disability following the Employee's
termination of employment in connection with a Change of Control shall not
affect the Company's obligation to continue making Salary and Benefits
Continuation payments. The Employee shall not be required to mitigate the amount
of any payment provided for in this Section 3 by seeking employment or
otherwise. The rights to Salary and Benefits Continuation shall be in addition
to whatever other benefits the Employee may be entitled to under any other
agreement or compensation plan, program or arrangement of the Company. For
purposes of interpreting any such other agreement, compensation plan, program or
arrangement, the occurrence of either of the events specified in (i) and (ii)
hereof shall be deemed to be a termination of Executive's employment by the
Company. The Company shall be authorized to withhold from any payment to the
Employee, his estate or his beneficiaries hereunder all such amounts, if any,
that the Company may reasonably determine it is required to withhold pursuant to
any applicable tax law or regulation.
Section 4. Termination of Employee for Cause.
Upon or following a Change of Control, the Company may at any time terminate the
Employee's employment for Cause. Termination of employment by the Company for
"Cause" shall mean termination upon:
(i) the willful and continued failure by the Employee to
substantially perform his duties with the Company (other than (A)
any such failure resulting from Employee's disability or (B) any
such actual or anticipated failure resulting from Employee's
termination of his/her employment for Good Reason), after a
written demand for substantial performance is delivered to the
Employee by the Board of Directors which specifically identifies
the manner in which the Board of Directors believes that the
Employee has not substantially performed his duties, and which
failure has not been cured within thirty days (30) after such
written demand; or
(ii) the willful and continued engaging by the Employee in
conduct which is demonstrably and materially injurious to the
Company, monetarily or otherwise, or
(iii) the breach by the Employee of the Confidentiality
provision set forth in Section 8 hereof.
For purposes of this Section 4, no act, or failure to act, on the
Employee's part shall be considered "willful" unless done, or omitted to be
done, by the Employee in bad faith and without reasonable belief that such
action or omission was in the best interest of the Company. Notwithstanding the
foregoing, the Employee shall not be deemed to have been terminated for Cause
unless and until there shall have been delivered to him a copy of a resolution
duly adopted by the affirmative vote of not less than three-quarters of the
entire membership of the Board of Directors at a meeting of the Board of
Directors called and held for that purpose (after reasonable notice to the
Employee and an opportunity for the Employee, together with his counsel, to be
heard before the Board of Directors) finding that in the good faith opinion of
the Board of Directors the Employee is guilty of the conduct set forth above in
clauses (i), (ii) or (iii) of this Section 4 and specifying the particulars
thereof in detail.
Section 5. Prior Termination.
Anything in this Agreement to the contrary notwithstanding, if the Employee's
employment with the Company is terminated prior to the date on which a Change of
Control occurs either (i) by the Company other than for Cause or (ii) by the
Employee for Good Reason, and it is reasonably demonstrated by Employee that
such termination of employment (a) was at the request of a third party who has
taken steps reasonably calculated to effect the Change of Control, or (b)
otherwise arose in connection with or anticipation of the Change of Control,
then for all purposes of this Agreement the termination shall be deemed to have
occurred upon a Change of Control and the Employee will be entitled to Salary
and Benefits Continuation as provided for in Section 3 hereof.
Section 6. Entire Understanding.
This Agreement contains the entire understanding of the Company and the Employee
with respect to the subject matter hereof.
Section 7. Construction of Agreement.
(a) Governing Law. This Agreement shall be governed by and
construed under the laws of the Commonwealth of Pennsylvania
without regard to its conflict of law provisions.
(b) Severability. In the event that any one or more of the
provisions of this Agreement shall be held to be invalid, illegal
or unenforceable, the validity, legality or enforceability of the
remaining provisions shall not in any way be affected or impaired
thereby.
(c) Headings. The descriptive headings of the several
paragraphs of this Agreement are inserted for convenience of
reference only and shall not constitute a part of this Agreement.
Section 8. Covenant as to Confidential Information.
In the event that the Employee violates the confidentiality requirement of
Section 1 of the Post Termination Confidentiality and Non-Competition Agreement
between the Executive and the Company, the Company shall be entitled, to the
extent permissible by law, and subject to Section 11 of this Agreement, to cease
to pay or provide the Employee or his dependents any compensation or benefit
being, or to be, paid or provided to him pursuant to Section 3 of this
Agreement, and also to obtain immediate injunctive relief restraining the
Employee from conduct in breach or threatened breach of the covenants contained
in this Section 8. Nothing herein shall be construed as prohibiting the Company
from pursuing any other remedies available to it for such breach or threatened
breach, including the recovery of damages from the Employee.
Section 9. Reimbursement of Fees.
The Company agrees to pay, to the full extent permitted by law, all legal fees
and expenses which the Employee may reasonably incur as a result of any contest
by the Company, Internal Revenue Service or others regarding the validity or
enforceability of, or liability under, any provision of this Agreement or any
guarantee of performance thereof (including as a result of any contest by the
Employee about the amount of any payment pursuant to Section 3 of this
Agreement) or in connection with any dispute arising from this Agreement,
regardless of whether Employee prevails in any such contest or dispute.
Section 10. Certain Reductions of Payments by the Company.
Notwithstanding anything herein to the contrary, if the aggregate of the amounts
due the Employee under this Agreement and any other plan or program of the
Company constitutes a "Parachute Payment," as such term is defined in Section
280G of the Internal Revenue Code of 1986, as amended, then the payments to be
made to the Employee under this Agreement which are contingent on a Change of
Control shall be reduced to an amount which, when added to the aggregate of all
other payments to be made to the Employee which are contingent on a Change of
Control, as a result of the termination of his employment, will make the total
amount of such payment equal to 2.99 times his Base Amount. The determinations
to be made with respect to this paragraph shall be made by an independent
auditor (the "Auditor") jointly selected by the Employee and the Company and
paid by the Company. In the event the payments to be made to the Employee are
required to be reduced pursuant to the limitations in this Section 10, the
Company shall allow the Employee to select which payment or benefits Employee
wants the Company to reduce in order that the total amount of such payment is
equal to 2.99 times such Employee's Base Amount. The Auditor shall be a
nationally recognized United States public accounting firm that has not, during
the two years preceding the date of its selection, acted in any way on behalf of
the Company or any of its subsidiaries.
Section 11. Resolution of Differences Over Breaches of Agreement.
Except as otherwise provided herein, in the event of any controversy, dispute or
claim arising out of, or relating to this Agreement, or the breach thereof, or
arising out of any other matter relating to the Employee's employment with the
Company or the termination of such employment, the parties may seek recourse
only for temporary or preliminary injunctive relief to the courts having
jurisdiction thereof and if any relief other than injunctive relief is sought,
the Company and the Employee agree that such underlying controversy, dispute or
claim shall be settled by arbitration conducted in Pittsburgh, Pennsylvania in
accordance with this Section 11 of this Agreement and the Commercial Arbitration
Rules of the American Arbitration Association ("AAA"). The matter shall be heard
and decided, and awards rendered by a panel of three (3) arbitrators (the
"Arbitration Panel"). The Company and the Employee shall each select one
arbitrator from the AAA National Panel of Commercial Arbitrators (the
"Commercial Panel") and AAA shall select a third arbitrator from the Commercial
Panel. The award rendered by the Arbitration Panel shall be final and binding as
between the parties hereto and their heirs, executors, administrators,
successors and assigns, and judgment on the award may be entered by any court
having jurisdiction thereof.
Section 12. Release.
The Employee hereby acknowledges and agrees that prior to the occurrence of the
Employee's or his dependents' right to receive from the Company or any of its
representatives or agents any compensation or benefit to be paid or provided to
him or his dependents pursuant to Section 3 of this Agreement, the Employee may
be required by the Company, in its sole discretion, to execute a release in a
form reasonably acceptable to the Company, which releases any and all claims
(other than amounts to be paid to Employee as expressly provided for under this
Agreement, the Employment Agreement, the Post Termination Confidentiality and
Non-Competition Agreement and the Supplemental Executive Retirement Agreement
the Employee has or may have against the Company or its subsidiaries, agents,
officers, directors, successors or assigns with respect to matters relating to
his employment and termination of employment.
Section 13. Waiver.
The waiver by a party hereto of any breach by the other party hereto of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach by a party hereto.
Section 14. Assignment.
This Agreement shall be binding upon and inure to the benefit of the successors
and assigns of the Company. The Company shall be obligated to require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the Company's business or assets, by a
written agreement in form and substance satisfactory to the Employee, to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform if no succession
had taken place. This Agreement shall inure to the extent provided hereunder to
the benefit of and be enforceable by the Employee or his legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. The Employee may not delegate any of his duties, responsibilities,
obligations or positions hereunder to any person and any such purported
delegation by him shall be void and of no force and effect with respect to
matters relating to his employment and termination of employment. Without
limiting the foregoing, the Employee's rights to receive payments and benefits
hereunder shall not be assignable or transferable, other than a transfer by
Employee's will or by the laws of descent and distribution.
Section 15. Notices.
Any notices required or permitted to be given under this Agreement shall be
sufficient if in writing, and if personally delivered or when sent by first
class certified or registered mail, postage prepaid, return receipt requested --
in the case of the Employee, to his residence address as set forth below, and in
the case of the Company, to the address of its principal place of business as
set forth below, in care of the Chairman of the Board -- or to such other person
or at such other address with respect to each party as such party shall notify
the other in writing.
Section 16. Pronouns.
Pronouns stated in either the masculine, feminine or neuter gender shall
include the masculine, feminine and neuter.
Section 17. Entire Agreement
This Agreement contains the entire agreement of the parties concerning the
matters set forth herein and all promises, representations, understandings,
arrangements and prior agreements on such subject are merged herein and
superseded hereby. The provisions of this Agreement may not be amended,
modified, repealed, waived, extended or discharged except by an agreement in
writing signed by the party against whom enforcement of any amendment,
modification, repeal, waiver, extension or discharge is sought. No person acting
other than pursuant to a resolution of the Board of Directors shall have
authority on behalf of the Company to agree to amend, modify, repeal, waive,
extend or discharge any provision of this Agreement or anything in reference
thereto or to exercise any of the Company's rights to terminate or to fail to
extend this Agreement.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its officers thereunto duly authorized, and the Employee has
hereunto set his hand, all as of the day and year first above written.
ATTEST: EQUITABLE RESOURCES, INC.
By: /s/ Xxxxxx X. Xxxxxxx /s/ Xxxxx X. Xxxxxx
______________________________________ By: ________________________________
Xxxxxx X. Xxxxxxx Xxxxx X. Xxxxxx
Vice President and Corporate Secretary President and Chief
Executive Officer
WITNESS:
By: /s/ Xxxxx Xxxxxx /s/ Xxxxx X. Xxxxxx
______________________________________ _________________________________
Xxxxx X. Xxxxxx
