PERFORMANCE SHARE AGREEMENT (Under The Connecticut Natural Gas Corporation Executive Restricted Stock Plan) This agreement, dated as of the 14th day of May, 1999, is made and entered into by and between Connecticut Natural Gas Corporation, a...
(Under The Connecticut Natural Gas Corporation
Executive Restricted Stock Plan)
This agreement, dated as of the 14th day of May, 1999, is made and entered into by and between Connecticut Natural Gas Corporation, a Connecticut corporation whose principal executive offices are located in Hartford, Connecticut (the "Corporation") and _________________ (the "Participant").
W i t n e s s e t h:
Whereas, the terms and conditions of such Award are set forth in this Agreement; and
Now, therefore, in consideration of the premises and of the mutual covenants and agreements herein contained, the parties hereto hereby agree as follows:
Cash distributions paid with respect to Restricted Shares shall be invested by the Custodian, promptly after the receipt thereof, in additional shares of common stock of the Company. Distributions and earnings from the reinvestment of cash distributions (the "Distribution Accumulations") shall be credited to a separate account in the Participant's name on the books of the Plan, the Distribution Accumulations so credited being subject to the same terms and conditions of this Agreement as pertain to the Restricted Shares (other than the Adjustment Provisions which shall not apply to distributions other than shares or rights to shares of the Company's capital stock). For purposes of this Agreement, the Restricted Shares, cash paid in lieu of Restricted Shares pursuant to Section 5, and Distribution Accumulations shall sometimes be referred to hereinafter as the "Restricted Property."
3. Adjustment in Number of Restricted Shares Under Award.
(a) The number of Restricted Shares granted under the Award and any shares of the Company's capital stock received as a distribution with respect to the Restricted Shares (the "Distribution Shares") shall be adjusted based upon the performance of the Company or an affiliate thereof during a three-year measuring period (the "Measuring Period") to the extent hereinafter provided. The Measuring Period shall consist of the thirty-six month period ending on the last trading day of the month immediately preceding the third anniversary date of the Effective Date. For purposes of the foregoing, the last trading day of any particular month shall be the last day of such month on which the New York Stock Exchange is open to effect transactions in shares of the common stock of the Company.
(b) The Restricted Shares and Distribution Shares shall be subject to adjustment with respect to the Measuring Period. The adjustments, if any, shall be based on the performance of the Company or affiliate thereof, as provided and measured in the manner set forth in Schedule A, in the Measuring Period.
(c) The total number of Restricted Shares granted under the Award and the Distribution Shares with respect to those Restricted Shares shall be adjusted as of the end of the Measuring Period in the manner and to the extent provided in Schedule A.
(a) The Restricted Property may not be encumbered, sold, assigned, transferred, pledged or otherwise disposed of at any time during the period that Risks of Forfeiture apply, in accordance with Sections 4 and 5, to such Restricted Property (the "Restriction Period"). If any of the Restricted Property is so encumbered, sold, assigned, transferred, pledged or otherwise disposed of during the Restriction Period, all then Restricted Property held for the account of Participant shall automatically be forfeited to the Corporation.
(b) Except as otherwise provided under the Agreement, if the Participant ceases to serve as an employee of the Corporation or a Subsidiary, as the case may be, and all Affiliates (as defined below) thereof, either voluntarily or otherwise, prior to an applicable vesting date with respect to Restricted Property (i.e. prior to the date on which Risks of Forfeiture with respect to the Restricted Property shall have lapsed in accordance with Section 5 of this Agreement), then all Restricted Property shall automatically be forfeited to the Corporation.
For purposes of this Agreement, "Affiliate" shall mean the Company, any entity in which the Corporation or the Company directly or indirectly owns 50% or more of the voting securities, or any other entity that is included in a controlled group of corporations in which the Corporation is included as provided in Section 414(b) of the Internal Revenue Code or is a trade or business under common control with the Corporation as provided in Section 414(c) of the Internal Revenue Code.
(a) Unless the Risks of Forfeiture shall sooner lapse as provided in this Agreement or as the Committee may determine in its discretion, the Risks of Forfeiture will lapse and the Participant's rights will vest with respect to the Restricted Shares, as adjusted as of the end of the Measuring Period under the Adjustment Provisions, and any Distribution Accumulations with respect to those Restricted Shares, on the first day following the end of the Measuring Period. As soon as practicable after the Restricted Shares and Distribution Accumulations vest, the Custodian shall deliver to the Participant, free of restrictions hereunder, cash and a certificate or certificates for shares of common stock of the Company equal in value to the vested Restricted Shares and Distribution Accumulations. The cash portion of the distribution shall be that amount, and no more, equal to the applicable tax withholding obligations arising in connection with the vesting of such Restricted Shares and Distribution Accumulations. The cash portion of the distribution shall be calculated on the basis of the closing price of the shares on the New York Stock Exchange for the vesting date, or, if the shares shall not have traded on the vesting date, the closing price on the next preceding day on which the shares shall have so traded. The balance shall be distributed in shares of common stock of the Company provided, however, that the Corporation shall not distribute any fractional shares. The Corporation and its Subsidiaries shall, to the extent required or permitted by law, deduct the amount of any withholding tax obligation from any payment of any kind otherwise due to the Participant.
(b) If the Participant ceases to be employed by the Corporation or any Subsidiary, as the case may be, and all Affiliates thereof by reason of his or her retirement on or after attaining age 60, his or her early retirement with the consent of the Committee, his or her death, or his or her disability and such termination occurs prior to any applicable vesting date, or upon the occurrence of any other event as the Committee may determine from time to time, the Participant's right to Restricted Property that shall not have vested as of such event, will immediately vest and become distributable in accordance with the terms of this Section 5 without further adjustment attributable to the Adjustment Provisions. For purposes of this Agreement, "disability" shall mean disability because of illness or injury of such severity that the Participant is unable to perform the usual duties of his or her employment with the Corporation, Subsidiary or Affiliate, as the case may be, as conclusively determined by the Board.
(c) Upon the occurrence of a Change of Control, as defined below, all Risks of Forfeiture will lapse and all Restricted Property shall vest and become distributable in accordance with the terms of Section 5 hereof, without further adjustment attributable to the Adjustment Provisions, except that if the vesting of the right to Restricted Property on the occurrence of a Change of Control is treated as a payment which either alone or together with other payments or distributions made to the Participant under any agreement, policy, plan, program or arrangement by the Corporation, an Affiliate, any Person, as defined below, whose actions result in a Change of Control or any affiliate of such Person, is deemed to be a "parachute payment" within the meaning of Section 280G of the Code and the Participant does not then have in effect an Employment Agreement with the Company that entitles the Participant to a Gross-up Payment (as defined therein), the right of the Participant to the Restricted Property shall be forfeited to the extent, and only to the extent, that the value of the right to receive the Restricted Property when added to such other payments received or to be received gives rise to a parachute payment; provided, however, that the foregoing forfeiture shall be made only if and to the extent that such forfeiture would result in an increase in the aggregate payments and benefits to be received by the Participant, determined on an after-tax basis (taking into account the excise tax imposed pursuant to Section 4999 of the Internal Revenue Code, or any successor provision thereto, any tax imposed by any comparable provisions of state law, and any applicable federal, state and local income taxes). For purposes of this Agreement, a "Change of Control" shall mean: (i) the acquisition by any individual, entity or group (within the meaning of Section 13(d) (3) or 14(d) (2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (1) the then outstanding shares of common stock of the Company (the "Outstanding Common Stock") or (2) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Voting Securities"); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change of Control: (1) any acquisition directly from the Company, (2) any acquisition by the Company, (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (4) any acquisition by any corporation pursuant to a transaction which complies with clauses (1), (2) and (3) of subsection (iii) of this Section 5(c); or (ii) Individuals who, as of the Effective Date, constitute the Board of Directors of the Company (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board of Directors of the Company; provided, however, that any individual becoming a director subsequent to the Effective Date whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board of Directors of the Company; or (iii) Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a "Business Combination"), in each case, unless, immediately following such Business Combination, (1) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Common Stock and Outstanding Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Common Stock and Outstanding Voting Securities, as the case may be, (2) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or any related corporation or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination, and (3) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board of Directors of the Company, providing for such Business Combination; or (iv) Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.
9. No Rights to Continued Service. No provision of this Agreement shall:
(a) confer or be deemed to confer upon the Participant or shall in any way affect the right of the Corporation or any Subsidiary to remove the Participant as an employee at any time for any reason with or without cause; or
(b) be construed to impose upon the Corporation or any Subsidiary any liability for any forfeiture of Restricted Property.
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER THE SECURITIES ACT OF 1933 OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.
In addition, the Participant hereby asserts, as a precondition to the issuance of Restricted Shares, that said Restricted Shares are being acquired for his or her own account and without any view to the distribution thereof.
CONNECTICUT NATURAL GAS CORPORATION,
A Connecticut Corporation
By
PARTICIPANT
Schedule A
PERFORMANCE MEASURE AND ADJUSTMENTS
(CTG Resources, Inc.)
(a) Performance Measure. The performance measure applicable to the Participant during the Measuring Period shall be the level of earnings per share of common stock of the Company during the last twelve-month period of the Measuring Period. The Committee shall take into consideration adjustments in the capital structure (of the types referred to in Section 12 of the Agreement) of the Company and such other factors as it, in its sole discretion, shall deem appropriate to measure the performance of the Company or the level of earnings per share of Company common stock for purposes of Section (b) below.
With respect to the Measuring Period, the number of Restricted Shares and Distribution Shares subject to adjustment shall be adjusted as follows based on whether the earnings per share of common stock of the Company during the last twelve-month period of the Measuring Period are less than, equal to or in excess of the target of $2.16 per share:
|
Amount of Company Earnings Per Share* |
Percent of Restricted Shares and Distribution Shares To Be Retained (Subject to Vesting Provisions) Following Adjustment* |
Less than $2.04 ; |
0% |
$2.04 |
50% |
$2.10 |
75% |
$2.16 |
100% |
$2.22 |
125% |
$2.28 or more |
150%
Schedule A
PERFORMANCE MEASURE AND ADJUSTMENTS
With respect to the Measuring Period, the number of Restricted Shares and Distribution Shares subject to adjustment shall be adjusted as follows based on whether the earnings per share of common stock of the Corporation during the last twelve-month period of the Measuring Period are less than, equal to or exceed the target of $1.72 per share:
|
