NATIONAL FUEL GAS COMPANY
EMPLOYMENT CONTINUATION
AND
NONCOMPETITION AGREEMENT
TABLE OF CONTENTS
Page
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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................................................3
4. Position and Duties..............................................3
5. Compensation.....................................................4
a. Base Salary.............................................4
b. Annual Bonus............................................4
c. Long-term Incentive Compensation Programs...............4
d. Benefit Plans...........................................4
e. Expenses................................................5
f. Vacation and Fringe Benefits............................5
g. Indemnification.........................................5
6. Termination......................................................5
a. Death, Disability or Retirement.........................5
b. Voluntary Termination...................................5
c. Cause...................................................6
d. Good Reason.............................................6
e. Notice of Termination...................................7
f. Date of Termination.....................................7
7. Obligations of the Company upon Termination......................7
a. Death or Disability.....................................7
b. Cause and Voluntary Termination.........................7
c. Termination by the Company other
than for Cause and Termination
by the Executive for Good Reason........................8
x. Xxxxxxxxx Benefits..................................8
ii. Continuation of Welfare Benefits....................8
iii.Qualification for Early Retirement..................9
d. Discharge of the Company's Obligations.................10
e. Limit on Payments by the Company.......................10
i. Application of Section 7(e)........................10
ii. Calculation of Benefits............................11
iii.Imposition of Payment Cap..........................11
iv. Application of Section 280G........................11
v. Applicable Tax Rates...............................12
vi. Adjustments in Respect of the Payment Cap..........12
f. If Termination of Employment
Occurs After the Executive Has
Reached Age 62.........................................13
8. Non-exclusivity of Rights.......................................13
9. No Offset ...................................................13
10. Non-Competition and Non-Solicitation............................14
a. Noncompete.............................................14
b. Non-Solicitation of Employees..........................14
c. Confidential Information...............................14
d. Non-disparagement......................................14
e. Company Property.......................................15
f. Additional Payment.....................................15
11. Injunctive Relief and Other Remedies with
Respect to Covenants............................................15
12. Successors ...................................................15
13. Miscellaneous16
a. Applicable Law.........................................16
b. Arbitration............................................16
c. Amendments.............................................16
d. Entire Agreement.......................................16
e. Notices................................................17
f. Source of Payments.....................................17
g. Tax Withholding........................................17
h. Severability; Reformation..............................18
i. Waiver.................................................18
j. Counterparts...........................................18
k. Captions...............................................18
Signature Page...........................................................18
EMPLOYMENT CONTINUATION AND
NONCOMPETITION AGREEMENT
THIS AGREEMENT between SENECA RESOURCES CORPORATION, a Pennsylvania
corporation (the "Company"), NATIONAL FUEL GAS COMPANY, a New Jersey corporation
("National"), and ___________________ (the "Executive"), dated as of the 11th
day of December, 1998.
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, at its meeting on December 10,
1998, 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).
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
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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
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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
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Control. Notwithstanding Section 1(a), if (i) the Executive's employment is
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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 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 this Agreement becomes effective.
2. Definitions. (a) Change in Control. For the purposes of
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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 0000 Xxx)
("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 0000 Xxx) 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 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
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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.
3. Employment Period. Subject to Section 6 of this Agreement,
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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
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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 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 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
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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) the assignment to the Executive of any duties
-
inconsistent in any material adverse respect with the Executive's
position, authority or responsibilities as contemplated by Section 4 of
this Agreement, or (B) any other material adverse change in such
-
position, including titles, authority or responsibilities;
(ii) any failure by the Company to comply with any of the
provisions of Section 5 of this Agreement, other than an insubstantial
or inadvertent failure remedied by the Company promptly after receipt
of notice thereof given by the Executive;
(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 (or such other lesser distance as shall be set forth in the
Company's relocation policy as in effect at the Effective Date) 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 failure by the Company to obtain the assumption and
agreement to perform this Agreement by a successor as contemplated by
Section 12(b).
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 180 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) if the termination date is other than the date of receipt
---
of such notice, specifies the termination date of this Agreement (which date
shall be not more than 15 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.
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 (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
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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
(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 third 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
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 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.
(e) Limit on Payments by the Company.
--------------------------------
(i) Application of Section 7(e). In the event that any amount
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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
(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, the Executive shall have the right to designate which of the
payments and benefits otherwise provided for in this Agreement that he
will receive in connection with the application of the Payment Cap.
(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
has 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:
(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
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 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.
(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.
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 and expressly supersedes the Change in Control Agreement by and between
the Executive, National and the Company dated as of March 16, 1995; 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 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: Seneca Resources Corporation
0000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Corporate Secretary
If to National: National Fuel Gas Company
00 Xxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Corporate Secretary
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 provided for in paragraph
------------------
3 above shall be paid in cash from the general funds of the Company or National;
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. 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 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. 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.
(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.
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.
SENECA RESOURCES CORPORATION
Attest: /s/ By: /s/
-------------------- -----------------------
Secretary Title: Chairman
NATIONAL FUEL GAS COMPANY
Attest: /s/ By: /s/
-------------------- -----------------------
Secretary Title: Chairman, President & CEO
EXECUTIVE:
/s/
-------------------------
