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EXHIBIT 10H
EMPLOYMENT AGREEMENT
BETWEEN
CONSOLIDATED NATURAL GAS COMPANY
AND
NAME
DATED JANUARY 19, 1999
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TABLE OF CONTENTS
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PAGE
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1. OPERATION AND TERM OF AGREEMENT; CERTAIN DEFINITIONS 2
2. CHANGE OF CONTROL 3
3. EMPLOYMENT PERIOD 4
4. TERMS OF EMPLOYMENT 5
(A) Position and Duties 5
(B) Compensation 6
(i) Base Salary 6
(ii) Annual Bonus 6
(iii) Incentive, Savings and Retirement Plans 6
(iv) Split Dollar Life Insurance and Supplemental Death
Benefit Plans 8
(v) Welfare Benefit Plans 8
(C) Additional Rights of the Executive and Obligations of the Company 8
(i) Expenses 8
(ii) Fringe Benefits 8
(iii) Office and Support Staff 9
(iv) Vacation 9
(v) Indemnification 9
5. TERMINATION 9
(A) Death or Disability 9
(B) Cause 10
(C) Good Reason 10
(D) Notice of Termination 12
(E) Date of Termination 12
6. OBLIGATIONS OF THE COMPANY AND CNG SYSTEM COMPANY
UPON TERMINATION 12
(A) Termination Because of Death 12
(B) Termination Because of Disability 13
(C) Termination For Cause by the Company or For Other Than
Good Reason by the Executive 14
(D) Termination For Good Reason by the Executive or For Other
Than Cause or Disability by the CNG System Company or
Other Than as a Result of Death 14
(E) Successor in Interest 17
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7. NON-EXCLUSIVITY OF RIGHTS 18
8. FULL SETTLEMENT 18
9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY 19
10. CONFIDENTIAL INFORMATION 21
11. SUCCESSORS 22
12. MISCELLANEOUS 22
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EMPLOYMENT AGREEMENT
AGREEMENT by and between Consolidated Natural Gas Company, a Delaware
corporation (the "Company"), and Name (the "Executive"), dated as of January 19,
1999.
WHEREAS, the Company recognizes that the current business environment
makes it difficult to attract and retain highly qualified executives unless a
certain degree of security can be offered to such individuals against
organizational and personnel changes which frequently follow Changes of Control
(as defined below) of a corporation; and
WHEREAS, even rumors of acquisitions or mergers may cause executives to
consider major career changes in an effort to assure financial security for
themselves and their families; and
WHEREAS, the Company desires to assure fair treatment of its key
executives in the event of a Change of Control and to allow them to make
critical career decisions without undue time pressure and financial uncertainty,
thereby increasing their willingness to remain with the Company notwithstanding
the outcome of a possible Change of Control transaction; and
WHEREAS, the Company recognizes that its key executives will be
involved in evaluating or negotiating any offers, proposals or other
transactions which could result in Changes of Control of the Company and
believes that it is in the best interest of the Company and its stockholders for
such key executives to be in a position, free from personal financial and
employment considerations, to be able to assess objectively and pursue
aggressively the interests of the Company's stockholders in making these
evaluations and carrying on such negotiations; and
WHEREAS, the Board of Directors (the "Board") of the Company believes
it is essential to provide the Executive with compensation arrangements upon a
Change of Control which provide the Executive with individual financial security
and which are competitive with those of other corporations, and in order to
accomplish these objectives, the Board has caused the Company to enter into this
Agreement, which is intended to supercede and cancel all previous change of
control agreements, employment agreements or salary continuation agreements
entered into between any of the CNG System Companies and the Executive.
NOW THEREFORE, the parties, for good and valuable consideration and
intending to be legally bound, agree as follows:
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1. Operation and Term of Agreement; Certain Definitions.
(A) This Agreement shall be effective immediately upon its execution, but
neither this Agreement nor any of its provisions shall be operative
unless and until there has been a Change of Control of the Company, as
such term is defined below. The term of this Agreement shall end on
the third anniversary of the date of execution of this Agreement;
provided, however, that commencing on the date one year after the date
hereof, and on each annual anniversary of such date (such date and
each annual anniversary thereof is hereinafter referred to as the
"Renewal Date"), the term of this Agreement shall be automatically
extended so as to terminate three years from such Renewal Date, unless
at least 60 days prior to the Renewal Date the Company shall give
written notice that the term of the Agreement shall not be so
extended; and provided, further, that after a Change of Control of the
Company during the term of this Agreement, this Agreement shall remain
in effect until all of the obligations of the parties hereunder are
satisfied.
(B) The "Effective Date" shall be the first date during the term of this
Agreement on which a Change of Control occurs. Anything in this
Agreement to the contrary notwithstanding, if the Executive's
employment with any CNG System Company is terminated or if the
Executive would otherwise lose any rights under this Agreement due to
a demotion or salary reduction prior to the date on which a Change of
Control occurs, and it is reasonably demonstrated that such
termination or demotion or salary reduction (i) was at the request of
a third party who has taken steps reasonably calculated to effect a
Change of Control or (ii) otherwise arose in connection with or
anticipation of a Change of Control, then for all purposes of this
Agreement the "Effective Date" shall mean the date immediately prior
to the date of such termination or demotion or salary reduction.
(C) "CNG System Company(ies)" shall be the Company and/or any and all of
its Subsidiaries.
(D) A reference herein to a section of the Internal Revenue Code of 1986,
as amended (the "Code") or a subdivision thereof shall be construed to
incorporate reference to any section or subdivision of the Code
enacted as a successor thereto, any applicable proposed, temporary or
final regulations promulgated pursuant to such sections and any
applicable interpretation thereof by the Internal Revenue Service.
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(E) A reference herein to a section of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or any rule or regulation
promulgated thereunder shall be construed to incorporate reference to
any section of the Exchange Act or any rule or regulation enacted or
promulgated as a successor thereto.
(F) Subsidiary(ies) means a corporation or other entity 50% or more of the
equity interests of which are owned directly or indirectly by the
Company.
(G) Employee Benefit Plan means any written plan providing benefits for
employees of the Company or any Subsidiary.
(H) Related Party means (i) a majority-owned subsidiary of the Company; or
(ii) an employee or group of employees of the Company or any
majority-owned subsidiary of the Company; or (iii) a trustee or other
fiduciary holding securities under an Employee Benefit Plan of the
Company or any majority-owned subsidiary of the Company; or (iv) a
corporation owned directly or indirectly by the stockholders of the
Company in substantially the same proportion as their ownership of
Voting Securities.
(I) Voting Securities or Security means any securities of the Company
which carry the right to vote generally in the election of directors.
2. Change of Control. For the purpose of this Agreement, a "Change of
Control" means and shall be deemed to have occurred upon the first to
occur of the following if:
(A) any Person (as defined in the Exchange Act), other than the Company or
a Related Party, is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of Voting
Securities representing 20 percent or more of the total voting power
of all the then-outstanding Voting Securities, except that there shall
be excluded from the number of Voting Securities deemed to be
beneficially owned by a Person a number of Voting Securities
representing not more than 10 percent of the then-outstanding voting
power if such Person is (i) eligible to file a Schedule 13G pursuant
to Rule 13d-1(b)(1) under the Exchange Act with respect to Voting
Securities or (ii) an underwriter who becomes the beneficial owner of
more than 20 percent of the then-outstanding Voting Securities
pursuant to a firm commitment underwriting agreement with the Company;
or
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(B) the individuals who, as of the date hereof, constitute the Board
together with those who first become directors subsequent to such date
and whose recommendation, election or nomination for election to the
Board was approved by a vote of at least a majority of the directors
then still in office who either were directors as of the date hereof
or whose recommendation, election or nomination for election was
previously so approved (the "Continuing Directors"), cease for any
reason to constitute a majority of the members of the Board; or
(C) the stockholders of the Company approve a merger, consolidation,
recapitalization or reorganization of the Company or a subsidiary of
the Company, reverse split of any class of Voting Securities, or an
acquisition of securities or assets by the Company or a subsidiary of
the Company, or consummation of any such transaction if stockholder
approval is not obtained, other than (i) any such transaction which
would result in at least 60 percent of the total voting power
represented by the voting securities of the Company (or the company
into which the Company has merged or the ultimate parent company of
the Company) outstanding immediately after such transaction being
beneficially owned by at least 60 percent of the holders of
outstanding Voting Securities immediately prior to the transaction,
with the voting power of each such continuing holder relative to other
such continuing holders not substantially altered in the transaction,
or (ii) any such transaction which would result in a Related Party
beneficially owning more than 50 percent of the voting securities of
the surviving entity outstanding immediately after such transaction;
for purposes of this subsection 2(C), the relevant measurements
concerning voting power and ownership will be examined on the date the
shareholders vote, as if the transaction closed that date, as opposed
to the date the transaction actually closes;
(D) the stockholders of the Company approve a plan of complete liquidation
of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets other than
any such transaction which would result in a Related Party owning or
acquiring more than 50 percent of the assets owned by the Company
immediately prior to the transaction.
3. Employment Period. The Company hereby agrees to continue or cause the
continuation of the Executive in the employ of a CNG System Company, and
the Executive hereby agrees to remain in the employ of a CNG System
Company, except as herein provided, for the period commencing on the
Effective Date and ending on the third anniversary of such date (the
"Employment Period").
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4. Terms of Employment.
(A) Position and Duties.
(i) During the Employment Period, (a) the Executive's position
(including status, offices, titles and reporting requirements),
authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant
of those held, exercised and assigned at any time during the
90-day period immediately preceding the Effective Date and (b)
the Executive's services shall be performed at the location where
the Executive was employed immediately preceding the Effective
Date or any office or location less than 25 miles from such
location.
(ii) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote reasonable attention and time during
normal business hours to the business and affairs of the CNG
System Company to which Executive is assigned and, to the extent
necessary to discharge the responsibilities assigned to the
Executive hereunder, to use the Executive's reasonable best
efforts to perform faithfully and efficiently such
responsibilities. During the employment period it shall not be a
violation of this Agreement for the Executive to (a) serve on
corporate, civic or charitable boards or committees, (b) deliver
lectures, fulfill speaking engagements or teach at educational
institutions and (c) manage personal investments, so long as such
activities do not significantly interfere with the performance of
the Executive's responsibilities as an employee of the CNG System
Company in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities
have been conducted by the Executive prior to the Effective Date,
the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to the
Effective Date shall not thereafter be deemed to interfere with
the performance of the Executive's responsibilities to the CNG
System Company to which Executive is assigned. The preceding
sentence shall in no way be construed as a limitation on the
non-business activities listed previously in this paragraph of
Section 4(A)(ii). Activities of the Executive consistent with
this paragraph shall not permit the CNG System Company to
terminate the Executive's employment for Cause, as defined below.
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(B) Compensation.
(i) Base Salary. During the Employment Period, the Executive shall
receive an annual base salary ("Base Salary"), at a monthly rate
at least equal to the highest monthly base salary paid or payable
to the Executive by any CNG System Company during the 12-month
period immediately preceding the month in which the Effective
Date occurs. As used herein, "Base Salary" will include all wages
or salary paid to the Executive and will be calculated before any
salary reduction or deferrals, including but not limited to
reductions made pursuant to: Code Section 125; Code Section
401(k); and the Executive Incentive Deferral Plan. During the
Employment Period, the Base Salary shall be reviewed at least
annually and shall be increased at any time and from time to time
as shall be substantially consistent with increases in base
salary awarded in the ordinary course of business to other key
executives of the CNG System Companies. Any increase in Base
Salary shall not serve to limit or reduce any other obligation to
the Executive under this Agreement. Base Salary shall not be
reduced after any such increase.
(ii) Annual Bonus. In addition to Base Salary, the Executive shall be
awarded, for each fiscal year ending during the Employment
Period, an annual bonus (an "Annual Bonus") (either pursuant to
the Company's Annual Executive Incentive Program, any successor
to such program or otherwise) in cash at least equal to the
highest of: a) the average annual bonus payable to the Executive
from any CNG System Company in respect of the highest two of the
last three fiscal years immediately preceding the Effective Date
in which bonuses were paid or b) the Target Annual Bonus in the
then current year for persons in the Executive's Salary Grade. As
used herein, "Target Annual Bonus" will mean the anticipated
bonus level for a salary grade or position, which will not be
less than the same percentage of base salary as was in effect for
the applicable salary grade or position at any time during the
90-day period immediately preceding the Change of Control.
(iii) Incentive, Savings and Retirement Plans. In addition to Base
Salary and Annual Bonus payable as hereinabove provided, the
Executive shall be entitled to participate during the Employment
Period in all incentive, savings and retirement plans, practices,
policies and programs in which the Executive was participating
prior to the Effective Date and which are applicable to other key
executives of the CNG System Companies (including, without
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limitation, the Company's Executive Incentive Deferral Plan and
its System Thrift Plan), in each case providing benefits which
are the economic equivalent to those currently in effect or as
subsequently amended prior to the Effective Date. The
compensation, benefits and reward opportunities provided to the
Executive pursuant to such plans, practices, policies and
programs, in the aggregate, shall be at least as favorable as the
most favorable of such compensation, benefits and reward
opportunities, in the aggregate, provided by CNG System Companies
for the Executive under such plans, practices, policies and
programs as in effect at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to
the Executive, as provided at any time thereafter with respect to
other key executives of the CNG System Companies. Notwithstanding
the foregoing, the Company will not be required to institute new
long-term incentive plans or programs following the Effective
Date and before the date of closing or consummation of the
transaction contemplated by a Change of Control so long as
existing long-term incentive awards for the full calendar year
which includes the Effective Date have been paid in connection
with the Change of Control.
In the event of the termination of the Company's Thrift Plan, or
modification of such Plan, having the effect of reducing the
applicable CNG System Company's monthly and/or matching
contributions for the benefit of the Executive pursuant to such
Plan, the CNG System Company shall, for the duration of the
Employment Period, make monthly and/or matching contributions to
a deferred compensation account maintained on behalf of the
Executive in amounts which when added to any contributions made
by the CNG System Company for the benefit of the Executive under
the Thrift Plan shall at least equal the greater of (a) the CNG
System Company's average monthly or matching contributions to the
Executive's account under the Thrift Plan in respect to the
fiscal year immediately preceding the Effective Date or (b) the
CNG System Company's average monthly contribution to the
Executive's account under the Thrift Plan during the term of the
Agreement. Amounts contributed to an account pursuant to the
preceding sentence and the income thereon shall be payable to the
Executive either in the case of an account maintained under a
qualified plan, in accordance with the terms of the plan, or in
the case of any other such account, at the termination of the
Executive's employment with the CNG System Companies.
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(iv) Split Dollar Life Insurance and Supplemental Death Benefit Plans.
During the Employment Period, and thereafter in accordance with
the terms of the Split Dollar Life Insurance and Supplemental
Death Benefit Plans applicable to the Executive, the Executive,
his beneficiaries and his estate shall be entitled to the benefit
of such plans as in effect on the Effective Date or, if more
favorable to the Executive, as in effect at any time thereafter
with respect to key executives of the CNG System Companies.
(v) Welfare Benefit Plans. During the Employment Period, the
Executive and/or the Executive's family, as the case may be,
shall be eligible for participation in and shall receive all
benefits under welfare benefit plans, practices, policies and
programs provided by the CNG System Companies (including, without
limitation, medical, prescription, dental, vision, short term
disability, income gap long term disability, salary continuance,
severance, employee life, group life, accidental death and travel
accident insurance plans and programs), in each case providing
benefits which are the economic equivalent to those currently in
effect or as subsequently amended prior to the Effective Date.
The benefits provided to the Executive and/or the Executive's
family pursuant to such plans, practices, policies and programs
in accordance with this Section 4(B)(v) shall at all times be at
least as favorable as the most favorable of such plans,
practices, policies and programs in effect at any time during the
90-day period immediately preceding the Effective Date or, if
more favorable to the Executive and/or the Executive's family, as
in effect at any time thereafter with respect to other key
executives of the CNG System Companies.
(C) Additional Rights of the Executive and Obligations of the Company.
(i) 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 most
favorable policies, practices and procedures of the CNG System
Companies in effect at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to
the Executive, as in effect at any time thereafter with respect
to other key executives of the CNG System Companies.
(ii) Fringe Benefits. During the Employment Period, the Executive
shall be entitled to the same fringe benefits for which the
Executive was eligible prior to the Effective Date, including but
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not limited to the use of an automobile and payment of related
expenses, or automobile allowances, where applicable, parking,
financial consulting services, reimbursement for club dues, where
applicable, home security, where applicable, in accordance with
the most favorable plans, practices, policies and programs of the
CNG System Companies in effect at any time during the 90-day
period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect at any time thereafter
with respect to other key executives of the CNG System Companies.
(iii) Office and Support Staff. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and
with furnishings and other appointments, and to secretarial and
other assistance, at least equal to the most favorable of the
foregoing provided to the Executive by the CNG System Company to
which the Executive was assigned at any time during the 90-day
period immediately preceding the Effective Date or, if more
favorable to the Executive, as provided at any time thereafter
with respect to other key executives of the CNG System Companies.
(iv) Vacation. During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the most favorable
plans, practices, policies and programs of the CNG System
Companies as in effect at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to
the Executive, as in effect at any time thereafter with respect
to other key executives of the CNG System Companies.
(v) Indemnification. The Executive shall be entitled during the
Employment Period, and thereafter with respect to occurrences
during the Employment Period, to the benefit of the
indemnification provisions contained in the By-laws of the
Company or the CNG System Company to which Executive is assigned
as in effect on the Effective Date or, if more favorable to the
Executive, as in effect at any time thereafter, to the extent
permitted by applicable law at the time of the assertion of any
liability against the Executive.
5. Termination.
(A) Death or Disability. The Executive's employment under this Agreement
shall terminate automatically upon the Executive's death. If the CNG
System Company to which Executive is assigned determines in good
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faith that the Disability of the Executive has occurred (pursuant to
the definition of "Disability" set forth below), it may give to the
Executive written notice of its intention to terminate the Executive's
employment. In such event, the Executive's employment with the CNG
System Company shall terminate effective on the 30th day after receipt
of such notice by the Executive (the "Disability Effective Date"),
provided that, within the 30 days after such receipt, the Executive
shall not have returned to full-time performance of the Executive's
duties. For purposes of this Agreement, "Disability" means any
physical or mental condition which wholly prevents the Executive from
performing the duties of his occupation with the CNG System Company
for at least 26 weeks after the commencement of such condition and
which is determined to be of a permanent duration by a physician
selected by the CNG System Company or its insurers and acceptable to
the Executive or the Executive's legal representative (such agreement
as to acceptability not to be withheld unreasonably).
(B) Cause. During the Employment Period, the CNG System Company to which
Executive is assigned may only terminate the Executive's employment
under Section 5(A) or for "Cause." For purposes of this Agreement,
"Cause" means (i) an act or acts of personal dishonesty engaged in by
the Executive and intended to result in substantial personal
enrichment of the Executive at the expense of any CNG System Company,
(ii) repeated violations by the Executive of the Executive's
obligations under Section 4(A)(ii) of this Agreement which are
demonstrably willful and deliberate on the Executive's part and which
are not remedied in a reasonable period of time after receipt of
written notice from the CNG System Company or (iii) the conviction of
the Executive of a felony.
(C) Good Reason. Anything in this Agreement to the contrary
notwithstanding, during the Employment Period, the Executive's
employment may be terminated by the Executive for Good Reason and such
termination shall be deemed a constructive discharge of the Executive
by the CNG System Company to which the Executive is assigned. For
purposes of this Agreement, "Good Reason" means:
(i) the assignment to the Executive of any duties inconsistent in any
respect with the Executive's position (included status, offices,
titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 4(A)(i) of this
Agreement, or any other action by the Company or the CNG System
Company to which the Executive is assigned which results in a
diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated,
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insubstantial and inadvertent action not taken in bad faith and
which is remedied by the CNG System Company promptly after
receipt of notice thereof given by the Executive;
(ii) any failure by the CNG System Company to which Executive is
assigned to comply with any of the provisions of Section 4 of
this Agreement, other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith and which is
remedied by the CNG System Company promptly after receipt of
notice thereof given by the Executive;
(iii) the Company or the CNG System Company's to which the Executive
is assigned requiring the Executive to be based at any office or
location other than that described in Section 4(A)(i)(b) hereof,
except for travel reasonably required in the performance of the
Executive's responsibilities;
(iv) any purported termination by the Company or the CNG System
Company to which Executive is assigned of the Executive's
employment otherwise than as expressly permitted by this
Agreement;
(v) any failure by the Company to comply with and satisfy Section
11(C) of this Agreement; or
(vi) any spin-off, sale or other disposition by the Company of the CNG
System Company employing the Executive at any time during the
Employment Period.
For purposes of this Section 5(C), any good faith determination of
"Good Reason" made by the Executive shall be conclusive. Anything in
this Agreement to the contrary notwithstanding, a termination by the
Executive for any reason during the 30-day period immediately
following the first anniversary of the Effective Date, shall be deemed
to be a termination for Good Reason for all purposes of this
Agreement. Any termination by the Executive for Good Reason (other
than a termination during the 30-day period described in the
immediately preceding sentence for a reason other than one set forth
in clauses (i) through (vi) of this Section 5(C)) will be treated as a
termination by the Company for purposes of any severance plan or
policy in which the Executive could have been a participant
immediately prior to the Effective Date, and the Executive shall be
entitled to severance benefits under any such plan or policy as in
effect immediately prior to the Effective Date. Notwithstanding the
foregoing, the Executive will
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not be entitled to severance under any voluntary severance pay policy
or plan or voluntary job elimination program.
(D) Notice of Termination. Any termination of the Executive's employment
by the CNG System Company for Cause or by the Executive for Good
Reason shall be communicated by Notice of Termination to the other
party hereto given in accordance with Section 12(B) of this Agreement.
For purposes of this Agreement, a "Notice of Termination" means a
written notice 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 Date of Termination (as defined below) is other than the
date of receipt of such notice, specifies the termination date (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.
(E) Date of Termination. "Date of Termination" means the date of receipt
of the Notice of Termination or any later date specified therein, as
the case may be; provided, however, that (i) if the Executive's
employment is terminated by the CNG System Company other than for
Cause or Disability or by reason of death, the Date of Termination
shall be the date on which the CNG System Company notifies the
Executive of such termination and (ii) if the Executive's employment
is terminated by reason of death or Disability, the Date of
Termination shall be the date of death of the Executive or the
Disability Effective Date, as the case may be.
6. Obligations of the Company and CNG System Company upon Termination.
(A) Termination Because of Death. If the Executive's employment is
terminated by reason of the Executive's death, such employment shall
terminate without further obligations under this Agreement to the
Executive's representatives, other than those obligations accrued or
earned and vested (if applicable) by the Executive as of the Date of
Termination, including, for this purpose (i) the Executive's full Base
Salary through the Date of Termination at the rate in effect on the
Date of Termination, (ii) the product of the Executive's Target Bonus
under the applicable bonus plan for the calendar year in effect
including the Date of Termination and a fraction, the numerator of
which is the number of days in the current fiscal year through the
Date of
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Termination, and the denominator of which is 365, (iii) any
compensation previously deferred by the Executive (together with any
accrued interest thereon) and not yet paid by the CNG System Company
or other appropriate plan or entity, and any accrued vacation pay not
yet paid by the CNG System Company and (iv) all amounts payable to the
estate or designated beneficiaries of the Executive under the System
Thrift Plan, System Pension Plan, ESOP, the Split Dollar Life
Insurance and Supplemental Death Benefit Plans and any other plans,
practices, policies and programs of the CNG System Company, and/or all
other amounts payable pursuant to Section 4(B)(iii) hereof (such
amounts specified in clauses (i), (ii), (iii) and (iv) are hereinafter
referred to as "Accrued Obligations"). All such Accrued Obligations
shall be paid to the Executive's estate or beneficiary, as applicable,
in a lump sum in cash within 30 days of the Date of Termination or
otherwise in accordance with the Executive's specific elections
pursuant to any such plan, practice, policy or program. Anything in
this Agreement to the contrary notwithstanding, the Executive's family
shall be entitled to receive benefits at least equal to the most
favorable benefits provided by the CNG System Company to surviving
families of executives of the CNG System Company under such plans,
practices, policies or programs relating to family death benefits, if
any, in accordance with the most favorable plans, practices, policies
and programs of the CNG System Company in effect at any time during
the 90-day period immediately preceding the Effective Date or, if more
favorable to the Executive and/or the Executive's family, as in effect
on the date of the Executive's death, with respect to other key
executives of the CNG System Companies and their families.
(B) Termination Because of Disability. If the Executive's employment is
terminated by reason of the Executive's Disability, such employment
shall terminate without further obligations to the Executive, other
than those obligations accrued or earned and vested (if applicable) by
the Executive as of the Date of Termination, including for this
purpose, all Accrued Obligations. All such Accrued Obligations shall
be paid to the Executive in a lump sum in cash within 30 days of the
Date of Termination or otherwise in accordance with the Executive's
specific elections pursuant to any plan, practice, policy or program
providing benefits forming a part of the Accrued Obligations. Anything
in this Agreement to the contrary notwithstanding, the Executive shall
be entitled after the Disability Effective Date to receive disability
and other benefits at least equal to the most favorable of those
provided by the CNG System Companies to disabled executives and/or
their families in accordance with such plans, practices, policies and
programs relating to disability, if any, of the CNG System Companies
in effect at any time during the 90-day period immediately preceding
the Effective Date or, if
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more favorable to the Executive and/or the Executive's family, as in
effect at any time thereafter with respect to other key executives of
the CNG System Companies and their families.
(C) Termination For Cause by the CNG System Company or For Other Than Good
Reason by the Executive. If the Executive's employment shall be
terminated for Cause, or if the Executive terminates his employment
other than for Good Reason, the Executive's employment under this
Agreement shall terminate without further obligations to the
Executive, other than those obligations accrued or earned and vested
(if applicable) by the Executive through the Date of Termination,
including for this purpose, all Accrued Obligations. All such Accrued
Obligations shall be paid to the Executive in a lump sum in cash
within 30 days of the Date of Termination or otherwise in accordance
with the Executive's specific elections pursuant to any plan,
practice, policy or program providing benefits forming a part of the
Accrued Obligations.
(D) Termination For Good Reason by the Executive or For Other Than Cause
or Disability by the CNG System Company or Other Than As a Result of
Death. If, during the Employment Period, the Executive's employment
shall be terminated by the Company or the CNG System Company to which
Executive is assigned, other than for Cause or Disability or other
than as a result of the Executive's death, or if the Executive shall
terminate his employment for Good Reason, the CNG System Companies
shall pay to the Executive in a lump sum in cash within 30 days after
the Date of Termination (or otherwise in accordance with the
Executive's specific elections pursuant to any plan, practice, policy
or program providing benefits forming a part of the Accrued
Obligations), the aggregate of the following amounts and shall make
the following transfers and provide the following benefits:
(i) The Executive's full Base Salary and vacation pay accrued (for
vacation not taken) through the Date of Termination at the rate
in effect at the time of the Notice of Termination, plus an
amount equal to the product of the Executive's Target Annual
Bonus under the applicable bonus plan for the calendar year
including the Date of Termination and a fraction, the numerator
of which is the number of days in such calendar year through the
Date of Termination and the denominator of which is 365, plus all
other amounts to which the Executive is entitled under any
compensation plan, practice, policy or program of the Company in
effect at the time such payments are due; and
(ii) In the event any compensation has been previously deferred by the
Executive, all amounts previously deferred (together with any
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accrued interest thereon) and not yet paid by the CNG System
Company; and
(iii) (a) In the event the Executive is at least 50 years old with 10
years of Service on the Date of Termination, the Executive shall
be entitled to elect, at the time of his termination of
employment, one of the following benefits under the Split Dollar
Life Insurance Program and the Consolidated Natural Gas Company
Supplemental Retirement Benefit Plan (the "Supplemental
Retirement Plan"): (x) retirement under the Supplemental
Retirement Plan with five (5) years added to age and Service for
all purposes, including retirement eligibility or (y) purchase
for and deliver to Executive by the Company of a completely paid
up whole life insurance policy to be owned by Executive, with the
beneficiary to be designated by the Executive, and with a death
benefit equal to two times Executive's Base Salary. The Company
will also pay to the Executive, at the time of termination of
employment, an amount that, after payment of all federal, state
and local income, employment and excise taxes thereon, is equal
to all applicable federal, state and local income and employment
and excise taxes payable on the benefit provided for in this
Section 6(D)(iii)(a).
(b) In the event the Executive is not 50 years old or has less
than 10 years of Service on the Date of Termination, the Company
will purchase for and deliver to the Executive a completely paid
up whole life insurance policy to be owned by the Executive, with
the beneficiary to be designated by the Executive, and with a
death benefit equal to two times the Executive's Base Salary. The
Company will also pay to the Executive, at the time of
termination of employment, an amount that, after payment of all
federal, state and local income, employment and excise taxes
thereon, is equal to all applicable federal, state and local
income and employment and excise taxes payable in respect of the
delivery of the whole life insurance policy pursuant to this
subsection (iii) (b).
(c) If the Executive elects to receive benefits under the
Supplemental Retirement Plan under subsection (iii) (a) above, he
will be entitled to no benefits and have no other rights under
the Split Dollar Life Insurance Program, and if the Executive
elects to receive a paid up whole life insurance policy under the
Split Dollar Life Insurance Program, he will be entitled to no
benefits and have no other rights under the Supplemental
Retirement Plan. Delivery of a paid up whole life insurance
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policy and the additional amount pursuant to this subsection
(iii) will constitute the full satisfaction of all the Company's
obligations to the Executive under the Split Dollar Life
Insurance Program. Benefits under the Supplemental Retirement
Plan may be provided in whole or in part under the COC Plan
(defined below); and
(iv) A lump sum severance payment in an amount equal to three (3)
times the Executive's Annual Compensation. For purposes of this
Agreement, "Annual Compensation" shall be an amount equal to the
sum of (a) the Executive's Base Salary from the CNG System
Companies, in effect immediately prior to the Date of
Termination, plus (b) the highest of the annual bonus payable to
the Executive (whether paid currently or deferred) for the
calendar year immediately preceding the Date of Termination or
the Executive's Target Annual Bonus, not prorated, for the
calendar year which includes the Date of Termination; and
(v) A lump sum payment equal to (a) the cost to the Company or CNG
System Company, at the Date of Termination, of coverage of the
Executive and his or her dependents under the Company or CNG
System Company's life, short term disability, long term
disability, health, medical, dental, vision, AD&D and other
employee welfare benefit plans or programs (as in effect on the
Date of Termination) for 36 months following the Date of
Termination, and (b) an amount that, after payment of all
federal, state and local income, employment and excise taxes
thereon, is equal to all applicable federal, state and local
income, employment and excise taxes payable on the amount set
forth in clause (a) of this Section 6(D)(v); and
(vi) (a) In the event the Executive is age 50 or older with 10 years
of service on the Date of Termination, (x) the Executive will be
eligible to receive retirement benefit payments under the
Retirement and Postretirement Benefit Plan for Certain Employees
of Consolidated Natural Gas Company and Its Participating
Subsidiaries (the "COC Plan"), which will contain terms requiring
the Company to fund the retirement benefits under the COC Plan
under the existing Rabbi Trust between the Company and Mellon
Bank in connection with a Change of Control) which will add five
(5) years to age and service and will allow payments beginning on
or about the Date of Termination all as more fully set forth in
the COC Plan, and (y) the Executive and his or her spouse will be
eligible to receive retiree medical insurance benefits beginning
on the Date of Termination and
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continuing for the remainder of their lives on terms
substantially identical to the terms of the Company's retiree
medical plan in effect on the Effective Date, any other
dependents of the Executive shall be entitled to such medical
benefits for so long as they are eligible, and the Executive
shall be eligible to receive retiree life insurance benefits
beginning on the Date of Termination and continuing for the
remainder of his or her life on terms substantially identical to
the terms of the Company's retiree life insurance plan as if
effect on the Effective Date. The COC Plan will contain
provisions for funding this benefit under the Rabbi Trust or
similar document to the maximum extent permitted by the Code.
(b) In the event the Executive is under age 50 or has less than
10 years of service on the Date of Termination, (x) the Executive
will be eligible for retirement benefits under the COC Plan,
which will treat Executive as having an additional five (5) years
of service for all purposes and add five (5) years to age for
purposes of retirement discounts, but not for the benefit
commencement date, and (y) retirement benefit payments under the
COC Plan will begin on the date the Executive reaches age 55, all
as more fully set forth in the COC Plan; and
(vii) At the CNG System Company's expense and without any limit on
such expenses, the Executive will be entitled to outplacement
services for up to one year following the Date of Termination,
including a private office, administrative support and
individualized consultation provided by an outplacement service
provider acceptable to the Executive and the CNG System Company.
The Executive may also elect to forego this benefit in exchange
for a payment of $25,000. The CNG System Company will pay to the
Executive an additional amount that, after payment of all
federal, state and local income, employment and excise taxes
thereon, is equal to all applicable federal, state and local
income, employment and excise taxes payable on the benefit or
cash set forth in this Section 6(D)(vii).
(E) Successor in Interest. The Executive may designate a Successor (or
Successors) in Interest to receive any and all amounts due the Executive in
accordance with this Agreement should the Executive be deceased at any time
of payment. Such designation of Successor(s) in Interest shall be made in
writing and signed by the Executive, and delivered to the Company pursuant
to Section 12(B) hereof. Any such designation may be made to any legal
person, persons, trust or the Executive's estate as he shall determine in
his sole discretion. In the
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event any designation shall be incomplete, or in the event the
Executive shall fail to designate a Successor in Interest, his estate
shall be deemed to be his Successor in Interest to receive such portion
of all of the payments due hereunder. The Executive may amend, change
or revoke any such designation at any time and from time to time, in
the same manner. This Section 6(E) shall not supersede any designation
of beneficiary or successor in interest made by the Executive, or
separately covered, under any other plan, practice, policy or program
of the Company or the CNG System Company.
7. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit
the Executive's continuing or future participation in any benefit, bonus,
incentive, severance or other plans, practices, policies or programs
provided by the Company and/or any CNG System Company and for which the
Executive may qualify, nor shall anything herein limit or otherwise affect
such rights as the Executive may have under any stock option or other
agreements with the Company and/or any CNG System Company. Amounts which
are vested benefits or which the Executive is otherwise entitled to receive
under any plan, practice, policy or program of the Company and/or any CNG
System Company at or subsequent to the Date of Termination shall be payable
in accordance with such plan, practice, policy or program.
8. Full Settlement. The Company's obligation to make or cause to be made the
payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Company or
any CNG System Company may have against the Executive or others. In no
event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive
under any of the provisions of this Agreement. The Company agrees to pay,
to the fullest extent permitted by law, all legal fees and expenses which
the Executive may reasonably incur as a result of any contest (regardless
of the outcome thereof) by the Company, any CNG System Company or others of
the validity or enforceability of, or liability under, any provision of
this Agreement (including as a result of any contest by the Executive about
the amount of any payment pursuant to Sections 6 or 9 of this Agreement),
plus in each case interest at the applicable Federal rate provided for in
Section 7872(f)(2) of the Code. In any such action brought by the Executive
for damages or to enforce any provisions of this Agreement, the Executive
shall be entitled to seek both legal and equitable relief and remedies,
including, without limitation, specific performance of the Company's
obligations hereunder, in the Executive's sole discretion.
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9. Certain Additional Payments by the Company.
(A) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment or distribution made, or
benefit provided, by the Company or any CNG System Company to or for
the benefit of the Executive (whether paid or payable or distributed
or distributable pursuant to the terms of this Agreement or otherwise,
but determined without regard to any additional payments required
under this Section 9) (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Code (or any similar excise tax) or any
interest or penalties are incurred by the Executive with respect to
such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise
Tax"), then the Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by
the Executive of all taxes (including any Excise Tax) imposed upon the
Gross-Up Payment and any interest or penalties imposed with respect to
such taxes, the Executive retains from the Gross-Up Payment an amount
equal to the Excise Tax imposed upon the Payments.
(B) Subject to the provisions of Section 9(C), all determinations required
to be made under this Section 9, including determination of whether a
Gross-Up Payment is required and of the amount of any such Gross-Up
Payment, shall be made by PricewaterhouseCoopers, LLP (the "Accounting
Firm") which shall provide detailed supporting calculations both to
the Company and the Executive within 30 business days of the Date of
Termination, if applicable, or such earlier time as is requested by
the Company, provided that any determination that an Excise Tax is
payable by the Executive shall be made on the basis of substantial
authority. The initial Gross-Up Payment, if any, as determined
pursuant to this Section 9(B), shall be paid to the Executive within
five business days of the receipt of the Accounting Firm's
determination. If the Accounting Firm determines that no Excise Tax is
payable by the Executive, it shall furnish the Executive with a
written opinion that he has substantial authority not to report any
Excise Tax on his Federal income tax return. Any determination by the
Accounting Firm meeting the requirements of this Section 9(B) shall be
binding upon the Company and the Executive; subject only to payments
pursuant to the following sentence based on a determination that
additional Gross-Up Payments should have been made, consistent with
the calculations required to be made hereunder (the amount of such
additional payments are referred to herein as the "Gross-Up
Underpayment"). In the event that the Company exhausts its remedies
pursuant to Section 9(C) and the Executive thereafter is required to
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make a payment of any Excise Tax, the Accounting Firm shall determine
the amount of the Gross-Up Underpayment that has occurred and any such
Gross-Up Underpayment shall be promptly paid by the Company to or for
the benefit of the Executive. The fees and disbursements of the
Accounting Firm shall be paid by the Company.
(C) The Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the
payment by the Company of a Gross-Up Payment. Such notification shall
be given as soon as practicable but not later than ten business days
after the Executive receives written notice of such claim and shall
apprise the Company of the nature of such claim and the date on which
such claim is requested to be paid. The Executive shall not pay such
claim prior to the expiration of the 30-day period following the date
on which it gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such
claim is due). If the Company notifies the Executive in writing prior
to the expiration of such period that it desires to contest such claim
and that it will bear the costs and provide the indemnification as
required by this sentence, the Employee shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation
with respect to such claim by an attorney reasonably selected by
the Company,
(iii) cooperate with the Company in good faith in order effectively to
contest such claim, and
(iv) permit the Company to participate in any proceedings relating to
such claim; provided, however, that the Company shall bear and
pay directly all costs and expenses (including additional
interest and penalties) incurred in connection with such contest
and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax, including
interest and penalties with respect thereto, imposed as a result
of such representation and payment of costs and expenses.
Without limitation on the foregoing provisions of this Section
9(C), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue
or forgo any and all administrative appeals, proceedings,
hearings and
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conferences with the taxing authority in respect of such claim
and may, at its sole option, either direct the Executive to pay
the tax claimed and ▇▇▇ for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in
a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however, that
if the Company directs the Executive to pay such claim and ▇▇▇
for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall
indemnify and hold the Executive harmless, on an after-tax basis,
from any Excise Tax or income tax, including interest or
penalties with respect thereto, imposed with respect to such
advance or with respect to any imputed income with respect to
such advance; and further provided that any extension of the
statute of limitations relating to the payment of taxes for the
taxable year of the Executive with respect to which such
contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Company's control of the
contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and the Executive
shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other
taxing authority.
(D) If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 9(C), the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall
(subject to the Company's complying with the requirements of Section
9(C)) promptly pay to the Company the amount of such refund (together
with any interest paid or credited thereon after taxes applicable
thereto). If, after the receipt by the Executive of an amount advanced
by the Company pursuant to Section 9(C), a determination is made that
the Executive shall not be entitled to any refund with respect to such
claim and the CNG System Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the
expiration of 30 days after such determination, then any obligation of
the Executive to repay such advance shall be forgiven and the amount
of such advance shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid.
10. Confidential Information. The Executive shall hold in a fiduciary capacity
for the benefit of the CNG System Companies all secret or confidential
information, knowledge or data relating to the CNG System Companies, and
their respective businesses, which shall have been obtained by the
Executive
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during the Executive's employment by the CNG System Companies and which
shall not be or become public knowledge (other than by acts of the
Executive or his representatives in violation of this Agreement). After the
Date of Termination of the Executive's employment with the CNG System
Companies, the Executive shall not, without the prior written consent of
the Company, communicate or divulge any such information, knowledge or data
to anyone other than the CNG System Companies and those designated by it.
In no event shall an asserted violation of the provisions of this Section
10 constitute a basis for deferring or withholding any amounts otherwise
payable to the Executive under this Agreement.
11. 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 or Successor(s)
in Interest.
(B) This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns.
(C) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise to all or substantially
all of the business and/or assets of the Company) to assume expressly
and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall
mean the Company as hereinbefore defined and any successor to its
business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law or otherwise.
12. Miscellaneous.
(A) This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, without reference to principles of
conflict of laws. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect. 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.
(B) 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
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certified mail, return receipt requested, postage prepaid, addressed
as follows:
If to the Executive:
--------------------
To the address on record
at the employing company
If to the Company or (CNG System):
Consolidated Natural Gas Company
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Senior Vice President and General Counsel
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.
(C) Whenever reference is made herein to any specific plan or program of
the Company or CNG System Company, to the extent that the Executive is
not a participant therein or has no benefit accrued thereunder,
whether vested or contingent, as of the Effective Date, then such
reference herein shall be null and void and of no effect, and the
Executive shall acquire no additional benefit as a result of such
reference. This section does not include any severance plans or any
other exit incentives.
(D) The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision
of this Agreement.
(E) The Company and the CNG System Company may 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.
(F) The Executive's failure to insist upon strict compliance with any
provision hereof shall not be deemed to be a waiver of such provision
or any other provision thereof.
(G) This Agreement contains the entire understanding of the Company and
the Executive with respect to the subject matter hereof but does not
supersede or override the provisions of any stock option, employee
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benefit or other plan, program, policy or practice in which Executive
is a participant or under which Executive is a beneficiary. This
Agreement supersedes and cancels all previous Change of Control
agreements, employment agreements and salary continuation agreements
entered into between the Company, or any of its subsidiaries, and the
Executive.
(H) The Executive and the Company acknowledge that the employment of the
Executive by any CNG System Company prior to the Effective Date is "at
will," and, prior to the Effective Date, may be terminated by either
the Executive or the applicable CNG System Company at any time, unless
subsection 1(B) applies. Upon a termination of the Executive's
employment or upon the Executive's ceasing to be an officer of any CNG
System Company, in each case, prior to the Effective Date, there shall
be no further rights under this Agreement, unless section 1(B)
applies.
(I) The Company agrees that it will cause the appropriate CNG System
Companies to perform any and all obligations hereunder which said CNG
System Companies need to perform to comply herewith. The Company will
assure compliance herewith and assume full responsibility and
liability for any failure on the part of any CNG System Company to do
so.
IN WITNESS WHEREOF, the Executive has hereunto set his hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed as of the day and year first above written.
--------------------------------------------
Name
Executive
CONSOLIDATED NATURAL GAS COMPANY
By:
-----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Senior Vice President and General Counsel
Attest:
------------------------------
▇. ▇. ▇▇▇▇▇
Secretary
