Exhibit 10.1
FORM ECNA
EMPLOYMENT CONTINUATION AND
NONCOMPETITION AGREEMENT
THIS AGREEMENT between [Subsidiary
Corporation], a [State] corporation (the “Company”),
NATIONAL FUEL GAS COMPANY, a New Jersey corporation
(“National”), and
(the “Executive”), dated as of the
[ ] day
of [
], 200[7].
W I T
N E S S E T H :
WHEREAS, the Company and National
wish to attract and retain well-qualified executive and key
personnel and to assure continuity of management, which will be
essential to its ability to evaluate and respond to any actual or
threatened Change in Control (as defined below) in the best
interests of shareholders;
WHEREAS, the Executive is a valuable
employee of the Company, an integral part of its management team
and a key participant in the decision making process relative to
short-term and long-term planning and policy for the Company;
WHEREAS, the Company and National
understand that any actual or threatened Change in Control will
present significant concerns for the Executive with respect to his
financial and job security;
WHEREAS, the Company and National
wish to encourage the Executive to continue his career and services
with the Company for the period during and after an actual or
threatened Change in Control and to assure to the Company the
Executive’s services during the period in which such a Change
in Control is threatened, and to provide the Executive certain
financial assurances to enable the Executive to perform the
responsibilities of his position without undue distraction and to
exercise his judgment without bias due to his personal
circumstances; and
WHEREAS, the Board of Directors of
National has determined that it would be in the best interests of
National and its shareholders to assure continuity in the
management of National in the event of a Change in Control by
entering into an employment continuation and noncompete agreement
with Executive;
WHEREAS, to achieve these objectives,
the Company, National and the Executive desire to enter into an
agreement providing the Company and the Executive with certain
rights and obligations upon the occurrence of a Change in Control
or Potential Change in Control (as defined in
Section 2).
NOW, THEREFORE, in consideration of
the premises and mutual covenants herein contained, it is hereby
agreed by and between the Company, National and the Executive as
follows:
1. Operation of Agreement.
(a) Effective Date. The effective date of this Agreement shall
be the date on which a Change in Control occurs (the
“Effective Date”), provided that, except as provided in
Section 1(b), if the Executive is not employed by the Company,
National or any of their subsidiaries on the Effective Date, this
Agreement shall be void and without effect.
(b) Termination of Employment
Following a Potential Change in Control. Notwithstanding Section
1(a), if (i) the Executive’s employment is terminated by
the Company Without Cause (as defined in Section 6(c)) after
the occurrence of a Potential Change in Control and prior to the
occurrence of a Change in Control and (ii) a Change in Control
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 this Agreement, a “Change in
Control” shall be deemed to have occurred if any of the
following have occurred:
(i) either (a) the Company
or National shall receive a report on Schedule 13D, or an
amendment to such a report, filed with the Securities and Exchange
Commission pursuant to Section 13(d) of the Securities Exchange Act
of 1934 (the “1934 Act”) disclosing that any person (as
such term is used in Section 13(d) of the 1934 Act)
(“Person”), is the beneficial owner, directly or
indirectly, of twenty (20) percent or more of the outstanding
stock of National or (b) the Company or National has actual
knowledge of facts which would require any Person to file such a
report on Schedule 13D, or to make an amendment to such a
report, with the SEC (or would be required to file such a report or
amendment upon the lapse of the applicable period of time specified
in Section 13(d) of the 1934 Act) 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);
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(iii) approval by the
shareholders of National of (a) any consolidation or merger of
National in which National is not the continuing or surviving
corporation or pursuant to which shares of stock of National would
be converted into cash, securities or other property, other than a
consolidation or merger of National in which holders of its stock
immediately prior to the consolidation or merger have substantially
the same proportionate ownership of common stock of the surviving
corporation immediately after the consolidation or merger as
immediately before, or (b) any consolidation or merger in which
National is the continuing or surviving corporation but in which
the common shareholders of National immediately prior to the
consolidation or merger do not hold at least a majority of the
outstanding common stock of the continuing or surviving corporation
(except where such holders of common stock hold at least a majority
of the common stock of the corporation which owns all of the common
stock of National), or (c) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions)
of all or substantially all the assets of National; or
(iv) a change in the majority of
the members of the Board of Directors of National (the
“Board”) within a 24-month period unless the election
or nomination for election by National’s shareholders of each
new director was approved by the vote of at least two-thirds of the
directors then still in office who were in office at the beginning
of the 24-month period.
(b) Potential Change in Control.
For the purposes of this Agreement, a Potential Change in Control
shall be deemed to have occurred if:
(i) a Person commences a tender
offer (with adequate financing) for securities representing at
least twenty (20) percent of the outstanding stock of National
(calculated as provided in paragraph (d) of Rule 13d-3
under the 1934 Act in the case of rights to acquire stock);
(ii) National enters into an
agreement the consummation of which would constitute a Change in
Control;
(iii) proxies for the election
of directors of National are solicited by anyone other than
National; or
(iv) any other event occurs
which is deemed to be a Potential Change in Control by the
Board.
3. Employment Period. Subject to
Section 6 of this Agreement, the Company agrees to continue
the Executive in its employ, and the Executive agrees to remain in
the employ of the Company, for the period (the “Employment
Period”) commencing on the Effective Date and ending on the
earlier to occur of (i) the third anniversary of the Effective
Date and (ii) the date on which the Executive attains age
65.
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4. Position and Duties. During
the Employment Period, the Executive’s position (including
titles), authority and responsibilities shall be at least
commensurate with those held, exercised and assigned immediately
prior to the Effective Date. It is understood that, for purposes of
this Agreement, such position, authority and responsibilities shall
not be regarded as not commensurate merely by virtue of the fact
that a successor shall have acquired all or substantially all of
the business and/or assets of the Company as contemplated by
Section 12(b) of this Agreement. The Executive’s services
shall be performed in the United States and within 30 miles of the
location where the Executive was employed immediately preceding the
Effective Date.
5. Compensation. (a) Base
Salary. During the Employment Period, the Executive shall receive a
base salary at a monthly rate at least equal to the monthly salary
paid to the Executive by the Company and any of its affiliated
companies immediately prior to the Effective Date. The base salary
shall be reviewed at least once each year after the Effective Date,
and shall be increased annually at a rate at least equal to the
greater of (i) the average percentage increase for the same
period in the compensation of salaried employees of National and
its subsidiaries who are not executives and (ii) the
percentage increase in the national Consumer Price Index for the
last completed calendar year. The Executive’s base salary, as
it shall be increased from time to time, shall hereafter be
referred to as “Base Salary”. Neither the Base Salary
nor any increase in Base Salary after the Effective Date shall
serve to limit or reduce any other obligation of the Company
hereunder.
(b) Annual Bonus. During the
Employment Period, in addition to the Base Salary, for each fiscal
year of the Company ending during the Employment Period, the
Executive shall be afforded the opportunity to receive an annual
bonus on terms and conditions no less favorable to the Executive
(taking into account reasonable changes in the Company’s
goals and objectives) than the annual bonus opportunity that had
been made available to the Executive for the fiscal year ended
immediately prior to the Effective Date (the “Annual Bonus
Opportunity”). Any amount payable in respect of the Annual
Bonus Opportunity shall be paid as soon as practicable following
the year for which the amount (or prorated portion) is earned or
awarded, unless electively deferred by the Executive pursuant to
any deferral programs or arrangements that the Company may make
available to the Executive.
(c) Long-term Incentive
Compensation Programs. During the Employment Period, the Executive
shall participate in all long-term incentive compensation programs
for key executives at a level that is 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
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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
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may,
upon not less than 30 days’ written notice to the
Company, voluntarily terminate employment for any reason (including
early retirement under the terms of any of the Company’s
retirement plans as in effect from time to time), provided that any
termination by the Executive pursuant to Section 6(d) on account of
Good Reason (as defined therein) shall not be treated as a
voluntary termination
under this Section 6(b).
(c) Cause. The Company may
terminate the Executive’s employment for Cause. For purposes
of this Agreement, “Cause” means the Executive’s
gross misconduct, fraud or dishonesty, which has resulted or is
likely to result in material economic damage to the Company or
National, as determined in good faith by a vote of at least
two-thirds of the non-employee directors of National at a meeting
of the Board at which the Executive is provided an opportunity to
be heard (with representation by counsel of his choosing, should he
so desire).
(d) Good Reason. Following the
occurrence of a Change in Control, the Executive may terminate his
employment for Good Reason. For purposes of this Agreement,
“Good Reason” means the occurrence of any of the
following, without the express written consent of the Executive,
after the occurrence of a Change in Control:
(i) a
material diminution in (A) the Executive’s authority,
duties, or responsibilities, (B) the Executive’s base
compensation or (C) the budget over which the Executive
retains authority;
(ii) a
material diminution in the authority, duties, or responsibilities
of the supervisor to whom the Executive is required to report,
including a requirement that the Executive report to a corporate
officer or employee instead of reporting directly to the board of
directors of a corporation; or
(iii) the
Company’s requiring the Executive to be based at any office
or location outside of the United States and/or more than 30 miles
from that location at which he performed his services specified
under the provisions of Section 4 immediately prior to the
Change in Control, except for travel reasonably required in the
performance of the Executive’s responsibilities; or
(iv) any
other action or inaction that constitutes a material breach by the
Company of this Agreement;
provided,
however, that to constitute Good Reason the Company shall have a
period of 30 days to cure any acts which would otherwise give
Executive the right to terminate his employment for Good Reason.
Such 30-day period shall commence as of the date of receipt by the
Company of the Notice of Termination.
In no
event shall the mere occurrence of a Change in Control, absent any
further impact on the Executive, be deemed to constitute Good
Reason. In the event that the Executive shall in good faith give
a
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Notice
of Termination for Good Reason and it shall thereafter be
determined that Good Reason did not exist, the Executive shall,
unless the Company and the Executive shall otherwise mutually
agree, return to employment with the Company within 5 business days
of such decision, without any impairment or other limitation of his
rights hereunder, except that he shall not be paid his base salary
for any period he did not perform services and his annual bonus
opportunity for such year may be reduced to reflect his period of
absence.
(e) Notice of Termination. Any
termination by the Company for Cause or by the Executive for Good
Reason shall be communicated by Notice of Termination given in
accordance with Section 13(e). For purposes of this Agreement,
a “Notice of Termination” means a written notice given,
in the case of a termination for Cause, within 30 business days of
the Company’s having actual knowledge of the events giving
rise to such termination, and in the case of a termination for Good
Reason, within 90 days of the Executive’s having actual
knowledge of the events giving rise to such termination, and which
(i) indicates the specific termination provision in this
Agreement relied upon, (ii) sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for
termination of the Executive’s employment under the provision
so indicated, and (iii) specifies the date the
Executive’s employment shall terminate (which date shall be
not less than 30 nor more than 60 days after the giving of
such notice). The failure by the Executive to set forth in the
Notice of Termination any fact or circumstance which contributes to
a showing of Good Reason shall not waive any right of the Executive
hereunder or preclude the Executive from asserting such fact or
circumstance in enforcing his rights hereunder.
(f) Date of Termination. For the
purpose of this Agreement, the term “Date of
Termination” means (i) in the case of a termination for
which a Notice of Termination is required, the date of receipt of
such Notice of Termination or, if later, the date specified
therein, as the case may be, and (ii) in all other cases, the
actual date on which the Executive’s employment terminates
during the Employment Period.
7. Obligations of the Company
upon Termination. (a) Death or Disability. If the
Executive’s employment is terminated during the Employment
Period by reason of the Executive’s death or Disability, this
Agreement shall terminate without further obligations to the
Executive or the Executive’s legal representatives under this
Agreement other than those obligations accrued hereunder at the
Date of Termination, and the Company shall pay to the Executive (or
his beneficiary or estate) (i) the Executive’s full Base
Salary through the Date of Termination (the “Earned
Salary”), (ii) any vested amounts or benefits owing to
the Executive under the Company’s otherwise applicable
employee benefit plans and programs, including any compensation
previously deferred by the Executive (together with any accrued
earnings thereon) and not yet paid by the Company and any amounts
payable pursuant any individual agreement with Executive (the
“Accrued Obligations”), and (iii) any other
benefits payable due to the
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Executive’s death or Disability under the Company’s
plans, policies or programs (the “Additional
Benefits”).
Any Earned Salary shall be paid in
cash in a single lump sum as soon as practicable, but in no event
more than 15 days (or at such earlier date required by law),
following the Date of Termination. Accrued Obligations and
Additional Benefits shall be paid in accordance with the terms of
the applicable plan, program or arrangement.
(b) Cause and Voluntary
Termination. If, during the Employment Period, the
Executive’s employment shall be terminated for Cause or
voluntarily terminated by the Executive (other than on account of
Good Reason following a Change in Control), the Company shall pay
the Executive (i) the Earned Salary in cash in a single lump
sum as soon as practicable, but in no event more than 10 days,
following the Date of Termination, and (ii) the Accrued
Obligations in accordance with the terms of the applicable plan,
program or arrangement.
(c) Termination by the Company
other than for Cause and Termination by the Executive for Good
Reason. Subject to Section 7(f) below, if, during the Employment
Period, the Company terminates the Executive’s employment
other than for Cause, or the Executive terminates his employment
for Good Reason, the Company shall pay to the Executive the
following amounts:
(i) Severance Benefits. The Executive
shall be paid the following:
(A) the Executive’s Earned
Salary;
(B) a cash amount (the
“Severance Amount”) equal to
(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
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