DIRECTORS' DEFERRED COMPENSATION PLAN

 

ARTICLE I

 

1.1          Purpose of Plan.

 

This Equitable Resources, Inc. Directors’ Deferred Compensation Plan (the “ Plan ”) hereby is created to provide an opportunity for the members of the Board of Directors of Equitable Resources, Inc. (the “ Board ”) to defer payment of all or a portion of the fees to which they are entitled as compensation for their services as members of the Board.  The Plan also shall provide for an award of Phantom Stock to certain members of the Board and for the deferral of stock units and phantom stock awarded pursuant to the 1999 Equitable Resources, Inc. Non-Employee Directors’ Stock Incentive Plan (the “ NEDSIP ”).  In addition, Plan Participants shall be entitled to direct the Company to transfer to this Plan directors’ fees previously deferred under the 1980 Board of Directors’ Deferred Compensation Plan as in effect prior to May 26, 1999 (the “ Prior Plan ”).  The Plan originally was effective as of May 26, 1999, and supersedes all prior deferred compensation and retirement plan arrangements established or maintained for the benefit of non-employee members of the Board.  The Plan was amended and restated (i) as of May 16, 2000, to reflect a change in the benefits committee structure of the Company, (ii) as of December 6, 2000 to provide for increased flexibility in directing investment in available investment options, and to modify vesting of Phantom Stock, and (iii) as of May 15, 2003 to reflect the payment of deferred stock units to non-employee directors in substitution for stock options.

 

ARTICLE II

 

DEFINITIONS

 

When used in this Plan and initially capitalized, the following words and phrases shall have the meanings indicated:

 

2.1          “Account” means the total of a Participant’s Deferral Account, Phantom Stock Account and Transferred Amounts Account under the Plan.

 

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2.2          “Beneficiary” means the person or persons designated or deemed to be designated by the Participant pursuant to Section 7.1 of the Plan to receive benefits payable under the Plan in the event of the Participant’s death.

 

2.3          “Change in Control” means any of the following events:

 

(a)                                   The sale or other disposition by the Company of all or substantially all of its assets to a single purchaser or to a group of purchasers, other than to a corporation with respect to which, following such sale or disposition, more than eighty percent (80%) of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of the Board of Directors is then owned beneficially, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the outstanding Company common stock and the combined voting power of the then outstanding voting securities immediately prior to such sale or disposition in substantially the same proportion as their ownership of the outstanding Company common stock and voting power immediately prior to such sale or disposition.

 

(b)                                  The acquisition in one or more transactions by any person or group, directly or indirectly, of beneficial ownership of twenty percent (20%) or more of the outstanding shares of Company common stock or the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of the Board; provided, however, that any acquisition by (x) the Company or any of its subsidiaries, or any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its subsidiaries or (y) any person

 

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that is eligible, pursuant to Rule 13d-1(b) under the Exchange Act (as such rule is in effect as of November 1, 1995) to file a statement on Schedule 13G with respect to its beneficial ownership of Company common stock and other voting securities whether or not such person shall have filed a statement on Schedule 13G, unless such person shall have filed a statement on Schedule 13D with respect to beneficial ownership of fifteen percent (15%) or more of the Company’s voting securities, shall not constitute a Change in Control;

 

(c)                                   The Company’s termination of its business and liquidation of its assets;

 

(d)                                  The reorganization, merger or consolidation of the Company into or with another person or entity, by which reorganization, merger or consolidation the persons who hold one hundred percent (100%) of the voting securities of the Company prior to such reorganization, merger or consolidation receive or continue to hold less than sixty percent (60%) of the outstanding voting shares of the new or continuing corporation; or

 

(e)                                   If, during any two-year period, less than a majority of the members of the Board are persons who were either (i) nominated or recommended for election by at least two-thirds vote of the persons who were members of the Board or Nominating Committee of the Board at the beginning of the period, or (ii) elected by at least two-thirds vote of the persons who were members of the Board at the beginning of the period.

 

2.4                                “Code” means the Internal Revenue Code of 1986, as amended.

 

2.5                                “Committee” means the Compensation Committee of the Board.

 

2.6          “Company” means Equitable Resources, Inc. and any successor thereto.

 

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2.7          “Deferral Account” means the recordkeeping account established on the books and records of the Company to record a Participant’s deferral amounts under Section 5.1 of the Plan, plus or minus any investment gain or loss allocable thereto under Section 5.5 of the Plan.

 

2.8          “Directors’ Fees” means the fees that are paid by the Company to members of the Board as compensation for services performed by them as members of the Board.

 

2.9          “Enrollment Form” means the agreement to participate and related elections filed by a Participant pursuant to Section 5.1 of the Plan, in the form prescribed by the Committee, directing the Company to reduce the amount of Directors’ Fees otherwise currently payable to the Participant and credit such amount to the Participant’s Deferral Account hereunder.

 

2.10        “Hardship Withdrawal” shall have the meaning set forth in Section 6.4 of the Plan.

 

2.11        “In-Service Distribution” shall have the meaning set forth in Section 6.3 of the Plan.

 

2.12        “Investment Options” means the investment options described in Appendix A to the Plan into which a Participant may direct all or part of his or her Deferral Account and/or Transferred Amounts Account pursuant to Section 5.2 of the Plan.

 

2.13        “Investment Return Rate” means:

 

(a)                                   In the case of an Investment Option named in Exhibit A of a fixed income nature, the interest deemed to be credited as determined in accordance with the procedures applicable to the same investment option provided under the Equitable Resources, Inc. Employee Savings Plan, originally adopted September 1, 1985, as amended ( “Equitable 401(k) Plan” );

 

(b)                                  In the case of a Investment Option named in Exhibit A of an equity investment nature, the increase or decrease in deemed value and any dividends deemed to be credited as determined in accordance with the

 

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procedures applicable to the same investment option provided under the Equitable 401(k) Plan; or

 

(c)                                   In the case of the Equitable Resources Common Stock Fund, the increase or decrease in the deemed value, and the reinvestment in the Equitable Resources Common Stock Fund of any dividends deemed to be credited, as determined in accordance with the procedures applicable to investments in the Equitable Resources Common Stock Fund under the Equitable 401(k) Plan.

 

2.14        “Irrevocable Trust” means a grantor trust that may be established prior to the occurrence of a Change in Control of the Company to assist the Company in fulfilling its obligations under this Plan but which shall be established by the Company in the event of a Change in Control of the Company.  All amounts held in such Irrevocable Trust shall remain subject to the claims of the general creditors of the Company and Participants in this Plan shall have no greater rights to any amounts held in any such Irrevocable Trust than any other unsecured general creditor of the Company.

 

2.15        “Participant” means any non-employee member of the Board who (i) receives an award of Phantom Stock pursuant to Section 4.1 of the Plan or an award of Phantom Stock under the NEDSIP, (ii) who elects to participate in the Plan for purposes of deferring his or her Directors’ Fees by filing an Enrollment Form with the Committee pursuant to Section 5.1 of the Plan, and/or (iii) who elects to transfer amounts previously deferred under the Prior Plan to this Plan by filing a Transfer of Existing Account Credits, or other form supplied by and/or acceptable to the Committee, pursuant to Section 5.2 of the Plan.

 

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2.16                         “Phantom Stock” means those shares of the common stock or stock units of the Company:

 

(i)                                     conditionally awarded to certain members of the Board in the amounts described in Appendix B to the Plan,

 

(ii)                                  which are subject to forfeiture in accordance with Section 6.1(a) of the Plan,

 

(iii)                               which are contributed to the Irrevocable Trust by the Company to assist it in satisfying its potential obligations under this Plan, and

 

(iv)                               which will be distributed to eligible Plan Participants satisfying all the conditions of this Plan, or

 

(v)                                  awarded pursuant to the NEDSIP, and

 

(vi)                               which will be distributed to eligible Plan Participants in the form elected by the Plan Participant and at the time specified in the Phantom Stock Agreement referred to in Section 2.18(ii) of the Plan.

 

2.17        “Phantom Stock Account” means the recordkeeping account established on the books and records of the Company to record the number of shares of Phantom Stock allocated to a Participant under the Plan.

 

2.18        “Phantom Stock Agreement” means

 

(i)                                      the agreement filed by a Participant pursuant to Section 4.1(a) of the Plan in the form prescribed by the Committee directing the Company to convert the Participant’s benefit under the Equitable Resources, Inc. Directors’ Defined Benefit Plan (the “ Defined Benefit Plan ”) into Phantom Stock

 

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under this Plan and relinquishing all rights to any benefits under such Defined Benefit Plan, and

 

(ii)                                  any agreements and/or terms of award of Phantom Stock under the NEDSIP pursuant to which Phantom Stock is or may be deferred.

 

2.19        “Plan” means this Equitable Resources, Inc. Directors’ Deferred Compensation Plan, as amended from time to time.

 

2.20        “Plan Year” means a twelve-month period commencing January 1 and ending the following December 31.

 

2.21        “Prior Plan” means the 1980 Board of Director’s Deferred Compensation Plan as in effect prior to May 26, 1999, under which members of the Board were permitted to defer payment of all or a portion of the fees to which they were entitled as compensation for their services as members of the Board.

 

2.22        “Transferred Amounts Account” means the recordkeeping account established on behalf of a Participant to account for those amounts previously deferred under the Prior Plan which were transferred to this Plan by filing a Transfer of Existing Account Credits, or other form supplied by and/or acceptable to the Committee, pursuant to Section 5.2 of the Plan.

 

2.23        “Transfer of Existing Account Credits” means the form filed with the Committee by a Participant directing the Committee to transfer amounts previously deferred under the Prior Plan to this Plan.

 

2.24        “Valuation Date” means the last day of each calendar quarter and any other date determined by the Committee or specified herein.

 

2.25        “Year of Service” means the twelve (12) month period beginning on the first day an individual is a member of the Board, and each twelve (12) month period thereafter.

 

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ARTICLE III

 

ELIGIBILITY AND PARTICIPATION

 

3.1          Eligibility for Phantom Stock Account.

 

Eligibility to participate in the Plan for purposes of the Phantom Stock Account under Article IV of the Plan is limited to those non-employee members of the Board who are either (i) designated by the Committee and listed on Exhibit B to the Plan or (ii) who receive Phantom Stock pursuant to the terms of the NEDSIP.  An eligible Board member shall commence participation in the Plan for purposes of the Phantom Stock Account on the earlier of May 26, 1999 or the date on which an award of Phantom Stock is made pursuant to the terms of the NEDSIP.

 

3.2          Eligibility for Deferral Account.

 

Eligibility to participate in the Plan for purposes of deferring Directors’ Fees under Section 5.1 of the Plan is limited to non-employee members of the Board.  An eligible Board member shall commence participation in the Plan for purposes of deferring Directors’ Fees as of the first day of the month following the receipt of his or her Enrollment Form by the Committee.

 

3.3          Eligibility for Transferred Amounts Account.

 

Eligibility to elect to transfer Transferred Amounts to this Plan is limited to those non-employee members of the Board who were participants in the Prior Plan and who had accounts in the Prior Plan as of May 25, 1999, representing fees for their prior service as members of the Board which were previously deferred pursuant to the terms of the Prior Plan.  An eligible Board member not otherwise participating pursuant to Sections 3.1 or 3.2 of the Plan shall become a Participant in the Plan and have a Transferred Amounts Account established on his or her behalf as of the effective date of any transfer of Transferred Amounts to this Plan.

 

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3.4          Ineligible Participant.

 

Notwithstanding any other provisions of this Plan to the contrary, if the Committee determines that the participation in the Plan by any Board member will jeopardize the status of the Plan as exempt from the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”), or regulations thereunder, the Committee may, in its sole discretion, determine that such Participant shall cease to be eligible to participate in the Plan.  As soon as administratively feasible following such determination, the Company shall make a lump sum payment, in cash and/or shares of Company common stock, as applicable, to the Participant equal to the value of his or her Account as of the most recent Valuation Date, less any income or employment tax withholding required under applicable law.  Upon such payment, no benefit shall thereafter be payable under this Plan either to the Participant or any Beneficiary of the Participant, and all of the Participant’s elections as to the time and manner of payment of his or her Account shall be deemed canceled.

 

ARTICLE IV

 

PHANTOM STOCK ACCOUNT

 

4.1          Phantom Stock Award.

 

(a)                                   As of May 26, 1999, the Phantom Stock Account of a Participant eligible for an award of Phantom Stock pursuant to Section 3.1(i) of the Plan shall be credited with an award of Phantom Stock in the number of shares specified in Exhibit B to the Plan.  The Company shall contribute shares of Company common stock to the Irrevocable Trust in an amount equal to the aggregate number of shares of Phantom Stock credited to all Phantom Stock Accounts under the Plan from such awards.  Any such contributions to an Irrevocable Trust and related investments shall be solely to assist the

 

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Company in satisfying its obligations under this Plan and no Participant shall have any right, title or interest whatsoever in any such contributions or investments.

 

(b)                                  As of the date of any Phantom Stock award pursuant to the terms of the NEDSIP, the Phantom Stock Account of a Participant eligible for such award shall be credited with the number of Phantom Stock units as specified in such award.  The Company shall not be required to contribute any shares or other property to the Irrevocable Trust for such awards.

 

4.2          Valuation of Phantom Stock Account; Deemed Reinvestment of Dividends

 

As of each Valuation Date, the value of a Participant’s Phantom Stock Account shall equal (i) the value of the number of shares of Phantom Stock credited to such account as of the last Valuation Date, plus (ii) the value of the number of shares of Phantom Stock deemed to have been credited to such account as a result of the deemed reinvestment of any dividends deemed to have been paid on such Phantom Stock since the last Valuation Date.  Any dividends paid on the common stock of the Company shall be deemed to be paid on the Phantom Stock under the Plan in an equal amount; provided, however, that to the extent they are paid in a form other than additional shares of the common stock of the Company, they shall be deemed to be immediately reinvested in such number of shares of the common stock of the Company as are represented by the aggregate amount of the dividends divided by the value of one share of the common stock of the Company on the date the dividend is paid.

 

For purposes of this Plan, the “value” of a share of Phantom Stock shall be deemed to equal the closing price of a share of Company common stock as listed on the New York Stock Exchange ( “NYSE” ) on any date of reference.  In the event that the date of reference is a date on which the NYSE is not open for business, the value of a share of Phantom Stock shall equal the average of the closing prices on the dates immediately preceding and following the date of reference during

 

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which the NYSE was open for business.  Notwithstanding anything in this Plan to the contrary, the Company may adopt alternate procedures for determining the value of Phantom Stock in the event Company common stock ceases to be traded on the NYSE or to reflect the occurrence of a Conversion Event described in Section 4.3.

 

For purposes of determining the value of the Phantom Stock credited to a Participant’s Phantom Stock Account as of any time of reference, each share of Phantom Stock shall be deemed equivalent in value to one share of the outstanding shares of common stock of the Company.  For purposes of valuing a Participant’s Phantom Stock Account upon the termination of his or her membership on the Board, the Valuation Date shall be the business day coincident with or immediately preceding the termination of the Participant’s Board membership.

 

4.3          Adjustment and Substitution of Phantom Stock

 

In the event of:  (a) a stock split (or reverse stock split) with respect to the common stock of the Company; (b) the conversion of the common stock of the Company into another form of security or debt instrument of the Company; (c) the reorganization, merger or consolidation of the Company into or with another person or entity; or (d) any other action which would alter the number of, and/or shareholder rights of, holders of outstanding shares of the common stock of the Company (collectively, a “Conversion Event” ), then, notwithstanding the fact that Plan Participants have no rights to the shares of Company common stock represented by their Phantom Stock Account nor to the shares of such Company common stock which may be contributed by the Company to the Irrevocable Trust, the number of shares of Phantom Stock then allocated to a Participant’s Phantom Stock Account shall be deemed to be converted, to the extent possible, to reflect any such Conversion Event to the same extent as the shares of holders of outstanding shares of Company common stock would have been converted upon the occurrence of the Conversion Event.  On and after any such Conversion Event, this Plan shall be applied, mutatis mutandis, as if the Participant’s Phantom Stock Account was comprised of the

 

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cash, securities, notes or other instruments into which the outstanding shares of Company common stock was converted.  Following the occurrence of a Conversion Event, the Board is authorized to amend the Plan as it, in its sole discretion, determines to be necessary or appropriate to address any administrative or operational details presented by the Conversion Event which are not addressed in the Plan.

 

4.4          Shareholder Rights.

 

Except as specifically provided herein, an award of Phantom Stock under the Plan shall not entitle a Participant to voting rights or any other rights of a shareholder of the Company.

 

4.5    &