SEVERANCE AGREEMENT, RELEASE AND WAIVER
THIS AGREEMENT is made by and between National Fuel Gas Supply
Corporation, a Pennsylvania corporation having offices at 10 Lafayette Square,
Buffalo, New York 14203 ("National Fuel"), and Mr. Richard Hare, 110 Foxmeadow
Lane, Orchard Park, NY 14127 ("Mr. Hare") on March 27, 2000.
WHEREAS, National Fuel and Mr. Hare (each a "party" collectively, the
"parties") mutually desire that Mr. Hare shall retire from his positions with
National Fuel and its affiliates, and that each party shall receive certain
consideration, on the terms set out in this Severance Agreement, Release and
Waiver (this "Agreement");
THE PARTIES THEREFORE AGREE AS FOLLOWS:
1. As used within this Agreement, the terms "Company," "we," "our" or "us"
collectively refer to National Fuel and its parent, subsidiary and
affiliated companies, other related entities, and successors or
assigns. As used within this Agreement, the terms "Mr. Hare,"
"employee," "you" or "your" refers to Richard Hare.
2. You hereby resign, effective March 31, 2000, any and all positions as
an officer, director, employee or equivalent of any Company entity.
Your separation from employment is by mutual agreement between you and
the Company. Your employment with the Company will terminate on March
31, 2000.
3. The Company agrees to pay you, minus all applicable taxes and
withholdings, your regular pay and benefits up to and including March
31, 2000.
4. You have voluntarily decided to apply for early retirement and will
receive your accrued benefit under the terms of the National Fuel Gas
Company Retirement Plan (the "Retirement Plan") beginning April 1,
2000. The annual benefit that you will receive under the Retirement
Plan will be eighty-one thousand two hundred two and 63/100 dollars
($81,202.63), if you receive benefits in the form of a single life
annuity under the Retirement Plan, payable in equal monthly
installments. Your benefits will be reduced if you elect to receive a
different form of benefit under the Retirement Plan.
5. You may take any accrued vacation you desire in March 2000. As of
February 15, 2000, you had four weeks of vacation accrued. You will be
paid on or before the first business day which is at least eight days
after you sign this Agreement for vacation which had accrued but not
been used by March 31, 2000.
6. In complete satisfaction of all Company obligations under the National
Fuel Gas Company Executive Retirement Plan (the "ERP"), including any
obligations related to your December 1999 election to receive the lump
sum benefit under the ERP, the Company agrees to pay you, and you agree
to accept, the sum of one million two hundred ninety-eight thousand
forty dollars (US$1,298,040). Such payment shall be made to you by
check hand-delivered to you at 10 Lafayette Square on or before the
first business day which is at least eight days after you sign this
Agreement.
7. The Company agrees to pay you, by check mailed to your home address or
other location designated by you, the following sums:
(a) one hundred seventeen thousand four hundred four dollars
(US$117,404), on or before March 1, 2001;
(b) one hundred seventeen thousand four hundred four dollars
(US$117,404), on or before March 1, 2002;
(c) one hundred seventeen thousand four hundred four dollars
(US$117,404), on or before March 1, 2003;
(d) one hundred seventeen thousand four hundred four dollars
(US$117,404), on or before March 1, 2004; and
(e) one hundred seventeen thousand four hundred four dollars
(US$117,404), on or before March 1, 2005.
In the event of your death prior to March 1, 2005, any remaining
payments will be payable to your Estate when due.
8. (a) Beginning April 1, 2000, you will be entitled to family
medical coverage under the Company's Traditional Indemnity
Plan for non-bargaining unit retirees, as well as the
Prescription Drug Plan. The Company will withhold the retiree
medical contribution of $48 per month from your monthly
Retirement Plan benefit, which contribution rate will remain
in effect for the duration of your coverage.
(b) If you predecease your spouse, your spouse will be offered
COBRA continuation for medical and prescription drug coverage
under the Traditional Plan for a period of 36 months (or if
your death occurs prior to March 31, 2001, then through March
31, 2004) at the COBRA rates in effect from time to time. Such
COBRA coverage must be elected in order for your spouse to be
eligible for the Executive Medical Plan coverage continuation
described in paragraph 8(d), as the Executive Medical Plan
supplements the Traditional Indemnity Plan.
(c) Beginning April 1, 2000, the Company Dental Plan will be
available to you under COBRA for a period of 18 months at the
monthly COBRA rate of $75.32 for family coverage. However, you
(or after your death, your spouse) will be permitted to extend
your dental coverage beyond the 18-month period through March
31, 2004 as described in paragraph 8 (d).
(d) The Company will provide you, for the period beginning on
April 1, 2000, and ending on March 31, 2004, with family
medical, dental and prescription drug coverage under the
Company's Executive Medical Plan, under the same terms and
conditions as would be available had you remained employed by
the Company as an officer, except that in order to retain
supplemental dental coverage under the Executive Medical Plan
you must continue to pay the monthly Dental Plan COBRA premium
referenced in paragraph 8(c) for the duration of the period
hereunder. You will pay to the Company the same monthly
contributions for Executive Medical Plan coverage as are
required of active officers from time to time. In the event of
your death prior to March 31, 2004, the Company will provide
your spouse with the same Executive Medical Plan coverage on a
"single" basis for the balance of such period, subject to the
same terms and conditions, including her payment to the
Company of the same rate of contribution as in effect from
time to time for single coverage for active officers of the
Company. You (or after your death, your spouse) will be billed
monthly for the contributions due for such coverage and the
COBRA dental coverage should you elect it, and payment will be
due the Company within 30 days after the receipt of each bill.
(e) In order to obtain the coverage described in this paragraph,
you must complete, sign and return to the Company the COBRA
election forms to be furnished by the Company. Executive
Medical Plan and Dental Plan coverage will not be available
after March 31, 2004.
9. The Company agrees, upon the effective date of this Agreement, to
extend the time within which your outstanding stock appreciation rights
and nonqualified stock options may be exercised, to the full extent of
the original term of each such award, notwithstanding your retirement.
The Company hereby offers to convert, upon the effective date of this
Agreement, your outstanding incentive stock options to nonqualified
stock options, with the exercise period also extended as described in
the preceding sentence. The Company and you acknowledge and agree that
Section 20 of the National Fuel Gas Company 1993 and 1997 Award and
Option Plans presently gives the Company the right to forfeit any
unexercised, unearned or unpaid Awards under those plans (including
stock options, SARs and unvested restricted stock) if you perform any
act or engage in any activity which in the opinion of the Committee is
inimical to the best interests of the Company or if you engage in
certain competitive activity. The Company and you further agree that
you will be considered to have engaged in conduct that constitutes
grounds for the Company to exercise its right to forfeit unexercised,
unearned or unpaid Awards under those plans (including stock options,
SARs and the 4,492 shares of restricted stock scheduled to vest on
January 2, 2001 referred to in paragraph 10 of this Agreement) only if
you violate the provisions of paragraph 16(c), 17 or 19 of this
Agreement.
10. The Company agrees that your 4,492 shares of unvested restricted stock
will vest as scheduled on January 2, 2001, notwithstanding your
retirement (which would otherwise have caused a forfeiture of that
stock), subject only to potential forfeiture as described in paragraph
9 of this Agreement.
11. National Fuel hereby offers to sell you the 1999 Jeep, National Fuel
vehicle #32056, as is, without warranties of any kind other than such
manufacturer's warranties, if any, as can be passed on to you, for the
sum of twenty-seven thousand nine hundred twenty-five dollars
($27,925), payable in cash upon the tender to you of the signed
certificate of title and a signed receipt for the purchase price. You
will be responsible for payment of the sales tax on the purchase price
when you register the vehicle in your name. This offer will remain open
through April 15, 2000.
12. National Fuel represents and warrants that the Company has awarded to
you under the National Fuel Gas Company 1997 Award and Option Plan,
twenty-five thousand (25,000) stock options on the terms described in
the award letters attached as Exhibit 1. These options have been
awarded in consideration of your promises under this Agreement.
13. Regarding the Split Dollar Insurance Agreement by and among you, the
trustees of your life insurance trust and the Company dated August 9,
1999 (the "Split Dollar Agreement"), the Company and you acknowledge
and agree that the Company is not obligated to make, and shall not
make, the premium payment which would have been due April 1, 2000, if
you had not retired. The Split Dollar Agreement shall otherwise remain
in force according to its terms, except that you will be considered to
have engaged in "Competition" for the purposes of Section IVB of the
Split Dollar Agreement only if you violate the provisions of paragraph
17 of this Agreement. The Company and you acknowledge and agree that
your rights under the Split Dollar Agreement and the life insurance
policy referred to therein shall not be subject to forfeiture after
March 31, 2003.
14. In consideration for the promises set forth in paragraphs 5, 6 (to the
extent, if any, that the amount payable to you thereunder exceeds what
you would have been entitled to receive in the absence of this
Agreement) 7, 8(d) and 9 through 12 of this Agreement, you hereby
knowingly and voluntarily release and unconditionally waive any and all
demands, claims and causes of action, of whatever kind or nature, which
you ever had, now have or which you, your successors, assigns, heirs,
executors or administrators can, shall or may have for any reason as of
the date you execute this Agreement against the Company or any of the
Company's predecessors, successors, assigns, executors, administrators,
directors, officers, employees and agents (collectively "Releasees")
regarding your employment and its termination, including, but not
limited to:
(a) all demands, claims and causes of action for wages, benefits
(including benefits under the ERP), bonuses, severance pay,
perquisites, or back wages, benefits or bonuses other than set
forth in this Agreement or in any benefit plan, program or
policy of the Company not specifically referred to in this
Agreement;
(b) all demands, claims and causes of action under state or
federal civil rights and anti-discrimination laws, regulations
or orders, including Executive Order 11246, Title VII of the
Civil Rights Act of 1964, the Age Discrimination in Employment
Act of 1967, the Americans with Disabilities Act of 1990 and
the New York Human Rights Law;
(c) all demands, claims and causes of action that your employment
or its termination violated any alleged contractual
relationship with the Company or was in any way unreasonable,
wrongful, or in violation of any Company policy; and
(d) all demands, claims and causes of action for mental, physical
or emotional distress or harm, or defamation relating in any
way to your employment or its termination.
15. In conjunction with the provisions of paragraph 14 herein, the Company
and you specifically acknowledge and agree that:
(a) you do not waive any claim which may arise after the execution
of this Agreement;
(b) but for this Agreement, you would not be entitled to the
severance pay and the other benefits set forth in paragraphs
5, 6 (to the extent, if any, that the amount payable to you
thereunder exceeds what you would have been entitled to
receive in the absence of this Agreement) 7, 8(d) and 9
through 12 of this Agreement;
(c) the Company has advised you to review the Agreement, and
specifically the release contained in paragraph 14 herein,
with your attorney prior to signing this Agreement;
(d) you and your attorney were given a working draft of this
Agreement on March 16, 2000 and you understand you may review
this Agreement for up to twenty-one (21) days before being
required to execute this Agreement. You and the Company agree
that the time period for you to consider this Agreement before
signing it will not be restarted if any changes, material or
non-material, are made to the Agreement after the date you
first received it.
(e) you may terminate this Agreement at any time within seven (7)
days after your execution of this Agreement. This Agreement
shall not become effective until the time to terminate it has
expired.
16. As a part of the consideration for the compensation provided in this
Agreement and for the other covenants made by National Fuel in this
Agreement, you agree to the following confidentiality provisions:
(a) You agree that the contents of this Agreement are confidential
and will not be disclosed to any third party, other than your
attorney, your wife, tax advisor, financial advisor(s), the
Internal Revenue Service, the New York State Tax Department or
the tax authority of any state or locality in which you are,
or may be, subject to income tax, unless you are compelled to
do so by a court having jurisdiction over such matter (in
which case you will notify the Company as soon as possible of
the activity and cooperate with the Company in seeking relief
from such compulsion) or as may be necessary in connection
with the enforcement of this Agreement. Notwithstanding the
previous sentence, you may disclose the provisions of this
paragraph 16 and paragraphs 17 and 19 hereof to any
prospective employer or any other person or entity for whom
you propose to provide services.
(b) You agree to return any and all corporate documents, records
or copies of the same, information or property in your
possession, except those relating to either your own
employment, such as payroll stubs and benefits statements, or
your shareholdings in the Company. Your performance of this
obligation is a condition precedent to your receipt of any
severance payments or other benefits under paragraphs 5, 6 (to
the extent, if any, that the amount payable to you thereunder
exceeds what you would have been entitled to receive in the
absence of this Agreement) 7, 8(d) and 9 through 12 of this
Agreement.
(c) You shall hold in a fiduciary capacity for the benefit of
National Fuel any and all of the Company's trade secrets and
confidential and proprietary information in your possession.
You shall not, without the prior written consent of National
Fuel Gas Company, unless compelled pursuant to an order of a
court or other body having jurisdiction over such matter (in
which case you will notify the Company as soon as possible of
the activity and cooperate with the Company in seeking relief
from such compulsion), at any time, utilize or communicate or
divulge to anyone other than the Company and those designated
by it, any of the Company's trade secrets and confidential and
proprietary information.
(d) The prohibition against your use of the Company's trade
secrets and confidential and proprietary information, other
than for the benefit of National Fuel, includes but is not
limited to the exploitation of any products or services that
embody or are derived from National Fuel's trade secrets or
confidential and proprietary information.
(e) You agree to comply with (i) any and all applicable laws and
regulations regarding your actions and omissions while in
possession of any material inside information about the
Company which you may have at any time; and (ii) any and all
confidentiality agreements that the Company entered into with
third parties, of which you were made aware during your
employment by the Company, under which the Company promised
that its Representatives (including you) would keep
confidential certain information described in those
confidentiality agreements.
(f) You represent, warrant and agree that you have no proprietary
or ownership rights or title to any of the Company's trade
secrets or confidential and proprietary information and no
legal right to use, disclose, disseminate, or publish any of
the Company's trade secrets or confidential and proprietary
information in any locality. You acknowledge that if you were
to work for or advise any entity in connection with a
potential acquisition of or merger with the Company, you would
in the course of that work inevitably use or disclose some of
the Company's trade secrets or confidential and proprietary
information.
(g) The Company's "trade secrets" and "confidential and
proprietary information" include, but are not limited to, any
and all memoranda, software, data bases, computer programs,
interface systems, pricing and client information, records and
"writings" as hereinafter defined pertaining to National
Fuel's methods or practices of doing business and marketing
its services and products, whether or not developed or
prepared by you during the term of your employment with
National Fuel. As used in the preceding sentence, the term
"writings" shall mean and include all works, expressed in
words, numbers or other verbal or numerical symbols,
regardless of the physical manner in which they are embodied,
including, but not limited, to books, articles, manuscripts,
memoranda, computer programs, computer software systems, maps,
charts, diagrams, technical drawings, manuals, video and audio
tape recordings, and photographs. Notwithstanding the
foregoing, the Company's trade secrets and confidential and
proprietary information shall mean only such information or
material not generally known to the public (other than by act
of you or your representatives in breach of this Agreement).
17. In order to protect and safeguard the Company's trade secrets and
confidential information, you agree that, during the period beginning
April 1, 2000 and ending March 31, 2003:
(a) you will not, directly or indirectly and without the prior
written consent of National Fuel Gas Company, engage in or be
interested in (as owner, partner, shareholder, employee,
director, agent, consultant or otherwise), any business which
is a "competitor" of the Company, as hereafter defined, except
as otherwise permitted under paragraph 17(c) below;
(b) for purposes of this Agreement, a "competitor" of the Company
is any corporation, sole proprietorship, partnership, joint
venture, syndicate, trust or any other form of organization or
parent, subsidiary or division of any of the foregoing, which,
during such period or the immediately preceding fiscal year of
such entity, was engaged in the transportation, purchase,
brokering, marketing, or trading of natural gas or other
energy products or services which are competitive to the
Company's products or services, any of which was engaged in
within 50 miles of the geographic area in which the Company is
engaged in such competitive business;
(c) the terms of this paragraph 17 shall not apply to:
(i) your present or future investments in the securities
of companies listed on a national securities exchange
or traded on the over-the-counter market to the
extent such investments do not exceed 2% of the total
outstanding shares of such company,
(ii) your employment with or rendering consulting services
to a competitor of the Company provided such
employment or consulting service is limited to areas
unrelated to the transportation, purchase, brokering,
marketing or trading of natural gas or other energy
products or services which are competitive to the
Company's products or services,
(iii) your employment with or rendering of consulting
services to a competitor of the Company provided such
employment or consulting service is limited to:
(A) public utility rate cases before state
utility commissions in states where the
Company owns no public utility;
(B) FERC rate cases which do not amount to a
"proceeding" as defined in paragraph
19(b)(i);
(C) natural gas storage or pipeline projects or
matters serving or intending to serve only
customers not located in New England, New
York, Pennsylvania, New Jersey, Virginia,
the District of Columbia, Maryland or
Delaware;
(D) marketing of natural gas to be delivered and
consumed more than 50 miles from any
geographic area in which the Company markets
natural gas;
(E) electric generation, marketing or brokering
into any electric transmission grid other
than such grids into which the Company
generates, markets or brokers electricity;
and
(F) production of natural gas or oil, or sale of
such production at the wellhead, more than
50 miles from any geographic area in which
the Company produces natural gas or oil; or
(iv) your engagement in or interest in any business with
the prior written consent of National Fuel Gas
Company.
(d) The parties acknowledge and agree that the foregoing
restrictions contain reasonable limitations as to the time,
geographical area, and scope of activity to be restrained and
these restrictions do not impose any greater restraint than is
necessary to protect the goodwill and other legitimate
business interests of the Company.
18. In consideration for your promises set forth in this Agreement,
National Fuel agrees that:
(a) any inquiries by prospective employers or third parties will be
handled as per Company policy; that is, the dates of your
employment and job title will be the only information released
by the Company;
(b) the contents of this Agreement are confidential; the Company
shall not disclose the contents of this Agreement to anyone
other than the directors, officers, employees and agents of
the Company or its affiliates who need to know except as
required, in the opinion of counsel, to comply with applicable
law, regulation or order;
(c) National Fuel warrants and represents that this Agreement has
been (i) approved by unanimous written consent of the
Compensation Committee, which consent delegates, to the
fullest extent permissible by applicable law, to the
Arbitrator the decisions of whether to cancel your unvested
restricted stock, unexercised stock options and/or unexercised
SARs as a result of action or inaction constituting a breach
of this Agreement by you; and (ii) all obligations imposed by
this Agreement on the Company are duly authorized and legally
binding on National Fuel Gas Company in the same manner as if
National Fuel Gas Company were a party to this Agreement.
(d) National Fuel, on behalf of the Company and with due
authorization from the Company, hereby knowingly and
voluntarily releases and unconditionally waives any and all
demands, claims and causes of action against you, of whatever
kind or nature, which the Company ever had, now has or which it
or its successors can, shall or may have for any reason as of
the date you execute this Agreement, except for claims for
fraud or other intentional misconduct discovered by the
Company's officers after the execution of this Agreement; the
Company does not release or waive any claim which may arise
after the execution of this Agreement; and
(e) the Company shall not publicly or privately disparage you,
either personally or professionally; the parties agree that
nothing in this paragraph shall be construed to prevent any
officer of the Company or any subsidiary or affiliate from
discussing your performance internally in the ordinary course
of business.
19. In further consideration for the promises set forth in this Agreement,
you agree that:
(a) you will not publicly or privately disparage the Company, or
any of its subsidiaries or affiliates, including any aspect of
their respective business, products, employees, management or
Board of Directors, in any manner which could adversely affect
the business of the Company or such subsidiaries or
affiliates; and
(b) you will not, directly or indirectly, take any action with the
purpose of interfering with, damaging or disrupting the assets
or business operations or affairs of the Company or its
subsidiaries or affiliates; without limiting the foregoing in
any way, it shall be conclusively presumed that you have
breached this subparagraph 19(b) if, without the prior written
consent of National Fuel Gas Company or other than at National
Fuel Gas Company's written request, you
(i) voluntarily participate in any rate case, claim,
litigation, arbitration, mediation or administrative
proceeding affecting the revenue, expenses, assets or
liabilities of the Company other than:
(A) an arbitration under this Agreement, or
(B) any claim, litigation, arbitration,
mediation or administrative proceeding that
does not relate to a rate matter, a claim
shared by other ratepayers or customers of
the Company, or a claim you have released
under this Agreement;
(collectively, a "Proceeding");
(ii) voluntarily render any assistance in the preparation
or development of any position in a Proceeding; or
(iii) submit any shareholder proposal, motion or resolution
to the Company to be discussed or voted upon by the
Company's shareholders.
(c) you will not, directly or indirectly and without the prior
written consent of National Fuel Gas Company, work for,
consult with, advise or represent (as employee, agent,
consultant or otherwise), any business which is a "customer"
of the Company, as hereafter defined, with respect to any
matter or activity which would tend to reduce the quantity or
price of services or commodities provided by the Company to
that business;
(d) for purposes of this Agreement, a "customer" of the Company is
any corporation, sole proprietorship, partnership, joint
venture, syndicate, trust or any other form of organization or
parent, subsidiary or division of any of the foregoing, which,
during such period or the immediately preceding fiscal year of
such entity, purchased commodities, goods or services from the
Company; and
(e) you will not induce or otherwise entice, directly or
indirectly, any employee or officer of the Company to leave
the Company, nor shall you attempt to hire any of the
Company's employees or officers.
20. You waive any and all rights to employment at the Company, agree not to
knowingly apply for, solicit, seek or otherwise attempt to obtain
employment with the Company, and further agree that the Company is not
or will not be at any time under any obligation to employ you. You
further agree that if you should apply for employment at the Company,
the Company will have no obligation to process your employment
application or to hire you and that the failure to process your
employment application or to hire you shall not constitute a violation
of any federal, state or local law, regulation or order. Nothing in
this Agreement shall preclude you, however, from soliciting, seeking or
otherwise attempting to obtain consulting work with the Company as an
independent contractor, or from actually performing consulting services
for the Company if retained by the Company, it being understood that
the Company is not and will not be under any obligation to engage you
as a consultant.
21. The parties agree that the Company will make payments due under this
Agreement subject to FICA, any other applicable employment taxes, and
no more than the minimum required withholding for income tax. If the
Company overwithholds income tax from any such payment, the Company
will reimburse you for the time value of such overwithholding, at
simple interest at 6% per annum, running from the date of the
overwithholding until April 15 of the next calendar year. If the
Company fails to withhold the minimum amount of income tax from any
payment to you, and it notifies you of such underwithholding, you will
reimburse the Company the minimum amount which should have been
withheld, no later than the last day of the calendar year in which such
underwithholding occurred.
22. The parties agree that any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be promptly
settled by binding arbitration as described in Exhibit 2 of this
Agreement. Judgment upon the award rendered by the Arbitrator(s) may be
entered in any court having jurisdiction thereof. The parties agree
that they will faithfully observe this Agreement and that they will
abide by and perform any award rendered by the Arbitrator(s).
23. The Company may refuse to process a Notice of Exercise of a stock
option or SAR which you give the Company after the second business day
before the Company issues an Arbitration Notice, pending resolution of
the arbitration. If the Arbitrator finds that you did not materially
breach this Agreement, the Arbitrator's award shall include provisions
intended to place you in the position you would have occupied (not
including consequential damages) if the Company had timely processed
your exercise(s). Except as described in this paragraph 23, the sole
remedies available to the parties to enforce this Agreement are binding
arbitration, and enforcement of the resulting awards and judgments.
24. National Fuel, with due authorization from the Company, agrees that the
Company shall indemnify Mr. Hare if he was or is a party or is
threatened to be made a party to any pending, threatened or completed
civil, criminal, administrative or arbitrative action, suit or
proceeding by reason of the fact that Mr. Hare is or was a director or
officer of the Company, or, while an officer or director of the
Company, is or was serving at the request of the Company as a director,
officer, trustee, employee or agent of another foreign or domestic
corporation, or of any partnership, joint venture, sole proprietorship,
employee benefit plan, trust or other enterprise, whether or not for
profit, to the fullest extent permitted and in the manner provided by
the laws of the State of New Jersey.
25. The parties agree that the legal invalidity of any provision of this
Agreement shall not make this Agreement void or unenforceable, and that
in such case this Agreement shall be construed so as to preserve as
much as possible of the parties' respective interests which motivated
them to execute this Agreement. It is also agreed that this Agreement
shall be construed and enforced in accordance with the laws of the
State of New York. The parties acknowledge that they have mutually
negotiated all provisions of this Agreement with the assistance of
counsel. The provisions of this Agreement shall be interpreted and
construed in accordance with their fair meanings, and not strictly for
or against either party, regardless of which party may have drafted
this Agreement or any specific provisions.
26. This Agreement, the option award document attached as Exhibit 1 and the
arbitration provisions attached as Exhibit 2 constitute the final,
complete and exclusive agreement between National Fuel and you
regarding your employment and its termination. You do not rely upon any
oral promises in signing this Agreement, and the only promises you rely
on are those set forth in writing herein. This Agreement may be
modified or amended only by a written instrument signed by National
Fuel and you.
26. This Agreement is personal to Mr. Hare and without the prior written
consent of National Fuel Gas Company shall not be assignable by him
other than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by Mr.
Hare's legal representatives.
27. This Agreement shall inure to the benefit of and be binding upon
National Fuel and its successors.
IN WITNESS WHEREOF, each party has executed this Agreement as of the
date indicated below.
NATIONAL FUEL GAS SUPPLY CORPORATION
By: /s/ Philip C. Ackerman Date: March 27, 2000
--------------------------
Name: Philip C. Ackerman
------------------------
Title: Executive Vice President
------------------------
RICHARD HARE
/s/ Richard Hare Date: March 29, 2000
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EXHIBIT 1
---------
March 17, 2000
Richard Hare
110 Foxmeadow Lane
Orchard Park, NY 14127
Dear Mr. Hare:
I am pleased to inform you that on March 17, 2000 (the "option grant
date") the Compensation Committee ("Committee") of the Board of Directors of
National Fuel Gas Company ("NFG") granted to you (the "Grantee") Non-Qualified
Stock Options ("Options"), under the National Fuel Gas Company 1997 Award and
Option Plan (the "Plan"), to purchase twenty-five thousand (25,000) shares of
Common Stock of NFG, One Dollar ($1.00) par value ("Common Stock") at a purchase
price of $41.5625 per share.
Your new Options are described in the balance of this letter agreement
("Award Notice"). The Plan text and the Committee's Administrative Rules
("Rules") govern the operation of the Plan, as well as the terms and conditions
of your Options granted under the Plan, and are incorporated herein by
reference.
Your Options may be exercised only as follows:
Five thousand (5,000) of your Options may be exercised in whole or in part on or
after April 1, 2005.
Another five thousand (5,000) of your Options may be exercised
in whole or in part on or after April 1, 2006.
Another five thousand (5,000) of your Options may be exercised
in whole or in part on or after April 1, 2007.
Another five thousand (5,000) of your Options may be exercised
in whole or in part on or after April 1, 2008.
The final five thousand (5,000) of your Options may be
exercised in whole or in part on or after April 1, 2009.
Mr. Richard Hare
Page 2
March 17, 2000
However, upon a Change in Control (as defined in the Plan) your
Options will vest, be valued and cashed out, and the Company will pay
you, all in the same manner as if you were then eligible for
treatment under Section 25 of the Plan. In any event, your Options
will expire at the end of the day on March 31, 2010 and may not be
exercised thereafter. Your Options will be forfeited and expire
sooner if:
you fail or refuse to execute, by April 15, 2000, an agreement which is
also executed by National Fuel Gas Supply Corporation by which you
voluntarily elect to retire as of April 1, 2000 (the "Severance
Agreement"); or
having executed the Severance Agreement, you subsequently exercise a
legal right to revoke the Severance Agreement; or
as a result of your breach of the Severance Agreement, an arbitrator
authorizes the forfeiture of some or all of your Options in accordance
with the arbitration provisions of the Severance Agreement.
Exercise of Options
- -------------------
To exercise your Options, you must deliver to the Secretary or Assistant
Secretary of NFG written notice of exercise specifying the number of shares to
be purchased (a "Notice of Exercise"). Your delivery of the written notice of
exercise creates your binding commitment to pay the full purchase price for the
shares. You may pay the purchase price with cash, with already-owned shares of
Common Stock, with a combination of cash and shares, or pursuant to "cashless
exercise" procedures established by the Committee. Checks should be payable to
NFG. Already-owned shares of Common Stock must be delivered in transferable form
and will be valued at their Fair Market Value (as defined in the Plan) on the
date of exercise. You may be required to represent to NFG in writing, at the
time of each exercise of these Options, that the shares of Common Stock being
purchased are being acquired for investment and not with a view to distribution.
Also, NFG may impose restrictions on your purchase of shares of Common Stock
pursuant to exercise of such Options if the Committee should determine that the
shares must first be listed, registered or qualified, or a governmental consent
obtained. Certificates for shares purchased will be delivered to you as soon as
practicable after you exercise your Options.
Mr. Richard Hare
Page 3
March 17, 2000
NFG may, in its sole discretion, refuse to process a Notice of Exercise
of an Option which you give NFG after the second business day before National
Fuel Gas Supply Corporation issues an Arbitration Notice under the Severance
Agreement, pending resolution of the arbitration.
Authority of Committee
- ----------------------
The Committee has the authority, in its sole discretion, to interpret
the Plan and all Options granted thereunder, to establish rules and regulations
relating to the Plan and to make all other determinations it believes necessary
or advisable for the administration of the Plan. The scope of the Committee's
authority is more fully described in the Plan. All determinations and actions of
the Committee are final, conclusive and binding on you, subject to the terms and
provisions of the Severance Agreement.
Miscellaneous
- -------------
Any capitalized term used but not defined in this Award Notice shall have the
same meaning as it is defined in the Plan or in the Committee's rules and
regulations as in effect as of the date hereof.
You have no right to assign or transfer your Options, except by will,
by the laws of descent and distribution, or as otherwise permitted in the Plan.
Nothing in this Award Notice or in the Plan gives you any right to
continue in the employment of the Company.
This Award Notice shall be binding on and inure to the benefit of the
Company (and its successors and assigns) and you (and your heirs, legal
representatives and estate). This Award Notice shall be governed, construed and
enforced in accordance with the Plan and with the laws of the State of New York.
This Award Notice together with the pertinent provisions of the
Severance Agreement constitutes the entire agreement between the parties with
respect to the subject matter hereof. With respect to unexercised Options, this
Award Notice may be unilaterally amended or modified by the Committee, as
permitted by the Plan or the Rules, to the extent it deems appropriate, but may
not be amended or modified without your consent if such amendment or
modification is adverse to you. Except as otherwise provided in the preceding
sentence, this Award Notice may not be modified, amended, renewed or terminated,
nor may any term or condition, or breach of any term or condition, be waived,
except in writing signed by the person or persons sought to be
Mr. Richard Hare
Page 4
March 17, 2000
bound by such modification, amendment, renewal, termination or waiver. Any
waiver of any term or condition or breach thereof shall not be a waiver of any
other term or condition, or of the same term or condition for the future, or of
any subsequent breach.
At the time of the exercise of your Options, the Company is entitled to
deduct from the shares of Common Stock being acquired upon the exercise of your
Options, or require you to pay to it prior to and as a condition of issuing
shares of Common Stock, the amount of all applicable income and employment taxes
required by law to be withheld with respect to such exercise. Alternatively, you
may pay such taxes respecting Option exercises by delivering to the Company
shares of Common Stock having a Fair Market Value equal to the amount of such
taxes.
Please be aware that it may be inappropriate to exercise your Options
at certain times, as a result of the federal securities laws.
In the event of the invalidity of any part or provision of this
agreement, such invalidity shall not affect the enforceability of any other part
or provision hereof.
Acceptance
- ----------
If the foregoing is acceptable to you, kindly acknowledge your
acceptance by signing both copies of this letter and returning one to Anna Marie
Cellino.
Very truly yours,
NATIONAL FUEL GAS COMPANY
By:_____________________________
B. J. Kennedy
Chief Executive Officer and
Chairman of the Board
AGREED TO AND ACCEPTED
this ____ day of March, 2000.
- ---------------------------
Grantee
EXHIBIT 2
---------
ARBITRATION
-----------
1. The parties agree that either party may demand that a dispute under this
Agreement shall be resolved by binding arbitration. The parties intend that this
right to binding arbitration be enforceable in accordance with applicable law,
including Article 75 of the New York Civil Practice Law and Rules.
2. The parties intend that the Arbitrator shall be Mr. John M. Brown, formerly
Vice Chairman of the Company, unless either party objects to his serving in that
capacity as provided in paragraph 5 below. This Exhibit 2 sets out the procedure
for arbitration if Mr. Brown is unable or unwilling to serve or if either party
duly objects to his serving as Arbitrator. Applicable law grants some rights to
seek to have an Arbitrator appointed or removed.
3. Any party wishing to begin arbitration regarding this Agreement shall notify
the other party of its intention to arbitrate in a writing (the "Arbitration
Notice") which briefly describes the issue(s).
4. An Arbitration Notice, and any other notice under this Agreement, shall be
deemed given when it is delivered in person, or when it is sent by prepaid
Federal Express or certified mail addressed as follows, or to another address
specified by the receiving party:
Richard Hare National Fuel Gas Company
110 Foxmeadow Lane President
Orchard Park, NY 14127 10 Lafayette Square
Buffalo, NY 14203
copy to:
Samuel J. Palisano
Jaeckle Fleischmann & Mugel
Fleet Bank Building
12 Fountain Plaza
Buffalo NY 14202
The date on which an Arbitration Notice is deemed given is referred to as the
"Notice Date").
5. Within twenty (20) days after the Notice Date, either party may object to Mr.
Brown serving as Arbitrator by giving written notice to the other party. If no
such objection is filed during such period, the party initiating arbitration
shall promptly send written notice to Mr. Brown requesting:
(a) Mr. Brown to serve as Arbitrator in accordance with the terms
set out in this Agreement, which shall be attached, and
(b) that Mr. Brown notify the parties of his willingness to serve
as Arbitrator.
6. If Mr. Brown agrees in writing to serve on the terms set out in this Exhibit
2, then he shall be the Arbitrator on the following terms:
(a) The Arbitrator shall be paid a fee of one hundred fifty
dollars per hour ($150/hr) plus reasonable expenses; each
party shall pay one-half (1/2) of the fees and costs of the
Arbitrator promptly upon receipt of invoices for same.
(b) The Arbitrator shall perform the Arbitrator's duties in
accordance with this Agreement, impartially and in good faith,
with the objective of securing a just and inexpensive
determination of the dispute without unnecessary delay.
(c) To the maximum extent permitted by applicable law, the
Arbitrator shall be immune from liability or suit with respect
to his conduct as such.
(d) The Arbitrator shall maintain in confidence the existence of
the arbitration, its outcome, and all related information
which is not already publicly known, and shall vigorously
enforce the confidentiality obligations of the parties.
7. If Mr. Brown serves as Arbitrator, the following rules shall apply:
(a) A Party may move for permission to serve written
interrogatories and requests for production of documents and
electronic media upon the opposing party. The Arbitrator shall
grant such motions to the extent that such interrogatories and
requests are designed to produce relevant evidence and only
upon such terms as the Arbitrator in his discretion considers
to be consistent with the objective of securing a just and
inexpensive determination of the dispute without unnecessary
delay.
(b) Upon motion by a party, the Arbitrator may order a deposition
upon a showing of good cause and a finding that the deposition
is designed to secure relevant and probative evidence which
(i) cannot be obtained by alternative means, or (ii) may
otherwise not be preserved for presentation at hearing.
(c) If a party fails to comply with an order issued under (a) or
(b) above, the Arbitrator shall draw inferences adverse to
that party in connection with the facts sought to be
discovered.
(d) The Arbitrator shall schedule hearing(s) in Buffalo, New York,
at which the parties may be heard, present evidence material
to the controversy, and cross-examine the other party and
other witnesses appearing at the hearing. At least five (5)
days prior to the hearing, each party shall make available to
each other party the names of the expert and other witnesses
it intends to call, together with a detailed summary of their
expected testimony, and copies of all documents and exhibits
which the party intends to introduce into evidence.
Thereafter, witnesses, documents or exhibits may be added and
narrative summaries of expected testimony amended only upon
motion by a party for good cause shown.
(e) Except for good cause shown, no request for postponement of a
hearing will be granted; in case of a postponement, the
hearing shall be rescheduled for a date as early as
circumstances permit.
(f) The Arbitrator shall make such orders as required to protect
the secrecy of confidential information or documents, such as
review in camera. The Arbitrator shall impose a sanction
against any party who violates an order issued under this
section. Such sanction may include an award against the
offending party.
(g) No party shall make or cause to be made to the Arbitrator an
unauthorized ex parte communication relevant to the merits of
the proceeding. The Arbitrator shall promptly disclose to the
other party any such communication and provide a meaningful
opportunity for rebuttal.
(h) The Arbitrator must make the award(s) within thirty (30) days
after the conclusion of hearing(s), or the date of the filing
of any briefs authorized by the Arbitrator, whichever date is
later, unless the parties and the Arbitrator agree to some
other time limit. The award(s) must be in writing and include
findings of fact and conclusions of law regarding the issues
in dispute.
8. If, within ten (10) days after the date on which notice is given to Mr. Brown
by the party initiating arbitration, Mr. Brown has failed or refused to notify
the parties that he will serve as Arbitrator, or if either party objects to Mr.
Brown serving as Arbitrator in accordance with paragraph 5 above, the dispute
shall be resolved by binding arbitration administered by the American
Arbitration Association under its National Rules for the Resolution of
Employment Disputes then in effect at the time of the arbitration (the "Rules"),
subject to the provisions of paragraph 9 below. The parties agree that such
arbitration shall be heard and determined by a single arbitrator appointed by
the parties in accordance with the Rules, that the location of any hearing shall
be in Buffalo, New York, and that the compensation of the Arbitrator and all
expenses of arbitration (other than expenses of witnesses for each party) shall
be borne equally by the parties.
9. The following provisions shall govern exclusively the remedies or relief that
may be included in an Arbitrator's award, whether the arbitration is conducted
by Mr. Brown in accordance with paragraphs 6 and 7 above or by an arbitrator
appointed under the Rules in accordance with paragraph 8 above, and shall
supersede any provision to the contrary in this Agreement or the Rules:
(a) If the Arbitrator imposes a sanction upon the Company, or
finds that the Company has breached this Agreement, the
Arbitrator's award may be in the form of a requirement that
the Company
(i) pay money damages to Mr. Hare,
(ii) take or refrain from some specified action, and/or
(iii) issue or publish specified communications.
(b) If the Arbitrator imposes a sanction upon Mr. Hare, or finds
that Mr. Hare has materially breached this Agreement, the
Arbitrator's award may be in the form of
(i) authorization of the Company to cancel Mr. Hare's
unvested restricted stock, unexercised stock options
and/or unexercised SARs,
(ii) approval of the Company's refusal to process a Notice
of Exercise of a stock option or SAR which was
received by the Company after the Company issued an
Arbitration Notice;
(iii) authorization of the Company to setoff money damages
awarded by the Arbitrator against future payments due
to Mr. Hare under this Agreement, to the extent
permitted by applicable law;
(iv) a requirement that Mr. Hare take or refrain from
taking some specified action, and/or
(vi) a requirement that Mr. Hare issue or publish
specified communications.
The parties agree that in no event may any award of money
damages against Mr. Hare pursuant to this Agreement exceed any
future payments due to Mr. Hare under this Agreement.
10. A final award is binding on the parties and may be enforced under applicable
law including Article 75 of the New York Civil Practice Law and Rules. No award
under this Agreement may serve as an estoppel in any other proceeding for any
issue that was not resolved in the proceeding. The award also may not be used as
a precedent or otherwise be considered in any factually unrelated proceeding or
in any other arbitration proceeding.