SECOND AMENDED AND RESTATED
SPLIT DOLLAR INSURANCE AGREEMENT
WHEREAS, National Fuel Gas Company (hereinafter, with any of its
subsidiaries, collectively called the "Company"), in recognition of the highly
valued services of Richard Hare (hereinafter called the "Executive"), the
Executive's importance to the success of the Company, and the need of
Executive's family for financial security in the event of Executive's death, has
authorized the adoption of a split dollar insurance agreement benefiting the
Executive; and
WHEREAS, the Executive and the Company desire to amend in certain
respects and to restate in its entirety the terms of the Amended and Restated
Split Dollar Insurance and Death Benefit Agreement between them dated September
15, 1997, as amended by an agreement dated March 29, 1999; which Amended and
Restated Agreement amended in certain respects and restated in its entirety the
agreement between them dated April 1, 1991; and
WHEREAS, the Executive has agreed not to participate in any
noncontributory group term life insurance program while employed by the Company;
and
WHEREAS, the Company desires to recover the premiums it pays for the
purchase of a life insurance policy or policies for these purposes upon
termination of this Agreement; and
WHEREAS, the Executive has assigned all of his interest in a certain
life insurance policy to his Trustees, as hereinafter more fully described, and
the Company has consented to such assignment;
NOW THEREFORE, for mutual consideration, the receipt and adequacy of
which the parties each acknowledge, the Company, the Executive and the Trustees
agree as follows:
I. LIFE INSURANCE
By a Trust Agreement dated June 7, 1999, the Executive has established
a trust to which the Executive has assigned all of his interest in a life
insurance policy, Policy Number 3484315 (hereinafter, together with any
additional or replacement policy and any supplementary contracts issued in
connection therewith, called the "Policy") in the face amount of $1,297,401,
issued by the Guardian Life Insurance Company of America, of New York, New York
(hereafter called the "Insurer"). The Company has or will consent to such
assignment. The Trustee or Trustees acting from time to time under such Trust
Agreement (the "Trustees") shall be the sole owner of the Policy and may
exercise all rights and incidents of ownership with respect to the Policy,
except as specifically provided in this Agreement. To secure the Company's
interest under this Agreement, the Trustees have executed a collateral
assignment of the Policy to the Company (the "Collateral Assignment").
II. PREMIUMS
The Company shall pay the total premiums due on the Policy during the
term of this Agreement. Premiums shall be paid directly to the Insurer on or
before the due date, extended by any grace period. At the Company's election,
Policy dividends may be applied to reduce premiums. Notwithstanding the above,
after the Executive reaches age 65 or if the Executive's employment with the
Company terminates prior to such age, the Company shall have no further
obligation to make premium payments pursuant to this Section 11.
III. BENEFICIARY
The Trustees may from time to time while this Agreement is in force, by
such written notice to the Insurer as the Insurer may require, designate the
beneficiary or beneficiaries (the "Beneficiary") to receive the Death Benefit as
provided in this Agreement.
IV. TERMINATION OF AGREEMENT
A. This Agreement shall terminate upon the earliest to occur of the
following:
a) August 24, 2008 (the Executive's 70th birthday), unless the
Company and the Executive agree in writing to a later date;
b) mutual agreement of the Company and the Executive prior to such
date;
c) the Executive's death.
B. If the Executive's employment with the Company is terminated for Cause,
as hereinafter defined, or if the Executive engages in Competition, as
hereinafter defined, with the Company, whether or not the Executive's employment
with the Company has been terminated, the Company may terminate this Agreement
by written notice to the Executive. In the event of termination under this
Subsection B, the Executive shall forfeit all rights under this Agreement, and,
notwithstanding anything in this Agreement, the Company shall be entitled to any
and all interests in the Policy.
V. REPAYMENT OF PREMIUMS TO THE COMPANY
Upon termination of this Agreement, the Company shall be entitled to
repayment of the amount of the total premiums paid by the Company to maintain
the Policy, less the amount of any distributions therefrom to the Company
(including the outstanding balance of any Policy loans to the Company) (the "Net
Premiums"). Such repayment may be made in cash or, if this Agreement terminates
during the Executive's lifetime, in the form of a paid-up policy having
equivalent value, as the Company may elect. If full repayment is not made within
60 days of termination of this Agreement, the Company may enforce its rights
under the Collateral Assignment, including (without limitation) recovery from
the Insurer out of the proceeds of the Policy or by surrender thereof Upon
receipt of the Net Premiums, the Company shall promptly release the Collateral
Assignment.
VI. DEATH BENEFIT WHILE AGREEMENT IS IN FORCE
A. If this Agreement terminates by reason of the Executive's death, the
Beneficiary shall be entitled to receive from the proceeds of the Policy, after
repayment of the Net Premiums, an amount (the "Death Benefit") equal to the sum
of 24 times the base monthly salary payable by the Company to the Executive in
the month preceding the Executive's death (or, if the Executive is retired, in
the month prior to the commencement of such retirement) and two times the most
recent award, if any, paid to the Executive under any of the Company's lump sum
payment programs including the Annual At Risk Compensation Incentive Program
(AARCIP). The value of restricted stock awarded to the Executive for service in
the Company's fiscal year 1996 or later to supplement an AARCIP award for that
fiscal year shall be deemed to be part of the Executive's AARCIP award for
purposes of determining the Death Benefit. The restricted stock shall be valued
at the average of the high and low market value on the grant date. If the
Executive has retired (on disability or otherwise) and becomes reemployed by the
Company, the latest date of commencement of retirement shall be used for
purposes of computing the Death Benefit. If the proceeds of the Policy after
repayment of the Net Premiums are inadequate to pay the Death Benefit in full,
the Company shall have no obligation for the shortfall.
B. The Company shall notify the Insurer of the amount of the Death Benefit
within 30 days of the death of the Executive while this Agreement is in force,
and the Death Benefit shall be paid to the Beneficiary under the settlement
option elected by the Trustees or the Beneficiary.
C. After payment of the Death Benefit, the Company shall be entitled to
any remaining balance of the proceeds of the Policy, and the Beneficiary, the
Trustees and the Executive's estate shall have no further rights in or under
this Agreement or the Policy.
VII. OTHER COMPANY BENEFITS
The Executive shall have no right to participate in any
non-contributory group-term life insurance plan maintained by the Company. In
other respects, the benefits provided to the Executive under this Agreement and
the Policy shall be separate from and in addition to other benefits that may be
offered by the Company to the Executive, including any non-contributory
accidental death and dismemberment coverage that the Company maintains.
VIII. POLICY LOANS
While this Agreement is in force, neither the Trustees nor any Assignee
shall borrow against or pledge the Policy as security for any debt.
IX. ASSIGNMENT OF THE POLICY AND THIS AGREEMENT
A. The Policy may not be assigned, transferred, pledged, surrendered or
otherwise encumbered or alienated without the written consent of the Company.
Any assignee pursuant to this Section and any other successor to the Executive's
or the Trustees' interest in the Policy (both referred to herein as the
"Assignee") shall be bound by this restriction.
B. The rights and obligations of this Agreement are personal to the
Executive and the Trustees and may not be assigned; however, one or more
successor Trustees may be appointed.
X. REPLACEMENT OF THE POLICY
The Company shall have the right to replace the Policy with a new
policy or policies, with the consent of the Executive and the Trustees, which
consent shall not unreasonably be withheld. In the event of such replacement,
the Company shall have the right to receive the cash surrender value of any
policy being canceled or surrendered.
XI. AMENDMENT
This Agreement may be altered, amended or modified only by a written
Agreement signed by the Company, the Executive and the Trustees (or, if the
Policy has been assigned, the Assignee). This Agreement and any amendments
hereto shall be binding upon the Company, the Executive and the Trustees and
their legal representatives, successors, beneficiaries and assigns. In the event
that the Company becomes a party to any merger, consolidation or reorganization,
this Agreement shall remain in full force and effect as an obligation of the
Company or its successors in interest.
XII. DEFINITION OF TERMS
A. "Cause" means serious, willful misconduct in respect of the Executive's
obligations to the Company that has damaged or is likely to damage the Company,
including (without limitation) any endeavor by the Executive, directly or
indirectly, to interfere in the business relations of or otherwise harm the
Company as the Company shall reasonably determine.
B. "Competition" means any employment, consulting contract or other
arrangement, before or after the termination of the Executive's employment with
the Company, with any person or entity that is then or becomes engaged in a
business enterprise of any sort that is, in any material respect, competitive
with the Company, or any assistance by the Executive to any such enterprise in
engaging in such competition.
XIII. NONINTERFERENCE
The Executive and the Trustees covenant that the Executive, the
Trustees, any Assignee and the Beneficiary shall not interfere with the
Company's rights under this Agreement or take any voluntary action that causes
the Policy to fail or lapse, in whole or in part. The Executive, the Trustees,
any Assignee and the Beneficiary will cooperate with Company and the Insurer in
all respects in obtaining and maintaining the Policy and shall, if necessary,
use their best efforts
to provide, from time to time, such evidence of insurability as the Insurer may
require.
XIV. MISCELLANEOUS
A. If any part of this Agreement or the application of any part to certain
persons or circumstances shall be invalid or unenforceable, the remainder of the
Agreement shall continue to be effective.
B. This Agreement shall be construed and regulated under the laws of the
State of New York.
C. The Executive understands that the benefits provided under this
Agreement will or may result in taxable income to him, and the Company reserves
the right to implement tax withholding respecting such amounts as and when it
may deem such withholding appropriate.
XV. ERISA PROVISIONS
This Agreement constitutes part of a welfare benefit plan ("Welfare
Plan") and, as such, the following provisions are part of this Agreement and are
intended to meet the requirements of Title I of the Employee Retirement Income
Security Act of 1974 ("ERISA"):
1. The named fiduciary of the Welfare Plan is the Company.
2. The funding policies under the Welfare Plan are that all
premiums on the Policy be remitted to the Insurer by the
Company when due, less any amount paid by the Executive, the
Trustees, or the Assignee, in their sole discretion.
3. Direct payment by the Insurer is the basis of payment of
benefits under this Agreement.
4. For claims procedure purposes with respect to claims asserted
under the Welfare Plan, the "Claims Manager" shall be Robert
J. Dauer, or such other person as may be designated from time
to time by the Company.
a. If for any reason a claim for benefits is made by a
participant under the Welfare Plan ("Claimant") and is denied
by the Company, the Claims Manager shall deliver to the
Claimant a written explanation specifying the reasons for the
denial, the provisions on which such denial is based, such
other data as may be pertinent, and the procedures available
to the Claimant to obtain review of the claim, all written in
a manner calculated to be understood by the Claimant. For this
purpose,
(i) the claim shall be deemed filed when presented in writing to
the Claims Manager; and
(ii) the Claims Manager's explanation shall be in writing delivered
to the Claimant within 90 days of the date the claim is filed.
(b) The Claimant shall have 60 days following receipt of the
denial of the claim to file with the Claims Manager a written
request for review of the denial. For such review, the
Claimant or his or her representative may submit pertinent
documents and written issues and comments.
(c) The Claims Manager shall have discretion to decide the issue
on review and shall furnish the Claimant with a copy of the
decision within 60 days of receiving the Claimant's request
for review of the claim. The decision on review shall be
written in a manner calculated to be understood by the
Claimant and shall specify the reasons for the decision, as
well as the provisions on which the decision is based. If a
copy of the decision is not so furnished to the Claimant
within such 60 days, the claim shall be deemed denied on
review.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
dates set opposite their respective signatures, to be effective on the 9th day
of August, 1999.
NATIONAL FUEL GAS COMPANY
August 9, 1999
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Date
/s/ Janet M. Conrad By: /s/ Phillip C. Ackerman
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Witness Philip C. Ackerman
President
EXECUTIVE:
August 9, 1999
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/s/ Janet M. Conrad /s/ Richard Hare
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Witness Richard Hare
TRUSTEES:
July 20, 1999
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Date
/s/ Mary Penny Hamilton /s/ Deborah Lynn Lenahan
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Witness Deborah Lynn Lenahan
July 28, 1999
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Date
/s/ Mary Penny Hamilton /s/ Diana Fields
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Witness Diana Fields
July 20, 1999
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Date
/s/ Mary Penny Hamilton /s/ Nancy Ann Hartung
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Witness Nancy Ann Hartung