SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________________________
QUARTERLY REPORT
ON
FORM 10-Q
FOR THE
QUARTERLY PERIOD ENDED
DECEMBER 31, 1993
________________________________________________
ALLEGHENY & WESTERN ENERGY CORPORATION
_____________________
EXHIBITS
_____________________
Exhibit Index
Exhibit
Number Exhibit Reference
3.1 Articles of Incorporation of Allegheny Incorporated by
and Western Energy Corporation dated reference to Exhibit
June 4, 1984. D to Form 8-K dated
July 3, 1984.
3.2 Amendment to Articles of Incorporation Incorporated by
of Allegheny & Western Energy Corporation, reference to Exhibit
dated August 2, 1990. 3.2 to Form 10-K for
the year ended June
30, 1990.
3.3 Bylaws of Allegheny & Western Energy Incorporated by
Corporation. reference to Exhibit
D to Form 8-K dated
July 3, 1984.
10.1 Appalachian Basin Pipeline Agreement. Incorporated by
reference to Exhibit
10.1.2 to Amendment
No.1 to Form S-1
Registration
Statement
No. 2-71252.
10.2 Columbia Gas Transmission Corporation Incorporated by
Gas Purchase Contract containing typical reference to Exhibit
"take or pay" contract provisions. 10.4 to Form S-1
Registration
Statement
No. 2-71252.
10.3 Revolving Credit and Term Loan Agreement, Incorporated by
dated as of June 13, 1989, between the reference to Exhibit
registrant and the First National Bank 10.3 to Form 10-K
of Boston. for the year ended
June 30, 1989.
10.4 Revolving Credit and Term Loan Agreement, Incorporated by
dated as of June 13, 1989, between reference to Exhibit
Mountaineer Gas Company and the First 10.5 to Form 10-K
National Bank of Boston. for the year ended
June 30, 1989.
10.5 Note Agreement, dated June 30, 1987, Incorporated by
between Mountaineer and Connecticut reference to Exhibit
General Life Insurance Company, Horace 10.5 to Form 10-K
Mann Life Insurance Company, INA Life for the year ended
Insurance Company of New York and Life June 30, 1990.
Insurance Company of North America.
10.6 Participation Agreement, dated March 8, Incorporated by
1990, among TEX-HEX Corporation, Louran reference to Exhibit
Oil & Gas, Inc., AHI Drilling, Inc., 10.6 to Form 10-K
SHIGO, Inc., Rush Moody, Jr., Peter W. for the year ended
Stevens, John Bielun, Andrew R. Fair, June 30, 1990.
Jonathan Conrad and Richard Grant.
10.7 Credit Agreement, dated September 24, Incorporated by
24, 1990, among Allegheny & Western reference to Exhibit
Energy Corporation, Pittsburgh National 10.7 to Form 10-K
Bank, and One Valley Bank, N.A. and for the year ended
Pittsburgh National Bank as Agent. June 30, 1990.
10.8 1987 Stock Option Plan (including form Incorporated by
of Stock Option Agreement). reference to Exhibit
10.8 to Form 10-K
for the year ended
June 30, 1990.
10.9 Credit Agreement, dated June 27, 1991, Incorporated by
between Mountaineer Gas Company and reference to Exhibit
Pittsburgh National Bank. 10.9 to Form 10-K
for the year ended
June 30, 1991.
10.10 Credit Agreement, dated June 27, 1991, Incorporated by
between Mountaineer Gas Company and reference to Exhibit
Pittsburgh National Bank. 10.10 to Form 10-K
for the year ended
June 30, 1991.
10.11 Agreements for Gas Purchase and Transpor- Incorporated by
tation Service between Mountaineer Gas reference to Exhibit
Company and Columbia Gas Transmission Corp. 10.11 to Form 10-K
for the year ended
June 30, 1991.
10.12 Second Amendment, dated October 31, 1991, Incorporated by
to Credit Agreement, dated September 21, reference to Exhibit
1990 among Allegheny & Western Energy 10.12 to Form 10-Q
Corporation, Pittsburgh National Bank and for the quarter
One Valley Bank, N.A. and Pittsburgh ended September 30,
National Bank as agent. 1991.
10.13 Third Amendment dated November 30, 1991, Incorporated by
to Credit Agreement, dated September 24, reference to Exhibit
1990, among Allegheny & Western Energy 10.13 to Form 10-Q
Corporation, Pittsburgh National Bank for the quarter
and One Valley Bank, N.A. and Pittsburgh ended December 31,
National Bank as agent. 1991.
10.14 Note Purchase Agreement, dated July 15, Incorporated by
1992, between Mountaineer Gas Company and reference to Exhibit
Teachers Insurance and Annuity Association 10.14 to Form 10-K
of America. for the year ended
June 30, 1992.
10.15 Employment Agreement, dated June 13, 1990 Incorporated by
between Mr. Grant and Mountaineer Gas reference to Exhibit
Company. 10.15 to Form 10-K
for the year ended
June 30, 1992.
10.16 Employment Agreement, dated June 13, 1990 Incorporated by
between Mr. Fletcher and Mountaineer reference to Exhibit
Gas Company. 10.16 to Form 10-K
for the year ended
June 30, 1992.
10.17 Consulting Agreement, dated March 1, 1992 Incorporated by
between Mr. Lindley and the Company. reference to Exhibit
10.17 to Form 10-K
for the year ended
June 30, 1992.
10.18 Fourth Amendment, dated October 31, 1992, Incorporated by
to Credit Agreement, dated September 24, reference to Exhibit
1990, among Allegheny & Western Energy 10.18 to Form 10-Q
Corporation, Pittsburgh National Bank and for the quarter
One Valley Bank, N.A. and Pittsburgh ended March 31,
National Bank as agent. 1993.
10.19 Fifth Amendment, dated November 30, 1992, Incorporated by
to Credit Agreement dated September 24, reference to Exhibit
1990, among Allegheny & Western Energy 10.19 to Form 10-Q
Corporation, Pittsburgh National Bank for the quarter
and One Valley Bank, N.A. and Pittsburgh ended March 31,
National Bank as agent. 1993.
10.20 Purchase and Sales Agreement, dated Incorporated by
July 21, 1992 among Hallwood Energy reference to Exhibit
Partners, L.P. et. al and Mountaineer 10.20 to Form 10-Q
Gas Company. for the quarter
ended March 31,
1993.
10.21 Sixth Amendment, dated September 28, Incorporated by
1993, to Credit Agreement, dated reference to Exhibit
September 24, 1990, among Allegheny 10.21 to Form 10-Q
and Western Energy Corporation, for the quarter
Pittsburgh National Bank and One ended September 30,
Valley Bank, N.A. and Pittsburgh 1993.
National Bank as agent.
10.22 Seventh Amendment, dated October 31, Filed herewith
1993, to Credit Agreement, dated
September 24, 1990, among Allegheny
and Western Energy Corporation,
Pittsburgh National Bank and One
Valley Bank, N.A. and Pittsburgh
National Bank as agent.
10.23 Employment Agreements with Richard Filed herewith
L. Grant, Michael S. Fletcher and W.
Merwyn Pittman, individually.
10.24 Supplemental Retirement Benefit Plan Filed herewith
Agreements between John G. McMillian,
Richard L. Grant, Michael S. Fletcher
and W. Merwyn Pittman, individually, and
Allegheny & Western Energy Corporation.
21.1 Subsidiaries of the Company. Incorporated by
reference to Exhibit
22.1 to Form 10-Q
for the quarter
ended March 31,
1993.
EXHIBIT
NUMBER DESCRIPTION
10.22 Seventh Amendment, dated October 31, 1993, to
Credit Agreement, dated September 24, 1990
among Allegheny and Western Energy
Corporation, Pittsburgh National Bank and One
Valley Bank, N. A. and Pittsburgh National
Bank as agent.
SEVENTH AMENDMENT TO CREDIT AGREEMENT AND NOTES
THIS SEVENTH AMENDMENT TO CREDIT AGREEMENT AND NOTES (the
"Seventh Amendment"), dated as of the 31st day of October, 1993, is made
and entered into by and among ALLEGHENY & WESTERN ENERGY CORPORATION, a
West Virginia corporation, as borrower (the "Borrower"), PNC BANK, NATIONAL
ASSOCIATION, formerly Pittsburgh National Bank, and ONE VALLEY BANK,
NATIONAL ASSOCIATION, as lenders (individually "PNC" and "Valley,
respectively, and collectively the "Banks") and PNC BANK, NATIONAL
ASSOCIATION, formerly Pittsburgh National Bank, as agent for the Banks (in
such capacity the "Agent").
WITNESSETH:
WHEREAS, pursuant to a Credit Agreement (the "Credit Agreement")
dated September 24, 1990 by and among the Borrower, the Banks and the
Agent, the Banks agreed to extend certain credit facilities to the
Borrower; and
WHEREAS, pursuant to the Credit Agreement, the Borrower executed
and delivered to PNC a Revolving Credit Note (the "PNC Revolving Credit
Note") dated September 24, 1990 in the face amount of Two Million Five
Hundred Thousand ($2,500,000) Dollars and made payable to the order of PNC
and executed and delivered to Valley a Revolving Credit Note (the "Valley
Revolving Credit Note") dated September 24, 1990 in the face amount of Two
Million Five Hundred Thousand ($2,500,000) Dollars and made payable to the
order of Valley; and
WHEREAS, pursuant to a First Amendment to Credit Agreement and
Notes dated September 20, 1991, a Second Amendment to Credit Agreement and
Notes dated October 31, 1991, a Third Amendment to Credit Agreement and
Notes dated November 30, 1991, a Fourth Amendment to Credit Agreement and
Notes dated October 31, 1992, a Fifth Amendment to Credit Agreement and
Notes dated November 30, 1992 and a Sixth Amendment to Credit Agreement
dated September 28, 1993, the Credit Agreement and the PNC Revolving Credit
Note and the Valley Revolving Credit Note were amended (the Credit
Agreement and the PNC Revolving Credit Note and the Valley Revolving Credit
Note as heretofore amended are herein referred to as the "Amended Credit
Agreement" and the "Amended PNC Revolving Credit Note" and the "Amended
Valley Revolving Credit Note", respectively); and
WHEREAS, the Borrower, the Banks and the Agent wish to further
amend the Amended Credit Agreement and the Amended PNC Revolving Credit
Note and the Amended Valley Revolving Credit Note as hereinafter set forth.
-1-
NOW THEREFORE, in consideration of the mutual promises contained
herein and other valuable consideration, and with the intent to be legally
bound hereby, the parties hereto agree as follows:
A. 1. (a) The reference to the date of October 31, 1993 in
the definition of Revolving Credit Maturity Date set forth in Section 9.1
of the Amended Credit Agreement is hereby deleted and there is substituted
therefor the date of October 30, 1994.
(b) The references to the date of October 31, 1993 in
the second paragraph of the Amended PNC Revolving Credit Note and of the
Amended Valley Revolving Credit Note are hereby deleted and there is
substituted therefor the date of October 30, 1994.
B. Upon the execution hereof, the Borrower shall pay to the
Agent, for the benefit of the Banks (and to be shared by the Banks on such
basis as they shall agree), a fee in the amount of Twenty Thousand
($20,000) Dollars.
C. Except as expressly amended hereby, the terms, provisions,
conditions and agreements of the Amended Credit Agreement, the Amended PNC
Revolving Credit Note, the Amended Valley Revolving Credit Note and the
other Loan Documents (as such term is defined in the Amended Credit
Agreement) are hereby confirmed and ratified and shall remain in full force
and effect. Each and every representation and warranty of the Borrower set
forth in the Amended Credit Agreement, the Amended PNC Revolving Credit
Note, the Amended Valley Revolving Credit Note and the other Loan Documents
is hereby confirmed and ratified and such representations and warranties
shall be deemed to have been made and undertaken as of the date of this
Seventh Amendment as well as at the time they were made and undertaken.
D. THIS SEVENTH AMENDMENT SHALL BE A CONTRACT MADE UNDER, AND
GOVERNED BY, THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA WITHOUT GIVING
EFFECT TO ITS CONFLICT OF LAWS PROVISIONS.
E. This Seventh Amendment shall be binding upon the Borrower,
the Banks and the Agent and their respective successors and assigns, and
shall inure to the benefit of the Borrower, the Banks and the Agent and the
successors and assigns of the Banks and the Agent; provided, however, that
Borrower may not assign any of its rights or obligations hereunder without
the prior written consent of the Banks.
F. All defined terms used herein which are not defined herein
but which are defined in the Amended Credit Agreement shall have the
meanings herein as are given to them in the Amended Credit Agreement.
G. This Seventh Amendment shall be effective as of the date
hereof. From and after the date hereof, all references to the Credit
Agreement in the Amended Credit Agreement, the Amended PNC Revolving Credit
-2-
Note, the Amended Valley Revolving Credit Note and each of the other Loan
Documents shall be deemed to be references to the Amended Credit Agreement
as amended hereby.
H. This Seventh Amendment may be executed in as many
counterparts as shall be convenient and by the different parties hereto on
separate counterparts, each of which when executed by the Borrower, the
Banks and the Agent shall be regarded as an original.
WITNESS the due execution hereof as of the date first written
above.
ATTEST: (SEAL) ALLEGHENY & WESTERN ENERGY CORPORATION
By /s/ Bradford C. Witmer By /s/ W. Merwyn Pittman
Name Bradford C. Witmer Name W. Merwyn Pittman
Title Controller Title Vice President
WITNESS: PNC BANK, NATIONAL ASSOCIATION, formerly
Pittsburgh National Bank, in its capacities
as a Bank and as the Agent
/s/ William S. Bennett By /s/ Thomas A. Majeski
Name Thomas A. Majeski
Title Commercial Banking Officer
WITNESS: ONE VALLEY BANK, NATIONAL ASSOCIATION
/s/Timothy A. Paxton By /s/William M. Kidd
Name William M. Kidd
Title Sr. Vice President
-3-
EXHIBIT
NUMBER DESCRIPTION
10.23 Employment Agreements with Richard L. Grant,
Michael S. Fletcher and W. Merwyn Pittman,
individually.
-4-
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated effective as of September 14, 1993,
between RICHARD L. GRANT (the "Executive"), MOUNTAINEER GAS COMPANY
("MGC"), and ALLEGHENY & WESTERN ENERGY CORPORATION ("A&W") (collectively,
the "Company").
W I T N E S S E T H:
WHEREAS, the Executive is currently serving as the President and
Chief Operating Officer of MGC and the Secretary of A&W; and
WHEREAS, MGC and A&W desire that the Executive continue to serve
as the President and Chief Operating Officer of MGC and the Secretary of
A&W on the terms and conditions set forth herein, and the Executive is
willing to continue such employment on such terms;
NOW, THEREFORE, in consideration of the foregoing and the
provisions contained herein, the Executive, MGC and A&W hereby agree as
follows:
1. Term. Subject to the provisions for earlier termination
provided in this Agreement, the term of this Agreement (the "Employment
Period") shall commence on the effective date as stated above and shall
terminate on December 31, 1995; provided, however, commencing on January 1,
1994 and on each January 1st thereafter, the term of the Employment Period
shall automatically be extended one additional year unless, not later than
September 30th of the preceding year, the Boards of Directors of A&W (the
"Board") and MGC shall give written notice to the Executive that the term
of the Employment Period shall cease to be so extended; provided, however,
if the Executive's employment is terminated by the Company during the
Employment Period other than for Cause, Disability or death prior to, but
within six months of, the date on which a Change in Control (as defined in
Section 6) occurs, and it is reasonably demonstrated by the Executive that
such termination of employment was in connection with or in anticipation of
the Change in Control, then for all purposes of this Agreement the Change
in Control shall be deemed to have occurred during the Employment Period on
the date immediately prior to the date of the Executive's termination of
employment. Notwithstanding anything in this Agreement to the contrary
however, termination of this Agreement shall not alter or impair any rights
of the Executive arising under this Agreement on or prior to the
termination of the Agreement or as a consequence of a Change in Control.
2. Position and Duties. The Executive shall have such titles,
duties and responsibilities with the Company as are set forth on Attachment
A, which is incorporated herein by reference and made a part hereof for all
purposes. During the Employment Period, the Company will furnish the
Executive with office space and secretarial and other services reasonably
commensurate with his position.
3. Salary During Employment Period. During the Employment
Period, the Company will pay an annual salary to the Executive as set forth
-1-
on Attachment B, which is incorporated herein by reference and made a part
hereof for all purposes, and which shall be subject to adjustment as
provided therein (the "Base Salary"). The Base Salary shall be payable in
equal installments during the year in accordance with the Company's regular
payroll practices for executives.
4. Benefits and Expenses. The Base Salary provided for in
Section 3 above shall not preclude the Executive from receiving such
incentive awards or bonuses or other types of additional compensation as
the Board of Directors of MGC or A&W, as the case may be, in the exercise
of its sole and exclusive discretion, may determine to grant or pay to the
Executive. As long as the Executive is employed by the Company, the
Executive shall be eligible for and shall participate in all employee
benefit plans and programs now or hereafter provided by the Company for its
executives in accordance with the provisions thereof. In addition, the
Executive will be reimbursed by the Company for reasonable travel, lodging
and meal expenses incurred by the Executive in connection with performing
the Executive's services hereunder in accordance with the Company's policy
at the time in respect of reimbursement of executives for such expenses.
5. Termination by the Company. The Executive's employment
hereunder shall terminate upon the Executive's death and may be terminated
by the Company, whether before or after a Change in Control, for the
reasons provided for in this Section 5.
(a) Termination for Disability. "Disability" as grounds for
termination of the Executive's employment means a physical or mental
illness or injury which is of such nature or effect as to result in the
Executive being unable to perform the Executive's duties with the Company
on a full-time basis for 180 consecutive calendar days. If within 30 days
after written notice of proposed termination for Disability is given to the
Executive by the Company, the Executive has not returned to the full-time
performance of his duties, the Company may terminate the Executive's
employment by giving written Notice of Termination for Disability.
(b) Termination for Cause. The Company may terminate the
Execu-tive's employment for "Cause" only upon:
(i) the Executive's continued failure to substantially
perform the Executive's duties with the Company (other than any such
failure resulting from the Executive's incapacity due to physical or mental
illness or injury) after there is given to the Executive by the Company a
written demand for substantial performance which sets forth the specific
respects in which it believes the Executive has not substantially performed
the Executive's duties, which failure is not cured within 10 days of
written notice thereof; or
(ii) the Executive's engaging in gross misconduct which is
materially and demonstrably injurious to the Company, monetarily or
otherwise.
6. Change in Control. If a Change in Control occurs during the
Employment Period, the Executive shall be entitled to certain additional
benefits and protections.
(a) Definition. A "Change in Control" shall mean, and shall be
deemed to have occurred upon,
-2-
(i) A transaction or series of transactions, whether
characterized as a sale of stock, sale of assets, reorganization or
otherwise, as a result of which A&W or any corporation, firm or partnership
directly or indirectly controlled by, controlling or under common control
with A&W shall cease to hold, directly or indirectly, at least a majority
of the equity interest in MGC; or
(ii) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person"), of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of 25% or more of either (1) the then outstanding shares
of Common Stock of A&W (the "Outstanding A&W Common Stock") or (2) the
combined voting power of the then outstanding voting securities of A&W
entitled to vote generally in the election of directors (the "Outstanding
A&W Voting Securities"); provided, however, that the following acquisitions
shall not constitute a Change in Control: (w) any acquisition directly
from A&W (excluding an acquisition by virtue of the exercise of a
conversion privilege), (x) any acquisition by A&W, (y) any acquisition by
any employee benefit plan(s) (or related trust(s)) sponsored or maintained
by A&W or any corporation controlled by A&W, or (z) any acquisition by any
corporation pursuant to a reorganization, merger or consolidation, if,
immediately following such reorganization, merger or consolidation, the
conditions described in clauses (1), (2) and (3) of subsection (iv) of this
paragraph are satisfied; or
(iii) Individuals who, as of the date hereof, constitute
A&W's Board of Directors (the "Incumbent Board"), cease for any reason to
constitute at least a majority of A&W's Board of Directors; provided,
however, that any individual becoming a director subsequent to the date
hereof whose election, or nomination for election by A&W's stockholders,
was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of either (1) an actual or threatened election contest (as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act), or an actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than A&W's Board of Directors or
(2) a plan or agreement to replace a majority of the members of A&W's Board
of Directors then comprising the Incumbent Board; or
(iv) Approval by the stockholders of A&W of a
reorganization, merger or consolidation, in each case unless, immediately
following such reorganization, merger or consolidation, (1) more than 60%
of, respectively, the then outstanding shares of common stock of the
corporation resulting from such reorganization, merger or consolidation
(including, without limitation, a corporation which as a result of such
transaction owns A&W through one or more subsidiaries) and the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of
the individuals and entities who were the beneficial owners, respectively,
-3-
of the Outstanding A&W Common Stock and Outstanding A&W Voting Securities
immediately prior to such reorganization, merger or consolidation in
substantially the same proportions as their ownership, immediately prior to
such reorganization, merger or consolidation, of the Outstanding A&W Common
Stock and Outstanding A&W Voting Securities, as the case may be, (2) no
Person (excluding A&W, any employee benefit plan(s) (or related trust(s))
of A&W and/or its subsidiaries or any Person beneficially owning,
immediately prior to such reorganization, merger or consolidation, directly
or indirectly, 25% or more of the Outstanding A&W Common Stock or
Outstanding A&W Voting Securities, as the case may be) beneficially owns,
directly or indirectly, 25% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such
reorganization, merger or consolidation or the combined voting power of the
then outstanding voting securities of such corporation entitled to vote
generally in the election of directors and (3) at least a majority of the
members of the board of directors of the corporation resulting from such
reorganization, merger or consolidation were members of the Incumbent Board
at the time of the execution of the initial agreement providing for such
reorganization, merger or consolidation; or
(v) Approval by the stockholders of A&W of (1) a complete
liquidation or dissolution of A&W or (2) the sale or other disposition of
all or substantially all of the assets of A&W, other than to a corporation,
with respect to which immediately following such sale or other disposition,
(A) more than 60% of, respectively, the then outstanding shares of common
stock of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned, directly
or indirectly, by all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the Outstanding A&W Common
Stock and Outstanding A&W Voting Securities immediately prior to such sale
or other disposition in substantially the same proportion as their
ownership, immediately prior to such sale or other disposition, of the
Outstanding A&W Common Stock and Outstanding A&W Voting Securities, as the
case may be, (B) no Person (excluding A&W and any employee benefit plan (or
related trust) of A&W and/or its subsidiaries or such corporation and any
Person beneficially owning, immediately prior to such sale or other
disposition, directly or indirectly, 25% or more of the Outstanding A&W
Common Stock or Outstanding A&W Voting Securities, as the case may be)
beneficially owns, directly or indirectly, 25% or more of, respectively,
the then outstanding shares of common stock of such corporation or the
combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors and (C)
at least a majority of the members of the board of directors of such
corporation were members of the Incumbent Board at the time of the
execution of the initial agreement or action of A&W's Board of Directors
providing for such sale or other disposition of assets of A&W.
(b) Bonus; House Purchase. If a Change in Control occurs during
the Employment Period, then notwithstanding anything in this Agreement to
the contrary
-4-
(i) the Company shall pay the Executive, in a lump sum not
later than the fifth day following the date of the Change in Control, an
amount (in cash) equal to 2.95 times the average of the annual Base Salary,
bonus and other compensation paid to the Executive during each of the three
calendar years preceding the Change in Control; and
(ii) upon a written request from the Executive during the
12-month period following the Change in Control, the Company will promptly
purchase from the Executive for cash (in a single payment) the Executive's
principal residence, determined as of the date of the Change in Control,
for its Fair Market Value (as defined in Section 9).
(c) A&W's Key Executives' Supplemental Retirement Plan.
Effective immediately with a Change in Control, the Executive shall be
automatically 100% vested under A&W's Key Executives' Supplemental
Retirement Plan (the "A&W Plan") and an amount equal to the Aggregate
Supplemental Benefit, as set forth on Attachment C hereto and made a part
hereof for all purposes, shall be paid to the Executive by the Company in a
lump sum (in cash) not later than the 15th day following the Change in
Control, unless during such 15-day period the Company (i) shall have
established an irrevocable grantor trust, with a national bank serving as
trustee, for the benefit of the Executive and (ii) shall have funded such
trust with cash and/or life insurance products in an amount sufficient to
fully provide (as determined below) for the payment of the Annual
Supplemental Benefits (in the annual amount set forth on Attachment C),
which shall commence as follows: (1) if the Executive is age 55 or older
as of the date of the Change in Control, on the date of the Change in
Control and (2) if the Executive has not attained the age of 55 as of the
date of the Change in Control, on the earlier of the fifth anniversary of
the date of the Change in Control or the date the Executive reaches age 55,
and shall be payable in equal monthly amounts for 15 years, unless
accelerated as provided below. Such commencement date provided hereunder
shall be deemed to be the Executive's "Retirement Date" under the A&W Plan,
and the Executive shall be entitled to full (unreduced) benefits under the
A&W Plan, as provided herein. A&W hereby acknowledges that the provisions
of this Agreement concerning the A&W Plan constitute an amendment to the
A&W Plan and the A&W Plan agreement entered into between A&W and the
Executive.
In the event of the Executive's death on or after the Change in
Control and prior to the Executive's receipt of the lump sum Aggregate
Supplemental Benefit or all of the Annual Supplemental Benefit payments
payable hereunder, whichever is applicable, any such payment(s) then
remaining unpaid as of the Executive's death shall continue to be payable
in full to the Executive's surviving spouse, or, if there is no surviving
spouse (or the surviving spouse dies prior to the receipt of all such
payments), to the Executive's estate.
The determination of the sufficiency of the Company's funding of
the trust to provide for the payment of the Annual Supplemental Benefits,
commencing as provided above, shall be made by a national employee benefits
consulting firm selected by the Company and reasonably satisfactory to the
Executive ("Consulting Firm"). The Consulting Firm shall issue its written
opinion to the Company and the Executive that as of the date of its initial
-5-
funding, the fair market value of the assets of the trust are equal to at
least 110% of the amount the Consulting Firm has determined will be
necessary to provide for such Annual Supplemental Benefits and on each
anniversary of such initial funding date, the Consulting Firm shall render
its written opinion to the parties as to whether the fair market value of
the assets of the trust continue to be equal to at least 100% of the amount
the Consulting Firm then determines will be necessary to provide for any
remaining unpaid Annual Supplemental Benefits. If, in any such opinion,
the Consulting Firm determines the fair market value of the assets of the
trust are less than 100% of the amount so necessary, the Company shall,
within five days of receipt of such written opinion of the Consulting Firm,
contribute to the trust the amount of cash necessary so that the sum of the
assets of the trust and the cash so contributed equals at least 110% of the
amount necessary to provide for the payment of the remaining unpaid Annual
Supplemental Benefits as determined by the Consulting Firm. If the Company
fails to timely make any such additional cash contribution deemed necessary
by the Consulting Firm, the full amount of the Annual Supplemental Benefits
then remaining unpaid shall be automatically accelerated and immediately
paid to the Executive (or the Executive's surviving spouse or the
Executive's estate, as the case may be) in a single lump sum in cash.
All fees and expenses of the Consulting Firm and the trustee of
the trust, including, without limitation, all taxes incurred on any income
of the trust's assets, shall be paid solely by the Company and shall not be
charged against or paid by the trust.
-6-
(d) Excess Parachute Payment Tax Gross-Up.
(i) To provide the Executive with adequate protection in
connection with the Executive's ongoing employment with the Company, this
Agreement provides the Executive with various benefits. On or following a
"change in control", within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"), a portion of those benefits
could be characterized as "excess parachute payments" within the meaning of
Section 280G of the Code. The parties hereto acknowledge that the
protections set forth in this Section 6(d) are important, and it is agreed
that the Executive should not have to bear the burden of any excise tax
that might be levied under Section 4999 of the Code, in the event that a
portion of the benefits payable to the Executive pursuant to this Agreement
are treated as an excess parachute payment. The parties, therefore, have
agreed as set forth in this Section 6(d).
(ii) Anything in this Agreement to the contrary
notwithstanding, if it shall be determined that any payment or benefit
provided by the Company or any other person to or for the benefit of the
Executive (whether paid or payable or provided or providable pursuant to
the terms of this Agreement or otherwise, but determined without regard to
any additional payments required under this Section 6(d)) (a "Payment")
would be subject to the excise tax imposed by Section 4999 of the Code or
any interest or penalties are incurred by the Executive with respect to
such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"),
then the Company shall pay to or on behalf of the Executive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed with
respect to such taxes), including, without limitation, any income taxes
(and any interest and penalties imposed with respect thereto) and Excise
Tax imposed upon the Gross-Up Payment, the Executive retains an amount of
the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
(iii) Subject to the provisions of Section 6(d)(iv)
below, all determinations required to be made under this Section 6(d),
including whether and when a Gross-Up Payment is required and the amount of
such Gross-Up Payment and the assumptions to be utilized in arriving at
such determination, shall be made by an independent public accounting firm
with a national reputation that is selected by the Executive (the
"Accounting Firm") which shall provide detailed supporting calculations
both to the Company and to the Executive within 15 business days after the
receipt of notice from the Executive that there has been a Payment, or such
earlier time as is requested by the Company. In the event that the
Accounting Firm is serving as accountant or auditor for the individual,
entity or group effecting the change in control, the Executive shall
appoint another nationally recognized accounting firm to make the
determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All fees and expenses of
the Accounting Firm shall be borne solely by the Company. Any Gross-Up
Payment, as determined pursuant to this Section 6(d), shall be paid by the
Company to the Executive within five days of the receipt of the Accounting
-7-
Firm's determination. If the Accounting Firm determines that no Excise Tax
is payable by the Executive, it shall furnish the Executive with a written
opinion that failure to report the Excise Tax on the Executive's applicable
federal income tax return would not result in the imposition of a
negligence or similar penalty. Any determination by the Accounting Firm
shall be binding upon the Company and the Executive. As a result of the
uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible
that Gross-Up Payments which will not have been made by the Company should
have been made ("Underpayment"), consistent with the calculations required
to be made hereunder. If the Company exhausts its remedies pursuant to
Section 6(d)(iv) below and the Executive thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine the amount
of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive.
(iv) The Executive shall notify the Company in writing of
any claim by the Internal Revenue Service that, if successful, would
require the payment by the Company of the Gross-Up Payment. Such
notification shall be given as soon as practicable but no later than 10
business days after the Executive is informed in writing of such claim and
shall apprise the Company of the nature of such claim and the date on which
such claim is requested to be paid. The Executive shall not pay such claim
prior to the expiration of the 30-day period following the date on which
the Executive gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is
due). If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the
Executive shall:
(A) give the Company any information reasonably
requested by the Company relating to such claim;
(B) take such action in connection with contesting
such claim as the Company shall reasonably request in writing from time to
time, including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the Company;
(C) cooperate with the Company in good faith in order
effectively to contest such claim; and
(D) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly
all costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold the
Executive harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto) imposed as a result
of such representation and payment of costs and expenses. Without
limitation on the foregoing provisions of this Section 6(d)(iv), the
Company shall control all proceedings taken in connection with such contest
and, at its sole option, may pursue or forgo any and all administrative
appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct the
Executive to pay the tax claimed and sue for a refund or contest the claim
-8-
in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court
of initial jurisdiction and in one or more appellate courts, as the
Executive shall determine; provided, further, that if the Company directs
the Executive to pay such claim and sue for a refund, the Company shall
advance the amount of such payment to the Executive, on an interest-free
basis, and shall indemnify and hold the Executive harmless on an after-tax
basis, from any Excise Tax or income tax (including interest or penalties
with respect thereto) imposed with respect to such advance or with respect
to any imputed income with respect to such advance; and further provided
that any extension of the statute of limitations relating to payment of
taxes for the taxable year of the Executive with respect to which such
contested amount is claimed to be due is limited solely to such contested
amount. In addition, the Company's control of the contest shall be limited
to issues with respect to which a Gross-Up Payment would be payable
hereunder and the Executive shall be entitled to settle or contest, as the
case may be, any other issue raised by the Internal Revenue Service or any
other taxing authority.
(v) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 6(d)(iv), the Executive becomes
entitled to receive any refund with respect to such claim, the Executive
shall (subject to the Company's complying with the requirements of Section
6(d)(iv)) promptly pay to the Company the amount of such refund (together
with any interest paid or credited thereon after taxes applicable thereto).
If after the receipt by the Executive of an amount advanced by the Company
pursuant to Section 6(d)(iv), a determination is made that the Executive
shall not be entitled to any refund with respect to such claim and the
Company does not notify the Executive in writing of its intent to contest
such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.
7. Compensation Upon Termination for Cause. In the event of
the termination of the Executive's employment at any time during the
Employment Period by the Company for Cause, this Agreement shall terminate
and the Executive's Base Salary and all other benefits to which the
Executive may be entitled under this Agreement, excluding any unpaid
benefits to which the Executive has already become entitled under Sections
6(b) and (c), if a Change in Control has occurred prior to the date of such
termination for Cause, will terminate upon the date of termination of the
Executive's employment.
8. Compensation Upon Termination for Disability or Death. In
the event of the termination of the Executive's employment at any time
during the Employment Period by the Company for Disability or due to the
Executive's death, this Agreement shall terminate and the Company shall pay
to the Executive, or the Executive's legal representative, if applicable,
an amount equal to one-half of the Executive's Base Salary in effect as of
the date of such termination of employment, provided that such death or
Disability payment shall be payable over a six-month period in equal
installments in accordance with the Company's regular payroll practices for
-9-
executives. If such Disability or death occurs on or after the date of a
Change in Control, the Executive (or the Executive's legal representative,
if applicable) shall remain entitled to receive any then unpaid benefits
provided by Sections 6(b) and (c).
9. Compensation Upon Termination by the Company Other Than for
Cause, Disability or Death. The Company may terminate the Executive's
employment hereunder other than for Cause, Disability or the Executive's
death. If the Company so terminates the Executive's employment, following
such termination the Company shall continue to pay the Executive the Base
Salary in effect as of the effective date of such termination for a period
of two years (the "Continuation Period"). Such Base Salary shall be
payable during the Continuation Period in equal installments in accordance
with the Company's regular payroll practices for executives.
In addition, (1) during the Continuation Period the Company, at
its cost, shall provide or arrange to provide the Executive (and the
Executive's dependents) with health insurance coverages and benefits
substantially similar to those which the Executive (and the Executive's
dependents) were receiving under the health plans of the Company
immediately prior to the Notice of Termination; however, any such health
benefits to which the Executive (or the Executive's dependents) would
otherwise receive pursuant hereto shall be secondary to (reduced by) any
health insurance benefits received by the Executive (or the Executive's
dependents) during the Continuation Period under any other employer's group
health plan(s), and (2) in the event that during the Continuation Period
the Executive moves from the metropolitan area in which the Executive's
principal residence is located at the date of such termination of
employment, the Company shall promptly purchase from the Executive for cash
(in a single payment) the Executive's principal residence (if owned by the
Executive) for an amount equal to the greater of (i) the fair market value
of such residence as determined by a member of the Society of Real Estate
Appraisers designated by the Executive and reasonably satisfactory to the
Company and (ii) the Executive's tax basis in such residence (the "Fair
Market Value").
10. Confidentiality. Except as required in the performance of
the Executive's duties to the Company, or as authorized in writing by the
Company, the Executive will not, directly or indirectly, divulge, disclose
or communicate during the Employment Period or thereafter, any information,
knowledge or data not theretofore publicly known and in the public domain
which the Executive may obtain during the Employment Period concerning the
Company or any of its subsidiaries or affiliates and relating to its or
their business, processes, trade secrets, customers or finances. All
reports, documents and other writings relating to the Company's business
which are prepared or created by the Executive or which may come into the
Executive's possession during the Employment Period are the property of the
Company, as the case may be, and shall be retained by the Executive in
trust in a fiduciary capacity for the sole benefit of the Company, and upon
termination of the Executive's employment by the Company shall be delivered
to or remain in the possession of the Company, as the case may be.
11. Notice of Termination. Any purported termination of the
Executive's employment by the Company shall be communicated to the
-10-
Executive by written Notice of Termination, which notice shall state the
specific termination provision in this Agreement relied upon and shall also
set forth in reasonable detail the facts and circumstances claimed to
provide the basis for the Executive's termination under the provision
indicated. Within 15 days after any Notice of Termination is received, the
Executive may provide notice to the Company that a dispute exists
concerning the Executive's termination. Notwithstanding the pendency of
any such dispute, the Company will continue to pay to the Executive the
full compensation in effect when the notice giving rise to the dispute was
given and continue the Executive as a participant in all perquisites,
compensation and employee benefit plans in which the Executive was
participating when the notice giving rise to the dispute was given, until
the dispute is finally resolved, but in no event past the expiration date
of the Employment Period, except as required by the terms of any such
employee benefit plan or applicable law.
12. Notices. All notices and communications provided for in
this Agreement shall be in writing and shall be deemed to have been duly
given when delivered by United States registered or certified mail, return
receipt requested, with postage thereon fully prepaid. All such
communications shall be addressed as follows, except that notice of change
of address shall be effective only upon receipt:
If to the Company, at:
1600 Kanawha, Valley Building
Charleston, West Virginia 25301
Attention: Chairman of the Board
If to the Executive, at:
1700 Oak Knolls Road
Charleston, West Virginia 25314
13. Miscellaneous.
(a) No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Executive, a duly authorized officer of the Company,
and a duly authorized member of the Board. No waiver of any party hereto
at any time of the breach of, or lack of compliance with, any conditions or
provisions of this Agreement shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or
subsequent time.
(b) No agreements or representations, oral or otherwise, express
or implied, with respect to the subject matter hereof have been made by any
party which are not set forth expressly in this Agreement.
(c) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, devises
and legatees. If the Executive should die while any amounts or benefits
are still payable to the Executive hereunder, all such amounts or benefits,
-11-
unless otherwise provided herein, shall continue to be paid or provided in
accordance with the terms of this Agreement to the Executive's devisee,
legatee, or other designee or, if there be no such designee, to the
Executive's estate.
(d) The Executive shall not be required to mitigate the amount
of any payment or benefit provided for in this Agreement by seeking other
employment or otherwise and no amount payable under this Agreement shall be
reduced by the Executive's acceptance of employment with another person
after the date of termination. Further, the Company's obligations to make
the payments provided for in this Agreement and otherwise to perform their
obligations hereunder shall not be affected by any set off, counterclaim,
recoupment, defense or other claim, rights or action that the Company may
have against the Executive.
(e) Nothing in this Agreement shall prevent or limit the
Executive's participation in any perquisite, employee benefit plans, bonus,
stock, incentive or other similar plan or program provided by the Company
in which the Executive currently participates or may qualify to participate
in the future, nor shall anything herein limit or otherwise adversely
affect any rights the Executive may have under any such plan, program or
arrangement.
(f) The obligations of the Company hereunder shall be joint and
several liabilities of A&W and MGC. If a Change in Control within the
meaning of Section 6(i)(a) occurs and following such Change in Control the
Executive continues to be an employee of A&W or MGC, but not both,
thereafter the "Company" shall mean A&W or MGC, whichever entity the
Executive continues to be an employee of, and the term "Board" shall mean
the Board of Directors of such entity; however, nothing in this
subparagraph (f) shall operate or be construed to adversely change the
joint and several nature of the liability of MGC and A&W for any
obligations arising under this Agreement on or before such Change in
Control.
14. Arbitration. The Executive shall be permitted (but not
required) to elect that any dispute or controversy arising under or in
connection with this Agreement be settled by arbitration in Charleston,
West Virginia, in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's
award in any court having jurisdiction. All legal fees and costs incurred
by the Executive in connection with the resolution of any dispute or
controversy under or in connection with this Agreement shall be reimbursed
by the Company as bills for such services are presented by the Executive to
the Company. The Company shall indemnify and hold the Executive harmless,
on an after-tax basis, from any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed on the Executive with
respect to such reimbursements or payments by the Company.
15. Validity. The invalidity and unenforceability of any
provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain
in full force and effect.
16. Applicable Law. This Agreement shall be interpreted and
enforced in accordance with the laws of the State of West Virginia.
-12-
17. Prior Agreement. This Agreement shall supersede and replace
that Employment Agreement between the Company and the Executive dated as of
June 13, 1990.
IN WITNESS WHEREOF, the parties have executed this Agreement
effective for all purposes as provided above.
EXECUTIVE
By: /s/Richard L. Grant
-13-
MOUNTAINEER GAS COMPANY
By: /s/John G. McMillian
Name: John G. McMillian
Title: Chairman of the Board and
Chief Executive Officer
ALLEGHENY & WESTERN ENERGY
CORPORATION
By: /s/John G. McMillian
Name: John G. McMillian
Title: Chairman of the Board, President
and Chief Executive Officer
-14-
ATTACHMENT A
The Executive shall continue to serve as the President and Chief
Operating Officer of MGC and shall be responsible for the general
management of MGC and shall render such services to MGC and/or affiliated
entities of MGC as are necessary for him to perform his duties and fulfill
his responsibilities hereunder. The Executive shall also continue to serve
as the Secretary of A&W and render such services consistent with those
previously performed by the Executive in that capacity. The Executive
shall perform such other duties and fulfill such other responsibilities as
may reasonably be assigned to him by the Company's Boards of Directors.
The Executive shall devote his full business time, effort and energies to
the performance of his duties and fulfillment of his responsibilities for
the Company, and will faithfully discharge his duties in furtherance of the
interest of the Company.
-15-
ATTACHMENT B
The Executive's Base Salary shall be $224,800. However,
beginning January 1, 1994, and on each January 1st thereafter during the
Employment Period, the amount of the Executive's Base Salary shall be
increased by an amount not less than the product of (1) the Executive's
Base Salary for the prior year and (2) the sum of (a) 2% and (b) the
percentage increase in base compensation established for exempt employees
who have performed at the mid-point of the "above-average" range in MGC's
Compensation Guidelines for the applicable year. (In the event MGC ceases
to be a subsidiary of A&W and the Executive continues his employment with
A&W and not MGC, the increase in the consumer price index ("CPI") shall be
used.) The Board of Directors of MGC or A&W, whichever is applicable, may
increase the Executive's Base Salary at such other time or times, and in
such amounts, as it deems appropriate. The Executive's Base Salary as in
effect from time to time may not be decreased.
-16-
ATTACHMENT C
1. Aggregate Supplemental Benefit - $3,300,000.
2. Annual Supplemental Benefit - $220,000.
-17-
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated effective as of September 14, 1993,
between MICHAEL S. FLETCHER (the "Executive") and MOUNTAINEER GAS COMPANY
("MGC").
W I T N E S S E T H:
WHEREAS, the Executive is currently serving as the Senior Vice
President, Chief Financial Officer and Secretary of MGC; and
WHEREAS, MGC and ALLEGHENY & WESTERN ENERGY CORPORATION ("A&W"),
the parent corporation of MGC (MGC and Allegheny & Western Energy
Corporation being collectively, the "Company"), desire that the Executive
continue to serve as the Senior Vice President, Chief Financial Officer and
Secretary of MGC on the terms and conditions set forth herein, and the
Executive is willing to continue such employment on such terms;
NOW, THEREFORE, in consideration of the foregoing and the
provisions contained herein, the Executive, MGC and A&W hereby agree as
follows:
1. Term. Subject to the provisions for earlier termination
provided in this Agreement, the term of this Agreement (the "Employment
Period") shall commence on the effective date as stated above and shall
terminate on December 31, 1995; provided, however, commencing on January 1,
1994 and on each January 1st thereafter, the term of the Employment Period
shall automatically be extended one additional year unless, not later than
September 30th of the preceding year, the Boards of Directors of A&W (the
"Board") and MGC shall give written notice to the Executive that the term
of the Employment Period shall cease to be so extended; provided, however,
if the Executive's employment is terminated by the Company during the
Employment Period other than for Cause, Disability or death prior to, but
within six months of, the date on which a Change in Control (as defined in
Section 6) occurs, and it is reasonably demonstrated by the Executive that
such termination of employment was in connection with or in anticipation of
the Change in Control, then for all purposes of this Agreement the Change
in Control shall be deemed to have occurred during the Employment Period on
the date immediately prior to the date of the Executive's termination of
employment. Notwithstanding anything in this Agreement to the contrary
however, termination of this Agreement shall not alter or impair any rights
of the Executive arising under this Agreement on or prior to the
termination of the Agreement or as a consequence of a Change in Control.
2. Position and Duties. The Executive shall have such titles,
duties and responsibilities with the Company as are set forth on Attachment
A, which is incorporated herein by reference and made a part hereof for all
purposes. During the Employment Period, the Company will furnish the
Executive with office space and secretarial and other services reasonably
commensurate with his position.
-18-
3. Salary During Employment Period. During the Employment
Period, the Company will pay an annual salary to the Executive as set forth
on Attachment B, which is incorporated herein by reference and made a part
hereof for all purposes, and which shall be subject to adjustment as
provided therein (the "Base Salary"). The Base Salary shall be payable in
equal installments during the year in accordance with the Company's regular
payroll practices for executives.
4. Benefits and Expenses. The Base Salary provided for in
Section 3 above shall not preclude the Executive from receiving such
incentive awards or bonuses or other types of additional compensation as
the Board of Directors of MGC or A&W, as the case may be, in the exercise
of its sole and exclusive discretion, may determine to grant or pay to the
Executive. As long as the Executive is employed by the Company, the
Executive shall be eligible for and shall participate in all employee
benefit plans and programs now or hereafter provided by the Company for its
executives in accordance with the provisions thereof. In addition, the
Executive will be reimbursed by the Company for reasonable travel, lodging
and meal expenses incurred by the Executive in connection with performing
the Executive's services hereunder in accordance with the Company's policy
at the time in respect of reimbursement of executives for such expenses.
5. Termination by the Company. The Executive's employment
hereunder shall terminate upon the Executive's death and may be terminated
by the Company, whether before or after a Change in Control, for the
reasons provided for in this Section 5.
(a) Termination for Disability. "Disability" as grounds for
termination of the Executive's employment means a physical or mental
illness or injury which is of such nature or effect as to result in the
Executive being unable to perform the Executive's duties with the Company
on a full-time basis for 180 consecutive calendar days. If within 30 days
after written notice of proposed termination for Disability is given to the
Executive by the Company, the Executive has not returned to the full-time
performance of his duties, the Company may terminate the Executive's
employment by giving written Notice of Termination for Disability.
(b) Termination for Cause. The Company may terminate the
Execu-tive's employment for "Cause" only upon:
(i) the Executive's continued failure to substantially
perform the Executive's duties with the Company (other than any such
failure resulting from the Executive's incapacity due to physical or mental
illness or injury) after there is given to the Executive by the Company a
written demand for substantial performance which sets forth the specific
respects in which it believes the Executive has not substantially performed
the Executive's duties, which failure is not cured within 10 days of
written notice thereof; or
(ii) the Executive's engaging in gross misconduct which is
materially and demonstrably injurious to the Company, monetarily or
otherwise.
6. Change in Control. If a Change in Control occurs during the
Employment Period, the Executive shall be entitled to certain additional
benefits and protections.
-19-
(a) Definition. A "Change in Control" shall mean, and shall be
deemed to have occurred upon,
(i) A transaction or series of transactions, whether
characterized as a sale of stock, sale of assets, reorganization or
otherwise, as a result of which A&W or any corporation, firm or partnership
directly or indirectly controlled by, controlling or under common control
with A&W shall cease to hold, directly or indirectly, at least a majority
of the equity interest in MGC; or
(ii) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person"), of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of 25% or more of either (1) the then outstanding shares
of Common Stock of A&W (the "Outstanding A&W Common Stock") or (2) the
combined voting power of the then outstanding voting securities of A&W
entitled to vote generally in the election of directors (the "Outstanding
A&W Voting Securities"); provided, however, that the following acquisitions
shall not constitute a Change in Control: (w) any acquisition directly
from A&W (excluding an acquisition by virtue of the exercise of a
conversion privilege), (x) any acquisition by A&W, (y) any acquisition by
any employee benefit plan(s) (or related trust(s)) sponsored or maintained
by A&W or any corporation controlled by A&W, or (z) any acquisition by any
corporation pursuant to a reorganization, merger or consolidation, if,
immediately following such reorganization, merger or consolidation, the
conditions described in clauses (1), (2) and (3) of subsection (iv) of this
paragraph are satisfied; or
(iii) Individuals who, as of the date hereof, constitute
A&W's Board of Directors (the "Incumbent Board"), cease for any reason to
constitute at least a majority of A&W's Board of Directors; provided,
however, that any individual becoming a director subsequent to the date
hereof whose election, or nomination for election by A&W's stockholders,
was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of either (1) an actual or threatened election contest (as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act), or an actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than A&W's Board of Directors or
(2) a plan or agreement to replace a majority of the members of A&W's Board
of Directors then comprising the Incumbent Board; or
(iv) Approval by the stockholders of A&W of a
reorganization, merger or consolidation, in each case unless, immediately
following such reorganization, merger or consolidation, (1) more than 60%
of, respectively, the then outstanding shares of common stock of the
corporation resulting from such reorganization, merger or consolidation
(including, without limitation, a corporation which as a result of such
transaction owns A&W through one or more subsidiaries) and the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then
-20-
beneficially owned, directly or indirectly, by all or substantially all of
the individuals and entities who were the beneficial owners, respectively,
of the Outstanding A&W Common Stock and Outstanding A&W Voting Securities
immediately prior to such reorganization, merger or consolidation in
substantially the same proportions as their ownership, immediately prior to
such reorganization, merger or consolidation, of the Outstanding A&W Common
Stock and Outstanding A&W Voting Securities, as the case may be, (2) no
Person (excluding A&W, any employee benefit plan(s) (or related trust(s))
of A&W and/or its subsidiaries or any Person beneficially owning,
immediately prior to such reorganization, merger or consolidation, directly
or indirectly, 25% or more of the Outstanding A&W Common Stock or
Outstanding A&W Voting Securities, as the case may be) beneficially owns,
directly or indirectly, 25% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such
reorganization, merger or consolidation or the combined voting power of the
then outstanding voting securities of such corporation entitled to vote
generally in the election of directors and (3) at least a majority of the
members of the board of directors of the corporation resulting from such
reorganization, merger or consolidation were members of the Incumbent Board
at the time of the execution of the initial agreement providing for such
reorganization, merger or consolidation; or
(v) Approval by the stockholders of A&W of (1) a complete
liquidation or dissolution of A&W or (2) the sale or other disposition of
all or substantially all of the assets of A&W, other than to a corporation,
with respect to which immediately following such sale or other disposition,
(A) more than 60% of, respectively, the then outstanding shares of common
stock of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned, directly
or indirectly, by all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the Outstanding A&W Common
Stock and Outstanding A&W Voting Securities immediately prior to such sale
or other disposition in substantially the same proportion as their
ownership, immediately prior to such sale or other disposition, of the
Outstanding A&W Common Stock and Outstanding A&W Voting Securities, as the
case may be, (B) no Person (excluding A&W and any employee benefit plan (or
related trust) of A&W and/or its subsidiaries or such corporation and any
Person beneficially owning, immediately prior to such sale or other
disposition, directly or indirectly, 25% or more of the Outstanding A&W
Common Stock or Outstanding A&W Voting Securities, as the case may be)
beneficially owns, directly or indirectly, 25% or more of, respectively,
the then outstanding shares of common stock of such corporation or the
combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors and (C)
at least a majority of the members of the board of directors of such
corporation were members of the Incumbent Board at the time of the
execution of the initial agreement or action of A&W's Board of Directors
providing for such sale or other disposition of assets of A&W.
-21-
(b) Bonus; House Purchase. If a Change in Control occurs during
the Employment Period, then notwithstanding anything in this Agreement to
the contrary
(i) the Company shall pay the Executive, in a lump sum not
later than the fifth day following the date of the Change in Control, an
amount (in cash) equal to 2.95 times the average of the annual Base Salary,
bonus and other compensation paid to the Executive during each of the three
calendar years preceding the Change in Control; and
(ii) upon a written request from the Executive during the
12-month period following the Change in Control, the Company will promptly
purchase from the Executive for cash (in a single payment) the Executive's
principal residence, determined as of the date of the Change in Control,
for its Fair Market Value (as defined in Section 9).
(c) A&W's Key Executives' Supplemental Retirement Plan.
Effective immediately with a Change in Control, the Executive shall be
automatically 100% vested under A&W's Key Executives' Supplemental
Retirement Plan (the "A&W Plan") and an amount equal to the Aggregate
Supplemental Benefit, as set forth on Attachment C hereto and made a part
hereof for all purposes, shall be paid to the Executive by the Company in a
lump sum (in cash) not later than the 15th day following the Change in
Control, unless during such 15-day period the Company (i) shall have
established an irrevocable grantor trust, with a national bank serving as
trustee, for the benefit of the Executive and (ii) shall have funded such
trust with cash and/or life insurance products in an amount sufficient to
fully provide (as determined below) for the payment of the Annual
Supplemental Benefits (in the annual amount set forth on Attachment C),
which shall commence as follows: (1) if the Executive is age 55 or older
as of the date of the Change in Control, on the date of the Change in
Control and (2) if the Executive has not attained the age of 55 as of the
date of the Change in Control, on the earlier of the fifth anniversary of
the date of the Change in Control or the date the Executive reaches age 55,
and shall be payable in equal monthly amounts for 15 years, unless
accelerated as provided below. Such commencement date provided hereunder
shall be deemed to be the Executive's "Retirement Date" under the A&W Plan,
and the Executive shall be entitled to full (unreduced) benefits under the
A&W Plan, as provided herein. A&W hereby acknowledges that the provisions
of this Agreement concerning the A&W Plan constitute an amendment to the
A&W Plan and the A&W Plan agreement entered into between A&W and the
Executive.
In the event of the Executive's death on or after the Change in
Control and prior to the Executive's receipt of the lump sum Aggregate
Supplemental Benefit or all of the Annual Supplemental Benefit payments
payable hereunder, whichever is applicable, any such payment(s) then
remaining unpaid as of the Executive's death shall continue to be payable
in full to the Executive's surviving spouse, or, if there is no surviving
spouse (or the surviving spouse dies prior to the receipt of all such
payments), to the Executive's estate.
The determination of the sufficiency of the Company's funding of
the trust to provide for the payment of the Annual Supplemental Benefits,
commencing as provided above, shall be made by a national employee benefits
-22-
consulting firm selected by the Company and reasonably satisfactory to the
Executive ("Consulting Firm"). The Consulting Firm shall issue its written
opinion to the Company and the Executive that as of the date of its initial
funding, the fair market value of the assets of the trust are equal to at
least 110% of the amount the Consulting Firm has determined will be
necessary to provide for such Annual Supplemental Benefits and on each
anniversary of such initial funding date, the Consulting Firm shall render
its written opinion to the parties as to whether the fair market value of
the assets of the trust continue to be equal to at least 100% of the amount
the Consulting Firm then determines will be necessary to provide for any
remaining unpaid Annual Supplemental Benefits. If, in any such opinion,
the Consulting Firm determines the fair market value of the assets of the
trust are less than 100% of the amount so necessary, the Company shall,
within five days of receipt of such written opinion of the Consulting Firm,
contribute to the trust the amount of cash necessary so that the sum of the
assets of the trust and the cash so contributed equals at least 110% of the
amount necessary to provide for the payment of the remaining unpaid Annual
Supplemental Benefits as determined by the Consulting Firm. If the Company
fails to timely make any such additional cash contribution deemed necessary
by the Consulting Firm, the full amount of the Annual Supplemental Benefits
then remaining unpaid shall be automatically accelerated and immediately
paid to the Executive (or the Executive's surviving spouse or the
Executive's estate, as the case may be) in a single lump sum in cash.
All fees and expenses of the Consulting Firm and the trustee of
the trust, including, without limitation, all taxes incurred on any income
of the trust's assets, shall be paid solely by the Company and shall not be
charged against or paid by the trust.
-23-
(d) Excess Parachute Payment Tax Gross-Up.
(i) To provide the Executive with adequate protection in
connection with the Executive's ongoing employment with the Company, this
Agreement provides the Executive with various benefits. On or following a
"change in control", within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"), a portion of those benefits
could be characterized as "excess parachute payments" within the meaning of
Section 280G of the Code. The parties hereto acknowledge that the
protections set forth in this Section 6(d) are important, and it is agreed
that the Executive should not have to bear the burden of any excise tax
that might be levied under Section 4999 of the Code, in the event that a
portion of the benefits payable to the Executive pursuant to this Agreement
are treated as an excess parachute payment. The parties, therefore, have
agreed as set forth in this Section 6(d).
(ii) Anything in this Agreement to the contrary
notwithstanding, if it shall be determined that any payment or benefit
provided by the Company or any other person to or for the benefit of the
Executive (whether paid or payable or provided or providable pursuant to
the terms of this Agreement or otherwise, but determined without regard to
any additional payments required under this Section 6(d)) (a "Payment")
would be subject to the excise tax imposed by Section 4999 of the Code or
any interest or penalties are incurred by the Executive with respect to
such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"),
then the Company shall pay to or on behalf of the Executive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed with
respect to such taxes), including, without limitation, any income taxes
(and any interest and penalties imposed with respect thereto) and Excise
Tax imposed upon the Gross-Up Payment, the Executive retains an amount of
the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
(iii) Subject to the provisions of Section 6(d)(iv)
below, all determinations required to be made under this Section 6(d),
including whether and when a Gross-Up Payment is required and the amount of
such Gross-Up Payment and the assumptions to be utilized in arriving at
such determination, shall be made by an independent public accounting firm
with a national reputation that is selected by the Executive (the
"Accounting Firm") which shall provide detailed supporting calculations
both to the Company and to the Executive within 15 business days after the
receipt of notice from the Executive that there has been a Payment, or such
earlier time as is requested by the Company. In the event that the
Accounting Firm is serving as accountant or auditor for the individual,
entity or group effecting the change in control, the Executive shall
appoint another nationally recognized accounting firm to make the
determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All fees and expenses of
the Accounting Firm shall be borne solely by the Company. Any Gross-Up
Payment, as determined pursuant to this Section 6(d), shall be paid by the
Company to the Executive within five days of the receipt of the Accounting
-24-
Firm's determination. If the Accounting Firm determines that no Excise Tax
is payable by the Executive, it shall furnish the Executive with a written
opinion that failure to report the Excise Tax on the Executive's applicable
federal income tax return would not result in the imposition of a
negligence or similar penalty. Any determination by the Accounting Firm
shall be binding upon the Company and the Executive. As a result of the
uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible
that Gross-Up Payments which will not have been made by the Company should
have been made ("Underpayment"), consistent with the calculations required
to be made hereunder. If the Company exhausts its remedies pursuant to
Section 6(d)(iv) below and the Executive thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine the amount
of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive.
(iv) The Executive shall notify the Company in writing of
any claim by the Internal Revenue Service that, if successful, would
require the payment by the Company of the Gross-Up Payment. Such
notification shall be given as soon as practicable but no later than 10
business days after the Executive is informed in writing of such claim and
shall apprise the Company of the nature of such claim and the date on which
such claim is requested to be paid. The Executive shall not pay such claim
prior to the expiration of the 30-day period following the date on which
the Executive gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is
due). If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the
Executive shall:
(A) give the Company any information reasonably
requested by the Company relating to such claim;
(B) take such action in connection with contesting
such claim as the Company shall reasonably request in writing from time to
time, including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the Company;
(C) cooperate with the Company in good faith in order
effectively to contest such claim; and
(D) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly
all costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold the
Executive harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto) imposed as a result
of such representation and payment of costs and expenses. Without
limitation on the foregoing provisions of this Section 6(d)(iv), the
Company shall control all proceedings taken in connection with such contest
and, at its sole option, may pursue or forgo any and all administrative
appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct the
Executive to pay the tax claimed and sue for a refund or contest the claim
-25-
in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court
of initial jurisdiction and in one or more appellate courts, as the
Executive shall determine; provided, further, that if the Company directs
the Executive to pay such claim and sue for a refund, the Company shall
advance the amount of such payment to the Executive, on an interest-free
basis, and shall indemnify and hold the Executive harmless on an after-tax
basis, from any Excise Tax or income tax (including interest or penalties
with respect thereto) imposed with respect to such advance or with respect
to any imputed income with respect to such advance; and further provided
that any extension of the statute of limitations relating to payment of
taxes for the taxable year of the Executive with respect to which such
contested amount is claimed to be due is limited solely to such contested
amount. In addition, the Company's control of the contest shall be limited
to issues with respect to which a Gross-Up Payment would be payable
hereunder and the Executive shall be entitled to settle or contest, as the
case may be, any other issue raised by the Internal Revenue Service or any
other taxing authority.
(v) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 6(d)(iv), the Executive becomes
entitled to receive any refund with respect to such claim, the Executive
shall (subject to the Company's complying with the requirements of Section
6(d)(iv)) promptly pay to the Company the amount of such refund (together
with any interest paid or credited thereon after taxes applicable thereto).
If after the receipt by the Executive of an amount advanced by the Company
pursuant to Section 6(d)(iv), a determination is made that the Executive
shall not be entitled to any refund with respect to such claim and the
Company does not notify the Executive in writing of its intent to contest
such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.
7. Compensation Upon Termination for Cause. In the event of
the termination of the Executive's employment at any time during the
Employment Period by the Company for Cause, this Agreement shall terminate
and the Executive's Base Salary and all other benefits to which the
Executive may be entitled under this Agreement, excluding any unpaid
benefits to which the Executive has already become entitled under Sections
6(b) and (c), if a Change in Control has occurred prior to the date of such
termination for Cause, will terminate upon the date of termination of the
Executive's employment.
8. Compensation Upon Termination for Disability or Death. In
the event of the termination of the Executive's employment at any time
during the Employment Period by the Company for Disability or due to the
Executive's death, this Agreement shall terminate and the Company shall pay
to the Executive, or the Executive's legal representative, if applicable,
an amount equal to one-half of the Executive's Base Salary in effect as of
the date of such termination of employment, provided that such death or
Disability payment shall be payable over a six-month period in equal
installments in accordance with the Company's regular payroll practices for
-26-
executives. If such Disability or death occurs on or after the date of a
Change in Control, the Executive (or the Executive's legal representative,
if applicable) shall remain entitled to receive any then unpaid benefits
provided by Sections 6(b) and (c).
9. Compensation Upon Termination by the Company Other Than for
Cause, Disability or Death. The Company may terminate the Executive's
employment hereunder other than for Cause, Disability or the Executive's
death. If the Company so terminates the Executive's employment, following
such termination the Company shall continue to pay the Executive the Base
Salary in effect as of the effective date of such termination for a period
of two years (the "Continuation Period"). Such Base Salary shall be
payable during the Continuation Period in equal installments in accordance
with the Company's regular payroll practices for executives.
In addition, (1) during the Continuation Period the Company, at
its cost, shall provide or arrange to provide the Executive (and the
Executive's dependents) with health insurance coverages and benefits
substantially similar to those which the Executive (and the Executive's
dependents) were receiving under the health plans of the Company
immediately prior to the Notice of Termination; however, any such health
benefits to which the Executive (or the Executive's dependents) would
otherwise receive pursuant hereto shall be secondary to (reduced by) any
health insurance benefits received by the Executive (or the Executive's
dependents) during the Continuation Period under any other employer's group
health plan(s), and (2) in the event that during the Continuation Period
the Executive moves from the metropolitan area in which the Executive's
principal residence is located at the date of such termination of
employment, the Company shall promptly purchase from the Executive for cash
(in a single payment) the Executive's principal residence (if owned by the
Executive) for an amount equal to the greater of (i) the fair market value
of such residence as determined by a member of the Society of Real Estate
Appraisers designated by the Executive and reasonably satisfactory to the
Company and (ii) the Executive's tax basis in such residence (the "Fair
Market Value").
10. Confidentiality. Except as required in the performance of
the Executive's duties to the Company, or as authorized in writing by the
Company, the Executive will not, directly or indirectly, divulge, disclose
or communicate during the Employment Period or thereafter, any information,
knowledge or data not theretofore publicly known and in the public domain
which the Executive may obtain during the Employment Period concerning the
Company or any of its subsidiaries or affiliates and relating to its or
their business, processes, trade secrets, customers or finances. All
reports, documents and other writings relating to the Company's business
which are prepared or created by the Executive or which may come into the
Executive's possession during the Employment Period are the property of the
Company, as the case may be, and shall be retained by the Executive in
trust in a fiduciary capacity for the sole benefit of the Company, and upon
termination of the Executive's employment by the Company shall be delivered
to or remain in the possession of the Company, as the case may be.
11. Notice of Termination. Any purported termination of the
Executive's employment by the Company shall be communicated to the
-27-
Executive by written Notice of Termination, which notice shall state the
specific termination provision in this Agreement relied upon and shall also
set forth in reasonable detail the facts and circumstances claimed to
provide the basis for the Executive's termination under the provision
indicated. Within 15 days after any Notice of Termination is received, the
Executive may provide notice to the Company that a dispute exists
concerning the Executive's termination. Notwithstanding the pendency of
any such dispute, the Company will continue to pay to the Executive the
full compensation in effect when the notice giving rise to the dispute was
given and continue the Executive as a participant in all perquisites,
compensation and employee benefit plans in which the Executive was
participating when the notice giving rise to the dispute was given, until
the dispute is finally resolved, but in no event past the expiration date
of the Employment Period, except as required by the terms of any such
employee benefit plan or applicable law.
12. Notices. All notices and communications provided for in
this Agreement shall be in writing and shall be deemed to have been duly
given when delivered by United States registered or certified mail, return
receipt requested, with postage thereon fully prepaid. All such
communications shall be addressed as follows, except that notice of change
of address shall be effective only upon receipt:
If to the Company, at:
1600 Kanawha, Valley Building
Charleston, West Virginia 25301
Attention: Chairman of the Board
If to the Executive, at:
411 Country Cove Estates
Scott Depot, West Virginia 25560
13. Miscellaneous.
(a) No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Executive, a duly authorized officer of the Company,
and a duly authorized member of the Board. No waiver of any party hereto
at any time of the breach of, or lack of compliance with, any conditions or
provisions of this Agreement shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or
subsequent time.
(b) No agreements or representations, oral or otherwise, express
or implied, with respect to the subject matter hereof have been made by any
party which are not set forth expressly in this Agreement.
(c) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, devises
and legatees. If the Executive should die while any amounts or benefits
are still payable to the Executive hereunder, all such amounts or benefits,
-28-
unless otherwise provided herein, shall continue to be paid or provided in
accordance with the terms of this Agreement to the Executive's devisee,
legatee, or other designee or, if there be no such designee, to the
Executive's estate.
(d) The Executive shall not be required to mitigate the amount
of any payment or benefit provided for in this Agreement by seeking other
employment or otherwise and no amount payable under this Agreement shall be
reduced by the Executive's acceptance of employment with another person
after the date of termination. Further, the Company's obligations to make
the payments provided for in this Agreement and otherwise to perform their
obligations hereunder shall not be affected by any set off, counterclaim,
recoupment, defense or other claim, rights or action that the Company may
have against the Executive.
(e) Nothing in this Agreement shall prevent or limit the
Executive's participation in any perquisite, employee benefit plans, bonus,
stock, incentive or other similar plan or program provided by the Company
in which the Executive currently participates or may qualify to participate
in the future, nor shall anything herein limit or otherwise adversely
affect any rights the Executive may have under any such plan, program or
arrangement.
(f) The obligations of the Company hereunder shall be joint and
several liabilities of A&W and MGC. If a Change in Control within the
meaning of Section 6(i)(a) occurs and following such Change in Control the
Executive continues to be an employee of A&W or MGC, but not both,
thereafter the "Company" shall mean A&W or MGC, whichever entity the
Executive continues to be an employee of, and the term "Board" shall mean
the Board of Directors of such entity; however, nothing in this
subparagraph (f) shall operate or be construed to adversely change the
joint and several nature of the liability of MGC and A&W for any
obligations arising under this Agreement on or before such Change in
Control.
14. Arbitration. The Executive shall be permitted (but not
required) to elect that any dispute or controversy arising under or in
connection with this Agreement be settled by arbitration in Charleston,
West Virginia, in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's
award in any court having jurisdiction. All legal fees and costs incurred
by the Executive in connection with the resolution of any dispute or
controversy under or in connection with this Agreement shall be reimbursed
by the Company as bills for such services are presented by the Executive to
the Company. The Company shall indemnify and hold the Executive harmless,
on an after-tax basis, from any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed on the Executive with
respect to such reimbursements or payments by the Company.
15. Validity. The invalidity and unenforceability of any
provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain
in full force and effect.
16. Applicable Law. This Agreement shall be interpreted and
enforced in accordance with the laws of the State of West Virginia.
-29-
17. Prior Agreement. This Agreement shall supersede and replace
that Employment Agreement between the Company and the Executive dated as of
June 13, 1990.
IN WITNESS WHEREOF, the parties have executed this Agreement
effective for all purposes as provided above.
EXECUTIVE
By: /s/Michael S. Fletcher
-30-
MOUNTAINEER GAS COMPANY
By: /s/John G. McMillian
Name: John G. McMillian
Title: Chairman of the Board and
Chief Executive Officer
ALLEGHENY & WESTERN ENERGY
CORPORATION
By: /s/John G. McMillian
Name: John G. McMillian
Title: Chairman of the Board, President
and Chief Executive Officer
-31-
ATTACHMENT A
The Executive shall continue to serve as the Senior Vice
President, Chief Financial Officer and Secretary of MGC and shall be
responsible for the management of all financial and accounting activities
and the duties of the corporate secretary of MGC and shall render such
services to MGC and/or affiliated entities of MGC as are necessary for him
to perform his duties and fulfill his responsibilities hereunder. The
Executive shall perform such other duties and fulfill such other
responsibilities as may reasonably be assigned to him by the Company's
Boards of Directors. The Executive shall devote his full business time,
effort and energies to the performance of his duties and fulfillment of his
responsibilities for the Company, and will faithfully discharge his duties
in furtherance of the interest of the Company.
-32-
ATTACHMENT B
The Executive's Base Salary shall be $175,616. However,
beginning January 1, 1994, and on each January 1st thereafter during the
Employment Period, the amount of the Executive's Base Salary shall be
increased by an amount not less than the product of (1) the Executive's
Base Salary for the prior year and (2) the sum of (a) 2% and (b) the
percentage increase in base compensation established for exempt employees
who have performed at the mid-point of the "above-average" range in MGC's
Compensation Guidelines for the applicable year. The Board may increase
the Executive's Base Salary at such other time or times, and in such
amounts, as it deems appropriate. The Executive's Base Salary as in effect
from time to time may not be decreased.
-33-
ATTACHMENT C
1. Aggregate Supplemental Benefit - $2,475,000.
2. Annual Supplemental Benefit - $165,000.
-34-
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated effective as of September 14, 1993,
between W. MERWYN PITTMAN (the "Executive") and ALLEGHENY & WESTERN ENERGY
CORPORATION (the "Company").
W I T N E S S E T H:
WHEREAS, the Executive is currently serving as the Vice
President, Treasurer and Chief Financial Officer of the Company; and
WHEREAS, the Company desires that the Executive continue to serve
as the Vice President, Treasurer and Chief Financial Officer of the Company
on the terms and conditions set forth herein, and the Executive is willing
to continue such employment on such terms;
NOW, THEREFORE, in consideration of the foregoing and the
provisions contained herein, the Executive and the Company hereby agree as
follows:
1. Term. Subject to the provisions for earlier termination
provided in this Agreement, the term of this Agreement (the "Employment
Period") shall commence on the effective date as stated above and shall
terminate on December 31, 1995; provided, however, commencing on January 1,
1994 and on each January 1st thereafter, the term of the Employment Period
shall automatically be extended one additional year unless, not later than
September 30th of the preceding year, the Board of Directors of the Company
(the "Board") shall give written notice to the Executive that the term of
the Employment Period shall cease to be so extended; provided, however, if
the Executive's employment is terminated by the Company during the
Employment Period other than for Cause, Disability or death prior to, but
within six months of, the date on which a Change in Control (as defined in
Section 6) occurs, and it is reasonably demonstrated by the Executive that
such termination of employment was in connection with or in anticipation of
the Change in Control, then for all purposes of this Agreement the Change
in Control shall be deemed to have occurred during the Employment Period on
the date immediately prior to the date of the Executive's termination of
employment. Notwithstanding anything in this Agreement to the contrary
however, termination of this Agreement shall not alter or impair any rights
of the Executive arising under this Agreement on or prior to the
termination of the Agreement or as a consequence of a Change in Control.
2. Position and Duties. The Executive shall have such titles,
duties and responsibilities with the Company as are set forth on Attachment
A, which is incorporated herein by reference and made a part hereof for all
purposes. During the Employment Period, the Company will furnish the
Executive with office space and secretarial and other services reasonably
commensurate with his position.
3. Salary During Employment Period. During the Employment
Period, the Company will pay an annual salary to the Executive as set forth
on Attachment B, which is incorporated herein by reference and made a part
hereof for all purposes, and which shall be subject to adjustment as
-35-
provided therein (the "Base Salary"). The Base Salary shall be payable in
equal installments during the year in accordance with the Company's regular
payroll practices for executives.
4. Benefits and Expenses. The Base Salary provided for in
Section 3 above shall not preclude the Executive from receiving such
incentive awards or bonuses or other types of additional compensation as
the Board, in the exercise of its sole and exclusive discretion, may
determine to grant or pay to the Executive. As long as the Executive is
employed by the Company, the Executive shall be eligible for and shall
participate in all employee benefit plans and programs now or hereafter
provided by the Company for its executives in accordance with the
provisions thereof. In addition, the Executive will be reimbursed by the
Company for reasonable travel, lodging and meal expenses incurred by the
Executive in connection with performing the Executive's services hereunder
in accordance with the Company's policy at the time in respect of
reimbursement of executives for such expenses.
5. Termination by the Company. The Executive's employment
hereunder shall terminate upon the Executive's death and may be terminated
by the Company, whether before or after a Change in Control, for the
reasons provided for in this Section 5.
(a) Termination for Disability. "Disability" as grounds for
termination of the Executive's employment means a physical or mental
illness or injury which is of such nature or effect as to result in the
Executive being unable to perform the Executive's duties with the Company
on a full-time basis for 180 consecutive calendar days. If within 30 days
after written notice of proposed termination for Disability is given to the
Executive by the Company, the Executive has not returned to the full-time
performance of his duties, the Company may terminate the Executive's
employment by giving written Notice of Termination for Disability.
(b) Termination for Cause. The Company may terminate the
Execu-tive's employment for "Cause" only upon:
(i) the Executive's continued failure to substantially
perform the Executive's duties with the Company (other than any such
failure resulting from the Executive's incapacity due to physical or mental
illness or injury) after there is given to the Executive by the Company a
written demand for substantial performance which sets forth the specific
respects in which it believes the Executive has not substantially performed
the Executive's duties, which failure is not cured within 10 days of
written notice thereof; or
(ii) the Executive's engaging in gross misconduct which is
materially and demonstrably injurious to the Company, monetarily or
otherwise.
6. Change in Control. If a Change in Control occurs during the
Employment Period, the Executive shall be entitled to certain additional
benefits and protections.
(a) Definition. A "Change in Control" shall mean, and shall be
deemed to have occurred upon,
(i) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person"), of
-36-
beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of 25% or more of either (1) the then outstanding shares
of Common Stock of the Company (the "Outstanding Company Common Stock") or
(2) the combined voting power of the then outstanding voting securities of
the Company entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that the
following acquisitions shall not constitute a Change in Control: (w) any
acquisition directly from the Company (excluding an acquisition by virtue
of the exercise of a conversion privilege), (x) any acquisition by the
Company, (y) any acquisition by any employee benefit plan(s) (or related
trust(s)) sponsored or maintained by the Company or any corporation
controlled by the Company, or (z) any acquisition by any corporation
pursuant to a reorganization, merger or consolidation, if, immediately
following such reorganization, merger or consolidation, the conditions
described in clauses (1), (2) and (3) of subsection (iii) of this paragraph
are satisfied; or
(ii) Individuals who, as of the date hereof, constitute the
Company's Board of Directors (the "Incumbent Board"), cease for any reason
to constitute at least a majority of the Company's Board of Directors;
provided, however, that any individual becoming a director subsequent to
the date hereof whose election, or nomination for election by the Company's
stockholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though
such individual were a member of the Incumbent Board, but excluding, for
this purpose, any such individual whose initial assumption of office occurs
as a result of either (1) an actual or threatened election contest (as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act), or an actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Company's Board of
Directors or (2) a plan or agreement to replace a majority of the members
of the Company's Board of Directors then comprising the Incumbent Board; or
(iii) Approval by the stockholders of the Company of a
reorganization, merger or consolidation, in each case unless, immediately
following such reorganization, merger or consolidation, (1) more than 60%
of, respectively, the then outstanding shares of common stock of the
corporation resulting from such reorganization, merger or consolidation
(including, without limitation, a corporation which as a result of such
transaction owns the Company through one or more subsidiaries) and the
combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, 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 Outstanding Company Voting
Securities immediately prior to such reorganization, merger or
consolidation in substantially the same proportions as their ownership,
immediately prior to such reorganization, merger or consolidation, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities,
as the case may be, (2) no Person (excluding the Company, any employee
benefit plan(s) (or related trust(s)) of the Company and/or its
subsidiaries or any Person beneficially owning, immediately prior to such
-37-
reorganization, merger or consolidation, directly or indirectly, 25% or
more of the Outstanding Company Common Stock or Outstanding Company Voting
Securities, as the case may be) beneficially owns, directly or indirectly,
25% or more of, respectively, the then outstanding shares of common stock
of the corporation resulting from such reorganization, merger or
consolidation or the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election
of directors and (3) at least a majority of the members of the board of
directors of the corporation resulting from such reorganization, merger or
consolidation were members of the Incumbent Board at the time of the
execution of the initial agreement providing for such reorganization,
merger or consolidation; or
(iv) Approval by the stockholders of the Company of (1) a
complete liquidation or dissolution of the Company or (2) the sale or other
disposition of all or substantially all of the assets of the Company, other
than to a corporation, with respect to which immediately following such
sale or other disposition, (A) more than 60% of, respectively, the then
outstanding shares of common stock of such corporation and the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then
beneficially owned, 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 Outstanding Company Voting
Securities immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately prior to
such sale or other disposition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (B) no Person
(excluding the Company and any employee benefit plan (or related trust) of
the Company and/or its subsidiaries or such corporation and any Person
beneficially owning, immediately prior to such sale or other disposition,
directly or indirectly, 25% or more of the Outstanding Company Common Stock
or Outstanding Company Voting Securities, as the case may be) beneficially
owns, directly or indirectly, 25% or more of, respectively, the then
outstanding shares of common stock of such corporation or the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors and (C) at least a
majority of the members of the board of directors of such corporation were
members of the Incumbent Board at the time of the execution of the initial
agreement or action of the Company's Board of Directors providing for such
sale or other disposition of assets of the Company.
(b) Bonus; House Purchase. If a Change in Control occurs during
the Employment Period, then notwithstanding anything in this Agreement to
the contrary
(i) the Company shall pay the Executive, in a lump sum not
later than the fifth day following the date of the Change in Control, an
amount (in cash) equal to 2.95 times the average of the annual Base Salary,
bonus and other compensation paid to the Executive during (A) each of the
three calendar years preceding the Change in Control or (B) the Executive's
period of employment with the Company, if such period of employment at the
date of the Change in Control is less than three entire calendar years,
-38-
with the Base Salary, bonus and other compensation for any partial calendar
year being "annualized"; and
(ii) upon a written request from the Executive during the
12-month period following the Change in Control, the Company will promptly
purchase from the Executive for cash (in a single payment) the Executive's
principal residence, determined as of the date of the Change in Control,
for its Fair Market Value (as defined in Section 9).
(c) The Company's Key Executives' Supplemental Retirement Plan.
Effective immediately with a Change in Control, the Executive shall be
automatically 100% vested under the Company's Key Executives' Supplemental
Retirement Plan (the "Company Plan") and an amount equal to the Aggregate
Supplemental Benefit, as set forth on Attachment C hereto and made a part
hereof for all purposes, shall be paid to the Executive by the Company in a
lump sum (in cash) not later than the 15th day following the Change in
Control, unless during such 15-day period the Company (i) shall have
established an irrevocable grantor trust, with a national bank serving as
trustee, for the benefit of the Executive and (ii) shall have funded such
trust with cash and/or life insurance products in an amount sufficient to
fully provide (as determined below) for the payment of the Annual
Supplemental Benefits (in the annual amount set forth on Attachment C),
which shall commence as follows: (1) if the Executive is age 55 or older
as of the date of the Change in Control, on the date of the Change in
Control and (2) if the Executive has not attained the age of 55 as of the
date of the Change in Control, on the earlier of the fifth anniversary of
the date of the Change in Control or the date the Executive reaches age 55,
and shall be payable in equal monthly amounts for 10 years, unless
accelerated as provided below. Such commencement date provided hereunder
shall be deemed to be the Executive's "Retirement Date" under the Company
Plan, and the Executive shall be entitled to full (unreduced) benefits
under the Company Plan, as provided herein. The Company hereby
acknowledges that the provisions of this Agreement concerning the Company
Plan constitute an amendment to the Company Plan and the Company Plan
agreement entered into between the Company and the Executive.
In the event of the Executive's death on or after the Change in
Control and prior to the Executive's receipt of the lump sum Aggregate
Supplemental Benefit or all of the Annual Supplemental Benefit payments
payable hereunder, whichever is applicable, any such payment(s) then
remaining unpaid as of the Executive's death shall continue to be payable
in full to the Executive's surviving spouse, or, if there is no surviving
spouse (or the surviving spouse dies prior to the receipt of all such
payments), to the Executive's estate.
The determination of the sufficiency of the Company's funding of
the trust to provide for the payment of the Annual Supplemental Benefits,
commencing as provided above, shall be made by a national employee benefits
consulting firm selected by the Company and reasonably satisfactory to the
Executive ("Consulting Firm"). The Consulting Firm shall issue its written
opinion to the Company and the Executive that as of the date of its initial
funding, the fair market value of the assets of the trust are equal to at
least 110% of the amount the Consulting Firm has determined will be
necessary to provide for such Annual Supplemental Benefits and on each
-39-
anniversary of such initial funding date, the Consulting Firm shall render
its written opinion to the parties as to whether the fair market value of
the assets of the trust continue to be equal to at least 100% of the amount
the Consulting Firm then determines will be necessary to provide for any
remaining unpaid Annual Supplemental Benefits. If, in any such opinion,
the Consulting Firm determines the fair market value of the assets of the
trust are less than 100% of the amount so necessary, the Company shall,
within five days of receipt of such written opinion of the Consulting Firm,
contribute to the trust the amount of cash necessary so that the sum of the
assets of the trust and the cash so contributed equals at least 110% of the
amount necessary to provide for the payment of the remaining unpaid Annual
Supplemental Benefits as determined by the Consulting Firm. If the Company
fails to timely make any such additional cash contribution deemed necessary
by the Consulting Firm, the full amount of the Annual Supplemental Benefits
then remaining unpaid shall be automatically accelerated and immediately
paid to the Executive (or the Executive's surviving spouse or the
Executive's estate, as the case may be) in a single lump sum in cash.
All fees and expenses of the Consulting Firm and the trustee of
the trust, including, without limitation, all taxes incurred on any income
of the trust's assets, shall be paid solely by the Company and shall not be
charged against or paid by the trust.
-40-
(d) Excess Parachute Payment Tax Gross-Up.
(i) To provide the Executive with adequate protection in
connection with the Executive's ongoing employment with the Company, this
Agreement provides the Executive with various benefits. On or following a
"change in control", within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"), a portion of those benefits
could be characterized as "excess parachute payments" within the meaning of
Section 280G of the Code. The parties hereto acknowledge that the
protections set forth in this Section 6(d) are important, and it is agreed
that the Executive should not have to bear the burden of any excise tax
that might be levied under Section 4999 of the Code, in the event that a
portion of the benefits payable to the Executive pursuant to this Agreement
are treated as an excess parachute payment. The parties, therefore, have
agreed as set forth in this Section 6(d).
(ii) Anything in this Agreement to the contrary
notwithstanding, if it shall be determined that any payment or benefit
provided by the Company or any other person to or for the benefit of the
Executive (whether paid or payable or provided or providable pursuant to
the terms of this Agreement or otherwise, but determined without regard to
any additional payments required under this Section 6(d)) (a "Payment")
would be subject to the excise tax imposed by Section 4999 of the Code or
any interest or penalties are incurred by the Executive with respect to
such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"),
then the Company shall pay to or on behalf of the Executive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed with
respect to such taxes), including, without limitation, any income taxes
(and any interest and penalties imposed with respect thereto) and Excise
Tax imposed upon the Gross-Up Payment, the Executive retains an amount of
the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
(iii) Subject to the provisions of Section 6(d)(iv)
below, all determinations required to be made under this Section 6(d),
including whether and when a Gross-Up Payment is required and the amount of
such Gross-Up Payment and the assumptions to be utilized in arriving at
such determination, shall be made by an independent public accounting firm
with a national reputation that is selected by the Executive (the
"Accounting Firm") which shall provide detailed supporting calculations
both to the Company and to the Executive within 15 business days after the
receipt of notice from the Executive that there has been a Payment, or such
earlier time as is requested by the Company. In the event that the
Accounting Firm is serving as accountant or auditor for the individual,
entity or group effecting the change in control, the Executive shall
appoint another nationally recognized accounting firm to make the
determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All fees and expenses of
the Accounting Firm shall be borne solely by the Company. Any Gross-Up
Payment, as determined pursuant to this Section 6(d), shall be paid by the
Company to the Executive within five days of the receipt of the Accounting
-41-
Firm's determination. If the Accounting Firm determines that no Excise Tax
is payable by the Executive, it shall furnish the Executive with a written
opinion that failure to report the Excise Tax on the Executive's applicable
federal income tax return would not result in the imposition of a
negligence or similar penalty. Any determination by the Accounting Firm
shall be binding upon the Company and the Executive. As a result of the
uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible
that Gross-Up Payments which will not have been made by the Company should
have been made ("Underpayment"), consistent with the calculations required
to be made hereunder. If the Company exhausts its remedies pursuant to
Section 6(d)(iv) below and the Executive thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine the amount
of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive.
(iv) The Executive shall notify the Company in writing of
any claim by the Internal Revenue Service that, if successful, would
require the payment by the Company of the Gross-Up Payment. Such
notification shall be given as soon as practicable but no later than 10
business days after the Executive is informed in writing of such claim and
shall apprise the Company of the nature of such claim and the date on which
such claim is requested to be paid. The Executive shall not pay such claim
prior to the expiration of the 30-day period following the date on which
the Executive gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is
due). If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the
Executive shall:
(A) give the Company any information reasonably
requested by the Company relating to such claim;
(B) take such action in connection with contesting
such claim as the Company shall reasonably request in writing from time to
time, including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the Company;
(C) cooperate with the Company in good faith in order
effectively to contest such claim; and
(D) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly
all costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold the
Executive harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto) imposed as a result
of such representation and payment of costs and expenses. Without
limitation on the foregoing provisions of this Section 6(d)(iv), the
Company shall control all proceedings taken in connection with such contest
and, at its sole option, may pursue or forgo any and all administrative
appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct the
Executive to pay the tax claimed and sue for a refund or contest the claim
-42-
in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court
of initial jurisdiction and in one or more appellate courts, as the
Executive shall determine; provided, further, that if the Company directs
the Executive to pay such claim and sue for a refund, the Company shall
advance the amount of such payment to the Executive, on an interest-free
basis, and shall indemnify and hold the Executive harmless on an after-tax
basis, from any Excise Tax or income tax (including interest or penalties
with respect thereto) imposed with respect to such advance or with respect
to any imputed income with respect to such advance; and further provided
that any extension of the statute of limitations relating to payment of
taxes for the taxable year of the Executive with respect to which such
contested amount is claimed to be due is limited solely to such contested
amount. In addition, the Company's control of the contest shall be limited
to issues with respect to which a Gross-Up Payment would be payable
hereunder and the Executive shall be entitled to settle or contest, as the
case may be, any other issue raised by the Internal Revenue Service or any
other taxing authority.
(v) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 6(d)(iv), the Executive becomes
entitled to receive any refund with respect to such claim, the Executive
shall (subject to the Company's complying with the requirements of Section
6(d)(iv)) promptly pay to the Company the amount of such refund (together
with any interest paid or credited thereon after taxes applicable thereto).
If after the receipt by the Executive of an amount advanced by the Company
pursuant to Section 6(d)(iv), a determination is made that the Executive
shall not be entitled to any refund with respect to such claim and the
Company does not notify the Executive in writing of its intent to contest
such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.
7. Compensation Upon Termination for Cause. In the event of
the termination of the Executive's employment at any time during the
Employment Period by the Company for Cause, this Agreement shall terminate
and the Executive's Base Salary and all other benefits to which the
Executive may be entitled under this Agreement, excluding any unpaid
benefits to which the Executive has already become entitled under Sections
6(b) and (c), if a Change in Control has occurred prior to the date of such
termination for Cause, will terminate upon the date of termination of the
Executive's employment.
8. Compensation Upon Termination for Disability or Death. In
the event of the termination of the Executive's employment at any time
during the Employment Period by the Company for Disability or due to the
Executive's death, this Agreement shall terminate and the Company shall pay
to the Executive, or the Executive's legal representative, if applicable,
an amount equal to one-half of the Executive's Base Salary in effect as of
the date of such termination of employment, provided that such death or
Disability payment shall be payable over a six-month period in equal
installments in accordance with the Company's regular payroll practices for
-43-
executives. If such Disability or death occurs on or after the date of a
Change in Control, the Executive (or the Executive's legal representative,
if applicable) shall remain entitled to receive any then unpaid benefits
provided by Sections 6(b) and (c).
9. Compensation Upon Termination by the Company Other Than for
Cause, Disability or Death. The Company may terminate the Executive's
employment hereunder other than for Cause, Disability or the Executive's
death. If the Company so terminates the Executive's employment, following
such termination the Company shall continue to pay the Executive the Base
Salary in effect as of the effective date of such termination for a period
of two years (the "Continuation Period"). Such Base Salary shall be
payable during the Continuation Period in equal installments in accordance
with the Company's regular payroll practices for executives.
In addition, (1) during the Continuation Period the Company, at
its cost, shall provide or arrange to provide the Executive (and the
Executive's dependents) with health insurance coverages and benefits
substantially similar to those which the Executive (and the Executive's
dependents) were receiving under the health plans of the Company
immediately prior to the Notice of Termination; however, any such health
benefits to which the Executive (or the Executive's dependents) would
otherwise receive pursuant hereto shall be secondary to (reduced by) any
health insurance benefits received by the Executive (or the Executive's
dependents) during the Continuation Period under any other employer's group
health plan(s), and (2) in the event that during the Continuation Period
the Executive moves from the metropolitan area in which the Executive's
principal residence is located at the date of such termination of
employment, the Company shall promptly purchase from the Executive for cash
(in a single payment) the Executive's principal residence (if owned by the
Executive) for an amount equal to the greater of (i) the fair market value
of such residence as determined by a member of the Society of Real Estate
Appraisers designated by the Executive and reasonably satisfactory to the
Company and (ii) the Executive's tax basis in such residence (the "Fair
Market Value").
10. Confidentiality. Except as required in the performance of
the Executive's duties to the Company, or as authorized in writing by the
Company, the Executive will not, directly or indirectly, divulge, disclose
or communicate during the Employment Period or thereafter, any information,
knowledge or data not theretofore publicly known and in the public domain
which the Executive may obtain during the Employment Period concerning the
Company or any of its subsidiaries or affiliates and relating to its or
their business, processes, trade secrets, customers or finances. All
reports, documents and other writings relating to the Company's business
which are prepared or created by the Executive or which may come into the
Executive's possession during the Employment Period are the property of the
Company, as the case may be, and shall be retained by the Executive in
trust in a fiduciary capacity for the sole benefit of the Company, and upon
termination of the Executive's employment by the Company shall be delivered
to or remain in the possession of the Company, as the case may be.
11. Notice of Termination. Any purported termination of the
Executive's employment by the Company shall be communicated to the
-44-
Executive by written Notice of Termination, which notice shall state the
specific termination provision in this Agreement relied upon and shall also
set forth in reasonable detail the facts and circumstances claimed to
provide the basis for the Executive's termination under the provision
indicated. Within 15 days after any Notice of Termination is received, the
Executive may provide notice to the Company that a dispute exists
concerning the Executive's termination. Notwithstanding the pendency of
any such dispute, the Company will continue to pay to the Executive the
full compensation in effect when the notice giving rise to the dispute was
given and continue the Executive as a participant in all perquisites,
compensation and employee benefit plans in which the Executive was
participating when the notice giving rise to the dispute was given, until
the dispute is finally resolved, but in no event past the expiration date
of the Employment Period, except as required by the terms of any such
employee benefit plan or applicable law.
12. Notices. All notices and communications provided for in
this Agreement shall be in writing and shall be deemed to have been duly
given when delivered by United States registered or certified mail, return
receipt requested, with postage thereon fully prepaid. All such
communications shall be addressed as follows, except that notice of change
of address shall be effective only upon receipt:
If to the Company, at:
1600 Kanawha, Valley Building
Charleston, West Virginia 25301
Attention: Chairman of the Board
If to the Executive, at:
337 Southpointe Drive
Charleston, West Virginia 25314
13. Miscellaneous.
(a) No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Executive, a duly authorized officer of the Company,
and a duly authorized member of the Board. No waiver of any party hereto
at any time of the breach of, or lack of compliance with, any conditions or
provisions of this Agreement shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or
subsequent time.
(b) No agreements or representations, oral or otherwise, express
or implied, with respect to the subject matter hereof have been made by any
party which are not set forth expressly in this Agreement.
(c) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, devises
and legatees. If the Executive should die while any amounts or benefits
are still payable to the Executive hereunder, all such amounts or benefits,
-45-
unless otherwise provided herein, shall continue to be paid or provided in
accordance with the terms of this Agreement to the Executive's devisee,
legatee, or other designee or, if there be no such designee, to the
Executive's estate.
(d) The Executive shall not be required to mitigate the amount
of any payment or benefit provided for in this Agreement by seeking other
employment or otherwise and no amount payable under this Agreement shall be
reduced by the Executive's acceptance of employment with another person
after the date of termination. Further, the Company's obligations to make
the payments provided for in this Agreement and otherwise to perform their
obligations hereunder shall not be affected by any set off, counterclaim,
recoupment, defense or other claim, rights or action that the Company may
have against the Executive.
(e) Nothing in this Agreement shall prevent or limit the
Executive's participation in any perquisite, employee benefit plans, bonus,
stock, incentive or other similar plan or program provided by the Company
in which the Executive currently participates or may qualify to participate
in the future, nor shall anything herein limit or otherwise adversely
affect any rights the Executive may have under any such plan, program or
arrangement.
14. Arbitration. The Executive shall be permitted (but not
required) to elect that any dispute or controversy arising under or in
connection with this Agreement be settled by arbitration in Charleston,
West Virginia, in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's
award in any court having jurisdiction. All legal fees and costs incurred
by the Executive in connection with the resolution of any dispute or
controversy under or in connection with this Agreement shall be reimbursed
by the Company as bills for such services are presented by the Executive to
the Company. The Company shall indemnify and hold the Executive harmless,
on an after-tax basis, from any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed on the Executive with
respect to such reimbursements or payments by the Company.
15. Validity. The invalidity and unenforceability of any
provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain
in full force and effect.
16. Applicable Law. This Agreement shall be interpreted and
enforced in accordance with the laws of the State of West Virginia.
IN WITNESS WHEREOF, the parties have executed this Agreement
effective for all purposes as provided above.
EXECUTIVE
By: /s/W. Merwyn Pittman
-46-
ALLEGHENY & WESTERN ENERGY
CORPORATION
By: /s/John G. McMillian
Name: John G. McMillian
Title: Chairman of the Board, President
and Chief Executive Officer
-47-
ATTACHMENT A
The Executive shall continue to serve as the Vice President,
Treasurer and Chief Financial Officer of the Company and shall render such
services to the Company and/or affiliated entities of the Company as are
necessary for him to perform his duties and fulfill his responsibilities
hereunder. The Executive shall perform such other duties and fulfill such
other responsibilities as may reasonably be assigned to him by the
Company's Board of Directors. The Executive shall devote his full business
time, effort and energies to the performance of his duties and fulfillment
of his responsibilities for the Company, and will faithfully discharge his
duties in furtherance of the interest of the Company.
-48-
ATTACHMENT B
The Executive's Base Salary shall be $135,000. However,
beginning January 1, 1994, and on each January 1st thereafter during the
Employment Period, the amount of the Executive's Base Salary shall be
increased by an amount not less than the product of (1) the Executive's
Base Salary for the prior year and (2) the sum of (a) 2% and (b) the
percentage increase in base compensation established for exempt employees
who have performed at the mid-point of the "above-average" range in the
Mountaineer Gas Company's Compensation Guidelines for the applicable year.
(In the event Mountaineer Gas Company ceases to be a subsidiary of the
Company, the increase in the consumer price index ("CPI") for the prior
year shall be used.) The Board may increase the Executive's Base Salary at
such other time or times, and in such amounts, as it deems appropriate.
The Executive's Base Salary as in effect from time to time may not be
decreased.
-49-
ATTACHMENT C
1. Aggregate Supplemental Benefit - $625,000.
2. Annual Supplemental Benefit - $62,500.
-50-
EXHIBIT
NUMBER DESCRIPTION
10.24 Supplemental Retirement Benefit Plan
Agreements between John G. McMillian, Richard
L. Grant, Michael S. Fletcher and W. Merwyn
Pittman, individually, and Allegheny &
Western Energy Corporation.
-51-
ALLEGHENY & WESTERN ENERGY CORPORATION
KEY EXECUTIVES' SUPPLEMENTAL RETIREMENT BENEFIT PLAN AGREEMENT
JOHN McMILLIAN
-1-
KEY EXECUTIVES' SUPPLEMENTAL RETIREMENT BENEFIT PLAN AGREEMENT
This Agreement is entered into as of December 1, 1992 by and between
Allegheny & Western Energy Corporation, a corporation organized and
existing under the laws of the State of West Virginia (the "Corporation"),
and John McMillian (the "Employee").
W I T N E S S E T H :
WHEREAS, the Employee has been employed by the Corporation or a
Participating Subsidiary (as defined in the Plan, as defined below) and has
discharged his duties in a capable and efficient manner to the benefit of
the Corporation; and
WHEREAS, it is the desire of the Corporation to retain the services of
the Employee; and
WHEREAS, the Employee is willing to continue in the employ of the
Corporation or a Participating Subsidiary, as the case may be, provided the
Corporation agrees to provide certain benefits hereinafter described in
accordance with the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual promises and covenants
herein contained as well as other good and valuable consideration, it is
agreed as follows:
1. The Employee is hereby designated a Participant under the
Corporation's Key Executives' Supplemental Retirement Benefit Plan (the
"Plan"), a copy of which is attached hereto and incorporated herein by
reference, and the Employee and the Corporation agree to the terms of the
Plan and to be bound thereby. The Corporation represents that the Employee
has satisfied the qualifications for participation in the Plan set forth in
Article III of the Plan.
2. For purposes of Section 2.7 of the Plan as applicable to the
Employee, the age for the Employee's retirement shall be seventy-one (71).
3. For purposes of Section 4.1 of the Plan as applicable to the
Employee, (a) the "Designated Amount" shall be $100,000, (b) the
"Designated Period" shall be a period commencing on the date the
Supplemental Retirement Benefit is first payable (the "SRB Start Date") and
ending on the 10th anniversary of such SRB Start Date, and (c) a
"Designated Year" shall be a one year period ending on any anniversary of
the commencement date of the Designated Period.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
-2-
ALLEGHENY & WESTERN ENERGY CORPORATION
By /s/John McMillian
/s/John McMillian
John McMillian
-3-
ALLEGHENY & WESTERN ENERGY CORPORATION
KEY EXECUTIVES' SUPPLEMENTAL RETIREMENT BENEFIT PLAN
ARTICLE I
PURPOSE
The purpose of the Allegheny & Western Energy Corporation Key
Executives' Supplemental Retirement Benefit Plan (the"Plan") is to provide
supplemental retirement benefits for a select group of management or highly
compensated employees of Allegheny & Western Energy Corporation and certain
of its subsidiaries which participate in the Plan. It is intended that the
Plan will aid in retaining and attracting employees of exceptional ability
by providing such individuals with these benefits. This Plan shall be
effective as of December 1, 1992.
ARTICLE II
DEFINITIONS
For the purpose of this Plan, the following terms shall have the
meanings indicated, unless the context clearly indicates otherwise:
2.1 BENEFICIARY. "Beneficiary" means any person or entity entitled
under Article VI to receive Plan Benefits after a Participant's death.
2.2 BOARD. "Board" means the Board of Directors of the Corporation.
2.3 COMMITTEE. "Committee" means the Benefit Committee appointed by
the Board to administer the Plan for the employees of the Employers.
2.4 DEATH BENEFITS. "Death Benefits" means the benefits determined
under Article V of this Plan.
2.5 DEFERRED RETIREMENT DATE. "Deferred Retirement Date" means the
first day of the calendar month coincident with or next following the date
occurring after the Normal Retirement Date and on which the Participant and
the Participant's Employer have agreed the Participant shall separate from
employment with such Employer (and all other Employers) as a result of
having attained a specified age.
2.6 EMPLOYER. "Employer" means Allegheny & Western Energy
Corporation, or any Participating Subsidiary, or any successor to the
business thereof. For purposes of this Plan, the Corporation and each
Participating Subsidiary shall be considered separate Employers, and each
separate corporation shall be treated as the Employer only with respect to
its own employees.
2.7 NORMAL RETIREMENT DATE. "Normal Retirement Date" means the first
day of the calendar month coincident with or next following the date on
-4-
which the Participant attains the age designated for his retirement in his
Participation Agreement.
2.8 PARTICIPANT. "Participant" means any individual who is
participating or has participated in this Plan pursuant to Article III.
2.9 PARTICIPATING SUBSIDIARY. "Participating Subsidiary" means
Mountaineer Gas Company or any other corporation with fifty percent (50%)
or more of its issued and outstanding voting stock directly or indirectly
owned by the Corporation and which elects to participate in the Plan.
2.10 PARTICIPATION AGREEMENT. "Participation Agreement" means the
agreement entered into by the Corporation and the Participant which, among
other things, evidences the agreement of such Participant and the
Corporation concerning such Participant's participation under the Plan.
2.11 PLAN BENEFITS. "Plan Benefits" means any Supplemental
Retirement Benefits or Death Benefits payable pursuant to Article IV or
Article V of this Plan.
2.12 PLAN YEAR. "Plan Year" means any period of 12 consecutive
months beginning on December 1 in any year and ending on the immediately
succeeding November 30.
2.13 RETIREMENT; RETIREMENT DATE. "Retirement" means separation of
the Participant from employment with the Participant's Employer (and all
other Employers) at the Participant's Normal Retirement Date or Deferred
Retirement Date, and "Retirement Date" means the date of such Retirement.
2.14 SUPPLEMENTAL RETIREMENT BENEFIT. "Supplemental Retirement
Benefit" means the benefit determined under Article IV of this Plan.
2.15 TERMINATION. "Termination" means separation of the Participant
from employment with the Employer (and all other Employers) for any reason
other than Retirement, death or Total and Permanent Disability.
2.16 TOTAL AND PERMANENT DISABILITY. "Total and Permanent
Disability" means a physical or mental condition which, in the sole opinion
of the Committee, prevents a Participant from satisfactorily performing the
Participant's usual duties for his Employer (and all other Employers) or
such other duties as such Employer may make available to the Participant.
For the purpose of this Section 2.16, in determining the availability of
other duties, the Committee will give due regard to the Participant's
position and earnings prior to the onset of such physical or mental
condition and, in otherwise determining whether a Participant is suffering
from Total and Permanent Disability, the Committee will take into
consideration the qualifications of such Participant by reason of training,
education and experience. The Committee's decision as to Total and
Permanent disability will be based upon medical reports and/or other
evidence satisfactory to the Committee.
ARTICLE III
PARTICIPATION
-5-
3.1 PARTICIPATION. Participation in the Plan shall be limited to
those employees of an Employer who are nominated for such participation by
the Chief Executive Officer (or, if none, the President) of such Employer
and approved for such participation by the Committee.
ARTICLE IV
SUPPLEMENTAL RETIREMENT BENEFITS; WITHHOLDING;
PAYMENTS TO GUARDIANS AND REPRESENTATIVES
4.1 SUPPLEMENTAL RETIREMENT BENEFIT. During the Designated Period
(as defined in the Participation Agreement for such Participant) commencing
upon a Participant's Normal Retirement Date, the Corporation shall pay to
such Participant a Supplemental Retirement Benefit. Such Supplemental
Retirement Benefit shall be an amount for each Designated Year (as defined
in the Participation Agreement for such Participant) equal to the
Designated Amount (as defined in the Participation Agreement for such
Participant), and such annual amount shall be paid in equal monthly
installments during such Designated Year. Notwithstanding the foregoing,
if the investment performance of the assets of the Plan is less than that
which is necessary to provide for Plan Benefits to the participants under
the Plan, the Designated Amount will be appropriately adjusted. The
payment of such Supplemental Retirement Benefit shall commence on the first
business day of the calendar month immediately following such Participant's
Normal Retirement Date and shall be paid thereafter (i) if the Basic Form
of Benefit Payment (as provided in Section 4.4) is in effect, on the first
business day of each calendar month thereafter during the Designated
Period, or (ii) if an Alternative Form of Benefit Payment (as provided in
Section 4.4) is in effect, on such dates as the Committee shall have
designated therefor.
4.2 DISABILITY. If a Participant separates from employment with his
Employer (and all other Employers) due to Total and Permanent Disability,
the Corporation shall pay to such Participant a Supplemental Retirement
Benefit as provided in Section 4.1 of this Plan except that the payment of
such Supplemental Retirement Benefit and the Designated Period shall
commence on the first business day of the calendar month immediately
following the date the Committee shall have issued its decision that such
Participant suffers from Total and Permanent Disability.
4.3 TERMINATION OF EMPLOYMENT. If a Participant shall voluntarily
terminate his employment with his Employer (and all other Employers) or if
his employment shall be terminated by the Board of Directors of such
Employer for cause (and he shall not be employed by another Employer), in
either case prior to the Participant's Normal Retirement Date or Total and
Permanent Disability, this Plan shall automatically terminate with respect
to such Participant and his Beneficiaries, the Corporation shall have no
further obligation under this Plan to such Participant and his
Beneficiaries, and such Participant and his Beneficiaries shall have no
rights to any Plan Benefits or other benefits or compensation under this
Plan. Notwithstanding the foregoing, if a Participant shall voluntarily
terminate his employment with his Employer (and all other Employers) or if
his employment shall be terminated by the Board of Directors of such
Employer for cause (and he shall not be employed by another Employer), in
-6-
either case prior to his Normal Retirement Date or Total and Permanent
Disability, and if, prior to such termination, a Change in Control
(hereinafter defined) of the Corporation (which, for purposes for this
Section 4.3, shall be deemed to include a Participating Subsidiary if such
Participant is employed by such Participating Subsidiary) shall have
occurred, then such Participant shall be entitled to receive, and the
Corporation shall pay to such Participant, a portion of such Participant's
Supplemental Retirement Benefit in an amount equal to the Designated
Percentage (hereinafter defined) of such Participant's Designated Amount
and otherwise at the times provided in, and subject to the other terms and
conditions of, Section 4.1 and Section 4.2 of this Plan. Notwithstanding
the immediately preceding sentence, however, if the benefits payable
pursuant to the immediately preceding sentence, either alone or together
with other payments which such Participant has the right to receive either
directly or indirectly from his Employer or from the Corporation or any of
its subsidiaries, would constitute an excess parachute payment (the "Excess
Payment") under Section 280G of the Internal Revenue Code of 1986, as
amended, then the benefit payable pursuant to the immediately preceding
sentence shall be reduced (but not below zero) by the amount necessary to
prevent any such payments to such Participant from constituting an Excess
Payment, as determined in good faith by the Committee. As used in this
Section 4.3,
-7-
(a) a "Change in Control" of the Corporation shall mean and
shall be deemed to have occurred upon:
(1) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")) (a "Person"), of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of
25% or more of either (1) the then outstanding shares of
common stock of the Corporation (the "Outstanding
Corporation Common Stock") or (2) the combined voting power
of the then outstanding voting securities of the Corporation
entitled to vote generally in the election of directors (the
"Outstanding Corporation Voting Securities"); provided,
however, that the following acquisitions shall not
constitute a Change in Control: (w) any acquisition
directly from the Corporation (excluding an acquisition by
virtue of the exercise of a conversion privilege), (x) any
acquisition by the Corporation, (y) any acquisition by any
employee benefit plan(s) (or related trust(s)) sponsored or
maintained by the Corporation or any corporation controlled
by the Corporation, or (z) any acquisition by any
corporation pursuant to a reorganization, merger or
consolidation, if, immediately following such
reorganization, merger or consolidation, the conditions
described in clauses (1), (2) and (3) of subsection (iii) of
this paragraph are satisfied; or
(ii) Individuals who, as of the date of such
Participant's Participation Agreement, constitute the Board
(the "Incumbent Board"), cease for any reason to constitute
at least a majority of the Board; provided, however, that
any individual becoming a director subsequent to the date of
such Participation Agreement whose election, or nomination
for election by the Corporation's stockholders, was approved
by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though
such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of either
(1) an actual or threatened election contest (as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act), or an actual or threatened solicitation
of proxies or consents by or on behalf of a Person other
than the Board or (2) a plan or agreement to replace a
majority of the members of the Board then comprising the
Incumbent Board; or
(iii) Approval by the stockholders of the Corporation of
a reorganization, merger or consolidation, in each case
unless, immediately following such reorganization, merger or
consolidation, (1) more than 60% of, respectively, the then
outstanding shares of common stock of the corporation
resulting from such reorganization, merger or consolidation
(including, without limitation, a corporation which as a
-8-
result of such transaction owns the Corporation through one
or more subsidiaries) and the combined voting power of the
then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is
then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding
Corporation Common Stock and Outstanding Corporation Voting
Securities immediately prior to such reorganization, merger
or consolidation in substantially the same proportions as
their ownership, immediately prior to such reorganization,
merger or consolidation, of the Outstanding Corporation
Common Stock and Outstanding Corporation Voting Securities,
as the case may be, (2) no Person (excluding the
Corporation, any employee benefit plan(s) (or related
trust(s)) of the Corporation and/or its subsidiaries or such
corporation resulting from such reorganization, merger or
consolidation and any Person beneficially owning,
immediately prior to such reorganization, merger or
consolidation, directly or indirectly, 25% or more of the
Outstanding Corporation Common Stock or Outstanding
Corporation Voting Securities, as the case may be)
beneficially owns, directly or indirectly, 25% or more of,
respectively, the then outstanding shares of common stock of
the corporation resulting from such reorganization, merger
or consolidation or the combined voting power of the then
outstanding voting securities of such corporation entitled
to vote generally in the election of directors and (3) at
least a majority of the members of the board of directors of
the corporation resulting from such reorganization, merger
or consolidation were members of the Incumbent Board at the
time of the execution of the initial agreement providing for
such reorganization, merger or consolidation; or
(iv) Approval by the stockholders of the Corporation of
(1) a complete liquidation or dissolution of the Corporation
or (2) the sale or other disposition of all or substantially
all of the assets of the Corporation, other than to a
corporation, with respect to which immediately following
such sale or other disposition, (A) more than 60% of,
respectively, the then outstanding shares of common stock of
such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled
to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding
Corporation Common Stock and Outstanding Corporation Voting
Securities immediately prior to such sale or other
disposition in substantially the same proportion as their
ownership, immediately prior to such sale or other
disposition, of the Outstanding Corporation Common Stock and
Outstanding Corporation Voting Securities, as the case may
be, (B) no Person (excluding the Corporation and any
employee benefit plan (or related trust) of the Corporation
-9-
and/or its subsidiaries or such corporation and any Person
beneficially owning, immediately prior to such sale or other
disposition, directly or indirectly, 25% or more of the
Outstanding Corporation Common Stock or Outstanding
Corporation Voting Securities, as the case may be)
beneficially owns, directly or indirectly, 25% or more of,
respectively, the then outstanding shares of common stock of
such corporation or the combined voting power of the then
outstanding voting securities of such corporation entitled
to vote generally in the election of directors and (C) at
least a majority of the members of the board of directors of
such corporation were members of the Incumbent Board at the
time of the execution of the initial agreement or action of
the Board providing for such sale or other disposition of
assets of the Corporation.
(b) "Designated Percentage" means, with respect to a
Participant, the percentage obtained by dividing (1) an
amount equal to the excess of such Participant's age at the
time a Change in Control of the Corporation occurs over the
age of such Participant on the date of his Participation
Agreement by (2) an amount equal to the excess of such
Participant's age for his Retirement as set forth in his
Participation Agreement over the age of such Participant on
the date of his Participation Agreement.
4.4 FORM OF BENEFIT PAYMENT. The Supplemental Retirement Benefit
shall be paid in the form of the Basic Benefit provided below, unless the
Committee, in its sole discretion, selects an alternative method. Any
method requested by a Participant or a Beneficiary shall be considered by
the Committee, but shall not be binding. The Basic and Alternative Methods
of Payment are as follows:
(a) Basic Form of Benefit Payment. Equal monthly installments
of the Benefit over the Designated Period.
(b) Alternative Forms of Benefit Payment. Any other form as
determined by the Committee in its sole discretion.
4.5 WITHHOLDING AND PAYROLL TAXES WITH RESPECT TO PLAN BENEFITS. The
Corporation shall withhold from any payment of Plan Benefits any taxes
required to be withheld from a Participant's wages or such payment by law,
regulation or any governmental authority.
4.6 PAYMENT OF PLAN BENEFITS TO GUARDIANS AND REPRESENTATIVES. If a
Plan Benefit is payable to a minor, a person declared incompetent or a
person incapable of handling the disposition of property, the Committee may
direct payment of such Plan Benefit to the guardian, legal representative
or person having the care and custody of such minor, incompetent or
incapable person. The Committee may require such proof of incompetency,
minority, incapacity, guardianship or representation as it may deem
appropriate prior to distribution of the Plan Benefit. Such distribution
shall completely
-10-
discharge the Committee and the Corporation from all liability with respect
to such Plan Benefit.
ARTICLE V
DEATH BENEFITS
5.1 PRE-RETIREMENT DEATH BENEFIT. If a Participant dies while
employed by an Employer or prior to the Participant's Normal Retirement
Date while Totally and Permanently Disabled, the Corporation shall pay a
Death Benefit to the Participant's Beneficiary in an amount equal to the
Supplemental Retirement Benefit as specified in Section 4.1 of this Plan
except that, for purposes of the Death Benefit payable under this Section
5.1, (a) the "Designated Period" shall be deemed to be a period commencing
on the DB Start Date (as defined in Section 5.3(a) of this Plan) and ending
on the fourth anniversary of such DB Start Date, and (b) the Death Benefit
shall be paid as provided in Section 5.3(a) of this Plan. The Death
Benefit will be appropriately adjusted to reflect any Supplemental
Retirement Benefit paid to such Participant prior to his death.
5.2 POST-RETIREMENT DEATH BENEFIT. If a Participant dies after
Retirement, the Participant's Beneficiary shall continue to receive the
Supplemental Retirement Benefit until the end of the Designated Period as
provided in Section 4.1 of this Plan.
5.3 FORM OF DEATH BENEFIT PAYMENT.
(a) Pre-Retirement Death Benefit. The Death Benefit payable
under Section 5.1 of this Plan shall be paid by the
Corporation in the form of five annual payments, payable as
follows: The first annual payment shall be made on the
first business day (the "DB Start Date") of the calendar
month which occurs on or immediately after the sixtieth
(60th) day after the date of death of the Participant, and
the remaining annual payments shall be made on each of the
next four succeeding anniversaries of the DB Start Date.
(b) Post-Retirement Death Benefit. The Death Benefit payable
under Section 5.2 of this Plan shall be paid in the same
manner as the Supplemental Retirement Benefit was being paid
to the Participant.
ARTICLE VI
BENEFICIARY DESIGNATION
6.1 BENEFICIARY DESIGNATION. Each Participant shall have the right,
at any time, to designate one or more persons or entities as his
Beneficiary or Beneficiaries (both primary and contingent) to whom Death
Benefits shall be paid in the event of such Participant's death prior to
complete distribution to him of the Plan Benefits due under the Plan. Each
Beneficiary designation shall be in a written form prescribed by the
Committee and will be effective only when filed with the Committee during
such Participant's lifetime. Any Beneficiary designation shall be valid or
-11-
effective only as permitted under applicable law.
6.2 AMENDMENTS. Any Beneficiary designation may be changed by a
Participant without the consent of any designated Beneficiary by the filing
of a new Beneficiary designation with the Committee. The filing of a new
Beneficiary designation form will cancel all Beneficiary designations
previously filed.
6.3 NO BENEFICIARY DESIGNATION. If any Participant fails to
designate a Beneficiary in the manner provided above, or if the Beneficiary
designated by a deceased Participant predeceased the Participant, the
Committee, in its sole discretion, shall direct the Corporation to
distribute such Participant's Plan Benefits (or the balance thereof) as
follows:
(a) To the Participant's surviving spouse, if any; or
(b) If the Participant shall have no surviving spouse, then to
the Participant's children in equal shares by right of
representation; or
(c) If the Participant shall have no surviving spouse or
children, then to the Participant's estate.
6.4 EFFECT OF PAYMENT. Payment to the Beneficiary of a Participant
shall completely discharge the Corporation's obligations under this Plan to
such Participant or any claimant to any of the Plan Benefits of or through
such Participant or a Beneficiary of such Participant.
6.5 BENEFICIARY DESIGNATION BY BENEFICIARY; DEATH OF BENEFICIARY.
Any Beneficiary may designate one or more persons or entities as his
Beneficiary as if he were a Participant under Sections 6.1 and 6.2 of this
Plan. Following commencement of payment of Death Benefits, if the
Beneficiary designated by a deceased Participant dies before receiving
complete distribution of the Death Benefits, the Committee shall direct the
Corporation to distribute the balance of such Plan Benefits
(a) as designated by the Beneficiary in accordance with the
provisions of this Section 6.5 and Section 6.1 of this Plan;
or
(b) if the Beneficiary shall not have made such designation,
then to the Beneficiary's estate.
ARTICLE VII
ADMINISTRATION
7.1 COMMITTEE: DUTIES. This Plan shall be administered for each
Employer by the Committee. Members of the Committee may be Participants
under this Plan.
7.2 AGENTS. The Committee may appoint an individual to be the
Committee's agent with respect to the day-to-day administration of the
-12-
Plan. In addition, the Committee may, from time to time, employ other
agents and delegate to them such administrative duties as it sees fit, and
may from time to time consult with counsel who may be counsel to an
Employer.
7.3 BINDING EFFECT OF DECISIONS. The decision or action of the
Committee in respect of any question arising out of or in connection with
the administration, interpretation and application of this Plan or any
rules and regulations which may be promulgated hereunder shall be final and
binding upon all persons having an interest in this Plan.
7.4 INDEMNITY OF COMMITTEE. The Employers shall jointly and
severally indemnify and hold harmless each of the members of the Committee
against any and all claims, losses, damages, expenses or liabilities
arising from any action or failure to act with respect to this Plan, except
in the case of gross negligence or willful misconduct by the Committee or
such member.
ARTICLE VIII
CLAIMS PROCEDURE
8.1 CLAIM. Any person claiming a benefit, requesting an
interpretation or ruling, or requesting information under the Plan shall
present the request in writing to the Committee which shall respond in
writing as soon as practicable.
8.2 DENIAL OF CLAIM. If the claim or request is denied, the written
notice of denial shall be made within ninety (90) days of the date of
receipt of such claim or request by the Committee and shall state:
(a) The reason for denial, with specific reference to the Plan
provisions on which the denial is based.
(b) A description of any additional material or information
required and an explanation of why it is necessary.
(c) An explanation of the Plan's claim review procedure.
8.3 REVIEW OF CLAIM. Any person whose claim or request is denied or
who has not received a response within ninety (90) days may request review
by notice given in writing to the Committee within sixty (60) days of
receiving a response or one hundred fifty (150) days from the date the
claim was received by the Committee. The claim or request shall be
reviewed by the Committee who may, but shall not be required to, grant the
claimant a hearing. On review, the claimant may have representation,
examine pertinent documents, and submit issues and comments in writing.
8.4 FINAL DECISION. The decision on review shall normally be made
within sixty (60) days after the Committee's receipt of a request for
review. If an extension of time is required for a hearing or other special
circumstances, the claimant shall be notified and the time limit shall be
one hundred twenty (120) days after the Committee's receipt of a request
for review. The decision shall be in writing and shall state the reason
-13-
and the relevant plan provisions. All decisions on review shall be final
and bind all parties concerned.
ARTICLE IX
AMENDMENT OR TERMINATION OF PLAN
9.1 AMENDMENT OR TERMINATION. The Board may, at any time and in its
sole discretion, terminate or amend this Plan or any Plan Benefits in whole
or in part and without obligation or liability to any Participant,
Beneficiary or other person (including without limitation with respect to
any Plan Benefits of (a) any Participant whose Retirement Date (or, with
respect to the Supplemental Retirement Benefit payable pursuant to Section
4.1, any Participant whose Normal Retirement Date) did not precede such
termination or amendment, (b) any Participant as to whom the Committee had
not, prior to such termination or amendment, issued a decision that such
Participant suffered from Total and Permanent Disability, and (c) any
Beneficiary of a Participant whose death did not precede such termination
or amendment); provided, however, no such termination or amendment shall
adversely affect the Plan Benefits of any Participant whose Retirement Date
(or, with respect to the Supplemental Retirement Benefit payable pursuant
to Section 4.1, any Participant whose Normal Retirement Date) preceded such
termination or amendment, the Plan Benefits of any Participant as to whom
the Committee had, prior to such termination or amendment, issued a
decision that such Participant suffered from Total and Permanent
Disability, or the Death Benefits of any Beneficiary of a Participant who
died prior to such termination or amendment.
9.2 SUCCESSOR. The provisions of this Plan shall be binding upon and
inure to the benefit of any successor or assign of the Corporation. The
term "successor" as used herein shall include any corporate or other
business entity which shall, whether by merger, consolidation, purchase or
otherwise, acquire all or substantially all of the business and assets of
the Corporation, and successors of any such corporation or other business
entity.
ARTICLE X
MISCELLANEOUS
10.1 UNSECURED GENERAL CREDITOR. Benefits to be provided under this
Plan are unfunded obligations of the Corporation. Participants and their
Beneficiaries, heirs, successors and assigns shall have no secured interest
or claim in any property or assets of the Corporation or any other
Employer, nor shall they be beneficiaries of, or have any rights, claims or
interests in any life insurance policies, annuity contracts or the proceeds
therefrom owned or which may be acquired by the Corporation or any other
Employer (collectively, "Policies"). Such Policies or other assets of the
Corporation or any other Employer shall not be held under any trust for the
benefit of Participants, their Beneficiaries, heirs, successors or assigns,
or be considered in any way as collateral security for the fulfilling of
the obligations of the Corporation under this Plan.
-14-
10.2 CAPTIONS. The captions of the articles, sections and paragraphs
of this Plan are for convenience only and shall not control or affect the
meaning or construction of any of its provisions.
10.3 GOVERNING LAW. The provisions of this Plan shall be construed
and interpreted according to the law of the State of West Virginia without
application of principles of conflicts or choice of law.
10.4 SEVERABILITY. If any provision of this Plan or the application
of any provision hereof to any person or circumstance is held invalid, the
remainder of this Plan and the application of such provision to other
persons or circumstances shall not be affected.
10.5 NOTICE. Any notice or filing required or permitted to be given
to the Committee under this Plan shall be sufficient if in writing and hand
delivered, or sent by registered or certified mail, to any member of the
Committee, the President of the Corporation or the Participant's Employer,
or the Statutory Agent of the Corporation or such Employer. Such notice
shall be deemed given as of the date of delivery or, if delivery is made by
mail, as of the earlier of receipt or three (3) days following the date
shown on the postmark.
-15-
ALLEGHENY & WESTERN ENERGY CORPORATION
KEY EXECUTIVES' SUPPLEMENTAL RETIREMENT BENEFIT PLAN AGREEMENT
-16-
KEY EXECUTIVES' SUPPLEMENTAL RETIREMENT BENEFIT PLAN AGREEMENT
This Agreement is entered into as of December 1, 1992 by and between
Allegheny & Western Energy Corporation, a corporation organized and
existing under the laws of the State of West Virginia (the "Corporation"),
and Richard Grant (the "Employee").
W I T N E S S E T H :
WHEREAS, the Employee has been employed by the Corporation or a
Participating Subsidiary (as defined in the Plan, as defined below) and has
discharged his duties in a capable and efficient manner to the benefit of
the Corporation; and
WHEREAS, it is the desire of the Corporation to retain the services of
the Employee; and
WHEREAS, the Employee is willing to continue in the employ of the
Corporation or a Participating Subsidiary, as the case may be, provided the
Corporation agrees to provide certain benefits hereinafter described in
accordance with the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual promises and covenants
herein contained as well as other good and valuable consideration, it is
agreed as follows:
1. The Employee is hereby designated a Participant under the
Corporation's Key Executives' Supplemental Retirement Benefit Plan (the
"Plan"), a copy of which is attached hereto and incorporated herein by
reference, and the Employee and the Corporation agree to the terms of the
Plan and to be bound thereby. The Corporation represents that the Employee
has satisfied the qualifications for participation in the Plan set forth in
Article III of the Plan.
2. For purposes of Section 2.7 of the Plan as applicable to the
Employee, the age for the Employee's retirement shall be fifty-five (55).
3. For purposes of Section 4.1 of the Plan as applicable to the
Employee, (a) the "Designated Amount" shall be $220,000, (b) the
"Designated Period" shall be a period commencing on the date the
Supplemental Retirement Benefit is first payable (the "SRB Start Date") and
ending on the 15th anniversary of such SRB Start Date, and (c) a
"Designated Year" shall be a one year period ending on any anniversary of
the commencement date of the Designated Period.
-17-
4. Notwithstanding the provisions of Section 4.3 of the Plan, in the
event of a Change in Control (as defined in the Plan):
(a) The Employee shall be automatically 100% vested under the
Plan and shall be entitled to the benefits and rights provided in Section
6(c) of the Amended and Restated Employment Agreement dated as of September
14, 1993 between the Employee and the Corporation (the "Employment
Agreement"); and
(b) The provisions of Section 6(d) of the Employment Agreement
shall apply if any of the benefits payable to the Employee pursuant to the
Plan upon a Change in Control or a "change in control" as defined in
Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"),
would constitute an "excess parachute payment" within the meaning of such
Section 280G or would be subject to the excise tax imposed by Section 4999
of the Code.
-18-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
ALLEGHENY & WESTERN ENERGY CORPORATION
By /s/John McMillian
/s/Richard Grant
Richard Grant
-19-
ALLEGHENY & WESTERN ENERGY CORPORATION
KEY EXECUTIVES' SUPPLEMENTAL RETIREMENT BENEFIT PLAN
ARTICLE I
PURPOSE
The purpose of the Allegheny & Western Energy Corporation Key
Executives' Supplemental Retirement Benefit Plan (the"Plan") is to provide
supplemental retirement benefits for a select group of management or highly
compensated employees of Allegheny & Western Energy Corporation and certain
of its subsidiaries which participate in the Plan. It is intended that the
Plan will aid in retaining and attracting employees of exceptional ability
by providing such individuals with these benefits. This Plan shall be
effective as of December 1, 1992.
ARTICLE II
DEFINITIONS
For the purpose of this Plan, the following terms shall have the
meanings indicated, unless the context clearly indicates otherwise:
2.1 BENEFICIARY. "Beneficiary" means any person or entity entitled
under Article VI to receive Plan Benefits after a Participant's death.
2.2 BOARD. "Board" means the Board of Directors of the Corporation.
2.3 COMMITTEE. "Committee" means the Benefit Committee appointed by
the Board to administer the Plan for the employees of the Employers.
2.4 DEATH BENEFITS. "Death Benefits" means the benefits determined
under Article V of this Plan.
2.5 DEFERRED RETIREMENT DATE. "Deferred Retirement Date" means the
first day of the calendar month coincident with or next following the date
occurring after the Normal Retirement Date and on which the Participant and
the Participant's Employer have agreed the Participant shall separate from
employment with such Employer (and all other Employers) as a result of
having attained a specified age.
2.6 EMPLOYER. "Employer" means Allegheny & Western Energy
Corporation, or any Participating Subsidiary, or any successor to the
business thereof. For purposes of this Plan, the Corporation and each
Participating Subsidiary shall be considered separate Employers, and each
separate corporation shall be treated as the Employer only with respect to
its own employees.
2.7 NORMAL RETIREMENT DATE. "Normal Retirement Date" means the first
day of the calendar month coincident with or next following the date on
which the Participant attains the age designated for his retirement in his
Participation Agreement.
2.8 PARTICIPANT. "Participant" means any individual who is
participating or has participated in this Plan pursuant to Article III.
-20-
2.9 PARTICIPATING SUBSIDIARY. "Participating Subsidiary" means
Mountaineer Gas Company or any other corporation with fifty percent (50%)
or more of its issued and outstanding voting stock directly or indirectly
owned by the Corporation and which elects to participate in the Plan.
2.10 PARTICIPATION AGREEMENT. "Participation Agreement" means the
agreement entered into by the Corporation and the Participant which, among
other things, evidences the agreement of such Participant and the
Corporation concerning such Participant's participation under the Plan.
2.11 PLAN BENEFITS. "Plan Benefits" means any Supplemental
Retirement Benefits or Death Benefits payable pursuant to Article IV or
Article V of this Plan.
2.12 PLAN YEAR. "Plan Year" means any period of 12 consecutive
months beginning on December 1 in any year and ending on the immediately
succeeding November 30.
2.13 RETIREMENT; RETIREMENT DATE. "Retirement" means separation of
the Participant from employment with the Participant's Employer (and all
other Employers) at the Participant's Normal Retirement Date or Deferred
Retirement Date, and "Retirement Date" means the date of such Retirement.
2.14 SUPPLEMENTAL RETIREMENT BENEFIT. "Supplemental Retirement
Benefit" means the benefit determined under Article IV of this Plan.
2.15 TERMINATION. "Termination" means separation of the Participant
from employment with the Employer (and all other Employers) for any reason
other than Retirement, death or Total and Permanent Disability.
2.16 TOTAL AND PERMANENT DISABILITY. "Total and Permanent
Disability" means a physical or mental condition which, in the sole opinion
of the Committee, prevents a Participant from satisfactorily performing the
Participant's usual duties for his Employer (and all other Employers) or
such other duties as such Employer may make available to the Participant.
For the purpose of this Section 2.16, in determining the availability of
other duties, the Committee will give due regard to the Participant's
position and earnings prior to the onset of such physical or mental
condition and, in otherwise determining whether a Participant is suffering
from Total and Permanent Disability, the Committee will take into
consideration the qualifications of such Participant by reason of training,
education and experience. The Committee's decision as to Total and
Permanent disability will be based upon medical reports and/or other
evidence satisfactory to the Committee.
ARTICLE III
PARTICIPATION
3.1 PARTICIPATION. Participation in the Plan shall be limited to
those employees of an Employer who are nominated for such participation by
the Chief Executive Officer (or, if none, the President) of such Employer
and approved for such participation by the Committee.
-21-
ARTICLE IV
SUPPLEMENTAL RETIREMENT BENEFITS; WITHHOLDING;
PAYMENTS TO GUARDIANS AND REPRESENTATIVES
4.1 SUPPLEMENTAL RETIREMENT BENEFIT. During the Designated Period
(as defined in the Participation Agreement for such Participant) commencing
upon a Participant's Normal Retirement Date, the Corporation shall pay to
such Participant a Supplemental Retirement Benefit. Such Supplemental
Retirement Benefit shall be an amount for each Designated Year (as defined
in the Participation Agreement for such Participant) equal to the
Designated Amount (as defined in the Participation Agreement for such
Participant), and such annual amount shall be paid in equal monthly
installments during such Designated Year. Notwithstanding the foregoing,
if the investment performance of the assets of the Plan is less than that
which is necessary to provide for Plan Benefits to the participants under
the Plan, the Designated Amount will be appropriately adjusted. The
payment of such Supplemental Retirement Benefit shall commence on the first
business day of the calendar month immediately following such Participant's
Normal Retirement Date and shall be paid thereafter (i) if the Basic Form
of Benefit Payment (as provided in Section 4.4) is in effect, on the first
business day of each calendar month thereafter during the Designated
Period, or (ii) if an Alternative Form of Benefit Payment (as provided in
Section 4.4) is in effect, on such dates as the Committee shall have
designated therefor.
4.2 DISABILITY. If a Participant separates from employment with his
Employer (and all other Employers) due to Total and Permanent Disability,
the Corporation shall pay to such Participant a Supplemental Retirement
Benefit as provided in Section 4.1 of this Plan except that the payment of
such Supplemental Retirement Benefit and the Designated Period shall
commence on the first business day of the calendar month immediately
following the date the Committee shall have issued its decision that such
Participant suffers from Total and Permanent Disability.
4.3 TERMINATION OF EMPLOYMENT. If a Participant shall voluntarily
terminate his employment with his Employer (and all other Employers) or if
his employment shall be terminated by the Board of Directors of such
Employer for cause (and he shall not be employed by another Employer), in
either case prior to the Participant's Normal Retirement Date or Total and
Permanent Disability, this Plan shall automatically terminate with respect
to such Participant and his Beneficiaries, the Corporation shall have no
further obligation under this Plan to such Participant and his
Beneficiaries, and such Participant and his Beneficiaries shall have no
rights to any Plan Benefits or other benefits or compensation under this
Plan. Notwithstanding the foregoing, if a Participant shall voluntarily
terminate his employment with his Employer (and all other Employers) or if
his employment shall be terminated by the Board of Directors of such
Employer for cause (and he shall not be employed by another Employer), in
either case prior to his Normal Retirement Date or Total and Permanent
Disability, and if, prior to such termination, a Change in Control
(hereinafter defined) of the Corporation (which, for purposes for this
Section 4.3, shall be deemed to include a Participating Subsidiary if such
Participant is employed by such Participating Subsidiary) shall have
occurred, then such Participant shall be entitled to receive, and the
-22-
Corporation shall pay to such Participant, a portion of such Participant's
Supplemental Retirement Benefit in an amount equal to the Designated
Percentage (hereinafter defined) of such Participant's Designated Amount
and otherwise at the times provided in, and subject to the other terms and
conditions of, Section 4.1 and Section 4.2 of this Plan. Notwithstanding
the immediately preceding sentence, however, if the benefits payable
pursuant to the immediately preceding sentence, either alone or together
with other payments which such Participant has the right to receive either
directly or indirectly from his Employer or from the Corporation or any of
its subsidiaries, would constitute an excess parachute payment (the "Excess
Payment") under Section 280G of the Internal Revenue Code of 1986, as
amended, then the benefit payable pursuant to the immediately preceding
sentence shall be reduced (but not below zero) by the amount necessary to
prevent any such payments to such Participant from constituting an Excess
Payment, as determined in good faith by the Committee. As used in this
Section 4.3,
-23-
(a) a "Change in Control" of the Corporation shall mean and
shall be deemed to have occurred upon:
(1) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")) (a "Person"), of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of
25% or more of either (1) the then outstanding shares of
common stock of the Corporation (the "Outstanding
Corporation Common Stock") or (2) the combined voting power
of the then outstanding voting securities of the Corporation
entitled to vote generally in the election of directors (the
"Outstanding Corporation Voting Securities"); provided,
however, that the following acquisitions shall not
constitute a Change in Control: (w) any acquisition
directly from the Corporation (excluding an acquisition by
virtue of the exercise of a conversion privilege), (x) any
acquisition by the Corporation, (y) any acquisition by any
employee benefit plan(s) (or related trust(s)) sponsored or
maintained by the Corporation or any corporation controlled
by the Corporation, or (z) any acquisition by any
corporation pursuant to a reorganization, merger or
consolidation, if, immediately following such
reorganization, merger or consolidation, the conditions
described in clauses (1), (2) and (3) of subsection (iii) of
this paragraph are satisfied; or
(ii) Individuals who, as of the date of such
Participant's Participation Agreement, constitute the Board
(the "Incumbent Board"), cease for any reason to constitute
at least a majority of the Board; provided, however, that
any individual becoming a director subsequent to the date of
such Participation Agreement whose election, or nomination
for election by the Corporation's stockholders, was approved
by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though
such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of either
(1) an actual or threatened election contest (as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act), or an actual or threatened solicitation
of proxies or consents by or on behalf of a Person other
than the Board or (2) a plan or agreement to replace a
majority of the members of the Board then comprising the
Incumbent Board; or
(iii) Approval by the stockholders of the Corporation of
a reorganization, merger or consolidation, in each case
unless, immediately following such reorganization, merger or
consolidation, (1) more than 60% of, respectively, the then
outstanding shares of common stock of the corporation
resulting from such reorganization, merger or consolidation
(including, without limitation, a corporation which as a
-24-
result of such transaction owns the Corporation through one
or more subsidiaries) and the combined voting power of the
then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is
then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding
Corporation Common Stock and Outstanding Corporation Voting
Securities immediately prior to such reorganization, merger
or consolidation in substantially the same proportions as
their ownership, immediately prior to such reorganization,
merger or consolidation, of the Outstanding Corporation
Common Stock and Outstanding Corporation Voting Securities,
as the case may be, (2) no Person (excluding the
Corporation, any employee benefit plan(s) (or related
trust(s)) of the Corporation and/or its subsidiaries or such
corporation resulting from such reorganization, merger or
consolidation and any Person beneficially owning,
immediately prior to such reorganization, merger or
consolidation, directly or indirectly, 25% or more of the
Outstanding Corporation Common Stock or Outstanding
Corporation Voting Securities, as the case may be)
beneficially owns, directly or indirectly, 25% or more of,
respectively, the then outstanding shares of common stock of
the corporation resulting from such reorganization, merger
or consolidation or the combined voting power of the then
outstanding voting securities of such corporation entitled
to vote generally in the election of directors and (3) at
least a majority of the members of the board of directors of
the corporation resulting from such reorganization, merger
or consolidation were members of the Incumbent Board at the
time of the execution of the initial agreement providing for
such reorganization, merger or consolidation; or
-25-
(iv) Approval by the stockholders of the Corporation of
(1) a complete liquidation or dissolution of the Corporation
or (2) the sale or other disposition of all or substantially
all of the assets of the Corporation, other than to a
corporation, with respect to which immediately following
such sale or other disposition, (A) more than 60% of,
respectively, the then outstanding shares of common stock of
such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled
to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding
Corporation Common Stock and Outstanding Corporation Voting
Securities immediately prior to such sale or other
disposition in substantially the same proportion as their
ownership, immediately prior to such sale or other
disposition, of the Outstanding Corporation Common Stock and
Outstanding Corporation Voting Securities, as the case may
be, (B) no Person (excluding the Corporation and any
employee benefit plan (or related trust) of the Corporation
and/or its subsidiaries or such corporation and any Person
beneficially owning, immediately prior to such sale or other
disposition, directly or indirectly, 25% or more of the
Outstanding Corporation Common Stock or Outstanding
Corporation Voting Securities, as the case may be)
beneficially owns, directly or indirectly, 25% or more of,
respectively, the then outstanding shares of common stock of
such corporation or the combined voting power of the then
outstanding voting securities of such corporation entitled
to vote generally in the election of directors and (C) at
least a majority of the members of the board of directors of
such corporation were members of the Incumbent Board at the
time of the execution of the initial agreement or action of
the Board providing for such sale or other disposition of
assets of the Corporation.
(b) "Designated Percentage" means, with respect to a
Participant, the percentage obtained by dividing (1) an
amount equal to the excess of such Participant's age at the
time a Change in Control of the Corporation occurs over the
age of such Participant on the date of his Participation
Agreement by (2) an amount equal to the excess of such
Participant's age for his Retirement as set forth in his
Participation Agreement over the age of such Participant on
the date of his Participation Agreement.
4.4 FORM OF BENEFIT PAYMENT. The Supplemental Retirement Benefit
shall be paid in the form of the Basic Benefit provided below, unless the
Committee, in its sole discretion, selects an alternative method. Any
method requested by a Participant or a Beneficiary shall be considered by
the Committee, but shall not be binding. The Basic and Alternative Methods
of Payment are as follows:
-26-
(a) Basic Form of Benefit Payment. Equal monthly installments
of the Benefit over the Designated Period.
(b) Alternative Forms of Benefit Payment. Any other form as
determined by the Committee in its sole discretion.
4.5 WITHHOLDING AND PAYROLL TAXES WITH RESPECT TO PLAN BENEFITS. The
Corporation shall withhold from any payment of Plan Benefits any taxes
required to be withheld from a Participant's wages or such payment by law,
regulation or any governmental authority.
4.6 PAYMENT OF PLAN BENEFITS TO GUARDIANS AND REPRESENTATIVES. If a
Plan Benefit is payable to a minor, a person declared incompetent or a
person incapable of handling the disposition of property, the Committee may
direct payment of such Plan Benefit to the guardian, legal representative
or person having the care and custody of such minor, incompetent or
incapable person. The Committee may require such proof of incompetency,
minority, incapacity, guardianship or representation as it may deem
appropriate prior to distribution of the Plan Benefit. Such distribution
shall completely
-27-
discharge the Committee and the Corporation from all liability with respect
to such Plan Benefit.
ARTICLE V
DEATH BENEFITS
5.1 PRE-RETIREMENT DEATH BENEFIT. If a Participant dies while
employed by an Employer or prior to the Participant's Normal Retirement
Date while Totally and Permanently Disabled, the Corporation shall pay a
Death Benefit to the Participant's Beneficiary in an amount equal to the
Supplemental Retirement Benefit as specified in Section 4.1 of this Plan
except that, for purposes of the Death Benefit payable under this Section
5.1, (a) the "Designated Period" shall be deemed to be a period commencing
on the DB Start Date (as defined in Section 5.3(a) of this Plan) and ending
on the fourth anniversary of such DB Start Date, and (b) the Death Benefit
shall be paid as provided in Section 5.3(a) of this Plan. The Death
Benefit will be appropriately adjusted to reflect any Supplemental
Retirement Benefit paid to such Participant prior to his death.
5.2 POST-RETIREMENT DEATH BENEFIT. If a Participant dies after
Retirement, the Participant's Beneficiary shall continue to receive the
Supplemental Retirement Benefit until the end of the Designated Period as
provided in Section 4.1 of this Plan.
5.3 FORM OF DEATH BENEFIT PAYMENT.
(a) Pre-Retirement Death Benefit. The Death Benefit payable
under Section 5.1 of this Plan shall be paid by the
Corporation in the form of five annual payments, payable as
follows: The first annual payment shall be made on the
first business day (the "DB Start Date") of the calendar
month which occurs on or immediately after the sixtieth
(60th) day after the date of death of the Participant, and
the remaining annual payments shall be made on each of the
next four succeeding anniversaries of the DB Start Date.
(b) Post-Retirement Death Benefit. The Death Benefit payable
under Section 5.2 of this Plan shall be paid in the same
manner as the Supplemental Retipement Benefit was being paid
to the Participant.
ARTICLE VI
BENEFICIARY DESIGNATION
6.1 BENEFICIARY DESIGNATION. Each Participant shall have the right,
at any time, to designate one or more persons or entities as his
Beneficiary or Beneficiaries (both primary and contingent) to whom Death
Benefits shall be paid in the event of such Participant's death prior to
complete distribution to him of the Plan Benefits due under the Plan. Each
Beneficiary designation shall be in a written form prescribed by the
Committee and will be effective only when filed with the Committee during
-28-
such Participant's lifetime. Any Beneficiary designation shall be valid or
effective only as permitted under applicable law.
6.2 AMENDMENTS. Any Beneficiary designation may be changed by a
Participant without the consent of any designated Beneficiary by the filing
of a new Beneficiary designation with the Committee. The filing of a new
Beneficiary designation form will cancel all Beneficiary designations
previously filed.
6.3 NO BENEFICIARY DESIGNATION. If any Participant fails to
designate a Beneficiary in the manner provided above, or if the Beneficiary
designated by a deceased Participant predeceased the Participant, the
Committee, in its sole discretion, shall direct the Corporation to
distribute such Participant's Plan Benefits (or the balance thereof) as
follows:
(a) To the Participant's surviving spouse, if any; or
(b) If the Participant shall have no surviving spouse, then to
the Participant's children in equal shares by right of
representation; or
(c) If the Participant shall have no surviving spouse or
children, then to the Participant's estate.
6.4 EFFECT OF PAYMENT. Payment to the Beneficiary of a Participant
shall completely discharge the Corporation's obligations under this Plan to
such Participant or any claimant to any of the Plan Benefits of or through
such Participant or a Beneficiary of such Participant.
6.5 BENEFICIARY DESIGNATION BY BENEFICIARY; DEATH OF BENEFICIARY.
Any Beneficiary may designate one or more persons or entities as his
Beneficiary as if he were a Participant under Sections 6.1 and 6.2 of this
Plan. Following commencement of payment of Death Benefits, if the
Beneficiary designated by a deceased Participant dies before receiving
complete distribution of the Death Benefits, the Committee shall direct the
Corporation to distribute the balance of such Plan Benefits
(a) as designated by the Beneficiary in accordance with the
provisions of this Section 6.5 and Section 6.1 of this Plan;
or
(b) if the Beneficiary shall not have made such designation,
then to the Beneficiary's estate.
ARTICLE VII
ADMINISTRATION
7.1 COMMITTEE: DUTIES. This Plan shall be administered for each
Employer by the Committee. Members of the Committee may be Participants
under this Plan.
-29-
7.2 AGENTS. The Committee may appoint an individual to be the
Committee's agent with respect to the day-to-day administration of the
Plan. In addition, the Committee may, from time to time, employ other
agents and delegate to them such administrative duties as it sees fit, and
may from time to time consult with counsel who may be counsel to an
Employer.
7.3 BINDING EFFECT OF DECISIONS. The decision or action of the
Committee in respect of any question arising out of or in connection with
the administration, interpretation and application of this Plan or any
rules and regulations which may be promulgated hereunder shall be final and
binding upon all persons having an interest in this Plan.
7.4 INDEMNITY OF COMMITTEE. The Employers shall jointly and
severally indemnify and hold harmless each of the members of the Committee
against any and all claims, losses, damages, expenses or liabilities
arising from any action or failure to act with respect to this Plan, except
in the case of gross negligence or willful misconduct by the Committee or
such member.
ARTICLE VIII
CLAIMS PROCEDURE
8.1 CLAIM. Any person claiming a benefit, requesting an
interpretation or ruling, or requesting information under the Plan shall
present the request in writing to the Committee which shall respond in
writing as soon as practicable.
8.2 DENIAL OF CLAIM. If the claim or request is denied, the written
notice of denial shall be made within ninety (90) days of the date of
receipt of such claim or request by the Committee and shall state:
(a) The reason for denial, with specific reference to the Plan
provisions on which the denial is based.
(b) A description of any additional material or information
required and an explanation of why it is necessary.
(c) An explanation of the Plan's claim review procedure.
8.3 REVIEW OF CLAIM. Any person whose claim or request is denied or
who has not received a response within ninety (90) days may request review
by notice given in writing to the Committee within sixty (60) days of
receiving a response or one hundred fifty (150) days from the date the
claim was received by the Committee. The claim or request shall be
reviewed by the Committee who may, but shall not be required to, grant the
claimant a hearing. On review, the claimant may have representation,
examine pertinent documents, and submit issues and comments in writing.
8.4 FINAL DECISION. The decision on review shall normally be made
within sixty (60) days after the Committee's receipt of a request for
review. If an extension of time is required for a hearing or other special
circumstances, the claimant shall be notified and the time limit shall be
-30-
one hundred twenty (120) days after the Committee's receipt of a request
for review. The decision shall be in writing and shall state the reason
and the relevant plan provisions. All decisions on review shall be final
and bind all parties concerned.
ARTICLE IX
AMENDMENT OR TERMINATION OF PLAN
9.1 AMENDMENT OR TERMINATION. The Board may, at any time and in its
sole discretion, terminate or amend this Plan or any Plan Benefits in whole
or in part and without obligation or liability to any Participant,
Beneficiary or other person (including without limitation with respect to
any Plan Benefits of (a) any Participant whose Retirement Date (or, with
respect to the Supplemental Retirement Benefit payable pursuant to Section
4.1, any Participant whose Normal Retirement Date) did not precede such
termination or amendment, (b) any Participant as to whom the Committee had
not, prior to such termination or amendment, issued a decision that such
Participant suffered from Total and Permanent Disability, and (c) any
Beneficiary of a Participant whose death did not precede such termination
or amendment); provided, however, no such termination or amendment shall
adversely affect the Plan Benefits of any Participant whose Retirement Date
(or, with respect to the Supplemental Retirement Benefit payable pursuant
to Section 4.1, any Participant whose Normal Retirement Date) preceded such
termination or amendment, the Plan Benefits of any Participant as to whom
the Committee had, prior to such termination or amendment, issued a
decision that such Participant suffered from Total and Permanent
Disability, or the Death Benefits of any Beneficiary of a Participant who
died prior to such termination or amendment.
9.2 SUCCESSOR. The provisions of this Plan shall be binding upon and
inure to the benefit of any successor or assign of the Corporation. The
term "successor" as used herein shall include any corporate or other
business entity which shall, whether by merger, consolidation, purchase or
otherwise, acquire all or substantially all of the business and assets of
the Corporation, and successors of any such corporation or other business
entity.
ARTICLE X
MISCELLANEOUS
10.1 UNSECURED GENERAL CREDITOR. Benefits to be provided under this
Plan are unfunded obligations of the Corporation. Participants and their
Beneficiaries, heirs, successors and assigns shall have no secured interest
or claim in any property or assets of the Corporation or any other
Employer, nor shall they be beneficiaries of, or have any rights, claims or
interests in any life insurance policies, annuity contracts or the proceeds
therefrom owned or which may be acquired by the Corporation or any other
Employer (collectively, "Policies"). Such Policies or other assets of the
Corporation or any other Employer shall not be held under any trust for the
benefit of Participants, their Beneficiaries, heirs, successors or assigns,
-31-
or be considered in any way as collateral security for the fulfilling of
the obligations of the Corporation under this Plan.
10.2 CAPTIONS. The captions of the articles, sections and paragraphs
of this Plan are for convenience only and shall not control or affect the
meaning or construction of any of its provisions.
10.3 GOVERNING LAW. The provisions of this Plan shall be construed
and interpreted according to the law of the State of West Virginia without
application of principles of conflicts or choice of law.
10.4 SEVERABILITY. If any provision of this Plan or the application
of any provision hereof to any person or circumstance is held invalid, the
remainder of this Plan and the application of such provision to other
persons or circumstances shall not be affected.
10.5 NOTICE. Any notice or filing required or permitted to be given
to the Committee under this Plan shall be sufficient if in writing and hand
delivered, or sent by registered or certified mail, to any member of the
Committee, the President of the Corporation or the Participant's Employer,
or the Statutory Agent of the Corporation or such Employer. Such notice
shall be deemed given as of the date of delivery or, if delivery is made by
mail, as of the earlier of receipt or three (3) days following the date
shown on the postmark.
-32-
ALLEGHENY & WESTERN ENERGY CORPORATION
KEY EXECUTIVES' SUPPLEMENTAL RETIREMENT BENEFIT PLAN AGREEMENT
-33-
KEY EXECUTIVES' SUPPLEMENTAL RETIREMENT BENEFIT PLAN AGREEMENT
This Agreement is entered into as of December 1, 1992 by and between
Allegheny & Western Energy Corporation, a corporation organized and
existing under the laws of the State of West Virginia (the "Corporation"),
and Michael Fletcher (the "Employee").
W I T N E S S E T H :
WHEREAS, the Employee has been employed by the Corporation or a
Participating Subsidiary (as defined in the Plan, as defined below) and has
discharged his duties in a capable and efficient manner to the benefit of
the Corporation; and
WHEREAS, it is the desire of the Corporation to retain the services of
the Employee; and
WHEREAS, the Employee is willing to continue in the employ of the
Corporation or a Participating Subsidiary, as the case may be, provided the
Corporation agrees to provide certain benefits hereinafter described in
accordance with the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual promises and covenants
herein contained as well as other good and valuable consideration, it is
agreed as follows:
1. The Employee is hereby designated a Participant under the
Corporation's Key Executives' Supplemental Retirement Benefit Plan (the
"Plan"), a copy of which is attached hereto and incorporated herein by
reference, and the Employee and the Corporation agree to the terms of the
Plan and to be bound thereby. The Corporation represents that the Employee
has satisfied the qualifications for participation in the Plan set forth in
Article III of the Plan.
2. For purposes of Section 2.7 of the Plan as applicable to the
Employee, the age for the Employee's retirement shall be sixty-five (65).
3. For purposes of Section 4.1 of the Plan as applicable to the
Employee, (a) the "Designated Amount" shall be $165,000, (b) the
"Designated Period" shall be a period commencing on the date the
Supplemental Retirement Benefit is first payable (the "SRB Start Date") and
ending on the 15th anniversary of such SRB Start Date, and (c) a
"Designated Year" shall be a one year period ending on any anniversary of
the commencement date of the Designated Period.
-34-
4. Notwithstanding the provisions of Section 4.3 of the Plan, in the
event of a Change in Control (as defined in the Plan):
(a) The Employee shall be automatically 100% vested under the
Plan and shall be entitled to the benefits and rights provided in Section
6(c) of the Amended and Restated Employment Agreement dated as of September
14, 1993 between the Employee and the Corporation (the "Employment
Agreement"); and
(b) The provisions of Section 6(d) of the Employment Agreement
shall apply if any of the benefits payable to the Employee pursuant to the
Plan upon a Change in Control or a "change in control" as defined in
Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"),
would constitute an "excess parachute payment" within the meaning of such
Section 280G or would be subject to the excise tax imposed by Section 4999
of the Code.
-35-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
ALLEGHENY & WESTERN ENERGY CORPORATION
By/s/John McMillian
/s/Michael Fletcher
Michael Fletcher
-36-
ALLEGHENY & WESTERN ENERGY CORPORATION
KEY EXECUTIVES' SUPPLEMENTAL RETIREMENT BENEFIT PLAN
ARTICLE I
PURPOSE
The purpose of the Allegheny & Western Energy Corporation Key
Executives' Supplemental Retirement Benefit Plan (the"Plan") is to provide
supplemental retirement benefits for a select group of management or highly
compensated employees of Allegheny & Western Energy Corporation and certain
of its subsidiaries which participate in the Plan. It is intended that the
Plan will aid in retaining and attracting employees of exceptional ability
by providing such individuals with these benefits. This Plan shall be
effective as of December 1, 1992.
ARTICLE II
DEFINITIONS
For the purpose of this Plan, the following terms shall have the
meanings indicated, unless the context clearly indicates otherwise:
2.1 BENEFICIARY. "Beneficiary" means any person or entity entitled
under Article VI to receive Plan Benefits after a Participant's death.
2.2 BOARD. "Board" means the Board of Directors of the Corporation.
2.3 COMMITTEE. "Committee" means the Benefit Committee appointed by
the Board to administer the Plan for the employees of the Employers.
2.4 DEATH BENEFITS. "Death Benefits" means the benefits determined
under Article V of this Plan.
2.5 DEFERRED RETIREMENT DATE. "Deferred Retirement Date" means the
first day of the calendar month coincident with or next following the date
occurring after the Normal Retirement Date and on which the Participant and
the Participant's Employer have agreed the Participant shall separate from
employment with such Employer (and all other Employers) as a result of
having attained a specified age.
2.6 EMPLOYER. "Employer" means Allegheny & Western Energy
Corporation, or any Participating Subsidiary, or any successor to the
business thereof. For purposes of this Plan, the Corporation and each
Participating Subsidiary shall be considered separate Employers, and each
separate corporation shall be treated as the Employer only with respect to
its own employees.
2.7 NORMAL RETIREMENT DATE. "Normal Retirement Date" means the first
day of the calendar month coincident with or next following the date on
which the Participant attains the age designated for his retirement in his
Participation Agreement.
2.8 PARTICIPANT. "Participant" means any individual who is
participating or has participated in this Plan pursuant to Article III.
-37-
2.9 PARTICIPATING SUBSIDIARY. "Participating Subsidiary" means
Mountaineer Gas Company or any other corporation with fifty percent (50%)
or more of its issued and outstanding voting stock directly or indirectly
owned by the Corporation and which elects to participate in the Plan.
2.10 PARTICIPATION AGREEMENT. "Participation Agreement" means the
agreement entered into by the Corporation and the Participant which, among
other things, evidences the agreement of such Participant and the
Corporation concerning such Participant's participation under the Plan.
2.11 PLAN BENEFITS. "Plan Benefits" means any Supplemental
Retirement Benefits or Death Benefits payable pursuant to Article IV or
Article V of this Plan.
2.12 PLAN YEAR. "Plan Year" means any period of 12 consecutive
months beginning on December 1 in any year and ending on the immediately
succeeding November 30.
2.13 RETIREMENT; RETIREMENT DATE. "Retirement" means separation of
the Participant from employment with the Participant's Employer (and all
other Employers) at the Participant's Normal Retirement Date or Deferred
Retirement Date, and "Retirement Date" means the date of such Retirement.
2.14 SUPPLEMENTAL RETIREMENT BENEFIT. "Supplemental Retirement
Benefit" means the benefit determined under Article IV of this Plan.
2.15 TERMINATION. "Termination" means separation of the Participant
from employment with the Employer (and all other Employers) for any reason
other than Retirement, death or Total and Permanent Disability.
2.16 TOTAL AND PERMANENT DISABILITY. "Total and Permanent
Disability" means a physical or mental condition which, in the sole opinion
of the Committee, prevents a Participant from satisfactorily performing the
Participant's usual duties for his Employer (and all other Employers) or
such other duties as such Employer may make available to the Participant.
For the purpose of this Section 2.16, in determining the availability of
other duties, the Committee will give due regard to the Participant's
position and earnings prior to the onset of such physical or mental
condition and, in otherwise determining whether a Participant is suffering
from Total and Permanent Disability, the Committee will take into
consideration the qualifications of such Participant by reason of training,
education and experience. The Committee's decision as to Total and
Permanent disability will be based upon medical reports and/or other
evidence satisfactory to the Committee.
ARTICLE III
PARTICIPATION
3.1 PARTICIPATION. Participation in the Plan shall be limited to
those employees of an Employer who are nominated for such participation by
the Chief Executive Officer (or, if none, the President) of such Employer
and approved for such participation by the Committee.
-38-
ARTICLE IV
SUPPLEMENTAL RETIREMENT BENEFITS; WITHHOLDING;
PAYMENTS TO GUARDIANS AND REPRESENTATIVES
4.1 SUPPLEMENTAL RETIREMENT BENEFIT. During the Designated Period
(as defined in the Participation Agreement for such Participant) commencing
upon a Participant's Normal Retirement Date, the Corporation shall pay to
such Participant a Supplemental Retirement Benefit. Such Supplemental
Retirement Benefit shall be an amount for each Designated Year (as defined
in the Participation Agreement for such Participant) equal to the
Designated Amount (as defined in the Participation Agreement for such
Participant), and such annual amount shall be paid in equal monthly
installments during such Designated Year. Notwithstanding the foregoing,
if the investment performance of the assets of the Plan is less than that
which is necessary to provide for Plan Benefits to the participants under
the Plan, the Designated Amount will be appropriately adjusted. The
payment of such Supplemental Retirement Benefit shall commence on the first
business day of the calendar month immediately following such Participant's
Normal Retirement Date and shall be paid thereafter (i) if the Basic Form
of Benefit Payment (as provided in Section 4.4) is in effect, on the first
business day of each calendar month thereafter during the Designated
Period, or (ii) if an Alternative Form of Benefit Payment (as provided in
Section 4.4) is in effect, on such dates as the Committee shall have
designated therefor.
4.2 DISABILITY. If a Participant separates from employment with his
Employer (and all other Employers) due to Total and Permanent Disability,
the Corporation shall pay to such Participant a Supplemental Retirement
Benefit as provided in Section 4.1 of this Plan except that the payment of
such Supplemental Retirement Benefit and the Designated Period shall
commence on the first business day of the calendar month immediately
following the date the Committee shall have issued its decision that such
Participant suffers from Total and Permanent Disability.
4.3 TERMINATION OF EMPLOYMENT. If a Participant shall voluntarily
terminate his employment with his Employer (and all other Employers) or if
his employment shall be terminated by the Board of Directors of such
Employer for cause (and he shall not be employed by another Employer), in
either case prior to the Participant's Normal Retirement Date or Total and
Permanent Disability, this Plan shall automatically terminate with respect
to such Participant and his Beneficiaries, the Corporation shall have no
further obligation under this Plan to such Participant and his
Beneficiaries, and such Participant and his Beneficiaries shall have no
rights to any Plan Benefits or other benefits or compensation under this
Plan. Notwithstanding the foregoing, if a Participant shall voluntarily
terminate his employment with his Employer (and all other Employers) or if
his employment shall be terminated by the Board of Directors of such
Employer for cause (and he shall not be employed by another Employer), in
either case prior to his Normal Retirement Date or Total and Permanent
Disability, and if, prior to such termination, a Change in Control
(hereinafter defined) of the Corporation (which, for purposes for this
Section 4.3, shall be deemed to include a Participating Subsidiary if such
Participant is employed by such Participating Subsidiary) shall have
occurred, then such Participant shall be entitled to receive, and the
-39-
Corporation shall pay to such Participant, a portion of such Participant's
Supplemental Retirement Benefit in an amount equal to the Designated
Percentage (hereinafter defined) of such Participant's Designated Amount
and otherwise at the times provided in, and subject to the other terms and
conditions of, Section 4.1 and Section 4.2 of this Plan. Notwithstanding
the immediately preceding sentence, however, if the benefits payable
pursuant to the immediately preceding sentence, either alone or together
with other payments which such Participant has the right to receive either
directly or indirectly from his Employer or from the Corporation or any of
its subsidiaries, would constitute an excess parachute payment (the "Excess
Payment") under Section 280G of the Internal Revenue Code of 1986, as
amended, then the benefit payable pursuant to the immediately preceding
sentence shall be reduced (but not below zero) by the amount necessary to
prevent any such payments to such Participant from constituting an Excess
Payment, as determined in good faith by the Committee. As used in this
Section 4.3,
-40-
(a) a "Change in Control" of the Corporation shall mean and
shall be deemed to have occurred upon:
(1) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")) (a "Person"), of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of
25% or more of either (1) the then outstanding shares of
common stock of the Corporation (the "Outstanding
Corporation Common Stock") or (2) the combined voting power
of the then outstanding voting securities of the Corporation
entitled to vote generally in the election of directors (the
"Outstanding Corporation Voting Securities"); provided,
however, that the following acquisitions shall not
constitute a Change in Control: (w) any acquisition
directly from the Corporation (excluding an acquisition by
virtue of the exercise of a conversion privilege), (x) any
acquisition by the Corporation, (y) any acquisition by any
employee benefit plan(s) (or related trust(s)) sponsored or
maintained by the Corporation or any corporation controlled
by the Corporation, or (z) any acquisition by any
corporation pursuant to a reorganization, merger or
consolidation, if, immediately following such
reorganization, merger or consolidation, the conditions
described in clauses (1), (2) and (3) of subsection (iii) of
this paragraph are satisfied; or
(ii) Individuals who, as of the date of such
Participant's Participation Agreement, constitute the Board
(the "Incumbent Board"), cease for any reason to constitute
at least a majority of the Board; provided, however, that
any individual becoming a director subsequent to the date of
such Participation Agreement whose election, or nomination
for election by the Corporation's stockholders, was approved
by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though
such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of either
(1) an actual or threatened election contest (as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act), or an actual or threatened solicitation
of proxies or consents by or on behalf of a Person other
than the Board or (2) a plan or agreement to replace a
majority of the members of the Board then comprising the
Incumbent Board; or
(iii) Approval by the stockholders of the Corporation of
a reorganization, merger or consolidation, in each case
unless, immediately following such reorganization, merger or
consolidation, (1) more than 60% of, respectively, the then
outstanding shares of common stock of the corporation
resulting from such reorganization, merger or consolidation
(including, without limitation, a corporation which as a
-41-
result of such transaction owns the Corporation through one
or more subsidiaries) and the combined voting power of the
then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is
then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding
Corporation Common Stock and Outstanding Corporation Voting
Securities immediately prior to such reorganization, merger
or consolidation in substantially the same proportions as
their ownership, immediately prior to such reorganization,
merger or consolidation, of the Outstanding Corporation
Common Stock and Outstanding Corporation Voting Securities,
as the case may be, (2) no Person (excluding the
Corporation, any employee benefit plan(s) (or related
trust(s)) of the Corporation and/or its subsidiaries or such
corporation resulting from such reorganization, merger or
consolidation and any Person beneficially owning,
immediately prior to such reorganization, merger or
consolidation, directly or indirectly, 25% or more of the
Outstanding Corporation Common Stock or Outstanding
Corporation Voting Securities, as the case may be)
beneficially owns, directly or indirectly, 25% or more of,
respectively, the then outstanding shares of common stock of
the corporation resulting from such reorganization, merger
or consolidation or the combined voting power of the then
outstanding voting securities of such corporation entitled
to vote generally in the election of directors and (3) at
least a majority of the members of the board of directors of
the corporation resulting from such reorganization, merger
or consolidation were members of the Incumbent Board at the
time of the execution of the initial agreement providing for
such reorganization, merger or consolidation; or
(iv) Approval by the stockholders of the Corporation of
(1) a complete liquidation or dissolution of the Corporation
or (2) the sale or other disposition of all or substantially
all of the assets of the Corporation, other than to a
corporation, with respect to which immediately following
such sale or other disposition, (A) more than 60% of,
respectively, the then outstanding shares of common stock of
such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled
to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding
Corporation Common Stock and Outstanding Corporation Voting
Securities immediately prior to such sale or other
disposition in substantially the same proportion as their
ownership, immediately prior to such sale or other
disposition, of the Outstanding Corporation Common Stock and
Outstanding Corporation Voting Securities, as the case may
be, (B) no Person (excluding the Corporation and any
employee benefit plan (or related trust) of the Corporation
-42-
and/or its subsidiaries or such corporation and any Person
beneficially owning, immediately prior to such sale or other
disposition, directly or indirectly, 25% or more of the
Outstanding Corporation Common Stock or Outstanding
Corporation Voting Securities, as the case may be)
beneficially owns, directly or indirectly, 25% or more of,
respectively, the then outstanding shares of common stock of
such corporation or the combined voting power of the then
outstanding voting securities of such corporation entitled
to vote generally in the election of directors and (C) at
least a majority of the members of the board of directors of
such corporation were members of the Incumbent Board at the
time of the execution of the initial agreement or action of
the Board providing for such sale or other disposition of
assets of the Corporation.
(b) "Designated Percentage" means, with respect to a
Participant, the percentage obtained by dividing (1) an
amount equal to the excess of such Participant's age at the
time a Change in Control of the Corporation occurs over the
age of such Participant on the date of his Participation
Agreement by (2) an amount equal to the excess of such
Participant's age for his Retirement as set forth in his
Participation Agreement over the age of such Participant on
the date of his Participation Agreement.
4.4 FORM OF BENEFIT PAYMENT. The Supplemental Retirement Benefit
shall be paid in the form of the Basic Benefit provided below, unless the
Committee, in its sole discretion, selects an alternative method. Any
method requested by a Participant or a Beneficiary shall be considered by
the Committee, but shall not be binding. The Basic and Alternative Methods
of Payment are as follows:
(a) Basic Form of Benefit Payment. Equal monthly installments
of the Benefit over the Designated Period.
(b) Alternative Forms of Benefit Payment. Any other form as
determined by the Committee in its sole discretion.
4.5 WITHHOLDING AND PAYROLL TAXES WITH RESPECT TO PLAN BENEFITS. The
Corporation shall withhold from any payment of Plan Benefits any taxes
required to be withheld from a Participant's wages or such payment by law,
regulation or any governmental authority.
4.6 PAYMENT OF PLAN BENEFITS TO GUARDIANS AND REPRESENTATIVES. If a
Plan Benefit is payable to a minor, a person declared incompetent or a
person incapable of handling the disposition of property, the Committee may
direct payment of such Plan Benefit to the guardian, legal representative
or person having the care and custody of such minor, incompetent or
incapable person. The Committee may require such proof of incompetency,
minority, incapacity, guardianship or representation as it may deem
appropriate prior to distribution of the Plan Benefit. Such distribution
shall completely
-43-
discharge the Committee and the Corporation from all liability with respect
to such Plan Benefit.
ARTICLE V
DEATH BENEFITS
5.1 PRE-RETIREMENT DEATH BENEFIT. If a Participant dies while
employed by an Employer or prior to the Participant's Normal Retirement
Date while Totally and Permanently Disabled, the Corporation shall pay a
Death Benefit to the Participant's Beneficiary in an amount equal to the
Supplemental Retirement Benefit as specified in Section 4.1 of this Plan
except that, for purposes of the Death Benefit payable under this Section
5.1, (a) the "Designated Period" shall be deemed to be a period commencing
on the DB Start Date (as defined in Section 5.3(a) of this Plan) and ending
on the fourth anniversary of such DB Start Date, and (b) the Death Benefit
shall be paid as provided in Section 5.3(a) of this Plan. The Death
Benefit will be appropriately adjusted to reflect any Supplemental
Retirement Benefit paid to such Participant prior to his death.
5.2 POST-RETIREMENT DEATH BENEFIT. If a Participant dies after
Retirement, the Participant's Beneficiary shall continue to receive the
Supplemental Retirement Benefit until the end of the Designated Period as
provided in Section 4.1 of this Plan.
5.3 FORM OF DEATH BENEFIT PAYMENT.
(a) Pre-Retirement Death Benefit. The Death Benefit payable
under Section 5.1 of this Plan shall be paid by the
Corporation in the form of five annual payments, payable as
follows: The first annual payment shall be made on the
first business day (the "DB Start Date") of the calendar
month which occurs on or immediately after the sixtieth
(60th) day after the date of death of the Participant, and
the remaining annual payments shall be made on each of the
next four succeeding anniversaries of the DB Start Date.
(b) Post-Retirement Death Benefit. The Death Benefit payable
under Section 5.2 of this Plan shall be paid in the same
manner as the Supplemental Retirement Benefit was being paid
to the Participant.
ARTICLE VI
BENEFICIARY DESIGNATION
6.1 BENEFICIARY DESIGNATION. Each Participant shall have the right,
at any time, to designate one or more persons or entities as his
Beneficiary or Beneficiaries (both primary and contingent) to whom Death
Benefits shall be paid in the event of such Participant's death prior to
complete distribution to him of the Plan Benefits due under the Plan. Each
Beneficiary designation shall be in a written form prescribed by the
Committee and will be effective only when filed with the Committee during
-44-
such Participant's lifetime. Any Beneficiary designation shall be valid or
effective only as permitted under applicable law.
6.2 AMENDMENTS. Any Beneficiary designation may be changed by a
Participant without the consent of any designated Beneficiary by the filing
of a new Beneficiary designation with the Committee. The filing of a new
Beneficiary designation form will cancel all Beneficiary designations
previously filed.
6.3 NO BENEFICIARY DESIGNATION. If any Participant fails to
designate a Beneficiary in the manner provided above, or if the Beneficiary
designated by a deceased Participant predeceased the Participant, the
Committee, in its sole discretion, shall direct the Corporation to
distribute such Participant's Plan Benefits (or the balance thereof) as
follows:
(a) To the Participant's surviving spouse, if any; or
(b) If the Participant shall have no surviving spouse, then to
the Participant's children in equal shares by right of
representation; or
(c) If the Participant shall have no surviving spouse or
children, then to the Participant's estate.
6.4 EFFECT OF PAYMENT. Payment to the Beneficiary of a Participant
shall completely discharge the Corporation's obligations under this Plan to
such Participant or any claimant to any of the Plan Benefits of or through
such Participant or a Beneficiary of such Participant.
6.5 BENEFICIARY DESIGNATION BY BENEFICIARY; DEATH OF BENEFICIARY.
Any Beneficiary may designate one or more persons or entities as his
Beneficiary as if he were a Participant under Sections 6.1 and 6.2 of this
Plan. Following commencement of payment of Death Benefits, if the
Beneficiary designated by a deceased Participant dies before receiving
complete distribution of the Death Benefits, the Committee shall direct the
Corporation to distribute the balance of such Plan Benefits
(a) as designated by the Beneficiary in accordance with the
provisions of this Section 6.5 and Section 6.1 of this Plan;
or
(b) if the Beneficiary shall not have made such designation,
then to the Beneficiary's estate.
ARTICLE VII
ADMINISTRATION
7.1 COMMITTEE: DUTIES. This Plan shall be administered for each
Employer by the Committee. Members of the Committee may be Participants
under this Plan.
-45-
7.2 AGENTS. The Committee may appoint an individual to be the
Committee's agent with respect to the day-to-day administration of the
Plan. In addition, the Committee may, from time to time, employ other
agents and delegate to them such administrative duties as it sees fit, and
may from time to time consult with counsel who may be counsel to an
Employer.
7.3 BINDING EFFECT OF DECISIONS. The decision or action of the
Committee in respect of any question arising out of or in connection with
the administration, interpretation and application of this Plan or any
rules and regulations which may be promulgated hereunder shall be final and
binding upon all persons having an interest in this Plan.
7.4 INDEMNITY OF COMMITTEE. The Employers shall jointly and
severally indemnify and hold harmless each of the members of the Committee
against any and all claims, losses, damages, expenses or liabilities
arising from any action or failure to act with respect to this Plan, except
in the case of gross negligence or willful misconduct by the Committee or
such member.
ARTICLE VIII
CLAIMS PROCEDURE
8.1 CLAIM. Any person claiming a benefit, requesting an
interpretation or ruling, or requesting information under the Plan shall
present the request in writing to the Committee which shall respond in
writing as soon as practicable.
8.2 DENIAL OF CLAIM. If the claim or request is denied, the written
notice of denial shall be made within ninety (90) days of the date of
receipt of such claim or request by the Committee and shall state:
(a) The reason for denial, with specific reference to the Plan
provisions on which the denial is based.
(b) A description of any additional material or information
required and an explanation of why it is necessary.
(c) An explanation of the Plan's claim review procedure.
8.3 REVIEW OF CLAIM. Any person whose claim or request is denied or
who has not received a response within ninety (90) days may request review
by notice given in writing to the Committee within sixty (60) days of
receiving a response or one hundred fifty (150) days from the date the
claim was received by the Committee. The claim or request shall be
reviewed by the Committee who may, but shall not be required to, grant the
claimant a hearing. On review, the claimant may have representation,
examine pertinent documents, and submit issues and comments in writing.
8.4 FINAL DECISION. The decision on review shall normally be made
within sixty (60) days after the Committee's receipt of a request for
review. If an extension of time is required for a hearing or other special
circumstances, the claimant shall be notified and the time limit shall be
-46-
one hundred twenty (120) days after the Committee's receipt of a request
for review. The decision shall be in writing and shall state the reason
and the relevant plan provisions. All decisions on review shall be final
and bind all parties concerned.
ARTICLE IX
AMENDMENT OR TERMINATION OF PLAN
9.1 AMENDMENT OR TERMINATION. The Board may, at any time and in its
sole discretion, terminate or amend this Plan or any Plan Benefits in whole
or in part and without obligation or liability to any Participant,
Beneficiary or other person (including without limitation with respect to
any Plan Benefits of (a) any Participant whose Retirement Date (or, with
respect to the Supplemental Retirement Benefit payable pursuant to Section
4.1, any Participant whose Normal Retirement Date) did not precede such
termination or amendment, (b) any Participant as to whom the Committee had
not, prior to such termination or amendment, issued a decision that such
Participant suffered from Total and Permanent Disability, and (c) any
Beneficiary of a Participant whose death did not precede such termination
or amendment); provided, however, no such termination or amendment shall
adversely affect the Plan Benefits of any Participant whose Retirement Date
(or, with respect to the Supplemental Retirement Benefit payable pursuant
to Section 4.1, any Participant whose Normal Retirement Date) preceded such
termination or amendment, the Plan Benefits of any Participant as to whom
the Committee had, prior to such termination or amendment, issued a
decision that such Participant suffered from Total and Permanent
Disability, or the Death Benefits of any Beneficiary of a Participant who
died prior to such termination or amendment.
9.2 SUCCESSOR. The provisions of this Plan shall be binding upon and
inure to the benefit of any successor or assign of the Corporation. The
term "successor" as used herein shall include any corporate or other
business entity which shall, whether by merger, consolidation, purchase or
otherwise, acquire all or substantially all of the business and assets of
the Corporation, and successors of any such corporation or other business
entity.
ARTICLE X
MISCELLANEOUS
10.1 UNSECURED GENERAL CREDITOR. Benefits to be provided under this
Plan are unfunded obligations of the Corporation. Participants and their
Beneficiaries, heirs, successors and assigns shall have no secured interest
or claim in any property or assets of the Corporation or any other
Employer, nor shall they be beneficiaries of, or have any rights, claims or
interests in any life insurance policies, annuity contracts or the proceeds
therefrom owned or which may be acquired by the Corporation or any other
Employer (collectively, "Policies"). Such Policies or other assets of the
Corporation or any other Employer shall not be held under any trust for the
benefit of Participants, their Beneficiaries, heirs, successors or assigns,
-47-
or be considered in any way as collateral security for the fulfilling of
the obligations of the Corporation under this Plan.
10.2 CAPTIONS. The captions of the articles, sections and paragraphs
of this Plan are for convenience only and shall not control or affect the
meaning or construction of any of its provisions.
10.3 GOVERNING LAW. The provisions of this Plan shall be construed
and interpreted according to the law of the State of West Virginia without
application of principles of conflicts or choice of law.
10.4 SEVERABILITY. If any provision of this Plan or the application
of any provision hereof to any person or circumstance is held invalid, the
remainder of this Plan and the application of such provision to other
persons or circumstances shall not be affected.
10.5 NOTICE. Any notice or filing required or permitted to be given
to the Committee under this Plan shall be sufficient if in writing and hand
delivered, or sent by registered or certified mail, to any member of the
Committee, the President of the Corporation or the Participant's Employer,
or the Statutory Agent of the Corporation or such Employer. Such notice
shall be deemed given as of the date of delivery or, if delivery is made by
mail, as of the earlier of receipt or three (3) days following the date
shown on the postmark.
-48-
ALLEGHENY & WESTERN ENERGY CORPORATION
KEY EXECUTIVES' SUPPLEMENTAL RETIREMENT BENEFIT PLAN AGREEMENT
-49-
KEY EXECUTIVES' SUPPLEMENTAL RETIREMENT BENEFIT PLAN AGREEMENT
This Agreement is entered into as of December 1, 1992 by and between
Allegheny & Western Energy Corporation, a corporation organized and
existing under the laws of the State of West Virginia (the "Corporation"),
and W. Merwyn Pittman (the "Employee").
W I T N E S S E T H :
WHEREAS, the Employee has been employed by the Corporation or a
Participating Subsidiary (as defined in the Plan, as defined below) and has
discharged his duties in a capable and efficient manner to the benefit of
the Corporation; and
WHEREAS, it is the desire of the Corporation to retain the services of
the Employee; and
WHEREAS, the Employee is willing to continue in the employ of the
Corporation or a Participating Subsidiary, as the case may be, provided the
Corporation agrees to provide certain benefits hereinafter described in
accordance with the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual promises and covenants
herein contained as well as other good and valuable consideration, it is
agreed as follows:
1. The Employee is hereby designated a Participant under the
Corporation's Key Executives' Supplemental Retirement Benefit Plan (the
"Plan"), a copy of which is attached hereto and incorporated herein by
reference, and the Employee and the Corporation agree to the terms of the
Plan and to be bound thereby. The Corporation represents that the Employee
has satisfied the qualifications for participation in the Plan set forth in
Article III of the Plan.
2. For purposes of Section 2.7 of the Plan as applicable to the
Employee, the age for the Employee's retirement shall be sixty-six (66).
3. For purposes of Section 4.1 of the Plan as applicable to the
Employee, (a) the "Designated Amount" shall be $62,500, (b) the "Designated
Period" shall be a period commencing on the date the Supplemental
Retirement Benefit is first payable (the "SRB Start Date") and ending on
the 10th anniversary of such SRB Start Date, and (c) a "Designated Year"
shall be a one year period ending on any anniversary of the commencement
date of the Designated Period.
-50-
4. Notwithstanding the provisions of Section 4.3 of the Plan, in the
event of a Change in Control (as defined in the Plan):
(a) The Employee shall be automatically 100% vested under the
Plan and shall be entitled to the benefits and rights provided in Section
6(c) of the Employment Agreement dated as of September 14, 1993 between the
Employee and the Corporation (the "Employment Agreement"); and
(b) The provisions of Section 6(d) of the Employment Agreement
shall apply if any of the benefits payable to the Employee pursuant to the
Plan upon a Change in Control or a "change in control" as defined in
Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"),
would constitute an "excess parachute payment" within the meaning of such
Section 280G or would be subject to the excise tax imposed by Section 4999
of the Code.
-51-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
ALLEGHENY & WESTERN ENERGY CORPORATION
By/s/John McMillian
/s/W. Merwyn Pittman
W. Merwyn Pittman
-52-
ALLEGHENY & WESTERN ENERGY CORPORATION
KEY EXECUTIVES' SUPPLEMENTAL RETIREMENT BENEFIT PLAN
ARTICLE I
PURPOSE
The purpose of the Allegheny & Western Energy Corporation Key
Executives' Supplemental Retirement Benefit Plan (the"Plan") is to provide
supplemental retirement benefits for a select group of management or highly
compensated employees of Allegheny & Western Energy Corporation and certain
of its subsidiaries which participate in the Plan. It is intended that the
Plan will aid in retaining and attracting employees of exceptional ability
by providing such individuals with these benefits. This Plan shall be
effective as of December 1, 1992.
ARTICLE II
DEFINITIONS
For the purpose of this Plan, the following terms shall have the
meanings indicated, unless the context clearly indicates otherwise:
2.1 BENEFICIARY. "Beneficiary" means any person or entity entitled
under Article VI to receive Plan Benefits after a Participant's death.
2.2 BOARD. "Board" means the Board of Directors of the Corporation.
2.3 COMMITTEE. "Committee" means the Benefit Committee appointed by
the Board to administer the Plan for the employees of the Employers.
2.4 DEATH BENEFITS. "Death Benefits" means the benefits determined
under Article V of this Plan.
2.5 DEFERRED RETIREMENT DATE. "Deferred Retirement Date" means the
first day of the calendar month coincident with or next following the date
occurring after the Normal Retirement Date and on which the Participant and
the Participant's Employer have agreed the Participant shall separate from
employment with such Employer (and all other Employers) as a result of
having attained a specified age.
2.6 EMPLOYER. "Employer" means Allegheny & Western Energy
Corporation, or any Participating Subsidiary, or any successor to the
business thereof. For purposes of this Plan, the Corporation and each
Participating Subsidiary shall be considered separate Employers, and each
separate corporation shall be treated as the Employer only with respect to
its own employees.
2.7 NORMAL RETIREMENT DATE. "Normal Retirement Date" means the first
day of the calendar month coincident with or next following the date on
which the Participant attains the age designated for his retirement in his
Participation Agreement.
2.8 PARTICIPANT. "Participant" means any individual who is
participating or has participated in this Plan pursuant to Article III.
-53-
2.9 PARTICIPATING SUBSIDIARY. "Participating Subsidiary" means
Mountaineer Gas Company or any other corporation with fifty percent (50%)
or more of its issued and outstanding voting stock directly or indirectly
owned by the Corporation and which elects to participate in the Plan.
2.10 PARTICIPATION AGREEMENT. "Participation Agreement" means the
agreement entered into by the Corporation and the Participant which, among
other things, evidences the agreement of such Participant and the
Corporation concerning such Participant's participation under the Plan.
2.11 PLAN BENEFITS. "Plan Benefits" means any Supplemental
Retirement Benefits or Death Benefits payable pursuant to Article IV or
Article V of this Plan.
2.12 PLAN YEAR. "Plan Year" means any period of 12 consecutive
months beginning on December 1 in any year and ending on the immediately
succeeding November 30.
2.13 RETIREMENT; RETIREMENT DATE. "Retirement" means separation of
the Participant from employment with the Participant's Employer (and all
other Employers) at the Participant's Normal Retirement Date or Deferred
Retirement Date, and "Retirement Date" means the date of such Retirement.
2.14 SUPPLEMENTAL RETIREMENT BENEFIT. "Supplemental Retirement
Benefit" means the benefit determined under Article IV of this Plan.
2.15 TERMINATION. "Termination" means separation of the Participant
from employment with the Employer (and all other Employers) for any reason
other than Retirement, death or Total and Permanent Disability.
2.16 TOTAL AND PERMANENT DISABILITY. "Total and Permanent
Disability" means a physical or mental condition which, in the sole opinion
of the Committee, prevents a Participant from satisfactorily performing the
Participant's usual duties for his Employer (and all other Employers) or
such other duties as such Employer may make available to the Participant.
For the purpose of this Section 2.16, in determining the availability of
other duties, the Committee will give due regard to the Participant's
position and earnings prior to the onset of such physical or mental
condition and, in otherwise determining whether a Participant is suffering
from Total and Permanent Disability, the Committee will take into
consideration the qualifications of such Participant by reason of training,
education and experience. The Committee's decision as to Total and
Permanent disability will be based upon medical reports and/or other
evidence satisfactory to the Committee.
ARTICLE III
PARTICIPATION
3.1 PARTICIPATION. Participation in the Plan shall be limited to
those employees of an Employer who are nominated for such participation by
the Chief Executive Officer (or, if none, the President) of such Employer
and approved for such participation by the Committee.
-54-
ARTICLE IV
SUPPLEMENTAL RETIREMENT BENEFITS; WITHHOLDING;
PAYMENTS TO GUARDIANS AND REPRESENTATIVES
4.1 SUPPLEMENTAL RETIREMENT BENEFIT. During the Designated Period
(as defined in the Participation Agreement for such Participant) commencing
upon a Participant's Normal Retirement Date, the Corporation shall pay to
such Participant a Supplemental Retirement Benefit. Such Supplemental
Retirement Benefit shall be an amount for each Designated Year (as defined
in the Participation Agreement for such Participant) equal to the
Designated Amount (as defined in the Participation Agreement for such
Participant), and such annual amount shall be paid in equal monthly
installments during such Designated Year. Notwithstanding the foregoing,
if the investment performance of the assets of the Plan is less than that
which is necessary to provide for Plan Benefits to the participants under
the Plan, the Designated Amount will be appropriately adjusted. The
payment of such Supplemental Retirement Benefit shall commence on the first
business day of the calendar month immediately following such Participant's
Normal Retirement Date and shall be paid thereafter (i) if the Basic Form
of Benefit Payment (as provided in Section 4.4) is in effect, on the first
business day of each calendar month thereafter during the Designated
Period, or (ii) if an Alternative Form of Benefit Payment (as provided in
Section 4.4) is in effect, on such dates as the Committee shall have
designated therefor.
4.2 DISABILITY. If a Participant separates from employment with his
Employer (and all other Employers) due to Total and Permanent Disability,
the Corporation shall pay to such Participant a Supplemental Retirement
Benefit as provided in Section 4.1 of this Plan except that the payment of
such Supplemental Retirement Benefit and the Designated Period shall
commence on the first business day of the calendar month immediately
following the date the Committee shall have issued its decision that such
Participant suffers from Total and Permanent Disability.
4.3 TERMINATION OF EMPLOYMENT. If a Participant shall voluntarily
terminate his employment with his Employer (and all other Employers) or if
his employment shall be terminated by the Board of Directors of such
Employer for cause (and he shall not be employed by another Employer), in
either case prior to the Participant's Normal Retirement Date or Total and
Permanent Disability, this Plan shall automatically terminate with respect
to such Participant and his Beneficiaries, the Corporation shall have no
further obligation under this Plan to such Participant and his
Beneficiaries, and such Participant and his Beneficiaries shall have no
rights to any Plan Benefits or other benefits or compensation under this
Plan. Notwithstanding the foregoing, if a Participant shall voluntarily
terminate his employment with his Employer (and all other Employers) or if
his employment shall be terminated by the Board of Directors of such
Employer for cause (and he shall not be employed by another Employer), in
either case prior to his Normal Retirement Date or Total and Permanent
Disability, and if, prior to such termination, a Change in Control
(hereinafter defined) of the Corporation (which, for purposes for this
Section 4.3, shall be deemed to include a Participating Subsidiary if such
Participant is employed by such Participating Subsidiary) shall have
occurred, then such Participant shall be entitled to receive, and the
-55-
Corporation shall pay to such Participant, a portion of such Participant's
Supplemental Retirement Benefit in an amount equal to the Designated
Percentage (hereinafter defined) of such Participant's Designated Amount
and otherwise at the times provided in, and subject to the other terms and
conditions of, Section 4.1 and Section 4.2 of this Plan. Notwithstanding
the immediately preceding sentence, however, if the benefits payable
pursuant to the immediately preceding sentence, either alone or together
with other payments which such Participant has the right to receive either
directly or indirectly from his Employer or from the Corporation or any of
its subsidiaries, would constitute an excess parachute payment (the "Excess
Payment") under Section 280G of the Internal Revenue Code of 1986, as
amended, then the benefit payable pursuant to the immediately preceding
sentence shall be reduced (but not below zero) by the amount necessary to
prevent any such payments to such Participant from constituting an Excess
Payment, as determined in good faith by the Committee. As used in this
Section 4.3,
-56-
(a) a "Change in Control" of the Corporation shall mean and
shall be deemed to have occurred upon:
(1) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")) (a "Person"), of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of
25% or more of either (1) the then outstanding shares of
common stock of the Corporation (the "Outstanding
Corporation Common Stock") or (2) the combined voting power
of the then outstanding voting securities of the Corporation
entitled to vote generally in the election of directors (the
"Outstanding Corporation Voting Securities"); provided,
however, that the following acquisitions shall not
constitute a Change in Control: (w) any acquisition
directly from the Corporation (excluding an acquisition by
virtue of the exercise of a conversion privilege), (x) any
acquisition by the Corporation, (y) any acquisition by any
employee benefit plan(s) (or related trust(s)) sponsored or
maintained by the Corporation or any corporation controlled
by the Corporation, or (z) any acquisition by any
corporation pursuant to a reorganization, merger or
consolidation, if, immediately following such
reorganization, merger or consolidation, the conditions
described in clauses (1), (2) and (3) of subsection (iii) of
this paragraph are satisfied; or
(ii) Individuals who, as of the date of such
Participant's Participation Agreement, constitute the Board
(the "Incumbent Board"), cease for any reason to constitute
at least a majority of the Board; provided, however, that
any individual becoming a director subsequent to the date of
such Participation Agreement whose election, or nomination
for election by the Corporation's stockholders, was approved
by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though
such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of either
(1) an actual or threatened election contest (as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act), or an actual or threatened solicitation
of proxies or consents by or on behalf of a Person other
than the Board or (2) a plan or agreement to replace a
majority of the members of the Board then comprising the
Incumbent Board; or
(iii) Approval by the stockholders of the Corporation of
a reorganization, merger or consolidation, in each case
unless, immediately following such reorganization, merger or
consolidation, (1) more than 60% of, respectively, the then
outstanding shares of common stock of the corporation
resulting from such reorganization, merger or consolidation
(including, without limitation, a corporation which as a
-57-
result of such transaction owns the Corporation through one
or more subsidiaries) and the combined voting power of the
then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is
then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding
Corporation Common Stock and Outstanding Corporation Voting
Securities immediately prior to such reorganization, merger
or consolidation in substantially the same proportions as
their ownership, immediately prior to such reorganization,
merger or consolidation, of the Outstanding Corporation
Common Stock and Outstanding Corporation Voting Securities,
as the case may be, (2) no Person (excluding the
Corporation, any employee benefit plan(s) (or related
trust(s)) of the Corporation and/or its subsidiaries or such
corporation resulting from such reorganization, merger or
consolidation and any Person beneficially owning,
immediately prior to such reorganization, merger or
consolidation, directly or indirectly, 25% or more of the
Outstanding Corporation Common Stock or Outstanding
Corporation Voting Securities, as the case may be)
beneficially owns, directly or indirectly, 25% or more of,
respectively, the then outstanding shares of common stock of
the corporation resulting from such reorganization, merger
or consolidation or the combined voting power of the then
outstanding voting securities of such corporation entitled
to vote generally in the election of directors and (3) at
least a majority of the members of the board of directors of
the corporation resulting from such reorganization, merger
or consolidation were members of the Incumbent Board at the
time of the execution of the initial agreement providing for
such reorganization, merger or consolidation; or
(iv) Approval by the stockholders of the Corporation of
(1) a complete liquidation or dissolution of the Corporation
or (2) the sale or other disposition of all or substantially
all of the assets of the Corporation, other than to a
corporation, with respect to which immediately following
such sale or other disposition, (A) more than 60% of,
respectively, the then outstanding shares of common stock of
such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled
to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding
Corporation Common Stock and Outstanding Corporation Voting
Securities immediately prior to such sale or other
disposition in substantially the same proportion as their
ownership, immediately prior to such sale or other
disposition, of the Outstanding Corporation Common Stock and
Outstanding Corporation Voting Securities, as the case may
be, (B) no Person (excluding the Corporation and any
employee benefit plan (or related trust) of the Corporation
-58-
and/or its subsidiaries or such corporation and any Person
beneficially owning, immediately prior to such sale or other
disposition, directly or indirectly, 25% or more of the
Outstanding Corporation Common Stock or Outstanding
Corporation Voting Securities, as the case may be)
beneficially owns, directly or indirectly, 25% or more of,
respectively, the then outstanding shares of common stock of
such corporation or the combined voting power of the then
outstanding voting securities of such corporation entitled
to vote generally in the election of directors and (C) at
least a majority of the members of the board of directors of
such corporation were members of the Incumbent Board at the
time of the execution of the initial agreement or action of
the Board providing for such sale or other disposition of
assets of the Corporation.
(b) "Designated Percentage" means, with respect to a
Participant, the percentage obtained by dividing (1) an
amount equal to the excess of such Participant's age at the
time a Change in Control of the Corporation occurs over the
age of such Participant on the date of his Participation
Agreement by (2) an amount equal to the excess of such
Participant's age for his Retirement as set forth in his
Participation Agreement over the age of such Participant on
the date of his Participation Agreement.
4.4 FORM OF BENEFIT PAYMENT. The Supplemental Retirement Benefit
shall be paid in the form of the Basic Benefit provided below, unless the
Committee, in its sole discretion, selects an alternative method. Any
method requested by a Participant or a Beneficiary shall be considered by
the Committee, but shall not be binding. The Basic and Alternative Methods
of Payment are as follows:
(a) Basic Form of Benefit Payment. Equal monthly installments
of the Benefit over the Designated Period.
(b) Alternative Forms of Benefit Payment. Any other form as
determined by the Committee in its sole discretion.
4.5 WITHHOLDING AND PAYROLL TAXES WITH RESPECT TO PLAN BENEFITS. The
Corporation shall withhold from any payment of Plan Benefits any taxes
required to be withheld from a Participant's wages or such payment by law,
regulation or any governmental authority.
4.6 PAYMENT OF PLAN BENEFITS TO GUARDIANS AND REPRESENTATIVES. If a
Plan Benefit is payable to a minor, a person declared incompetent or a
person incapable of handling the disposition of property, the Committee may
direct payment of such Plan Benefit to the guardian, legal representative
or person having the care and custody of such minor, incompetent or
incapable person. The Committee may require such proof of incompetency,
minority, incapacity, guardianship or representation as it may deem
appropriate prior to distribution of the Plan Benefit. Such distribution
shall completely
-59-
discharge the Committee and the Corporation from all liability with respect
to such Plan Benefit.
ARTICLE V
DEATH BENEFITS
5.1 PRE-RETIREMENT DEATH BENEFIT. If a Participant dies while
employed by an Employer or prior to the Participant's Normal Retirement
Date while Totally and Permanently Disabled, the Corporation shall pay a
Death Benefit to the Participant's Beneficiary in an amount equal to the
Supplemental Retirement Benefit as specified in Section 4.1 of this Plan
except that, for purposes of the Death Benefit payable under this Section
5.1, (a) the "Designated Period" shall be deemed to be a period commencing
on the DB Start Date (as defined in Section 5.3(a) of this Plan) and ending
on the fourth anniversary of such DB Start Date, and (b) the Death Benefit
shall be paid as provided in Section 5.3(a) of this Plan. The Death
Benefit will be appropriately adjusted to reflect any Supplemental
Retirement Benefit paid to such Participant prior to his death.
5.2 POST-RETIREMENT DEATH BENEFIT. If a Participant dies after
Retirement, the Participant's Beneficiary shall continue to receive the
Supplemental Retirement Benefit until the end of the Designated Period as
provided in Section 4.1 of this Plan.
5.3 FORM OF DEATH BENEFIT PAYMENT.
(a) Pre-Retirement Death Benefit. The Death Benefit payable
under Section 5.1 of this Plan shall be paid by the
Corporation in the form of five annual payments, payable as
follows: The first annual payment shall be made on the
first business day (the "DB Start Date") of the calendar
month which occurs on or immediately after the sixtieth
(60th) day after the date of death of the Participant, and
the remaining annual payments shall be made on each of the
next four succeeding anniversaries of the DB Start Date.
(b) Post-Retirement Death Benefit. The Death Benefit payable
under Section 5.2 of this Plan shall be paid in the same
manner as the Supplemental Retirement Benefit was being paid
to the Participant.
ARTICLE VI
BENEFICIARY DESIGNATION
6.1 BENEFICIARY DESIGNATION. Each Participant shall have the right,
at any time, to designate one or more persons or entities as his
Beneficiary or Beneficiaries (both primary and contingent) to whom Death
Benefits shall be paid in the event of such Participant's death prior to
complete distribution to him of the Plan Benefits due under the Plan. Each
Beneficiary designation shall be in a written form prescribed by the
Committee and will be effective only when filed with the Committee during
-60-
such Participant's lifetime. Any Beneficiary designation shall be valid or
effective only as permitted under applicable law.
6.2 AMENDMENTS. Any Beneficiary designation may be changed by a
Participant without the consent of any designated Beneficiary by the filing
of a new Beneficiary designation with the Committee. The filing of a new
Beneficiary designation form will cancel all Beneficiary designations
previously filed.
6.3 NO BENEFICIARY DESIGNATION. If any Participant fails to
designate a Beneficiary in the manner provided above, or if the Beneficiary
designated by a deceased Participant predeceased the Participant, the
Committee, in its sole discretion, shall direct the Corporation to
distribute such Participant's Plan Benefits (or the balance thereof) as
follows:
(a) To the Participant's surviving spouse, if any; or
(b) If the Participant shall have no surviving spouse, then to
the Participant's children in equal shares by right of
representation; or
(c) If the Participant shall have no surviving spouse or
children, then to the Participant's estate.
6.4 EFFECT OF PAYMENT. Payment to the Beneficiary of a Participant
shall completely discharge the Corporation's obligations under this Plan to
such Participant or any claimant to any of the Plan Benefits of or through
such Participant or a Beneficiary of such Participant.
6.5 BENEFICIARY DESIGNATION BY BENEFICIARY; DEATH OF BENEFICIARY.
Any Beneficiary may designate one or more persons or entities as his
Beneficiary as if he were a Participant under Sections 6.1 and 6.2 of this
Plan. Following commencement of payment of Death Benefits, if the
Beneficiary designated by a deceased Participant dies before receiving
complete distribution of the Death Benefits, the Committee shall direct the
Corporation to distribute the balance of such Plan Benefits
(a) as designated by the Beneficiary in accordance with the
provisions of this Section 6.5 and Section 6.1 of this Plan;
or
(b) if the Beneficiary shall not have made such designation,
then to the Beneficiary's estate.
ARTICLE VII
ADMINISTRATION
7.1 COMMITTEE: DUTIES. This Plan shall be administered for each
Employer by the Committee. Members of the Committee may be Participants
under this Plan.
-61-
7.2 AGENTS. The Committee may appoint an individual to be the
Committee's agent with respect to the day-to-day administration of the
Plan. In addition, the Committee may, from time to time, employ other
agents and delegate to them such administrative duties as it sees fit, and
may from time to time consult with counsel who may be counsel to an
Employer.
7.3 BINDING EFFECT OF DECISIONS. The decision or action of the
Committee in respect of any question arising out of or in connection with
the administration, interpretation and application of this Plan or any
rules and regulations which may be promulgated hereunder shall be final and
binding upon all persons having an interest in this Plan.
7.4 INDEMNITY OF COMMITTEE. The Employers shall jointly and
severally indemnify and hold harmless each of the members of the Committee
against any and all claims, losses, damages, expenses or liabilities
arising from any action or failure to act with respect to this Plan, except
in the case of gross negligence or willful misconduct by the Committee or
such member.
ARTICLE VIII
CLAIMS PROCEDURE
8.1 CLAIM. Any person claiming a benefit, requesting an
interpretation or ruling, or requesting information under the Plan shall
present the request in writing to the Committee which shall respond in
writing as soon as practicable.
8.2 DENIAL OF CLAIM. If the claim or request is denied, the written
notice of denial shall be made within ninety (90) days of the date of
receipt of such claim or request by the Committee and shall state:
(a) The reason for denial, with specific reference to the Plan
provisions on which the denial is based.
(b) A description of any additional material or information
required and an explanation of why it is necessary.
(c) An explanation of the Plan's claim review procedure.
8.3 REVIEW OF CLAIM. Any person whose claim or request is denied or
who has not received a response within ninety (90) days may request review
by notice given in writing to the Committee within sixty (60) days of
receiving a response or one hundred fifty (150) days from the date the
claim was received by the Committee. The claim or request shall be
reviewed by the Committee who may, but shall not be required to, grant the
claimant a hearing. On review, the claimant may have representation,
examine pertinent documents, and submit issues and comments in writing.
8.4 FINAL DECISION. The decision on review shall normally be made
within sixty (60) days after the Committee's receipt of a request for
review. If an extension of time is required for a hearing or other special
circumstances, the claimant shall be notified and the time limit shall be
-62-
one hundred twenty (120) days after the Committee's receipt of a request
for review. The decision shall be in writing and shall state the reason
and the relevant plan provisions. All decisions on review shall be final
and bind all parties concerned.
ARTICLE IX
AMENDMENT OR TERMINATION OF PLAN
9.1 AMENDMENT OR TERMINATION. The Board may, at any time and in its
sole discretion, terminate or amend this Plan or any Plan Benefits in whole
or in part and without obligation or liability to any Participant,
Beneficiary or other person (including without limitation with respect to
any Plan Benefits of (a) any Participant whose Retirement Date (or, with
respect to the Supplemental Retirement Benefit payable pursuant to Section
4.1, any Participant whose Normal Retirement Date) did not precede such
termination or amendment, (b) any Participant as to whom the Committee had
not, prior to such termination or amendment, issued a decision that such
Participant suffered from Total and Permanent Disability, and (c) any
Beneficiary of a Participant whose death did not precede such termination
or amendment); provided, however, no such termination or amendment shall
adversely affect the Plan Benefits of any Participant whose Retirement Date
(or, with respect to the Supplemental Retirement Benefit payable pursuant
to Section 4.1, any Participant whose Normal Retirement Date) preceded such
termination or amendment, the Plan Benefits of any Participant as to whom
the Committee had, prior to such termination or amendment, issued a
decision that such Participant suffered from Total and Permanent
Disability, or the Death Benefits of any Beneficiary of a Participant who
died prior to such termination or amendment.
9.2 SUCCESSOR. The provisions of this Plan shall be binding upon and
inure to the benefit of any successor or assign of the Corporation. The
term "successor" as used herein shall include any corporate or other
business entity which shall, whether by merger, consolidation, purchase or
otherwise, acquire all or substantially all of the business and assets of
the Corporation, and successors of any such corporation or other business
entity.
ARTICLE X
MISCELLANEOUS
10.1 UNSECURED GENERAL CREDITOR. Benefits to be provided under this
Plan are unfunded obligations of the Corporation. Participants and their
Beneficiaries, heirs, successors and assigns shall have no secured interest
or claim in any property or assets of the Corporation or any other
Employer, nor shall they be beneficiaries of, or have any rights, claims or
interests in any life insurance policies, annuity contracts or the proceeds
therefrom owned or which may be acquired by the Corporation or any other
Employer (collectively, "Policies"). Such Policies or other assets of the
Corporation or any other Employer shall not be held under any trust for the
benefit of Participants, their Beneficiaries, heirs, successors or assigns,
-63-
or be considered in any way as collateral security for the fulfilling of
the obligations of the Corporation under this Plan.
10.2 CAPTIONS. The captions of the articles, sections and paragraphs
of this Plan are for convenience only and shall not control or affect the
meaning or construction of any of its provisions.
10.3 GOVERNING LAW. The provisions of this Plan shall be construed
and interpreted according to the law of the State of West Virginia without
application of principles of conflicts or choice of law.
10.4 SEVERABILITY. If any provision of this Plan or the application
of any provision hereof to any person or circumstance is held invalid, the
remainder of this Plan and the application of such provision to other
persons or circumstances shall not be affected.
10.5 NOTICE. Any notice or filing required or permitted to be given
to the Committee under this Plan shall be sufficient if in writing and hand
delivered, or sent by registered or certified mail, to any member of the
Committee, the President of the Corporation or the Participant's Employer,
or the Statutory Agent of the Corporation or such Employer. Such notice
shall be deemed given as of the date of delivery or, if delivery is made by
mail, as of the earlier of receipt or three (3) days following the date
shown on the postmark.
-64-