Exhibit 10.4
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
This Supplemental Executive Retirement Agreement (the "Agreement") is
hereby entered into by and between Equitable Resources, Inc. (the "Company") and
Xxxxx X. Xxxxxx (the "Executive"), as of this 4th day of May, 1998.
WHEREAS, the Company desires to employ the Executive as Chief Executive
Officer and President of the Company; and
WHEREAS, the Executive will forego certain retirement benefits from a
prior employer by accepting employment with the Company; and
WHEREAS, in recognition of the Executive's potential loss of benefits
and in consideration of his expected substantial contributions to the success of
the Company, the Company desires to provide the Executive with additional
supplemental retirement benefits as provided in this Agreement.
NOW THEREFORE, the Company and the Executive agree to the following
terms of this Agreement.
SECTION 1. DEFINITIONS.
Except as otherwise provided herein, the capitalized terms set forth below shall
be defined as follows:
(a) Beneficiary. The beneficiary designated by the Executive in writing
and delivered to the Committee. In the absence of any such writing, the
beneficiary shall be the Executive's spouse, if living, and if not
living, the Executive's estate.
(b) Code. The Internal Revenue Code of 1986, as amended.
(c) Committee. The Compensation Committee of the Board of Directors of
the Company.
(d) Company. Equitable Resources, Inc. and any successors or assigns
of Equitable Resources, Inc.
(e) ERI Annuity Amount. The ERI Annuity Amount shall equal the
hypothetical straight-life annuity on the life of the Executive that is
determined as of the Executive's Termination Date and is based on the
sum of the vested account balances of the Executive under the Equitable
Resources, Inc. Employee Savings Plan and the Equitable Resources, Inc.
Deferred Compensation Plan. The annuity assumptions that will be used to
determine the ERI Annuity Amount shall be those set forth in Appendix A
of this Agreement.
(f) ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
(g) Executive. Xxxxx X. Xxxxxx.
(h) Shell Annuity Amount. The Shell Annuity Amount shall equal
$150,000.
(i) Supplemental Retirement Period. The Supplemental Retirement Period
shall be the period described in Section 2 of this Agreement.
(j) Termination Date. The Executive's Termination Date shall be the date
that the Executive terminates employment with the Company.
SECTION 2. ELIGIBILITY FOR BENEFITS.
The Executive shall be eligible for benefits under this Agreement if his
Termination Date is on or after his 55th birthday and before his 65th birthday
(this period of time shall be referred to as the "Supplemental Retirement
Period"). If the Executive terminates employment with the Company before his
55th birthday, or on or after his 65th birthday, he shall not receive any
benefits under this Agreement. Notwithstanding the above sentences, if the
Executive is terminated by the Company involuntarily for any reason other than
cause as defined in the Employment Agreement, and is age 52 or greater, he will
be eligible for benefits under this Agreement commencing on his 55th birthday.
SECTION 3. AMOUNT OF BENEFITS. It is the intent of the Company that if the
Executive terminates employment with the Company during the Supplemental
Retirement Period, he shall receive benefits under this Agreement as provided in
paragraphs (a) and (b) below:
(a) Annual Benefit. The amount of the Executive's annual benefit under
this Agreement shall equal $211,500 minus the ERI Annuity Amount. This
benefit shall be paid to the Executive in monthly installments as
provided in Section 4 of this Agreement for each full and partial year
of the Supplemental Retirement Period.
(b) Final Benefit. Upon the expiration of the Supplemental Retirement
Period, the Executive shall receive a final benefit under this Agreement
equal to the present value, if any, of a straight-life annuity for the
Executive based on an annual amount equal to $211,500 minus (i) the ERI
Annuity Amount, and minus (ii) the Shell Annuity Amount. If the final
benefit amount determined under this paragraph is less than zero, then
no additional benefits shall be paid to the Executive under this
Agreement. The life expectancy assumption and the present value amount
shall be determined based on the assumptions set forth in Appendix A.
SECTION 4. PAYMENT OF BENEFITS. The Executive shall receive annual benefits as
described in Section 3(a) of this Agreement commencing with the last day of the
month following the month of his Termination Date during the Supplemental
Retirement Period and continuing on the last day of each succeeding month until
the expiration of the Supplemental Retirement Period. The Executive shall
receive his final benefit as described in Section 3(b) of this Agreement in a
lump-sum cash payment as soon as practicable following his 65th birthday.
SECTION 5. FORFEITURE OF BENEFITS. The Executive shall forfeit his right to
benefits under this Agreement if he accepts employment with another company
after his Termination Date during the Supplemental Retirement Period.
SECTION 6. DEATH BENEFITS.
No death benefits are provided under this Agreement because this Agreement is
designed to compensate for benefits provided to the Executive under his prior
retirement plan in the form of a straight-life annuity.
SECTION 7. UNSECURED RIGHT TO BENEFITS.
The Executive shall have only the unsecured and unfunded promise to be paid
benefits under this Agreement. The Company shall establish a rabbi trust for the
purpose of holding assets to assist it in meeting its obligations to the
Executive under this Agreement. The Company may make such contributions to the
rabbi trust at its discretion, except that if the Executive's Termination Date
is within the Supplemental Retirement Period, the Company shall contribute an
amount to the rabbi trust equal to the present value of the amount necessary to
pay all future amounts under this Agreement. The present value amount shall be
determined in accordance with the assumptions set forth in Appendix A. This
Agreement and rabbi trust is intended to constitute an unfunded plan for federal
income tax purposes and shall be a "top-hat plan" for purposes of Sections
201(2), 301(a)(3) and 401(a)(1) of ERISA.
SECTION 8. EMPLOYMENT TAX TREATMENT.
This Agreement is intended to be a "deferred compensation agreement" for
purposes of the employment tax provisions of Code Section 3121(v). It is
intended that the Executive's rights to a benefit will be subject to a
substantial risk of forfeiture for purposes of Section 3121(v) and within the
meaning of Treasury Regulation Section 1.83-3(c) until the Executive's
termination of employment during the Supplemental Retirement Period. At that
time, it is intended that the Executive's unfunded promise to be paid benefits
as they come due shall not be treated as a substantial risk of forfeiture for
purposes of Section 3121(v).
SECTION 9. PARACHUTE PAYMENT TREATMENT.
The purpose of this Agreement is to both induce the Executive to become employed
with the Company and to recognize the value of the Executive's expected services
for the Company. Therefore, it is intended that benefits payable under this
Agreement should be treated as payments in the nature of compensation within the
meaning of Code Section 280G and the Regulations thereunder (the "280G Rules")
and that such payments constitute reasonable compensation within the meaning of
the 280G Rules.
SECTION 10. ADMINISTRATION.
This Agreement shall be administered by the Committee. All determinations of the
Committee as to any questions arising under this Agreement, including questions
of construction and interpretation, shall be final, binding and conclusive upon
all persons. The Committee may delegate any of its responsibilities under the
plan to another committee of the Company or to any other delegee. The Executive
may not serve as a member of this Committee or be a delegee.
SECTION 11. INTEREST NOT TRANSFERABLE.
All benefits provided under this Agreement may not be assigned, alienated,
attached or encumbered by the Executive or his Beneficiary.
SECTION 12. EFFECT ON OTHER BENEFIT PLANS.
Amounts credited or paid under this Agreement shall not be considered to be
compensation for the purposes of any qualified retirement plans maintained by
the Company. The treatment of such amounts under other employee benefit plans
will be determined pursuant to the provisions of such plans. In addition, the
Executive's right to benefits under this Agreement shall survive the termination
of the Executive's Employment Agreement.
SECTION 13. INCOMPETENCY.
In the event the Executive is determined by a court to be incompetent, the
Committee may, in its discretion, pay the benefits provided herein to the
Executive's legal guardian for the benefit of the Executive.
SECTION 14. CLAIMS PROVISION.
The Executive may make a claim to the Committee with regard to a payment of
benefits provided herein. If the Committee receives a claim in writing, the
Committee must give notice to the Executive in writing within a reasonable
period of time after receipt of the claim, (not to exceed 90 days; or under
special circumstances, 120 days). The notice of denial shall set forth the
following information:
(a) The specific reasons for such denial;
(b) Specific reference to pertinent Agreement provisions on which
the denial is based;
(c) A description of any additional material or information
necessary for the Executive to perfect a claim and an
explanation of why such material or information is necessary;
and
(d) An explanation of the Agreement's claim review procedure.
If the Executive does not receive a notice of denial within 180 days after
receipt of the claim, the claim will be deemed to have been denied. The
Executive may request a review of a denial (or deemed denial) by filing with the
Committee a written request for such review. The request must be filed within 60
days after the notice of denial is received, or within 60 days after the denial
is deemed to have occurred. The Executive may review pertinent documents and
submit issues and comments in writing within the same 60 day period. If a
request for review is filed, such review shall be made by the Committee within
60 days after receipt of such request, unless special circumstances require an
extension of time for processing, in which case the Executive shall be so
notified and a decision shall be rendered as soon as possible, but not later
than 120 days after receipt of the request for review. Upon completion of the
review, the Executive shall be given written notice of the decision resulting
from such review, which notice shall include specific reasons for the decision
and specific references to the pertinent Agreement provisions on which the
decision is based.
SECTION 15. SEVERABILITY.
In the event that any provision of the Agreement shall be held invalid or
illegal for any reason, any illegality or invalidity shall not affect the
remaining parts of the Agreement. Instead, the Agreement shall be construed and
enforced as if the illegal or invalid provision had never been inserted and the
Company shall have the privilege and opportunity to correct and remedy such
questions of illegality or invalidity by amendment.
SECTION 16. APPLICABLE LAW.
To the extent that state law applies, the Agreement shall be governed and
construed in accordance with the laws of the Commonwealth of Pennsylvania.
SECTION 17. AMENDMENT AND TERMINATION.
The Company and the Executive may amend or terminate this Agreement only by
mutual assent as evidenced by a written documentation. In the event that the
Agreement is terminated during the Supplemental Retirement Period at a time in
which the Executive is entitled to future payments under the Agreement, the
Executive will receive a lump-sum cash payment of the present value of any such
remaining benefits. The present value amount shall be determined in accordance
with the assumptions set forth in Appendix A. In any event, this Agreement shall
terminate immediately upon the Executive's receipt of all benefits under this
Agreement or in the event that the Executive's Termination Date is before or
after the Supplemental Retirement Period.
IN WITNESS WHEREOF, the Company and the Executive have caused this
Agreement to be executed as of the date first written above.
ATTEST: EQUITABLE RESOURCES, INC.
/s/ Xxxxxx X. Xxxxxxx /s/ Xxxxxx X. Xxxxxx
______________________________________ By: __________________________________
Vice President and Corproate Secretary Xxxxxx X. Xxxxxx
President and
Chief Executive Officer
WITNESS: XXXXX X. XXXXXX
/s/ X. X. Xxxxxxx /s/ X. X. Xxxxxx
______________________________________ ______________________________________
APPENDIX A
The annuity assumptions that shall be used to determine the ERI Annuity Amount
shall be as follows:
The annual rate of interest on 30-year Treasury securities for the November
preceding the Executive's Termination Date (the "GATT Rate").
The 1983 Group Annuity Mortality Table, with a 50%/50% weighting of the
male/female mortality rates, without projection (the "GAM83 50/50 Table").
