<PAGE> 1
[LOGO]
NOTICE OF 1994 ANNUAL MEETING OF SHAREHOLDERS
- --------------------------------------------------------------------------------
The Annual Meeting of Shareholders of Equitable Resources, Inc. will be
held on Friday, May 27, 1994, at 10:00 a.m., Eastern Daylight Time, in the Union
Trust Building at Two Mellon Bank Center, 10th Floor, 501 Grant Street,
Pittsburgh, Pennsylvania, for the following purposes:
(1) To elect four directors, each to serve for a term of three years.
(2) To ratify the appointment of the firm of Ernst & Young as auditors for
the year 1994.
(3) To consider and act upon a proposal to approve the 1994 Equitable
Resources, Inc. Non-Employee Directors' Stock Incentive Plan.
(4) To consider and act upon a proposal to approve the 1994 Equitable
Resources, Inc. Long-Term Incentive Plan.
(5) To consider and act upon a shareholder-proposed resolution (designated
as "Shareholder Proposal" in the accompanying proxy statement) if
presented at the meeting.
(6) To transact such other business as may properly come before the meeting
or any adjournment thereof.
The Board of Directors has fixed the close of business on April 7, 1994, as
the record date for determining shareholders entitled to notice of, and to vote
at, the meeting or any adjournment thereof.
If you plan to attend the meeting, please complete and return the form on
the last page of the accompanying proxy statement. An admission card will be
mailed to you prior to the meeting. Presentation of the admission card upon
arrival will expedite registration.
By Order of the Board of Directors
AUDREY C. MOELLER
Vice President and Corporate
Secretary
April 12, 1994
YOUR VOTE IS IMPORTANT. PLEASE SIGN, DATE AND
MAIL THE ENCLOSED PROXY AS SOON AS POSSIBLE
<PAGE> 2
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MAY 27, 1994
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Equitable Resources, Inc. (the "Company")
for use at the Annual Meeting of Shareholders of the Company on Friday, May 27,
1994, and at any adjournment thereof. Any proxy given pursuant to this
solicitation may be revoked at any time by written or oral notice to the
Corporate Secretary prior to exercise of the proxy. The shares represented by
the proxy will be voted and, where the shareholder specifies in the proxy a
choice with respect to any matter to be acted upon, the shares will be voted in
accordance with the specification made. Except as otherwise noted, abstentions
and broker non-votes on returned proxies and ballots shall be counted as neither
for nor against a matter or nominee but the shares represented by such an
abstention or broker non-vote shall be considered present at the Annual Meeting
for quorum purposes. This proxy statement and accompanying proxy will be mailed
to holders of common stock on or about April 12, 1994.
VOTING SECURITIES AND RECORD DATE
Shareholders of record at the close of business on April 7, 1994, are
entitled to notice of and to vote at the Annual Meeting. On that date,
34,495,417 shares of common stock were outstanding and entitled to be voted.
Record holders are entitled to one vote for each share held on all matters to be
voted upon at the Annual Meeting and have cumulative voting rights in the
election of directors.
Shares of common stock credited to the accounts of participants in the
Dividend Reinvestment and Stock Purchase Plan of the Company have been added to
such persons' other holdings on their proxy card. Mellon Bank, N.A., the Agent
for such Plan, will vote the shares held in accordance with the instructions on
the returned proxy cards. Employees holding Company stock in the 401(k) Employee
Savings Plan will receive separate proxy cards and their votes will be cast by
PNC Bank, as Trustee, in accordance with the instructions on the returned proxy
cards.
Except as set forth below, the Company does not know of any holder who has
or shares voting or investment power over more than 5% of the Company's common
stock.
<TABLE>
<CAPTION>
SHARES PERCENT OF
BENEFICIALLY COMMON STOCK
NAME & ADDRESS OWNED OUTSTANDING
---------------------------------------------- ------------ ------------
<S> <C> <C>
The Prudential Insurance Company of America1 1,665,800 5.3%
Prudential Plaza
Newark, NJ 07102
</TABLE>
No nominee, director or officer beneficially owned more than .14% of the
outstanding shares of the Company's common stock and all nominees, directors and
officers as a group beneficially owned approximately 1% of such shares. In
computing the percentage ownership for each individual and all nominees,
directors and officers as a group, the shares subject to acquisition within 60
days by the particular individual and group are deemed outstanding.
- ---------
1 This information is based on a Schedule 13G for the year ended December 31,
1993, filed with the Securities and Exchange Commission, reporting that The
Prudential Insurance Company of America, a registered broker-dealer and
registered investment adviser, had sole voting and sole dispositive power as
to 3,825 shares and shared voting and shared dispositive power as to 1,661,975
shares.
1
<PAGE> 3
ITEM NO. 1
ELECTION OF DIRECTORS
Pursuant to the Company's Articles, the Board of Directors is divided into
three classes and the term of one class expires each year. The terms of four
directors, Clifford L. Alexander, Jr., E. Lawrence Keyes, Jr., Thomas A.
McConomy and Malcolm M. Prine, expire in 1994. These four positions on the Board
of Directors will be filled at the Annual Meeting.
To be eligible for election as directors, persons nominated other than by
the Board of Directors must be nominated in accordance with the procedures set
forth in the By-Laws which require that notice be received by the Corporate
Secretary at least 60 days, but not more than 90 days, prior to the date of the
Annual Meeting containing certain information regarding the person or persons to
be nominated and the shareholder giving such notice.
Record holders of common stock have cumulative voting rights with respect
to the election of directors. Cumulative voting entitles each record shareholder
to as many votes as shall equal the number of whole shares held by such
shareholder multiplied by the number of directors to be elected, and each such
shareholder may cast all of such votes for a single nominee or may distribute
them among any two or more nominees as such shareholder sees fit. The nominees
receiving the highest number of votes are elected.
Unless authority to do so is withheld, it is intended that the proxies
solicited by the Board of Directors will be voted for the nominees named. Unless
otherwise indicated on the proxy by the shareholder, the votes represented by
any proxy may be cumulated and voted at the discretion of the persons named as
proxies in favor of any one or more of the nominees. The effect of cumulation
and voting in accordance with this discretionary authority may be to offset the
effect of a shareholder's having withheld authority to vote for individual
nominees because the persons named as proxies will be able to allocate the votes
of shareholders who have not withheld authority to vote in any manner they
determine among the nominees. If any of the nominees becomes unavailable for
election for any reason, the persons named as proxies in the accompanying proxy
intend to vote for such substitute nominees as the Board may propose, unless the
Board adopts a resolution reducing the number of directors.
The information set forth below is given as of April 7, 1994. Each nominee
for election at this meeting and each director continuing in office has had the
same principal occupation during the past five years unless otherwise indicated.
Each individual has sole voting power and sole investment power with respect to
the shares shown, except as indicated in the footnotes below.
NOMINEES FOR TERMS EXPIRING IN 1997
- -------------------
CLIFFORD L. ALEXANDER, JR.--Age 60--Director since January
1987. President of Alexander & Associates, Inc. (management
consulting firm). Also a director of American Home Products,
Dreyfus Family of General & Premier Funds, Dreyfus Third
Century Fund, The Dunn & Bradstreet Corporation, MCI
Communications Corporation and Mutual of America Life
Insurance Company.
Member: Audit and Pension Trust Investment Committees
Shares owned: 1,350 (a)(b)
2
<PAGE> 4
- -------------------
E. LAWRENCE KEYES, JR.--Age 64--Director since May 1988.
President, Fortune Group Consulting, Inc. (management
consulting firm) since November 1992; Partner, The Fortune
Group since January 1987. Also a director of Laclede Steel
Company.
Member: Compensation, Corporate Development and Pension Trust
Investment Committees
Shares owned: 1,200(b)
- -------------------
THOMAS A. MCCONOMY--Age 60--Director since May 1991.
President and Chief Executive Officer, Calgon Carbon
Corporation (manufactures and markets activated carbon and
related products and services). Also a director of Calgon
Carbon Corporation.
Member: Compensation and Pension Trust Investment Committees
Shares owned: 1,200 (a)(b)
- -------------------
MALCOLM M. PRINE--Age 65--Director since May 1982. Chairman
and Chief Executive Officer, Bundy Industries, Inc.
(manufacturer of commercial baking products) since December
1989; Chairman, Bundy Industries, Inc., June 1988; financial
consultant, May 1987 through April 1990. Also a director of
Pennsylvania Capital Bank and Rymac Mortgage Investment Corp.
Member: Audit, Corporate Development and Pension Trust
Investment Committees
Chairman: Corporate Development Committee
Shares owned: 1,519 (b)
DIRECTORS WHOSE TERMS EXPIRE IN 1995
- -------------------
FREDERICK H. ABREW--Age 56--Director since December 1988.
President and Chief Operating Officer of the Company since
December 1993; Executive Vice President and Chief Operating
Officer, June 1992 until December 1993; Executive Vice
President, June 1991 through May 1992; Executive Vice
President--Utility Services, June 1988 through May 1991.
Shares owned: 58,511 (d)(e)
- -------------------
DONALD I. MORITZ--Age 66--Director since June 1972. Chairman
and Chief Executive Officer of the Company since December
1993; President and Chief Executive Officer until December
1993. Also a director of PNC Bank Corp.
Member: Corporate Development and Nominating Committees
Shares owned: 105,827 (a)(d)(e)(f)
3
<PAGE> 5
- -------------------
DANIEL M. ROONEY--Age 61--Director since May 1986. President
and Director of Pittsburgh Steelers Sports, Inc.
(professional football franchise).
Member: Audit and Compensation Committees
Chairman: Audit Committee
Shares owned: 1,950(b)
DIRECTORS WHOSE TERMS EXPIRE IN 1996
- -------------------
MERLE E. GILLIAND--Age 72--Director since November 1984.
Retired Chairman and Chief Executive Officer of PNC Bank
Corp. (bank holding company).
Member: Compensation, Corporate Development and Nominating
Committees
Chairman: Compensation Committee
Shares owned: 1,950(a)(b)
- -------------------
DAVID S. SHAPIRA--Age 52--Director since May 1987. Chief
Executive Officer of Giant Eagle, Inc. (retail grocery store
chain) since April 1992; President and Chief Executive
Officer of Giant Eagle, Inc. to April 1992; Chairman of the
Board of Phar-Mor, Inc. (retail chain of general merchandise
and variety stores) since February 1993; Chief Executive
Officer of Phar-Mor, Inc., March 1984 to February 1993. Also
a director of Action Industries, Inc., The Bell Telephone
Company of Pennsylvania and Mellon Bank Corporation.
Member: Corporate Development, Nominating and Pension Trust
Investment Committees
Chairman: Pension Trust Investment Committee
Shares owned: 1,575(b)(c)
- -------------------
BARBARA BOYLE SULLIVAN--Age 56--Director since October 1979.
President of Boyle/Kirkman West, Inc. (human resources
consulting); Managing Partner of Innovation Associates, Inc.
(management consulting company) July 1988 through December
1992.
Member: Audit, Compensation and Nominating Committees
Chairman: Nominating Committee
Shares owned: 2,216 (a)(b)
ALL NOMINEES, DIRECTORS AND OFFICERS (INCLUDING THOSE NAMED ABOVE) 336,081
SHARES (A)(B)(C)(D)(E)(G)
- ---------
(a) Includes shares held jointly with spouse as to which voting power and
investment power are shared. In the case of Mr. Alexander, includes shares
held jointly with daughter as to which voting power and investment power are
shared.
4
<PAGE> 6
(b) Includes 450 shares issued conditionally under the Non-Employee Directors'
Stock Incentive Plan as to which the individual has sole voting power only.
(c) Includes 1,125 shares held in a trust of which Mr. Shapira is a co-trustee
and has a beneficial interest and shares voting and investment power.
(d) Includes the following shares which may be acquired within 60 days of April
7, 1994, through the exercise of stock options: Mr. Moritz--3,093; Mr.
Abrew--41,400; and all nominees, directors and officers as a group,
including such persons--126,993 shares.
(e) Includes shares held in escrow as a result of restricted stock awards as to
which the individual has sole voting power only: Mr. Moritz--44,250; Mr.
Abrew--6,750; and all nominees, directors and officers as a group, including
such persons--59,250 shares.
(f) Does not include 1,350 shares owned by Mr. Moritz's wife as to which he
disclaims beneficial ownership.
(g) Includes shares allocated under the Company's Employee Savings Plan as to
which the individual has sole voting power only: all nominees, directors and
officers as a group--1,190 shares.
BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors held six regular meetings and two special meetings
during 1993. The standing committees of the Board are the Audit, Compensation,
Corporate Development, Nominating and Pension Trust Investment Committees. All
directors, with the exception of Messrs. Alexander and Rooney, attended at least
75% of Board and Committee meetings. Mr. Alexander attended 71% while Mr. Rooney
attended 65% of such meetings. During 1993, attendance of the directors at Board
and Committee meetings averaged 90%.
The Audit Committee consists of four non-employee directors. It reviews the
annual financial statements of the Company, examines and considers the scope and
adequacy of audits performed by the independent auditors and the Company's
internal auditing staff, as well as other financial affairs of the Company;
recommends to the Board of Directors an independent auditing firm to audit the
Company's financial statements; reviews the adequacy of internal controls and
management's implementation of recommendations made by the independent auditors
and by the internal auditors with respect to their audit activities; and
approves fees charged by the independent auditors. The Committee met three times
in 1993.
The Compensation Committee consists of five non-employee directors. It
reviews the salaries of all executive officers and makes recommendations to the
Board of Directors for its approval. It also administers the Company's Key
Employee Restricted Stock Option and Stock Appreciation Rights Incentive
Compensation Plan and the Short-Term Incentive Compensation Plan. The Committee
met six times in 1993.
The Corporate Development Committee consists of four non-employee directors
and one employee director. It examines proposed acquisitions and similar new
ventures and advises management with regard to the expansion or disposition of
the Company's businesses through mergers, acquisitions, sales and similar
transactions. The Committee met three times in 1993.
The Nominating Committee consists of three non-employee directors and one
employee director. It acts as the selection committee to recommend candidates
for election to the Board. The Committee, in making such recommendations,
attempts to locate candidates for Board membership who have attained a prominent
position in their field of endeavor and whose backgrounds indicate that they
have broad knowledge and experience and the ability to exercise sound business
judgment. The Committee will consider nominees recommended by shareholders. Any
such recommendation, together with the nominee's qualifications and consent to
be considered as a nominee, should be sent to the Corporate Secretary. The
Committee held one meeting during 1993.
The Pension Trust Investment Committee consists of five non-employee
directors. Its function is to monitor the investment performance of those
designated to manage the investment of the assets of the Company-maintained
pension plans; establish broad investment policy or objectives; and select
investment fund managers. The Committee met three times in 1993.
5
<PAGE> 7
DIRECTORS' COMPENSATION AND RETIREMENT PROGRAM
Directors who are not officers of the Company receive (i) an annual
retainer of $20,000 payable quarterly; (ii) a fee of $750 for each Board meeting
attended; (iii) a fee of $750 for each Committee meeting attended unless the
Committee meeting is held on the same day as a Board meeting or another
Committee meeting, in which case the fee is $500; and (iv) a fee of $500 for
participation in a telephonic meeting. Under a deferred compensation plan for
non-employee directors, these fees may be deferred until termination of services
as a director or such earlier time as the director may elect.
All non-employee directors who have reached age 58 at the date of
retirement as a director with at least 60 months of service as a director
qualify for benefits under a retirement program for the directors. A qualified
director who retires as a director after reaching age 72 with at least 60 months
of service, or retires prior to age 72 with at least 120 months of service, is
entitled to receive a benefit equal to the quarterly retainer for 40 quarters or
until death, whichever occurs first. A qualified director who retires as a
director prior to age 72 with less than 120 months of service is entitled to
receive a benefit payable for 40 quarters or until death, whichever occurs
first, equal to 50% of the quarterly retainer, plus 10% for each additional 12
months of service in excess of 60 months.
In recognition of services rendered by non-employee directors and
furtherance of its community support, the Company has established a Life
Insurance Program to fund contributions to qualified organizations upon the
death of a director. Each participating director is insured for $500,000 under
policies owned by the Company. Where possible, policies are written on two
directors' lives, with $500,000 payable at each death. The program restricts
bequests to civic, charitable and educational organizations with emphasis on
those in the Company's operating/service areas. New directors elected subsequent
to December 1992 will qualify for participation after serving on the Board for
thirty-six months. The cost of the program is nominal.
The Board of Directors approved, subject to shareholder approval, a
Non-Employee Directors' Stock Incentive Plan effective January 21, 1994. Under
the terms of this Plan, each director received, on February 3, 1994, a
conditional restricted stock grant of 450 shares of common stock and will also
receive an annual option, beginning June 1, 1994, to purchase 500 shares of the
Company's common stock.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has entered into an agreement to purchase a 49% interest in a
business aircraft from Phar-Mor of Ohio, Inc. for $1,311,000. This same 49%
interest was sold to Phar-Mor of Ohio, Inc. in December 1991 for $1,633,623. The
Company currently owns a 51% interest in this aircraft. David S. Shapira, a
Director of the Company, is a Director of Phar-Mor of Ohio, Inc. and Chief
Executive Officer and a Director of Giant Eagle, Inc., which has a substantial
ownership interest in Phar-Mor of Ohio, Inc.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
On August 17, 1992, voluntary petitions pursuant to Chapter 11 of the U.S.
Bankruptcy Code were filed by Phar-Mor, Inc. and fifteen of its related
entities. Mr. Shapira was the Chief Executive Officer of Phar-Mor, Inc. at that
time, and Chief Executive Officer of Phar-Mor Real Estate, Inc., one of the
affiliated entities which filed bankruptcy. Currently, Mr. Shapira is Chairman
of the Board of Phar-Mor, Inc. and Chairman of Phar-Mor Real Estate, Inc.
6
<PAGE> 8
EXECUTIVE COMPENSATION
There is shown below information concerning the annual and long-term
compensation for services in all capacities to the Company for the years 1991,
1992, and 1993 of those persons who were, at December 31, 1993, (i) the chief
executive officer and (ii) the other four most highly compensated executive
officers of the Company. No information is included in the table for any year
during which an individual was not an executive officer of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------------------------- -------------------------
AWARDS
--------------------------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL COMPENSATION AWARD(S) OPTIONS/ COMPENSATION
POSITION YEAR SALARY ($) BONUS ($)(2) ($)(4) ($)(5) SARS # ($)(4)(6)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Donald I. Moritz 1993 439,585 264,300 2,371 0 3,093 16,651
Director, Chairman
and 1992 417,504 0 2,097 0 0 0
Chief Executive
Officer 1991 400,419 50,000 1,006,250 0
Frederick H. Abrew 1993 277,585 141,200 204 0 32,400 5,544
Director, President
and 1992 252,589 0 1,014 0 0 0
Chief Operating
Officer 1991 230,508 42,700 80,500 18,000
Harry E.
Gardner, Jr.(1) 1993 192,915 54,100 0 0 11,000 5,774
Vice President-- 1992 185,449 0 0 0 0 0
Energy Resources
Augustine A.
Mazzei, Jr. 1993 171,416 64,900 209 0 8,700 3,414
Senior Vice President 1992 165,756 0 195 0 0 0
and General Counsel 1991 160,088 25,400 0 3,000
Richard Riazzi 1993 155,754 107,144(3) 657 0 11,600 967
Vice President-- 1992 147,756 107,144(3) 550 0 0 0
Energy Group 1991 141,192 101,040(3) 0 30,000
</TABLE>
- ---------
(1) First elected as an officer June 1992.
(2) Paid under the Company's Short-Term Incentive Compensation Plan unless
otherwise noted.
(3) Bonus award under a plan for the Company's marketing subsidiary.
(4) Does not include information with respect to 1991.
(5) Dividends are paid on the restricted stock awards. The number and value of
aggregate restricted stock holdings at December 31, 1993 were as follows:
<TABLE>
<S> <C>
D.I. Moritz 44,250 shares -- $1,620,656
F.H. Abrew 6,750 shares -- $ 247,219
A.A. Mazzei, Jr. 3,750 shares -- $ 137,344
</TABLE>
(6) Includes the term insurance benefit and interest on cumulative Company funds
used to pay the remaining premium for split-dollar life insurance policies
(each based on applicable Internal Revenue Service rates); and matching
contributions to the Company's Employee Savings Plan, as follows:
<TABLE>
<CAPTION>
TERM SAVINGS PLAN
INSURANCE INTEREST CONTRIBUTION
--------- -------- ------------
<S> <C> <C> <C>
D. I. Moritz $ 1,436 $ 14,391 $824
F. H. Abrew 667 4,053 824
H. E. Gardner, Jr. 213 4,737 824
A. A. Mazzei, Jr. 460 2,130 824
R. Riazzi 36 652 279
</TABLE>
7
<PAGE> 9
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
NUMBER OF VALUE OF
SECURITIES UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS/SARS AT
OPTIONS/SARS AT FISCAL YEAR-
FISCAL YEAR-END END($)
---------------- ---------------
SHARES EXERCISABLE/
ACQUIRED ON VALUE UNEXERCISABLE EXERCISABLE/
NAME EXERCISE(#) REALIZED($) (1) UNEXERCISABLE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Donald I. Moritz Options 0 0 0/3,093 0/387
SARs 0 0 0/0 0/0
Frederick H. Abrew Options 0 0 9,000/32,400 148,455/4,050
SARs 0 0 9,000/0 88,155/0
Harry E. Gardner, Jr. Options 2,250 40,500 6,750/11,000 112,301/1,375
SARs 2,250 27,383 6,750/0 67,346/0
Augustine A. Mazzei, Jr. Options 0 0 0/8,700 0/1,088
SARs 0 0 0/0 0/0
Richard Riazzi Options 0 0 15,000/11,600 247,425/1,450
SARs 0 0 15,000/0 146,925/0
</TABLE>
- ---------
(1) Options and SARs are exercisable six months after grant; shares are
restricted (in escrow) and subject to forfeiture for three years from the
date of grant.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
- ---------------------------------------------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF PERCENT OF TOTAL ANNUAL RATES OF
SECURITIES OPTIONS/SARS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM($)
OPTIONS/SARS EMPLOYEES BASE PRICE EXPIRATION --------------------
NAME GRANTED(1) IN FISCAL YEAR PER SHARE($) DATE 5%(2) 10%(2)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Donald I. Moritz 3,093 2.08% 36.50 July 16, 1998 31,317 68,819
Frederick H. Abrew 32,400 21.81% 36.50 July 16, 1998 328,050 720,900
Harry E. Gardner, Jr. 11,000 7.41% 36.50 July 16, 1998 111,375 244,750
Augustine A. Mazzei, Jr. 8,700 5.86% 36.50 July 16, 1998 88,088 193,575
Richard Riazzi 11,600 7.81% 36.50 July 16, 1998 117,450 258,100
</TABLE>
(1) Options and SARs are exercisable six months after grant; shares are
restricted (in escrow) and subject to forfeiture for three years from the
date of grant.
(2) The assumed annual rates of appreciation of 5 and 10 percent over the life
of the options would result in the price of the Company's stock increasing
to $46 5/8 and $58 3/4, respectively. During the past five years, the market
price of the Company's stock has increased at a compounded annual rate of
10.1 percent.
8
<PAGE> 10
SHAREOWNER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total shareowner return on the Company's Common Stock against the
cumulative total return of the S&P 500 Index and Value Line Diversified Natural
Gas Group for the five-year period 1988-1993.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG COMPANY,
S&P 500 INDEX AND VALUE LINE DIVERSIFIED NATURAL GAS GROUP
<TABLE>
<CAPTION>
EQUITABLE
MEASUREMENT PERIOD RESOURCES S&P 500 VL PEER
(FISCAL YEAR COVERED) INC. INDEX GROUP
- ------------------------------ ----------- --------- ---------
<S> <C> <C> <C>
1988 100 100 100
1989 127 132 145
1990 120 127 122
1991 135 166 109
1992 172 179 129
1993 193 197 156
</TABLE>
ASSUMES $100 INVESTED 12/31/88 IN EQT STOCK, S&P 500 INDEX
AND VALUE LINE DIV. NATURAL GAS GROUP (DIVIDENDS REINVESTED)
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Compensation for the executive officers of the Company is administered
under the direction of the Compensation Committee of the Board (the "Committee")
which currently consists of five independent Directors. There are no
"Compensation Committee Interlocks" or "Insider Participation," which the
Securities and Exchange Commission ("SEC") regulations would require to be
disclosed in this proxy statement. The Committee submits its recommendations for
executive base salary changes to the full Board of Directors. All other
components of executive compensation are acted upon by the Committee and those
actions taken are reported to the Board of Directors. The Committee oversees
compensation arrangements previously approved by the Board of Directors
applicable to the executive group, those being executive base salaries, the
Short-Term Incentive Compensation Plan, the Key Employee Restricted Stock Option
and Stock Appreciation Rights Incentive Compensation Plan, and broad-based
employee and executive benefits plans.
The following is the Compensation Committee's report, in its role as
overseer of the Company's executive pay programs, on 1993 compensation practices
for the executive officers of the Company.
9
<PAGE> 11
COMPENSATION POLICIES ATTRIBUTABLE TO EXECUTIVE OFFICERS
Equitable Resources, Inc. is a fully integrated energy company consisting
of two major segments: Energy Resources, which is dedicated to exploration,
development, production, gathering and marketing of natural gas and crude oil,
intrastate transportation of natural gas, extraction and sale of natural gas
liquids and contract drilling; and Utility Services, which gathers, transports,
stores, and distributes natural gas, with the major portion being subject to
rate regulation by federal and state authorities. The Company's compensation
arrangements are designed to meet the requirements of each of these business
segments in terms of their unique business and human resource needs and goals,
while reinforcing the Company's ultimate objective of creating value for
shareholders.
In order to attract, motivate, and retain talented executives, the
Company's compensation policy considers the skills, talents, and experience
necessary for the successful operation and growth of each major business
segment, as well as the unique risk characteristics of each segment. To support
the Company's financial performance and shareholder value enhancement
objectives, incentive arrangements that focus on achievement of key annual
business objectives and the creation of long-term value are in place for the
Company's executives.
In particular, the Company has maintained a series of executive
compensation programs for a number of years, which are designed to achieve the
level of professional expertise and commitment necessary to succeed in its
challenging business environment. These programs include:
- Base salaries that are consistent with competitive practices for
comparable positions in comparable business situations--competitive
practices are determined using independent industry surveys provided by
compensation consultants and publicly available compensation information
from peer companies.
- Short-term (annual) incentives which are funded when overall return on
total capitalization goals are attained and which are distributed to
Plan participants based on achievement of corporate, unit, and
individual performance goals identified annually; and
- Long-term reward programs that encourage share ownership by management,
reinforce value creation imperatives, align management's interest to
shareholder interests, and help assure retention of key executive
contributors.
The Compensation Committee believes that stock ownership by management is a
crucial tool for focusing management on the enhancement of the Company's
shareholder value. Thus, the Committee views stock options and other
equity-related arrangements as a key element of the executive compensation
program.
The Compensation Committee adheres to an Executive Compensation Policy as
the framework for managing the compensation program for executive officers,
which includes the following characteristics and guidelines:
BASE SALARIES
The executive salary structure is based upon studies prepared by
independent compensation consultants, primarily using salary surveys of twenty
(20) peer group companies that, including the Company, comprise The Value Line
Investment Survey--Natural Gas (Diversified) Industry Group. This survey data is
supplemented by data from the gas utility and oil/gas exploration and production
industries, as well as data from major Pittsburgh-based corporations. The base
salary levels are generally targeted at the 50th percentile of the combined
survey group.
Individual salary increases are based primarily upon individual
performance, which includes factors such as revenue growth, shareholder
appreciation, achievement of business plan and personal goals. Aggregate annual
salary increases for executive officers are based on factors such as the
Company's overall financial performance, which includes comparison to the same
peer group of companies referred to above and overall shareholder returns
adjusted for the Company's size relative to its peers. General economic
conditions and
10
<PAGE> 12
marketplace compensation trends are also considered. Independent compensation
consultants assist in the evaluation of the marketplace compensation trends.
Pursuant to these guidelines, annual salaries of the named executive
officers in the Summary Compensation Table on page 7 increased at the following
rates:
Donald I. Moritz, 5.9 percent; Frederick H. Abrew, 10.4 percent;
Augustine A. Mazzei, Jr., 3.0 percent; Richard Riazzi, 22.9
percent, and Harry E. Gardner, Jr., 2.6 percent. Messrs. Abrew's
and Riazzi's salary increases reflect increased organizational
responsibilities of each.
ANNUAL INCENTIVES
The Company's Short-Term Incentive Compensation Plan is structured so that
awards are commensurate with the performance level achieved; e.g. 75th
percentile performance will result in 75th percentile annual incentive payout,
and below average performance will receive no award.
The Committee approved the method of determining the 1993 goals for the
eight executive officers of the Company together with the 1993 performance
measures for the Energy Resources and the Utility Services business segments.
They also set and approved the maximum funding levels for the Incentive Plan.
The total annual funding of the Incentive Plan cannot exceed 2.5 percent of the
Company's net income.
The Company performance measures used to determine the level of payout to
those individuals listed in the Summary Compensation Table include the Company's
return on total capitalization ranking among The Value Line Investment
Survey--Natural Gas (Diversified) Industry Group, natural gas and oil reserve
additions and specific financial results for the Energy Resources business
segment and pretax operating income for the Company's marketing subsidiary. In
addition, individual performance which includes individual goals and overall
performance is evaluated.
Mr. Moritz was given the opportunity to earn a maximum annual incentive in
the amount of 65 percent and a target level incentive of 42 percent of his base
salary. The amount of the actual incentive payment for Mr. Moritz is determined
by two performance measures--return on total capitalization ranking (75 percent
weighting) and individual performance (25 percent weighting). For Mr. Moritz to
receive his maximum annual incentive, the Company must be the number one ranked
company in return on total capitalization and Mr. Moritz must achieve 91 percent
or more of his personal goals.
Messrs. Abrew, Gardner and Mazzei have maximum annual incentives ranging
from 45-55 percent of base salary and target level incentives ranging from 30-35
percent of base salary. Mr. Riazzi is included in the Equitable Resources
Marketing Company's (ERMCO) annual incentive plan. Under that plan Mr. Riazzi is
eligible to receive a percentage of pretax operating income as determined by
ERMCO's annual financial performance.
In the event that the Company's return on total capitalization ranking
among the 20 companies included in The Value Line Investment Survey--Natural Gas
(Diversified) Industry Group falls below 10, no annual incentive payments are
made.
The Summary Compensation Table on page 7 shows each executive officer's
annual bonus earned under the Company's Short-Term Incentive Compensation Plan
for 1993. For performance during 1993, Mr. Moritz earned an annual incentive
equal to 60 percent of his 1993 base salary, Mr. Abrew earned 51 percent of his
1993 base salary, Mr. Gardner earned 28 percent of his 1993 base salary, and Mr.
Mazzei earned 38 percent of his 1993 base salary. Mr. Riazzi earned 69 percent
of his 1993 base salary through a bonus paid under a plan for the Company's
marketing subsidiary.
LONG-TERM INCENTIVES
The Company utilizes combined stock options/stock appreciation rights and
restricted stock on a case-by-case basis to reinforce its value creation
imperatives, executive retention goals, and to support management ownership as
an effective means of aligning management to shareholder interests. Because
stock option grants
11
<PAGE> 13
and restricted stock awards do not vest for a minimum of three years,
stock-based compensation arrangements are tied to long-term value creation
performance and key executive retention. The award of stock options and/or
restricted stock under the Company's Key Employee Restricted Stock Option and
Stock Appreciation Rights Incentive Compensation Plan is based on the overall
financial performance of the Company, primarily the Company's return on its
total capitalization, and the individual performance of the participant. Among
the individual factors considered are managerial ability, individual
performance, succession planning, and executive development. Stock based awards
have been made without regard to the size of prior grants or the amount of stock
held by employees to whom such awards were made.
During 1993, the Committee approved a stock option award at the 50th
percentile level of the same peer group of companies previously referred to for
long-term incentive plans in place among the executive officers' compensation
peer group. The Committee determined the level of the stock options awarded
using the Black-Scholes option pricing model. The options granted can be
exercised at any time; however, for any options exercised within the first three
years of the grant date, the stock will not be distributed to the participant
until three years after the date of grant. All of the options granted expire no
later than five years after the award date. In the event that the employment of
a Long-Term Incentive Plan participant terminates, except for reasons of death,
or normal retirement, all restricted stock grants, stock option awards and stock
appreciation rights that have not vested are subject to forfeiture as of the
effective date of termination. The Options/SAR Grants in Last Fiscal Year table
on page 8 shows the terms of each award. Historically, stock option grants have
been the primary means of providing long-term incentive compensation to
executives. Stock appreciation rights have been granted in tandem with stock
options as a means of providing cash-based incentives to such executives.
Restricted stock has been granted primarily to the most senior executives to
reward exceptional performance. No restricted stock or stock appreciation rights
were awarded in 1993.
During 1993, the Committee, with the assistance of an independent
compensation consultant, evaluated the Company's Long-Term Incentive
Compensation Plan as it compared to like plans at peer group companies. As a
result of this evaluation, the Committee recommended to the Board of Directors
and the Board of Directors approved, subject to shareholder approval, a new
Long-Term Incentive Plan effective January 21, 1994. See page 17 for a
description of this Plan. The new Plan will further the Board's goal of linking
management performance with long-term shareholder interest by providing the
Board with greater flexibility in packaging stock incentives and by gradually
raising stock award levels to the 75th percentile of the Company's peer group.
BENEFITS BASED ON RETIREMENT OR DEATH UNDER PLANS
Benefits are based on retirement or death under the Retirement Plan, the
Supplemental Pension Plan, the Supplemental Executive Retirement Plan, and the
optional Split-Dollar Life Insurance Program. Estimated benefits payable under
the Retirement Plans are shown in the Pension table on page 14. Estimated
benefits paid under the Split-Dollar Life Insurance Program are shown in the
Summary Compensation table on page 7.
1993 COMPENSATION FOR THE CEO OF EQUITABLE - DONALD I. MORITZ
Mr. Moritz is eligible to participate in all compensation programs
available to executives. The factors considered for Mr. Moritz's 1993 incentive
were discussed earlier in the Committee's report. In addition to the particulars
discussed earlier, the Committee also considered the following items when
evaluating Mr. Moritz's total compensation level in 1993:
- Net income for 1993 was the second highest in the Company's history.
1993 net income exceeded that of 1992 by 22 percent or $13.5 million.
- For calendar year 1993, the Company's return on total capitalization
ranked second in the Value Line peer group. Mr. Moritz's total combined
compensation (base salary, annual and long-term incentives) ranked in
the bottom quartile of the peer group CEO's.
12
<PAGE> 14
- Mr. Moritz has demonstrated a consistent ability to help increase the
Company's value to the shareholders. During the last five years, the
Company's total shareholder return has exceeded that of its peer group
average by 25 percent, which places the Company in the top quartile.
- The successful acquisition of Louisiana Intrastate Gas Corporation and
Hershey Oil Corporation (Alberta, Canada). These strategic acquisitions
are expected to contribute to the long-term enhancement of the Company's
earnings.
Based upon all of the information considered, the Committee believes that
the component parts of Mr. Moritz's total annual compensation (base salary
increase, annual incentive, and long-term incentive within the limits of the
plan) portray a conservative compensation package as related to this Company's
peers, the financial performance of the Company, as well as Mr. Moritz's long
and successful tenure as the Chief Executive Officer of the Company.
The foregoing report has been furnished by the Compensation Committee of
the Board of Directors.
Merle E. Gilliand, Chairman
E. Lawrence Keyes, Jr.
Thomas A. McConomy
Daniel M. Rooney
Barbara B. Sullivan
EMPLOYMENT CONTRACTS AND CHANGE-IN-CONTROL ARRANGEMENTS
Frederick H. Abrew and Augustine A. Mazzei, Jr. are employed under
agreements with the Company dated as of March 18, 1988, amended June 1, 1989,
and extended annually. Mr. Abrew is employed at present as President and Chief
Operating Officer, and Mr. Mazzei is employed at present as Senior Vice
President and General Counsel at minimum annual salaries of $318,000 and
$173,500, respectively, subject to annual increases at the discretion of the
Board. The agreements with Messrs. Abrew and Mazzei terminate on the date of the
executive's retirement in accordance with the provisions of the Company's
retirement policy as set forth in its Management Manual unless terminated
earlier under the provisions of the contracts.
Each of the contracts provides that if the Company terminates the
employment of the executive (other than for cause) or reduces the executive's
duties or compensation (other than for good reason), the executive will be
entitled to (1) his full base salary through the date of termination at the rate
in effect at the time notice of termination was given; (2) payments equivalent
to the discounted value of the executive's annual salary then in effect for the
duration of the contract; (3) an amount of cash equal to the value of any
outstanding stock options and stock appreciation rights, which value is
determined from the closing price as reported on the New York Stock Exchange on
the date of termination; (4) payment of all legal fees and expenses which the
executive may incur as a result of the Company's contesting the validity or
enforceability of the employment contract; (5) the continuation of employee
benefits for the term of the agreement; and (6) all benefits payable under the
Company's Pension Plan for Salaried Employees.
Upon certain change-in-control events, shares or cash normally placed into
escrow upon the exercise of stock options or stock appreciation rights shall
instead be transferred to employees free of escrow restrictions, and shares and
cash already held in escrow will likewise be immediately transferred to
employees free of restrictions.
PENSION PLAN
The Company's pension plan covering salaried employees is a
non-contributory defined benefit plan. The plan provides for pensions based upon
credited years of service and average base salary during the highest paid
consecutive five years during the last ten years of employment. The following
table presents estimated annual retirement benefits payable upon normal
retirement at age 65 and assumes a straight life annuity with no
13
<PAGE> 15
survivor option. The pension plan is a step rate plan and is integrated with
social security; the estimated benefits shown do not include social security
benefits.
<TABLE>
<CAPTION>
HIGHEST CONSECUTIVE
5-YEAR ANNUAL RETIREMENT BENEFITS
AVERAGE COMPENSATION FOR CREDITED YEARS OF SERVICE
- ----------------------- -------------------------------------------------------------------------------
15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS 40 YEARS
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
$150,000 $ 35,667 $ 47,556 $ 59,445 $ 71,334 $ 83,223 $ 84,484
200,000 48,192 64,256 80,320 96,384 112,448 113,708
250,000 60,717 80,956 101,195 121,434 141,673 142,933
300,000 73,242 97,656 122,070 146,484 170,898 172,158
350,000 85,767 114,356 142,945 171,534 200,123 201,383
400,000 98,292 131,056 163,820 196,584 229,348 230,608
450,000 110,817 147,756 184,695 221,634 258,573 259,833
500,000 123,342 164,456 205,570 246,684 287,798 289,058
550,000 135,867 181,156 226,445 271,734 317,023 318,283
</TABLE>
In addition to base salary, compensation for executive officers includes
bonuses paid under the Company's Short-Term Incentive Compensation Plan which
are funded through the Supplemental Executive Retirement Plan.
The credited years of service as of December 31, 1993 for the persons named
in the Summary Compensation Table were as follows: Mr. Moritz, 41 years; Mr.
Abrew, 13 years; Mr. Gardner, 23 years; Mr. Mazzei, 21 years; and Mr. Riazzi, 13
years.
With certain exceptions, the Internal Revenue Code (the "Code") prohibits
benefits based on earnings in excess of $235,840 per year and restricts to an
aggregate amount of $115,641 (plus cost-of-living adjustments in each case) the
annual pension which may be paid by an employer from a plan which is qualified
under the Code for federal income tax purposes. The Company's Supplemental
Pension Plan and Supplemental Executive Retirement Plan provide for supplemental
payments to be made to salaried employees of the Company, where necessary, in
amounts sufficient to maintain total benefits upon retirement which would have
been provided by the pension plan had there been no such limitations. A Trust
has been established to which the Company has made contributions and plans to
make further contributions from time to time for the purpose of advance funding
of the Supplemental Plans.
ITEM NO. 2
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors, upon recommendation of the Audit Committee, has
reappointed Ernst & Young, certified public accountants, as auditors to examine
the consolidated financial statements of the Company and its subsidiaries for
the calendar year 1994. Ernst & Young, and its predecessor, have acted for the
Company as auditors since 1950. Although shareholder approval is not required
for the appointment of auditors, the Board of Directors believes shareholders
should participate through ratification. If such ratification is not obtained,
the Board will consider the appointment of other auditors for the following
year.
Representatives of Ernst & Young expect to be present at the annual meeting
to respond to appropriate questions and to make a statement if they desire to do
so.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT OF
ERNST & YOUNG.
14
<PAGE> 16
ITEM NO. 3
PROPOSAL TO APPROVE 1994 EQUITABLE RESOURCES, INC.
NON-EMPLOYEE DIRECTORS' STOCK INCENTIVE PLAN
On January 21, 1994, the Board of Directors of the Company adopted, subject
to approval by the Company's shareholders, the 1994 Equitable Resources, Inc.
Non-Employee Directors' Stock Incentive Plan (the "Directors' Plan"). Following
is a general summary of the Directors' Plan which is qualified in its entirety
by reference to the Directors' Plan which is included as Exhibit A to this proxy
statement.
The purposes of the Directors' Plan are to assist the Company in attracting
and retaining, as members of the Board of Directors, highly qualified persons
who are not employees of the Company or its subsidiaries while furthering the
identity of interests of non-employee Directors with those of the Company's
shareholders.
ADMINISTRATION
The Directors' Plan will be administered by the Compensation Committee of
the Board of Directors who will be authorized to interpret and administer the
Directors' Plan but who will have no authority or discretion to determine the
timing, amounts and terms of stock options and restricted stock grants awarded
under the Directors' Plan. All such matters are fixed and determinable by the
provisions of the Directors' Plan.
AMENDMENT AND TERMINATION
The Board of Directors may amend, discontinue or terminate the Directors'
Plan at any time without shareholder approval except to the extent that Federal
or state law or regulation require such approval, or that the Board of Directors
determines that shareholder approval is advisable. No shares may be granted
under the Directors' Plan after June 2, 1998.
ELIGIBILITY
There are currently eight non-employee Directors who are eligible to
receive stock options and restricted stock pursuant to the Directors' Plan.
GRANTS OF RESTRICTED STOCK
Conditional upon approval of the shareholders, the Directors' Plan provides
for the grant of 450 shares of restricted stock to each non-employee Director on
February 3, 1994. These shares will be held in escrow and released to the
Directors on November 27, 1994, except for any Director who has ceased to be a
Board member subsequent to the date of shareholder approval for reasons other
than death or disability (in which case the shares will be transferred to the
Director or his estate at the time of such event). In any case, no shares shall
be issuable under the Directors' Plan unless it is approved by the shareholders
of the Company.
GRANTS OF STOCK OPTIONS
On the first business day of June in each year from 1994 through 1998 each
Director shall automatically be granted an option for 500 shares of common
stock. The exercise price of each share will be 100% of the mean of the high and
low trading prices of the common stock on the date of grant. Each option is
exercisable upon the earlier of three years from the date of grant or the
Directors' termination of service by reason of retirement, disability or death.
Each option may be exercised for a period of five years after the date of its
grant.
SHARES SUBJECT TO THE PLAN
The maximum number of shares of common stock that may be issued under the
Directors' Plan is 80,000. That number is subject to adjustment by the
Compensation Committee in certain circumstances, including stock splits,
dividends, recapitalizations and major corporate changes. The market value of a
share of common
15
<PAGE> 17
stock based on the mean of the high and low prices on the New York Stock
Exchange Composite Tape on April 7, 1994 was $34.4375.
TRANSFERABILITY
A Director may not pledge or encumber any interest in a stock option or
restricted stock except in favor of the Company. Options may only be exercised
by the Director or their legal representative and may not be transferred to any
other party. The Compensation Committee may permit a Director to designate a
beneficiary to exercise an option and to receive a distribution upon the
Director's death.
CHANGE OF CONTROL
In the event of a change of control, as defined in the Directors' Plan, all
outstanding options shall become fully exercisable and all outstanding
restricted stock and stock option awards shall be surrendered to the Company in
exchange for a cash payment in accordance with a formula specified under the
Directors' Plan.
FEDERAL INCOME TAX CONSEQUENCES
A Director will not realize any taxable income upon the grant of a stock
option. A Director to whom shares of common stock are issued upon exercise of a
stock option will recognize taxable income in an amount equal to the difference
between the fair market value of the common stock at the time the stock is
exercised and the exercise price paid for the common stock. At that time the
Company will receive a corresponding Federal income tax deduction.
Absent making an election under Section 83(b) of the Internal Revenue Code
within thirty (30) days of the grant, in general, a Director who receives a
grant of restricted stock does not recognize taxable income for Federal income
tax purposes until the shares are released to the Director. At that time, the
tax is based on the then current market value of the stock. If a Director makes
a Section 83(b) election, the market value of the restricted stock at the time
it is granted is included in the Director's taxable income in the year of such
grant. The Company is entitled to a Federal income tax deduction in an amount
equal to the taxable income recognized by the Director in either instance.
NEW PLAN BENEFITS
The following table sets forth the benefits to be received under the
Directors' Plan, subject to shareholder approval:
<TABLE>
<CAPTION>
DOLLAR
NAME AND POSITION VALUE NUMBER OF UNITS
-------------------------------------------- -------- ---------------
<S> <C> <C>
Non-Executive Director Group................ $138,375 3,600(1)
Non-Executive Director Group................ 20,000(2)
</TABLE>
The affirmative vote of the holders of a majority of the shares of common
stock present in person or by proxy at the Annual Meeting and entitled to vote
is required to adopt the Directors' Plan. An abstention will in effect
constitute a vote against the proposal, while a broker non-vote will not be
counted.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THIS PROPOSAL.
- ---------
(1) Represents a restricted stock grant on February 3, 1994 of 450 shares of
common stock to each incumbent non-employee Director. The fair market value
of each share on that date was $38.4375.
(2) Represents a grant of 500 stock options to be made to each incumbent
non-employee Director on June 1, 1994 and each June 1 through 1998 if the
Directors' Plan is approved by the shareholders. The aggregate number of
shares shown is based on the assumption that there are no changes in the
composition of the Board of Directors during that period.
16
<PAGE> 18
ITEM NO. 4
PROPOSAL TO APPROVE 1994 EQUITABLE RESOURCES, INC.
LONG-TERM INCENTIVE PLAN
On January 21, 1994, the Board of Directors of the Company adopted, subject
to approval by the Company's shareholders, the 1994 Equitable Resources, Inc.
Long-Term Incentive Plan (the "Long-Term Incentive Plan"). Following is a
general summary of the Long-Term Incentive Plan which is qualified in its
entirety by reference to the Long-Term Incentive Plan which is included as
Exhibit B to this proxy statement.
The purposes of the Long-Term Incentive Plan are to assist the Company in
attracting and retaining highly qualified persons as employees of the Company,
to align the interests of key employees with those of the shareholders by
encouraging share ownership, and to focus key employees on performance that will
enhance shareholder value. The Long-Term Incentive Plan will replace the
Equitable Resources, Inc. Key Employee Restricted Stock Option and Stock
Appreciation Rights Incentive Compensation Plan, originally adopted in 1980 (the
"1980 Plan"). No future grants of stock options, stock appreciation rights or
restricted stock will be made under the 1980 Plan if the Long-Term Incentive
Plan is approved by the shareholders. In the judgment of the Board of Directors,
the Long-Term Incentive Plan will provide the Compensation Committee with
greater flexibility in designing appropriate stock-based incentives than was
provided by the 1980 Plan.
ADMINISTRATION
The Long-Term Incentive Plan will be administered by the Compensation
Committee of the Board of Directors (the "Compensation Committee") who will be
authorized to designate those individuals eligible to participate in the
Long-Term Incentive Plan; to determine the types, numbers and terms of awards
granted under the Plan; and to interpret and administer the Plan. The
Compensation Committee is composed of non-employee Directors who are not
eligible to receive any awards under the Long-Term Incentive Plan.
AMENDMENT AND TERMINATION
The Board of Directors may amend, discontinue or terminate the Long-Term
Incentive Plan at any time without shareholder approval except to the extent
that Federal or state law or regulation require such approval, or that the Board
of Directors determines that shareholder approval is advisable. No awards may be
granted under the Long-Term Incentive Plan after May 27, 1999.
ELIGIBILITY
Officers and key employees of the Company and its subsidiaries are eligible
to participate in the Long-Term Incentive Plan.
TYPES OF AWARDS
The Plan provides for the potential grant by the Compensation Committee of
the following types of awards:
Stock Options. The exercise price of each share of an option will be 100%
of the mean of the high and low New York Stock Exchange trading prices of the
Company's Common Stock on the date of grant. Such options shall be nonstatutory
stock options or incentive stock options. The term of each option shall be fixed
by the Compensation Committee but no incentive stock option shall be exercisable
more than ten years from the date of grant of the option.
Restricted Stock. The Committee may make restricted stock awards on such
terms and conditions as it determines. Except as otherwise determined by the
Compensation Committee, termination of an employee's employment during the
applicable restriction period will result in a forfeiture of the restricted
shares.
17
<PAGE> 19
Stock Appreciation Rights. SARs provide an employee a right to receive
upon exercise the difference between the fair market value of the number of
shares covered by the stock appreciation right on the date of exercise and the
grant price of the stock appreciation right (which is the fair market value of
the Company's Common Stock on the date of grant).
Deferred Stock. These awards provide for the delivery of shares upon
expiration of a deferral period specified by the Committee. Except as provided
by the Committee, termination of employment during the applicable deferral
period will result in a forfeiture of the right to receive the shares.
Other Awards. The Committee may also grant performance awards representing
the right to receive cash, stock or property based upon the attainment of
performance criteria specified by the Committee, dividend equivalents providing
the right to receive interest or dividends without ownership of securities to
which such interest or dividends relate, and other types of stock based awards.
GRANTS OF AWARDS
The Compensation Committee shall have the discretion to impose such terms
and conditions as it deems appropriate on any award granted under the Long-Term
Incentive Plan. Awards granted under the Long-Term Incentive Plan may be granted
either alone, or in addition to, in tandem with, or in substitution for any
other award granted under the Long-Term Incentive Plan or any other plan
maintained by the Company.
SHARES SUBJECT TO THE PLAN
The maximum number of shares of common stock that may be issued under the
Long-Term Incentive Plan is equal to 5% of the number of shares of the Company's
common stock outstanding on the date of shareholder approval. This number is
subject to adjustment by the Compensation Committee in certain circumstances,
including stock splits, dividends, recapitalizations and major corporate
changes. Stock options and stock appreciation rights granted to any single key
employees may not exceed 25% of the number of shares which are authorized to be
granted under the terms of the Long-Term Incentive Plan. The market value of a
share of common stock based on the mean of the high and low prices on the New
York Stock Exchange Composite Tape on April 7, 1994 was $34.4375.
TRANSFERABILITY
Awards granted under the Plan may not be transferred by an employee except
by will or the laws of descent and distribution and will be exercisable during
an employee's lifetime only by that employee. In certain cases, the Compensation
Committee may make exceptions to this restriction.
CHANGE OF CONTROL
In the event of a change of control, as defined in the Long-Term Incentive
Plan, all outstanding awards shall become fully exercisable and all outstanding
awards shall be surrendered to the Company in exchange for a cash payment in
accordance with a formula specified under the Long-Term Incentive Plan.
FEDERAL INCOME TAX CONSEQUENCE
An employee will not realize any taxable income upon the grant of a
nonstatutory stock option. An employee to whom shares of common stock are issued
upon exercise of a nonstatutory stock option will recognize taxable income in an
amount equal to the difference between the fair market value of the common stock
at the time the stock is exercised and the exercise price paid for the common
stock. At that time the Company will receive a corresponding Federal income tax
deduction.
In general, an employee will not recognize taxable income at the time an
incentive stock option is granted or exercised except that the excess of the
fair market value of the common stock acquired upon exercise of an incentive
stock option over the exercise price is potentially subject to the alternative
minimum tax. If the employee holds the shares acquired pursuant to an incentive
stock option for at least two years from the date of grant and for at least one
year from the date of exercise, the employee's gain will be taxed as a long-term
18
<PAGE> 20
capital gain in an amount equal to the difference between the exercise price and
the sales price. In that case, the Company is not entitled to a tax deduction.
If the employee disposes of the stock before the end of these holding periods,
he will recognize ordinary income upon sale of the stock and the Company will be
entitled to a corresponding tax deduction.
Absent making an election under Section 83(b) of the Internal Revenue Code
within thirty (30) days of the grant, in general, an employee who receives a
grant of restricted stock does not recognize taxable income for Federal income
tax purposes until the shares are released to the employee. At that time, the
tax is based on the then current market value of the stock. If an employee makes
a Section 83(b) election, the market value of the restricted stock at the time
it is granted is included in the employee's taxable income in the year of such
grant. The Company is entitled to a Federal income tax deduction in an amount
equal to the taxable income recognized by the employee in either instance.
The amount received by an employee upon exercise of a stock appreciation
right will be treated as ordinary income to the employee and the Company will be
entitled to a corresponding tax deduction.
The affirmative vote of the holders of a majority of the shares of common
stock present in person or by proxy at the Annual Meeting and entitled to vote
is required to adopt the Long-Term Incentive Plan. An abstention will in effect
constitute a vote against the proposal, while a broker non-vote will not be
counted.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THIS PROPOSAL.
ITEM NO. 5
SHAREHOLDER PROPOSAL
Progressive Securities Financial Services Corporation of Portland, Oregon,
on behalf of three of its clients who it states are the beneficial owners of a
total of 450 shares of the Company's common stock, advised the Company that a
representative of the filers would present the following preamble and resolution
at the Annual Meeting:
"PUBLIC ENVIRONMENTAL REPORTING
"WHEREAS WE BELIEVE:
"The responsible implementation of sound environmental policy increases
long-term shareholder value by increasing efficiency, decreasing
clean-up costs, reducing litigation, and enhancing public image and
product attractiveness;
"Adherence to public standards for environmental performance gives a
company greater public credibility than is achieved by following
standards created by industry alone. In order to maximize public
credibility and usefulness, such standards also need to reflect what
investors and other stakeholders want to know about the environmental
records of their companies;
"Standardized environmental reports will provide shareholders with
useful information which allows comparisons of performance against
uniform standards and comparisons of progress over time. Companies can
also attract new capital from investors seeking investments that are
environmentally responsible, responsive, progressive, and which
minimize the risk of environmental liability.
"AND WHEREAS:
"The Coalition for Environmentally Responsible Economies (CERES)--which
comprises large institutional investors with $150 billion in
stockholdings (including shareholders of this Company), public interest
representatives, and environmental experts--consulted with dozens of
corporations and produced comprehensive public standards for both
environmental performance and reporting. Over 50 companies have
endorsed the CERES Principles--including the Sun Company, a Fortune-500
company--to demonstrate their commitment to public environmental
accountability.
19
<PAGE> 21
"In endorsing the CERES Principles, a company commits to work toward:
1. Protection of the biosphere
2. Sustainable use of natural resources
3. Waste reduction & disposal
4. Energy conservation
5. Risk reduction
6. Safe products and services
7. Environmental restoration
8. Informing the public
9. Management commitment
10. Audits and reports
"The full text of the CERES Principles and the accompanying CERES
Report Form are available from CERES, 711 Atlantic Avenue, Boston, MA
02110, tel: 617/451-0927.
"Concerned investors are asking the Company to be publicly accountable
for its environmental impact, including collaboration with this
corporate, environmental, investor, and community coalition to develop
(a) standards for environmental performance and disclosure; (b)
appropriate goals relative to these standards; (c) evaluation methods
and tools for measurement of progress toward these goals; and (d) a
formate (sic) for public reporting of this progress.
"We believe this request is consistent with regulation adopted by the
European Community for companies' voluntary participation in verified
and publicly-reported eco-management and auditing.
"RESOLVED: Shareholders request the Company to prepare a report at
reasonable cost and omitting proprietary information, describing
company programs, progress and future plans relative to the
CERES Principles, and using the standard CERES Report Form as a
guide.
"SUPPORTlNG STATEMENT
"We believe that investors and customers are expecting comprehensive
and impartial environmental reports by business, as a sign of corporate
commitment to environmental excellence. Without this public scrutiny,
corporate environmental policies and reports lack the critical
component of adherence to standards set not only by management by [sic]
also by other stakeholders. Shareholders are invited to support this
resolution, to encourage our Company to demonstrate environmental
leadership and account for its environmental impact."
STATEMENT BY THE BOARD AGAINST THE PROPOSAL
Equitable Resources, Inc. is dedicated to being an exemplary environmental
citizen in the pursuit of its business goals and the conduct of its business
operations. The Company has implemented a substantial number of practices in
support of this commitment, including employee training and awareness programs,
extensive environmental audits of its operating facilities, the creation of a
hotline encouraging employees to report environmental concerns relating to
Company operations, and regular reports to the Company's Board of Directors on
environmental issues affecting the Company. The Company has also supported new
natural gas technologies designed to conserve energy and reduce dependence on
less environmentally desirable fuels. In recognition of the Company's efforts in
this area, its stock continues to be recommended by socially conscious
investment advisory services and is owned by a number of mutual funds which
invest in the equities of companies that meet social and environmental
responsibility criteria.
Because the Company believes that its own practices and policies best serve
the goal of environmental responsibility, it opposes the proponents' proposal.
The CERES reporting format is, in the Company's view, unduly complex and would
result in an open-ended public disclosure that could have adverse competitive or
legal implications for the Company. The completion of the report would simply be
an additional administrative burden which would add little to the Company's
ongoing environmental compliance efforts. The Company is monitoring and
participating, where appropriate, in several initiatives to formulate generally
acceptable environmental standards and reporting formats.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE PROPOSAL.
20
<PAGE> 22
1995 SHAREHOLDER PROPOSALS
To be eligible for inclusion in the Company's proxy statement, shareholder
proposals for the 1995 Annual Meeting of Shareholders must be received by the
Corporate Secretary, Equitable Resources, Inc., 420 Boulevard of the Allies,
Pittsburgh, Pennsylvania 15219, on or before December 13, 1994.
ADDITIONAL INFORMATION
OTHER MATTERS
No matters other than those set forth in the Notice of Meeting accompanying
this proxy statement are expected to be presented to shareholders for action at
the annual meeting. However, should other matters properly come before the
meeting, the persons named in the accompanying proxy will vote in such manner as
they may, in their discretion, determine.
SOLICITATION OF PROXIES
The cost of soliciting proxies will be borne by the Company. In addition to
solicitation by mail, proxies may be solicited by directors, officers and
employees of the Company, personally or by telephone or telegraph. Brokerage
houses and other custodians, nominees and fiduciaries will be requested to
forward soliciting material to the beneficial owners of common stock held of
record by such persons and will be reimbursed by the Company for their expenses.
The Company may engage a professional proxy soliciting firm to solicit proxies
in the same manner.
ANNUAL REPORT
The Annual Report of the Company to shareholders, including financial
statements, for the year ended December 31, 1993, has previously been mailed to
shareholders.
By Order of the Board of Directors
AUDREY C. MOELLER
Vice President and Corporate
Secretary
April 12, 1994
21
<PAGE> 23
EXHIBIT A
1994 EQUITABLE RESOURCES, INC.
NON-EMPLOYEE DIRECTORS' STOCK INCENTIVE PLAN
SECTION 1. PURPOSE
1.01 The purpose of the 1994 Equitable Resources, Inc. Non-Employee
Directors' Stock Incentive Plan (the "Plan") is to assist Equitable Resources,
Inc. (together with any successor thereto, the "Company") in attracting and
retaining the services of non-employee directors who exhibit a high degree of
business responsibility, personal integrity and professionalism.
SECTION 2. DEFINITIONS; CONSTRUCTION
2.01 Definitions. In addition to the terms defined elsewhere in the Plan,
the following terms as used in the Plan shall have the following meanings when
used with initial capital letters:
2.01.1 "Award" means any Option or Restricted Stock granted under the
Plan.
2.01.2 "Award Agreement" means any written agreement, contract or
other instrument or document evidencing an Award.
2.01.3 "Board" means the Company's Board of Directors.
2.01.4 "Code" means the Internal Revenue Code of 1986, as amended from
time to time, together with rules, regulations and interpretations
promulgated thereunder.
2.01.5 "Committee" means the Compensation Committee or such other
Committee of the Board as may be designated by the Board to administer the
Plan, as referred to in Section 3.01 hereof.
2.01.6 "Common Stock" means the shares of the common stock, without
par value, and such other securities of the Company as may be substituted
for Shares pursuant to Section 8.01 hereof.
2.01.7 "Disability" means that a Participant is disabled within the
meaning of Section 422(c)(6) of the Code.
2.01.8 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
2.01.9 "Fair Market Value" of shares of any stock, including but not
limited to Common Stock, or units of any other securities (herein
"shares"), shall be the mean between the following prices, as applicable,
for the date as of which Fair Market Value is to be determined as quoted in
The Wall Street Journal (or in such other reliable publication as the
Committee, in its discretion, may determine to rely upon): (a) if the
shares are listed on the New York Stock Exchange, the highest and lowest
sales prices per share as quoted in the NYSE-Composite Transactions listing
for such date, (b) if the shares not listed on such exchange, the highest
and lowest sales prices per share for such date on (or on any composite
index including) the principal United States securities exchange registered
under the Exchange Act on which the shares are listed, or (c) if the shares
are not listed on any such exchange, the highest and lowest sales prices
per share for such date on the National Association of Securities Dealers
Automated Quotations System or any successor system then in use ("NASDAQ").
If there are no such sale price quotations for the date as of which Fair
Market Value is to be determined but there are such sale price quotations
within a reasonable period both before and after such date, then Fair
Market Value shall be determined by taking a weighted average of the means
between the highest and lowest sales prices per share as so quoted on the
nearest date before and the nearest date after the date as of which Fair
Market Value is to be determined. The average should be weighted inversely
by the respective numbers of trading days between the selling dates and the
date as of which Fair Market Value is to be determined. If there are no
such sale price quotations on or within a reasonable period both before and
after the date as of which Fair Market Value is to be determined, then Fair
Market Value of the shares shall be the mean between the bona fide bid and
asked prices per share as so quoted for such date on NASDAQ, or if none,
the weighted average of the means between such bona fide bid and asked
prices on
A-1
<PAGE> 24
the nearest trading date before and the nearest trading date after the date
as of which Fair Market Value is to be determined, if both such dates are
within a reasonable period. The average is to be determined in the manner
described above in this Section 2.01.9. If the Fair Market Value of shares
on the date as of which Fair Market Value is to be determined cannot be
determined on the basis previously set forth in this Section 2.01.9, or if
a determination is required as to the Fair Market Value on any date of
property other than shares, the Committee shall in good faith determine the
Fair Market Value of such shares or other property on such date. Fair
Market Value shall be determined without regard to any restriction other
than a restriction which, by its terms, will never lapse.
2.01.10 "Option" means a right, granted under Section 6.04 hereof, to
purchase Shares at a specified price during specified time periods as
provided in Section 6.03. Each Option shall be a nonstatutory stock option,
which is an Option not intended to meet the requirements of Section 422 of
the Code or any successor provision thereto.
2.01.11 "Participant" means at any time any person who is a member of
the Board, but who is not at the time a full-time employee of the Company
or any Subsidiary nor has been a full-time employee during the preceding
12-month period. The term "Participant" does not include advisory, emeritus
or honorary directors.
2.01.12 "Person" shall have the meaning assigned in the Exchange Act.
2.01.13 "Restricted Stock" means Shares, granted under Section 6.04
hereof, that are subject to restrictions as provided in Section 6.02.
2.01.14 "Retirement" means that a Participant ceases to be a member of
the Board for any reason on or after reaching the age of fifty-eight (58)
years with at least sixty (60) months of service as a Director. Service
shall include the time a Director was an employee Director.
2.01.15 "Rule 16b-3" means Rule 16b-3 under the Exchange Act, as
amended from time to time, or any successor to such Rule promulgated by the
Securities and Exchange Commission under Section 16 of the Exchange Act.
2.01.16 "Shares" means the common stock of the Company, without par
value, and such other securities of the Company as may be substituted for
Shares pursuant to Section 8.01 hereof.
2.01.17 "Subsidiary" means any corporation in an unbroken chain of
corporations beginning with the Company, if each of the corporations other
than the last corporation in the chain owns stock possessing at least 50%
of the total combined voting power of all classes of stock in one of the
other corporations in the chain.
Definitions of the terms "Change of Control," "Change of Control Price,"
"Potential Change of Control," "Related Party," "Voting Securities or Security"
and "Beneficial Ownership" are set forth in Section 9.03 hereof.
2.02 Construction. For purposes of the Plan, the following rules of
construction shall apply:
2.02.1 The word "or" is disjunctive but not necessarily exclusive.
2.02.2 Words in the singular include the plural; words in the plural
include the singular; words in the neuter gender include the masculine and
feminine genders, and words in the masculine or feminine gender include the
other and neuter genders.
SECTION 3. ADMINISTRATION
3.01 The Plan shall be administered by the Committee, members of which
receive no additional compensation for such administrative service. All Awards
will be automatic and nondiscretionary pursuant to the terms of the Plan. The
Committee shall have full and final authority to take the following actions, in
each case subject to and consistent with the provisions of the Plan:
A-2
<PAGE> 25
(i) to interpret and administer the Plan and any instrument or
agreement relating to, or Award granted under, the Plan;
(ii) to adopt, amend, suspend, waive and rescind such rules and
regulations as the Committee may deem necessary or advisable to administer
the Plan;
(iii) to correct any defect or supply any omission or reconcile any
inconsistency, and to construe and interpret the Plan, the rules and
regulations, any Award Agreement or other instrument entered into or Award
granted under the Plan; and
(iv) to make all other decisions and determinations as may be required
under the terms of the Plan or as the Committee may deem necessary or
advisable for the administration of the Plan.
Any action of the Committee with respect to the Plan shall be final,
conclusive and binding on all Persons, including the Company, Participants, any
Person claiming any rights under the Plan from or through any Participant and
shareholders. The express grant of any specific power to the Committee, and the
taking of any action by the Committee, shall not be construed as limiting any
power or authority of the Committee. The Committee may delegate to officers or
managers of the Company the authority, subject to such terms as the Committee
shall determine, to perform administrative functions under the Plan. Each member
of the Committee shall be entitled to, in good faith, rely or act upon any
report or other information furnished to him by any officer, manager or other
employee of the Company, the Company's independent certified public accountants,
or any executive compensation consultant or other professional retained by the
Company to assist in the administration of the Plan. Any and all powers,
authorizations and discretions granted by the Plan to the Committee shall
likewise be exercisable at any time by the Board.
Notwithstanding the above or any provisions of the Plan to the contrary,
(1) the selection of Participants to whom Awards are to be granted, the number
of shares subject to any Award, the exercise price of any Option, the periods
during which any Option may be exercised, the term of any Option, the minimum
restrictions to which Restricted Stock shall be subject and the duration of such
restrictions shall be as hereinafter provided, and the Committee shall have no
discretion as to such matters and (2) in no event shall the Committee or the
Board have any power of authority which would cause the Plan to fail to be a
plan described in Rule 16b-3(c)(2)(ii).
SECTION 4. SHARES SUBJECT TO THE PLAN
4.01 The maximum number of shares of Common Stock in respect of which
Awards may be granted under the Plan, subject to adjustment as provided in
Section 8.01 of the Plan, shall be 80,000.
For purposes of this Section 4.01, the number of Shares to which an Award
relates shall be counted against the number of Shares reserved and available
under the Plan at the time of grant of the Award. If any Award is forfeited, or
an Option otherwise terminates without being exercised in full, any Shares
counted against the number of Shares reserved and available under the Plan with
respect to such Award shall, to the extent of any such forfeiture or
termination, again be available for Awards under the Plan; provided, however,
that forfeited Shares of Restricted Stock may not again be made available to the
extent the Participant received dividends or other benefits of ownership (not
including voting rights) prior to such forfeiture. The payment of the exercise
price of an Option in Shares shall not increase the number of Shares available
under the Plan.
Any Shares distributed pursuant to an Award may consist, in whole or in
part, of authorized and unissued Shares or of treasury Shares, including Shares
repurchased by the Company for purposes of the Plan.
SECTION 5. ELIGIBILITY
5.01 Awards shall be granted only to Participants as defined in Section
2.01.11.
A-3
<PAGE> 26
SECTION 6. SPECIFIC TERMS OF AWARDS
6.01 General. Awards shall be granted only as set forth in this Section 6.
Awards shall be granted for no consideration other than prior and future
services.
6.02 Terms of Restricted Stock. Restricted Stock shall be granted to
Participants on the following terms and conditions:
(i) Restriction Period. Shares of Restricted Stock shall be subject
to the restrictions provided in this Section 6.02 during the period (the
"Restriction Period") commencing on the date of grant and ending six months
after the date of approval of the Plan by the shareholders of the Company
as provided in Section 12.01.
(ii) Restrictions. During the Restriction Period, Shares of
Restricted Stock may not be sold, assigned, transferred or encumbered by
the Participant, and certificates for such Shares shall be deposited with
the Company in escrow. Subject to the foregoing restrictions, from the date
of grant of Restricted Stock, and unless and until such Shares are deemed
forfeited to the Company as provided herein, the Participant shall be a
shareholder with respect to the Restricted Stock, and shall have all of the
rights of a shareholder with respect to such Shares, including the right to
vote such Shares and to receive all dividends and other distributions paid
with respect to such Shares, except that any dividend or distribution
payable during the Restriction Period in Common Stock shall be added to the
Restricted Stock awarded and held by the Company in escrow subject to the
same restrictions.
(iii) Forfeiture of Restricted Stock. If during the Restriction
Period a Participant shall cease to be a member of the Board for any reason
other than death or Disability on or after the date of shareholder approval
of the Plan, the Shares of Restricted Stock granted to the Participant
shall be deemed forfeited to the Company.
(iv) Lapse of Restrictions. The restrictions on Shares of Restricted
Stock provided herein shall lapse upon the earlier of (1) expiration of the
Restriction Period or (2) the death or Disability of the Participant while
a member of the Board during the Restriction Period and on or after the
date of shareholder approval of the Plan. As promptly as practicable
following the lapse of the restrictions, certificates for such Shares shall
be delivered to the Participant or his estate or beneficiary.
6.03 Terms of Options. The Options shall be granted to Participants on the
following terms and conditions:
(i) Exercise Price. The exercise price per Share of an Option shall
be 100% of the Fair Market Value of a Share on the date of grant of such
Option.
(ii) Option Term. The term of each Option shall be five (5) years
from the date of grant, provided however, that the Option shall expire upon
the Participant's termination of service as a director of the Company for
any reason other than Retirement, Disability or death.
(iii) Exercisability. The Option shall become exercisable upon the
expiration of three years from the date of grant or, if earlier, upon the
Participant's termination of service as a director of the Company by reason
of Retirement, Disability or death.
(iv) Methods of Exercise. The exercise price of any Option may be
paid in cash or Shares, or any combination thereof, having a Fair Market
Value on the date of exercise equal to the exercise price, provided,
however, that (1) any portion of the exercise price representing a fraction
of a Share shall in any event be paid in cash and (2) no Shares which have
been held for less than six months may be delivered in payment of the
exercise price of an Option. Delivery of Shares in payment of the exercise
price of an Option may be accomplished through the effective transfer to
the Company of Shares held by a broker or other agent. The Company will
also cooperate with any person exercising an Option who participates in a
cashless exercise program of a broker or other agent under which all or
part of the Shares received upon exercise of the Option are sold through
the broker or other agent, or under which the broker or other agent makes a
loan to such person, for the purpose of paying the exercise price of an
A-4
<PAGE> 27
Option. Notwithstanding the preceding sentence, the exercise of the Option
shall not be deemed to occur, and no Shares will be issued by the Company
upon exercise of an Option, until the Company has received payment in full
of the exercise price.
6.04 Grant of Awards. Subject to Section 12.01 hereof:
6.04.1 Initial Restricted Stock Grants. Upon the effectiveness of a
Registration Statement with respect to such shares under the Securities Act
of 1933 and the furnishing to such Participants of an appropriate
prospectus with respect thereto, each Person who is then a Participant
shall automatically be granted 450 Shares of Restricted Stock.
6.04.2 Initial Option Grants. On the first day of June (or if not a
day on which the New York Stock Exchange is open for trading, then on the
first such trading day thereafter) in each year during the term of the
Plan, any Person who is then a Participant and who has not previously been
granted Restricted Stock under Section 6.04.1 or an Option under this
Section 6.04.2 shall automatically be granted an Option for 2,500 Shares,
which shall be in addition to the Option granted to the Participant on such
date under Section 6.04.3.
6.04.3 Annual Option Grants. On the first day of June (or if not a
day on which the New York Stock Exchange is open for trading, then on the
first such trading day thereafter) in each year during the term of the
Plan, each Person who is then a Participant shall automatically be granted
an Option for 500 Shares.
6.04.4 Allocation of Shares. If on any date on which Awards would
otherwise be granted under this Section 6.04 the number of Shares remaining
available under Section 4.01 is not sufficient for each Participant
otherwise entitled to the grant of an Award to be granted an Award for the
full number of Shares provided in this Section 6.04, then each such
Participant shall automatically be granted an Award for the number of whole
Shares (if any) equal to (a) the number of Shares then remaining available
under the Plan, multiplied by (b) a fraction of which (1) the numerator is
the number of Shares for which such Participant would otherwise be granted
an Award on such date and (2) the denominator is the number of Shares for
which all Participants would otherwise be granted Awards on such date, with
any fractional shares being disregarded.
6.04.5 Nature of Award Grants; Award Agreements. The grant of the
Awards provided for in this Section 6.04 shall be automatic and not subject
to the discretion of the Committee or any other Person. However, the
Committee may condition the right of Participant to be granted an Award
upon the execution and delivery by the Participant of an Award Agreement
setting forth the terms and conditions of the Award as provided herein and
such other terms, conditions and restrictions, not inconsistent with the
provisions of the Plan, as the Committee in its discretion may determine.
SECTION 7. GENERAL TERMS OF AWARDS
7.01 Certain Restrictions Under Rule 16b-3. Upon the effectiveness of any
amendment to Rule 16b-3, this Plan and any Award Agreement for an outstanding
Award held by a Participant then subject to Section 16 of the Exchange Act shall
be deemed to be amended, without further action on the part of the Committee,
the Board or the Participant, to the extent necessary for Awards under the Plan
or such Award Agreement to qualify for the exemption provided by Rule 16b-3, as
so amended, except to the extent any such amendment requires shareholder
approval.
7.01.1 Six-Month Limitations on Sales. Except in the case of death,
Shares underlying any Award granted under the Plan may not be sold for at
least six months after the later of (1) the date of approval of the Plan by
the shareholders of the Company as provided in Section 12.01 and (2) the
date of grant of the Award; provided, that these limitations shall not
apply to the extent such limitations are not at the time required for the
grant of the Award to continue to qualify for the exemption provided by
Rule 16b-3. Certificates issued for Shares subject to limitations under
this Section 7.01.1 may be made subject to stop-transfer orders and/or
legended as provided in Section 7.04.
A-5
<PAGE> 28
7.01.2 Nontransferability. Options shall not be transferable by a
Participant except by will or the laws of descent and distribution and
shall be exercisable during a Participant's lifetime only by such
Participant or his guardian or legal representative; provided, that these
restrictions on transferability shall not apply to the extent such
restrictions are not at the time required for the Plan to continue to meet
the requirements of Rule 16b-3. Notwithstanding the preceding sentence and
notwithstanding the restrictions on transfer of Restricted Stock, if so
determined by the Committee, a Participant may, in the manner established
by the Committee, designate a beneficiary or beneficiaries to exercise the
rights of the Participant, and to receive any distribution with respect to
any Award, upon the death of the Participant.
7.02 Limits on Transfer of Awards; Beneficiaries. No right or interest of
a Participant in any Option or Restricted Stock shall be pledged, encumbered or
hypothecated to or in favor of any Person other than the Company, or shall be
subject to any lien, obligation or liability of such Participant to any Person
other than the Company. A beneficiary, guardian, legal representative or other
Person claiming any rights under the Plan from or through any Participant shall
be subject to all the terms and conditions of the Plan and any Award Agreement
applicable to such Participant as well as any additional restrictions or
limitations deemed necessary or appropriate by the Committee.
7.03 Registration and Listing Compliance. No Shares shall be distributed
with respect to any Award in a transaction subject to the registration
requirements of the Securities Act of 1933, as amended, or any state securities
law or subject to a listing requirement under any listing agreement between the
Company and any national securities exchange, and no Award shall confer upon any
Participant rights to such delivery or distribution until such laws and
contractual obligations of the Company have been complied with in all material
respects. Neither the grant of any Award nor anything else contained herein
shall obligate the Company to take any action to comply with any requirements of
any such securities laws or contractual obligations relating to the registration
(or exemption therefrom) or listing of any Shares or other securities, whether
or not necessary in order to permit any such delivery or distribution.
7.04 Stock Certificates. All certificates for Shares delivered under the
terms of the Plan shall be subject to such stop-transfer orders and other
restrictions as the Committee may deem advisable under federal or state
securities laws, rules and regulations thereunder, and the rules of any national
securities exchange or automated quotation system on which Shares are listed or
quoted. The Committee may cause a legend or legends to be placed on any such
certificates to make appropriate reference to such restrictions or any other
restrictions or limitations that may be applicable to Shares.
SECTION 8. ADJUSTMENT PROVISIONS
8.01 In the event that the Committee shall determine that any dividend or
other distribution (whether in the form of cash, Shares, other securities or
other property), recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, exchange of Shares or other securities of the Company, or other
similar corporate transaction or event affects the Shares such that an
adjustment is determined by the Committee to be appropriate in order to prevent
dilution or enlargement of Participants' rights under the Plan, then the
Committee shall, in such manner as it may deem equitable, adjust any or all of
(i) the number and kind of Shares which may thereafter be issued in connection
with Awards; (ii) the number and kind of Shares issued or issuable in respect of
outstanding Options; and (iii) the exercise price of outstanding Options.
SECTION 9. CHANGE OF CONTROL PROVISIONS
9.01 Acceleration of Exercisability and Lapse of Restrictions; Automatic
Cash-Out of Awards. In the event of a Change of Control, the following
acceleration and cash-out provisions shall apply:
(i) All outstanding Options shall become fully exercisable, and all
restrictions (other than those contained in Section 7.01.1) on outstanding
Restricted Stock shall immediately lapse.
(ii) All outstanding Awards not subject to limitations under Section
7.01.1 shall be automatically surrendered, and the Participants shall
receive, in full satisfaction therefor, cash payments equal to the
A-6
<PAGE> 29
Change of Control Price of the Shares subject to the Award, reduced in the
case of Options by the exercise price thereof. In no event will an Award be
automatically surrendered or a Participant have the right to receive cash
under this Section 9.01(ii) with respect to an Award (a) if at least six
months shall not have elapsed from the date on which the Participant was
granted the Award (or, if later, from the date of shareholder approval of
the Plan) before the date of the Change of Control (unless this restriction
is not at such time required under Rule 16b-3(c)(1) or Rule 16b-3(e)) or
(b) if the Participant is subject to Section 16 of the Exchange Act and had
the power to control the occurrence or timing of the Change of Control such
that the surrender and right to receive cash under this Section 9.01 (ii)
would fail to be exempt pursuant to Rule 16b-3(e).
(iii) In the event that any Award is subject to limitations under
Section 7.01.1 at the time of a Change of Control, then, solely for the
purpose of determining the rights of the Participant with respect to such
Award, a Change of Control shall be deemed to occur at the close of
business on the first business day following the date on which the
limitations on such Award under Section 7.01.1 have expired; provided,
however, that this Section 9.01(iii) shall not apply if its application
would cause the surrender of the Award and the receipt of cash under
Section 9.01(ii) to fail to be exempt pursuant to Rule 16b-3(e).
(iv) In the discretion of the Committee, the Committee may permit any
Participant not subject to Section 16 of the Exchange Act on the date of a
Change of Control to elect, in such manner and at such time or times or
within such periods as the Committee may determine (whether before or after
a Change of Control), and subject to such other terms, conditions or
restrictions, if any, as the Committee may determine to impose, not to
surrender for cash pursuant to Section 9.01(ii) all or any portion of any
Award held by the Participant; provided, however, that such election may
not be made available if to do so would cause the grant of the Award to
fail to qualify for the exemption provided by Rule 16b-3(c)(2)(ii).
9.02 Creation and Funding of Trust. Upon the occurrence of a Potential
Change of Control, the Company shall deposit with the trustee of a trust for the
benefit of Participants monies or other property having a Fair Market Value at
least equal to the Fair Market Value of the Shares subject to the Awards
outstanding at that date, reduced in the case of Options by the aggregate
exercise price thereof. The trust shall be a grantor trust which shall preserve
the "unfunded" status of Awards under the Plan. Subsequent to a Potential Change
of Control which is no longer continuing and prior to a Change of Control and
termination of the trust, upon the request of the Company, the trustee shall
deliver the monies or other property held in the trust to the Company. In the
discretion of the Committee, moneys or other property may also be deposited in
the trust created under this Section 9.02 for the benefit of participants in any
other compensation or benefit plan, program, contract or arrangement of the
Company or any Subsidiary.
9.03 Definition of Certain Terms. For purposes of this Section 9, the
following definitions, in addition to those set forth in Section 2.01, shall
apply:
9.03.1 "Change of Control" means and shall be deemed to have occurred
if (i) any Person, other than the Company or a Related Party, purchases or
otherwise acquires, under a tender offer or otherwise, Beneficial Ownership
of any Voting Securities which, when combined with other Voting Securities
then Beneficially Owned by such Person, represent twenty percent (20%) or
more of the total voting power of all the then outstanding Voting
Securities; or (ii) the individuals (a) who as of the effective date of the
Plan constitute the Board or (b) who thereafter are elected to the Board
and whose election, or nomination for election, to the Board was approved
by a vote of at least two-thirds of the directors then still in office who
either were directors as of the effective date of the Plan or whose
election or nomination for election was previously so approved (the
"Continuing Directors"), cease for any reason to constitute a majority of
the members of the Board; or (iii) the Company is a party to a merger,
consolidation, share exchange, recapitalization or reorganization of the
Company or an acquisition of securities or assets by the Company, other
than any such transaction (a) which would result in the Voting Securities
outstanding immediately prior thereto continuing to represent either by
remaining outstanding or by being converted into Voting Securities of the
surviving or acquiring entity, at least fifty percent (50%) of
A-7
<PAGE> 30
the total voting power represented by the Voting Securities of such
surviving or acquiring entity outstanding immediately after such
transaction and (b) in or as a result of which the voting rights of each
Voting Security relative to the voting rights of all other Voting
Securities are not altered other than through the exercise of dissenters'
rights; or (iv) the shareholders of the Company approve a plan of complete
liquidation of the Company; or (v) the Company shall sell or otherwise
dispose of, other than to a Related Party, in a single or a series of
related transactions otherwise than in the ordinary course of business,
assets of the Company and/or stock or assets of any Subsidiary, having a
book value equal to 50% or more of the consolidated total assets of the
Company, in each case measured as the date of the most recent quarterly or
annual balance sheet of the Company required to be included or incorporated
by reference in any proxy or information statement of the Company furnished
to the shareholders of the Company in connection with such transaction, or
if no such proxy or information statement is furnished to shareholders or
no such balance sheet is required to be included or incorporated by
reference therein, as of the date of the most recent quarterly or annual
balance sheet of the Company required to be filed with the Securities and
Exchange Commission prior to the date of any such transaction;
9.03.2 "Change of Control Price" means, with respect to a Share, the
higher of (i) the highest reported sales price of Shares on the New York
Stock Exchange's consolidated transaction reporting system (or if the
Common Stock is not then listed on such Exchange, on or on any composite
index including the principal United States securities exchange on which
the Common Stock is then listed, or if none, on NASDAQ or any similar
system then in use, and in the absence of any such reported sales prices,
the highest publicly reported bid price for Shares) during the 30 calendar
days preceding the date of a Change of Control or (ii) the highest price
paid or offered in a transaction which either (a) results in a Change of
Control or (b) would be consummated but for another transaction which
results in a Change of Control and, if it were consummated, would result in
a Change of Control. With respect to clause (ii) in the preceding sentence,
the "price paid or offered" will be equal to the sum of (a) the face amount
of any portion of the consideration consisting of cash or cash equivalents
and (b) the fair market value of any portion of the consideration
consisting of real or personal property other than cash or cash
equivalents, as established by an independent appraiser selected by the
Committee.
9.03.3 "Potential Change of Control" means and shall be deemed to have
arisen if (i) the Company enters into an agreement, the consummation of
which would result in the occurrence of the Change of Control; or (ii) any
Person (including the Company) publicly announces an intention to take or
to consider taking actions which if consummated would constitute a Change
of Control; or (iii) any Person, other than a Related Party, files with the
Securities and Exchange Commission a Schedule 13D pursuant to Rule 13d-1
under the Exchange Act with respect to Voting Securities; or (iv) any
Person, other than the Company or a Related Party, files with the Federal
Trade Commission a notification and report form pursuant to the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 with respect to any
Voting Securities or any assets of the Company or a Subsidiary; or (v) the
Board or a committee thereof adopts a resolution to the effect that, for
purposes of the Plan, a Potential Change of Control has arisen. A Potential
Change of Control will be deemed to continue (a) with respect to an
agreement within the purview of clause (i) of the preceding sentence, until
the agreement is canceled or terminated; or (b) with respect to an
announcement within the purview of clause (ii) of the preceding sentence,
until the Person making the announcement publicly abandons the stated
intention or fails to act on such intention for a period of 12 calendar
months; or (c) with respect to the filing of a Schedule 13D within the
purview of clause (iii) of the preceding sentence, until the Person
involved publicly announces that its ownership or acquisition of the Voting
Securities is for investment purposes only and not for the purpose of
seeking a Change of Control or such Person disposes of all Voting
Securities exceeding 5% of the outstanding shares of any class; or (d) with
respect to the filing of a notification and report form within the purview
of clause (iv) of the preceding sentence with respect to Voting Securities
or assets, until the person publicly abandons the transaction which was the
subject of such filing or fails to act thereon for a period of 12 calendar
months or, in the case of a filing with respect to Voting Securities, until
the Person involved (1) publicly announces that its ownership or
acquisition of the Voting Securities is for investment purposes only and
not for the purpose of seeking a Change of Control or (2) following
completion of such transaction disposes of all Voting Securities exceeding
5% of the outstanding shares of any class; or (e)
A-8
<PAGE> 31
until a Change of Control has occurred if the majority of the Continuing
Directors, on reasonable belief after due investigation, adopts a
resolution that either (1) the Potential Change of Control has ceased to
exist or (2) the Potential Change of Control is believed to be not
reasonably likely to result in a Change of Control.
9.03.4 "Related Party" means (i) a Subsidiary; or (ii) a trustee or
other fiduciary holding securities under an employee benefit plan of the
Company or any Subsidiary; or (iii) a Company owned directly or indirectly
by the shareholders of the Company in substantially the same proportion as
their ownership of Voting Securities.
9.03.5 "Voting Securities or Security" means any securities of the
Company which carry the right to vote generally in the election of
directors.
9.03.6 "Beneficial Ownership" shall be determined in accordance with
Regulation 13D-G under the Exchange Act, as in effect on the effective date
of the Plan.
SECTION 10. AMENDMENTS TO AND TERMINATION OF THE PLAN
10.01 The Board may amend, alter, suspend, discontinue or terminate the
Plan without the consent of shareholders or Participants, except that, without
the approval of the shareholders of the Company, no amendment, alteration,
suspension, discontinuation or termination shall be made if shareholder approval
is required by any federal or state law or regulation, or if the Board
determines that obtaining such shareholder approval is for any reason advisable;
provided, however, that (1) except as provided in Section 7.01, without the
consent of the Participant, no amendment, alteration, suspension,
discontinuation or termination of the Plan may materially and adversely affect
the rights of such Participant under any Award theretofore granted to him and
(2) no provision of the Plan referred to in Rule 16b-3(c)(2)(ii)(A) may be
amended more than once every six months other than to comport with changes in
the Code or the rules thereunder.
SECTION 11. GENERAL PROVISIONS
11.01 No Shareholder Rights. No Option shall confer on any Participant any
of the rights of a shareholder of the Company unless and until Shares are in
fact issued to such Participant in connection with such Option.
11.02 No Right to Directorship. Nothing contained in the Plan or any Award
Agreement shall confer, and no grant of an Award shall be construed as
conferring, upon any Participant any right to continue as a director of the
Company or interfere in any way with the rights of the shareholders of the
Company or the Board to elect and remove directors.
11.03 Unfunded Status of Awards; Creation of Trusts. The Plan is intended
to constitute an "unfunded" plan for incentive compensation. With respect to any
Shares not yet issued to a Participant pursuant to an Award, nothing contained
in the Plan or any Award Agreement shall give any such Participant any rights
that are greater than those of a general unsecured creditor of the Company;
provided, however, that, in addition to the requirements of Section 9.02, the
Committee may authorize the creation of trusts or make other arrangements to
meet the Company's obligations under the Plan to deliver Shares pursuant to any
Award, which trusts or other arrangements shall be consistent with the
"unfunded" status of the Plan unless the Committee otherwise determines.
11.04 No Limit on Other Compensatory Arrangements. Nothing contained in
the Plan shall prevent the Company from adopting other or additional
compensation arrangements, and such arrangements may be either generally
applicable or applicable only in specific cases. To the extent consistent with
the Plan, the terms of each Award shall be construed so as to be consistent with
such other arrangements in effect at the time the Award is granted.
11.05 No Fractional Shares. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award.
A-9
<PAGE> 32
11.06 Governing Law. The validity, interpretation, construction and effect
of the Plan and any rules and regulations relating to the Plan shall be governed
by the laws of the Commonwealth of Pennsylvania (without regard to the conflicts
of laws thereof), and applicable federal law.
11.07 Severability. If any provision of the Plan or any Award Agreement is
or becomes or is deemed invalid, illegal or unenforceable in any jurisdiction,
or would disqualify the Plan or any Award under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to conform to
applicable laws or if it cannot be construed or deemed amended without, in the
determination of the Committee, materially altering the intent of the Plan, it
shall be deleted and the remainder of the Plan shall remain in full force and
effect; provided, however, that, unless otherwise determined by the Committee,
the provision shall not be construed or deemed amended or deleted with respect
to any Participant whose rights and obligations under the Plan are not subject
to the law of such jurisdiction or the law deemed applicable by the Committee.
SECTION 12. EFFECTIVE DATE AND TERM OF THE PLAN
12.01 The effective date and date of adoption of the Plan shall be January
21, 1994, the date of adoption of the Plan by the Board, provided that such
adoption of the Plan is approved by the affirmative vote of a majority of the
shares of Common Stock present in person or represented by proxy and entitled to
vote at a duly held meeting of shareholders of the Company held on or prior to
December 31, 1994. Notwithstanding anything else contained in the Plan or in any
Award Agreement, no Option granted under the Plan may be exercised, and no
certificates for Shares of Restricted Stock may be delivered, prior to such
shareholder approval or prior to any required approval or consent from those
governmental agencies having jurisdiction in these matters. In the event such
shareholder or regulatory approval is not obtained, all Options granted under
the Plan shall automatically be deemed void and of no effect, and all Shares of
Restricted Stock granted under the Plan shall be deemed forfeited to the
Company. No Award may be granted under the Plan subsequent to June 2, 1998.
A-10
<PAGE> 33
EXHIBIT B
1994 EQUITABLE RESOURCES, INC.
LONG-TERM INCENTIVE PLAN
SECTION 1. PURPOSES
1.01 The purpose of the 1994 Equitable Resources, Inc. Long-Term Incentive
Plan (the "Plan") is to enable Equitable Resources, Inc. (together with any
successor thereto, the "Company") to focus key executives' efforts on
performance which will increase the value of the Company for its shareholders.
The Plan is intended to align the interests of key executives with those of the
shareholders by encouraging share ownership. The Plan is also intended to help
to attract and retain key executives.
SECTION 2. DEFINITIONS; CONSTRUCTION
2.01 Definitions. In addition to the terms defined elsewhere in the Plan,
the following terms as used in the Plan shall have the following meanings when
used with initial capital letters:
2.01.1 "Award" means any Option, Stock Appreciation Right, Restricted
Stock, Deferred Stock, Performance Award, Dividend Equivalent, or Other
Stock-Based Award, or any other right or interest relating to Shares or
cash granted under the Plan.
2.01.2 "Award Agreement" means any written agreement, contract or
other instrument or document evidencing an Award.
2.01.3 "Board" means the Company's Board of Directors.
2.01.4 "Code" means the Internal Revenue Code of 1986, as amended from
time to time, together with rules, regulations and interpretations
promulgated thereunder.
2.01.5 "Committee" means the Compensation Committee or such other
Committee of the Board as may be designated by the Board to administer the
Plan, as referred to in Section 3.01 hereof; provided however, that the
Committee shall qualify to administer the Plan as contemplated by Rule 16b-
3(c)(2)(i) of the Exchange Act or any successor and by Section 162(m)(4)(C)
of the Code or any successor.
2.01.6 "Common Stock" means shares of the common stock without par
value, and such other securities of the Company as may be substituted for
Shares pursuant to Section 8.01 hereof.
2.01.7 "Covered Employee" shall have the meaning provided in Section
162(m)(3) of the Code.
2.01.8 "Deferred Stock" means Shares, granted under Section 6.05
hereof, receipt of which is deferred for a specified deferral period.
2.01.9 "Dividend Equivalent" means a right, granted under Section 6.07
hereof, to receive interest or dividends, or interest or dividend
equivalents.
2.01.10 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
2.01.11 "Fair Market Value" of shares of any stock, including but not
limited to Common Stock, or units of any other securities (herein
"shares"), shall be the mean between the following prices, as applicable,
for the date as of which Fair Market Value is to be determined as quoted in
The Wall Street Journal (or in such other reliable publication as the
Committee, in its discretion, may determine to rely upon): (a) if the
shares are listed on the New York Stock Exchange, the highest and lowest
sales prices per share as quoted in the NYSE-Composite Transactions listing
for such date, (b) if the shares not listed on such exchange, the highest
and lowest sales prices per share for such date on (or on any composite
index including) the principal United States securities exchange registered
under the Exchange Act on which the shares are listed, or (c) if the shares
are not listed on any such exchange, the highest and lowest sales prices
per share for such date on the National Association of Securities Dealers
Automated Quotations System or any successor system then in use ("NASDAQ").
If there are no such
B-1
<PAGE> 34
sale price quotations for the date as of which Fair Market Value is to be
determined but there are such sale price quotations within a reasonable
period both before and after such date, then Fair Market Value shall be
determined by taking a weighted average of the means between the highest
and lowest sales prices per share as so quoted on the nearest date before
and the nearest date after the date as of which Fair Market Value is to be
determined. The average should be weighted inversely by the respective
numbers of trading days between the selling dates and the date as of which
Fair Market Value is to be determined. If there are no such sale price
quotations on or within a reasonable period both before and after the date
as of which Fair Market Value is to be determined, then Fair Market Value
of the shares shall be the mean between the bona fide bid and asked prices
per share as so quoted for such date on NASDAQ, or if none, the weighted
average of the means between such bona fide bid and asked prices on the
nearest trading date before and the nearest trading date after the date as
of which Fair Market Value is to be determined, if both such dates are
within a reasonable period. The average is to be determined in the manner
described above in this Section 2.01.10. If the Fair Market Value of shares
on the date as of which Fair Market Value is to be determined cannot be
determined on the basis previously set forth in this Section 2.01.10, or if
a determination is required as to the Fair Market Value on any date of
property other than shares, the Committee shall in good faith determine the
Fair Market Value of such shares or other property on such date. Fair
Market Value shall be determined without regard to any restriction other
than a restriction which, by its terms, will never lapse.
2.01.12 "Incentive Stock Option" means an Option that is intended to
meet the requirements of Section 422 of the Code or any successor provision
thereto and is designated as such in the Award Agreement relating thereto.
2.01.13 "Option" means a right, granted under Section 6.02 hereof, to
purchase Shares at a specified price during specified time periods. An
Option may be either an Incentive Stock Option or a nonstatutory stock
option, which is an Option not intended to be an Incentive Stock Option.
2.01.14 "Other Stock-Based Award" means an Award, granted under
Section 6.08 hereof, that is denominated or payable in, valued in whole or
in part by reference to, or otherwise based on, or related to, Shares.
2.01.15 "Participant" means a key employee of the Company or any
Subsidiary, including, but not limited to, Covered Employees, who is
granted an Award under the Plan.
2.01.16 "Performance Award" means a right, granted under Section 6.06
hereof, to receive Awards based upon performance criteria specified by the
Committee.
2.01.17 "Person" shall have the meaning assigned in the Exchange Act.
2.01.18 "Restricted Stock" means Shares, granted under Section 6.04
hereof, that are subject to certain restrictions.
2.01.19 "Rule 16b-3" means Rule 16b-3 under the Exchange Act, as
amended from time to time, or any successor to such Rule promulgated by the
Securities and Exchange Commission under Section 16 of the Exchange Act.
2.01.20 "Shares" means the common stock of the Company, without par
value, and such other securities of the Company as may be substituted for
Shares pursuant to Section 8.01 hereof.
2.01.21 "Stock Appreciation Right" means a right, granted under
Section 6.03 hereof, to be paid an amount measured by the appreciation in
the Fair Market Value of Shares from the date of grant to the date of
exercise.
2.01.22 "Subsidiary" means any corporation in an unbroken chain of
corporations beginning with the Company, if each of the corporations other
than the last corporation in the chain owns stock possessing at least 50%
of the total combined voting power of all classes of stock in one of the
other corporations in the chain.
B-2
<PAGE> 35
Definitions of the terms "Change of Control," "Change of Control Price,"
"Potential Change of Control," "Related Party," "Voting Securities or Security"
and "Beneficial Ownership" are set forth in Section 9.03 hereof.
2.02 Construction. For purposes of the Plan, the following rules of
construction shall apply:
2.02.1 The word "or" is disjunctive but not necessarily exclusive.
2.02.2 Words in the singular include the plural; words in the plural
include the singular; words in the neuter gender include the masculine and
feminine genders, and words in the masculine or feminine gender include the
other and neuter genders.
SECTION 3. ADMINISTRATION
3.01 The Plan shall be administered by the Committee. The Committee shall
have full and final authority to take the following actions, in each case
subject to and consistent with the provisions of the Plan:
(i) to designate Participants;
(ii) to determine the type or types of Awards to be granted to each
Participant;
(iii) to determine the number of Awards to be granted, the number of
Shares or amount of cash or other property to which an Award will relate,
the terms and conditions of any Award (including, but not limited to, any
exercise price, grant price or purchase price, any limitation or
restriction, any schedule for lapse of limitations, forfeiture restrictions
or restrictions on exercisability or transferability, and accelerations or
waivers thereof, based in each case on such considerations as the Committee
shall determine), and all other matters to be determined in connection with
an Award;
(iv) to determine whether, to what extent and under what circumstances
an Award may be settled in, or the exercise price of an Award may be paid
in cash, Shares, other Awards or other property, or an Award may be
accelerated, vested, canceled, forfeited, exchanged or surrendered;
(v) to determine whether, to what extent and under what circumstances
cash, Shares, other Awards, other property and other amounts payable with
respect to an Award shall be deferred, whether automatically or at the
election of the Committee or at the election of the Participant;
(vi) to interpret and administer the Plan and any instrument or
agreement relating to, or Award made under, the Plan;
(vii) to prescribe the form of each Award Agreement, which need not be
identical for each Participant;
(viii) to adopt, amend, suspend, waive and rescind such rules and
regulations as the Committee may deem necessary or advisable to administer
the Plan;
(ix) to correct any defect or supply any omission or reconcile any
inconsistency, and to construe and interpret the Plan, the rules and
regulations, any Award Agreement or other instrument entered into or Award
made under the Plan;
(x) to make all other decisions and determinations as may be required
under the terms of the Plan or as the Committee may deem necessary or
advisable for the administration of the Plan;
(xi) to submit for shareholder approval or not as may be appropriate
and to take such other actions and make such other decisions as may be
required by the Revenue Reconciliation Act of 1993 with respect to the
definition of performance-based compensation as it may from time to time be
defined; and
(xii) to make such filings and take such actions as may be required
from time to time by appropriate state, regulatory and governmental
agencies.
Any action of the Committee with respect to the Plan shall be final,
conclusive and binding on all Persons, including the Company, Subsidiaries,
Participants, any Person claiming any rights under the Plan
B-3
<PAGE> 36
from or through any Participant, employees and shareholders. The express grant
of any specific power to the Committee, and the taking of any action by the
Committee, shall not be construed as limiting any power or authority of the
Committee. The Committee may delegate to officers or managers of the Company or
any Subsidiary the authority, subject to such terms as the Committee shall
determine, to perform administrative functions under the Plan and, with respect
to Participants who are not subject to Section 16 of the Exchange Act, to take
such actions and perform such functions under the Plan as the Committee may
specify. Each member of the Committee shall be entitled to, in good faith, rely
or act upon any report or other information furnished to him by an officer,
manager or other employee of the Company or a Subsidiary, the Company's
independent certified public accountants, or any executive compensation
consultant or other professional retained by the Company to assist in the
administration of the Plan.
SECTION 4. SHARES SUBJECT TO THE PLAN
4.01 The maximum number of shares of Common Stock in respect of which
Awards may be granted under the Plan in any calendar year, subject to adjustment
as provided in Section 8.01 of the Plan, shall be (a) in 1994 the sum of (1) one
percent (1%) of the total number of issued and outstanding shares of Common
Stock as of December 31, 1993 and (2) the number of shares of Common Stock which
are reserved but not subject to grants under the Company's Key Employee
Restricted Stock Option and Stock Appreciation Rights Incentive Compensation
Plan as of the date this Plan is approved by the shareholders of the Company and
(b) in each succeeding calendar year the sum of (1) one percent (1%) of the
total number of issued and outstanding shares of Common Stock as of the close of
the preceding calendar year, (2) the number of shares of Common Stock which were
available for Awards under this Section 4.01 as of the close of the preceding
calendar year and (3) any shares of Common Stock which are subject to an
outstanding Award at the beginning of such year but which thereafter again
become available for Awards under the Plan as provided in the fourth paragraph
of this Section 4.01; provided, however, that in no event may:
(i) the sum of (x) the number of Shares subject to all outstanding
Awards under the Plan and (y) the number of Shares previously issued under
the Plan at any time equal or exceed 5% of the total number of shares of
Common Stock outstanding on the date of shareholder approval of the Plan;
or
(ii) the sum of (x) the number of Shares subject to all outstanding
Options and Stock Appreciation Rights granted under the Plan and held by
any single Participant and (y) the number of shares previously issued to
such Participant upon exercise of Options and Stock Appreciation Rights
granted under the Plan at any time exceed 25% of the sum of (A) the total
number of Shares subject to all outstanding Awards under the Plan, (B) the
total number of Shares previously issued under the Plan and (C) the total
number of Shares then available for the grant of additional Awards under
the Plan. Subject to subparagraphs (i) and (ii) above, but notwithstanding
anything else contained above in this Section 4.01, in the event of a
Change of Control, the maximum number of shares of Common Stock available
for Awards under the Plan shall be 5% of the total number of shares of
Common Stock issued and outstanding on the date of shareholder approval of
the Plan, less (1) the number of Shares subject to outstanding Awards under
the Plan and (2) the number of Shares previously issued under the Plan.
For purposes of this Section 4.01, the number of Shares to which an Award
relates shall be counted against the number of Shares reserved and available
under the Plan at the time of grant of the Award, unless such number of Shares
cannot be determined at that time, in which case the number of Shares actually
distributed pursuant to the Award shall be counted against the number of Shares
reserved and available under the Plan at the time of distribution; provided,
however, that Awards related to or retroactively added to, or granted in tandem
with, substituted for or converted into, other Awards shall be counted or not
counted against the number of Shares reserved and available under the Plan in
accordance with procedures adopted by the Committee so as to ensure appropriate
counting but avoid double counting.
If any Shares to which an Award relates are forfeited, or payment is made
to the Participant in the form of cash, cash equivalents or other property other
than Shares, or the Award otherwise terminates without payment being made to the
Participant in the form of Shares, any Shares counted against the number of
Shares reserved and available under the Plan with respect to such Award shall,
to the extent of any such
B-4
<PAGE> 37
forfeiture, alternative payment or termination, again be available for Awards
under the Plan provided, however, forfeited Shares may not again be made
available to the extent the Participant received dividends or other benefits of
ownership (not including voting rights) prior to such forfeiture. The payment of
the exercise price of an Award in Shares shall not increase the number of Shares
available under the Plan. Any Shares distributed pursuant to an Award may
consist, in whole or part, of authorized and unissued Shares or of treasury
Shares, including Shares repurchased by the Company for purposes of the Plan.
SECTION 5. ELIGIBILITY
5.01 Awards may be granted only to individuals who are key full-time
employees (including, without limitation, employees who also are directors or
officers and Covered Employees) of the Company or any Subsidiary; provided,
however, that no Award shall be granted to any member of the Committee.
SECTION 6. SPECIFIC TERMS OF AWARDS
6.01 General. Subject to the terms of the Plan and any applicable Award
Agreement, Awards may be granted as set forth in this Section 6. In addition,
the Committee may impose on any Award or the exercise thereof, at the date of
grant or thereafter (subject to the terms of Section 10.01), such additional
terms and conditions, not inconsistent with the provisions of the Plan, as the
Committee shall determine, including separate escrow provisions and terms
requiring forfeiture of Awards in the event of termination of employment by the
Participant. Except as provided in Section 7.01, or as required by applicable
law, Awards may be granted for no consideration other than prior and/or future
services.
6.02 Options. The Committee is authorized to grant Options to Participants
on the following terms and conditions:
(i) Exercise Price. The exercise price per Share of an Option shall
be 100% of the Fair Market Value of a Share on the date of grant of such
Option, except as otherwise provided in Section 7.01, and except that in
the case of an Incentive Stock Option granted to an employee who,
immediately prior to such grant, owns stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company or any
Subsidiary (a "Ten Percent Employee") such exercise price shall be 110% of
the Fair Market Value of a Share on the date of grant. For purposes of the
preceding sentence, an individual (A) shall be considered as owning not
only shares of stock owned individually but also all shares of stock that
are at the time owned, directly or indirectly, by or for the spouse,
ancestors, lineal descendants and brothers and sisters (whether by the
whole or half blood) of such individual and (B) shall be considered as
owning proportionately any shares owned, directly or indirectly, by or for
any corporation, partnership, estate or trust in which such individual is a
shareholder, partner or beneficiary.
(ii) Option Term. The term of each Option shall be determined by the
Committee, except that no Incentive Stock Option shall be exercisable after
the expiration of ten years from the date of grant, and no Incentive Stock
Option granted to a Ten Percent Employee shall be exercisable after the
expiration of five years from the date of grant.
(iii) Times and Methods of Exercise. The Committee shall determine
the time or times at which an Option may be exercised in whole or in part,
the methods by which such exercise price may be paid or deemed to be paid,
and the form of such payment, including, without limitation, cash, Shares,
other outstanding Awards or other property (including notes or other
contractual obligations of Participants to make payment on a deferred
basis, to the extent permitted by law) or any combination thereof, having a
Fair Market Value on the date of exercise equal to the exercise price,
provided, however, that (1) in the case of a Participant who is at the time
of exercise subject to Section 16 of the Exchange Act, any portion of the
exercise price representing a fraction of a Share shall in any event be
paid in cash or in property other than any equity security (as defined by
the Exchange Act) of the Company and (2) except as otherwise determined by
the Committee, in its discretion, at the time the Option is granted, no
shares which have been held for less than six months may be delivered in
payment of the exercise price of an Option.
B-5
<PAGE> 38
Delivery of Shares in payment of the exercise price of an Option, if
authorized by the Committee, may be accomplished through the effective transfer
to the Company of Shares held by a broker or other agent. Unless otherwise
determined by the Committee, the Company will also cooperate with any person
exercising an Option who participates in a cashless exercise program of a broker
or other agent under which all or part of the Shares received upon exercise of
the Option are sold through the broker or other agent, or under which the broker
or other agent makes a loan to such person, for the purpose of paying the
exercise price of an Option. Notwithstanding the preceding sentence, unless the
Committee, in its discretion, shall otherwise determine, the exercise of the
Option shall not be deemed to occur, and no Shares will be issued by the Company
upon exercise of an Option, until the Company has received payment in full of
the exercise price.
Notwithstanding any other provision contained in the Plan or in any Award
Agreement, but subject to the possible exercise of the Committee's discretion
contemplated in the last sentence of this Section 6.02(iii), the aggregate Fair
Market Value, determined as of the date of grant, of the Shares with respect to
which Incentive Stock Options are exercisable for the first time by a
Participant during any calendar year under all plans of the corporation
employing such employee, any parent or subsidiary corporation of such
corporation and any predecessor corporation of any such corporation shall not
exceed $100,000. If the date on which one or more of such Incentive Stock
Options could first be exercised would be accelerated pursuant to any provision
of the Plan or any Award Agreement, and the acceleration of such exercise date
would result in a violation of the restriction set forth in the preceding
sentence, then, notwithstanding any such provision, but subject to the
provisions of the next succeeding sentence, the exercise dates of such Incentive
Stock Options shall be accelerated only to the date or dates, if any, that do
not result in a violation of such restriction and, in such event, the exercise
dates of the Incentive Stock Options with the lowest option prices shall be
accelerated to the earliest such dates. The Committee may, in its discretion,
authorize the acceleration of the exercise date of one or more Incentive Stock
Options even if such acceleration would violate the $100,000 restriction set
forth in the first sentence of this paragraph and even if such Incentive Stock
Options are thereby converted in whole or in part to nonstatutory stock options.
6.03 Stock Appreciation Rights. The Committee is authorized to grant Stock
Appreciation Rights to Participants on the following terms and conditions:
(i) Right to Payment. A Stock Appreciation Right shall confer on the
Participant to whom it is granted a right to receive, upon exercise
thereof, the excess of (A) the Fair Market Value of a Share on the date of
exercise or, if the Committee shall so determine in the case of any such
right other than one related to any Incentive Stock Option, at any time
during a specified period before or after the date of exercise, over (B)
the grant price of the Stock Appreciation Right as determined by the
Committee as of the date of grant of the Stock Appreciation Right, which,
except as provided in Section 7.01, shall be equal to the Fair Market Value
of a Share on the date of grant.
(ii) Other Terms. The term, methods of exercise, methods of
settlement and any other terms and conditions of any Stock Appreciation
Right shall be determined by the Committee.
6.04 Restricted Stock. The Committee is authorized to grant Restricted
Stock to Participants on the following terms and conditions:
(i) Issuance and Restrictions. Restricted Stock shall be subject to
such restrictions on transferability and other restrictions as the
Committee may impose (including, without limitation, limitations on the
right to vote Restricted Stock or the right to receive dividends thereon),
which restrictions may lapse separately or in combination at such times,
under such circumstances, in such installments or otherwise, as the
Committee shall determine at the time of grant or thereafter.
(ii) Forfeiture. Except as otherwise determined by the Committee at
the time of grant or thereafter, upon termination of employment (as
determined under criteria established by the Committee) during the
applicable restriction period, Restricted Stock that is at that time
subject to restrictions shall be forfeited and reacquired by the Company;
provided, however, that the Committee may provide, by rule or regulation or
in any Award Agreement, that restrictions on Restricted Stock shall be
waived in
B-6
<PAGE> 39
whole or in part in the event of terminations resulting from specified
causes, and the Committee may in other cases waive in whole or in part
restrictions on Restricted Stock.
(iii) Certificates for Shares. Restricted Stock granted under the
Plan may be evidenced in such manner as the Committee shall determine,
including, without limitation, issuance of certificates representing
Shares. Certificates representing Shares of Restricted Stock shall be
registered in the name of the Participant and shall bear an appropriate
legend referring to the terms, conditions and restrictions applicable to
such Restricted Stock.
6.05 Deferred Stock. The Committee is authorized to grant Deferred Stock
to Participants on the following terms and conditions:
(i) Issuance and Limitations. Delivery of Shares shall occur upon
expiration of the deferral period specified for the Award of Deferred Stock
by the Committee. In addition, an Award of Deferred Stock shall be subject
to such limitations as the Committee may impose, which limitations may
lapse at the expiration of the deferral period or at other specified times,
separately or in combination, in installments or otherwise as the Committee
shall determine at the time of grant or thereafter. A Participant awarded
Deferred Stock shall have no voting rights and shall have no rights to
receive dividends in respect of Deferred Stock, unless and only to the
extent that the Committee shall award Dividend Equivalents in respect of
such Deferred Stock.
(ii) Forfeiture. Except as otherwise determined by the Committee upon
termination of employment (as determined under criteria established by the
Committee) during the applicable deferral period, Deferred Stock that is at
that time subject to deferral (other than a deferral at the election of the
Participant) shall be forfeited; provided, however, that the Committee may
provide, by rule or regulation or in any Award Agreement, that forfeiture
of Deferred Stock shall be waived in whole or in part in the event of
terminations resulting from specified causes, and the Committee may in
other cases waive in whole or in part the forfeiture of Deferred Stock.
6.06 Performance Awards. The Committee is authorized to grant Performance
Awards to Participants on the following terms and conditions:
(i) Right to Payment. A Performance Award shall confer upon the
Participant rights, valued as determined by the Committee, and payable to,
or exercisable by, the Participant to whom the Performance Award is
granted, in whole or in part, as the Committee shall establish. The
performance criteria and all other terms and conditions of the Performance
Award shall be determined by the Committee upon the grant of each
Performance Award or thereafter.
(ii) Other Terms. A Performance Award may be denominated or payable
in cash, deferred cash, Shares, other Awards or other property, and other
terms and conditions of Performance Awards shall be as determined by the
Committee.
6.07 Dividend Equivalents. The Committee is authorized to grant Dividend
Equivalents to Participants. Dividend Equivalents shall confer upon the
Participant rights to receive, currently or on a deferred basis, interest or
dividends, or interest or dividend equivalents, with respect to a number of
Shares, or otherwise, as determined by the Committee. The Committee may provide
that Dividend Equivalents shall be paid or distributed when accrued or shall be
deemed to have been reinvested in additional Shares or additional Awards or
otherwise reinvested.
6.08 Other Stock-Based Awards. The Committee is authorized, subject to
limitations under applicable law, to grant to Participants such other Awards
that are denominated or payable in, valued in whole or in part by reference to,
or otherwise based on, or related to, Shares, as deemed by the Committee to be
consistent with the purposes of the Plan and, with respect to Participants who
are subject to Section 16 of the Exchange Act, to comply with Rule 16b-3 and
applicable law including, without limitation, purchase rights, Shares awarded
which are not subject to any restrictions or conditions, convertible securities,
exchangeable securities or other rights convertible or exchangeable into Shares,
as the Committee in its discretion may determine. In the discretion of the
Committee, such Other Stock-Based Awards, including Shares, or other types of
Awards
B-7
<PAGE> 40
authorized under the Plan, may be used in connection with, or to satisfy
obligations of the Company or a Subsidiary under, other compensation or
incentive plans, programs or arrangements of the Company or any Subsidiary for
eligible Participants, including without limitation the Short-Term Incentive
Compensation Plan, the Supplemental Executive Retirement Plan (SERP) and
executive contracts.
The Committee shall determine the terms and conditions of Other Stock-Based
Awards. Except as provided in Section 7.01, Shares or securities delivered
pursuant to a purchase right granted under this Section 6.08 shall be purchased
for such consideration, paid for by such methods and in such forms, including,
without limitation, cash, Shares, outstanding Awards or other property or any
hereof, as the Committee shall determine, but the value of such consideration
shall not be less than the Fair Market Value of such Shares or other securities
on the date of grant of such purchase right. Delivery of Shares or other
securities in payment of a purchase right, if authorized by the Committee, may
be accomplished through the effective transfer to the Company of Shares or other
securities held by a broker or other agent. Unless otherwise determined by the
Committee, the Company will also cooperate with any person exercising a purchase
right who participates in a cashless exercise program of a broker or other agent
under which all or part of the Shares or securities received upon exercise of a
purchase right are sold through the broker or other agent, or under which the
broker or other agent makes a loan to such person, for the purpose of paying the
exercise price of a purchase right. Notwithstanding the preceding sentence,
unless the Committee, in its discretion, shall otherwise determine, the exercise
of the purchase right shall not be deemed to occur, and no Shares or other
securities will be issued by the Company upon exercise of a purchase right,
until the Company has received payment in full of the exercise price.
6.09 Exchange Provisions. The Committee may at any time offer to exchange
or buy out any previously granted Award for a payment in cash, Shares, another
Award or other property, based on such terms and conditions as the Committee
shall determine and communicate to the Participant at the time that such offer
is made.
SECTION 7. GENERAL TERMS OF AWARDS
7.01 Stand-Alone, Tandem and Substitute Awards. Awards granted under the
Plan may, in the discretion of the Committee, be granted either alone or in
addition to, in tandem with or in substitution for, any other Award granted
under the Plan or any award granted under the Management Incentive Compensation
Plan, or any other plan, program or arrangement of the Company or any Subsidiary
(subject to the terms of Section 10.01) or any business entity acquired or to be
acquired by the Company or a Subsidiary. If an Award is granted in substitution
for another Award or award, the Committee shall require the surrender of such
other Award or award in consideration for the grant of the new Award. Awards
granted in addition to or in tandem with other Awards or awards may be granted
either at the same time as or at a different time from the grant of such other
Awards or awards, except that Awards may be granted in tandem with an Incentive
Stock Option only at the time the Incentive Stock Option is granted. The
exercise price of any Option, the grant price of any Stock Appreciation Right or
the purchase price of any other Award conferring a right to purchase Shares:
(i) granted in substitution for an outstanding Award or award shall be
not less than the Fair Market Value of Shares at the date such substitute
Award is granted; provided, however, that (1) except in the case of (a) an
Incentive Stock Option or (b) an Option or Stock Appreciation Right granted
to a Covered Employee, the exercise, grant or purchase price per share of
the substituted Award may be reduced to reflect the Fair Market Value of
the Award or award required to be surrendered by the Participant as a
condition to receipt of such substitute Award, and (2) in the case of any
Participant, the Committee may, in lieu of such price reduction, make an
additional Award or payment to the Participant reflecting the Fair Market
Value of the Award or award required to be surrendered; or
(ii) retroactively granted in tandem with an outstanding Award or
award shall be not less than the lesser of the Fair Market Value of Shares
at the date of grant of the later Award or the Fair Market Value of Shares
at the date of grant of the earlier Award.
B-8
<PAGE> 41
7.02 Certain Restrictions Under Rule 16b-3. Upon the effectiveness of any
amendment to Rule 16b-3, this Plan and any Award Agreement for an outstanding
Award held by a Participant then subject to Section 16 of the Exchange Act shall
be deemed to be amended, without further action on the part of the Committee,
the Board or the Participant, to the extent necessary for Awards under the Plan
or such Award Agreement to qualify for the exemption provided by Rule 16b-3, as
so amended, except to the extent any such amendment requires shareholder
approval.
7.02.1 Six-Month Limitations on Sales and Exercises. Any equity
security (as defined by the Exchange Act), other than a derivative
security, granted or awarded pursuant to the Plan to a Participant who is
at the time of grant or award subject to Section 16 of the Exchange Act
must be held by the Participant for at least six months after grant (or, if
later, after the date of shareholder approval of the Plan), except in the
case of death. If a derivative security is granted or awarded to a
Participant who is at the time of grant or award subject to Section 16 of
the Exchange Act, (1) the Participant may not dispose of the derivative
security (other than through exercise or conversion or upon death) or of
any equity security acquired upon its exercise or conversion (other than
upon death) until six months have elapsed from the date of grant or award
of the derivative security (or, if later, from the date of shareholder
approval of the Plan) and (2) except with respect to an Option, the
derivative security may not be exercised or converted within such six-month
period (other than upon death) unless such exercise would not cause the
grant or award of the derivative security to cease to be exempt under Rule
16b-3. The limitations in this Section 7.02.1 shall not apply to the extent
such limitations are not at the time required for the grant of the Award to
continue to qualify for the exemption provided by Rule 16b-3. Certificates
issued for Shares subject to limitations under this Section 7.02.1 may be
made subject to stop-transfer orders, legended and/or made subject to a
custodial arrangement as provided in Section 7.07.
7.02.2 Nontransferability. Awards which constitute derivative
securities shall not be transferable by a Participant except by will or the
laws of descent and distribution and shall be exercisable during a
Participant's lifetime only by such Participant; provided, however, that,
if so determined by the Committee, a Participant may, in the manner
established by the Committee, designate a beneficiary or beneficiaries to
exercise the rights of the Participant, and to receive any distribution
with respect to any Award (other than an Incentive Stock Option), upon the
death of the Participant; and provided, further, that the Committee may
determine that these restrictions on transferability shall not apply to
Awards (other than an Incentive Stock Option) granted to any Participant
who, at the time of the initial grant and the transfer, is not subject to
Section 16 of the Exchange Act or shall not apply to Awards (other than an
Incentive Stock Option) granted to a Participant subject to Section 16 to
the extent such restrictions are not at the time required for the Plan to
continue to meet the requirements of Rule 16b-3.
7.02.3 Decisions Required to be Made by the Committee. Other
provisions of the Plan and any Award Agreement notwithstanding, if any
decision regarding an Award or the exercise of any right by a Participant,
at any time such Participant is subject to Section 16 of the Exchange Act,
is required to be made or approved by the Committee in order that the Plan
will continue to meet the requirements of Rule 16b-3 or in order that a
transaction by such Participant will be exempt under Rule 16b-3, then the
Committee shall retain full and exclusive power and authority to make such
decision or to approve or disapprove any such decision by the Participant.
7.03 Term of Awards. The term of each Award shall be for such period as
may be determined by the Committee; provided, however, that in no event shall
the term of any Incentive Stock Option, or a Stock Appreciation Right granted in
tandem therewith, exceed a period of ten years from the date of its grant.
7.04 Form of Payment of Awards. Subject to the terms of the Plan and any
applicable Award Agreement, payments or substitutions to be made by the Company
upon the grant, exercise or other payment or distribution of an Award may be
made in such forms as the Committee shall determine at the time of grant or
thereafter (subject to the terms of Section 10.01), including, without
limitation, cash, Shares, other Awards or other property or any combination
thereof, and may be made in a single payment or substitution, in installments or
on a deferred basis, in each case in accordance with rules and procedures
established, or as
B-9
<PAGE> 42
otherwise determined, by the Committee. Such rules and procedures or
determinations may include, without limitation, provisions for the payment or
crediting of reasonable interest on installment or deferred payments or the
grant or crediting of Dividend Equivalents in respect of installment or deferred
payments.
7.05 Limits on Transfer of Awards; Beneficiaries. No right or interest of
a Participant in any Award shall be pledged, encumbered or hypothecated to or in
favor of any Person other than the Company, or shall be subject to any lien,
obligation or liability of such Participant to any Person other than the Company
or a Subsidiary. Unless otherwise determined by the Committee (subject to the
requirements of Section 7.02.2), no Award and no rights or interests therein
shall be assignable or transferable by a Participant otherwise than by will or
the laws of descent and distribution except to the Company or a Subsidiary under
the terms of the Plan; provided, however, that, if so determined by the
Committee, a Participant may, in the manner established by the Committee,
designate a beneficiary or beneficiaries to exercise the rights of the
Participant, and to receive any distribution with respect to any Award, upon the
death of the Participant. A beneficiary, guardian, legal representative or other
Person claiming any rights under the Plan from or through any Participant shall
be subject to all the terms and conditions of the Plan and any Award Agreement
applicable to such Participant as well as any additional restrictions or
limitations deemed necessary or appropriate by the Committee.
7.06 Registration and Listing Compliance. No Award shall be paid and no
Shares or other securities shall be distributed with respect to any Award in a
transaction subject to the registration requirements of the Securities Act of
1933, as amended, or any state securities law or subject to a listing
requirement under any listing agreement between the Company and any national
securities exchange, and no Award shall confer upon any Participant rights to
such payment or distribution until such laws and contractual obligations of the
Company have been complied with in all material respects. Except to the extent
required by the terms of an Award Agreement or another contract between the
Company and the Participant, neither the grant of any Award nor anything else
contained herein shall obligate the Company to take any action to comply with
any requirements of any such securities laws or contractual obligations relating
to the registration (or exemption therefrom) or listing of any Shares or other
securities, whether or not necessary in order to permit any such payment or
distribution.
7.07 Stock Certificates. All certificates for Shares delivered under the
terms of the Plan shall be subject to such stop-transfer orders and other
restrictions as the Committee may deem advisable under federal or state
securities laws, rules and regulations thereunder, and the rules of any national
securities exchange or automated quotation system on which Shares are listed or
quoted. The Committee may cause a legend or legends to be placed on any such
certificates to make appropriate reference to such restrictions or any other
restrictions or limitations that may be applicable to Shares. In addition,
during any period in which Awards or Shares are subject to restrictions or
limitations under the terms of the Plan or any Award Agreement, or during any
period during which delivery or receipt of an Award or Shares has been deferred
by the Committee or a Participant, the Committee may require any Participant to
enter into an agreement providing that certificates representing Shares issuable
or issued pursuant to an Award shall remain in the physical custody of the
Company or such other Person as the Committee may designate.
SECTION 8. ADJUSTMENT PROVISIONS
8.01 In the event that the Committee shall determine that any dividend or
other distribution (whether in the form of cash, Shares, other securities or
other property), recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, exchange of Shares or other securities of the Company, or other
similar corporate transaction or event affects the Shares such that an
adjustment is determined by the Committee to be appropriate in order to prevent
dilution or enlargement of Participants' rights under the Plan, then the
Committee shall, in such manner as it may deem equitable, adjust any or all of
(i) the number and kind of Shares which may thereafter be issued in connection
with Awards; (ii) the number and kind of Shares issued or issuable in respect of
outstanding Awards; and (iii) the exercise price, grant price or purchase price
relating to any Award or, if deemed appropriate, make provision for a cash
payment with respect to any outstanding Award; provided, however, in each case,
that (1) with respect to Incentive Stock Options, no such adjustment shall be
authorized to the extent that such authority would cause
B-10
<PAGE> 43
the Plan to violate Section 422(b)(1) of the Code or any successor provision
thereto and (2) with respect to Options and Stock Appreciation Rights held by a
Covered Employee, no such adjustment shall be authorized to the extent that such
authority would cause such Awards to fail to qualify as "performance-based
compensation" under Section 162(m)(4)(C) of the Code. In addition, the Committee
is authorized to make adjustments in the terms and conditions of, and the
criteria of, Awards in recognition of unusual or nonrecurring events (including,
without limitation, events described in the preceding sentence) affecting the
Company or the financial statements of the Company, or in response to changes in
applicable laws, regulations or accounting principles; provided, however, that
(1) with respect to Incentive Stock Options, no such adjustment shall be
authorized to the extent that such authority would cause the Plan to violate
Section 422(b)(1) of the Code or any successor provision thereto and (2) with
respect to Options and Stock Appreciation Rights held by a Covered Employee, no
such adjustment shall be authorized to the extent that such authority would
cause such Awards to fail to qualify as "performance-based compensation" under
Section 162(m)(4)(C) of the Code.
SECTION 9. CHANGE OF CONTROL PROVISIONS
9.01 Acceleration of Exercisability and Lapse of Restrictions; Automatic
Cash-Out of Awards. In the event of a Change of Control, the following
acceleration and cash-out provisions shall apply unless otherwise provided by
the Committee at the time of the Award grant:
(i) All outstanding Awards pursuant to which the Participant may have
rights, the exercise of which is restricted or limited, shall become fully
exercisable, except as may be otherwise provided in Section 7.02.1; unless
the right to lapse of restrictions or limitations is waived or deferred by
a Participant prior to such lapse, all restrictions or limitations
(including risks of forfeiture and deferrals) on outstanding Awards subject
to restrictions or limitations under the Plan shall lapse, except as may be
otherwise provided in Section 7.02.1; and all performance criteria and
other conditions to payment of Awards under which payments of cash, Shares
or other property are subject to conditions shall be deemed to be achieved
or fulfilled and shall be waived by the Company, except as may be otherwise
required to comply with Rule 16b-3.
(ii) All outstanding Awards not subject to limitations under Section
7.02.1 shall be automatically surrendered, and the Participants shall
receive, in full satisfaction therefor, cash payments equal to the value of
such outstanding Awards calculated on the basis of the Change of Control
Price of any Shares or the Fair Market Value of any property other than
Shares relating to such Award; provided, however, that (a) in the case of a
nonstatutory stock option, or a Stock Appreciation Right granted in tandem
therewith, the cash payment shall be equal to the Change of Control Price
of the Shares subject to the Option reduced by the exercise price thereof,
(b) in the case of an Incentive Stock Option, or a Stock Appreciation Right
granted in tandem therewith, the cash payment shall be equal to the Fair
Market Value of the Shares subject to the Option on the date on which the
Change of Control occurred reduced by the exercise price thereof, (c) in
the case of a Stock Appreciation Right not granted in tandem with another
award, the cash payment shall be equal to the Change of Control Price of
the Shares subject to the Stock Appreciation Right reduced by the grant
price thereof, and (d) in the case of any other purchase right, the cash
payment shall be reduced by the Fair Market Value of the consideration
otherwise required to exercise such purchase right. In the event that an
Award is granted in tandem with another Award such that the Participant's
right to payment for such Award is an alternative to payment of another
Award, the Participant shall surrender all alternative Awards and receive
payment for the Award which produces the highest payment to the
Participant. In no event will an Award be automatically surrendered or a
Participant have the right to receive cash under this Section 9.02(ii) with
respect to an Award (1) if the Participant is subject to Section 16 of the
Exchange Act (or was subject to Section 16 of the Exchange Act at the date
of grant of the Award) and at least six months shall not have elapsed from
the date on which the Participant was granted the Award (or, if later, from
the date of shareholder approval of the Plan) before the date of the Change
of Control (unless this restriction is not at such time required under Rule
16b-3(c)(1) or Rule 16b-3(e)) or (2) if the Participant is subject to
Section 16 of the Exchange Act and had the power to control the occurrence
or timing of the Change of
B-11
<PAGE> 44
Control such that the surrender and right to receive cash under this
Section 9.01(ii) would fail to be exempt pursuant to Rule 16b-3(e).
(iii) In the event that any Award is subject to limitations under
Section 7.02.1 at the time of a Change of Control, then, solely for the
purpose of determining the rights of the Participant under Section 9.02(ii)
with respect to such Award, a Change of Control shall be deemed to occur at
the close of business on the first business day following the date on which
the limitations on such Award under Section 7.02.1 have expired; provided,
however, that this Section 9.01(iii) shall not apply if its application
would cause the surrender of the Award and the receipt of cash under
Section 9.01(ii) to fail to be exempt pursuant to Rule 16b-3(e).
(iv) In the discretion of the Committee, the Committee may permit any
Participant not subject to Section 16 of the Exchange Act on the date of a
Change of Control to elect, in such manner and at such time or times or
within such periods as the Committee may determine (whether before or after
a Change of Control), and subject to such other terms, conditions or
restrictions, if any, as the Committee may determine to impose, not to
surrender for cash pursuant to Section 9.02(ii) all or any portion of any
Award or Awards held by the Participant.
9.02 Creation and Funding of Trust. Upon the occurrence of a Potential
Change of Control, the Company shall deposit with the trustee of a trust for the
benefit of Participants monies or other property having a Fair Market Value at
least equal to the value of the cash, Shares and other property to be paid or
distributed in connection with Awards outstanding at that date. The trust shall
be a grantor trust which shall preserve the "unfunded" status of Awards under
the Plan. Subsequent to a Potential Change of Control which is no longer
continuing and prior to a Change of Control and termination of the trust, upon
the request of the Company the trustee shall deliver the monies or other
property held in the trust to the Company. In the discretion of the Committee,
monies or other property may also be deposited in the trust created under this
Section 9.02 for the benefit of participants in any other compensation or
benefit plan, program, contract or arrangement of the Company or any Subsidiary.
9.03 Definition of Certain Terms. For purposes of this Section 9, the
following definitions, in addition to those set forth in Section 2.01, shall
apply:
9.03.1 "Change of Control" means and shall be deemed to have occurred
if (i) any Person, other than the Company or a Related Party, purchases or
otherwise acquires, under a tender offer or otherwise, Beneficial Ownership
of any Voting Securities which, when combined with other Voting Securities
then Beneficially Owned by such Person, represent twenty percent (20%) or
more of the total voting power of all the then outstanding Voting
Securities; or (ii) the individuals (a) who as of the effective date of the
Plan constitute the Board or (b) who thereafter are elected to the Board
and whose election, or nomination for election, to the Board was approved
by a vote of at least two-thirds of the directors then still in office who
either were directors as of the effective date of the Plan or whose
election or nomination for election was previously so approved (the
"Continuing Directors"), cease for any reason to constitute a majority of
the members of the Board; or (iii) the Company is a party to a merger,
consolidation, share exchange, recapitalization or reorganization of the
Company or an acquisition of securities or assets by the Company, other
than any such transaction (a) which would result in the Voting Securities
outstanding immediately prior thereto continuing to represent either by
remaining outstanding or by being converted into voting securities of the
surviving or acquiring entity, at least fifty percent (50%) of the total
voting power represented by the voting securities of such surviving or
acquiring entity outstanding immediately after such transaction and (b) in
or as a result of which the voting rights of each Voting Security relative
to the voting rights of all other Voting Securities are not altered other
than through the exercise of dissenters' rights; or (iv) the shareholders
of the Company approve a plan of complete liquidation of the Company; or
(v) the Company shall sell or otherwise dispose of, other than to a Related
Party, in a single or a series of related transactions otherwise than in
the ordinary course of business, assets of the Company and/or stock or
assets of any Subsidiary, having a book value equal to 50% or more of the
consolidated total assets of the Company, in each case measured as the date
of the most recent quarterly or annual balance sheet of the Company
required to be included or incorporated by
B-12
<PAGE> 45
reference in any proxy or information statement of the Company furnished to
the shareholders of the Company in connection with such transaction, or if
no such proxy or information statement is furnished to shareholders or no
such balance sheet is required to be included or incorporated by reference
therein, as of the date of the most recent quarterly or annual balance
sheet of the Company required to be filed with the Securities and Exchange
Commission prior to the date of any such transaction;
9.03.2 "Change of Control Price" means, with respect to a Share, the
higher of (i) the highest reported sales price of Shares on the New York
Stock Exchange's consolidated transaction reporting system (or if the
Common Stock is not then listed on such Exchange, on or on any composite
index including the principal United States securities exchange on which
the Common Stock is then listed, or if none, on NASDAQ or any similar
system then in use, and in the absence of any such reported sales prices,
the highest publicly reported bid price for Shares) during the 30 calendar
days preceding the date of a Change of Control or (ii) the highest price
paid or offered in a transaction which either (a) results in a Change of
Control or (b) would be consummated but for another transaction which
results in a Change of Control and, if it were consummated, would result in
a Change of Control. With respect to clause (ii) in the preceding sentence,
the "price paid or offered" will be equal to the sum of (a) the face amount
of any portion of the consideration consisting of cash or cash equivalents
and (b) the fair market value of any portion of the consideration
consisting of real or personal property other than cash or cash
equivalents, as established by an independent appraiser selected by the
Committee.
9.03.3 "Potential Change of Control" means and shall be deemed to have
arisen if (i) the Company enters into an agreement, the consummation of
which would result in the occurrence of the Change of Control; or (ii) any
Person (including the Company) publicly announces an intention to take or
to consider taking actions which if consummated would constitute a Change
of Control; or (iii) any Person, other than a Related Party, files with the
Securities and Exchange Commission a Schedule 13D pursuant to Rule 13d-1
under the Exchange Act with respect to Voting Securities; or (iv) any
Person, other than the Company or a Related Party, files with the Federal
Trade Commission a notification and report form pursuant to the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 with respect to any
Voting Securities or any assets of the Company or a Subsidiary; or (v) the
Board or a committee thereof adopts a resolution to the effect that, for
purposes of the Plan, a Potential Change of Control has arisen. A Potential
Change of Control will be deemed to continue (a) with respect to an
agreement within the purview of clause (i) of the preceding sentence, until
the agreement is canceled or terminated; or (b) with respect to an
announcement within the purview of clause (ii) of the preceding sentence,
until the Person making the announcement publicly abandons the stated
intention or fails to act on such intention for a period of 12 calendar
months; or (c) with respect to the filing of a Schedule 13D within the
purview of clause (iii) of the preceding sentence, until the Person
involved publicly announces that its ownership or acquisition of the Voting
Securities is for investment purposes only and not for the purpose of
seeking a Change of Control or such Person disposes of all Voting
Securities exceeding 5% of the outstanding shares of any class; or (d) with
respect to the filing of a notification and report form within the purview
of clause (iv) of the preceding sentence with respect to Voting Securities
or assets, until the Person publicly abandons the transaction which was the
subject of such filing or fails to act thereon for a period of 12 calendar
months or, in the case of a filing with respect to Voting Securities, until
the Person involved (1) publicly announces that its ownership or
acquisition of the Voting Securities is for investment purposes only and
not for the purpose of seeking a Change of Control or (2) following
completion of such transaction disposes of all Voting Securities exceeding
5% of the outstanding shares of any class; or (e) until a Change of Control
has occurred if the majority of the Continuing Directors, on reasonable
belief after due investigation, adopts a resolution that either (1) the
Potential Change of Control has ceased to exist or (2) the Potential Change
of Control is believed to be not reasonably likely to result in a Change of
Control.
9.03.4 "Related Party" means (i) a Subsidiary; or (ii) a trustee or
other fiduciary holding securities under an employee benefit plan of the
Company or any Subsidiary; or (iii) a Company owned directly or indirectly
by the shareholders of the Company in substantially the same proportion as
their ownership of Voting Securities.
B-13
<PAGE> 46
9.03.5 "Voting Securities or Security" means any securities of the
Company which carry the right to vote generally in the election of
directors.
9.03.6 "Beneficial Ownership" shall be determined in accordance with
Regulation 13D-G under the Exchange Act, as in effect on the effective date
of the Plan.
SECTION 10. AMENDMENTS TO AND TERMINATION OF THE PLAN
10.01 The Board may amend, alter, suspend, discontinue or terminate the
Plan without the consent of shareholders or Participants, except that, without
the approval of the shareholders of the Company, no amendment, alteration,
suspension, discontinuation or termination shall be made if shareholder approval
is required by any federal or state law or regulation, or if the Board in its
discretion determines that obtaining such shareholder approval is for any reason
advisable; provided, however, that except as provided in Section 7.02, without
the consent of the Participant, no amendment, alteration, suspension,
discontinuation or termination of the Plan may materially and adversely affect
the rights of such Participant under any Award theretofore granted to him. The
Committee may waive any conditions or rights under, amend any terms of, or
amend, alter, suspend, discontinue or terminate, any Award theretofore granted,
prospectively or retrospectively; provided, however, that except as provided in
Section 7.02, without the consent of a Participant, no amendment, alteration,
suspension, discontinuation or termination of any Award may materially and
adversely affect the rights of such Participant under any Award theretofore
granted to him.
SECTION 11. GENERAL PROVISIONS
11.01 No Right to Awards; No Shareholder Rights. No Participant or
employee shall have any claim to be granted any Award under the Plan, and there
is no obligation for uniformity of treatment of Participants and employees,
except as provided in any other compensation arrangement. No Award shall confer
on any Participant any of the rights of a shareholder of the Company unless and
until Shares are in fact issued to such Participant in connection with such
Award.
11.02 Withholding. To the extent required by applicable Federal, state,
local or foreign law, the Participant or his successor shall make arrangements
satisfactory to the Company, in its discretion, for the satisfaction of any
withholding tax obligations that arise in connection with an Award. The Company
shall not be required to issue any Shares or make any cash or other payment
under the Plan until such obligations are satisfied.
The Company is authorized to withhold from any Award granted or any payment
due under the Plan, including from a distribution of Shares, amounts of
withholding taxes due with respect to an Award, its exercise or any payment
thereunder, and to take such other action as the Committee may deem necessary or
advisable to enable the Company and Participants to satisfy obligations for the
payment of such taxes. This authority shall include authority to withhold or
receive Shares, Awards or other property and to make cash payments in respect
thereof in satisfaction of such tax obligations.
11.03 No Right to Employment. Nothing contained in the Plan or any Award
Agreement shall confer, and no grant of an Award shall be construed as
conferring, upon any Participant any right to continue in the employ of the
Company or to interfere in any way with the right of the Company to terminate
his employment at any time or increase or decrease his compensation from the
rate in existence at the time of granting of an Award, except as provided in any
Award Agreement or other compensation arrangement.
11.04 Unfunded Status of Awards; Creation of Trusts. The Plan is intended
to constitute an "unfunded" plan for incentive and deferred compensation. With
respect to any payments not yet made to a Participant pursuant to an Award,
nothing contained in the Plan or any Award shall give any such Participant any
rights that are greater than those of a general unsecured creditor of the
Company; provided, however, that, in addition to the requirements of Section
9.02, the Committee may authorize the creation of trusts or make other
arrangements to meet the Company's obligations under the Plan to deliver cash,
Shares or other property pursuant to any Award, which trusts or other
arrangements shall be consistent with the "unfunded" status of the Plan unless
the Committee otherwise determines.
B-14
<PAGE> 47
11.05 No Limit on Other Compensatory Arrangements. Nothing contained in
the Plan shall prevent the Company from adopting other or additional
compensation arrangements (which may include, without limitation, employment
agreements with executives and arrangements which relate to Awards under the
Plan), and such arrangements may be either generally applicable or applicable
only in specific cases. Notwithstanding anything in the Plan to the contrary
(other than the provisions of Section 7.02), the terms of each Award shall be
construed so as to be consistent with such other arrangements in effect at the
time of the Award.
11.06 No Fractional Shares. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award. The Committee shall determine
whether cash, other Awards or other property shall be issued or paid in lieu of
fractional Shares or whether such fractional Shares or any rights thereto shall
be forfeited or otherwise eliminated.
11.07 Governing Law. The validity, interpretation, construction and effect
of the Plan and any rules and regulations relating to the Plan shall be governed
by the laws of the Commonwealth of Pennsylvania (without regard to the conflicts
of laws thereof), and applicable Federal law.
11.08 Severability. If any provision of the Plan or any Award is or
becomes or is deemed invalid, illegal or unenforceable in any jurisdiction, or
would disqualify the Plan or any Award under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to conform to
applicable laws or if it cannot be construed or deemed amended without, in the
determination of the Committee, materially altering the intent of the Plan or
Award, it shall be deleted and the remainder of the Plan or Award shall remain
in full force and effect; provided, however, that, unless otherwise determined
by the Committee, the provision shall not be construed or deemed amended or
deleted with respect to any Participant whose rights and obligations under the
Plan are not subject to the law of such jurisdiction or the law deemed
applicable by the Committee.
SECTION 12. EFFECTIVE DATE AND TERM OF THE PLAN
12.01 The effective date and date of adoption of the Plan shall be January
21, 1994, the date of adoption of the Plan by the Board, provided that such
adoption of the Plan is approved by the affirmative vote of a majority of the
shares of Common Stock present in person or represented by proxy and entitled to
vote at a duly held meeting of shareholders of the Company held on or prior to
December 31, 1994. Notwithstanding anything else contained in the Plan or in any
Award Agreement, no Option, Stock Appreciation Right or other purchase right
granted under the Plan may be exercised, and no Shares may be distributed
pursuant to any Award granted under the Plan, prior to such shareholder approval
or prior to any required approval or consent from those governmental agencies
having jurisdiction in these matters. In the event such shareholder or
regulatory approval is not obtained, all Awards granted under the Plan shall
automatically be deemed void and of no effect. No Award may be granted under the
Plan subsequent to May 27, 1999.
B-15
<PAGE> 48
TICKET REQUEST
If you plan to attend the Annual Meeting of Shareholders on May 27, 1994, this
form may be used to request an admission card. Please fill in your name(s) and
address and return the form promptly. The envelope provided for return of your
proxy card should also be used to return this form. An admission card will be
sent to you approximately two weeks prior to the meeting.
I/we plan to attend the meeting.
Name __________________________________________________________________________
Please Print
Address _______________________________________________________________________
City, State ________________________________________ Zip Code _________________
<PAGE> 49
EQUITABLE RESOURCES LOGO
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
DONALD I. MORITZ, FREDERICK H. ABREW AND AUDREY C. MOELLER are, and each of them
is, hereby appointed as proxies of the undersigned to vote all shares which the
undersigned is entitled to vote at the Annual Meeting of Shareholders of the
Company to be held on Friday, May 27, 1994 at 10:00 a.m., in the Union Trust
Building at Two Mellon Bank Center, 501 Grant Street, Pittsburgh, PA, and at any
adjournment of such meeting. WHERE A VOTE IS NOT SPECIFIED, THE PROXIES WILL
VOTE THE SHARES REPRESENTED BY THIS PROXY FOR THE ELECTION OF DIRECTORS AND FOR
ITEM 2, ITEM 3 AND ITEM 4 AND AGAINST ITEM 5 AND WILL VOTE IN THEIR DISCRETION
ON SUCH OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING.
A vote FOR the election of nominees listed on the reverse side includes
discretionary authority to cumulate votes selectively among the nominees as to
whom authority to vote has not been withheld and to vote for a substitute if any
nominee becomes unavailable for election for any reason.
This Proxy is solicited on behalf of the Board of Directors of the Company and
may be revoked prior to its exercise. The Board of Directors recommends votes
FOR the election of all nominees for director and FOR Item 2, Item 3 and Item 4
and AGAINST Item 5.
PLEASE SIGN AND DATE ON REVERSE SIDE AND RETURN THE PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.
<PAGE> 50
WHERE A VOTE IS NOT SPECIFIED, THE PROXIES WILL VOTE THE SHARES REPRESENTED BY
THE PROXY FOR ITEM 1, ITEM 2, ITEM 3 AND ITEM 4 AND AGAINST ITEM 5 AND WILL
VOTE IN ACCORDANCE WITH THEIR DISCRETION ON SUCH OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE MEETING. (MARK ONLY ONE BOX FOR EACH ITEM).
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTOR NOMINEES: CLIFFORD L. ALEXANDER, JR., E. LAWRENCE KEYES, 2. RATIFY APPOINTMENT
JR., THOMAS A. MCCONOMY, AND MALCOLM M. PRINE OF AUDITORS
FOR all WITHHOLD Instruction: To withhold authority to vote for any For Against Abstain
nominees AUTHORITY individual nominee, write that nominee's name on the line
listed (except to vote for provided below.
as indicated) all nominees
----------------------------------------------------------
0 0 0 0 0
<S> <C> <C>
3. 1994 NON-EMPLOYEE DIRECTORS' 4. 1994 LONG-TERM 5. SHAREHOLDER PROPOSAL
STOCK INCENTIVE PLAN. INCENTIVE PLAN RE: CERES PRINCIPLES
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
0 0 0 0 0 0 0 0 0
</TABLE>
Dated:______________________, 1994
__________________________________
__________________________________
Signature(s) of Shareholder(s)
Sign exactly as name appears hereon.
Executors, administrators, trustees,
etc. should give full title as such.
If the signer is a corporation,
please sign full corporate name by a
duly authorized officer.
PLEASE MARK INSIDE BLUE BOXES SO THAT DATA PROCESSING EQUIPMENT WILL RECORD YOUR
VOTES.
