<PAGE>
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
Equitable Resources, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
[LOGO OF EQUITABLE RESOURCES] One Oxford Centre
Suite 3300
Pittsburgh, PA 15219
Notice of Annual Meeting of Shareholders
To Be Held May 26, 1999
The Annual Meeting of Shareholders of Equitable Resources, Inc. will be held
on Wednesday, May 26, 1999, at 10 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 three directors, each to serve for a term of three years.
(2) To ratify the appointment of the firm of Ernst & Young LLP as independent
auditors for the year 1999.
(3) To consider and act upon a proposal to approve the 1999 Equitable
Resources, Inc. Non-Employee Directors' Stock Incentive Plan.
(4) To consider and act upon a proposal to approve the 1999 Equitable
Resources, Inc. Long-Term Incentive Plan.
(5) 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 14, 1999, 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 which
is attached to the proxy card. 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
/s/ Audrey C. Moeller
AUDREY C. MOELLER
Vice President and Corporate Secretary
April 22, 1999
YOUR VOTE IS IMPORTANT. PLEASE SIGN, DATE AND
----------------------------------------------
MAIL THE ENCLOSED PROXY AS SOON AS POSSIBLE
-------------------------------------------
<PAGE>
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Equitable Resources, Inc. (the "Company" or
"Equitable ") for use at the Annual Meeting of Shareholders of the Company on
Wednesday, May 26, 1999, 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 in accordance with the specification
made. Proxies submitted with abstentions and broker non-votes will be included
in determining whether or not a quorum is present. Abstentions and broker non-
votes will not be counted in tabulating the number of votes cast on proposals
presented to shareholders. This proxy statement and accompanying proxy will be
mailed to holders of common stock on or about April 22, 1999.
VOTING SECURITIES AND RECORD DATE
Shareholders of record at the close of business on April 14, 1999, are
entitled to notice of and to vote at the Annual Meeting. As of that date,
34,107,403 shares of common stock were outstanding and entitled to be voted.
Treasury shares are not included in the total. 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 for the election of directors.
If a shareholder is a participant in the Company's Dividend Reinvestment and
Stock Purchase Plan, the proxy card represents the number of shares in the
participant's dividend reinvestment account on the record date, as well as
shares registered in the participant's name. Employees holding Company stock in
the Employee Savings Plan, the Employee Savings and Protection Plan, the
Employee Stock Purchase Plan, and/or the Executive Retention Program will
receive separate proxy cards and their votes will be cast by the Trustee or
Administrator of said Plans, 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 and Address Owned Outstanding
---------------- ------------ ------------
<S> <C> <C>
Wellington Management Company, LLP 5,177,800/1/ 13.94%
75 State Street
Boston, MA 02109
The Prudential Insurance Company of America 2,122,225/2/ 5.71%
751 Broad Street
Newark, NJ 07102
</TABLE>
_________________________
/1/ This information is based on a Schedule 13G for the year ended December 31,
1998, filed with the Securities and Exchange Commission, reporting that
Wellington Management Company, LLP has shared voting power over 1,325,000
shares and shared dispositive power over 5,177,800 shares.
/2/ This information is based on a Schedule 13G for the year ended December 31,
1998, filed with the Securities and Exchange Commission, reporting that The
Prudential Insurance Company of America has sole voting and dispositive
power over 4,725 shares and shared voting and dispositive power over
2,117,500 shares.
1
<PAGE>
As of March 15, 1999, all nominees, directors and officers as a group
beneficially owned 1,940,796 shares representing approximately 5.2% of the
Company's outstanding common stock. No nominee, director or named executive
officer owned more than 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 after March 15, 1999, by
the particular individual and group are deemed outstanding.
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. At the Annual
Meeting, three nominees will stand for election. The terms of Phyllis A. Domm,
Ed. D., James E. Rohr and David S. Shapira as Directors expire at the Annual
Meeting. All nominees were previously elected by the shareholders.
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 by the shareholder, 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 March 15, 1999. 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.
2
<PAGE>
CLASS I NOMINEES FOR ELECTION AS DIRECTORS
WITH TERMS EXPIRING IN 2002
[PHOTO] PHYLLIS A. DOMM, Ed. D. Age 52 Director since May 1996
Vice President - Human Resources, MedStar Health (health care
services) since March 1998; President, Management and Marketing
Solutions, Inc. (marketing, public relations and human resources
consulting) July 1997 through February 1998; Senior Vice
President - Health Care Services, Intracoastal Health Systems,
Inc. April 1995 through June 1997; Vice President - Human
Resources, Inova Health System, October 1992 through March 1995.
Member of the Audit and Compensation Committees.
Shares Owned: 845
[PHOTO] JAMES E. ROHR Age 50 Director since May 1996
President and Chief Operating Officer of PNC Bank Corp.
(financial services) since April 1998; President of PNC Bank
Corp. from January 1992; President and Chief Operating Officer of
PNC Bank, N.A. since April 1988. Also a director of Allegheny
Teledyne Incorporated and PNC Bank Corp.
Member of the Compensation and Executive Committees.
Shares Owned: 5,500
[PHOTO] DAVID S. SHAPIRA Age 57 Director since May 1987
Chairman and Chief Executive Officer of Giant Eagle, Inc. (retail
grocery store chain) since February 1994; Chief Executive Officer
of Giant Eagle, April 1992 through January 1994; Chairman of the
Board of Phar-Mor, Inc. (retail chain of general merchandise and
variety stores), February 1993 to September 11, 1995. Also a
director of Action Industries, Inc. and Mellon Bank Corporation.
Member of the Audit and Corporate Governance Committees.
Shares owned: 2,575 (b) (d)
3
<PAGE>
CLASS II DIRECTORS WITH TERMS EXPIRING IN 2000
[PHOTO] E. LAWRENCE KEYES, JR. Age 69 Director since May 1988
Partner, The Fortune Group, LLC (management consulting and
investment banking firm) since January 1987.
Chairman of the Compensation Committee.
Shares owned: 2,200 (b)
[PHOTO] THOMAS A. McCONOMY Age 65 Director since May 1991
Chairman of the Board and interim President and Chief Executive
Officer of Calgon Carbon Corporation (manufacturer and marketer
of activated carbon and related products and services) since
February 19, 1998; Chairman of the Board of Calgon Carbon
Corporation from July 1994 to February 19, 1998; President and
Chief Executive Officer of Calgon Carbon Corporation from January
1990 through June 1994.
Chairman of the Corporate Governance Committee and a member of
the Compensation Committee.
Shares owned: 2,200 (a) (b)
[PHOTO] GUY W. NICHOLS Age 73 Director since July 1997
Retired Chairman and Chief Executive Officer, New England
Electric System (electric utility).
Member of the Audit Committee.
Shares owned: 10,000
[PHOTO] MALCOLM M. PRINE Age 70 Director since May 1982
Chairman of the Board, Core Materials Corp. (manufacturer of
plastics moulding) since January 1997; President, Malcar, Inc.
(housing business) since January 1990; Chairman and Chief
Executive Officer, Bundy Industries, Inc., December 1989 through
August 1995. Also a director of Core Materials Corp.
Chairman of the Audit Committee and a member of the Corporate
Governance and Executive Committees.
Shares owned: 2,848 (b)
4
<PAGE>
CLASS III DIRECTORS WITH TERMS EXPIRING IN 2001
[PHOTO] PAUL CHRISTIANO, Ph. D. Age 56 Director since May 1996
Provost of Carnegie Mellon University (private co-educational
research university) since July 1991.
Member of the Audit Committee.
Shares Owned: 223
[PHOTO] MURRY S. GERBER Age 46 Director since May 1998
President and Chief Executive Officer of the Company since June
1998. Chief Executive Officer, Coral Energy, L.P. (energy
marketing and services) November 1996 through May 1998;
Treasurer, Shell Oil Company, October 1994 through October 1996;
General Manager, Strategic Planning/Exploration & Production,
Shell Oil Company, February 1992 through September 1994.
Member of the Executive Committee.
Shares owned: 59,549 (a) (b) (e) (f) (g)
[PHOTO] DONALD I. MORITZ Age 71 Director since June 1972
Retired Chairman and Chief Executive Officer of the Company;
Interim President and Chief Executive Officer of the Company from
July 17, 1997 through May 1998; Chairman and Chief Executive
Officer of the Company, December 1993 until retirement in
December 1994.
Chairman of the Executive Committee and a member of the Corporate
Governance Committee.
Shares owned: 223,292 (a) (b) (c)
[PHOTO] J. MICHAEL TALBERT Age 52 Director since May 1995
Chairman and Chief Executive Officer of Transocean Offshore Inc.
(owns and operates offshore drilling rigs) since September 1994;
President and Chief Executive Officer, Lone Star Gas Company,
January 1991 through August 1994. Also a director of Transocean
Offshore Inc.
Member of the Compensation, Corporate Governance and Executive
Committees.
Shares owned: 4,000 (b)
5
<PAGE>
All nominees, directors and officers (including those named above) 1,940,796
shares (a)(b)(c)(d)(e)(f)(g)
(a) Includes shares held jointly with spouse as to which voting power and
investment power are shared.
(b) Includes the following shares which may be acquired within 60 days after
March 15, 1999, through the exercise of stock options: Mr. Gerber, 50,000;
Mr. Keyes, 1,000; Mr. McConomy, 1,000; Mr. Moritz, 135,000; Mr. Prine,
1,000; Mr. Shapira, 1,000; Mr. Talbert, 3,000; all nominees, directors and
officers as a group (18 persons), 213,800 shares.
(c) Does not include 1,350 shares owned by Mr. Moritz's wife as to which he
disclaims beneficial ownership.
(d) Shares are held in a trust of which Mr. Shapira is a co-trustee and has a
beneficial interest and shares voting and investment power.
(e) Includes shares allocated under the Company's Employee Savings Plan: Mr.
Gerber, 529 shares; all officers, 7,543 shares.
(f) Includes shares allocated under the Company's Employee Stock Purchase Plan:
Mr. Gerber, 945 shares; all officers, 6,714 shares.
(g) Includes 5,000 stock awards which vest on May 4, 1999.
6
<PAGE>
Board of Directors and its Committees
The Board of Directors held six regular meetings and three special meetings
during 1998. The standing committees of the Board are the Audit, Compensation,
Corporate Governance and Executive Committees. During 1998, attendance of the
directors at Board and Committee meetings averaged 93%.
The Audit Committee consists of five 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 function, 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 auditors performing the internal audit function with respect to their
audit activities; and approves fees charged by the independent auditors. It
also reviews environmental matters, audits and compliance programs and monitors
the overall environmental strategy of the Company. The Committee held five
meetings in 1998.
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 Short-Term
Incentive Compensation Plan, the Long-Term Incentive Plan and the Non-Employee
Directors' Stock Incentive Plan. It addresses, recommends and approves any
other compensation and benefits issues which apply to the officers of the
Company, including perquisites that require Board approval. The Committee held
ten meetings in 1998.
The Corporate Governance Committee consists of four non-employee directors
and Mr. Moritz who served as interim Chief Executive Officer through May 31,
1998. The Committee is responsible for recommending to the Board of Directors
persons to be nominated for election as directors of the Company and monitoring
and recommending enhancements to the Company's corporate governance framework,
particularly with respect to the structure, processes, and proceedings of the
Board of Directors. In performing the nominating function, the Committee
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 is also responsible for recommending the level of compensation and
other fringe benefits for the Directors. The Committee held two meetings in
1998.
The Executive Committee consists of three non-employee directors, Mr. Moritz
who served as interim Chief Executive Officer through May 31, 1998 and Murry S.
Gerber, President and Chief Executive Officer. 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 has the authority to
act in all matters that the full Board may act upon when the Board is not in
session, unless limited by a resolution of the Board and except to the extent
limited by law. The Committee held three meetings in 1998.
Directors' Compensation and Retirement Program
Directors of the Company receive (i) an annual retainer of $24,000 payable
quarterly; (ii) a fee of $1,000 for each Board meeting attended; (iii) a fee of
$1,000 for each Committee meeting attended; and (iv) a fee of $500 for
telephonic participation in a 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.
7
<PAGE>
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 in
furtherance of its community support, the Company uses 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 will qualify for participation after
serving on the Board for 36 months. The cost of the program is nominal.
The Company also provides non-employee directors with $20,000 of life
insurance, $20,000 of accidental death and dismemberment insurance and $100,000
of travel accident insurance while traveling on Company business.
Under the terms of the 1994 Non-Employee Directors' Stock Incentive Plan, on
June 1 of each year each non-employee director is granted an option to purchase
500 shares of the Company's common stock at an exercise price which is 100% of
the fair market value of a share on the date of such grant. The option is
exercisable upon the earlier of three years from the date of grant or upon
termination of service as a director by reason of retirement, disability or
death. Newly elected directors, on the first day of June following their
election, are automatically granted an initial option grant for 2,500 shares of
the Company's common stock at an exercise price of 100% of the market value of a
share on the grant date, in addition to receiving the annual option grant for
500 shares which all non-employee directors automatically receive on June 1 of
each year. No options could be granted under this Plan after June 1998.
On March 17, 1999, the Board of Directors approved, subject to shareholder
approval, the 1999 Non-Employee Directors' Stock Incentive Plan which is more
fully described in Item 3 hereof.
8
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers and any persons who own more than ten percent
of the Company's common stock to file with the Securities and Exchange
Commission and the New York Stock Exchange various reports as to ownership of
such common stock. Such persons are required by Securities and Exchange
Commission regulations to furnish the Company with copies of all Section 16(a)
forms they file.
Based solely on information provided to the Company by individual officers
and directors, the Company believes that during 1998 its officers and directors
have timely complied with all filing requirements applicable to them.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation of the
Company's chief executive officer and each of the other four most highly
compensated executive officers of the Company at the end of the last completed
fiscal year, as well as the compensation of Donald I. Moritz who served as
interim President and Chief Executive Officer through May, 1998 and R. Gerald
Bennett who resigned from the Company in December, 1998 but otherwise would have
been one of the four most highly compensated executive officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
-----------------------------------------------------------------------------------
Awards
---------------------------------
Other Restricted Securities
Annual Stock Underlying All Other
Salary Bonus Compensation Award(s) Options/SARs Compensation
Name and Principal Position Year ($) ($) (1) ($) ($) (2) # ($)(3)(4)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Murry S. Gerber 1998 291,681 300,000 0 436,785 210,000/0 20,417
Director, President and 1997
Chief Executive Officer 1996
- ----------------------------------------------------------------------------------------------------------------------------------
Donald I. Moritz 1998 217,750 0 0 0 0 67,474
Director, Interim President 1997 238,823 355,000 0 0 0/0 70,704
and Chief Executive Officer 1996
- ----------------------------------------------------------------------------------------------------------------------------------
David L. Porges 1998 135,000 175,000 0 291,250 94,000 5,400
Senior Vice President and 1997
Chief Financial Officer 1996
- ----------------------------------------------------------------------------------------------------------------------------------
R. Gerald Bennett 1998 261,500 0 0 0 34,000/0 13,086
Senior Vice President 1997 245,600 160,000 0 187,217/(5)/ 0 28,866
1996 140,000 91,000 0 0 33,400/0 7,800
- ----------------------------------------------------------------------------------------------------------------------------------
John C. Gongas, Jr. 1998 252,125 0 0 0 34,000/0 19,766
Senior Vice President 1997 220,810 160,000 0 170,340 0/0 27,117
1996 207,004 115,000 0 0 0/0 9,365
- ----------------------------------------------------------------------------------------------------------------------------------
Richard D. Spencer 1998 198,831 0 0 0 15,000/0 10,870
Vice President and Chief 1997 188,400 60,000 0 145,800 0 0
Information Officer 1996 135,000 0 0 0 24,000/0 0
- ----------------------------------------------------------------------------------------------------------------------------------
Gregory R. Spencer 1998 193,791 0 0 0 20,000/0 14,040
Senior Vice President and 1997 172,894 110,000 0 133,579 0/0 18,585
Chief Administrative Officer 1996 156,600 95,000 0 0 17,400/0 5,304
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Mr. Gerber was elected President and Chief Executive Officer of the Company
effective June 1, 1998.
Mr. Moritz served as interim President and Chief Executive Officer through May,
1998.
Mr. Porges was elected Senior Vice President and Chief Financial Officer
effective August 1, 1998.
Mr. Bennett resigned from the Company effective December 15, 1998.
9
<PAGE>
/1/ Paid under the Company's Short-Term Incentive Compensation Plan. The amount
for Mr. Gerber represents a $300,000 bonus paid upon commencement of his
employment with the Company. The amount for Mr. Porges represents a
$175,000 bonus paid upon commencement of his employment with the Company.
/2/ Stock awards for 15,000 shares of the Company's common stock were granted
to Mr. Gerber on May 4, 1998. The stock awards vest equally over a three-
year period. The value of these awards at December 31, 1998 was $436,875.
Stock awards for 10,000 shares of the Company's common stock were granted
to Mr. Porges on July 1, 1998. Stock awards vest equally over a three-year
period. Value of these awards at December 31, 1998 was $291,250.
/3/ 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),
matching contributions and other Company contributions to the Employee
Savings Plan and the Company's contribution to the Deferred Compensation
Plan, as follows:
<TABLE>
<CAPTION>
Term Savings Plan Deferred
Insurance Interest Contribution Compensation Plan
--------- -------- ------------ -----------------
<S> <C> <C> <C> <C>
Murry S. Gerber $ - $ - $ 6,400 $14,017
Donald I. Moritz 1,259 25,215 -
David L. Porges - - 5,400 -
R. Gerald Bennett - - 8,412 4,674
John C. Gongas, Jr. 45 6,229 9,807 3,685
Richard D. Spencer - - 9,316 1,554
Gregory R. Spencer 25 1,474 11,189 1,357
</TABLE>
/4/ Mr. Moritz received $41,000 in Director's fees.
/5/ Mr. Bennett forfeited $124,811 of this grant upon his resignation on
December 15, 1998.
10
<PAGE>
OPTIONS/SAR GRANTS IN 1998
<TABLE>
<CAPTION>
Individual Grants
----------------- Potential Realizable
% of Total Value at Assumed
Options/SARs Annual Rates of Stock
Options/ Granted to Exercise or Price Appreciation for
SARs Employees Base Price Expiration the Option Term/2/
Name Granted/1/ In 1998 Per Share Date 5% 10%
- ---- --------- ------------ ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Murry S. Gerber 150,000 14.79 $ 33.07 Various/3/ $1,690,812 $3,851,959
Murry S. Gerber 60,000 5.91 28.06 2005 685,605 1,597,552
Donald I. Moritz 500/4/ N/A 28.375 2003 3,920 8,662
David L. Porges 60,000 5.91 29.72 Various/5/ 608,259 1,385,292
David L. Porges 34,000 3.35 28.06 2005 388,510 905,280
R. Gerald Bennett 34,000/6/ 3.35 28.06 2005 388,510 905,280
John C. Gongas, Jr. 34,000 3.35 28.06 2005 388,510 905,280
Richard D. Spencer 15,000 1.48 28.06 2005 171,401 399,388
Gregory R. Spencer 20,000 1.97 28.06 2005 228,535 532,517
- -----------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------
/1/ There were no SARs granted.
/2/ The option values presented were calculated based on the share price as of
the date of grant at assumed 5% and 10% annualized rates for the term of
the grant. The actual value, if any, that an optionee may realize upon
exercise will depend on the excess of the market price of the common stock
over the option exercise price on the date the option is exercised. There
is no assurance that the actual value realized by an optionee upon the
exercise of an option will be at or near the value estimated under the
model described above.
/3/ These options vest equally over a three-year period beginning May 4, 1999,
and have an exercise period of five years from the vesting date.
/4/ These options were granted under the Non-Employee Directors' Incentive
Plan.
/5/ These options vest equally over a three-year period beginning July 1, 1999,
and have an exercise period of five years from the vesting date.
/6/ These options were forfeited upon Mr. Bennett's resignation.
11
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN 1998
AND YEAR-END 1998 OPTION VALUES
<TABLE>
<CAPTION> Number of Value of Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
Year End 1998 Year-End 1998
Shares (#) ($)/1/
Acquired on Value --------------- --------------------
Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
---- ----------- -------- --------------- --------------------
<S> <C> <C> <C> <C>
Murry S. Gerber 0 0 0/210,000 0
Donald I. Moritz 0 0 135,000/1,500 0
David L. Porges 0 0 0/94,000 0
R. Gerald Bennett 0 0 0/34,000 0
John C. Gongas, Jr. 0 0 13,000/34,000 0
Richard D. Spencer 8,200 1,281 6,000/15,000 0
Gregory R. Spencer 0 0 0/20,000 0
</TABLE>
____________________________
/1/ Calculated by determining the difference between the fair market value of
the underlying shares of common stock and the various applicable exercise
prices of outstanding options at the end of 1998 for the named executive
officers. The last reported sale price of the Company's common stock on the
New York Stock Exchange on December 31, 1998 was $29.125 per share.
LONG-TERM INCENTIVE PLANS -- AWARDS IN 1998
<TABLE>
<CAPTION>
Estimated Future Payouts
Number of Shares, Units Under Non-Stock Price-Based Plans/2/
or Other Rights/1/ Threshold Value
Name (#) ($ or #) ($)
---- ------------------------ ------------------------------------
<S> <C> <C> <C>
Murry S. Gerber 70,176 $50.00 $3,508,800
Donald I. Moritz N/A N/A N/A
David L. Porges 37,895 50.00 1,894,750
R. Gerald Bennett/3/ 37,895 50.00 1,894,750
John C. Gongas, Jr. 37,895 50.00 1,894,750
Richard D. Spencer 28,351 50.00 1,417,550
Gregory R. Spencer 28,772 50.00 1,438,600
</TABLE>
- -------------------------
/1/ All such awards were granted under the Company's 1998 Breakthrough Long-
Term Incentive Plan.
/2/ The dollar values were calculated by multiplying the number of phantom
units by $50.00. Under the Plan, phantom shares vest when the Company's
common stock closing price is at or above $50.00 for 20 consecutive
business days. If the shares have not vested by December 31, 2001, the
number of units is decreased by 50%. If the shares have not vested by
December 31, 2002, all remaining shares are forfeited. Phantom shares are
credited with dividends throughout the Plan period which are reinvested in
phantom units.
/3/ All rights under the Plan were forfeited upon Mr. Bennett's resignation.
12
<PAGE>
SHAREOWNER RETURN PERFORMANCE PRESENTATION
The following graph compares the five-year cumulative total return on the
Company's common stock with the cumulative total return of the S&P 500 Index and
the Value Line Investment Survey--Natural Gas (Diversified) Industry Group. The
graph assumes a $100 investment made on December 31, 1993, and the reinvestment
of all dividends.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
Equitable Resources, Inc. 100 77 92 91 114 98
Value Line Peer Group 100 88 109 142 132 98
S&P 500 100 101 139 171 229 294
</TABLE>
13
<PAGE>
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 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 all compensation
arrangements applicable to the executive officers including base salaries,
benefits, short-term annual incentives and long-term stock based awards.
The following is the Compensation Committee's report, in its role as overseer
of the Company's executive pay programs, on 1998 compensation practices for the
executive officers of the Company.
Compensation Policies Attributable to Executive Officers
Equitable Resources, Inc. is an integrated energy company with emphasis on
natural gas distribution and transmission, Appalachian area natural gas
production, and energy services marketing in the northeastern section of the
United States. It offers energy solutions to the wholesale and retail markets
with innovative products and services developed through its Production,
Utilities, and Energy Services business segments. A major portion of the
Company's storage, transportation and distribution of natural gas is 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.
The Compensation Committee adheres to an executive compensation strategy as
the framework for managing the compensation program for executive officers which
includes the following objectives and guidelines:
. To establish base salaries at approximately the 50th percentile and
potential total cash compensation at the 75th percentile of two comparison
groups (peer group and general industry companies of similar revenue size).
Competitive practices are determined using independent industry surveys
provided by compensation consultants and publicly available compensation
information from peer companies.
. To link short-term bonus compensation opportunities to the overall
performance of the Company and to the individual contribution of each
executive. Short-term (annual) incentives are funded when pre-established
earnings and operational goals are attained. Awards are distributed to
Plan participants based on achievement of corporate, business segment and
individual performance goals identified annually.
14
<PAGE>
. To provide 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.
Base Salaries
The executive salary structure is based upon studies prepared by independent
compensation consultants, primarily using salary surveys of peer group
companies. 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. The consultants' study
concluded that the base compensation for the executive officers of the Company
was below the 50th percentile of the comparison groups; salaries were increased
in 1998 to reflect more market competitive salaries.
Individual salary increases are based primarily upon individual performance,
taking into account competitive salaries. Factors included in salary increases
are revenue growth, share price appreciation, achievement of strategic
initiatives and personal goals. General economic conditions and marketplace
compensation trends are also considered. Independent compensation consultants
assist in the evaluation of the marketplace compensation trends.
Pursuant to these guidelines, annual base salaries of the named executive
officers in the Summary Compensation Table on page 9 increased at the following
rates: Murry S. Gerber, (hired June 1, 1998), 0%; Donald I. Moritz (resigned as
interim CEO effective May 31, 1998), 0%; David L. Porges (hired July 1, 1998),
0%; John C. Gongas, Jr., 18.9%; Richard D. Spencer, 3.9%; and Gregory R.
Spencer, 15.1%. Messrs. Gongas and Gregory Spencer's increases included a
market competitive salary adjustment. The increases in 1998 are reflective of
competitive practices, individual performance and the Company's 1997 earnings.
Annual Incentives
The Company's Short-Term Incentive Compensation Plan (the "Plan") is
structured so that cash bonus payments are made when the Company has met pre-
established Board approved earnings per share goals. Once the thresholds have
been met, a bonus pool is funded based on pre-established targets for each
participant. Awards are based on market competitive bonus targets, individual
performance and the amount of dollars funded into the bonus pool. Participants
have individual performance goals established for their position which include
financial goals, strategic initiatives, operational and organizational
objectives, human resource management goals and environmental management goals
as appropriate. Individual participant's bonuses can be adjusted based on
corporate, business segment and individual performance to a maximum of 150% of
target and down to a minimum of 0% (no award payout).
The Committee approved the method of determining the 1998 goals for the
executive officers of the Company, together with the 1998 performance measures
for the regulated and unregulated business segments. They also set and approved
the maximum funding levels for the Plan. The total annual funding of the Plan
cannot exceed 2.5% of the Company's net income.
Mr. Moritz was given a targeted bonus of 65% of his annual base salary pro-
rated based on the number of months he performed the role of Chief Executive
Officer. Messrs. Gongas, Richard
15
<PAGE>
Spencer and Gregory Spencer had annual incentive targets ranging from 40% to 50%
of their base salary. Incentive awards are capped at 100% of base salary for all
plan participants.
In the event that the Company's earnings per share target does not exceed the
business plan, no annual incentive payments are made. This was the case in 1998
and no bonus payments were made according to the provisions of the Plan.
Long-Term Incentives
The Company utilizes stock options and restricted stock to reinforce its
shareholder value creation imperatives, executive retention goals, and to
support management ownership as an effective means of aligning management to
shareholder interests. Stock based awards have been made on a market competitive
basis.
1995 -- 1998 Long-Term Incentive Program
----------------------------------------
During 1998, the option grant that the Committee approved in 1995 expired.
Under this grant stock options would have vested if pre-established objectives
were met or exceeded. The vesting of these options was dependent upon a formula
tied to the Company's total shareholder return relative to the Company's peer
group. A review of the Company's total shareholder return was done each year to
determine if any of the options vested on a performance basis. The last review
was done in July of 1998. No options under the grant qualified for vesting
under the terms of the grant. As provided in the grant, all shares vested for
only one day in July of 1998 for all participants. A total of 1,053,227 options
were granted under this program. All of these options expired unexercised
except for options representing 10,000 shares.
1998 Long-Term Incentive Program
--------------------------------
During 1998, the Committee approved 1,007,400 new-stock option awards to 132
employees. The awards were based on the 50th percentile level of long-term
incentive opportunities for the same peer group of companies previously referred
to for executive officers' compensation. The Committee determined the level of
the stock options awarded using the Black-Scholes option pricing model.
The options awarded have a twelve-month vesting period and a seven-year
exercise term. In the event that the employment of a Long-Term Incentive Plan
participant terminates, except for reasons of death or normal retirement, all
awards that have not vested are subject to forfeiture as of the effective date
of termination. The option price was the fair market value(s) on the date the
options were granted. Historically, stock option grants have been the primary
means of providing long-term incentive compensation to executives.
1998 Breakthrough Long-Term Incentive Plan
------------------------------------------
In July of 1998, the Committee approved the Breakthrough Long-Term Incentive
Plan for eight corporate officers. Under this Plan the Company assigned an
amount equal to four (4) times the employee's base salary in effect on July 1,
1998 into an account designated for the employee in the Company's Deferred
Compensation Plan. These account balances were invested in the Company stock
account of the Deferred Compensation Plan and will be credited with dividends
and stock appreciation. The total expected value of the Plan will be expensed
on a variable accounting basis over the term of the Plan beginning in 1998 and
ending in the year 2002.
16
<PAGE>
This deferral amount will not vest until the share price has averaged $50 for
twenty consecutive business days. If the Company's common stock has not reached
this threshold by December 31, 2001, participant accounts will be reduced as
follows:
January 1, 2002 50% reduction
January 1, 2003 100% reduction
Shares that have vested will be distributed based on deferral instructions
established by the participant at the beginning of the plan. After vesting,
shares not distributed can be invested in any of the other investment options
available in the Deferred Compensation Plan. A participant can only transfer
out of the Equitable stock fund if he or she has satisfied the Company's Stock
Ownership Guidelines.
Employees that terminate employment voluntarily (including retirement), or
for cause, as defined by the Company, forfeit all rights to any of the deferred
amounts.
Employees that terminate because of job elimination will have their account
value frozen at the time of their separation. The account value will be reduced
based upon their year of separation as follows: July, 1998 through June, 1999 -
100%, July, 1999 - June, 2000 - 50%, July, 2000 until before share vesting date
- - 25%. The account balance will only be distributed to the participant if the
$50 performance threshold of the plan is achieved. Employees that become
eligible for long-term disability as defined under the Company's policy will be
eligible to continue to participate in the Plan. Employees who die while
participating in the plan will have their account value frozen at the time of
their death and reduced by 100, 50 or 25% depending on the date of their death.
The account balance will be paid to their estate only if the performance
threshold of the Plan is achieved in accordance with the provisions of the Plan.
Stock Ownership Guidelines
To promote stock ownership by management, in 1998 the Committee approved new
personal stock ownership guidelines for executives. These guidelines require
that an executive must retain a minimum of fifty-percent of the net shares
received from the exercise of an option until the executive's total stock
holdings meet a pre-determined value. For Mr. Gerber, the value is four times
his annual base salary. Messrs. Porges, Gongas, Richard Spencer and Gregory
Spencer are required to hold stock valued at three times their annual base
salary. Once the required value has been reached, the executives may sell any
shares greater than the target from Company-based stock awards and receive cash
for the transaction.
Benefits Based on Retirement or Death Under Plans
Benefits are based on retirement or death under the Employee Savings Plan,
the Deferred Compensation Plan, and the optional Split-Dollar Life Insurance
Program. Company contributions to these plans for the benefit of the named
executives are shown in the Summary Compensation Table on page 9.
Policy Regarding Section 162(m) of the Internal Revenue Code
In 1993, the tax laws were amended to limit the deduction a publicly-held
company is allowed for compensation paid in 1994 and thereafter to the chief
executive officer and to the four most highly compensated executive officers
other than the chief executive officer. Generally, amounts paid in excess of $1
million to a covered executive, other than performance-based compensation,
cannot be deducted. Based on current compensation levels of the executive
officers, this deductibility limit has no impact on the Company. At such time
as the Committee deems it appropriate, it will take the necessary action to
insure that the deductibility of executive compensation is maximized.
17
<PAGE>
Compensation of the Chief Executive Officer
Effective June 1, 1998, Murry S. Gerber was elected and assumed the position
of President and Chief Executive Officer. Mr. Gerber received the following
compensation package: base salary $500,000; a bonus of $300,000 payable on his
first day of employment; stock grants and options including 15,000 shares in the
form of a grant which vest equally over a three-year period and are grossed up
for tax purposes, 150,000 stock options at a strike price of $33.07 which vest
equally over a three-year period; a second-to-die life insurance policy equal to
$2,000,000; a three-year employment contract; a change-of-control agreement;
various perquisites and a supplemental retirement plan provided Mr. Gerber
remains with the Company upon reaching age 55. He subsequently received in
July of 1998, 60,000 additional stock options at a strike price of $28.06 which
vest after a one-year period. These options were provided for in Mr. Gerber's
contract. Mr. Gerber is also a participant in the 1998 Breakthrough Long-Term
Incentive Plan. The basis for Mr. Gerber's base salary, including the
Committee's goals and methodology, is discussed earlier in this report.
Based upon all of the information considered, the Committee believes that Mr.
Gerber's compensation package provides a competitive compensation package as
related to this Company's peers.
Mr. Moritz assumed the role of interim Chief Executive Officer on July 17,
1997 and resigned that position effective May 31, 1998. Mr. Moritz was paid
$43,550 on a monthly basis for services provided to the Company. He was not
awarded a bonus in 1998 and did not receive any stock-based grants or options
under the 1994 Long-Term Incentive Plan. As a director, he received an option
to purchase 500 shares of the Company's stock
The foregoing report has been furnished by the Compensation Committee of the
Board of Directors.
E. Lawrence Keyes, Jr., Chairman
Phyllis A. Domm
Thomas A. McConomy
James E. Rohr
J. Michael Talbert
Employment Contracts and Change-of-Control Arrangements
Murry S. Gerber entered into an agreement with the Company effective May 4,
1998 under which Mr. Gerber assumed the role of President and Chief Executive
Officer on June 1, 1998. This agreement provides, among other things, for an
annual base salary of $500,000, subject to periodic increases, a one-time bonus
of $300,000, long-term incentives as described previously, life insurance in the
amount of twice his annual salary, a second-to-die life insurance policy in the
amount of $2,000,000, perquisites appropriate to his position, including club
memberships, a car allowance and personal financial planning services, and
supplemental retirement benefits if he remains with the Company until age 55.
The agreement also provides that if Mr. Gerber's employment is terminated
other than for cause, he will receive full salary and benefits until the
expiration of its term. The agreement also includes non-competition provisions.
Donald I. Moritz entered into an agreement with the Company, effective July
17, 1997, amended November 19, 1997, under which Mr. Moritz assumed the
responsibilities of the Chief
18
<PAGE>
Executive Officer on an interim basis at a monthly salary of $43,550. Mr. Moritz
was eligible to participate in the Company's Short-Term Incentive Compensation
Plan on a full-year basis for 1998 and continued to receive applicable Board of
Directors' fees. The agreement was terminated on May 31, 1998.
David L. Porges entered into an agreement with the Company effective July 1,
1998 under which Mr. Porges assumed the role of Senior Vice President and Chief
Financial Officer. This agreement provides, among other things, for an annual
base salary of $270,000, subject to periodic increases, a one-time bonus of
$175,000, long-term incentives as described previously, life insurance in the
amount of his annual salary, second-to-die life insurance policy in the amount
of $1,000,000, perquisites appropriate to his position, including club
memberships, a car allowance and personal financial planning services.
The agreement also provides that if Mr. Porges' employment is terminated
other than for cause, he will receive full salary and benefits until the
expiration of its term. The agreement also includes non-competition provisions.
In January of 1999, R. Gerald Bennett received compensation for entering into
an agreement with the Company. Mr. Bennett terminated from the Company
effective December 15, 1998. In consideration for entering into this agreement,
Mr. Bennett received a lump sum payment of $675,000 in addition to a $135,000
severance payment. This lump sum payment was in recognition of the success of
the Midstream asset sale and in consideration of entering into the agreement
which details provisions related to a general release, confidentiality and non-
competition.
Gregory R. Spencer has an agreement with the Company under which he will
receive, in addition to payments under the Company's normal severance pay plan,
severance equal to twelve months of his base salary if his employment is
terminated by the Company other than for good cause or if he resigns after
receiving a demotion and/or reduction in salary. The agreement provides that
Mr. Spencer would be subject to certain non-competitive obligations for a period
of one year after termination of employment.
The Company also has Change-of-Control Agreements with the executive
officers. These agreements were developed to ensure that during a change-of-
control situation, the interests of the shareholders are foremost on the minds
of key executives. The agreements provide for the following if a change-of-
control occurs followed by an involuntary or constructive termination of the
covered executive within two years after the change event: base salary
continuation; average incentive bonus payment earned over the past three years;
immediate vesting of all unvested cash awards and stock incentives; immediate
delivery of Company stock or payment of an amount equal to average grants
received by the employee over the preceding five years under applicable long-
term incentive plans; medical, dental, life and disability insurance; additional
months of service and age credit for determining benefit amounts and early
retirement reductions; outplacement assistance and legal fees in the event the
contract is contested; and the executive may elect a lump sum payment or payment
of benefits over the course of the agreement. Messrs. Gerber and Porges will
receive 12 months of base salary. In addition, Mr. Gerber will receive 36
months of benefits continuance and three times his average annual and long-term
incentive awards under the provisions of his agreement. Mr. Porges will receive
24 months of benefits continuance and two times his average annual and long-term
incentive awards under the provisions of his agreement. Messrs. Gongas, Richard
Spencer and Gregory Spencer will receive 24 months of base salary, benefits
continuance and retirement plan credits and two times their average annual and
long-term incentive awards under the provisions of their agreements. Other
executive officers were given agreements which provide them with either 24
months or 18 months of change-of-control benefits.
Payments to an executive officer under any Change-of-Control Agreement shall
not exceed amounts deductible by the Company under the provisions of the
Internal Revenue Code (the "Code").
19
<PAGE>
Payments under any other agreement to which an executive officer is a party will
not be limited to amounts deductible under the provisions of the Code.
Pension Plan
All executive officers participate in a defined contribution plan pursuant to
which the Company contributes an amount equal to a percentage of each employee's
base salary to an individual investment account for such employee.
Item No. 2
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors, upon recommendation of the Audit Committee, has
reappointed Ernst & Young LLP, certified public accountants, as auditors to
examine the consolidated financial statements of the Company and its
subsidiaries for the calendar year 1999. Ernst & Young LLP, and its
predecessor, have acted as auditors for the Company 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 LLP 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 LLP.
Item No. 3
PROPOSAL TO APPROVE
1999 NON-EMPLOYEE DIRECTORS' STOCK INCENTIVE PLAN
The 1999 Equitable Resources, Inc. Non-Employee Directors' Stock Incentive
Plan (the "Plan") was adopted by the Board of Directors on March 17, 1999. If
approved by the shareholders, the Plan will replace the 1994 Non-Employee
Directors' Stock Incentive Plan which expired June 2, 1998.
The principal features of the Plan are summarized below. This summary is
qualified in its entirety by reference to the full text of the Plan, which is
included as Exhibit A to this proxy statement.
General
The purpose of the Plan is to assist the Company in attracting and
retaining the services of non-employee directors who exhibit a high degree of
business responsibility, personal integrity and professionalism. Any Director
of the Company who is not at the time and has not within the preceding 12 months
been a full-time employee of the Company or a subsidiary is eligible to receive
stock incentive awards ("Awards") under the Plan. The number of non-employee
directors currently eligible to receive Awards under the Plan is ten.
The aggregate net number of shares of Common stock which may be issued and
as to which Awards may be granted under the Plan is 300,000 shares. The number
of shares authorized under the Plan, and the numbers of shares to be subject to
the automatic Award grants discussed below,
20
<PAGE>
are subject to adjustment in the event of stock splits, recapitalizations,
mergers and similar events affecting the Common Stock.
Administration
The Plan will be administered by the Compensation Committee of the Board of
Directors (the "Committee"). In addition to the stock option grants which will
be made automatically under the Plan, the Committee will have the authority to
use shares of Common Stock authorized under the Plan to make other stock-based
Awards to eligible non-employee directors as described below. All members of
the Committee participating in any action taken under the Plan must qualify as
"non-employee directors" under Securities and Exchange Commission Rule 16b-3.
Annual Stock Option Grants
On June 1, 1999 and on the first trading day in June in each year
thereafter while shares remain available under the Plan, each person who is then
an eligible non-employee director will automatically be granted a stock option
for 500 shares of Common Stock at an option price equal to the fair market value
of the Common Stock on the date the option is granted. Fair market value, for
purposes of the Plan, will generally be the publicly reported closing price of
the Common Stock on the date as of which fair market value is to be determined.
On April 1, 1999, the fair market value of a share of Common Stock, as so
determined, was $25.875.
The term of each stock option so granted shall be five years from the date
of grant, provided that the option shall expire upon the optionee's termination
of service as a director of the Company for any reason other than retirement,
disability or death. The option shall become exercisable three years after the
date of grant or, if earlier, upon the optionee's termination of service as a
director by reason of retirement, disability or death. For these purposes,
"retirement" shall mean termination of service as a director for any reason on
or after reaching age 58 with at least 60 months of service as a director,
including service while an employee director.
The exercise price of an option may be paid in cash or in shares of Common
Stock having a fair market value on the date of exercise equal to the exercise
price, or any combination thereof. A director who exercises a stock option
through the delivery of previously owned shares will automatically be granted on
the date of such exercise a new stock option (a "reload option") (1) for a
number of shares of Common Stock equal to the number of shares delivered in
payment of the option price of the original option, (2) having an option price
equal to the fair market value of the Common Stock on date of grant of the
reload option and (3) having the same expiration date and other terms and
conditions as the original option, except that a reload option shall become
exercisable six months from its date of grant. Reload options shall be granted
only if the underlying option is exercised while the optionee remains a director
of the Company.
Because the number of shares covered by a reload option is limited to the
number of previously owned shares delivered in payment of the option price of
the original option, reload options will not increase the net number of shares
which may be acquired under a stock option. Because the option price of the
reload option may not be less than fair market value on the date the underlying
option is exercised, reload options also will not increase the total net value
(excess of fair market value over the option price) realizable under the
original option. However, since a director who exercises an option before the
end of its term will not forfeit the potential for future market price
appreciation, reload option rights will encourage earlier stock option
exercises, thereby promoting the identification with shareholder interests
resulting from ownership by directors of Common Stock.
If on the date of any annual stock option grant the number of authorized
shares of Common Stock remaining available under the Plan is not sufficient for
each non-employee director to be
21
<PAGE>
granted stock options for the full numbers of shares called for by the Plan, the
numbers of shares covered by the stock options granted to each director will be
reduced proportionately.
Other Stock-Based Awards
In addition to the stock options to be granted automatically under the
Plan, the Committee may, in its discretion, use shares of Common Stock
authorized under the Plan to grant to eligible non-employee directors 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 of Common Stock, as
deemed by the Committee to be consistent with the purposes of the Plan.
Such other stock-based Awards may include, without limitation, stock
options or other purchase rights, shares of Common Stock awarded with or without
restrictions or conditions, convertible securities, exchangeable securities or
other rights convertible or exchangeable into shares of Common Stock, as the
Committee may determine. In the discretion of the Committee, such other stock-
based Awards, including shares of Common Stock, or other types of Awards
authorized under the Plan, may be used in connection with, or to satisfy
obligations of the Company under, other compensation or incentive plans,
programs or arrangements of the Company for eligible directors.
The Committee shall determine the terms and conditions of other stock-based
Awards. Any shares of Common Stock or securities delivered pursuant to a stock
option or other purchase right shall be purchased for such consideration, paid
for by such methods and in such forms, including, without limitation, cash,
shares of Common Stock, outstanding Awards or other property or any combination
thereof, as the Committee shall determine. However, the value of such
consideration shall not be less than the fair market value of such shares of
Common Stock or other securities on the date of grant of the purchase right,
except that the exercise price of a purchase right may be reduced to reflect the
fair market value of any Award or other compensation required to be surrendered
as a condition to receiving the purchase right.
Change of Control
Unless otherwise determined by the Committee, if the shareholders of the
Company shall approve a transaction which upon consummation would constitute a
Change of Control, as defined in the Plan, or if any Change of Control not
subject to shareholder approval shall occur (1) all outstanding stock options,
and other Awards under which the participant may have rights the exercise of
which is restricted or limited, shall become fully exercisable, (2) all
restrictions or limitations, including risks of forfeiture and deferrals, on
restricted stock or other Awards subject to restrictions or limitations under
the Plan shall lapse and (3) any other conditions to payment of any Awards under
which payment is subject to conditions shall be deemed to be achieved or
fulfilled and shall be waived by the Company.
If within three years after any Change of Control the service of a
participant as a director of the Company is terminated voluntarily or
involuntarily for any reason, then unless otherwise provided in the
participant's Award agreement, and in addition to any other rights of post-
termination exercise which may be applicable, any stock option or other Award
outstanding on the date of the Change of Control the payment or receipt of which
is dependent upon exercise by the holder of the Award shall be exercisable for a
period of 90 days following the date of termination of service but not later
than the expiration date of the option or other Award.
22
<PAGE>
Miscellaneous
Except to the extent otherwise determined by the Committee, 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, and any stock
option or other right to purchase or acquire shares of Common Stock granted to a
participant under the Plan shall be exercisable during the participant's
lifetime only by such participant.
The Board of Directors may amend, suspend or terminate the Plan at any time
without shareholder approval except to the extent that shareholder approval is
required by law or stock exchange rules or the Board determines that shareholder
approval is advisable. Without the consent of the participant, no amendment,
suspension or termination of the Plan may materially and adversely affect the
rights of such participant under any previously granted Award.
Nothing contained in the Plan shall prevent the Company from adopting other
or additional compensation arrangements for directors, and such arrangements may
be either generally applicable or applicable only in specific cases.
Federal Income Tax Consequences
The following is a brief summary of the principal Federal income tax
consequences of the grant and exercise of Awards under present law:
Stock Options. A director will not recognize any taxable income for
Federal income tax purposes upon receipt of a stock option. Upon the exercise
of a stock option the amount by which the fair market value of the shares
received, determined as of the date of exercise, exceeds the option price will
be treated as compensation received by the director in the year of exercise. If
the option price of a stock option is paid in whole or in part with shares of
Common Stock, no income, gain or loss will be recognized by the director on the
receipt of shares equal in value on the date of exercise to the shares delivered
in payment of the option price. The fair market value of the remainder of the
shares received upon exercise of the stock option, determined as of the date of
exercise, less the amount of cash, if any, paid upon exercise will be treated as
compensation income received by the director on the date of exercise of the
stock option. The Company will be entitled to a deduction for compensation paid
in the same amount treated as compensation received by the director.
Reload Options. A director should not recognize any taxable income for
Federal income tax purposes upon receipt of a reload option, and a reload option
should be treated as a stock option, as described above.
Vote Required for Approval
Approval of the adoption of the Plan requires the affirmative vote of a
majority of the votes cast on the proposal by the holders of Common Stock voting
in person or by proxy. Under the Pennsylvania Business Corporation Law, an
abstention or broker non-vote is not a vote cast and will not be counted in
determining the number of votes required for approval, though it will be counted
in determining the presence of a quorum.
The Board of Directors recommends that shareholders vote "FOR" approval of
the adoption of the 1999 Non-Employee Directors' Stock Incentive Plan.
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Item No. 4
PROPOSAL TO APPROVE 1999 LONG-TERM INCENTIVE PLAN
The 1999 Equitable Resources, Inc. Long-Term Incentive Plan (the "Plan")
was adopted by the Board of Directors on March 17, 1999. If approved by the
shareholders, the Plan will replace the 1994 Long-Term Incentive Plan which was
scheduled by its terms to expire on May 27, 1999.
The principal features of the Plan are summarized below. This summary is
qualified in its entirety by reference to the full text of the Plan, which is
included as Exhibit B to this proxy statement.
General
The purpose of the Plan is to assist the Company in attracting, retaining
and motivating employees of outstanding ability and to align their interests
with those of the shareholders of the Company. Any full-time employee of the
Company or a subsidiary, including executive officers and employee directors, is
eligible to be granted stock incentive awards ("Awards") under the Plan. As of
March 1, 1999, the number of full-time employees of the Company and its
subsidiaries was approximately 1,570.
The aggregate net number of shares of Common stock which may be issued and
as to which Awards may be granted under the plan is 3,000,000 shares. This
number is subject to adjustment in the event of stock splits, recapitalizations,
mergers and similar events affecting the Common Stock. No Awards may be granted
under the Plan subsequent to March 16, 2009, except that reload options may be
granted pursuant to reload options rights then outstanding.
Administration
The Plan will be administered by the Compensation Committee of the Board of
Directors (the "Committee"). Subject to the terms of the Plan, the Committee
will be authorized to determine which employees will receive Awards under the
Plan, the number and types of Awards to be granted to any employee so selected,
and the terms and conditions of such Awards.
All members of the Committee participating in any action taken under the
Plan must qualify as "non-employee directors" under Securities and Exchange
Commission Rule 16b-3 and as "outside directors" under Section 162(m) of the
Internal Revenue Code of 1986 (the "Code"). No Awards under the Plan may be
granted to any member of the Committee.
The types of Awards which the Committee will have authority to grant
consist of (1) stock options (with or without reload option rights), (2)
restricted stock, (3) performance awards and (4) other stock-based awards. Each
of these types of Awards is described below.
Stock Options
Types and Terms of Options. Stock options granted by the Committee may be
either "incentive stock options" (options qualifying under Section 422 of the
Code) or nonstatutory stock options (stock options which do not so qualify).
The option price for each stock option may not be less than 100% of the fair
market value of the Common Stock on the date the option is granted, except that
the option price may be reduced to reflect the fair market value of any Award or
other compensation required to be surrendered as a condition to receiving an
option. Fair market value, for purposes of the Plan, will generally be the
publicly reported closing price of the Common Stock on
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the date as of which fair market value is to be determined. On April 1, 1999,
the fair market value of a share of Common Stock, as so determined, was $25.875.
The term of each stock option shall be determined by the Committee, except
that no incentive stock option shall be exercisable more than 10 years after its
date of grant. The Committee shall also determine the time or times at which an
Option may be exercised in whole or in part, the methods by which the exercise
price may be paid, and the form of such payment, including, without limitation,
cash, notes, shares of Common Stock, other Awards or other property or any
combination thereof, having a fair market value on the date of exercise equal to
the exercise price.
Unless otherwise determined by the Committee and except as provided under
"Change of Control" below, options will terminate upon termination of all
employment of the optionee with the Company or a subsidiary, except that options
exercisable at the date of termination of employment may be exercised, but not
later than the expiration date of the option, (1) within 90 days after an
involuntary termination due to a reduction in force by the Company, retirement
under a retirement plan of the Company or a subsidiary or a voluntary
termination with the written consent of the Company or a subsidiary specifically
permitting such exercise or (2) within one year after death of the optionee
during employment or during a period following termination when the option
remains exercisable.
Reload Option Rights. The Committee may in its discretion grant reload
option rights in conjunction with a stock option. Reload option rights entitle
the holder of a stock option, upon exercise of the stock option through the
delivery of previously owned shares, to automatically be granted on the date of
such exercise a new nonstatutory stock option (a "reload option") (1) for a
number of shares of Common Stock not exceeding the number of shares delivered in
payment of the option price of the original option and any related withholding
taxes, (2) having an option price not less than the fair market value of the
Common Stock on date of grant of the reload option, (3) having an expiration
date not later than the expiration date of the original option and (4) otherwise
having terms permissible for an original grant of a stock option under the Plan.
In granting reload option rights, the Committee may provide for successive
reload option grants upon the exercise of reload options. Unless otherwise
determined by the Committee, reload options shall be granted only if the
underlying option is exercised during the employment with the Company or a
subsidiary of the original awardee of the option.
Because the number of shares covered by a reload option is limited to the
number of previously owned shares delivered in payment of the option price of
the original option, reload option rights will not increase the net number of
shares which may be acquired under a stock option. Because the option price of
the reload option may not be less than fair market value on the date the
underlying option is exercised, reload option rights also will not increase the
total net value (excess of fair market value over the option price) realizable
under the original option. However, since an optionee who exercises an option
before the end of its term will not forfeit the potential for future market
price appreciation, reload option rights will encourage earlier stock option
exercises, thereby promoting the identification with shareholder interests
resulting from employee ownership of Common Stock.
Individual Option Limit. The aggregate number of shares of Common Stock
for which stock options may be granted under the Plan to any single participant
shall not exceed 750,000 shares. This limit is intended to help ensure that
compensation income recognized on the exercise of stock options granted under
the Plan will qualify for the "performance based compensation" exception to the
$1 million cap on deductibility of executive compensation imposed by Section
162(m) of the Code and shall be interpreted and applied in a manner consistent
with Section 162(m). To the extent consistent with Section 162(m), in applying
this limitation a reload option shall not be deemed to increase the number of
shares covered by the original underlying option grant.
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Restricted Stock
Restricted shares of Common Stock awarded by the Committee will be subject
to such restrictions on transferability and other restrictions as the Committee
may impose, which restrictions may lapse separately or in combination at such
times, under such circumstances, in such installments or otherwise, as the
Committee shall determine. Except as provided under "Change of Control" below
or as otherwise determined by the Committee, upon termination of employment
during the applicable restriction period, restricted shares that remain subject
to restrictions shall be forfeited to the Company. The Committee may provide
that restrictions on restricted stock shall be waived in whole or in part in the
event of termination of employment resulting from specified causes and may in
other cases waive restrictions in whole or in part in its discretion.
Performance Awards
A performance award granted by the Committee under the Plan shall represent
a right to receive shares of Common Stock, cash, other property or any
combination thereof based on the achievement, or the level of achievement,
during a specified performance period of one or more Performance Goals
established by the Committee at the time of the Award.
At the time a performance award is granted, the Committee shall set forth
in writing (1) the Performance Goals applicable to the Award and the performance
period during which the achievement of the Performance Goals shall be measured,
(2) the amount which may be earned by the participant based on the achievement,
or the level of achievement, of the Performance Goals or the formula by which
such amount shall be determined and (3) such other terms and conditions
applicable to the Award as the Committee may, in its discretion, determine. The
terms so established by the Committee shall be objective such that a third party
having knowledge of the relevant facts could determine whether or not any
Performance Goal has been achieved, or the extent of such achievement, and the
amount, if any, which has been earned by the participant based on such
performance. The Committee may retain the discretion to reduce (but not to
increase) the amount of a performance award which will be earned based on the
achievement of Performance Goals.
"Performance Goals" shall mean one or more preestablished, objective
measures of performance during a specified performance period by the Company, a
subsidiary or subsidiaries, any branch, department or other portion thereof or
the participant individually, selected by the Committee in its discretion to
determine whether a performance award has been earned in whole or in part.
Performance Goals may be based on earnings per share, net income, revenue
growth, revenues, expenses, return on equity, return on total capital or return
on assets. Performance Goals based on such performance measures may be based
either on the performance of the Company, subsidiary or portion thereof under
such measure for the performance period and/or upon a comparison of such
performance with the performance of a peer group of corporations selected by the
Committee. The Committee may in its discretion also determine to use other
objective performance measures as Performance Goals.
Following completion of the applicable performance period, and prior to any
payment of a performance award to the participant, the Committee shall determine
in accordance with the terms of the performance award and shall certify in
writing whether the applicable Performance Goal or Goals were achieved, or the
level of such achievement, and the amount, if any, earned by the participant
based upon such performance.
With respect to all performance periods ending in any one calendar year,
the maximum amount which may be earned by any single participant under all
performance awards granted under the Plan shall be limited to $1 million. In
applying this limit, the amount of any cash or the fair market value of any
shares of Common Stock or other property earned by a participant shall be
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measured as of the close of the applicable performance period, regardless of the
fact that certification by the Committee and actual payment to the participant
may occur in a subsequent calendar year or years.
Performance awards granted by the Committee under the Plan are intended to
qualify for the "performance based compensation" exception from the $1 million
cap on deductibility executive compensation imposed by Section 162(m) of the
Code. Absent additional shareholder approval, no performance award may be
granted under the Plan subsequent to the Company's annual meeting of
shareholders in 2004, and no performance period for any performance award
granted under the Plan may end later than December 31, 2007.
Other Stock-Based Awards
The Committee is authorized, subject to limitations under applicable law,
to grant to eligible employees 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 Common Stock, as deemed by the Committee to be consistent
with the purposes of the Plan, including, without limitation, purchase rights,
shares of Common Stock awarded without restrictions or conditions, convertible
securities, exchangeable securities or other rights convertible or exchangeable
into shares of Common Stock, as the Committee in its discretion may determine.
In the discretion of the Committee, such other stock-based Awards, including
shares of Common Stock, or other types of Awards 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 employees, including
without limitation the Short-Term Incentive Compensation Plan, the Deferred
Compensation Plan and executive contracts.
The Committee shall determine the terms and conditions of other stock-based
Awards. Any shares of Common Stock or securities delivered pursuant to a
purchase right granted under the Plan shall be purchased for such consideration,
paid for by such methods and in such forms, including, without limitation, cash,
shares of Common Stock, outstanding Awards or other property or any combination
thereof, as the Committee shall determine. However, the value of such
consideration shall not be less than the fair market value of such shares of
Common Stock or other securities on the date of grant of the purchase right,
except that the exercise price of a purchase right may be reduced to reflect the
fair market value of any Award or other compensation required to be surrendered
as a condition to receiving the purchase right.
Change of Control
Unless otherwise determined by the Committee, if the shareholders of the
Company shall approve a transaction which upon consummation would constitute a
Change of Control, as defined in the Plan, or if any Change of Control not
subject to shareholder approval shall occur (1) all outstanding stock options,
and other Awards under which the participant may have rights the exercise of
which is restricted or limited, shall become fully exercisable, (2) all
restrictions or limitations, including risks of forfeiture and deferrals, on
restricted stock or other Awards subject to restrictions or limitations under
the Plan shall lapse and (3) all Performance Goals applicable to performance
awards, and any other conditions to payment of any Awards under which payment is
subject to conditions shall be deemed to be achieved or fulfilled and shall be
waived by the Company.
If within three years after any Change of Control the employment of a
participant is terminated voluntarily or involuntarily for any reason other than
for cause, as defined in the Plan, then unless otherwise provided in the
participant's Award agreement, and in addition to any other rights of post-
termination exercise which may be applicable, any stock option or other Award
outstanding on the date of the Change of Control the payment or receipt of which
is dependent upon
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exercise by the holder of the Award shall be exercisable for a period of 90 days
following the date of termination of employment but not later than the
expiration date of the option or other Award.
Miscellaneous
Except to the extent otherwise determined by the Committee, 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, and any stock
option or other right to purchase or acquire shares of Common Stock granted to a
participant under the Plan shall be exercisable during the participant's
lifetime only by such participant.
The Board of Directors may amend, suspend or terminate the Plan at any time
without shareholder approval except to the extent that shareholder approval is
required by law or stock exchange rules or the Board determines that shareholder
approval is advisable. Without the consent of the participant, no amendment,
suspension or termination of the Plan or any Award may materially and adversely
affect the rights of such participant under any previously granted Award.
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.
Federal Income Tax Consequences
The following is a brief summary of the principal Federal income tax
consequences of the grant and exercise of Awards under present law:
Incentive Stock Options. An employee will not recognize any taxable income
for Federal income tax purposes upon receipt of an incentive stock option or,
generally, at the time of exercise of the option provided that the option price
of the option was not less than the fair market value of the Common Stock,
within the meaning of Section 422 of the Code, at the time the option was
granted. The exercise of an incentive stock option generally will result in an
increase in an employee's taxable income for alternative minimum tax purposes.
If an employee holds the shares acquired pursuant to an incentive stock
option for at least two years after the date of grant of the incentive stock
option or one year after the shares are transferred to the employee, i.e., does
not make a "disqualifying disposition," upon disposition of the shares any
amount realized in excess of the employee's tax basis in the shares disposed of
will be treated as a long-term capital gain, and any loss will be treated as a
long-term capital loss. In the event of a "disqualifying disposition," the
difference between the fair market value on the date of exercise of the shares
received and the option price (limited, in the case of a taxable sale or
exchange, to the excess of the amount realized upon disposition over the
employee's tax basis in the shares) will be treated as compensation received by
the employee in the year of disposition. Under proposed regulations, special
rules apply in determining the compensation income recognized upon a
disqualifying disposition if the option price of the incentive stock option is
paid with shares of Common Stock.
The Company will not be entitled to a deduction with respect to shares
received by an optionee upon exercise of an incentive stock option and not
disposed of in a "disqualifying disposition." If an amount is treated as
compensation received by an optionee because of a "disqualifying disposition,"
the Company generally will be entitled to a corresponding deduction in the same
amount for compensation paid.
Nonstatutory Stock Options. An employee will not recognize any taxable
income for Federal income tax purposes upon receipt of a nonstatutory stock
option. Upon the exercise of a
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nonstatutory stock option the amount by which the fair market value of the
shares received, determined as of the date of exercise, exceeds the option price
will be treated as compensation received by the employee in the year of
exercise. If the option price of a nonstatutory stock option is paid in whole or
in part with shares of Common Stock, no income, gain or loss will be recognized
by the employee on the receipt of shares equal in value on the date of exercise
to the shares delivered in payment of the option price. The fair market value of
the remainder of the shares received upon exercise of the nonstatutory stock
option, determined as of the date of exercise, less the amount of cash, if any,
paid upon exercise will be treated as compensation income received by the
employee on the date of exercise of the stock option. The Company generally will
be entitled to a deduction for compensation paid in the same amount treated as
compensation received by the employee.
Reload Option Rights. An employee should not recognize any taxable income
for Federal income tax purposes upon receipt of a reload option and a reload
option should be treated as a nonstatutory stock option. See "Nonstatutory
Stock Options," above.
Restricted Stock. An employee who receives an award of restricted stock
will not recognize any taxable income for Federal income tax purposes in the
year of the award, provided the shares are subject to restrictions (that is,
they are nontransferable and subject to a substantial risk of forfeiture).
However, an employee may elect under Section 83(b) of the Code to recognize
compensation income in the year of the award, provided the shares are subject to
restrictions (that is, they are nontransferable and subject to a substantial
risk of forfeiture). If the employee does not make a Section 83(b) election
within 30 days of the grant, the fair market value of the shares on the date the
restrictions lapse will be treated as compensation income to the employee and
will be taxable in the year the restrictions lapse. The Company generally will
be entitled to a deduction for compensation paid in the same amount treated as
compensation income to the employee.
Performance Awards. An employee who receives a performance award will not
recognize any taxable income for Federal income tax purposes upon receipt of the
award. Any cash or shares of Common Stock received pursuant to the award will
be treated as compensation income received by the employee generally in the year
in which the employee receives such cash or shares of Common Stock. The Company
generally will be entitled to a deduction for compensation paid in the same
amount treated as compensation income to the employee.
Other Tax Matters. The exercise by an employee of a stock option, the
lapse of restrictions on restricted stock, or the deemed achievement or
fulfillment of performance awards following the occurrence of a Change of
Control Event, in certain circumstances, may result in (i) a 20% Federal excise
tax (in addition to Federal income tax) to the employee on certain payments of
Common Stock or cash resulting from such exercise or deemed achievement or
fulfillment of performance awards or, in the case of restricted stock, on all or
a portion of the fair market value of the shares on the date the restrictions
lapse and (ii) the loss of a compensation deduction which would otherwise be
allowable to the Company as explained above. Except for stock options and
performance awards that meet the requirements of the Plan, the Company may lose
a compensation deduction which would otherwise be allowable for compensation
paid to any employee if, as of the close of the tax year, the employee is the
chief executive officer of the Company or is among the four other highest
compensated officers for that tax year for whom compensation is required to be
reported to shareholders under the Securities Exchange Act to the extent the
total compensation paid to such employee exceeds $1,000,000.
Vote Required for Approval
Approval of the adoption of the Plan requires the affirmative vote of a
majority of the votes cast on the proposal by the holders of Common Stock voting
in person or by proxy. Under the Pennsylvania Business Corporation Law, an
abstention or broker non-vote is not a vote cast and will
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not be counted in determining the number of votes required for approval, though
it will be counted in determining the presence of a quorum.
The Board of Directors recommends that shareholders vote "FOR" approval of
the adoption of the 1999 Long-Term Incentive Plan.
SHAREHOLDER PROPOSALS FOR 2000
Shareholder proposals submitted for inclusion in next year's proxy materials
must be received by the Company no later than December 24, 1999. Shareholder
proposals submitted to be considered at the 2000 Annual Meeting without
inclusion in next year's proxy materials must be received by the Company no
later than February 24, 2000. If the Company is not notified of a shareholder
proposal by February 24, 2000, then proxies held by management of the Company
may provide the discretion to vote against such shareholder proposal, even
though such proposal is not discussed in the Proxy Statement. Proposals should
be addressed to the Corporate Secretary, Equitable Resources, Inc., One Oxford
Centre, Suite 3300, Pittsburgh, Pennsylvania 15219.
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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, 1998, has previously been mailed to
shareholders.
By Order of the Board of Directors
/s/ Audrey C. Moeller
AUDREY C. MOELLER
Vice President and Corporate Secretary
April 22, 1999
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Exhibit A
1999 EQUITABLE RESOURCES, INC.
NON-EMPLOYEE DIRECTORS' STOCK INCENTIVE PLAN
SECTION 1. PURPOSE
1.01 The purpose of the 1999 Equitable Resources, Inc. Non-Employee
Directors' Stock Incentive Plan (the "Plan") is to assist 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 Other Stock-Based Award 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. References to particular sections of the Code
shall include any successor provisions.
2.01.5 "Change of Control" has the meaning provided in Section 9.03.
2.01.6 "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 any
member of the Committee participating in the taking of any action under the
Plan shall qualify as a "non-employee director" as then defined under Rule
16b-3.
2.01.7 "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.
2.01.8 "Disability" means that a Participant is disabled within the
meaning of Section 422(c)(6) of the Code.
2.01.9 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
2.01.10 "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 closing price for the date as of which Fair Market
Value is to be determined in the principal market in which such shares are
traded, as quoted in The Wall Street Journal (or in such other reliable
publication as the Committee, in its discretion, may determine to rely
upon). If the Fair Market Value of shares on any date cannot be determined
on the basis set forth in the preceding sentence, 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
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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.
2.01.11 "Option" means a right granted under Section 6.02 hereof to
purchase Shares at a specified price during specified time periods as
provided in Section 6.02. Each Option shall be a nonstatutory stock
option, which is an Option not intended to meet the requirements of Section
422 of the Code.
2.01.12 "Other Stock-Based Award" means an Award, granted under
Section 6.04 hereof, that is denominated or payable in, valued in whole or
in part by reference to, or otherwise based on, or related to, Shares.
2.01.13 "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.
201.14 "Reload Option Rights" and "Reload Option" have the meanings
provided in Section 6.02.2(v).
2.01.15 "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.
2.01.16 "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.
2.01.17 "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.
2.01.18 "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.
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:
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(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;
(iv) to determine the type or types of Other Stock-Based Awards to be
granted to each Participant;
(v) to determine the number of Other Stock-Based Awards to be
granted, the number of Shares or amount of cash or other property to which
an Other Stock-Based Award will relate, the terms and conditions of any
Other Stock-Based 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
Other Stock-Based Award;
(vi) to determine whether, to what extent and under what
circumstances an Other Stock-Based Award may be settled in, or the exercise
price of an Other Stock-Based Award may be paid in cash, Shares, other
Awards or other property, or an Other Stock-Based Award may be accelerated,
vested, canceled, forfeited, exchanged or surrendered;
(vii) to determine whether, to what extent and under what
circumstances cash, Shares, other Awards, other property and other amounts
payable with respect to an Other Stock-Based Award shall be deferred,
whether automatically or at the election of the Committee or at the
election of the Participant;
(viii) to prescribe the form of each Award Agreement, which need not
be identical for each Participant;
(ix) 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; and
(x) 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, 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.
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SECTION 4. SHARES SUBJECT TO THE PLAN
4.01 The maximum net number of Shares which may be issued and in respect
of which Awards may be granted under the Plan shall be limited to 300,000 shares
of Common Stock, subject to adjustment as provided in Section 8.01.
For purposes of this Section 4.01, the number of Shares to which an Award
relates shall be counted against the number of Shares 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 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 available under the Plan with respect to such Award shall, to the extent
of any such forfeiture, alternative payment or termination, again be available
for Awards under the Plan. If the exercise price of an Award is paid by
delivering to the Company Shares previously owned by the Participant, the Shares
covered by the Award equal to the number of Shares so delivered shall again be
available for Awards 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 shall be granted only to Participants as defined in Section
2.01.13.
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. Except as required by applicable law, Awards may be
granted for no consideration other than prior and/or future services.
6.02 Automatic Option Grants.
6.02.1 Annual Option Grants. Subject to Section 12.01 hereof, 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.
6.02.2 Terms of Options. The Options granted under Section 6.02.1
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.
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(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 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.
(v) Reload Option Rights. Options granted under this Section
6.02 shall have Reload Option Rights which shall entitle the holder of
the Option, upon exercise of the Option or any portion thereof through
delivery of previously owned Shares, to automatically be granted on
the date of such exercise a new nonstatutory stock option (a "Reload
Option") (1) for a number of Shares equal to the number of full Shares
delivered in payment of the option price of the original Option, (2)
having an option price equal to 100% of the Fair Market Value per
Share of the Common Stock on such date of grant, (3) becoming
exercisable six months from such date of grant, (4) having the same
expiration date as the original Option so exercised and (5) having the
same other terms and conditions as apply to an Option granted under
Section 6.02.1. Subject to the preceding sentence and the other
provisions of the Plan, Reload Option Rights and Reload Options shall
have such additional terms and be subject to such additional
restrictions and conditions, if any, as shall be determined, in its
discretion, by the Committee. The Committee may, in its discretion,
provide in an Award Agreement for such limitations on the number or
frequency of exercises of Reload Option Rights, or the minimum numbers
of Shares for which such rights may be exercised, as the Committee may
deem advisable for the efficient administration of the Plan. Reload
Option Rights granted under this Section 6.02 shall entitle the holder
of an Option to be granted a Reload Option only if the underlying
Option to which they relate is exercised during service as a director
of the Company of the original grantee of the underlying Option.
Except as otherwise specifically provided herein or required by the
context, the term Option as used in this Plan shall include Reload
Options granted under this paragraph.
6.02.3 Allocation of Shares. If on any date on which Options would
otherwise be granted under this Section 6.02 the number of Shares remaining
available under Section 4.01 is not sufficient for each Participant
otherwise entitled to the grant of an Option to be granted an Option for
the full number of Shares provided in this Section 6.02, then each such
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Participant shall automatically be granted an Option 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 Option on such date and (2) the denominator is the
number of Shares for which all Participants would otherwise be granted
Options on such date, with any fractional shares being disregarded.
6.03. Nature of Automatic Award Grants; Award Agreements. The grant of
the Awards provided for in Section 6.02 shall be automatic and not subject to
the discretion of the Committee or any other Person. However, the Committee may
condition the right of a Participant to be granted any such 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.
6.04 Other Stock-Based Awards. In addition to the automatic Awards
provided for in Section 6.02, 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, including, without limitation, stock
options or purchase rights having terms and conditions similar to or different
from Options granted under 6.02, Shares awarded subject to restrictions, 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 authorized under the Plan, may be used in connection with,
or to satisfy obligations of the Company under, other compensation or incentive
plans, programs or arrangements of the Company for eligible Participants.
The Committee shall determine the terms and conditions of Other Stock-Based
Awards. Except as provided in the next paragraph, Shares or securities
delivered pursuant to a stock option or other purchase right granted under this
Section 6.04 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 combination thereof, 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.
Awards granted under this Section 6.04 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 any other plan, program or arrangement of the Company (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
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granted either at the same time as or at a different time from the grant of such
other Awards or awards. The exercise price of an 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) 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.
6.05 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 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 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 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 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. Except to the extent otherwise determined by the Committee, 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,
and any Option or other right to purchase or acquire Shares granted to a
Participant under the Plan shall be exercisable during the Participant's
lifetime only by such 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.
7.04 Registration and Listing Compliance. No Award shall be paid and 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
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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. 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.
7.05 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 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.
SECTION 9. CHANGE OF CONTROL PROVISIONS
9.01 Acceleration of Exercisability and Lapse of Restrictions. Unless
otherwise determined by the Committee at the time of grant of an Award or unless
otherwise provided in the applicable Award Agreement, if the shareholders of the
Company shall approve a transaction which upon consummation would constitute a
Change of Control of the Company, or if any Change of Control of the Company not
subject to shareholder approval shall occur:
(i) all outstanding Awards pursuant to which the Participant may have
rights, the exercise of which is restricted or limited, shall become fully
exercisable;
(ii) all restrictions or limitations (including risks of forfeiture
and deferrals) on outstanding Awards subject to restrictions or limitations
under the Plan shall lapse unless prior to such lapse the right to lapse of
restrictions or limitations is waived or deferred by the Participant; and
(iii) all 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.
9.02 Termination of Service Following Change of Control. If within three
years following the date of any Change of Control the service of a Participant
as a director of the Company shall be terminated voluntarily or involuntarily
for any reason, then unless otherwise provided in the applicable Award
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Agreement, and in addition to any other rights of post-termination exercise
which the Participant (or other holder of the Award) may have under the Plan or
the applicable Award Agreement, any Option or other Award granted to the
Participant and outstanding on the date of the Change of Control, the payment or
receipt of which is dependent upon exercise by the Participant (or other holder
of the Award) shall be exercisable for a period of 90 days following the date of
such termination of service but not later than the expiration date of the Award.
9.03 Definition of Change of Control. For purposes of this Section 9, a
"Change of Control" of the Company shall mean any of the following events:
(a) The sale or other disposition by the Company of all or
substantially all of its assets to a single purchaser or to a group of
purchasers, other than to a corporation with respect to which, following
such sale or disposition, more than eighty percent of, respectively, the
then outstanding shares of Common Stock and the combined voting power of
the then outstanding voting securities entitled to vote generally in the
election of the Board is then owned beneficially, directly or indirectly,
by all or substantially all of the individuals and entities who were the
beneficial owners, respectively of the outstanding Common Stock and the
combined voting power of the then outstanding voting securities immediately
prior to such sale or disposition in substantially the same proportion as
their ownership of the outstanding Common Stock and voting power
immediately prior to such sale or disposition;
(b) The acquisition in one or more transactions by any person or
group, directly or indirectly, of beneficial ownership of twenty percent or
more of the outstanding shares of Common Stock or the combined voting power
of the then outstanding voting securities of the Company entitled to vote
generally in the election of the Board; provided, however, that any
acquisition by (x) the Company or any of its Subsidiaries, or any employee
benefit plan (or related trust) sponsored or maintained by the Company or
any of its Subsidiaries or (y) any person that is eligible, pursuant to
Rule 13d-1(b) under the Exchange Act (as in effect on the effective date of
the Plan) to file a statement on Schedule 13G with respect to its
beneficial ownership of Common Stock and other voting securities, whether
or not such person shall have filed a statement on Schedule 13G, unless
such person shall have filed a statement on Schedule 13D with respect to
beneficial ownership of fifteen percent or more of the Company's voting
securities, shall not constitute a Change of Control;
(c) The Company's termination of its business and liquidation of its
assets;
(d) There is consummated a merger, consolidation, reorganization,
share exchange, or similar transaction involving the Company (including a
triangular merger), in any case, unless immediately following such
transaction: (i) all or substantially all of the persons who were the
beneficial owners of the outstanding Commons Stock and outstanding voting
securities of the Company immediately prior to the transaction beneficially
own, directly or indirectly, more than 60% of the outstanding shares of
Commons Stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors of the
corporation resulting from such transaction (including a corporation or
other person which as a result of such transaction owns the Company or all
or substantially all of the Company's assets through one or more
subsidiaries (a "Parent Company")) in substantially the same proportion as
their ownership of the Common Stock and other voting securities of the
Company immediately prior to the consummation of the transaction, (ii) no
person (other than the Company, any employee benefit plan sponsored or
maintained by the Company or, if reference was made to equity ownership of
any Parent Company for purposes of determining whether clause (i) above is
satisfied in connection with the transaction, such Parent Company)
beneficially owns, directly or indirectly, 20% or more of the outstanding
shares of Common Stock or the combined voting power of the voting
securities entitled to vote generally in the election of directors of the
corporation resulting from such transaction and (iii) individuals who were
members of the Board immediately prior to the consummation of the
transaction constitute at least a majority of the members of
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the board of directors resulting from such transaction (or, if reference
was made to equity ownership of any Parent Company for purposes of
determining whether clause (i) above is satisfied in connection with the
transaction, such Parent Company); or
(e) The following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals who, on the
date hereof, constitute the entire Board and any new director (other than a
director whose initial assumption of office is in connection with an actual
or threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Company) whose
appointment or election by the Board or nomination for election by the
Company's shareholders was approved by a vote of at least two-thirds (2/3)
of the directors then still in office who either were directors on the
effective date of the Plan or whose appointment, election or nomination for
election was previously so approved.
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 by the rules of any
stock exchange on which the Shares may then be listed, or if the Board
determines that obtaining such shareholder approval is for any reason advisable;
provided, however, that 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.
SECTION 11. GENERAL PROVISIONS
11.01 No Shareholder Rights. 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 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 or payments not yet made 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 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.
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.
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11.05 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.
11.06 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 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 March 17,
1999, the date of adoption of the Plan by the Board, provided that such adoption
of the Plan is approved by a majority of the votes cast at a duly held meeting
of shareholders held on or prior to March 16, 2000 at which a quorum
representing a majority of the outstanding voting stock of the Company is,
either in person or by proxy, present and voting. Notwithstanding anything else
contained in the Plan or in any Award Agreement, no Option or other purchase
right granted under the Plan may be exercised, and no certificates for Shares
may be delivered 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.
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Exhibit B
1999 EQUITABLE RESOURCES, INC.
LONG-TERM INCENTIVE PLAN
SECTION 1. PURPOSES
1.01 The purpose of the 1999 Equitable Resources, Inc. Long-Term Incentive
Plan (the "Plan") is to assist the Company in attracting, retaining and
motivating employees of outstanding ability and to align their interests with
those of the shareholders of the Company.
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, Restricted Stock, Performance Award
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.
2.02.4 "Cause," when used with respect to the termination of
employment of a Participant, means:
(a) the willful and continued failure by the Participant to
substantially perform his duties with the Company or a Subsidiary
(other than any such failure resulting from the Participant's
disability), after a written demand for substantial performance is
delivered to the Participant by the Board which specifically
identifies the manner in which the Board believes that the Participant
has not substantially performed his duties, and which failure has not
been cured within 30 days after such written demand; or
(b) the willful and continued engaging by the Participant in
conduct which is demonstrably and materially injurious to the Company
or a Subsidiary, monetarily or otherwise, or
(c) the breach by the Participant of any obligation of
confidentiality owed to the Company or a Subsidiary.
For purposes of this Section 2.02.4, no act, or failure to act, on the
Participant's part shall be considered "willful" unless done, or omitted to
be done, by the Participant in bad faith and without reasonable belief that
such action or omission was in the best interest of the Company.
Notwithstanding the foregoing, the Participant shall not be deemed to have
been terminated for Cause unless and until there shall have been delivered
to him a copy of a resolution duly adopted by the affirmative vote of not
less than three-quarters of the entire membership of the Board at a meeting
of the Board called and held for that purpose (after reasonable notice to
the Participant and an opportunity for the Participant, together with his
counsel, to be heard before the Board) finding that in the good faith
opinion of the Board the Participant is guilty of the conduct set forth
above in clauses (a), (b) or (c) of this Section 2.02.4 and specifying the
particulars thereof in detail.
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2.01.5 "Code" means the Internal Revenue Code of 1986, as amended
from time to time, together with rules, regulations and interpretations
promulgated thereunder. References to particular sections of the Code
shall include any successor provisions.
2.01.6 "Change of Control" has the meaning provided in Section 9.03.
2.01.7 "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 any
member of the Committee participating in the taking of any action under the
Plan shall qualify as a "non-employee director" as then defined under Rule
16b-3 and an "outside director" as then defined under Section 162(m) of the
Code.
2.01.8 "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.
2.01.9 "Covered Employee" shall have the meaning provided in Section
162(m)(3) of the Code.
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 closing price for the date as of which Fair Market
Value is to be determined in the principal market in which such shares are
traded, as quoted in The Wall Street Journal (or in such other reliable
publication as the Committee, in its discretion, may determine to rely
upon). If the Fair Market Value of shares on any date cannot be determined
on the basis set forth in the preceding sentence, 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 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 6.05 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 an 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," "Performance Goal" and "Performance
Period" shall have the meanings provided in Section 6.04.
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2.01.17 "Reload Option Rights" and "Reload Option" have the meanings
provided in Section 6.02(v).
2.01.18 "Restricted Stock" means Shares, granted under Section 6.03
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 "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.
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
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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; and
(xi) 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 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 net number of Shares which may be issued and in respect
of which Awards may be granted under the Plan shall be limited to 3,000,000
shares of Common Stock, subject to adjustment as provided in Section 8.01.
For purposes of this Section 4.01, the number of Shares to which an Award
relates shall be counted against the number of Shares 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 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.
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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 available under the Plan with respect to such Award shall, to the extent
of any such forfeiture, alternative payment or termination, again be available
for Awards under the Plan. If the exercise price of an Award is paid by
delivering to the Company Shares previously owned by the Participant, the Shares
covered by the Award equal to the number of Shares so delivered shall again be
available for Awards 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 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
not be less than 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.
(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.
(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 the exercise price may be paid or deemed to be paid,
and the form of such payment, including, without limitation, cash
(including notes or other contractual obligations of Participants to make
payment on a deferred basis, to the extent permitted by law), Shares, other
outstanding Awards or other property 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.
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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.
(iv) Termination of Employment. Unless otherwise determined by the
Committee and reflected in the Award Agreement:
(A) if a Participant shall die while employed by the Company or
a Subsidiary or during a period following termination of employment
during which an Option otherwise remains exercisable under this
Section 6.02(iv), Options granted to the Participant, to the extent
exercisable at the time of the Participant's death, may be exercised
within one year after the date of the Participant's death, but not
later than the expiration date of the Option, by the executor or
administrator of the Participant's estate or by the Person or Persons
to whom the Participant shall have transferred such right by will, by
the laws of descent and distribution or, if permitted by the
Committee, by inter vivos transfer.
(B) if the employment of a Participant with the Company or a
Subsidiary shall be involuntarily terminated under circumstances which
would qualify the Participant for benefits under the Company's
Separation Allowance Plan, or if a Participant shall retire under the
terms of any retirement plan of the Company or a Subsidiary or shall
terminate his or her employment with the written consent of the
Company or a Subsidiary specifically permitting such exercise, Options
granted to the Participant, to the extent exercisable at the date of
the Participant's termination of employment, may be exercised within
90 days after the date of termination of employment, but not later
than the expiration date of the Option.
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(C) except to the extent an Option remains exercisable under
paragraph (A) or (B) above or under Section 9.02, any Option granted
to a Participant shall terminate immediately upon the termination of
all employment of the Participant with the Company or a Subsidiary.
(v) Reload Option Rights. Reload Option Rights if awarded with
respect to an Option shall entitle the holder of the Option, upon exercise
of the Option or any portion thereof through delivery of previously owned
Shares, to automatically be granted on the date of such exercise a new
nonstatutory stock option (a "Reload Option") (1) for a number of Shares
not exceeding the number of full Shares delivered in payment of the option
price of the original Option and any withholding taxes related thereto, (2)
having an option price not less than 100% of the Fair Market Value per
Share of the Common Stock on such date of grant, (3) having an expiration
date not later than the expiration date of the original Option so exercised
and (4) otherwise having terms permissible for the grant of an Option under
the Plan. Subject to the preceding sentence and the other provisions of
the Plan, Reload Option Rights and Reload Options shall have such terms and
be subject to such restrictions and conditions, if any, as shall be
determined, in its discretion, by the Committee. In granting Reload Option
Rights, the Committee, may, in its discretion, provide for successive
Reload Option grants upon the exercise of Reload Options granted
thereunder. Unless otherwise determined, in its discretion, by the
Committee, Reload Option Rights shall entitle the holder of an Option to be
granted a Reload Option only if the underlying Option to which they relate
is exercised during employment with the Company or a Subsidiary of the
original grantee of the underlying Option. Except as otherwise
specifically provided herein or required by the context, the term Option as
used in this Plan shall include Reload Options granted hereunder.
(vi) Individual Option Limit. The aggregate number of Shares for
which Options may be granted under the Plan to any single Participant shall
not exceed 750,000 Shares. The limitation in the preceding sentence shall
be interpreted and applied in a manner consistent with Section 162(m) of
the Code and, to the extent consistent with Section 162(m) of the Code, in
accordance with Section 4.01 hereof. To the extent consistent with Section
162(m) of the Code, in applying this limitation a Reload Option shall not
be deemed to increase the number of Shares covered by the original
underlying Option grant.
6.03 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 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.
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(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.
6.04 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 represent a right to
receive Shares, cash, other property or any combination thereof based on
the achievement, or the level of achievement, during a specified
Performance Period of one or more Performance Goals established by the
Committee at the time of the Award.
(ii) Terms of Performance Awards. At the time a Performance Award is
granted, the Committee shall cause to be set forth in the Award Agreement
or otherwise in writing (1) the Performance Goals applicable to the Award
and the Performance Period during which the achievement of the Performance
Goals shall be measured, (2) the amount which may be earned by the
Participant based on the achievement, or the level of achievement, of the
Performance Goals or the formula by which such amount shall be determined
and (3) such other terms and conditions applicable to the Award as the
Committee may, in its discretion, determine to include therein. The terms
so established by the Committee shall be objective such that a third party
having knowledge of the relevant facts could determine whether or not any
Performance Goal has been achieved, or the extent of such achievement, and
the amount, if any, which has been earned by the Participant based on such
performance. The Committee may retain the discretion to reduce (but not to
increase) the amount of a Performance Award which will be earned based on
the achievement of Performance Goals.
(iii) Performance Goals. "Performance Goals" shall mean one or more
preestablished, objective measures of performance during a specified
Performance Period by the Company, a Subsidiary or Subsidiaries, any
branch, department or other portion thereof or the Participant
individually, selected by the Committee in its discretion to determine
whether Performance Award has been earned in whole or in part. Performance
Goals may be based on earnings per share, net income, revenue growth,
revenues, expenses, return on equity, return on total capital or return on
assets. Performance Goals based on such performance measures may be based
either on the performance of the Company, Subsidiary or portion thereof
under such measure for the Performance Period and/or upon a comparison of
such performance with the performance of a peer group of corporations
selected or defined by the Committee at the time of making a Performance
Award. The Committee may in its discretion also determine to use other
objective performance measures as Performance Goals.
(iv) Committee Certification. Following completion of the applicable
Performance Period, and prior to any payment of a Performance Award to the
Participant, the Committee shall determine in accordance with the terms of
the Performance Award and shall certify in writing whether the applicable
Performance Goal or Goals were achieved, or the level of such achievement,
and the amount, if any, earned by the Participant based upon such
performance. For this purpose, approved minutes of the meeting of the
Committee at which certification is made shall be sufficient to satisfy the
requirement of a written certification.
(v) Maximum Individual Performance Award Payments. With respect to
all Performance Periods ending in any one calendar year, the maximum amount
which may be earned by any single Participant under all Performance Awards
granted under the Plan shall be limited to $1,000,000. In applying this
limit, the amount of any cash or the Fair Market Value of any Shares or
other property earned by a Participant shall be measured as of the
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close of the applicable Performance Period, regardless of the fact
that certification by the Committee and actual payment to the Participant
may occur in a subsequent calendar year or years.
6.05 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, 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 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
Deferred Compensation Plan 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 6.05 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
combination thereof, 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.
6.06 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, except that an Incentive Stock Option
may not be granted in tandem with other Awards or awards. 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. The exercise price of any Option or the
purchase price of any other Award conferring a right to purchase Shares:
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(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 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.
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.
7.03 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 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.
7.04 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 exceed a period of ten years from the
date of its grant.
7.05 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 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.
7.06 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. Except to the extent otherwise determined by the Committee, 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,
and any Option or other right to purchase or acquire Shares granted to a
Participant under the Plan shall be exercisable during the Participant's
lifetime only by such 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
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such Participant as well as any additional restrictions or limitations deemed
necessary or appropriate by the Committee.
7.07 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.
7.08 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 the Plan to violate
Section 422(b)(1) of the Code and (2) with respect to Options or Performance
Awards 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 and (2) with respect to
Options or Performance Awards held by a Covered Employee, no such
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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. Unless
otherwise determined by the Committee at the time of grant of an Award or unless
otherwise provided in the applicable Award Agreement, if the shareholders of the
Company shall approve a transaction which upon consummation would constitute a
Change of Control of the Company, or if any Change of Control of the Company not
subject to shareholder approval shall occur:
(i) all outstanding Awards pursuant to which the Participant may have
rights, the exercise of which is restricted or limited, shall become fully
exercisable;
(ii) all restrictions or limitations (including risks of forfeiture
and deferrals) on outstanding Awards subject to restrictions or limitations
under the Plan shall lapse unless prior to such lapse the right to lapse of
restrictions or limitations is waived or deferred by the Participant; and
(iii) 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.
9.02 Termination of Employment Following Change of Control. If within
three years following the date of any Change of Control the employment of a
Participant shall be terminated voluntarily or involuntarily for any reason
other than for Cause, then unless otherwise provided in the applicable Award
Agreement, and in addition to any other rights of post-termination exercise
which the Participant (or other holder of the Award) may have under the Plan or
the applicable Award Agreement, any Option or other Award granted to the
Participant and outstanding on the date of the Change of Control, the payment or
receipt of which is dependent upon exercise by the Participant (or other holder
of the Award) shall be exercisable for a period of 90 days following the date of
such termination of employment but not later than the expiration date of the
Award.
9.03 Definition of Change of Control. For purposes of this Section 9, a
"Change of Control" of the Company shall mean any of the following events:
(a) The sale or other disposition by the Company of all or
substantially all of its assets to a single purchaser or to a group of
purchasers, other than to a corporation with respect to which, following
such sale or disposition, more than eighty percent of, respectively, the
then outstanding shares of Common Stock and the combined voting power of
the then outstanding voting securities entitled to vote generally in the
election of the Board is then owned beneficially, directly or indirectly,
by all or substantially all of the individuals and entities who were the
beneficial owners, respectively of the outstanding Common Stock and the
combined voting power of the then outstanding voting securities immediately
prior to such sale or disposition in substantially the same proportion as
their ownership of the outstanding Common Stock and voting power
immediately prior to such sale or disposition;
(b) The acquisition in one or more transactions by any person or
group, directly or indirectly, of beneficial ownership of twenty percent or
more of the outstanding shares of Common Stock or the combined voting power
of the then outstanding voting securities of the Company entitled to vote
generally in the election of the Board; provided, however, that any
acquisition by (x) the Company or any of its Subsidiaries, or any employee
benefit plan (or related trust) sponsored or maintained by the Company or
any of its Subsidiaries or (y) any person that is eligible, pursuant to
Rule 13d-1(b) under the Exchange Act (as in effect on the
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effective date of the Plan) to file a statement on Schedule 13G with
respect to its beneficial ownership of Common Stock and other voting
securities, whether or not such person shall have filed a statement on
Schedule 13G, unless such person shall have filed a statement on Schedule
13D with respect to beneficial ownership of fifteen percent or more of the
Company's voting securities, shall not constitute a Change of Control;
(c) The Company's termination of its business and liquidation of its
assets;
(d) There is consummated a merger, consolidation, reorganization,
share exchange, or similar transaction involving the Company (including a
triangular merger), in any case, unless immediately following such
transaction: (i) all or substantially all of the persons who were the
beneficial owners of the outstanding Commons Stock and outstanding voting
securities of the Company immediately prior to the transaction beneficially
own, directly or indirectly, more than 60% of the outstanding shares of
Commons Stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors of the
corporation resulting from such transaction (including a corporation or
other person which as a result of such transaction owns the Company or all
or substantially all of the Company's assets through one or more
subsidiaries (a "Parent Company")) in substantially the same proportion as
their ownership of the Common Stock and other voting securities of the
Company immediately prior to the consummation of the transaction, (ii) no
person (other than the Company, any employee benefit plan sponsored or
maintained by the Company or, if reference was made to equity ownership of
any Parent Company for purposes of determining whether clause (i) above is
satisfied in connection with the transaction, such Parent Company)
beneficially owns, directly or indirectly, 20% or more of the outstanding
shares of Common Stock or the combined voting power of the voting
securities entitled to vote generally in the election of directors of the
corporation resulting from such transaction and (iii) individuals who were
members of the Board immediately prior to the consummation of the
transaction constitute at least a majority of the members of the board of
directors resulting from such transaction (or, if reference was made to
equity ownership of any Parent Company for purposes of determining whether
clause (i) above is satisfied in connection with the transaction, such
Parent Company); or
(e) The following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals who, on the
date hereof, constitute the entire Board and any new director (other than a
director whose initial assumption of office is in connection with an actual
or threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Company) whose
appointment or election by the Board or nomination for election by the
Company's shareholders was approved by a vote of at least two-thirds (2/3)
of the directors then still in office who either were directors on the
effective date of the Plan or whose appointment, election or nomination for
election was previously so approved.
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 by the rules of any
stock exchange on which the Shares may then be listed, 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
13
<PAGE>
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 Agreement shall give any such
Participant any rights that are greater than those of a general unsecured
creditor of the Company; provided, however, that 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.
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,
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.
14
<PAGE>
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 March
17, 1999, the date of adoption of the Plan by the Board, provided that such
adoption of the Plan is approved by a majority of the votes cast at a duly held
meeting of shareholders held on or prior to March 16, 2000 at which a quorum
representing a majority of the outstanding voting stock of the Company is,
either in person or by proxy, present and voting. Notwithstanding anything else
contained in the Plan or in any Award Agreement, no Option 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. Absent additional shareholder
approval, (1) no Performance Award may be granted under the Plan subsequent to
the Company's Annual Meeting of Shareholders in 2004, (2) no Performance Period
for any Performance Award granted under the Plan may end later than December 31,
2007 and (3) no other Award may be granted under the Plan subsequent to March
16, 2009, except that Reload Options may be granted pursuant to Reload Option
Rights then outstanding.
15
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[LOGO OF EQUITABLE RESOURCES] One Oxford Centre
Suite 3300
Pittsburgh, PA 15219
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
Audrey C. Moeller and Johanna G. O'Loughlin 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 Wednesday, May 26, 1999, at 10 a.m., in the Union Trust Building at Two
Mellon Bank Center, 501 Grant Street, Pittsburgh, Pennsylvania, 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 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 the substitution 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.
Please Sign and Date on the Reverse Side and Return the Proxy Card Promptly
Using the Enclosed Envelope.
<PAGE>
Please mark
your votes as [X]
indicated in
this example
The Board of Directors recommends a vote FOR Item 1, Item 2, Item 3 and Item 4.
1. Election of Directors Nominees: Phyllis A. Domm, Ed. D., James E. Rohr
and David S. Shapira
FOR WITHHELD
[_] [_]
(INSTRUCTIONS: To withhold authority to vote for
particular nominees, write that nominee's name in the
space provided here.)
- ------------------------------------------------------
2. Ratify Appointment of Ernst & Young LLP as Auditors
FOR AGAINST ABSTAIN
[_] [_] [_]
3. 1999 Non-Employee Director's Stock Incentive Plan
FOR AGAINST ABSTAIN
[_] [_] [_]
4. 1999 Long-Term Incentive Plan
FOR AGAINST ABSTAIN
[_] [_] [_]
THIS PROXY SHOULD BE SIGNED 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.
