-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, i3xaVTWaCK6uAvhOVjS/+qhAe3bbl9K/sOjAbMo8DOoZJAlPK4tuFk7BTyQywPnH gpE4aOHggV+ocVi3jXaxUQ== 0000033213-95-000002.txt : 19950616 0000033213-95-000002.hdr.sgml : 19950616 ACCESSION NUMBER: 0000033213-95-000002 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 21 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950322 SROS: NYSE SROS: PHLX FILER: COMPANY DATA: COMPANY CONFORMED NAME: EQUITABLE RESOURCES INC /PA/ CENTRAL INDEX KEY: 0000033213 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS TRANSMISSION & DISTRIBUTION [4923] IRS NUMBER: 250464690 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-03551 FILM NUMBER: 95522346 BUSINESS ADDRESS: STREET 1: 420 BLVD OF THE ALLIES CITY: PITTSBURGH STATE: PA ZIP: 15219 BUSINESS PHONE: 4122613000 MAIL ADDRESS: STREET 1: 420 BOULEVARD OF THE ALLIES CITY: PITTSBURGH STATE: PA ZIP: 15219 FORMER COMPANY: FORMER CONFORMED NAME: EQUITABLE GAS CO DATE OF NAME CHANGE: 19841120 10-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________ TO ________ COMMISSION FILE NUMBER 1-3551 EQUITABLE RESOURCES, INC. (Exact name of registrant as specified in its charter) PENNSYLVANIA 25-0464690 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 420 Boulevard of the Allies 15219 Pittsburgh, Pennsylvania (Zip Code) (Address of principal executive offices) Registrant's telephone number, including area code: (412) 261-3000 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange Title of each class on which registered Common Stock, no par value New York Stock Exchange Philadelphia Stock Exchange 7 1/2 Percent Debentures due July 1, 1999 New York Stock Exchange 9 1/2 Percent Convertible Subordinated Debentures due 2006 New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] The aggregate market value of voting stock held by non-affiliates of the registrant as of February 28, 1995: $961,673,725 The number of shares outstanding of the issuer's classes of common stock as of February 28, 1995: 34,654,909 DOCUMENTS INCORPORATED BY REFERENCE Part III, a portion of Item 10 and Items 11, 12, and 13 are incorporated by reference to the Proxy Statement for the Annual Meeting of Stockholders on May 26, 1995, to be filed with the Commission within 120 days after the close of the Company's fiscal year ended December 31, 1994. Index to Exhibits - Page 54. TABLE OF CONTENTS Part I Page Item 1 Business 1 Item 2 Properties 9 Item 3 Legal Proceedings 11 Item 4 Submission of Matters to a Vote of Security Holders 11 Item 10 Directors and Executive Officers of the Registrant 12 Part II Item 5 Market for Registrant's Common Equity and Related Stockholder Matters 14 Item 6 Selected Financial Data 15 Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations 16 Item 8 Financial Statements and Supplementary Data 22 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 48 Part III Item 10 Directors and Executive Officers of the Registrant 49 Item 11 Executive Compensation 49 Item 12 Security Ownership of Certain Beneficial Owners and Management 49 Item 13 Certain Relationships and Related Transactions 49 Part IV Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K 51 Index to Financial Statements and Financial Statement Schedules Covered by Report of Independent Auditors 52 Index to Exhibits 54 Signatures 58 PART I Item 1. Business (a) Equitable Resources, Inc. ("Equitable" or the "Company") was formed under the laws of Pennsylvania by the consolidation and merger in 1925 of two constituent companies, the older of which was organized in 1888. The Company owns all the capital stock of subsidiary companies. Principal operating subsidiaries are Equitable Resources Energy Company ("Equitable Resources Energy") and Kentucky West Virginia Gas Company ("Kentucky West"). Equitable Resources Energy owns all the capital stock of Equitable Resources Marketing Company ("ERMCO") and Andex Energy, Inc. ("Andex"). Kentucky West owns all the capital stock of Equitrans, Inc. ("Equitrans") and Nora Transmission, Inc. ("Nora"). ERMCO owns all the capital stock of Louisiana Intrastate Gas Company ("LIG"). The Company and all such subsidiaries are referred to as the "Company and its Subsidiaries" or the "Companies." The Companies operate in the Appalachian area and, to a lesser extent, in the Rocky Mountain, Southwest, Louisiana and Gulf Coast offshore areas, the Canadian Rockies and has interests in Colombia, South America. The Companies engage primarily in the exploration for, development, production, purchase, transmission, storage, distribution and marketing of natural gas, the extraction of natural gas liquids, the exploration for, development, production and sale of oil and contract drilling. (b) and (b) (1) Beginning in 1994, the Company expanded the reporting of its business operations to four business segments: exploration and production, natural gas marketing, natural gas distribution and natural gas transmission. Financial information by business segment is presented in Note L to the consolidated financial statements contained in Part II. (b)(2) Not applicable. (c)(1) EXPLORATION AND PRODUCTION. Exploration and production activities are conducted by Equitable Resources Energy Company through its divisions and subsidiaries. Its activities are principally in the Appalachian area where it explores for, develops, produces and sells natural gas and oil, extracts and markets natural gas liquids and performs contract drilling and well maintenance services. The exploration and production segment also conducts operations in the Rocky Mountain area including the Canadian Rockies where it explores for, develops and produces oil, and to a lesser extent natural gas. In the Southwest and Gulf Coast offshore areas, this segment participates in exploration and development of gas and oil projects. Exploration and production also owns an interest in two natural gas liquids plants in Texas. Andex participates in ventures to explore for and develop oil in Colombia, South America. NATURAL GAS MARKETING. Natural gas marketing activiites are conducted by ERMCO and its subsidiaries. Its activities include marketing of natural gas, extraction, and sale of natural gas liquids and intrastate transportation. ERMCO operates nationwide as a full-service natural gas marketing and supply company. ERMCO provides a full range of energy services, including monthly "spot" and longer term contracts, peak shaving and transportation arrangements. In 1994, ERMCO was granted a Federal Energy Regulatory Commission (FERC) certificate for electricity wholesaling. In Louisiana, LIG provides intrastate transportation of gas and extracts and markets natural gas liquids. NATURAL GAS DISTRIBUTION. Natural gas distribution activities comprise the operations of Equitable Gas Company, the Company's state- regulated natural gas utility. Equitable Gas is regulated by state public utility commissions in Pennsylvania, West Virginia and Kentucky and is engaged in the purchase, distribution, marketing and transportation of natural gas. The territory served by Equitable Gas embraces principally the city of Pittsburgh and surrounding municipalities in southwestern Pennsylvania, a few municipalities in northern West Virginia and field line sales in eastern Kentucky. Natural gas distribution services are provided to more than 265,000 customers located mainly in the city of Pittsburgh and its environs. Residential and commercial sales volumes reflect annual variations which are primarily related to weather. In addition, commercial and industrial sales volumes have decreased mainly as the result of customers acquiring gas directly from third parties. However, this gas is transported and delivered by the natural gas transmission segment. NATURAL GAS TRANSMISSION. Natural gas transmission activities are conducted by three FERC-regulated gas pipelines: Kentucky West, Equitrans, and Nora. Activities include gas transportation, gathering, storage, and marketing activities. Kentucky West is an open access natural gas pipeline company. Prior to restructuring pursuant to FERC Order 636, Kentucky West purchased gas from the exploration and production segment and independent producers in Kentucky. Most of Kentucky West's sales were to Equitrans and, to a lesser extent, to industrial customers and other utilities. Kentucky West also transported gas independently marketed by the natural gas marketing segment. With the FERC Order 636 restructuring, which was effective July 1, 1993, Kentucky West provides open-access transportation service. Transportation service is provided to Equitable Gas, Equitrans, the exploration and production segment, and other industrial end-users. Kentucky West's pipelines are not physically connected with those of Equitrans or Equitable Gas and deliveries are made to Columbia Gas Transmission Corporation, a nonaffiliate, which in turn delivers like quantities to Equitrans in West Virginia and Pennsylvania under a Transportation and Exchange Agreement. Equitrans has production, storage and transmission facilities in Pennsylvania and West Virginia. Prior to FERC Order 636 restructuring, Equitrans produced, purchased and sold gas and provided transportation and underground storage services. With the FERC Order 636 restructuring, which was effective September 1, 1993, Equitrans provides transportation and storage services and markets natural gas. Equitrans provides transportation service for Equitable Gas Company and nonaffiliates including customers in off-system markets. Storage services are provided for Equitable Gas Company and nine nonaffiliated customers. Nora transports the exploration and production segment's gas produced in Virginia and Kentucky. (c) (1) (i) Operating revenues as a percentage of total operating revenues for each of the four business segments during the years 1992 through 1994 are as follows: 1994 1993 1992 Exploration and Production: Natural gas production 9 percent 10 percent 10 percent Oil 2 3 5 Natural gas liquids 1 2 3 Contract drilling 1 1 3 Other - 1 1 --- --- --- Total Exploration and Production 13 17 22 --- --- --- Natural Gas Marketing: Natural gas marketing 51 45 32 Natural gas liquids 4 2 - Transportation 1 1 - --- --- --- Total Natural Gas Marketing 56 48 32 --- --- --- Natural Gas Distribution: Residential 19 23 30 Commercial 5 5 7 Industrial and utility 2 1 1 Transportation 2 2 2 --- --- --- Total Natural Gas Distribution 28 31 40 --- --- --- Natural Gas Transmission: Industrial and utility - - 1 Marketed gas 1 1 - Transportation 1 2 4 Storage 1 1 1 --- --- --- Total Natural Gas Transmission 3 4 6 --- --- --- Total Revenues 100 percent 100 percent 100 percent === === === See Note L to the Consolidated Financial Statements in Part II regarding financial information by business segment. (c) (1) (ii) Not applicable. (c) (1) (iii) The following pages (4, 5 and 6) summarize gas and oil supply and disposition for the years 1992 through 1994.
1994 Exploration Natural Gas Natural Gas Natural Gas Intersegment and Production Marketing Distribution Transmission Eliminations Consolidated Gas Produced, Purchased and Sold (MMcf): Produced 62,507 143 1,871 64,521 ------- -------- ------ ------- ------- ------- Purchased: Other producers 389,710 45,632 7,263 442,605 Inter-segment purchases 2,523 47,920 12,963 472 (63,878) ------- ------- ------ ------- ------- ------- Total purchases 2,523 437,630 58,595 7,735 (63,878) 442,605 ------- ------- ------ ------- ------- ------- Total produced and purchased 65,030 437,630 58,738 9,606 (63,878) 507,126 Deduct: Net increase (decrease) in gas in storage 241 (181) 60 Extracted natural gas liquids (equivalent gas volumes) 1,546 6,377 7,923 System use and unaccounted for 480 1,602 6,391 268 8,741 ------- ------- ------ ------- ------- ------- Total 63,004 429,651 52,106 9,519 (63,878) 490,402 ======= ======= ====== ======= ======= ======= Gas Sales (MMcf): Residential 29,570 29,570 Commercial 9,681 9,681 Industrial and Utility 12,855 388 (3,576) 9,667 Production 62,507 (7,237) 55,270 Marketing 497 429,651 9,131 (53,065) 386,214 ------- ------- ------ ------- ------- ------- Total 63,004 429,651 52,106 9,519 (63,878) 490,402 ======= ======= ====== ======= ======= ======= Natural Gas Transported (MMcf) 103,726 8,611 123,472 (100,472) 135,337 ======= ====== ======= ======== ======= Oil Produced and Sold (thousands of bls) 1,986 1,986 Natural Gas Liquids Sold (thousands of gallons) 51,032 194,493 245,525 Average Selling Price: Residential Gas Sales (per Mcf) $8.974 Commercial Gas Sales 6.916 Industrial and Utility Gas Sales 2.478 $5.951 Produced Natural Gas $1.949 Marketed Natural Gas 1.873 $1.932 2.327 Oil (per barrel) 14.723 Natural Gas Liquids (per gallon) .299 .263
1993 Exploration Natural Gas Natural Gas Natural Gas Intersegment and Production Marketing Distribution Transmission Eliminations Consolidated Gas Produced, Purchased and Sold (MMcf): Produced 53,550 144 1,828 55,522 ------ ------- ------ ------ ------- ------- Purchased: Other producers 221,948 21,583 30,287 273,818 Inter-segment purchases 3,598 35,531 24,773 6,227 (70,129) ------ ------- ------ ------ ------- ------- Total purchases 3,598 257,479 46,356 36,514 (70,129) 273,818 ------ ------- ------ ------ ------- ------- Total produced and purchased 57,148 257,479 46,500 38,342 (70,129) 329,340 Deduct: Net increase in gas in storage 3,904 2,300 6,204 Extracted natural gas liquids (equivalent gas volumes) 3,005 3,162 6,167 System use and unaccounted for 294 801 2,614 5,645 9,354 ------ ------- ------ ------ ------- ------- Total 53,849 253,516 39,982 30,397 (70,129) 307,615 ====== ======= ====== ====== ======= ======= Gas Sales (MMcf): Residential 29,980 29,980 Commercial 8,235 8,235 Industrial and Utility 1,767 25,387 (23,872) 3,282 Production 53,550 (3,719) 49,831 Marketing 299 253,516 4,052 (41,580) 216,287 ------ ------- ------ ------ ------- ------- Total gas sales 53,849 253,516 39,982 29,439 (69,171) 307,615 Processed gas extracted 958 (958) ------ ------- ------ ------ ------- ------- Total 53,849 253,516 39,982 30,397 (70,129) 307,615 ====== ======= ====== ====== ======= ======= Natural Gas Transported (MMcf) 50,659 10,986 88,550 (67,892) 82,303 ======= ====== ====== ======= ======= Oil Produced and Sold (thousands of bls) 2,112 2,112 Natural Gas Liquids Sold (thousands of gallons) 60,973 101,218 162,191 Average Selling Price: Residential Gas Sales (per Mcf) $8.247 Commercial Gas Sales 7.171 Industrial and Utility Gas Sales 4.537 $4.237 Produced Natural Gas $2.236 Marketed Natural Gas 2.659 $2.231 2.517 Oil (per barrel) 16.182 Natural Gas Liquids (per gallon) .321 .272
1992 Exploration Natural Gas Natural Gas Natural Gas Intersegment and Production Marketing Distribution Transmission Eliminations Consolidated Gas Produced, Purchased and Sold (MMcf): Produced 48,243 225 2,473 50,941 ------ ------- ------ ------ ------- ------- Purchased: Other producers 131,711 11,037 31,938 174,686 Inter-segment purchases 3,137 30,424 30,918 8,489 (72,968) ------ ------- ------ ------ ------- ------- Total purchases 3,137 162,135 41,955 40,427 (72,968) 174,686 ------ ------- ------ ------ ------- ------- Total produced and purchased 51,380 162,135 42,180 42,900 (72,968) 225,627 Deduct: Net increase (decrease) in gas in storage 677 (4,381) (3,704) Extracted natural gas liquids (equivalent gas volumes) 2,061 2,061 System use and unaccounted for 593 2,596 10,584 13,773 ------ ------- ------ ------ ------- ------- Total 48,726 162,135 38,907 36,697 (72,968) 213,497 ====== ======= ====== ====== ======= ======= Gas Sales (MMcf): Residential 30,089 30,089 Commercial 8,097 8,097 Industrial and Utility 721 34,636 (31,511) 3,846 Production 48,243 (4,491) 43,752 Marketing 483 162,135 (34,905) 127,713 ------ ------- ------ ------ ------- ------- Total gas sales 48,726 162,135 38,907 34,636 (70,907) 213,497 Processed gas extracted 2,061 (2,061) ------ ------- ------ ------ ------- ------- Total 48,726 162,135 38,907 36,697 (72,968) 213,497 ====== ======= ====== ====== ======= ======= Natural Gas Transported (MMcf) 13,080 79,015 (56,382) 35,713 ====== ====== ======= ======= Oil Produced and Sold (thousands of bls) 2,406 2,406 Natural Gas Liquids Sold (thousands of gallons) 64,938 64,938 Average Selling Price: Residential Gas Sales (per Mcf) $8.021 Commercial Gas Sales 7.334 Industrial and Utility Gas Sales 6.370 $4.115 Produced Natural Gas $1.884 Marketed Natural Gas 2.184 $1.938 Oil (per barrel) 18.067 Natural Gas Liquids (per gallon) .327
During 1994, a total of 507,126 MMcf of gas was produced and purchased by the Companies compared with 325,377 MMcf in 1993. The increase reflects greater marketing activity, including the full-year effect of the LIG acquisition, and increased production. GAS PURCHASES. Total purchases in 1994 amounted to 442,605 MMcf, of which 386,214 MMcf was applicable to marketing operations and 56,391 MMcf was for system supply, compared with 216,287 MMcf for marketing operations and 53,568 MMcf for system supply in 1993. Through gas purchase contracts for system supply, the Company controls proved reserves on acreage developed by independent producers. The majority of these contracts cover the productive lives of the wells. NATURAL GAS AND OIL PRODUCTION. Natural gas production by the exploration and production segment in 1994 of 62,507 MMcf increased 8,957 MMcf over the 1993 total of 53,550 MMcf. Other production by transmission and distribution segments in 1994 was 2,014 MMcf compared with the 1993 total of 1,972 MMcf. Production of crude oil in 1994 was 1,986,000 barrels, compared with 2,112,000 barrels in 1993. In 1994, the Company drilled 198 gross wells (144.9 net wells). The primary focus of drilling activity was in Virginia for gas and coalbed methane and in the Rockies for oil. The Company has been able to develop gas reserves at costs which make it very competitive in marketing its gas to pipeline and commercial buyers. As a result, even in periods of surplus gas supply, the Company has been able to sell all gas production at a profit. NATURAL GAS AND OIL RESERVES. The Company's estimate of proved developed and undeveloped gas reserves for the exploration and production segment comprised 875.0 Bcf as of December 31, 1994. These reserves included 771.7 Bcf of proved developed reserves. The Company's oil reserves at December 31, 1994 consisted of 18.3 million barrels of proved developed and undeveloped reserves; proved developed oil reserves amounted to 18.1 million barrels. Of the total reserves, 77 percent is in the Appalachian area, 18 percent in the Rockies and 5 percent in the Gulf. See Note P to the Consolidated Financial Statements in Part II for details of gas and oil producing activities. STORAGE. Net storage withdrawals for system use during the 1993-94 heating season were 7.1 Bcf, compared with 11.0 Bcf the previous heating season. Net withdrawals for storage service customers of 14.1 Bcf were made during the 1993-94 heating season compared with 12.8 Bcf the previous heating season. SUPPLY OUTLOOK. The Company's near-term gas supply for distribution operations is excellent. The long-range gas supply outlook also is very favorable. Annual gas supply is forecasted to exceed demand at least for the next decade. The natural gas marketing segment has also been in a favorable supply position and reserves for the exploration and production segment have continued to increase. However, the rate of purchase of future supplies or development of reserves will depend largely on energy prices. (c) (1) (iv) Equitable Gas is regulated by the Pennsylvania Public Utility Commission and the Public Service Commissions of West Virginia and Kentucky; LIG is regulated by the Louisiana Public Service Commission; Kentucky West, Equitrans, Nora, LIG and Equitable Resources Energy are regulated by the Federal Energy Regulatory Commission under the Natural Gas Act and the Natural Gas Policy Act. Equitable Gas, Kentucky West, Equitrans, Nora, LIG and Equitable Resources Energy are also subject to regulation by the Department of Transportation under the Natural Gas Pipeline Safety Act of 1968 with respect to safety requirements in the design, construction, operation and maintenance of pipelines and related facilities. (c) (1) (v) and (vi) Approximately 65 percent of natural gas distribution revenue is recorded during the winter heating season from November through March. Significant quantities of purchased gas are placed in underground storage inventory during the off-peak season to accommodate high customer demands during the winter heating season. Funds required to finance this inventory are obtained through short-term loans. The exploration and production and natural gas marketing segments' revenues are not subject to seasonal variation to the same degree as natural gas distribution revenues. However, they are subject to price fluctuations, particularly during the summer months. (c) (1) (vii) Not applicable. (c) (1) (viii) Not applicable. (c) (1) (ix) Not applicable. (c) (1) (x) Equitable Gas is in competition with others for the purchase of natural gas and Equitable Resources Energy is in competition with others for the acquisition of gas and oil leases. Equitable Gas competes for gas sales with other utilities in its service area, as well as with other fuels and forms of energy and other sources of marketed natural gas available to existing or potential customers. The natural gas distribution segment has been successful in meeting competition with aggressive marketing which retained load and added new residential, commercial and off-system customers in areas served by two or more energy suppliers. This has been achieved by responding to market requirements with a portfolio of firm and interruptible services at competitive prices. See Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations contained in Part II regarding FERC Order 636 and its impact on the operations of the natural gas transmission companies. (c) (1) (xi) Not material. (c) (1) (xii) The Company and its subsidiaries are subject to federal, state and local environmental laws and regulations. Principal concerns are with respect to oil and thermal pollution of waterways, storage and disposal of hazardous wastes and liquids, and erosion and sedimentation control in pipeline construction work. For further discussion of environmental matters, see Management's Discussion and Analysis of Financial Condition and Results of Operations and Note N to the consolidated financial statements in Part II. (c) (1) (xiii) The Companies had 2,171 regular employees at the end of 1994. (d) Not material. Item 2. Properties Principal facilities are owned by the Company's business segments with the exception of several office locations and warehouse buildings. The terms of the leases on these facilities expire at various times from 1995 through 2014. All leases contain adequate renewal options for various periods. A minor portion of equipment is also leased. With few exceptions, transmission, storage and distribution pipelines are located on or under (1) public highways under franchises or permits from various governmental authorities, or (2) private properties owned in fee, or occupied under perpetual easements or other rights acquired for the most part without examination of underlying land titles. The Company's facilities have adequate capacity, are well maintained and, where necessary, are replaced or expanded to meet operating requirements. NATURAL GAS DISTRIBUTION. Equitable Gas owns and operates natural gas distribution properties as well as other general property and equipment in Pennsylvania, West Virginia and Kentucky. NATURAL GAS TRANSMISSION. Equitrans owns and operates production, underground storage and transmission facilities as well as other general property and equipment in Pennsylvania and West Virginia. Kentucky West owns and operates gathering and transmission properties as well as other general property and equipment in Kentucky. NATURAL GAS MARKETING. This segment owns an intrastate pipeline system and four hydrocarbon extraction plants in Louisiana. It also has a high-deliverability gas storage project under development in Louisiana. EXPLORATION AND PRODUCTION. This business segment owns or controls and operates substantially all of the Company's gas and oil production properties, the majority of which are located in the Appalachian area. This segment also owns hydrocarbon extraction facilities in Kentucky with a 100-mile liquid products pipeline which extends into West Virginia and an interest in two hydrocarbon extraction plants in Texas. This business segment owns or controls acreage of proved developed and undeveloped gas and oil lands located principally in the Appalachian area and, to a lesser extent, in the Rocky Mountain area including the Canadian Rockies, the Southwest and Gulf Coast offshore areas and in Colombia, South America. The acquisition of Canadian properties in 1993 is described in Note M to the consolidated financial statements contained in Part II. Information relating to Company estimates of natural gas and oil reserves and future net cash flows is summarized in Note P to the consolidated financial statements in Part II. No report has been filed with any Federal authority or agency reflecting a five percent or more difference from the Company's estimated total reserves. Gas and Oil Production (Exploration and Production): 1994 1993 1992 Gas - MMcf 62,507 53,550 48,243 Oil - Thousands of Barrels 1,986 2,112 2,406 Natural Gas: Average field sales price of natural gas produced during 1994, 1993 and 1992 was $1.95, $2.24 and $1.88 per Mcf, respectively. Average production cost (lifting cost) of natural gas during 1994, 1993 and 1992 was $.424, $.458 and $.443 per Mcf, respectively. Oil: Average sales price of oil produced during 1994, 1993 and 1992 was $14.72, $16.18 and $18.07 per barrel, respectively. Average production cost (lifting cost) of oil during 1994, 1993 and 1992 was $3.73, $4.30 and $3.75 per barrel, respectively. Gas Oil Total productive wells at December 31, 1994: Total gross productive wells 5,542 952 Total net productive wells 4,085 489 Total acreage at December 31, 1994: Total gross productive acres 713,000 Total net productive acres 588,000 Total gross undeveloped acres 3,087,000 Total net undeveloped acres 2,217,000 Number of net productive and dry exploratory wells and number of net productive and dry development wells drilled: 1994 1993 1992 Exploratory wells: Productive 7.0 12.0 11.6 Dry 5.7 6.7 6.3 Development wells: Productive 126.9 123.4 134.1 Dry 5.3 10.6 12.0 As of December 31, 1994, the Company had 2 gross wells (1.8 net wells) in the process of being drilled. Item 3. Legal Proceedings LIG is a party to certain claims involving its gas purchase contracts, including take-or-pay liabilities. As more fully described in Note M to the consolidated financial statements in Part II, the seller, and/or the previous owner of LIG, have provided indemnifications for the Company. There are no other material pending legal proceedings, other than those which are adequately covered by insurance, to which the Company or any of its subsidiaries is a party, or to which any of their property is subject. The Company is claimant as a creditor in Columbia Gas Transmission Company's bankruptcy proceeding as described in Notes B and N to the consolidated financial statements in Part II. Item 4. Submission of Matters to a Vote of Security Holders No matters were submitted to a vote of the Company's security holders during the last quarter of its fiscal year ended December 31, 1994. Item 10. Directors and Executive Officers of the Registrant (b) Identification of executive officers Name and Age Title Business Experience Donald I. Moritz (67) Chairman and Chief Executive Officer (Retired December 31, 1994) First elected to present position December 17, 1993; President and Chief Executive Officer from August 1, 1978. Frederick H. Abrew (57) President and Chief Operating Officer (Elected Chief Executive Officer effective January 1, 1995) First elected to present position December 17, 1993; Executive Vice President and Chief Operating Officer from June 1, 1992; Executive Vice President from June 1, 1991; Executive Vice President - Utility Services from June 1, 1988. A. Mark Abramovic (46) Vice President and Chief Financial Officer First elected to present position November 1, 1994; Vice President - Corporate Development from June 1, 1994; Assistant to the President from November 1993; Vice President - - Finance and Chief Financial Officer of Connecticut Natural Gas Corporation, Hartford, CT, from January 1991; Vice President - Finance of the Peoples Natural Gas Company, Pittsburgh, PA, from September 1986. Jeremiah J. Ayres (62) Senior Vice President - Environment and Technology (Retired July 1, 1994) First elected to present position February 1, 1991; Vice President - Corporate Services from March 26, 1987. Robert E. Daley (55) Vice President and Treasurer First elected to present position May 22, 1986. Harry E. Gardner, Jr. (57) Vice President - Energy Resources (Retired December 31, 1994) First elected to present position June 1, 1992; President - Equitable Resources Energy Company since January 1, 1991; President Equitable Resources Exploration Division from July 1, 1987. Joseph L. Giebel (64) Vice President - Accounting and Administration First elected to present position February 1, 1991; Vice President - Accounting from May 1, 1981. John C. Gongas, Jr. (50) Vice President - Utility Group First elected to present position January 1, 1994; Vice President - Utility Services from June 1, 1992; President of Kentucky West Virginia Gas Company since April 20, 1992; President of Equitrans, Inc. from February 26, 1988. Augustine A. Mazzei, Jr. (58) Senior Vice President and General Counsel First elected to present position June 1, 1988. Audrey C. Moeller (59) Vice President and Corporate Secretary First elected to present position May 22, 1986. Richard Riazzi (40) Vice President - Energy Group First elected to present position January 1, 1994; Vice President - Corporate Development from August 1, 1991; Director - Special Projects from October 1, 1990; President - Equitable Resources Marketing Company from February 27, 1989. Gregory R. Spencer (46) Vice President - Human Resources First elected to present position October 10, 1994; Vice President of Human Resources Administration of AMSCO International, Inc., Pittsburgh, PA, from May 1993 (integrated manufacturer of sterilization and decontamination equipment for health care and scientific customers); General Manager - Human Resources of U.S. Steel Group of USX Corporation, Pittsburgh, PA, from October 1991; Director - Personnel, U.S. Steel Group of USX Corporation, Pittsburgh, PA, from July 1987. Officers are elected annually to serve during the ensuing year or until their successors are chosen and qualified. Except as indicated, the officers listed above were elected on May 27, 1994. PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters (a) The Company's common stock is listed on the New York Stock Exchange and the Philadelphia Stock Exchange. The high and low sales prices reflected in the New York Stock Exchange Composite Transactions as reported by THE WALL STREET JOURNAL and the dividends declared and paid per share are summarized as follows: 1994 1993 High Low Dividend High Low Dividend 1st Quarter 38 3/4 34 $.285 41 1/2 33 $.270 2nd Quarter 37 32 1/4 .285 * 40 3/4 36 7/8 .270 * 3rd Quarter 35 5/8 29 .285 44 1/4 35 1/4 .270 4th Quarter 31 1/8 25 1/2 .295 42 3/4 35 1/4 .285 * Actually declared near the end of the preceding quarter. (b) As of December 31, 1994, there were 8,686 shareholders of record of the Company's common stock. (c)(1) The indentures under which the Company's long-term debt is outstanding contain provisions limiting the Company's right to declare or pay dividends and make certain other distributions on, and to purchase any shares of, its common stock. Under the most restrictive of such provisions, $408,797,000 of the Company's consolidated retained earnings at December 31, 1994, was available for declarations or payments of dividends on, or purchases of its common stock. (c)(2) The Company anticipates dividends will continue to be paid on a regular quarterly basis. Item 6. Selected Financial Data
1994 1993 1992 1991 1990 (Thousands Except Per Share Amounts) Operating revenues $1,397,280 $1,094,794 $ 812,374 $ 679,631 $ 659,216 Net income $60,729 $73,455 $60,026 $64,168 $58,949 Earnings per share of common stock $1.76 $2.27 $1.92 $2.05 $1.88 Total assets $2,019,122 $1,946,907 $1,468,424 $1,440,593 $1,229,154 Long-term debt $398,282 $378,845 $346,693 $346,818 $254,725 Cash dividends paid per share of common stock $1.15 $1.10 $1.04 $1.00 $.91
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations OVERVIEW Equitable's consolidated net income for 1994 was $60.7 million or $1.76 per share, compared with $73.5 million or $2.27 per share for 1993, and $60.0 million or $1.92 per share for 1992. While natural gas production reached a record high for 1994, an increase of 17 percent over 1993, income was adversely impacted by a 13 percent decline in average wellhead prices for natural gas, increased operating and interest expense, and lower margins from the Company's Louisiana Intrastate Gas subsidiary. The increase in net income for 1993 compared to 1992 is due primarily to increases in production and average wellhead prices for natural gas, and increased margins from natural gas distribution and transmission operations. These increases were partially offset by a $5 million increase in 1993 federal income taxes as a result of a one percent increase in the federal corporate income tax rate. RESULTS OF OPERATIONS Beginning in 1994, the Company expanded the reporting of operations to comprise four segments--Exploration and Production, Natural Gas Marketing, Natural Gas Distribution and Natural Gas Transmission. This discussion supplements the detailed financial information by business segment presented in Note L to the consolidated financial statements. EXPLORATION AND PRODUCTION Operating revenues, which are derived primarily from the sale of produced natural gas, oil and natural gas liquids and from contract drilling, were $195.8 million in 1994 compared with $202.4 million in 1993 and $191.5 million in 1992. The decrease in revenues for 1994 compared to 1993 is due primarily to lower wellhead prices for natural gas and oil, and lower selling prices and production of natural gas liquids which were partially offset by increased gas production. The increase in revenues for 1993 compared to 1992 is due primarily to increases in average wellhead prices and production of natural gas. Exploration and Production 1994 1993 1992 Operating Revenues (thousands): Natural Gas . . . . . . . . . $121,810 $119,746 $ 90,886 Oil . . . . . . . . . . . 29,239 34,176 43,469 Natural Gas Liquids . . . . . 15,244 19,545 21,256 Contract Drilling . . . . . . 15,427 14,611 19,924 Direct Billing Settlements. . 7,815 7,815 7,815 Other . 6,260 6,529 8,128 ------- ------- ------- Total Revenues . . . . $195,795 $202,422 $191,478 ======= ======= ======= Sales Quantities: Natural Gas (MMcf). . . . . . 62,507 53,550 48,243 Oil (MBls). . . . . . . . . . 1,986 2,112 2,406 Natural Gas Liquids (thousands of gallons) . . . . . . . . 51,032 60,973 64,938 Gas purchased amounted to $10.6 million in 1994 compared with $17.0 million in 1993 and $15.3 million in 1992. The decrease in gas purchased for 1994 compared to 1993 is due to the lower requirements attributed to decreased production of natural gas liquids. The increase in gas purchased for 1993 compared to 1992 is due to higher costs for purchased gas. Other operating expenses were $154.4 million in 1994, $142.9 million in 1993, and $139.8 million in 1992. Increases for the respective years are attributed to increased production expenses and depreciation and depletion related to the higher level of natural gas production. Operating income was $30.8 million in 1994, $42.5 million in 1993, and $36.4 million in 1992. The decrease in operating income for 1994 compared to 1993 reflects lower wellhead prices for natural gas and oil, and lower selling prices and production of natural gas liquids which were partially offset by increased gas production. The increase in operating income for 1993 compared to 1992 reflects primarily the increase in average wellhead prices and production of natural gas. Average wellhead natural gas prices for 1994 decreased 13 percent from the 1993 level, which was the highest level that had been experienced since 1988. Thus far in 1995, the wellhead prices have shown little sign of improving. Prices for oil and natural gas liquids continued the decline that began as far back as 1991. Natural gas production continued to increase in 1994 reflecting the on-going development of Appalachian properties, which are the foundation of the segment's activities, as well as expansion in the off-shore Gulf Coast area. The 1995 capital expenditure program of $71.0 million for exploration and production includes $15.4 million for development of Appalachian holdings, $18.3 million for the Rocky Mountain area, $32.3 million for off-shore drilling in the Gulf of Mexico, and $2.7 million for exploration in South America. Market and price trends will continue to be the principal factors for the economic justification of drilling investments under the 1995 program. NATURAL GAS MARKETING Operating revenues, which are derived primarily from the marketing of natural gas, sale of produced natural gas liquids, and intrastate transportation of natural gas in Louisiana, were $890.8 million in 1994 compared with $599.6 million in 1993 and $314.6 million in 1992. The increase in revenues between the years is attributed primarily to the acquisition of Louisiana Intrastate Gas Company (LIG) on June 30, 1993, as more fully described in Note M to the consolidated financial statements. Natural Gas Marketing 1994 1993 1992 Operating Revenues (thousands): Natural Gas Marketing . . . . $830,082 $565,605 $ 314,276 Natural Gas Liquids . . . . . 51,113 27,576 -- Transportation. . . . . . . . 9,266 6,247 -- Other . 317 196 350 ------- ------- ------- Total Revenues . . . . $890,778 $599,624 $314,626 ======= ======= ======= Sales Quantities: Marketed Natural Gas (MMcf) . 429,651 253,516 162,135 Natural Gas Liquids (thousands of gallons) . . . . . . . . 194,493 101,218 -- Gas purchased amounted to $857.4 million in 1994 compared with $575.7 million in 1993 and $305.9 million in 1992. The increased cost between the years reflects the increase in volume of marketed natural gas and requirements for the higher production levels of natural gas liquids. Other operating expenses were $29.3 million in 1994, $12.2 million in 1993, and $3.8 million in 1992. Increases for the respective years reflect the acquisition of LIG. Operating income was $4.1 million in 1994, $11.7 million in 1993, and $4.9 million in 1992. The decrease in operating income for 1994 compared to 1993 reflects lower prices for natural gas liquids. The increase in operating income for 1993 compared to 1992 reflects primarily the acquisition of LIG. Gas marketing activities continued to expand during 1994. However, the impact of lower energy prices overshadowed the nearly seventy percent increase in marketed volumes. LIG, which contributed to the increase in marketed services, fell below profit expectations because of the substantial decline in liquids processing margins. This is attributed to the competitive pressure of lower oil prices during most of the year. Nevertheless, the acquisition of LIG has positioned the Company's marketing activities in the Gulf Coast area where it also has expanding exploration and production activities. The Company is developing gas storage and interchange facilities which will connect with the Henry Hub as well as LIG's system of pipelines, gas processing facilities, and multiple interconnections with major pipelines. This integration and expansion of services is the foundation for developing a Gulf Coast market center. The 1995 capital expenditure program of $25.2 million for marketing operations includes $19.0 million for development of the gas storage system, $5.0 million for improvement of LIG's pipeline and gathering system, and $1.2 million for development of information systems to support the expanded services expected to be offered. NATURAL GAS DISTRIBUTION Operating revenues, which are derived from the sale and transportation of natural gas primarily to retail customers at state regulated rates, were $390.5 million in 1994 compared with $335.1 million in 1993 and $328.0 million in 1992. The increase in revenues for 1994 compared to 1993 is due primarily to higher retail rates to pass through increased purchased gas costs to customers, increased sales to utilities, and increased commercial and industrial sales reflecting some transportation customers switching service. The increase in revenues for 1993 compared to 1992 is due to the full-year impact of a retail rate increase for Pennsylvania customers, which went into , effect in July of 1992 offset by lower retail rates to pass through decreased purchased gas costs to customers. Natural Gas Distribution 1994 1993 1992 Operating Revenues (thousands): Residential Gas Sales . . . . $265,356 $247,238 $241,331 Commercial Gas Sales. . . . . 66,956 59,057 59,386 Industrial and Utility Gas Sales . 31,853 8,017 4,593 Transportation Service. . . . 21,750 16,526 17,967 Other . 4,560 4,311 4,745 ------- ------- ------- Total Revenues. . . . . . . $390,475 $335,149 $328,022 ======= ======= ======= Sales Quantities (MMcf): Residential Gas Sales . . . . 29,570 29,980 30,089 Commercial Gas Sales. . . . 9,681 8,235 8,097 Industrial and Utility Gas Sales 12,855 1,767 721 Transportation Deliveries . . 8,611 10,986 13,080 Heating Degree Days (Normal - 5,968). . . . . . 5,607 5,628 5,629 Gas purchased amounted to $232.9 million in 1994, $182.8 million in 1993, and $179.4 million in 1992. The increase in gas costs for 1994 compared to 1993 reflects the pass-through of higher costs in rates to retail customers and the increase in sales to commercial, industrial, and utility customers. The increase in gas costs for 1993 compared to 1992 reflects increased sales to commercial, industrial, and utility customers partially offset by the pass-through of lower costs in rates to retail customers. Other operating expenses amounted to $114.4 million in 1994, $106.6 million in 1993, and $97.2 million in 1992. The increase between the years is due principally to increased labor, sales and marketing, distribution, and uncollectible account expenses. Operating income was $43.2 million in 1994 compared with $45.7 million in 1993 and $51.4 million in 1992. The decrease in operating income between the years is due primarily to increased operating expenses, which more than offset the higher margins being realized. The operating results of the distribution operations continue to be impacted by the effects of weather on gas sales, primarily to residential customers. However, increased sales to utility customers and the continuing expansion of new gas-using technologies such as co-generation, natural gas vehicles, and natural gas-fired cooling have served to retain system throughput. In addition, new services for customers, such as energy management, have helped to offset the effects of weather that continues to be warmer than normal. The 1995 capital expenditure program of $25.1 million for distribution operations includes $17.1 million for the distribution system, $5.7 million for development of information systems and $2.3 million for other items. NATURAL GAS TRANSMISSION Operating revenues, which are derived from the interstate transportation, storage and sale of natural gas subject to federal regulation, and the marketing of natural gas, were $116.8 million in 1994 compared with $188.9 million in 1993 and $203.4 million in 1992. The decrease in revenues between the years reflects the effects of FERC Order 636 restructuring which took effect in the middle of 1993. Natural Gas Transmission 1994 1993 1992 Operating Revenues (thousands): Industrial and Utility Gas Sales . . . $ 2,309 $114,867 $155,271 Marketed Gas Sales. . . . . . 21,244 10,200 -- Transportation Service. . . . 69,958 47,534 34,779 Storage Service . . . . . . . 16,993 10,014 6,693 Other . 6,265 6,267 6,658 ------- ------- ------- Total Revenues. . . . . . . $116,769 $188,882 $203,401 ======= ======= ======= Sales Quantities (MMcf): Industrial and Utility Gas Sales . . . 388 26,345 36,697 Marketed Gas Sales. . . . . . 9,131 4,052 -- Transportation Deliveries . . 123,472 88,550 79,015 Gas purchased amounted to $18.2 million in 1994, $95.9 million in 1993, and $127.4 million in 1992. The decrease in gas costs between the years reflects the elimination of pipeline gas sales pursuant to FERC Order 636 restructuring. Other operating expenses amounted to $66.4 million in 1994, $62.3 million in 1993, and $54.0 million in 1992. The increase in expenses between the years is due primarily to provisions for possible refunds to customers. Operating income was $32.2 million in 1994 compared with $30.7 million in 1993 and $22.0 million in 1992. The increase in operating income between the years is due primarily to the restructuring of tariff rates pursuant to FERC Order 636 whereby all fixed costs are now recovered in the demand portion of pipeline rates. The 1995 capital expenditure program of $19.6 million for transmission operations includes $12.3 million for maintaining and expanding the transmission system, $4.0 million for expansion of gas storage facilities, and $3.3 million for other items. CAPITAL RESOURCES AND LIQUIDITY Operating Activities Cash required for operations is impacted primarily by the seasonal nature of the Company's distribution operations. Gas purchased for storage during the nonheating season is financed with short-term loans, which are repaid as gas is withdrawn from storage and sold during the heating season. In addition, short- term loans are used to provide other working capital requirements during the nonheating season. Investing Activities The Company's business requires major ongoing expenditures for replacements, improvements, and additions to its distribution and transmission plant and continuing development and expansion of its resource production activities. Such expenditures during 1994 were $146.2 million. A total of $140.9 million has been authorized for the 1995 capital expenditure program. Short-term loans are also used as interim financing for a portion of capital expenditures. The Company expects to finance its 1995 capital expenditures with cash generated from operations and temporarily with short-term loans. Capital expenditures, including acquisitions, totaled about $922 million during the five-year period ended December 31, 1994, of which 45 percent was financed from operations. Financing Activities The Company has adequate borrowing capacity to meet its financing requirements. Bank loans and commercial paper, supported by available credit, are used to meet short-term financing requirements. Interest rates on these short-term loans ranged from 2.99 percent to 6.80 percent during 1994. At December 31, 1994, $256.0 million of commercial paper and $13.3 million of bank loans were outstanding at an average interest rate of 5.94 percent. In January 1995, the Company established a five-year revolving Credit Agreement with a group of banks providing $500 million of available credit. The agreement requires a facility fee of one-tenth of one percent. Adequate credit is expected to continue to be available in the future. On September 29, 1993, the Company issued 3 million shares of common stock at a price of $38.50 per share. Net proceeds of approximately $111.6 million, after underwriters' commissions and other issuance costs, were used to repay a portion of the short-term debt incurred to purchase the stock of LIG. During the first quarter of 1994, the Company issued the remaining $43.5 million of Medium-Term Notes--Series B which were available under a shelf registration filed in March 1992 covering $100 million of medium-term notes. The Company filed a new shelf registration effective June 9, 1994, for the issuance of $100 million of Medium-Term Notes--Series C to be used to retire short-term loans. No Series C Notes have been issued. Federal Income Tax Provisions Cash flow has been affected by the Alternative Minimum Tax (AMT) since 1988. Despite the availability of nonconventional fuels tax credit, the Company has incurred an AMT liability in each of the years 1988 through 1994. Although AMT payments can be carried forward indefinitely and applied to income tax liabilities in future periods, they reduce cash generated from operations. At December 31, 1994, the Company has available $82.9 million of AMT credit carryforwards. The impact of AMT on future cash flow will depend on the level of taxable income. AMT is not expected to affect the Company's ability to finance future capital requirements. Under current law, wells drilled after 1992 do not qualify for the nonconventional fuels tax credit. While production from qualified wells drilled in the Appalachian area will generate tax credits through the year 2002, it is anticipated that the amount of such credits will decline as the related reserves are depleted. The credits recorded in 1994, 1993, and 1992 reduced the Company's federal income tax provisions by $16.4 million, $20.6 million, and $14.1 million, respectively. Environmental Matters Management does not know of any environmental liabilities that will have a material effect on the Company's financial position or results of operations. The Company has identified situations that require remedial action for which $6.5 million is accrued at December 31, 1994. The portion of amounts expensed through 1994 that have been deferred, pending recovery in future rates, and included in regulatory assets amounts to $3.5 million. Environmental matters are described in Note N to the consolidated financial statements. Balance Sheet Changes The increase in deferred purchased gas cost is due to the timing of pass- through of gas costs to ratepayers. Changes in deferred purchased gas costs generally do not affect results of operations due to regulatory procedures for purchased gas cost recovery in rates. The increase in refunds due customers reflects provisions for refund of a portion of Equitrans' current rates that are in effect subject to approval by the FERC. AUDIT COMMITTEE The Audit Committee, composed entirely of outside directors, meets periodically with the Company's independent auditors, its internal auditor, and management to review the Company's financial statements and the results of audit activities. The Audit Committee, in turn, reports to the Board of Directors on the results of its review and recommends the selection of independent auditors. Item 8. Financial Statements and Supplementary Data Page Reference Report of Independent Auditors 24 Statements of Consolidated Income for each of the three years in the period ended December 31, 1994 25 Consolidated Balance Sheets December 31, 1994 and 1993 26 & 27 Statements of Consolidated Cash Flows for each of the three years in the period ended December 31, 1994 28 Statements of Common Stockholders' Equity for each of the three years in the period ended December 31, 1994 29 Long-term Debt, December 31, 1994 and 1993 30 Notes to Consolidated Financial Statements 31 - 48 REPORT OF INDEPENDENT AUDITORS The Board of Directors and Stockholders Equitable Resources, Inc. We have audited the accompanying consolidated balance sheets and statements of long-term debt of Equitable Resources, Inc., and Subsidiaries at December 31, 1994 and 1993, and the related consolidated statements of income, common stockholders' equity and cash flows for each of the three years in the period ended December 31, 1994. Our audits also included the financial statement schedule listed in the Index at Item 14(a). These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Equitable Resources, Inc., and Subsidiaries at December 31, 1994 and 1993, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1994 in conformity with generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. As described in Note E to the consolidated financial statements, the Company changed its method of accounting for postretirement benefits in 1993. s/ Ernst & Young LLP Ernst & Young LLP Pittsburgh, Pennsylvania February 13, 1995 EQUITABLE RESOURCES, INC. AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED INCOME FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
1994 1993 1992 (Thousands Except Per Share Amounts) Operating Revenues $1,397,280 $1,094,794 $812,374 Cost of Gas Purchased 926,905 644,157 407,055 --------- --------- ------- Net operating revenues 470,375 450,637 405,319 --------- --------- ------- Operating Expenses: Operation 192,799 174,420 161,972 Maintenance 31,737 29,024 26,327 Depreciation and depletion 93,347 76,894 65,940 Taxes other than income 42,244 39,802 36,654 --------- --------- ------- Total operating expenses 360,127 320,140 290,893 --------- --------- ------- Operating Income 110,248 130,497 114,426 Other Income 3,163 1,706 1,781 Interest Charges 43,905 38,728 37,411 --------- --------- ------- Income Before Income Taxes 69,506 93,475 78,796 Income Taxes 8,777 20,020 18,770 --------- --------- ------- Net Income $ 60,729 $ 73,455 $ 60,026 ========= ========= ======= Average Common Shares Outstanding 34,509 32,359 31,342 Earnings Per Share of Common Stock $1.76 $2.27 $1.92 See notes to consolidated financial statements Pages 31 to 48, inclusive
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS, DECEMBER 31, 1994 AND 1993
ASSETS 1994 1993 (Thousands) Property, Plant and Equipment: Exploration and production (successful efforts method) $ 983,328 $ 905,856 Natural gas marketing 309,579 297,743 Natural gas distribution 552,789 523,497 Natural gas transmission 387,921 379,741 --------- --------- Total 2,233,617 2,106,837 Less accumulated depreciation and depletion 637,951 558,413 --------- --------- Net property, plant and equipment 1,595,666 1,548,424 --------- --------- Current Assets: Cash and cash equivalents 23,415 15,037 Accounts receivable (less accumulated provision for doubtful accounts: 1994, $10,890; 1993, $10,106) 172,178 171,626 Unbilled revenues 25,794 27,853 Gas stored underground - current inventory 15,101 18,059 Material and supplies 12,876 12,261 Deferred purchased gas cost 24,890 17,148 Prepaid expenses and other 33,569 23,977 --------- --------- Total current assets 307,823 285,961 --------- --------- Other Assets: Regulatory assets 88,387 87,024 Other 27,246 25,498 --------- --------- Total other assets 115,633 112,522 --------- --------- Total $2,019,122 $1,946,907 ========= ========= See notes to consolidated financial statements Pages 31 to 48, inclusive
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS, DECEMBER 31, 1994 AND 1993
CAPITALIZATION AND LIABILITIES 1994 1993 (Thousands) Capitalization: Common stockholders' equity $ 750,002 $ 728,030 Long-term debt 398,282 378,845 --------- --------- Total capitalization 1,148,284 1,106,875 --------- --------- Current Liabilities: Long-term debt payable within one year 24,500 1,971 Short-term loans 269,300 253,900 Accounts payable 123,394 143,808 Accrued taxes 19,588 15,358 Accrued interest 13,032 12,338 Refunds due customers 22,255 14,206 Customer credit balances 10,427 7,578 Other 16,399 14,794 --------- --------- Total current liabilities 498,895 463,953 --------- --------- Deferred and Other Credits: Deferred income taxes 326,597 331,140 Deferred investment tax credits 22,082 23,178 Other 23,264 21,761 --------- --------- Total deferred and other credits 371,943 376,079 --------- --------- Commitments and Contingencies - - --------- --------- Total $2,019,122 $1,946,907 ========= ========= See notes to consolidated financial statements Pages 31 to 48, inclusive
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
1994 1993 1992 (Thousands) Cash Flows from Operating Activities: Net income $ 60,729 $ 73,455 $ 60,026 ------- ------- ------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and depletion 93,347 76,894 65,940 Deferred income taxes (5,059) 756 (2,015) Other - net 1,566 1,319 1,435 Changes in other assets and liabilities: Accounts receivable and unbilled revenues 723 (22,352) (8,035) Gas stored underground 2,958 (5,076) 3,990 Material and supplies (615) (709) (724) Deferred purchased gas cost (7,742) (14,024) 4,915 Regulatory assets (1,363) (18,657) (2,870) Accounts payable (20,414) 18,747 2,821 Accrued taxes 4,230 1,024 1,018 Refunds due customers 8,049 2,537 4,050 Other - net (1,274) (4,588) 3,965 ------- ------- ------- Total adjustments 74,406 35,871 74,490 ------- ------- ------- Net cash provided by operating activities 135,135 109,326 134,516 ------- ------- ------- Cash Flows from Investing Activities: Capital expenditures (146,174) (339,411) (99,589) Proceeds from sale of property 1,195 1,270 6,872 ------- ------- ------- Net cash used in investing activities (144,979) (338,141) (92,717) ------- ------- ------- Cash Flows from Financing Activities: Issuance of common stock 1,791 112,412 1,427 Purchase of treasury stock (395) (28) (226) Dividends paid (39,686) (35,279) (32,595) Proceeds from issuance of long-term debt 43,083 31,702 24,359 Repayments and retirements of long-term debt (1,971) (16,445) (15,995) Increase (decrease) in short-term loans 15,400 139,900 (15,500) ------ ------- ------- Net cash provided (used) by financing activities 18,222 232,262 (38,530) ------- ------- ------- Net Increase in Cash and Cash Equivalents 8,378 3,447 3,269 Cash and Cash Equivalents at Beginning of Year 15,037 11,590 8,321 ------- ------- ------- Cash and Cash Equivalents at End of Year $ 23,415 $ 15,037 $ 11,590 ======= ======= ======= Cash Paid During the Year for: Interest (net of amount capitalized) $ 40,105 $ 34,592 $ 31,304 Income taxes $ 13,098 $ 27,547 $ 17,587 See notes to consolidated financial statements Pages 31 to 48, inclusive
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES STATEMENTS OF COMMON STOCKHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
Common Stock (a) Foreign Common Shares No Retained Currency Stockholders' Outstanding Par Value Earnings Translation Equity (Thousands) Balance, January 1, 1992 31,311 $ 93,840 $454,826 $ - $548,666 Net income for the year 1992 60,026 Dividends ($1.04 per share) (32,595) Stock issued: Conversion of 9 1/2 percent debentures 23 259 Restricted stock option plan 60 1,427 Treasury stock (8) (226) ------ ------- ------- ------ Balance, December 31, 1992 (b) 31,386 95,300 482,257 577,557 Net income for the year 1993 73,455 Dividends ($1.10 per share) (35,279) Foreign currency translation (581) Stock issued: New stock issuance 3,000 111,570 Conversion of 9 1/2 percent debentures 51 564 Restricted stock option plan 29 850 Cash paid in lieu of fractional shares (78) Treasury stock (1) (28) ------ ------- ------- ------ Balance, December 31, 1993 (b) 34,465 208,178 520,433 (581) 728,030 Net income for the year 1994 60,729 Dividends ($1.15 per share) (39,686) Foreign currency translation (923) Stock issued: Conversion of 9 1/2 percent debentures 31 345 Restricted stock option plan 8 313 Dividend reinvestment plan 47 1,504 Treasury stock (10) (310) ------ ------ ------- ------ Balance, December 31, 1994 (b)(c)(d) 34,541 $210,030 $541,476 $(1,504) $750,002 ====== ======= ======= ====== (a) Shares authorized: Common - 80,000,000 shares, Preferred - 3,000,000 shares. (b) Net of treasury stock: 1994 - 632,000 shares ($14,933,000); 1993 - 622,000 shares ($14,623,000); 1992 - 621,000 shares ($14,595,000). (c) A total of 2,870,000 shares of authorized but unissued common stock was reserved for the conversion of the 9 1/2% convertible subordinated debentures, for issuance under the key employee restricted stock option and stock appreciation rights incentive compensation plan, the long-term incentive plan, the non- employee directors' stock incentive plan, and for issuance under the company's dividend reinvestment and stock purchase plan. (d) Retained earnings of $408,797,000 is available for dividends on, or purchase of, common stock pursuant to restrictions imposed by indentures securing long-term debt. See notes to consolidated financial statements Pages 31 to 48, inclusive
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES LONG-TERM DEBT DECEMBER 31, 1994 AND 1993
Annual Debt Maturities After Maturities One Year 1994 1993 1994 1993 (Thousands) 8 1/4 percent Debentures, $ - $ - $ 75,000 $ 75,000 due July 1, 1996 (a) 7 1/2 percent Debentures, due July 1, 1999 ($75,000 principal amount, net of unamortized original issue discount)(a) - - 70,466 69,684 9 1/2 percent Convertible subordinated debentures, due January 15, 2006 - - 2,316 2,661 9.9 percent Debentures, due - - 75,000 75,000 April 15, 2013 (b) Medium-term notes: 7.2 to 9.0 percent Series A, due 1998 thru 2021 - - 100,000 100,000 5.1 to 7.6 percent Series B, due 1995 thru 2023 24,500 - 75,500 56,500 Other - 1,971 - - ------ ----- ------- ------- Total $24,500 $1,971 $398,282 $378,845 ====== ===== ======= ======= (a) Not redeemable prior to maturity. (b) Annual sinking fund payments of $3,750,000 are required beginning in 1999. See notes to consolidated financial statements Pages 31 to 48, inclusive
EQUITABLE RESOURCES, INC. Notes to Consolidated Financial Statements December 31, 1994 A. Summary of Significant Accounting Policies (1) PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include the accounts of Equitable Resources, Inc. and Subsidiaries (the "Company" or "Companies"). All subsidiaries are 100 percent owned. (2) PROPERTIES, DEPRECIATION AND DEPLETION: The cost of property additions, replacements and improvements capitalized includes labor, material and overhead. The cost of property retired, plus removal costs less salvage, is charged to accumulated depreciation. Depreciation for financial reporting purposes is provided on the straight-line method at composite rates based on estimated service lives, except for most gas and oil production properties as explained below. Depreciation rates are based on periodic studies. The Company uses the successful efforts method of accounting for exploration and production activities. Under this method, the cost of productive wells and development dry holes, as well as productive acreage, are capitalized and depleted on the unit-of-production method. Capitalized acquisition costs of unproved properties are periodically assessed for impairment of value, and any loss is recognized at the time of impairment. (3) ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION: The Federal Energy Regulatory Commission (FERC) prescribes a formula to be used for computing overhead allowances for funds used during construction (AFC). AFC applicable to equity funds capitalized is included in other income and amounted to $.9 million in 1994, $1.0 million in 1993 and $1.3 million in 1992. AFC applicable to borrowed funds, as well as other interest capitalized for the nonregulated companies, is applied as a reduction of interest charges and amounted to $2.1 million in 1994, $1.8 million in 1993 and $1.3 million in 1992. (4) INVENTORIES: Inventories are stated at cost which is below market. Gas stored underground--current inventory is stated at cost under the average cost method. Material and supplies are stated generally at average cost. (5) INCOME TAXES: The Companies file a consolidated federal income tax return. The current provision for income taxes represents amounts paid or payable. Deferred income tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities. Where deferred tax liabilities will be passed through to customers in regulated rates, the Companies establish a corresponding regulatory asset for the increase in future revenues that will result when the temporary differences reverse. Investment tax credits realized in prior years were deferred and are being amortized over the estimated service lives of the related properties where required by ratemaking rules. (6) DEFERRED PURCHASED GAS COST: Where permitted by regulatory authority under purchased gas adjustment clauses or similar tariff provisions, the Company defers the difference between purchased gas cost, less refunds, and the billing of such cost and amortizes the deferral over subsequent periods in which billings either recover or repay such amounts. (7) REGULATORY ASSETS: Certain costs, which will be passed through to customers under ratemaking rules for regulated operations, are deferred by the Company as regulatory assets. The amounts deferred relate primarily to the accounting for income taxes. (8) DERIVATIVE FINANCIAL INSTRUMENTS: The Company uses exchange- traded natural gas and crude oil futures contracts to hedge exposures to energy price changes. To qualify for hedge accounting, the Company must be exposed to energy price risk and the futures contracts must be designated and effective as hedges. Realized gains and losses on futures contracts which qualify as hedges of firm commitments or anticipated transactions are deferred and recognized in income when the hedged transactions occur. The Company also trades natural gas futures. Realized and unrealized gains and losses on such transactions are recorded in other income in the period in which the changes occur. Margin requirements on futures contracts are recorded in other current assets on the balance sheet. (9) CASH FLOWS: The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. (10) RECLASSIFICATION: Certain amounts contained in prior year comparative information have been reclassified to conform with the 1994 presentation. B. Direct Billing Settlements Kentucky West Virginia Gas Company received FERC approval of settlement agreements with all customers for the direct billing to recover the higher Natural Gas Policy Act (NGPA) prices, which the FERC had denied on natural gas produced from exploration and production properties between 1978 and 1983. The portion of the settlement with the Equitable Gas Division has been subject to Pennsylvania Public Utility Commission (PUC) review. The PUC approved the recovery of $7.8 million relating to the settlement in each of the years 1992 to 1994, which increased net income reported for the third quarter of each year by $4.7 million. Approximately $42 million from the settlement remains to be recovered in future gas cost filings with the PUC over the next six years. The settlement with Columbia Gas Transmission Company for the recovery of $19 million has been accepted in Columbia's bankruptcy proceeding. However, in view of Columbia's pending reorganization under Chapter 11 of the Bankruptcy Code, the amount of recovery from Columbia remains uncertain and therefore has not been recognized. C. Income Taxes The following table summarizes the source and tax effects of temporary differences between financial reporting and tax bases of assets and liabilities: December 31, 1994 1993 (Thousands) Deferred tax liabilities (assets): Exploration and development costs expensed for income tax reporting . . . . $141,479 $138,089 Tax depreciation in excess of book depreciation . . . . . . . 255,683 250,032 Regulatory temporary differences . . 37,319 36,841 Deferred purchased gas cost. . . . . 6,397 8,413 Alternative minimum tax. . . . . . . (82,925) (69,333) Investment tax credit. . . . . . . . (9,306) (10,340) Other. . . . . . . . . . . . . . . . (17,606) (21,829) ------- ------- Total (including amounts classified as current liabilities of $4,444 for 1994 and $733 for 1993) . . $331,041 $331,873 ======= ======= As of December 31, 1994 and 1993, $76.2 million and $76.4 million, respectively, of the net deferred tax liabilities are related to rate regulated operations and have been deferred as regulatory assets. Income tax expense is summarized as follows: Years Ended December 31, 1994 1993 1992 (Thousands) Current: Federal. . . . . . . . . . $11,196 $15,577 $13,540 State. . . . . . . . . . . 2,640 3,687 7,245 Deferred: Federal. . . . . . . . . . (6,848) (2,758) (4,547) State. . . . . . . . . . . 1,789 3,514 2,532 ----- ------ ------ Total . . . . . . . . $ 8,777 $20,020 $18,770 ====== ====== ====== Provisions for income taxes are less than amounts computed at the federal statutory rate of 35 percent for 1994 and 1993, and 34 percent for 1992 on pretax income. The reasons for the difference are summarized as follows: Years Ended December 31, 1994 1993 1992 (Thousands) Tax at statutory rate . $ 24,327 $ 32,716 $ 26,791 State income taxes . . . 3,069 4,332 6,453 Increase in federal income tax rate. . . . - 5,070 - Nonconventional fuels tax credit . . . . . . (16,442) (20,600) (14,051) Other . (2,177) (1,498) (423) ------- ------- ------- Income tax expense . . $ 8,777 $ 20,020 $ 18,770 ======= ======= ======= Effective tax rate . . . 12.6 percent 21.4 percent 23.8 percent In August 1993, the Omnibus Budget Reconciliation Act of 1993 (Act) was signed into law. One of the provisions of the Act was to raise the maximum corporate income tax rate from 34 to 35 percent. The effect of this tax rate change increased deferred tax liabilities by approximately $11 million and increased regulatory assets by approximately $6 million. The consolidated federal income tax liability of the Companies has been settled through 1990. The Company has available $82.9 million of alternative minimum tax credit carryforward which has no expiration date. In addition, the Company has net operating loss carryforwards for federal income tax purposes of $14.9 million which begin to expire in 2006. The net operating loss carryforwards apply to Louisiana Intrastate Gas. Amortization of deferred investment tax credits amounted to $1.1 million for 1994, $1.4 million for 1993 and $1.1 million for 1992. D. Employee Pension Benefits The Companies have several trusteed retirement plans covering substantially all employees. The Companies' annual contributions to the plans are based on a 25-year funding level. Plans covering union members generally provide benefits of stated amounts for each year of service. Plans covering salaried employees use a benefit formula which is based upon employee compensation and years of service to determine benefits to be provided. Plan assets consist principally of equity and debt securities. The following table sets forth the plans' funded status and amounts recognized in the Company's consolidated balance sheets: December 31, 1994 1993 (Thousands) Actuarial present value of benefit obligations: Vested benefit obligation $120,763 $132,402 ======= ======= Accumulated benefit obligation $123,877 $135,809 ======= ======= Market value of plan assets $143,121 $159,433 Projected benefit obligation 134,111 148,265 ------- ------- Excess of plan assets over projected benefit obligation 9,010 11,168 Unrecognized net asset (2,905) (3,237) Unrecognized net gain (15,606) (16,732) Unrecognized prior service cost 9,512 10,403 ------- ------- Prepaid pension cost recognized in the consolidated balance sheets $ 11 $ 1,602 ======= ======= At year-end the discount rate used in determining the actuarial present value of benefit obligations was 8 1/4 percent for 1994, 7 1/4 percent for 1993 and 8 1/4 percent for 1992. The assumed rate of increase in compensation levels was 4 1/2 percent for 1994 and 1993 and 5 percent for 1992. The Companies' pension cost, using a 9 percent average rate of return on plan assets, comprised the following: Years Ended December 31, 1994 1993 1992 (Thousands) Service cost benefits earned during the period. $ 3,916 $ 2,806 $ 2,345 Interest cost on projected benefit obligation 10,752 10,472 9,917 Actual loss (return) on assets. . . . . 2,757 (17,224) (18,214) Net amortization and deferral. (14,680) 5,486 7,069 ------ ------ ------ Net periodic pension cost . . $ 2,745 $ 1,540 $ 1,117 ====== ====== ====== E. Other Postretirement Benefits In addition to providing pension benefits, the Companies provide certain health care and life insurance benefits for retired employees and their dependents. Substantially all employees are eligible for these benefits upon retirement from the Companies. The Company's transition obligation is being amortized over 20 years. In determining the accumulated postretirement benefit obligation at December 31, 1994, the Company used a beginning inflation factor of 10 1/2 percent decreasing gradually to 4 3/4 percent after 15 years and a discount rate of 8 1/4 percent. At December 31, 1993, the beginning inflation factor was 11 percent decreasing gradually to 4 3/4 percent after 16 years and the discount rate was 7 1/4 percent. The following summarizes the status of the Company's accrued postretirement benefit costs (OPEBS): December 31, 1994 1993 (Thousands) Accumulated postretirement benefit obligation: Retired employees. . . . . . . . . $ 21,269 $ 23,078 Active employees: Fully eligible . . . . . . . . . 9,158 8,942 Other. . . . . . . . . . . . . . 13,459 16,741 ------- ------- Total obligation . . . . . . . 43,886 48,761 Unrecognized net gain . . . . . . . 5,160 40 Unrecognized transition obligation. (41,501) (43,806) ------- ------- Accrued postretirement benefit cost . $ 7,545 $ 4,995 ======= ======= The net periodic cost for postretirement health care and life insurance benefits includes the following: Years Ended December 31, 1994 1993 (Thousands) Service cost. . . . . . . . . . . . $1,049 $1,065 Interest cost . . . . . . . . . . . 3,423 3,936 Amortization of transition obligation. . . 2,305 2,306 ----- ----- Periodic cost. . . . . . . . . . . $6,777 $7,307 ===== ===== As of December 31, 1994 and 1993, $3.5 million and $2.9 million, respectively, of the accrued OPEBS related to rate regulated operations have been deferred as regulatory assets. Rate filings have been undertaken to seek recovery of accrued costs over periods of up to 20 years. An increase of one percent in the assumed medical cost inflation rate would increase the accumulated postretirement benefit obligation by 7 percent and would increase the periodic cost by 8 percent. The cost of OPEBS for 1992 was recognized as paid and amounted to $2.9 million. F. Common Stock (1) Common Stock Issuance On September 29, 1993, the Company issued 3 million shares of common stock at a price of $38.50 per share. Net proceeds after underwriters' commissions and other issuance costs were approximately $111.6 million. The proceeds were used to repay a portion of the short-term debt incurred to purchase the stock of Louisiana Intrastate Gas Company as described in Note M. (2) Key Employee Restricted Stock Option Plan The Equitable Resources, Inc., Key Employee Restricted Stock Option and Stock Appreciation Rights Incentive Compensation Plan is nonqualified and provided for the granting of restricted stock awards or options to purchase common stock of the Company at prices ranging from 75 percent to 100 percent of market value on the date of grant. Options expire five years from the date of grant. Stock awarded under the Plan or purchased through the exercise of options, and the value of certain stock appreciation units, are restricted and subject to risk of forfeiture should an optionee terminate employment prior to specified vesting dates. The following schedule summarizes the stock option activity: Years Ended December 31, 1994 1993 1992 Options outstanding January 1 . . 253,068 139,725 228,787 Granted . . . . . . . . . . . . . - 148,543 - Exercised . . . . . . . . . . . . (7,650) (33,325) (89,062) Canceled, forfeited, surrendered or expired . . . . . . . . . . . (3,600) (1,875) - ------- ------- ------- Options outstanding December 31 . 241,818 253,068 139,725 ======= ======= ======= Average price of options exercised during the year . . . $22.48 $18.97 $17.07 At December 31: Prices of options outstanding . $18.81 $17.50 $15.20 to to to $36.50 $36.50 $20.13 Average option price . . . . . . $29.82 $29.69 $19.76 Shares reserved for issuance . . 663,699 671,349 705,209 No future grants may be made under the Plan which was replaced by the Long-Term Incentive Plan effective May 27, 1994 as described below. (3) Long-Term Incentive Plan On May 27, 1994, shareholders approved the Equitable Resources, Inc. Long-Term Incentive Plan which provides for the granting of shares of common stock to officers and key employees of the Company. These grants may be made in the form of stock options, restricted stock, stock appreciation rights and other types of stock-based or performance-based awards as determined by the Compensation Committee of the Board of Directors at the time of each grant. Stock awarded under the Plan, or purchased through the exercise of options, and the value of stock appreciation units, are restricted and subject to forfeiture should an optionee terminate employment prior to specified vesting dates. The maximum number of shares which could have been granted under the Plan during 1994 was 763,500 shares. In each subsequent year, an additional number of shares equal to 1 percent of the total outstanding shares as of the preceding December 31 will be available for grant. In no case may the number of shares granted under the Plan exceed 1,725,500 shares. No awards may be made under the Plan after May 27, 1999. In May 1994, 363,400 stock options were granted to purchase common stock at $33.81 per share, which was the mean of the high and the low trading prices of the common stock on the date of grant. These options expire five years from the date of grant. At December 31, 1994, 1,725,500 shares of common stock were reserved for issuance under the Plan. (4) Non-Employee Directors' Stock Incentive Plan On May 27, 1994, shareholders approved the Equitable Resources, Inc. Non-Employee Directors' Stock Incentive Plan which provides for the granting of up to 80,000 shares of common stock in the form of stock option grants and restricted stock awards to non-employee directors of the Company. Each Director received 450 shares of restricted stock on February 3, 1994. On June 1, 1994, each director was granted an option for 500 shares of common stock at $34.625 per share. On the first business day of June, in each year from 1995 through 1998, each Director will be granted an option for 500 additional shares of common stock. The exercise price for each share is 100 percent of the mean of the high and the low trading prices of the common stock on the date of grant. Each option is exercisable upon the earlier of three years from the date of grant or a Director's retirement, disability or death. No option may be exercised more than five years after date of grant. At December 31, 1994, 76,400 shares of common stock were reserved for issuance under the Plan. (5) Dividend Reinvestment and Stock Purchase Plan Pursuant to this plan, stockholders may reinvest dividends and make limited additional cash investments to purchase shares of common stock. Shares issued through the Plan may be acquired on the open market or by issuance of previously unissued shares. At December 31, 1994, 194,183 shares of common stock were reserved for issuance under the Plan. G. Short-Term Loans Maximum lines of credit available to the Company were $325 million during 1994, $360 million during 1993 and $140 million during 1992. The Company is not required to maintain compensating bank balances. Commitment fees averaging one-tenth of one percent were paid to maintain credit availability. In January 1995, the Company established a five-year revolving Credit Agreement with a group of banks providing $500 million of available credit. The agreement requires a facility fee of one-tenth of one percent. At December 31, 1994, short-term loans consisted of $256.0 million of commercial paper and $13.3 million of bank loans at a weighted average annual interest rate of 5.94 percent; and at December 31, 1993, $189.9 million and $64.0 million, respectively, at a weighted average annual interest rate of 3.30 percent. The maximum amount of outstanding short-term loans was $269.3 million in 1994, $339.0 million in 1993 and $130.5 million in 1992. The average daily total of short-term loans outstanding was approximately $204.6 million during 1994, $174.9 million during 1993 and $107.4 million during 1992; weighted average annual interest rates applicable thereto were 4.4 percent in 1994, 3.3 percent in 1993 and 3.8 percent in 1992. H. Long-Term Debt The Company filed a shelf registration with the Securities and Exchange Commission effective June 9, 1994 to issue $100 million of Medium-Term Notes--Series C to be used to retire short-term loans. No Series C Notes have been issued. During the first quarter of 1994, the Company issued the remaining $43.5 million of Medium Term Notes--Series B under a shelf registration filed with the Securities and Exchange Commission in March 1992. The Series B Notes have maturity dates ranging from three to thirty years from date of issuance and a weighted average interest rate of 6.60 percent. The 9 1/2 percent Convertible Subordinated Debentures are convertible at any time into common stock at a conversion price of $11.06 per share. During 1994, 1993 and 1992, $345,000, $564,000 and $259,000 of these debentures were converted into 31,187 shares, 50,983 shares and 23,399 shares of common stock, respectively. At December 31, 1994, 209,731 shares of common stock were reserved for conversions. Interest expense on long-term debt amounted to $35.5 million in 1994, $33.2 million in 1993 and $31.9 million in 1992. Aggregate maturities of long-term debt will be $24.5 million in 1995, $75.0 million in 1996, none in 1997, $5.0 million in 1998 and $78.8 million in 1999. I. Derivative Financial Instruments The Company is exposed to risk from fluctuations in energy prices in the normal course of business. The Company uses exchange-traded energy futures contracts to hedge exposures to changes in energy prices, primarily relating to its gas marketing operations. The Company also trades in energy futures. Energy futures contracts are commitments to either purchase or sell a designated commodity, generally natural gas or crude oil, at a future date for a specified price and may be settled in cash or through delivery. The contracts used by the Company cover one-month periods from one to eighteen months in the future. Initial margin requirements are met in cash or other instruments, and changes in contract values are settled daily. Energy futures contracts have minimal credit risk because futures exchanges are the counterparties. At December 31, 1994, natural gas futures contracts for the purchase of 10.8 Bcf and the sale of 3.7 Bcf were outstanding as hedges on future transactions. At December 31, 1994, deferrals related to hedging activities include realized losses of $.2 million and unrealized losses of $1.5 million. At December 31, 1994, there were no outstanding energy futures contracts held for trading purposes. During 1994, the average fair value of traded contracts was $30,000 and a net gain of $1.5 million was realized. The value of these financial instruments is subject to fluctuations in market prices for natural gas and crude oil. Exposure to this risk is managed by maintaining open positions within defined trading limits. J. Fair Value of Financial Instruments The carrying value of cash and cash equivalents as well as short-term loans approximates fair value due to the short maturity of the instruments. The estimated fair value of long-term debt, including the portion due within one year, at December 31, 1994 and 1993 would be $430.2 million and $433.0 million, respectively. The fair value was estimated based on the quoted market prices as well as the discounted values using a current discount rate reflective of the remaining maturity. The Company's 8 1/4 percent Debentures and 7 1/2 percent Debentures may not be redeemed prior to maturity. The 9.9 percent Debentures require payment of premiums for early redemption, exclusive of annual sinking fund requirements. The futures described in Note I are reflected in other current assets at fair value of $(1.5) million. K. Concentrations of Credit Risk Revenues and related accounts receivable from exploration and production operations are generated primarily from the sale of produced natural gas to utility and industrial customers located mainly in the Appalachian area; the sale of produced oil to refinery customers in the Rocky Mountain and Appalachian areas; and the sale of produced natural gas liquids to a refinery customer in Kentucky. Natural gas marketing operating revenues and related accounts receivable are generated from the nationwide marketing of natural gas to brokers and large volume utility and industrial customers; and the sale of produced natural gas liquids and intrastate transportation of natural gas in Louisiana. Natural gas distribution operating revenues and related accounts receivable are generated from state-regulated utility natural gas sales and transportation to more than 265,000 residential, commercial and industrial customers located in southwest Pennsylvania and parts of West Virginia and Kentucky. Under state regulations, the utility is required to provide continuous gas service to residential customers during the winter heating season. Natural gas transmission operating revenues and related accounts receivable are generated from FERC-regulated interstate pipeline transportation and storage service for the affiliated utility, Equitable Gas, as well as other utility and end-user customers located in nine mid- Atlantic and northeastern states. The Company is not aware of any significant credit risks which have not been recognized in provisions for doubtful accounts. L. Financial Information by Business Segment Beginning in 1994, the Company expanded the reporting of operations to comprise four segments. Exploration and production acitivities comprise the exploration, development, production and sale of natural gas and oil, extraction and sale of natural gas liquids and contract drilling. Natural gas marketing activities comprise marketing of natural gas, extraction and sale of natural gas liquids and intrastate transportation. Natural gas distribution activities comprise the operations of the Company's state- regulated natural gas utility. Natural gas transmission activities comprise gas transportation, gathering, storage and marketing activities involving the Company's three FERC-regulated gas pipelines. The following table sets forth financial information for each of the business segments: Years Ended December 31, 1994 1993 1992 (Thousands) Operating Revenues: Exploration and production $ 195,795 $ 202,422 $ 191,478 Natural gas marketing 890,778 599,624 314,626 Natural gas distribution 390,475 335,149 328,022 Natural gas transmission 116,769 188,882 203,401 Sales between segments (196,537) (231,283) (225,153) --------- --------- ---------- Total $1,397,280 $1,094,794 $ 812,374 ========= ========= ========== Operating Income: Exploration and production $ 30,843 $ 42,453 $ 36,348 Natural gas marketing 4,089 11,700 4,850 Natural gas distribution 43,180 45,714 51,372 Natural gas transmission 32,136 30,630 21,856 --------- --------- --------- Total $ 110,248 $ 130,497 $ 114,426 ========= ========= ========= Identifiable Assets: Exploration and production $ 724,144 $ 699,322 $ 666,924 Natural gas marketing 396,166 386,040 33,092 Natural gas distribution 690,068 660,889 610,830 Natural gas transmission 297,140 302,102 278,109 Eliminations (88,396) (101,446) (120,531) --------- --------- --------- Total $2,019,122 $1,946,907 $1,468,424 ========= ========= ========= Depreciation and Depletion: Exploration and production $ 57,196 $ 47,645 $ 45,569 Natural gas marketing 11,702 5,778 69 Natural gas distribution 15,196 14,624 12,425 Natural gas transmission 9,253 8,847 7,877 --------- --------- --------- Total $ 93,347 $ 76,894 $ 65,940 ========= ========= ========= Capital Expenditures: Exploration and production $ 84,460 $ 101,203 $ 52,719 Natural gas marketing 15,765 195,042 204 Natural gas distribution 32,712 26,077 22,593 Natural gas transmission 13,237 17,089 24,073 --------- --------- --------- Total $ 146,174 $ 339,411 $ 99,589 ========= ========= ========= M. Acquisitions On June 30, 1993, the Company purchased the outstanding common stock of Louisiana Intrastate Gas Company (LIG) for $191 million. LIG owns a 1,900 mile intrastate pipeline system in Louisiana, four natural gas processing plants and is also engaged in gas marketing. The purchase was funded initially with short-term debt, a portion of which was repaid with the proceeds from the issuance of common stock as described in Note F to the consolidated financial statements. Under terms of the purchase agreement, the seller, and/or the previous owner of LIG, have indemnified the Company against any losses resulting from claims of liability under the gas purchase contracts and substantially all environmental liabilities attributable to operation of LIG prior to June 30, 1993. On July 8, 1993, the Company purchased all of the outstanding stock of Hershey Oil Corporation (Hershey) for approximately $18 million. Hershey's assets consist primarily of approximately 68 billion cubic feet of proved natural gas reserves and 17,000 net undeveloped acres in Alberta, Canada. The acquisitions were accounted for under the purchase method and are included in the natural gas marketing segment and exploration and production segment, respectively. Had the purchases occurred as of the beginning of 1993 and 1992, unaudited proforma consolidated results for the Company would have been: revenues of $1,119 million and $872 million; net income of $74.0 million and $68.6 million; and earnings per share of $2.29 and $2.19 for the years ended December 31, 1993 and 1992, respectively. N. Commitments and Contingencies Rent expense was $9.7 million in 1994, $9.8 million in 1993 and $9.3 million in 1992. Long-term leases are principally for division operating headquarters and warehouse buildings and computer hardware and have renewal options ranging to 19 years from December 31, 1994. Future minimum rentals for all noncancelable long-term leases at December 31, 1994 are as follows: 1995, $5.9 million; 1996, $5.3 million; 1997, $4.6 million; 1998, $3.2 million; 1999, $2.6 million, and $15.7 million thereafter for a total of $37.3 million. The Company has annual commitments of approximately $31 million for demand charges under existing long-term contracts with pipeline suppliers for periods extending up to 8 years at December 31, 1994, which relate to gas distribution operations. However, substantially all of these costs are recoverable in customer rates. The Company is subject to federal, state and local environmental laws and regulations. These laws and regulations, which are constantly changing, can require expenditures for remediation and may in certain instances result in assessment of fines. The Company has established procedures for on-going evaluation of its operations to identify potential environmental exposures and assure compliance with regulatory policies and procedures. The estimated costs associated with identified situations that require remedial action are accrued. However, certain of these costs are deferred as regulatory assets when recoverable through regulated rates. On-going expenditures for compliance with environmental laws and regulations, including investments in plant and facilities to meet environmental requirements, have not been material. Management believes that any such required expenditures will not be significantly different in either their nature or amount in the future and does not know of any environmental liabilities that will have a material effect on the Company's financial position or results of operations. As described in Note B, the Company has a claim in Columbia Gas Transmission Company's bankruptcy proceeding related to the direct billing settlements. In addition, the Company has various claims against Columbia for abrogation of contracts to purchase gas from the Company. The amount that may be realized, if any, under the claims cannot be estimated in view of Columbia's bankruptcy proceeding. O. Interim Financial Information (Unaudited) The following quarterly summary of operating results reflects variations due primarily to the seasonal nature of the Company's business and the activities of new subsidiaries from the date of acquisition as described in Note M. March June September December 31 30 30 31 (Thousands except per share amounts) 1994 Operating revenues $439,538 $316,122 $297,712 $343,908 Operating income 60,979 10,054 12,847 26,368 Net income 36,359 6,057 2,381 15,932 Earnings per share $1.05 $.18 $.07 $.46 1993 Operating revenues $269,819 $207,782 $272,745 $344,448 Operating income 55,349 13,978 24,787 36,383 Net income 30,795 8,831 8,612 25,217 Earnings per share $.98 $.28 $.27 $.73 P. Natural Gas and Oil Producing Activities The supplementary information summarized below presents the results of natural gas and oil activities for the exploration and production segment in accordance with Statement of Financial Accounting Standards No. 69, "Disclosures About Oil and Gas Producing Activities." The information presented excludes data associated with natural gas reserves related to rate regulated operations. These reserves (proved developed) are less than 5 percent of total Company proved reserves for the years presented. (1) Production Costs The following table presents the costs incurred relating to natural gas and oil production activities: 1994 1993 1992 (Thousands) At December 31: Capitalized costs. . . . . $909,443 $836,638 $748,325 Accumulated depreciation and depletion . . . . 304,835 256,508 216,005 ------- ------- ------- Net capitalized costs. . . . $604,608 $580,130 $532,320 ======= ======= ======= Costs incurred : Property acquisition . .. $ 8,335 $ 29,345 $ 663 Exploration. . . . . . . . 22,783 13,928 13,166 Development. . . . . . . . 60,690 62,336 46,321 (2) Results of Operations for Producing Activities The following table presents the results of operations related to natural gas and oil production: 1994 1993 1992 (Thousands) Revenues: Affiliated . . . . . . . .$ 16,564 $ 15,467 $ 8,964 Nonaffiliated . . . . . . 136,029 140,380 127,369 Production costs . . . . . . 33,891 33,620 30,385 Exploration expenses . . . . 16,634 13,559 16,439 Depreciation and depletion . 52,505 43,841 40,744 Income tax expense . . . . . 3,602 5,039 5,221 ------- ------- ------- Results of operations from producing activities (excluding corporate overhead). . . . . . . . .$ 45,961 $ 59,788 $ 43,544 ======= ======= ======= (3) Reserve Information (Unaudited) The information presented below represents estimates of proved gas and oil reserves prepared by Company engineers. Proved developed reserves represent only those reserves expected to be recovered from existing wells and support equipment. Proved undeveloped reserves represent proved reserves expected to be recovered from new wells after substantial development costs are incurred. Substantially all reserves are located in the United States. Natural Gas 1994 1993 1992 (Millions of Cubic Feet) Proved developed and undeveloped reserves: Beginning of year. . . . . . . 822,583 720,032 695,898 Revision of previous estimates. 18,663 9,399 25,736 Purchase of natural gas in place - net (a) . . . . . 6,307 86,113 434 Extensions, discoveries and other additions. . . . . . . 89,918 60,589 46,207 Production . . . . . . . . . . (62,507) (53,550) (48,243) ------- ------- ------- End of year (b). . . . . . . . 874,964 822,583 720,032 ======= ======= ======= Proved developed reserves: Beginning of year. . . . . . . 759,282 665,194 621,846 End of year (c). . . . . . . . 771,635 759,282 665,194 (a) Includes purchases in Canada of 68,000 Mmcf in 1993. (b) Includes proved reserves in Canada of 67,000 MMcf in 1994 and 70,000 MMcf in 1993. (c) Includes proved developed reserves in Canada of 43,000 MMcf in 1994 and 46,000 MMcf in 1993. Oil 1994 1993 1992 (Thousands of Barrels) Proved developed and undeveloped reserves: Beginning of year . . . . . 16,468 20,023 19,427 Revision of previous estimates 2,601 (4,876) 951 Purchase (sale) of oil in place - net (a) . . . . (169) 418 (138) Extensions, discoveries and other additions. . . . . . 1,369 3,015 2,189 Production. . . . . . . . . (1,986) (2,112) (2,406) ------ ------ ------ End of year (b) . . . . . . 18,283 16,468 20,023 ====== ====== ====== Proved developed reserves: Beginning of year . . . . . 16,442 18,540 17,072 End of year (c) . . . . . . 18,110 16,442 18,540 (a) Includes purchases in Canada of 68,000 barrels in 1993. (b) Includes proved reserves in Canada of 75,000 barrels in 1994 and 65,000 barrels in 1993. (c) Includes proved developed reserves in Canada of 50,000 barrels in 1994 and 39,000 barrels in 1993. (4) Standard Measure of Discounted Future Cash Flow (Unaudited) Management cautions that the standard measure of discounted future cash flows should not be viewed as an indication of the fair market value of gas and oil producing properties, nor of the future cash flows expected to be generated therefrom. The information presented does not give recognition to future changes in estimated reserves, selling prices or costs and has been discounted at an arbitrary rate of 10 percent. Estimated future net cash flows from natural gas and oil reserves based on selling prices and costs at year- end price levels are as follows: 1994 1993 1992 (Thousands) Future cash inflows . . . . $1,983,757 $2,140,151 $2,058,973 Future production costs . . (562,841) (598,707) (551,987) Future development costs. . (46,985) (24,579) (41,612) Future income tax expenses. (361,486) (434,362) (409,970) --------- --------- --------- Future net cash flow. . . . 1,012,445 1,082,503 1,055,404 10 percent annual discount for estimated timing of cash flows. . (471,778) (515,023) (507,082) --------- --------- --------- Standardized measure of discounted future net cash flows (a). . . $ 540,667 $ 567,480 $ 548,322 ========= ========= ========= (a) Includes $10,043,000 in 1994 and $31,267,000 in 1993 related to Canada. Summary of changes in the standardized measure of discounted future net cash flows: 1994 1993 1992 (Thousands) Sales and transfers of gas and oil produced - net. . $(118,702) $(122,227) $(105,948) Net changes in prices, production and development costs . . (135,742) (80,256) 11,370 Extensions, discoveries, and improved recovery, less related costs . . . . . 74,900 90,035 77,759 Development costs incurred. 16,037 18,482 27,807 Purchase (sale) of minerals in place - net . 9,627 62,843 (142) Revisions of previous quantity estimates. . . . 19,189 (14,910) 1,709 Accretion of discount . . . 72,058 69,284 62,548 Net change in income taxes. 45,012 (8,584) (21,093) Other . . (9,192) 4,491 (7,747) -------- ------- ------- Net increase (decrease) . . (26,813) 19,158 46,263 Beginning of year . . . . . 567,480 548,322 502,059 -------- ------- ------- End of year . . . . . . . . $ 540,667 $ 567,480 $ 548,322 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Not Applicable. PART III Item 10. Directors and Executive Officers of the Registrant Information required by Item 10 with respect to directors is incorporated herein by reference to the section describing "Election of Directors" in the Company's definitive proxy statement relating to the annual meeting of stockholders to be held on May 26, 1995, which will be filed with the Commission within 120 days after the close of the Company's fiscal year ended December 31, 1994. Information required by Item 10 with respect to executive officers is included herein after Item 4 at the end of Part I. Item 11. Executive Compensation Information required by Item 11 is incorporated herein by reference to the section describing "Executive Compensation", "Employment Contracts and Change-In-Control Arrangements" and "Pension Plan" in the Company's definitive proxy statement relating to the annual meeting of stockholders to be held on May 26, 1995. Item 12. Security Ownership of Certain Beneficial Owners and Management Information required by Item 12 is incorporated herein by reference to the section describing "Voting Securities and Record Date" in the Company's definitive proxy statement relating to the annual meeting of stockholders to be held on May 26, 1995. Item 13. Certain Relationships and Related Transactions Information required by Item 13 is incorporated herein by reference to the section describing "Certain Relationships and Related Transactions" in the Company's Definitive Proxy Statement relating to the annual meeting of stockholders to be held on May 26, 1995. PART IV Item 14. Exhibits and Reports on Form 8-K (a) 1. Financial statements The financial statements listed in the accompanying index to financial statements (page 52) are filed as part of this annual report. 2. Financial Statement Schedule The financial statement schedule listed in the accompanying index to financial statements and financial schedule (page 53) is filed as part of this annual report. 3. Exhibits The exhibits listed on the accompanying index to exhibits (pages 54 through 57) are filed as part of this annual report. (b) Reports on Form 8-K filed during the quarter ended December 31, 1994. None (c) Each management contract and compensatory arrangement in which any director or any named executive officer participates has been marked with an asterisk (*) in the Index to Exhibits. EQUITABLE RESOURCES, INC. INDEX TO FINANCIAL STATEMENTS COVERED BY REPORT OF INDEPENDENT AUDITORS (Item 14 (a)) 1. The following consolidated financial statements of Equitable Resources, Inc. and Subsidiaries are included in Item 8: Page Reference Statements of Consolidated Income for each of the three years in the period ended December 31, 1994 25 Consolidated Balance Sheets December 31, 1994 and 1993 26 & 27 Statements of Consolidated Cash Flows for each of the three years in the period ended December 31, 1994 28 Statements of Common Stockholders' Equity for each of the three years in the period ended December 31, 1994 29 Long-term Debt, December 31, 1994 and 1993 30 Notes to Consolidated Financial Statements 31 thru 48 2. Schedule for the Years Ended December 31, 1994, 1993 and 1992 included in Part IV: II - Valuation and Qualifying Accounts and Reserves 53 All other schedules are omitted since the subject matter thereof is either not present or is not present in amounts sufficient to require submission of the schedules. EQUITABLE RESOURCES, INC. AND SUBSIDIARIES SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES FOR THE THREE YEARS ENDED DECEMBER 31, 1994 Column A Column B Column C Column D Column E Balance At Additions Charged Balance Beginning To Costs At End Description Of Period and Expenses Deductions Of Period (Thousands) 1994 Accumulated Provision for Doubtful Accounts $10,106 $10,010 $9,226(A) $10,890 1993 Accumulated Provision for Doubtful Accounts $9,503 $9,352 $8,749(A) $10,106 1992 Accumulated Provision for Doubtful Accounts $8,722 $8,998 $8,217(A) $9,503 Note:(A) Customer accounts written off, less recoveries. 2.01 (a) Stock Purchase Agreement dated May 5, 1993 among Arkla, Inc., Arkla Finance Corporation and Equitable Pipeline Company for the purchase of Louisiana Intrastate Gas Company Filed as Exhibit 2.1 (a) to Form 8-K Dated June 30, 1993 2.01 (b) Schedule 4.1.11 to the Stock Purchase Agreement pertaining to outstanding litigation claims Filed as Exhibit 2.1 (b) to Form 8-K Dated June 30, 1993 2.01 (c) Schedule 4.1.15 to the Stock Purchase Agreement pertaining to environmental matters Filed as Exhibit 2.1 (c) to Form 8-K Dated June 30, 1993 2.01 (d) Letter Agreement Dated June 30, 1993 amending the Stock Purchase Agreement Filed as Exhibit 2.1 (d) to Form 8-K Dated June 30, 1993 3.01 Restated Articles of Incorporation of the Company dated May 21, 1993 (effective May 27, 1993) Filed as Exhibit 3.01 to Form 10-K for the year ended December 31, 1993. 3.02 By-Laws of the Company (amended through December 16, 1994) Filed herewith as Exhibit 3.02 4.01 (a) Indenture dated as of April 1, 1983 between the Company and Pittsburgh National Bank relating to Debt Securities Filed as Exhibit 4.01 (Revised) to Post- Effective Amendment No. 1 to Registration Statement (Registration No. 2-80575) 4.01 (b) Instrument appointing Bankers Trust Company as successor trustee to Pittsburgh National Bank Filed as Exhibit 4.01 (b) to Form 10-K for the year ended December 31, 1993 4.01 (c) Resolution adopted June 26, 1986 by the Finance Committee of the Board of Directors of the Company establishing the term of the $75,000,000 of debentures, 8 1/4% Series due July 1, 1996 Filed as Exhibit 4.01 (c) to Form 10-K for the year ended December 31, 1993 4.01 (d) Resolutions adopted June 22, 1987 by the Finance Committee of the Board of Directors of the Company establishing the terms of the 75,000 units (debentures with warrants) issued July 1, 1987 Filed as Exhibit 4.01 (d) to Form 10-K for the year ended December 31, 1993 4.01 (e) Resolution adopted April 6, 1988 by the Ad Hoc Finance Committee of the Board of Directors of the Company establishing the terms and provisions of the 9.9% Debentures issued April 14, 1988 Filed as Exhibit 4.01 (e) to Form 10-K for the year ended December 31, 1993 4.01 (f) Supplemental indenture dated March 15, 1991 with Bankers Trust Company eliminating limitations on liens and additional funded debt Filed as Exhibit 4.3 to Form S-3 (Registration Statement 33-39505) filed August 21, 1991 4.01 (g) Resolution adopted August 19, 1991 by the Ad Hoc Finance Committee of the Board of Directors of the Company Addenda Nos. 1 thru 27, establishing the terms and provisions of the Series A Medium-Term Notes Filed as Exhibit 4.05 to Form 10-K for the year ended December 31, 1991 4.01 (h) Resolutions adopted July 6, 1992 and February 19, 1993 by the Ad Hoc Finance Committee of the Board of Directors of the Company and Addenda Nos. 1 thru 8, establishing the terms and provisions of the Series B Medium-Term Notes Filed as Exhibit 4.05 to Form 10-K for the year ended December 31, 1992 * 10.01 Equitable Resources, Inc. Key Employee Restricted Stock Option and Stock Appreciation Rights Incentive Compensation Plan (as amended through March 17, 1989) Refiled herewith as Exhibit 10.01 pursuant to Rule 24 of SEC's Rules of Practice * 10.02 (a) Employment Agreement dated as of March 18, 1988 with Frederick H. Abrew Filed as Exhibit 10.02 (a) to Form 10-K for the year ended December 31, 1993 * 10.02(b) Amendment effective June 1, 1989 to Employment Agreement with Frederick H. Abrew Filed as Exhibit 10.02 (b) to Form 10-K for the year ended December 31, 1993 * 10.03 (a) Employment Agreement dated as of March 18, 1988 with Augustine A. Mazzei, Jr. Filed as Exhibit 10.03 (a) to Form 10-K for the year ended December 31, 1993 * 10.03 (b) Amendment effective June 1, 1989 to Employment Agreement with Augustine A. Mazzei, Jr. Filed as Exhibit 10.03 (b) to Form 10-K for the year ended December 31, 1993 * 10.04 (a) Agreement dated December 15, 1989 with Barbara B. Sullivan for deferred payment of 1990 director fees Refiled herewith as Exhibit 10.04 (a) pursuant to Rule 24 of SEC's Rules of Practice * 10.04 (b) Agreement dated December 21, 1990 with Barbara B. Sullivan for deferred payment of 1991 director fees Filed as Exhibit 10.16 to Form 10-K for the year ended December 31, 1990 * 10.04 (c) Agreement dated December 13, 1991 with Barbara B. Sullivan for deferred payment of 1992 director fees Filed as Exhibit 10.16 to Form 10-K for the year ended December 31, 1991 * 10.04 (d) Agreement dated December 28, 1993 with Barbara B. Sullivan for deferred payment of 1994 director fees Filed as Exhibit 10.04 (d) to Form 10-K for the year ended December 31, 1993 * 10.04 (e) Agreement dated December 16, 1994 with Barbara B. Sullivan for deferred payment of 1995 director fees Filed herewith as Exhibit 10.04 (e) * 10.05 Supplemental Executive Retirement Plan (as amended and restated through December 16, 1994) Filed herewith as Exhibit 10.05 * 10.06 Retirement Program for the Board of Directors of Equitable Resources, Inc. (as amended through August 1, 1989) Refiled herewith as Exhibit 10.06 pursuant to Rule 24 of SEC's Rules of Practice * 10.07 Supplemental Pension Plan (as amended and restated through December 16, 1994) Filed herewith as Exhibit 10.07 * 10.08 Policy to Grant Supplemental Deferred Compensation Benefits in Selected Instances to a Select Group of Management or Highly Compensated Employees (as amended and restated through August 1, 1989) Refiled herewith as Exhibit 10.08 pursuant to Rule 24 of SEC's Rules of Practice * 10.09 (a) Equitable Resources, Inc. and Subsidiaries Short-Term Incentive Compensation Plan dated January 18, 1988 Refiled herewith as Exhibit 10.09 pursuant to Rule 24 of SEC's Rules of Practice * 10.09 (b) Amendment dated February 17, 1993 to Equitable Resources, Inc. and Subsidiaries Short-Term Incentive Compensation Plan Filed as Exhibit 10.22 to Form 10-K for the year ended December 31, 1992 * 10.10 (a) Agreement dated December 31, 1987 with Malcolm M. Prine for deferred payment of 1988 director fees Filed as Exhibit 10.10 (a) to Form 10-K for the year ended December 31, 1993 * 10.10 (b) Agreement dated December 30, 1988 with Malcolm M. Prine for deferred payment of 1989 director fees Filed as Exhibit 10.10 (b) to Form 10-K for the year ended December 31, 1993 * 10.11 (a) Agreement dated September 30, 1986 with Daniel M. Rooney for deferred payment of 1986 and 1987 director fees Filed as Exhibit 10.11 (a) to Form 10-K for the year ended December 31, 1993 * 10.11 (b) Agreement dated December 21, 1987 with Daniel M. Rooney for deferred payment of 1988 director fees Filed as Exhibit 10.11 (b) to Form 10-K for the year ended December 31, 1993 * 10.11 (c) Agreement dated December 30, 1988 with Daniel M. Rooney for deferred payment of 1989 director fees Filed as Exhibit 10.11 (c) to Form 10-K for the year ended December 31, 1993 * 10.11 (d) Agreement dated December 15, 1989 with Daniel M. Rooney for deferred payment of 1990 director fees Refiled herewith as Exhibit 10.11 (d) pursuant to Rule 24 of SEC's Rules of Practice * 10.11 (e) Agreement dated December 21, 1990 with Daniel M. Rooney for deferred payment of 1991 director fees Filed as Exhibit 10.27 to Form 10-K for the year ended December 31, 1990 * 10.11 (f) Agreement dated December 13, 1991 with Daniel M. Rooney for deferred payment of 1992 director fees Filed as Exhibit 10.27 to Form 10-K for the year ended December 31, 1991 * 10.11 (g) Agreement dated December 18, 1992 with Daniel M. Rooney for deferred payment of 1993 director fees Filed as Exhibit 10.27 to Form 10-K for the year ended December 31, 1992 * 10.11 (h) Agreement dated December 14, 1993 with Daniel M. Rooney for deferred payment of 1994 director fees Filed as Exhibit 10.11 (h) to Form 10-K for the year ended December 31, 1993 * 10.11 (i) Agreement dated December 15, 1994 with Daniel M. Rooney for deferred payment of 1995 director fees Filed herewith as Exhibit 10.11 (i) 10.12 Trust Agreement with Pittsburgh National Bank to act as Trustee for Supplemental Pension Plan, Supplemental Deferred Compensation Benefits, Retirement Program for Board of Directors, and Supplemental Executive Retirement Plan Refiled herewith as Exhibit 10.12 pursuant to Rule 24 of SEC's Rules of Practice * 10.13 Equitable Resources, Inc. Non-Employee Directors' Stock Incentive Plan Filed herewith as Exhibit 10.13 * 10.14 Equitable Resources, Inc. Long-Term Incentive Plan Filed herewith as Exhibit 10.14 * 10.15 Agreement dated December 31, 1994 with Donald I. Moritz for consulting services Filed herewith as Exhibit 10.15 11.01 Statement re Computation of Earnings Per Share Filed herewith as Exhibit 11.01 21 Schedule of Subsidiaries Filed herewith as Exhibit 21 23.01 Consent of Independent Auditors Filed herewith as Exhibit 23.01 99.01 Equitable Resources, Inc. Employees Savings Plan Form 11-K Annual Report Filed herewith as Exhibit 99.01 The Company agrees to furnish to the Commission, upon request, copies of instruments with respect to long-term debt which have not previously been filed. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. EQUITABLE RESOURCES, INC. (Registrant) By: (Frederick H. Abrew) President and Chief Executive Officer Date: March 17, 1995 Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. President and Chief Executive Officer and Director s/ Frederick H. Abrew (Principal Executive Officer) March 17, 1995 Frederick H. Abrew Vice President and s/ A. Mark Abramovic Chief Financial Officer March 17, 1995 A. Mark Abramovic Vice President - Accounting and Administration s/ Joseph L. Giebel (Chief Accounting Officer) March 17, 1995 Joseph L. Giebel s/ Clifford L. Alexander, Jr. Director March 17, 1995 Clifford L. Alexander, Jr. s/ Merle E. Gilliand Director March 17, 1995 Merle E. Gilliand s/ E. Lawrence Keyes, Jr. Director March 17, 1995 E. Lawrence Keyes, Jr. s/ Thomas A. McConomy Director March 17, 1995 Thomas A. McConomy s/ Donald I. Moritz Director March 17, 1995 Donald I. Moritz s/ Malcolm M. Prine Director March 17, 1995 Malcolm M. Prine Director Daniel M. Rooney s/ David S. Shapira Director March 17, 1995 David S. Shapira s/ Barbara Boyle Sullivan Director March 17, 1995 Barbara Boyle Sullivan EX-3.II 2 EQUITABLE RESOURCES, INC. Exhibit 3.02 BY-LAWS (Amended through December 16, 1994) EFFECTIVE JANUARY 1, 1995 ARTICLE I MEETINGS OF SHAREHOLDERS Section 1.01 All meetings of the shareholders shall be held at the principal office of the Company or such other places, either within or without the Commonwealth of Pennsylvania, as the Board of Directors may from time to time determine. Section 1.02 An annual meeting of shareholders shall be held in each calendar year at such time and place as the Board of Directors shall determine. If the annual meeting shall not be called and held during such calendar year, any shareholder may call such meeting at any time thereafter. Section 1.03 At each such annual meeting, the class of Directors then being elected shall be elected to hold office for a term of three (3) years, and until their successors shall have been elected and qualified. All elections of Directors shall be conducted by three (3) Judges of Election, who need not be shareholders, appointed by the Board of Directors. If any such appointees are not present, the vacancy shall be filled by the presiding officer of the meeting. The President of the Company shall preside and the Secretary shall take the minutes at all meetings of the shareholders. In the absence of the President, the Chairman of the Executive Committee shall preside. In the absence of both, the presiding officer shall be designated by the Board of Directors or, if not so designated, by the shareholders of the Company, and if the Secretary is unable to do so, the presiding officer shall designate any person to take the minutes of the meeting. Section 1.04 The presence, in person or by proxy, of the holders of a majority of the voting power of all shareholders shall constitute a quorum except as otherwise provided by law or by the Restated Articles of the Company. If a meeting is not organized because a quorum is not present, the shareholders present may adjourn the meeting to such time and place as they may determine, except that any meeting at which Directors are to be elected shall be adjourned only from day to day, or for such longer periods not exceeding fifteen (15) days each, as may be directed by a majority of the voting stock present. Section 1.05 Shareholders entitled to vote on any matter shall be entitled to one (1) vote for each share of capital stock standing in their respective names upon the books of the Company to be voted by the shareholder in person or by his or her duly authorized proxy or attorney. The validity of every unrevoked proxy shall cease eleven (11) months after the date of its execution unless some other definite period of validity shall be expressly provided therein, but in no event shall a proxy, unless coupled with an interest, be voted on after three (3) years from the date of its execution. All questions shall be decided by the vote of shareholders entitled to cast at least a majority of the votes which all shareholders present and voting (excluding abstentions) are entitled to cast on the matter, unless otherwise expressly provided by law or by the Restated Articles of the Company. Section 1.06 Special meetings of shareholders may be called by the Board of Directors, by the President, or by the holders of at least one-fifth (1/5) of all the shares outstanding and entitled to vote thereat. Section 1.07 Notice of the annual meeting and of all special meetings of shareholders shall be given by sending a written or printed notice thereof by mail, specifying the place, day, and hour of the meeting and, in the case of a special meeting of shareholders, the general nature of the business to be trans-acted, to each shareholder at the address appearing on the books of the Company, or the address supplied by such shareholder to the Company for the purpose of notice, at least five (5) days before the day named for the meeting, unless such shareholders shall waive notice or be in attendance at the meeting. ARTICLE II GENERAL PROVISIONS Section 2.01 The principal office of the Company shall be in the City of Pittsburgh, Pennsylvania, and shall be kept open during business hours every day except Saturdays, Sundays, and legal holidays, unless otherwise ordered by the Board of Directors or the President. Section 2.02 The Company shall have a corporate seal which shall contain within a circle the following words: "Equitable Resources, Inc., Pittsburgh, Pennsylvania" and in an inner circle the words "Corporate Seal." Section 2.03 The fiscal year of the Company shall begin with January 1 and end with December 31 of the same calendar year. Section 2.04 The Board of Directors shall fix a time, not more than seventy (70) days prior to the date of any meeting of shareholders, or the date fixed for the payment of any dividend or distribution, or the date for any allotment of rights, or the date when any change or conversion or exchange of shares will be made or go into effect, as a record date for the determination of the shareholders entitled to notice of, or to vote at, any such meeting, or entitled to receive payment of any such dividend or distribution, or to receive any such allotment of rights, or to exercise the rights in respect of any such change, conversion, or exchange of shares. ARTICLE III BOARD OF DIRECTORS Section 3.01 Regular meetings of the Board of Directors shall be held at least six (6) times each year, immediately after the annual meeting of shareholders and at such other times and places as the Board of Directors shall from time to time designate by resolution of the Board. Notice need not be given of regular meetings of the Board held at the times and places fixed by resolution of the Board. If the Board shall fail to designate the specific time and place of any regular meeting, such regular meeting shall be held at such time and place as designated by the President and, in such case, oral, telegraphic or written notice shall be duly served or sent or mailed by the Secretary to each Director not less than five (5) days before the meeting. Section 3.02 Special meetings may be held at any time upon the call of the President, or the Chairman of the Executive Committee in the absence of the President, at such time and place as he may deem necessary, or by the Secretary at the request of any two (2) members of the Board, by oral, telegraphic or written notice duly served or sent or mailed to each Director not less than twenty-four (24) hours before the meeting. Section 3.03 Fifty percent (50%) of the Directors at the time in office shall constitute a quorum for the transaction of business. Vacancies in the Board of Directors, including vacancies resulting from an increase in the number of Directors, shall be filled only by a majority vote of the remaining Directors then in office, though less than a quorum, except that vacancies resulting from removal from office by a vote of the shareholders may be filled by the shareholders at the same meeting at which such removal occurs. All Directors elected to fill vacancies shall hold office for a term expiring at the annual meeting of shareholders at which the term of the class to which they have been elected expires. Section 3.04 One (1) or more Directors may par- ticipate in a meeting of the Board or of a committee of the Board by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and all Directors so participating shall be deemed present at the meeting. Section 3.05 The full Board of Directors shall consist of not less than five (5) nor more than twelve (12) persons, the exact number to be fixed from time to time by the Board of Directors pursuant to a resolution adopted by a majority vote of the Directors then in office. Section 3.06 The Board of Directors may elect one (1) of its members (who shall not be an officer of the Company during his tenure) as its Chairman, if the By-Laws of the Company do not then provide for the election of a Chairman of the Board who shall be the Chief Executive Officer of the Company. A Chairman so elected shall confer with the President as to the content of agendas for such meetings and shall consult with the President as to matters affecting or relating to the Board of Directors. The Chairman so elected shall serve until the first meeting of the Board following the next annual meeting of the shareholders. The Board shall also fix the annual rate of compensation to be paid to the Chairman in addition to compensation paid to all non-officer members of the Board. The Chairman, or in the absence of the Chairman, the President, shall preside at all meetings of the Board, preserve order, and regulate debate according to the usual parliamentary rules. In the absence of the Chairman or the President, a Chairman pro tem may be appointed by the Board. Section 3.07 Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors. Nomination for election to the Board of Directors of the Company at a meeting of share- holders may be made by the Board of Directors or by any shareholder of the Company entitled to vote for the election of directors at such meeting who complies with the notice procedures set forth in this Section 3.07. Such nomi- nations, other than those made by or on behalf of the Board of Directors, shall be made by notice in writing delivered or mailed by first class United States mail, postage prepaid, to the Secretary, and received not less than 60 days nor more than 90 days prior to such meeting; provided, however, that if less than 70 days' notice or prior public disclosure of the date of the meeting is given to shareholders, such nomination shall have been mailed or delivered to the Secretary not later than the close of business on the 10th day following the day on which the notice of the meeting was mailed or such public disclosure was made, whichever occurs first. Such notice shall set forth (a) as to each proposed nominee (i) the name, age, business address and, if known, residence address of each such nominee, (ii) the principal occupation or employment of each such nominee, (iii) the number of shares of stock of the Company which are beneficially owned by each such nominee, and (iv) any other information concerning the nominee that must be disclosed as to nominees in proxy solicitations pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (including such person's written consent to be named as a nominee and to serve as a director if elected); and (b) as to the shareholder giving the notice (i) the name and address, as they appear on the Company's books, of such shareholder and (ii) the class and number of shares of the Company which are beneficially owned by such shareholder. The Company may require any proposed nominee to furnish such other information as may reasonably be required by the Company to determine the eligibility of such proposed nominee to serve as a director of the Company. The Chairman of the meeting may, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the foregoing procedure, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded. Section 3.08 The age limit for Directors of this Company shall be seventy-two (72) and they shall not be eligible for election or re-election after reaching their seventy-second (72nd) birthday; provided, this qualification and limitation shall not apply to Directors holding office on June 12, 1972, the date this By-Law was adopted by the shareholders. No person who is an employee or officer of the Company, except the Chief Executive Officer, shall be eligible to serve as a Director of the Company after he has retired from service as an employee or officer. Section 3.09 No Director shall be personally liable for monetary damages as such (except to the extent otherwise provided by law) for any action taken, or any failure to take any action, unless such Director has breached or failed to perform the duties of his or her office under Title 42, Chapter 83, Subchapter F of the Pennsylvania Consolidated Statutes (or any successor statute relating to Directors' standard of care and justifiable reliance); and the breach or failure to perform constitutes self-dealing, willful misconduct or recklessness. If the Pennsylvania Consolidated Statutes are amended after May 22, 1987, the date this section received shareholder approval, to further eliminate or limit the personal liability of Directors, then a Director shall not be liable, in addition to the circumstances set forth in this section, to the fullest extent permitted by the Pennsylvania Consolidated Statutes, as so amended. The provisions of this section shall not apply to any actions filed prior to January 27, 1987, nor to any breach of performance of duty, or any failure of performance of duty, by any Director occurring prior to January 27, 1987. ARTICLE IV INDEMNIFICATION OF DIRECTORS AND OFFICERS Section 4.01 Directors, officers, agents, and employees of the Company shall be indemnified as of right to the fullest extent not prohibited by law in connection with any actual or threatened action, suit or proceeding, civil, criminal, admin-istrative, investigative or other (whether brought by or in the right of the Company or otherwise) arising out of their service to the Company or to another enterprise at the request of the Company. The Company may purchase and maintain insurance to protect itself and any such Director, officer, agent or employee against any liability asserted against and incurred by him or her in respect of such service, whether or not the Company would have the power to indemnify him or her against such liability by law or under the provisions of this section. The provisions of this section shall be applicable to persons who have ceased to be Directors, officers, agents, and employees and shall inure to the benefit of the heirs, executors, and administrators of persons entitled to indemnity hereunder. Indemnification under this section shall include the right to be paid expenses incurred in advance of the final disposition of any action, suit or proceeding for which indemnification is provided, upon receipt of an undertaking by or on behalf of the indemnified person to repay such amount if it ultimately shall be determined that he or she is not entitled to be indemnified by the Company. The indemnification rights granted herein are not intended to be exclusive of any other rights to which those seeking indemnification may be entitled and the Company may enter into contractual agreements with any Director, officer, agent or employee to provide such individual with indemnification rights as set forth in such agreement or agreements, which rights shall be in addition to the rights set forth in this section. The provisions of this section shall be applicable to actions, suits or proceedings commenced after the adoption hereof, whether arising from acts or omissions occurring before or after the adoption hereof. ARTICLE V STANDING COMMITTEES Section 5.01 The Board of Directors shall have authority to appoint an Executive Committee, a Finance Committee, an Audit Committee, and such other committees as it deems advisable, each to consist of two (2) or more Directors, and from time to time to define the duties and fix the number of members of each committee. In the absence or disqualification of any member of any such committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not con-stituting a quorum, may unanimously appoint another Director or Directors to act at the meeting in the place of any such absent or disqualified member or members. ARTICLE VI OFFICERS Section 6.01 The officers of the Company shall be chosen by the Board of Directors and shall be a President, a Secretary, and a Treasurer. The Board of Directors may also choose such Vice Presidents, including one (1) or more Executive Vice Presidents and Senior Vice Presidents, and one (1) or more Assistant Secretaries and Assistant Treasurers as it may determine. Section 6.02 The Board of Directors shall, at the first meeting of the Board after its election, elect the principal officers of the Company, and may elect additional officers at that or any subsequent meeting. All officers elected by the Board of Directors shall hold office at the pleasure of the Board. Section 6.03 At the discretion of the Board of Directors, any two (2) of the offices mentioned in Section 6.01 hereof may be held by the same person except the offices of President and Secretary. Section 6.04 The salaries of all officers of the Company, other than Assistant Secretaries and Assistant Treasurers, shall be fixed by the Board of Directors. Section 6.05 The officers of the Company shall hold office until the next annual meeting of the Board and until their successors are chosen and qualify in their stead or until their earlier resignation or removal. Any officer or agent may be removed by the Board of Directors whenever in its judgment the best interests of the Company will be served thereby. Such removal, however, shall be without prejudice to the contract rights of the person so removed. If the office of any officer becomes vacant for any reason, the vacancy may be filled by the Board of Directors. PRESIDENT Section 6.06 The President shall be the Chief Executive Officer of the Company; shall preside at all meetings of the shareholders and at all meetings of the Board of Directors; shall have general and active management of the business of the Company; and shall see that all orders and resolutions of the Board of Directors are carried into effect. In addition to any specific powers conferred upon the President by these By-Laws, he shall have and exercise such further powers and duties as from time to time may be conferred upon or assigned to him by the Board of Directors. SECRETARY Section 6.07 The Secretary shall attend all meetings of the shareholders and Board of Directors; shall record all votes and the minutes of all proceedings in a book to be kept for that purpose; and shall perform like duties for all committees of the Board, if so designated by the Board. The Secretary shall keep in safe custody the seal of the Company and when authorized by the Board of Directors, affix the seal of the Company to any instrument requiring it and, when so affixed, it shall be attested by the signature of the Secretary or by the signature of the Treasurer or an Assistant Secretary. The Secretary shall have custody of all contracts, leases, assignments, and all other valuable instruments unless the Board of Directors or the President shall otherwise direct. The Secretary shall give, or cause to be given, notice of all annual meetings of the shareholders and any other meetings of the shareholders and, when required, notice of the meetings of the Board of Directors; and, in general, shall perform all duties incident to the office of a secretary of a corporation, and such other duties as may be prescribed by the Board of Directors or the President. Section 6.08 The Board of Directors may elect one (1) or more Assistant Secretaries who shall perform the duties of the Secretary in the event of the Secretary's absence or inability to act, as well as such other duties as the Board of Directors, the President, or the Secretary may from time to time designate. TREASURER Section 6.09 The Treasurer shall have charge of all moneys and securities belonging to the Company subject to the direction and control of the Board of Directors. The Treasurer shall deposit all moneys received by the Company in the name and to the credit of the Company in such bank or other place or places of deposit as the Board of Directors shall designate; and for that purpose the Treasurer shall have power to endorse for collection or payment all checks or other negotiable instruments drawn payable to the Treasurer's order or to the order of the Company. The Treasurer shall disburse the moneys of the Company upon properly drawn checks which shall bear the signature of the Treasurer or of any Assistant Treasurer or of the Cashier (who shall be appointed by the Assistant Treasurer with the approval of the Treasurer). All checks shall be covered by vouchers which shall be certified by the Controller or the Auditor of Disbursements or such other employee of the Company (other than the Cashier) as may be designated by the Treasurer from time to time. The Treasurer may create, from time to time, such special imprest funds as may, in the Treasurer's discretion, be deemed advisable and necessary, and may open accounts with such bank or banks as may be deemed advisable for the deposit therein of such special imprest funds, and may authorize disbursements therefrom by checks drawn against such accounts by the Treasurer, any Assistant Treasurer, or such other employee of the Company as may be designated by the Treasurer from time to time. The Treasurer shall perform such other duties as may be assigned from time to time by the Board of Directors, the President or the Chief Financial Officer. Section 6.10 No notes or similar obligations shall be made except jointly by the President or the Chief Financial Officer and the Treasurer or an Assistant Treasurer, except as otherwise authorized by the Board of Directors. Section 6.11 The Board of Directors may elect one (1) or more Assistant Treasurers who shall perform the duties of the Treasurer in the event of the Treasurer's absence or inability to act, as well as such other duties as the Board of Directors, the President, the Chief Financial Officer or the Treasurer may from time to time designate. VICE PRESIDENTS Section 6.12 Vice Presidents shall perform such duties as may be assigned to them from time to time by the Board of Directors or the President as their positions are established or changed. During the absence or inability of the President to serve, an Executive Vice President or Senior Vice President so designated by the Board of Directors shall have all the powers and perform the duties of the President. GENERAL Section 6.13 Fidelity bond coverage shall be obtained on such officers and employees of the Company, and of such type and in such amounts as may, in the discretion of the Board of Directors, be deemed proper and advisable. ARTICLE VII CERTIFICATES OF STOCK Section 7.01 The shares of the capital stock of the Company shall be represented by certificates of stock signed by the President or a Vice President, and countersigned by the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer, and sealed with the corporate seal of the Company. Said certificates shall be in such form as the Board of Directors may from time to time prescribe. The Board of Directors may from time to time appoint an incorporated company or companies to act as Transfer Agent and Registrar of the stock certificates of the Company, and in the case of the appointment of such Transfer Agent, the officers of the Company shall sign and seal stock certificates in blank and place them with the transfer books in the custody and control of such Transfer Agent. If any stock certificate is signed by a Transfer Agent or Registrar, the signature of any such officer and the corporate seal upon any such certificate may be a facsimile, engraved or printed. Section 7.02 New certificates for shares of stock may be issued to replace certificates lost, stolen, destroyed or mutilated upon such terms and conditions as the Board may from time to time determine. ARTICLE VIII AMENDMENTS Section 8.01 (a) The Board of Directors may make, amend, and repeal the By-Laws with respect to those matters which are not, by statute, reserved exclusively to the shareholders, subject always to the power of the shareholders to change such action as provided herein. No By-Law may be made, amended or repealed by the shareholders unless such action is approved by the affirmative vote of the holders of not less than eighty percent (80%) of the voting power of the then outstanding shares of capital stock of the Company entitled to vote in an annual election of Directors, voting together as a single class, unless such action has been previously approved by a two-thirds vote of the whole Board of Directors, in which event (unless otherwise expressly provided in the Articles or the By-Laws) the affirmative vote of not less than a majority of the votes which all shareholders are entitled to cast thereupon shall be required. (b) Unless otherwise provided by a By-Law, by the Restated Articles or by law, any By-Law may be amended, altered or repealed, and new By-Laws may be adopted, by vote of a majority of the Directors present at any regular or special meeting duly convened, but only if notice of the specific sections to be amended, altered, repealed or added is included in the notice of meeting. No provision of the By-Laws shall vest any property or contract right in any shareholder. ARTICLE IX PENNSYLVANIA CORPORATION LAW Section 9.01 Subchapter G--Control Share Acquisi- tions--and Subchapter H--Disgorgement by Certain Controlling Shareholders Following Attempts to Acquire Control--of Title 15, Chapter 25, of the Pennsylvania Consolidated Statutes, shall not be applicable to the Company. (Amended through December 16, 1994) (Effective January 1, 1995) EX-10.01 3 Exhibit 10.01 EQUITABLE RESOURCES, INC. KEY EMPLOYEE RESTRICTED STOCK OPTION AND STOCK APPRECIATION RIGHTS INCENTIVE COMPENSATION PLAN (As amended, effective March 17, 1989) Purpose of the Plan This Key Employee Restricted Stock Option and Stock Appreciation Rights Incentive Compensation Plan (the "Plan") has been established in order to further the success and interests of Equitable Resources, Inc. and its Subsidiaries (collectively the "Company"), and its shareholders by a long- term incentive program offering to key employees of the Company an opportunity to acquire a direct economic interest in the growth and prosperity of the Company through common stock ownership in the manner and under the terms and conditions of the Plan. Thus the Plan will enable the Company to retain key employees who are presently in the employ of the Company and to create incentive for persons of high managerial and administrative skills to become attracted to the employment opportunities of the Company, thereby enhancing the Company's continued success and progress. ARTICLE I Eligibility 1.1 Participation in the Plan is limited to key employees of the Company, including those who are officers and directors who, in the judgment of the Committee hereinafter established, contribute materially to the growth and prosperity of the Company. 1.2 All benefits provided under the Plan to which a key employee may become entitled will be conditioned upon the key employee's remaining in the employ of the Company for a period of three years from the date the benefit is provided (except to the extent otherwise set forth in the Plan), except in the case of retirement, death or disability as hereinafter expressly provided. ARTICLE II Authorized Stock 2.1 The stock to be subject to the options, the related Stock Appreciation Rights and the restricted stock grants under the Plan shall be shares of the Common Stock, without par value, of the Company (the "Common Stock") and may be authorized but unissued shares or treasury shares held in the treasury. The total amount of Common Stock which may be issued or delivered under the Plan shall not exceed 1,025,496 shares, subject to adjustment as provided in Article VII. ARTICLE III Administration 3.1 The Board of Directors of the Company ("Board") shall, by resolution, establish a Compensation Committee (the "Committee"), comprised of those directors (exclusive of directors who are or were officers or employees of the Company on the effective date of the Plan) chosen by the Board as set forth in the resolution. The members of the Committee shall serve at the pleasure of the Board. 3.2 The duties of the Committee shall be to select those employees of the Company whom it deems to have earned, by their work performance during the previous year, the opportunity to acquire the Common Stock and benefit from the appreciation in Common Stock during the period set forth in the Plan. In making such selection of key employees, consideration shall be given to the position of the individual and the performance of that individual as to the duties the position entails and the effect that such position has on the growth and prosperity of the Company. 3.3 The Committee shall have the sole right to interpret the Plan and to establish rules for the Plan's operation. In the performance of these duties, the Committee shall establish rules and regulations for the conduct of its affairs and where, in the Plan, the Committee is authorized or directed to take action, the Committee shall establish such forms, notices or procedures as it deems necessary. 3.4 In the administration of the Plan, the Committee may appoint any agents or other persons for the purpose of administration and may delegate such ministerial duties to them as the Committee deems appropriate; provided, however, the Committee may not delegate the determination and selection of the key employees to whom options or restricted stock will be granted, nor may the Committee delegate the establishment of the number of shares of Common Stock to which each option or restricted stock grant shall apply. In addition, the Committee shall make the sole determination as to the exercise price of any granted option. 3.5 The Company shall reimburse the Committee members for all out-of-pocket expenses incurred in the performance of their duties. 3.6 Any decision made or action taken by the Committee arising out of, or in connection with, the construction, interpretation and administration of the Plan and rules and regulations adopted by the Committee pursuant hereto shall lie within the absolute discretion of the Committee and shall be conclusive and binding upon all parties, including the Company, the shareholders, the key employees, and any and all persons claiming under or through any key employee. No member of the Board or of the Committee and no officer of the Company shall be liable for any act or action hereunder, whether of commission or omission, taken by any other member, or by any officer, agent or employee; nor, except in circumstances involving his bad faith and to the extent permitted by law, for anything done or omitted to be done by himself. ARTICLE IV Options 4.1 Upon selection by the Committee, a key employee may be granted an option to purchase such number of shares of Common Stock as the Committee shall determine. 4.2 The Committee shall establish an exercise price under each option granted of not less than 75 percent or more than 100 percent of the fair market value on the shares on the date the option is granted, but in no event less than the par value of the Common Stock. "Fair market value" shall mean the closing sales price of shares of Common Stock as reported on the New York Stock Exchange's consolidated transaction reporting system on the date the option is granted. 4.3 The Committee shall not grant to any key employee an option or options on Common Stock for an aggregate number of shares (when added to the number of shares granted under Article VI) in excess of 10 percent of the total number of shares which may be issued under the Plan. For this purpose, if shares have been issued under the Plan and the shares which may yet be issued under the Plan are adjusted under Article VIII, the shares already issued shall be deemed to have been similarly adjusted and considered as having been issued under the Plan. 4.4 Any unexercised option outstanding for a period of 18 months or less at the time the key employee holding such option retires shall be subject to forfeiture at the sole discretion of the Committee and, for a period of 30 days after such retirement, the Company shall have the right, exercisable in the sole discretion of the Committee, to repurchase all or any part of the shares of such key employee attributable to the exercise of such option which are held in escrow, in accordance with the repurchase provisions of Section 4.8. 4.5 Except as otherwise provided in Sections 4.8, 4.9 and 10.2, an option granted under the Plan shall expire five years from the date of grant. Except as provided in Section 4.11, the key employee may exercise the option at any time after the date of grant and prior to the expiration date as to all or any part of the whole shares of Common Stock to which the option applies by delivery to the Committee of an appropriate notice of exercise and a payment in an amount equal to the total option price for the number of shares for which the exercise is to be effective. Payment may be made in cash or shares of Common Stock (except for shares held in escrow under the terms of the Plan) or any combination thereof and if payment is made in shares of Common Stock, such Common Stock shall be valued at the closing sales price of shares of Common Stock as reported on the New York Stock Exchange's consolidated transaction reporting system on the date of exercise. 4.6 Upon the exercise of an option, the Committee shall authorize the issue of the number of whole shares of Common Stock for which full payment has been made. Except in the case of the exercise of an option following retirement or death as provided in Section 4.9, or the exercise of an option occurring after the end of the escrow period applicable to such option, the Committee shall further issue instructions that such shares, when issued, shall bear the following restriction: "These shares are subject to the covenant that, should the registered owner's employment be terminated with the Company, including successors by reason of merger or consolidation, prior to [Date three years from grant of option to purchase applicable to such shares; five years in the case of options granted prior to March 18, 1986], these shares are subject to repurchase in accordance with Section 4.8 of the Equitable Resources, Inc. Key Employee Restricted Stock Option and Stock Appreciation Rights Incentive Compensation Plan." and that such shares shall be held by the Company in escrow. 4.7 Any restricted shares held in escrow shall be issued in the name of the key employee and shall not be physically transferred to the key employee until the third anniversary of the date of grant of the option (the fifth anniversary date in the case of options granted prior to March 18, 1986), except as provided in Section 4.9. While shares are held by the Company in escrow, the key employee shall be entitled to all dividends (both cash and securities, except for dividends paid in Common Stock which are charged to earned surplus) and voting rights, but shall not have power to transfer in any manner the legal or equitable ownership of such shares. Common Stock distributed as a result of an adjustment under Section 8.2 shall be added to the shares held in escrow. 4.8 Upon the termination of the key employee's employment for any reason other than retirement or death, all options which have not been exercised will be forfeited. In addition, for a period of 30 days after such termination of employment for any reason other than retirement or death, the Company shall have the option, exercisable in the sole discretion of the Committee, to repurchase all or any part of the shares of such key employee which are held in escrow. The repurchase price for shares acquired through the exercise of options granted prior to March 18, 1986 shall be the exercise price which was paid by the key employee to acquire such shares. In the case of options granted on or after March 18, 1986, the Committee, in its sole discretion, may reduce the repurchase price by the exercise value of any SAR units (as set forth in Section 5.3 of the Plan) associated with the shares being repurchased. If the exercise price was paid in cash, the shares shall be repurchased by the Company for cash. If the exercise price was paid in Common Stock, an appropriate number of shares shall be returned to the key employee from the escrow. If the exercise price was paid partly in cash and partly in shares of Common Stock, the key employee will receive a proportionate amount of cash and a proportionate number of shares shall be returned to the key employee from the escrow. In any case, no payment shall be made to the key employee if the repurchase price is calculated to be equal to, or less than, zero. All shares of Common Stock under an unexercised option forfeited by reason of this Section, together with all repurchased shares of Common Stock, shall again be available for the grant of future options under the Plan. In the event the Company does not exercise the option to repurchase, the shares held in escrow will be transferred to the key employee free of further restrictions. 4.9 In the event of the termination of employment of the key employee by reason of retirement or death, the key employee or the person or persons entitled to do so under the Will of the key employee, or, if the key employee shall fail to make testamentary disposition of said option or shall die intestate, the legal representative of the key employee may, within 90 days after such termination, exercise the options outstanding at the time of such termination regardless of whether the five-year option period expires within the 90 days. In addition, in the event of death during the 90-day period following termination of employment by reason of retirement, the option may be exercised within 90 days after such death regardless of whether the five-year option period expires within the additional 90-day period. In any event, all options remaining outstanding at the end of such periods shall expire. In addition, all shares held in escrow shall be transferred unrestricted as of the key employee's retirement date or date of death, whichever is applicable. The Committee may elect to treat the total and permanent disability of a key employee as a retirement. "Total and permanent disability" shall mean any physical or mental condition which is determined by the Committee to have rendered the key employee incapable of employment with the Company and has substantially impaired and will continue to impair his or her earning ability. 4.10 In lieu of exercising an option, any key employee or other person entitled to exercise an option shall have the right to cancel, in whole or in part, any option that has not been exercised by filing with the Committee a notice of cancellation containing the number of shares of Common Stock that are affected by the option cancelled and the date such option was granted. 4.11 Options may be exercised or cancelled only in the order of date of grant except that this Section shall not apply in the event of the exercise or cancellation of an option following termination of employment of the key employee by reason of retirement or death. 4.12 The Committee shall not grant any options in any calendar year in which the Company does not pay a cash dividend on the Common Stock. ARTICLE V Stock Appreciation Rights Units 5.1 The Committee may, in its discretion, establish or cause to be established in the name of a key employee, on the same date as such key employee is granted an option to acquire Common Stock, an account to which will be credited the same number of units of Stock Appreciation Rights as the number of shares of Common Stock that are subject to the key employee's granted option. The base price for each Stock Appreciation Rights unit shall be the fair market value (as defined in Section 4.2) of a share of Common Stock on the date of grant of the related option. 5.2 Upon the termination of the key employee's employment for any reason other than retirement or death, all Stock Appreciation Rights units shall be forfeited. 5.3 Except as provided in Section 5.5, upon the exercise, cancellation or expiration of an option granted under Article IV, the value of related Stock Appreciation Rights units equal in number to the number of shares of Common Stock affected by such exercise, cancellation or expiration shall become due and payable. The amount to be paid by reason of the exercise, cancellation or expiration of an option shall be determined by subtracting the Stock Appreciation Rights unit base price from the closing sales price of the Common Stock as reported on the New York Stock Exchange's consolidated transaction reporting system for the date of the exercise, cancellation or expiration of the option and multiplying this amount, if positive, by the number of Stock Appreciation Rights units that are equivalent to the number of shares of Common Stock affected by the exercise, cancellation or expiration of the option. Upon determination of the amount payable or in the event the difference is negative, all Stock Appreciation Rights units utilized in the calculation shall be cancelled. 5.4 The amount determined to be payable under Section 5.3 shall be paid in shares of Common Stock, cash, or partly in shares and partly in cash as the Committee in its sole discretion may determine at the time of the exercise, cancellation or expiration of the related option. In determining the number of whole shares of Common Stock to be issued, the closing sales price of shares of Common Stock as reported on the New York Stock Exchange's consolidated transaction reporting system on the date of exercise, cancellation or expiration of the related option, as the case may be, shall be used. 5.5 Upon the cancellation of an option during the employment of a key employee, the value of related Stock Appreciation Rights units equal in number to the number of shares of Common Stock affected by such cancellation shall be determined as set forth in Section 5.3 and the amount which would otherwise be payable in shares of Common Stock, cash or partly in shares and partly in cash shall be held by the Company in escrow and not physically transferred to the key employee until the earlier of the fifth anniversary of the date of grant of the related option and the second anniversary of the date of cancellation of the related option, except that the escrow shall be forfeited upon the termination of the key employee's employment during the escrow period for any reason other than retirement or death and except that the escrow shall be transferred unrestricted as of the key employee's retirement date or date of death, whichever is applicable. Shares of Common Stock held in escrow shall be issued in the name of the key employee and shall bear the following restriction: "These shares are subject to the covenant that should the registered owner's employment be terminated with the Company, including successors by reason of merger or consolidation, prior to [insert applicable date], these shares are subject to forfeiture in accordance with Section 5.5 of the Equitable Resources, Inc. Key Employee Restricted Stock Option and Stock Appreciation Rights Incentive Compensation Plan." While shares are held by the Company in escrow the key employee shall be entitled to the same dividend and voting rights as set forth in Section 4.7 and any shares distributed as a result of an adjustment under Section 8.2 shall be added to the shares held in escrow. Cash held in escrow for a key employee shall not bear interest. All shares of Common Stock forfeited under this provision shall again be available for the grant of future options under the Plan. ARTICLE VI Restricted Stock 6.1 Upon selection by the Committee, a key employee may be granted an award of such number of shares of restricted Common Stock as the Committee shall determine. The number of restricted shares granted to any key employee shall not, when added to the number of shares subject to options granted pursuant to Article IV, exceed 10 percent of the total number of shares which may be granted under the Plan. For this purpose, if the shares have been issued under the Plan and the shares which may yet be issued under the Plan are adjusted under Article VIII, the shares already issued shall be deemed to have been similarly adjusted and considered as having been issued under the Plan. 6.2 All restricted stock shall be held by the Company in escrow until such time as it becomes fully vested upon the key employee's continued employment with the Company for the period (not less than three, nor more than five, years) established by the Committee at the time of grant. 6.3 Restricted stock held in escrow shall bear the following instruction: "These shares are subject to the covenant that, should the registered owner's employment be terminated with the Company, including successors, by reason of merger or consolidation, prior to [date specified by the Committee] these shares are subject to forfeiture at the Committee's discretion." 6.4. Any restricted shares held in escrow shall be issued in the name of the key employee and shall not be physically transferred to the key employee until the date specified by the Committee, except as provided in Section 6.7. While shares are held by the Company in escrow, the key employee shall be entitled to all dividends (both cash and securities, except for dividends paid in Common Stock which are charged to earned surplus) and voting rights, but shall not have power to transfer in any manner the legal or equitable ownership of such shares. Common Stock distributed as a result of an adjustment under Section 8.2 shall be added to the shares held in escrow. 6.5 Upon the termination of the key employee's employment for any reason other than retirement or death, all restricted shares held in escrow shall be subject to forfeiture at the sole discretion of the Committee. All shares of Common Stock forfeited by reason of this Section shall again be available for the grant of future options under the Plan. 6.6 Any restricted stock held in escrow for a period of 18 months or less at the time the key employee to whom such restricted stock is granted retires shall be subject to forfeiture at the sole discretion of the Committee. 6.7 In the event of the termination of employment of the key employee by reason of retirement or death, all shares held in escrow shall be transferred unrestricted as of the key employee's retirement date or date of death whichever is applicable. The Committee may elect to treat the total and permanent disability of a key employee as a retirement. "Total and permanent disability" shall mean any physical or mental condition which is determined by the Committee to have rendered the key employee incapable of employment with the Company and has substantially impaired and will continue to impair his or her earning ability. 6.8 The Committee shall not make any award of restricted stock in any calendar year in which the Company does not pay a cash dividend on the Common Stock. ARTICLE VII Key Employee Agreement 7.1 Upon the Committee's granting to a key employee any option, Stock Appreciation Rights units or restricted stock under the Plan, the Committee shall furnish to each such key employee an agreement setting forth the basic terms of the Plan which are applicable to him, together with a copy of the Plan. The employee shall sign and return to the Committee, within 10 days of receipt, a copy of the agreement. No exercise or cancellation of any option will be accepted by the Committee prior to the receipt by it of a signed agreement. Should the key employee refuse to sign an agreement or fail to return the agreement signed within such 10-day period, the option or restricted stock that has been granted will be null and void and deemed not to have been granted and any Stock Appreciation Rights units credited as a result of an option grant will be null and void and deemed not to have been granted or credited. 7.2 The Committee, in its sole discretion, may waive the requirements of this Article in the event of the death of the key employee during such 10-day period or waive such requirements or extend the period for return of the signed agreement in the event of the death or illness of the key employee during such 10-day period. Should the Committee extend the 10-day period for acceptance of the signed agreement, it shall notify the key employee and establish a new return date. No more than one extension will be granted as to any one option. ARTICLE VIII Adjustment of Common Stock 8.1 The Company will at all times during the term of the Plan reserve and keep available the number of shares sufficient to satisfy the requirements of the Plan. 8.2 The 1,025,496 shares of Common Stock authorized in Article II, including any shares held in escrow and including any number of shares of Common Stock which shall at any time be subject to options which have been granted but which have not been exercised and the exercise price thereof (and the base price of Stock Appreciation Rights units), shall be adjusted in the event that there occurs a capital adjustment. [For the purposes of the Plan, a capital adjustment shall include any stock dividend (except a dividend paid in Common Stock which is charged to earned surplus), stock split, combination or division, conversion or exchange of shares of Common Stock pursuant to a merger or consolidation, recapitalization, separation, reorganization, or other similar change in the capital structure of the Company.] The adjustment of the Common Stock to which this subsection applies shall be in the same manner, number and amount as all outstanding Common Stock is adjusted, as determined by the Committee, except that all fractional shares which may result from such adjustment shall be disregarded. 8.3 No cash or other form of dividends shall be paid or reserved on any shares reserved for the purpose of the Plan, nor on any shares which are subject to any outstanding option unless and until such option is exercised and the Common Stock issued in the name of the key employee, prior to the record date for such dividend. 8.4 Should there occur a capital adjustment to the Common Stock as provided in this Article, the Committee will proportionately adjust all unpaid Stock Appreciation Rights units and base price per unit to reflect such capital adjustment. 8.5 All shares of Common Stock upon which an option has expired or been terminated shall again be available for the purposes of the Plan. ARTICLE IX Effective Date, Termination and Amendment 9.1 Upon the approval of the Plan by the holders of Common Stock, the effective date shall be established thereafter by the Board as soon as practical after all required approvals and consents are obtained from those governmental agencies having jurisdiction in these matters. 9.2 This program may be terminated at any time by the action of the Board of Directors of Equitable Resources, Inc., but in no event shall options or Stock Appreciation Rights units be granted fifteen years after the effective date of the Plan. 9.3 The Plan may be amended from time to time by the Board of Directors, provided, however, no amendment which would increase the number of shares of Common Stock available for the purposes of the Plan (exclusive of those due to capital adjustment) shall be effective until approved by the shareholders. ARTICLE X Spendthrift 10.1 No option granted pursuant to the Plan shall be transferable except as hereinafter specifically authorized. No option granted pursuant to the Plan shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance, charge, garnishment, execution, attachment, or lien of any kind, either voluntary or involuntary, whether arising at law or equity, including any claims arising in or by reason of support or divorce proceedings or decrees. 10.2 Notwithstanding the provisions of Section 10.1 above, a transfer by Will or through the operation of the laws of descent and distribution shall be permitted. In addition, such option may be exercised or cancelled by any personal representative of the key employee who is declared incompetent if the key employee was an employee within the 90 days immediately preceding the exercise or cancellation in favor of the personal representative, regardless of whether the five-year option period expires within the 90 days. ARTICLE XI Miscellaneous 11.1 Neither the establishment of the Plan nor the granting of any option or restricted stock hereunder shall establish any right to be retained in the employ of the Company nor in any way limit the rights of the Company to terminate the employment of any key employee at any time. The Plan shall not be deemed nor construed as a contract of employment. 11.2 The Company shall have the right to withhold from any payment to the key employee sufficient amounts to cover withholding and employment tax resulting from the operation of the Plan. ARTICLE XII Additional Rights in Certain Events 12.1 For purposes of this Article XII, the following terms shall have the following meanings: (a) The term "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. (b) "Affiliate", "Associate" and "Parent" shall have the respective meanings set forth in Rule 12b-2 under the Exchange Act as in effect on the effective date of the amendment adding Article XII to the Plan. (c) The term "Person" shall be used as that term is used in Sections 13(d) and 14(d) of the Exchange Act. (d) "Beneficial Ownership" shall be determined as provided in Rule 13d-3, or any successor rule, under the Exchange Act. (e) The term "Proxy Rules" shall mean regulation 14A, or any successor rule or regulation, under the Exchange Act. (f) "Voting Shares" shall mean all securities of a company entitling the holders thereof to vote in an annual election of directors (without consideration of the rights of any class of stock other than Common Stock to elect directors by a separate class vote); and a specified percentage of "Voting Power" of a company shall mean such number of the Voting Shares as shall enable the holders thereof to cast such percentage of all the votes which could be cast in an annual election of directors (without consideration of the rights of any class of stock other than Common Stock to elect directors by a separate class vote). (g) "Tender Offer" shall mean a tender offer or exchange offer to acquire securities of the Company (other than such an offer made by the Company or any Subsidiary), whether or not such offer is approved or opposed by the Board. (h) "Article XII Event" shall mean the date upon which any of the following events occurs: (i) The Company acquires actual knowledge that any Person [other than the Company, a Subsidiary, any director of the Company on the effective date of the amendment adding Article XII to the Plan, any Affiliate or Associate of any such director, any member of the family of any such director, any trust (including the trustees thereof) established by or for the benefit of any such Persons, any charitable foundation, whether a trust or a corporation (including the trustees and directors thereof) established by any such Persons or any employee benefit plan(s) sponsored by the Company] has acquired the Beneficial Ownership, directly or indirectly, of securities of the Company entitling such Person to 20 percent or more of the Voting Power of the Company; (ii) (A) A Tender Offer is made to acquire securities of the Company entitling the holders thereof to 50 percent or more of the Voting Power of the Company; or (B) Voting Shares are first purchased pursuant to any other Tender Offer; (iii) At any time less than 51 percent of the members of the Board of Directors shall be persons who were either (A) directors on the effective date of the amendment adding Article XII to the Plan; or (B) individuals whose election, or nomination for election, was approved by a vote of at least two-thirds of the directors then still in office who were directors on the effective date of the amendment adding Article XII to the Plan or who were so approved; (iv) The shareholders of the Company shall approve an agreement or plan providing for the Company or all or substantially all its assets or stock to be acquired by, or merged, consolidated or otherwise combined with, another corporation, as a consequence of which the former shareholders of the Company will own, immediately after such acquisition, merger, consolidation or combination less than a majority of the Voting Power of the surviving or acquiring corporation or the Parent thereof; or (v) The shareholders of the Company shall approve any liquidation of all or substantially all of the assets of the Company, or any distribution to security holders of assets of the Company, having a value equal to 30 percent or more of the total value of all the assets of the Company. 11.2 Notwithstanding anything to the contrary in the Plan or in any stock option or restricted stock agreement in case any Article XII Event occurs: (a) All shares and cash held in escrow pursuant to Sections 4.6 through 4.9, Section 5.5 and Article VI shall be immediately transferred unrestricted to the employee. (b) Upon the exercise or cancellation of an option within 60 days after the date of the Article XII Event, the requirement that the shares issuable upon such exercise be held in escrow pursuant to Sections 4.6 through 4.9 shall not be applicable, and the requirement that the amount which would otherwise be payable with respect to Stock Appreciation Rights units be held in escrow pursuant to Section 5.5 upon such cancellation shall not be applicable. (c) The first two sentences of Section 4.8 and the first sentence of Section 6.5 shall not be applicable to options or shares held by an employee in the event of a termination of such employee's employment within six months after the date of the Article XII Event. (d) Sections 4.11 and 5.2 shall not be applicable to options and Stock Appreciation Rights units held by an employee in the event of a termination of such employee's employment within six months after the date of the Article XII Event. ARTICLE XIII Tax Withholding 13.1 At the request of a key employee, the Company may, at the Committee's discretion, reduce the number of shares to be delivered to the key employee (from escrow or otherwise) in connection with the exercise of a stock option, the payment of a stock appreciation right or the release from escrow of restricted stock by an amount sufficient to satisfy tax withholding requirements. 13.2 If the key employee's tax liability is deferred beyond the date shares are delivered to the key employee, upon approval of the Committee the key employee shall be permitted to tender back to the Company at the time such tax liability is determined the number of shares necessary to satisfy tax withholding requirements. 13.3 The fair market value of the shares withheld or tendered back (calculated as of the date the tax liability is determined) shall be transmitted by the Company to the appropriate taxing authorities in satisfaction of tax withholding requirements. EX-10.4A 4 Exhibit 10.04 (a) EQUITABLE RESOURCES, INC. Board of Directors Deferred Compensation Agreement THIS AGREEMENT, made and executed this 15th day of December, 1989 by and between Equitable Resources, Inc., herein designated as "Equitable", and Barbara B. Sullivan, herein designated as the "Participant." WITNESSETH: WHEREAS, the Participant is currently a member of the Board of Directors of Equitable as a Director or an Advisory Director; and WHEREAS, Equitable and the Participant desire to defer all of the fees arising from the above-stated relationship. NOW, THEREFORE, the parties hereby agree as follows: Section 1 - Account 1.1) Effective January 1, 1990, the Participant herein elects to defer, under the terms of this Agreement, all compensation earned for his/her service as a Director or an Advisory Director of Equitable for the calendar year 1990. 1.2) Equitable shall establish a bookkeeping account, hereinafter referred to as the "Account", and shall credit to the Account the amounts of the deferred fees. 1.3) Interest shall be credited to the Account monthly. The rate of interest shall be the same as the yield for 30-day Treasury Bills applicable to the first day of such month. Section 2 - Payment 2.1) All amounts credited to the Account on the Participant's behalf shall be payable in one lump sum by Equitable to the Participant on _______________ (date selected by the Participant) but in no event later than sixty (60) days after the Participant ceases to be a Director or an Advisory Director of Equitable. Unless a date specific is selected by the Participant, the distribution will be made within sixty (60) days after the Participant ceases to be a Director or an Advisory Director of Equitable; provided, however, that nothing contained in this Section 2.1 shall negate the provisions of Section 2.3 below. 2.2) In the event of the death of the Participant, such payment shall be made to the Participant's beneficiary. For purposes of the Agreement, "beneficiary" means any person(s) or trust(s) or combination of these, last designated by the Participant to receive benefits provided under this Agreement. Such designation shall be in writing filed with the Compensation Committee of the Board of Directors (the "Committee") and shall be revocable at any time through written instrument similarly filed without consent of any beneficiary. In the absence of any designation, the beneficiary shall be the Participant's spouse, if surviving, otherwise, all amounts payable hereunder shall be delivered by Equitable to the executors and administrators of the Participant's estate for administration as a part thereof. 2.3) For financial reasons, the Participant may apply to the Committee for withdrawal from the Agreement prior to the Payment Date. Such early withdrawal shall lie within the absolute discretion of the Committee. Upon approval from the Committee, and within fifteen (15) days thereafter, the Participant will be deemed to have withdrawn from the Agreement and a distribution, in the amount necessary, will be made in a one-time payment. Amounts still payable to the Participant after the application of this Paragraph 2.3 shall be distributed pursuant to the foregoing Paragraphs of this Section 2. Section 3 - Miscellaneous Provisions 3.1) Nothing contained in this Agreement and no action taken pursuant to the provisions of this Agreement shall create or be construed to create a trust of any kind, or a fiduciary relationship between Equitable and the Participant, his/her designated beneficiary or any other person. Any fees deferred under the provisions of this Agreement shall continue for all purposes to be a part of the general funds of Equitable. To the extent that any person acquires a right to receive payment from Equitable under this Agreement, such right shall be no greater than the right of any unsecured general creditor of Equitable. 3.2) The right of the Participant or any other person to the payment of deferred fees under this Agreement shall not be assigned, transferred, pledged or encumbered except by will or by the laws of descent and distribution. 3.3) If the Committee shall find that any person to whom any payment is payable under this Agreement is unable to care for his/her affairs because of illness or accident, or is a minor, any payment due (unless a prior claim therefor shall have been made by a duly appointed guardian, committee or other legal representative) may be paid to the spouse, child, a parent, or a brother or sister, or to any person deemed by the Committee to have incurred expense for such person otherwise entitled to payment, in such manner and proportions as the Committee may determine. Any such payment shall be a complete discharge of the liabilities of Equitable under this Agreement. 3.4) Nothing contained herein shall be construed as conferring upon the Participant the right to continue in the service of Equitable as a member of the Board of Directors. 3.5) This Agreement shall be binding upon and inure to the benefit of Equitable, its successors and assigns and the Participant and his/her heirs, executors, administrators and legal representatives. 3.6) Equitable may terminate this Plan at any time. Upon such termination, the Committee shall dispose of any benefits of the Participant as provided in Section 2. Equitable may also amend the provisions of this Plan at any time; provided, however, that no amendment shall affect the rights of the Participant, or his/her beneficiaries, to the receipt of payment of benefits to the extent of any compensation deferred before the time of the amendment. This Agreement shall terminate when the payment due under this Agreement is made. 3.7) This Agreement shall be construed in accordance with and governed by the laws of the Commonwealth of Pennsylvania. Section 4 - Committee 4.1) The Committee's interpretation and construction of the Agreement, and the actions thereunder, including the amount or recipient of the payment to be made therefrom, shall be binding and conclusive on all persons for all purposes. The Committee members shall not be liable to any person for any action taken or omitted in connection with the interpretation and administration of this Agreement unless attributable to his/her own willful misconduct or lack of good faith. IN WITNESS WHEREOF, Equitable has caused this Agreement to be executed by its duly authorized officers and the Participant has hereunto set his/her hand as of the date first above written. ATTEST: EQUITABLE RESOURCES, INC. s/ Audrey C. Moeller s/ D. I. Moritz Vice President and President and Corporate Secretary Chief Executive Officer WITNESS: (Participant) s/ Douglas Grymes s/ Barbara Sullivan EX-10.4E 5 Exhibit 10.04 (e) EQUITABLE RESOURCES, INC. Board of Directors Deferred Compensation Agreement THIS AGREEMENT, made and executed this 16th day of December, 1994, by and between Equitable Resources, Inc., herein designated as "Equitable", and Barbara B. Sullivan, herein designated as the "Participant." WITNESSETH: WHEREAS, the Participant is currently a member of the Board of Directors of Equitable as a Director or an Advisory Director; and WHEREAS, Equitable and the Participant desire to defer all of the fees arising from the above-stated relationship. NOW, THEREFORE, the parties hereby agree as follows: Section 1 - Account 1.1) Effective December 16, 1994, the Participant herein elects to defer, under the terms of this Agreement, all compensation earned for his/her service as a Director or an Advisory Director of Equitable for the calendar year 1995. 1.2) Equitable shall establish a bookkeeping account, hereinafter referred to as the "Account", and shall credit to the Account the amounts of the deferred fees. 1.3) Interest shall be credited to the Account monthly. The rate of interest shall be the same as the yield for 30-day Treasury Bills applicable to the first day of such month. Section 2 - Payment 2.1) All amounts credited to the Account on the Participant's behalf shall be payable in one lump sum by Equitable to the Participant on January 1, 1998 (date selected by the Participant) but in no event later than sixty (60) days after the Participant ceases to be a Director or an Advisory Director of Equitable. Unless a date specific is selected by the Participant, the distribution will be made within sixty (60) days after the Participant ceases to be a Director or an Advisory Director of Equitable; provided, however, that nothing contained in this Section 2.1 shall negate the provisions of Section 2.3 below. 2.2) In the event of the death of the Participant, such payment shall be made to the Participant's beneficiary. For purposes of the Agreement, "beneficiary" means any person(s) or trust(s) or combination of these, last designated by the Participant to receive benefits provided under this Agreement. Such designation shall be in writing filed with the Compensation Committee of the Board of Directors (the "Committee") and shall be revocable at any time through written instrument similarly filed without consent of any beneficiary. In the absence of any designation, the beneficiary shall be the Participant's spouse, if surviving, otherwise, all amounts payable hereunder shall be delivered by Equitable to the executors and administrators of the Participant's estate for administration as a part thereof. 2.3) For financial reasons, the Participant may apply to the Committee for withdrawal from the Agreement prior to the Payment Date. Such early withdrawal shall lie within the absolute discretion of the Committee. Upon approval from the Committee, and within fifteen (15) days thereafter, the Participant will be deemed to have withdrawn from the Agreement and a distribution, in the amount necessary, will be made in a one-time payment. Amounts still payable to the Participant after the application of this Paragraph 2.3 shall be distributed pursuant to the foregoing Paragraphs of this Section 2. Section 3 - Miscellaneous Provisions 3.1) Nothing contained in this Agreement and no action taken pursuant to the provisions of this Agreement shall create or be construed to create a trust of any kind, or a fiduciary relationship between Equitable and the Participant, his/her designated beneficiary or any other person. Any fees deferred under the provisions of this Agreement shall continue for all purposes to be a part of the general funds of Equitable. To the extent that any person acquires a right to receive payment from Equitable under this Agreement, such right shall be no greater than the right of any unsecured general creditor of Equitable. 3.2) The right of the Participant or any other person to the payment of deferred fees under this Agreement shall not be assigned, transferred, pledged or encumbered except by will or by the laws of descent and distribution. 3.3) If the Committee shall find that any person to whom any payment is payable under this Agreement is unable to care for his/her affairs because of illness or accident, or is a minor, any payment due (unless a prior claim therefor shall have been made by a duly appointed guardian, committee or other legal representative) may be paid to the spouse, child, a parent, or a brother or sister, or to any person deemed by the Committee to have incurred expense for such person otherwise entitled to payment, in such manner and proportions as the Committee may determine. Any such payment shall be a complete discharge of the liabilities of Equitable under this Agreement. 3.4) Nothing contained herein shall be construed as conferring upon the Participant the right to continue in the service of Equitable as a member of the Board of Directors. 3.5) This Agreement shall be binding upon and inure to the benefit of Equitable, its successors and assigns and the Participant and his/her heirs, executors, administrators and legal representatives. 3.6) Equitable may terminate this Plan at any time. Upon such termination, the Committee shall dispose of any benefits of the Participant as provided in Section 2. Equitable may also amend the provisions of this Plan at any time; provided, however, that no amendment shall affect the rights of the Participant, or his/her beneficiaries, to the receipt of payment of benefits to the extent of any compensation deferred before the time of the amendment. This Agreement shall terminate when the payment due under this Agreement is made. 3.7) This Agreement shall be construed in accordance with and governed by the laws of the Commonwealth of Pennsylvania. Section 4 - Committee 4.1) The Committee's interpretation and construction of the Agreement, and the actions thereunder, including the amount or recipient of the payment to be made therefrom, shall be binding and conclusive on all persons for all purposes. The Committee members shall not be liable to any person for any action taken or omitted in connection with the interpretation and administration of this Agreement unless attributable to his/her own willful misconduct or lack of good faith. IN WITNESS WHEREOF, Equitable has caused this Agreement to be executed by its duly authorized officers and the Participant has hereunto set his/her hand as of the date first above written. ATTEST: EQUITABLE RESOURCES, INC. s/ Audrey C. Moeller s/ Frederick H. Abrew Vice President and President and Corporate Secretary Chief Operating Officer WITNESS: (Participant) s/ Janice A. Haas s/ Barbara Sullivan EX-10.05 6 Exhibit 10.05 SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN EQUITABLE RESOURCES, INC. Effective Date: January 1, 1989 As Amended and Restated Through December 16, 1994 I. EFFECTIVE DATE OF PLAN 1.1. Effective Date. The effective date of the Plan is January 1, 1989. II. DEFINITIONS 2.1 Affiliated Company: Any company which is wholly- owned or less than wholly-owned but is controlled by the Company, and any other organization so designated by the Company. 2.2 Beneficiary: The spouse or other beneficiary entitled to a benefit under the applicable Qualified Plan in the event of the death of a participant in such Qualified Plan. 2.3 Company: Equitable Resources, Inc., or any corporation which succeeds to the position of Equitable Resources, Inc. 2.4 Internal Revenue Code: The Internal Revenue Code, as amended, or as it may be amended from time to time, and any regulations issued thereunder. 2.5 Participant: All salaried employees of the Company or Affiliated Company who participate in a Qualified Plan, who are deemed part of a select group of management or highly compensated employees, and who are chosen to participate in the Plan by the Compensation Committee of the Company's Board of Directors. A Participant may be also referred to as "a Member" herein. 2.6 Plan: The Equitable Resources, Inc. Supplemental Executive Retirement Plan as set forth herein, and as may be hereafter amended. 2.7 Qualified Plan: Any defined benefit pension plan of the Company or an Affiliated Company which is qualified under Section 401 of the Internal Revenue Code. 2.8 Capitalized terms not defined herein shall have the meaning given to such terms in the Retirement Plan for Non-Union Employees of Equitable Resources, Inc., Equitable Resources Energy Company, Equitrans, Inc. and Equitable Resources Marketing Company, as amended and restated. III. PLAN BENEFIT 3.1 The monthly benefit payable to any individual Participant shall be an amount equal to the sum of (a) [reduced by (b) and (c)] follows: (a) The amount of retirement benefit that would have been payable to the Participant under any Qualified Plan in which he participates if that Qualified Plan (1) had provided a retirement benefit without regard to any applicable maximum benefit limitations under Section 415 of the Internal Revenue Code or any limitation as to the maximum amount of annual compensation which may be taken into account under Section 401(a)(17) of the Internal Revenue Code or any limitation on the maximum number of years of a Participant's service for which an unrestricted amount of benefit accruals may be taken into account under Section 401(1) of the Internal Revenue Code; and (2) had included payments made under the Company's Short-Term Incentive Compensation Plan in its definition of Compensation. reduced by (b) The amount of retirement benefit payable to the Participant under any Qualified Plan in which he participates taking into account any applicable maximum benefit limitations under Sections 415, 401(a)(17) and 401(1) of the Internal Revenue Code; and (c) The amount of retirement benefit payable to the Participant under the Company's Supplemental Pension Plan. IV. FORM OF PAYMENT OF BENEFITS 4.1 Normal Form: The normal form of retirement benefit shall be a single life annuity, payable monthly, for the life of the Member. If a Member dies prior to the receipt of the full actuarial value of such annuity determined at the time of retirement, the remaining value of the annuity shall be paid in a lump sum to the Member's beneficiary or to the Member's estate if the beneficiary should predecease the Member. 4.2 Qualified Joint and Survivor Annuity: If a Member is married on the later of his applicable Retirement Date or the date his retirement benefit payments commence under the Plan, his retirement benefit payment shall be in the form of a Qualified Joint and Survivor Annuity which is the Actuarial Equivalent of the normal form of retirement benefit payment. A Member who would receive the Qualified Joint Survivor Annuity as provided herein may elect to receive his retirement benefit in the normal form or in one of the following survivorship optional forms and any such election shall be an affirmative election not to receive his benefit in the Qualified Joint and Survivor Annuity form; provided, however, that any such election shall be made prior to the commencement of a Member's services with the Company for which benefits are to be provided under this Plan; and provided that any such election (other than an election to make the spouse a Joint Annuitant pursuant to Section 4.3 to receive a monthly benefit after the death of the Member equal to 75% or 100% of the pension paid to the Member) made after December 31, 1984 shall be effective only if the Member obtains his spouse's consent thereto. If both the Member and his Beneficiary die prior to their joint receipt of the full actuarial value of such annuity determined at the time of retirement, the remaining value of the annuity shall be paid to the Member's estate. 4.3 Survivorship Options: A Member may elect in the manner hereinafter provided to have the value of his retirement benefit payment apply to the payment of a reduced pension to him during his life, and after his death to his designated surviving Joint Annuitant in an amount equal to 100% of, or 75% of, or 50% of, or 25% of such reduced pension. The reduced pensions to be paid to the Member and to the surviving Joint Annuitant shall be determined on the basis of actuarial values selected by the Committee according to the ages of the Member and of the Member's designated Joint Annuitant at the time the Member retires. If both the Member and his Beneficiary die prior to their joint receipt of the full actuarial value of such annuity determined at the time of retirement, the remaining value of the annuity shall be paid to the Member's estate. In order for an effective election of an optional form of benefit to be made hereunder, the following requirements must be met. The present value of benefit payments to be made to the Member determined as of the date benefit payments will commence must exceed fifty percent (50%) of the present value of all payments to be made under the option, except where the designated Joint Annuitant is the Member's spouse. The Member must furnish all information requested by the Committee at the times and in the form and manner required by it, including specific designation of the percentage of the benefit payable to the Member under the option which is to be paid to the Joint Annuitant. A Member may designate only one Joint Annuitant with respect to his election of an option. Any election shall be made prior to the commencement of a Member's services with the Company for which benefits are to be provided under this Plan. 4.4 Pre-retirement Spouse's Benefit: (a) Death On or After Age Fifty-Five or Completion of Twenty-Five Years: Effective on and after March 1, 1985, if a Member who is married on the date of his death and who has attained age fifty-five or completed twenty-five years of Continuous Service dies while actively employed by the Company, his spouse shall receive a benefit, payable in the form of a single life annuity, in an amount equal to fifty percent (50%) of the Member's Accrued Benefit determined as of the first day of the calendar month in which he died but without reduction for age due to benefit commencement prior to the date such Member would have attained age sixty-five, if applicable. (b) Eligibility for Alternative Benefits: Effective on and after August 23, 1984, if a Member who is credited with at least one hour of service (or one hour of paid leave) on or after August 23, 1984, is legally married on the date of his death (a "Qualified Spouse") and who has ten (10) or more years of Continuous Service and a nonforfeitable right to a benefit under the Plan, and who dies prior to said benefit's annuity starting date, his Qualified Spouse shall receive the Survivor's Benefit provided herein in an amount determined in paragraph (c). (c) Amount: The amount of the Survivor's Benefit payable in the form of a life annuity to the surviving Qualified Spouse of Members satisfying (b) shall equal (1) or (2) whichever applies: (1) Death on or After Age Fifty-Five or Completion of Twenty-Five Years of Service: An amount computed in accordance with Section 4.4(a) without regard to whether the Member dies while actively employed by the Company. (2) Death Before Age Fifty-Five or Completion of Twenty-Five Years of Service: An amount equal to the survivor's portion of the Qualified Joint and Survivor Annuity which the Member would have received computed as if he had terminated employment with the Company on the date of his death with a Deferred Vested Benefit, survived to age Fifty-Five (55) and made an election under a Qualified Plan for immediate commencement of benefit payments subject to the reduction, if any, provided in such Qualified Plan for early commencement of benefit payments, commenced receipt of his Deferred Vested Benefit in the form of said Qualified Joint and Survivor Annuity on the first day of the next month and then died the next day. 4.5 Commencement and Termination of Benefit: Retirement benefits shall commence on the Member's Retirement Date. The Survivor Annuity payable to a spouse and the Survivor Annuity payable to the Member's designated Joint Annuitant shall commence on the first day of the month next succeeding the month in which the Member's death occurs. The pre-retirement spouse's benefit payable under Section 4.4 above shall commence on the first day of the month next succeeding the month in which the Member would have attained age fifty-five (55) or the month which he died, whichever is the later to occur. All benefit payments shall cease with payment due immediately preceding the date of death of the last person entitled to benefits under the form of benefit payment being made. Notwithstanding the foregoing, in the event no effective election of a date for commencement of benefits is made by a Member, the payment of benefits hereunder shall commence within thirty (30)days after the close of the Plan Year in which occurs the latest of: (a) attainment of the Member's Normal Retirement Date or if the Member is not an employee his sixty-fifth (65) birthday; (b) the Member's termination of employment with the Company; provided, however, the retirement benefit payments under the Plan shall commence no later than April 1 of the calendar year following the calendar year in which the Member retires. At the first day of the month succeeding the month in which such Member's sixty-fifth (65) birthday occurred, in the event the whereabouts of a Member whose only entitlement is to a Deferred Vested Benefit are not known, a reasonable effort will be made by the Committee to locate such Member. In the event the Member cannot be located, the Member's benefit payments shall be held by the Plan until the earlier of the time the whereabouts of the Member are made known to the Committee by the Member or his lawful agent or seven (7) years subsequent to his Normal Retirement Date, after which such Member shall be presumed dead and any other benefit which becomes payable by reason of such death under the rules of the Plan relating to form of benefit payment shall be paid thereafter. 4.6 Payments in the Event of Incapacity: In the event it is determined that a Member, retired Member or other person entitled to benefits under the Plan, in the judgement of the Committee, is unable to care for his affairs because of illness, accident, or incapacity (either mental or physical), or for any other reason, the Committee shall cause any payment of a benefit or refund of contributions to be paid in the form of a life annuity, payable monthly to a duly appointed guardian, committee, or other legal representative of such person, or, if there is no such legal representative, to his spouse or child or such other object of natural bounty as the Committee may determined, or to such person, persons or institutions as, in the judgement of the Committee, are then maintaining or have custody of such Member, retired Member or other person entitled to benefits. 4.7 Nonforfeitability of Benefits: Except as provided by the Plan, all Member retirement benefits in pay status and all benefits after attainment of the Normal Retirement Age shall be nonforfeitable except in the event of death, which shall result in a forfeiture of all such Member's benefits. These provisions shall have no application to any survivorship annuities, including the Qualified Joint and Survivor Annuity which may be payable by reason of the operation of the rules of this Plan, which benefits shall terminate by reason of the death of the survivor annuitant. All benefits provided by the Plan are personal in nature and shall be payable only to and during the life of the applicable recipient and no other person shall inure to any right therein. For purposes of this Section, "Normal Retirement Age" shall mean the date on which the Member attains age sixty-five (65). 4.8 Special Rule for Small Payments: If a benefit otherwise payable under this Plan is ten dollars ($10.00) or less per month, it shall be paid annually in a lump sum equal to its commuted value. Where the present value of any benefit otherwise payable under the Plan, including without limiting the foregoing, any pre-retirement surviving spouse's benefit, does not exceed $3,500 (and payment of the benefit has not commenced) the Committee shall direct the Trustee to distribute the entire present value in one lump sum payment. As used herein, "present value" shall mean the value of a benefit determined as of the date of distribution utilizing an interest rate not greater than the interest rate which would be used (as of the date of the distribution) by the Pension Benefit Guaranty Corporation for purposes of determining the present value of a lump sum distribution on Plan termination. 4.9 A Participant may request at any time to be granted his entire benefit under this Plan in a lump sum form (whether or not he has commenced receiving an annuity under the Plan). An election of a lump sum payment of benefits hereunder must be approved by the Compensation Committee of the Board of Directors at its sole discretion. However, if the Internal Revenue Service determines at any time that a Participant has constructively received, for any reason and under any rationale, the total value of his benefit payable under this Plan, the Participant shall have an absolute right to elect to receive his benefit in a lump sum form without any action required by the Compensation Committee of the Board of Directors. V. DEATH BENEFITS 5.1 The monthly death benefit payable to the Beneficiary of a Participant, if any, shall be determined in accordance with Section 3.1 above assuming that the term "Beneficiary" has been substituted for the term "Participant" each place it appears. 5.2 Any death benefit payable to the Beneficiary of a Participant under Section 5.1 shall be paid to the Beneficiary in the form of a monthly annuity for the life of the Beneficiary. VI. COST OF THE PLAN 6.1 The entire cost of benefits and administrative expenses for this Plan shall be paid for by the Company as incurred. No contributions by Participants will be permitted or required. VII. ADMINISTRATION 7.1 This Plan shall be administered by the Administrator appointed under the Qualified Plan. In addition, the terms of the Qualified Plan shall govern in situations not specifically provided for herein, but only to the extent such terms are not inconsistent with the provisions and intent of this Plan. VIII. GENERAL PROVISIONS 8.1 This Plan is intended to be a plan maintained by the Company for the purpose of providing deferred compensation to a select group of management or highly compensated employees. 8.2 This Plan is purely voluntary on the part of the Company. The Company expects and intends to continue the Plan indefinitely, but necessarily reserves the right to amend, alter, suspend or terminate the Plan in whole or in part, at any time. 8.3 All rights of a Participant or a Beneficiary under this Plan shall be mere unsecured creditors' rights against the Company, with no rights to the assets of the Company (or any trust in which assets are held for purposes of this Plan) superior to that of any other general unsecured creditor. 8.4 Participant's rights payable under the Plan are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge or encumbrance. Such rights may not be subject to the debts, contracts, liabilities, engagements or torts of the Participants or the Participant's beneficiaries. EX-10.06 7 Exhibit 10.06 RETIREMENT PROGRAM FOR THE BOARD OF DIRECTORS OF EQUITABLE RESOURCES, INC. I BENEFITS After the effective date of this program, any qualified Director who (1) retires after reaching the mandatory retirement age (at present, 72 years) with at least sixty (60) months of service as a Director, or (2) retires prior to the mandatory retirement age with at least 120 months of service as a Director (including any service as a Director prior to July 12, 1984) shall be entitled to receive a benefit equal to the quarterly retainer paid to Directors effective the date such Director's service terminates. The benefit shall be paid quarterly for forty (40) quarters or until death, whichever shall first occur. Any qualified Director who retires prior to the mandatory retirement age with less than 120 months of service shall be entitled to receive a benefit payable for forty (40) quarters or until death, whichever shall first occur, equal to 50 percent of the quarterly retainer paid to Directors effective the date such Director's service terminates, plus 10 percent for each additional twelve (12) months of service in excess of sixty (60) months as a Director. All rights of a Director under this program shall be mere unsecured creditors' rights against the Company, with no rights to the assets of the Company (or any trust in which assets are held for purposes of this program) superior to that of any other general unsecured creditor. Participant's rights payable under the Plan are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge or encumbrance. Such rights may not be subject to the debts, contracts, liabilities, engagements or torts of the participants or the participant's beneficiaries. II QUALIFICATIONS All nonemployee Directors who have reached the age of fifty-eight (58) years or older at the date of retirement as a Director with at least sixty (60) months of service as a Director. A Director's status as to being an employee Director or a nonemployee Director shall be determined at the date of retirement from the Board. Service shall include the time Director was an employee Director. III PAYMENTS Payments as set forth above shall continue as set forth provided the nonemployee Director, if physically able, remains available for consultative services. IV AMENDMENTS The Company reserves the right to alter, amend or discontinue this program at any time. V EFFECTIVE DATE The effective date of this program shall be July 12, 1984. This program has been amended and restated through August 1, 1989. EX-10.07 8 Exhibit 10.07 SUPPLEMENTAL PENSION PLAN EQUITABLE RESOURCES, INC. Effective Date: January 1, 1984 As Amended and Restated I. EFFECTIVE DATE OF PLAN 1.1. Effective Date. The effective date of the Plan is January 1, 1984. II. DEFINITIONS 2.1 Affiliated Company: Any company which is wholly- owned or less than wholly-owned but is controlled by the Company, and any other organization so designated by the Company. 2.2 Beneficiary: The spouse or other beneficiary entitled to a benefit under the applicable Qualified Plan in the event of the death of a participant in such Qualified Plan. 2.3 Company: Equitable Resources, Inc., or any corporation which succeeds to the position of Equitable Resources, Inc. 2.4 Internal Revenue Code: The Internal Revenue Code, as amended, or as it may be amended from time to time, and any regulations issued thereunder. 2.5 Participant: All salaried employees of the Company or Affiliated Company who participate in a Qualified Plan. A Participant may be also referred to as "a Member" herein. 2.6 Plan: The Equitable Resources, Inc. Supplemental Pension Plan as set forth herein, and as may be hereafter amended. 2.7 Qualified Plan: Any defined benefit pension plan of the Company or an Affiliated Company which is qualified under Section 401 of the Internal Revenue Code. 2.8 Capitalized terms not defined herein shall have the meaning given to such terms in the Retirement Plan for Non-Union Employees of Equitable Resources, Inc., Equitable Resources Energy Company, Equitrans, Inc. and Equitable Resources Marketing Company, as amended and restated. III. PLAN BENEFIT 3.1 The monthly benefit payable to a Participant shall be an amount not less than zero equal to (a) reduced by (b) as follows: (a) The amount of retirement benefit that would have been payable to the Participant under any Qualified Plan in which he participates if that Qualified Plan had provided a retirement benefit without regard to any applicable maximum benefit limitations under Section 415 of the Internal Revenue Code; reduced by (b) The amount of retirement benefit payable to the Participant under any Qualified Plan in which he participates taking into account any applicable maximum benefit limitations under Section 415 of the Internal Revenue Code. (c) No benefit may be paid under this Plan which is payable under any Supplemental Executive Retirement Plan maintained by the Company. IV. FORM OF PAYMENT OF BENEFITS 4.1 Normal Form: The normal form of retirement benefit shall be a single life annuity, payable monthly, for the life of the Member. If a Member dies prior to the receipt of the full actuarial value of such annuity determined at the time of retirement, the remaining value of the annuity shall be paid in a lump sum to the Member's beneficiary or to the Member's estate if the beneficiary should predecease the Member. 4.2 Qualified Joint and Survivor Annuity: If a Member is married on the later of his applicable Retirement Date or the date his retirement benefit payments commence under the Plan, his retirement benefit payment shall be in the form of a Qualified Joint and Survivor Annuity which is the Actuarial Equivalent of the normal form of retirement benefit payment. A Member who would receive the Qualified Joint Survivor Annuity as provided herein may elect to receive his retirement benefit in the normal form or in one of the following survivorship optional forms and any such election shall be an affirmative election not to receive his benefit in the Qualified Joint and Survivor Annuity form; provided, however, that any such election shall be made prior to the commencement of a Member's services with the Company for which benefits are to be provided under this Plan; and provided that any such election (other than an election to make the spouse a Joint Annuitant pursuant to Section 4.3 to receive a monthly benefit after the death of the Member equal to 75% or 100% of the pension paid to the Member) made after December 31, 1984 shall be effective only if the Member obtains his spouse's consent thereto. If both the Member and his Beneficiary die prior to their joint receipt of the full actuarial value of such annuity determined at the time of retirement, the remaining value of the annuity shall be paid to the Member's estate. 4.3 Survivorship Options: A Member may elect in the manner hereinafter provided to have the value of his retirement benefit payment apply to the payment of a reduced pension to him during his life, and after his death to his designated surviving Joint Annuitant in an amount equal to 100% of, or 75% of, or 50% of, or 25% of such reduced pension. The reduced pensions to be paid to the Member and to the surviving Joint Annuitant shall be determined on the basis of actuarial values selected by the Committee according to the ages of the Member and of the Member's designated Joint Annuitant at the time the Member retires. If both the Member and his Beneficiary die prior to their joint receipt of the full actuarial value of such annuity determined at the time of retirement, the remaining value of the annuity shall be paid to the Member's estate. In order for an effective election of an optional form of benefit to be made hereunder, the following requirements must be met. The present value of benefit payments to be made to the Member determined as of the date benefit payments will commence must exceed fifty percent (50%) of the present value of all payments to be made under the option, except where the designated Joint Annuitant is the Member's spouse. The Member must furnish all information requested by the Committee at the times and in the form and manner required by it, including specific designation of the percentage of the benefit payable to the Member under the option which is to be paid to the Joint Annuitant. A Member may designate only one Joint Annuitant with respect to his election of an option. Any election shall be made prior to the commencement of a Member's services with the Company for which benefits are to be provided under this Plan. 4.4 Pre-retirement Spouse's Benefit: (a) Death On or After Age Fifty-five: If a Member who is married on the date of his death and who has attained age fifty-five dies while actively employed by the Company, his spouse shall receive the survivor portion of the Qualified Joint and Survivor Annuity determined as if the Member had retired upon the first day of the calendar month in which he died and elected the immediate commencement of his benefit payments. (b) Death On or After Age Fifty-Five or Completion of Twenty-Five Years: Effective on and after March 1, 1985, if a Member who is married on the date of this death and who has attained age fifty-five or completed twenty-five years of Continuous Service dies while actively employed by the Company, his spouse shall receive a benefit, payable in the form of a single life annuity, in an amount equal to fifty percent (50%) of the Member's Accrued Benefit determined as of the first day of the calendar month in which he died but without reduction for age due to benefit commencement prior to the date such Member would have attained age sixty-five, if applicable. (c) Eligibility for Alternative Benefits: Effective on and after August 23, 1984, if a Member who is credited with at least one hour of service (or one hour of paid leave) on or after August 23, 1984, is legally married on the date of his death (a "Qualified Spouse") and who has ten (10) or more years of Continuous Service and a nonforfeitable right to a benefit under the Plan, and who dies prior to said benefit's annuity starting date, his Qualified Spouse shall receive the Survivor's Benefit provided herein in an amount determined in paragraph (d). (d) Amount: The amount of the Survivor's Benefit payable in the form of a life annuity to the surviving Qualified Spouse of Members satisfying (c) shall equal (1) or (2) whichever applies: (1) Death on or After Age Fifty-Five or Completion of Twenty-Five Years of Service: An amount computed in accordance with Section 4.4(b) without regard to whether the Member dies while actively employed by the Company. (2) Death Before Age Fifty-Five or Completion of Twenty-Five Years of Service: An amount equal to the survivor's portion of the Qualified Joint and Survivor Annuity which the Member would have received computed as if he had terminated employment with the Company on the date of his death with a Deferred Vested Benefit, survived to age Fifty-Five (55) and made an election under a Qualified Plan for immediate commencement of benefit payments subject to the reduction, if any, provided in such Qualified Plan for early commencement of benefit payments, commenced receipt of his Deferred Vested Benefit in the form of said Qualified Joint and Survivor Annuity on the first day of the next month and then died the next day. 4.5 Commencement and Termination of Benefit: Retirement benefits shall commence on the Member's Retirement Date. The Survivor Annuity payable to a spouse and the Survivor Annuity payable to the Member's designated Joint annuitant shall commence on the first day of the month next succeeding the month in which the Member's death occurs. The pre-retirement spouse's benefit payable under Section 4.4 above shall commence on the first day of the month next succeeding the month in which the Member would have attained age fifty-five (55) or the month which he died, whichever is the later to occur. All benefit payments shall cease with payment due immediately preceding the date of death of the last person entitled to benefits under the form of benefit payment being made. Notwithstanding the foregoing, in the event no effective election of a date for commencement of benefits is made by a Member, the payment of benefits hereunder shall commence within thirty (30)days after the close of the Plan Year in which occurs the latest of: (a) attainment of the Member's Normal Retirement Date or if the Member is not an employee his sixty-fifth (65) birthday; or (b) the Member's termination of employment with the Company; provided, however, the retirement benefit payments under the Plan shall commence no later than April 1 of the calendar year following the calendar year in which the Member retires. At the first day of the month succeeding the month in which such Member's sixty- fifth (65) birthday occurred, in the event the whereabouts of a Member whose only entitlement is to a Deferred Vested Benefit are not known, a reasonable effort will be made by the Committee to locate such Member. In the event the Member cannot be located, the Member's benefit payments shall be held by the Plan until the earlier of the time the whereabouts of the Member are made known to the Committee by the Member or his lawful agent or seven (7) years subsequent to his Normal Retirement Date, after which such Member shall be presumed dead and any other benefit which becomes payable by reason of such death under the rules of the Plan relating to form of benefit payment shall be paid thereafter. 4.6 Payments in the Event of Incapacity: In the event it is determined that a Member, retired Member or other person entitled to benefits under the Plan, in the judgement of the Committee, is unable to care for his affairs because of illness, accident, or incapacity (either mental or physical), or for any other reason, the Committee shall cause any payment of a benefit or refund of contributions to be paid in the form of a life annuity, payable monthly to a duly appointed guardian, committee, or other legal representative of such person, or, if there is no such legal representative, to his spouse or child or such other object of natural bounty as the Committee may determine, or to such person, persons or institutions as, in the judgement of the Committee, are then maintaining or have custody of such Member, retired Member or other person entitled to benefits. 4.7 Nonforfeitability of Benefits: Except as provided by the Plan, all Member retirement benefits in pay status and all benefits after attainment of the Normal Retirement Age shall be nonforfeitable except in the event of death, which shall result in a forfeiture of all such Member's benefits. These provisions shall have no application to any survivorship annuities, including the Qualified Joint and Survivor Annuity which may be payable by reason of the operation of the rules of this Plan, which benefits shall terminate by reason of the death of the survivor annuitant. All benefits provided by the Plan are personal in nature and shall be payable only to and during the life of the applicable recipient and no other person shall inure to any right therein. For purposes of this Section, "Normal Retirement Age" shall mean the date on which the Member attains age sixty-five (65). 4.8 Special Rule for Small Payments: If a benefit otherwise payable under this Plan is ten dollars ($10.00) or less per month, it shall be paid annually in a lump sum equal to its commuted value. Effective on or after January 1, 1985, where the present value of any benefit otherwise payable under the Plan, including without limiting the foregoing, any pre-retirement surviving spouse's benefit, does not exceed $3,500 (and payment of the benefit has not commenced) the Committee shall direct the Trustee to distribute the entire present value in one lump sum payment. As used herein, "present value" shall mean the value of a benefit determined as of the date of distribution utilizing an interest rate not greater than the interest rate which would be used (as of the date of the distribution) by the Pension Benefit Guaranty Corporation for purposes of determining the present value of a lump sum distribution on Plan termination. 4.9 A Participant may request at any time to be granted his entire benefit under this Plan in a lump sum form (whether or not he has commenced receiving an annuity under the Plan). An election of a lump sum payment of benefits hereunder must be approved by the Compensation Committee of the Board of Directors at its sole discretion. However, if the Internal Revenue Service determines at any time that a Participant has constructively received, for any reason and under any rationale, the total value of his benefit payable under this Plan, the Participant shall have an absolute right to elect to receive his benefit in a lump sum form without any action required by the Compensation Committee of the Board of Directors. V. DEATH BENEFITS 5.1 The monthly death benefit payable to the Beneficiary of a Participant, if any, shall be determined in accordance with Section 3.1 above assuming that the term "Beneficiary" has been substituted for the term "Participant" each place it appears. 5.2 Any death benefit payable to the Beneficiary of a Participant under Section 5.1 shall be paid to the Beneficiary in the form of a monthly annuity for the life of the Beneficiary. VI. COST OF THE PLAN 6.1 The entire cost of benefits and administrative expenses for this Plan shall be paid for by the Company as incurred. No contributions by Participants will be permitted or required. VII. ADMINISTRATION 7.1 This Plan shall be administered by the Administrator appointed under the Qualified Plan. In addition, the terms of the Qualified Plan shall govern in situations not specifically provided for herein, but only to the extent such terms are not inconsistent with the provisions and intent of this Plan. VIII. GENERAL PROVISIONS 8.1 This Plan is intended to be an "excess benefit plan" as that term is used in Section 3(36) of the Employee Retirement Income Security Act of 1974, as amended. 8.2 This Plan is purely voluntary on the part of the Company. The Company expects and intends to continue the Plan indefinitely, but necessarily reserves the right to amend, alter, suspend or terminate the Plan in whole or in part, at any time. 8.3 All rights of a Participant or a Beneficiary under this Plan shall be mere unsecured creditors' rights against the Company, with no rights to the assets of the Company (or any trust in which assets are held for purposes of this Plan) superior to that of any other general unsecured creditor. 8.4 Participant's rights payable under the Plan are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge or encumbrance. Such rights may not be subject to the debts, contracts, liabilities, engagements or torts of the Participants or the Participant's beneficiaries. EX-10.08 9 Exhibit 10.08 POLICY TO GRANT SUPPLEMENTAL DEFERRED COMPENSATION BENEFITS IN SELECTED INSTANCES TO A SELECT GROUP OF MANAGEMENT OR HIGHLY COMPENSATED EMPLOYEES As Amended and Restated Through August l, 1989 I. Effective Date: 1.1 The effective date of this Policy (sometimes referred to as "the Plan") is January 1, 1984. 1.2 Capitalized terms not defined herein shall have the meaning given to such terms in the Retirement Plan for Non-Union Employees of Equitable Resources, Inc., Equitable Gas-Energy, Equitable Resources Energy Company, Eastern Kentucky Production Company and PECO Resources, Inc., as amended and restated effective January 1, 1984 (Plan A). II. Authorization: 2.1 Authority is hereby granted to the Chief Executive Officer of the Company to grant supplemental benefits to a select group of management or highly compensated employees who will retire from the Company, or a related Company, with a benefit based upon less than thirty (30) years of continuous service. III. Implementation: 3.1 The decision to implement a benefit under this policy will be made by means of a Contract entered into between the designated employee ("Member") and the Company. IV. Amount of Benefit: 4.1 The benefit will be in a monthly amount specified in such Contract, the same having been established by the Chief Executive Officer of the Company, but in no event will the amount payable be more than the benefit to which the employee would be entitled under the Company's Qualified Defined Benefit Plan if the employee were to retire at age sixty-five (65) with a benefit based upon thirty (30) years of service, and reduced by (a) and (b) below: (a) The amount of the employee's benefit under the Company's Defined Benefit Plan, plus (b) The amount of deferred vested benefit, if any, to which the employee is entitled on account of his service with other employers preceding his employment with the Company. V. Form of Payment of Benefits: 5.1 Normal Form: The normal form of retirement benefit payment shall be a single life annuity, payable monthly, for the life of the Member. 5.2 Qualified Joint and Survivor Annuity: If a Member is married on the later of his applicable Retirement Date or the date of his retirement benefit payments commence under the Plan, his retirement benefit payment shall be in the form of a Qualified Joint and Survivor Annuity which is the Actuarial Equivalent of the normal form of retirement benefit payment. A Member who would receive the Qualified Joint Survivor Annuity as provided herein may elect as provided in Section 5.5 herein to receive his retirement benefit in the normal form or in one of the following survivorship optional forms and any such election shall be an affirmative election not to receive his benefit in the Qualified Joint and Survivor Annuity form; provided, however, that any such election shall be made prior to the commencement of a Member's services with the Company for which benefits are to be provided under this Plan; and provided, that any such election (other than an election to make the spouse a Joint Annuitant pursuant to Section 5.3 to receive a monthly benefit after the death of the Member equal to 75 percent or 100 percent of the pension paid to the Member) made after December 31, 1984 shall be effective only if the Member obtains his spouse's consent thereto as provided in Section 5.5(c) herein. 5.3 Survivorship Options: A Member may elect in the manner hereinafter provided to have the value of this retirement benefit payment apply to the payment of a reduced pension to him during this life, and after his death to his designated surviving Joint Annuitant in an amount equal to 100 percent of, or 75 percent of, or 50 percent of, or 25 percent of such reduced pension. The reduced pensions to be paid to the Member and to the surviving Joint Annuitant shall be determined on the basis of actuarial values selected by the Committee according to the ages of the Member and of the member's designated Joint Annuitant at the time the Member retires. In order for an effective election of an optional form of benefit to be made hereunder, the following requirements must be met. The election must be made before the commencement of the service to be performed. The present value of benefit payments to be made to the Member determined as of the date benefit payments will commence must exceed fifty percent (50 percent) of the present value of all payments to be made under the option, except where the designated Joint Annuitant is the Member's spouse. The Member must furnish all information requested by the Committee at the times and in the form and manner required by it, including specific designation of the percentage of the benefit payable to the member under the option which is to be paid to the Joint Annuitant. A Member may designate only one Joint Annuitant with respect to his election of an option. Except as otherwise provided in Section 5.2 all elections hereunder are subject to the provisions of Section 5.5 relating to election periods and spousal consents; provided, however, that any such election shall be made prior to the commencement of a Member's services with the Company for which benefits are to be provided under this Plan. 5.4 Pre-retirement Spouse's Benefit: (a) Death On or After Age Fifty-five: If a Member who is married on the date of his death and who has attained age fifty-five dies while actively employed by the Company, his spouse shall receive the survivor portion of the Qualified Joint and Survivor Annuity determined as if the Member had retired upon the first day of the calendar month in which he died and elected the immediate commencement of his benefit payments. (b) Death On or After Age Fifty-five or Completion of Twenty-five Years: Effective on and after March 1, 1985, if a Member who is married on the date of this death and who has attained age fifty-five or completed twenty-five years of Continuous Service dies while actively employed by the Company, his spouse shall receive a benefit, payable in the form of a single life annuity, in an amount equal to fifty percent (50 percent) of the Member's Accrued Benefit determined as of the first day of the calendar month in which he died but without reduction for age due to benefit commencement prior to the date such Member would have attained age sixty-five, if applicable. 5.5 Commencement and Termination of Benefit: Retirement benefits shall commence on the Member's Retirement Date. The survivor annuity payable to a spouse and the survivor annuity payable to the Member's designated Joint Annuitant should commence on the first day of the month next succeeding the month in which the Member's death occurs. The pre-retirement spouse's benefit payable under Section 5.4 above shall commence on the first day of the month next succeeding the month in which the Member would have attained age fifty-five (55) or the month which he died, whichever is the later to occur. All benefit payments shall cease with payment due immediately preceding the date of death of the last person entitled to benefits under the form of benefit payment being made. Notwithstanding the foregoing, in the event no effective election of a date for commencement of benefits is made by a Member, the payment of benefits hereunder shall commence within thirty (30) days after the close of the Plan Year in which occurs the latest of: (a) attainment of the Member's Normal Retirement Date or if the Member is not an employee his sixty-fifth (65) birthday; or (b) the Member's termination of employment with the Company; provided, however, the retirement benefit payments under the Plan shall commence no later than the April 1 of the calendar year following the calendar year in which the Member retires. At the first day of the month succeeding the month in which such Member's sixty-fifth (65) birthday occurred, in the event the whereabouts of a Member whose only entitlement is to a Deferred Vested Benefit are not known, a reasonable effort will be made by the Committee to locate such Member. In the event the Member cannot be located, the Member's benefit payments shall commence and shall be held by the Plan until the earlier of the time the whereabouts of the Member are made known to the Committee by the Member or his lawful agent or seven (7) years subsequent to his Normal Retirement Date, after which such Member shall be presumed dead and any other benefit which becomes payable by reason of such death under the rules of the Plan relating to form of benefit payment shall be paid thereafter. 5.6 Payments in the Event of Incapacity: In the event it is determined that a Member, retired Member or other person entitled to benefits under the Plan, in the judgement of the Committee, is unable to care for his affairs because of illness, accident, or incapacity (either mental or physical), or for any other reason, the Committee shall cause any payment of a benefit or refund of contributions to be paid in the form of a life annuity, payable monthly to a duly appointed guardian, committee, or other legal representative of such person, or, if there is no such legal representative, to his spouse or child or such other object of natural bounty as the Committee may determine, or to such person, persons or institutions as, in the judgement of the Committee, are then maintaining or have custody of such Member, retired Member of other person entitled to benefits. 5.7 Nonforfeitability of Benefits: Except as provided by the Plan, all Member retirement benefits in pay status and all benefits after attainment of the Normal Retirement Age shall be nonforfeitable except in the event of death which shall result in a forfeiture of all such Member's benefits. These provisions shall have no application to any survivorship annuities including the Qualified Joint and Survivor Annuity which may be payable by reason of the operation of the rules of this Plan, which benefits shall terminate by reason of the death of the survivor annuitant. All benefits provided by the Plan are personal in nature and shall be payable only to and during the life of the applicable recipient and no other person shall inure to any right therein. For purposes of this Section, "Normal Retirement Age" shall mean the date on which the Member attains age sixty-five (65). 5.8 Special Rule for Small Payments: If a benefit otherwise payable under this Plan is ten dollars ($10.00) or less per month, it shall be paid annually in a lump sum equal to its commuted value. Effective on or after January 1, 1985, where the present value of any benefit otherwise payable under the Plan, including without limiting the foregoing, any pre-retirement surviving spouse's benefit, does not exceed $3,500 (and payment of the benefit has not commenced) the Committee shall direct the Trustee to distribute the entire present value in one lump sum payment. As used herein, "present value" shall mean the value of a benefit determined as of the date of distribution utilizing an interest rate not greater than the interest rate which would be used (as of the date of the distribution) by the Pension Benefit Guaranty Corporation for purposes of determining the present value of a lump sum distribution on plan termination. VI. Death Benefits: 6.1 In the event of the death, after age fifty-five (55) but prior to retirement, of an employee to whom a benefit has been granted under this Policy, the amount payable under the Contract to the employee's surviving spouse, if any, would be calculated as under the provisions of the Company's Qualified Pension Plan, but based upon the benefit provided under this Policy. VII. Termination: 7.1 In the event that an employee who has been granted a benefit under this Policy leaves the employ of the Company prior to age sixty-two 62 for any reason other than death or disability, the benefits described in this employee's Contract may be forfeited at the discretion of the Chief Executive Officer of the Company. VIII. Costs of the Policy: 8.1 The entire cost of benefits and administrative expenses for benefits granted under this Policy shall be paid for by the Company as incurred. IX. Administration: 9.1 Contracts granted under this Policy shall be administered by the Administrator appointed under the Qualified Plan. In addition, the terms of the Qualified Plan shall govern in situations not specifically provided for herein, but only to the extent such terms are not inconsistent with the provisions and intent of the employee's Contract. X. General Provisions: 10.1 This Policy is intended to provide supplemental benefits for "a select group of management or highly compensated employees" as that term is used in Section 201(2) of ERISA. 10.2 These Contracts are purely voluntary on the part of the Company. The Company expects and intends to continue each Contract for life, but necessarily reserves the right to amend, alter, suspend or terminate any or all Contracts, in whole or in part, at any time. 10.3 All rights of a Participant of a Beneficiary under this Plan shall be mere unsecured creditors' rights against the Company, with no rights to the assets of the Company (or any trust in which assets are held for purposes of this Plan) superior to that of any other general unsecured creditor. 10.4 Participant's rights payable under the Plan are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge or encumbrance. Such rights may not be subject to the debts, contracts, liabilities engagements or torts of the participants or the participant's beneficiaries. EX-10.9A 10 Exhibit 10.09 (a) EQUITABLE RESOURCES, INC. AND SUBSIDIARIES Short-Term Incentive Compensation Plan Administrative Procedures 1. For each plan calendar year 1/, the Compensation Committee (Committee) shall determine: Participants eligible for awards, Estimated maximum awards for each participant; and An estimate of the maximum incentive fund required based on the aggregate estimated maximum awards for the participants for that year. 2. Each participant's estimated maximum award shall be allocated to various performance segments. Objectives and/or goals shall be established for each performance segment consistent with Equitable Resources' business plan. In determining actual incentive awards for each participant for the plan calendar year, each performance segment shall be expressed in a range of dollars from zero to a maximum as determined by the Committee. 3. Following the close of the plan calendar year and after adjusting the estimated maximum awards to reflect the actual salaries earned by each participant during the plan calendar year, each participant's performance shall be evaluated resulting in a recommended award for each participant. The Committee and the Chief Executive Officer shall review the recommended awards to ensure that each participant's performance is objectively and consistently evaluated. ________________ 1/ The plan calendar year is the calendar year, except for the initial year which is applicable to the six months ending December 31, 1984. 4. Following the publication of the Company's consolidated financial statements for the calendar year, the incentive fund shall be determined based upon the Company's financial performance (measured by the rate of return that net income bears to average capitalization 2/ for the year). In no event will the incentive fund exceed 2.5 percent of net income. In addition, return on capitalization goals should be assessed annually to preserve consistency with peer companies' performance opportunities. Should the Company's financial performance be less than the minimum rate of return as determined by the Committee, there shall be no incentive fund for that plan calendar year and no incentive awards shall be authorized. Should the Company's financial performance be equal to or higher than the minimum rate of return as determined by the Committee, the sum of the recommended awards shall be compared to the incentive fund. Should the sum of the recommended awards be less than or equal to the incentive fund, then the recommended award shall be the actual incentive award for each participant. Should the sum of the recommended awards exceed the incentive fund, each participant's actual incentive award shall be derived by reducing the participant's recommended award by the percentage which the sum of the recommended awards exceed the incentive fund. The Committee, after reviewing these procedures, shall authorize the actual incentive award for each participant. ___________ 2 / Effective with the plan calendar year 1986, rate of return will be measured by average capitalization in lieu of average stockholders' equity. Average capitalization is defined as the average balance, as of the beginning and end of the calendar year, applicable to the capitalization and short-term loans for construction in current liabilities as recorded in the certified consolidated balance sheet of Equitable Resources, Inc. 5. The actual incentive award shall be paid to each participant at such time and in such periodic amount as the Committee shall, from time to time, determine, provided however, that in no event shall the payments extend beyond twenty-four(24) months from the date the Committee authorizes the actual incentive awards. 6. The actual incentive award, once authorized by the Committee, may be subsequently revoked should the participant's employment with the Company terminate; provided however, that upon normal retirement or death, all authorized actual incentive awards become due and payable; and provided further, that revocation shall not be applicable where the participant's termination of employment is caused directly or indirectly by a change in control of the Company. (Change in control of the Company is defined as the acquisition of 10 percent or more of the Company's outstanding voting shares and/or a change in the majority of the Board of Directors as a result of a cash tender offer or exchange offer, merger or other business combination, sale of assets or contested election, or any combination of these transactions without the prior consent of the Board of Directors.) 7. The Company's Short-Term Incentive Compensation Plan may be cancelable at the discretion of the Board of Directors, but such cancellation shall not affect actual incentive awards previously authorized. January 18, 1988 EX-10.1D 11 Exhibit 10.11 (d) EQUITABLE RESOURCES, INC. Board of Directors Deferred Compensation Agreement THIS AGREEMENT, made and executed this 15th day of December, 1989, by and between Equitable Resources, Inc., herein designated as "Equitable", and Daniel M. Rooney, herein designated as the "Participant." WITNESSETH: WHEREAS, the Participant is currently a member of the Board of Directors of Equitable as a Director or an Advisory Director; and WHEREAS, Equitable and the Participant desire to defer all of the fees arising from the above-stated relationship. NOW, THEREFORE, the parties hereby agree as follows: Section 1 - Account 1.1) Effective January 1, 1990, the Participant herein elects to defer, under the terms of this Agreement, all compensation earned for his/her service as a Director or an Advisory Director of Equitable for the calendar year 1990. 1.2) Equitable shall establish a bookkeeping account, hereinafter referred to as the "Account", and shall credit to the Account the amounts of the deferred fees. 1.3) Interest shall be credited to the Account monthly. The rate of interest shall be the same as the yield for 30-day Treasury Bills applicable to the first day of such month. Section 2 - Payment 2.1) All amounts credited to the Account on the Participant's behalf shall be payable in one lump sum by Equitable to the Participant on _____________ (date selected by the Participant) but in no event later than sixty (60) days after the Participant ceases to be a Director or an Advisory Director of Equitable. Unless a date specific is selected by the Participant, the distribution will be made within sixty (60) days after the Participant ceases to be a Director or an Advisory Director of Equitable; provided, however, that nothing contained in this Section 2.1 shall negate the provisions of Section 2.3 below. 2.2) In the event of the death of the Participant, such payment shall be made to the Participant's beneficiary. For purposes of the Agreement, "beneficiary" means any person(s) or trust(s) or combination of these, last designated by the Participant to receive benefits provided under this Agreement. Such designation shall be in writing filed with the Compensation Committee of the Board of Directors (the "Committee") and shall be revocable at any time through written instrument similarly filed without consent of any beneficiary. In the absence of any designation, the beneficiary shall be the Participant's spouse, if surviving, otherwise, all amounts payable hereunder shall be delivered by Equitable to the executors and administrators of the Participant's estate for administration as a part thereof. 2.3) For financial reasons, the Participant may apply to the Committee for withdrawal from the Agreement prior to the Payment Date. Such early withdrawal shall lie within the absolute discretion of the Committee. Upon approval from the Committee, and within fifteen (15) days thereafter, the Participant will be deemed to have withdrawn from the Agreement and a distribution, in the amount necessary, will be made in a one-time payment. Amounts still payable to the Participant after the application of this Paragraph 2.3 shall be distributed pursuant to the foregoing Paragraphs of this Section 2. Section 3 - Miscellaneous Provisions 3.1) Nothing contained in this Agreement and no action taken pursuant to the provisions of this Agreement shall create or be construed to create a trust of any kind, or a fiduciary relationship between Equitable and the Participant, his/her designated beneficiary or any other person. Any fees deferred under the provisions of this Agreement shall continue for all purposes to be a part of the general funds of Equitable. To the extent that any person acquires a right to receive payment from Equitable under this Agreement, such right shall be no greater than the right of any unsecured general creditor of Equitable. 3.2) The right of the Participant or any other person to the payment of deferred fees under this Agreement shall not be assigned, transferred, pledged or encumbered except by will or by the laws of descent and distribution. 3.3) If the Committee shall find that any person to whom any payment is payable under this Agreement is unable to care for his/her affairs because of illness or accident, or is a minor, any payment due (unless a prior claim therefor shall have been made by a duly appointed guardian, committee or other legal representative) may be paid to the spouse, child, a parent, or a brother or sister, or to any person deemed by the Committee to have incurred expense for such person otherwise entitled to payment, in such manner and proportions as the Committee may determine. Any such payment shall be a complete discharge of the liabilities of Equitable under this Agreement. 3.4) Nothing contained herein shall be construed as conferring upon the Participant the right to continue in the service of Equitable as a member of the Board of Directors. 3.5) This Agreement shall be binding upon and inure to the benefit of Equitable, its successors and assigns and the Participant and his/her heirs, executors, administrators and legal representatives. 3.6) Equitable may terminate this Plan at any time. Upon such termination, the Committee shall dispose of any benefits of the Participant as provided in Section 2. Equitable may also amend the provisions of this Plan at any time; provided, however, that no amendment shall affect the rights of the Participant, or his/her beneficiaries, to the receipt of payment of benefits to the extent of any compensation deferred before the time of the amendment. This Agreement shall terminate when the payment due under this Agreement is made. 3.7) This Agreement shall be construed in accordance with and governed by the laws of the Commonwealth of Pennsylvania. Section 4 - Committee 4.1) The Committee's interpretation and construction of the Agreement, and the actions thereunder, including the amount or recipient of the payment to be made therefrom, shall be binding and conclusive on all persons for all purposes. The Committee members shall not be liable to any person for any action taken or omitted in connection with the interpretation and administration of this Agreement unless attributable to his/her own willful misconduct or lack of good faith. IN WITNESS WHEREOF, Equitable has caused this Agreement to be executed by its duly authorized officers and the Participant has hereunto set his/her hand as of the date first above written. ATTEST: EQUITABLE RESOURCES, INC. s/ Audrey C. Moeller s/ D. I. Moritz Vice President and President and Corporate Secretary Chief Executive Officer WITNESS: (Participant) s/ David S. Shapiro s/ Daniel M. Rooney EX-10.1I 12 Exhibit 10.11 (i) EQUITABLE RESOURCES, INC. Board of Directors Deferred Compensation Agreement THIS AGREEMENT, made and executed this 15th day of December, 1994, by and between Equitable Resources, Inc., herein designated as "Equitable", and Daniel M. Rooney, herein designated as the "Participant." WITNESSETH: WHEREAS, the Participant is currently a member of the Board of Directors of Equitable as a Director or an Advisory Director; and WHEREAS, Equitable and the Participant desire to defer all of the fees arising from the above-stated relationship. NOW, THEREFORE, the parties hereby agree as follows: Section 1 - Account 1.1) Effective January 1, 1995, the Participant herein elects to defer, under the terms of this Agreement, all compensation earned for his/her service as a Director or an Advisory Director of Equitable for the calendar year 1995. 1.2) Equitable shall establish a bookkeeping account, hereinafter referred to as the "Account", and shall credit to the Account the amounts of the deferred fees. 1.3) Interest shall be credited to the Account monthly. The rate of interest shall be the same as the yield for 30-day Treasury Bills applicable to the first day of such month. Section 2 - Payment 2.1) All amounts credited to the Account on the Participant's behalf shall be payable in one lump sum by Equitable to the Participant on _____________ (date selected by the Participant) but in no event later than sixty (60) days after the Participant ceases to be a Director or an Advisory Director of Equitable. Unless a date specific is selected by the Participant, the distribution will be made within sixty (60) days after the Participant ceases to be a Director or an Advisory Director of Equitable; provided, however, that nothing contained in this Section 2.1 shall negate the provisions of Section 2.3 below. 2.2) In the event of the death of the Participant, such payment shall be made to the Participant's beneficiary. For purposes of the Agreement, "beneficiary" means any person(s) or trust(s) or combination of these, last designated by the Participant to receive benefits provided under this Agreement. Such designation shall be in writing filed with the Compensation Committee of the Board of Directors (the "Committee") and shall be revocable at any time through written instrument similarly filed without consent of any beneficiary. In the absence of any designation, the beneficiary shall be the Participant's spouse, if surviving, otherwise, all amounts payable hereunder shall be delivered by Equitable to the executors and administrators of the Participant's estate for administration as a part thereof. 2.3) For financial reasons, the Participant may apply to the Committee for withdrawal from the Agreement prior to the Payment Date. Such early withdrawal shall lie within the absolute discretion of the Committee. Upon approval from the Committee, and within fifteen (15) days thereafter, the Participant will be deemed to have withdrawn from the Agreement and a distribution, in the amount necessary, will be made in a one-time payment. Amounts still payable to the Participant after the application of this Paragraph 2.3 shall be distributed pursuant to the foregoing Paragraphs of this Section 2. Section 3 - Miscellaneous Provisions 3.1) Nothing contained in this Agreement and no action taken pursuant to the provisions of this Agreement shall create or be construed to create a trust of any kind, or a fiduciary relationship between Equitable and the Participant, his/her designated beneficiary or any other person. Any fees deferred under the provisions of this Agreement shall continue for all purposes to be a part of the general funds of Equitable. To the extent that any person acquires a right to receive payment from Equitable under this Agreement, such right shall be no greater than the right of any unsecured general creditor of Equitable. 3.2) The right of the Participant or any other person to the payment of deferred fees under this Agreement shall not be assigned, transferred, pledged or encumbered except by will or by the laws of descent and distribution. 3.3) If the Committee shall find that any person to whom any payment is payable under this Agreement is unable to care for his/her affairs because of illness or accident, or is a minor, any payment due (unless a prior claim therefor shall have been made by a duly appointed guardian, committee or other legal representative) may be paid to the spouse, child, a parent, or a brother or sister, or to any person deemed by the Committee to have incurred expense for such person otherwise entitled to payment, in such manner and proportions as the Committee may determine. Any such payment shall be a complete discharge of the liabilities of Equitable under this Agreement. 3.4) Nothing contained herein shall be construed as conferring upon the Participant the right to continue in the service of Equitable as a member of the Board of Directors. 3.5) This Agreement shall be binding upon and inure to the benefit of Equitable, its successors and assigns and the Participant and his/her heirs, executors, administrators and legal representatives. 3.6) Equitable may terminate this Plan at any time. Upon such termination, the Committee shall dispose of any benefits of the Participant as provided in Section 2. Equitable may also amend the provisions of this Plan at any time; provided, however, that no amendment shall affect the rights of the Participant, or his/her beneficiaries, to the receipt of payment of benefits to the extent of any compensation deferred before the time of the amendment. This Agreement shall terminate when the payment due under this Agreement is made. 3.7) This Agreement shall be construed in accordance with and governed by the laws of the Commonwealth of Pennsylvania. Section 4 - Committee 4.1) The Committee's interpretation and construction of the Agreement, and the actions thereunder, including the amount or recipient of the payment to be made therefrom, shall be binding and conclusive on all persons for all purposes. The Committee members shall not be liable to any person for any action taken or omitted in connection with the interpretation and administration of this Agreement unless attributable to his/her own willful misconduct or lack of good faith. IN WITNESS WHEREOF, Equitable has caused this Agreement to be executed by its duly authorized officers and the Participant has hereunto set his/her hand as of the date first above written. ATTEST: EQUITABLE RESOURCES, INC. s/ Audrey C. Moeller s/ Frederick H. Abrew Vice President and President and Corporate Secretary Chief Operating Officer WITNESS: (Participant) s/ Marianne Espy s/ Daniel M. Rooney EX-10.12 13 Exhibit 10.12 TRUST AGREEMENT This Agreement made as of the day of , 1989, by and between EQUITABLE RESOURCES, INC., a corporation duly established and existing under the laws of the Commonwealth of Pennsylvania (hereinafter referred to as the "Company"), and Pittsburgh National Bank (hereinafter referred to as the "Trustee"). WITNESSETH WHEREAS, the Company established the Equitable Gas Company Supplemental Pension Plan (the "Supplemental Pension Plan") effective January 1, 1984, as a nonqualified, deferred, unfunded, excess benefits plan to provide benefits to employees of the Company (at that time named Equitable Gas Company) and its affiliated companies in amounts equal to those they would be entitled to under any defined pension benefit plan of the Company or its affiliates except for the maximum benefit limitations of Section 415 of the Internal Revenue Code; and WHEREAS, the Company established a Policy to Grant Supplemental Deferred Compensation Benefits in Selected Instances to a Select Group of Management or Highly Compensated Employees (the "Supplemental Deferred Compensation Policy"), effective January 1, 1984, to enable the Company to contract with certain designated employees in order to provide them with benefits equivalent to those that they would be entitled to receive had they retired at age 65 after 30 years of service with the Company; and WHEREAS, the Company established a nonqualified, unfunded Retirement Program for the Board of Directors of the Company (the "Directors' Retirement Program") effective July 12, 1984, to pay retirement benefits to members of the Board of Directors; and WHEREAS, the Company has entered into a Supplemental Executive Retirement Plan (the "Supplemental Executive Plan") effective January 1, 1989, as a nonqualified, deferred, unfunded plan to provide benefits to employees of the Company and its affiliated companies in amounts equal to those they would be entitled to under any defined pension benefit plan of the Company or its affiliates except for the maximum benefit limitations of Section 401(a)(17) of the Internal Revenue Code and the maximum years of service limitation of Section 401(1) of the Internal Revenue code; and WHEREAS, the Company desires to establish an irrevocable trust (hereinafter referred to as the "Trust") and to transfer to the Trust assets which shall be held there in order to fund the Company's obligations under the Supplemental Pension Plan, the Supplemental Deferred Compensation Policy, the Directors' Retirement Program and the Supplemental Executive Plan (the Supplemental Pension Plan, the Supplemental Deferred Compensation Policy, the Directors' Retirement Program and the Supplemental Executive Plan hereinafter jointly referred to as the "Deferral Agreements") subject to the claims of the Company's general creditors in the event of the Company's bankruptcy or insolvency, until paid as provided in this Agreement. NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and intending to be legally bound hereby, the Company and the Trustee do hereby covenant and agree as follows: SECTION 1 TRUST FUND (A) The Trustee shall receive for deposit in the Trust such cash or other property as shall be transferred to the Trustee by the Company and thereupon the Trust shall be established. All cash or other property so received, together with the income therefrom and any other increment thereon shall be held, managed and administered by the Trustee pursuant to the terms of this Agreement without distinction between principal and income. The Company may make, from time to time, additional deposits of cash or other property to the Trust to be held and administered and disposed of by the Trustee as provided in this Agreement. (B) The Trust is intended to be a "grantor trust," within the meaning of Section 671 of the Internal Revenue Code of 1986, and shall be construed accordingly. (C) For accounting purposes only, a separate account shall be established for each individual participant in the Supplemental Pension Plan, for each individual participant in the Supplemental Deferred Compensation Policy, for each individual participant in the Directors' Retirement Program, and for each individual participant in the Supplemental Executive Plan. Monies allocated to any of these individual accounts (hereinafter the "Trust Accounts") shall be distributable only to the beneficiary of such account (or to the appropriate beneficiaries of such beneficiary pursuant to the provisions of the Deferral Agreements) subject to the provisions set forth below. Such Trust Accounts are collectively designated hereinafter as the "Trust Fund." (D) The Trust Fund shall be held separate and apart from other funds of the Company and shall be used exclusively for the purpose of assuring payment by the Company of future obligations of the Company under the Deferral Agreements, except to the extent otherwise set forth herein. SECTION 2 DISTRIBUTIONS FROM TRUST FUND (A) The Company's Board of Directors' Compensation Committee in the case of Trust Accounts relating to the Directors' Retirement Program and the Company's Employee Pension Committee in the case of Trust Accounts relating to the Supplemental Pension Plan; the Supplemental Executive Plan and the Supplemental Deferred Compensation Policy shall each designate to the Trustee one or more representatives (hereinafter individually or collectively the "Designated Representatives") who shall direct the Trustee, by express written instructions, with respect to all distributions from the Trust Fund, including the amounts, dates and party or parties, which may include the Company, to whom such distribution shall be made. All such distributions shall be made to such party as absolute owner, free and clear of the Trust. (B) The Company shall provide the Trustee with a certified list of the names and specimen signatures of the Designated Representatives. The Company shall also notify the Trustee in writing from time to time of any changes in the Designated Representatives. Until such times as the Trustee is notified by the Company of any such change, the Trustee may continue to rely on instructions from such Designated Representatives. (C) No person, including any participant in the Deferral Agreements, shall have any preferred claim on, or any beneficial ownership interest in, the Trust Fund prior to the time payment from the Trust Fund is made to such person, and all rights created under the Deferral Agreements or the Trust shall be mere unsecured contractual rights against the Company. (D) The Trustee shall make distributions from the Trust Fund pursuant to the written instructions received by the Trustee in accordance with paragraph (A) above (provided that at the time of payment the Trustee has not made a determination in accordance with the provisions of Section 3 below that the Company is Insolvent), and the Trustee shall have no liability for any distributions made by it pursuant to such written instructions. The Trustee shall have no duty to make inquiries as to whether any distribution in accordance with this paragraph (D) is made pursuant to the provisions of the Deferral Agreements. In no event shall the Trustee be obligated or liable to make payments to any participant in excess of the value of the assets held in the applicable Trust Accounts. SECTION 3 TRUSTEE RESPONSIBILITY REGARDING PAYMENTS FROM TRUST FUND WHEN COMPANY INSOLVENT (A) This Agreement and the Trust shall be irrevocable; provided, however, that at all times during the continuance of this Agreement and the Trust, the Trust Fund shall be subject to the claims of the creditors of the Company as hereinafter set forth. (B) The Company shall be considered Insolvent for purposes of this Agreement if it is: (i) unable to pay its debts as they mature; or (ii) subject to a pending proceeding as a debtor under the Bankruptcy Code. (C) At any time the Trustee has actual knowledge, or has determined in accordance with paragraph (D) below, that the Company is Insolvent, the Trustee shall hold for the benefit of, or deliver upon the order of a court of competent jurisdiction, any undistributed portion of the Trust Fund to satisfy the claims of the Company's general creditors. (D) The Board of Directors of the Company and the Chief Executive Officer of the Company shall have the duty to inform the Trustee of the Company's Insolvency. If the Company or a person claiming to be a creditor of the Company alleges in writing to the Trustee that the Company has become Insolvent, the Trustee shall independently determine, within thirty (30) days after receipt of such notice whether the Company is Insolvent, and pending such notice whether the Company is Insolvent, and pending such determination, shall discontinue all payments from the Trust Fund. The Trustee shall resume payments in accordance with Section 2 of this Agreement only after the Trustee has determined that the Company is not Insolvent (or is no longer Insolvent, if the Trustee initially determined the Company to be Insolvent). Nothing in this Agreement shall in any way diminish any rights of any participant in the Deferral Agreements to pursue his or her rights as a general creditor of the Company with respect to benefits under the Deferral Agreements. (E) Unless the Trustee has received notice or otherwise has actual knowledge of the Company's Insolvency or alleged Insolvency, the Trustee shall have no duty to inquire as to whether the Company is Insolvent. The Trustee may in all events rely on evidence concerning the Company's solvency which will give the Trustee a reasonable basis for making a determination concerning the Company's solvency. (F) If the Trustee discontinues payments to a person from the Trust Fund pursuant to paragraph (D) above and subsequently resumes such payments, the first payment to such person following the discontinuance shall include the aggregate amount of all payments which would have been made to such person in accordance with Section 2 of this Agreement during the period of such discontinuance less the aggregate amount of payments made to such person by the Company in lieu of payment hereunder for such period of discontinuance, as specified in writing to the Trustee by the Designated Representatives. SECTION 4 PAYMENTS TO COMPANY Neither the Designated Representatives nor the Company shall have any power or right to direct the Trustee to return to the Company or to divert to others (other than participants in the Deferral Agreements) any portion of the Trust Fund prior to the complete satisfaction of the Company's obligations to participants in the Deferral Agreements. If the Company determines that a portion of the Trust Fund will clearly never be required to satisfy such obligations, such portion may be returned to the Company if the Trustee is directed to make such payment by the Designated Representatives in accordance with Section 2(A) above; the Trustee shall be entitled to rely on the written direction of the Designated Representatives and shall have no duty or obligation to inquire about or challenge such determination by the Company. In addition, on termination of the Trust as provided in Section 9(B) of this Agreement, any remaining assets shall be returned to the Company as provided in Section 9(C). Notwithstanding the foregoing, the Designated Representatives may direct the Trustee to reimburse the Company for payments made by the company to participants in the Deferral Agreements in satisfaction of its obligations thereunder. SECTION 5 INVESTMENT AND ADMINISTRATION OF TRUST (A) The Trustee shall invest and reinvest the assets in the Trust Fund in accordance with the directions of the Treasurer or Assistant Treasurer of the Company. (B) The Trustee shall have the following powers and authority in the administration and investment of the Trust, to be exercised as provided in Section 6 of this Agreement: (i) to exercise (subject to Company direction) any and all investment powers that would be possessed if it were the sole and absolute owner of all securities or other property forming the Trust Fund and to purchase or subscribe for any securities or other property and to retain in the Trust such securities or other property; (ii) to settle, compromise or submit to arbitration, any claims, debts or damages, due or owing to or from the Trust, to commence or defend suits or legal proceedings and to represent the Trust in all suits or legal proceedings; provided, however, that the Trustee shall not be required to undertake or to defend any litigation arising in connection with this Agreement, the Trust or the Trust Fund (other than litigation between the Company and the Trustee or in connection with any alleged negligence or gross or willful misconduct by the Trustee with respect thereto) unless it is first indemnified by the Company against its prospective costs, expenses and liability; SECTION 6 ACCOUNTING BY TRUSTEE (A) The Trustee shall keep accurate and detailed records of all investments, receipts, disbursements and all other transactions required to be done, including such specific records as shall be agreed upon in writing from time to time between the Company and the Trustee. All such accounts, books and records shall be open to inspection and audit at all reasonable times by the Company, and the Designated Representatives. Within sixty (60) days following the close of each calendar year (or such other date as shall be agreed upon in writing between the Company and the Trustee) and within sixty (60) days after the removal or resignation of the Trustee, the Trustee shall deliver to the Company a written account of its administration of the Trust during such year or during the period from the close of the last preceding year to the date of such removal or resignation, setting forth all receipts, investment earnings, disbursements and other transactions effected by it and showing all cash and other property held in the Trust Accounts and Trust Fund at the end of such year or as of the date of such removal or resignation, as the case may be, and certified as to the accuracy of the information set forth therein. In the absence of the filing in writing with the Trustee by the Company of exceptions or objections to any such account within ninety (90) days, the Company shall be deemed to have approved such account; and in such case, or upon the written approval of the Company of any such account, the Trustee shall be released, relieved and discharged with respect to all matters and things set forth in such account as though such account had been settled by the decree of a court of competent jurisdiction. SECTION 7 RESPONSIBILITY OF TRUSTEE (A) The Trustee shall act with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims; provided, however, that the Trustee shall incur no liability to anyone for any action taken pursuant to a direction, request or approval given by the Company or the Designated Representatives, contemplated by and complying with the terms of this Agreement. The Company hereby agrees to indemnify the Trustee and hold it harmless from and against any claim or liability which may be asserted against the Trustee by reason of any such action. (B) The Trustee may consult with legal counsel (who may also be counsel for the Trustee generally) with respect to any of its duties or obligations hereunder, and shall be fully protected in acting or refraining from acting in accordance with the advice of such counsel. (C) The Trustee shall exercise the powers listed in Section 5 of this Agreement at all times in a fiduciary capacity primarily in the interest of the Company. (D) In addition to the powers and authority granted to the Trustee pursuant to Section 4(B) of this Agreement, the Trustee shall have, without exclusion, all powers conferred on Trustees by the laws of the Commonwealth of Pennsylvania unless expressly provided otherwise herein. SECTION 8 COMPENSATION AND EXPENSES OF TRUSTEE The Trustee shall be entitled to receive such reasonable compensation for its services as shall from time to time be agreed upon by the Company and the Trustee. The Trustee shall also receive reimbursement for reasonable expenses incurred by it with respect to the administration of the Trust. Such compensation and expenses, and all income taxes and other taxes of any and all kinds levied or assessed under existing or future laws against the Trustee on behalf of the Trust or against the Trust Fund shall be a charge on the Trust Fund to the extent not paid by the Company. SECTION 9 REPLACEMENT OF TRUSTEE The Trustee may be removed at any time by action of the Board of Directors of the Company and written notice to the Trustee. The Trustee may resign at any time by giving at least thirty (30) days' advance written notice to the Company. In the case of resignation or removal of the Trustee as provided above, or in the case of any other inability of the Trustee to serve, a new trustee, which shall be independent and not subject to control of the Company, shall be appointed by the Board of Directors of the Company. Any successor Trustee shall have the same powers and duties as those conferred upon the Trustee hereunder and a new agreement shall be entered into between the Company and the new Trustee. SECTION 10 AMENDMENT OR TERMINATION (A) This Agreement may be amended at any time and to any extent by a written instrument executed by the Company and the Trustee, except to make the Trust revocable or to adversely affect the interest of any Deferral Agreement participant in funds held in his or her Trust Account. (B) The Trust shall terminate on the date on which the Company notifies the Trustee in writing that: (i) all benefits due under the Deferral Agreements have been paid by the Company to or on behalf of all participants in the Deferral Agreements; or (ii) that the Internal Revenue Service or the Department of Labor has determined that the Deferral Agreements are "funded" for ERISA purposes. (C) Upon termination of the Trust as provided in paragraph (B) above, any assets remaining in the Trust Fund shall be first used to pay any fees and expenses of the Trust and the remainder shall be returned to the Company. (D) The existence of the Trust shall not preclude the Company from amending or terminating the Supplemental Pension Plan or the Supplemental Deferred Compensation Policy (or contracts entered into thereunder) or the Directors' Retirement Program or the Supplemental Executive Plan; provided, however, that the rights of any Deferral Agreement participant in his or her respective Trust Account shall not be adversely affected by such action. SECTION 11 SEVERABILITY AND ALIENATION (A) Any provision of this Agreement prohibited by law shall be ineffective to the extent of any such prohibition without invalidating the remaining provisions hereof. (B) To the extent permitted by law, benefits to which any person is entitled under the Deferral Agreements or the Trust Fund may not be anticipated, assigned (either at law or in equity), pledged or alienated and are not subject to attachment, garnishment, levy, execution or other legal or equitable process and no benefit actually paid to or on behalf of such a person by the Trustee shall be subject to any claim for repayment by the Company or the Trustee; provided, however, that the Company or the Trustee may make a claim for repayment of any amount paid in error. SECTION 12 CONSTRUCTION (A) This Agreement and the Trust shall be governed, construed and administered in accordance with the laws of the Commonwealth of Pennsylvania except to the extent preempted by applicable federal law. (B) This Agreement shall be binding upon and inure to the benefit of the Company and its successors and assigns. IN WITNESS WHEREOF, the Company and the Trustee have caused this Agreement to be executed by their duly authorized officers as of the date first written above. ATTEST: EQUITABLE RESOURCES, INC. _________________________ By _______________________ Corporate Secretary Title ____________________ [Seal] WITNESS: PITTSBURGH NATIONAL BANK _________________________ By _______________________ Title ____________________ 7/89 COMMONWEALTH OF PENNSYLVANIA ) ) SS: COUNTY OF ALLEGHENY ) On this ________ day of ______________, 1989, before me personally came _______________________, to me known, who, being duly sworn, did depose and say that he is the _________________________ of the Company described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; and that he signed his name thereto. _________________________ Notary Public My Commission Expires: COMMONWEALTH OF PENNSYLVANIA ) ) SS: COUNTY OF ALLEGHENY ) On this ___________ day of __________________,1989, before me personally came __________________________, to me known, who, being duly sworn, did depose and say that he is the _________________________ of the Trustee described in and which executed the foregoing instrument; that he knows the seal of said Trustee; that the seal affixed to said instrument is such corporate seal; and that he signed his name thereto. _________________________ Notary Public My Commission Expires: 7/89 EX-10.13 14 Exhibit 10.13 EQUITABLE RESOURCES, INC. NON-EMPLOYEE DIRECTORS' STOCK INCENTIVE PLAN Section 1. Purpose 1.01 The purpose of the 1994 Equitable Resources, Inc. Non-Employee Directors' Stock Incentive Plan (the "Plan") is to assist Equitable Resources, Inc. (together with any successor thereto, the "Company") in attracting and retaining the services of non-employee directors who exhibit a high degree of business responsibility, personal integrity and professionalism. Section 2. Definitions; Construction 2.01 Definitions. In addition to the terms defined elsewhere in the Plan, the following terms as used in the Plan shall have the following meanings when used with initial capital letters: 2.01.1 "Award" means any Option or Restricted Stock granted under the Plan. 2.01.2 "Award Agreement" means any written agreement, contract or other instrument or document evidencing an Award. 2.01.3 "Board" means the Company's Board of Directors. 2.01.4 "Code" means the Internal Revenue Code of 1986, as amended from time to time, together with rules, regulations and interpretations promulgated thereunder. 2.01.5 "Committee" means the Compensation Committee or such other Committee of the Board as may be designated by the Board to administer the Plan, as referred to in Section 3.01 hereof. 2.01.6 "Common Stock" means the shares of the common stock, without par value, and such other securities of the Company as may be substituted for Shares pursuant to Section 8.01 hereof. 2.01.7 "Disability" means that a Participant is disabled within the meaning of Section 422 (c) (6) of the Code. 2.01.8 "Exchange Act" means the Securities Exchange Act of 1934, as amended. 2.01.9 "Fair Market Value" of shares of any stock, including but not limited to Common Stock, or units of any other securities (herein "shares"), shall be the mean between the following prices, as applicable, for the date as of which Fair Market Value is to be determined as quoted in The Wall Street Journal (or in such other reliable publication as the Committee, in its discretion, may determine to rely upon): (a) if the shares are listed on the New York Stock Exchange, the highest and lowest sales prices per share as quoted in the NYSE-Composite Transactions listing for such date, (b) if the shares not listed on such exchange, the highest and lowest sales prices per share for such date on (or on any composite index including) the principal United States securities exchange registered under the Exchange Act on which the shares are listed, or (c) if the shares are not listed on any such exchange, the highest and lowest sales prices per share for such date on the National Association of Securities Dealers Automated Quotations System or any successor system then in use ("NASDAQ"). If there are no such sale price quotations for the date as of which Fair Market Value is to be determined but there are such sale price quotations within a reasonable period both before and after such date, then Fair Market Value shall be determined by taking a weighted average of the means between the highest and lowest sales prices per share as so quoted on the nearest date before and the nearest date after the date as of which Fair Market Value is to be determined. The average should be weighted inversely by the respective numbers of trading days between the selling dates and the date as of which Fair Market Value is to be determined. If there are no such sale price quotations on or within a reasonable period both before and after the date as of which Fair Market Value is to be determined, then Fair Market Value of the shares shall be the mean between the bona fide bid and asked prices per share as so quoted for such date on NASDAQ, or if none, the weighted average of the means between such bona fide bid and asked prices on the nearest trading date before and the nearest trading date after the date as of which Fair Market Value is to be determined, if both such dates are within a reasonable period. The average is to be determined in the manner described above in this Section 2.01.9. If the Fair Market Value of shares on the date as of which Fair Market Value is to be determined cannot be determined on the basis previously set forth in this Section 2.01.9, or if a determination is required as to the Fair Market Value on any date of property other than shares, the Committee shall in good faith determine the Fair Market Value of such shares or other property on such date. Fair Market Value shall be determined without regard to any restriction other than a restriction which, by its terms, will never lapse. 2.01.10 "Option" means a right, granted under Section 6.04 hereof, to purchase Shares at a specified price during specified time periods as provided in Section 6.03. Each Option shall be a nonstatutory stock option, which is an Option not intended to meet the requirements of Section 422 of the Code or any successor provision thereto. 2.01.11 "Participant" means at any time any person who is a member of the Board, but who is not at the time a full-time employee of the Company or any Subsidiary nor has been a full-time employee during the preceding 12-month period. The term "Participant" does not include advisory, emeritus or honorary directors. 2.01.12 "Person" shall have the meaning assigned in the Exchange Act. 2.01.13 "Restricted Stock" means Shares, granted under Section 6.04 hereof, that are subject to restrictions as provided in Section 6.02. 2.01.14 "Retirement" means that a Participant ceases to be a member of the Board for any reason on or after reaching the age of fifty-eight (58) years with at least sixty (60) months of service as a Director. Service shall include the time a Director was an employee Director. 2.01.15 "Rule 16b-3" means Rule 16b-3 under the Exchange Act, as amended from time to time, or any successor to such Rule promulgated by the Securities and Exchange Commission under Section 16 of the Exchange Act. 2.01.16 "Shares" means the common stock of the Company, without par value, and such other securities of the Company as may be substituted for Shares pursuant to Section 8.01 hereof 2.01.17 "Subsidiary" means any corporation in an unbroken chain of corporations beginning with the Company, if each of the corporations other than the last corporation in the chain owns stock possessing at least 50% of the total combined voting power of all classes of stock in one of the other corporations in the chain. Definitions of the terms "Change of Control," "Change of Control Price," "Potential Change of Control...... Related Party," "Voting Securities or Security" and "Beneficial Ownership" are set forth in Section 9.03 hereof 2.02 Construction. For purposes of the Plan, the following rules of construction shall apply: 2.02.1 The word "or" is disjunctive but not necessarily exclusive. 2.02.2 Words in the singular include the plural; words in the plural include the singular, words in the neuter gender include the masculine and feminine genders, and words in the masculine or feminine gender include the other and neuter genders. Section 3. Administration 3.01 The Plan shall be administered by the Committee, members of which receive no additional compensation for such administrative service. All Awards will be automatic and nondiscretionary pursuant to the terms of the Plan. The Committee shall have full and final authority to take the following actions, in each case subject to and consistent with the provisions of the Plan: (i) to interpret and administer the Plan and any instrument or agreement relating to, or Award granted under, the Plan; (ii) to adopt, amend, suspend, waive and rescind such rules and regulations as the Committee may deem necessary or advisable to administer the Plan; (iii) to correct any defect or supply any omission or reconcile any inconsistency, and to construe and interpret the Plan, the rules and regulations, any Award Agreement or other instrument entered into or Award granted under the Plan; and (iv) to make all other decisions and determinations as may be required under the terms of the Plan or as the Committee may deem necessary or advisable for the administration of the Plan. Any action of the Committee with respect to the Plan shall be final, conclusive and binding on all Persons, including the Company, Participants, any Person claiming any rights under the Plan from or through any Participant and shareholders. The express grant of any specific power to the Committee, and the taking of any action by the Committee, shall not be construed as limiting any power or authority of the Committee. The Committee may delegate to officers or managers of the Company the authority, subject to such terms as the Committee shall determine, to perform administrative functions under the Plan. Each member of the Committee shall be entitled to, in good faith, rely or act upon any report or other information famished 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 discretion s granted by the Plan to the Committee shall likewise be exercisable at any time by the Board. Notwithstanding the above or any provisions of the Plan to the contrary, (1) the selection of Participants to whom Awards are to be granted, the number of shares subject to any Award, the exercise price of any Option, the periods during which any Option may be exercised, the term of any Option, the minimum restrictions to which Restricted Stock shall be subject and the duration of such restrictions shall be as hereinafter provided, and the Committee shall have no discretion as to such matters and (2) in no event shall the Committee or the Board have any power of authority which would cause the Plan to fail to be a plan described in Rule 16b-3 (c) (2) (ii). Section 4. Shares Subject to the Plan 4.01 The maximum number of shares of Common Stock in respect of which Awards may be granted under the Plan, subject to adjustment as provided in Section 8.01 of the Plan, shall be 80,000. For purposes of this Section 4.01, the number of Shares to which an Award relates shall be counted against the number of Shares reserved and available under the Plan at the time of grant of the Award. If any Award is forfeited, or an Option otherwise terminates without being exercised in full, any Shares counted against the number of Shares reserved and available under the Plan with respect to such Award shall, to the extent of any such forfeiture or termination, again be available for Awards under the Plan; provided, however, that forfeited Shares of Restricted Stock may not again be made available to the extent the Participant received dividends or other benefits of ownership (not including voting rights) prior to such forfeiture. The payment of the exercise price of an Option in Shares shall not increase the number of Shares available under the Plan. Any Shares distributed pursuant to an Award may consist, in whole or in part, of authorized and unissued Shares or of treasury Shares, including Shares repurchased by the Company for purposes of the Plan. Section 5. Eligibility 5.01 Awards shall be granted only to Participants as defined in Section 2.01.1 1. Section 6. Specific Terms of Awards 6.01 General Awards shall be granted only as set forth in this Section 6. Awards shall be granted for no consideration other than prior and future services. 6.02 Terms of Restricted Stock. Restricted Stock shall be granted to Participants on the following terms and conditions: (i) Restriction Period. Shares of Restricted Stock shall be subject to the restrictions provided in this Section 6.02 during the period (the "Restriction Period") commencing on the date of grant and ending six months after the date of approval of the Plan by the shareholders of the Company as provided in Section 12.01. (ii) Restrictions. During the Restriction Period, Shares of Restricted Stock may not be sold, assigned, transferred or encumbered by the Participant, and certificates for such Shares shall be deposited with the Company in escrow. Subject to the foregoing restrictions, from the date of grant of Restricted Stock, and unless and until such Shares are deemed forfeited to the Company as provided herein, the Participant shall be a shareholder with respect to the Restricted Stock, and shall have all of the rights of a shareholder with respect to such Shares, including the right to vote such Shares and to receive all dividends and other distributions paid with respect to such Shares, except that any dividend or distribution payable during the Restriction Period in Common Stock shall be added to the Restricted Stock awarded and held by the Company in escrow subject to the same restrictions. (iii) Forfeiture of restricted Stock. If during the Restriction Period a Participant shall cease to be a member of the Board for any reason other than death or Disability on or after the date of shareholder approval of the Plan, the Shares of Restricted Stock granted to the Participant shall be deemed forfeited to the Company. (iv) Lapse of Restrictions. The restrictions on Shares of Restricted Stock provided herein shall lapse upon the earlier of (1) expiration of the Restriction Period or (2) the death or Disability of the Participant while a member of the Board during the Restriction Period and on or after the date of shareholder approval of the Plan. As promptly as practicable following the lapse of the restrictions, certificates for such Shares shall be delivered to the Participant or his estate or beneficiary. 6.03 Terms of Options. The Options shall be granted to Participants on the following terms and conditions: (i) Exercise Price. The exercise price per Share of an Option shall be 100% of the Fair Market Value of a Share on the date of grant of such Option. (ii) Option Term. The term of each Option shall be five (5) years from the date of grant, provided however, that the Option shall expire upon the Participant's termination of service as a director of the Company for any reason other than Retirement, Disability or death. (iii) Exercisability. The Option shall become exercisable upon the expiration of three years from the date of grant or, if earlier, upon the Participant's termination of service as a director of the Company by reason of Retirement, Disability or death. (iv) Methods of Exercise. The exercise price of any Option may be paid in cash or Shares, or any combination thereof, having a Fair Market Value on the date of exercise equal to the exercise price, provided, however, that (1) any portion of the exercise price representing a fraction of a Share shall in any event be paid in cash and (2) no Shares which have been held for less than six months may be delivered in payment of the exercise price of an Option. Delivery of Shares in payment of the exercise price of an Option may be accomplished through the effective transfer to the Company of Shares held by a broker or other agent. The Company will also cooperate with any person exercising an Option who participates in a cashless exercise program of a broker or other agent under which all or part of the Shares received upon exercise of the Option are sold through the broker or other agent, or under which the broker or other agent makes a loan to such person, for the purpose of paying the exercise price of an Option. Notwithstanding the preceding sentence, the exercise of the Option shall not be deemed to occur, and no Shares will be issued by the Company upon exercise of an Option, until the Company has received payment in full of the exercise price. 6.04 Grant of Awards. Subject to Section 12.01 hereof-. 6.04.1 Initial Restricted Stock Grants. Upon the effectiveness of a Registration Statement with respect to such shares under the Securities Act of 1933 and the furnishing to such Participants of an appropriate prospectus with respect thereto, each Person who is then a Participant shall automatically be granted 450 Shares of Restricted Stock. 6.04.2 Initial Option Grants. On the first day of June (or if not a day on which the New York Stock Exchange is open for trading, then on the first such trading day thereafter) in each year during the term of the Plan, any Person who is then a Participant and who has not previously been granted Restricted Stock under Section 6.04.1 or an Option under this Section 6.04.2 shall automatically be granted an Option for 2,500 Shares, which shall be in addition to the Option granted to the Participant on such date under Section 6.04.3. 6.04.3 Annual Option Grants. On the first day of June (or if not a day on which the New York Stock Exchange is open for trading, then on the first such trading day thereafter) in each year during the term of the Plan, each Person who is then a Participant shall automatically be granted an Option for 500 Shares. 6.04.4 Allocation of shore. If on any date on which Awards would otherwise be granted under this Section 6.04 the number of Shares remaining available under Section 4.01 is not sufficient for each Participant otherwise entitled to the grant of an Award to be granted an Award for the full number of Shares provided in this Section 6.04, then each such Participant shall automatically be granted an Award for the number of whole Shares (if any) equal to (a) the number of Shares then remaining available under the Plan, multiplied by (b) a fraction of which (1) the numerator is the number of Shares for which such Participant would otherwise be granted an Award on such date and (2) the denominator is the number of Shares for which all Participants would otherwise be granted Awards on such date, with any fractional shares being disregarded. 6.04.5 Nature of Award Grants; Award Agreements. The grant of the Awards provided for in this Section 6.04 shall be automatic and not subject to the discretion of the Committee or any other Person. However, the Committee may condition the right of Participant to be granted an Award upon the execution and delivery by the Participant of an Award Agreement setting forth the terms and conditions of the Award as provided herein and such other terms, conditions and restrictions, not inconsistent with the provisions of the Plan, as the Committee in its discretion may determine. Section 7. General Terms of Awards 7.01 Certain Restrictions Under Rule 16b-3. Upon the effectiveness of any amendment to Rule 16b-3, this Plan and any Award Agreement for an outstanding Award held by a Participant then subject to Section 16 of the Exchange Act shall be deemed to be amended, without further action on the part of the Committee, the Board or the Participant, to the extent necessary for Awards under the Plan or such Award Agreement to qualify for the exemption provided by Rule 16b-3, as so amended, except to the extent any such amendment requires shareholder approval. 7.01.1 Six-Month Limitations on Sales. Except in the case of death, Shares underlying any Award granted under the Plan may not be sold for at least six months after the later of (1) the date of approval of the Plan by the shareholders of the Company as provided in Section 12.01 and (2) the date of grant of the Award; provided, that these limitations shall not apply to the extent such limitations are not at the time required for the grant of the Award to continue to qualify for the exemption provided by Rule 16b-3. Certificates issued for Shares subject to limitations under this Section 7.01.1 may be made subject to stop-transfer orders and/or legended as provided in Section 7.04. 7.01.2 Nontransferability. Options shall not be transferable by a Participant except by will or the laws of descent and distribution and shall be exercisable during a Participant's lifetime only by such Participant or his guardian or legal representative; provided, that these restrictions on transferability shall not apply to the extent such restrictions are not at the time required for the Plan to continue to meet the requirements of Rule 16b- 3. Notwithstanding the preceding sentence and notwithstanding the restrictions on transfer of Restricted Stock, if so determined by the Committee, a Participant may, in the manner established by the Committee, designate a beneficiary or beneficiaries to exercise the rights of the Participant, and to receive any distribution with respect to any Award, upon the death of the Participant. 7.02 Limits on Transfer of Awards,- Beneficiaries. No right or interest of a Participant in any Option or Restricted Stock shall be pledged, encumbered or hypothecated to or in favor of any Person other than the Company, or shall be subject to any lien, obligation or liability of such Participant to any Person other than the Company. A beneficiary, guardian, legal representative or other Person claiming any rights under the Plan from or through any Participant shall be subject to all the terms and conditions of the Plan and any Award Agreement applicable to such Participant as well as any additional restrictions or limitations deemed necessary or appropriate by the Committee. 7.03 Registration and Listing Compliance. No Shares shall be distributed with respect to any Award in a transaction subject to the registration requirements of the Securities Act of 1933, as amended, or any state securities law or subject to a listing requirement under any listing agreement between the Company and any National securities exchange, and no Award shall confer upon any Participant rights to such delivery or distribution until such laws and contractual obligations of the Company have been complied with in all material respects. Neither the grant of any Award nor anything else contained herein shall obligate the Company to take any action to comply with any requirements of any such securities laws or contractual obligations relating to the registration (or exemption therefrom) or listing of any Shares or other securities, whether or not necessary in order to permit any such delivery or distribution. 7.04 Stock Certificates. All certificates for Shares delivered under the terms of the Plan shall be subject to such stop-transfer orders and other restrictions as the Committee may deem advisable under federal or state securities laws, rules and regulations thereunder, and the rules of any National securities exchange or automated quotation system on which Shares are listed or quoted. The Committee may cause a legend or legends to be placed on any such certificates to make appropriate reference to such restrictions or any other restrictions or limitations that may be applicable to Shares. Section 8. Adjustment Provisions 8.01 In the event that the Committee shall determine that any dividend or other distribution (whether in the form of cash, Shares, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, exchange of Shares or other securities of the Company, or other similar corporate transaction or event affects the Shares such that an adjustment is determined by the Committee to be appropriate in order to prevent dilution or enlargement of Participants' rights under the Plan, then the Committee shall, in such manner as it may deem equitable, adjust any or all of (i) the number and kind of Shares which may thereafter be issued in connection with Awards; (ii) the number and kind of Shares issued or issuable in respect of outstanding Options; and (iii) the exercise price of outstanding Options. Section 9. Change of Control Provisions 9.01 Acceleration of Exercisability and Lapse of Restrictions; Automatic Cash-Out of Awards. In the event of a Change of Control, the following acceleration and cash-out provisions shall apply: (i) All outstanding Options shall become fully exercisable, and all restrictions (other than those contained in Section 7.01.1) on outstanding Restricted Stock shall immediately lapse. (ii) All outstanding Awards not subject to limitations under Section 7.01.1 shall be automatically surrendered, and the Participants shall receive, in full satisfaction therefor, cash payments equal to the Change of Control Price of the Shares subject to the Award, reduced in the case of Options by the exercise price thereof In no event will an Award be automatically surrendered or a Participant have the right to receive cash under this Section 9.01 (ii) with respect to an Award (a) if at least six months shall not have elapsed from the date on which the Participant was granted the Award (or, if later, from the date of shareholder approval of the Plan)before the date of the Change of Control (unless this restriction is not at such time required under Rule 16b-3(c)(1) or Rule 16b-3(e)) or (b) if the Participant is subject to Section 16 of the Exchange Act and had the power to control the occurrence or timing of the Change of Control such that the surrender and right to receive cash under this Section 9.01 (ii) would fail to be exempt pursuant to Rule 16b-3(e). (iii) In the event that any Award is subject to limitations under Section 7.01.1 at the time of a Change of Control, then, solely for the purpose of determining the rights of the Participant with respect to such Award, a Change of Control shall be deemed to occur at the close of business on the first business day following the date on which the limitations on such Award under Section 7.01.1 have expired; provided, however, that this Section 9.01 (iii) shall not apply if its application would cause the surrender of the Award and the receipt of cash under Section 9.01 (ii) to fail to be exempt pursuant to Rule 16b3 (e). (iv) In the discretion of the Committee, the Committee may permit any Participant not subject to Section 16 of the Exchange Act on the date of a Change of Control to elect, in such manner and at such time or times or within such periods as the Committee may determine (whether before or after a Change of Control), and subject to such other terms, conditions or restrictions, if any, as the Committee may determine to impose, not to surrender for cash pursuant to Section 9.01 (ii) all or any portion of any Award held by the Participant; provided, however, that such election may not be made available if to do so would cause the grant of the Award to fail to qualify for the exemption provided by Rule 16b3 (c) (2) (ii). 9.02 Creation and Funding of Trust. Upon the occurrence of a Potential Change of Control, the Company shall deposit with the trustee of a trust for the benefit of Participants monies or other property having a Fair Market Value at least equal to the Fair Market Value of the Shares subject to the Awards outstanding at that date, reduced in the case of Options by the aggregate exercise price thereof The trust shall be a grantor trust which shall preserve the "unfunded" status of Awards under the Plan. Subsequent to a Potential Change of Control which is no longer continuing and prior to a Change of Control and termination of the trust, upon the request of the Company, the trustee shall deliver the monies or other property held in the trust to the Company. In the discretion of the Committee, moneys or other property may also be deposited in the trust created under this Section 9.02 for the benefit of participants in any other compensation or benefit plan, program, contract or arrangement of the Company or any Subsidiary. 9.03 Definition of Certain Terms. For purposes of this Section 9, the following definitions, in addition to those set forth in Section 2.01, shall apply: 9.03.1 "Change of Control" means and shall be deemed to have occurred if (i) any Person, other than the Company or a Related Party, purchases or otherwise acquires, under a tender offer or otherwise, Beneficial Ownership of any Voting Securities which, when combined with other Voting Securities then Beneficially Owned by such Person, represent twenty percent (20%) or more of the total voting power of all the then outstanding Voting Securities; or (ii) the individuals (a) who as of the effective date of the Plan constitute the Board or (b) who thereafter are elected to the Board and whose election, or nomination for election, to the Board was approved by a vote of at least two-thirds of the directors then still in office who either were directors as of the effective date of the Plan or whose election or nomination for election was previously so approved (the "Continuing Directors"), cease for any reason to constitute a majority of the members of the Board; or (iii) the Company is a party to a merger, consolidation, share exchange, recapitalization or reorganization of the Company or an acquisition of securities or assets by the Company, other than any such transaction (a) which would result in the Voting Securities outstanding immediately prior thereto continuing to represent either by remaining outstanding or by being converted into Voting Securities of the surviving or acquiring entity, at least fifty percent (50%) of the total voting power represented by the Voting Securities of such surviving or acquiring entity outstanding immediately after such transaction and (b) in or as a result of which the voting rights of each Voting Security relative to the voting rights of all other Voting Securities are not altered other than through the exercise of dissenters' rights; or (iv) the shareholders of the Company approve a plan of complete liquidation of the Company; or (v) the Company shall sell or otherwise dispose of, other than to a Related Party, in a single or a series of related transactions otherwise than in the ordinary course of business, assets of the Company and/or stock or assets of any Subsidiary, having a book value equal to 50% or more of the consolidated total assets of the Company, in each case measured as the date of the most recent quarterly or annual balance sheet of the Company required to be included or incorporated by reference in any proxy or information statement of the Company famished to the shareholders of the Company in connection with such transaction, or if no such proxy or information statement is famished to shareholders or no such balance sheet is required to be included or incorporated by reference therein, as of the date of the most recent quarterly or annual balance sheet of the Company required to be filed with the Securities and Exchange Commission prior to the date of any such transaction; 9.03.2 "Change of Control Price" means, with respect to a Share, the higher of (i) the highest reported sales price of Shares on the New York Stock Exchange's consolidated transaction reporting system (or if the Common Stock is not then listed on such Exchange, on or on any composite index including the principal United States securities exchange on which the Common Stock is then listed, or if none, on NASDAQ or any similar system then in use, and in the absence of any such reported sales prices, the highest publicly reported bid price for Shares) during the 30 calendar days preceding the date of a Change of Control or (ii) the highest price paid or offered in a transaction which either (a) results in a Change of Control or (b) would be consummated but for another transaction which results in a Change of Control and, if it were consummated, would result in a Change of Control. With respect to clause (ii) in the preceding sentence, the "price paid or offered" will be equal to the sum of (a) the face amount of any portion of the consideration consisting of cash or cash equivalents and (b) the fair market value of any portion of the consideration consisting of real or personal property other than cash or cash equivalents, as established by an independent appraiser selected by the Committee. 9.03.3 "Potential Change of Control" means and shall be deemed to have arisen if (i) the Company enters into an agreement, the consummation of which would result in the occurrence of the Change of Control; or (ii) any Person (including the Company) publicly announces an intention to take or to consider taking actions which if consummated would constitute a Change of Control; or (iii) any Person, other than a Related Party, files with the Securities and Exchange Commission a Schedule 13D pursuant to Rule 13d-I under the Exchange Act with respect to Voting Securities; or (iv) any Person, other than the Company or a Related Party, files with the Federal Trade Commission a notification and report form pursuant to the Hart-Scott- Rodino Antitrust Improvements Act of 1976 with respect to any Voting Securities or any assets of the Company or a Subsidiary; or (v) the Board or a committee thereof adopts a resolution to the effect that, for purposes of the Plan, a Potential Change of Control has arisen. A Potential Change of Control will be deemed to continue (a) with respect to an agreement within the purview of clause (i) of the preceding sentence, until the agreement is canceled or terminated; or (b) with respect to an announcement within the purview of clause (ii) of the preceding sentence, until the Person making the announcement publicly abandons the stated intention or fails to act on such intention for a period of 12 calendar months; or (c) with respect to the filing of a Schedule 13D within the purview of clause (iii) of the preceding sentence, until the Person involved publicly announces that its ownership or acquisition of the Voting Securities is for investment purposes only and not for the purpose of seeking a Change of Control or such Person disposes of all Voting Securities exceeding 5% of the outstanding shares of any class; or (d) with respect to the filing of a notification and report form within the purview of clause (iv) of the preceding sentence with respect to Voting Securities or assets, until the person publicly abandons the transaction which was the subject of such filing or fails to act thereon for a period of 12 calendar months or, in the case of a filing with respect to Voting Securities, until the Person involved (1) publicly announces that its ownership or acquisition of the Voting Securities is for investment purposes only and not for the purpose of seeking a Change of Control or (2) following completion of such transaction disposes of all Voting Securities exceeding 5% of the outstanding shares of any class; or (e)until a Change of Control has occurred if the majority of the Continuing Directors, on reasonable belief after due investigation, adopts a resolution that either (1) the Potential Change of Control has ceased to exist or (2) the Potential Change of Control is believed to be not reasonably likely to result in a Change of Control. 9.03.4 "Related Party" means (i) a Subsidiary; or (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Subsidiary; or (iii) a Company owned directly or indirectly by the shareholders of the Company in substantially the same proportion as their ownership of Voting Securities. 9.03.5 "Voting Securities or Security" means any securities of the Company which carry the right to vote generally in the election of directors. 9.03.6 "Beneficial Ownership" shall be determined in accordance with Regulation 13D-G under the Exchange Act, as in effect on the effective date of the Plan. Section 10. Amendments to and Termination of the Plan 10.01 The Board may amend, alter, suspend, discontinue or terminate the Plan without the consent of shareholders or Participants, except that, without the approval of the shareholders of the Company, no amendment, alteration, suspension, discontinuation or termination shall be made if shareholder approval is required by any federal or state law or regulation, or if the Board determines that obtaining such shareholder approval is for any reason advisable; provided, however, that (1) except as provided in Section 7.01, without the consent of the Participant, no amendment, alteration, suspension, discontinuation or termination of the Plan may materially and adversely affect the rights of such Participant under any Award theretofore granted to him and (2) no provision of the Plan referred to in Rule 16b-3 (c) (2) (ii) (A) may be amended more than once every six months other than to comport with changes in the Code or the rules thereunder. Section 11. General Provisions 11.01 No Shareholder Rights. No Option shall confer on any Participant any of the rights of a shareholder of the Company unless and until Shares are in fact issued to such Participant in connection with such Option. 11.02 No Right to Directorship. Nothing contained in the Plan or any Award Agreement shall confer, and no grant of an Award shall be construed as conferring, upon any Participant any right to continue as a director of the Company or interfere in any way with the rights of the shareholders of the Company or the Board to elect and remove directors. 11.03 Unfunded Status of Awards,-Creation of Trusts. The Plan is intended to constitute an unfunded" plan for incentive compensation. With respect to any Shares not yet issued to a Participant pursuant to an Award, nothing contained in the Plan or any Award Agreement shall give any such Participant any rights that are greater than those of a general unsecured creditor of the Company; provided, however, that, in addition to the requirements of Section 9.02, the Committee may authorize the creation of trusts or make other arrangements to meet the Company's obligations under the Plan to deliver Shares pursuant to any Award, which trusts or other arrangements shall be consistent with the "unfunded" status of the Plan unless the Committee otherwise determines. 11.04 No Limit on Other Compensatory Arrangements. Nothing contained in the Plan shall prevent the Company from adopting other or additional compensation arrangements, and such arrangements may be either generally applicable or applicable only in specific cases. To the extent consistent with the Plan, the terms of each Award shall be construed so as to be consistent with such other arrangements in effect at the time the Award is granted. 11.05 No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award. 11.06 Governing Law. The validity, interpretation, construction and effect of the Plan and any rules and regulations relating to the Plan shall be governed by the laws of the Commonwealth of Pennsylvania (without regard to the conflicts of laws thereof), and applicable federal law. 11.07 Severability. If any provision of the Plan or any Award Agreement is or becomes or is deemed invalid, illegal or unenforceable in any jurisdiction, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan, it shall be deleted and the remainder of the Plan shall remain in full force and effect; provided, however, that, unless otherwise determined by the Committee, the provision shall not be construed or deemed amended or deleted with respect to any Participant whose rights and obligations under the Plan are not subject to the law of such jurisdiction or the law deemed applicable by the Committee. Section 12. Effective Date and Term of the Plan 12.01 The effective date and date of adoption of the Plan shall be January 21, 1994, the date of adoption of the Plan by the Board, provided that such adoption of the Plan is approved by the affirmative vote of a majority of the shares of Common Stock present in person or represented by proxy and entitled to vote at a duly held meeting of shareholders of the Company held on or prior to December 31, 1994. Notwithstanding anything else contained in the Plan or in any Award Agreement, no Option granted under the Plan may be exercised, and no certificates for Shares of Restricted Stock may be delivered, prior to such shareholder approval or prior to any required approval or consent from those governmental agencies having jurisdiction in these matters. In the event such shareholder or regulatory approval is not obtained, all Options granted under the Plan shall automatically be deemed void and of no effect, and all Shares of Restricted Stock granted under the Plan shall be deemed forfeited to the Company. No Award may be granted under the Plan subsequent to June 2, 1998. EX-10.14 15 Exhibit 10.14 EQUITABLE RESOURCES, INC. LONG-TERM INCENTIVE PLAN EXHIBIT B Section 1. Purposes 1.01 The purpose of the 1994 Equitable Resources, Inc. Long-Term Incentive Plan (the "Plan") is to enable Equitable Resources, Inc. (together with any successor thereto, the "Company") to focus key executives' efforts on performance which will increase the value of the Company for its shareholders. The Plan is intended to align the interests of key executives with those of the shareholders by encouraging share ownership. The Plan is also intended to help to attract and retain key executives. Section 2. Definitions; Construction 2.01 Definitions. In addition to the terms defined elsewhere in the Plan, the following terms as used in the Plan shall have the following meanings when used with initial capital letters: 2.01.1 "Award" means any Option, Stock Appreciation Right, Restricted Stock, Deferred Stock, Performance Award, Dividend Equivalent, or Other Stock-Based Award, or any other right or interest relating to Shares or cash granted under the Plan. 2.01.2 "Award Agreement" means any written agreement, contract or other instrument or document evidencing an Award. 2.01.3 "Board" means the Company's Board of Directors. 2.01.4 "Code" means the Internal Revenue Code of 1986, as amended from time to time, together with rules, regulations and interpretations promulgated thereunder. 2.01.5 "Committee" means the Compensation Committee or such other Committee of the Board as may be designated by the Board to administer the Plan, as referred to in Section 3.01 hereof; provided however, that the Committee shall qualify to administer the Plan as contemplated by Rule 16b3 (c) (2) (i) of the Exchange Act or any successor and by Section 162 (m) (4) (C) of the Code or any successor. 2.01.6 "Common Stock" means shares of the common stock without par value, and such other securities of the Company as may be substituted for Shares pursuant to Section 8.01 hereof. 2.01.7 "Covered Employee" shall have the meaning provided in Section 162(m) (3) of the Code. 2.01.8 "Deferred Stock" means Shares, granted under Section 6.05 hereof, receipt of which is deferred for a specified deferral period. 2.01.9 "Dividend Equivalent" means a right, granted under Section 6.07 hereof, to receive interest or dividends, or interest or dividend equivalents. 2.01.10 "Exchange Act" means the Securities Exchange Act of 1934, as amended. 2.01.11 "Fair Market Value" of shares of any stock, including but not limited to Common Stock, or units of any other securities (herein "shares"), shall be the mean between the following prices, as applicable, for the date as of which Fair Market Value is to be determined as quoted in The Wall Street Journal (or in such other reliable publication as the Committee, in its discretion, may determine to rely upon): (a) if the shares are listed on the New York Stock Exchange, the highest and lowest sales prices per share as quoted in the NYSE-Composite Transactions listing for such date, (b) if the shares not listed on such exchange, the highest and lowest sales prices per share for such date on (or on any composite index including) the principal United States securities exchange registered under the Exchange Act on which the shares are listed, or (c) if the shares are not listed on any such exchange, the highest and lowest sales prices per share for such date on the National Association of Securities Dealers Automated Quotations System or any successor system then in use ("NASDAQ"). If there are no such sale price quotations for the date as of which Fair Market Value is to be determined but there are such sale price quotations within a reasonable period both before and after such date, then Fair Market Value shall be determined by taking a weighted average of the means between the highest and lowest sales prices per share as so quoted on the nearest date before and the nearest date after the date as of which Fair Market Value is to be determined. The average should be weighted inversely by the respective numbers of trading days between the selling dates and the date as of which Fair Market Value is to be determined. If there are no such sale price quotations on or within a reasonable period both before and after the date as of which Fair Market Value is to be determined, then Fair Market Value of the shares shall be the mean between the bona fide bid and asked prices per share as so quoted for such date on NASDAQ, or if none, the weighted average of the means between such bona fide bid and asked prices on the nearest trading date before and the nearest trading date after the date as of which Fair Market Value is to be determined, if both such dates are within a reasonable period. The average is to be determined in the manner described above in this Section 2.01.10. If the Fair Market Value of shares on the date as of which Fair Market Value is to be determined cannot be determined on the basis previously set forth in this Section 2.01.10, or if a determination is required as to the Fair Market Value on any date of property other than shares, the Committee shall in good faith determine the Fair Market Value of such shares or other property on such date. Fair Market Value shall be determined without regard to any restriction other than a restriction which, by its terms, will never lapse. 2.01.12 "Incentive Stock Option" means an Option that is intended to meet the requirements of Section 422 of the Code or any successor provision thereto and is designated as such in the Award Agreement relating thereto. 2.01.13 "Option" means a right, granted under Section 6.02 hereof, to purchase Shares at a specified price during specified time periods. An Option may be either an Incentive Stock Option or a nonstatutory stock option, which is an Option not intended to be an Incentive Stock Option. 2.01.14 "Other Stock-Based Award" means an Award, granted under Section 6.08 hereof, that is denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Shares. 2.01.15 "Participant" means a key employee of the Company or any Subsidiary, including, but not limited to, Covered Employees, who is granted an Award under the Plan. 2.01.16 "Performance Award" means a right, granted under Section 6.06 hereof, to receive Awards based upon performance criteria specified by the Committee. 2.01.17 "Person" shall have the meaning assigned in the Exchange Act. 2.01.18 "Restricted Stock" means Shares, granted under Section 6.04 hereof, that are subject to certain restrictions. 2.01.19 "Rule 16b-3" means Rule 16b-3 under the Exchange Act, as amended from time to time, or any successor to such Rule promulgated by the Securities and Exchange Commission under Section 16 of the Exchange Act. 2.01.20 "Shares" means the common stock of the Company, without par value, and such other securities of the Company as may be substituted for Shares pursuant to Section 8.01 hereof 2.01.21 "Stock Appreciation Right" means a right, granted under Section 6.03 hereof, to be paid an amount measured by the appreciation in the Fair Market Value of Shares from the date of grant to the date of exercise. 2.01.22 "Subsidiary" means any corporation in an unbroken chain of corporations beginning with the Company, if each of the corporations other than the last corporation in the chain owns stock possessing at least 50% of the total combined voting power of all classes of stock in one of the other corporations in the chain. Definitions of the terms "Change of Control," "Change of Control Price," "Potential Change of Control," "Related Party," "Voting Securities or Security" and "Beneficial Ownership" are set forth in Section 9.03 hereof 2.02 Construction. For purposes of the Plan, the following rules of construction shall apply: 2.02.1 The word "or" is disjunctive but not necessarily exclusive. 2.02.2 Words in the singular include the plural; words in the plural include the singular; words in the neuter gender include the masculine and feminine genders, and words in the masculine or feminine gender include the other and neuter genders. Section 3. Administration 3.01 The Plan shall be administered by the Committee. The Committee shall have full and final authority to take the following actions, in each case subject to and consistent with the provisions of the Plan: (i) to designate Participants; (ii) to determine the type or types of Awards to be granted to each Participant; (iii) to determine the number of Awards to be granted, the number of Shares or amount of cash or other property to which an Award will relate, the terms and conditions of any Award (including, but not limited to, any exercise price, grant price or purchase price, any limitation or restriction, any schedule for lapse of limitations, forfeiture restrictions or restrictions on exercisability or transferability, and accelerations or waivers thereof, based in each case on such considerations as the Committee shall determine), and all other matters to be determined in connection with an Award; (iv) to determine whether, to what extent and under what circumstances an Award may be settled in, or the exercise price of an Award may be paid in cash, Shares, other Awards or other property, or an Award may be accelerated, vested, canceled, forfeited, exchanged or surrendered; (v) to determine whether, to what extent and under what circumstances cash, Shares, other Awards, other property and other amounts payable with respect to an Award shall be deferred, whether automatically or at the election of the Committee or at the election of the Participant; (vi) to interpret and administer the Plan and any instrument or agreement relating to, or Award made under, the Plan; (vii) to prescribe the form of each Award Agreement, which need not be identical for each Participant; (viii) to adopt, amend, suspend, waive and rescind such rules and regulations as the Committee may deem necessary or advisable to administer the Plan; (ix) to correct any defect or supply any omission or reconcile any inconsistency, and to construe and interpret the Plan, the rules and regulations, any Award Agreement or other instrument entered into or Award made under the Plan; (x) to make all other decisions and determinations as may be required under the terms of the Plan or as the Committee may deem necessary or advisable for the administration of the Plan; (xi) to submit for shareholder approval or not as may be appropriate and to take such other actions and make such other decisions as may be required by the Revenue Reconciliation Act of 1993 with respect to the definition of performance-based compensation as it may from time to time be defined; and (xii) to make such filings and take such actions as may be required from time to time by appropriate state, regulatory and governmental agencies. Any action of the Committee with respect to the Plan shall be final, conclusive and binding on all Persons, including the Company, Subsidiaries, Participants, any Person claiming any rights under the Plan from or through any Participant, employees and shareholders. The express grant of any specific power to the Committee, and the taking of any action by the Committee, shall not be construed as limiting any power or authority of the Committee. The Committee may delegate to officers or managers of the Company or any Subsidiary the authority, subject to such terms as the Committee shall determine, to perform administrative functions under the Plan and, with respect to Participants who are not subject to Section 16 of the Exchange Act, to take such actions and perform such functions under the Plan as the Committee may specify. Each member of the Committee shall be entitled to, in good faith, rely or act upon any report or other information furnished to him by an officer, manager or other employee of the Company or a Subsidiary, the Company's independent certified public accountants, or any executive compensation consultant or other professional retained by the Company to assist in the administration of the Plan. Section 4. Shares Subject to the Plan 4.01 The maximum number of shares of Common Stock in respect of which Awards may be granted under the Plan in any calendar year, subject to adjustment as provided in Section 8.01 of the Plan, shall be (a) in 1994 the sum of (1) one percent (I%) of the total number of issued and outstanding shares of Common Stock as of December 31, 1993 and (2) the number of shares of Common Stock which are reserved but not subject to grants under the Company's Key Employee Restricted Stock Option and Stock Appreciation Rights Incentive Compensation Plan as of the date this Plan is approved by the shareholders of the Company and (b) in each succeeding calendar year the sum of (1) one percent (I%) of the total number of issued and outstanding shares of Common Stock as of the close of the preceding calendar year, (2) the number of shares of Common Stock which were available for Awards under this Section 4.01 as of the close of the preceding calendar year and (3) any shares of Common Stock which are subject to an outstanding Award at the beginning of such year but which thereafter again become available for Awards under the Plan as provided in the fourth paragraph of this Section 4.01; provided, however, that in no event may: (i) the sum of (x) the number of Shares subject to all outstanding Awards under the Plan and (y) the number of Shares previously issued under the Plan at any time equal or exceed 5% of the total number of shares of Common Stock outstanding on the date of shareholder approval of the Plan; or (ii) the sum of (x) the number of Shares subject to all outstanding Options and Stock Appreciation Rights granted under the Plan and held by any single Participant and (y) the number of shares previously issued to such Participant upon exercise of Options and Stock Appreciation Rights granted under the Plan at any time exceed 25% of the sum of (A) the total number of Shares subject to all outstanding Awards under the Plan, (B) the total number of Shares previously issued under the Plan and (C) the total number of Shares then available for the grant of additional Awards under the Plan. Subject to subparagraphs (i) and (ii) above, but notwithstanding anything else contained above in this Section 4.01, in the event of a Change of Control, the maximum number of shares of Common Stock available for Awards under the Plan shall be 5% of the total number of shares of Common Stock issued and outstanding on the date of shareholder approval of the Plan, less (1) the number of Shares subject to outstanding Awards under the Plan and (2) the number of Shares previously issued under the Plan. For purposes of this Section 4.01, the number of Shares to which an Award relates shall be counted against the number of Shares reserved and available under the Plan at the time of grant of the Award, unless such number of Shares cannot be determined at that time, in which case the number of Shares actually distributed pursuant to the Award shall be counted against the number of Shares reserved and available under the Plan at the time of distribution; provided, however, that Awards related to or retroactively added to, or granted in tandem with, substituted for or converted into, other Awards shall be counted or not counted against the number of Shares reserved and available under the Plan in accordance with procedures adopted by the Committee so as to ensure appropriate counting but avoid double counting. If any Shares to which an Award relates are forfeited, or payment is made to the Participant in the form of cash, cash equivalents or other property other than Shares, or the Award otherwise terminates without payment being made to the Participant in the form of Shares, any Shares counted against the number of Shares reserved and available under the Plan with respect to such Award shall, to the extent of any such forfeiture, alternative payment or termination, again be available for Awards under the Plan provided, however, forfeited Shares may not again be made available to the extent the Participant received dividends or other benefits of ownership (not including voting rights) prior to such forfeiture. The payment of the exercise price of an Award in Shares shall not increase the number of Shares available under the Plan. Any Shares distributed pursuant to an Award may consist, in whole or part, of authorized and unissued Shares or of treasury Shares, including Shares repurchased by the Company for purposes of the Plan. Section 5. Eligibility 5.01 Awards may be granted only to individuals who are key full-time employees (including, without limitation, employees who also are directors or officers and Covered Employees) of the Company or any Subsidiary; provided, however, that no Award shall be granted to any member of the Committee. Section 6. Specific Terms of Awards 6.01 GeneraL Subject to the terms of the Plan and any applicable Award Agreement, Awards may be granted as set forth in this Section 6. In addition, the Committee may impose on any Award or the exercise thereof, at the date of grant or thereafter (subject to the terms of Section 10.01), such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall determine, including separate escrow provisions and terms requiring forfeiture of Awards in the event of termination of employment by the Participant. Except as provided in Section 7.01, or as required by applicable law, Awards may be granted for no consideration other than prior and/or future services. 6.02 Options. The Committee is authorized to grant Options to Participants on the following terms and conditions: (i) Exercise Price. The exercise price per Share of an Option shall be 100% of the Fair Market Value of a Share on the date of grant of such Option, except as otherwise provided in Section 7.01, and except that in the case of an Incentive Stock Option granted to an employee who, immediately prior to such grant, owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any Subsidiary (a "Ten Percent Employee") such exercise price shall be I 10% of the Fair Market Value of a Share on the date of grant. For purposes of the preceding sentence, an individual (A) shall be considered as owning not only shares of stock owned individually but also all shares of stock that are at the time owned, directly or indirectly, by or for the spouse, ancestors, lineal descendants and brothers and sisters (whether by the whole or half blood) of such individual and (B) shall be considered as owning proportionately any shares owned, directly or indirectly, by or for arty corporation, partnership, estate or trust in which such individual is a shareholder, partner or beneficiary. (ii) Option Term. The term of each Option shall be determined by the Committee, except that no Incentive Stock Option shall be exercisable after the expiration of ten years from the date of grant, and no Incentive Stock Option granted to a Ten Percent Employee shall be exercisable after the expiration of five years from the date of grant. (iii) Times and Methods of Exercise. The Committee shall determine the time or times at which an Option may be exercised in whole or in part, the methods by which such exercise price may be paid or deemed to be paid, and the form of such payment, including, without limitation, cash, Shares, other outstanding Awards or other property (including notes or other contractual obligations of Participants to make payment on a deferred basis, to the extent permitted by law) or any combination thereof, having a Fair Market Value on the date of exercise equal to the exercise price, provided, however, that (1) in the case of a Participant who is at the time of exercise subject to Section 16 of the Exchange Act, any portion of the exercise price representing a fraction of a Share shall in any event be paid in cash or in property other than any equity security (as defined by the Exchange Act) of the Company and (2) except as otherwise determined by the Committee, in its discretion, at the time the Option is granted, no shares which have been held for less than six months may be delivered in payment of the exercise price of an Option. 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 dales. 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 $ 1 00,000 restriction set forth in the first sentence of this paragraph and even if such Incentive Stock Options are thereby converted in whole or in part to nonstatutory stock options. 6.03 Stock Appreciation Rights. The Committee is authorized to grant Stock Appreciation Rights to Participants on the following terms and conditions: (i) Right to Payment. A Stock Appreciation Right shall confer on the Participant to whom it is granted a right to receive, upon exercise thereof, the excess of (A) the Fair Market Value of a Share on the date of exercise or, if the Committee shall so determine in the case of any such right other than one related to any Incentive Stock Option, at any time during a specified period before or after the date of exercise, over (B) the grant price of the Stock Appreciation Right as determined by the Committee as of the date of grant of the Stock Appreciation Right, which, except as provided in Section 7.01, shall be equal to the Fair Market Value of a Share on the date of grant. (ii) Other Terms. The term, methods of exercise, methods of settlement and any other terms and conditions of any Stock Appreciation Right shall be determined by the Committee. 6.04 Restricted Stock. The Committee is authorized to grant Restricted Stock to Participants on the following terms and conditions: (i) Issuance and Restrictions. Restricted Stock shall be subject to such restrictions on transferability and other restrictions as the Committee may impose (including, without limitation, limitations on the right to vote Restricted Stock or the right to receive dividends thereon), which restrictions may lapse separately or in combination at such times, under such circumstances, in such installments or otherwise, as the Committee shall determine at the time of grant or thereafter. (ii) Forfeiture. Except as otherwise determined by the Committee at the time of grant or thereafter, upon termination of employment (as determined under criteria established by the Committee) during the applicable restriction period, Restricted Stock that is at that time subject to restrictions shall be forfeited and reacquired by the Company; provided, however, that the Committee may provide, by rule or regulation or in any Award Agreement, that restrictions on Restricted Stock shall be waived in whole or in part in the event of terminations resulting from specified causes, and the Committee may in other cases waive in whole or in part restrictions on Restricted Stock. (iii) Certificates for Shares. Restricted Stock granted under the Plan may be evidenced in such manner as the Committee shall determine, including, without limitation, issuance of certificates representing Shares. Certificates representing Shares of Restricted Stock shall be registered in the name of the Participant and shall bear an appropriate legend referring to the terms, conditions and restrictions applicable to such Restricted Stock. 6.05 Deferred Stock. The Committee is authorized to grant Deferred Stock to Participants on the following terms and conditions: (i) Issuance and Limitations. Delivery of Shares shall occur upon expiration of the deferral period specified for the Award of Deferred Stock by the Committee. In addition, an Award of Deferred Stock shall be subject to such limitations as the Committee may impose, which limitations may lapse at the expiration of the deferral period or at other specified times, separately or in combination, in installments or otherwise as the Committee shall determine at the time of grant or thereafter. A Participant awarded Deferred Stock shall have no voting rights and shall have no rights to receive dividends in respect of Deferred Stock, unless and only to the extent that the Committee shall award Dividend Equivalents in respect of such Deferred Stock. (ii) Forfeiture. Except as otherwise determined by the Committee upon termination of employment (as determined under criteria established by the Committee) during the applicable deferral period, Deferred Stock that is at that time subject to deferral (other than a deferral at the election of the Participant) shall be forfeited; provided, however, that the Committee may provide, by rule or regulation or in any Award Agreement, that forfeiture of Deferred Stock shall be waived in whole or in part in the event of terminations resulting from specified causes, and the Committee may in other cases waive in whole or in part the forfeiture of Deferred Stock. 6.06 Performance Awards. The Committee is authorized to grant Performance Awards to Participants on the following terms and conditions: (i) Right to Payment. A Performance Award shall confer upon the Participant rights, valued as determined by the Committee, and payable to, or exercisable by, the Participant to whom the Performance Award is granted, in whole or in part, as the Committee shall establish. The performance criteria and all other terms and conditions of the Performance Award shall be determined by the Committee upon the grant of each Performance Award or thereafter. (ii) Other Terms. A Performance Award may be denominated or payable in cash, deferred cash, Shares, other Awards or other property, and other terms and conditions of Performance Awards shall be as determined by the Committee. 6.07 Dividend Equivalents. The Committee is authorized to grant Dividend Equivalents to Participants. Dividend Equivalents shall confer upon the Participant rights to receive, currently or on a deferred basis, interest or dividends, or interest or dividend equivalents, with respect to a number of Shares, or otherwise, as determined by the Committee. The Committee may provide that Dividend Equivalents shall be paid or distributed when accrued or shall be deemed to have been reinvested in additional Shares or additional Awards or otherwise reinvested. 6.08 Other Stock-Based Awards. The Committee is authorized, subject to limitations under applicable law, to grant to Participants such other Awards that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Shares, as deemed by the Committee to be consistent with the purposes of the Plan and, with respect to Participants who are subject to Section 16 of the Exchange Act, to comply with Rule 16b-3 and applicable law including, without limitation, purchase rights, Shares awarded which are not subject to any restrictions or conditions, convertible securities, exchangeable securities or other rights convertible or exchangeable into Shares, as the Committee in its discretion may determine. In the discretion of the Committee, such Other Stock-Based Awards, including Shares, or other types of Awards authorized under the Plan, may be used in connection with, or to satisfy obligations of the Company or a Subsidiary under, other compensation or incentive plans, programs or arrangements of the Company or any Subsidiary for eligible Participants, including without limitation 'the Short-Term Incentive Compensation Plan, the Supplemental Executive Retirement Plan (SERP) and executive contracts. The Committee shall determine the terms and conditions of Other Stock-Based Awards. Except as provided in Section 7.01, Shares or securities delivered pursuant to a purchase right granted under this Section 6.08 shall be purchased for such consideration, paid for by such methods and in such forms, including, without limitation, cash, Shares, outstanding Awards or other property or any hereof, as the Committee shall determine, but the value of such consideration shall not be less than the Fair Market Value of such Shares or other securities on the date of grant of such purchase right. Delivery of Shares or other securities in payment of a purchase right, if authorized by the Committee, may be accomplished through the effective transfer to the Company of Shares or other securities held by a broker or other agent. Unless otherwise determined by the Committee, the Company will also cooperate with any person exercising a purchase right who participates in a cashless exercise program of a broker or other agent under which all or part of the Shares or securities received upon exercise of a purchase right are sold through the broker or other agent, or under which the broker or other agent makes a loan to such person, for the purpose of paying the exercise price of a purchase right. Notwithstanding the preceding sentence, unless the Committee, in its discretion, shall otherwise determine, the exercise of the purchase right shall not be deemed to occur, and no Shares or other securities will be issued by the Company upon exercise of a purchase right, until the Company has received payment in full of the exercise price. 6.09 Exchange Provisions. The Committee may at any time offer to exchange or buy out any previously granted Award for a payment in cash, Shares, another Award or other property, based on such terms and conditions as the Committee shall determine and communicate to the Participant at the time that such offer is made. Section 7. General Terms of Awards 7.01 Stand-Alone, Tandem and Substitute Awards. Awards granted under the Plan may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with or in substitution for, any other Award granted under the Plan or any award granted under the Management Incentive Compensation Plan, or any other plan, program or arrangement of the Company or any Subsidiary (subject to the terms of Section 10.01) or any business entity acquired or to be acquired by the Company or a Subsidiary. If an Award is granted in substitution for another Award or award, the Committee shall require the surrender of such other Award or award in consideration for the grant of the new Award. Awards granted in addition to or in tandem with other Awards or awards may be granted either at the same time as or at a different time from the grant of such other Awards or awards, except that Awards may be granted in tandem with an Incentive Stock Option only at the time the Incentive Stock Option is granted. The exercise price of any Option, the grant price of any Stock Appreciation Right or the purchase price of any other Award conferring a right to purchase Shares: (i) granted in substitution for an outstanding Award or award shall be not less than the Fair Market Value of Shares at the date such substitute Award is granted; provided, however, that (1) except in the case of (a) an Incentive Stock Option or (b) an Option or Stock Appreciation Right granted to a Covered Employee, the exercise, grant or purchase price per share of the substituted Award may be reduced to reflect the Fair Market Value of the Award or award required to be surrendered by the Participant as a condition to receipt of such substitute Award, and (2) in the case of any Participant, the Committee may, in lieu of such price reduction, make an additional Award or payment to the Participant reflecting the Fair Market Value of the Award or award required to be surrendered; or (ii) retroactively granted in tandem with an outstanding Award or award shall be not less than the lesser of the Fair Market Value of Shares at the date of grant of the later Award or the Fair Market Value of Shares at the date of grant of the earlier Award. 7.02 Certain Restrictions Under Rule ]6b-3. Upon the effectiveness of any amendment to Rule 16b-3, this Plan and any Award Agreement for an outstanding Award held by a Participant then subject to Section 16 of the Exchange Act shall be deemed to be amended, without further action on the part of the Committee, the Board or the Participant, to the extent necessary for Awards under the Plan or such Award Agreement to qualify for the exemption provided by Rule 16b-3, as so amended, except to the extent any such amendment requires shareholder approval. 7.02.1 Six-Month Limitations on Sales and Exercises. Any equity security (as defined by the Exchange Act), other than a derivative security, granted or awarded pursuant to the Plan to a Participant who is at the time of grant or award subject to Section 16 of the Exchange Act must be held by the Participant for at least six months after grant (or, if later, after the date of shareholder approval of the Plan), except in the case of death. If a derivative security is granted or awarded to a Participant who is at the time of grant or award subject to Section 16 of the Exchange Act, (1) the Participant may not dispose of the derivative security (other than through exercise or conversion or upon death) or of any equity security acquired upon its exercise or conversion (other than upon death) until six months have elapsed from the date of grant or award of the derivative security (or, if later, from the date of shareholder approval of the Plan) and (2) except with respect to an Option, the derivative security may not be exercised or converted within such six-month period (other than upon death) unless such exercise would not cause the grant or award of the derivative security to cease to be exempt under Rule 16b- 3. The limitations in this Section 7.02.1 shall not apply to the extent such limitations are not at the time required for the grant of the Award to continue to qualify for the exemption provided by Rule 16b-3. Certificates issued for Shares subject to limitations under this Section 7.02.1 may be made subject to stop-transfer orders, legended and/or made subject to a custodial arrangement as provided in Section 7.07. 7.02.2 Nontransferability. Awards which constitute derivative securities shall not be transferable by a Participant except by will or the laws of descent and distribution and shall be exercisable during a Participant's lifetime only by such Participant; provided, however, that, if so determined by the Committee, a Participant may, in the manner established by the Committee, designate a beneficiary or beneficiaries to exercise the rights of the Participant, and to receive any distribution with respect to any Award (other than an Incentive Stock Option), upon the death of the Participant; and provided, further, that the Committee may determine that these restrictions on transferability shall not apply to Awards (other than an Incentive Stock Option) granted to any Participant who, at the time of the initial grant and the transfer, is not subject to Section 16 of the Exchange Act or shall not apply to Awards (other than an Incentive Stock Option) granted to a Participant subject to Section 16 to the extent such restrictions are not at the time required for the Plan to continue to meet the requirements of Rule 16b-3. 7.02.3 Decisions Required to be Made by the Committee. Other provisions of the Plan and any Award Agreement notwithstanding, if any decision regarding an Award or the exercise of any right by a Participant, at any time such Participant is subject to Section 16 of the Exchange Act, is required to be made or approved by the Committee in order that the Plan will continue to meet the requirements of Rule 16b-3 or in order that a transaction by such Participant will be exempt under Rule 16b-3, then the Committee shall retain full and exclusive power and authority to make such decision or to approve or disapprove any such decision by the Participant. 7.03 Term of Awards. The term of each Award shall be for such period as may be determined by the Committee; provided, however, that in no event shall the term of any Incentive Stock Option, or a Stock Appreciation Right granted in tandem therewith, exceed a period of ten years from the date of its grant. 7.04 Form of Payment of Awards. Subject to the terms of the Plan and any applicable Award Agreement, payments or substitutions to be made by the Company upon the grant, exercise or other payment or distribution of an Award may be made in such forms as the Committee shall determine at the time of grant or thereafter (subject to the terms of Section 10.01), including, without limitation, cash, Shares, other Awards or other property or any combination thereof, and may be made in a single payment or substitution, in installments or on a deferred basis, in each case in accordance with rules and procedures established, or as otherwise determined, by the Committee. Such rules and procedures or determinations may include, without limitation, provisions for the payment or crediting of reasonable interest on installment or deferred payments or the grant or crediting of Dividend Equivalents in respect of installment or deferred payments. 7.05 Limits on Transfer of awards; Beneficiaries. No right or interest of a Participant in any Award shall be pledged, encumbered or hypothecated to or in favor of any Person other than the Company, or shall be subject to any lien, obligation or liability of such Participant to any Person other than the Company or a Subsidiary. Unless otherwise determined by the Committee (subject to the requirements of Section 7.02.2), no Award and no rights or interests therein shall be assignable or transferable by a Participant otherwise than by will or the laws of descent and distribution except to the Company or a Subsidiary under the terms of the Plan; provided, however, that, if so determined by the Committee, a Participant may, in the manner established by the Committee, designate a beneficiary or beneficiaries to exercise the rights of the Participant, and to receive any distribution with respect to any Award, upon the death of the Participant. A beneficiary, guardian, legal representative or other Person claiming any rights under the Plan from or through any Participant shall be subject to all the terms and conditions of the Plan and any Award Agreement applicable to such Participant as well as any additional restrictions or limitations deemed necessary or appropriate by the Committee. 7.06 Registration and Listing Compliance. No Award shall be paid and no Shares or other securities shall be distributed with respect to any Award in a transaction subject to the registration requirements of the Securities Act of 1933, as amended, or any state securities law or subject to a listing requirement under any listing agreement between the Company and any national securities exchange, and no Award shall confer upon any Participant rights to such payment or distribution until such laws and contractual obligations of the Company have been complied with in all material respects. Except to the extent required by the terms of an Award Agreement or another contract between the Company and the Participant, neither the grant of any Award nor anything else contained herein shall obligate the Company to take any action to comply with any requirements of any such securities laws or contractual obligations relating to the registration (or exemption therefrom) or listing of any Shares or other securities, whether or not necessary in order to permit any such payment or distribution. 7.07 Stock Certificates. All certificates for Shares delivered under the terms of the Plan shall be subject to such stop-transfer orders and other restrictions as the Committee may deem advisable under federal or state securities laws, rules and regulations thereunder, and the rules of any national securities exchange or automated quotation system on which Shares are listed or quoted. The Committee may cause a legend or legends to be placed on any such certificates to make appropriate reference to such restrictions or any other restrictions or limitations that may be applicable to Shares. In addition, during any period in which Awards or Shares are subject to restrictions or limitations under the terms of the Plan or any Award Agreement, or during any period during which delivery or receipt of an Award or Shares has been deferred by the Committee or a Participant, the Committee may require any Participant to enter into an agreement providing that certificates representing Shares issuable or issued pursuant to an Award shall remain in the physical custody of the Company or such other Person as the Committee may designate. Section 8. Adjustment Provisions 8.01 In the event that the Committee shall determine that any dividend or other distribution (whether in the form of cash, Shares, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, exchange of Shares or other securities of the Company, or other similar corporate transaction or event affects the Shares such that an adjustment is determined by the Committee to be appropriate in order to prevent dilution or enlargement of Participants' rights under the Plan, then the Committee shall, in such manner as it may deem equitable, adjust any or all of (i) the number and kind of Shares which may thereafter be issued in connection with Awards; (ii) the number and kind of Shares issued or issuable in respect of outstanding Awards; and (iii) the exercise price, grant price or purchase price relating to any Award or, if deemed appropriate, make provision for a cash payment with respect to any outstanding Award; provided, however, in each case, that (1) with respect to Incentive Stock Options, no such adjustment shall be authorized to the extent that such authority would cause the Plan to violate Section 422(b) (1) of the Code or any successor provision thereto and (2) with respect to Options and Stock Appreciation Rights held by a Covered Employee, no such adjustment shall be authorized to the extent that such authority would cause such Awards to fail to qualify as "performance-based compensation" under Section 162 (m) (4) (C) of the Code. In addition, the Committee is authorized to make adjustments in the terms and conditions of, and the criteria of, Awards in recognition of unusual or nonrecurring events (including, without limitation, events described in the preceding sentence) affecting the Company or the financial statements of the Company, or in response to changes in applicable laws, regulations or accounting principles; provided, however, that (1) with respect to Incentive Stock Options, no such adjustment shall be authorized to the extent that such authority would cause the Plan to violate Section 422(b)(1) of the Code or any successor provision thereto and (2) with respect to Options and Stock Appreciation Rights held by a Covered Employee, no such adjustment shall be authorized to the extent that such authority would cause such Awards to fail to qualify as "performance-based compensation" under Section 162 (m) (4) (C) of the Code. Section 9. Change of Control Provisions 9.01 Acceleration of Exercisability and Lapse of Restrictions,- Automatic Cash-Out of Awards. In the event of a Change of Control, the following acceleration and cash-out provisions shall apply unless otherwise provided by the Committee at the time of the Award grant: (i) All outstanding Awards pursuant to which the Participant may have rights, the exercise of which is restricted or limited, shall become fully exercisable, except as may be otherwise provided in Section 7.02. 1; unless the right to lapse of restrictions or limitations is waived or deferred by a Participant prior to such lapse, all restrictions or limitations (including risks of forfeiture and deferrals) on outstanding Awards subject to restrictions or limitations under the Plan shall lapse, except as may be otherwise provided in Section 7.02. 1; and all performance criteria and other conditions to payment of Awards under which payments of cash, Shares or other property are subject to conditions shall be deemed to be achieved or fulfilled and shall be waived by the Company, except as may be otherwise required to comply with Rule 16b-3. (ii) All outstanding Awards not subject to limitations under Section 7.02.1 shall be automatically surrendered, and the Participants shall receive, in full satisfaction therefor, cash payments equal to the value of such outstanding Awards calculated on the basis of the Change of Control Price of any Shares or the Fair Market Value of any property other than Shares relating to such Award; provided, however, that (a) in the case of a nonstatutory stock option, or a Stock Appreciation Right granted in tandem therewith, the cash payment shall be equal to the Change of Control Price of the Shares subject to the Option reduced by the exercise price thereof, (b) in the case of an Incentive Stock Option, or a Stock Appreciation Right granted in tandem therewith, the cash payment shall be equal to the Fair Market Value of the Shares subject to the Option on the date on which the Change of Control occurred reduced by the exercise price thereof, (c) in the case of a Stock Appreciation Right not granted in tandem with another award, the cash payment shall be equal to the Change of Control Price of the Shares subject to the Stock Appreciation Right reduced by the grant price thereof, and (d) in the case of any other purchase right, the cash payment shall be reduced by the Fair Market Value of the consideration otherwise required to exercise such purchase right. In the event that an Award is granted in tandem with another Award such that the Participant's right to payment for such Award is an alternative to payment of another Award, the Participant shall surrender all alternative Awards and receive payment for the Award which produces the highest payment to the Participant. In no event will an Award be automatically surrendered or a Participant have the right to receive cash under this Section 9.02 (ii) with respect to an Award (1) if the Participant is subject to Section 16 of the Exchange Act (or was subject to Section 16 of the Exchange Act at the date of grant of the Award) and at least six months shall not have elapsed from the date on which the Participant was granted the Award (or, if later, from the date of shareholder approval of the Plan) before the date of the Change of Control (unless this restriction is not at such time required under Rule 16b-3 (c) (1) or Rule 16b-3 (e)) or (2) if the Participant is subject to Section 16 of the Exchange Act and had the power to control the occurrence or timing of the Change of Control such that the surrender and right to receive cash under this Section 9.01 (ii) would fail to be exempt pursuant to Rule 16b- 3(e). (iii) In the event that any Award is subject to limitations under Section 7.02.1 at the time of a Change of Control, then, solely for the purpose of determining the rights of the Participant under Section 9.02(ii) with respect to such Award, a Change of Control shall be deemed to occur at the close of business on the first business day following the date on which the limitations on such Award under Section 7.02.1 have expired; provided, however, that this Section 9.01 (iii) shall not apply if its application would cause the surrender of the Award and the receipt of cash under Section 9.01 (ii) to fail to be exempt pursuant to Rule 16b-3(e). (iv) In the discretion of the Committee, the Committee may permit any Participant not subject to Section 16 of the Exchange Act on the date of a Change of Control to elect, in such manner and at such time or times or within such periods as the Committee may determine (whether before or after a Change of Control), and subject to such other terms, conditions or restrictions, if any, as the Committee may determine to impose, not to surrender for cash pursuant to Section 9.02(ii) all or any portion of any Award or Awards held by the Participant. 9.02 Creation and Funding of Trust. Upon the occurrence of a Potential Change of Control, the Company shall deposit with the trustee of a trust for the benefit of Participants monies or other property having a Fair Market Value at least equal to the value of the cash, Shares and other property to be paid or distributed in connection with Awards outstanding at that date. The trust shall be a grantor trust which shall preserve the "unfunded" status of Awards under the Plan. Subsequent to a Potential Change of Control which is no longer continuing and prior to a Change of Control and termination of the trust, upon the request of the Company the trustee shall deliver the monies or other property held in the trust to the Company. In the discretion of the Committee, monies or other property may also be deposited in the trust created under this Section 9.02 for the benefit of participants in any other compensation or benefit plan, program, contract or arrangement of the Company or any Subsidiary. 9.03 Definition of Certain Terms. For purposes of this Section 9, the following definitions, in addition to those set forth in Section 2.01, shall apply: 9.03.1 "Change of Control" means and shall be deemed to have occurred if (i) any Person, other than the Company or a Related Party, purchases or otherwise acquires, under a tender offer or otherwise, Beneficial Ownership of any Voting Securities which, when combined with other Voting Securities then Beneficially Owned by such Person, represent twenty percent (20%) or more of the total voting power of all the then outstanding Voting Securities; or (ii) the individuals (a) who as of the effective date of the Plan constitute the Board or (b) who thereafter are elected to the Board and whose election, or nomination for election, to the Board was approved by a vote of at least two-thirds of the directors then still in office who either were directors as of the effective date of the Plan or whose election or nomination for election was previously so approved (the "Continuing Directors"), cease for any reason to constitute a majority of the members of the Board; or (iii) the Company is a party to a merger, consolidation, share exchange, recapitalization or reorganization of the Company or an acquisition of securities or assets by the Company, other than any such transaction (a) which would result in the Voting Securities outstanding immediately prior thereto continuing to represent either by remaining outstanding or by being converted into voting securities of the surviving or acquiring entity, at least fifty percent (50%) of the total voting power represented by the voting securities of such surviving or acquiring entity outstanding immediately after such transaction and (b) in or as a result of which the voting rights of each Voting Security relative to the voting rights of all other Voting Securities are not altered other than through the exercise of dissenters' rights; or (iv) the shareholders of the Company approve a plan of complete liquidation of the Company; or (v) the Company shall sell or otherwise dispose of, other than to a Related Party, in a single or a series of related transactions otherwise than in the ordinary course of business, assets of the Company and/or stock or assets of any Subsidiary, having a book value equal to 50% or more of the consolidated total assets of the Company, in each case measured as the date of the most recent quarterly or annual balance sheet of the Company required to be included or incorporated by reference in any proxy or information statement of the Company furnished to the shareholders of the Company in connection with such transaction, or if no such proxy or information statement is furnished to shareholders or no such balance sheet is required to be included or incorporated by reference therein, as of the date of the most recent quarterly or annual balance sheet of the Company required to be filed with the Securities and Exchange Commission prior to the date of any such transaction; 9.03.2 "Change of Control Price" means, with respect to a Share, the higher of (i) the highest reported sales price of Shares on the New York Stock Exchange's consolidated transaction reporting system (or if the Common Stock is not then listed on such Exchange, on or on any composite index including the principal United States securities exchange on which the Common Stock is then listed, or if none, on NASDAQ or any similar system then in use, and in the absence of any such reported sales prices, the highest publicly reported bid price for Shares) during the 30 calendar days preceding the date of a Change of Control or (ii) the highest price paid or offered in a transaction which either (a) results in a Change of Control or (b) would be consummated but for another transaction which results in a Change of Control and, if it were consummated, would result in a Change of Control. With respect to clause (ii) in the preceding sentence, the "price paid or offered" will be equal to the sum of (a) the face amount of any portion of the consideration consisting of cash or cash equivalents and (b) the fair market value of any portion of the consideration consisting of real or personal property other than cash or cash equivalents, as established by an independent appraiser selected by the Committee. 9.03.3 "Potential Change of Control" means and shall be deemed to have arisen if (i) the Company enters into an agreement, the consummation of which would result in the occurrence of the Change of Control; or (ii) any Person (including the Company) publicly announces an intention to take or to consider taking actions which if consummated would constitute a Change of Control; or (iii) any Person, other than a Related Party, files with the Securities and Exchange Commission a Schedule 13D pursuant to Rule 13d-I under the Exchange Act with respect to Voting Securities; or (iv) any Person, other than the Company or a Related Party, files with the Federal Trade Commission a notification and report form pursuant to the Hart-Scott- Rodino Antitrust Improvements Act of 1976 with respect to any Voting Securities or any assets of the Company or a Subsidiary; or (v) the Board or a committee thereof adopts a resolution to the effect that, for purposes of the Plan, a Potential Change of Control has arisen. A Potential Change of Control will be deemed to continue (a) with respect to an agreement within the purview of clause (i) of the preceding sentence, until the agreement is canceled or terminated; or (b) with respect to an announcement within the purview of clause (ii) of the preceding sentence, until the Person making the announcement publicly abandons the stated intention or fails to act on such intention for a period of 12 calendar months; or (c) with respect to the filing of a Schedule 13D within the purview of clause (iii) of the preceding sentence, until the Person involved publicly announces that its ownership or acquisition of the Voting Securities is for investment purposes only and not for the purpose of seeking a Change of Control or such Person disposes of all Voting Securities exceeding 5% of the outstanding shares of any class; or (d) with respect to the filing of a notification and report form within the purview of clause (iv) of the preceding sentence with respect to Voting Securities or assets, until the Person publicly abandons the transaction which was the subject of such filing or fails to act thereon for a period of 12 calendar months or, in the case of a filing with respect to Voting Securities, until the Person involved (1) publicly announces that its ownership or acquisition of the Voting Securities is for investment purposes only and not for the purpose of seeking a Change of Control or (2) following completion of such transaction disposes of all Voting Securities exceeding 5% of the outstanding shares of any class; or (e) until a Change of Control has occurred if the majority of the Continuing Directors, on reasonable belief after due investigation, adopts a resolution that either (1) the Potential Change of Control has ceased to exist or (2) the Potential Change of Control is believed to be not reasonably likely to result in a Change of Control. 9.03.4 "Related Party" means (i) a Subsidiary; or (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Subsidiary; or (iii) a Company owned directly or indirectly by the shareholders of the Company in substantially the same proportion as their ownership of Voting Securities. 9.03.5 "Voting Securities or Security" means any securities of the Company which carry the right to vote generally in the election of directors. 9.03.6 "Beneficial Ownership" shall be determined in accordance with Regulation 13D-G under the Exchange Act, as in effect on the effective date of the Plan. Section 10. Amendments to and Termination of the Plan 10.01 The Board may amend, alter, suspend, discontinue or terminate the Plan without the consent of shareholders or Participants, except that, without the approval of the shareholders of the Company, no amendment, alteration, suspension, discontinuation or termination shall be made if shareholder approval is required by any federal or state law or regulation, or if the Board in its discretion determines that obtaining such shareholder approval is for any reason advisable; provided, however, that except as provided in Section 7.02, without the consent of the Participant, no amendment, alteration, suspension, discontinuation or termination of the Plan may materially and adversely affect the rights of such Participant under any Award theretofore granted to him. The Committee may waive any conditions or rights under, amend any terms of, or amend, alter, suspend, discontinue or terminate, any Award theretofore granted, prospectively or retrospectively; provided, however, that except as provided in Section 7.02, without the consent of a Participant, no amendment, alteration, suspension, discontinuation or termination of any Award may materially and adversely affect the rights of such Participant under any Award theretofore granted to him. Section 11. General Provisions 11.01 No Right to Awards,- No Shareholder Rights. No Participant or employee shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Participants and employees, except as provided in any other compensation arrangement. No Award shall confer on any Participant any of the rights of a shareholder of the Company unless and until Shares are in fact issued to such Participant in connection with such Award. 11.02 Withholding. To the extent required by applicable Federal, state, local or foreign law, the Participant or his successor shall make arrangements satisfactory to the Company, in its discretion, for the satisfaction of any withholding tax obligations that arise in connection with an Award. The Company shall not be required to issue any Shares or make any cash or other payment under the Plan until such obligations are satisfied. The Company is authorized to withhold from any Award granted or any payment due under the Plan, including from a distribution of Shares, amounts of withholding taxes due with respect to an Award, its exercise or any payment thereunder, and to take such other action as the Committee may deem necessary or advisable to enable the Company and Participants to satisfy obligations for the payment of such taxes. This authority shall include authority to withhold or receive Shares, Awards or other property and to make cash payments in respect thereof in satisfaction of such tax obligations. 11.03 No Right to Employment. Nothing contained in the Plan or any Award Agreement shall confer, and no grant of an Award shall be construed as conferring, upon any Participant any right to continue in the employ of the Company or to interfere in any way with the right of the Company to terminate his employment at any time or increase or decrease his compensation from the rate in existence at the time of granting of an Award, except as provided in any Award Agreement or other compensation arrangement. 11.04 Unfunded Status of awards,- Creation of Trusts. The Plan is intended to constitute an "unfunded" plan for incentive and deferred compensation. With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Award shall give any such Participant any rights that are greater than those of a general unsecured creditor of the Company; provided, however, that, in addition to the requirements of Section 9.02, the Committee may authorize the creation of trusts or make other arrangements to meet the Company's obligations under the Plan to deliver cash, Shares or other property pursuant to any Award, which trusts or other arrangements shall be consistent with the "unfunded" status of the Plan unless the Committee otherwise determines. 11.05 No Limit on Other Compensatory Arrangements. Nothing contained in the Plan shall prevent the Company from adopting other or additional compensation arrangements (which may include, without limitation, employment agreements with executives and arrangements which relate to Awards under the Plan), and such arrangements may be either generally applicable or applicable only in specific cases. Notwithstanding anything in the Plan to the contrary (other than the provisions of Section 7.02), the terms of each Award shall be construed so as to be consistent with such other arrangements in effect at the time of the Award. 11.06 No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award. The Committee shall determine whether cash, other Awards or other property shall be issued or paid in lieu of fractional Shares or whether such fractional Shares or any rights thereto shall be forfeited or otherwise eliminated. 11.07 Governing Law. The validity, interpretation, construction and effect of the Plan and any rules and regulations relating to the Plan shall be governed by the laws of the Commonwealth of Pennsylvania (without regard to the conflicts of laws thereof), and applicable Federal law. 11.08 Severability. If any provision of the Plan or any Award is or becomes or is deemed invalid, illegal or unenforceable in any jurisdiction, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or Award, it shall be deleted and the remainder of the Plan or Award shall remain in full force and effect; provided, however, that, unless otherwise determined by the Committee, the provision shall not be construed or deemed amended or deleted with respect to any Participant whose rights and obligations under the Plan are not subject to the law of such jurisdiction or the law deemed applicable by the Committee. Section 12. Effective Date and Term of the Plan 12.01 The effective date and date of adoption of the Plan shall be January 21, 1994, the date of adoption of the Plan by the Board, provided that such adoption of the Plan is approved by the affirmative vote of a majority of the shares of Common Stock present in person or represented by proxy and entitled to vote at a duly held meeting of shareholders of the Company held on or prior to December 31, 1994. Notwithstanding anything else contained in the Plan or in any Award Agreement, no Option, Stock Appreciation Right or other purchase right granted under the Plan may be exercised, and no Shares may be distributed pursuant to any Award granted under the Plan, prior to such shareholder approval or prior to any required approval or consent from those governmental agencies having jurisdiction in these matters. In the event such shareholder or regulatory approval is not obtained, all Awards granted under the Plan shall automatically be deemed void and of no effect. No Award may be granted under the Plan subsequent to May 27, 1999. EX-10.15 16 Exhibit 10.15 AGREEMENT FOR CONSULTING SERVICES Recommend to the Board for approval. This Agreement is made as of this 31st day of December, 1994, between DONALD I. MORITZ ("Consultant") and EQUITABLE RESOURCES, INC. ("Equitable") a Pennsylvania corporation. WHEREAS, Consultant has served Equitable in a long and successful term as Chief Executive Officer and has developed a keen knowledge of the business operations of Equitable and the natural gas industry in general; and WHEREAS, it is desirable for Equitable to enter into a Consulting Agreement with Consultant to continue to have the benefit of his experience and knowledge. NOW, THEREFORE, in consideration of the foregoing premises and of other good and valuable consideration, the receipt of which is hereby acknowledged and intending to be legally bound, the parties agree as follows: 1. Consultant will provide advice and counsel from a business and legal perspective for specific business expansion opportunities in the United States and internationally for existing operating units. 2. Consultant will provide advice and counsel regarding potential merger and acquisition opportunities and specifically provide advice on negotiation strategy, industry contacts, and financial and organization impact. 3. Consultant will provide advice and counsel concerning potential organizational structural impacts resulting from the reengineering of Equitable. 4. Consultant will provide advice and counsel in such other areas as Equitable may request and Consultant agrees to perform. 5. The term of this contract is for a maximum of three (3) years. 6. Equitable shall pay Consultant a retainer of $125,000 for the first year of this Agreement. This fee shall be in addition to all applicable Board of Directors' fees as long as Consultant is a member of the Board of Directors. 7. At the end of calendar year 1995, the President and CEO shall provide the Compensation Committee with an evaluation of Consultant's performance as well as the recommended services and retainer for the next twelve-month period. 8. A copy of the 1995 projects is attached hereto. 9. This Agreement shall be governed by the Laws of the Commonwealth of Pennsylvania. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first written above. EQUITABLE RESOURCES, INC. CONSULTANT By: s/ Frederick H. Abrew by: s/ Donald I. Moritz 1995 Consultant Projects a. Board Governance Research Project Current interest suggests that Board Governance is an important issue. Equitable Resources, while at the forefront of many Board issues, has never undertaken a comprehensive review of the matter with the intent of informing the Board of pertinent issues and recommended action. I have asked Don to study these Board Governance and performance issues and present recommendations to the Board of Directors for consideration. b. Investor Relations Don will be assigned the responsibility to research and develop an overarching communication plan that will improve the investment community's understanding of the values contained in ERI's integrated business strategy. c. L.I.G. Recent acquisitions have not been well understood by the investment community and, consequently, anticipated shareholder value has not been achieved. Consequently, I have assigned Don the responsibility to oversee the implementation of current business plan for L.I.G. to ensure that ERI achieves the maximum value of the plan that management has prescribed. d. Monumental Butte Don will oversee a research and development project intended to identify and develop a strategy that ERI management can implement that will improve the economic results of the Monumental Butte project. In our judgment, the investment community has not given us the valuation that we believe this project deserves suggesting that a different approach be undertaken. EX-11.01 17 Exhibit 11.01 EQUITABLE RESOURCES, INC. AND SUBSIDIARIES COMPUTATION OF EARNINGS PER COMMON SHARE FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992 1994 1993 1992 Earnings: Net income $60,729 $73,455 $60,026 Interest net of applicable income taxes on 9 1/2% convertible subordinated debentures 146 89 208 Adjusted earnings $60,875 $73,544 $60,234 Shares: Average common shares outstanding 34,509 32,359 31,342 Dilutive effect of conversion of 9 1/2% convertible subordinated debentures 220 257 305 Dilutive effect of stock options outstanding 11 61 61 Total 34,740 32,677 31,708 Primary Earnings Per Share $1.76 $2.27 $1.92 Fully Diluted Earnings Per Share $1.75 $2.25 $1.90 EX-21 18 Exhibit 21 EQUITABLE RESOURCES, INC. Subsidiaries of the Registrant December 31, 1994 Percentage of Voting Securities State Owned by of Immediate Name of Subsidiary Incorporation Parent Company Equitable Resources, Inc. (also d/b/a Equitable Gas Company) Pennsylvania EQT Capital Corporation Delaware 100 Equitable Gas-Energy Company Pennsylvania 100 Kentucky West Virginia Gas Company West Virginia 100 Equitrans, Inc. Delaware 100 ET Storage Company Pennsylvania 100 Nora Transmission Company Delaware 100 ET Blue Grass Company Delaware 100 EREC Capital Corporation Delaware 100 Equitable Power Services Company Delaware 100 Equitable Resources Energy Company West Virginia 100 Equitable Resources Marketing Company Delaware 100 Equitable Storage Company Delaware 100 Equitable Pipeline Company Delaware 100 LIG, Inc. Delaware 100 Louisiana Intrastate Gas Company LLC Delaware 100 LIG Liquids Company LLC Delaware 100 LIG Chemical Company Louisiana 100 Tuscaloosa Pipeline Company Louisiana 100 Equitable Resources (Canada) Limited Alberta, Canada 100 Hershey Oil Corporation California 100 Andex Energy, Inc. Delaware 100 ERI Realty, Inc. Pennsylvania 100 Equitable Resources (Argentina) Company Delaware 100 Note: All subsidiaries are included in the consolidated financial statements of the Registrant. See Note A to Financial Statements, Page 31. EX-23 19 Exhibit 23.01 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference of our report dated February 13, 1995, with respect to the consolidated financial statements and schedule of Equitable Resources, Inc. included in this Annual Report (Form 10-K) for the year ended December 31, 1994 in the Prospectus part of the following Registration Statements: Registration Statement No. 33-52151 on Form S-8 pertaining to the 1994 Equitable Resources, Inc. Long-Term Incentive Plan; Registration Statement No. 33-52137 on Form S-8 pertaining to the 1994 Equitable Resources, Inc. Non-Employee Directors' Stock Incentive Plan; Post-Effective Amendment No. 2 to Registration Statement No. 2-69010 on Form S-8 pertaining to the Equitable Resources, Inc. Key Employee Restricted Stock Option and Stock Appreciation Rights Incentive Compensation Plan; Post-Effective Amendment No. 1 to Registration Statement No. 33-00252 on Form S-8 pertaining to the Equitable Resources, Inc. Employee Savings Plan; Post-Effective Amendment No. 1 to Registration Statement No. 33-10508 on Form S-8 pertaining to the Equitable Resources, Inc. Key Employee Restricted Stock Option and Stock Appreciation Rights Incentive Compensation Plan. We also consent to the incorporation by reference in the Registration Statement No. 33-53703 on Form S-3 pertaining to the registration of $100,000,000 Medium Term Notes, Series C of Equitable Resources, Inc. and in the related Prospectus of our report dated February 13, 1995, with respect to the consolidated financial statements and schedule of Equitable Resources, Inc. included in this Annual Report (Form 10-K) for the year ended December 31, 1994. We also consent to the incorporation by reference of our report dated February 22, 1995 with respect to the financial statements and schedules of the Equitable Resources, Inc. Employee Savings Plan included in the Annual Report (Form 11- K) for the year ended October 31, 1994, included in Exhibit 99.01 to this Annual Report (Form 10-K) into Post-Effective Amendment No. 1 to Registration Statement No. 33-00252 on Form S-8 pertaining to the Equitable Resources, Inc. Employee Savings Plan. By s/ Ernst & Young LLP Ernst & Young LLP Pittsburgh, Pennsylvania March 20, 1995 EX-27 20
5 1,000 YEAR DEC-31-1994 DEC-31-1994 23,415 0 197,972 10,890 27,977 307,823 2,233,617 637,951 2,019,122 498,895 398,282 210,030 0 0 539,972 2,019,122 1,397,280 1,397,280 0 1,287,032 0 10,010 43,905 69,506 8,777 60,729 0 0 0 60,729 1.76 1.75
EX-99 21 Exhibit 99.01 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 11-K FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS AND SIMILAR PLANS PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended October 31, 1994 [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission file number 1-3551 EQUITABLE RESOURCES, INC. EMPLOYEE SAVINGS PLAN (Full title of the Plan and address of the Plan, if different from that of the issuer named below) EQUITABLE RESOURCES, INC. 420 Boulevard of the Allies, Pittsburgh, Pennsylvania 15219 (Name of issuer of the securities held pursuant to the plan and the address of principal executive office) SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the members of the Administrative Committee of the Plan have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. EQUITABLE RESOURCES, INC. EMPLOYEE SAVINGS PLAN (Name of Plan) By s/ Joseph L. Giebel Joseph L. Giebel Member of Administrative Committee February 22, 1995 REPORT OF INDEPENDENT AUDITORS Administrative Committee Equitable Resources, Inc. Employee Savings Plan We have audited the accompanying statements of net assets available for plan benefits of the Equitable Resources, Inc. Employee Savings Plan (the Plan) as of October 31, 1994 and 1993, and the related statements of changes in net assets available for plan benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for plan benefits of the Plan as of October 31, 1994 and 1993, and the changes in net assets available for plan benefits for the years then ended, in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplemental schedules of assets held for investment as of October 31, 1994, and transactions or series of transactions in excess of 5 percent of the current value of plan assets for the year then ended, are presented for purposes of complying with the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974, and are not a required part of the basic financial statements. The supplemental schedules have been subjected to the auditing procedures applied in our audit of the 1994 financial statements and, in our opinion, are fairly stated in all material respects in relation to the 1994 basic financial statements taken as a whole. s/ Ernst & Young LLP Ernst & Young LLP Pittsburgh, Pennsylvania February 22, 1995 EQUITABLE RESOURCES, INC. EMPLOYEE SAVINGS PLAN STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS OCTOBER 31, 1994
Fixed Employer Aggressive Common Life Income Balanced Stock Stock Stock Bond Insrnce Clearing Combined Fund Fund Fund Fund Fund Fund Fund Account Funds Investments: Equitable Resources, Inc. Common Stock, at market $ $ $4,143,410 $ $ $ $ $ $4,143,410 Fixed Income Fund 4,813,884 4,813,884 Balanced Fund 4,689,620 4,689,620 Aggressive Stock Fund 2,086,435 2,086,435 Common Stock Fund 2,647,575 2,647,575 Bond Fund 1,377,416 1,377,416 Short-term investments 134 252,288 252,422 Total investments 4,813,884 4,689,620 4,143,410 2,086,435 2,647,575 1,377,416 134 252,288 20,010,762 Receivables: Participant loans 779,726 779,726 Interest 874 23 897 Total 780,600 23 780,623 receivables Transfers due from (to) funds 93,543 34,584 26,253 48,046 38,615 4,219 7,028 (252,288) Total assets 5,688,027 4,724,204 4,169,686 2,134,481 2,686,190 1,381,635 7,162 20,791,385 Payables: Participants 52,088 8,581 64,660 990 1,480 127,799 Others 7,162 7,162 Total payables 52,088 8,581 64,660 990 1,480 7,162 134,961 Net Assets Available for Plan Benefits $5,635,939 $4,715,623 $4,105,026 $2,133,491 $2,684,710 $1,381,635 $ $ $20,656,424 See accompanying notes.
EQUITABLE RESOURCES, INC. EMPLOYEE SAVINGS PLAN STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS OCTOBER 31, 1993
Fixed Employer Aggressive Common Life Income Balanced Stock Stock Stock Bond Insrnce Clearing Combined Fund Fund Fund Fund Fund Fund Fund Account Funds Investments: Equitable Resources, Inc.Common Stock, at market $ $ $4,923,135 $ $ $ $ $ $ 4,923,135 Fixed Income Fund 3,840,103 3,840,103 Balanced Fund 4,839,462 4,839,462 Aggressive Stock Fund 1,741,574 1,741,574 Common Stock Fund 1,938,484 1,938,484 Bond Fund 1,913,017 1,913,017 Short-term investments 22 334,977 337,999 Total investments 3,840,103 4,839,462 4,923,135 1,741,574 1,938,484 1,913,017 22 334,977 19,530,774 Receivables: Contributions 23,456 9,783 4,994 8,211 12,619 1,452 60,515 Participant loans 663,931 663,931 Interest 808 14 106 8 10 3 949 Total receivables 688,195 9,797 5,100 8,219 12,629 1,455 725,395 Transfers due from (to) funds 68,751 (12,288) 107,979 69,207 72,963 22,137 6,228 (334,977) Total assets 4,597,049 4,836,971 5,036,214 1,819,000 2,024,076 1,936,609 6,250 20,256,169 Payables: Participants 128,132 102,940 64,620 8,950 8,807 42,748 356,197 Others 27 6,250 6,277 Total payables 128,159 102,940 64,620 8,950 8,807 42,748 6,250 362,474 Net Assets Available for Plan Benefits $4,468,890 $4,734,031 $4,971,594 $1,810,050 $2,015,269 $1,893,861 $ $ $19,893,695 See accompanying notes.
EQUITABLE RESOURCES, INC. EMPLOYEE SAVINGS PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS YEAR ENDED OCTOBER 31, 1994
Fixed Employer Aggressive Common Life Income Balanced Stock Stock Stock Bond Insrnce Combined Fund Fund Fund Fund Fund Fund Fund Funds Additions to plan equity attributed to: Investment income: Interest and dividends $ 2,470 $ 2,587 $ 148,445 $ 1,793 $ 2,207 $ 889 $ $ 158,391 Interest on participant loans 60,485 60,485 Total investment income 62,955 2,587 148,445 1,793 2,207 889 218,876 Gain realized on sale or distribution of Equitable Resources, Inc. Common Stock 62,859 62,859 Unrealized depreciation of investment in Equitable Resources, Inc. Common Stock (1,194,729) (1,194,729) Unrealized appreciation (depreciation) in value of investment 238,766 (233,804) (9,893) 97,686 (47,870) 44,885 Contributions 508,954 564,349 352,423 359,716 447,849 172,477 50,010 2,455,778 Participant rollovers 72,135 40,928 10,639 47,247 49,736 3,478 224,163 Total additions 882,810 374,060 (620,363) 398,863 597,478 128,974 50,010 1,811,832 Deductions from plan equity atributed to: Withdrawals by participants 163,103 242,256 170,233 56,150 82,937 202,419 917,098 Purchase of life insurance 54,711 54,711 Expenses 13,256 28,780 11,213 13,113 10,932 77,294 Total deductions 176,359 271,036 170,233 67,363 96,050 213,351 54,711 1,049,103 Transfers from (to) funds 460,598 (121,432) (75,972) (8,059) 168,013 (427,849) 4,701 Net increase (decrease) in net assets available for plan benefits 1,167,049 (18,408) (866,568) 323,441 669,441 (512,226) 762,729 Net assets available for plan benefits: At beginning of year 4,468,890 4,734,031 4,971,594 1,810,050 2,015,269 1,893,861 19,893,695 At end of year $5,635,939 $4,715,623 $4,105,026 $2,133,491 $2,684,710 $1,381,635 $ $20,656,424 See accompanying notes.
EQUITABLE RESOURCES, INC. EMPLOYEE SAVINGS PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS YEAR ENDED OCTOBER 31, 1993
Fixed Employer Aggressive Common Life Income Balanced Stock Stock Stock Bond Insrnce Combined Fund Fund Fund Fund Fund Fund Fund Funds Additions to plan equity attributed to: Investment income: Interest and dividends $ 2,261 $ 1,680 $ 132,137 $ 872 $ 1,064 $ 480 $ $ 138,494 Interest on participant loans 52,557 52,557 Total investment income 54,818 1,680 132,137 872 1,064 480 191,051 Gain realized on sale or distribution of Equitable Resources, Inc. Common Stock 130,345 130,345 Unrealized appreciation of investment in Equitable Resources, Inc. Common Stock 732,815 732,815 Unrealized appreciation in value of investment 241,751 713,069 376,015 412,637 181,411 1,924,883 Contributions 493,957 612,647 339,519 319,420 358,549 196,744 36,238 2,357,074 Participant rollovers 200,102 62,170 11,344 43,550 37,040 14,586 368,792 Total additions 990,628 1,389,566 1,346,160 739,857 809,290 393,221 36,238 5,704,960 Deductions from plan equity atributed to: Withdrawals by participants 239,795 127,477 179,058 13,035 14,068 42,779 616,212 Purchase of life insurance 36,238 36,238 Expenses 10,798 36,341 11 11,624 12,387 13,890 85,051 Total deductions 250,593 163,818 179,069 24,659 26,455 56,669 36,238 737,501 Transfers from (to) funds 555,687 (451,638) (127,596) (35,057) (498) 59,102 Net increase in net assets available for plan benefits 1,295,722 774,110 1,039,495 680,141 782,337 395,654 4,967,459 Net assets available For plan benefits: At beginning of year 3,173,168 3,959,921 3,932,099 1,129,909 1,232,932 1,498,207 14,926,236 At end of year $4,468,890 $4,734,031 $4,971,594 $1,810,050 $2,015,269 $1,893,861 $ $19,893,695 See accompanying notes.
1. Description of the Plan The following description of the Equitable Resources, Inc. Employee Savings Plan (Plan) provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan's provisions. General The Plan is a defined contribution profit sharing and savings plan, with a 401(k) salary reduction feature, implemented on September 1, 1985 by Equitable Resources, Inc. and certain subsidiaries (the Company or Companies). All regular, full-time, non-union employees of the Companies who complete a certain service requirement are eligible to participate. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). Contributions The Companies make contributions to the Plan equal to the amount by which participants agree to reduce their salaries (Contract Contributions). These contributions are considered to be Company (as opposed to employee) contributions to the Plan. In addition, the Companies may, at their discretion, contribute an additional amount to the Plan (Discretionary Contributions). All contributions are allocated to individual participant accounts. The Company made a Discretionary Contribution to the Plan for the Plan year ended October 31, 1993. The amount of the contribution was $162,173 and was allocated based upon each participant's contribution during the calendar year 1993 up to a maximum of six percent. Discretionary Contributions were invested in the same manner as participant's Contract Contributions. As a result of the purchase of Louisiana Intrastate Gas Corporation (LIG) by Equitable Resources, Inc., employees of LIG became participants in the Plan in July 1993. As part of the purchase of LIG, the Company agreed to continue, through December 1993, discretionary contributions matching contributions made by LIG employees up to a maximum of six percent of gross earnings. Such discretionary contributions were $38,058 and $112,225 for the plan years ended October 31, 1994 and 1993, respectively. Rollover Contributions Participants are allowed to make rollover contributions (contributions transferred to the Plan from other qualified retirement plans), subject to certain requirements. 1. Description of Plan (Continued) Vesting Participants are 100 percent vested in the value of Contract Contributions made, and any rollover contributions. If employment is terminated for any reason other than retirement, death, or total and permanent disability, a participant is entitled to receive the vested value of any Discretionary Contributions, as determined in accordance with the following schedule: Years of Continuous Service Vested Interest Less than five years 0 percent Five years or more 100 percent Amounts forfeited by participants upon termination will be used to reduce the amount of future Discretionary Contributions to the Plan. Upon retirement, death, total and permanent disability or termination of the Plan, a participant is entitled to receive the full value of any Discretionary Contributions, regardless of years of continuous service. Withdrawals by Participants Payments to participants are made in one of two ways: a single cash payment or distribution of stock (mandatory for participants who are terminated for a reason other than retirement, death or disability) or equal periodic payments over the lesser of: a) the life expectancy of the participant and beneficiary or b) twenty (20) years. Loans to Participants A participant may borrow money from the Plan in amounts up to 50 percent of the value of the participant's account, plus the vested portion of Discretionary Contributions, subject to certain limitations. All loans are at a rate consistent with rates charged by commercial lenders for similar loans. One half of the participant's nonforfeitable interest in the Plan at the time of the loan is pledged as collateral. As of October 31, 1994 and 1993, collateral for participant loans amounted to $2,780,245 and $2,372,188, respectively. 1. Description of the Plan (Continued) Investment of Contributions Contributions are initially deposited with PNC Bank (Trustee), and are invested in a short-term fund until allocated. The Plan authorizes the participants to direct the Trustee to invest their accounts in various combinations of the investment funds described below: a) The Fixed Income Fund - comprised of a single type of fixed income investment where the principal and interest are fixed. The Company entered into an ongoing contract with Equitable Life Assurance Society (Equitable Life) to provide this and other investment vehicles and manage the respective funds. b) The Balanced Fund - invests in various types of securities: primarily common stocks, securities convertible into common stocks, publicly traded bonds, and short-term money market investments. The Company's contract with Equitable Life provides this investment vehicle and fund management. c) The Employer Stock Fund - invests in the Common Stock of the Company. This fund is managed by the Plan Trustee. d) The Aggressive Stock Fund - invests primarily in common stocks of medium and smaller sized companies and also in securities not generally defined as growth stocks, but with unusual value or potential. The Company's contract with Equitable Life provides this investment vehicle and fund management. e) The Common Stock Fund - invests primarily in common stocks and other equity-type securities. The Company's contract with Equitable Life provides this investment vehicle and fund management. f) The Bond Fund - invests primarily in publicly-traded fixed income securities, such as bonds, debentures and notes. The Company's contract with Equitable Life provides this investment vehicle and fund management. g) The Life Insurance Fund - comprised solely of life insurance contracts issued on the lives of participants. This option is subject to a limitation that no more than 25 percent of the contributions allocated to a participant may be allocated to the purchase of insurance. The Company's contract with Equitable Life provides this investment vehicle and fund management. 2. Summary of Significant Accounting Policies Investments Short-term investments are valued at cost, which approximates market. The Equitable Resources, Inc. common stock is valued at market price as quoted on the New York Stock Exchange. The fixed income fund contract is valued at face value, which approximates market. Other investments are valued at market. 3. Investments Investments at October 31, 1994 and 1993 are comprised of:
1994 1993 Fair Fair Market Original Market Original Shares Value Cost Shares Value Cost Equitable Resources, Inc., Common Stock 135,826 $ 4,143,410 $ 3,114,846 124,987 $ 4,923,135 $ 2,667,541 Fixed Income Fund(1) - 4,813,884 4,813,884 - 3,840,103 3,840,103 Balanced Fund(1) - 4,689,620 4,689,620 - 4,839,462 4,839,462 Aggressive Stock Fund(1) - 2,086,435 2,086,435 - 1,741,574 1,741,574 Common Stock Fund(1) - 2,647,575 2,647,575 - 1,938,484 1,938,484 Bond Fund(1) - 1,377,416 1,377,416 - 1,913,017 1,913,017 Short-Term investment - 252,422 252,422 334,999 334,999 Total $20,010,762 $18,982,198 $19,530,774 $17,275,180 The interest rate for the Fixed Income Fund was 6.00 percent for the 1994 fiscal year and 6.75 percent for the 1993 fiscal year. (1) Securities investments are provided by contract through a pooled investment account; fair market value is used as original cost.
4. Gain Realized on Sale/Distribution of Stock During the year ended October 31, 1994, 4,769 shares of Equitable Resources, Inc. Common Stock with a market value of $168,878 were sold at an average price of $35.41 per share. The cost of the shares sold was $106,019 ($22.23 per share) calculated using the "average cost" method. During the year ended October 31, 1993, 8,680 shares of Equitable Resources, Inc. Common Stock with a market value of $304,717 were sold at an average price of $35.11 per share. The cost of the shares sold was $175,959 ($20.27 per share) calculated using the "average cost" method. In addition, 109 shares of Equitable Resources, Inc. Common Stock with a market value of $3,815 were distributed during the year ended October 31, 1993. The cost of the shares distributed was $2,228. 5. Plan Termination Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, the interests of all affected participants will become fully vested. 6. Income Tax Status of Plan The Internal Revenue Service has determined that the Plan is qualified under Section 401(a) of the Internal Revenue Code and exempt under Section 501(a) of the Code. Future amendments will be made to the Plan as necessary so that the Plan remains qualified and tax exempt under the Code. 7. Federal Income Tax Status - Employee Contributions by the employer to the Plan (including those resulting from salary reduction) and all dividends and interest earned on such contributions are not taxable to the participant for federal income tax purposes until distributed. The tax consequences, to participants, of a distribution from the Plan are dependent upon the circumstances existing at the time of distribution. Delinquent and unpaid loans are considered distributions from the Plan. In general, a participant is subject to federal income tax on a distribution in the year received. Special rules applicable to lump sum distributions may result in deferral of taxation in whole or in part. SUPPLEMENTARY INFORMATION EQUITABLE RESOURCES, INC. Schedule 1 EMPLOYEE SAVINGS PLAN ASSETS HELD FOR INVESTMENT October 31, 1994
Current Identity of Issue Description of Investment Cost Value Equitable Resources, Inc.(1) 135,826 shares common stock $3,114,846 $4,143,410 The Equitable Life Assurance Society Fixed Income Contract 6 percent per annum(2) $4,813,884(3) $4,813,884(3) The Equitable Life Assurance Society Retirement Investment Accounts, Pooled Separate Account No. 10, "Balanced Account" 57,760 units $4,689,620(3) $4,689,620(3) The Equitable Life Assurance Society Retirement Investment Accounts, Pooled Separate Account No. 3, "Aggressive Stock Account" 15,566 units $2,086,435(3) $2,086,435(3) The Equitable Life Assurance Society Retirement Investment Accounts, Pooled Separate Account No. 4, "Common Stock Account" 7,348 units $2,647,575(3) $2,647,575(3) The Equitable Life Assurance Society Retirement Investment Accounts, Pooled Separate Account No 13, "Bond Account" 32,642 units $1,377,416(3) $1,377,416(3) Participant Loans 8 to 10 percent N/A $779,726 PNC Bank STIF Institutional Fund(1) 252,422 units $252,422 $252,422 (1) Party in interest to the Plan. (2) Rate in effect for Plan year ended October 31, 1994. (3) Fair market value is used as original cost
EQUITABLE RESOURCES, INC. Schedule 2 EMPLOYEE SAVINGS PLAN TRANSACTIONS OR SERIES OF TRANSACTIONS IN EXCESS OF 5 PERCENT OF THE CURRENT VALUE OF PLAN ASSETS Year Ended October 31, 1994
Party Description Number of Total Number Total Sales Original Net Gain Involved of Investment Purchases Purchases of Sales Proceeds Cost or (Loss) Series Transactions: (1) Short-term investments 166 $4,085,099 96 $4,419,550 $4,419,550 None (1) Fixed income mutual funds 16 $1,271,291 5 $ 320,447 $ 320,447 None (1) The above transactions were carried out by the Trustee, PNC Bank.
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