SUPPLEMENTAL PENSION AGREEMENT

With Robert E. Shively

 

This Agreement is entered into by and between SM&P Utility Resources, Inc.
(“SM&P”) and Robert E. Shively (“Shively”).

 

RECITALS

 

Whereas, Shively is an employee of Laclede Gas Company (“Laclede Gas”), a
subsidiary of The Laclede Group, Inc. (“Group”), and is willing to transfer
employment to SM&P, another subsidiary of Group;

 

Whereas, SM&P recognizes the value of Shively’s services and wishes to encourage
his full-time employment at SM&P; and

 

Whereas, SM&P and Shively agree that SM&P shall provide Shively with deferred
compensation that duplicates the rights and benefits Shively would have been
entitled to under the Employee’s Retirement Plan of Laclede Gas Company
(“Retirement Plan”) and the Laclede Gas Company Supplemental Retirement Benefit
Plan (“SERP”), both as amended from time to time, as well as provide Shively
with deferred compensation that duplicates the benefits Shively has accrued as
Deferred Compensation under the Laclede Gas Company Incentive Compensation Plan
(“ICP”) as of September 30, 2006;

 

NOW, THEREFORE, in consideration of the mutual promises contained in this
Agreement, the parties agree as follows:

 

Article I – Definitions

 

1.1

“Change in Control” shall mean the acquisition by one person, or more than one
person acting as a group, other than Group and any of its affiliates, of
ownership of stock of SM&P that, together with stock held by such person or
group, constitutes more than 50% of the total fair market value or total voting
power of the stock of SM&P; provided, however, that Change in Control shall not
encompass a change in control of Group. This definition of Change in Control
shall be interpreted in accordance with, and in a manner consistent with
compliance with, the regulations under Section 409A of the Internal Revenue
Code.

 

1.2

“Code” shall mean the Internal Revenue Code of 1986, as amended.

 

1.3

“Disability” shall mean if Shively (i) is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months, or (ii) is, by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period of not less
than 12 months, receiving income replacement benefits

 

3440956.4

 

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for a period of not less than 3 months under an accident and health plan
covering employees of SM&P.

 

1.4

“Earliest Retirement Date” means the earliest date Shively is eligible to
receive payments from the Retirement Plan.

 

1.5

“Moody’s Corporate Bond Average” means the “Published Monthly Average Composite
Yield on Seasoned Corporate Bonds” published by Moody’s Investor’s Service, Inc.
(formerly known as Moody's Corporate Bond Yield Average -- Monthly Average
Corporates) available at http://www.naic.org/research_moody.htm or a successor
site.

 

1.6

“Retirement Plan” means the Employee’s Retirement Plan of Laclede Gas Company as
amended from time to time.

 

1.7

“SERP” means the Laclede Gas Company Supplemental Retirement Benefit Plan as
amended from time to time and any successor plan.

 

1.8

“Profit Sharing Funds” shall mean all funds derived from employer contributions,
other than matching contributions under the Employees’ Profit Sharing and Salary
Deferral Plan of SM&P Utility Resources, Inc., under SM&P’s Profit Sharing Plans
and under any other profit-sharing plan of SM&P as may be adopted from time to
time after the date of this Agreement.

 

1.9

“Profit Sharing Plans” shall mean the Employees’ Profit Sharing and Salary
Deferral Plan of SM&P Utility Resources, Inc., together with its corresponding
Adoption Agreement, and any successor plan and adoption agreement; and the
Executive Non-Qualified Excess Plan of SM&P Utility Resources, Inc. and its
corresponding Adoption Agreement, and any successor plan and adoption agreement;
as well as any other profit-sharing, deferred compensation or pension plan of
SM&P as may be adopted from time to time after the date of this Agreement.

 

1.10

“Transfer Event” shall mean Shively’s termination of employment with SM&P
through transfer of employment to an affiliate.

 

1.11

“Termination of Employment” shall mean Shively’s separation from service from
SM&P and its affiliates, as defined in IRS regulations under Section 409A of the
Code.

 

Article II – Nature of the Agreement

 

2.1

Overview of Benefits Provided by this Agreement. This Agreement provides a
deferred compensation benefit to Shively as described in more detail in Article
III (“Pension Benefit Amount”) and a deferred compensation benefit to Shively as
described in more detail in Article VI (“ICP Benefit Amount”).

 

 

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2.2

Nature of Contract. Shively’s employment with SM&P, Group or any of their
affiliates has been and will continue to be at will. Nothing contained in this
Agreement shall be construed to be a contract of employment for any term, nor as
conferring upon Shively the right to continue in the employ of SM&P, Group, or
any of their affiliates in his present capacity or any other capacity. Nothing
contained in this Agreement shall be construed to preclude termination of his
employment at any time. It is expressly understood by the parties that this
Agreement relates exclusively to additional compensation for Shively’s services
and is not an employment contract.

 

Article III – Calculation of Pension Benefit Amount

 

3.1

Pension Benefit Amount Formula. Upon the earliest to occur of a Transfer Event,
Termination of Employment or a Change in Control, such date being known as the
Benefit Calculation Date, Shively’s Pension Benefit Amount under this Agreement
shall be calculated and shall be in an amount equivalent to the Retirement Plan
Amount described in Section 3.2 of this Agreement, less the sum of:

 

 

(1)

the Actual Accrued Benefit Offset described in Section 3.3 of this Agreement,
and

 

 

(2)

the Profit Sharing Offset described in Section 3.4 of this Agreement.

 

No Pension Benefit Amount shall accrue under this Agreement on or after the
Benefit Calculation Date. The terms of payment of the Pension Benefit Amount are
provided in Article IV of this Agreement.

 

3.2

Retirement Plan Amount. The Retirement Plan Amount means the lump sum value on
the Benefit Calculation Date of the benefit calculated under the Retirement Plan
and SERP as if Shively had been continuously employed to that date by Laclede
Gas using:

 

 

(1)

average final compensation that includes Shively’s actual salary and bonuses
paid by SM&P using the highest 36 consecutive month average over the previous
120 months and, to the extent needed to obtain the highest 36 consecutive month
average, Shively’s actual salary and bonuses paid by Laclede Gas; and

 

 

(2)

years of credited service with The Laclede Group, which includes Shively’s
service with SM&P and Laclede Gas.

 

If the Earliest Retirement Date is later than the Benefit Calculation Date, the
benefit shall be reduced to the Actuarial Equivalent, as defined in the
Retirement Plan and as determined in accordance with Section 1.1.15 of the
Retirement Plan, of the Retirement Plan Amount.

 

3.3

Actual Accrued Benefit Offset. The Actual Accrued Benefit Offset shall be the
sum on the Benefit Calculation Date of

 

 

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(1)

Shively’s actual accrued vested benefit under the Retirement Plan, payable to
him as of the Earliest Retirement Date available to him under the Retirement
Plan in the form of a lump sum distribution, plus

 

 

(2)

the actual amount to which Shively is entitled under the SERP, payable to him as
of the Earliest Retirement Date available to him under the SERP in the form of a
lump sum distribution.

 

If the Earliest Retirement Date is later than the Benefit Calculation Date, the
benefit shall be reduced to the Actuarial Equivalent, determined in accordance
with Section 1.1.15 of the Retirement Plan, of the Actual Accrued benefit
Offset.

 

3.4

Profit Sharing Offset. The Profit Sharing Offset shall be the Profit Sharing
Funds plus a rate of return over the term of investment equal to Moody’s
Corporate Bond Average plus two percent.

 

Article IV – Pension Benefit Amount Vesting

 

4.1

Vesting. The Pension Benefit Amount under this Agreement shall be fully vested
and non-forfeitable at all times.

 

Article V – Payment of Pension Benefit Amount

 

5.1

Termination of Employment. In the event of Shively’s Termination of Employment,
the Pension Benefit Amount calculated under Section 3.1 shall be payable to
Shively in a lump sum on the date that is six months after the Benefit
Calculation Date. The payment date may be delayed if calculation of the amount
of the payment is not administratively practicable due to events beyond the
control of the SM&P, in which case payment will be made as soon as reasonably
practicable. The Pension Benefit Amount shall earn simple interest at the
Moody’s Corporate Bond Average rate, determined as of the date of the Benefit
Calculation Date, from such Benefit Calculation Date to the date of actual
payment.

 

5.2

Change in Control. In the event of a Change in Control, the Pension Benefit
Amount calculated under Section 3.1 shall be payable to Shively in a lump sum on
the earlier to occur of Termination of Employment or death, with the payment
terms to be as described in Section 5.1 or 5.4, as applicable.

 

5.3

Transfer Event. In the event of a Transfer Event, the Pension Benefit Amount
calculated under Section 3.1 shall be payable to Shively in a lump sum on the
earlier to occur of Termination of Employment or death, with the payment terms
to be as described in Section 5.1 or 5.4, as applicable.

 

5.4

Death. If Shively dies prior to the Benefit Calculation Date or prior to payment
of the Pension Benefit Amount, the Pension Benefit Amount shall be paid as soon
as administratively feasible after the date of Shively’s death in a lump sum to
his beneficiary

 

 

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as indicated on his designation of beneficiary form on file with SM&P. The
payment date may be delayed if calculation of the amount of the payment is not
administratively practicable due to events beyond the control of the SM&P, in
which case payment will be made as soon as reasonably practicable.

 

Shively may specifically designate in writing the beneficiary(ies) who shall
receive any benefits under this Agreement that may be payable after his death.
Such designation shall be made by actual delivery in writing to SM&P. Shively
may change or revoke a designation of beneficiary without the consent of the
beneficiary at any time or from time to time in writing in such manner as may be
suitable to SM&P. If the designated beneficiary does not survive Shively, or if
Shively does not designate a beneficiary, any benefits payable under this
Agreement shall be paid to Shively’s estate.

 

ARTICLE VI

ICP Benefit

 

6.1

ICP Benefit Amount. As of the date of this Agreement, Shively’s accrued benefit
under the ICP is $17,850, which shall be payable upon his retirement, death, or
Disability but which is forfeited in the event of his Termination of Employment
other than by reason of retirement, death, or Disability.

 

6.2

Payment of ICP Benefit. The ICP Benefit Amount shall be paid in a lump sum upon
the first to occur of Shively’s Termination of Employment after reaching the
earliest retirement age under the Retirement Plan, death, or Disability. The ICP
Benefit Amount shall be payable:

 

•

Thirty days after his death or Disability, or

 

•

On the date that is six months after the date of his retirement, and the ICP
Benefit Amount shall earn simple interest at the Moody’s Corporate Bond Average
rate, determined as of the date of retirement, from such date to the date of
actual payment.

 

ARTICLE VII – Source of Benefits

 

7.1

General Creditor Status. Shively’s claim against SM&P under this Agreement shall
be that of an unsecured general creditor of SM&P. Benefits payable under this
Agreement shall represent an unfunded and unsecured promise to pay by SM&P. SM&P
shall not be obligated to set aside, earmark or escrow any funds or other assets
to satisfy its obligations under this Agreement.

 

7.2

Anti-assignation. The interests of Shively and his beneficiaries under this
Agreement are not subject to the claims of their creditors and may not be
voluntarily or involuntarily sold, transferred, alienated, assigned, pledged,
anticipated, or encumbered. Any attempt by Shively to transfer, alienate,
assign, pledge, anticipate, encumber, charge or otherwise dispose of any right
to benefits payable hereunder shall be void. SM&P may cancel and

 

 

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refuse to pay any portion of a benefit which is sold, transferred, alienated,
assigned, pledged, anticipated or encumbered.

 

Distribution pursuant to a domestic relations order of all or any portion of the
Pension Benefit Amount or ICP Benefit may be paid to an Alternate Payee (as
defined in Section 414(p) of the Code) who is a former spouse in an amount
specified in such domestic relations order in a lump-sum cash payment as soon as
administratively feasible after the Plan Administrator determines that the order
is a domestic relations order (as defined in Section 414(p)(1)(B) of the Code).

 

ARTICLE VIII – General Provisions

 

8.1

Amendment. The provisions of this Agreement may be amended or waived only with
the prior written consent of each of Shively, SM&P and The Laclede Group, Inc.

 

8.2

Controlling State Law. The laws of the State of Missouri shall be controlling in
all matters relating to this Agreement.

 

8.3

Severability. In case any provision of this Agreement shall be held illegal or
invalid for any reason, such illegality or invalidity shall not affect the
remaining provisions of the Agreement, and the Agreement shall be construed and
enforced as if such illegal and invalid provisions had never been set forth.

 

8.4

Full Discharge of Obligation. Payment of the Pension Benefit Amount and the ICP
Benefit, unless forfeited hereunder, shall constitute (i) payment in full of the
benefits due Shively and his beneficiaries under this Agreement and (ii)
fulfillment of all of SM&P’s obligations under this Agreement.

 

8.5

Tax Withholding. All distributions under this Agreement, to the extent required
by law, shall be subject to withholding of federal, state and local taxes.

 

 

 

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IN WITNESS WHEREOF, SM&P Utility Resources, Inc. and Robert E. Shively have
executed this Agreement this 3rd day of January, 2007.

 

 

 

SM&P UTILITY RESOURCES, INC.

 

 

 

 

 

By:_/s/D. H. Yaeger_____________________

 

Title: Chief Executive Officer

 

 

                

 

 

 

 

 

 

 

___/s/ Robert E. Shively__________________

 

Robert E. Shively

 

 

                

 

 

 

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