Exhibit 10.I
EL PASO CORPORATION
2004 KEY EXECUTIVE SEVERANCE
PROTECTION PLAN
Effective as of March 9, 2004

 

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TABLE OF CONTENTS

         
SECTION 1 ESTABLISHMENT OF PLAN
    1  
 
       
SECTION 2 DEFINITIONS
    1  
2.1 Base Salary
    1  
2.2 Benefits Protection Trust
    1  
2.3 Board
    1  
2.4 Bonus Amount
    2  
2.5 Cause
    2  
2.6 Change in Control
    2  
2.7 Company
    4  
2.8 Effective Date
    4  
2.9 Employer
    5  
2.10 Executive Employee
    5  
2.11 Good Reason
    5  
2.12 Notice of Termination
    6  
2.13 Operating Companies
    6  
2.14 Participant
    6  
2.15 Permanent Disability
    6  
2.16 Plan
    6  
2.17 Severance Benefit
    6  
 
       
SECTION 3 ELIGIBILITY
    6  
3.1 Participation
    6  
3.2 Duration of Participation
    7  
 
       
SECTION 4 SEVERANCE BENEFITS
    7  
4.1 Right to Severance Benefit
    7  
4.2 Amount of Severance Benefit
    8  
 
       
SECTION 5 TERMINATION OF EMPLOYMENT
    9  
5.1 Written Notice Required
    9  
5.2 Termination Date
    9  
 
       
SECTION 6 ADDITIONAL PAYMENTS BY THE COMPANY
    10  
6.1 Gross-Up Payment
    10  
6.2 Determination By Accountant
    10  
6.3 Notification Required
    11  
6.4 Repayment
    12  
 
       
SECTION 7 SUCCESSORS TO COMPANY
    12  
7.1 Successors
    12  
7.2 Sale of Operating Companies
    13  

          El Paso Corporation
2004 Key Executive Severance Protection Plan   - i -   Table of Contents

 

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SECTION 8 AMENDMENT AND PLAN TERMINATION
    13  
8.1 Amendment and Termination
    13  
8.2 Form of Amendment
    14  
 
       
SECTION 9 MISCELLANEOUS
    14  
9.1 Indemnification
    14  
9.2 Employment Status
    14  
9.3 Validity and Severability
    14  
9.4 Governing Law; Choice of Forum
    15  
9.5 Payment to Benefits Protection Trust
    15  
APPENDIX I
    16  
 
       
APPENDIX II
    17  

          El Paso Corporation
2004 Key Executive Severance Protection Plan   - ii -   Table of Contents

 

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EL PASO CORPORATION
2004 KEY EXECUTIVE SEVERANCE PROTECTION PLAN
Effective as of March 9, 2004
     WHEREAS, the Board of Directors of El Paso Corporation recognizes that the
threat of a change in ownership or control of the Company may occur which can
result in significant distractions of its key executive personnel because of the
uncertainties inherent in such a situation; and
     WHEREAS, the Board has determined that it is essential and in the best
interest of the Company and its stockholders to retain the services of its key
executive personnel in the event of a threat of a Change in Control of the
Company and to ensure their continued dedication and efforts in such event
without undue concern for their personal financial and employment security.
     NOW, THEREFORE, in order to fulfill the above purposes, the following plan
has been developed and is hereby adopted.
SECTION 1 ESTABLISHMENT OF PLAN
     As of the Effective Date, the Company hereby establishes a severance
compensation plan known as the El Paso Corporation 2004 Key Executive Severance
Protection Plan as set forth in this document.
SECTION 2 DEFINITIONS
     As used herein the following words and phrases shall have the following
respective meanings unless the context clearly indicates otherwise.
2.1 Base Salary
     As to any Participant the amount that the Participant is entitled to
receive as wages or salary from his or her Employer on an annualized basis, as
in effect immediately prior to a Change in Control or, if greater, at any time
following the Change in Control.
2.2 Benefits Protection Trust
     The El Paso Corporation Benefits Protection Trust.
2.3 Board
     The Board of Directors of the Company.

 

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2.4 Bonus Amount
     The term “Bonus Amount” shall mean, as to any Participant, an amount equal
to the Participant’s target bonus opportunity that becomes payable to the
Participant in the event of a “qualifying change in control” under the Company’s
2001 Omnibus Incentive Compensation Plan (or under the same or similar terms of
any successor bonus plan or program thereto) for the fiscal year in which a
Change in Control occurs, determined as if the Participant had continued in
employment until the end of such fiscal year and as if the Company and the
Participant had fully met all performance targets and goals (if applicable) for
such year, but excluding any single or one time “spot” award.
2.5 Cause
     A termination of a Participant by his or her Employer shall be for “Cause”
if evidenced by a resolution adopted in good faith by two-thirds (2/3) of the
Board that the Participant (i) willfully and continually failed to substantially
perform his or her duties with his or her Employer (other than a failure
resulting from the Participant’s incapacity due to physical or mental illness)
which failure continued for a period of at least thirty (30) days after a
written notice of demand for substantial performance has been delivered to the
Participant specifying the manner in which the Participant has failed to
substantially perform, or (ii) willfully engaged in conduct which is
demonstrably and materially injurious to the Company or any of its affiliates,
monetarily or otherwise; provided, however, that no termination of the
Participant’s employment shall be for Cause as set forth in clause (ii) above
until (A) there shall have been delivered to the Participant a copy of a written
notice setting forth that the Participant was guilty of the conduct set forth in
clause (ii) and specifying the particulars thereof in detail, and (B) the
Participant shall have been provided an opportunity to be heard by the Board
(with the assistance of the Participant’s counsel if the Participant so
desires). No act, nor failure to act, on the Participant’s part shall be
considered “willful” unless he or she has acted, or failed to act, with an
absence of good faith and without a reasonable belief that his or her action or
failure to act was in the best interest of the Company or any of its affiliates.
Notwithstanding anything contained in this Plan to the contrary, no failure to
perform by the Participant after Notice of Termination is given by the
Participant shall constitute Cause.
2.6 Change in Control
     A “Change in Control” shall mean the occurrence of any of the following
after the Effective Date:
     (a) An acquisition (other than directly from the Company) of any voting
securities of the Company (the “Voting Securities”) by any “Person” (as the term
“person” is used for purposes of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)), immediately after which
such Person has “Beneficial Ownership” (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of more than twenty percent (20%) of (1) the
then-outstanding shares of common stock of the Company (or any other securities
into which such shares of

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common stock are changed or for which such shares of common stock are exchanged)
(the “Shares”) or (2) the combined voting power of the Company’s
then-outstanding Voting Securities; provided, however, that in determining
whether a Change in Control has occurred pursuant to this paragraph (a), the
acquisition of Shares or Voting Securities in a “Non-Control Acquisition” (as
hereinafter defined) shall not constitute a Change in Control. A “Non-Control
Acquisition” shall mean an acquisition by (i) an employee benefit plan (or a
trust forming a part thereof) maintained by (A) the Company or (B) any
corporation or other Person the majority of the voting power, voting equity
securities or equity interest of which is owned, directly or indirectly, by the
Company (for purposes of this definition, a “Related Entity”), (ii) the Company
or any Related Entity, or (iii) any Person in connection with a “Non-Control
Transaction” (as hereinafter defined);
     (b) The individuals who, as of the Effective Date, are members of the board
of directors of the Company (the “Incumbent Board”), cease for any reason to
constitute at least a majority of the members of the board of directors of the
Company or, following a Merger (as hereinafter defined), the board of directors
of (x) the corporation resulting from such Merger (the “Surviving Corporation”),
if fifty percent (50%) or more of the combined voting power of the
then-outstanding voting securities of the Surviving Corporation is not
Beneficially Owned, directly or indirectly, by another Person (a “Parent
Corporation”) or (y) if there is one or more than one Parent Corporation, the
ultimate Parent Corporation; provided, however, that, if the election, or
nomination for election by the Company’s common stockholders, of any new
director was approved by a vote of at least two-thirds of the Incumbent Board,
such new director shall, for purposes of the Plan, be considered a member of the
Incumbent Board; and provided, further, however, that no individual shall be
considered a member of the Incumbent Board if such individual initially assumed
office as a result of an actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the board of directors of the
Company (a “Proxy Contest”), including by reason of any agreement intended to
avoid or settle any Proxy Contest; or
     (c) The consummation of:
          (i) A merger, consolidation or reorganization (1) with or into the
Company or (2) in which securities of the Company are issued (a “Merger”),
unless such Merger is a “Non-Control Transaction.” A “Non-Control Transaction”
shall mean a Merger in which:
     (A) the stockholders of the Company immediately before such Merger own
directly or indirectly immediately following such Merger at least fifty percent
(50%) of the combined voting power of the outstanding voting securities of
(x) the Surviving Corporation, if there is no Parent Corporation or (y) if there
is one or more than one Parent Corporation, the ultimate Parent Corporation;
     (B) the individuals who were members of the Incumbent Board immediately
prior to the execution of the agreement providing for such Merger constitute at
least a majority of the members of the board of directors of (x) the

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Surviving Corporation, if there is no Parent Corporation, or (y) if there is one
or more than one Parent Corporation, the ultimate Parent Corporation; and
     (C) no Person other than (1) the Company, (2) any Related Entity, or
(3) any employee benefit plan (or any trust forming a part thereof) that,
immediately prior to the Merger, was maintained by the Company or any Related
Entity, or (4) any Person who, immediately prior to the Merger had Beneficial
Ownership of twenty percent (20%) or more of the then outstanding Shares or
Voting Securities, has Beneficial Ownership, directly or indirectly, of twenty
percent (20%) or more of the combined voting power of the outstanding voting
securities or common stock of (x) the Surviving Corporation, if fifty percent
(50%) or more of the combined voting power of the then outstanding voting
securities of the Surviving Corporation is not Beneficially Owned, directly or
indirectly by a Parent Corporation, or (y) if there is one or more than one
Parent Corporation, the ultimate Parent Corporation;
          (ii) A complete liquidation or dissolution of the Company; or
          (iii) The sale or other disposition of all or substantially all of the
assets of the Company and its subsidiaries taken as a whole to any Person (other
than (x) a transfer to a Related Entity, (y) a transfer under conditions that
would constitute a Non-Control Transaction, with the disposition of assets being
regarded as a Merger for this purpose or (z) the distribution to the Company’s
stockholders of the stock of a Related Entity or any other assets).
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because any Person (the “Subject Person”) acquired Beneficial Ownership
of more than the permitted amount of the then outstanding Shares or Voting
Securities as a result of the acquisition of Shares or Voting Securities by the
Company which, by reducing the number of Shares or Voting Securities then
outstanding, increases the proportional number of shares Beneficially Owned by
the Subject Persons; provided, that if a Change in Control would occur (but for
the operation of this sentence) as a result of the acquisition of Shares or
Voting Securities by the Company and, after such share acquisition by the
Company, the Subject Person becomes the Beneficial Owner of any additional
Shares or Voting Securities and such Beneficial Ownership increases the
percentage of the then outstanding Shares or Voting Securities Beneficially
Owned by the Subject Person, then a Change in Control shall occur.
2.7 Company
     “Company” shall mean El Paso Corporation.
2.8 Effective Date
     The “Effective Date” of this Plan is March 9, 2004.

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2.9 Employer
     “Employer” shall mean, as to any Participant on any date, the Company or
the affiliate of the Company that employs the Participant on such date.
2.10 Executive Employee
     All employees of the Employer employed in an Executive Salary Grade
Position.
2.11 Good Reason
     “Good Reason” shall mean, as to any Participant, the occurrence of any of
the following events or conditions following a Change in Control:
     (a) a change in the Participant’s status, title, position or
responsibilities (including reporting responsibilities) which, in his or her
reasonable judgment, represents a substantial reduction of his or her status,
title, position or responsibilities as in effect immediately prior thereto; the
assignment to the Participant of any duties or responsibilities which, in the
Participant’s reasonable judgment, are inconsistent with such status, title,
position or responsibilities; or any removal of the Participant from or failure
to reappoint or reelect him or her to any of such positions, except in
connection with the termination of his or her employment for Cause, Permanent
Disability, as a result of his or her death, or by the Participant other than
for Good Reason;
     (b) a reduction in the Participant’s annual base salary;
     (c) the requirement by the Participant’s Employer (without the consent of
the Participant) that he or she have a principal place of employment which is
outside a thirty-five (35) mile radius of his or her principal place of
employment immediately prior to a Change in Control, except for reasonably
required travel on the Employer’s business which is not materially greater than
such travel requirements prior to the Change in Control;
     (d) the failure by the Company or any of its affiliates to (i) continue in
effect any material compensation or benefit plan, program or practice in which
the Participant was participating immediately prior to the Change in Control,
including, without limitation, the Company’s 2001 Omnibus Incentive Compensation
Plan, Pension Plan, Supplemental Benefits Plan and Retirement Savings Plan, with
any amendments and restatements of such plans made prior to such Change in
Control, or (ii) provide the Participant with compensation and benefits at least
equal (in terms of benefit levels and/or reward opportunities) to those provided
for under each compensation or employee benefit plan, program and practice of
the Company and its affiliates as in effect immediately prior to the Change in
Control (or as in effect following the Change in Control, if greater);
     (e) any material breach by the Company of any provision of this Plan; or

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     (f) any purported termination of the Participant’s employment for Cause by
the Employer which does not otherwise comply with the terms of this Plan.
2.12 Notice of Termination
     “Notice of Termination” shall mean a notice which indicates the specific
provisions in this Plan relied upon as the basis for any termination of
employment and which sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Participant’s employment under
the provision so indicated. No purported termination of employment shall be
effective without such Notice of Termination.
2.13 Operating Companies
     Subsidiary companies of the Company designated by the Company on Appendix I
of the Plan.
2.14 Participant
     An Executive Employee who meets the eligibility requirements of Section 3.
2.15 Permanent Disability
     A Participant shall be deemed to have become permanently disabled for
purposes of this Plan if the Chief Executive Officer of the Company (or, in the
case of a determination with respect to the Chief Executive Officer, the Board)
finds, upon the basis of medical evidence satisfactory to him or her, that the
Participant is totally disabled, whether due to physical or mental condition, so
as to be prevented from engaging in further employment by the Employer and that
such disability will be permanent and continuous during the remainder of his or
her life.
2.16 Plan
     This El Paso Corporation 2004 Key Executive Severance Protection Plan.
2.17 Severance Benefit
     The benefit payable in accordance with Section 4 of the Plan.
SECTION 3 ELIGIBILITY
3.1 Participation
     Executive Employees shall become Participants in the Plan if they are
designated by the Board or Compensation Committee thereof as Participants;
provided, however, that an Executive Employee who is a participant in the
Company’s Key Executive Severance Protection Plan or Employee Severance
Protection Plan must waive participation therein (in form satisfactory to the
Company) as a condition to becoming a

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Participant in this Plan. Participants shall be identified on Appendix II of the
Plan. The Company shall amend Appendix II from time to time as necessary to
include new Participants in the Plan or remove Participants from the Plan who
are no longer eligible to participate in the Plan, in each case in accordance
with the terms and conditions of the Plan.
3.2 Duration of Participation
     A Participant shall cease to be a Participant in the Plan if he or she
ceases to be an Executive Employee at any time prior to a Change in Control (but
subject to Section 4.1(b)) or if his or her employment is terminated following a
Change in Control under circumstances where he or she is not entitled to a
Severance Benefit under the terms of this Plan. A Participant whose termination
of employment entitles him or her to payment of a Severance Benefit shall remain
a Participant in the Plan until the full amount of the Severance Benefit has
been paid to him or her.
SECTION 4 SEVERANCE BENEFITS
4.1 Right to Severance Benefit
     (a) A Participant shall be entitled to receive from the Company a Severance
Benefit in the amount provided in Section 4.2 if (i) a Change in Control has
occurred and (ii) within two years thereafter, the Participant’s employment with
the Employer terminates for any reason, except that notwithstanding the
provisions of this Section 4.1(a), no benefits under this Plan will be payable
should the Participant’s termination of employment be (A) by the Employer for
Cause, (B) by reason of Permanent Disability, (C) voluntarily initiated by the
Participant other than for Good Reason, or (D) by reason of the Participant’s
death.
     (b) If (i) a Participant’s employment is terminated by the Employer without
Cause prior to the date of a Change in Control or (ii) an action is taken with
respect to the Participant prior to the date of a Change in Control that would
constitute Good Reason if taken after a Change in Control, and the Participant
reasonably demonstrates that such termination or action (A) was at the request
of a third party that has indicated an intention or taken steps reasonably
calculated to effect a Change in Control or (B) otherwise arose in connection
with, or in anticipation of, a Change in Control that has been threatened or
proposed, such termination or action shall be deemed to have occurred after such
Change in Control for purposes of the Plan, so long as such Change in Control
actually occurs.
     (c) Notwithstanding any other provision of the Plan, the sale, divestiture
or other disposition of an Operating Company (or part thereof) before the
execution of an agreement providing for a transaction or transactions which, if
consummated, would constitute a Change in Control or before a Change in Control
shall not be deemed to be a termination of employment of Participants employed
by such Operating Company (or whose employment relates to such Operating
Company, if applicable), and such Participants shall not be entitled to benefits
from the Company under this Plan as a result of such sale, divestiture or other
disposition. The sale, divestiture or other disposition of

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an Operating Company (or part thereof) after the execution of an agreement
providing for a transaction or transactions which, if consummated, would
constitute a Change in Control or after a Change in Control shall not be deemed
to be a termination of employment of Participants employed by such Operating
Company (or whose employment relates to such Operating Company, if applicable),
and such Participants shall not be entitled to benefits from the Company under
this Plan as a result of such sale, divestiture or other disposition, in each
case so long as the provisions of Section 7.2 have been satisfied.
4.2 Amount of Severance Benefit
     If a Participant’s employment is terminated in circumstances entitling him
or her to a Severance Benefit as provided in Section 4.1, such Participant shall
be entitled to the following benefits:
     (a) the Company shall pay to the Participant, as severance pay and in lieu
of any further salary for periods subsequent to the Termination Date (as
specified in Section 5.2), in a single payment (without any discount for
accelerated payment), an amount in cash equal to a formula, as described below,
and based upon a multiplier, as assigned in the table below to the Participant
according to the Participant’s salary grade level (“Executive Grade Level”):

              Executive   Corporate Title Multiplier   Grade Level   (or
Equivalent Position at Subsidiary Level)
3 X
  XA   President and Chief Executive Officer  
2 X
  XB – XE; XF   Executive Vice President and Senior Vice President  
1 X
  XG – XI   Vice President

(X) times the sum of (A) the Participant’s Base Salary and (B) the Bonus Amount.
The Company shall also pay to the Participant the prorated portion of the
Participant’s Bonus Amount for the year in which the Participant’s employment is
terminated;
     (b) for the period of months, as specified for each Executive Grade Level
in the table below, subsequent to the Participant’s termination of employment,
the Company shall at its expense continue on behalf of the Participant and his
or her dependents and beneficiaries, the basic life insurance, flexible spending
account, medical and dental benefits which were being provided to the
Participant immediately prior to the Change in Control (or, if greater, at any
time thereafter). The benefits provided in this Subsection 4.2(b) shall be no
less favorable to the Participant, in terms of amounts and deductibles and costs
to him or her, than the coverage provided the Participant under the plans
providing such benefits at the time Notice of Termination is given. The
Company’s obligation hereunder to provide the foregoing benefits shall terminate
to the extent the Participant obtains replacement coverage under a subsequent
employer’s benefit plans at an equal or higher level. The Company also shall pay
a lump sum equal to the amount of any additional income tax payable by the
Participant and attributable to the benefits

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provided under this subparagraph (b) at the time such tax is imposed upon the
Participant;

          Number of Months of   Executive   Corporate Title Continued Coverage  
Grade Level   (or Equivalent Position at Subsidiary Level)
36 months
  XA   President and Chief Executive Officer  
24 months
  XB – XE; XF   Executive Vice President and Senior Vice President  
12 months
  XG – XI   Vice President

     The amounts provided for in Section 4.2(a) shall be paid or transferred
within thirty (30) days after the Participant’s termination of employment (or,
if Section 4.1(b) applies to the termination, then within 30 days after the
Change in Control). The Participant shall not be required to mitigate the amount
of any payment provided for in this Plan by seeking other employment or
otherwise and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Participant in any subsequent
employment.
SECTION 5 TERMINATION OF EMPLOYMENT
5.1 Written Notice Required
     Any purported termination of employment, either by the Employer or by the
Participant, shall be communicated by written Notice of Termination to the
other.
5.2 Termination Date
     In the case of the Participant’s death, the Participant’s Termination Date
shall be his or her date of death. In all other cases, the Participant’s
Termination Date shall be the date specified in the Notice of Termination
subject to the following:
     (a) If the Participant’s employment is terminated by the Employer for Cause
or due to Permanent Disability, the date specified in the Notice of Termination
shall be at least thirty (30) days from the date the Notice of Termination is
given to the Participant, provided that in the case of Permanent Disability the
Participant shall not have returned to the full-time performance of his or her
duties during such period of at least thirty (30) days; and
     (b) If the Participant terminates his or her employment for Good Reason,
the date specified in the Notice of Termination shall not be more than sixty
(60) days from the date the Notice of Termination is given to the Employer.

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SECTION 6 ADDITIONAL PAYMENTS BY THE COMPANY
6.1 Gross-Up Payment
     (a) Subject only to Section 6.1(b) hereof, in the event it shall be
determined that any payment or distribution of any type by the Company or any of
its affiliates to or for the benefit of the Participant, whether paid or payable
or distributed or distributable pursuant to the terms of this Plan or otherwise
(the “Payments”), would be subject to the excise tax imposed by Section 4999 of
the Internal Revenue Code of 1986, as amended (the “Code”), or any interest or
penalties with respect to such excise tax (such excise tax, together with any
such interest and penalties, are collectively referred to as the “Excise Tax”),
then the Participant shall be entitled to receive an additional payment (a
“Gross-Up Payment”) in an amount such that after payment by the Participant of
all taxes (including any interest or penalties imposed with respect to such
taxes), including any income taxes, employment taxes and Excise Tax, imposed
upon the Gross-Up Payment, the Participant retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments. Payment of the
Gross-Up Payment shall be made in accordance with Section 6.3.
     (b) Notwithstanding Section 6.1(a), in the event that a reduction to the
Payments in respect of a Participant of 10% or less would cause no Excise Tax to
be payable, the Participant will not be entitled to a Gross-Up Payment and the
Payments shall be reduced (but not below zero) to the extent necessary so that
the Payments shall not be subject to the Excise Tax. Unless the Participant
shall have given prior written notice specifying a different order to the
Company to effectuate the foregoing, the Company shall reduce or eliminate the
Payments, by first reducing or eliminating the portion of the Payments which are
not payable in cash and then by reducing or eliminating cash payments, in each
case in reverse order beginning with payments or benefits which are to be paid
the farthest in time from the date of the Change in Control. Any notice given by
the Participant pursuant to the preceding sentence shall take precedence over
the provisions of any other plan, arrangement or agreement governing the
Participant’s rights and entitlements to any benefits or compensation.
6.2 Determination By Accountant
     All determinations required to be made under this Section 6, including
whether a Gross-Up Payment is required and the amount of such Gross-Up Payment,
shall be made by the independent accounting firm retained by the Company on the
date of Change in Control (the “Accounting Firm”), which shall provide detailed
supporting calculations both to the Company and the Participant within 15
business days of the date of termination, if applicable, or such earlier time as
is requested by the Company. If the Accounting Firm determines that no Excise
Tax is payable by the Participant, it shall furnish the Participant with an
opinion that he or she has substantial authority not to report any Excise Tax on
his or her federal income tax return. Any determination by the Accounting Firm
shall be binding upon the Company and the Participant. As a result of the
uncertainty in the application of Section 4999 of the Code at the time of the
initial

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determination by the Accounting Firm hereunder, it is possible that Gross-Up
payments which will not have been made by the Company should have been made
(“Underpayment”), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 6.3 and the Participant thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Participant.
6.3 Notification Required
     The Participant shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten (10) business days after the Participant knows
of such claim and shall apprise the Company of the nature of such claim and the
date on which such claim is requested to be paid. The Participant shall not pay
such claim prior to the expiration of the thirty (30) day period following the
date on which it gives such notice to the Company (or such shorter period ending
on the date that any payment of taxes with respect to such claim is due). If the
Company notifies the Participant in writing prior to the expiration of such
period that it desires to contest such claim, the Participant shall:
(a) give the Company any information reasonably requested by the Company
relating to such claim,
(b) take such action in connection with contesting such claim as the Company
shall reasonably request in writing from time to time, including, without
limitation, accepting legal representation with respect to such claim by an
attorney reasonably selected by the Company,
(c) cooperate with the Company in good faith in order to effectively contest
such claim, and
(d) permit the Company to participate in any proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Participant harmless, on an
after-tax basis, for any Excise Tax or income tax, including interest and
penalties with respect thereto, imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 6.3, the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
the Participant to pay the tax claimed and sue for a refund, or contest the
claim in any permissible manner, and the Participant agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or

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more appellate courts, as the Company shall determine; provided, however, that
if the Company directs the Participant to pay such claim and sue for a refund,
the Company shall advance the amount of such payment to the Participant (unless
otherwise prohibited by applicable law), on an interest-free basis and shall
indemnify and hold the Participant harmless, on an after-tax basis, from any
Excise Tax or income tax, including interest or penalties with respect thereto,
imposed with respect to such advance or with respect to any imputed income with
respect to such advance; and provided, further, that any extension of the
statute of limitations relating to payment of taxes for the taxable year of the
Participant with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Company’s control of
the contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and the Participant shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.
6.4 Repayment
     If, after the receipt by the Participant of an amount advanced by the
Company pursuant to Section 6.3, the Participant becomes entitled to receive any
refund with respect to such claim, the Participant shall (subject to the
Company’s complying with the requirements of Section 6.3) promptly pay to the
Company the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by the
Participant of an amount advanced by the Company pursuant to Section 6.3, a
determination is made that the Participant shall not be entitled to any refund
with respect to such claim and the Company does not notify the Participant in
writing of its intent to contest such denial of refund prior to the expiration
of thirty (30) days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of such advance
shall offset, to the extent thereof the amount of Gross-Up Payment required to
be paid.
SECTION 7 SUCCESSORS TO COMPANY
7.1 Successors
     This Plan shall bind any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company, in the same manner and to the same extent
that the Company would be obligated under this Plan if no succession had taken
place. In the case of any transaction in which a successor would not by the
foregoing provision or by operation of law be bound by this Plan, the Company
shall require such successor expressly and unconditionally to assume and agree
to perform the Company’s obligations under this Plan, in the same manner and to
the same extent that the Company would be required to perform if no such
succession had taken place.
7.2 Sales of Operating Companies

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     If a Participant’s employment with his or her Employer terminates in
connection with the sale, divestiture or other disposition of the stock or
assets of any Operating Company (or part thereof) (a “Transaction”) after the
execution of an agreement providing for a transaction or transactions which, if
consummated, would constitute a Change in Control or after a Change in Control,
such termination shall not be a termination of employment of the Participant for
purposes of the Plan, and (notwithstanding the rights provided to the
Participant by Section 4.1(a)) the Participant shall not be entitled to a
Severance Benefit as a result of such termination of employment if (i) the
Participant is offered continued employment, or continues in employment, with
the divested Operating Company (or part thereof) or the purchaser of the stock
or assets of the Operating Company (or part thereof), as the case may be, or one
of their respective affiliates (the “Post-Transaction Employer”) on terms and
conditions that would not constitute Good Reason and (ii) the Company obtains an
agreement from the acquiror of the stock or assets of the divested Operating
Company (or part thereof), enforceable by the Participant, to provide or cause
the Post-Transaction Employer to provide severance pay and benefits, if the
Participant accepts the offered employment or continues in employment with the
Post-Transaction Employer or its affiliates following the Transaction, (A) at
least equal to the Severance Benefit and (B) payable upon a termination of the
Participant’s employment with the Post-Transaction Employer and its affiliates
within the period described in Section 4.1(a)(ii) (or such part of it as is then
remaining) for any reason other than Cause, Permanent Disability, the
Participant’s death or a termination by the Participant without Good Reason. For
purposes of this Section 7.2, the terms Cause, Good Reason and Permanent
Disability shall have the meanings ascribed to them in Sections 2.5, 2.11 and
2.15 respectively, but the term Employer as it is used in those Sections shall
be deemed to refer to the entity employing the Participant after the
Transaction, the term Company shall mean such employer or, if there is an
ultimate parent corporation of such employer, such ultimate parent corporation,
and the terms Board and Chief Executive Officer as used in those Sections shall
be deemed to refer to the individuals or bodies serving those functions for such
employer or, if applicable, such ultimate parent corporation.
SECTION 8 AMENDMENT AND PLAN TERMINATION
8.1 Amendment and Termination
     Prior to a Change in Control, the Plan may be amended or modified in any
respect, and may be terminated, in any such case, by resolution adopted by
two-thirds of the Board; provided, however, that no such amendment, modification
or termination which would adversely affect the benefits or protections
hereunder of any individual who is a Participant as of the date such amendment,
modification or termination is adopted shall be effective as it relates to such
individual unless no Change in Control occurs within one year after such
adoption, any such attempted amendment, modification or termination adopted
within one year prior to a Change in Control being null and void ab initio as it
relates to all such individuals who were Participants prior to such adoption (it
being understood that the removal of Participants from participation in the Plan
shall, for purposes of this proviso, constitute an adverse action for the
Participants so removed);

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provided, further, however, that the Plan may not be amended, modified or
terminated, (i) at the request of a third party who has indicated an intention
or taken steps to effect a Change in Control and who effectuates a Change in
Control or (ii) otherwise in connection with, or in anticipation of, a Change in
Control which actually occurs, any such attempted amendment, modification or
termination being null and void ab initio. Any action taken to amend, modify or
terminate the Plan which is taken after the execution of an agreement providing
for a transaction or transactions which, if consummated, would constitute a
Change in Control shall conclusively be presumed to have been taken in
connection with a Change in Control. From and after the occurrence of a Change
in Control, the Plan may not be amended or modified in any manner that would in
any way adversely affect the benefits or protections provided hereunder to any
individual who is a Participant in the Plan on the date the Change in Control
occurs.
8.2 Form of Amendment
     The form of any amendment or termination of the Plan shall be a written
instrument signed by a duly authorized officer or officers of the Company,
certifying that the amendment or termination has been approved by the Board.
SECTION 9 MISCELLANEOUS
9.1 Indemnification
     If, after a Change in Control, a Participant institutes any legal action in
seeking to obtain or enforce, or is required to defend in any legal action the
validity or enforceability of, any right or benefit provided by this Plan, the
Company will pay for all actual legal fees and expenses (including, without
limitation, attorneys’ fees, filing fees and the costs of experts) as they are
incurred by such Participant.
9.2 Employment Status
     This Plan does not constitute a contract of employment or impose on any
Employer any obligation to retain the Participant as an employee, to change the
status of the Participant’s employment as an Executive Employee, or to change
any employment policies of any Employer. Without limiting the generality of the
immediately preceding sentence, the Employer of a Participant may terminate the
employment of the Participant at any time following a Change in Control, with or
without Cause, subject to Section 5 hereof.
9.3 Validity and Severability
     The invalidity or unenforceability of any provision of the Plan shall not
affect the validity or enforceability of any other provision of the Plan, which
shall remain in full force and effect, and any prohibition or unenforceability
in any jurisdiction shall not invalidate or render unenforceable such provision
in any other jurisdiction.
9.4 Governing Law; Choice of Forum

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     The validity, interpretation, construction and performance of the Plan
shall in all respects be governed by the laws of the State of Texas. A
Participant shall be entitled to enforce the provisions of this Plan in any
state or federal court located in the State of Texas, in addition to any other
appropriate forum.
9.5 Payment to Benefits Protection Trust
     Notwithstanding any other provision of the Plan, the Company shall not be
required to make any payment to a Participant under the terms of this Plan if
such payment is otherwise made to the Participant by the Benefits Protection
Trust in accordance with the provisions of said Benefits Protection Trust.
     IN WITNESS WHEREOF, the Company has caused the Plan to be effective as of
the Effective Date.

              EL PASO CORPORATION
 
       
 
  By   /s/ Susan B. Ortenstone
 
       
 
  Title:   Senior Vice President,
 
      Human Resources

ATTEST:

         
By
  /s/ David L. Siddall    
 
 
 
Corporate Secretary    

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APPENDIX I
Operating Companies under the
El Paso Corporation
2004 Key Executive Severance Protection Plan
“Operating Companies” as defined in Section 2.13 shall include the following
subsidiaries during the specified time periods.

              Employer   Beginning   Ending
ANR Pipeline Company
  03/09/2004  
Colorado Interstate Gas Company
  03/09/2004  
El Paso Energy Service Company
  03/09/2004  
El Paso Global Networks
  03/09/2004  
El Paso Merchant Energy North America
  03/09/2004  
El Paso Merchant Energy-Petroleum
  03/09/2004  
El Paso Natural Gas Company
  03/09/2004  
El Paso Power Operations Company
  03/09/2004  
El Paso Production Company
  03/09/2004  
Sandbar Petroleum Company
  03/09/2004  
Southern Natural Gas Company
  03/09/2004  
Tennessee Gas Pipeline Company
  03/09/2004

Acknowledged and Accepted this 9th day of March, 2004.

         
By:
       
 
 
 
Susan B. Ortenstone    
 
  Senior Vice President,    
 
  Human Resources    

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APPENDIX II
Eligible Employees Covered by the
El Paso Corporation
2004 Key Executive Severance Protection Plan
(as of March 9, 2004)
Executive Employees in Executive Grade Levels XA – XI as of the effective date
of the Plan shall be eligible to become Participants in the Plan; provided,
however, that an Executive Employee who is a participant in the Company’s Key
Executive Severance Protection Plan or Employee Severance Protection Plan must
waive participation therein as a condition to becoming a Participant in this
Plan.

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