Document:

EX-10.5

 

Exhibit 10.5

NATIONAL FUEL GAS COMPANY

AND PARTICIPATING SUBSIDIARIES

EXECUTIVE RETIREMENT PLAN

 

 

 

Amended and Restated as of January 1, 2007

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	ARTICLE	 	 	 	PAGE NO.
	 
	 	 	 	 
	ARTICLE 1
	 	Purpose	 	2
	 
	 	 	 	 
	ARTICLE 2
	 	Definitions	 	2
	 
	 	 	 	 
	ARTICLE 3
	 	Determination of Retirement Benefits	 	8
	 
	 	 	 	 
	ARTICLE 4
	 	Vesting; Forfeiture	 	13
	 
	 	 	 	 
	ARTICLE 5
	 	Form of Payment of Benefits	 	14
	 
	 	 	 	 
	ARTICLE 6
	 	Source of Payment	 	17
	 
	 	 	 	 
	ARTICLE 7
	 	Administration of the Plan	 	17
	 
	 	 	 	 
	ARTICLE 8
	 	Amendment and Termination	 	19
	 
	 	 	 	 
	ARTICLE 9
	 	General Provisions	 	20
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 

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ARTICLE 1

PURPOSE

     1.1 National Fuel Gas Company established this National Fuel Gas Company and Participating
Subsidiaries Executive Retirement Plan effective as of February 19, 1987 for the purpose of
attracting and retaining executives, and for these additional purposes: (1) to provide
retirement benefits to eligible employees in addition to basic retirement benefits provided them
under the National Fuel Gas Company Retirement Plan as it may be amended and restated; (2)
to provide retirement benefits to such employees to make up for benefit reductions, if any, under
the National Fuel Gas Company Retirement Plan caused by participation in the National Fuel Gas
Company Deferred Compensation Plan, as it may be amended and restated; (3) to provide
retirement benefits to such employees without regard to the $200,000 limit on qualified plans’
covered compensation that became effective respecting the National Fuel Gas Company Retirement Plan
effective July 1, 1989 (and as that limit may change from time to time); and (4) to provide
to such employees benefits which would have been payable from the tax-exempt trust under the
National Fuel Gas Company Retirement Plan but for the limitations placed by Section 415 of the
Code, on benefits payable and contributions made with respect to such employees under such plans.

     1.2 The National Fuel Gas Company and Participating Subsidiaries Executive Retirement Plan is
intended to constitute an unfunded deferred compensation plan under Section 201(2) of the Act and
the Company’s obligation to pay benefits hereunder, if any, is unfunded and unsecured.

     1.3 The National Fuel Gas Company and Participating Subsidiaries Executive Retirement Plan has
been amended to comply with the requirements of Section 409A of the Code.

ARTICLE 2

DEFINITIONS

     When used herein, the following terms shall have the following meanings:

     2.1 Act means the Employee Retirement Income Security Act of 1974, as amended from
time to time.

     2.2 Annual Cash Compensation with respect to any Member shall include the following:

 

 

     (i) The Member’s base salary, whether or not the receipt of a portion thereof has been
deferred;

     (ii) The Member’s compensation (whether or not the receipt of all or a portion thereof
has been deferred) under National Fuel Gas Company’s short-term annual incentive program,
known as the Annual At Risk Compensation Incentive Program (“AARCIP”) or any
successor program thereto; and

     (iii) The Member’s other performance-related lump sum compensation (i.e. lump sum
payments other than expense or tuition reimbursements, moving expense reimbursements, lump
sum payments for eligible unused vacation, worker’s compensation payments, award payments
for suggestions, severance payments or any other non-performance related lump sum payments)
made on or after August 1, 1997.

The Member’s Annual Cash Compensation shall also exclude all commissions, stock, option or SAR
awards, restricted stock awards, special allowances, supplemental compensation, any payment under
the National Fuel Gas Company Performance Incentive Program and any other extra compensation or
incentives or bonuses not expressly included in Annual Cash Compensation pursuant to the foregoing
provisions of this Section 2.2.

     2.3 Basic Pension Plan means the National Fuel Gas Company Retirement Plan, as amended
and restated from time to time.

     2.4 Basic Pension Plan Benefit means the benefit, stated as a monthly annuity for the
Member’s life, commencing at the Member’s Normal Retirement Date, under which the annual payments
shall equal the Benefit Base as determined under the Basic Pension Plan, taking into account the
effect, if any, of the Benefit Limitations and the fact that deferrals under the National Fuel Gas
Company Deferred Compensation Plan are excluded from the definition of Final Average Pay under the
Basic Pension Plan.

     2.5 Beneficiary means the person or persons entitled to receive the amount, if any,
payable under the Plan upon the death of a Member or retired Member in the Plan in accordance with
the form of benefit distribution selected by the Member pursuant to Sections 5.2 and 5.3.

     2.6 Benefit Limitations means (i) the maximum “annual benefit” payable under
the Basic Pension Plan in accordance with Section 415 of the Code and the implementing provisions
of the Basic Pension Plan (as they operate in conjunction with the relevant provisions of other
Company employee benefit plans), and (ii) the maximum amount of annual compensation of an
employee that may be taken into account under the Basic Pension Plan in accordance with Section
401(a)(17) of the Code, as amended and supplemented, and the implementing provisions of the Basic
Pension Plan.

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     2.7 Board of Directors means the Board of Directors of National Fuel Gas Company.

     2.8 Code means the Internal Revenue Code of 1986, as amended from time to time.

     2.9 Committee means the committee appointed from time to time by the Board of
Directors to administer the Plan.

     2.10 Company means National Fuel Gas Company and each of the following subsidiaries,
which participate in the Plan: National Fuel Gas Distribution Corporation, National Fuel Gas
Supply Corporation, Seneca Resources Corporation, National Fuel Resources Inc., Penn-York Energy
Corporation, Empire Exploration, Inc. and Horizon Energy Development, Inc., each of which has
adopted or has indicated that it will adopt the Plan.

     2.11 Early Retirement Date shall be the Retirement Date selected by the Member that is
no earlier than the first day of the calendar month immediately following or coinciding with the
Member’s 55th birthday, or any first of a month thereafter, but prior to the Member’s Normal
Retirement Date, provided the Member is Vested in either or both the Top Hat Benefit or the
Supplemental Benefit.

     2.12 Employment Year is the consecutive 12-month period commencing on the date on
which the Member commenced employment with a Company, and each subsequent 12-month period
commencing on each anniversary thereof.

     2.13 Final Average Pay means an amount equal to the average of the Annual Cash
Compensation payable by the Company to a Member for the 60 consecutive month period during the 120
consecutive month period immediately preceding the date the Member retires which results in the
Member receiving the highest average. If an AARCIP or other annual performance bonus is granted
following the Member’s retirement date, unless such payment is expressly excluded from
consideration in the computation of the Member’s benefits, that award shall be used in determining
the Member’s Final Average Pay, if it is payable in connection with employment periods included in
the 60-month period referred to above. In this event, the Member’s Retirement Benefits shall be
increased, once the effect of such award is determined, and the increase shall be made retroactive
to the Member’s Retirement Date, without interest (provided that no such retroactive application
shall have the effect of accelerating the date at which Retirement Benefits shall commence to be
paid in accordance with Section 5.2).

     Notwithstanding the preceding paragraph of this Section 2.13, if any such post retirement
AARCIP award included in the definition of Annual Cash Compensation is used in determining Final
Average Pay hereunder, AARCIP awards relating to no more

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than five of National Fuel Gas Company’s fiscal years may be used in determining Final Average
Pay. An example of the effect of this provision is as follows. Assume that a Member retires on
October 1, 2006, and that his salary and AARCIP awards were as follows for the following calendar
year:

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	AARCIP Award (relating to	 
	 	 	 	 	 	 	fiscal year ending September	 
	 	 	Salary	 	 	30 but paid in December)	 
	2001
	 	$	480,000	 	 	$	120,000	 
	2002
	 	$	540,000	 	 	$	150,000	 
	2003
	 	$	600,000	 	 	$	180,000	 
	2004
	 	$	660,000	 	 	$	210,000	 
	2005
	 	$	780,000	 	 	$	240,000	 
	2006
	 	$	840,000	 	 	$	270,000	 

     This Member’s Final Average Pay would be $876,000 computed as follows:

[9/12 ($840,000) + 12/12 ($780,000) + 12/12 ($660,000) + 12/12 ($600,000) + 12/12
($540,000) + 3/12 ($480,000) + $270,000 + $240,000 + $210,000 + $180,000 + $150,000] ÷ 5.

     2.14 409A Election Date means December 31, 2007 or such other date as the Company
shall determine to be the latest date that benefits payable under the Plan may commence to be paid
based on the Member’s election as to the form and timing of payment in respect of his or her
benefits payable under the Basic Pension Plan without violating the election requirements
applicable under Section 409A of the Code and any regulations, proposed regulations or other
guidance promulgated thereunder.

     2.15 Member means any person employed by a Company who is designated as a Member by
the Chief Executive Officer of National Fuel Gas Company.

     2.16 Normal Retirement Date is the first day of the month coinciding with or
immediately following the Member’s 65th birthday.

     2.17 Plan means the National Fuel Gas Company and Participating Subsidiaries Executive
Retirement Plan as set forth herein and as amended and restated from time to time.

     2.18 Retirement Benefits means the benefits payable under this Plan.

     2.19 Retirement Date is the date with respect to which payment of Retirement Benefits
under the Plan commence (which for this purpose shall be determined without regard to any six-month
delay pursuant to Section 5.1 hereof).

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     2.20 Social Security Benefit means the annual amount estimated by the Committee to be
payable to a Member under the Social Security Act of 1935, as amended, at the Member’s Retirement
Date, calculated on the assumption that the Member will not receive any future wages that would be
treated as such for purposes of that act. If a Member’s Retirement Date precedes his attainment of
age 62, the amount estimated to be payable to the Member at age 62 (without assuming any cost of
living increases) shall be reduced as follows. The percentage early retirement factor applicable
at age 62 (e.g., 80%) shall be further reduced by .75% per month for the first 24 months, and by
        .5% per month for the remaining months, if any, by which the Member’s Retirement Date precedes his
attainment of age 62. The Social Security Benefit, once calculated, will be frozen as of the
Member’s Retirement Date. For example, assume that the Member retired on his 59th birthday, and
that his estimated Social Security benefit beginning at age 65 (Primary Insurance Amount) was
$15,912 per annum. Using current Social Security tables, his age 62 early retirement factor (80%)
would be further reduced to 56%. This Member’s Social Security Benefit would therefore equal
$8,910.72.

     2.21 Social Security Offset means, in respect of a Member’s Supplemental Benefit, the
product of (i) .0125 times the Member’s Years of Service times (ii) the Member’s
Social Security Benefit.

     2.22 Supplemental Benefit means a benefit which is stated as a monthly annuity for the
Member’s lifetime, commencing at the Member’s Normal Retirement Date, under which the annual
payments shall equal the remainder of (1) minus (2) below, where (1) and (2) are:

	 	(1)	 	the Member’s Total Benefit Base;

	 	(2)	 	the sum of

	 	(i)	 	the Member’s Social Security Offset and

	 	(ii)	 	the Member’s Basic Pension Plan Benefit.

If the remainder of (1) minus (2) is negative, the Member’s Supplemental Benefit shall be zero.

     2.23 Top-Hat Benefit means a benefit which is stated as a monthly annuity for the
Member’s life, commencing at the Member’s Normal Retirement Date, under which the annual payments
shall equal the remainder of (1) minus (2) below, where (1) and (2) are:

	 	(1)	 	the Member’s Benefit Base as determined under the Basic Pension Plan, but
without reduction on account of Benefit Limitations and adjusted as if deferrals under
the National Fuel Gas Company Deferred Compensation
Plan were not excluded from the definition of Final Average Pay under the Basic
Pension Plan and

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	 	(2)	 	the Member’s Basic Pension Plan Benefit.

     2.24 Total Benefit Base means, with respect to a Vested Member, a monthly annuity for
the Member’s life, commencing at his Normal Retirement Date, under which the annual payments shall
equal an amount calculated by multiplying the sum of (1) and (2) by (3), where (1), (2) and (3)
are:

	 	(1)	 	.0197 times the Member’s Years of Service not in excess of 30;

	 	(2)	 	.0132 times the Member’s Years of Service, if any, in excess of 30 (but not
to exceed 10);

	 	(3)	 	the Member’s Final Average Pay.

     2.25 Vesting

     (a) A Member’s Top-Hat Benefit shall vest in the same manner and subject to the same service
requirements and/or other conditions that apply to become vested in the retirement benefits
provided under the Basic Pension Plan.

     (b) A Member’s Supplemental Benefit shall vest on the latter of (i) the first of the
month coinciding with or immediately following his 55th birthday or (ii) the date on which
the Member has completed five Years of Service with a Company.

     A “Vested” Member is a Member with respect to whom “Vesting” has occurred.

     2.26 Years of Service equals the number of Employment Years completed by a Member.
With respect to an Employment Year in which a Member completed 1,000 or more hours, but less than a
full year of service, the Member shall be credited with a fractional Year of Service equal to the
quotient of (i) the number of full months of the Member’s service during such Employment Year and
(ii) 12. Years of Service shall not exceed 40. Notwithstanding the foregoing sentence, if a
Member retires prior to having completed 1,000 hours in his final Employment Year, the Member shall
be credited with a fractional Year of Service as calculated above. No more than one Year
of Service shall be credited in any Employment Year.

     2.27 In construing the Plan, masculine pronouns shall refer to both males and females, as
appropriate.

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ARTICLE 3

DETERMINATION OF RETIREMENT BENEFITS

     3.1 Introduction. The Plan provides a Member with a two-part benefit: the Top-Hat
Benefit and the Supplemental Benefit. The Top-Hat Benefit makes a Member whole for any reduction
in the regular pension he receives under the Basic Pension Plan resulting from Internal Revenue
Code limitations and/or his participation in the National Fuel Gas Company Deferred Compensation
Plan. The Supplemental Benefit provides an additional retirement benefit to the Basic Pension
Plan.

     A Member who does not satisfy the requirements to Vest in a Top Hat Benefit prior to the date
his service for the Company terminates shall receive no benefit under the Plan. A Member who Vests
in the Top Hat Benefit, but does not Vest in the Supplemental Benefit, shall receive only a Top-Hat
Benefit. A Member who is Vested in both the Top Hat Benefit and the Supplemental Benefit and who
terminates service with the Company after having attained an Early Retirement Date shall receive
the Top Hat Benefit and a portion of the Supplemental Benefit, as described in Section 3.3.

     3.2 Benefit for Member Retiring at Normal Retirement Date. A Member who retires on or
after the Member’s Normal Retirement Date shall receive only the Supplemental Benefit if he shall
have Vested in such Supplement Benefit. A Member who retires on or after his Normal Retirement
Date, but has not Vested in the Supplement Benefit, shall receive the Top Hat Benefit.

     3.3 Benefit for Members Terminating Service After Qualifying for Early Retirement.

     (a) The benefit payable under the Plan to a Vested Member whose termination of service with
the Company occurs after the Member has satisfied the conditions to retire at an Early Retirement
Date shall equal the sum of (1) plus [(2) minus (3)], where (1), (2) and (3) are:

	 	(1)	 	the product of (i) and (ii), where (i) and (ii) are

	 	(i)	 	the Member’s Top Hat Benefit,
	 
	 	(ii)	 	the early retirement percentage that would be applicable to the Member
were the Top Hat Benefit actually payable from the Basic Pension Plan
commencing on the date on which payment of the Top Hat Benefit is to commence
hereunder (regardless of when payment of the Basic Pension Plan Benefit
actually commences);

	 	(2)	 	the product of (i) and (ii ), where (i) and (ii) are

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	 	(i)	 	the remainder of (x) minus [the sum of (y) and (z)], where (x), (y) and
(z) are:

	 	(x)	 	the Member’s Total Benefit Base;
	 
	 	(y)	 	the amount determined under Section 3.3(a)(1);
	 
	 	(z)	 	(A) the Member’s Basic Pension Plan Benefit times (B) the
early retirement percentage that would be applicable to the Member
were the Basic Pension Plan to commence on the date on which payment
of the Top Hat Benefit is to commence hereunder (regardless of when
payment of the Basic Pension Plan Benefit actually commences);

	 	(ii)	 	the Member’s Early Retirement Percentage as determined in Section
3.3(b) below; and

	 	(3)	 	the Member’s Social Security Offset.

Notwithstanding the foregoing, if the remainder of subclause (2) minus subclause (3) above is less
than zero, then the Member shall receive (instead of the benefit calculated pursuant to the
foregoing formula) the benefit described in subclause (1) above.

     (b) The Early Retirement Percentage applicable under the Plan to the Member’s Supplemental
Benefit is determined in accordance with the following scale:

	 	 	 	 	 	 	 
	Retirement Age	 	 	 	Early Retirement Percentage
	 
	 	65	 	 	 	100
	 
	 	64	 	 	 	94
	 
	 	63	 	 	 	88
	 
	 	62	 	 	 	82
	 
	 	61	 	 	 	70
	 
	 	60	 	 	 	58
	 
	 	59	 	 	 	46
	 
	 	58	 	 	 	34
	 
	 	57	 	 	 	22
	 
	 	56	 	 	 	10
	 
	 	55 years and 2 months	 	 	 	0

     The Early Retirement Percentage determined in accordance with the above scale respecting ages
62, 63 and 64, shall be increased by 1/2 of 1% for each whole calendar month by which a Member’s
Early Retirement Date follows the first of the month coinciding with or immediately following his
62nd, 63rd, or 64th birthday, as the case may be. The Early Retirement Percentage determined in
accordance with the above scale

9

 

respecting ages 55 years and 2 months, 56, 57, 58, 59, 60, and 61, shall be increased by 1%
for each whole calendar month by which his Early Retirement Date follows the first of the month
coinciding with or immediately following his 55 year and 2 month, 56th, 57th, 58th, 59th, 60th and
61st birthdays, as the case may be. Furthermore, the Early Retirement Percentage shall be
increased by .125% for each whole calendar month by which a Member’s Years of Service exceed 30;
provided, however, that this shall never result in an Early Retirement Percentage in excess of
100%. (In the event a Member desires to retire on the earliest possible Early Retirement Date,
i.e., on the first of the month coinciding with or immediately following his 55th birthday, the
increase in percentage as a result of Years of Service in excess of 30 shall be made from a base
percentage of -2%, in computing Early Retirement Percentage.)

     (c) The provisions of this Section 3.3 are illustrated by the following example. Assume that
(i) a Member has 30 Years of Service under this Plan (29 under the Basic Pension Plan) and a Final
Average Pay of $300,000; (ii) he desires to retire in 2006 at age 58 (10% reduction under the Basic
Pension Plan); (iii) the maximum amount of the Member’s Final Average Pay allowed to be taken into
account under the Basic Pension Plan applicable limits under Section 401(a)(17) of the Code is
limited to $220,000; and (iv) his Social Security Benefit was $15,000:

Step 1. Calculate the Top Hat Benefit

[(.015 x $300,000) x 29] — the Member’s Basic Pension Plan Benefit

	 	 	 	 	 
	The Member’s Base Pension Plan Benefit is
	 	 	 	 
	[(.015 x $220,000) x 29]
	 	 	 	 
	($3,300) x 29 = $95,700
	 	 	 	 
	 
	 	 	 	 
	so the Top Hat Benefit is
	 	 	 	 
	[(.015 x $300,000) x 29] -$95,700
	 	 	 	 
	[$4,500 x 29] — $95,700
	 	 	 	 
	$130,500 — 95,700=
	 	$	34,800	 

Step 2. Adjust the Top Hat Benefit for Early Retirement

	 	 	 	 	 
	$34,800 x .9 =
	 	$	31,320	 

Step 3. Determine the Total Benefit Base

	 	 	 	 	 
	[(.0197 x $300,000) x 30]
	 	 	 	 
	$5,910 x 30 =
	 	$	177,300	 

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Step 4. Reduce the Total Benefit Base by the Top Hat Benefit and the 

              Basic Pension Plan Benefit, each as Adjusted for Early Retirement

	 	 	 	 	 
	$177,300 — [Adjusted Top Hat Benefit + Adjusted Basic Pension Plan Benefit]
	 	 	 	 
	 
	 	 	 	 
	$177,300 — [$31,320 + (95,700 x .9)]
	 	 	 	 
	$177,300 — [$31,320 + 86,130]
	 	 	 	 
	$177,300 - $117,450 =
	 	$	59,850	 

Step 5. Adjust Reduced Total Benefit Base for the Early Retirement Percentage

	 	 	 	 	 
	$59,850 x .34 =
	 	$	20,349	 

Step 6. Calculate the Social Security Offset

	 	 	 	 	 
	[(.0125 x 30) x $15,000]
	 	 	 	 
	(0.3750) x $15,000 =
	 	$	5,625	 

Step 7. Determine the ERP Benefit Payable

     Add the Adjusted Top Hat Benefit (shown in Step 2) and the Adjusted Total Benefit Base, (shown in
Step 5), then subtract the Social Security Offset (shown in Step 6)

	 	 	 	 	 
	($31,320 + 20,349) — $5,625
	 	 	 	 
	$51,669- $5,625 =
	 	$	46,044	 

     3.4 Benefit for Members Terminating Service Before Qualifying for Early Retirement.
The benefit payable under the Plan to a Member whose termination of employment with the Company
occurs before the Member has attained an Early Retirement Date, but after the Member has Vested in
his Top Hat Benefit, and who has elected to commence receipt of his Top Hat Benefit at an Early
Retirement Date shall equal the Member’s Top-Hat Benefit adjusted to reflect the actuarial
reduction therein for early commencement of the benefit that would be applicable to the Member were
the Top Hat Benefit actually payable from the Basic Pension Plan commencing on the date on which
payment of the Top Hat Benefit is to commence hereunder (regardless of when payment of the Basic
Pension Plan Benefit actually commences).

     3.5 Late Retirement. A Member’s Years of Service shall be credited if they extend
beyond his Normal Retirement Date (but shall not exceed 40 in total), and the Final Average Pay
determination shall reflect such Years of Service. However, there shall be no actuarial adjustment
to his Additional Benefit Base on account of a Member’s
retirement after Normal Retirement Date; for such purpose the Additional Benefit Base
hereunder shall be computed as if his late retirement date were his Normal Retirement Date.

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ARTICLE 4

VESTING; FORFEITURE

     4.1 Time of Vesting. No Retirement Benefits will be payable to or in respect of any
Member unless that Member remains employed by the Company until he is Vested in at least the
Top-Hat Benefit under this Plan.

     4.2 Misconduct. Notwithstanding Section 4.1 hereof, no Retirement Benefits will be
payable to or in respect of a Member whose employment is terminated by the Company for serious,
willful misconduct in respect of his obligations to the Company, including but not limited to the
commission of a felony or a perpetration of a common law fraud which has damaged, or is likely to
result in damage to, the Company (provided that, the same result shall obtain if, in the case of
Member who terminates service before the Company is aware or has a reasonable opportunity to act on
such conduct, the Committee determines that the Member could have been terminated by the Company
due to such conduct in accordance with this Section 4.2.)

     4.3 Competition. If and so long as a Member or retired Member shall be employed by
any corporation, entity or individual which is then engaged in a business competitive with the
Company, or shall be engaged in any such business, or shall aid, advise or assist or attempt to
aid, advise or assist any corporation, individual or entity in engaging in any such business, or
shall endeavor, directly or indirectly, to interfere with the relations between the Company and any
customer or engage in any activity that would be deemed by the Committee in its sole discretion to
be detrimental to the Company’s best interests, the rights of such Member or retired Member to
Retirement Benefits, including the rights of any Beneficiary, shall be forfeited with the same full
force and effect as though the Retirement Benefits had not been granted under any of the provisions
of the Plan, unless the Committee determines that such activity is not detrimental to the best
interests of the Company; provided that from and after 60 days following cessation by the Member or
retired Member of such activity and written notice by him to the Committee, his right to receive
Retirement Benefits hereunder shall be restored, unless the Committee, in its sole discretion,
determines that the prior activity has caused substantial damage to the Company. Notwithstanding
anything else contained in this Section 4.3 to the contrary, this Section shall not apply following
the occurrence of a Change in Control.

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ARTICLE 5

FORM OF PAYMENT OF BENEFITS

     5.1 Time of Distribution of Retirement Benefits. Retirement Benefits shall be payable
as soon as practicable after the Member’s Normal Retirement Date or Early Retirement Date; provided
that after the 409A Election Date, no payment of benefits under this Plan shall commence prior to
the six-month anniversary of the date on which the Member’s employment with the Company and its
Subsidiaries terminates; and provided further, that, to the extent that the immediately preceding
proviso delays payment of the Member’s Retirement Benefit, the Member shall be paid in a lump sum,
as soon as practicable after such six-month anniversary, the Retirement Benefits that would have
been payable but for such minimum six month delay.

     5.2 Elections with Respect to Distribution of Retirement Benefits. Retirement
Benefits shall be payable to or in respect of a Member eligible therefor in accordance with
distribution elections made by the Member. Such election must specify the date at which any
benefits payable to such Member under the Plan shall be payable, as well as the form in which such
benefits are to be provided from among the options available under, and described in, Section 5.3.
A Member who does not elect the date on which any benefits payable under the Plan shall commence to
be paid shall commence receipt of such benefits on the later of (i) the earliest date on
which the Member’s benefits hereunder could commence or (ii) the six-month anniversary of
the date of the Member’s termination of employment. The following rules shall apply with respect
to the distribution elections made in respect of the receipt of Retirement Benefits:

     (a) A Member who commences receipt of payment of his or her Retirement Benefit on or before
the 409A Election Date and, on the 409A Election Date, was receiving Retirement Benefits in the
same form of annuity as is applicable to the benefits payable to such Member under the Basic
Pension Plan shall continue to receive such benefit in the same manner and form as the benefit
received by such Member under the Basic Pension Plan.

     (b) A Member who is entitled to a Retirement Benefit with respect to any Years of Service
completed on or prior to the 409A Election Date, and who has not commenced receipt of a
distribution thereof prior to the 409A Election Date, shall make an election in accordance with
Section 5.3, on or prior to the 409A Election Date, regarding the form of distribution of such
Retirement Benefits, provided that such election shall also be applicable with
respect to any Retirement Benefits accrued by the Member under this Plan after the 409A Election
Date. A Member described in this Section 5.2(b) must also elect whether, if the Member terminates
employment prior to his Normal Retirement Date, distribution of his or her Retirement Benefits
shall commence as of an Early Retirement Date and, if so, when such benefits shall commence.

13

 

     (c) A Member who commences participation in the Plan after the 409A Election Date shall, on
the first date that such Member is eligible to commence participation in the Plan, make an election
in accordance with Section 5.3 regarding the distribution of his or her Retirement Benefit accrued
under this Plan and an election as to the date (which shall be at least six months) following the
termination of the Member’s employment (or, if later, at the earliest date as of which such
Member’s benefits hereunder could otherwise commence) that such Member’s Vested Retirement Benefit,
if any, payable under the Plan is to commence to be paid.

     5.3 Forms of Payment. Unless a Member shall elect an alternative form of payment in
the manner described in Section 5.2, the Member’s Retirement Benefits shall be paid in the form
specified in Section 5.3(a). A Member may elect to receive benefits, by making an election within
the time period established under Section 5.2, in any of the alternative forms described in
Sections 5.3(b) through 5.3(d). Each form of benefit is intended to be of actuarial equivalent
value.

     (a) Normal Form of Payment. The normal benefit form for Retirement Benefits is a
four-year period certain annuity that is actuarially equivalent to the lump-sum present value
(calculated using the most recently published mortality table that is generally accepted by
American actuaries and reasonably applicable to the Plan, and a 6 percent annual interest rate or
discount rate) of (i) the Member’s Supplemental Benefit, if the Member is Vested therein or (ii)
otherwise, the Member’s Top-Hat Benefit. The first payment will be paid on the six-month
anniversary of the date of the Member’s Retirement or Early Retirement; provided that, at the time
the Member makes an election pursuant to Section 5.2, the Member may elect to have the first
payment be payable on the later of (i) the six-month anniversary of the Member’s
termination of employment with the Company and its Subsidiaries and (ii) the first business
day of the calendar year following the Member’s Retirement or Early Retirement. Subsequent
installments shall be paid on each of the first three anniversaries of the date on which the first
installment is due to be paid. The Retirement Benefits of a Member who fails to make a timely
distribution election under Section 5.2 shall be paid in accordance with the normal benefit form
provided for in this Section 5.3(a).

     (b) Single Life Annuity. Retirement Benefits may be paid in the form of a single life
annuity for the Member’s lifetime payable in equal monthly installments which shall commence not
earlier than the six-month anniversary of the Retirement or Early Retirement of the Member, as
elected by such Member. The date on which such benefits commence to be paid shall be established
pursuant to the Member’s election or, in the absence of a timely election, pursuant to the default
provided under Section 5.2.

     (c) Ten-Year Period Certain and Life. Retirement Benefits may be paid in the form of
an annuity in monthly installments for ten years from the Member’s Retirement or Early Retirement,
as elected by such Member, and for life thereafter if the Member survives such ten-year period.
Such payments shall commence not earlier than the six-

14

 

month anniversary of the Member’s Retirement or Early Retirement, as elected by such Member.
If the Member’s death occurs within such ten-year period, annuity payments shall continue for the
remainder of the ten-year period to the Member’s Beneficiary. To provide for the possibility that
benefit payments will continue after the Member’s lifetime, the benefit payable to the Member
during his or her lifetime under this Section 5.3(c) shall be reduced from the benefit that would
have been payable as a single life annuity under Section 5.3(b), based on the same factors that
would apply were such benefit payable under the Basic Pension Plan, including the Member’s age. No
adjustment shall be made to the amount payable to the Member in the event that no survivor benefit
should become payable because the Member lives longer than 10 years following the date the
Retirement Benefits commence to be paid. The date on which such benefits commence to be paid shall
be established pursuant to the Member’s election or, in the absence of a timely election, pursuant
to the default election provided under Section 5.2.

     (d) Joint and Survivor Annuity. Retirement Benefits may be paid in the form of a
joint and survivor annuity so that the Member receives a monthly installment for the duration of
the Member’s life and the Member’s Beneficiary receives a monthly installment for the duration of
his or her life in an amount that is either 50% or 100% of the Member’s monthly installment, as so
elected by the Member. To provide for the possibility that benefit payments will continue after
the Member’s lifetime, the benefit payable to the Member during his or her lifetime under this
Section 5.3(d) shall be reduced from the benefit that would have been payable as a single life
annuity under Section 5.3(b), based on the same factors that would apply were such benefit payable
under the Basic Pension Plan, including the Member’s age and that of his or her Beneficiary. The
date on which such benefits commence to be paid shall be established pursuant to the Member’s
election or, in the absence of a timely election, pursuant to the default election provided under
Section 5.2. No adjustment shall be made to the amount payable to the Member in the event that no
survivor benefit should become payable because the Beneficiary that the Member selects shall not
survive the Member. Notwithstanding the previous sentence, if the Beneficiary selected hereunder
is the Member’s spouse and if said spousal Beneficiary dies prior to the fifth anniversary of the
Member’s retirement date, the Member’s benefit shall be adjusted to be that which would have been
payable as a single life annuity under Section 5.3(b), as of the first of the month coinciding with
or next following the spouse’s date of death. There will be no actuarial adjustment made in
calculating the benefit under this Section 5.3(d) as a result of the availability of this pop-up
benefit other than as provided to reflect commencement of benefits prior to the Normal Retirement
Date.

     5.4 Distribution of Benefits to Spouses/Beneficiaries. If the Member’s Retirement
Benefits are payable to the Member in the normal form, and the Member dies prior to the date the
last installment of such benefit is paid, any installments remaining to be paid at the date of the
Member’s death will be paid to the Member’s Beneficiary at the

15

 

same time and in the same amounts as they would have been paid to the Member. If the Member
selects an optional form of distribution of his or her Retirement Benefits such that a portion of
such Retirement Benefits is eligible to be paid to his Beneficiary after the Member’s death, such
benefits shall be paid in accordance with the terms of the form of distribution elected by the
Member; that is (i) with respect to any remaining payments related to the minimum 120
payments payable under the Ten-Year Certain and Life Option, such remaining monthly payments shall
continue to be paid to the Member’s Beneficiary at the same time and in the same amounts as they
would have been payable to the Member, until a total of 120 monthly payments have been made to the
Member and the Member’s Beneficiary (at which time payment to the Beneficiary will cease) and
(ii) with respect to either joint and survivor annuity options, in the form of an annuity
for the lifetime of the Member’s Beneficiary (if living at the time of the Member’s death) in a
monthly amount that is equal to the percentage (50% or 100%) of the monthly benefit payable to the
Member immediately prior to his or her death that was elected by the Member pursuant to Section
5.3(d).

     5.5 Changes in Distributions Elections. A Member may only change an election
previously filed pursuant to Section 5.2 in accordance with the conditions specified in this
Section 5.5. Except as otherwise expressly provided below, any such change in such an election,
whether as to when payment of the Retirement Benefits is to commence or the form of distribution of
such Retirement Benefits, must (1) be made in writing, (2) be delivered at least 12
months prior to date as of which the Member’s Retirement Benefits would otherwise commence to be
paid hereunder, and (3) delay commencement of payment of such Retirement Benefits for at
least five years from the date payment of such Retirement Benefits would otherwise have commenced.
Notwithstanding the foregoing, a Member who has elected to receive a distribution in the form of a
life annuity under Section 5.3(b), a ten-year period certain and life annuity under Section 5.3(c)
or either joint and survivor annuity form under Section 5.3(d) may elect to change from that form
to any other annuity form at any time prior to the commencement of the receipt of Retirement
Benefits hereunder. For example, a Member who has elected to receive his Retirement Benefits in
the form of an annuity just for his life may change that election to a joint and survivor annuity
without the 12 months advance notice and five year delay in commencement of payments described in
the second sentence of this Section 5.5.

     5.6 Right to Adjust. The Committee shall have the right to adjust Retirement Benefits
payable under this Plan to correct errors, and/or to provide uniform treatment of Members, retired
Members or Beneficiaries.

     5.7 Spouse’s Benefit. In the event of a Vested Member’s death prior to the
commencement of the receipt of Retirement Benefits hereunder, his spouse, if she shall survive him,
shall receive Retirement Benefits hereunder for her lifetime commencing as
of the first day of the month following the Member’s death equal to the greater of (i) or
(ii):

16

 

     (i) .50 times the Member’s Supplemental Benefit, except that if the Member’s surviving
spouse is more than five years younger than the Member, the .50 multiplier described in
this clause shall be reduced by .00125 for each month in excess of 60 that the surviving
spouse’s age is less than that of the Member. Thus, for example, the multiplier declines
to .30 if the surviving spouse is 220 months younger than the Member.

     (ii) 50% of the Retirement Benefit which the Member would have received had payment
thereof commenced on the day before the date of his death in the form of the Automatic
Joint and Survivor Annuity (as defined and described in the Basic Pension Plan), determined
without regard to whether the Member could have commenced such benefit on such date.

ARTICLE 6

SOURCE OF PAYMENT

     6.1 All payments provided for under the Plan shall be paid in cash from the general funds of
the Company; provided, however, that such payments shall be reduced by the amount of any payments
made to or in respect of a Member from any trust or special or separate fund established by the
Company to assure such payments. The Company shall not be required to establish a special or
separate fund or other segregation of assets to assure such payments, and, if the Company shall
make any investments to aid it in meeting its obligations hereunder, the Member and his Beneficiary
shall have no right, title, or interest whatever in or to any such investments except as may
otherwise be expressly provided in a separate written instrument relating to such investments.
Nothing contained in this Plan, and no action taken pursuant to its provisions, shall create or be
construed to create a trust of any kind between the Company and any Member or Beneficiary. To the
extent that any Member or Beneficiary acquires a right to receive payments from the Company
hereunder, such right shall be no greater than the right of an unsecured creditor of the Company.

ARTICLE 7

ADMINISTRATION OF THE PLAN

     7.1 Committee to Administer. The Plan shall be administered by the Committee which
shall have full power and authority to interpret, construe and administer the Plan, and review
claims for benefits under the Plan, and the Committee’s
interpretations and constructions of the Plan and actions thereunder shall be binding and
conclusive on all persons and for all purposes.

17

 

     7.2 Agents. For purposes of the Act, the members of the Committee shall be the named
fiduciaries of the Plan for administration of the Plan (including but not limited to complying with
reporting and disclosure requirements and establishing and maintaining Plan records), and shall
engage such certified public accountants, who may be accountants for the Company, as it shall
require or may deem advisable for purposes of the Plan. The Committee may arrange for the
engagement of such legal counsel, who may be counsel for the Company, and make use of such agents
and clerical or other personnel as they each shall require or may deem advisable for purposes of
the Plan. The Committee may rely upon the written opinion of such counsel and the accountants
engaged by the Committee and may delegate to any agent, who may be a Company employee, or to any
sub-committee or member of the Committee, its authority to perform any act hereunder, including
without limitation those matters involving the exercise of discretion, provided that such
delegation shall be subject to revocation at any time at the discretion of the Committee.

     7.3 Liability; Indemnity. To the maximum extent permitted by the Act, no member of
the Committee, nor any of their agents, including Company officers or employees, shall be
personally liable by reason of any contract or other instrument executed by any of them in their
capacity as members of the Committee or otherwise, nor for any mistake of judgment made in good
faith, and the Company shall indemnify and hold harmless, directly from its own assets, each member
of the Committee and each other officer, employee, or director of the Company to whom any duty or
power relating to the administration or interpretation of the Plan or to the management or control
of the assets of the Plan may be delegated or allocated, against any cost or expense (including
counsel fees) or liability (including any sum paid in settlement of a claim with the approval of
the Company) arising out of any act or omission to act in connection with the Plan unless arising
out of such person’s own fraud or bad faith. Said persons shall be entitled to rely conclusively
upon, and shall be fully protected in any action taken by them or any of them in good faith in
reliance upon, any table, valuation, certificate, opinion or report which shall be furnished to
them or any of them by an actuary, accountant, counsel or other expert who shall be employed or
engaged by them.

     7.4 Binding Effect of Decisions. The decision or action of this Committee with
respect to any question arising out of or in connection with the administration, interpretation and
application of the Plan and the rules and regulations promulgated hereunder shall be final,
conclusive and binding upon all persons having any interest in the Plan.

     7.5 Effect of Restatement. Notwithstanding anything else contained herein to the
contrary, in no event shall the restatement of this Plan as of January1, 2007 reduce the amount of
Retirement Benefits payable to any Member hereunder, or otherwise reduce

18

 

the amount of such Member’s Final Average Pay, in either case below the amount that would have
applied under the terms of this Plan as in effect immediately prior to such restatement.

     7.6 Section 409A of the Code. Notwithstanding anything herein to the contrary, the
Committee and any of its delegates shall use their commercially reasonable best efforts to
administer the plan in a manner that will cause the Plan and any payments to be made hereunder, to
comply with the requirements of Section 409A, with the intent of avoiding the imposition of an
additional tax under Section 409A of the Code on any Member.

ARTICLE 8

AMENDMENT AND TERMINATION

     8.1 General Power to Amend. Subject to the application of Article 4 in the situations
therein enumerated, the Plan may be amended, suspended or terminated, in whole or in part, by the
Board of Directors, and Members may be adversely affected thereby provided that such actions may
not deprive Vested Members of Retirement Benefits accrued until the date of such actions. In
addition, the rights of Vested Members may be affected if (i) failing to make changes would
be administratively burdensome; (ii) the Member voluntarily consents to such change in
writing; or (iii) if changes are required by law.

     8.2 Limited Power of the President. Notwithstanding Section 8.1, the President of
National Fuel Gas Company is empowered to amend, restate or otherwise change the Plan (i)
as counsel may advise to be necessary or appropriate in order to ensure that the Plan continues to
operate as a plan of deferred compensation for tax purposes in compliance with requirements of
Section 409A, remain exempt from many of the provisions of the Act and otherwise continues to
fulfill the purposes for which the Plan was adopted and intended; (ii) as he or she may
deem necessary in order to make technical or clarifying changes not inconsistent with or in order
to fulfill the purposes of the Plan; (iii) as counsel may advise to be necessary to reflect
the impact of Benefit Limitations, as they may change from time to time; and (iv) in other
respects except as will materially increase the cost of the Plan to the Companies or the benefits
of the Plan to Members or as will otherwise reduce the accrued benefits of any Member without his
or her consent.

19

 

ARTICLE 9

GENERAL PROVISIONS

     9.1 Effect of Corporate Reorganization. This Plan shall be binding upon and inure to
the benefit of the Company and its successors and assigns and the Member, and his designees,
Beneficiaries, legal representatives and estate. Nothing in this Plan shall preclude the Company
from consolidating or merging into or with, or transferring all or substantially all of its assets
to, another corporation which assumes this Plan and all obligations of the Company hereunder. Upon
such a consolidation, merger or transfer of assets, and assumption of the Plan, the term “Company”
shall refer to such other corporation and this Plan shall continue in full force and effect.

     9.2 Right to Discharge Member. Neither the Plan nor any action taken hereunder shall
be construed as giving to a Member the right to be retained in the employ of the Company or as
affecting the right of the Company to discharge any Member, at any time without regard to the
effect such discharge would have upon his eligibility for or receipt of benefits under the Plan.

     9.3 Withholding. The Company may withhold from any benefits payable under this Plan
all federal, state, city or other taxes as shall be required (as determined by the Company)
pursuant to any law or governmental regulation or ruling.

     9.4 Assignability. No right to any amount payable at any time under the Plan may be
assigned, transferred, pledged, or encumbered, either voluntarily or by operation of law, except as
provided expressly herein as to payments to a Beneficiary or as may otherwise be required by law.
If, by reason of any attempted assignment, transfer, pledge, or encumbrance, or any bankruptcy or
other event happening at any time, any amount payable under the Plan would be made subject to the
debts or liabilities of the Member or his Beneficiary or would otherwise not be enjoyed by him,
then the Committee, if it so elects, may terminate such person’s interest in any such payment and
direct that the same be held and applied to or for the benefit of the Member, his Beneficiary, or
any other person deemed to be the natural objects of his bounty, taking into account the expressed
wishes of the Member (or, in the event of his death, his Beneficiary).

     9.5 Inability to Utilize Benefits. If the Committee shall find that any person to
whom any amount is or was payable hereunder is unable to care for his affairs because of illness or
accident or other reasons, or has died, then the Committee, if it so elects, may direct that any
payment or any part thereof due such person shall be paid to his estate (unless a prior claim
therefor has been made by a duly appointed legal representative) or be paid or applied for the
benefit of such person or to or for the benefit of his spouse, children or other dependents, an
institution maintaining or having custody of such person, any other person deemed by the Committee
to be a proper recipient on behalf of such

20

 

person otherwise entitled to payment, or any of them, in such manner and proportion as the
Committee may deem proper. Any such payment shall be in complete discharge of the liability
therefor of the Company, the Plan or the Committee or any member, officer or employee thereof. The
Committee may withhold the payment of any amount that shall be payable in accordance with the
provisions of the Plan to a person under legal disability until a representative of such person
competent to receive such payment on his behalf shall have been properly appointed.

     9.6 Actuarial Equivalents. Except as otherwise provided herein, whenever it is
necessary to determine under this Plan whether one benefit is less than, equal to, or larger than
another, or whether one benefit is the actuarial equivalent of another whether or not such benefits
are provided under this Plan, such determination shall be made using mortality, interest and any
other assumptions used at the time in determining actuarial equivalents under the Basic Pension
Plan.

     9.7 Health Information. The Member shall provide to the Company, if so requested and
as a precondition for remaining a Member, all health information and other information as the
Company may require should it decide to purchase life insurance policies or annuity contracts.

     9.8 Additional Benefit. The benefits payable under this Plan shall be in addition to
all other benefits provided for Employees of the Company, except as otherwise provided in this
Plan.

     9.9 Headings. The captions preceding the sections and articles hereof have been
inserted solely as a matter of convenience and in no way define or limit the scope or intent of any
provisions of the Plan.

     9.10 Governing Law. Except to the extent that such laws are pre-empted by the
Employee Retirement Income Security Act of 1974, as amended, this Plan shall be governed by the
laws of the State of New York as from time to time in effect.

21EX-10.6

 

Exhibit 10.6

ADMINISTRATIVE

RULES OF THE

COMPENSATION COMMITTEE

OF THE

BOARD OF DIRECTORS

OF

NATIONAL FUEL GAS COMPANY

As amended and restated

effective December 6, 2006

I.  MEETINGS

     Each meeting (“Meeting”) of the Compensation Committee (“Committee”) of the Board of Directors
of National Fuel Gas Company (“Company”) shall be held as indicated in a notice made in accordance
with these rules. Notice of each Meeting, stating the place, date and hour thereof, shall be given
to each member of the Committee (“Member”) by mailing written notice not less than five days before
the Meeting to each Member, or by telegraphing, telephoning or delivering oral or written notice to
each Member personally not less than one day before the Meeting.

     Any one or more Members of the Committee may participate in a Meeting by means of a conference
telephone or similar equipment. Participation by such means shall constitute presence in person at
a Meeting.

     The Committee may also take action by unanimous written consent.

II.  QUORUM AND VOTING; DELEGATION

     At all Meetings, a quorum shall be required for the transaction of business and shall consist
of a majority of the entire Committee. The majority vote of the Members at a Meeting at which a
quorum is present shall decide any question that may come before the meeting.

 

 

     Consistently with limitations imposed by the Plans, the Committee may delegate in these rules
or by resolution any or all of its authority to the Chief Executive Officer, to the Secretary and
to any other officer of the Company (individually, “Delegate”), so long as the Delegate has no
potential conflict of interest which would cause him or her not to exercise his or her good faith
independent business judgment in respect of a delegated matter, and so long as such delegation
would not result in the requirement under applicable law that the Delegate’s name appear beneath
the Committee’s report required to be included in Company filings with the Securities and Exchange
Commission. Subject to such limitations, the Committee hereby delegates the power to implement its
decisions to appropriate officers of the Company.

III.  GRANTS AND AWARDS UNDER THE PLANS

     The following rules and regulations shall apply with respect to grants and awards of stock
options, stock appreciation rights (“SARs”) and shares of restricted stock (“Restricted Stock”)
under the Company’s 1997 Award and Option Plan (“1997 Plan”) and 1993 Award and Option Plan (“1993
Plan”) (together, the “Plans”). These rules also address other Awards under the Plans.

     Any capitalized term not defined in these rules shall have the same meaning as in the
applicable Plan. The following rules are intended to supplement the Plans and, to the extent that
any rule is determined to be inconsistent with any Plan, the Plan shall control.

     These rules may be amended by the Committee at any time and from time to time. Except to the
extent otherwise specified in the particular Award Notice or at the time these rules are amended,
any grant or award under the Plans shall be subject to these rules as in effect on the date of the
grant or award.

2

 

     A.  GENERAL RULES REGARDING AWARDS UNDER THE 1997 AND 1993 PLANS

     1.  Making of An Award

                An Award within the meaning of these rules occurs upon the grant by the Committee of any stock
option, SAR, Restricted Stock, performance unit, performance share or other incentive award. An
Award Notice within the meaning of these rules means a written notice from the Company to a
Participant that sets forth the terms and conditions of an Award in addition to those established
in the applicable Plan and by the Committee’s exercise of its administrative powers.

     2.  Contemporaneous Awards

                An Award of one type granted contemporaneously with an Award of any other type shall be
treated as having been granted in combination, and not in the alternative, with the Award of the
other type.

     3.  Stock-based Awards

                a. Source.  Stock-based Awards, to the extent actually paid in Common Stock, shall reduce
treasury shares first and thereafter authorized but unissued shares.

                b. Cash Dividends and Cash Dividend Equivalents.

                    (i) Stock-Based Awards Other Than Restricted Stock. No stock-based Award carries with it the
entitlement to receive cash dividends or cash dividend equivalents until such stock-based Award is
exercised (in the case of a stock option) or earned. If a stock-based Award is exercised or
earned prior to or on the record date for determination of stockholders entitled to receive a cash
dividend, then such stock-based Award or the securities

3

 

resulting from the exercise thereof, as the case may be, shall be entitled to receive such cash
dividend.

                    (ii) Restricted Stock Awards. Notwithstanding clause (i) of this paragraph (b) or §26 of the
1993 Plan or the 1997 Plan, dividends shall be payable with respect to each outstanding Award of
Restricted Stock whether or not the restrictions in such Award have been satisfied or have lapsed.

                c. Payment.  Payment of stock-based Awards (other than SARs and performance shares, which
shall be paid in cash) shall be made with Common Stock.

     4.  Withholding Taxes

                At the time a Participant is taxable with respect to Options, SARs or Restricted Stock granted
under the Plans, or the exercise or surrender of the same, the Company shall have the right to
withhold from amounts payable to the Participant under the Plan or from other compensation payable
to the Participant in its sole discretion, or require the Participant to pay to it, an amount
sufficient to satisfy all federal, state and/or local withholding tax requirements. A Participant
may pay, in whole or in part, such tax withholding amounts by requesting that the Company withhold
such amounts of taxes from the amounts owed to the Participant or by delivering as payment to the
Company, shares of Common Stock having a Fair Market Value less than or equal to the amount of such
required withholding taxes (with the remainder payable in cash).

4

 

     5.  Deferral of Payment

                The Committee intends to permit Participants to elect, at any time prior to one year before
the date of exercise, to defer the receipt of payment of Awards that are payable in cash; provided,
however, that (1) under the then applicable income tax rules the Participant is not in constructive
receipt of, and subject to income tax on, the payment prior to its actual receipt, (2) such
deferral does not result in any of the Plans being subject to the Employee Retirement Income
Security Act of 1974, as amended, and (3) if the Participant is an Executive Officer (i.e.,
is subject to Section 16 of the Securities Exchange Act of 1934, including a retired officer who
is, at the relevant time, a director), such election shall comply with Rule 16b-3 promulgated
pursuant to the Securities Exchange Act of 1934, as then in effect.

     B.  STOCK OPTIONS UNDER THE 1997 AND 1993 PLANS

     1.  Designation

                The Award Notice setting forth the terms and conditions of a grant of a stock option shall
indicate the applicable Plan under which the stock option is granted and whether the stock option
is an incentive stock option (within the meaning of Section 422 of the Code, an “ISO”) or a
non-qualified stock option (“NSO”). The Committee hereby delegates to the President and Chief
Executive Officer of the Company the authority to prepare, execute and deliver Award Notices
consistent with actions taken by the Committee. The Committee hereby directs that any action taken
by the Committee granting stock options without specifying whether the stock options are ISOs be
interpreted as follows:

                a. an award of stock options to a Participant who is younger than 60 on the grant date shall
be deemed to be an award of ISOs to the maximum extent permitted in

5

 

accordance with Section 422 of the Internal Revenue Code, with the remainder awarded as NSOs; and

                b. an award of stock options to a Participant who is 60 or older on the grant date shall be
deemed to be awards of NSOs only.

     2.  Price

                The price at which Common Stock may be purchased upon exercise of a stock option (the
“exercise price”) shall be the Fair Market Value of the Common Stock on the date of the Award.

     3.  Exercise Period/Duration

                a. Non-Qualified Stock Options Under the 1997 and 1993 Plans. A non-qualified stock option
granted under the 1997 Plan or the 1993 Plan first may be exercised twelve months after the date of
grant, or, if earlier, on the date of the optionee’s death.

                b. Incentive Stock Options Under the 1997 and 1993 Plans. An incentive stock option granted
under the 1997 Plan or the 1993 Plan first may be exercised twelve months after the date of grant,
or, if earlier, on the date of the optionee’s death.

                c. Suspension of rights to exercise. The Committee may, among other things, suspend or limit
the right of any optionee to exercise stock options during any period:

                    (i) for which counsel for the Company advises in writing that such stock option exercises
would violate federal or state securities laws or other applicable laws, rules, regulations,
judgments, or orders; or

6

 

                    (ii) during which management is investigating an allegation that the optionee has engaged in
any act which would permit the Committee to forfeit the optionee’s stock options pursuant to
Section 19 of the 1993 Plan or Section 17 of the 1997 Plan.

                d. Delegation of Authority.  The Committee hereby delegates to the Chief Executive Officer,
President, Treasurer, Secretary and General Counsel of the Company, and each of them, the
Committee’s authority to suspend optionees’ rights to exercise stock options during the periods
described in Section III(B)(4)(c) above. Management shall report to the Committee at each
Committee meeting any suspension actions taken or ongoing since the previous meeting, and the
Committee shall adopt a resolution ratifying, continuing and/or discontinuing each such suspension.

     4.  Death or Other Termination of Employment

                a. Definitions.  For purposes of these rules, the following terms shall have the following
meanings:

                    (i) “Disability” shall mean that the Participant is eligible to receive disability benefits
under Article 3 of The National Fuel Gas Company Retirement Plan (“Retirement Plan”), as from time
to time amended.

                    (ii) “Principal Subsidiary” shall mean a Subsidiary that has a net income of at least
$5,000,000 as of the end of the most recent fiscal year.

                    (iii) “Retirement” shall mean that the Participant has commenced receiving retirement benefits
under the Retirement Plan at or after attaining age 65.

                    (iv) “Subsidiary” shall mean a corporation or other business entity in which the Company
directly or indirectly has an ownership interest of eighty percent (80%) or more.

7

 

                b. Non-Qualified Stock Options Under the 1997 and 1993 Plans. With respect to the President
and Chief Executive Officer of the Company and the Presidents of each Principal Subsidiary, if
termination of employment occurs by reason of death, Disability or Retirement, each non-qualified
option awarded under the 1997 Plan or the 1993 Plan shall remain exercisable for the balance of its
unexpired term. If termination occurs by reason of discharge by the Company for cause or voluntary
resignation of the Participant prior to age 60, each such non-qualified option shall lapse unless
extended by the Committee in its discretion. If termination of any such officer occurs for any
other reason, each such non-qualified option shall remain exercisable for five years from such
termination (or in the case of non-qualified options awarded under the 1997 Plan, such greater
period as the Committee deems appropriate) or the balance of its unexpired term, whichever is less.

     For all other Participants, if termination of employment occurs by reason of death, Disability
or retirement at or after age 60, each non-qualified option awarded under the 1997 Plan or the 1993
Plan shall remain exercisable for five years from such termination or the balance of its unexpired
term, whichever is less. If termination occurs for any other reason, each such non-qualified
option shall lapse unless extended by the Committee in its discretion.

                c. Incentive Stock Options Under the 1997 and 1993 Plans. Pursuant to §16(a) of the 1997 Plan
and the 1993 Plan, the Committee hereby establishes that, with respect to an incentive stock option
granted under the 1997 Plan or the 1993 Plan which has not theretofore expired, upon termination of
employment by reason of the optionee’s Disability, the optionee may within one year after the date
of termination of employment, exercise all or part of the incentive stock option which the optionee
was entitled to exercise on the date of termination of employment.

8

 

                d. Extension of Incentive Stock Options Under the 1997 and 1993 Plans.
Pursuant to the last paragraph of §16(b) of the 1997 Plan and the 1993 Plan, the Committee hereby
determines that:

                    (i) With respect to the President and Chief Executive Officer of the Company
and the Presidents of each Principal Subsidiary, if termination of employment occurs
by reason of death, Disability or Retirement, another officer of the Company shall,
within thirty days of such termination, offer in writing to extend the period during
which any incentive stock option granted to such optionee under the 1997 Plan or the
1993 Plan may be exercised to the date on which the incentive stock option would
have otherwise expired absent such termination of employment.

                              If termination of any such officer’s employment occurs for any other reason,
another officer of the Company, if the Committee so authorizes, shall, within thirty
days of such termination, offer in writing to extend the period during which any
incentive stock option granted to such optionee may be exercised to the date
specified in the offer, which shall not be later than the date on which the
incentive stock option would have otherwise expired absent such termination of
employment;

                    (ii) With respect to all Participants other than the President and Chief
Executive Officer of the Company and the Presidents of each Principal Subsidiary, if
termination of employment occurs by reason of death, Disability or Retirement, an
officer of the Company other than such Participant shall, within

9

 

thirty days of such termination, offer in writing to extend the period during which
any incentive stock option granted to such optionee under the 1997 Plan or the 1993
Plan may be exercised, to the date which is the earlier of five years from such
termination or the balance of the unexpired term of such incentive stock option.

                              If termination of such Participant’s employment occurs for any other reason, an
officer of the Company other than such Participant, if the Committee so authorizes,
shall, within thirty days of such termination, offer to extend the period during
which any incentive stock option granted to such optionee may be exercised to the
date specified in the offer, which shall not be later than the earlier of five years
from such termination of employment or the date on which the incentive stock option
would have otherwise expired absent such termination of employment.

                The written offer shall notify the optionee, or the optionee’s estate or the person to whom
the optionee’s rights under the incentive stock option are transferred by will or the laws of
descent and distribution, of the right to accept the offer by consenting to the extension, in
writing, within thirty days of the offer. If such consent is timely received the incentive stock
option may be exercised during the period specified in the offer, but not later than the expiration
of the exercise period specified in the Award Notice.

     5.  Mechanics of Exercise

                To exercise a stock option, the Participant shall provide a signed exercise notice to an
appropriate officer or other designee of the Company, which notice shall indicate which options are
being exercised, how the exercise price is to be paid and any other appropriate

10

 

information. Appropriate delivery of a signed notice of exercise binds the Participant to pay the
exercise price. Part IV of these Rules contains procedures for exercising stock options.

     6.  Reload Options

                No optionee shall be issued a new stock option automatically upon exercise of a stock option.
However, if the Award Notice provides for the issuance of such new stock option, the new stock
option shall have an option price equal to the Fair Market Value of the Common Stock on the date
the new stock option is issued and shall otherwise be subject, as nearly as possible, to the same
terms and conditions as the exercised stock option.

     C.  SARs UNDER THE 1997 PLAN

                All outstanding SARs granted under the 1997 Plan are Independent SARs as described in the
Plan. The Plan has been amended to eliminate future awards of SARs.

                The base price of an Independent SAR shall be the Fair Market Value of the Common Stock on the
date of the grant of the Independent SAR, and shall otherwise be subject to the terms and
conditions imposed by the Award Notice upon the Independent SAR, by the 1997 Plan, and by these
Rules upon non-qualified stock options. An Independent SAR shall be outstanding and exercisable
during the entire exercise period otherwise applicable to a non-qualified stock option granted on
the same day as the Independent SAR (as adjusted in accordance with paragraph III.B.4 above in the
event of death or other termination of employment).

                To exercise a SAR, the Participant shall deliver a signed exercise notice to an appropriate
officer or other designee of the Company, which notice shall indicate which SARs are being
exercised, and any other appropriate information. The Committee hereby delegates to

11

 

appropriate officers of the Company the authority to establish and revise appropriate procedures
with respect to the exercise of SARs.

     D.  RESTRICTED STOCK UNDER THE 1997 AND 1993 PLANS

     1. Restrictions on Transferability; Vesting

                The restrictions on transferability and vesting and all other terms and conditions of
Restricted Stock granted under the 1997 and 1993 Plans shall be specified in the Award Notice. All
shares of Restricted Stock shall be subject to the Participant’s continued employment with the
Company or a Subsidiary until vesting. The Committee may accelerate the vesting of Restricted
Stock on its own motion as it deems appropriate and in the best interests of the Company.

     2. Mechanics of Grant

                The Committee hereby delegates to appropriate officers of the Company the authority to
establish and revise appropriate procedures with respect to the issuance of certificates
representing Restricted Stock and the payment of dividends thereon.

     E.  PERFORMANCE UNITS AND PERFORMANCE SHARES UNDER THE 1997 PLAN

                The performance period and performance objectives of a performance unit or performance share
granted under the 1997 Plan shall be specified in the Award Notice.

                The Committee shall consider any written submission from a Participant, regarding revision of
the performance period and/or performance objectives of an Award on the basis of events which may
have been unforeseen by the Committee, or circumstances which have changed since the Award, and may
consider such matters on its own motion. Upon such consideration, the Committee shall revise such
performance period and/or performance

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objectives when such revision is determined to be in the best interests of the Company and
consistent with the purposes of the 1997 Plan or the 1993 Plan.

IV.  PROCEDURES FOR EXERCISING STOCK OPTIONS

     A. AUTHORITY AND SCOPE

                Notwithstanding any provision of any award letter issued before 1998, these are the exercise
procedures for Incentive Stock Options (“ISOs”) and Non-Qualified Stock Options (“NSOs”) issued
under the 1993 Plan, the 1997 Plan, and (unless the Compensation Committee specifically orders
otherwise) any other compensation plan which in the future is adopted by the Company.

     B. NOTICE OF EXERCISE

     1. Form and Delivery

                A Participant holding options granted under any of the Plans elects to exercise options by
delivering (by personal delivery or fax) to the office of the Company’s Secretary or Assistant
Secretary a Notice of Exercise. A Notice of Exercise is a writing signed by the Participant
indicating that the Participant thereby elects to exercise options identified in the Notice
(including the quantity and exercise price), and describing the method by which the Participant
will pay the exercise price. Appropriate delivery of a Notice of Exercise binds the Participant to
pay the exercise price. An optional form of Notice of Exercise is attached to these Rules (see
Exhibit A).

     2. Exercise Date

                The effective date of a Notice of Exercise is the “Exercise Date”. An exercise will be
effective as of the date the Notice of Exercise is received by the office of the Secretary or
Assistant Secretary; provided, however, that:

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                    (i) a Notice of Exercise received on a business day before trading opens that
day on the New York Stock Exchange may validly designate the Exercise Date to be the
preceding business day; and

                    (ii) a Notice of Exercise may validly designate the Exercise Date to be any
date later than the date the Notice of Exercise is received.

                    (iii) if the exercise is accomplished through a “cashless exercise” as
described in Section IV (C)(4) below, the Exercise Date shall be the date the broker
sells Company stock into the market regarding that exercise.

     C. Payment of Exercise Price

     1. Cash Payment

                To pay the exercise price in cash, a Participant must deliver to the Secretary or Assistant
Secretary payment in full, in cash or by check payable in immediately available U.S. funds to the
Company, within three business days after the Exercise Date (except as additional time may be
allowed under Section IV (C)(3) below). Payment of the exercise price may be partly in cash and
partly in Company stock as described in Section IV (C)(2) below, or may be accomplished through a
“cashless exercise” as described in Section IV (C)(4) below.

14

 

     2. Payment with Existing Company Stock

                The exercise price of a stock option cannot be paid with Company stock that was both (i)
issued later than six months before the date of the exercise, and (ii) issued as a result of a
stock option exercise. To pay the exercise price in shares of Company stock already owned by a
Participant, the Participant must surrender to the Company shares having a total Market Value (as
of the Exercise Date) of at least the total exercise price, or pay any shortfall in cash. The
Participant must, within three business days after the Exercise Date (except as additional time may
be allowed under Section IV (C)(3) below) do one or both of the following:

                a. regarding shares in the Company’s Direct Registration System, comply with
the Company’s procedures (including signature guarantee requirements) for
transferring book-entry shares to the Company; or

                b. regarding shares that are evidenced by a paper stock certificate, deliver
the certificate to the Secretary or Assistant Secretary. Each certificate
delivered must have a guaranteed signature either on the back or on a stock
power to be attached. Recommended procedure for mailing certificates is to
mail the certificate and signed stock power separately.

     3. Additional Time to Pay Exercise Price

                If, at any time the Participant’s payment of the exercise price would otherwise be required
pursuant to Section IV (C)(1) or (2) above, a Participant is either

                a. traveling away from his or her usual place of Company employment, or

                b. “disabled”, as defined in the applicable Plan or these Administrative
Rules,

15

 

then the Participant may pay the exercise price on or before the first business day after the
Participant’s return to his or her usual place of NFG employment, but no later than the tenth
business day after the Exercise Date. However, the President, Chief Executive Officer, or
Treasurer of the Company shall have the authority to grant such additional time to pay the exercise
price as is reasonably necessary to accommodate the travel or disability of the Participant.

     4. Cashless Exercise

                The broker-assisted method of exercising options described in this Section IV (C)(4)
(“cashless exercise”) requires no cash outlay by the Participant. A Participant wishing to do a
cashless exercise must first establish a trading account with a registered securities
broker-dealer. Establishing that trading account will likely include the Participant’s commitment
to pay the broker as described in their agreement. Upon request by a Participant, the Secretary or
Assistant Secretary will provide information that may help the Participant find a broker who has
previously done cashless exercises with the Company and/or may be willing to do so at a discounted
commission rate. The Participant must provide the Secretary or Assistant Secretary with the
Participant’s broker’s name, firm, address, telephone and fax numbers.

                To do a cashless exercise, the Participant must deliver a Notice of Exercise as described in
Section IV (B)(1), and notify the Participant’s broker to proceed with the exercise. The
Participant’s broker will sell Company stock for the Participant’s account and pay to the Company
the exercise price, plus any necessary tax withholding. The Company will have share certificates
delivered to the Participant’s broker within three business days after the Exercise Date, unless
the Company elects to retain the certificates pending receipt of the exercise price. The
Participant will be required to pay the Participant’s broker according to the agreement
between them, typically a few days’ interest on the exercise price plus a commission on the shares
sold.

16

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