Document:

ex10-1

 

Exhibit 10.1

EMPLOYMENT AGREEMENT

     This EMPLOYMENT AGREEMENT (the “Agreement”) is entered into by and between
Washington Gas Light Company (the “Company” or the “Utility”) and Terry D.
McCallister (the “Executive”), as of the 14th day of December, 2001.

RECITALS

     The Board of Directors of the Company (the “Board”) has determined that it
is in the best interests of the Company and its shareholders to assure that the
Company will have the continued dedication of the Executive, notwithstanding
the possibility, threat or occurrence of a Change of Control (as defined below)
of the Company or its parent company, WGL Holdings, Inc. The Board believes it
is imperative to diminish the inevitable distraction of the Executive by virtue
of the personal uncertainties and risks created by a pending or threatened
Change of Control of the Company or WGL Holdings, Inc., to encourage the
Executive’s full attention and dedication to the interests of the Company
currently and in the event of any threatened or pending Change of Control of
the Company or WGL Holdings, Inc. and to provide the Executive with
compensation and benefits arrangements upon such a Change of Control which
ensure that the compensation and benefits expectations of the Executive will be
satisfied and which are competitive with those of other corporations.
Therefore, in order to accomplish these objectives, the Board has caused the
Company to enter into this Agreement.

AGREEMENT

     NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

     1.     Certain Definitions. (a) The “Effective Date” shall mean the first
date during the Change of Control Period (as defined in Section l(b)) on which
a Change of Control (as defined in Section 2) occurs. Anything in this
Agreement to the contrary notwithstanding, if a Change of Control occurs and if
the Executive’s employment with the Company is terminated within twelve months
prior to the date on which the Change of Control occurs, and if it is
reasonably demonstrated by the Executive that such termination of employment
(i) was at the request of a third party who has taken steps reasonably
calculated to effect a Change of Control or (ii) otherwise arose in connection
with or anticipation of a Change of Control, then for all purposes of

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 this Agreement the “Effective Date” shall mean the date immediately prior
to the date of such termination of employment.

     (b)  The “Change of Control Period” shall mean the period commencing on the
date hereof and ending on the second anniversary of the Effective Date.

		
	 	     2. Change of Control. For the purpose of this Agreement, a “Change
of Control” shall mean:

		
	 	     (a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”)) (a “Person”), of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 30% or more of either (i) the then-outstanding shares
of common stock of WGL Holdings, Inc. or (ii) the combined voting power
of the then-outstanding voting securities of WGL Holdings, Inc. entitled
to vote generally in the election of directors; provided, however, that
for purposes of this subsection (a), the following acquisitions shall
not constitute a Change of Control: (i) any acquisition directly from
WGL Holdings, Inc., (ii) any acquisition by WGL Holdings, Inc. or any
corporation controlled by or otherwise affiliated with WGL Holdings,
Inc., (iii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by WGL Holdings, Inc. or any corporation
controlled by or otherwise affiliated with WGL Holdings, Inc.; or (iv)
any transaction described in clauses (i), (ii), and (iii) of subsection
(d) of this Section 2; or

		
	 	     (b) Individuals who, as of the close of business on November 1,
2000, constituted the Board of Directors of WGL Holdings, Inc. (the
“Incumbent WGL Holdings, Inc. Board”) cease for any reason to constitute
at least a majority of the Board of Directors of WGL Holdings, Inc.;
provided, however, that any individual becoming a director subsequent to
November 1, 2000 whose election, or nomination for election by WGL
Holdings, Inc.’s shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent WGL Holdings,
Inc. Board shall be considered as though such individual were a member
of the Incumbent WGL Holdings, Inc. Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs
as a result of an actual or threatened election contest with respect to
the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other
than the Incumbent WGL Holdings, Inc. Board; or

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	 	     (c) The acquisition by any Person of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or
more of either (i) the then-outstanding shares of common stock of the
Utility or (ii) the combined voting power of the then-outstanding voting
securities of the Utility entitled to vote generally in the election of
directors, provided, however, that for purposes of this subsection (a),
the following acquisitions shall not constitute a Change of Control: (i)
any acquisition directly from the Utility, (ii) any acquisition by the
Utility or any corporation controlled by or otherwise affiliated with
the Utility, (iii) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Utility or any corporation
controlled by or otherwise affiliated with the Utility; or (iv) any
transaction described in clauses (i) and (ii) of subsection (e) of this
Section 2; or

		
	 	     (d) Consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of
the WGL Holdings, Inc. (a “Business Combination”), in each case unless,
following such Business Combination, (i) all or substantially all of the
individuals and entities who were the beneficial owners, respectively,
of the outstanding WGL Holdings, Inc. common stock and outstanding WGL
Holdings, Inc. voting securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 50% of,
respectively, the then-outstanding shares of common stock and the
combined voting power of the then-outstanding voting securities entitled
to vote generally in the election of directors, as the case may be, of
the corporation resulting from such Business Combination in
substantially the same proportions as their ownership, immediately prior
to such Business Combination, of the outstanding WGL Holdings, Inc.
common stock and outstanding WGL Holdings, Inc. voting securities, as
the case may be, (ii) no Person (excluding any corporation resulting
from such Business Combination or any employee benefit plan (or related
trust) of WGL Holdings, Inc. or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly, 30% or
more of, respectively, the then-outstanding shares of common stock of
the corporation resulting from such Business Combination, or the
combined voting power of the then-outstanding voting securities of such
corporation, except to the extent that such ownership existed prior to
the Business Combination and (iii) at least a majority of the members of
the board of directors of the corporation resulting from such Business
Combination were members of the Incumbent WGL Holdings, Inc. Board at
the time of the execution of the initial agreement, or of such Incumbent
WGL Holdings, Inc. Board, providing for such Business Combination; or

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	 	     (e) Consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of
the Utility (a “Utility Business Combination”), in each case unless,
following such Utility Business Combination, (i) all or substantially
all of the individuals and entities who were the beneficial owners,
directly or indirectly, respectively, of the outstanding Utility common
stock and the outstanding Utility voting securities immediately prior to
such Utility Business Combination beneficially own, directly or
indirectly, more than 50% of, respectively, the then-outstanding shares
of common stock and the combined voting power of the then-outstanding
voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such
Utility Business Combination in substantially the same proportions as
their ownership, immediately prior to such Utility Business Combination,
of the outstanding Utility common stock and outstanding Utility voting
securities, as the case may be, and (ii) no Person (excluding any
corporation resulting from such Utility Business Combination or any
employee benefit plan (or related trust) of the Utility or such
corporation resulting from such Utility Business Combination)
beneficially owns, directly or indirectly, 30% or more of, respectively,
the then-outstanding shares of common stock of the corporation resulting
from such Utility Business Combination, or the combined voting power of
the then-outstanding voting securities of such corporation, except to
the extent that such ownership existed prior to the Utility Business
Combination; or

		
	 	     (f) Approval by the shareholders of WGL Holdings, Inc. of a complete
liquidation or dissolution of WGL Holdings, Inc.

     3.     Employment Period. The Company hereby agrees to continue the Executive
in its employ, and the Executive hereby agrees to remain in the employ of the
Company subject to the terms and conditions of this Agreement, for the period
commencing on the Effective Date and ending on the second anniversary of such
date (the “Employment Period”).

     4.     Terms of Employment. (a) Positions and Duties. (i) During the
Employment Period, (A) the Executive’s position, duties and responsibilities
shall be at least commensurate in all material respects with the most
significant of those held, exercised and assigned at any time during the
120-day period immediately preceding the Effective Date (it being understood
that changes in reporting relationships or offices shall not necessarily
constitute a material change in position, duties or responsibilities) and (B)
the Executive’s services shall be performed at the location where the Executive
was employed

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immediately preceding the Effective Date or any office or location less than 35
miles from such location; and

     (ii)  During the Employment Period, and excluding any periods of vacation
and sick leave to which the Executive is entitled, the Executive agrees to
devote reasonable attention and time during normal business hours to the
business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Executive hereunder, to use the
Executive’s reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions, and (C) manage personal investments, so long
as such activities do not significantly interfere with the performance of the
Executive’s responsibilities as an employee of the Company in accordance with
this Agreement. It is expressly understood and agreed that to the extent that
any such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of the
activities similar in nature and scope thereto) subsequent to the Effective
Date shall not thereafter be deemed to interfere with the performance of the
Executive’s responsibilities to the Company.

     (b) Compensation. (i) Base Salary. During the Employment Period, the
Executive shall receive an annual base salary (“Annual Base Salary”), which
shall be paid at a monthly rate, at least equal to twelve times the highest
monthly base salary paid or payable, including any base salary which has been
earned but deferred, to the Executive by the Company and its affiliated
companies in respect of the 12-month period immediately preceding the month in
which the Effective Date occurs. As used herein, “Annual Base Salary” will
include all wages or salary paid to the Executive and will be calculated before
any salary reduction or deferrals, including but not limited to reductions made
pursuant to Section 125 and 401(k) of the Internal Revenue Code of 1986, as
amended. During the Employment Period, the Annual Base Salary shall be
reviewed no more than 12 months after the last salary increase awarded to the
Executive prior to the Effective Date and thereafter at least annually. Any
increase in Annual Base Salary shall not serve to limit or reduce any other
obligation to the Executive under this Agreement. Annual Base Salary shall not
be reduced after any such increase and the term Annual Base Salary as utilized
in this Agreement shall refer to Annual Base Salary as so increased. As used
in this Agreement, the term “affiliated companies” shall include any company
controlled by, controlling or under common control with the Company.

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     (ii)  Annual Incentive. In addition to Annual Base Salary, the Executive
shall earn annual incentive compensation (the “Annual Incentive”) for each
fiscal year ending during the Employment Period, at least equal to that
available to other peer executives of the Company and its affiliated companies.
Each such Annual Incentive shall be paid no later than the end of the third
month of the fiscal year next following the fiscal year for which the Annual
Incentive is awarded, unless the Executive shall elect to defer the receipt of
such Annual Incentive. In the event the Executive is terminated during the
Employment Period, the Executive’s Annual Incentive for the most recent year
shall be prorated for the portion of that year that the Executive worked in the
manner set forth in Section 6(a)(i)(A)(2).

     (iii)  Incentive, Savings and Retirement Plans. During the Employment
Period, the Executive shall be entitled to participate in all incentive,
savings and retirement plans, practices, policies and programs applicable
generally to other peer executives of the Company and its affiliated companies,
but in no event shall such plans, practices, policies and programs provide the
Executive with incentive opportunities (measured with respect to both regular
and special incentive opportunities, to the extent, if any, that such
distinction is applicable), savings opportunities and retirement benefit
opportunities, less favorable, in the aggregate, than the most favorable of
those provided by the Company and its affiliated companies for the Executive
under such plans, practices, policies and programs as in effect at any time
during the 120-day period immediately preceding the Effective Date or if more
favorable to the Executive, those provided generally at any time after the
Effective Date to other peer executives of the Company and its affiliated
companies.

     (iv)  Welfare Benefit Plans. During the Employment Period, the Executive
and/or the Executive’s beneficiaries, as the case may be, shall be eligible for
participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and its affiliated
companies (including, without limitation, medical, prescription, dental,
disability, employee life, group life, accidental death and travel accident
insurance plans and programs) to the extent applicable generally to other peer
executives of the Company and its affiliated companies, but in no event shall
such plans, practices, policies and programs provide the Executive with
benefits which are less favorable, in the aggregate, than the most favorable of
such plans, practices, policies and programs in effect for the Executive at any
time during the 120-day period immediately preceding the Effective Date or, if
more favorable to the Executive, those provided generally at any time after the
Effective Date to other peer executives of the Company and its affiliated
companies.

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     (v)  Expenses. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred
by the Executive in accordance with the most favorable policies, practices and
procedures of the Company and its affiliated companies in effect for the
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect generally
at any time thereafter with respect to other peer executives of the Company and
its affiliated companies.

     (vi)  Fringe Benefits. During the Employment Period, the Executive shall
be entitled to fringe benefits, including, without limitation, payment of club
dues, and, if applicable, use of an automobile and payment of related expenses,
in accordance with the most favorable plans, practices, programs and policies
of the Company and its affiliated companies in effect for the Executive at any
time during the 120-day period immediately preceding the Effective Date or, if
more favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies.

     (vii)  Office. During the Employment Period, the Executive shall be
entitled to an office at least equal to that of other peer executives of the
Company and its affiliated companies.

     (viii)  Vacation. During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the most favorable plans,
policies, programs and practices of the Company and its affiliated companies as
in effect for the Executive at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer executives
of the Company and its affiliated companies.

     5.     Termination of Employment. (a) Death or Disability. The Executive’s
employment shall terminate automatically upon the Executive’s death during the
Employment Period. If the Company determines in good faith that the Disability
of the Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may give to the Executive written
notice in accordance with Section 12(b) of this Agreement of its intention to
terminate the Executive’s employment. In such event, the Executive’s
employment with the Company shall terminate effective on the 30th day after
receipt of such notice by the Executive (the “Disability Effective Date”),
provided that, within the 30 days after such receipt, the Executive shall not
have returned to full-time performance of the Executive’s duties. For purposes
of this Agreement, “Disability” shall mean the absence of the

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Executive from the Executive’s duties with the Company on a full-time basis for
180 consecutive business days as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a physician
selected by the Company or its insurers and acceptable to the Executive or the
Executive’s legal representative.

     (b)  Cause. The Company may terminate the Executive’s employment during
the Employment Period for Cause. For purposes of this Agreement, “Cause” shall
mean:

		
	 	     (i) the willful and continued failure of the Executive to perform
substantially the Executive’s duties with the Company or one of its
affiliates (other than any such failure from incapacity due to physical
or mental illness), after a written demand for substantial performance is
delivered to the Executive by the Board or the Chief Executive Officer of
the Company which specifically identifies the manner in which the Board
or Chief Executive Officer believes that the Executive has not
substantially performed the Executive’s duties, or
	 
	 	     (ii) the willful engaging by the Executive in illegal conduct or
gross misconduct which is materially and demonstrably injurious to the
Company.

For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered “willful” unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive’s action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board or upon the instructions of the Chief Executive
Officer or a senior officer of the Company or based upon the advice of counsel
for the Company shall be conclusively presumed to be done, or omitted to be
done, by the Executive in good faith and in the best interests of the Company.
The cessation of employment of the Executive shall not be deemed to be for
Cause unless and until there shall have been delivered to the Executive a copy
of a resolution duly adopted by the affirmative vote of not less than three
quarters of the entire membership of the Board at a meeting of the Board called
and held for such purpose (after reasonable notice is provided to the Executive
and the Executive is given an opportunity, together with counsel, to be heard
before the Board), finding that, in the good faith opinion of the Board, the
Executive is guilty of the conduct described in subparagraph (i) or (ii) above,
and specifying the particulars thereof in detail.

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     (c)  Good Reason. The Executive’s employment may be terminated by the
Executive for Good Reason. For purposes of this Agreement, “Good Reason” shall
mean:

		
	 	     (i) the assignment to the Executive of any duties inconsistent in
any material respect with the Executive’s position as contemplated by
Section 4(a) of this Agreement, excluding for this purpose an isolated,
insubstantial and inadvertent action which is remedied by the Company
promptly after receipt of notice thereof given by the Executive;
	 
	 	     (ii) any failure by the Company to comply with any of the provisions
of Section 4(b) of this Agreement, other than an isolated, insubstantial
and inadvertent failure which is remedied by the Company promptly after
receipt of notice thereof given by the Executive;
	 
	 	     (iii) if there is a Change of Control, merger, acquisition or
other similar affiliation with another entity and Executive does not
continue in the position of the President and Chief Operating Officer or
a more senior position of the most senior resulting entity;
	 
	 	     (iv) failure by the Company to reimburse the Executive for expenses
related to a required relocation;
	 
	 	     (v) any required relocation of the Executive more than thirty five
miles from Washington, D.C., other than on a temporary basis (less than
two months);
	 
	 	     (vi) any purported termination by the Company of the Executive’s
employment otherwise than as expressly permitted by this Agreement; or
	 
	 	     (vii) any failure by the Company to comply with and satisfy Section
11(c) of this Agreement.

     (d)  Notice of Termination. Any termination by the Company for Cause, or
by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 12(b) of
this Agreement. For purposes of this Agreement, a “Notice of Termination”
means a written notice which (i) indicates the specific termination provision
in this Agreement relied upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive’s employment under the provision so indicated and
(iii) if the Date of Termination (as defined below) is other than the date of
receipt of such

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notice, specifies the termination date (which date shall be not more than 30
days after the giving of such notice). The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or circumstance
which contributes to a showing of Good Reason or Cause shall not waive any
right of the Executive or the Company, respectively, hereunder or preclude the
Executive or the Company, respectively, from asserting such fact or
circumstance in enforcing the Executive’s or the Company’s rights hereunder.

     (e)  Date of Termination. “Date of Termination” means (i) if the
Executive’s employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein, as the case may be, (ii) if the Executive’s
employment is terminated by the Company other than for Cause or Disability, the
Date of Termination shall be the date on which the Company notifies the
Executive of such termination and (iii) if the Executive’s employment is
terminated by reason of death or Disability, the Date of Termination shall be
the date of death of the Executive or the Disability Effective Date, as the
case may be.

     6.     Obligations of the Company upon Termination During Employment Period.
(a) Good Reason, Other Than for Cause, Death or Disability. If, during the
Employment Period, the Company shall terminate the Executive’s employment other
than for Cause or Disability or the Executive shall terminate employment for
Good Reason:

		
	 	     (i) the Company shall pay to the Executive in a lump sum in cash
within 30 days after the Date of Termination the aggregate of the
following amounts:

		
	 	     A. the sum of (1) the Executive’s Annual Base Salary through
the Date of Termination to the extent not theretofore paid, (2) the
product of (x) the Target Annual Incentive (as defined in the
Executive Compensation Plan of the Company) in the fiscal year of
the Executive’s Termination and (y) a fraction, the numerator of
which is the number of days in the current fiscal year through the
Date of Termination, and the denominator of which is 365 and (3)
any compensation previously deferred by the Executive (together
with any accrued interest or earnings thereon) and any accrued
vacation pay, in each case to the extent not therefore paid (the
sum of the amounts described in clauses (1), (2), and (3) shall be
hereinafter referred to as the “Accrued Obligations”); and

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	 	     B. Subject to the provisions of Section 9, the amount equal to
three times the Executive’s Highest Pay. For purposes of this
Agreement, Highest Pay shall mean the sum of (1) the Executive’s
Annual Base Salary, plus (2) the highest of the Executive’s Annual
Incentive actually earned for the last three full fiscal years.

		
	 	     (ii) for three years after the Executive’s Date of Termination, or
such longer period as may be provided by the terms of the appropriate
plan, program, practice or policy, the Company shall continue benefits to
the Executive and/or the Executive’s beneficiaries at least equal to
those which would have been provided to them in accordance with the
plans, programs, practices and policies described in Section 4(b)(iv) of
this Agreement if the Executive’s employment had not been terminated or,
if more favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company and its
affiliated companies and their families, provided, however, that if the
Executive becomes reemployed with another employer and is eligible to
receive medical or other welfare benefits under another employer-provided
plan, the medical and other welfare benefits described herein shall be
secondary to those provided under such other plan during such applicable
period of eligibility. After this three-year term, the Executive shall
immediately be eligible for COBRA benefits. For purposes of determining
eligibility (but not the time of commencement of benefits) of the
Executive for retiree benefits pursuant to such plans, practices,
programs and policies, the Executive shall be considered to have remained
employed until three years after the Date of Termination and to have
retired on the last day of such period;
	 
	 	     (iii) to the extent not theretofore paid or provided, the Company
shall timely pay or provide to the Executive any other amounts or
benefits required to be paid or provided or which the Executive is
eligible to receive under any plan, program, policy or practice or
contract or agreement of the Company and its affiliated companies (such
other amounts and benefits shall be hereinafter referred to as the “Other
Benefits”);
	 
	 	     (iv) the Company shall credit the Executive with up to an additional
three years of benefit service under the Company’s Supplemental Executive
Retirement Plan (the “SERP”), but in no event shall such additional years
of benefit service result in total years of benefit service exceeding the
maximum under the SERP;

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	 	     (v) the Company shall, at its sole expense as incurred, provide the
Executive with reasonable outplacement services the scope and provider of
which shall be selected by the Executive in the Executive’s sole
discretion; and
	 
	 	     (vi) immediately prior to termination of the Executive’s employment,
all restricted stock grants made to the Executive which are outstanding
at the time of such event shall be accelerated and vest.

     (b)  Death. If the Executive’s employment is terminated by reason of the
Executive’s death during the Employment Period, this Agreement shall terminate
without further obligations to the Executive’s legal representatives under this
Agreement, other than for payment of Accrued Obligations and the timely payment
or provision of Other Benefits. Accrued Obligations shall be paid to the
Executive’s estate or beneficiary, as applicable, in a lump sum in cash within
30 days of the Date of Termination. With respect to the provision of Other
Benefits, the term Other Benefits as utilized in this Section 6(b) shall
include, without limitation, and the Executive’s estate and/or beneficiaries
shall be entitled to receive, benefits at least equal to the most favorable
benefits provided by the Company and affiliated companies to the estates and
beneficiaries of peer executives of the Company and such affiliated companies
under such plans, programs, practices and policies relating to death benefits,
if any, as in effect with respect to other peers and their beneficiaries at any
time during the 120-day period immediately preceding the Effective Date or, if
more favorable to the Executive’s estate and/or the Executive’s beneficiaries,
as in effect on the date of the Executive’s death with respect to other peer
executives of the Company and its affiliated companies and their beneficiaries.

     (c)  Disability. If the Executive’s employment is terminated by reason of
the Executive’s Disability during the Employment Period, this Agreement shall
terminate without further obligations to the Executive, other than for payment
of Accrued Obligations and the timely payment or provision of Other Benefits.
Accrued Obligations shall be paid to the Executive in a lump sum in cash within
30 days of the Date of Termination. With respect to the provision of Other
Benefits, the term “Other Benefits” as utilized in this Section 6(c) shall
include, and the Executive shall be entitled after the Disability Effective
Date to receive, disability and other benefits at least equal to the most
favorable of those generally provided by the Company and its affiliated
companies to disabled executives and/or their families in accordance with such
plans, programs, practices and policies relating to disability, if any, as in
effect generally with respect to other peer executives and their families at
any time

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during the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive and/or the Executive’s beneficiaries, as in effect
at any time thereafter generally with respect to other peer executives of the
Company and its affiliated companies and their families.

     (d)  Cause: Other than for Good Reason. If the Executive’s employment
shall be terminated for Cause during the Employment Period, this Agreement
shall terminate without further obligations to the Executive other than the
obligation to pay to the Executive (x) the Executive’s Annual Base Salary
through the Date of Termination, (y) the amount of any compensation previously
deferred by the Executive, and (z) Other Benefits, in each case to the extent
theretofore unpaid. If the Executive voluntarily terminates employment during
the Employment Period, excluding a termination for Good Reason, this Agreement
shall terminate without further obligations to the Executive, other than for
Accrued Obligations and the timely payment or provision of Other Benefits. In
such case, all Accrued Obligations shall be paid to the Executive in a lump sum
in cash within 30 days of the Date of Termination.

     7.     Nonexclusivity of Rights. Nothing in this Agreement shall prevent or
limit the Executive’s continuing or future participation in any plan, program,
policy or practice provided by the Company or any of its affiliated companies
and for which the Executive may qualify, nor, subject to Section 12(f), shall
anything herein limit or otherwise affect such rights as the Executive may have
under any contract or agreement with the Company or any of its affiliated
companies. Amounts which are vested benefits or which the Executive is
otherwise entitled to receive under any plan, policy, practice or program of or
any contract or agreement with the Company or any of its affiliated companies
at or subsequent to the Date of Termination shall be payable in accordance with
such plan, policy, practice or program or contract or agreement except as
explicitly modified by this Agreement.

     8.     Full Settlement. The Company’s obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek
other employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement and such
amounts shall not be reduced whether or not the Executive obtains other
employment.

     9.     Certain Additional Payments by the Company. (a) Anything in this
Agreement to the contrary notwithstanding and except as set forth below,

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in the event it shall be determined that any payment or distribution by the
Company to or for the benefit of the Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this Section 9) (a “Payment”) would be subject to the excise tax imposed
by Section 4999 of the Code or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
“Excise Tax”), then the Executive shall be entitled to receive an additional
payment (a “Gross-Up Payment”) in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed with
respect to such taxes), including, without limitation, any income taxes (and
any interest and penalties imposed with respect thereto) and Excise Tax imposed
upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments.

     (b) Subject to the provisions of Section 9(c), all determinations required
to be made under this Section 9, including whether and when a Gross-Up Payment
is required and the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by such certified
public accounting firm as may be designated by the Company (the “Accounting
Firm”) which shall provide detailed supporting calculations both to the Company
and the Executive within 15 business days of the receipt of notice from the
Executive that there has been a Payment, or such earlier time as is requested
by the Company. In the event that the Accounting Firm is serving as accountant
or auditor for the individual, entity or group effecting the Change of Control,
the Company shall appoint another nationally recognized accounting firm to make
the determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 9, shall be paid by the Company to the
Executive within five days of the receipt of the Accounting Firm’s
determination. Any determination by the Accounting Firm shall be binding upon
the Company and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial
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 9(c) and the Executive 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 Executive.

14

 

     (c)  In the event the Internal Revenue Service (“IRS”) subsequently
challenges the Excise Tax computation herein described, then the Executive
shall notify the Company in writing of any claim by the IRS that, if
successful, would require the payment by the Executive of additional Excise
Taxes. Such notification shall be given no later than ten days after the
Executive receives written notice of such claim. The Executive shall not pay
such claim prior to the expiration of the 30-day period following the date on
which the Executive gives 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 Executive in writing prior to the expiration of such
period that it desires to contest such claim and that it will bear the costs
and provide the indemnification as required by this sentence, the Executive
shall cooperate with the Company in good faith in order effectively to contest
such claim and permit the Company to participate in any proceedings relating to
such claim. In the event a final determination is made with respect to the IRS
claim, or in the event the Company chooses not to further challenge such claim,
then the Company shall reimburse the Executive for the additional Excise Tax
owed to the IRS in excess of the Excise Tax calculated by the Accounting Firm.
The Company shall also reimburse the Executive for all interest and penalties
related to the underpayment of such Excise Tax. The Company will also
reimburse the Executive for all federal and state income tax and employment
taxes thereon.

     10.     Confidential Information. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated companies,
and their respective businesses, which shall have been obtained by the
Executive during the Executive’s employment by the Company or any of its
affiliated companies and which shall not be or become public knowledge (other
than by acts by the Executive or representatives of the Executive in violation
of this Agreement). After termination of the Executive’s employment with the
Company, the Executive shall not, without the prior written consent of the
Company or as may otherwise be required by law or legal process, communicate or
divulge any such information, knowledge or data to anyone other than the
Company and those designated by it. In no event shall an asserted violation of
the provisions of this Section 10 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this
Agreement.

     11.     Successors & Assigns. (a) This Agreement is personal to the
Executive and without the prior written consent of the Company shall not be
assignable by the Executive otherwise than by will or the laws of descent and

15

 

distribution. This Agreement shall inure to the benefit of and be enforceable
by the Executive’s legal representatives.

     (b)  This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns.

     (c)  The Company will require any successor or any party that acquires
control of the Company (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company or any party that acquires control of the Company to
assume expressly and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, “Company” shall mean
the Company as hereinbefore defined and any successor to its business and/or
assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.

     12.     Miscellaneous. (a) Governing Law; Headings; Amendment. This
Agreement shall be governed by and construed in accordance with the laws of the
Commonwealth of Virginia, without reference to principles of conflict of laws.
The captions of this Agreement are not part of the provisions hereof and shall
have no force or effect. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.

     (b)  Notices. All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:

	 
	If to the Executive:
	at the address for Executive that is on file with the Company
	
 

	If to the Company:
	Washington Gas Light Company
	1100 H Street, N.W
	Washington, D.C. 20080
	ATTN: General Counsel

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.

16

 

     (c)  Severability. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.

     (d)  Withholding. The Company may withhold from any amounts payable under
this Agreement such federal, state, local or foreign taxes as shall be required
to be withheld pursuant to any applicable law or regulation.

     (e)  Waiver. The Executive’s or the Company’s failure to insist upon
strict compliance with any provision of this Agreement or the failure to assert
any right the Executive or the Company may have hereunder, including, without
limitation, the right of the Executive to terminate employment for Good Reason
pursuant to Section 5(c)(i)-(v) of this Agreement, shall not be deemed to be a
waiver of such provision or right or any other provision or right under this
Agreement.

     (f)  At Will Employment. The Executive and the Company acknowledge that,
except as may otherwise be provided under any other written agreement between
the Executive and the Company, the employment of the Executive by the Company
is “at will” and, subject to Section 1(a) hereof, prior to the Effective Date,
the Executive’s employment and/or this Agreement may be terminated by either
the Executive or the Company at any time prior to the Effective Date, in which
case the Executive shall have no further rights under this Agreement. From and
after the Effective Date this Agreement shall supersede any other agreement
between the parties with respect to the subject matter hereof.

     (g) Arbitration. In the event of any dispute between the parties
regarding this Agreement, the parties shall submit to binding arbitration,
conducted in Washington, DC or in Virginia within 25 miles of Washington, DC.
The arbitration shall be conducted pursuant to the rules of the American
Arbitration Association. Each of the parties shall select one arbitrator, who
shall not be related to, affiliated with or employed by that party. The two
arbitrators shall, in turn, select a third arbitrator. The decision of any two
of the arbitrators shall be binding upon the parties, and may, if necessary, be
reduced to judgment in any court of competent jurisdiction. Notwithstanding
the foregoing, the parties expressly agree that nothing herein in any way
precludes Company from seeking injunctive relief or declaratory judgment
through a court of competent jurisdiction with respect to a breach (or an
alleged breach) of any covenant not to compete or of any confidentiality
covenant contained in this Agreement. In the event the Executive pursues
arbitration pursuant to this Section herein, the Executive shall be compensated
up to $150,000 in legal costs.

17

 

     (h)  Pooling of Interests Accounting. In the event any provision of this
Agreement would prevent the use of pooling of interests accounting in a
corporate transaction involving the Company and such transaction is contingent
upon pooling of interests accounting, then that provision shall be deemed
amended or revoked to the extent required to preserve such pooling of
interests. The Executive will, upon advice from the Company, take (or refrain
from taking, as appropriate) all actions necessary or desirable to ensure that
pooling of interests accounting is available.

     (i)  Effect of Prior Agreements. This Agreement contains the entire
understanding between the parties hereto and supersedes the Employment
Agreement dated November 1, 2000 between the Company and the Executive.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.

	 
	 

Name:  Terry D. McCallister
	 
	WASHINGTON GAS LIGHT COMPANY
	 
	By:
	

James H. DeGraffenreidt, Jr.
	Title:  Chairman and Chief Executive Officer

 

18ex10-2

 

Exhibit 10.2

WGL HOLDINGS, INC.

AND

WASHINGTON GAS LIGHT COMPANY

DEFERRED COMPENSATION PLAN FOR OUTSIDE DIRECTORS

(ADOPTED DECEMBER 18, 1985)

(AMENDED NOVEMBER 26, 1986)

(AMENDED NOVEMBER 1, 2000)

 

 

WGL HOLDINGS, INC.

AND

WASHINGTON GAS LIGHT COMPANY

DEFERRED COMPENSATION PLAN FOR OUTSIDE DIRECTORS

(1)  DEFINITIONS

	 	(a)	 	“Company” means WGL Holdings, Inc. and/or Washington Gas
Light Company.
	 
	 	(b)	 	“Deferral Period” means the period of time over which
Participants elect to defer their compensation. Deferral periods
for a specific number of years shall begin on January 1 and expire
on December 31.
	 
	 	(c)	 	“Outside Director” means a member of the Board of Directors
of the Company who is not an employee of the Company.
	 
	 	(d)	 	“Participant” means an Outside Director who elects to defer
compensation in accordance with the terms of the Plan.
	 
	 	(e)	 	“Plan” means the Company’s Deferred Compensation Plan for
Outside Directors, as adopted December 18, 1985, and as amended from
time to time.
	 
	 	(f)	 	“Plan Year” means any calendar year in which the Plan is in
effect. The first Plan Year is the calendar year 1986.

 

- 2 -

(2)  OBJECTIVE OF THE PLAN

     The objective of the Plan is the provide Outside Directors the opportunity
to defer receipt of compensation for their service on the Company’s Board of
Directors.

(3)  ELIGIBILITY

     Outside Directors of the Company are eligible to participate in the Plan.

(4)  ELECTION TO PARTICIPATE

     To participate in the Plan for any Plan Year, the Outside Director shall
execute a Deferral Application with the Company on a form to be supplied by the
Company. Participants will elect to defer annually. The Deferral Application
shall be executed on or before December 31 of the year preceding the Plan Year
in which compensation is to be deferred (i.e., to defer compensation to be
earned in Plan Year 1986, the Deferral Application must be executed by December
31, 1985). The Plan Administrator may execute the Deferral Application on
behalf of the Company. An approved application to defer (or to re-defer)
cannot be modified or revoked.

(5)  COMPENSATION SUBJECT TO DEFERRAL

     Participants may defer payment of all or a portion of their annual
retainer, monthly meeting fees, committee meeting fees and fees for attendance
at annual and special stockholder meetings. Deferrals shall be in set
percentage increments of 10% (10%, 20%, 30%, etc.). The minimum deferral is
10% of the annual retainer or $1000.00, whichever is less.

 

- 3 -

(6)  LENGTH OF DEFERRAL PERIOD

     Participants may elect to defer their compensation for a minimum period of
four years* or until the occurrence of the Participant’s retirement, as defined
in Paragraph (10)(B) of this Plan, or death, whichever occurs first.

(7)  RE-DEFERRALS**

     Prior to the termination of a Deferral Period for a specified period of
years, a Participant may apply to re-defer payment amounts previously deferred,
including interest accumulated on those amounts. The re-deferral must be of
the entire amount originally deferred (including accumulated interest) for a
minimum period of four years, or until the occurrence of the Participant’s
retirement, as defined in Paragraph (10)(B) of this Plan, or death, whichever
occurs first. Application to re-defer must be submitted to and approved by the
Plan Administrator no later than June 30 prior to expiration of the Deferral
Period.

(8)  DEFERRAL ACCOUNTS; DEFERRAL ACCOUNT BALANCE

     Amounts deferred, including accumulated interest, will be credited to a
Deferral Account for each Participant. The total amount credited for a
Participant at any particular time is designated the Deferral Account Balance.

(9)  INTEREST ON DEFERRED AMOUNTS

     A Participant’s Deferral Account Balance shall earn interest compounded
quarterly. The quarterly interest rate shall be the weekly average yield to
maturity for ten year U.S. Government fixed interest rate securities (adjusted
to a

	*	 	Effective November 26, 1986, the minimum deferral period is one year.

 

- 4 -

constant maturity of ten years) as published by the Federal Reserve Board in
its Statistical release H.15 published on or prior to December 31 of the
immediately preceding year. Notwithstanding this calculation, the rate
credited to any deferral account shall not be less than 8% per year.

(10)  METHOD OF PAYMENT

     (A)  Except as provided by Paragraph (10)(C), payment of any Deferral
Account Balance will be in the form of ten annual installments. In the
alternative, the Participant may apply to receive payment in a lump sum or in
fewer than ten annual installments. Application for the alternative payment
method must be submitted to and approved by the Plan Administrator prior to any
installment payment of a Deferral Account Balance. Payments shall commence
within 30 days of the event which triggers payout.

     (B)  At the time the Participant retires from the Company’s Board of
Directors, all Deferral Periods will expire. The Participant’s Deferral
Account Balance shall be paid to the Participant or to an Alternate Payee in
the form specified by Paragraph (10)(A).

     For purposes of this Plan, retirement from the Company’s Board of
Directors occurs at the time the Participant ceases for any reason other than
death to be an Outside Director of the Company.

	**	 	The provision for referrals is eliminated for amounts deferred after
December 31, 1986 (amendment adopted November 26, 1986).

 

- 5 -

     (C)  If a Participant dies prior to retirement from the Company’s Board of
Directors (as defined in Paragraph (10)(B) of this Plan) or if the Participant
dies prior to full payment of the Participant’s Deferral Account Balance, then
any remaining Account Balance shall be paid to the Participant’s Designated
Beneficiary in a lump sum, unless the Participant elected to have the
Designated Beneficiary receive payments in installments.

(11)  DESIGNATED BENEFICIARY AND ALTERNATE PAYEE

     Participants under this Plan may provide a Designated Beneficiary to
receive benefits payable under the Plan upon the death of the Participant.

     As a matter of convenience to the Participants, the Company will permit
Participants to provide for an Alternate Payee to receive payments on
retirement of the Participant. Provision for an Alternate Payee shall not
confer any rights on the Alternate Payee against the Company under this Plan
and shall be effective only upon written acknowledgement of the Alternate Payee
that the Alternate Payee has no right against the Company under this Plan. Upon
death of either the Participant or the Alternate Payee, the provision for the
Alternate Payee automatically expires.

     The Designated Beneficiary or Alternate Payee shall be specified on forms
provided by the Company. Participants may revoke or change a Designated
Beneficiary and an Alternate Payee at any time.

(12)  HARDSHIP WITHDRAWAL

     A Participant or the Designated Beneficiary may request a lump sum payment
or accelerated payments not yet due for distribution under the Plan in

 

- 6 -

the event of hardship, permanent disability or emergency. The Plan
Administrator has the sole discretion to determine whether such a withdrawal or
accelerated payment shall be permitted.

(13)  PAYMENT RIGHTS UNSECURED

     The terms of this Plan shall not mean, under any circumstance, that any
person or entity shall have any right, title or interest in or to any specific
asset of the Company. To the extent that any person acquires a right to
receive payments under the Plan, that right shall be no greater than the right
of any unsecured creditor of the Company.

(14)  NON-ASSIGNMENT

     Rights to receive payment under the Plan may not be assigned, alienated or
pledged.

(15)  PLAN ADMINISTRATOR

     The Chairman of the Board of Directors may from time to time designate an
Administrator to implement provisions of the Plan.

(16)  AMENDMENT AND TERMINATION

     The Company’s Board of Directors may amend or terminate this Plan at any
time. In the event of termination of the Plan, amounts deferred but not yet
paid shall be paid to Participants in a manner to be determined by the Board of
Directors.

 

Exhibit 10.3

WGL HOLDINGS, INC.

DIRECTORS’ STOCK

COMPENSATION PLAN

As Adopted on October 25, 1995

As Amended January 1, 1998

As Amended March 1, 1999

As Amended November 1, 2000

 

 

WGL HOLDINGS, INC.

DIRECTOR’S STOCK COMPENSATION PLAN

ARTICLE I

DEFINITIONS

     1.01 Affiliate means any “subsidiary” or “parent” corporation of the
Company (as such terms are defined in section 424 of the Code).

     1.02 Board means the Board of Directors of the Company.

     1.03 Code means the Internal Revenue Code of 1986, as amended.

     1.04 Common Stock means the common stock of the Company.

     1.05 Company means WGL Holdings, Inc. and includes any predecessor or
successor in interest.

     1.06 Date of Award means each January 1 during the term of the Plan.

     1.07 Fair Market Value means, on any given date, the average of the high
and low prices of a share of Common Stock as reported on the New York Stock
Exchange or, if the Common Stock was not traded on such day, then on the next
preceding day that the Common Stock was traded on such exchange, all as
reported by the Wall Street Journal.

     1.08 Participant means a member of the Board who satisfies the
requirements of Article IV.

     1.09 Plan means the WGL Holdings, Inc. Directors’ Stock Compensation Plan.

	 	 
		
 

 

 

ARTICLE II

PURPOSES

     The Plan is intended to assist the Company in promoting a greater identity
of interest between the Company’s non-employee directors and its shareholders,
and to assist the Company in attracting and retaining non-employee directors by
affording Participants an opportunity to share in the future success of the
Company.

ARTICLE III

ADMINISTRATION

     The Plan shall be administered by the Human Resources Committee of the
Company’s Board of Directors, or such other person or group as the Board of
Directors may designate, in a manner that is consistent with the provisions of
this Plan. The person or group administering the Plan shall not be liable for
any act done in good faith with respect to this Plan. All expenses of
administering this Plan shall be borne by the Company and its Affiliates.

ARTICLE IV

ELIGIBILITY

     Each member of the Board who is not an employee of the Company or an
Affiliate, and who has not been employed by the Company or one of its
Affiliates during the twelve months preceding the Date of Award will
participate in the Plan during his or her service on the Board.

	 	 
	- 2 -	
 

 

 

ARTICLE V

AWARDS

     Shares of Common Stock will be awarded to each Participant as of each Date
of Award. Subject to Article VIII’s limitation on the number of shares of
Common Stock which may be issued under the Plan, on each Date of Award each
Participant will be awarded 800 shares of common stock.

ARTICLE VI

VESTING OF SHARES

     The shares of Common Stock awarded under the Plan will be immediately
vested and nonforfeitable. Subject to the requirements of Article IX, the
shares awarded under the Plan may be sold or transferred by the Participant at
any time.

ARTICLE VII

SHAREHOLDER RIGHTS

     Participants will have all the rights of shareholders with respect to
shares awarded under the Plan. Accordingly, Participants will be entitled to
vote the shares and receive dividends.

ARTICLE VIII

SHARES AUTHORIZED

     Up to forty thousand shares of Common Stock may be awarded under the Plan.
If the

	 	 
	- 3 -	
 

 

 

Company effects one or more stock dividends, stock split-ups,
subdivisions, reclassifications, or consolidations of shares, or other similar
changes in capitalization after the Plan’s adoption by the Board, the maximum
number of shares that may be awarded under the Plan shall be proportionately
adjusted.

ARTICLE IX

COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES

     No Common Stock shall be awarded and no certificates for shares of Common
Stock shall be delivered under the Plan except in compliance with all
applicable federal and state laws and regulations, any listing agreement to
which the Company is a party, and the rules of all domestic stock exchanges on
which the Company’s shares may be listed. The Company shall have the right to
rely on the opinion of its counsel as to such compliance. Any share
certificate issued to evidence Common Stock issued under the Plan may bear such
legends and statements as the Company may deem advisable to assure compliance
with federal and state law and regulations. No Common Stock shall be awarded
and no certificates for shares of Common Stock shall be delivered until the
Company has obtained such consent or approval as it may deem advisable from
regulatory bodies having jurisdiction over such matters.

	 	 
	- 4 -	
 

 

 

ARTICLE X

GENERAL PROVISIONS

     10.01 Unfunded Plan. The Plan, insofar as it provides for grants, shall
be unfunded, and the Company shall not be required to segregate any assets that
may at any time be represented by grants under the Plan. Any liability of the
Company to any person with respect to any grant under the Plan shall be based
solely upon any contractual obligations that may be created pursuant to the
Plan. No such obligation of the Company shall be deemed to be secured by any
pledge of, or other encumbrance on, any property of the Company.

     10.02 Rules of Construction. Headings are given to the articles and
sections of the Plan solely as a convenience to facilitate reference. The
references to any statute, regulation, or other property of law shall be
construed to refer to any amendment to or successor of such provisions of law.

ARTICLE XI

AMENDMENT OF PLAN

     The Board may amend the Plan from time to time. No amendment may become
effective until shareholder approval is obtained if such approval is required
by any federal or state law or regulation or the rules of any stock exchange on
which the Common Stock may be listed, or if the Board in its discretion
determines that the obtaining of such shareholder approval is for any reason
advisable. No amendment shall, without a Participant’s consent, adversely
affect any rights of such Participant under any Award outstanding at the time
such amendment is made.

	 	 
	- 5 -	
 

 

 

ARTICLE XII

DURATION OF PLAN

     The final award under the Plan will be made as of the Date of Award in
2006. The Board may terminate the Plan sooner by appropriate action. The Plan
will terminate automatically, without action by the Board, if there are
insufficient shares available to make the awards described in the Plan.

ARTICLE XIII

EFFECTIVE DATE OF PLAN

     The Plan will become effective once it is adopted by the Board and
approved by a majority of the votes cast at a duly held shareholders’ meeting
at which a quorum representing a majority of all outstanding voting stock is,
either in person or by proxy, present and voting on the Plan. No awards will
be made under the Plan prior to approval of the Plan, by the Company’s
shareholders.

	 	 
	- 6 -

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