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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(D)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 4)
COLUMBIA ENERGY GROUP
(NAME OF SUBJECT COMPANY)
COLUMBIA ENERGY GROUP
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, PAR VALUE $0.01
(TITLE OF CLASS OF SECURITIES)
197648108
(CUSIP NUMBER OF CLASS OF SECURITIES)
MICHAEL W. O'DONNELL
SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
COLUMBIA ENERGY GROUP
13880 DULLES CORNER LANE
HERNDON, VIRGINIA 20171
(703) 561-6000
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICE
AND COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING STATEMENT)
COPY TO:
NEIL T. ANDERSON, ESQ.
SULLIVAN & CROMWELL
125 BROAD STREET
NEW YORK, NEW YORK 10004
(212) 558-4000
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This Amendment No. 4 amends and supplements the
Solicitation/Recommendation Statement on Schedule 14D-9 filed with the
Securities and Exchange Commission on July 6, 1999, and as subsequently amended
July 6, 1999, July 9, 1999 and July 12, 1999 (as so amended, the "Schedule
14D-9"), by Columbia Energy Group, a Delaware corporation (the "Company"),
relating to the tender offer by NiSource Inc., an Indiana corporation, to
purchase for cash through its wholly-owned subsidiary, CEG Acquisition Corp., a
Delaware corporation, all of the outstanding common shares, par value $0.01 per
share, of the Company (the "NiSource Tender Offer"). Capitalized terms used but
not defined herein have the meaning ascribed to them in the Schedule 14D-9.
ITEM 3. IDENTITY AND BACKGROUND.
Item 3(b)(1) is hereby supplemented and amended by adding the
following:
At a special meeting of the Board of Directors of the Company (the
"Board") held on July 14, 1999, after consideration of the potentially
destabilizing effects of the pendency of the NiSource Tender Offer on the morale
and retention of Company employees, the Board authorized (i) a form of amendment
to employment agreements for each of Oliver G. Richard III, Peter M. Schwolsky
and Catherine G. Abbott ("Employment Agreement Amendments") in substantially the
form of Exhibit (c)(7) hereto; (ii) a form of change in control agreement for 8
key executives of the Company ("Key Executive Agreements") in substantially the
form of Exhibit (c)(8) hereto; and (iii) a form of change in control agreement
for 19 additional key management personnel of the Company ("Key Management
Agreements") in substantially the form of Exhibit (c)(9) hereto.
Pursuant to the terms of the Employment Agreement Amendments, if the
executive covered by the agreement (the "Executive") (a) terminates his/her
employment as a result of the occurrence of a Change in Control, provided that
the executive gives 90-day notice of such termination within 180 days of the
Change in Control; (b) terminates his/her employment for Good Reason during the
period beginning on the date of the occurrence of a Change in Control and ending
36 full calendar months following such date (the "Coverage Period") ; or (c) has
his/her employment terminated by the Company without cause (as defined in the
Employment Agreement Amendments) during the Coverage Period, the Company will
pay to the Executive in cash the following amounts: (i) accrued but unpaid
salary and accrued but unused vacation; (ii) an amount equal to three times the
sum of (x) the Executive's base salary at the time of the Change in Control, or,
if greater, at the time of termination of employment, plus (y) the target level
of incentive compensation under the Company's Annual Incentive Compensation Plan
or any other short term or cash bonus incentive plans that the Executive had the
opportunity to earn in the year in which the Change in Control Occurred, or, if
greater, the incentive compensation for the year in which the Change in Control
occurred, (iii) a prorated portion of the incentive compensation that the
Executive could have received in the year during which his/her employment is
terminated; (iv) an amount equal to the excess of (A) the lump-sum actuarial
equivalent of the benefits under the Company's (or, for Messrs. Richard and
Schwolsky, if greater under their previous employer's) qualified defined benefit
retirement plan and the Company's (or, for Messrs. Richard and Schwolsky, if
greater under their previous employer's) non-qualified
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supplemental retirement plans that the Executive would have received if his/her
employment had continued for three years following the date of employment
termination (the "Severance Period") based on certain assumptions regarding
service and compensation, over (B) the lump-sum actuarial equivalent of the
Executive's actual accrued benefit under the qualified defined benefit plan and
any supplemental retirement plans as of the date of termination; and (v) an
amount equal to the sum of the additional contributions that would have been
made or credited during the Severance Period by the Company to the Executive's
account(s) under each qualified defined contribution plan, and each
non-qualified supplemental executive savings plan had the Executive's employment
continued through the Severance Period.
In addition, the Executive shall be entitled to the following benefits:
(i) all unexpired and unexercised stock options and value sharing rights
previously awarded to the Executive shall become immediately vested and
exercisable, and restrictions on all restricted stock beneficially owned by the
Executive shall lapse immediately; (ii) certain outplacement services; and (iii)
for a period of 36 months from the month of termination of employment, the
Executive and his/her covered dependents shall be entitled to all health,
welfare, and fringe benefits provided by the Company at the same level of
benefits and at the same dollar cost to the Executive as is available generally
to comparable employees of the Company.
If the aggregate payments and benefits provided to the Executive
pursuant to the Employment Agreement Amendments and any other payments and
benefits provided to the Executive which constitute "parachute payments" as
defined in Section 280G of the Code ("Parachute Payments") would be subject to
the excise tax imposed by Section 4999 of the Code, then the Executive shall
receive an additional payment (a "Gross-Up Payment") in an amount such that
after payment by the Executive of all taxes imposed upon the Gross-Up Payment
and any interest or penalties imposed with respect to such taxes, the Executive
retains from the Gross-Up Payment an amount equal to the Excise Tax imposed upon
the payments and benefits.
Generally, the Key Executive Agreements provide each key executive
covered by the agreement (each, a "Key Executive") with benefits similar to
those provided pursuant to the terms of the Employment Agreement Amendments,
except that benefits under the Key Executive Agreements do not become payable by
the Company upon a voluntary termination (or termination without Good Reason) of
employment by the Key Executive after the occurrence of a Change of Control.
The Key Management Agreements provide each other key executive or
manager covered by the agreement (each, a "Key Manager") with benefits similar
to those provided pursuant to the terms of the Key Executive Agreements, except
that: (i) the Coverage Period is limited to 24 months; (ii) the lump-sum cash
severance benefit is an amount equal to two times the Key Manager's base salary
and target incentive compensation; (ii) the Severance Period used to calculate
certain benefits is limited to two years after the date of termination; (iii)
the period for health, welfare and fringe benefit coverage is limited to 24
months after the month in which termination of employment occurred; and (iv) the
Key Manager is not entitled to
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receive a Gross-Up Payment; instead, Parachute Payments are to be reduced to the
extent necessary so that no portion thereof is subject to Excise Tax.
"Change of Control" in each of the Employment Agreement Amendments, Key
Executive Agreements and Key Management Agreements is defined as (i) any person
(as such term is used in Section 13(d) of the Securities Exchange Act of 1934
(the "Act")), excluding a corporation or other entity owned by all or
substantially all of the stockholders of the Company immediately prior to the
transaction in substantially the same proportions as their ownership of stock of
the Company ("Person"), is the beneficial owner, directly or indirectly, of 25%
or more of the outstanding stock of the Company requiring the filing of a report
with the Securities and Exchange Commission under Section 13(d) of the Act; (ii)
a recommendation by the Board of approval of a purchase by any Person of shares
pursuant to a tender or exchange offer to acquire stock of the Company for cash,
securities or any other consideration, provided, that, pursuant to the terms of
the proposed tender or exchange offer, such Person intends to become the
beneficial owner (as defined in Rule 13d-3 under the Act), directly or
indirectly, of 25% or more of the outstanding stock of the Company (calculated
as provided in Paragraph (d) of Rule 13d-3 under the Act in the case of rights
to acquire stock); (iii) the approval of the shareholders of the Company of a
merger, consolidation, liquidation or dissolution of the Company, or the sale of
all or substantially all of the assets of the Company (a "Business
Combination"), unless, following such Business Combination, all or substantially
all of the stockholders of the Company immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 60% of,
respectively, both the outstanding shares of common stock and the combined
voting power of the outstanding voting securities entitled to vote generally in
the election of directors of the corporation resulting from such Business
Combination; or (iv) during any period of 24 consecutive months, individuals who
at the beginning of such period constitute the Board and any new directors whose
election by the Board or nomination for election by the Company's shareholders
was approved by a vote of at least two-thirds of the directors then still in
office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for any
reason to constitute a majority of the Board.
"Good Reason" in each of the Employment Agreement Amendments, Key
Executive Agreements and Key Management Agreements is defined to cover the
following events, provided that the executive gives proper notice to the
Company: (i) the Company or an affiliate of the Company requiring the executive
to be based at any office or location more than 50 miles from the executive's
current principal office and/or the Company requires the executive to travel on
Company business to a substantially greater extent than was required of the
executive immediately prior to the date of Change in Control; (ii) a reduction
which is more than de minimis in (A) the executive's annual rate of base salary
or the incentive compensation opportunities, or (B) the long-term incentive
compensation the executive has the opportunity to earn, determined in the
aggregate if multiple long-term incentive opportunities exist; (iii) failure of
the Company to continue in effect any employee benefit plan, policy or
arrangement, including,
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but not limited to, any retirement, 401(k) life, medical, dental, disability,
accidental death or travel insurance plan, policy or arrangement in which the
executive was participating immediately prior to the Change in Control, unless
the Company provides the executive with a plan or plans that provide
substantially similar benefits, (iv) the Company failing to require a successor
entity to assume and agree to perform the Company's obligations pursuant to the
Agreement, or, with respect to the Key Executive Agreements and the Employment
Agreement Amendments only, (v) a reduction in the level of the executive's
positions or titles as in effect immediately prior to the Change in Control, or
any action by the Company, or any successor thereto, which results in a material
reduction in the executive's authority, duties or responsibilities, or with
respect to the Employment Agreement Amendments only, or (vi) the Company giving
notice to the Executive that the term of such Executive's employment agreement,
as amended by the Employment Agreement Amendments, will no longer be
automatically extended.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
Item 6(a) is hereby supplemented and amended by adding the following:
At a special meeting of the Board held on July 14, 1999, the Board
authorized a $400 million increase in the Company's open market share repurchase
program, bringing the total current amount available under the program to
approximately $420 million. The Board authorized the repurchases to take place
through July 14, 2000. The Board considers the Company's stock a good long-term
investment and determined that the increase in the authorized amount of share
repurchases would provide additional liquidity and some immediate value for
those shareholders interested in cash, while enabling long-term shareholders to
increase their proportionate interest in the Company's equity and therefore in
the Company's earnings and assets.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
Item 7(a-b) is hereby supplemented and amended by adding the following:
Disclosure with respect to amendments to the Company's open market
share repurchase program is set forth in Item 6(a) of this Amendment No. 4 and
is incorporated herein by reference.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
Item 9 is hereby supplemented and amended by adding the following:
Exhibit (a)(8) Text of Press Release, dated July 15, 1999.
Exhibit (c)(7) Form of Amendment to Employment Agreement for Oliver
G. Richard III, Peter M. Schwolsky and Catherine G.
Abbott.
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(c)(8) Form of Change in Control Agreement for Certain Key
Executives.
(c)(9) Form of Change in Control Agreement for Certain Other
Executives and Key Managers.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
COLUMBIA ENERGY GROUP
By: /s/ Michael W. O'Donnell
-------------------------------------
Name: Michael W. O'Donnell
Title: Senior Vice President and Chief Financial
Officer
Dated: July 15, 1999
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Exhibit List
Exhibit (a)(8) Text of Press Release, dated July 15, 1999.
Exhibit (c)(7) Form of Amendment to Employment Agreement for Oliver
G. Richard III, Peter M. Schwolsky and Catherine G. Abbott.
(c)(8) Form of Change in Control Agreement for Certain Key
Executives.
(c)(9) Form of Change in Control Agreement for Certain Other
Executives and Key Managers.
Exhibit (a)(8)
For Immediate Release CONTACTS:
July 15, 1999 Thomas L. Hughes (Financial Community)
703/561-6001
R. A. Rankin, Jr. (News Media)
703/561-6044
COLUMBIA ENERGY GROUP INCREASES
STOCK REPURCHASE PROGRAM BY $400 MILLION
HERNDON, Va., July 15 - Columbia Energy Group announced today that its
board of directors has authorized a $400 million increase in the company's open
market share repurchase program, bringing the total current amount available
under the program to $420 million. The board authorized the repurchases to take
place through July 14, 2000.
The board considers Columbia's stock a good long-term investment and
determined that the increase in the authorized amount of share repurchases would
provide additional liquidity and some immediate value for those shareholders
interested in cash, while enabling long-term shareholders to increase their
proportionate interest in Columbia's equity and therefore in the company's
earnings and assets.
Oliver G. Richard III, Columbia's chairman, president and CEO said,
"The board has taken this action because it believes Columbia's true value is
not fully reflected in its current stock price, which was impacted in 1999 by
much warmer than usual weather and by significant investments and costs in the
marketing segment, and does not reflect Columbia's long-term business prospects.
This repurchase program, announced on the same day as we reported our fourth
consecutive quarter of increased net income, demonstrates our clear commitment
to enhance shareholder value in both the near and long term. We continue to
implement our strategic initiatives to take advantage of opportunities in a
rapidly evolving energy industry."
Columbia previously has repurchased approximately $80 million of its
common shares under a $100 million buyback program authorized by the board in
February 1999.
As required under the securities laws, Columbia will not repurchase any
of its securities under the repurchase program until a Schedule 13e-1 containing
certain information is filed with the Securities and Exchange Commission and
sent to Columbia's shareholders. The repurchase program authorizes Columbia
Energy Group to make purchases in the open market or otherwise. Any market
purchase transactions will be effected on the New York Stock Exchange. The
timing and terms of these purchases, and the number of shares actually
purchased, will be determined by management based on market conditions and other
factors. Purchases will be conducted in accordance with applicable rules of the
Securities and Exchange Commission. Purchased shares will be held in
- more -
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treasury and will be available for general corporate purposes or resale at a
future date, or will be retired. Any purchases will be financed with short-term
debt, or made from available funds. The plan may be suspended or terminated at
any time, at the company's discretion. This announcement is not a request or
offer for tender of shares to the company. The company currently has
approximately 82 million shares outstanding.
Columbia Energy Group, based in Herndon, Va., is one of the nation's
leading energy services companies, with 1998 revenues of nearly $6.6 billion and
assets of about $7 billion. Its operating companies engage in all phases of the
natural gas business, including exploration and production, transmission,
storage and distribution, as well as commodities marketing, energy management,
propane sales and electric power generation, sales and trading. Information
about Columbia Energy Group (NYSE:CG) is available on the Internet at
www.columbiaenergygroup.com.
This press release contains "forward-looking statements" within the
meaning of the federal securities laws, including statements concerning
Columbia's plans, objectives and expected performance. There can be no assurance
that actual results will not differ materially due to various factors, many of
which are beyond the control of Columbia, including, but not limited to,
competition, the regulatory approval process, weather, supply and demand for
natural gas, electricity, propane and petroleum and changes in general economic
conditions. The safe harbor provisions of the Private Securities Litigation
Reform Act with respect to forward-looking statements are not available to
statements made in connection with a tender offer.
# # #
Exhibit (c)(7)
AMENDMENT TO
EMPLOYMENT AGREEMENT
This amendment to the employment agreement entered into on the 15th day of
March, 1995, by and between the Columbia Energy Group (formerly named "The
Columbia Gas System, Inc.") (the "Company") and ______________________ (the
"Executive"), and amended as of the 17th day of January, 1996 (such employment
agreement, together with the amendment, the "Agreement"), is made effective this
__ day of _________, 1999.
RECITALS
WHEREAS, the Company and the Executive are parties to the Agreement;
and
WHEREAS, the Company desires to make arrangements at this time to help
further assure the Executive's continuing dedication to his duties to the
Company and its Shareholders, notwithstanding any attempts by outside parties to
gain control of the Company; and
WHEREAS, the Company and the Executive wish to amend certain provisions in
the Agreement to effect such objectives; and
WHEREAS, Section 13 of the Agreement provides that the Agreement may be
amended by written instrument executed by the Company and the Executive.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which is acknowledged by the Company and the Executive, the Company and the
Executive hereby agree as follows:
1. A new Section shall be added preceding Section 1 of the Agreement, which
new Section shall read as follows:
"1. Term of the Agreement.
(a) This Agreement, as amended the __ day of ________, 1999,
shall be effective as of the ___ day of _____, 1999 (the "Effective Date"),
and shall continue thereafter until the date which is the third anniversary
of the Effective Date or until such later date as provided in paragraph (b)
of this Section 1 (the "Term of this Agreement"); PROVIDED, however, the
Term of this Agreement shall not expire prior to the last day of any
Coverage Period (as that term is defined in paragraph (e)(v) of Section 8
(formerly section 7) of this Agreement), and the Company's obligations, if
any, to provide payments and/or benefits pursuant to this Agreement shall
survive the Term of this Agreement.
(b) The Term of this Agreement shall be extended automatically
for subsequent one year periods beginning on the first anniversary of the
Effective Date and continuing each anniversary thereafter, unless either
the Company or the
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Executive shall give written notice to the other that the Term of this
Agreement shall not be so extended on a particular anniversary date;
PROVIDED, however, that such notice must be given, if at all, within the 30
day period preceding such anniversary."
2. Sections 2,3,4,5,6, and 7 shall be renumbered as Sections 3,4,5,6,7, and 8,
respectively.
3. Current Section 7(d) of the Agreement shall be renumbered as Section 8(d)
and shall be amended to read as follows:
"(d) The 90th day after the Executive notifies the Company in
writing that he is terminating his employment as a result of one or more of
the following events: (i) the Board of Directors of the Company (the
"Board") failing to reelect him to, or removing him from, the position of
Chairman of the Board, President or Chief Executive Officer; (ii) a
material reduction in his duties and/or responsibilities in any such
position; and/or (iii) the Company giving notice pursuant to paragraph (b)
of Section 1 of this Agreement that the Term of this Agreement shall no
longer be automatically extended. Any notice pursuant to this paragraph
must be given in writing no later than 90 days after one of the events
described above occurs."
4. Current Section 7(e) of the Agreement shall be renumbered as 8(e) and shall
be amended to read as follows:
"(e) (i) The 90th day after the Executive notifies the Company
(or any successor to the Company) in writing that he is terminating his
employment as a result of the occurrence of a "Change in Control" (as that
term is defined below), PROVIDED such notice is given in writing by the
Executive to the Company no later than 180 days after such event.
(ii) If within the Coverage Period (as defined below), the
date specified in the Executive's written notice to the Company (which date
shall not be less than 31 nor more than 90 days after the date the notice
is received by the Company) that he is terminating employment for Good
Reason (as defined below).
(iii) For purposes of this Agreement, the term "Change in
Control" shall mean:
(A) any person (as such term is used in Section 13(d)
of the Securities Exchange Act of 1934 (the "Act"), excluding a corporation
or other entity owned, directly or indirectly, by all or substantially all
of the stockholders of the Company immediately prior to the transaction in
substantially the same proportions as their ownership of stock of the
Company ("Person")), is the beneficial owner, directly or indirectly, of
25% or more of the outstanding stock of the Company requiring the filing of
a report with the Securities and Exchange Commission under Section 13(d) of
the Act;
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(B) recommendation by the Board of approval, or
approval by the Board, of a purchase by any Person of shares pursuant to a
tender or exchange offer to acquire any stock of the Company (or securities
convertible into stock) for cash, securities or any other consideration,
PROVIDED that, pursuant to the terms of the proposed tender offer, such
Person intends to become the beneficial owner (as defined in Rule 13d-3
under the 1934 Act), directly or indirectly, of 25% or more of the
outstanding stock of the Company (calculated as provided in Paragraph (d)
of Rule 13d-3 under the 1934 Act in the case of rights to acquire stock);
(C) approval of the Shareholders of the Company of a
merger, consolidation, liquidation or dissolution of the Company, or the
sale of all or substantially all of the assets of the Company (a "Business
Combination"), in each case, unless, following such Business Combination,
all or substantially all of the stockholders of the Company immediately
prior to such Business Combination beneficially own, directly or
indirectly, more than 60% 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 of the
corporation resulting from such Business Combination; or
(D) during any period of 24 consecutive months,
individuals who at the beginning of such period constitute the Board and
any new directors whose election by the Board or nomination for election by
the Company's Shareholders was approved by a vote of at least two-thirds of
the directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority of
the Board.
With respect to paragraphs (e)(iii)(B) and (e)(iii)(C) of this Section 8,
upon the Board's determination that the transaction subject to Board
recommendation of approval, Board approval, or Shareholder approval, as the
case may be, will not be closed, a Change in Control shall be deemed not to
have occurred from such date forward and this Agreement shall continue in
effect as if no Change in Control had occurred, except to the extent
termination requiring payments under Section 9 (formerly Section 8) hereof
shall have occurred prior to such determination by the Board. In no event
shall any one transaction result in more than one Change in Control.
(iv) For purposes of this Agreement, the term "Good Reason"
shall mean:
(A) a reduction in the level of the Executive's
positions or titles as in effect immediately prior to the Change in
Control, or any action by the Company, or any successor thereto, which
results in a material reduction in the Executive's authority, duties or
responsibilities (including, without
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limitation, the Executive occupying the same positions, but with a
non-publicly held company);
(B) the Company or an affiliate of the Company
requiring the Executive to be based at any office or location more than 50
miles from the principal executive office of the Company in [insert
applicable principal executive office], and/or the Company requiring the
Executive to travel on Company business to a substantially greater extent
than was required of the Executive immediately prior to the date of the
Change in Control;
(C) a reduction which is more than de minimis in (A)
the Executive's annual rate of base salary or the Bonus (as defined below
in paragraph (d)(i)(B) of Section 9 (formerly Section 8)) opportunity, and
(B) the long-term incentive compensation the Executive has the opportunity
to earn, determined in the aggregate if multiple long-term incentive
opportunities exist;
(D) failure of the Company to continue in effect any
employee benefit plan, policy or arrangement, including, but not limited
to, any retirement, 401(k), life, medical, dental, disability, accidental
death or travel insurance plan, policy or arrangement in which the
Executive was participating immediately prior to the Change in Control,
unless the Company provides the Executive with a plan or plans that provide
substantially similar benefits, or benefits substantially similar to the
benefits provided to similarly situated executives;
(E) the Company failing to require a successor entity
to assume and agree to perform the Company's obligations under this
Agreement; or
(F) the Company giving notice pursuant to paragraph (b)
of Section 1 (as added by amendment) of this Agreement that the Term of
this Agreement shall no longer be automatically extended.
For purposes of this Section 8, no event described above shall constitute
Good Reason unless the Executive has given written notice to the Company of
his termination for Good Reason specifying the event relied upon for such
termination within one year after the occurrence of such event (but in no
event later than the last day of any Coverage Period (as defined below in
paragraph (e)(v) of this Section 8)) and the Company has not remedied such
within 30 days of receipt of such notice. The Company and Executive, upon
mutual written agreement, may waive any of the foregoing provisions which
would otherwise constitute a Good Reason.
(v) For purposes of this Agreement, the term "Coverage
Period" shall mean the period beginning on the date of the occurrence of a
Change in Control that occurs during the Term of this Agreement, and ending
36 full calendar months following the date on which a Change in Control
occurs;
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PROVIDED, however, that if a Change in Control is based on Board
recommendation of approval, Board approval, or Shareholder approval
(pursuant to paragraphs (e)(iii)(B) or (e)(iii)(C) of this Section 8), the
Coverage Period shall end on the date which is 36 full calendar months
following the date of the consummation of the transaction which was the
subject of the Board recommendation of approval, Board approval, or
Shareholder approval, whichever is applicable."
5. Current Section 8 shall be renumbered as Section 9.
6. Current Section 8(d) of the Agreement shall be renumbered as Section 9(d)
and shall be amended to read as follows:
"(d) Notwithstanding any provision herein to the contrary, if the
Executive's employment is terminated for a reason set forth in paragraph
(e) of Section 8 (formerly Section 7), or, during the Coverage Period (as
that term is defined below), the Executive's employment is terminated for a
reason set forth in paragraph (c) of Section 8 (formerly Section 7)
(PROVIDED such termination is not due to the Executive's permanent
disability (as defined in paragraph (b) of Section 8 (formerly Section 7))
or the Executive's death), then,
(i) within thirty business days after such termination, the
Company shall pay to the Executive (or if the Executive dies after
termination of employment but before receiving all payments to which he has
become entitled hereunder, to the estate of the Executive) in cash the
following amounts:
(A) accrued but unpaid salary and accrued but unused
vacation;
(B) an amount equal to three times the sum of the
following amounts: (1) the Executive's annual base salary at the time of
the Change in Control or, if greater, at the time of termination of
employment, plus (2) the "target" level of incentive compensation under the
Annual Incentive Compensation Plan or any other short-term or cash bonus
incentive plans (the "Bonus") that the Executive had the opportunity to
earn in the year in which his employment was terminated, or, if greater,
the Bonus for the year in which the Change in Control occurred, in all
cases, including any amounts which are deferred by the Executive;
(C) a prorated portion of the Bonus that the Executive
could have received in the year during which his employment is terminated,
determined by calculating the product of (1) the amount of the Bonus the
Executive could have earned in such year, and (2) a fraction, the numerator
of which is the number of days through the date of termination in the year
with respect to which the Bonus relates, and the denominator of which is
the total number of days in the applicable year;
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(D) an amount equal to the excess of
(1) the lump-sum actuarial equivalent of the
benefits under (x) the Company's qualified defined benefit retirement
plan(s) in which the Executive participated or, if it would result in
greater benefits, the qualified defined benefit retirement plan(s) in which
the Executive participated while an employee at ________________ (the
"Retirement Plan") (utilizing actuarial assumptions no less favorable to
the Executive than those in effect under the Retirement Plan immediately
prior to the date of the Change in Control), and (y) any and all of the
Company's non-qualified supplemental retirement plans relating to any
qualified defined benefit plans (including, but not limited to, any benefit
restoration plan(s) maintained by the Company from time to time) in which
the Executive participated or, if it would result in greater benefits, the
non-qualified supplemental retirement plan(s), which relate to defined
benefit plans, in which the Executive participated while an employee at
________________ (the "SERP"), that the Executive would have received if
his employment had continued for three years following the date of
employment termination (the "Severance Period") (giving credit for all
purposes, including, but not limited to, accrual of benefits, vesting, age
and years of service), assuming the following:
(I) for purposes of determining the reduction
for any early retirement benefit, the Executive had not less than 10 years
of service,
(II) for purposes of determining benefits
under the Retirement Plan and SERP, the Executive's covered annual
compensation ("Covered Compensation") during the Severance Period would
have been equal to the Executive's annual rate of Covered Compensation at
the time of termination of employment or, if greater, at the time of the
Change in Control (determined without regard to compensation or benefit
limitations prescribed by federal law or regulation), and
(III) for all purposes under the Retirement
Plan and the SERP, the Executive's years of service and annual compensation
include service and compensation with both the Company and
________________; over
(2) the lump-sum actuarial equivalent of the
Executive's actual accrued benefit (paid or payable), if any, under the
Retirement Plan and the SERP as of the date of termination (utilizing the
same actuarial assumptions as used above in paragraph (d)(i)(D)(1) of this
Section 9); and
(E) an amount equal to the sum of the additional
contributions (other than pre-tax salary deferral contributions by the
Executive) that would have been made or credited during the Severance
Period (as defined above in
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paragraph (d)(i)(D)(1) of this Section 9) by the Company to the Executive's
account(s) under each qualified defined contribution plan, and each
non-qualified supplemental executive savings plan relating to such
qualified defined contribution plans (including, but not limited to, any
benefit restoration plan(s) maintained by the Company from time to time) in
which the Executive participated, determined by assuming that,
(1) the Executive's employment had continued
through the Severance Period;
(2) the Executive's rate of compensation
recognized by each such plan would, during the Severance Period, have been
equal to the Executive's annual rate of Covered Compensation at the time of
termination of employment or, if greater, at the time of the Change in
Control; and
(3) with respect to matching and/or discretionary
contributions, the Executive's rate of pre-tax salary deferral
contributions and the Company's matching contribution, in each year during
the Severance Period, would have been equal to the maximum percentage
allowed under the applicable plan at the time of termination of employment
or, if greater, at the time of the Change in Control; and
(ii) in addition, the Executive shall be entitled to the
following additional benefits:
(A) all unexpired and unexercised stock options and
value sharing rights previously awarded to the Executive shall become
immediately vested and exercisable, and restrictions on all restricted
stock beneficially owned by the Executive shall lapse immediately;
(B) outplacement services, the scope and provider of
which shall be selected by the Executive in his or her sole discretion (but
at a cost to the Company of not more than the lesser of (1) 15% of the
Executive's annual base salary at the time of termination of employment or
(2) $50,000); and
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(C) for a period commencing with the month in which
termination of employment shall have occurred and ending 36 months
thereafter, the Executive and, as applicable, the Executive's covered
dependants shall be entitled to all health, welfare, and fringe benefits
provided by the Company to its employees generally or to the Executive on
an individual or group basis (including, but not limited to, any life,
accident, health, hospitalization or long-term disability insurance,
maintained from time to time by the Company), whether maintained pursuant
to a plan, policy or other arrangement (written or unwritten), as if the
Executive were still employed during such period, at the same level of
benefits and at the same dollar cost to the Executive as is available
generally to comparable employees of the Company. If the Company reasonably
determines that the coverage required hereunder would cause a welfare plan
sponsored by the Company to violate any provision of the Internal Revenue
Code of 1986, as amended (the "Code") prohibiting discrimination in favor
of highly compensated employees or key employees, or if any benefits
described hereunder cannot be provided (or the Company determines that it
does not wish to provide such benefits) pursuant to the appropriate plan or
program maintained for employees of the Company, the Company shall provide
such benefits outside such plan or program at no additional cost
(including, without limitation, tax costs) to the Executive or, as
determined by the Company in its sole discretion, the Company will pay to
the Executive the cash equivalent thereof. The benefits provided hereunder
shall be secondary to any comparable benefits provided by another
employer."
7. A new Section 9(f) shall be added to the Agreement, which new Section shall
read as follows:
"(f) (i) If Independent Tax Counsel (as that term is defined
below) shall determine that the aggregate payments and benefits provided to
the Executive pursuant to this Agreement and any other payments and
benefits provided to the Executive from the Company, its affiliates and/or
plans of the Company and/or its affiliates, which constitute "parachute
payments" as defined in Section 280G of the Code (or any successor
provision thereto) ("Parachute Payments") would be subject to the excise
tax imposed by Section 4999 of the Code (the "Excise Tax"), then the
Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount (determined by Independent Tax Counsel) such that
after payment by the Executive of all taxes (including any Excise Tax)
imposed upon the Gross-Up Payment and any interest or penalties imposed
with respect to such taxes, the Executive retains from the Gross-Up Payment
an amount equal to the Excise Tax imposed upon the payments and benefits.
For purposes of this Section 9(f), "Independent Tax Counsel" shall mean a
lawyer, a certified public accountant with a nationally recognized
accounting firm, or a compensation consultant with a nationally recognized
actuarial and benefits consulting firm with expertise in the area of
executive compensation tax law, who shall be selected by the Company and
shall be reasonably acceptable to the Executive, and whose fees and
disbursements shall be paid by the Company.
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(ii) If the Independent Tax Counsel shall determine that no
Excise Tax is payable by the Executive, it shall furnish the Executive with
a written opinion that the Executive has substantial authority not to
report any Excise Tax on the Executive's Federal income tax return. If the
Executive is subsequently required to make a payment of any Excise Tax,
then the Independent Tax Counsel shall determine the amount of such
additional payment ("Gross-Up Underpayment"), and any such Gross-Up
Underpayment shall be promptly paid by the Company to or for the benefit of
the Executive. The fees and disbursements of the Independent Tax Counsel
shall be paid by the Company.
(iii) The Executive shall notify the Company in writing
within 15 days of any claim by the IRS that, if successful, would require
the payment by the Company of a Gross-Up Payment. If the Company notifies
the Executive in writing 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:
(A) give the Company any information reasonably
requested by the Company relating to such claim,
(B) take such action in connection with contesting such
claim as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect
to such claim by an attorney reasonably selected by the Company,
(C) cooperate with the Company in good faith in order
to effectively contest such claim, and
(D) permit the Company to participate in any
proceedings relating to such claim; PROVIDED, however, that the Company
shall bear and pay directly all costs and expenses (including additional
interest and penalties) incurred in connection with such contest and shall
indemnify and hold the Executive harmless, on an after tax basis, for any
Excise Tax or income tax, including interest and penalties with respect
thereto, imposed as a result of such representation and payment of costs
and expenses. The Company shall control all proceedings taken in connection
with such contest; PROVIDED, however, that if the Company directs the
Executive to pay such claim and sue for a refund, the Company shall advance
the amount of such payment to the Executive, on an interest free basis, and
shall indemnify and hold the Executive harmless, on an after tax basis,
from any Excise Tax or income tax, including interest or penalties with
respect thereto, imposed with respect to such advance or with respect to
any imputed income with respect to such advance.
(iv) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to paragraph (f)(iii) of this Section 9,
the
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<PAGE>
Executive becomes entitled to receive any refund with respect to such
claim, the Executive shall, within 10 days of the receipt of such refund,
pay to the Company the amount of such refund, together with any interest
paid or credited thereon after taxes applicable thereto."
8. A new Section 10 shall be added to the Agreement, which new Section shall
read as follows:
"10. Pooling of Interests. Notwithstanding any other provision
contained in this Agreement to the contrary, if any action taken or
required to be taken pursuant to the terms of this Agreement would preclude
the use of the "pooling of interests" accounting method with respect to any
specific transaction, the consummation of which is intended to be accounted
for under the "pooling of interests" method, this Agreement may be modified
to the extent the Company deems necessary to permit such "pooling of
interests" accounting treatment."
9. Sections 9, 10, 11, 12, 13, 14, 15, 16, and 17 shall be renumbered as
Sections 11, 12, 13, 14, 15, 16, 17, 18, and 19, respectively.
10. Current Section 12 (to be renumbered Section 14) shall be amended to change
the mailing address for notices as follows:
"If to the Executive:
17654 Canby Road
Leesburg, VA 20175
If to the Company:
Board of Directors
13880 Dulles Corner Lane
Herndon, VA 20171"
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<PAGE>
All provisions of the Agreement not specifically mentioned in this
Amendment shall be considered modified to the extent necessary to be consistent
with the changes made in this Amendment.
Date: ___________________________ Columbia Energy Group
By___________________________
Its
Attested: The Executive
- ------------------------------ ------------------------------
11
Exhibit (c)(8)
CHANGE IN CONTROL AGREEMENT
COLUMBIA ENERGY GROUP
AND
THIS AGREEMENT, is by and between Columbia Energy Group (the "Company") and
(the "Executive") and is effective as of this ___ day of ______________, 1999.
W I T N E S S E T H:
WHEREAS, the Board has determined that it is in the best interests of the
Company and its shareholders for the Company to agree to provide benefits under
the circumstances described below to the Executive and other executives who are
responsible for the policy-making functions of the Company and the overall
viability of the Company's business; and
WHEREAS, the Board recognizes that the possibility of a change in control
of the Company is unsettling to such executives and desires to make arrangements
at this time to help assure their continuing dedication to their duties to the
Company and its shareholders, notwithstanding any attempts by outside parties to
gain control of the Company; and
WHEREAS, the Board believes it important, should the Company receive
proposals from outside parties, to enable such executives, without being
distracted by the uncertainties of their own employment situation, to perform
their regular duties, and, where appropriate, to assess such proposals and
advise the Board as to the best interests of the Company and its shareholders
and to take such other action regarding such proposals as the Board determines
to be appropriate; and
WHEREAS, the Board also desires to demonstrate to the executives that the
Company is concerned with their welfare and intends to provide that loyal
executives are treated fairly; and
WHEREAS, the Board wishes to assure the executives of fair severance should
any of their employment terminate in specified circumstances following a change
in control of the Company and to assure the executives of other benefits upon a
change in control.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto agree as follows:
1. Definitions.
a. "Board" shall mean the Board of Directors of the Company.
b. "Cause" shall mean the Executive's fraud or dishonesty which has
resulted or is likely to result in material economic damage to the Company
or an affiliate of the Company, as determined in good faith by a vote of at
least two-thirds of the non-employee directors of the Company at a meeting
of the Board at which the Executive is provided an opportunity to be heard.
<PAGE>
c. "Change in Control" shall mean:
(i) any person (as such term is used in Section 13(d) of the
Securities Exchange Act of 1934 (the "Act"), excluding a corporation or other
entity owned, directly or indirectly, by all or substantially all of the
stockholders of the Company immediately prior to the transaction in
substantially the same proportions as their ownership of stock of the Company
("Person")), becomes the beneficial owner, directly or indirectly, of 25% or
more of the outstanding stock of the Company requiring the filing of a report
with the Securities and Exchange Commission under Section 13(d) of the Act;
(ii) recommendation by the Board of approval of a purchase by any
Person of shares pursuant to a tender or exchange offer to acquire any stock of
the Company (or securities convertible into stock) for cash, securities or any
other consideration, PROVIDED that, pursuant to the terms of the proposed tender
or exchange offer, such Person intends to become the beneficial owner (as
defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 25% or
more of the outstanding stock of the Company (calculated as provided in
Paragraph (d) of Rule 13d-3 under the 1934 Act in the case of rights to acquire
stock);
(iii) approval of the shareholders of the Company of a merger,
consolidation, liquidation or dissolution of the Company, or the sale of all or
substantially all of the assets of the Company (a "Business Combination"),
unless, following such Business Combination, all or substantially all of the
stockholders of the Company immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 60% of, respectively, both
the outstanding shares of common stock and the combined voting power of the
outstanding voting securities entitled to vote generally in the election of
directors of the corporation resulting from such Business Combination; or
(iv) during any period of 24 consecutive months, individuals who
at the beginning of such period constitute the Board and any new directors whose
election by the Board or nomination for election by the Company's shareholders
was approved by a vote of at least two-thirds of the directors then still in
office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for any
reason to constitute a majority of the Board.
With respect to subsections (c)(ii) and (c)(iii) of this Section 1, upon the
Board's determination that the transaction subject to Board recommendation of
approval or shareholder approval, as the case may be, will not be closed, a
Change in Control shall be deemed not to have occurred from such date forward
and this Agreement shall continue in effect as if no Change in Control had
occurred, except to the extent termination requiring payments under Section 3
hereof shall have occurred prior to such determination by the Board. In no event
shall any one transaction result in more than one Change in Control.
d. "Company Information" shall mean (i) confidential information
including, without limitation, information received from third parties under
confidential conditions, (ii)
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information subject to the Company's and its affiliates attorney-client or
work-product privilege; and (iii) other technical, business, legal or financial
information (including, without limitation, customer lists), the use or
disclosure of which might reasonably be construed to be contrary to the
Company's and its affiliates' interests.
e. "Compensation" shall mean the sum of the following amounts: (i) the
Executive's annual base salary at the time of the Change in Control or, if
greater, at the time of termination of employment, plus (ii) the "target" level
of incentive compensation under the Annual Incentive Compensation Plan or any
other short-term or cash bonus incentive plans (the "Bonus") that the Executive
had the opportunity to earn in the year in which his employment was terminated,
or, if greater, the Bonus for the year in which the Change in Control occurred,
including any amounts which are deferred by the Executive.
f. "Coverage Period" shall begin on the Starting Date and end on the
Ending Date.
g. "Disability" shall mean an injury or illness which permanently
prevents the Executive from performing services to the Company and which
qualifies the Executive for payments under the Company's long-term disability
plan, as in effect from time to time.
h. "Effective Date" shall mean the date of the execution of this
Agreement.
i. "Ending Date" shall be the date which is 36 full calendar months
following the date on which a Change in Control occurs; PROVIDED, however, that
if a Change in Control is based on Board recommendation of approval or
shareholder approval, pursuant to Sections 1(c)(ii) or 1(c)(iii), the Ending
Date shall be the date which is 36 full calendar months following the date of
the consummation of the transaction which was the subject of Board
recommendation of approval or shareholder approval, whichever is applicable.
j. "Good Reason" shall mean any of the following:
(i) a reduction in the level of the Executive's positions or titles as
in effect immediately prior to the Change in Control, or any action by the
Company, or any successor thereto, which results in a material reduction in the
Executive's authority, duties or responsibilities;
(ii) the Company or an affiliate of the Company requiring the Executive
to be based at any office or location more than 50 miles from [insert applicable
principal executive office], and/or the Company requiring the Executive to
travel on Company business to a substantially greater extent than was required
of the Executive immediately prior to the date of the Change in Control;
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<PAGE>
(iii) a reduction which is more than de minimis in (A) the Executive's
annual rate of base salary or the Bonus opportunity, or (B) the long-term
incentive compensation the Executive has the opportunity to earn, determined in
the aggregate if multiple long-term incentive opportunities exist;
(iv) failure of the Company to continue in effect any employee benefit
plan, policy or arrangement, including, but not limited to, any retirement,
401(k), life, medical, dental, disability, accidental death or travel insurance
plan, policy or arrangement in which the Executive was participating immediately
prior to the Change in Control, unless the Company provides the Executive with a
plan or plans that provide substantially similar benefits, or benefits
substantially similar to the benefits provided to similarly situated executives;
or
(v) the Company failing to require a successor entity to assume and
agree to perform the Company's obligations pursuant to Section 9 of this
Agreement.
For purposes of this Section 1(j), no event described above shall constitute
Good Reason unless the Executive has given written notice to the Company of his
termination for Good Reason specifying the event relied upon for such
termination within one year after the occurrence of such event (but in no event
later than the Ending Date) and the Company has not remedied such within 30 days
of receipt of such notice. The Company and Executive, upon mutual written
agreement, may waive any of the foregoing provisions which would otherwise
constitute Good Reason.
k. "Retirement Plan" shall mean the Company's qualified defined
benefit retirement plan(s) in which the Executive participates.
l. "SERP" shall mean any and all supplemental retirement plans in
which the Executive participates (including, but not limited to, any benefit
restoration plan(s) maintained by the Company from time to time).
m. "Starting Date" shall be the date on which a Change in Control
occurs during the Term of this Agreement (as defined below).
2. Term.
a. This Agreement shall be effective as of the Effective Date and
shall continue thereafter until the date which is the third anniversary of the
Effective Date, or such later date as provided in paragraph (b) of this Section
2 (the "Term of this Agreement"); PROVIDED however, the Term of this Agreement
shall not expire prior to the last day of any Coverage Period, and the Company's
obligations, if any, to provide payments and/or benefits pursuant to Section 3
of this Agreement and the obligations of the Company and the Executive pursuant
to Section 5 of this Agreement shall survive the termination of this Agreement.
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<PAGE>
b. The Term of this Agreement shall be extended automatically for
subsequent one year periods beginning on the first anniversary of the Effective
Date and continuing each anniversary thereafter, unless either the Company or
the Executive shall give written notice to the other that the Term of this
Agreement shall not be so extended on a particular anniversary date; PROVIDED,
however, that such notice must be given, if at all, within the 30 day period
preceding such anniversary.
3. Severance Benefits.
a. If the Executive's employment is terminated during the Coverage
Period for a reason other than the Executive's death, and such termination is by
the Company for any reason other than Cause or the Executive's Disability, or by
the Executive in the event of Good Reason, then,
(i) within thirty business days after such termination, the
Company shall pay to the Executive (or if the Executive dies after termination
of employment but before receiving all payments to which he has become entitled
hereunder, to the estate of the Executive) in cash the following amounts:
(A) accrued but unpaid salary and accrued but unused
vacation;
(B) an amount equal to two times the Executive's
Compensation;
(C) a prorated portion of the Bonus that the Executive could
have received in the year during which his employment is terminated, determined
by calculating the product of (1) the amount of the Bonus the Executive could
have earned in such year, and (2) a fraction, the numerator of which is the
number of days through the date of termination in the year with respect to which
the Bonus relates, and the denominator of which is the total number of days in
the applicable year;
(D) an amount equal to the excess of (1) the lump-sum
actuarial equivalent of the benefit under (x) the Retirement Plan (utilizing
actuarial assumptions no less favorable to the Executive than those in effect
under the Retirement Plan immediately prior to the date of the Change in
Control), and (y) the SERP, that the Executive would have received if his
employment had continued for two years after the date of termination (the
"Severance Period") (giving credit for all purposes, including, but not limited
to, accrual of benefits, vesting, age and years of service), and assuming for
purposes of determining the reduction for any early retirement benefit that the
Executive had not less than 10 years of service, and further assuming that, for
purposes of determining benefits under the Retirement Plan and SERP, the
Executive's covered annual compensation ("Covered Compensation") during the
Severance Period would have been equal to the Executive's annual rate of Covered
Compensation at the time of termination of employment or, if greater, at the
time of the Change in Control (determined without regard to compensation or
benefit limitations prescribed by federal law or regulation), over (2) the
lump-sum actuarial equivalent of the Executive's actual accrued benefit (paid or
payable), if any, under the
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Retirement Plan and the SERP as of the date of termination (utilizing the same
actuarial assumptions as used above in this subsection (1) of this Section
3(a)(i)(D)); and
(E) an amount equal to the sum of the additional
contributions (other than pre-tax salary deferral contributions by the
Executive) that would have been made or credited during the Severance Period (as
defined in Section 3(a)(i)(D) above) by the Company to the Executive's
account(s) under each qualified defined contribution plan, and each
non-qualified supplemental executive savings plan relating to such qualified
defined contribution plans (including, but not limited to, any benefit
restoration plan(s) maintained by the Company from time to time) in which the
Executive participated, determined by assuming that,
(1) the Executive's employment had continued through
the Severance Period;
(2) the Executive's rate of compensation recognized by
each such plan would, during the Severance Period, have been equal to the
Executive's annual rate of Covered Compensation at the time of termination of
employment or, if greater, at the time of the Change in Control; and
(3) with respect to matching and/or discretionary
contributions, the Executive's rate of pre-tax salary deferral contributions and
the Company's matching contribution, in each year during the Severance Period,
would have been equal to the maximum percentage allowed under the applicable
plan at the time of termination of employment or, if greater, at the time of the
Change in Control; and
(ii) in addition, the Executive shall be entitled to the
following additional benefits:
(A) all unexpired and unexercised stock options and/or value
sharing rights previously awarded to the Executive shall become immediately
vested and exercisable, and restrictions on all restricted stock beneficially
owned by the Executive shall lapse immediately;
(B) outplacement services, the scope and provider of which
shall be selected by the Executive in his or her sole discretion (but at a cost
to the Company of not more than the lesser of (1) 15% of the Executive's annual
base salary at the time of termination of employment or (2) $50,000); and
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(C) for a period commencing with the month in which
termination of employment shall have occurred and ending 24 months thereafter,
the Executive and, as applicable, the Executive's covered dependants shall be
entitled to all health, welfare, and fringe benefits provided by the Company to
its employees generally or to the Executive on an individual or group basis
(including, but not limited to, any life, accident, health, hospitalization or
long-term disability insurance, maintained from time to time by the Company),
whether maintained pursuant to a plan, policy or other arrangement (written or
unwritten), as if the Executive were still employed during such period, at the
same level of benefits and at the same dollar cost to the Executive as is
available generally to comparable employees of the Company. If the Company
reasonably determines that the coverage required under this Section 3(a)(ii)(C)
would cause a welfare plan sponsored by the Company to violate any provision of
the Internal Revenue Code of 1986, as amended (the "Code") prohibiting
discrimination in favor of highly compensated employees or key employees, or if
any benefits described in this Section 3(a)(ii)(C) cannot be provided (or the
Company determines that it does not wish to provide such benefits) pursuant to
the appropriate plan or program maintained for employees of the Company, the
Company shall provide such benefits outside such plan or program at no
additional cost (including, without limitation, tax costs) to the Executive or,
as determined by the Company in its sole discretion, the Company will pay to the
Executive the cash equivalent thereof. The benefits provided in accordance with
this Section 3(a)(ii)(C) shall be secondary to any comparable benefits provided
by another employer.
b. If Independent Tax Counsel (as that term is defined below) shall
determine that the aggregate payments and benefits provided to the Executive
pursuant to this Agreement and any other payments and benefits provided to the
Executive from the Company, its affiliates and/or plans of the Company and/or
its affiliates, which constitute "parachute payments" as defined in Section 280G
of the Code (or any successor provision thereto) ("Parachute Payments") would be
subject to the excise tax imposed by Section 4999 of the Code (the "Excise
Tax"), then the Executive shall be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount (determined by Independent Tax Counsel) such
that after payment by the Executive of all taxes (including any Excise Tax)
imposed upon the Gross-Up Payment and any interest or penalties imposed with
respect to such taxes, the Executive retains from the Gross-Up Payment an amount
equal to the Excise Tax imposed upon the payments and benefits. For purposes of
this Section 3(b), "Independent Tax Counsel" shall mean a lawyer, a certified
public accountant with a nationally recognized accounting firm, or a
compensation consultant with a nationally recognized actuarial and benefits
consulting firm with expertise in the area of executive compensation tax law,
who shall be selected by the Company and shall be reasonably acceptable to the
Executive, and whose fees and disbursements shall be paid by the Company.
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(i) If the Independent Tax Counsel shall determine that no Excise Tax
is payable by the Executive, it shall furnish the Executive with a written
opinion that the Executive has substantial authority not to report any Excise
Tax on the Executive's Federal income tax return. If the Executive is
subsequently required to make a payment of any Excise Tax, then the Independent
Tax Counsel shall determine the amount of such additional payment ("Gross-Up
Underpayment"), and any such Gross-Up Underpayment shall be promptly paid by the
Company to or for the benefit of the Executive. The fees and disbursements of
the Independent Tax Counsel shall be paid by the Company.
(ii) The Executive shall notify the Company in writing within 15 days
of any claim by the IRS that, if successful, would require the payment by the
Company of a Gross-Up Payment. If the Company notifies the Executive in writing
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:
(A) give the Company any information reasonably requested by
the Company relating to such claim,
(B) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by the Company,
(C) cooperate with the Company in good faith in order to
effectively contest such claim, and
(D) permit the Company to participate in any proceedings
relating to such claim; PROVIDED, however, that the Company shall bear and pay
directly all costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold the
Executive harmless, on an after tax basis, for any Excise Tax or income tax,
including interest and penalties with respect thereto, imposed as a result of
such representation and payment of costs and expenses. The Company shall control
all proceedings taken in connection with such contest; PROVIDED, however, that
if the Company directs the Executive to pay such claim and sue for a refund, the
Company shall advance the amount of such payment to the Executive, on an
interest free basis and shall indemnify and hold the Executive harmless, on an
after tax basis, from any Excise Tax or income tax, including interest or
penalties with respect thereto, imposed with respect to such advance or with
respect to any imputed income with respect to such advance.
(iii) If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 3(b)(iii), the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall, within 10
days of the receipt of such refund, pay to the Company the amount of such
refund, together with any interest paid or credited thereon after taxes
applicable thereto.
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c. In the event of any termination of the Executive's employment
described in Section 3(a), the Executive shall be under no obligation to seek
other employment, and there shall be no offset against amounts due the Executive
under this Agreement on account of any remuneration attributable to any
subsequent employment; PROVIDED, however, to the extent the Executive receives
medical and health benefits from a subsequent employer, medical and health
benefits provided pursuant to Section 3(a)(ii)(C) shall be secondary to those
received from the subsequent employer.
d. It is intended that the termination provisions herein are in lieu
of, and not in addition to, termination or severance payments and benefits
provided under the Company's other termination or severance programs, plans or
agreements, whether or not in written form ("Other Termination Benefits").
Unless waived by the Executive, Other Termination Benefits the Executive
receives, or is entitled to receive in the future, shall reduce payments and
benefits provided hereunder.
e. If the Executive's employment shall terminate by reason of the
Executive's death or Disability, this Agreement shall terminate without further
obligations to the Executive or the Executive's legal representatives under this
Agreement, other than for payment of accrued but unpaid obligations and the
timely payment or provision of other benefits pursuant to the terms of the
respective plan, policy or arrangement. Such accrued but unpaid obligations
shall be paid to the Executive or the Executive's estate or beneficiary, as the
case may be, in a lump sum in cash within 30 days of the Executive's death or
Disability.
4. Source of Payments.
All payments provided for in Section 3 above 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 the Executive or his
dependents, beneficiaries or estate 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 Executive shall have no right,
title or interest 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 Agreement, and no action taken pursuant
to its provisions, shall create or be construed to create a trust of any kind or
a fiduciary relationship between the Company and the Executive or any other
person. To the extent that any person acquires a right to receive payments from
the Company such right shall be no greater than the right of an unsecured
creditor of the Company.
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5. Litigation Expenses.
The Company shall pay to the Executive reasonable legal fees
and expenses incurred in good faith by the Executive as a result of a
termination which entitles the Executive to benefits under this Agreement
(including, but not limited to, all such fees and expenses incurred in disputing
any such termination or in seeking in good faith to obtain or enforce any
benefit or right provided by this Agreement or in connection with any tax audit
or proceeding to the extent attributable to the application of Code Sections
4999 or 280G to any payment or benefit provided hereunder). Such payments shall
be made within 5 business days after delivery of the Executive's written
requests for payment accompanied with such evidence of fees and expenses
incurred as the Company reasonably may require.
6. Tax Withholding.
The Company may withhold from any payments made under this Agreement
all federal, state or other taxes as shall be required pursuant to any law or
governmental regulation or ruling.
7. Entire Understanding.
This Agreement contains the entire understanding between the Company
and the Executive with respect to the subject matter hereof and supersedes any
prior severance or termination agreement between the Company and the Executive,
except that this Agreement shall not affect or operate to reduce any benefit or
compensation inuring to the Executive of any kind elsewhere provided and not
expressly dealt with in this Agreement.
8. Severability.
If, for any reason, any one or more of the provisions or part of a
provision contained in this Agreement shall be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision or part of a provision of this Agreement
not held so invalid, illegal or unenforceable, and each other provision or part
of a provision shall to the fullest extent consistent with law continue in full
force and effect.
9. Consolidation, Merger, or Sale of Assets.
If the Company is acquired, consolidates or merges into or with, or
transfers all or substantially all of its assets to, another entity, the term
"the Company" as used herein shall mean such other entity and this Agreement
shall continue in full force and effect. In the case of any transaction in which
a successor would not by the foregoing provision or by operation of law be bound
by this Agreement, the Company shall require such successor expressly and
unconditionally to assume and agree to perform the Company's obligations under
this Agreement, in the same manner and to the same extent that the Company would
be required to perform if no such succession had taken place.
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10. Confidentiality; Outstanding Charges.
a. Within a reasonable period of time following termination of
employment, the Executive shall return to the Company all Company Information,
reports, files, memoranda, records, credit cards, cardkey passes, door and file
keys, computer access codes, software and other property which the Executive has
received or prepared or helped to prepare in connection with his employment with
the Company.
b. The Executive acknowledges that in the course of employment with
the Company, he has acquired Company Information and that such Company
Information has been disclosed to him in confidence and for the Company's use
only. The Executive agrees that he (i) will keep such Company Information
confidential at all times, (ii) will not disclose or communicate Company
Information to any third party, and (iii) will not make use of Company
Information on his own behalf or on behalf of any third party. The Executive
further acknowledges and agrees that the Company's remedy in the form of
monetary damages for any breach by him of any of the provisions of this Section
10 may be inadequate and that, in addition to any monetary damages for such
breach, the Company shall be entitled to institute and maintain any appropriate
proceeding or proceedings, including an action for specific performance and/or
injunction.
c. In addition to the foregoing, the Executive agrees to keep the
terms of this Agreement strictly confidential. The Executive may only disclose
the terms of this Agreement to the Executive's attorney, spouse and tax advisor,
unless the existence of this Agreement with the Executive and the terms hereof
are publicly disclosed by the Company.
11. Notices.
All notices, requests, demands and other communications required or
permitted hereunder shall be given in writing and shall be deemed to have been
duly given if delivered or mailed, postage prepaid, first class as follows:
a. to the Company:
c/o Columbia Energy Group Service Corporation
Sr. Vice President--Human Resources
13880 Dulles Corner Lane
Herndon, Virginia 20171-4600
b. to the Executive:
-----------------
-----------------
-----------------
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or to such other address as either party shall have previously specified in
writing to the other.
12. No Attachment.
Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge or hypothecation or to execution,
attachment, levy or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to effect any such action shall be null, void
and of no effect.
13. Binding Agreement.
This Agreement shall be binding upon, and shall inure to the benefit
of, the Executive and the Company and their respective permitted successors and
assigns.
14. Modification, Waiver and Pooling of Interests.
Except as provided below, this Agreement may not be terminated,
modified or amended (other than with respect to amendments or modifications made
by the Company solely for purposes of clarifying an ambiguous or unclear
provision) other than by an instrument in writing signed by the parties hereto.
No term or condition of this Agreement shall be deemed to have been waived, nor
shall there be any estoppel against the enforcement of any provision of this
Agreement, except by written instrument signed by the party charged with such
waiver or estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future or as to any act other than that
specifically waived. Notwithstanding any other provision contained in this
Agreement to the contrary, if any action taken or required to be taken pursuant
to the terms of this Agreement would preclude the use of the "pooling of
interests" accounting method with respect to any specific transaction, the
consummation of which is intended to be accounted for under the "pooling of
interests" method, this Agreement may be modified to the extent the Company
deems necessary to permit such "pooling of interests" accounting treatment.
15. Headings of No Effect.
The section headings contained in this Agreement are included solely
for convenience of reference and shall not in any way affect the meaning or
interpretation of any of the provisions of this Agreement.
16. Revocation and Executive Acknowledgments.
The Executive acknowledges that he has read and understands the
provisions of this Agreement. The Executive further acknowledges that he has
been given an opportunity for his legal counsel to review this Agreement (or is
given the opportunity to do so prior to the end of the
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revocation period hereunder) and that the provisions of this Agreement are
reasonable and that he has received a copy of this Agreement.
17. Not Compensation for Other Plans.
It is understood by all parties hereto that amounts paid and benefits
provided hereunder are not to be considered compensation, earnings or wages for
purpose of any employee benefit plan of the Company or its affiliates,
including, but not limited to, the SERP and the qualified retirement plans.
18. Release.
Notwithstanding any provision herein to the contrary, the Company
shall not have any obligation to pay any amount or provide any benefit under
this Agreement unless and until the Executive executes a release of the Company,
its affiliates and related parties, in such form as the Company may reasonably
request, of all claims against the Company, its affiliates and related parties
relating to the Executive's employment and termination thereof.
19. Governing Law.
This Agreement and its validity, interpretation, performance, and
enforcement shall be governed by the laws of Virginia.
IN WITNESS WHEREOF, the Company through its officers duly authorized, and
the Executive both intending to be legally bound have duly executed and
delivered this Agreement, to be effective as of the Effective Date.
COMPANY
Date:____________________ By: _____________________________
Its
EXECUTIVE
Date:____________________ __________________________________
13
Exhibit (c)(9)
CHANGE IN CONTROL AGREEMENT
COLUMBIA ENERGY GROUP
AND
_______________
THIS AGREEMENT, is by and between Columbia Energy Group (the "Company") and
______________ (the "Executive") and is effective as of this ___ day of _______,
1999.
W I T N E S S E T H:
WHEREAS, the Board has determined that it is in the best interests of the
Company and its shareholders for the Company to agree to provide benefits under
the circumstances described below to the Executive and other executives who are
responsible for the policy-making functions of the Company and the overall
viability of the Company's business; and
WHEREAS, the Board recognizes that the possibility of a change in control
of the Company is unsettling to such executives and desires to make arrangements
at this time to help assure their continuing dedication to their duties to the
Company and its shareholders, notwithstanding any attempts by outside parties to
gain control of the Company; and
WHEREAS, the Board believes it important, should the Company receive
proposals from outside parties, to enable such executives, without being
distracted by the uncertainties of their own employment situation, to perform
their regular duties, and, where appropriate, to assess such proposals and
advise the Board as to the best interests of the Company and its shareholders
and to take such other action regarding such proposals as the Board determines
to be appropriate; and
WHEREAS, the Board also desires to demonstrate to the executives that the
Company is concerned with their welfare and intends to provide that loyal
executives are treated fairly; and
WHEREAS, the Board wishes to assure the executives of fair severance should
any of their employment terminate in specified circumstances following a change
in control of the Company and to assure the executives of other benefits upon a
change in control.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto agree as follows:
1. Definitions.
a. "Board" shall mean the Board of Directors of the Company.
b. "Cause" shall mean the Executive's fraud or dishonesty which has
resulted or is likely to result in material economic damage to the Company
or an affiliate of the Company, as determined in good faith by a vote of at
least two-thirds of the non-employee directors of the Company at a meeting
of the Board at which the Executive is provided an opportunity to be heard.
<PAGE>
c. "Change in Control" shall mean:
(i) any person (as such term is used in Section 13(d) of the
Securities Exchange Act of 1934 (the "Act"), excluding a corporation or other
entity owned, directly or indirectly, by all or substantially all of the
stockholders of the Company immediately prior to the transaction in
substantially the same proportions as their ownership of stock of the Company
("Person")), becomes the beneficial owner, directly or indirectly, of 25% or
more of the outstanding stock of the Company requiring the filing of a report
with the Securities and Exchange Commission under Section 13(d) of the Act;
(ii) recommendation by the Board of approval of a purchase by any
Person of shares pursuant to a tender or exchange offer to acquire any stock of
the Company (or securities convertible into stock) for cash, securities or any
other consideration, PROVIDED that, pursuant to the terms of the proposed tender
or exchange offer, such Person intends to become the beneficial owner (as
defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 25% or
more of the outstanding stock of the Company (calculated as provided in
Paragraph (d) of Rule 13d-3 under the 1934 Act in the case of rights to acquire
stock);
(iii) approval of the shareholders of the Company of a merger,
consolidation, liquidation or dissolution of the Company, or the sale of all or
substantially all of the assets of the Company (a "Business Combination"),
unless, following such Business Combination, all or substantially all of the
stockholders of the Company immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 60% of, respectively, both
the outstanding shares of common stock and the combined voting power of the
outstanding voting securities entitled to vote generally in the election of
directors of the corporation resulting from such Business Combination; or
(iv) during any period of 24 consecutive months, individuals who
at the beginning of such period constitute the Board and any new directors whose
election by the Board or nomination for election by the Company's shareholders
was approved by a vote of at least two-thirds of the directors then still in
office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for any
reason to constitute a majority of the Board.
With respect to subsections (c)(ii) and (c)(iii) of this Section 1, upon the
Board's determination that the transaction subject to Board recommendation of
approval or shareholder approval, as the case may be, will not be closed, a
Change in Control shall be deemed not to have occurred from such date forward
and this Agreement shall continue in effect as if no Change in Control had
occurred, except to the extent termination requiring payments under Section 3
hereof shall have occurred prior to such determination by the Board. In no event
shall any one transaction result in more than one Change in Control.
d. "Company Information" shall mean (i) confidential information
including, without limitation, information received from third parties under
confidential conditions, (ii)
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information subject to the Company's and its affiliates attorney-client or
work-product privilege; and (iii) other technical, business, legal or financial
information (including, without limitation, customer lists), the use or
disclosure of which might reasonably be construed to be contrary to the
Company's and its affiliates' interests.
e. "Compensation" shall mean the sum of the following amounts: (i) the
Executive's annual base salary at the time of the Change in Control or, if
greater, at the time of termination of employment, plus (ii) the "target" level
of incentive compensation under the Annual Incentive Compensation Plan or any
other short-term or cash bonus incentive plans (the "Bonus") that the Executive
had the opportunity to earn in the year in which his employment was terminated,
or, if greater, the Bonus for the year in which the Change in Control occurred,
in all cases, including any amounts which are deferred by the Executive.
f. "Coverage Period" shall begin on the Starting Date and end on the
Ending Date.
g. "Disability" shall mean an injury or illness which permanently
prevents the Executive from performing services to the Company and which
qualifies the Executive for payments under the Company's long-term disability
plan, as in effect from time to time.
h. "Effective Date" shall mean the date of the execution of this
Agreement.
i. "Ending Date" shall be the date which is 24 full calendar months
following the date on which a Change in Control occurs; PROVIDED, however, that
if a Change in Control is based on Board recommendation of approval or
shareholder approval, pursuant to Sections 1(c)(ii) or 1(c)(iii), the Ending
Date shall be the date which is 24 full calendar months following the date of
the consummation of the transaction which was the subject of Board
recommendation of approval or shareholder approval, whichever is applicable.
j. "Good Reason" shall mean any of the following:
(i) the Company or an affiliate of the Company requiring the
Executive to be based at any office or location more than 50 miles from [insert
applicable principal executive office], and/or the Company requires the
Executive to travel on Company business to a substantially greater extent than
was required of the Executive immediately prior to the date of Change in
Control;
(ii) a reduction which is more than de minimis in (A) the
Executive's annual rate of base salary or the Bonus opportunity, or (B) the
long-term incentive compensation the Executive has the opportunity to earn,
determined in the aggregate if multiple long-term incentive opportunities exist;
(iii) failure of the Company to continue in effect any employee
benefit plan, policy or arrangement, including, but not limited to, any
retirement, 401(k) life, medical,dental, disability, accidental death or travel
insurance plan, policy or arrangement in which the Executive was
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participating immediately prior to the Change in Control, unless the Company
provides the Executive with a plan or plans that provide substantially similar
benefits, or benefits substantially similar to the benefits provided to
similarly situated executives; or
(iv) the Company failing to require a successor entity to assume
and agree to perform the Company's obligations pursuant to Section 9 of this
Agreement.
For purposes of this Section 1(j), no event described above shall constitute
Good Reason unless the Executive has given written notice to the Company of his
termination for Good Reason specifying the event relied upon for such
termination within one year after the occurrence of such event (but in no event
later than the Ending Date) and the Company has not remedied such within 30 days
of receipt of such notice. The Company and Executive, upon mutual written
agreement, may waive any of the foregoing provisions which would otherwise
constitute Good Reason.
k. "Retirement Plan" shall mean the Company's qualified defined
benefit retirement plan(s) in which the Executive participates.
l. "SERP" shall mean any and all supplemental retirement plans in
which the Executive participates (including, but not limited to, any benefit
restoration plan(s) maintained by the Company from time to time).
m. "Starting Date" shall be the date on which a Change in Control
occurs during the Term of this Agreement (as defined below).
2. Term.
a. This Agreement shall be effective as of the Effective Date and
shall continue thereafter until the date which is the third anniversary of the
Effective Date, or such later date as provided in paragraph (b) of this Section
2 (the "Term of this Agreement"); PROVIDED however, the Term of this Agreement
shall not expire prior to the last day of any Coverage Period, and the Company's
obligations, if any, to provide payments and/or benefits pursuant to Section 3
of this Agreement and the obligations of the Company and the Executive pursuant
to Section 5 of this Agreement shall survive the termination of this Agreement.
b. The Term of this Agreement shall be extended automatically for
subsequent one year periods beginning on the first anniversary of the Effective
Date and continuing each anniversary thereafter, unless either the Company or
the Executive shall give written notice to the other that the Term of this
Agreement shall not be so extended on a particular anniversary date; PROVIDED,
however, that such notice must be given, if at all, within the 30 day period
preceding such anniversary.
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3. Severance Benefits.
a. If the Executive's employment is terminated during the Coverage
Period for a reason other than the Executive's death, and such termination is by
the Company for any reason other than Cause or the Executive's Disability, or by
the Executive in the event of Good Reason, then,
(i) within thirty business days after such termination, the
Company shall pay to the Executive (or if the Executive dies after termination
of employment but before receiving all payments to which he has become entitled
hereunder, to the estate of the Executive) in cash the following amounts:
(A) accrued but unpaid salary and accrued but unused
vacation;
(B) an amount equal to two times the Executive's
Compensation;
(C) a prorated portion of the Bonus that the Executive could
have received in the year during which his employment is terminated, determined
by calculating the product of (1) the amount of the Bonus the Executive could
have earned in such year, and (2) a fraction, the numerator of which is the
number of days through the date of termination in the year with respect to which
the Bonus relates, and the denominator of which is the total number of days in
the applicable year;
(D) an amount equal to the excess of (1) the lump-sum
actuarial equivalent of the benefit under (x) the Retirement Plan (utilizing
actuarial assumptions no less favorable to the Executive than those in effect
under the Retirement Plan immediately prior to the date of the Change in
Control), and (y) the SERP, that the Executive would have received if his
employment had continued for two years after the date of termination (the
"Severance Period") (giving credit for all purposes, including, but not limited
to, accrual of benefits, vesting, age and years of service), and assuming for
purposes of determining the reduction for any early retirement benefit that the
Executive had not less than 10 years of service, and further assuming that, for
purposes of determining benefits under the Retirement Plan and SERP, the
Executive's covered annual compensation ("Covered Compensation") during the
Severance Period would have been equal to the Executive's annual rate of Covered
Compensation at the time of termination of employment or, if greater, at the
time of the Change in Control (determined without regard to compensation or
benefit limitations prescribed by federal law or regulation), over (2) the
lump-sum actuarial equivalent of the Executive's actual accrued benefit (paid or
payable), if any, under the Retirement Plan and the SERP as of the date of
termination (utilizing the same actuarial assumptions as used above in this
subsection (1) of this Section 3(a)(i)(D)); and
(E) an amount equal to the sum of the additional
contributions (other than pre-tax salary deferral contributions by the
Executive) that would have been made or credited during the Severance Period (as
defined in Section 3(a)(i)(D) above) by the Company to the Executive's
account(s) under each qualified defined contribution plan, and each
non-qualified supplemental executive savings plan relating to such qualified
defined contribution plans (including,
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but not limited to, any benefit restoration plan(s) maintained by the Company
from time to time) in which the Executive participated, determined by assuming
that,
(1) the Executive's employment had continued through
the Severance Period;
(2) the Executive's rate of compensation recognized by
each such plan would, during the Severance Period, have been equal to the
Executive's annual rate of Covered Compensation at the time of termination of
employment or, if greater, at the time of the Change in Control; and
(3) with respect to matching and/or discretionary
contributions, the Executive's rate of pre-tax salary deferral contributions and
the Company's matching contribution, in each year during the Severance Period,
would have been equal to the maximum percentage allowed under the applicable
plan at the time of termination of employment or, if greater, at the time of the
Change in Control; and
(ii) in addition, the Executive shall be entitled to the
following additional benefits:
(A) all unexpired and unexercised stock options and/or value
sharing rights previously awarded to the Executive shall become immediately
vested and exercisable, and restrictions on all restricted stock beneficially
owned by the Executive shall lapse immediately;
(B) outplacement services, the scope and provider of which
shall be selected by the Executive in his or her sole discretion (but at a cost
to the Company of not more than the lesser of (1) 15% of the Executive's annual
base salary at the time of termination of employment or (2) $50,000); and
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(C) for a period commencing with the month in which
termination of employment shall have occurred and ending 24 months thereafter,
the Executive and, as applicable, the Executive's covered dependants shall be
entitled to all health, welfare, and fringe benefits provided by the Company to
its employees generally or to the Executive on an individual or group basis
(including, but not limited to, any life, accident, health, hospitalization or
long-term disability insurance, maintained from time to time by the Company),
whether maintained pursuant to a plan, policy or other arrangement (written or
unwritten), as if the Executive were still employed during such period, at the
same level of benefits and at the same dollar cost to the Executive as is
available generally to comparable employees of the Company. If the Company
reasonably determines that the coverage required under this Section 3(a)(ii)(C)
would cause a welfare plan sponsored by the Company to violate any provision of
the Internal Revenue Code of 1986, as amended (the "Code") prohibiting
discrimination in favor of highly compensated employees or key employees, or if
any benefits described in this Section 3(a)(ii)(C) cannot be provided (or the
Company determines that it does not wish to provide such benefits) pursuant to
the appropriate plan or program maintained for employees of the Company, the
Company shall provide such benefits outside such plan or program at no
additional cost (including, without limitation, tax costs) to the Executive or,
as determined by the Company in its sole discretion, the Company will pay to the
Executive the cash equivalent thereof. The benefits provided in accordance with
this Section 3(a)(ii)(C) shall be secondary to any comparable benefits provided
by another employer.
b. If Independent Tax Counsel (as that term is defined below) shall
determine that the aggregate payments and benefits provided to the Executive
pursuant to this Agreement, and any other payments and benefits provided to the
Executive from the Company, its affiliates and/or plans of the Company and/or
its affiliates, which constitute "parachute payments" as defined in Section 280G
of the Code, or any successor provision thereto ("Parachute Payments"), would be
subject to the excise tax imposed by Section 4999 of the Code (the "Excise
Tax"), then such Parachute Payments shall be reduced (but not below zero) to the
extent necessary so that no portion thereof shall be subject to the Excise Tax.
The determination of the Independent Tax Counsel under this subsection shall be
final and binding on all parties hereto. No additional payments by the Company
or return of payments by the Executive shall be required or made if an Excise
Tax is later imposed upon the Executive or a later determination is made which,
based on case law, an IRS holding or otherwise, would result in a recalculation
of the Excise Tax implications. Unless the Executive gives prior written notice
specifying a different order to the Company to effectuate the limitations
described above, the Company shall reduce or eliminate the Parachute Payments by
first reducing or eliminating those payments or benefits which are not payable
in cash and then by reducing or eliminating other Parachute Payments, in each
case in reverse order beginning with payments or benefits which are to be paid
the farthest in time from the employment termination date. Any notice given by
the Executive pursuant to the preceding sentence shall take precedence over the
provisions of any other plan, arrangement or agreement governing the Executive's
rights and entitlement to any benefits or compensation. For purposes of this
Section 3(b), "Independent Tax Counsel" shall mean a lawyer, a certified public
accountant with a nationally recognized accounting firm, or a compensation
consultant with a nationally recognized actuarial and benefits consulting firm
with expertise in the area of executive compensation tax law, who shall be
selected by the Company and shall be reasonably acceptable to the Executive, and
whose fees and disbursements shall be paid by the Company.
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c. In the event of any termination of the Executive's employment
described in Section 3(a), the Executive shall be under no obligation to seek
other employment, and there shall be no offset against amounts due the Executive
under this Agreement on account of any remuneration attributable to any
subsequent employment; PROVIDED, however, to the extent the Executive receives
medical and health benefits from a subsequent employer, medical and health
benefits provided pursuant to Section 3(a)(ii)(C) shall be secondary to those
received from the subsequent employer.
d. It is intended that the termination provisions herein are in lieu
of, and not in addition to, termination or severance payments and benefits
provided under the Company's other termination or severance programs, plans or
agreements, whether or not in written form ("Other Termination Benefits").
Unless waived by the Executive, Other Termination Benefits the Executive
receives, or is entitled to receive in the future, shall reduce payments and
benefits provided hereunder.
e. If the Executive's employment shall terminate by reason of the
Executive's death or Disability, this Agreement shall terminate without further
obligations to the Executive or the Executive's legal representatives under this
Agreement, other than for payment of accrued but unpaid obligations and the
timely payment or provision of other benefits pursuant to the terms of the
respective plan, policy or arrangement. Such accrued but unpaid obligations
shall be paid to the Executive or the Executive's estate or beneficiary, as the
case may be, in a lump sum in cash within 30 days of the Executive's death or
Disability.
4. Source of Payments.
All payments provided for in Section 3 above 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 the Executive or his
dependents, beneficiaries or estate 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 Executive shall have no right,
title or interest 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 Agreement, and no action taken pursuant
to its provisions, shall create or be construed to create a trust of any kind or
a fiduciary relationship between the Company and the Executive or any other
person. To the extent that any person acquires a right to receive payments from
the Company such right shall be no greater than the right of an unsecured
creditor of the Company.
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5. Litigation Expenses.
The Company shall pay to the Executive reasonable legal fees
and expenses incurred in good faith by the Executive as a result of a
termination which entitles the Executive to benefits under this Agreement
(including, but not limited to, all such fees and expenses incurred in disputing
any such termination or in seeking in good faith to obtain or enforce any
benefit or right provided by this Agreement or in connection with any tax audit
or proceeding to the extent attributable to the application of Code Sections
4999 or 280G to any payment or benefit provided hereunder). Such payments shall
be made within 5 business days after delivery of the Executive's written
requests for payment accompanied with such evidence of fees and expenses
incurred as the Company reasonably may require.
6. Tax Withholding.
The Company may withhold from any payments made under this Agreement
all federal, state or other taxes as shall be required pursuant to any law or
governmental regulation or ruling.
7. Entire Understanding.
This Agreement contains the entire understanding between the Company
and the Executive with respect to the subject matter hereof and supersedes any
prior severance or termination agreement between the Company and the Executive,
except that this Agreement shall not affect or operate to reduce any benefit or
compensation inuring to the Executive of any kind elsewhere provided and not
expressly dealt with in this Agreement.
8. Severability.
If, for any reason, any one or more of the provisions or part of a
provision contained in this Agreement shall be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision or part of a provision of this Agreement
not held so invalid, illegal or unenforceable, and each other provision or part
of a provision shall to the fullest extent consistent with law continue in full
force and effect.
9. Consolidation, Merger, or Sale of Assets.
If the Company is acquired, consolidates or merges into or with, or
transfers all or substantially all of its assets to, another entity, the term
"the Company" as used herein shall mean such other entity and this Agreement
shall continue in full force and effect. In the case of any transaction in which
a successor would not by the foregoing provision or by operation of law be bound
by this Agreement, the Company shall require such successor expressly and
unconditionally to assume and agree to perform the Company's obligations under
this Agreement, in the same manner and to the same extent that the Company would
be required to perform if no such succession had taken place.
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10. Confidentiality; Outstanding Charges.
a. Within a reasonable period of time following termination of
employment, the Executive shall return to the Company all Company Information,
reports, files, memoranda, records, credit cards, cardkey passes, door and file
keys, computer access codes, software and other property which the Executive has
received or prepared or helped to prepare in connection with his employment with
the Company.
b. The Executive acknowledges that in the course of employment with
the Company, he has acquired Company Information and that such Company
Information has been disclosed to him in confidence and for the Company's use
only. The Executive agrees that he (i) will keep such Company Information
confidential at all times, (ii) will not disclose or communicate Company
Information to any third party, and (iii) will not make use of Company
Information on his own behalf or on behalf of any third party. The Executive
further acknowledges and agrees that the Company's remedy in the form of
monetary damages for any breach by him of any of the provisions of this Section
10 may be inadequate and that, in addition to any monetary damages for such
breach, the Company shall be entitled to institute and maintain any appropriate
proceeding or proceedings, including an action for specific performance and/or
injunction.
c. In addition to the foregoing, the Executive agrees to keep the
terms of this Agreement strictly confidential. The Executive may only disclose
the terms of this Agreement to the Executive's attorney, spouse and tax advisor,
unless the existence of this Agreement with the Executive and the terms hereof
are publicly disclosed by the Company.
d. The Executive agrees to pay to the Company any outstanding amounts
owed to the Company, and further agrees that by signing this Agreement he hereby
authorizes the Company to deduct any outstanding charges from the payments
provided pursuant to Section 3 of this Agreement.
11. Notices.
All notices, requests, demands and other communications required or
permitted hereunder shall be given in writing and shall be deemed to have been
duly given if delivered or mailed, postage prepaid, first class as follows:
a. to the Company:
c/o Columbia Energy Group Service Corporation
Sr. Vice President--Human Resources
13880 Dulles Corner Lane
Herndon, Virginia 20171-4600
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b. to the Executive:
-----------------
-----------------
-----------------
or to such other address as either party shall have previously specified in
writing to the other.
12. No Attachment.
Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge or hypothecation or to execution,
attachment, levy or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to effect any such action shall be null, void
and of no effect.
13. Binding Agreement.
This Agreement shall be binding upon, and shall inure to the benefit
of, the Executive and the Company and their respective permitted successors and
assigns.
14. Modification, Waiver and Pooling of Interests.
Except as provided below, this Agreement may not be terminated,
modified or amended (other than with respect to amendments or modifications made
by the Company solely for purposes of clarifying an ambiguous or unclear
provision) other than by an instrument in writing signed by the parties hereto.
No term or condition of this Agreement shall be deemed to have been waived, nor
shall there be any estoppel against the enforcement of any provision of this
Agreement, except by written instrument signed by the party charged with such
waiver or estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future or as to any act other than that
specifically waived. Notwithstanding any other provision contained in this
Agreement to the contrary, if any action taken or required to be taken pursuant
to the terms of this Agreement would preclude the use of the "pooling of
interests" accounting method with respect to any specific transaction, the
consummation of which is intended to be accounted for under the "pooling of
interests" method, this Agreement may be modified to the extent the Company
deems necessary to permit such "pooling of interests" accounting treatment.
15. Headings of No Effect.
The section headings contained in this Agreement are included solely
for convenience of reference and shall not in any way affect the meaning or
interpretation of any of the provisions of this Agreement.
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16. Revocation and Executive Acknowledgments.
The Executive acknowledges that he has read and understands the
provisions of this Agreement. The Executive further acknowledges that he has
been given an opportunity for his legal counsel to review this Agreement (or is
given the opportunity to do so prior to the end of the revocation period
hereunder) and that the provisions of this Agreement are reasonable and that he
has received a copy of this Agreement.
17. Not Compensation for Other Plans.
It is understood by all parties hereto that amounts paid and benefits
provided hereunder are not to be considered compensation, earnings or wages for
purpose of any employee benefit plan of the Company or its affiliates,
including, but not limited to, the SERP and the qualified retirement plans.
18. Release.
Notwithstanding any provision herein to the contrary, the Company
shall not have any obligation to pay any amount or provide any benefit under
this Agreement unless and until the Executive executes a release of the Company,
its affiliates and related parties, in such form as the Company may reasonably
request, of all claims against the Company, its affiliates and related parties
relating to the Executive's employment and termination thereof.
19. Governing Law.
This Agreement and its validity, interpretation, performance, and
enforcement shall be governed by the laws of Virginia.
IN WITNESS WHEREOF, the Company through its officers duly authorized, and
the Executive both intending to be legally bound have duly executed and
delivered this Agreement, to be effective as of the Effective Date.
COMPANY
Date:____________________ By: _____________________________
Its
EXECUTIVE
Date:____________________ __________________________________
