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Exhibit 10(d)
SEVERANCE COMPENSATION AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into as of the
day of , by and between ENERGEN CORPORATION, an
Alabama corporation ("Energen"), and , ("Executive").
W I T N E S S E T H:
WHEREAS, Executive is an effective and valuable employee of Energen
and/or one or more of its subsidiaries;
WHEREAS, Executive desires certain assurances with respect to any change
in control of Energen;
WHEREAS, Energen recognizes that the uncertainties involved in a
potential or actual change in control of Energen could result in the distraction
or departure of management personnel such as Executive to the detriment of
Energen and its shareholders; and
WHEREAS, Energen desires to lessen the personal and economic pressure
which a potential or actual change in control may impose on Executive and
thereby facilitate Executive's ability to bargain successfully for the best
interests of Energen's shareholders in the event of such a change in control;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, Energen and Executive hereby agree as follows:
Section 1. Definitions. As used in this Agreement the following words
and terms shall have the following meanings:
(a) "Applicable Period" means the period commencing with the earliest
date that a Change in Control occurs and ending on the last day of the
thirty-sixth calendar month following the calendar month during which such
Change in Control occurred. Anything in this Agreement to the contrary
notwithstanding, if a Change in Control occurs, and if the Date of Termination
with respect to Executive's employment with Energen occurs prior to the date on
which the Change in Control occurs, and if it is reasonably demonstrated by
Executive that such termination of employment (i) was at the request of a third
party who has taken steps reasonably calculated to effect the Change in Control
or (ii) otherwise arose in connection with or in anticipation of the Change in
Control, then for all purposes of this Agreement the "Applicable Period" shall
be deemed to have commenced on the date immediately preceding the Date of
Termination.
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(b) "Cause". Termination of employment by Employer for "Cause" shall
mean termination based on any of the following:
(1) The willful and continued failure by the Executive to
substantially perform Executive's duties with Employer (other than any such
failure resulting from Executive's incapacity due to physical or mental illness)
after a written demand for substantial performance is delivered to Executive
specifically identifying the manner in which Executive has not substantially
performed Executive's duties;
(2) The engaging by Executive in willful misconduct which is
demonstrably injurious to Employer monetarily or otherwise; or
(3) The conviction of Executive of a felony.
(c) "Change in Control" means the occurrence of any one or more of the
following:
(1) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") of
beneficial ownership (within the meaning of Rule 13(d)-3 promulgated under the
Exchange Act) of 25% or more of either (i) the then outstanding shares of common
stock of Energen (the "Outstanding Common Stock") or (ii) the combined voting
power of the then outstanding voting securities of Energen entitled to vote
generally in the election of directors (the "Outstanding Voting Securities");
provided, however, that for purposes of this subsection (1) any acquisition by
an employee benefit plan (or related trust) sponsored or maintained by Energen
or any corporation controlled by Energen shall not constitute a Change in
Control;
(2) Individuals who, as of September 1, 1998, constitute the
Board of Directors of Energen (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board of Directors of Energen (the "Board
of Directors"); provided, however that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by
Energen's shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board of Directors;
(3) Consummation of a reorganization, merger or consolidation,
or sale or other disposition of all or substantially all of the assets, of
Energen (a "Business Combination"), in each case, unless, following such
Business Combination, (i) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding Common
Stock and Outstanding Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 75% of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting
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securities entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination (including,
without limitation, a corporation which as a result of such transaction owns
Energen or all or substantially all of Energen's assets either directly or
through one or more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination, of the Outstanding
Common Stock and Outstanding Voting Securities, as the case may be, (ii) no
Person (excluding any corporation resulting from such Business Combination or
any employee benefit plan (or related trust) of Energen or such corporation
resulting from such Business Combination) beneficially owns, directly or
indirectly, 25% or more of, respectively, the then outstanding shares of common
stock of the corporation resulting from such Business Combination or the
combined voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to the
Business Combination and (iii) at least a majority of the members of the board
of directors of the corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board of Directors, providing for such
Business Combination;
(4) Any transaction or series of transactions which is expressly
designated by resolution of the Board of Directors to constitute a Change in
Control for purposes of this Agreement.
(d) "Code" means the Internal Revenue Code of 1986, as the same may be
from time to time amended.
(e) "Compensation" means an amount equal to the sum of (A) plus (B),
where (A) is the Executive's annualized base salary in effect immediately prior
to the Change in Control, and (B) is the highest annual bonus awarded Executive
by Employer pursuant to the Energen Annual Incentive Compensation Plan (or any
successor annual cash incentive plan) with respect to the three (3) fiscal years
immediately preceding the fiscal year in which the Change in Control occurs.
Compensation shall be calculated without reduction for any amounts deferred by
the Executive pursuant to the Energen Corporation 1997 Deferred Compensation
Plan.
(f) "Date of Termination" means the date that a termination of
Executive's employment with Employer is first effective.
(g) "Disability" means the total and permanent disability which entitles
Executive to a disability benefit under a disability program sponsored and/or
maintained by Energen.
(h) "Employer" means Energen and its Subsidiaries.
(i) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(j) "Good Reason" means the occurrence during an Applicable Period of
any of the following events without Executive's prior written consent:
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(1) The assignment to Executive by Employer of duties
inconsistent with Executive's position, authority, duties, responsibilities and
status with Employer immediately prior to a Change in Control, or a change in
Executive's titles or offices as in effect immediately prior to a Change in
Control, or any removal of Executive from or any failure to reelect Executive to
any of such positions, if such assignment, change, or removal results in a
diminution in Executive's position, authority, duties, responsibilities or
status with Employer immediately prior to a Change in Control or any other
action by Employer that results in such a diminution in Executive's position,
authority, duties, responsibilities or status;
(2) A reduction in Executive's aggregate rate of monthly base
pay from the Employer;
(3) The termination or material adverse modification of the
Energen Annual Incentive Compensation Plan or the Energen Corporation 1996
Long-Range Performance Share Plan (or any other short or long-term incentive
compensation plan in effect immediately prior to a Change in Control) without
substitution of new short or long-term incentives providing comparable
compensation opportunities for Executive.
(4) A failure by Employer to use its best efforts to provide
Executive with either the same fringe benefits (including retirement benefits
and paid vacations) as were provided to Executive immediately prior to a Change
in Control or a package of fringe benefits that, though one or more of such
benefits may vary from those in effect immediately prior to the Change in
Control, is substantially comparable in all material respects to the fringe
benefits (taken as a whole) in effect prior to a Change in Control;
(5) Executive's relocation by Employer to any place more than 25
miles from the location at which Executive performed the substantial portion of
Executive's duties prior to a Change in Control, except for required travel by
Executive on Employer's business to an extent substantially consistent with
Executive's business travel obligations immediately prior to such Change in
Control;
(6) Any material breach by Energen of any provision of this
Agreement or any other agreement between Energen and Executive which breach
continues for a period of thirty days following delivery by Executive to Energen
of written notice of such breach.
(k) "Independent Auditor" means the firm of certified public accountants
which at the time of the Change in Control had been most recently engaged by
Energen to prepare Energen's audited financial statements, or any other firm of
certified public accountants mutually agreeable to Energen and Executive.
(l) "Notice of Termination" has the meaning set forth in Section 2(a) of
this Agreement.
(m) "Qualified Termination" shall mean
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(1) during a Window Period, any termination (including
retirement) of Executive's employment, other than for Cause, death or
Disability, and
(2) during the Applicable Period but not during a Window Period,
(i) any termination by Employer of Executive's
employment other than for Cause,
(ii) a termination of Executive's employment which
Executive and Energen agree in writing will constitute a Qualified Termination
for purposes of this Agreement, and
(iii) a voluntary termination of Executive's employment
by Executive for Good Reason.
(n) "Subsidiary" means any corporation, the majority of the outstanding
voting stock of which is owned directly or indirectly, by Energen.
(o) "Window Period" shall mean the 30-day period immediately following
the first anniversary of a Change in Control.
Section 2. Notice of Termination. During any Applicable Period:
(a) Any termination for Cause or Good Reason shall be communicated to
the other party by written notice ("Notice of Termination") referencing this
Agreement and, indicating in reasonable detail the facts and circumstances
providing a basis for such termination. The failure of Executive or Employer to
set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Cause or Good Reason shall not waive any right of
Executive or Energen hereunder or preclude Executive or Energen from asserting
or relying upon the omitted fact or circumstance in enforcing Executive's or
Energen's rights hereunder.
(b) Termination for Cause or Good Reason shall be effective upon
delivery of a Notice of Termination or at such later date as may be specified in
the Notice of Termination. In the event that each party delivers a Notice of
Termination, the Notice of Termination first delivered shall establish the
effective date of such Notice of Termination.
Section 3. Severance Payment. In the event of a Qualified Termination, then
Executive shall, subject to the provisions of Sections 5 and 8 hereof, receive
as severance pay an amount equal to his Compensation multiplied by a factor of
[1.5 or 2 or 3]. Subject to Section 5 hereof, any severance payment to be made
under this Section 3 shall be paid in one payment and in full on or prior to the
thirtieth day following the Date of Termination.
Section 4. Other Benefits. Subject to Sections 5 and 8 hereof, in the event
of a Qualified Termination, for a period of twenty-four months commencing with
the Date of
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Termination, Executive and the Executive's family shall continue to be covered
at the expense of Energen by the same or substantially equivalent hospital,
medical, dental, vision, accident, disability and life insurance coverages as
were provided to Executive and the Executive's family by Employer immediately
prior to the Change in Control; provided, however, that if Executive becomes
employed with another employer and is eligible to receive benefits of the type
described above from such other employer, Energen's obligations under this
Section 4 and the benefits described herein shall be secondary to those provided
by such other employer.
Section 5. Certain Further Payments by the Company.
(a) In the event that any amount or benefit paid or distributed to the
Executive pursuant to any provision of this Agreement, and/or any amounts or
benefits otherwise paid or distributed to the Executive by the Employer or any
affiliated company including, without limitation, any distribution or payment
made pursuant to the terms of the Employer's compensation plans or arrangements
(collectively, the "Covered Payments"), are or become subject to the tax (the
"Excise Tax") imposed under Section 4999 of the Internal Revenue Code of 1986,
as amended (the "Code"), or any similar tax that may hereafter be imposed,
Energen shall pay to the Executive at the time specified in Section 5(d) below
an additional amount (the "Tax Reimbursement Payment") such that the net amount
retained by the Executive with respect to Covered Payments, after deduction of
any Excise Tax on Covered Payments and any Federal, state and local income or
employment tax and Excise Tax on the Tax Reimbursement Payment provided for by
this Section 5(a), but before deduction for any Federal, state or local income
or employment tax withholding on Covered Payments, shall be equal to the amount
of the Covered Payments.
(b) For purposes of determining whether any of the Covered Payments will
be subject to the Excise Tax and the amount of such Excise Tax,
(i) such Covered Payments will be treated as "parachute
payments" within the meaning of Section 280G of the Code, and all "parachute
payments" in excess of the "base amount" (as defined under Section 280G(b)(3) of
the Code) shall be treated as subject to the Excise Tax, unless, and except to
the extent that, in the good faith judgment of the Company's Independent Auditor
or tax counsel selected by the Independent Auditor, Energen has a reasonable
basis to conclude that such Covered Payments (in whole or in part) either do not
constitute "parachute payments" or represent reasonable compensation for
personal services actually rendered (within the meaning of Section 280G(b)(4)(B)
of the Code) in excess of the "base amount", or such "parachute payments" are
otherwise not subject to such Excise Tax, and
(ii) the value of any non-cash benefits or any deferred payment
or benefit shall be determined by the Independent Auditor in accordance with the
principles of Section 280G of the Code.
(c) For purposes of determining the amount of the Tax Reimbursement
Payment, the Executive shall be deemed to pay:
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(i) Federal income taxes at the highest applicable marginal rate
of Federal income taxation for the calendar year in which the Tax Reimbursement
Payment is to be made, and
(ii) any applicable state and local income taxes at the highest
applicable marginal rate of taxation for the calendar year in which the Tax
Reimbursement Payment is to be made, net of the maximum reduction in Federal
income taxes which could be obtained from the deduction of such state or local
taxes if paid in such year.
(d) The Tax Reimbursement Payment (or portion thereof) provided for in
Section 5(a) above shall be paid to the Executive not later than ten business
days following the payment of the Covered Payments; provided, however, that if
the amount of such Tax Reimbursement Payment (or portion thereof) cannot be
finally determined on or before the date on which payment is due, Energen shall
pay to the Executive by such date an amount estimated in good faith by the
Independent Auditors to be the minimum amount of such Tax Reimbursement Payment
and shall pay the remainder of such Tax Reimbursement Payment (together with
interest at the rate provided in Section 7872(f)(2)(A) of the Code) as soon as
the amount thereof can be determined, but in no event later than 45 calendar
days after payment of the related Covered Payment. In the event that the amount
of the estimated Tax Reimbursement Payment exceeds the amount subsequently
determined to have been due, such excess shall be repaid by Executive in
accordance with Section 5(f) below.
(e) In the event that the Excise Tax is subsequently determined by the
Independent Auditors or pursuant to any proceeding or negotiations with the
Internal Revenue Service to be less than the amount taken into account hereunder
in calculating the Tax Reimbursement Payment made, the Executive shall repay to
Energen, at the time that the amount of such reduction in the Excise Tax is
finally determined, the portion of such prior Tax Reimbursement Payment that
would not have been paid if such Excise Tax had been applied in initially
calculating such Tax Reimbursement Payment, plus interest on the amount of such
repayment at the rate provided in Section 7872(f)(2)(A) of the Code.
Notwithstanding the foregoing, in the event any portion of the Tax Reimbursement
Payment to be refunded to Energen has been paid or is payable to any Federal,
state or local tax authority, repayment thereof shall not be required unless and
until actual refund or credit of such portion has been made to the Executive,
and interest payable to Energen shall not exceed interest received or credited
to the Executive by such tax authority for the period it held such portion. The
Executive and Energen shall mutually agree upon the course of action to be
pursued in connection with a claim for refund or credit by Executive.
(f) In the event that the Excise Tax is later determined by the
Accountants or pursuant to any proceeding or negotiations with the Internal
Revenue Service to exceed the amount taken into account hereunder at the time
the Tax Reimbursement Payment is made (including, but not limited to, by reason
of any payment the existence or amount of which cannot be determined at the time
of the Tax Reimbursement Payment), Energen shall make an additional Tax
Reimbursement Payment in respect of such excess (plus any interest or penalty
payable with respect to such excess) at the time that the amount of such excess
is finally determined.
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Section 6. No Obligation To Seek Further Employment; No Effect on Other
Benefits.
(a) Executive shall not be required to seek other employment, nor
(except as otherwise provided under Section 4 with respect to insurance
coverages) shall the amount of any severance payment or other benefit to be made
or provided under this Agreement be reduced by any compensation or benefit
earned by Executive as the result of employment by another employer after the
Date of Termination, or otherwise.
(b) Subject to Section 5 hereof, any severance payment or benefit to be
made or provided under this Agreement is in addition to all other benefits, if
any, to which Executive may be entitled under other agreements, plans or
programs of Energen.
Section 7. Continuing Obligations of Executive. As a result of and in
connection with Executive's employment by Employer, Executive is involved in a
number of matters of strategic importance and value to Employer including
various projects, proceedings, planning processes, and negotiations. Any number
of these matters may be ongoing and continuing after the Date of Termination. In
addition Employee is privy to proprietary and confidential information of
Employer including without limitation, financial information and projections,
business plans and strategies, customer and vendor lists and information, and
oil and gas properties and prospects. The Executive agrees as follows:
(a) Consulting Services. For a period of three years following the Date
of Termination, Executive agrees to fully assist and cooperate with Employer and
its representatives (including outside auditors, counsel and consultants) with
respect to any matters with which the Executive was involved during the course
of employment with Employer, including being available upon reasonable notice
for interviews, consultation, and litigation preparation. Except as otherwise
agreed by Executive, Executive's obligation under this Section 7 (a) shall not
exceed 80 hours during the first year and 20 hours during each of the following
two years. Such services shall be provided upon request of Employer but
scheduled to accommodate Executive's reasonable scheduling requirements.
Executive shall receive no additional fee for such services but shall be
reimbursed all reasonable out-of-pocket expenses.
(b) Non-Compete. For a period of twelve months following the Date of
Termination, the Executive shall not Compete, (as defined below ) or assist
others in Competing with the Employer. For purposes of this Agreement, "Compete"
means (i) solicit in competition with Alabama Gas Corporation ("Alagasco") any
person or entity which was a customer of Alagasco at the Date of Termination,
(ii) offer to acquire any local gas distribution system in the State of Alabama;
or (iii) offer to acquire any coalbed methane interest in the State of Alabama.
Employment by, or an investment of less than one percent of equity capital in, a
person or entity which Competes with Employer does not constitute Competition by
Executive so long as Executive does not directly participate in, assist or
advise with respect to such Competition.
(c) Confidentiality. Executive agrees that at all times following the
Date of Termination, Executive will not, without the prior written consent of
Energen, disclose to any person, firm or corporation any confidential
information of Employer which is now known to Executive or which hereafter may
become known to Executive as a result of Executive's
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employment or association with Employer, unless such disclosure is required
under the terms of a valid and effective subpoena or order issued by a court or
governmental body; provided, however, that the foregoing shall not apply to
confidential information which becomes publicly disseminated by means other than
a breach of this Agreement.
Section 8. Board Resignation. Energen shall have no obligation under
Sections 3 and 4 hereof if Executive shall not, promptly after the Date of
Termination and upon receiving a written request to do so, resign from each
officer and/or director position which Executive then holds with Energen and any
Subsidiary.
Section 9. Payment of Professional Fees and Expenses. Energen agrees to pay
promptly as incurred, to the full extent permitted by law, all legal, accounting
and other professional fees and expenses (Professional Fees) which Executive may
reasonably incur (i) as a result of any contest (regardless of the outcome
thereof) by Energen, Executive or others of the validity or enforceability of,
or liability under, any provision of this Agreement or any guarantee of
performance thereof (including as a result of any contest by Executive about the
amount of any payment pursuant to this Agreement); (ii) as a result of any
contest by a taxing authority of Executive's tax treatment of any amounts
received under this or any other Employer agreement or plan to the extent such
tax treatment is consistent with the determinations made by the Independent
Auditor under Section 5; or (iii) the filing and pursuit of a claim for refund
or credit in connection with Section 5 (e) above; plus in each case interest on
any delayed payment at the applicable Federal rate provided for in Section
7872(f)(2)(A) of the Code. In addition Energen shall promptly pay to Executive
an additional amount (the "Tax Coverage Payment") such that the net amount
retained by the Participant with respect to all payments made under this Section
9 after deduction of Taxes, shall be equal to the amount of the Professional
Fees reimbursement plus applicable interest. For purposes of this Section 9,
"Taxes" means all federal, state and local, employment and income taxes payable
or withheld with respect to Professional Fees reimbursement payments (excluding
interest) and Tax Coverage Payments. The Independent Auditor, at Energen's
expense, shall make all calculations with respect to the Tax Reimbursement
Payment and in making such calculations shall follow the assumptions set forth
in Section 5(c) above.
Section 10. Term. This Agreement shall terminate (except to the extent of
any unpaid or unfulfilled obligation with respect to a prior termination of
Executive's employment) on the first to occur of (i) any termination of
Executive's employment with Employer which does not constitute a Qualified
Termination or (ii) expiration of the Term. The initial "Term" of this Agreement
shall be for a period of three years from the date hereof. On each anniversary
of the date hereof, the Term shall automatically extend by one year unless at
least thirty days prior to such an anniversary Energen notifies Executive that
there will be no such extension, in which event the term shall continue until
the later to occur of (i) two years from such anniversary or (ii) three years
from the date of the most recent Change in Control, if any.
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Section 11. Binding Effect; Successors.
(a) This Agreement shall be binding upon and inure to the benefit of
Executive and Executive's personal representative and heirs, and Energen and its
successors and assigns including any successor organization or organizations
which shall succeed to substantially all of the business and property of
Energen, whether by means of merger, consolidation, acquisition of assets or
otherwise, including operation of law. Energen will require any such successor
to expressly assume and agree to perform Energen's obligations under this
Agreement.
(b) Without the prior consent of Energen, Executive may not assign the
Agreement, except by will or the laws of descent and distribution.
Section 12. Notice. For purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, as follows:
If to Energen or Employer:
Energen Corporation
000 00xx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Chairman
If to Executive:
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or such other address as either party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
Section 13. Miscellaneous. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by Executive and Energen. No waiver by either party hereto at
any time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not set forth expressly in this
Agreement. This Agreement shall be governed by and construed in accordance with
the laws of the State of Alabama.
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Section 14. Validity. The invalidity or unenforceability of any provisions
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
Section 15. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
Section 16. Amendment and Restatement of Prior Agreement. This agreement
constitutes a complete amendment and restatement and fully supersedes that
certain Severance Compensation Agreement between the parties dated , 19 .
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
ENERGEN CORPORATION
By
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Its
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EXECUTIVE
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