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 xxx 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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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:
00000 Xxxxx Xxxx
Xxxxxxxx, XX 00000
If to the Company:
Board of Directors
00000 Xxxxxx Xxxxxx Xxxx
Xxxxxxx, XX 00000"
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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
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