EXHIBIT 10.21(c)
ATMOS ENERGY CORPORATION
CHANGE IN CONTROL SEVERANCE AGREEMENT
TIER II
THIS AGREEMENT made and entered into as of ________________, 199___, by and
between ATMOS ENERGY CORPORATION, a Texas and Virginia corporation (the
"Company"), and ________________________________________________________________
("Executive").
W I T N E S S E T H:
WHEREAS, the Company recognizes that the current business environment makes
it difficult to attract and retain highly qualified executives unless a certain
degree of security can be offered to such individuals against organizational and
personnel changes which frequently follow Changes in Control (as defined below)
of a corporation; and
WHEREAS, even rumors of acquisitions or mergers may cause executives to
consider major career changes in an effort to assure financial security for
themselves and their families; and
WHEREAS, the Company desires to assure fair treatment of its key executives
in the event of a Change in Control and to allow them to make critical career
decisions without undue time pressure and financial uncertainty, thereby
increasing their willingness to remain with the Company notwithstanding the
outcome of a possible Change in Control transaction; and
WHEREAS, the Company recognizes that its key executives will be involved in
evaluating or negotiating any offers, proposals or other transactions which
could result in Changes in Control of the Company and believes that it is in the
best interest of the Company and its stockholders for such key executives to be
in a position, free from personal financial and employment considerations, to be
able to assess objectively and pursue aggressively the interests of the Company
and its stockholders in making these evaluations and carrying on such
negotiations; and
WHEREAS, the Board of Directors of the Company (the "Board") believes it is
essential to provide the Executive with compensation arrangements upon a Change
in Control which provide the Executive with individual financial security and
which are competitive with those of other corporations, and in order to
accomplish these objectives, the Board has caused the Company to enter into this
Agreement.
NOW, THEREFORE, in consideration of the mutual premises and conditions
contained herein, the parties hereto agree as follows:
1. TERM. This Agreement shall be effective immediately upon its
execution, but, anything in this Agreement to the contrary notwithstanding,
neither this Agreement nor any of its provisions shall be operative unless and
until there has been a Change in Control of the Company, as such term is defined
below. The term of this Agreement shall end on the third anniversary of the
date of execution of this Agreement; provided, however, that commencing on the
date one year after the date hereof, and on each annual anniversary of such date
(such date and each annual anniversary thereof is hereinafter referred to as the
"Renewal Date"), the term of this Agreement shall be automatically extended so
as to terminate three years from such Renewal Date, unless at least thirty (30)
days prior to the Renewal Date the Company shall give written notice that the
term of the Agreement shall not be so extended; and provided, further, that
after a Change in Control of the Company during the term of this Agreement, this
Agreement shall remain in effect until three years after the Change in Control
or until all of the obligations of the parties hereunder are satisfied,
whichever occurs later.
2. CHANGE IN CONTROL.
2.1 Change of Control Events. For purposes of this Agreement, a
"Change in Control" of the Company shall be deemed to have occurred if:
(a) Any "Person" (as defined in Section 2.2(a) below), other than (1)
the Company or any of its subsidiaries, (2) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any of
its Affiliates, (3) an underwriter temporarily holding securities pursuant
to an offering of such securities, or (4) a corporation owned, directly or
indirectly, by the shareholders of the Company in substantially the same
proportions as their ownership of stock of the Company, is or becomes the
"beneficial owner" (as defined in Section 2.2(b) below), directly or
indirectly, of securities of the Company (not including in the securities
beneficially owned by such person any securities acquired directly from the
Company or its Affiliates) representing 33-1/3% or more of the combined
voting power of the Company's then outstanding securities, or 33-1/3% or
more of the then outstanding common stock of the Company, excluding any
Person who becomes such a beneficial owner in connection with a transaction
described in subparagraph (c)(1) below.
(b) During any period of two consecutive years (the "Period"),
individuals who at the beginning of the Period constitute the Board of
Directors of the Company and any "new director" (as defined in Section
2.2(c) below) cease for any reason to constitute a majority of the Board of
Directors.
(c) There is consummated a merger or consolidation of the Company or
any direct or indirect subsidiary of the Company with any other
corporation, except if:
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(1) the merger or consolidation would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity or any parent
thereof) at least sixty percent (60%) of the combined voting power of
the voting securities of the Company or such surviving entity or any
parent thereof outstanding immediately after such merger or
consolidation; or
(2) the merger or consolidation is effected to implement a
recapitalization of the Company (or similar transaction) in which no
Person is or becomes the beneficial owner, directly or indirectly, of
securities of the Company (not including in the securities beneficially
owned by such Person any securities acquired directly from the Company
or its Affiliates other than in connection with the acquisition by the
Company or its Affiliates of a business) representing 60% or more of
the combined voting power of the Company's then outstanding securities;
(d) The shareholders of the Company approve a plan of complete
liquidation or dissolution of the Company or an agreement for the sale or
disposition by the Company of all or substantially all the Company's
assets, other than a sale or disposition by the Company of all or
substantially all of the Company's assets to an entity, at least 60% of the
combined voting power of the voting securities of which are owned by the
stockholders of the Company in substantially the same proportions as their
ownership of the Company immediately prior to such sale.
2.2 Definitions. For purposes of Section 2.1 above,
(a) "Person" shall have the meaning given in Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") as
modified and used in Sections 13(d) and 14(d) of the Exchange Act.
(b) "Beneficial owner" shall have the meaning provided in Rule 13d-3
under the Exchange Act.
(c) "New director" shall mean an individual whose election by the
Company's Board of Directors or nomination for election by the Company's
shareholders was approved by a vote of at least two-thirds (2/3) 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 or recommended. However, "new director" shall not include a
director whose initial assumption of office is in connection with an actual
or threatened election contest, including but not limited to a consent
solicitation relating to the election of directors of the Company.
(d) "Affiliate" shall have the meaning set forth in Rule 12b-2
promulgated under Section 12 of the Exchange Act.
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3. TERMINATION OF EMPLOYMENT FOLLOWING CHANGE IN CONTROL. If any of the
events described in Section 2.1 constituting a Change in Control of the Company
shall have occurred, the Executive shall be entitled to the benefits provided in
Section 4 upon the subsequent termination of his employment, provided that such
termination occurs within three years after a Change in Control of the Company,
unless such termination is (a) because of his death, his "Disability," or
"Retirement" (as defined in Section 3.1), (b) by the Company for "Cause" (as
defined in Section 3.2), or (c) by Executive other than for "Constructive
Termination" (as defined in Section 3.3) (any such termination qualifying for
benefits under Section 4 hereof being sometimes referred to herein as "CIC
Termination").
If Executive's employment with the Company is terminated by the Company for
any reason other than for "Cause" prior to the date on which a Change in Control
occurs (whether or not the Change in Control ever occurs), and such termination
either (1) was at the request or direction of a person who has entered into an
agreement with the Company, the consummation of which would constitute a Change
in Control, or (2) was otherwise in connection with or in anticipation of a
Change in Control (whether or not the Change in Control ever occurs), then for
all purposes hereof, such termination shall be deemed to have occurred
immediately following a Change in Control.
3.1 Disability; Retirement. The Executive's employment shall be
terminated due to "Disability" if the Executive is qualified for disability
benefits under the Atmos Energy Corporation Long-Term Disability Plan, as in
effect from time to time, or, if no such Long-Term Disability Plan is then in
existence, if because of ill health, physical or mental disability or any other
reason beyond his control, the Executive is unable to perform his duties of
employment for a period of six (6) continuous months, as determined in good
faith by the Company.
Termination by the Executive of his employment based on "Retirement"
shall mean termination in accordance with the Company's retirement policy
generally applicable to its salaried employees, or in accordance with any
retirement arrangement established with Executive's consent with respect to him.
3.2 Cause. For the purposes of this Agreement, the Company shall have
"Cause" to terminate Executive's employment hereunder upon (1) the willful and
continued failure by Executive to substantially perform his duties with the
Company (other than any such failure resulting from incapacity due to physical
or mental illness), after a written demand for substantial performance is
delivered to Executive by the Board which specifically identifies the manner in
which the Board believes that he has not substantially performed his duties, or
(2) the willful engaging by Executive in conduct materially and demonstrably
injurious to the Company, monetarily or otherwise. For purposes of this Section
3.2, no act, or failure to act, on Executive's part shall be considered
"willful" if, in the Executive's sole judgment, his action or omission was done,
or omitted to be done, in good faith and with a reasonable belief that his
action or omission was in the best interest of the Company. Notwithstanding the
foregoing, Executive shall not be deemed to have been terminated for Cause
unless and until
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there shall have been delivered to him a copy of a resolution duly adopted by
the affirmative vote of not less than three-quarters (3/4) of the entire
authorized membership of the Board at a meeting of the Board called and held for
the purpose (after reasonable notice to Executive and an opportunity for
Executive, together with counsel, to be heard before the Board), finding that in
the good faith opinion of the Board Executive was guilty of conduct set forth
above in clause (1) or (2) of the first sentence of this Section 3.2, and
specifying the particulars thereof in detail.
3.3 Constructive Termination. For purposes of this Agreement,
"Constructive Termination" shall mean:
(a) Without his express written consent, the assignment to Executive
of any duties inconsistent with his positions, duties, responsibilities and
status with the Company immediately prior to a Change in Control, or a
change in his reporting responsibilities, titles or offices as in effect
immediately prior to a Change in Control, or any removal of Executive from
or any failure to re-elect Executive to any of such positions, except in
connection with the termination of his employment for Cause, death,
Disability or Retirement or termination of employment by Executive for
reasons other than Constructive Termination;
(b) A reduction by the Company in Executive's base salary as in effect
on the date of a Change in Control or as the same may be increased from
time to time thereafter;
(c) A reduction by the Company in the bonus payable to Executive in
any year below a percentage of Executive's then base salary equal to the
average percentage of Executive's base salary represented by the bonuses
received by Executive for the three (3) years (or, if shorter, the years of
Executive's employment by the Company) immediately preceding the year in
which a Change in Control occurs as percentages of his base salaries in
each of such three (3) years (or shorter number of years). By way of
example, but not in limitation of the provisions of this paragraph (c),
assume a Change in Control occurs in 1998, and Executive received bonuses
for each of 1995, 1996 and 1997 as follows: 30% of his base salary for
1995; 50% of his base salary for 1996; and 50% of his base salary for 1997.
If Executive receives a bonus for 1998 which is less than 43.33% of his
1998 base salary, Executive may terminate his employment for "Constructive
Termination" under this Section 3.3. If Executive was only employed during
1996 and 1997, using the same facts as recited herein, Executive may
terminate his employment for "Constructive Termination" if his 1998 bonus
was less than 50% of his 1998 base salary;
(d) The Company's requiring Executive to be based anywhere other than
either the Company's offices at which he was based immediately prior to a
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Change in Control or the Company's offices which are no more than seventy-
five (75) miles from the offices at which the Executive was based
immediately prior to a Change in Control, except for required travel on the
Company's business to an extent substantially consistent with his business
travel obligations immediately prior to the Change in Control (excluding,
however, any travel obligations prior to the Change in Control that are
associated with or caused by the Change in Control events or
circumstances), or, in the event Executive consents to any relocation
beyond such seventy-five-mile radius, the failure by the Company to pay (or
reimburse Executive) for all reasonable moving expenses incurred by him
relating to a change of his principal residence in connection with such
relocation and to indemnify Executive against any loss (defined as the
difference between the actual sale price of such residence and the higher
of (a) his aggregate investment in such residence or (b) the fair market
value of such residence as determined by a real estate appraiser designated
by Executive and reasonably satisfactory to the Company) realized on the
sale of Executive's principal residence in connection with any such change
of residence;
(e) The failure by the Company to continue in effect any benefit or
compensation plan (including but not limited to any stock option plan,
pension plan, deferred compensation plan, life insurance plan, health and
accident plan or disability plan) in which Executive is participating at
the time of a Change in Control of the Company (or plans providing
substantially similar benefits), the taking of any action by the Company
which would adversely affect Executive's participation in, payment from, or
materially reduce his benefits under any of such plans or deprive him of
any material fringe benefit enjoyed by him at the time of the Change in
Control, or the failure by the Company to provide Executive with the number
of days of paid time off to which he is then entitled on the basis of years
of service with the Company in accordance with the Company's normal paid
time off or vacation policy in effect immediately prior to the Change in
Control;
(f) Any failure of the Company to obtain the assumption of, or the
agreement to perform, this Agreement by any successor as contemplated in
Section 5;
(g) Any purported termination of Executive's employment which is not
effected pursuant to a Notice of Termination satisfying the requirements of
Section 3.4 (and, if applicable, Section 3.2); and for purposes hereof, no
such purported termination shall be effective; or
(h) The failure of the Company otherwise to honor all the terms and
provisions of this Agreement.
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For purposes of this Section 3.3, any good faith determination of "Constructive
Termination" made by the Executive shall be conclusive and binding on the
parties.
3.4 Notice of Termination. Any termination pursuant to the foregoing
provisions of this Section (including termination due to Executive's death)
shall be communicated by written Notice of Termination to the other party
hereto. For purposes hereof, a "Notice of Termination" shall mean a notice
which shall indicate the specific termination provision herein relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the provision so
indicated. In the event that Executive seeks to terminate his employment with
the Company pursuant to Section 3.3, he must communicate his written Notice of
Termination to the Company within sixty (60) days of being notified of such
action or actions by the Company which constitute Constructive Termination.
3.5 Date of Termination. "Date of Termination" shall mean (i) if this
Agreement is terminated for Disability, thirty (30) days after Notice of
Termination is given (provided that Executive shall not have returned to the
performance of his duties on a full-time basis during such thirty (30)-day
period); (ii) if Executive's employment is terminated pursuant to Section 3.3,
the date specified in the Notice of Termination; and (iii) if Executive's
employment is terminated for any other reason, the date on which a Notice of
Termination is given.
4. COMPENSATION UPON TERMINATION.
4.1 Termination Without Cause or for Constructive Termination. If
Executive suffers a CIC Termination, then, subject to Section 4.2, Executive
shall be entitled, if such CIC Termination occurred within three (3) years of a
Change in Control, to the following benefits:
(a) The Company shall pay to Executive as severance pay in one lump
sum not later than the tenth (10th) day following the Date of Termination,
an amount equal to the product of (i) the Executive's Total Compensation
(as defined below) multiplied by (ii) the number one and one-half (1.5).
For purposes of this Section 4.1(a), the Executive's "Total Compensation"
shall mean the annual base salary being paid to the Executive at the Date
of Termination plus the Executive's "Average Bonus." The Executive's
"Average Bonus" shall mean the greater of (i) the bonus or incentive awards
pursuant to any annual performance bonus or incentive compensation plan of
the Company (the "Bonus") last paid or awarded to Executive immediately
prior to his Date of Termination, or (ii) the average of the highest three
Bonuses (whether or not consecutive) paid or awarded to Executive.
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(b) The Company shall continue to provide Executive with (i) all
medical, dental, vision, accident, and other health benefits, (ii) life
insurance benefits, and (iii) disability benefits equal to or economically
equivalent to the benefits in effect for Executive at the time of the
Change in Control, and the Company shall provide such benefits at the same
cost to Executive as the cost, if any, charged to Executive for those
benefits prior to termination of employment. The Company shall provide the
foregoing benefits for the period from Executive's termination of
employment until eighteen (18) months from the Executive's Date of
Termination.
4.2 Limitation on Payments.
(a) Anything in Section 4.1 to the contrary notwithstanding, in the
event it shall be determined that any payment or distribution made, or benefit
provided, by the Company to or for the benefit of Executive (whether paid or
payable or distributed or distributable or provided pursuant to the terms hereof
or otherwise) would constitute a "parachute payment" as defined in Section 280G
of the Internal Revenue Code of 1986, as amended (the "Code"), then the lump sum
severance payment payable pursuant to Section 4.1(a) shall be reduced so that
the aggregate present value of all payments in the nature of compensation to (or
for the benefit of) Executive which are contingent on a change in control (as
defined in Code Section 280G(b)(2)(A)) is one dollar ($1.00) less than the
amount which Executive could receive without being considered to have received
any parachute payment (the amount of this reduction in the lump sum severance
payment is referred to herein as the "Excess Amount"). The determination of the
amount of any reduction required by this Section 4.2 shall be made by an
independent accounting firm (other than the Company's independent accounting
firm) selected by the Company and acceptable to Executive, and such
determination shall be conclusive and binding on the parties hereto.
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(b) Notwithstanding the provisions of Section 4.2(a), if it is
established pursuant to a final determination of a court or an Internal
Revenue Service proceeding which has been finally and conclusively resolved,
that an Excess Amount was received by Executive from the Company, then such
Excess Amount shall be deemed for all purposes to be a loan to Executive
made on the date Executive received the Excess Amount and Executive shall
repay the Excess Amount to the Company on demand (but no less than ten (10)
days after written demand is received by Executive) together with interest
on the Excess Amount at the "applicable Federal rate" (as defined in Section
1274(d) of the Code) from the date of Executive's receipt of such Excess
Amount until the date of such repayment.
4.3 Mitigation or Set-off of Amounts Payable Hereunder. Executive
shall not be required to mitigate the amount of any payment provided for in this
Section 4 by seeking other employment or otherwise, nor shall the amount of any
payment provided for in this Section 4 be reduced by any compensation earned by
Executive as the result of employment by another employer after the Date of
Termination, or otherwise. The Company's obligations hereunder also shall not
be affected by any set-off, counterclaim, recoupment, defense or other claim,
right or action which the Company may have against Executive.
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5. SUCCESSORS; BINDING AGREEMENT.
5.1 Successors of the Company. The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company, by
agreement in form and substance satisfactory to Executive, expressly to assume
and agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if there had been a Change in
Control but no such succession had taken place. Failure of the Company to
obtain such agreement prior to the effectiveness of any such succession shall be
a breach hereof. As used herein, "the Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which executes and delivers the agreement provided for in this Section
5 or which otherwise becomes bound by all the terms and provisions hereof by
operation of law.
5.2 Executive's Heirs, etc. This Agreement shall inure to the benefit
of and be enforceable by Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If Executive should die while any amounts would still be payable to
him hereunder as if he had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms hereof to his
designee or, if there be no such designee, to his estate.
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6. NOTICE. For the purposes hereof, notices and all other communications
provided for herein shall be in writing and shall be deemed to have been duly
given when delivered or mailed by United States registered or certified mail,
return receipt requested, postage prepaid, addressed to the Company at its
principal place of business and to Executive at his address as shown on the
records of the Company, provided that all notices to the Company shall be
directed to the attention of the Chief Executive Officer of the Company with a
copy to the Secretary of the Company, or to such other in writing in accordance
herewith, except that notices of change of address shall be effective only upon
receipt.
7. MISCELLANEOUS. No provisions hereof may be amended, modified, waived
or discharged unless such amendment, waiver, modification or discharge is agreed
to in writing signed by Executive and such officer as may be specifically
designated by the Board (which shall in any event include the Company's Chief
Executive Officer). 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
hereof 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 herein.
8. VALIDITY. The invalidity or unenforceability of any provisions hereof
shall not affect the validity or enforceability of any other provision hereof,
which shall remain in full force and effect.
9. NON-EXCLUSIVITY OF RIGHTS. Nothing herein shall prevent or limit the
Executive's continuing or future participation in any benefit, bonus, incentive
or other plans, practices, policies or programs provided by the Company and for
which the Executive may qualify, nor shall anything herein limit or otherwise
affect such rights as the Executive may have under any stock option or other
agreements with the Company. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, practice, policy or
program of the Company at or subsequent to the Date of Termination shall be
payable in accordance with such plan, practice, policy or program.
10. LEGAL EXPENSES. The Company agrees to pay, upon written demand
therefor by Executive, all legal fees and expenses which Executive may
reasonably incur as a result of any dispute or contest (regardless of the
outcome thereof) by or with the Company or others regarding the validity or
enforceability of, or liability under, any provision hereof (including as a
result of any contest about the amount of any payment pursuant to Section 4),
plus in each case interest at the "applicable Federal rate" (as defined in
Section 1274(d) of the Code). In any such action brought by Executive for
damages or to enforce any provisions hereof, he shall be entitled to seek both
legal and equitable relief and remedies, including, without limitation, specific
performance of the Company's obligations hereunder, in his sole discretion.
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11. 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.
12. GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of Texas.
13. CAPTIONS AND GENDER. The use of captions and Section headings herein
is for purposes of convenience only and shall not effect the interpretation or
substance of any provisions contained herein. Similarly, the use of the
masculine gender with respect to pronouns herein is for purposes of convenience
and includes either sex who may be a signatory.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the
day and year first above written.
ATMOS ENERGY CORPORATION
By:
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Name:
Title:
EXECUTIVE
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