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EXHIBIT 10(g)
SEVERANCE COMPENSATION AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into as of
the ____ day of _________, 199_, 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 June 1, 1996,
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 involving, 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
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outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business
Combination (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) The occurrence of one transaction or a series
of transactions, which has the effect of a divestiture by Energen of 25% or
more of the combined voting power of Alabama Gas Corporation's outstanding
voting securities;
(5) The occurrence of any sale, lease or other
transfer, in one transaction or a series of transactions of all or
substantially all of the assets of Alabama Gas Corporation (other than to
Energen or an entity controlled by Energen); or
(6) 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 at
the time of a 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.
(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.
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(i) "Excess Parachute Payment" shall have the same
meaning as the term "excess parachute payment" defined in Section 280G(b)(1) of
the Code.
(j) "Exchange Act" means the Securities Exchange Act of
1934, as amended.
(k) "Good Reason" means the occurrence during an
Applicable Period of any of the following events without Executive's prior
written consent:
(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.
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(l) "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.
(m) "Notice of Termination" has the meaning set forth in
Section 2(a) of this Agreement.
(n) ""Parachute Payment" shall have the same meaning as
the term "parachute payment" defined in Section 280G(b)(2) of the Code.
(o) "Qualified Termination" shall mean
(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.
(p) "Reasonable Compensation" shall have the same meaning
as provided for the term "reasonable compensation" in Section 280G(b)(4) of the
Code.
(q) "Retirement" means termination of Executive's
employment (other than for Good Reason) by the Executive on or after
Executive's having reached age 60.
(r) "Subsidiary" means any corporation, the majority of
the outstanding voting stock of which is owned directly or indirectly, by
Energen.
(s) "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 (other than for Retirement, death or
Disability) of Executive's employment, whether by Employer or Executive, shall
be communicated by the terminating party transmitting or sending the other
party a written notice ("Notice of
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Termination") referencing this Agreement and, if such termination is for Cause
or Good Reason, 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 Good Reason or Cause 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) Subject to (c) below, such termination of Executive's
employment shall be effective upon delivery of a Notice of Termination or at
such later date as may be specified in the Notice of Termination.
(c) 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 2.5]. 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 (other than Retirement), for a period
of twenty-four months commencing with the Date of 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. Limitation on Benefits.
(a) Basic Rule. Except as otherwise provided in
paragraph (c) below, any benefits payable or to be provided to the Executive by
Employer, whether pursuant to this Agreement or otherwise (including, without
limitation, Awards under the Energen Corporation 1992 or 1996 Long-Range
Performance Share Plans), which constitute Parachute Payments shall be modified
or reduced as provided in paragraph (b) below to the extent necessary so that
the benefits payable or to be provided to Executive under this Agreement that
constitute Parachute Payments, as well as any payments or benefits provided
outside of this Agreement that constitute Parachute Payments, shall not cause
Employer to have paid an Excess Parachute Payment. All provisions of Section
280G of the Code, and the regulations (proposed, interim, or final) thereunder,
shall be taken into account in computing such amount, including making
appropriate adjustment to such calculation for amounts established to be
Reasonable Compensation.
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(b) Reductions. In the event that the amount of any
Parachute Payment otherwise payable to or for the benefit of the Executive must
be modified or reduced to comply with paragraph (a) above, the Executive shall
direct which Parachute Payments are to be modified or reduced; provided,
however, that no increase in the amount of any payment or any change in the
timing of payment shall be made without the consent of Energen.
(c) Optimization. Prior to the first date any Parachute
Payment is due to be made, Energen shall, at its own expense, cause the
Independent Auditor to determine whether X exceeds Y, where
(i) X is the total amount of Parachute Payments
that would be made to the Executive, whether pursuant to this Agreement or
otherwise, if the limitation provided for in paragraph (a) above were not
applied, reduced by the total amount of applicable federal, state, and local
income, payroll and excise taxes that would be payable by the Executive with
respect to such Parachute Payments, and
(ii) Y is the total amount of Parachute Payments
that would be payable to the Executive, whether pursuant to this Agreement or
otherwise, if the limitation provided for in paragraph (a) above were applied,
reduced by the total amount of applicable federal, state and local income,
payroll and excise taxes that would be payable by the Executive with respect to
such Parachute Payments.
If X exceeds Y, then the limitation provided for in paragraph (a) above shall
not apply. For purposes of making the determination provided for in this
paragraph (c), the Independent Auditor shall assume that all Parachute Payments
to be made to the Executive will be subject to federal income tax at the
maximum rate in effect at the time the determination is made unless the
Executive provides the Independent Auditor with evidence satisfactory to the
Independent Auditor that it is more probable than not that one or more
Parachute Payments will be taxable at a lower rate, or lower rates, in which
case the Independent Auditor shall assume that such Parachute Payments will be
taxed at the lower rate or rates.
(d) Subsequent Payments. As a result of various
incentive or other plans, Executive may be entitled to receive various
Parachute Payments over a period of several years. In such event, the
Independent Auditor may need to update its Section 5(c) calculations one or
more times. In the event that all or a portion of a Parachute Payment is not
made due to the limitations of this Section 5, Energen shall not be relieved of
liability for such amount but such Parachute Payment shall be deferred and
included in calculations with respect to subsequent Parachute Payments.
(e) Overpayments and Underpayments. As a result of
uncertainty in the application of section 280G of the Code at the time of
determinations by the Independent Auditor hereunder, uncertainties in the
valuation of future payments, and deferrals pursuant to Section 5(d), it is
possible that Parachute Payments will have been made by Energen which should
not have been made (an "Overpayment") or that additional Parachute Payments
which will not have been made by Energen could have been made (an
"Underpayment"), consistent in each case
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with the other provisions of this Section 5. In the event that the Independent
Auditor, based upon the assertion of a deficiency by the Internal Revenue
Service against Energen or the Executive which the Independent Auditor believes
has a high probability of success, determines that an Overpayment has been
made, such Overpayment shall be treated for all purposes as a loan to the
Executive which the Executive shall repay to Energen, together with interest at
the applicable federal rate provided for in section 7872(f)(2)(A) of the Code;
provided, however, that no amount shall be payable by the Executive to Energen
if and to the extent that such payment would not reduce the amount which is
subject to taxation under section 4999 of the Code. In the event that the
Independent Auditor determines that an Underpayment has occurred, such
Underpayment shall promptly be paid or transferred by Energen to or for the
benefit of the Executive, together with interest at the applicable federal rate
provided for in section 7872(f)(2)(A) of the Code.
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.
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(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 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 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); 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; or (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.
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.
(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
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
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.
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.
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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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