Exhibit 10(e)(4)
FORM OF SEVERANCE AGREEMENT
BETWEEN
PUBLIC SERVICE COMPANY OF COLORADO
AND
(EXECUTIVE NAME)
THIS AGREEMENT, effective this 27th day of November, 1995, by and between
Public Service Company of Colorado, a Colorado corporation (the "Company") and
(Executive Name) (the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive is a valuable employee of the Company and an integral
part of its management who is a key participant in the decision making process
relative to short-term and long-term planning and policy for the Company; and
WHEREAS, the Company wishes to encourage the Executive to continue his career
and services with the Company for the period during and after an actual or
threatened Change in Control; and
WHEREAS, the Board of Directors of the Company, at its meeting on August 22,
1995, determined that it would be in the best interests of the Company and its
shareholders to assure continuity in the management of the Company's
administration and operations in the event of a Change in Control by entering
into this Severance Agreement with the Executive;
NOW THEREFORE, it is hereby agreed by and between the parties hereto as
follows:
1. Definitions.
"Board" shall mean the Board of Directors of the Company.
"Cause" shall mean the Executive's fraud or dishonesty which has resulted
or is likely to result in material economic damage to the Company, as determined
in good faith by a vote of at least two-thirds of the non-employee directors of
the Company at a meeting of the Board at which the Executive is provided an
opportunity to be heard.
"Change in Control" shall mean:
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(i) either (A) receipt by the Company of a report on Schedule 13D, or an
amendment to such a report, filed with the Securities and Exchange Commission
pursuant to Section 13(d) of the Securities Exchange Act of 1934 (the "1934
Act") disclosing that any person (as such term is used in Section 13(d) of the
▇▇▇▇ ▇▇▇) ("Person"), is the beneficial owner, directly or indirectly, of twenty
(20) percent or more of the outstanding stock of the Company, or (B) actual
knowledge by the Company of facts, on the basis of which any Person is required
to file such a report on Schedule 13D, or to make an amendment to such a report,
with the SEC (or would be required to file such a report or amendment upon the
lapse of the applicable period of time specified in Section 13(d) of the ▇▇▇▇
▇▇▇) disclosing that such Person is the beneficial owner, directly or
indirectly, of twenty (20) percent or more of the outstanding stock of the
Company;
(ii) purchase by any Person, other than the Company or a wholly-owned
subsidiary of the Company, 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, after consummation of
the offer, such Person is the beneficial owner (as defined in Rule 13d-3 under
the 1934 Act), directly or indirectly, of twenty (20) percent or more of the
outstanding stock of the Company (calculated as provided in paragraph (d) of
Rule 13d-3 under the 1934 Act in the case of rights to acquire stock);
(iii) approval by the shareholders of the Company of (a) any consolidation or
merger of the Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of stock of the Company would be
converted into cash, securities or other property, other than a consolidation or
merger of the Company in which holders of its stock immediately prior to the
consolidation or merger have substantially the same proportionate ownership of
common stock of the surviving corporation immediately after the consolidation or
merger as immediately before, or (b) any consolidation or merger in which the
Company is the continuing or surviving corporation but in which the common
shareholders of the Company immediately prior to the consolidation or merger do
not hold at least a majority of the outstanding common stock of the continuing
or surviving corporation (except where such holders of common stock hold at
least a majority of the common stock of the corporation which owns all of the
common stock of the Company), or (c) any sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of all or substantially
all the assets of the Company, or (d) any merger or consolidation of
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the Company where, after the merger or consolidation, one Person owns 100% of
the shares of stock of the Company (except where the common holders of the
Company's stock immediately prior to such merger or consolidation own at least
90% of the outstanding stock of such Person immediately after such merger or
consolidation); or
(iv) a change in the majority of the members of the Board within a 24-month
period unless the election or nomination for election by the Company's
shareholders of each new director was approved by the vote of at least two-
thirds of the directors then still in office who were in office at the beginning
of the 24-month period.
"Compensation" shall mean the sum of (i) the Executive's annual rate of base
salary on the last day the Executive was an employee of the Company, including
any elective contributions made by the Company on behalf of the Executive that
are not includible in the gross income of the Executive under Section 125 or
402(a)(8) of the Internal Revenue Code of 1986, as amended (the "Code") or any
successor provision thereto, (ii) the target incentive award for the Executive
under the short-term component of the Annual Incentive Plan of the Company for
the current year, (iii) the economic equivalent value of any long-term incentive
awards (including dividend equivalents) the Executive would have received had he
remained employed for the remaining term of this Agreement, based upon the
awards received in the calendar year preceding termination, (iv) an amount equal
to any Company matching or special contribution allocated to the Executive's
account for the calendar year preceding termination under the Employees' Savings
Plan or stock ownership plan.
"Constructive Discharge" shall mean a good faith determination by the
Executive that there has been any (i) material change by the Company of the
Executive's functions, duties or responsibilities which change would cause the
Executive's position with the Company to become of less dignity, responsibility,
importance, prestige or scope, including, without limitation, the assignment to
the Executive of duties and responsibilities inconsistent with his positions,
(ii) assignment or reassignment by the Company of the Executive without the
Executive's consent to another place of employment more than 50 miles from the
Executive's current place of employment, (iii) liquidation, dissolution,
consolidation or merger of the Company, or transfer of all or substantially all
of its assets, other than a transaction or series of transactions in which the
resulting or surviving transferee entity has, in the aggregate, a net worth at
least equal to that of the Company immediately
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before such transaction and expressly assumes this Agreement and all obligations
and undertakings of the Company hereunder, or (iv) reduction which is more
than de minimis in the Executive's total compensation or benefits or any
component thereof, by written notice to the Company, specifying the event
relied upon for such termination and given at any time within six months after
the occurrence of such event. Notwithstanding any provision herein to the
contrary, during the 30-day period following the one year anniversary of the
Transaction Completion Date the Executive may elect to terminate employment
for any reason and such termination of employment shall be considered a
Constructive Discharge; provided, however, for purposes of determining the
benefits under Paragraph 3.a. hereof, `two years' shall be substituted for
`three years.' The Company and Executive, upon mutual written agreement, may
waive any of the foregoing provisions which would otherwise constitute a
Constructive Discharge.
"Transaction Completion Date" shall mean the date on which occurs subparagraphs
(i), (ii) or (iv) of the definition of Change in Control in paragraph 1 or
occurs the transaction which was the subject of shareholder approval pursuant to
subparagraph (iii) of the definition of Change in Control in paragraph 1."
2. Term. This Agreement shall be effective as of the date above written and
shall continue thereafter until 36 full calendar months following the
Transaction Completion Date. This Agreement shall remain in effect until all of
the obligations of the parties hereunder are satisfied.
3. Severance Benefit.
a. If the Executive's employment hereunder is terminated by the Company for
any reason other than cause, death or disability, or by the Executive in the
event of a Constructive Discharge, at any time during the Coverage Period, then,
within five business days after such termination, the Company shall pay to the
Executive (if the Executive has died before receiving all payments to which he
has become entitled hereunder to the estate of the Executive) (i) accrued but
unpaid salary and accrued but unused vacation and (ii) severance pay in a lump
sum cash amount equal to three years of the Executive's Compensation. During
the three year period which begins on the date of employment termination the
Executive shall receive (i) full benefits coverage for welfare plans in place
and operational on the date of termination and (ii) full perquisites for all
perquisites in place and operational on the date of termination. The Company
shall pay to Executive the
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present value of the benefits that would have accrued under the qualified
retirement plans in place and operational on the date of termination if the
Executive had received credit for the three year period of severance under
this Agreement. The Company shall treat the Executive as if he had continued
participation and benefit accruals under the Company's Supplemental Retirement
Income Plan or a successor plan (as in effect upon the Change in Control)
during the three year period. The Company shall treat the Executive as
employed by the Company for purposes of exercising stock options during the
three year period. The Coverage Period shall begin on the Starting Date and
end on the Ending Date. The Starting Date shall be the earlier of (i) the date
on which a public announcement is made by the Company of its intention to
participate in a transaction which constitutes a Change in Control, or (ii)
the date on which a Change in Control occurs. The Ending Date shall be the
earlier of (i) the date on which a public announcement is made by the Company
of its intention to abandon a Change in Control transaction, or (ii) the date
which is 36 full calendar months following the Transaction Completion Date.
The Executive's termination of employment with the Company to become an
employee of a corporation which owns 100% of the Company shall not be
considered a termination of employment for purposes of this Agreement. The
subsequent termination of Executive's employment from such corporation shall
be considered a termination of employment for purposes of this Agreement.
b. For a period commencing with the month in which termination of
employment as described in paragraph 3.a. above shall have occurred, and ending
36 months thereafter, the Executive shall be entitled to all benefits under the
Company's welfare benefit plans (within the meaning of Section 3(1) of the
Employee Retirement Income Security Act of 1974, as amended), 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 to all of the
Company's senior executives generally and if and to the extent that equivalent
benefits shall not be payable or provided under any such plan, the Company shall
pay or provide equivalent benefits on an individual basis. The benefits provided
in accordance with this paragraph 3.b. shall be secondary to any comparable
benefits provided by another employer.
c. (i) If Independent Tax Counsel shall determine that the aggregate
payments made to the Executive pursuant to this Agreement and any other payments
to the Executive from the Company which constitute "parachute payments" as
defined in Section 280G of the Code (or any successor provision thereto)
("Parachute
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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. For purposes of this Paragraph 3.c., "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 Executive and
shall be reasonably acceptable to the Company, and whose fees and
disbursements shall be paid by the Company.
(ii) If 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 (the amount of such additional payments are referred herein
as "Gross-Up Underpayment") of such payment and any such Gross-Up Underpayment
shall be promptly paid by the Company to or for the benefit of the Employee. 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 Internal Revenue Service 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,
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(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 ▇▇▇ 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 3.c.(iii), the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall within 10
days pay to the Company the amount of such refund (together with any interest
paid or credited thereon after taxes applicable thereto).
d. In the event of any termination of the Executive's employment described
in paragraph 3.a., the Executive shall be under no obligation to seek other
employment, and there shall be no offset against amounts due the Executive under
this Agreement on account of any remuneration attributable to any subsequent
employment.
4. Source of Payments.
All payments provided for in paragraph 3. above shall be paid in cash
from the general funds of the Company; provided, however, that such payments
shall be reduced by the amount of any payments made to the Executive or his
dependents, beneficiaries or estate from any trust or special or separate fund
established by the Company to assure such payments. The Company shall not be
required to establish a special or separate fund or other segregation of assets
to assure such payments, and, if the Company
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shall make any investments to aid it in meeting its obligations hereunder, the
Executive shall have no right, title or interest whatever in or to any such
investments except as may otherwise be expressly provided in a separate written
instrument relating to such investments. Nothing contained in this Agreement,
and no action taken pursuant to its provisions, shall create or be construed to
create a trust of any kind, or a fiduciary relationship between the Company and
the Executive or any other person. To the extent that any person acquires a
right to receive payments from the Company such right shall be no greater than
the right of an unsecured creditor of the Company.
5. Litigation Expenses: Arbitration.
a. Full Settlement, Litigation Expenses; Arbitration. The Company's
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obligation to make the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action which the
Company may have against the Executive or others. In no event shall the
Executive be obligated to seek other employment or take any other action by
way of mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement. The Company agrees to pay, upon written demand
therefor by the Executive, all legal fees and expenses which the 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 of this Agreement,
plus in each case interest at the applicable Federal rate provided for in
Section 7872(f)(2) of the Code. In any such action brought by the Executive
for damages or to enforce any provisions of this Agreement, 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. If the parties hereto so agree in
writing, any disputes under this Agreement may be settled by arbitration.
The obligation of the Company under this paragraph 5. shall survive the
termination for any reason of this Agreement (whether such termination is by
the Company, by the Executive, upon the expiration of this Agreement or
otherwise).
b. In the event of any dispute or difference between the Company and
the Executive with respect to the subject matter of this Agreement and the
enforcement of rights hereunder, the Executive may, in his sole discretion
by written notice to the Company, require such dispute or difference to be
submitted to
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arbitration. The arbitrator or arbitrators shall be selected by agreement of the
parties or, if they cannot agree on an arbitrator or arbitrators within 30
days after the Executive had notified the Company of his desire to have the
question settled by arbitration, then the arbitrator or arbitrators shall
be selected by the American Arbitration Association (the "AAA") in Denver,
Colorado upon the application of the Executive. The determination reached
in such arbitration shall be final and binding on both parties without any
right of appeal or further dispute. Execution of the determination by such
arbitrator may be sought in any court of competent jurisdiction. The
arbitrators shall not be bound by judicial formalities and may abstain from
following the strict rules of evidence and shall interpret this Agreement
as an honorable engagement and not merely as a legal obligation. Unless
otherwise agreed by the parties, any such arbitration shall take place in
Denver, Colorado, and shall be conducted in accordance with the Rules of
the AAA.
6. Income Tax Withholding.
The Company may withhold from any payments made under this Agreement all
federal, state or other taxes as shall be required pursuant to any law or
governmental regulation or ruling.
7. Entire Understanding.
This Agreement contains the entire understanding between the Company and
the Executive with respect to the subject matter hereof and supersedes any prior
severance agreement between the Company and the Executive, except that this
Agreement shall not affect or operate to reduce any benefit or compensation
inuring to the Executive of any kind elsewhere provided and not expressly
provided for in this Agreement including without limitation, any benefit or
compensation under the Company's Annual Incentive Plan, Supplemental Benefit
Plan for Key Management Employees, and any excess or supplemental plan to the
Employees' Savings and Stock Ownership Plan.
8. Severability.
If, for any reason, any one or more of the provisions or part of a
provision contained in this Agreement shall be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision or part of a provision of this Agreement
not held so invalid, illegal or unenforceable, and each other provision or part
of a
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provision shall to the full extent consistent with law continue in full force
and effect.
9. Consolidation, Merger, or Sale of Assets.
If the Company consolidates or merges into or with, or transfers all or
substantially all of its assets to, another corporation the term "the Company"
as used herein shall mean such other corporation and this Agreement shall
continue in full force and effect.
10. Notices.
All notices, requests, demands and other communications required or
permitted hereunder shall be given in writing and shall be deemed to have been
duly given if delivered or mailed, postage prepaid, first class as follows:
a. to the Company:
Public Service Company of Colorado
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Senior Vice President and
General Counsel
b. to the Executive:
EXECUTIVE NAME
STREET ADDRESS
CITY, STATE ZIP CODE
or to such other address as either party shall have previously specified in
writing to the other.
11. No Attachment.
Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge or hypothecation or to execution,
attachment, levy or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to effect any such action shall be null, void
and of no effect.
12. Binding Agreement.
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This Agreement shall be blinding upon, and shall inure to the benefit of,
the Executive and the Company and their respective permitted successors and
assigns.
13. Modification and Waiver.
This Agreement may not be modified or amended except by an instrument in
writing signed by the parties hereto. No term or condition of this Agreement
shall be deemed to have been waived, nor shall there be any estoppel against the
enforcement of any provision of this Agreement except by written instrument
signed by the party charged with such waiver or estoppel. No such written
waiver shall be deemed a continuing waiver unless specifically stated therein,
and each such waiver shall operate only as to the specific term or condition
waived and shall not constitute a waiver of such term or condition for the
future or as to any act other than that specifically waived.
14. Headings of No Effect.
The paragraph headings contained in this Agreement are included solely for
convenience of reference and shall not in any way affect the meaning or
interpretation of any of the provisions of this Agreement.
15. Governing Law.
This Agreement and its validity, interpretation, performance, and
enforcement shall be governed by the laws of the State of Colorado without
giving effect to the choice of law provisions in effect in such State.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its officers thereunto duly authorized, and the Executive has signed this
Agreement, all effective as of the date first above written.
PUBLIC SERVICE COMPANY OF COLORADO
By: _____________________________
_________________________________
EXECUTIVE NAME
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SCHEDULE TO FORM OF KEY EXECUTIVE SEVERANCE AGREEMENT, AS AMENDED
ON AUGUST 22, 1995 AND NOVEMBER 27, 1995
ORIGINAL
EFFECTIVE AMENDMENT
EXECUTIVE DATE DATE(S)
------------------------------ ----------------- --------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇ November 26, 1991 August 22, 1995
November 27, 1995
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ July 18, 1994 August 22, 1995
November 27, 1995
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ November 26, 1991 August 22, 1995
November 27, 1995
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ December 5, 1994 August 22, 1995
November 27, ▇▇▇▇
▇. ▇▇▇▇▇ ▇▇▇▇▇ August 22, 1995 November 27, 1995
▇▇▇▇ ▇. ▇▇▇▇ August 22, 1995 November 27, 1995
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇. August 22, 1995 November 27, 1995
▇▇▇▇▇ ▇▇▇▇▇▇▇ III August 22, 1995 November 27, 1995
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ August 22, 1995 November 27, 1995
NOTE: The terms of the severance agreements that were executed with each of the
above executives are substantially identical, except for the date of
execution.
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