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RETENTION AGREEMENT
between
The Columbia Gas System, Inc.
and
Logan W. Wallingford
dated as of
July 19, 1991
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THIS AGREEMENT, made effective as of July 19, 1991, by and
between The Columbia Gas System, Inc. (the "Company"), a Delaware corporation,
and Logan W. Wallingford of Wilmington, Delaware (the "Employee"),
W I T N E S S E T H T H A T
WHEREAS, the Board of Directors of the Company, at a meeting
held on July 19, 1991, determined that it would be in the best interests of the
Company and its shareholders to retain the services of certain key employees in
order to assure the continuity in the management of the Company's
administration and operations by entering into retention agreements with such
key employees for a period of three (3) years; and
WHEREAS, the Employee is a valuable employee of the Company
and an integral part of its management who participates in the decision-making
process relative to short and long term planning and policy for the Company;
and
WHEREAS, the Company wishes to assure itself of the continued
services of the Employee for the said period of three (3) years, by granting to
the Employee a Retention Award under certain conditions if he remains employed
by the Company at the end of said period of three (3) years;
NOW THEREFORE, it is hereby agreed by and between the parties
hereto as follows:
1. RETENTION AWARD
(a) In the event the Employee's employment is not terminated prior
to July 19, 1994 by the Company or any of its subsidiaries or
affiliates for a reason specified in paragraph (b) below, and
provided further that the Employee remains employed by the
Company or any of its subsidiaries or affiliates on July 19,
1994, then the Employee shall be eligible to receive a
Retention Award of $95,445 on July 19, 1994. In the event the
Employee's employment terminates prior to July 19, 1994
because of his death or disability, because of a Change of
Control as defined in paragraph (c) below, or because the
Employee is terminated by the Company or any of its
subsidiaries or affiliates for a reason other than those
specified in paragraph (b) below, then a pro-rata share of
said Retention Award shall be paid to the Employee or the
Employee's beneficiary. Said pro-rata share of the Retention
Award shall be based on the date of termination in relation to
the three-year period of July 19, 1991 through July 19, 1994,
and shall be paid to the Employee or the Employee's
beneficiary as soon as practicable after the Employee's date
of termination.
(b) No portion of the Retention Award specified in paragraph
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(a) above shall be paid to the Employee or the Employee's
beneficiary in the event the Employee's employment is
terminated by the Company or any of its subsidiaries or its
affiliates because of:
(i) the Employee's serious, willful misconduct in respect
of the Employee's duties, including conviction for a
felony or perpetration of a common law fraud which
has resulted, or is likely to result, in material
economic damage to the Company or any of its
subsidiaries or affiliates; or
(ii) the Employee's repeated failure to follow rules or
procedures of the Company or any of its subsidiaries
or affiliates, or to meetbona fide objectives and
qualifications duly promulgated as part of the
customary personnel practices of the Company or any
of its subsidiaries or affiliates.
(c) As used in this Agreement, "Change in Control" means the
happening of any of the following:
(i) the acquisition by any party or parties of the
beneficial ownership of 25% or more of the voting
shares of the Company, or
(ii) the occurrence of a transaction requiring
shareholders approval for the acquisition of the
Company through purchase or exchange of stock or
assets, or by merger, or otherwise, or
(iii) the election during a period of 24 months, or less,
of 30% or more, of the members of the Board of
Directors of the Company, without the approval of a
majority of the Board of Directors as constituted at
the beginning of the period, or
(iv) the occurrence of a transaction requiring the filing
of a report or disclosure with the Securities and
Exchange Commission in connection with the obtaining
of an interest in the Company through a purchase or
exchange of stock or assets, or by merger or
otherwise.
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(d) This Retention Award shall not constitute an agreement or
contract of employment for any duration of time, including
(but not limited to) the three (3) year period of July 19,
1991 through July 19, 1994.
2. Source of Payments
The Retention Award provided for in paragraphs 1 and 3 herein shall be
paid in cash from the general funds of the Company, its subsidiaries
or affiliates. The Company, or its subsidiaries or affiliates, shall
not be required to establish a special or separate fund or other
segregation of assets to assure payment of such Retention Award.
3. Litigation Expenses; Arbitration
(a) In the event of any litigation or other proceeding between the
Company or any of its subsidiaries or affiliates and the
Employee with respect to the subject matter of this Agreement
and the enforcement of rights hereunder, the Employee shall be
reimbursed for all reasonable costs and expenses relating to
such litigation or other proceeding, including his reasonable
attorneys' fees and expenses, provided that such litigation or
proceeding results in any:
(i) settlement requiring the Company or any of its
subsidiaries or affiliates to make a payment to the
Employee; or
(ii) judgment or order in favor of the Employee,
regardless of whether such judgment or order is
subsequently reversed on appeal or in a collateral
proceeding.
In no event shall the Employee be required to reimburse the
Company or any of its subsidiaries or affiliates for any of
the costs and expenses relating to such litigation or other
proceeding. The obligation of the Company or any of its
subsidiaries or affiliates under this paragraph 3 shall
survive the termination for any reason of this Agreement
(whether such termination is by the Company or any of its
subsidiaries or affiliates, by the Employee, upon the
expiration of this Agreement or otherwise).
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(b) In the event of any dispute or difference between the Company
or any of its subsidiaries or affiliates and the Employee with
respect to the subject matter of this Agreement and the
enforcement of rights hereunder, the Employee may, in his sole
discretion by notice to the Company or any such subsidiary or
affiliate, require such dispute or difference to be submitted
to 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
Employee had notified the Company or any of its subsidiaries
or affiliates 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 Philadelphia, Pennsylvania, upon the application of the
Employee. 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 or arbitrators 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
rule 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 Wilmington, Delaware, and shall be
conducted in accordance with the rules of the AAA.
4. Income Tax Withholding
The Company or any of its subsidiaries or affiliates may withhold from
any payments made under this Agreement all Federal, State, City or
other taxes as shall be required pursuant to any law or governmental
regulation or ruling.
5. Entire Understanding
This Agreement contains the entire understanding between the Company
or any of its subsidiaries or affiliates and the Employee with respect
to the subject matter hereof.
6. 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
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provision or part of a provision shall to the full extent consistent
with law continue in full force and effect. If this Agreement is held
invalid or cannot be enforced, then to the full extent permitted by
law any prior agreement between the Company or any of its subsidiaries
or affiliates and the Employee shall be deemed reinstated as if this
Agreement had not been executed.
7. Consolidation, Merger, or Sale of Assets
Nothing in this Agreement shall preclude the Company or any of its
subsidiaries or affiliates from consolidating or merging into or with,
or transferring all or substantially all of its assets to, another
corporation which assumes this Agreement and all obligations and
undertakings of the Company or any of its subsidiaries or affiliates
hereunder. Upon such a consolidation, merger or transfer of assets
and assumption, the term, "the Company," as used herein shall mean
such other corporation and this Agreement shall continue in full force
and effect.
8. 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 or any of its subsidiaries or affiliates at:
20 Montchanin Road
Wilmington, Delaware 19807
Attention: Vice President, Human Resources
(b) to the Employee at:
Logan W. Wallingford
124 Ponds Lane
Wilmington, DE 19807
or to such other address as either party shall have previously
specified in writing to the other.
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9. No Attachment
Except as required by law, no right to receive a Retention Award 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.
10. Binding Agreement
This Agreement shall be binding upon, and shall inure to the benefit
of, the Employee and the Company or any of its subsidiaries or
affiliates and their respective permitted successors and assigns.
11. 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.
12. 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.
13. Governing Law
This Agreement and its validity, interpretation, performance, and
enforcement shall be governed by the laws of the State of Delaware.
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IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed and its seal to be affixed hereunto by the Chairman of the
Compensation Committee of its Board of Directors thereunto duly authorized, and
the Employee has signed this Agreement, all as of the date first above written.
THE COLUMBIA GAS SYSTEM, INC.
ATTEST:
By: -----------------------
Chairman,
Compensation Committee
Secretary of the Board of Directors
By: /S/ LOGAN W. WALLINGFORD
------------------------
Logan W. Wallingford
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