EMPLOYMENT SEPARATION AGREEMENT AND RELEASE
EXHIBIT
10.2
EMPLOYMENT
SEPARATION AGREEMENT AND RELEASE
This
Employment Separation Agreement and Release ("Agreement") is a contract entered
into between EI Paso Electric Company, a Texas corporation (the "Company"),
and
Xxxx X. Xxxxxxx ("Officer"), and is effective as of May 18, 2007 (the
“Effective Date”) unless revoked by Officer within seven (7) days following its
execution by Officer.
WHEREAS,
Officer has been a valued employee of the Company for nearly 30 years,
including its President and Chief Executive Officer for the last six and
one-half years, and continues to be recognized as a leading figure in the
communities served by the Company; and
WHEREAS,
the Company and Officer have reached an accord regarding the financial and
other
aspects of Officer’s separation from employment; and
WHEREAS,
the Company and Officer desire to enter into this Agreement.
NOW,
THEREFORE, in consideration of the foregoing recitals, and the mutual promises
and agreements hereinafter set forth, the Company and Officer agree as
follows:
1. Separation.
Officer
agrees that his employment as President and Chief Executive Officer of the
Company and, except as set forth in the next sentence, all other positions
which
Officer holds with the Company, its subsidiaries, and affiliates, ceased at
5:00 p.m. on the Effective Date. Officer will continue to serve on the
Board of Directors but will resign from the Executive Committee, effective
immediately. Except as provided in this Agreement, Officer agrees not to seek
reemployment with the Company, its subsidiaries, and affiliates, and no payments
made to Officer under the terms of this Agreement shall be construed as a
continuation of Officer's employment with the Company. This provision does
not
prohibit Officer from working for the Company at the Company’s
request.
2. Payments
to Officer; Consulting Obligation.
The
Company agrees to make a one-time settlement payment of $1,791,224 as soon
as
practicable following the Effective Date and, in addition, will pay a severance
to Officer as follows: (a) one payment of $11,739.13 on May 31, 2007;
(b) seven payments of $30,000 on the last business day of each month from
June through December 2007; and (c) twenty-two payments of $20,852 on the
last business day of each month from January 2008 through October 2009 (in
each
case, less deductions for applicable federal, state, and local taxes, all and
in
each instance in accordance with the payment practices of the Company);
provided, however, that as conditions precedent to any entitlement to any
payment under this Section 2, Officer must (i) execute and deliver
this Agreement to the Company, (ii) not revoke or otherwise withdraw his
acceptance of this Agreement for a period of seven (7) days following such
delivery of this Agreement, and (iii) not be in breach or default of any
provision of this Agreement; and provided further, payments otherwise due under
this
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Section 2
or Section 3(b)(ii) within the six-month period following the Effective
Date shall be paid in a lump sum cash payment within five (5) business days
following the six-month anniversary of the Effective Date. As additional
consideration for such payments, through October 31, 2009, Officer agrees
to be available at reasonable times (following adequate notice) as required
to
provide consulting services, including regulatory advice or meetings with
regulators, testimony and/or service on civic and charitable boards, upon the
Company's request, with respect to matters within the scope of Officer's duties
and responsibilities during employment. Officer agrees that the payments
pursuant to this Section 2 are in lieu of fees payable to him for service
on the Board, and he waives all Director fees (including any grants of options
or restricted shares) otherwise payable through the term of this
Agreement.
3. Other
Benefits.
(a) Officer
is
a participant in the Company’s Retirement Income Plan for Employees (“RIP”) and
Excess Benefit Plan (“EBP”). Nothing in this Agreement shall affect Officer’s
rights (as such exist immediately prior to 5:00 p.m. on the Effective Date)
under the RIP and EBP.
(b) (i) The
Company shall pay Officer on the Effective Date or as soon thereafter as
practicable a cash lump sum of $199,665.22 for unused hours of “Current PTO,”
“New PTO” and “Old PTO”, which represent hours worked and “banked” in accordance
with the Company’s policies, subject to deductions for applicable federal,
state, and/or local taxes.
(ii) Officer
may elect to continue, at the Company’s expense, health care, medical and dental
benefit coverage under and in accordance with the provisions of the Company's
Employee Welfare Benefit Plan, the Consolidated Omnibus Budget Reconciliation
Act of 1996 ("COBRA"), and Section 4980B of the Internal Revenue Code (the
“Code”) through October 31, 2009 (or, if Officer is no longer eligible for
COBRA prior to such date other than because he becomes eligible under another
employer’s health plan, Company will pay an amount equal to the premiums paid
under COBRA through such date), and thereafter as permitted by applicable law
and regulations, pursuant to the terms provided other retirees of the Company,
at his own expense.
(iii) Officer
is
also entitled to all amounts, if any, accrued by and vested in Officer as of
the
Effective Date, under and in accordance with the El Paso Electric Company
Savings Plan ("401(k) Plan").
(iv) Company
agrees to make available to Officer at no cost through November 30, 2007 an
office (at a location in El Paso acceptable to the Company) with secretarial
assistance and telecommunications services.
(v) Except
as
otherwise provided in this Agreement, Officer's participation in any and all
other benefit and compensation plans and arrangements of the Company (including,
without limitation, accident and disability insurance programs and life
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insurance)
are deemed by both parties to have ceased on the Effective Date, other than
such
plans, if any, afforded to all other retirees of the Company.
4. Releases.
(a) Officer
agrees to and does fully and completely release, discharge and waive any and
all
claims, complaints, causes of action, demands of whatever kind or nature which
Officer has or may have against the Company, its subsidiaries, affiliates,
predecessors, and successors and all of their respective directors, officers,
and employees by reason of any event, matter, cause, or thing that has occurred
prior to the date of execution of this Agreement (hereinafter "Officer Claims").
Officer agrees that this Agreement specifically covers, but is not limited
to,
any and all Officer Claims which Officer has or may have against the Company
relating in any way to compensation, or to any other terms, conditions, or
circumstances of Officer's employment with the Company, and to the cessation
of
such employment, based on statutory or common law claims for employment
discrimination, including claims under Title VII, the Age Discrimination in
Employment Act, Americans with Disabilities Act, and any and all discrimination
or retaliation claims under state or federal law, wrongful discharge, breach
of
contract, defamation, intentional infliction of emotional distress, breach
of
fiduciary duty, or any other theory whether legal or equitable; provided,
however, that this release shall not affect Officer's rights under or with
respect to any retirement plan which is subject to ERISA and is qualified under
Section 401(a) of the Code. Notwithstanding the foregoing, Officer does not
waive any right he may have to enforce this Agreement.
(b) The
Company agrees to release Officer from any and all claims, causes of action,
or
liabilities of the Company against Officer arising under and relating to
Officer's acts or omissions occurring on or before the Effective Date in the
course, scope and duties of Officer's employment with the Company; provided
however, this release shall not apply to any claim, cause of action, or
liability arising from any breach of fiduciary duty, gross negligence, willful
misconduct or intentional tort by Officer or any act or omission which
improperly benefited Officer personally. Notwithstanding the foregoing, the
Company does not waive any right it may have to enforce this Agreement, and
Officer does not waive any right he may have to indemnification by the Company
as provided under the Company’s Bylaws or applicable law.
(c) This
Agreement constitutes a general release and is not an admission of liability
by
either party. The Company and any other persons released have denied liability,
and the Company has agreed to pay the consideration set forth herein merely
to
avoid disputes or litigation and in an effort to ease the economic impact of
Officer's separation from employment. To the extent any claims against the
Company have not been released by this Agreement, Officer assigns those claims
to the Company. Notwithstanding the foregoing, Officer does not waive any right
he may have to enforce this Agreement.
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5. Confidentiality;
No Disparagement; No Adverse Positions.
(a) Officer
agrees not to cause or participate in the publication of any information
concerning the facts underlying the cessation of Officer's employment with
the
Company or the terms and conditions of this Agreement to any person or entity,
except as required by law or legal process. This provision shall not prevent
Officer from disclosing such information to Officer's immediate family or to
Officer's legal counsel and accountants in order to obtain professional advice;
provided that each are advised as to and agree to observe the confidentiality
of
such information. Officer acknowledges that he has reviewed a copy of the press
release (and related SEC Form 8-K) to be issued in connection with his
separation from employment.
(b) Officer
agrees that he shall not make negative statements or representations, or
otherwise communicate negatively, directly or indirectly, in writing, orally,
or
otherwise, or take any action which may, directly or indirectly, disparage
or be
damaging to the Company its subsidiaries, affiliates, successors or their
respective officers, directors, employees, businesses or reputations. Officer
does not waive any obligation to testify truthfully regarding matters involving
the Company if required by law or legal process.
(c) The
Company agrees that it shall not, and shall not authorize any officer, agent,
employee, or other representative of the Company to make negative statements
or
representations, or otherwise communicate negatively, directly or indirectly,
in
writing, orally or otherwise, concerning Officer's performance of his duties
while employed by the Company (other than the Company's employees with a need
to
know, legal counsel and accountants, or, if necessary, in any litigation
involving the Company or by filing a copy of this Agreement pursuant to the
requirements of the Securities Exchange Act of 1934, as amended, or as otherwise
required by law), or in connection therewith take any action which may, directly
or indirectly, in any way disparage or be damaging to Officer. The Company
does
not waive its obligation, or that of its employees and agents, to testify
truthfully as required by law or legal process. Officer acknowledges that the
Company will be required to file a copy of this Agreement with the SEC pursuant
to the Securities Exchange Act of 1934.
(d) Officer
agrees that until October 31, 2009, Officer shall not, without the prior
written consent of the Board, directly or indirectly, and whether as an
employee, officer, director, manager, partner, consultant, agent or otherwise,
alone or in association with any other person or organization, do any of the
following:
(i) carry
on a
business in which the Company is engaged in its service area in Texas and New
Mexico;
(ii) interfere
with the business of the Company or hold any position or accept any engagement
that may require him to take a position adverse to that of the Company in any
matter;
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(iii) induce
any
employee, customer or supplier of the Company to terminate its relationship
with
the Company;
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provided
that nothing herein shall limit Officer’s right to hold a passive
investment of not more than 1% of the equity securities of any corporation
that is listed on a national securities
exchange.
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(e) Officer
specifically acknowledges and agrees that if he fails to comply with any of
the
covenants contained in this Section 5, (i) he shall forfeit any
amounts due under Section 2 of this Agreement not previously paid, and
(ii) he shall repay to the Company any amounts previously paid under
Section 2 and 3 of this Agreement.
6. Taxes.
Officer
agrees to be solely and fully responsible for satisfying any federal, state,
or
local income tax liability that may be assessed against Officer as a result
of
any payments tendered by the Company pursuant to this Agreement or as a result
of the exercise of Officer’s vested stock options or the termination of
restrictions on the sale or transfer of any restricted shares. Officer
acknowledges the Company has provided no legal or other advice to him concerning
the tax consequences, if any, of the payments made under this
Agreement.
7. Proprietary
Information.
Officer
acknowledges that the Company's and its affiliates' trade secrets, information
concerning legislation, regulation, tax, litigation, labor, securities,
customers, employees, facilities, products and their development, technical
information, marketing, investment, and sales activities and procedures,
promotion and pricing techniques, credit and financial data, and other
information concerning the Company or its affiliates and any information of
third parties made available to the Company, its subsidiaries, or affiliates
(the "Proprietary Information") are valuable, special, and unique assets of
the
Company and its affiliates, access to and knowledge of which have been gained
by
virtue of Officer's position and involvement with the Company and its
affiliates. Officer agrees that all Proprietary Information obtained by Officer
as a result of any such position or involvement shall be considered
confidential. In recognition of such fact, Officer agrees that Officer will
not
disclose any such Proprietary Information to any person or other entity for
any
reason or purpose whatsoever, and that Officer will not make use of any
Proprietary Information for his own purposes or for the benefit of any person
or
other entity.
8. Remedies.
Officer
agrees that, in addition to any other remedy at law or in equity that Company
may have upon a material breach of this Agreement, Officer shall refund the
amount of all payments received from Company under Section 2 and shall
forfeit his right to receive any future payments under Section 2. In
addition, Officer acknowledges and agrees that the Company's remedies at law
for
a breach or threatened breach of any of the provisions of Section 7(b)
would be inadequate and, in recognition of this fact, Officer agrees that,
in
the event of a breach or threatened breach, in addition to any remedies at
law,
the Company, without posting any bond, shall be entitled to obtain equitable
relief in the form of specific performance, temporary restraining order,
temporary or permanent injunction and any other equitable remedy which may
then
be available.
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9. Entire
Agreement, Amendment.
This
Agreement shall supercede any and all existing agreements between Officer and
the Company or any of its affiliates relating to the terms of Officer's
employment, and contains the entire understanding of the parties with respect
to
the termination of Officer's employment. It may not be altered, modified, or
amended except by a written agreement signed by both parties
hereto.
10. No
Waiver.
The
failure of a party to insist upon strict adherence to any term of this Agreement
on any occasion shall not be considered a waiver of such party's rights or
deprive such party of the right thereafter to insist upon strict adherence
to
that term or any other term of this Agreement
11. Severability.
In the
event that any one or more of the provisions of this Agreement shall be or
become invalid, illegal, or unenforceable in any respect, the validity, legality
or enforceability of the remaining provisions of this Agreement shall not be
affected thereby.
12. Benefits
of Agreement.
This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective heirs, representatives, successors, and
assigns.
13. Attorneys'
Fees.
If legal
or equitable action is filed to enforce the terms of this Agreement, the
prevailing party shall be entitled to court costs, collection costs, and
reasonable attorneys' fees in addition to any other relief to which the party
may be entitled.
14. Acknowledgement.
Officer
acknowledges that Officer has carefully read this Agreement, fully understands
and accepts all of its provisions. Officer further acknowledges that Officer
has
been provided a full opportunity to review and reflect on the terms of this
Agreement, has been advised by Company to seek the advice of legal counsel
of
Officer's choice, and signs the Agreement voluntarily, of his own free will,
and
has signed an acknowledgement (Exhibit A, fully incorporated herein by this
reference) to that effect.
15. Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Texas without reference to its conflicts of law or choice of laws
rules.
16. Counterparts.
This
Agreement may be signed in counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the
same
instrument.
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IN
WITNESS
WHEREOF, the parties hereto have duly executed this Agreement effective as
of
the date and year first above written.
/s/
Xxxx X.
Xxxxxxx
Xxxx
X.
Xxxxxxx
May
11,
2007
Date
of
Execution
EL
PASO ELECTRIC COMPANY
By:
/s/
Xxxxxxx X.
Xxxxx
Name: Xxxxxxx
X.
Xxxxx
Title: Vice
Chairman
May
11,
2007
Date
of
Execution
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EXHIBIT
A
ACKNOWLEDGEMENT
I
acknowledge that I am allowed twenty-one (21) days to review and consider the
Employment Separation Agreement and Release ("Agreement") attached hereto.
I
have also been advised verbally and by this writing of my right to consult
with
an attorney prior to executing this Agreement. I understand that by signing
the
Agreement, I am voluntarily relinquishing, in exchange for the benefits and
consideration listed in the Agreement, my past and present right to bring any
claim, including those under the Civil Rights Act of 1964, 42 X.X.X
§0000(x) et seq., the Americans with Disabilities Act, the Age Discrimination
in
Employment Act, the Texas Labor Code, and any other equivalent federal or state
laws or statutes, against El Paso Electric Company. I do not waive any claims
that may arise after the Effective Date of the Agreement. I am further aware
that even if I sign the Agreement, I may revoke the Agreement for a period
of
seven (7) days following the day I sign the Agreement, and the Agreement shall
not be effective or enforceable until the revocation period has
expired.
/s/
Xxxx X.
Xxxxxxx
Xxxx
X.
Xxxxxxx
May
11,
2007
Date
of
Receipt
