SEPARATION AND RELEASE AGREEMENT
Exhibit
10.2
This
Separation and Release Agreement ("Separation Agreement") is made and entered
into as of the 30th day of June, 2005 by and between XXXXXXX X. XXXX ("Xx.
Xxxx"), UIL Holdings Corporation and The United Illuminating Company
(collectively referred to as “the Company”).
WHEREAS,
Xx. Xxxx was formerly employed by the Company as its Treasurer and Assistant
Secretary pursuant to an Employment Agreement dated November 8, 2004 (the
“Employment Agreement”); and
WHEREAS,
pursuant to the Company’s plans for a finance reorganization, the Compensation
and Executive Development Committee of the Board of Directors approved Xx.
Xxxx’x xxxxxxxxx compensation at its meeting on December 17, 2004 and the
Company informed Xx. Xxxx of his termination shortly thereafter in December,
2004; and
WHEREAS,
as of the date that Xx. Xxxx was notified of his termination without Cause
he
became entitled to the separation payments and benefits provided under his
Employment Agreement on account of a termination without Cause and was not
required to stay for any minimum retention period in order to be entitled
to
receive such benefits; and
WHEREAS,
for purposes of this Separation Agreement Xx. Xxxx’x termination date is
considered to be June 30, 2005 (the “Termination Date”); and
WHEREAS,
after discussions between the parties, the parties now desire to define with
greater specificity the payments and benefits to be provided to Xx. Xxxx,
to
substitute the provisions of this Separation Agreement for those related
provisions in the Employment Agreement as of the Termination Date except
as
expressly otherwise stated herein, and to compromise and settle any and all
issues, obligations and liabilities that may exist among Mr.
1
Pepe
and
the Company (together with all Affiliates of the Company as defined herein)
in
connection with any employment relationship, fiduciary relationship, contractual
relationship, or any other relationship or interest of whatsoever
nature.
NOW
THEREFORE, in consideration of the mutual promises of the parties and other
valuable and sufficient consideration, including but not limited to the
obligations of the Company set forth below, and intending to compromise and
settle any and all disputes between Xx. Xxxx and the Company (and their
Affiliates), the parties hereto agree as follows:
1. Separation
Payments and Benefits.
The
following payments and benefits are in full and final satisfaction of all
amounts due and owing to Xx. Xxxx under the Employment Agreement, including
without limitation Section 4(g) and Section 6 of the Employment
Agreement.
(a)
Base
Salary; Business Expense Reimbursement.
The
parties acknowledge that the Company has paid to Xx. Xxxx (i) all of his
Base
Salary (as defined in Section 4(a) of the Employment Agreement and as approved
by the Board of Directors of the Company at the time of the most recent review
of the salary rates of all of the Company’ officers earned prior to the
Termination Date; and (ii) all reasonable business expenses incurred by Xx.
Xxxx
prior to the Termination Date.
(b)
Accumulated
Unused Vacation.
The
Company shall pay Xx. Xxxx for all accumulated but unused vacation due to
Xx.
Xxxx in accordance with the Company’s existing vacation pay policies and
practices, which amount the parties agree to be $24,417.60, representing
37.5
days of accrued but unused vacation.
(c)
Stub-period
Incentive.
Xx. Xxxx
shall be entitled to a short-term annual incentive payment for 2005, equal
to
one-half of that short-term annual incentive compensation payment to which
he
would be entitled under the UIL Holdings Corporation executive incentive
compensation program, calculated as if he had been employed by UIL on the
last
day of 2005
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and
had
achieved personal goals ‘at target’, but based on actual performance with
respect to achievement of Company financial goals (“Stub-Period Incentive
Compensation”). Such Stub Period Incentive Compensation shall be paid following
the close of 2005 after the Company’s audited financials have been completed,
and shall be paid at the same time that 2005 short-term incentive compensation
is approved for payment to executives generally upon authorization by the
Compensation and Executive Development Committee.
(d)
Cash
Bonus.
The
Executive shall be entitled to an additional cash bonus in the amount of
$4200,
which shall be paid as soon as administratively feasible following expiration
of
the release revocation period provided for in Paragraph 3 of this
Agreement.
(e)
Supplemental
Retirement Benefit.
Under
Section 4(g) of his existing Employment Agreement, Xx. Xxxx is entitled to
certain nonqualified supplemental executive retirement benefits (“SERP”),
payment of which has been affected by the enactment of Section 409A of the
Internal Revenue Code. Section 4(g) of Xx. Xxxx’x Employment Agreement, amended
as provided hereinafter, shall survive the termination of his Employment
Agreement. The parties to this Agreement covenant that they will take any
and
all action necessary to amend Xx. Xxxx’x Employment Agreement during 2005 to do
the following:
(i)
bifurcate his accrued SERP benefit, thereby creating a grandfathered benefit,
determined as of December 31, 2004 , which shall remain subject to the law
in
effect prior to the enactment of Section 409A (the “Old Law benefit”) and
creating a post-2004 accrued benefit subject to Section 409A of the Code
(the
“New Law benefit”);
(ii)
incorporate the provisions Section 409A insofar as they affect the New Law
Benefit; and
(iii)
provide for the payment of Xx. Xxxx’x Old Law benefit in the form of a joint and
100% survivor annuity as previously elected by Xx. Xxxx, in the monthly amount
of $2468.20 (including, in the calculation of the value of Old Law benefit
the
imputed years
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of
age
and service to which Xx. Xxxx became entitled under Section 6(c)(vi)(B) of
his
Employment Agreement when the Company notified him in 2004 that he was being
terminated without Cause), commencing as soon as feasible following the
expiration of the revocation period provided for in the release required
in
Paragraph 3 of this Separation Agreement; and
(iv)
provide for Xx. Xxxx’x election, in accordance with Question 19 of IRS Notice
2005-1, as of June 30, 2005, to commence receiving his New Law benefit in
the
form of a joint and 100% survivor annuity commencing as of January 1, 2006,
in
the monthly amount of $368.59.
(f)
Options.
Xx.
Xxxx shall be treated as ‘retirng’ under the provisions of the UIL Holdings
Corporation 1999 Amended and Restated Stock Plan. Accordingly, all stock
options
granted to Xx. Xxxx thereunder, to the extent that they have not expired
or been
exercised, shall become immediately exercisable, and Xx. Xxxx shall be entitled
to exercise his then exercisable options for a three (3) year period, subject
to
any applicable legal restrictions on exercise.
(g)
Long-term
Incentive Plan.
Xx.
Xxxx is a participant in the UIL Holdings Corporation UIL Long Term Incentive
Program (“UIL LTIP”) with respect to 1600 long-term Performance Shares
documented in a performance share agreement dated as of May 10, 2004. Xx.
Xxxx
is entitled to be treated as ‘retiring’ pursuant to the terms of the UIL LTIP
and his performance share agreement and, accordingly, shall be deemed to
have
been continuously employed by UIL Holdings Corporation throughout the duration
of the Performance Period. Provided that Xx. Xxxx complies Sections 10-12
of his
Employment Agreement, which shall survive the termination of his employment,
he
shall fully vest in all of his Performance Shares as of December 31, 2006,
the
last day of the performance period, and shall be entitled to receive payment
for
his performance shares in 2007, calculated in the same manner and payable
in
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shares
of
UIL stock at the same time and under the same conditions as all other UIL
executives holding long-term incentive performance shares vesting on that
date.
(h)
Post-termination
Group Health and Retiree Life Benefits.
(i)
For
the period extending from July 1, 2005 through June 30, 2006, Xx. Xxxx shall
be
entitled to continued participation in the medical and dental plan(s) in
which
he was a participant as of his termination of employment on the same basis
as if
he remained as an active employee, provided that such participation is possible
under the terms and conditions of such plans and applicable law. Such period
of
continued participation shall run concurrently with, and reduce day-for-day,
any
obligation that the Company or any Affiliate would have to provide “COBRA”
continuation coverage with respect to Xx. Xxxx’x termination of employment. If
Xx. Xxxx’x continued participation is barred due to his termination of
employment, the Company shall instead provide Xx. Xxxx with the discounted
present value of the expected cost of family premium coverage for such 12
month
period, which amount shall be payable in a single sum Nothing in the foregoing
shall be construed to prevent the Company or its Affiliates from modifying
or
terminating any of their employee benefit plans at any time.
(ii)
As
of July 1, 2006, Xx. Xxxx may elect COBRA coverage with respect to himself
and
his dependents for a period of two months. At the end of that period and
taking
into account the imputation of a total of 6 years of age and service, as
provided in Section 6(c)(vi)(B) of his Employment Agreement, Xx. Xxxx shall
be
deemed to be age 61 with 31 years of service, and shall be entitled to commence
retiree medical benefits under the UI retiree medical program with 25% of
the
monthly medical premium being paid by him, and 75% paid by the Company.
(iii)
Xx.
Xxxx shall also be entitled to a paid up retiree life insurance benefit in
the
amount of $14,000, which amount shall be paid to the beneficiary designated
by
him upon his death.
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(i)
Discharge
of All Obligations.
Xx. Xxxx
acknowledges and agrees that the imputation of a total of 6 years of service
and
age in the calculation of his SERP benefit and in the calculation of his
entitlement to retiree medical benefits provided for in Section 6(c)(vi)(B)
of
this Employment Agreement is more valuable than the lump sum severance benefit
provided for in Section 6(c)(vi)(A) thereof, and therefore that he is not
entitled to said lump sum severance benefit. Except as specifically referenced
or provided in this Separation Agreement and except for such retirement benefits
for which Xx. Xxxx eligible under both The United Illuminating Company Pension
Plan and 401(k)/ Employee Stock Ownership Plan, Xx. Xxxx acknowledges and
agrees
that the Company does not owe him any wages, salary, commissions, bonuses,
vacation or severance payments, buyouts, fringe benefits or any other payments
of any kind, including any payments under any current or former executive
incentive compensation plan applicable to Xx. Xxxx. Xx. Xxxx acknowledges
and
agrees that the payments set forth in Paragraph 1 of this Separation Agreement
are in full satisfaction of any and all wages, salary, benefits and compensation
of any nature owed to him by the Company under the Employment Agreement or
otherwise.
(j)
Tax
withholding Requirements.
All
payments under Paragraph 1 of this Separation Agreement shall be subject
to
withholding for all state or federal taxes.
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2. Communications.
(a) Disclosure
of Separation Agreement.
From
the date this Separation Agreement has been signed by all parties, the Company
and Xx. Xxxx mutually agree that neither party shall disclose the financial
or
other terms of this Separation Agreement except for disclosure to Xx. Xxxx’x
immediate family members, counsel, and financial consultants, and except
as
necessary to comply and obtain compliance with this Separation Agreement
and
except as otherwise provided in this Separation Agreement.
(b) Compulsory
Disclosure.
The
proscriptions contained in (a) above Separation Agreement shall not be construed
to limit any person's duty to testify under oath as directed by a valid subpoena
or similar compulsory process or to provide information in filings with
governmental agencies or officials or to make public filings as may by
legislative enactment or administrative regulation, rule or order be required
to
be so disclosed, provided that the person required to testify or who is
otherwise legally compelled to provide information shall have made every
reasonable effort to notify the person whose information may be disclosed
in
time to afford him or it an opportunity to contest the subpoena, other process
or other governmental requirements giving rise to the duty to testify or
to
otherwise provide such information. The aforementioned notice requirement
shall
not apply to SEC and other regulatory filings.
3. Release
and Covenant Not to Xxx.
(a)
In
exchange
for
the
payments and benefits described above,
and
consistent with Section 6 of the Employment Agreement, Xx.
Xxxx
waives any requirement for a specific period of termination notice, and waives,
and releases the Company from, any and all claims or charges or suits
of
whatever nature which Xx.
Xxxx has
or
may have against the Company, whether or
not
now
known, including
any
claims arising out of or in connection
with Xx. Xxxx'x employment
with the Company or the termination of Xx. Xxxx'x employment; provided,
however,
that by
this Paragraph 3(a) Xx. Xxxx does not waive any claim he may have for
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indemnification
from the Company for acts performed within the scope of his employment by
the
Company.
(b)
To
the
fullest extent
permitted by law, Xx. Xxxx further agrees not to commence
any action or proceeding against the Company in any state or federal court,
or
with
any
administrative agency, for the purpose of recovering individual damages or
other
monetary
or personal relief
for
any
claim based on any act or event
that occurred prior to the date of this Separation Agreement. Xx.
Xxxx further
waives and relinquishes any right to benefit financially from any charge
of
discrimination, or from any other claim of any nature, filed by him or on
his
behalf. If
Xx.
Xxxx violates this Paragraph, all consideration described
in Paragraph 1 of this Separation Agreement shall be immediately recoverable
by
the
Company.
(c) The
release and covenant not to xxx contained in subparagraph (a) and
(b)
above includes, but is not limited to, any claim of discrimination on the
basis
of race, color, sex,
religion, marital status, sexual preference, national origin, ancestry, handicap
or disability, age, or veteran status; any other claim based on a statutory
prohibition; any claim for breach of an
express or implied contract, or of any covenant of good faith and fair
dealing;
any tort claims; any claim for
wrongful
discharge or retaliation; or any other claim growing out of any legal
restriction on Company’s right to terminate the employment of an employee, and
further including, without limitation, any claim for back pay, front pay,
incentive pay, bonuses, commissions, expenses, vacation, severance pay,
liquidated damages, punitive damages, compensatory damages, court costs or
attorneys’ fees.
(d) Xx.
Xxxx
further agrees not to seek redress under any internal
complaint procedure available to him under any policies of the
Company.
(e) Xx.
Xxxx
represents that he understands the foregoing release,
that rights and claims under the Age
Discrimination
in Employment Act of 1967,
Title
VII of the
8
Civil
Rights Act, Executive Order 11246, ERISA, the Americans with
Disabilities
Act , the Connecticut Fair Employment Practice Act, Title VII of the Civil
Rights Act of 1964, as amended, the Civil Rights Act of 1866, the Equal Pay
Act
of 1963, the Connecticut Family and Medical Leave Act, the federal Family
and
Medical Leave Act, and the Workers’ Compensation Act as it relates to
discrimination (i.e., C.G.S. Sec. 31-290a) are among the rights and claims
which
Xx.
Xxxx
is releasing, and that Xx.
Xxxx
is not releasing any rights or claims arising after the effective date of
the
Separation
Agreement.
(f) This
release and covenant not to xxx shall apply to the Company and their
Affiliates, and to
all of
their current and former officers, directors, employees, agents, fiduciaries,
representatives, successors and assigns,
or any
person acting on behalf of
the
Company and its Affiliates and shall be
binding upon Xx. Xxxx, and Xx. Xxxx'x executors, administrators, and heirs.
For
purposes of this Separation Agreement, the term Affiliate includes United
Resources, Inc., and all other direct and indirect subsidiaries of UIL Holdings
Corporation and The United Illuminating Company.
(h) This
release and covenant not to xxx is not intended to waive any workers'
compensation claims Xx. Xxxx may have
or
any payment or benefits to which Xx.
Xxxx
may
be
entitled
under The United Illuminating Company Pension Plan, The
United Illuminating Company 401(k)/ Employee Stock Ownership Plan, The UIL
Holdings Corporation 1999 Amended and Restated Stock Plan, the UIL LTIP,
and UI
retiree health and life insurance program.
4. Property
of the Company.
By his
signature on this Separation Agreement, Xx. Xxxx confirms that he has delivered
to the Company any and all property and equipment of the Company previously
in
his possession, including without limitation his beeper, mobile phone, credit
card, keys, laptop or other computers, together with all memoranda, notes,
records, drawings documents and other writings referenced in Section 10 of
the
Employment Agreement.
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5. Miscellaneous
Provisions.
(a) Non
Admission.
This
Separation Agreement does not and shall not be construed to constitute an
admission of liability or wrongdoing on any matter by Xx. Xxxx, the Company
or
any Affiliate, or any present or former director, officer, employee, agent,
or
representative thereof.
(b) Voluntariness.
Xx.
Xxxx represents and acknowledges that he has completely read and completely
understands this Separation Agreement and that he has entered into this
Separation Agreement voluntarily. Xx. Xxxx also acknowledges and agrees that
by
receipt of a draft of this Separation Agreement he has been advised in writing
to, and has been given the opportunity to, consult with an attorney of his
choice prior to executing this Separation Agreement. The parties mutually
acknowledge the adequacy of consideration for this Separation
Agreement.
(c) Entire
Agreement.
The
parties agree that this Separation Agreement contains the entire agreement
and
understanding of the parties with respect to employment, cessation of
employment, and any other rights of Xx. Xxxx in and to the assets of the
Company
and its Affiliates, that this Separation Agreement supercedes and replaces
all
provisions of the Employment Agreement except for Sections 10, 11 and 12
which
shall survive the termination of the Xx. Xxxx’x employment, and that all other
provisions of the Employment Agreement shall be of no further force and effect.
The parties acknowledge that the only consideration for their signing this
Separation Agreement is as stated in this Separation Agreement, and that
no
promise, commitment or addition has been made to either of them that is not
set
forth in this Separation Agreement. No amendment or supplementation of this
Separation Agreement shall be effective unless it is reduced to writing and
signed by Xx. Xxxx and the Company by their authorized representative.
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(d) Persons
Bound.
This
Separation Agreement shall be binding upon and inure to the benefit of Xx.
Xxxx'x personal representatives, heirs, executors, administrators and
dependents. This Separation Agreement shall also bind and be enforceable
against
the Company and any successor to or assignee of the Company. Neither this
Separation Agreement nor any rights, benefits, duties or obligations hereunder
shall be assignable by either party hereto without the written consent of
the
other party. Any consent may be withheld for any reason or for no reason.
(e) Governing
Law.
The
performance of this Separation Agreement is intended to occur primarily within
the State of Connecticut. The laws of Connecticut exclusively shall govern
the
interpretation and enforcement of this Separation Agreement, but without
regard
to any Connecticut law that may rely upon or refer to the laws of any other
jurisdiction foreign to that state.
(f) Validity.
The
validity or unenforceability of any provision or provisions of this Separation
Agreement shall not affect the validity or enforceability of any other provision
of this Separation Agreement, which shall remain in full force and
effect.
(f) Further
Acts.
All
parties hereto shall perform any and all acts and shall execute any and all
documents which may be reasonably necessary and desirable to carry out the
terms
and intent of this Separation Agreement.
(g) Duplicate
Copies.
Multiple copies of this Separation Agreement shall be executed, each of which
shall be used as an original.
(h)
Acknowledgement.
Xx.
Xxxx acknowledges that he has a period of more than 21 days from the receipt
of
this Separation Agreement in which to consider the terms of this Separation
Agreement. If Xx. Xxxx elects to sign this Separation Agreement, he shall
have a
period of seven days following the execution of this Separation Agreement
to
revoke the
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Separation
Agreement and this Separation Agreement shall not become effective and
enforceable until this seven day period expires.
/s/
Xxxxxxx X. Xxxx
/s/
Xxxxx X. Xxxxx
XXXXXXX
X. XXXX
Witness Date:
June 30, 2005
UIL
HOLDINGS CORPORATION.
/s/
Xxxxxxxxx X. Xxxxxxx
/s/
Xxxxx X. Xxxxx By
Xxxxxxxxx X. Xxxxxxx
Witness Its
Chairman, President and Chief Executive Officer
Date:
June 30, 2005
THE
UNITED ILLUMINATING COMPANY
/s/
Xxxxx X. Xxxxx /s/
Xxxxxxxxx X. Xxxxxxx
Witness By
Xxxxxxxxx X. Xxxxxxx
Its
Chairman and Chief Executive Officer
Date:
June 30, 2005
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