EX-10.1
AGREEMENT
THIS AGREEMENT, dated as of November 8, 1995 (this "Agreement"),
is made by and between Interstate Power Company, a Delaware corporation,
having its principal offices at 0000 Xxxx Xxxxxx, Xxxxxxx, Xxxx 00000-0000
(the "Company"), and Xxxxxxx X. Xxxxx residing at 0000 Xxxxxxxx Xxxxx #00,
Xxxxxxx, Xxxx 00000 (the "Executive").
WHEREAS, the Company considers it essential to the best
interests of its shareholders to xxxxxx the continued employment of key
executive management personnel; and
WHEREAS, the Board of Directors of the Company (the "Board")
recognizes that, as is the case with many publicly-held corporations, the
possibility of a Change in Control (as defined in Section 1.3 below) of
the Company exists from time to time and that such possibility, and the
uncertainty, instability and questions that it may raise for and among key
executive management personnel, may result in the premature departure or
significant distraction of such management personnel to the material
detriment of the Company and its shareholders; and
WHEREAS, the Board has determined that appropriate steps should
be taken to reinforce, focus and encourage the continued attention and
dedication of key members of the executive management of the Company and
its subsidiaries, including (without limitation) the Executive, to their
assigned duties without distraction in the face of potentially disturbing
or unsettling circumstances arising from the possibility of a Change in
Control of the Company;
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and the Executive hereby agree as
follows:
1. Definitions. For purposes of this Agreement, the following
terms shall have the meanings set forth below:
1.1 "Annual Base Salary" shall mean the Executive's rate of
regular basic annual compensation prior to any reduction under a salary
reduction agreement pursuant to section 401(k) or section 125 of the
Internal Revenue Code of 1986, as amended from time to time (the "Code")
or any deferred compensation arrangements, and shall not include, without
limitation, cost of living allowances, fees, retainers, reimbursements,
bonuses, incentive awards, prizes or similar payments.
1.2 "Cause" shall mean:
(i) the willful and continued failure by the Executive to
substantially perform the Executive's duties with the Company, or a
subsidiary of the Company, as such duties may reasonably be defined
from time to time by the Board (or a duly authorized committee
thereof), or to abide by the reasonable written policies of the
Company or of the Executive's primary employer (other than any such
failure resulting from the Executive's incapacity due to physical or
mental illness) after a written demand for substantial performance is
delivered to the Executive by the Board, which demand specifically
identifies the manner in which the Board believes that the Executive
has not substantially performed the Executive's duties or has not
abided by any reasonable written policies, or
(ii) the continued and willful engaging by the Executive in
conduct which is demonstrably and materially injurious to the Company
or its subsidiaries, monetarily or otherwise; or
(iii) the Executive's conviction of, or plea of no contest
to, a felony.
For purposes of clauses (i) and (ii) of this definition, no act, or
failure to act, on the Executive's part shall be deemed "willful" unless
done, or omitted to be done, by the Executive in bad faith and without
reasonable belief that the Executive's act, or failure to act, was in the
best interest of the Company or its subsidiaries. Any act, or failure to
act, based upon authority given pursuant to a resolution duly adopted by
the Board or upon the instructions of the Board (or a committee thereof),
the Company's chief executive officer or other duly authorized senior
officer of the Company (as appropriate) or based upon the advice of
counsel for the Company shall be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in the best
interests of the Company and its subsidiaries. The cessation of
employment of the Executive shall not be deemed to be for Cause unless and
until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than three-
quarters (3/4) of the entire membership of the Board at a meeting of the
Board called and held for such purpose (after reasonable notice of any
such meeting is provided to the Executive and the Executive is given an
opportunity, together with counsel, to be heard before the Board) finding
that, in the good faith opinion of the Board, the Executive has acted in a
manner described in clause (i) or (ii) above and specifying the
particulars thereof in detail.
1.3 "Change in Control" shall mean and be deemed to have
occurred if:
(i) any Person is or becomes the Beneficial Owner (as
that term is defined in Rule 13d-3 under the Securities Exchange
Act of 1934 (the "Exchange Act")), directly or indirectly, of
securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired
directly from the Company) representing twenty-five percent
(25%) or more of the combined voting power of the Company's then
outstanding securities; or
(ii) during any period of twenty-four (24)
consecutive months (not including any period prior to November
1, 1995), individuals who at the beginning of such period
constitute the Board and any new director (other than a director
designated by a Person who has entered into an agreement with
the Company to effect a transaction described in clause (i),
(iii) or (iv) of this definition or any such individual whose
initial assumption of office occurs as a result of either an
actual or threatened election contest (as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act) or other actual or threatened solicitation of proxies or
consents) whose election by the Board or nomination for election
by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of such period or whose
election or nomination for election was previously so approved,
cease for any reason to constitute a majority of the Board; or
(iii) the shareholders of the Company approve a
reorganization, merger or consolidation, other than a
reorganization, merger or consolidation with respect to which
all or substantially all of the individuals and entities who
were Beneficial Owners, immediately prior to such
reorganization, merger or consolidation, of the combined voting
power of the Company's then outstanding securities beneficially
own, directly or indirectly, immediately after such
reorganization, merger or consolidation, more then seventy-five
percent (75%) of the combined voting power of the securities of
the corporation resulting from such reorganization, merger or
consolidation in substantially the same proportions as their
respective ownership, immediately prior to such reorganization,
merger or consolidation, of the combined voting power of the
Company's securities; or
(iv) the shareholders of the Company approve (a) the
sale or disposition by the Company (other than to a subsidiary
of the Company) of all or substantially all of the assets of the
Company (or any such sale or disposition is effected through
condemnation proceedings), or (b) a complete liquidation or
dissolution of the Company.
Notwithstanding the foregoing, a Change in Control shall not include any
event, circumstance or transaction which results from the action
(excluding the Executive's employment activities with the Company or any
of its affiliates) of any Person or group of Persons which includes, is
directly affiliated with or is wholly or partly controlled by one or more
executive officers of the Company and in which the Executive actively
participates.
1.4 "Company" shall include Interstate Power Company and any
successor to its business and/or assets which assumes (either expressly,
by operation of law or otherwise) and/or agrees to perform this Agreement
by operation of law or otherwise (except in determining, under Section 1.3
hereof, whether or not any Change in Control of the Company has occurred
in connection with such succession).
1.5 "Disability" shall mean and be deemed the reason for the
termination by the Company of the Executive's employment, if, as a result
of the Executive's incapacity due to physical or mental illness, (i) the
Executive shall have been absent from the full-time performance of the
Executive's duties with the Company for a period of six (6) consecutive
months, (ii) the Company gives the Executive a Notice of Termination for
Disability, and (iii) within thirty (30) days after such Notice of
Termination is given, the Executive does not return to the full-time
performance of the Executive's duties.
1.6 "Employment Period" shall mean the period commencing on the
date of any Change in Control until the earliest to occur of (i) the date
which is thirty-six (36) months from the date of any such Change in
Control, (ii) the date of termination by the Executive of the Executive's
employment for any reason, (iii) the termination by the Company of the
Executive's employment for any reason or (iv) the Executive's attaining
age sixty-two (62).
1.7 "Good Reason" shall mean the occurrence (without the
Executive's prior express written consent) of any one of the following
acts, or failures to act, unless, in the case of any act or failure to act
described in clauses (i), (iv), (v) or (vi) below, such act or failure to
act is corrected by the Company prior to the Date of Termination specified
in the Notice of Termination given by the Executive in respect thereof not
later than six (6) months after the occurrence of the event that serves as
the basis for the Notice of Termination:
(i) the assignment to the Executive of any duties or
responsibilities inconsistent with those described in Section
3.2 below or with the Executive's position(s) or status
(including, without limitation, offices, titles, and reporting
relationships) as an executive officer of the Company and its
subsidiaries or a substantial adverse alteration in the nature
of the Executive's authority, duties, responsibilities, position
or status from those described in Section 3.2 below or
otherwise;
(ii) a reduction in the Executive's Annual Base
Salary or annual bonus opportunity as in effect on the date of
this Agreement or as the same may be increased at any time
thereafter and from time to time;
(iii) the relocation of the Company's principal
executive offices to a location more than one hundred and twenty
(120)* miles from its location on the date of this Agreement
(or, if different, more than one hundred and twenty (120)* miles
from where such offices are located immediately prior to any
Potential Change in Control) or the Company's requiring the
Executive to be based anywhere other than the Company's
principal executive offices except for required travel on the
Company's business to an extent substantially consistent with
the Executive's business travel obligations as of the date of
this Agreement;
(iv) any failure by the Company to comply with any of
the provisions of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith
and which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
* Thirty (30) miles if the Executive has attained age 60 at the time of
the Change in Control.
(v) the failure by the Company or a subsidiary to
continue in effect any pension benefit or incentive or deferred
compensation plan in which the Executive participates
immediately prior to any Potential Change in Control which is
material to the Executive's total compensation, unless an equitable
arrangement (embodied in an ongoing substitute or alternative plan or
arrangement) has been made with respect to such plan, or the failure
by the Company or a subsidiary to continue the Executive's
participation therein (or in such substitute or alternative plan or
arrangement) on a basis not materially less favorable, both in terms
of the amount of benefits provided and the level of the Executive's
participation relative to other participants, as existed at the time
of the Potential Change in Control;
(vi) the failure by the Company or a subsidiary to
continue to provide the Executive with health and welfare
benefits substantially similar to those enjoyed by the Executive
under any of the Company's or a subsidiary's retirement, life
insurance, medical, health and accident, or disability or
similar plans in which the Executive was participating at the
time of any Potential Change in Control, the taking of any
action by the Company or a subsidiary which would directly or
indirectly materially reduce any of such benefits or deprive the
Executive of any material fringe benefit enjoyed by the
Executive at the time of the Potential Change in Control, or the
failure by the Company or a subsidiary to provide the Executive
with the number of paid vacation days to which the Executive is
entitled in accordance with the Company's or a subsidiary's
normal vacation policy in effect at the time of the Potential
Change in Control;
(vii) any purported termination of the Executive's
employment which is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 7.1; and/or
(viii) the failure of the Company to obtain a written
agreement reasonably satisfactory to the Executive from any successor
to the Company (as described in Section 9.1) to perform this
Agreement.
1.8 "Person" shall have the meaning ascribed thereto in Section
3(a)(9) of the Exchange Act, as modified, applied and used in Sections
13(d) and 14(d) thereof; provided, however, a Person shall not include (i)
the Company or any of its subsidiaries, (ii) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any of
its subsidiaries (in its capacity as such), (iii) an underwriter
temporarily holding securities pursuant to an offering of such securities,
or (iv) a corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same character and proportions as
their ownership of stock of the Company.
1.9 "Potential Change in Control" shall mean and be deemed to
have occurred if:
(i) the Company enters into an agreement, the
consummation of which would result in the occurrence of a Change
in Control;
(ii) the Company or any Person publicly announces an
intention to take actions which, if consummated, would
constitute a Change in Control; and/or
(iii) any Person becomes the Beneficial Owner,
directly or indirectly, of securities of the Company
representing ten percent (10%) or more of the combined voting
power of the Company's then outstanding securities, or any
Person increases such Person's beneficial ownership of such
securities by five (5) percentage points or more over the
percentage so owned by such Person on November 1, 1995.
1.10 "Retirement" shall mean and be deemed the reason for the
termination by the Executive of the Executive's employment if such
employment is terminated in accordance with the Company's normal
retirement policy for those aged 62 and older, not including early
retirement or so-called "window period" retirements, generally applicable
to its officers, as in effect immediately prior to any Potential Change in
Control.
2. Term of this Agreement. This Agreement shall commence on the
date hereof and shall continue in effect through December 31, 1998;
provided, however, that commencing on January 1, 1999 and each January 1
thereafter, the term of this Agreement shall automatically be extended for
one additional year unless, not later than June 30 of the preceding year,
the Company or the Executive shall have given written notice to the other
not to extend this Agreement or a Change in Control shall have occurred
prior to any such January 1; provided, further, however, that if a Change
in Control shall have occurred during the term of this Agreement, this
Agreement shall continue in effect for a period of not less than thirty-
six (36) months beyond the month in which such Change in Control occurred
(the "Term"). Notwithstanding the foregoing provisions of this Section 2,
the Term shall terminate upon the Executive's attaining the age of
sixty-two (62) years (or the date on which the Executive would have
attained age 62 if the Executive had survived).
3. Company's Covenants.
3.1 Severance Payments. In order to induce the Executive to
remain in the employ of the Company and/or one or more of its subsidiaries
and in consideration of the Executive's covenants set forth in Section 4
below, the Company agrees, under the terms and conditions described herein
and in addition to the amounts payable to the Executive under Section 5
below, to pay the Executive the "Severance Payments" described in Section
6.1 below and the other payments and benefits described herein in the
event the Executive's employment with the Company is terminated during the
Employment Period or under the other circumstances set forth in Section
6.1 below.
3.2 Position and Duties. During the Employment Period, (a) the
Executive's position (including status, offices, titles and reporting
relationships), authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of those
held, exercised and assigned at any time during the one hundred eighty
(180) day period immediately preceding any related Potential Change in
Control, and (b) the Executive's services shall be performed at the
location where the Executive was employed immediately preceding any such
Potential Change in Control, or any office or location less than one
hundred and twenty (120)* miles from such location.
3.3 Base Salary. During the Employment Period, the Executive
shall receive Annual Base Salary at least equal to twelve (12) times the
highest monthly base salary paid or payable, including (without
limitation) any base salary which has been earned but deferred, to the
Executive by the Company and its affiliated companies in respect of the
twelve (12) month period immediately preceding the month in which any
related Potential Change in Control occurs. In addition, Annual Base
Salary shall not be reduced after the occurrence of a Potential Change in
Control. As used in this Agreement, the term "affiliated companies" shall
include any company controlled by, controlling or under common control
with the Company.
3.4 Annual Bonus. In addition to Annual Base Salary, if the
Company adopts an annual bonus program for officers during the Employment
Period (the "Annual Bonus") the Executive shall be entitled to tee in such
Annual Bonus program on a basis equivalent to other executive officers of
the Company. Each Annual Bonus shall be paid no later than the end of the
third month of the fiscal year next following the fiscal year for which
the Annual Bonus is awarded, unless the Executive shall elect to defer the
receipt of such Annual Bonus in accordance with rules established by the
Company for that purpose.
3.5 Incentive, Savings and Retirement Plans. During the
Employment Period, the Executive shall be entitled to participate in all
incentive, savings and retirement plans, practices, policies and programs
applicable generally to other peer executives of the Company and its
subsidiaries, but in no event shall such plans, practices, policies and
programs provide the Executive with incentive opportunities (measured with
respect to both regular and special incentive opportunities, to the
extent, if any, that such distinction is applicable), savings
opportunities and retirement benefit opportunities, in each case, less
favorable, in the aggregate, than the most favorable of those provided by
the Company and its affiliated companies for the Executive under such
plans, practices, policies and programs as in effect at any time during
the one hundred eighty (180) day period immediately preceding any related
Potential Change in Control or if more favorable to the Executive, those
provided generally at any time thereafter to other peer executives of the
Company and its affiliated companies.
3.6 Welfare Benefit Plans. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be
entitled to participate in and shall receive all benefits under all of the
health and welfare benefit plans, practices, policies and programs
* Thirty (30) miles if the Executive has attained age 60 at the time of
the Change in Control.
provided by the Company and its affiliated companies (including, without
limitation, medical, prescription, dental, disability, employee life,
group life, accidental death and travel accident insurance plans and
programs) to the extent (and at the same cost) applicable generally to
other peer executives of the Company and its subsidiaries, but in no event
shall such plans, practices, policies and programs provide the Executive
with benefits that are less favorable, in the aggregate, than the most
favorable of such plans, practices, policies and programs in effect for
the Executive at any time during the one hundred eighty (180) day period
immediately preceding any related Potential Change in Control or, if more
favorable to the Executive, those provided generally at any time
thereafter to other peer executives of the Company and its affiliated
companies.
3.7 Expenses. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all reasonable
business expenses incurred by the Executive in accordance with the most
favorable policies, practices and procedures of the Company and its
affiliated companies in effect for the Executive at any time during the
one hundred eighty (180) day period immediately preceding any related
Potential Change in Control or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies.
3.8 Office Support; Perquisites. During the Employment Period,
the Executive shall be entitled to a private office, secretarial support
and other facilities, perquisites and programs to enable the Executive to
be able to discharge the Executive's responsibilities hereunder in
accordance with the most favorable plans, practices, programs and policies
of the Company and its affiliated companies in effect for the Executive at
any time during the one hundred eighty (180) day period immediately
preceding any related Potential Change in Control or, if more favorable to
the Executive, as in effect generally at any time thereafter with respect
to other peer executives of the Company and its affiliated companies.
3.9 Vacation. During the Employment Period, the Executive
shall be entitled to paid vacation in accordance with the most favorable
plans, policies, programs and practices of the Company and its affiliated
companies as in effect for the Executive at any time during the one
hundred eighty (180) day period immediately preceding any related
Potential Change in Control or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies.
4. The Executive's Covenants.
4.1 Employment. The Executive agrees that, subject to the
terms and conditions of this Agreement, in the event of a Change in
Control during the Term the Executive will remain in the employ of the
Company during any related Employment Period.
4.2 Time and Attention. During the Employment Period, and
excluding any periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote reasonable attention and time
during normal business hours to the business and affairs of the Company
and to use the Executive's reasonable best efforts to perform faithfully
and efficiently the responsibilities and duties assigned to the Executive
hereunder. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (i) serve on corporate, civic or
charitable boards or committees, (ii) deliver lectures and fulfill
speaking engagements and (iii) manage personal investments, so long as
such activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company and its
subsidiaries in accordance with this Agreement. It is expressly understood
and agreed that to the extent that any such activities have been conducted
by the Executive prior to any Potential Change in Control, the
reinstatement or continued conduct of such activities (or the
reinstatement or conduct of activities similar in nature and scope
thereto) subsequent to any related Potential Change in Control shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company and its subsidiaries.
4.3. Non-interference; Confidential Information
(a) No Interference. For so long as the Executive is employed
by the Company, and for a period of two (2) years thereafter, the
Executive shall not, whether for his own account or for the account of any
other individual, partnership, firm, corporation or other business
organization (other than the Company or one of its affiliates),
intentionally solicit, endeavor to entice away from the Company (or any of
its affiliates), or otherwise interfere with the relationship of the
Company (or any of its affiliates) with, any person who is employed by or
otherwise engaged to perform services for the Company (or any of its
affiliates) including, but not limited to, any independent representatives
or organizations, or any person or entity that is a customer of the
Company (or any of its affiliates). The Executive understands and agrees
that the rights and obligations set forth in this Section 4.3(a) could
extend beyond the Term.
(b) Confidential Information. The Executive covenants and
agrees with the Company that he will not at any time, during or after
employment with the Company, except in performance of the Executive's
obligations to the Company or with the prior express written consent of
the Board of Directors, directly or indirectly, intentionally or
unintentionally, disclose any Confidential Information that he may learn
or has learned by reason of his employment or association with the
Company, or any predecessors to its business, or use any such information
for his own personal benefit or gain. The term "Confidential Information"
includes, without limitation, information not previously disclosed to the
public or to the trade by the Company's management with respect to the
products, facilities and methods, trade secrets and other intellectual
property, systems, procedures, manuals, confidential reports, fee or rate
information, customer lists, financial information (including the
revenues, costs or profits associated with any of the Company's activities
or products), business plans, prospects, opportunities or other
information of the Company or any of its affiliates. Confidential
Information shall not include information which (i) is or becomes
generally available to the public other than as a result of disclosure by
the Executive in violation of this Section 4.3(b) or (ii) the Executive is
required to disclose under any applicable laws, regulations or directives
of any government agency, tribunal or authority having jurisdiction in the
matter or under subpoena or other process of law. The Executive
understands and agrees that the rights and obligations set forth in this
Section 4.3 (b) shall extend beyond the Term.
(c) Exclusive Property. The Executive confirms that all
Confidential Information is and shall remain the exclusive property of the
Company or any of its affiliates. All business records, papers and
documents kept or made by the Executive relating to the business of the
Company (or any of its affiliates) or any Confidential Information shall
be and remain the property of the Company. Upon termination of employment
with the Company or upon the request of the Company at any time, the
Executive shall promptly deliver to the Company, and shall not without the
prior express written consent of the Company retain, any and all copies of
(i) any written materials not previously made available to the public, or
(ii) records and documents made by the Executive or coming into his
possession concerning any Confidential Information or the business or
affairs of the Company or any predecessors to its business, or any of its
affiliates. The Executive understands and agrees that the rights and
obligations set forth in this Section 4.3(c) shall extend beyond the Term.
(d) Injunctive Relief. Without intending to limit the remedies
available to the Company, the Executive acknowledges that a breach of any
of the covenants contained in this Section 4.3 may result in material
irreparable injury to the Company or its affiliates for which there is no
adequate remedy at law, that it will not be possible to measure damages
for such injuries precisely and that, in the event of such a breach or
threat thereof, the Company shall be entitled to obtain a temporary
restraining order and/or a preliminary or permanent injunction restraining
the Executive from engaging in activities prohibited by this Section 4.3
or such other relief as may be required to specifically enforce any of the
covenants in this Section 4.3.
5. Compensation Other Than Severance Payments.
5.1 Disability. Following a Potential Change in Control and
during the Term, during any period that the Executive fails to perform the
Executive's full-time duties with the Company as a result of incapacity
due to physical or mental illness, the Executive's full salary shall be
paid to the Executive by the Company at a rate no less than the rate in
effect at the commencement of any such disability period, together with
all compensation and benefits payable to the Executive under the terms of
any compensation or benefit plan, program or arrangement maintained by the
Company or its subsidiaries during such disability period, until the
Executive's employment is terminated by the Company for Disability.
5.2 Base Salary. If the Executive's employment shall be
terminated for any reason following a Potential Change in Control and
during the Term, the Executive's full salary shall be paid to the
Executive by the Company through the Date of Termination (as defined below
in Section 7.2) at the rate in effect at the time the Notice of
Termination is given, together with all compensation and benefits payable
to or with respect to the Executive through the Date of Termination under
the terms of any compensation or benefit plan, program or arrangement
maintained by the Company or its subsidiaries during such period.
5.3 Benefits. If the Executive's employment shall be
terminated for any reason following a Potential Change in Control and
during the Term, the Executive's normal post-termination compensation and
benefits shall be paid to the Executive as such payments become due. Such
post-termination compensation and benefits shall be determined under, and
paid in accordance with, the retirement, health insurance, life insurance
and other compensation or benefit plans, programs and arrangements
maintained by the Company or its affiliates.
6. Severance Payments.
6.1 Severance. The Company shall pay the Executive the
payments and benefits described in this Section 6.1 (the "Severance
Payments") upon the termination of the Executive's employment with the
Company following a Change in Control and during the Term, in addition to
the payments and benefits described in Section 5 hereof, unless such
termination is (i) by the Company for Cause, (ii) by reason of Retirement,
(iii) by the Executive without Good Reason, (iv) due to death, or (v) due
to Disability. In addition, the Executive's employment shall be deemed to
have been terminated following a Change in Control by the Company without
Cause or by the Executive with Good Reason (a) if the Executive reasonably
demonstrates that the Executive's employment was terminated prior to a
Change in Control without Cause (1) at the request of a Person who has
entered into an agreement with the Company the consummation of which will
constitute a Change in Control (or who has taken other steps reasonably
calculated to effect a Change in Control) or (2) otherwise in connection
with, as a result of or in anticipation of a Change in Control, or (b) if
the Executive terminates his employment for Good Reason prior to a Change
in Control and the Executive reasonably demonstrates that the
circumstance(s) or event(s) which constitute such Good Reason occurred (1)
at the request of such Person or (2) otherwise in connection with, as a
result of or in anticipation of a Change in Control. The Executive's
right to terminate the Executive's employment for Good Reason shall not be
affected by the Executive's incapacity due to physical or mental illness.
The Executive's continued employment shall not constitute consent to, or a
waiver of rights with respect to, any act or failure to act constituting
Good Reason hereunder. In the event of the Disability or death of the
Executive after the Date of Termination in respect of any termination
without cause or any termination for Good Reason, payments and benefits
shall be made to the Executive, or the Executive's beneficiaries or legal
representative, as the case may be.
(a) In lieu of any further salary and annual bonus
payments to the Executive for periods subsequent to the Date of
Termination, the Company shall pay to the Executive a lump sum
severance payment, in cash, equal to three (3) or, if less, the
number of years, including fractions, from the Date of
Termination until the Executive reaches the age of sixty-two
(62) years times the sum of (i) the Executive's Annual Base
Salary immediately preceding the Change in Control or, if
higher, the Executive's Annual Base Salary on the Date of
Termination, and (ii) the average annual bonus paid or payable
to the Executive with respect to the three (3) years (or portion
thereof with respect to which an annual bonus was paid) prior to
the year in which the Date of Termination occurs.
(b) For a thirty-six (36) month period after the Date
of Termination, or if sooner, until the Executive reaches the
age of sixty-two (62) years, the Company shall arrange to
provide the Executive with life, disability, accident and health
insurance benefits substantially similar (and at the same cost)
to those that the Executive is receiving immediately prior to
any related Potential Change in Control or the receipt of the
Notice of Termination (without giving effect to any reduction in
such benefits subsequent to a Change in Control which reduction
constitutes Good Reason), whichever is greater. Benefits
otherwise receivable by the Executive pursuant to this Section
6.1(b) shall be reduced to the extent comparable benefits are
actually received by or made available to the Executive without
cost during such period following the Executive's termination of
employment (and any such benefits actually received by the
Executive shall be reported to the Company by the Executive).
(c) The Executive shall receive, at the expense of the
Company, outplacement services, on an individualized basis at a level
of service commensurate with the Executive's status with the Company
immediately prior to the Change in Control (or, if higher,
immediately prior to the termination of the Executive's employment),
provided by a nationally recognized executive placement firm selected
by the Executive and reasonably satisfactory to the Company; provided
that the cost to the Company of such services shall not exceed 15% of
the Executive's Annual Base Salary in effect immediately prior to the
Change in Control.
(d) All outstanding stock options previously granted to
the Executive shall become immediately 100% vested and exercisable,
and all shares of restricted stock shall become immediately 100%
vested and all forfeiture restrictions thereon shall lapse. Such
accelerated and vested options shall be exercisable for the remainder
of the term of such option, as set forth in the Executive's related
stock option agreement (without regard to any truncation of such
period therein, or under any plan or arrangement maintained by the
Company,on account of any termination of the Executive's employment).
6.2 Code Section 280G Reduction. Notwithstanding any other
provisions of this Agreement or of any other agreement, contract,
understanding, plan or program entered into or maintained by the Company,
if any payment or benefit received or to be received by the Executive in
connection with a Change in Control or the termination of the Executive's
employment (whether pursuant to the terms of this Agreement or any other
plan, arrangement or agreement with (a) the Company or any affiliate,
parent or subsidiary of the Company, (b) any Person whose actions result
in a Change in Control, or (c) any Person affiliated with the Company)
(all such payments and/or benefits, including the payments and benefits,
if any, under this Section 6, being hereinafter referred to as the "Total
Payments") would subject the Executive to the excise tax imposed under
Section 4999 of the Code, on any successor section thereto (the "Excise
Tax"), and if the amount of such Total Payments, reduced by all federal,
state and local taxes applicable with respect thereto, including without
limitation the Excise Tax, is less than the amount of Total Payments which
would otherwise be payable to the Executive, after all such taxes, without
the imposition of the Excise Tax, then, to the extent necessary to
eliminate the imposition of the Excise Tax (after taking into account any
reduction in the Total Payments provided by reason of Section 280G of the
Code under plan, arrangement or agreement), (i) the cash and non-cash
payments and benefits payable under this Agreement shall first be reduced
(but not below zero), and (ii) all other cash and non-cash payments and
benefits shall next be reduced (but not below zero); but only if, by
reason of any such reduction, the Total Payments with any such reduction,
after all such taxes, shall exceed the Total Payments without any such
reduction, after all such taxes. For purposes of this Section 6.2, (A) no
portion of the Total Payments the receipt or enjoyment of which the
Executive shall have effectively waived in writing prior to the Date of
Termination shall be taken into account, (B) no portion of the Total
Payments shall be taken into account which in the opinion of tax counsel
selected in good faith by the Company does not constitute a "parachute
payment" within the meaning of Section 280G(b)(2) of the Code, including
(without limitation) by reason of Section 280G(b)(4)(A) of the Code, (C)
the payments and/or benefits under this Agreement shall be reduced only to
the extent necessary so that the Total Payments (other than those referred
to in clauses (A) and (B) above) in their entirety constitute reasonable
compensation for services actually rendered within the meaning of Section
280G(b)(4)(B) of the Code or are otherwise not subject to disallowance as
deductions, in the opinion of the tax counsel referred to above in clause
(B), and (D) the value of any non-cash payment or benefit or any deferred
payment or benefit included in the Total Payments shall be determined by
the Company's independent auditors in accordance with the principles of
Sections 280G(d)(3) and (4) of the Code. Except as otherwise provided
above, the foregoing calculations and determinations shall be made in good
faith by the Company and the Executive. If no agreement on the
calculations is reached, then the Executive and the Company will cooperate
and attempt to agree to the selection of an accounting firm to make the
calculations. If no agreement can be reached regarding the selection of
an accounting firm, the Company will select in good faith a prominent
national accounting firm that has no current or recent business
relationship with the Company. The Company shall pay all costs and
expenses incurred in connection with any such calculations or
determinations. Any calculations or determinations made in accordance
with this Section 6.2 shall be conclusive and binding on all parties.
6.3 Date of Payment. The payments provided for in Section
6.1.(a) and Section 6.2 hereof shall , unless deferred pursuant to the
last sentence of this Section 6.3, be made not later than the fifteenth
(15th) day following the Date of Termination; provided, however, that if
the amounts of such payments cannot be finally determined on or before
such day, the Company shall pay to the Executive (subject to the last
sentence of this Section 6.3) on such day an estimate, as determined in
good faith by the Company, of the minimum amount of such payments to which
the Executive is likely to be entitled to and shall pay the remainder of
such payments (together with interest at the rate provided in section
1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined
but in no event later than the thirtieth (30th) day after the Date of
Termination. In the event that the amount of the estimated payments
exceeds the amount subsequently determined to have been due, such excess
shall constitute a loan by the Company to the Executive, payable on the
tenth (10th) business day after demand by the Company (together with
interest at the rate provided in section 1274(b)(2)(B) of the Code). At
the time that payments are made or would have been made, disregarding for
this purpose only, any deferral effected by the Executive, under this
Section 6.3, the Company shall provide the Executive with a detailed
written statement setting forth the manner in which such payments were
calculated and the basis for such calculations including, without
limitation, any opinions or other advice the Company has received from
outside counsel, auditors or consultants (and any such opinions or advice
which are in writing shall be attached to the statement). The Executive
may irrevocably elect, in a writing delivered to the Company no later than
the last day of the calendar year preceding the calendar year in which
occurs the Change in Control, to defer the receipt of any payment to which
the Executive may become entitled to under Section 6.1 of this Agreement
for the period of time specified in such writing.
6.4 Legal Costs. The Company shall also reimburse the
Executive for reasonable legal fees and expenses incurred in good faith by
the Executive as a result of any dispute with the Company or any affiliate
of the Company regarding the payment of any benefit provided for in this
Agreement (including, but not limited to, all such fees and expenses
incurred in disputing any termination or in seeking in good faith to
obtain or enforce any benefit or right provided by this Agreement or in
connection with any tax audit or proceeding to the extent attributable to
the application of section 4999 of the Code) 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. Such payments shall, in the aggregate, not
exceed $10,000 and shall be made within ten (10) business days after
delivery of the Executive's written requests for payment accompanied by
such evidence of fees and expenses incurred as the Company reasonably may
require.
7. Termination Procedures and Compensation During Dispute.
7.1 Notice of Termination. After a Change in Control and
during the Term, any purported termination of the Executive's employment
with the Company (other than by reason of death) shall be communicated by
written Notice of Termination from one party hereto to the other party
hereto in accordance with Section 10 hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall
indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment
with the Company under the provision so indicated. Further, a Notice of
Termination for Cause is required to include a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters (3/4) of
the entire membership of the Board at a meeting of the Board which was
called and held for the purpose of considering such termination (which
meeting may be a regular meeting of the Board where prior notice of
consideration of such termination is given to members of the Board)
finding that, in the good faith opinion of the Board, the Executive
engaged in conduct set forth in clause (i) or (ii) of the definition of
Cause herein, and specifying the particulars thereof in detail. For
purposes of this Agreement, any purported termination not effected in
accordance with this Section 7.1 shall not be considered effective.
7.2 Date of Termination. "Date of Termination", with respect
to any purported termination of the Executive's employment after a Change
in Control and during the Term, shall mean (i) if the Executive's
employment is terminated for Disability, thirty (30) days after Notice of
Termination is given (provided that the Executive shall not have returned
to the full-time performance of the Executive's duties during such thirty
(30) day period), and (ii) if the Executive's employment is terminated for
any other reason, the date specified in the Notice of Termination (which,
in the case of a termination by the Company, shall not be less than thirty
(30) days (except in the case of a termination for Cause) and, in the case
of a termination by the Executive, shall not be less than fifteen (15)
days nor more than sixty (60) days, respectively, after the date such
Notice of Termination is given).
7.3 Dispute Concerning Termination. If within fifteen (15)
days after any Notice of Termination is given, or, if later, prior to the
Date of Termination (as determined without regard to this Section 7.3),
the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, the Date of Termination
shall be the date on which the dispute is finally resolved either by
mutual written agreement of the parties or by a final judgment, order or
decree of a court of competent jurisdiction (which is not appealable or
with respect to which the time for appeal therefrom has expired and no
appeal has been perfected); provided, however, that the Date of
Termination shall be extended by a notice of dispute only if the basis for
such notice is reasonable, such notice is given in good faith and the
party giving such notice pursues the resolution of such dispute with
reasonable diligence.
7.4 Compensation During Dispute. If a purported termination
occurs following a Change in Control and during the Term, and such
termination is disputed in accordance with Section 7.3 above, the Company
shall continue to pay the Executive the full compensation (including,
without limitation, Annual Base Salary and Annual Bonus) in effect at the
time of any related Potential Change in Control or when the notice giving
rise to the dispute was given (whichever is greater) and continue the
Executive as a participant in all compensation, incentive, pension and
welfare benefit and insurance plans in which the Executive was
participating at the time of any Potential Change in Control or when the
notice giving rise to the dispute was given, whichever is greater, until
the dispute is finally resolved in accordance with Section 7.3 hereof.
Amounts paid under this Section 7.4 are in addition to all other amounts
due under this Agreement (other than those due under Section 5.2 hereof)
and shall not be offset against or reduce any other amounts due under this
Agreement or any other plan, agreement or arrangement.
8. No Mitigation. The Company agrees that, if the Executive's
employment is terminated during the Term, the Executive is not required to
seek other employment or to attempt in any way to reduce any amounts
payable to the Executive by the Company pursuant to Section 6 or Section
7.4. Further, the amount of any payment or benefit provided for in
Section 6 (other than pursuant to Section 6.1.(b)) or Section 7.4 shall
not be reduced by any compensation earned by the Executive as the result
of employment by another employer, by retirement benefits, or offset
against any amount claimed to be owed by the Executive to the Company or
any of its subsidiaries, or otherwise.
9. Successors; Binding Agreement.
9.1 Successors. In addition to any obligations imposed by law
upon any successor to the Company, the Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of
the Company to expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. Failure of the Company
to obtain such assumption and agreement prior to the effectiveness of any
such succession shall be a breach of this Agreement and shall entitle the
Executive to compensation from the Company in the same amount and on the
same terms as the Executive would be entitled to hereunder if the
Executive were to terminate employment with the Company for Good Reason
after a Change in Control, except that, for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall
be deemed the Date of Termination.
9.2 Binding Agreement. This Agreement shall inure to the
benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive shall die while any
amount would still be payable to the Executive hereunder (other than
amounts which, by their terms, terminate upon the death of the Executive)
if the Executive had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this
Agreement to the beneficiary (or beneficiaries) designated by the
Executive from time to time in accordance with the procedures for notice
set out in Section 10; provided, however, that if there shall be no
effective designation of beneficiary by the Executive, such amounts shall
be paid to the executors, personal representatives or administrators of
the Executive's estate.
10. Notices; Other Communications. For the purpose 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 certified mail, return receipt
requested, postage prepaid, addressed to the respective addresses set
forth below, or to such other address as either party may have furnished
to the other in writing in accordance herewith, except that notice of
change of address shall be effective only upon actual receipt:
To the Company:
Interstate Power Company
0000 Xxxx Xxxxxx
X.X. Xxx 000
Xxxxxxx, Xxxx 00000-0000
Attention: Corporate Secretary
To the Executive:
Xx. Xxxxxxx X. Xxxxx
0000 Xxxxxxxx Xxxxx #00
Xxxxxxx, Xxxx 00000
11. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge (i) is
agreed to in writing and signed by the Executive and such officer as may
be specifically designated by the Board, or (ii) is (a) approved by such
officer as may be specifically designated by the Board, (b) effective only
in respect of any Change in Control resulting from the proposed merger
transaction involving the Company, IES Industries Inc. and WPL Holdings,
Inc., and (c) applicable to all members of the senior management of the
Company who have executed an agreement substantially similar to this
Agreement. In respect of any proposed waiver, modification, or discharge
which meets the conditions specified above in Section 11(ii), the
Executive hereby irrevocably appoints the Chairman of the Board of the
Company to be the Executive's attorney-in-fact for the limited purpose of
entering into, on behalf of the Executive, any form of waiver,
modification or discharge necessary to effect any such waiver,
modification or discharge meeting the conditions of this Section 11(ii).
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 expressly set forth in this Agreement. The
validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of Iowa without regard to the
principles of conflict of laws thereof. All references to sections of the
Exchange Act or the Code (or the rules and/or regulations under either)
shall be deemed also to refer to and include any successor provisions to
such sections. Any payments provided for hereunder shall be paid net of
any applicable withholding required under federal, state or local law and
any additional withholding to which the Executive has agreed. The rights
and obligations of the Company and the Executive under this Agreement
shall survive the expiration of the Term and the Employment Period.
12. Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement, all of which shall remain in full force
and effect.
13. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
14. No Limitation. Nothing in this Agreement shall prevent or limit
the Executive's continuing or future participation in any plan, program,
policy or practice provided by the Company or any of its affiliated
companies and for which the Executive may qualify, nor shall anything
herein limit or otherwise affect such rights as the Executive may have
under any other contract or agreement with the Company or any of its
affiliated companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, policy,
practice or program of or any contract or agreement with the Company or
any of its affiliated companies at or subsequent to the Date of
Termination shall be payable in accordance with such plan, policy,
practice or program or contract or agreement as in effect from time to
time except as explicitly modified by this Agreement.
15. Other Agreements. This Agreement contains the entire agreement
between the parties concerning the subject matter hereof and supersedes
all prior agreements understandings, discussions, negotiations and
undertakings, whether written or oral, between the parties with respect
thereto.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.
INTERSTATE POWER COMPANY
By: /s/ Xxxxx X. Xxxxxxxxxxx
Title: Chairman, President and Chief
Executive Officer
/s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx
