Exhibit 10.5
CORNERSTONE PROPANE GP, INC.
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement"), effective July 1, 1998, is entered
into by and between ______________, an individual ("Executive"), and Cornerstone
Propane GP, Inc. ("Cornerstone") and supersedes any existing employment
agreements between the parties.
RECITALS:
A. The business purpose of Cornerstone is to serve as the managing
general partner of Cornerstone Propane Partners, L. P., a Delaware limited
partnership, and Cornerstone Propane, L. P., a Delaware limited partnership
(collectively the "Partnerships").
B. Executive will provide management services to Cornerstone and the
Partnerships, and, in addition, to all propane distribution and related
companies and businesses ("Additional Companies") in which Cornerstone or the
Partnerships may directly or indirectly hold a majority voting or equity
interest after the effective date of this Agreement.
C. It is contemplated, but not required, by Cornerstone and Executive
that Executive will also provide management services to propane distribution and
related companies and businesses purchased by Northwestern Corporation (the
"Parent") or Northwestern Growth Corporation ("NGC"), other than through
Cornerstone or a Partnership.
AGREEMENT:
1. Employment by Cornerstone and Duration.
a. Full Time and Best Efforts. Subject to the terms set forth
herein, Cornerstone agrees to employ Executive to provide management services
for the businesses conducted by Cornerstone, the Partnerships and the Additional
Companies, as:
[title]
and Executive hereby accepts such employment. During the duration of his
employment with Cornerstone, Executive will devote his best efforts and
substantially all of his business time and attention to the performance of his
duties hereunder, except for vacation periods as set forth herein and reasonable
absences due to injury, illness as permitted by Cornerstone's general policies
or serving on outside Boards of Directors and participating in normal civic
activities.
b. Duties. Executive shall serve in the position shown above for
Cornerstone and shall perform such duties as are customarily associated with
such title, consistent with the By-Laws of Cornerstone and as required by
Cornerstone's Board of Directors (the "Board").
c. Cornerstone Policies. The employment relationship between the
parties shall be governed by the general employment policies and practices of
Cornerstone, including, but not limited to, those relating to protection of
confidential information, except that when the terms of this Agreement differ
from or are in conflict with Cornerstone's general employment policies or
practices, this Agreement shall control.
d. Duration. The duration of employment hereunder shall commence
effective on the date hereof and end on June 30, 2002, subject to the provisions
for termination set forth herein.
e. Locations of Performance. Executive shall be domiciled in the
vicinity of:
Watsonville, California
The parties acknowledge, however, that the Executive will be required to
undertake reasonable
16
travel to Cornerstone's, the Partnerships', and the Additional Companies'
market areas, including the Parent's facilities, in connection with the
performance of his duties hereunder and that Executive may be requested by
Cornerstone, with Executive's mutual consent, to move the domicile of
Executive's performance during the term of this Agreement.
2. Compensation and Benefits.
a. Salary. Executive shall receive for services to be rendered
hereunder annual base compensation included in schedule A hereto.
b. Bonus. Executive shall receive such discretionary bonuses, if
any, as the Board in its sole discretion and from time to time may deem
appropriate.
c. Annual Operating Performance Incentive Plan. Executive shall be
eligible to participate in the Annual Operating Performance Incentive Plan on
the terms and conditions set forth in Schedule B attached hereto.
d. New Acquisition Incentive Plan. Executive shall be eligible to
participate in the New Acquisition Incentive Plan on the terms and conditions
set forth in Schedule C attached hereto.
e. Long-Term Equity Incentive Plan. Executive shall be eligible to
participate in the Long-Term Equity Incentive Plan for Cornerstone on the terms
and conditions set forth in Schedule D attached hereto.
f. Restricted Unit Plan. Executive shall be eligible to participate
in Cornerstone's Restricted Unit Plan, and to receive grants thereunder as
approved by the Board of Directors, acting on the recommendation of its
Nomination and Compensation Committee.
g. Non-Qualified Plans. Executive shall be eligible to participate
in the Non-Qualified Plans of Cornerstone on the terms and conditions set forth
in Schedule E, attached hereto.
h. Participation in Benefit Plans. During the duration of
employment hereunder, Executive shall be entitled to participate in the plans
and programs as set forth in Schedule F attached hereto, or those established by
Cornerstone hereafter to the extent that he is eligible under the general
provisions thereof. (If any such hereafter-established plan is intended as a
substitute for or alternative to one or more Schedule F plans, Executive shall
be eligible to participate in only one, not both, of the plans in question.)
Cornerstone may, in its sole discretion and from time to time, establish
additional senior management benefit programs as it deems appropriate.
i. Life Insurance. Cornerstone will maintain life insurance in the
amount of __________ on the life of Executive, payable to such beneficiary or
beneficiaries as Executive may designate from time to time.
j. Vacation. Executive shall be entitled to an annual vacation of
three weeks (four weeks following 10 years of employment by Cornerstone or its
predecessors).
k. Participation in Change of Control Plan. Executive shall be
entitled to participate in Cornerstone's Change of Control Plan, set forth on
Schedule G attached hereto (herein referred to as Change of Control Agreement).
l. Withholding. All payments and benefits under this Section 2 for
which withholding is required under applicable law will be made subject to the
required withholding.
3. Reasonable Business Expenses and Support.
Executive shall be reimbursed for documented and reasonable business
expenses in connection with the performance of his duties hereunder.
4. Termination of Employment.
17
The date on which Executive's employment by Cornerstone ceases, under
any of the following circumstances, shall be defined herein as the "Termination
Date".
a. Termination Without Cause.
i. Termination Payment. Upon notice to Executive,
Cornerstone's Board may terminate Executive's employment with Cornerstone at
will at any time for any reason and without "cause", as defined below. In the
event Executive's employment is terminated by Cornerstone without cause,
Executive shall receive payment for all accrued salary and vacation time through
the Termination Date, and Cornerstone shall pay Executive within 90 days of the
Termination Date as severance an amount that is equal to the sum of (1) the
compensation of Executive under this Agreement for the remaining term of
employment under this Agreement and (2) the then-current level of Executive's
salary and benefits (as calculated under Sections 1.a. and 2.h.) for a twelve
(12) month period. For purposes of this Section 4.a.(i) the term compensation
shall be defined to include (1) all then-current base compensation and benefits
to Executive provided in Section 2.a., 2.g. and 2.h. for the remaining term of
this agreement, (2) the most recent annual bonuses provided under Section 2.b.
and 2.c. for the remaining term of this agreement, and (3) the amount of all
long term equity incentive plan benefits, as if fully vested, provided under
Section 2.e.
ii. Fundamental Changes. In the event that Cornerstone makes a
fundamental change as defined herein below, Executive may at any time thereafter
terminate his employment, provided, however that Executive shall provide
Cornerstone ten (10) days notice prior to any such termination, and Cornerstone
shall have a reasonable period of time not to exceed thirty (30) days to cure
such fundamental change. "Fundamental change" shall be defined as any of the
following:
(a) Diminution in Executive's duties, authority,
responsibility and/or compensation;
(b) Cornerstone moves Executive's primary office more than
fifty (50) miles from the location shown above without Executive's consent; or
(c) A Change of Control or Major Transaction as defined in
the Change of Control Agreement.
A termination by Executive in the event of a fundamental change shall
be treated as a Cornerstone termination without cause, and Executive shall be
entitled to the termination payments as provided in Section 4.a.(i) of this
Agreement, or the payments provided in the Change of Control Agreement,
whichever is greater.
b. Termination for Cause.
i. Termination Payments. Cornerstone's Board may terminate
Executive's employment with Cornerstone at any time for "cause" as defined
below, immediately upon notice to Executive of the circumstances leading to such
termination for cause. In the event that Executive's employment is terminated
for cause, Executive shall receive payment for all accrued salary and vacation
time through the Termination Date, which in this event shall be the date upon
which notice of termination is given. Executive shall also receive any vested
compensation benefits or incentives as provided under the benefit plans included
in Section 2.h. Cornerstone shall pay all amounts due under this Section
4.b.(i) within 90 days of the Termination Date and shall have no further
obligation to pay severance of any kind nor to make any payment in lieu of
notice.
ii. Restitution. In the event that a majority of the Board of
Directors of Cornerstone determines that Executive has committed an act of
defalcation or other theft of
18
property from Cornerstone, any Partnership or any Additional Company,
Cornerstone may retain any monies due Executive under this Agreement in an
amount necessary to satisfy any restitution obligation owed by Executive to
Cornerstone, any Partnership or any Additional Company, as the case may be.
iii. Definition of Cause. "Cause" means the occurrence or
existence of any of the following with respect to Executive, as determined by a
majority of the Directors of the Board: (a) any act of dishonesty,
misappropriation, embezzlement, intentional fraud or similar conduct involving
Cornerstone; (b) the conviction or the plea of nolo contendere or the equivalent
in respect to a felony involving moral turpitude; (c) any intentional damage of
a material nature to any property of Cornerstone; or (d) conduct by Executive
which demonstrates gross negligence in serving in his capacity as employee of
Cornerstone.
c. Termination Upon Disability. Cornerstone may terminate
Executive's employment in the event Executive suffers a disability that renders
Executive unable to perform the essential functions of his position, even with
reasonable accommodation, for nine (9) months within any twelve (12) month
period. Commencing on the Termination Date, which in this event shall be the
date upon which notice of termination is given, Cornerstone shall pay Executive
within 90 days of the Termination Date an amount that is equal to the
compensation of Executive under this Agreement for the remaining term of
employment under this Agreement in the same amounts as provided under Section
4.a.(i).
d. Benefits Upon Termination. All benefits provided under Section
2.h. hereof shall be extended, to the extent permitted by Cornerstone's
insurance policies and benefit plans, for one (1) year after Executive's
Termination Date, except (a) as required by law (e.g., COBRA health insurance
continuation election), or (b) in the event of a termination described in
Section 4.b. if Cornerstone does not decide to require the noncompetition
agreement as described in Section 6.
e. Termination Upon Death. If Executive dies prior to the
expiration of the duration of employment under this Agreement, Cornerstone shall
continue coverage of Executive's dependents (if any) under all benefit plans or
programs of the type listed above in Section 2.h. herein for a period of twelve
(12) months.
f. Incentive Plans. In the event Executive's employment terminates
for any reason, he (or his estate or heirs) will be entitled to the following
with respect to the incentive plans referred to in Sections 2.c., 2.d., 2.e. and
2.f.:
i. Annual Operating Performance Incentive Plan. A ratable
portion (based on the days in the fiscal year in which termination occurs on or
before its effective date and the total number of days in the fiscal year) of
the cash award to which Executive would have been entitled under the Plan for
the entire year, which shall be paid in cash no later than ninety (90) fiscal
days after the close of the fiscal year.
ii. New Acquisition Incentive Plan. The amount payable for any
addition to the propane operations as to which a letter of intent, memorandum of
understanding or similar document, or the definitive agreements, were entered
into prior to the Termination Date, which shall be payable if and when the
addition is consummated.
iii. Long Term Equity Incentive Plan. The amount payable in
accordance with the Plan's vesting provisions.
iv. Restricted Units Plan. The amount payable in accordance
with the Plan's vesting provisions.
5. Proprietary Information Obligations. During the duration of employment
under this Agreement, Executive will have access to and become acquainted with
confidential and
19
proprietary information of Cornerstone, the Partnerships and the Additional
Companies, including but not limited to information or plans regarding
customer relationships, personnel, sales, marketing, and financial operations
and methods, trade secrets, formulas, devices, secret inventions, processes,
and other compilations of information, records, and specifications
(collectively, except to the extent it was already known from other sources,
or is or becomes general knowledge, in each case without known violation of
any confidentiality obligation, "Proprietary Information"). Executive shall
not disclose any of the Proprietary Information directly or indirectly, or
use it in any way, either during the duration of this Agreement or at any
time thereafter, except as required in the course of his employment with
Cornerstone or as authorized in writing by Cornerstone. All files, records,
documents, computer-recorded information, drawings specifications, equipment
and similar items relating to the business of Cornerstone, whether prepared
by Executive or otherwise coming into his possession, shall remain the
exclusive property of Cornerstone, respectively, and shall not be removed
under any circumstances whatsoever without the prior written consent of the
Chairman of Cornerstone, except when (and only for the period) necessary to
carry out Executive's duties hereunder, and if removed shall be immediately
returned to Cornerstone upon any termination of his employment and no copies
thereof shall be kept by Executive; provided, however, that Executive shall
be entitled to retain documents that were personally owned or acquired.
6. Covenant Not to Compete, Noninterference. Executive shall be subject
to the covenant not to compete and noninterference terms as provided in the
noncompetition agreement set forth in Schedule H attached hereto.
7. Arbitration of Disputes.
a. Scope. Any disputes of any kind regarding this Agreement,
including, but not limited to, its termination shall be subject to final and
binding arbitration, to the extent permitted by law, pursuant to the Employment
Dispute Resolution Rules and Regulations of the American Arbitration
Association. Such disputes shall include, but are not limited to, claims for
breach of contract (express or implied), tort claims, claims for discrimination,
and claims for violation of any federal or state law or regulation.
b. Request. Any request for arbitration must be made in writing
within 365 calendar days of the occurrence giving rise to the dispute.
c. Applicable Law. The arbitrator shall apply the substantive law
(and the law of remedies, if applicable) of Delaware, or federal law, or both,
as applicable to the claim or claims asserted.
d. Final and Binding. The arbitration shall be final and binding
upon all of the parities and shall be enforceable to the extent permitted by
law.
8. Miscellaneous.
a. Notices. Any notices provided hereunder must be in writing and
shall be deemed effective upon the earlier of personal delivery (including
personal delivery by fax) or the third day after mailing by first class mail to
the recipient at the address indicated below:
To Executive:
_________________
_________________
_________________
_________________
To Cornerstone:
20
Corporate Secretary
Cornerstone Propane GP, Inc.
000 Xxxxxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxxx 00000
Voice: 000-000-0000
Fax: 000-000-0000
or to such other address or to the attention of such other person as the
recipient party shall have specified by prior written notice to the sending
party.
b. Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provisions had never been contained herein.
c. Entire Agreement. This document constitutes the final, complete,
and exclusive embodiment of the entire agreement and understanding between the
parties related to the subject matter hereof and supersedes and preempts any
prior or contemporaneous understandings, agreements, or representations by or
between the parties, written or oral.
d. Counterparts. This Agreement may be executed on separate
counterparts, any one of which need not contain signatures of more than one
party, but all of which taken together will constitute one and the same
agreement.
e. Successors and Assigns. This Agreement is intended to bind and
inure to the benefit of and be enforceable by Executive and Cornerstone, and
their respective successors and assigns, except that Executive may not assign
any of his duties hereunder and he may not assign any of his rights hereunder
without the written consent of Cornerstone, which shall not be withheld
unreasonably.
f. Attorneys' Fees. If any legal proceeding is necessary to enforce
or interpret the terms of this Agreement, or to recover damages for breach
hereof, the prevailing party shall be entitled to reasonable attorneys' fees, in
an amount up to $50,000, as well as costs and disbursements, in addition to any
other relief to which he or it may be entitled.
g. Amendments. No amendments or other modifications to this
Agreement may be made except by a writing signed by both parties. Nothing in
this Agreement, express or implied, is intended to confer upon any third person
any rights or remedies under or by reason of this Agreement. No amendment or
waiver of this Agreement requires the consent of any individual, partnership,
corporation or other entity not a party to this Agreement.
h. Choice of Law. All questions concerning the construction,
validity and interpretation of this Agreement will be governed by the internal
law, and not the law of conflicts, of the State of Delaware.
9. Effective Date. This Agreement shall be effective at the commencement
of the duration hereof referred to in Section 1.d. hereof.
Cornerstone Propane GP, Inc.
-----------------------------
[name]
"Executive"
21
By
----------------------------------------
President and Chief Executive Officer Date: , 1998
------------
Date: , 1998
------------
22
