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EXHIBIT 10.2
EMPLOYMENT AGREEMENT OF XXXXX X. XXXXXXXX
THIS AGREEMENT by and between Northern States Power Company, a
Minnesota corporation (the "Company"), and New Century Energies, Inc., a
Delaware corporation ("NCE"), and Xxxxx X. Xxxxxxxx (the "Executive"), dated as
of the 24th day of March, 1999.
WITNESSETH THAT
WHEREAS, the Company and NCE have entered into an Agreement
and Plan of Merger dated as of March 24, 1999 (the "Merger Agreement"), whereby
NCE will merge with and into the Company (the "Merger");
WHEREAS, the Company and NCE wish to provide for the orderly
succession of management of the surviving company in the Merger (the "Company")
following the Effective Time (as defined in the Merger Agreement); and
WHEREAS, the Company and NCE further wish to provide for the
employment by the Company of the Executive, and the Executive wishes to serve
the Company, in the capacities and on the terms and conditions set forth in this
Agreement;
NOW, THEREFORE, it is hereby agreed as follows:
1. EFFECT ON PRIOR AGREEMENTS; EMPLOYMENT PERIOD.
(a) The Executive is currently employed by NCE pursuant to an
Employment Agreement dated as of August 1, 1997 (the "Prior Agreement"). The
Prior Agreement shall remain in effect without amendment until the Effective
Time (as defined in the Merger Agreement), and this Agreement shall supersede
the Prior Agreement at the Effective Time. The Change in Control Agreement
between NCE and the Executive shall remain in effect from and after the date of
this Agreement, except that the Executive hereby waives any right that he might
otherwise have to receive any severance or other payment or benefit under the
Change In Control Agreement that would be duplicative of a payment or benefit to
which he is entitled under this Agreement.
(b) The Company shall employ the Executive, and the Executive
shall serve the Company, on the terms and conditions set forth in this
Agreement, for an initial period (the "Initial Period") and a further period
(the "Secondary Period") (the Initial Period and the Secondary Period are
hereinafter referred to in the aggregate as the "Employment Period"). The
Initial Period shall begin at the Effective Time and end on the first
anniversary of the Effective Time. The Secondary Period shall begin on the first
day after the end of the Initial Period and end on the third anniversary of such
day; provided, that on each anniversary of such day, the Secondary Period shall
be automatically extended by an additional year unless either the Company or the
Executive shall have given notice to the other, not less than 60 days before
such anniversary, that the Secondary Period shall not be so extended.
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(c) Notwithstanding any other provision of this Agreement,
this Agreement shall be null and void and of no force or effect unless and until
the Merger is consummated.
2. POSITION AND DUTIES; LOCATION.
(a) During the Initial Period, the Executive shall serve as
Chief Executive Officer and President of the Company. During the Second Period,
the Executive shall serve as Chief Executive Officer of the Company and Chairman
of the Board of Directors of the Company (the "Board"). The Executive shall
serve in each such case as an employee of the Company and with such duties and
responsibilities as are customarily assigned to such positions, and such other
duties and responsibilities not inconsistent therewith as may from time to time
be assigned to him by the Board. The Executive shall be a member of the Board on
the first day of the Employment Period, and the Board shall propose the
Executive for re-election to the Board throughout the Employment Period.
(b) During the Employment Period as is customary, the
Executive shall report to the Board.
(c) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive shall
devote reasonable attention and time during normal business hours to the
business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Executive under this Agreement, use the
Executive's reasonable best efforts to carry out such responsibilities
faithfully and efficiently. It shall not be considered a violation of the
foregoing for the Executive to serve on corporation, industry, civic or
charitable boards or committees, so long as such activities do not significantly
interfere with the performance of the Executive's responsibilities as an
employee of the Company in accordance with this Agreement.
(d) During the period beginning on the first day of the
Employment Period and ending as soon as practicable thereafter but in no event
later than the date of the first subsequent annual meeting of the shareholders
of the Company (the "Transition Period"), the Executive's service shall be
performed at the Company's headquarters in Minneapolis, Minnesota and at NCE's
headquarters in Denver, Colorado. After the end of the Transition Period, the
Executive shall spend the majority of his time and perform the majority of his
duties at the Company's headquarters in Minneapolis, Minnesota. No later than
the end of the Transition Period, the Executive shall relocate the residence at
which he spends the majority of his time to the Twin Cities area. The Company
shall reimburse the Executive for all of his moving expenses incurred in such
relocation, and during the period from the first day of the Employment Period
through the earlier of the end of the Transition Period and the date of such
relocation, the Company shall provide the Executive with an apartment in
Minneapolis and reimburse him for reasonable expenses of meals while in
Minneapolis and travel between Minneapolis and his principal residence, provided
in each case that the Executive complies with the policies, practices and
procedures of the Company for submission of expense reports, receipts, or
similar documentation of such expenses.
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3. COMPENSATION.
(a) Base Salary. The Executive's compensation during the
Employment Period shall be determined by the Board upon the recommendation of
the Compensation Committee of the Board, subject to the next sentence and
Section 3(b). During the Employment Period, the Executive shall receive an
annual base salary (the "Annual Base Salary") at least equal to his annual base
salary as in effect immediately before the Effective Time. The Annual Base
Salary shall be payable in accordance with the Company's regular payroll
practice for its senior executives, as in effect from time to time. During the
Employment Period, the Annual Base Salary shall be reviewed at least annually
for possible increase. Any increase in the Annual Base Salary shall not limit or
reduce any other obligation of the Company under this Agreement.
(b) Incentive Compensation. During the Employment Period, the
Executive shall participate in short-term incentive compensation plans and
long-term incentive compensation plans (the latter to consist of plans offering
stock options, restricted stock and other long-term incentive compensation)
providing him with the opportunity to earn, on a year-by-year basis, short-term
and long-term incentive compensation (the "Incentive Compensation") at least
equal to the amounts that he had the opportunity to earn under the comparable
plans of NCE as in effect immediately before the Effective Time.
(c) Other Benefits.
(i) Supplemental Executive Retirement Plan. During the
Employment Period, the Executive shall participate in a supplemental executive
retirement plan ("SERP") such that the aggregate value of the retirement
benefits that he and his spouse will receive at the end of the Employment Period
under all defined benefit plans of the Company and its affiliates (whether
qualified or not) will be not less than the aggregate value of the benefits he
and his spouse would have received (and with the same forms of benefit payments)
had he continued, through the end of the Employment Period, to accrue the
supplemental retirement benefits provided by the terms of his employment
agreement with NCE as in effect immediately before the Effective Time and those
of Public Service Company of Colorado ("PSCo") as in effect as of August 1,
1997.
(ii) During the Employment Period, the Company shall
provide the Executive with life insurance coverage providing a death benefit to
such beneficiary or beneficiaries as the Executive may designate of not less
than 400% of the Executive's then-current Annual Base Salary if death occurs
during employment, and equal to 200% his final Annual Base Salary if death
occurs following termination of employment.
(iii) In addition, and without limiting the generality of
the foregoing, during the Employment Period and thereafter: (A) the Executive
shall be entitled to participate in all applicable incentive, savings and
retirement plans, practices, policies and programs of the Company and its
subsidiaries to the same extent as other senior executives of the Company; and
(B) the Executive and/or the Executive's family, as the case may be, shall be
eligible for participation in, and shall receive all benefits under, all
applicable welfare benefit
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plans, practices, policies and programs provided by the Company and its
subsidiaries, other than severance plans, practices, policies and programs but
including, without limitation, medical, prescription, dental, disability, sick
leave, employee life insurance, group life insurance, accidental death and
travel accident insurance plans and programs, to the same extent as other senior
executives of the Company (but excluding the Company's Senior Executive
Severance Policy and 1999 Senior Executive Severance Policy and NCE's 1999
Senior Executive Severance Policy (the "Severance Policies").
(d) Fringe Benefits. During the Employment Period, the
Executive shall be entitled to receive fringe benefits on the same terms and
conditions as the greater of (i) the fringe benefits received by, or available
to, him from NCE immediately before the Effective Time, or (ii) the fringe
benefits provided by the Company or its subsidiaries which are available to the
next highest executive officer of the Company for the year.
4. TERMINATION OF EMPLOYMENT.
(a) Death or Disability. The Executive's employment shall
terminate automatically upon the Executive's death during the Employment Period.
The Company shall be entitled to terminate the Executive's employment because of
the Executive's Disability during the Employment Period. "Disability" means that
(i) the Executive has been unable, for a period of 180 consecutive business
days, to perform the Executive's duties under this Agreement, as a result of
physical or mental illness or injury, and (ii) a physician selected by the
Company or its insurers, and acceptable to the Executive or the Executive's
legal representative, has determined that the Executive's incapacity is total
and permanent. A termination of the Executive's employment by the Company for
Disability shall be communicated to the Executive by written notice, and shall
be effective on the 30th day after receipt of such notice by the Executive (the
"Disability Effective Date") unless the Executive returns to full-time
performance of the Executive's duties before the Disability Effective Date.
(b) By the Company.
(i) The Company may terminate the Executive's employment
during the Employment Period for Cause or without Cause. "Cause" means:
A. the willful and continued failure of the Executive
substantially to perform the Executive's duties under this
Agreement (other than as a result of physical or mental
illness or injury), after the Board of the Company
delivers to the Executive a written demand for substantial
performance that specifically identifies the manner in
which the Board believes that the Executive has not
substantially performed the Executive's duties; or
B. illegal conduct or gross misconduct by the
Executive, in either case that is willful and results in
material and demonstrable damage to the business or
reputation of the Company.
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No act or failure to act on the part of the Executive shall be considered
"willful" unless it is done, or omitted to be done, by the Executive in bad
faith or without reasonable belief that the Executive's action or omission was
in the best interests of the Company. Any act or failure to act that is based
upon authority given pursuant to a resolution duly adopted by the Board, or 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.
(ii) A termination of the Executive's employment for Cause
shall be effected in accordance with the following procedures. The Company shall
give the Executive written notice ("Notice of Termination for Cause") of its
intention to terminate the Executive's employment for Cause, setting forth in
reasonable detail the specific conduct of the Executive that it considers to
constitute Cause and the specific provision(s) of this Agreement on which it
relies, and stating the date, time and place of the Special Board Meeting for
Cause. The "Special Board Meeting for Cause" means a meeting of the Board called
and held specifically for the purpose of considering the Executive's termination
for Cause, that takes place not less than ten and not more than twenty business
days after the Executive receives the Notice of Termination for Case. The
Executive shall be given an opportunity, together with counsel, to be heard at
the Special Board Meeting for Cause. The Executive's termination for Cause shall
be effective when and if a resolution is duly adopted at the Special Board
Meeting for Cause by an affirmative vote of at least the greater of (A)
two-thirds (2/3) of the entire membership of the Board (excluding the Executive
who shall not vote on this matter) or (B) ten (10) members of the Board, stating
that in the good faith opinion of the Board, the Executive is guilty of the
conduct described in the Notice of Termination for Cause, and that conduct
constitutes Cause under this Agreement.
(iii) A termination of the Executive's employment without
Cause shall be effective in accordance with the following procedures. The
Company shall give the Executive written notice ("Notice of Termination without
Cause") of its intention to terminate the Executive's employment without Cause,
stating the date, time and place of the Special Board Meeting without Cause. The
"Special Board Meeting without Cause" means a meeting of the Board called and
held specifically for the purpose of considering the Executive's termination
without Cause, that takes place not less than ten and not more than twenty
business days after the Executive receives the Notice of Termination without
Cause. The Executive shall be given an opportunity, together with counsel, to be
heard at the Special Board Meeting without Cause. The Executive's termination
without Cause shall be effective when and if a resolution is duly adopted at the
Special Board Meeting without Cause by an affirmative vote of the greater of (A)
at least two-thirds (2/3) of the entire membership of the Board (excluding the
Executive who shall not vote on this matter) or (B) ten members of the Board
stating that the Executive is terminated without Cause.
(c) Good Reason.
(i) The Executive may terminate employment for Good Reason
or without Good Reason. "Good Reason" means the occurrence (without the
Executive's express written consent) of any of the following acts by the
Company, or failures by the Company to
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act, unless such act or failure to act is corrected within thirty days of a
Notice of Termination for Good Reason (as that term is defined below) given in
respect thereof:
A. the Executive's duties and responsibilities are
materially and adversely diminished in comparison to the
duties and responsibilities set forth in Section 2(a) of
this Agreement (for purposes of this Agreement, it shall
be considered a material and adverse diminishment of
duties and responsibilities if the Executive occupies the
same position but only with a non-publicly held company);
B. any failure by the Company to comply with any
provision of Section 3 of this Agreement;
C. any purported termination of the Executive's
employment by the Company for a reason or in a manner not
expressly permitted by this Agreement;
D. any failure by the Company to comply with paragraph
(c) of Section 11 of this Agreement;
E. any other substantial breach of this Agreement by
the Company; or
F. the Executive is no longer a member of the Board or
the Board fails to propose the Executive for re-election
to the Board.
The Company and the Executive, upon mutual written Agreement, may waive any of
the foregoing provisions which would otherwise constitute Good Reason.
(ii)A termination of employment by the Execute for Good
Reason shall be effectuated by giving the Company written notice ("Notice of
Termination for Good Reason") of the termination within one year (but not after
the end of the Employment Period) of the date of the event which is the basis of
the Notice of Termination for Good Reason, setting forth in reasonable detail
the specific conduct of the Company that constitutes Good Reason and the
specific provision(s) of this Agreement on which the Executive relies. A
termination of employment by the Executive for Good Reason shall be effective on
the fifth business day following the date when the Notice of Termination for
Good Reason is given, unless the notice sets forth a later date (which date
shall in no event be later than 30 days after the notice is given). For purposes
of this Section 4(c), any good faith determination of "Good Reason" made by the
Executive shall be conclusive.
(iii)A termination of the Executive's employment by the
Executive without Good Reason shall be effected by giving the Company written
notice of the termination.
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(d) No Waiver. The failure to set forth any fact or
circumstance in a Notice of Termination for Cause, a Notice of Termination
without Cause or a Notice of Termination for Good Reason shall not constitute a
waiver of the right to assert, and shall not preclude the party giving notice
from asserting, such fact or circumstance in an attempt to enforce any right
under or provision of this Agreement.
(e) Date of Termination. The "Date of Termination" means the
date of the Executive's death, the Disability Effective Date, the date on which
the termination of the Executive's employment by the Company for Cause or
without Cause or by the Executive for Good Reason is effective, or the date on
which the Executive gives the Company notice of a termination of employment
without Good Reason, as the case may be.
5. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(a) By the Company other than for Cause or Disability; by the
Executive for Good Reason. If, during the Employment Period, the Company
terminates the Executive's employment other than for Cause or Disability, or the
Executive terminates employment for Good Reason, the Company shall continue to
provide the Executive with the compensation and benefits set forth in paragraphs
(a), (b) and (c) of Section 3 as if he had remained employed by the Company
pursuant to this Agreement through the end of the Employment Period and then
retired (at which time he will be treated as eligible for all retiree welfare
benefits and other benefits provided to retired senior executives, as set forth
in Section 3(c)(ii) and (iii); provided, that the Incentive Compensation for
such period shall be based upon the target Incentive Compensation for the year
in which the Date of Termination occurs; provided, further, that in lieu of
stock options, restricted stock and other stock-based awards, the Executive
shall be paid cash equal to the fair market value as of the Date of Termination
(without regard to any restrictions and based upon a valuation model generally
utilized for purposes of valuing comparable stock-based compensation awards) of
the stock options, restricted stock and other stock-based awards that would
otherwise have been granted with such cash being paid within 90 days after the
Date of Termination; provided, further that, to the extent any benefits
described in paragraph (c) of Section 3 cannot be provided pursuant to the plan
or program maintained by the Company for its executives, the Company shall
provide such benefits outside such plan or program at no additional cost
(including without limitation tax cost) to the Executive and his family, and
provided, finally, that during any period when the Executive is eligible to
receive benefits of the type described in clause (B) of paragraph (c)(iii) of
Section 3 under another employer-provided plan, the benefits provided by the
Company under paragraph (a) of Section 5 may be made secondary to those provided
under another plan. In addition to the foregoing, any restricted stock
outstanding on the Date of Termination shall be fully vested as of the Date of
Termination and all options outstanding on the Date of Termination shall be
fully vested and exercisable and shall remain in effect and exercisable through
the end of their respective terms, without regard to the termination of the
Executive's employment. The payments and benefits provided pursuant to this
paragraph (a) of Section 5 are intended as liquidated damages for a termination
for the Executive's employment by the Company other than for Cause or Disability
or for the actions of the Company leading to a termination of the Ex-
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ecutive's employment by the Executive for Good Reason, and shall be the sole
and exclusive remedy therefor.
(b) Death or Disability. If the Executive's employment is
terminated by reason of the Executive's death or Disability during the
Employment Period, the Company shall pay to the Executive, or in the cause of
the Executive's death, to the Executive's designated beneficiaries (or, if there
is no such beneficiary, to the Executive's estate or legal representative) in a
lump sum in cash within 30 days after the Date of Termination, the sum of the
following amounts (the "Accrued Obligations"): (1) any portion of the
Executive's Annual Base Salary through the Date of Termination that has not yet
been paid; (2) an amount representing the target Incentive Compensation for the
year that includes the Date of Termination, computed by assuming that the amount
of all such target Incentive Compensation would be equal to the amount of such
target Incentive Compensation that the Executive would have been eligible to
earn for such period, and multiplying that amount by a fraction, the numerator
of which is the number of days in such period through the Date of Termination,
and the denominator of which is the total number of days in the relevant period;
(3) any compensation previously deferred by the Executive (together with any
accrued interest or earnings thereon) that has not yet been paid; and (4) any
accrued but unpaid Incentive Compensation and vacation pay; and the Company
shall have no further obligations under this Agreement, except as specified in
Section 6 below. If the Executive's employment is terminated by reason of
Disability, he shall be entitled to receive the maximum disability payments
which can be provided under the disability plans described in Section 3(c)(iii),
reduced, however, by actual disability benefits received under such plans.
(c) By the Company for Cause; by the Executive other than for
Good Reason. If the Executive's employment is terminated by the Company for
Cause during the Employment Period, the Company shall pay the Executive the
Annual Base Salary through the Date of Termination and the amount of any
compensation previously deferred by the Executive (together with any accrued
interest or earnings thereon), in each case to the extent not yet paid, and the
Company shall have no further obligations under this Agreement, except as
specified in Section 6 below. If the Executive voluntarily terminates employment
during the Employment Period, other than for Good Reason, the Company shall pay
the Accrued Obligations to the Executive in a lump sum in cash within 30 days of
the Date of Termination, and the Company shall have no further obligations under
this Agreement, except as specified in Section 6 below.
6. NON-EXCLUSIVITY OF RIGHTS. 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
for which the Executive may qualify, nor, subject to paragraph (f) of Section
12, shall anything in this Agreement limit or otherwise affect such rights as
the Executive may have under any contract or agreement with the Company or any
of its affiliated companies. Vested benefits and other amounts that the
Executive is otherwise entitled to receive under the SERP or any other plan,
policy, practice or program of, or any contract or agreement with, the Company
or any of its affiliated companies on or after the Date of Termination shall be
payable in accordance with the terms
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of each such plan, policy, practice, program, contract or agreement, as the case
may be, except as explicitly modified by this Agreement.
7. FULL SETTLEMENT. The Company's obligation to make the payments provided
for in, and otherwise to perform its obligations under this Agreement shall not
be affected by any set-off, counterclaim, recoupment, defense or other claim,
right or action that the Company may have against the Executive or others. In no
event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement and, except as specifically provided in
paragraph (a) of Section 5 with respect to benefits described in clause (B) of
paragraph (c)(iii) of Section 3, such amounts shall not be reduced, regardless
of whether the Executive obtains other employment.
8. NON-COMPETITION PROVISION AND CONFIDENTIAL INFORMATION.
(a) Without the prior written consent of the Company, while
actively employed, and if and only if the Executive becomes entitled to receive
severance benefits pursuant to Section 5(a) hereof, for 24 months following the
termination of the Executive's employment, the Executive shall not, as a
shareholder, officer, director, partner, consultant, or otherwise, engage
directly or indirectly in any business or enterprise which is "in competition"
with the Company or its successors or assigns; provided, however, that the
Executive's ownership of less than five percent of the issued and outstanding
voting securities of a publicly-traded company shall not be deemed to constitute
such competition. A business or enterprise is deemed to be "in competition" if
it is engaged in the business of generation, purchase, transmission,
distribution, or sale of electricity, or in the purchase, transmission,
distribution, sale or transportation of natural gas within the States of
Colorado, Kansas, Minnesota, New Mexico, North Dakota, Oklahoma, South Dakota,
Texas, Wisconsin or Wyoming.
(b) The Executive shall hold in a fiduciary capacity for the
benefit of the Company all secret or confidential information, knowledge or data
relating to the Company or any of its affiliated companies and their respective
businesses that the Executive obtains during the Executive's employment by the
Company or any of its affiliated companies and that is not public knowledge
(other than as a result of the Executive's violation of this Section 8)
("Confidential Information"). The Executive shall not communicate, divulge or
disseminate Confidential Information at any time during or after the Executive's
employment with the Company, except with the prior written consent of the
Company or as otherwise required by law or legal process. In no event shall any
asserted violation of the provisions of this Section 8 constitute a basis for
deferring or withholding any amounts otherwise payable to the Executive under
this Agreement.
9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment or
distribution by the Company to or for the benefit of the Executive (whether paid
or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined with regard to any additional payments
required
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under this Section 9) (a "Payment") would be subject to the excise tax imposed
by Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"),
or any interest or penalties are incurred by the Executive with respect to such
excise tax (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"), then the Executive
shall be entitled to receive an additional payment (a "Gross-Up Payment") in an
amount such that after payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such taxes) including, without
limitation, any income taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
the Payments.
(b) Subject to the provisions of paragraph (c) of this Section
9, all determinations required to be made under this Section 9, including
whether and when a Gross-Up Payment is required and the amount of such Gross-Up
Payment and the assumptions to be utilized in arriving at such determination,
shall be made by Xxxxxx Xxxxxxxx LLP (the "Accounting Firm"), which shall
provide detailed supporting calculations both to the Company and the Executive
within 15 business days of the receipt of notice from the Executive that there
has been a Payment, or such earlier time as is requested by the Company. All
fees and expenses of the Accounting Firm shall be borne solely by the Company.
Any Gross-Up Payment, as determined pursuant to this Section 9, shall be paid by
the Company to the Executive within five days of the receipt of the Accounting
Firm's determination. Any determination by the Accounting Firm shall be binding
upon the Company and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Gross-Up Payments which
will not have been made by the Company should have been made ("Underpayment")
consistent with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to paragraph (c) of this Section
9 and the Executive thereafter is required to make a payment of any Excise Tax,
the Accounting Firm shall determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly paid by the Company to or
for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment. Such notification shall be given
as soon as practicable but not later than ten business days after the Executive
is informed in writing of such claim and shall apprise the Company of the nature
of such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the 30-day period
following the date on which it gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to such claim
is due). If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the Executive
shall:
(i) give the Company any information reasonably requested
by the Company relating to such claim;
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(ii) take such action in connection with contesting such
claim as the Company shall reasonably request in writing from
time to time, including, without limitation, accepting legal
representation with respect to such claim by an attorney
reasonably selected by the Company;
(iii)cooperate with the Company in good faith in order
effectively to contest such claim; and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this paragraph (c) of Section 9, the Company shall control all proceedings taken
in connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and xxx for a refund or contest the
claim in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine, provided, however, that if the Company directs the Executive to pay
such claim and xxx for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and provided, further, that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Executive shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.
(d) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to paragraph (c) of this Section 9, the
Executive becomes entitled to receive any refund with respect to such claim, the
Executive shall (subject to the Company's complying with the requirements of
paragraph (c) of this Section 9) promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon after taxes
applicable thereto). If after the receipt by the Executive of an amount advanced
by the Company pursuant to paragraph (c) of this Section 9, a determination is
made that the Executive shall not be entitled to any refund with respect to such
claim and the Company does not notify the Executive in writing of its intent to
contest such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be
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repaid and the amount of such advance shall offset, to the extent thereof, the
amount of Gross-Up Payment required to be paid.
10. ATTORNEY'S FEES. The Company agrees to pay, as incurred, to the fullest
extent permitted by law, all legal fees and expenses that the Executive may
reasonably incur as a result of any contest regardless of the outcome by the
Company, the Executive or others of the validity or enforceability of or
liability under or otherwise involving, any provision of this Agreement,
together with interest on any delayed payment at the applicable federal rate
provided for in Section 7872(f)(2)(A) of the Code.
11. SUCCESSORS.
(a) This Agreement is personal to the Executive and, without
the prior written consent of the Company, shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(c) The Company shall 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 expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would have been required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall mean both
the Company as defined above and any such successor that assumes and agrees to
perform this Agreement, by operation of law or otherwise.
12. MISCELLANEOUS.
(a) This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Minnesota, without reference to
principles of conflict of laws. The captions of this Agreement are not part of
the provisions hereof and shall have no force and effect. This Agreement may not
be amended or modified except by a written agreement executed by the parties
hereto or their respective successors and legal representatives.
(b) All notices and other communications under this Agreement
shall be in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
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If to the Executive: Xxxxx X. Xxxxxxxx
If to the Company: Northern States Power Company
000 Xxxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: General Counsel
or to such other address as either party furnishes to the other in writing in
accordance with this paragraph (b) of Section 12. Notices and communications
shall be effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement. If any provision of this Agreement shall be held
invalid or unenforceable in part, the remaining portion of such provision,
together with all other provisions of this Agreement, shall remain valid and
enforceable and continue in full force and effect to the fullest extent
consistent with law.
(d) Notwithstanding any other provision of this Agreement, the
Company may withhold from amounts payable under this Agreement all federal,
state, local and foreign taxes that are required to be withheld by applicable
laws or regulations.
(e) The Executive's or the Company's failure to insist upon
strict compliance with any provision of, or to assert any right under, this
Agreement (including, without limitation, the right of the Executive to
terminate employment for Good Reason pursuant to paragraph (c) of Section 4 of
this Agreement) shall not be deemed to be a waiver of such provision or right or
of any other provision of or right under this Agreement.
(f) The Executive and the Company acknowledge that this
Agreement supersedes and terminates any other severance and employment
agreements between the Executive and the Company, NCE and their respective
affiliates, except as specifically provided in Section 1 hereof. Without
limiting the generality of the foregoing, the Executive hereby expressly waived
any right that he might otherwise have to receive any payments or benefits under
the Severance Policies.
(g) The rights and benefits of the Executive under this
Agreement may not be anticipated, assigned, alienated or subject to attachment,
garnishment, levy, execution or other legal or equitable process except as
required by law. Any attempt by the Executive to anticipate, alienate, assign,
sell, transfer, pledge, encumber or charge the same shall be void. Payments
hereunder shall not be considered assets of the Executive in the event of
insolvency or bankruptcy.
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(h) This Agreement may be executed in several counterparts,
each of which shall be deemed an original, and said counterparts shall
constitute but one and the same instrument.
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IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization of their respective Boards
of Directors, the Company and NCE have caused this Agreement to be executed in
their names on their behalf, all as of the day and year first above written.
/s/ Xxxxx X. Xxxxxxxx
--------------------------------------------------
Xxxxx X. Xxxxxxxx
NORTHERN STATES POWER COMPANY
By: /s/ Xxxxx X. Xxxxx
----------------------------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President - Human Resources
NEW CENTURY ENERGIES, INC.
By: /s/ Xxxx X. Xxxxxx
---------------------------------------------
Name: Xxxx X. Xxxxxx
Title: Chairman and Chief Executive Officer
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