AMENDED AND RESTATED CHANGE-IN-CONTROL AGREEMENT
AMENDED
AND RESTATED
THIS
AGREEMENT dated as of December 18, 2007 (the “Agreement Date”) is made by and
among Nicor Inc. (the “Company”), an Illinois corporation, and Xxxxxx X. Xxxxx
(the “Executive”).
Executive
and the Company have previously entered into a Change-in-Control Agreement
dated
November 22, 2002 (the “Prior Agreement”). The Company and Executive desire to
amend and restate the Prior Agreement to conform to the requirements of Section
409A of the Code.
ARTICLE
I
PURPOSES
The
Board
has determined that it is in the best interests of the Company and its
shareholders to assure that the Company and Nicor Gas will have the continued
services of the Executive, despite the possibility or occurrence of a Change
in
Control of the Company. The Board believes it is imperative to reduce the
distraction of the Executive that would result from the personal uncertainties
caused by a pending or threatened Change in Control, to encourage the
Executive’s full attention and dedication to the Company and Nicor Gas, and to
provide the Executive with compensation and benefits arrangements upon a Change
in Control which are competitive with those of similarly situated corporations.
This Agreement is intended to accomplish these objectives.
ARTICLE
II
CERTAIN
DEFINITIONS
When
used
in this Agreement, the terms specified below shall have the following
meanings:
2.1. The
“Agreement Term” shall begin on the Agreement Date and shall continue through
December 31, 2008. As of December 31, 2008, and on each
December 31 thereafter, the Agreement Term shall automatically be extended
for one additional year unless, not later than the preceding June 30,
either party shall have given notice that such party does not wish to extend
the
Agreement Term. If a Change in Control shall have occurred during the Agreement
Term (as it may be extended from time to time), the Agreement Term shall
continue for a period ending on the two-year anniversary of the date of the
Change in Control, but if the Termination Date (as defined below) occurs during
that two-year period, then the Agreement Term shall continue until the end
of
the Severance Period (as defined below). Unless the Termination Date occurs
during the two-year period after a Change in Control so that the Agreement
Term
is extended to include the Severance Period, as provided in the immediately
preceding sentence, the Agreement Term shall not extend beyond the two-year
anniversary of the Change in Control.
2.2. “Board”
means the board of directors of the Company.
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2.3. “Change
in Control” means the occurrence of a “change in the ownership,” a “change in
the effective control” or a “change in the ownership of a substantial portion of
the assets” of an entity, as determined in accordance with this Section. In
determining whether an event shall be considered a “change in the ownership,” a
“change in the effective control” or a “change in the ownership of a substantial
portion of the assets” of an entity, the following provisions shall
apply:
2.3.1 A
“change
in the ownership” of the Company shall occur on the date on which any one
person, or more than one person acting as a group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (a
“Person”)), acquires ownership of the equity securities of the Company that,
together with the equity securities held by such Person, constitutes more than
50% of the total fair market value or total voting power of the Company, as
determined in accordance with Treas. Reg. §1.409A-3(i)(5)(v). If a Person is
considered either to own more than 50% of the total fair market value or total
voting power of the equity securities of the Company, or to have effective
control of the Company within the meaning of Section 2.3.2, and such Person
acquires additional equity securities of the Company, the acquisition of
additional equity securities by such Person shall not be considered to cause
a
“change in the ownership” of the Company.
2.3.2 A
“change
in the effective control” of the Company shall occur on either of the following
dates:
2.3.2.1 The
date
on which any Person, acquires (or has acquired during the 12-month period ending
on the date of the most recent acquisition by such Person) ownership of stock
of
the Company possessing 30% or more of the total voting power of the Company’s
equity securities, as determined in accordance with Treas. Reg.
§1.409A-3(i)(5)(vi). If a Person is considered to possess 30% or more of the
total voting power of the Company’s equity securities, and such Person acquires
additional stock of the Company, the acquisition of additional stock by such
Person shall not be considered to cause a “change in the effective control” of
the Company; or
2.3.2.2 The
date
on which a majority of the members of the Board is replaced during any 12-month
period by directors whose appointment or election is not endorsed by a majority
of the members of the Board before the date of the appointment or election,
as
determined in accordance with Treas. Reg. §1.409A-3(i)(5)(vi).
2.3.3 A
“change
in the ownership of a substantial portion of the assets” of the Company shall
occur on the date on which any one Person acquires (or has acquired during
the
12-month period ending on the date of the most recent acquisition by such
Person) assets from the Company that have a total gross fair market value equal
to or more than 40% of the total gross fair market value of all of the assets
of
the Company immediately before such acquisition or acquisitions, as determined
in accordance with Treas. Reg. §1.409A-3(i)(5)(vii). A transfer of assets shall
not be treated as a “change in the ownership of a substantial portion of the
assets” when such transfer is made to an entity that is controlled by the
holders of the Company’s equity securities, as determined in accordance with
Treas. Reg. §1.409A-3(i)(5)(vii)(B).
2
2.3.4 Notwithstanding
the foregoing, the following acquisitions shall not constitute a Change in
Control: (i) an acquisition by the Company or entity controlled by the Company,
or (ii) an acquisition by an employee benefit plan (or related trust) sponsored
or maintained by the Company or any entity controlled by the Company.
2.3.5 For
purposes of this Section 2.3, (i) the term “Company” shall mean Nicor
Inc. and shall include any Successor to Nicor Inc.; and (ii) the term
“Successor to Nicor Inc.” shall mean any corporation, partnership, joint venture
or other entity that succeeds to the interests of Nicor Inc. by means of a
merger, consolidation, or other restructuring that does not constitute a Change
in Control.
2.4. “Code”
means the Internal Revenue Code of 1986, as amended.
2.5. “Effective
Date” means the first date during the Agreement Term on which a Change in
Control occurs.
2.6. “Employment
Period” means the period commencing on the Effective Date and ending on the
two-year anniversary of that date.
2.7. “Incentive
Plan” shall have the meaning set forth in Section 3.2.2.
2.8. “Payment
Date” means the date on which all of the following are complete (i) the
Termination Date, (ii) the execution of the release required pursuant to Section
5.1, and (iii) the expiration of the required revocation period specified in
the
release without revocation occurring.
2.9. “Plans”
shall have the meaning set forth in Section 3.2.3.
2.10. A
“Potential Change in Control” shall exist during any period in which the
circumstances described in Sections 2.10.1, 2.10.2, or 2.10.3 exist
(provided, however, that a Potential Change in Control shall cease to exist
not
later than the occurrence of a Change in Control):
2.10.1 The
Company enters into an agreement, the consummation of which would result in
the
occurrence of a Change in Control, provided that a Potential Change in Control
described in this Section 2.10.1 shall cease to exist upon the expiration
or other termination of all such agreements.
2.10.2 Any
person (including the Company) publicly announces an intention to take or to
consider taking actions the consummation of which would constitute a Change
in
Control; provided that a Potential Change in Control described in this
Section 2.10.2 shall cease to exist upon the withdrawal of such intention,
or upon a reasonable determination by the Board that there is no reasonable
chance that such actions would be consummated.
2.10.3 The
Board
adopts a resolution to the effect that, for purposes of this Agreement, a
Potential Change in Control exists; provided that a Potential Change in Control
described in this Section 2.10.3 shall cease to exist upon a reasonable
determination by the Board
3
2.11. “Separation
from Service” means the termination of Executive’s services to the Company and
all Subsidiaries, whether voluntarily or involuntarily, other than by reason
of
death, in accordance with Treas. Reg. §1.409A-1(h).
2.12. “Severance
Incentive” means the greater of (i) the target annual incentive under an
Incentive Plan applicable to the Executive for the Performance Period (as such
term is defined in Section 3.2.2) in which the Termination Date occurs, or
(ii) the average of the actual annual incentives paid (or payable, to the
extent not previously paid) to the Executive under the applicable Incentive
Plan
for each of the two calendar years preceding the calendar year in which the
Termination Date occurs.
2.13. “Severance
Period” means the period beginning on the Executive’s Termination Date and
ending on the third anniversary thereof; provided, however, that no Severance
Period will occur unless the Executive’s Termination Date occurs under
circumstances described in Section 5.1 (relating to termination by the
Executive for Good Reason or by the Company and Nicor Gas other than for Cause
or Permanent Disability).
2.14. “Subsidiary”
shall mean any corporation, partnership, joint venture or other entity during
any period in which at least a fifty percent interest in such entity is owned,
directly or indirectly, by the Company (or a successor to the
Company).
2.15. “Termination
Date” means the first day on or after which the Executive has a Separation from
Service.
2.16. “Welfare
Plans” shall have the meaning set forth in Section 3.2.4.
ARTICLE
III
TERMS
OF EMPLOYMENT
3.1.
Position
and Duties.
3.1.1 The
Company hereby agrees to cause the Company and/or Nicor Gas to continue the
Executive’s employment during the Employment Period and, subject to
Article IV of this Agreement, the Executive agrees to remain in the employ
of the Company and Nicor Gas, as applicable, subject to the terms and conditions
hereof. During the Employment Period, (i) the Executive’s position
(including status, offices, titles and reporting requirements), authority,
duties and responsibilities shall be at least commensurate in all material
respects with the most significant of those held, exercised and assigned to
the
Executive at any time during the 90-day period immediately preceding the
Effective Date, and (ii) the Executive’s services shall be performed at the
location where the Executive was employed immediately preceding the Effective
Date or any office or location less than 25 miles from such
location.
3.1.2
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
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3.2.
Compensation.
3.2.1 Base
Salary.
During
the Employment Period, the Executive shall receive an annual base salary
(“Annual Base Salary”), which shall be paid at an annual rate at least equal to
twelve times the highest monthly base salary paid or payable, including any
base
salary which has been earned but deferred, to the Executive by the Company
in
respect of the twelve-month period immediately preceding the month in which
the
Effective Date occurs. During the Employment Period, the Annual Base Salary
shall be reviewed no more than twelve months after the last salary increase
awarded to the Executive prior to the Effective Date and, thereafter, at least
annually, and shall be increased at any time and from time to time as shall
be
substantially consistent with increases in base salary awarded to other senior
executives of the Company. Annual Base Salary shall not be reduced after any
such increase unless such reduction is part of a policy, program or arrangement
applicable to senior executives of the Company and of any successor entity,
and
the term Annual Base Salary as used in this Agreement shall refer to Annual
Base
Salary as so increased. Any increase in Annual Base Salary shall not limit
or
reduce any other obligation of the Company to the Executive under this
Agreement.
3.2.2 Annual
Incentive.
In
addition to Annual Base Salary, the Company shall pay or cause to be paid to
the
Executive an incentive award (the “Annual Incentive”) for each Performance
Period or portion thereof which falls within the Employment Period. “Performance
Period” means each period of time designated in accordance with any annual
incentive award arrangement (“Incentive Plan”) which is based upon performance
and approved by the Board or any committee of the Board, or in the absence
of
any Incentive Plan or any such designated period of time, Performance Period
shall mean each calendar year. The Executive’s target and maximum Annual
Incentive with respect to any Performance Period shall not be less than the
target and maximum annual incentive award payable with respect to the Executive
under the Company’s annual incentive program as in effect immediately preceding
the Effective Date.
3.2.3 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
(including, without limitation, the Nicor Inc. Salary Deferral Plan and the
Nicor Inc. Stock Deferral Plan) (“Plans”) applicable generally to other senior
executives of the Company, but in no event shall such Plans provide the
Executive with incentive
5
3.2.4 Welfare
Benefit Plans.
During
the Employment Period, 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 welfare benefit plans, practices, policies and programs (“Welfare Plans”)
provided by the Company (including, without limitation, medical, prescription,
dental, disability, salary continuance, employee life, group life, accidental
death and travel accident insurance benefits), but in no event shall such
Welfare Plans provide the Executive with benefits which are less favorable,
in
the aggregate, than the greater of (i) those provided by the Company for
the Executive under such Welfare Plans as were in effect at any time during
the
90-day period immediately preceding the Effective Date, or (ii) those
provided generally at any time after the Effective Date to other senior
executives of the Company.
3.2.5 Other
Employee Benefits.
During
the Employment Period, the Executive shall be entitled to other employee
benefits and perquisites in accordance with the most favorable plans, practices,
programs and policies of the Company, as in effect with respect to the Executive
at any time during the 90-day period immediately preceding the Effective Date,
or if more favorable, as in effect generally with respect to other senior
executives of the Company.
3.2.6 Expenses.
The
Executive shall be entitled to receive prompt reimbursements for all reasonable
expenses incurred by the Executive during the Employment Period in accordance
with the policies, practices and procedures of the Company, as in effect with
respect to the Executive at any time during the 90-day period immediately
preceding the Effective Date, or if more favorable, as in effect generally
with
respect to other senior executives of the Company. All such expenses shall
be
reimbursed no later than the date six (6) months following the Termination
Date.
The amount of expenses reimbursed in one year shall not affect the amount
eligible for reimbursement in any subsequent year.
3.2.7 Office
and Support Staff.
During
the Employment Period, the Executive shall be entitled to an office or offices
of a size and with furnishings and other appointments, and to exclusive personal
secretarial and other assistance, as in effect with respect to the Executive
at
any time during the 90-day period immediately preceding the Effective Date,
or
if more favorable, as provided generally with respect to other senior executives
of the Company.
3.2.8 Paid
Time Off.
During
the Employment Period, the Executive shall be entitled to paid time off in
accordance with the plans, policies, programs and practices of the Company
as in
effect with respect to the Executive at any time during the 90-day period
immediately preceding the Effective Date, or if more favorable, as provided
generally with respect to other senior executives of the Company.
6
3.2.9 Subsidiaries.
To the
extent that immediately prior to the Effective Date, the Executive has been
on
the payroll of, and participated in the incentive or employee benefit plans
of,
a Subsidiary of the Company, the references to the Company contained in
Sections 3.2.1 through 3.2.8 and the other sections of this Agreement
referring to benefits to which the Executive may be entitled shall be read
to
refer to such Subsidiary.
ARTICLE
IV
TERMINATION
OF EMPLOYMENT
4.1.
Disability.
4.1.1 During
the Agreement Term, the Company and Nicor Gas may terminate the Executive’s
employment upon the Executive’s Permanent Disability (as defined in
Section 4.1.2) by giving the Executive or his legal representative, as
applicable, (1) written notice in accordance with Section 11.8 of the
Company’s or Nicor Gas’, as applicable, intention to terminate the Executive’s
employment pursuant to this section, and (2) a certification of the
Executive’s Permanent Disability by a physician selected by the Company or Nicor
Gas or its insurers and reasonably acceptable to the Executive or the
Executive’s legal representative. The Executive’s employment shall terminate
effective on the 30th day (the “Permanent Disability Effective Date”) after the
Executive’s receipt of such notice unless, before the Permanent Disability
Effective Date, the Executive shall have resumed the full-time performance
of
the Executive’s duties. During the period in which the Executive has a
Disability, the Company or Nicor Gas, as applicable, may appoint a temporary
replacement to assume the Executive’s responsibilities.
4.1.2 The
Executive shall be considered to have a “Permanent Disability” during any period
in which he has a Disability (as defined below); provided, however, that the
Executive shall not be considered to have “Permanent Disability” until (i) for a
period of 180 consecutive days, the Executive, as a result of a Disability,
is
incapable, after reasonable accommodation, of performing his duties under this
Agreement on a full-time basis; (ii) such Disability is reasonably expected
to
continue for at least another 90 days; and (iii) at the Executive’s
Termination Date, he is eligible for income replacement benefits under the
Company’s or Nicor Gas’ long-term disability plan. The Executive shall be
considered to have a “Disability” during any period in which he has a physical
or mental disability which renders him incapable, after reasonable
accommodation, of performing his duties under this Agreement.
4.2.
Death.
The
Executive’s employment shall terminate automatically upon the Executive’s death
during the Agreement Term.
4.3.
Cause.
The
Company or Nicor Gas, as applicable, may terminate the Executive’s employment
during the Employment Period for Cause. For purposes of this Agreement, “Cause”
means:
4.3.1 the
Executive’s willful commission of acts or omissions which have, have had, or are
likely to have a material adverse effect on the business, operations, financial
condition or reputation of the Company or Nicor Gas;
7
4.3.2 the
Executive’s conviction (including a plea of guilty or nolo contendere) of a
felony or any crime of fraud, theft, dishonesty or moral turpitude;
or
4.3.3 the
Executive’s material violation of any statutory or common law duty of loyalty to
the Company or Nicor Gas.
For
purposes of this Agreement, 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 or Nicor
Gas. Any act, or failure to act, pursuant to direction provided by the person
to
whom the Executive reports, or provided by a resolution duly adopted by the
Board, or pursuant to advice of counsel for the Company or Nicor Gas, 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 or Nicor Gas.
4.4.
Good
Reason.
During
the Employment Period, the Executive’s employment may be terminated by the
Executive for Good Reason. For purposes of this Agreement, “Good Reason” means:
4.4.1 a
material diminution in the Executive’s base compensation;
4.4.2 a
material diminution in the authority, duties or responsibilities of the
Executive;
4.4.3 a
material change, of not less than 25 miles, in the geographic location at which
the Executive must provide services; or
4.4.4 any
other
action or inaction that constitutes a material breach by the Company of this
Agreement;
provided,
however, that the above conditions, as applicable, shall not constitute Good
Reason: (i) unless the Executive gives the Company or Nicor Gas, as applicable,
written notice of such condition and the Company or Nicor Gas, as applicable,
fails to remedy the condition within 30 days of such notice; (ii) if the initial
existence of the condition is more than 90 days before the Executive gives
the
Company or Nicor Gas such notice; or (iii) if the Executive has consented in
writing to such condition in a document that makes specific reference to this
Section 4.4.
4.5.
Without
Cause During a Potential Change in Control.
If the
Executive’s employment is terminated by the Company and Nicor Gas, as
applicable, without Cause during a Potential Change in Control, and such date
of
termination occurs not more than 180 days prior to the occurrence of a
Change in Control and the Executive establishes by reasonable evidence that
such
termination of employment was materially connected with and in anticipation
of
the Change in Control, then the Executive shall be entitled to receive the
benefits that would have been provided under Section 5.1, determined as
though:
8
4.5.1 the
Executive were rehired by the Company and Nicor Gas, as applicable, immediately
prior to the Change in Control at the salary rate equal to the Executive’s
highest salary rate during the one-year period prior to the date of the Change
in Control, and with other Company and Nicor Gas compensation and benefit
arrangements comparable to those provided to comparable executives of the
Company and Nicor Gas;
4.5.2 the
Executive’s employment were terminated by the Company and Nicor Gas without
Cause immediately after the Change in Control; and
4.5.3 this
Agreement were in full force and effect at the time of the Change in Control,
and at the time of the Executive’s deemed termination of
employment.
4.6.
Right
of Resignation and Termination.
This
Agreement does not constitute a guarantee of continued employment at any time,
but instead provides for certain rights and benefits for the Executive during
his employment following the occurrence of a Change in Control, and in the
event
his employment with the Company and Nicor Gas, as applicable, terminates under
the circumstances described herein. The Company and Nicor Gas, as applicable,
may terminate the employment of the Executive at any time for any reason,
without breach of this Agreement, subject to its obligations set forth in
Article V and elsewhere in this Agreement. The Executive may resign from the
Company and Nicor Gas, as applicable, for Good Reason, or for any other reason,
without breach of this Agreement, subject to the Executive’s obligations set
forth in this Agreement; provided that, in the event of a resignation without
Good Reason, the Executive shall provide at least four weeks advance notice
of
such resignation to the Company and Nicor Gas, as applicable.
ARTICLE
V
OBLIGATIONS
OF THE COMPANY UPON TERMINATION
5.1.
If
by the Executive for Good Reason or by the Company and Nicor Gas, as Applicable,
Other Than for Cause or Permanent Disability.
If,
during the Employment Period, the Company and Nicor Gas, as applicable, shall
terminate the Executive’s employment other than for Cause or Permanent
Disability, or if the Executive shall terminate employment for Good Reason,
the
Company’s and Nicor Gas’ obligations to the Executive shall be as set forth in
this Section 5.1. As a precondition to fulfilling such obligations, the
Company shall require the Executive to execute and deliver within 60 days
following his Termination Date a release prepared by the Company and providing
for the Executive’s release of any and all claims against the Company and its
Subsidiaries (and those acting on behalf of them) that may have arisen on or
before the date of the release, which release shall contain such other
reasonable and customary terms as are specified by the Company. Notwithstanding
any provisions to the contrary, no payments shall be made or other benefits
arise pursuant to this Section 5.1 unless and until such binding release is
effective. If such release is not delivered by the Executive within 60 days
following the Executive’s Termination Date, all rights of the Executive with
respect to this Agreement and any benefits hereunder shall be forfeited.
5.1.1 The
Company shall, within five business days of the Payment Date, pay the Executive
a cash payment equal to the sum of the following amounts:
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5.1.1.1 to
the
extent not previously paid, the Annual Base Salary and any accrued paid time
off
through the Termination Date;
5.1.1.2 an
amount
equal to the product of (i) the Annual Incentive (as defined in
Section 3.2.2) at target for any Performance Period in which the
Termination Date occurs multiplied by (ii) a fraction, the numerator of
which is the number of days the Executive was actually employed by the Company
during such Performance Period, and the denominator of which is the number
of days in the Performance Period; or, if greater, the amount of any Annual
Incentive otherwise payable to the Executive with respect to a Performance
Period in which the Termination Date occurs, which payment shall be in full
settlement of Annual Incentive amounts due with respect to any such Performance
Period;
5.1.1.3 an
amount
equal to the product of (A) three (3) multiplied by (B) the sum of
(i) the Executive’s Annual Base Salary, and (ii) the Severance
Incentive; and
5.1.1.4 an
amount
equal to the sum of (A) the balance of the Executive’s accounts forfeited under
the Company’s Savings Investment Plan, or any successor plan, if applicable
(“SIP”) and the Nicor Gas Supplementary Savings Plan (“SSIP”) as a result of
termination of employment, and (B) the sum of (i) the aggregate maximum matching
contributions which the Company would have made on behalf of the Executive
to
the SIP and the SSIP for the Severance Period, calculated as if the amount
payable under subsection 5.1.1.3 of this Agreement had been earned equally
over
the Severance Period and the Executive had made the maximum allowable voluntary
contributions to the SIP and SSIP, and (ii) the aggregate additional “retirement
growth” contributions, if any, which the Company would have made on behalf of
the Executive for the Severance Period to the SIP and SSIP if the amount payable
under subsection 5.1.1.3 of this Agreement had been earned equally over the
Severance Period. For purposes of calculating the amount that would be
contributed to the SIP and SSIP for the Severance Period under this Section
5.1.1.4(B), the limits contained in the plan documents and Internal Revenue
Code
Sections 415, 402(g) and 401(a)(17), for the year of termination shall
apply.
5.1.2 For
purposes of each of the Executive’s stock options granted under the Company’s
Long Term Incentive Plan (the “LTIP”), any successor plan, or otherwise, that is
or becomes exercisable on the Termination Date, the Executive’s Separation from
Service shall be disregarded, and each such option shall continue to be
exercisable as though the Executive’s employment had continued through the last
day on which such option would be exercisable in the absence of such Separation
from Service (such earlier date being referred to herein as the “Applicable
Expiration Date”). This Section 5.1.2 shall be applicable notwithstanding
any term of any plan, arrangement, or agreement providing for early expiration
of the option because of the Executive’s Separation from Service, except for an
amendment adopted in accordance with Section 11.7 of this Agreement and
that by its specific terms amends this Agreement.
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5.1.3 On
the
Termination Date (i) the Executive shall become fully vested in, and may
thereupon and until the Applicable Expiration Date of such stock incentive
awards exercise in whole or in part, any and all stock incentive awards granted
to the Executive under the LTIP, any successor plan or otherwise which have
not
become exercisable as of the Termination Date; (ii) all performance units
previously awarded to the Executive shall become vested, and a prorated
calculation of the target value of all such units shall be done as of the
Termination Date and full payment of such prorated target value shall be made
by
the Company within 30 days after the Termination Date; and (iii) the
Executive shall become fully vested at the prorated target level in any other
cash incentive awards granted for the performance period in which the
Termination Date occurs under the LTIP, a successor plan or otherwise which
have
not, as of the Termination Date, become fully vested.
5.1.4 All
forfeiture conditions that as of the Termination Date are applicable to any
deferred stock unit, deferred dividends, restricted stock or restricted share
units awarded to the Executive by the Company pursuant to the LTIP, a successor
plan or otherwise shall lapse immediately (to the extent such awards are
outstanding immediately prior to the Termination Date). Notwithstanding the
foregoing, to the extent such awards are subject to performance criteria, a
prorated calculation of the target value of such awards shall be performed
and
forfeiture conditions shall lapse only with respect to the portion of such
awards attributable to such prorated value.
5.1.5 During
the Severance Period (or until such later date as any Welfare Plan of the
Company may specify), the Company shall continue to provide to the Executive
and
the Executive’s family welfare benefits (including, without limitation, medical,
prescription, dental, disability, individual life and group life insurance
benefits) which are at least as favorable as those provided under the most
favorable Welfare Plans of the Company applicable (i) with respect to the
Executive and his family during the 90-day period immediately preceding the
Termination Date, or (ii) with respect to other senior executives and their
families during the Severance Period. In determining benefits under such Welfare
Plans, the Executive’s annual compensation attributable to base salary and
incentives for any plan year or calendar year, as applicable, shall be deemed
to
be not less than the Executive’s Annual Base Salary and Target Annual Incentive.
The cost of the welfare benefits provided under this Section 5.1.5 shall
not exceed the cost of such benefits to the Executive immediately before the
Termination Date or, if less, the Effective Date. All such benefit payments
shall be made no later than December 31 of the year following the year in which
the expense was incurred. The amount of benefits provided in one year shall
not
affect the amounts provided in any subsequent year. Such benefits shall not
be
subject to liquidation or exchange for another benefit. Notwithstanding the
foregoing, if the Executive obtains comparable coverage under any Welfare Plans
sponsored by another employer, then the amount of coverage required to be
provided by the Company hereunder shall be reduced by the amount of coverage
provided by such other employer’s Welfare Plans. The Executive’s rights under
this Section shall be in addition to and not in lieu of any
post-termination continuation coverage or conversion rights the Executive may
have pursuant to applicable law, including, without limitation, continuation
coverage required by Section 4980B of the Code. For purposes of
determining eligibility for (but not the time of commencement of) retiree
benefits under any Welfare Plans of the Company, the Executive shall be
considered (i) to have remained employed until the last day of the
Severance Period and to have retired on the last
11
5.1.6 If
the
Executive participates in the Company’s nonqualified supplemental executive
retirement plan (“SERP”), the amount payable under subsection 5.1.1.3 of
this Agreement shall be taken into account for purposes of determining the
amount of benefits to which the Executive is entitled under the SERP; provided
that such amount shall be taken into account as though it was earned equally
over the Severance Period, and further provided that the Executive shall be
deemed to have attained the age he or she would have attained as of the last
day
of the Severance Period, and completed the number of years of service he or
she
would have completed as of the last day of the Severance Period. The Severance
Period shall be taken into account for purposes of determining the amount of
and
eligibility to begin to receive benefits under the SERP.
5.1.7 If
the
Executive participates in the Company’s nonqualified Supplemental Senior Officer
Retirement Plan (“SSORP”), on the Termination Date (i) the Executive shall
become fully vested in all contributions (and in any earnings applied to such
contributions) made by the Company on behalf of the Executive under the SSORP
or
any successor plan, if applicable, and (ii) the Company shall immediately make
an additional contribution to the SSORP of an amount equal to the product of
(x)
the Annual Deferral Percentage (as defined in the SSORP) used for the most
recently completed SSORP Plan Year, times (y) the amount payable under
subsection 5.1.1.3 of this Agreement.
5.1.8 During
the Severance Period, the Company shall, at its sole expense, as incurred,
pay
on behalf of Executive all fees and costs charged by a nationally recognized
outplacement firm selected by the Company (subject to approval by the Executive,
which shall not be withheld unreasonably) to provide outplacement services.
The
amount of expenses incurred in one year shall not affect the amounts paid in
any
subsequent year.
5.2.
If
by the Company and Nicor Gas for Cause.
If the
Company and Nicor Gas, as applicable, terminates the Executive’s employment for
Cause during the Employment Period, this Agreement shall terminate without
further obligation by the Company and Nicor Gas, as applicable, to the
Executive, other than the obligation immediately to pay the Executive in cash
the Executive’s Annual Base Salary through the Termination Date, plus any
accrued paid time off, in each case to the extent not previously
paid.
5.3.
If
by the Executive Other Than for Good Reason.
If the
Executive terminates employment during the Employment Period other than for
Good
Reason (including, but not by way of limitation, voluntary retirement), and
other than for Disability or death, this Agreement shall terminate without
further obligation by the Executive or by the Company, other than the obligation
of the Company immediately to pay the Executive in cash the Executive’s Annual
Base Salary through the Termination Date, plus any accrued paid time off, in
each case to the extent not previously paid.
5.4.
If
by the Company and Nicor Gas, as applicable, for Permanent
Disability.
If the
Company or Nicor Gas, as applicable, terminates the Executive’s employment by
reason of
12
5.4.1 the
Company’s obligation immediately to pay the Executive in cash all amounts
specified in Sections 5.1.1.1, and 5.1.1.2, in each case, to the extent unpaid
as of the Termination Date (such amounts collectively, the “Accrued
Obligations”), and
5.4.2 the
Executive’s right after the Permanent Disability Effective Date to receive
disability and other benefits at least equal to the greater of (i) those
provided under the most favorable disability Plans applicable to disabled senior
executives of the Company in effect immediately before the Termination Date,
or
(ii) those provided under the most favorable disability Plans of the
Company in effect at any time during the 90-day period immediately before the
Effective Date.
5.5.
If
upon Death.
If the
Executive’s employment is terminated by reason of the Executive’s death during
the Employment Period, this Agreement shall terminate without further obligation
to the Executive’s legal representatives under this Agreement, other than the
obligation immediately to pay the Executive’s estate or beneficiary in cash all
Accrued Obligations. Notwithstanding anything in this Agreement to the contrary,
the Executive’s family shall be entitled to receive benefits at least equal to
the most favorable benefits provided under Plans of the Company to the surviving
families of senior executives of the Company, but in no event shall such Plans
provide benefits which in each case are less favorable, in the aggregate, than
the most favorable of those provided by the Company to the Executive under
such
Plans in effect at any time during the 90-day period immediately before the
Effective Date.
ARTICLE
VI
CERTAIN
ADDITIONAL PAYMENTS BY THE COMPANY
6.1.
Gross-up
for Certain Taxes.
6.1.1 If
it is
determined by the Company’s independent auditors that any benefit received or
deemed received by the Executive from the Company pursuant to this Agreement
or
otherwise, whether or not in connection with a Change in Control (such monetary
or other benefits collectively, the “Potential Parachute Payments”) is or will
become subject to any excise tax under Section 4999 of the Code or any
similar tax payable under any United States federal, state, local or other
law
(such excise tax and all such similar taxes collectively, “Excise Taxes”), then
the Company shall, subject to Sections 6.6 and 6.7, within five business
days after such determination, pay the Executive an amount (the “Gross-up
Payment”) equal to the product of:
(a) the
amount of such Excise Taxes multiplied by
(b) the
Gross-up Multiple (as defined in Section 6.4). The Gross-up Payment is
intended to compensate the Executive for all Excise Taxes payable by the
Executive with respect to the Potential Parachute Payments and any federal,
state, local or other income or other taxes or Excise Taxes payable by the
Executive with respect to the Gross-up Payment.
13
6.1.2 The
determination of the Company’s independent auditors described in
Section 6.1.1, including the detailed calculations of the amounts of the
Potential Parachute Payments, Excise Taxes and Gross-up Payment and the
assumptions relating thereto, shall be set forth in a written certificate of
such auditors (the “Company Certificate”) delivered to the Executive. The
Executive or the Company may at any time request the preparation and delivery
to
the Executive of a Company Certificate. The Company shall cause the Company
Certificate to be delivered to the Executive as soon as reasonably possible
after such request.
6.1.3 All
determinations by the Company’s auditors under this Section 6.1 shall be made
using reasonable good faith interpretations of the Code, the regulations and
other guidance issued thereunder.
6.2.
Determination
by the Executive.
6.2.1 If
(i) the Company shall fail to deliver a Company Certificate to the
Executive within 30 days after its receipt of his written request therefor,
or (ii) at any time after the Executive’s receipt of a Company Certificate,
the Executive disputes either (x) the amount of the Gross-up Payment set
forth therein, or (y) the determination set forth therein to the effect
that no Gross-up Payment is due (whether by reason of Section 6.7 or
otherwise), then the Executive may elect to require the Company to pay a
Gross-up Payment in the amount determined by the Executive as set forth in
an
Executive Counsel Opinion (as defined in Section 6.5). Any such demand by
the Executive shall be made by delivery to the Company of a written notice
which
specifies the Gross-up Payment determined by the Executive (together with the
detailed calculations of the amounts of Potential Parachute Payments, Excise
Taxes and Gross-up Payment and the assumptions relating thereto) and an
Executive Counsel Opinion regarding such Gross-up Payment (such written notice
and opinion collectively, the “Executive’s Determination”). Within 30 days
after delivery of an Executive’s Determination to the Company, the Company shall
either (i) pay the Executive the Gross-up Payment set forth in Executive’s
Determination (less the portion thereof, if any, previously paid to Executive
by
the Company) or (ii) deliver to the Executive a Company Certificate and a
Company Counsel Opinion (as defined in Section 6.5), and pay the Executive
the Gross-up Payment specified in such Company Certificate. If for any reason
the Company fails to comply with the preceding sentence, the Gross-up Payment
specified in the Executive’s Determination shall be controlling for all
purposes.
6.2.2 If
the
Executive does not request a Company Certificate, and the Company does not
deliver a Company Certificate to the Executive, then (i) the Company shall,
for purposes of Section 6.7, be deemed to have determined that no Gross-up
Payment is due, and (ii) the Executive shall not pay any Excise Taxes in
respect of Potential Parachute Payments, except in accordance with
Sections 6.6.1 or 6.6.4.
6.3.
Additional
Gross-up Amounts.
If for
any reason it is later determined (whether pursuant to the subsequently-enacted
provisions of the Code, final regulations or published rulings of the IRS,
a
final judgment of a court of competent jurisdiction, a determination of the
Company’s independent auditors set forth in a Company Certificate or, subject to
the last two sentences of Section 6.2.1, an Executive’s Determination) that
the amount of Excise Taxes
14
(a) the
sum
of (1) such additional Excise Taxes and (2) any interest, fines,
penalties, expenses or other costs incurred by the Executive as a result of
having taken a position in accordance with determination made pursuant to
Section 6.1 or 6.2, as applicable,
multiplied
by
(b) the
Gross-up Multiple.
6.4.
Gross-up
Multiple.
The
Gross-up Multiple shall equal a fraction, the numerator of which is
one (1.0), and the denominator of which is one (1.0) minus the lesser
of (i) the sum, expressed as a decimal fraction, of the effective marginal
tax rates of all federal, state, local and other income and other taxes and
any
Excise Taxes applicable to the Gross-up Payment; or (ii) 0.80, it being
intended that the Gross-up Multiple shall in no event exceed five (5.0).
(If different rates of tax are applicable to various portions of a Gross-up
Payment, the weighted average of such rates shall be used.)
6.5.
Opinion
of Counsel.
“Executive Counsel Opinion” means an opinion of nationally-recognized executive
compensation counsel to the effect (i) that the amount of the Gross-up
Payment determined by the Executive pursuant to Section 6.2 is the amount
that a court of competent jurisdiction, based on a final judgment not subject
to
further appeal, is most likely to decide to have been calculated in accordance
with this Article and applicable law and (ii) if the Company has previously
delivered a Company Certificate to the Executive, that there is no reasonable
basis or no substantial authority for the calculation of the Gross-up Payment
set forth in the Company Certificate. “Company Counsel Opinion” means an opinion
of nationally-recognized executive compensation counsel to the effect that
(i) the amount of the Gross-up Payment set forth in the Company Certificate
is the amount that a court of competent jurisdiction, based on a final judgment
not subject to further appeal, is most likely to decide to have been calculated
in accordance with this Article and applicable law and (ii) for purposes of
Section 6662 of the Code, the Executive has substantial authority to report
on his federal income tax return the amount of Excise Taxes set forth in the
Company Certificate.
6.6.
Amount
Increased or Contested.
6.6.1 The
Executive shall notify the Company in writing (an “Executive’s Notice”) of any
claim by the IRS or other taxing authority (an “IRS Claim”) that, if successful,
would require the payment by the Executive of Excise Taxes in respect of
Potential Parachute Payments in an amount in excess of the amount of such Excise
Taxes determined in accordance with Section 6.1 or 6.2, as applicable. Such
Executive’s Notice shall include the nature and amount of such IRS Claim, the
date on which such IRS Claim is due to be paid (the “IRS Claim Deadline”), and a
copy of all notices and other documents or correspondence received by
the
15
6.6.1.1 deliver
to the Executive a Company Certificate to the effect that the IRS Claim has
been
reviewed by the Company’s independent auditors and, notwithstanding the IRS
Claim, the amount of Excise Taxes, interest and penalties payable by the
Executive is either zero or an amount less than the amount specified in the
IRS
Claim,
6.6.1.2 pay
to
the Executive an amount (which shall also be deemed a Gross-up Payment) equal
to
the positive difference between (x) the product of the amount of Excise
Taxes, interest and penalties specified in the Company Certificate, if any,
multiplied by the Gross-up Multiple, and (y) the portion of such product,
if any, previously paid to the Executive by the Company, and
6.6.1.3 direct
the Executive pursuant to Section 6.6.4 to contest the balance of the IRS
Claim, then the Executive shall pay only the amount, if any, of Excise Taxes,
interest and penalties specified in the Company Certificate. In no event shall
the Executive pay an IRS Claim earlier than 30 days after having given an
Executive’s Notice to the Company (or, if sooner, the IRS Claim
Deadline).
6.6.2 At
any
time after the payment by the Executive of any amount of Excise Taxes or related
interest or penalties in respect of Potential Parachute Payments (whether or
not
such amount was based upon a Company Certificate or an Executive’s
Determination), the Company may in its discretion require the Executive to
pursue a claim for a refund (“Refund Claim”) of all or any portion of such
Excise Taxes, interest or penalties as the Company may specify by written notice
to the Executive.
6.6.3 If
the
Company notifies the Executive in writing that the Company desires the Executive
to contest an IRS Claim or to pursue a Refund Claim, the Executive
shall:
6.6.3.1 give
the
Company all information that it reasonably requests in writing from time to
time
relating to such IRS Claim or Refund Claim, as applicable,
6.6.3.2 take
such
action in connection with such IRS Claim or Refund Claim (as applicable) as
the
Company reasonably requests in writing from time to time, including accepting
legal representation with respect thereto by an attorney selected by the
Company, subject to the approval of the Executive (which approval shall not
be
unreasonably withheld or delayed),
16
6.6.3.3 cooperate
with the Company in good faith to contest such IRS Claim or pursue such Refund
Claim, as applicable,
6.6.3.4 permit
the Company to participate in any proceedings relating to such IRS Claim or
Refund Claim, as applicable, and
6.6.3.5 contest
such IRS Claim or prosecute such Refund Claim (as applicable) to a determination
before any administrative tribunal, in a court of initial jurisdiction and
in
one or more appellate courts, as the Company may from time to time determine
in
its discretion.
The
Company shall control all proceedings in connection with such IRS Claim or
Refund Claim (as applicable) and in its discretion may cause the Executive
to
pursue or forego any and all administrative appeals, proceedings, hearings
and
conferences with the IRS or other taxing authority in respect of such IRS Claim
or Refund Claim (as applicable); provided that (i) any extension of the
statute of limitations relating to payment of taxes for the taxable year of
the
Executive relating to the IRS Claim is limited solely to such IRS Claim,
(ii) the Company’s control of the IRS Claim or Refund Claim (as applicable)
shall be limited to issues with respect to which a Gross-up Payment would be
payable, and (iii) the Executive shall be entitled to settle or contest, as
the case may be, any other issue raised by the IRS or other taxing
authority.
6.6.4 The
Company may at any time in its discretion direct the Executive to
(i) contest the IRS Claim in any lawful manner or (ii) pay the amount
specified in an IRS Claim and pursue a Refund Claim; provided, however, that
if
the Company directs the Executive to pay an IRS Claim and pursue a Refund Claim,
the Company shall advance the amount of such payment to the Executive on an
interest-free basis and shall indemnify the Executive, on an after-tax basis,
for any income or other applicable taxes or Excise Tax, and any related interest
or penalties imposed with respect to such advance.
6.6.5 The
Company shall pay directly all legal, accounting and other costs and expenses
(including additional interest and penalties) incurred by the Company or the
Executive in connection with any IRS Claim or Refund Claim, as applicable,
and
shall indemnify the Executive, on an after-tax basis, for any income or other
applicable taxes, Excise Tax and related interest and penalties imposed on
the
Executive as a result of such payment of costs and expenses.
6.7.
Refunds.
If,
after the receipt by the Executive of any payment or advance of Excise Taxes
advanced by the Company pursuant to Section 6.6, the Executive receives any
refund with respect to such claim, the Executive shall (subject to the Company’s
complying with the requirements of Section 6.6) promptly pay 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 Section 6.6, 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 determination within 30 days after the Company receives
written notice of such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance
17
6.8.
Payments.
All
amounts payable to Executive under Section 6.1, 6.3 or 6.6 shall be paid as
soon
as practicable after a Change in Control or other event giving rise to any
payment of the Excise Tax by the Executive, but no later than the December
31 of
the year next following the year in which the Executive, or the Company on
behalf of the Executive, remits the Excise Tax.
ARTICLE
VII
EXPENSES
AND INTEREST
7.1.
Legal
Fees and Other Expenses.
7.1.1 During
the Employment Period and for a period of ten (10) years following the
Termination Date, if the Executive incurs legal fees or other expenses in an
effort to secure, preserve, establish entitlement to, or obtain benefits under
this Agreement (including, without limitation, the fees and other expenses
of
the Executive’s legal counsel in connection with the delivery of the Executive
Counsel opinion referred to in Section 6.5), then the Company shall, regardless
of the outcome of such effort, promptly reimburse the Executive on a current
basis for such fees and expenses following the Executive’s written submission of
a request for reimbursement together with evidence that such fees and expenses
were incurred. All such expenses shall be reimbursed by December 31 of the
year
following the year in which the expense was incurred. The amount of expenses
reimbursed in one year shall not affect the amount eligible for reimbursement
in
any subsequent year.
7.1.2 If
the
Executive does not prevail (after exhaustion of all available judicial remedies)
in respect of a claim by the Executive or by the Company hereunder, and the
Company establishes before a court of competent jurisdiction, by clear and
convincing evidence, that the Executive had no reasonable basis for his claim
hereunder, or for his response to the Company’s claim hereunder, and acted in
bad faith, no further reimbursement for legal fees and expenses shall be due
to
the Executive in respect of such claim and the Executive shall refund any
amounts previously reimbursed hereunder with respect to such claim.
7.2.
Interest.
Except
for any required delay under Section 11.16, if the Company and Nicor Gas, as
applicable, does not pay any amount due to the Executive under this Agreement
within three days after such amount became due and owing, interest shall accrue
on such amount from the date it became due and owing until the date of payment
at an annual rate equal to 200 basis points above the base commercial lending
rate published in The Wall Street Journal in effect from time to time during
the
period of such nonpayment.
ARTICLE
VIII
NO
SET-OFF OR MITIGATION
8.1.
No
Set-off by Company.
The
Executive’s right to receive when due the payments and other benefits provided
for under this Agreement is absolute, unconditional and
18
8.2.
No
Mitigation.
The
Executive shall not have any duty to mitigate the amounts payable by the Company
and Nicor Gas, as applicable, under this Agreement by seeking new employment
following termination. Except as specifically otherwise provided in this
Agreement, all amounts payable pursuant to this Agreement shall be paid without
reduction regardless of any amounts of salary, compensation or other amounts
which may be paid or payable to the Executive as the result of the Executive’s
employment by another employer.
ARTICLE
IX
NON-EXCLUSIVITY
OF RIGHTS
9.1.
Waiver
of Other Severance Rights.
Except
as may be otherwise specifically provided in an amendment of this
Section 9.1 adopted in accordance with Section 11.7 of this Agreement,
the Executive’s rights under Section 5.1 of this Agreement shall be in lieu
of any benefits that may be otherwise payable to or on behalf of the Executive
pursuant to the terms of any severance pay arrangement of the Company or any
Subsidiary
or any
other, similar arrangement of the Company or any Subsidiary providing benefits
upon involuntary termination of employment and shall also be in lieu of any
benefits under the Nicor Inc. Executive/Key Employee Severance Benefits Program
(notwithstanding any provision of that program to the contrary); provided,
however, that this Section 9.1 shall not affect the Executive’s rights to
receive any benefits with respect to a termination of employment that occurs
outside of the Employment Period. To the extent Executive receives severance
or
similar payments and/or benefits under any other plan, program, agreement,
policy, practice, or the like of Nicor Gas, the Company or any Subsidiary,
or
under the WARN Act or similar state law, the payments and benefits due to
Executive under this Agreement will be correspondingly reduced on a
dollar-for-dollar basis (or vice-versa).
9.2.
Other
Rights.
Except
as provided in Section 9.1, this Agreement shall not prevent or limit the
Executive’s continuing or future participation in any benefit, bonus, incentive
or other plans provided by the Company or any Subsidiary and for which the
Executive may qualify, nor shall this Agreement limit or otherwise affect such
rights as the Executive may have under any other agreements with the Company
or
any Subsidiary. Amounts which are vested benefits or which the Executive is
otherwise entitled to receive under any plan of the Company or any Subsidiary
and any other payment or benefit required by law at or after the Termination
Date shall be payable in accordance with such Plan or applicable law except
as
expressly modified by this Agreement.
ARTICLE
X
CONFIDENTIALITY
10.1. Confidentiality.
The
Executive acknowledges that it is the policy of the Company and its Subsidiaries
to maintain as secret and confidential all valuable and unique
19
10.2.
Remedy.
The
Executive and the Company specifically agree that, in the event that the
Executive shall breach his obligations under this Article X, the Company
and its Subsidiaries will suffer irreparable injury and shall be entitled to
injunctive relief therefor, and shall not be precluded from pursuing any and
all
remedies it may have at law or in equity for breach of such obligations;
provided, however, that such breach shall not in any manner or degree whatsoever
limit, reduce or otherwise affect the obligations of the Company or Nicor Gas,
as applicable, under this Agreement, and in no event shall an asserted breach
of
the Executive’s obligations under this Article X constitute a basis for
deferring or withholding any amounts otherwise payable to the Executive under
this Agreement.
ARTICLE
XI
MISCELLANEOUS
11.1.
No
Assignability.
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.
11.2.
Successors.
Before
or upon the consummation of any Change in Control, the Company shall obtain
from
each individual, group or entity, if any, that becomes a successor of the
Company by reason of the Change in Control, the unconditional written agreement
of such individual, group or entity to assume this Agreement and to perform
all
of the obligations of the Company hereunder.
11.3.
Payments
to Beneficiary.
If the
Executive dies before receiving amounts to which the Executive is entitled
under
this Agreement, such amounts shall be paid in a lump sum to the beneficiary
designated in writing by the Executive, or if none is so designated, to the
Executive’s estate.
20
11.4.
Nonalienation
of Benefits.
Benefits payable under this Agreement shall not be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
charge, garnishment, execution or levy of any kind, either voluntary or
involuntary, before actually being received by the Executive, and any such
attempt to dispose of any right to benefits payable under this Agreement shall
be void.
11.5.
Severability.
If any
one or more articles, sections or other portions of this Agreement are declared
by any court or governmental authority to be unlawful or invalid, such
unlawfulness or invalidity shall not serve to invalidate any article, section
or
other portion not so declared to be unlawful or invalid. Any article, section
or
other portion so declared to be unlawful or invalid shall be construed so as
to
effectuate the terms of such article, section or other portion to the fullest
extent possible while remaining lawful and valid.
11.6.
Arbitration.
Any and
all disputes between the parties hereto arising out of this Agreement (other
than disputes related to Article VI or to an alleged breach of the covenant
contained in Article X) shall be settled by arbitration before an impartial
arbitrator pursuant to the rules and regulations of the American Arbitration
Association (AAA) pertaining to the arbitration of commercial disputes.
Either party may invoke the right to arbitration. The arbitrator shall be
selected by means of the parties striking alternatively from a panel of seven
arbitrators supplied by the Chicago office of AAA. The Arbitrator shall have
the
authority to interpret and apply the provisions of this Agreement, consistent
with Section 11.10 below. The decision of the arbitrator shall be final and
binding upon the parties. Judgment may be entered on the award in any court
of
competent jurisdiction. The arbitrator’s fees and expenses shall be borne by the
Company.
11.7.
Amendments.
This
Agreement shall not be altered, amended or modified except by written instrument
executed by the Company and the Executive.
11.8.
Notices.
All
notices and other communications under this Agreement shall be in writing and
delivered by hand, by a nationally-recognized commercial delivery service,
or by
first-class registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If
to the Executive:
Xxxxxx X. Xxxxx
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
If
to the Company:
0000 Xxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxxxx
X. Xxxxxxxxx
21
or
to
such other address as either party shall have furnished to the other in writing.
Notice and communications shall be effective when actually received by the
addressee.
11.9.
Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument.
11.10. Governing
Law.
This
Agreement is intended to be interpreted and construed in accordance with the
laws of the State of Illinois, without regard to its choice of law
principles.
11.11. Captions.
The
captions of this Agreement are not a part of the provisions hereof and shall
have no force or effect.
11.12. Number
and Gender.
Wherever from the context it appears appropriate, each term stated in either
the
singular or plural shall include the singular and the plural, and pronouns
stated in either the masculine, the feminine or the neuter gender shall include
the masculine, feminine and neuter genders.
11.13. Tax
Withholding.
The
Company or Nicor Gas, as applicable, may withhold from any amounts payable
under
this Agreement any federal, state or local taxes that are required to be
withheld pursuant to any applicable law or regulation.
11.14. No
Waiver.
A
waiver of any provision of this Agreement shall not be deemed a waiver of any
other provision, and any waiver of any default as to any such provision shall
not be deemed a waiver of any later default as to that or any other
provision.
11.15. Entire
Agreement.
This
Agreement contains the entire understanding of the Company, Nicor Gas and the
Executive with respect to its subject matter. 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. This Agreement supersedes the Prior Agreement, which shall no longer
be in force or have any effect.
11.16. Section
409A Compliance.
11.16.1 To
the
extent applicable, this Agreement shall be interpreted in accordance with
Internal Revenue Code Section 409A and Department of Treasury regulations and
other interpretive guidance issued thereunder. If the Company determines that
any compensation or benefits payable under this Agreement do not comply with
Code Section 409A and related Department of Treasury guidance, the Company
and
Executive agree to amend this Agreement or take such other actions as the
Company deems necessary or appropriate to comply with the requirements of Code
Section 409A while preserving the economic agreement of the
parties.
11.16.2 Notwithstanding
any provision to the contrary in this Agreement, if Executive is deemed at
the
time of his separation from service to be a “specified employee” for purposes of
Section 409A(a)(2)(B)(i) of the Code, to the extent delayed commencement of
any
portion of the benefits to which Executive is entitled under Section 5.1 or
5.4
of this Agreement
22
IN
WITNESS WHEREOF, the Executive and the Company have executed this Agreement
as
of the date first above written.
/s/
XXXXXX X.
DODGE____ _______
Xxxxxx
X.
Xxxxx
By:
/s/
XXXX X.
XXXXXXX
Xxxx
X.
Xxxxxxx
Chairman,
President
and Chief
Executive Officer
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23
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