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EXHIBIT 10.11
FORM OF EMPLOYMENT AGREEMENT
Employment Agreement ("Agreement") entered into as of the 1st day of July,
1996 between SOUTHWEST GAS CORPORATION, a California corporation (the "Company")
and ______________ ("Employee").
1. DEFINITIONS
For the purposes of this Agreement:
(a) The term "Company" shall include any corporate successor to the
business presently conducted by the Company.
(b) The term "Subsidiary" shall mean any corporation, partnership, joint
venture or other entity in which the Company has a 20% or greater
equity interest.
(c) "Permanent Disability" shall mean that because of physical or mental
illness or disability, Employee shall have been continuously unable
to perform his duties hereunder for a consecutive period of six
months.
(d) Employee shall be deemed to engage in a "Competing Business" if, in
any capacity, including but not limited to proprietor, partner,
officer, director or employee, he engages or participates, directly
or indirectly, in the operation, ownership or management of any
proprietorship, partnership, corporation or other business entity
which is in the natural gas distribution business. Indirect
participation in the operation or ownership of any such entity shall
include any investment by Employee in any such entity, by way of
loan, guarantee or stock ownership (other than ownership of 1% or
less of any class of the entity or other securities of a company
which is listed and regularly traded on any national securities
exchange or which is regularly traded over-the-counter).
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2. EMPLOYMENT: TERM OF AGREEMENT
(a) Employee shall perform the duties of [Officer's Title] of the
Company and, as such, shall supervise and direct the
activities/operation[s] of the Company and, to the extent
practicable, its Subsidiaries. He shall continue to perform such
additional duties related to the business and affairs of the Company
as may be delegated to him from time to time by the Board of
Directors of the Company (the "Board") [or the President and CEO].
(b) Company agrees to employ Employee and Employee agrees to serve
Company, in accordance with the terms of this Agreement, for an
initial term of [24 or 36] months, commencing July 1, 1996. Unless
within 60 days prior to each anniversary date of this Agreement, the
Company gives to Employee written notice of termination as of the
then applicable expiration date of this Agreement, the term of this
Agreement shall automatically be extended for an additional 12
months. The term of this Agreement shall include any extension
pursuant to this Paragraph 2(b).
3. COMPENSATION
Employee shall receive the following compensation for services during the
term of his employment hereunder:
(a) The Employee's minimum base salary shall be $___________ per annum,
payable as nearly as possible in equal semi-monthly installments,
subject to adjustment (but not below the minimum base salary
provided above) in accordance with the regular procedures
established by the Company for salary adjustments; and
(b) The Employee shall participate in: (i) any incentive
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compensation plan, pension or profit sharing plans, stock purchase
plan or executive retirement plan maintained by the Company for its
employees in accordance with the terms and conditions thereof; (ii)
any annuity or group insurance benefit plan, medical plan and other
welfare/ employee benefit plans maintained by the Company for its
executive employees, in accordance with the terms and conditions
thereof; and (iii) the Company will provide a suitable automobile
valued at retail at approximately $___________, with the Company
assuming the expenses for insurance, repairs and maintenance of the
automobile.
4. DUTIES
Employee agrees that at all times during the term hereof, he will:
(a) Faithfully, industriously and to the best of his ability, experience
and talents, perform all of the duties that may be required of and
from him and fulfill all of his responsibilities hereunder pursuant
to the express and explicit terms hereof, to the reasonable
satisfaction of the Board;
(b) Devote all of his undivided time, attention, knowledge and skills,
during customary business hours to the business and interests of the
Company, subject to such holidays, personal holidays, reasonable
vacations and sick leave as are provided under the general policies
of the Company as they may exist from time to time;
(c) Comply with all the general rules and regulations of the Company;
(d) Not engage in a Competing Business; and
(e) Maintain his residence at a location within the city or in or
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near a suburban community of the city in which the executive offices
of the Company are located, or the executive offices of a Company
division if so assigned.
5. CONFIDENTIALITY
Employee covenants and agrees to hold in strictest confidence, and not
disclose to any person, firm or corporation, without the express written consent
of the Company, any and all of the Company's confidential data, including but
not limited to information and documents concerning the Company's business,
customers and suppliers, market methods, files, trade secrets, or other
"know-how" or techniques or information not of a published nature which shall
come into his possession, knowledge, or custody concerning the business of the
Company, except as such disclosure may be required by law or in connection with
Employee's employment hereunder. This covenant and agreement of Employee shall
survive this Agreement and continue to be binding upon Employee after the
expiration or termination of this Agreement, whether by passage of time or
otherwise so long as such information and data shall remain confidential.
6. TERMINATION DUE TO DEATH OR DISABILITY
Employee's employment with the Company shall terminate (i) upon the
Employee's death, or (ii) in the event of the Permanent Disability of Employee
upon notice in writing to the Employee to that effect.
7. OTHER TERMINATION
The Company may terminate this Agreement for Cause (as hereinafter
defined) upon written notice to Employee. In the event of termination by the
Company of this Agreement for Cause, Employee's salary shall immediately cease
and the Employee shall be entitled to no other payments or benefits pursuant to
this
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Agreement, except for any vested rights Employee may have in items under
paragraph 3(b) hereof.
Termination of this Agreement for "Cause" shall mean (i) any material
breach of any material provision of this Agreement by Employee which is not
cured within 60 days after receipt by Employee of written notice of such breach
from the Company, (ii) an adjudication that Employee is bankrupt, (iii)
conviction of Employee of a felony or crime involving moral turpitude (meaning a
crime that necessarily includes the commission of an act of gross depravity,
dishonesty or bad morals) or (iv) any acts or willful malfeasance or gross
negligence in a matter of material importance to the Company.
Employee may terminate this Agreement for any "Good Reason" as specified
in paragraph 10 (b)(ii) without regard for whether there has been any change in
control under paragraph 10(b)(i). Such a termination by Employee shall be
treated as a termination without cause by the Company under paragraph 8.
8. TERMINATION WITHOUT CAUSE
Termination of the employment of Employee by the Company for reason other
than (i) death, (ii) Permanent Disability,(iii) Cause, or (iv) upon expiration
of the term of this Agreement as provided in numbered paragraph 2 hereof, shall
have the following effect:
(a) Any such purported termination must be on 60 days advance written
notice to the Employee, whose employment shall continue during the
notice period; provided, however, that at the Company's option,
Employee may be placed on a paid administrative leave for all or any
part of the 60 days;
(b) Any restricted stock awards, stock options or stock
appreciation rights to purchase or relating to Common
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Stock of the Company held by Employee on the date notice of such
purported termination is given ("Notice Date") which are not at the
Notice Date currently vested or exercisable shall on the Notice Date
automatically become vested or exercisable and be exercisable for 90
days thereafter; and
The provisions of this paragraph 8 are not to be construed as modifying in
any way the provisions of paragraph 2 hereof, nor as granting the Company the
right to terminate the employment of the Employee other than for the permissible
reasons specified in clauses (i) through (iv) of the first sentence of this
paragraph; and the effects of such a purported termination specified in clauses
(a) and (b) hereof shall be in addition to and not in limitation of any other
rights the Employee has hereunder as a result of such purported termination.
9. BENEFITS UPON TERMINATION OF EMPLOYEE BY COMPANY FOR REASONS OTHER THAN
CAUSE, PERMANENT DISABILITY OR DEATH
If Employee's employment is terminated by the Company for any reason other
than Cause, Permanent Disability or Employee's death, the Company will:
(a) Continue to pay Employee his base salary being paid at the time of
notification, plus 20% of his base salary in lieu of employee
benefits referred to in Paragraph 3(b)(ii) for the balance of the
term of this Agreement;
(b) Pay Employee his incentive compensation, which shall be 60% of his
base salary, for the balance of the term of this Agreement;
(c) Pay his expenses which will be normal business expenses, including
automobile, plus any conventions, seminars or travel scheduled at
the time of notification of
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termination; and
(d) Pay benefits under the Company's Deferred Compensation Plan and
Supplemental Executive Retirement Plan ("SERP"), which are fully
vested at the "Employment Termination Date", in accordance with the
payment schedules and any applicable elections; provided, however
that Employee shall receive additional benefits under the SERP such
that Employee will be permitted to add to the formula for purposes
of eligibility for benefits, vesting and calculation of benefits 10
points which, at the election of Employee, may be applied either to
an age assumption or continuous Length of Service assumption (e.g.,
if an officer is 50 and has 20 years of service, he could allocate
the points so that for purposes of eligibility, vesting and
calculation of benefits, he is age 60 and has 20 years of service.)
These enhanced assumptions will be applicable to Employee, including
Employee who is so designated with the execution of this Agreement
for purposes of eligibility, vesting and calculation of benefits.
The termination of Employee's employment (the "Employment Termination
Date") shall be effective upon the 60th day following the notice date.
In addition, from the Notice Date until the Benefit Termination Date (as
hereinafter defined), the Company will provide Employee with suitable office
space (equivalent to that occupied by Employee on the Notice Date) and private
secretarial services away from the Company's offices in an office complex of
Employee's choice in Las Vegas, Nevada, or the Division Headquarters City
where Employee was last assigned. The "Benefit Termination Date",
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shall be the date following the Employment Termination Date which is the later
of (i) the expiration of the term of his Agreement as provided in paragraph 2
hereof, or (ii) the anniversary of the Employment Termination Date.
Provided that the Company duly performs all of its obligations arising by
virtue of a termination of Employee for reasons other than Cause, Employee will
not publicly disparage the Company or its officers, directors, employees or
agents and will refrain from any action which would reasonably be expected to
cause material adverse public relations or embarrassment to the Company or to
any of such persons. Similarly, the Company (including its officers, directors,
employees and agents) will not disparage Employee and will refrain from any
action which would reasonably be expected to result in embarrassment to Employee
or to materially and adversely affect his opportunities for employment. The
preceding two sentences shall not apply to disclosures required by applicable
law, regulation or order of court or governmental agency.
10. CHANGE IN CONTROL OF THE COMPANY
The Board recognizes that the continuing possibility of a change in
control of the Company is unsettling to Employee and other senior executives of
the Company. Therefore, the arrangements set forth below are being made to help
assure a continuing dedication by Employee to his duties to the Company,
notwithstanding the occurrence or potential occurrence of a change in control.
In particular, the Board believes it important, should the Company receive
proposals from third parties with respect to its future, to enable Employee,
without being influenced by the uncertainties of his own situation, to assess
and advise the Board whether such proposals would be in the best interests of
the Company and its shareholders and to take such other action
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regarding such proposals as the Board might determine to be appropriate. The
Board also wishes to demonstrate to executives of the Company that the Company
is concerned with the welfare of its executives and intends to see that loyal
executives are treated fairly.
In view of the foregoing and in further consideration of Employee's
continued employment with the Company, the Company agrees as follows:
(a) Limited Right to Receive a Severance Benefit
In the event that within 24 months after a Change in Control of the
Company (as hereinafter defined), Employee terminates his employment
with the Company for Good Reason (as hereinafter defined),
irrespective of the period then remaining until the end of the term
of this Agreement under paragraph 2 hereof, Employee shall be
entitled to severance benefits provided in subparagraph (d) of this
paragraph 10, provided he terminates his employment within 120 days
following the occurrence of any of the events specified in (aa)
through (dd) of subparagraph 10(b)(ii) below.
(b) Certain Additional Definitions
For purposes of this Agreement:
(i) Change in Control.
The term "Change in Control of the Company" shall mean any of
the following:
(aa) Approval by the shareholders of the Company of the
dissolution or liquidation of the Company;
(bb) Approval by the shareholders of the Company of an
agreement to merge or consolidate, or otherwise
reorganize, with or into one or more
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entities that are not wholly owned by the Company, as a
result of which less than 50% of the outstanding voting
securities of the surviving or resulting entity
immediately after the reorganization are, or will be,
owned by shareholders of the Company immediately before
such reorganization (assuming for purposes of such
determination that there is no change in the record
ownership of the Company's securities from the record
date for such approval until such reorganization and
that such record owners hold no securities of the other
parties to such reorganization);
(cc) Approval by the shareholders of the Company of the sale
of substantially all of the Company's business and/or
assets to a person or entity which is not wholly owned
by the Company;
(dd) Any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act but excluding any person
described in and satisfying the conditions of Rule
13d-l(b)(1) thereunder), becomes the beneficial owner
(as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company
representing more than 20% of the combined voting power
of the Company's then outstanding securities entitled to
then vote generally in the election of directors of the
Company; or
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(ee) A majority of the Board not being comprised of
Continuing Directors. For purposes of this Agreement,
"Continuing Directors" shall mean persons who were
members of the Board on the date of execution of this
Agreement or nominated for election or elected to the
Board with the affirmative vote of at least three-
fourths of the directors who were Continuing Directors
at the time of such nomination or election.
(ii) Good Reason
For purposes of this Agreement, "Good Reason" shall mean:
(aa) without Employee's express written consent, the
assignment to him of any duties inconsistent with his
positions, duties, authority, responsibilities and
status with the Company immediately prior to a change in
control, or a demotion, or a change in his titles or
offices as in effect immediately prior to a change in
control, or any removal of him from or any failure to
re-elect him to any of such positions, except in
connection with the termination of his employment for
cause, permanent disability or retirement or as a result
of his death or by him other than for Good Reason;
(bb) a reduction by the Company in Employee's base salary as
in effect on the date hereof or as the same may be
increased from time to time;
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and
(cc) the failure by the Company to continue in effect any
thrift, incentive or compensation plan, or any pension,
life insurance, health and accident or disability plan
in which Employee is participating at the time of a
change in control of the Company (or plans providing
Employee with substantially similar benefits), the
taking of any action by the Company which would
adversely affect Employee's participation in or
materially reduce his aggregate benefits under all of
such plans, when taken together, or deprive him of any
material fringe benefit enjoyed by him at the time of
the change in control (except for acceleration of stock
options or restricted stock contemplated by this
Agreement).
(dd) assignment to a new location which would require a
round-trip commute to work from Employee's current
residence of more than 40 miles per day.
(c) Notice of Termination
Any termination by Employee under this paragraph 10 shall be
communicated by written notice to the Company which shall set forth
in reasonable detail the facts and circumstances claimed to provide
a basis for such termination.
(d) Effect of Termination
If Employee is entitled to receive a severance benefit
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pursuant to subparagraph 10(a) hereof, the Company will provide
Employee with only the following severance benefits:
(i) a severance payment equal to eighteen months of Employee's
yearly base salary in effect as of the date of Employee's
notification of termination ("Employee Notice Date"), eighteen
months of incentive compensation calculated as 60% of such
base salary, and eighteen months' fringe benefits calculated
as 20% of such base salary;
(ii) suitable office space (equivalent to that occupied by Employee
on the Employee's Notice Date) and private secretarial
services away from the Company's offices in an office complex
of Employee's choice in Las Vegas, Nevada or the Division
Headquarters City where Employee was last assigned for a
period equal to the earlier of (aa) the second anniversary of
the Employee's Notice Date, or (bb) when Employee secures
suitable other employment;
(iii) the benefits specified in subparagraph 8(b) hereof, "Notice
Date" in said subparagraphs being deemed to be the Employee's
Notice Date;
(iv) Amounts fully vested and payable by the Company to Employee
under the Company's Deferred Compensation Plan and the
Company's Supplemental Executive Retirement Plan ("SERP") in
accordance with the payment schedules and any applicable
elections set forth under both such plans, such amounts having
been deposited with a trustee under an appropriate
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Trust Agreement providing for a so-called Rabbi Trust
Arrangement pursuant to I.R.S. Rev. Proc. 92-64, as described
in paragraph 20; and
(v) Benefits under the SERP, which are fully vested at the
"Employment Termination Date", provided, however that Employee
shall receive additional benefits under the SERP such that
Employee will be permitted to add to the formula for purposes
of eligibility for benefits, vesting and calculation of
benefits 10 points which, at the election of Employee, may be
applied either to an age assumption or a Continuous Length of
Service assumption. [See Paragraph 9(d) for illustration.]
11. RESTRICTIVE COVENANT
In consideration of the Company's agreements contained herein and the
payments to be made by it to Employee pursuant hereto, Employee agrees that,
during the period of his employment hereunder and for a further period expiring
12 months following the date of termination of this Agreement or any extensions
or renewal thereof, Employee will not, without the written consent of the Board
of Directors of the Company, engage in a Competing Business within the
geographical limits of any state (or such lesser geographical area as may be set
by a court of competent jurisdiction) in which any of the businesses of the
Company are being conducted on the date of any such termination. Employee
acknowledges and agrees that a breach by Employee of the provisions of this
section will constitute such damage as will be irreparable and the exact amount
of which will be impossible to ascertain and, for that reason, agrees that the
Company will be entitled to an injunction to be issued by any court of competent
jurisdiction restraining and
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enjoining Employee from violating the provisions of this paragraph. The right of
an injunction shall be in addition to and not in lieu of any other remedy
available to the Company for such breach or threatened breach, including the
recovery of damages from Employee.
Termination of this Agreement, whether by passage of time or any other
cause, shall not constitute a waiver of the Company's rights under this
paragraph 11, nor a release of Employee from his obligations thereunder.
12. ARBITRATION AND LITIGATION
In the event the Company terminates Employee by reason of his Permanent
Disability or for Cause and Employee disputes the accuracy of the assertion of
Permanent Disability or Cause, or in the event Employee terminates his
employment for Good Reason following a Change in Control of the Company and the
Company disputes the accuracy of such assertion of Good Reason, the accuracy of
such assertion shall be submitted to arbitration in accordance with the then
current commercial arbitration rules of the American Arbitration Association
("Association") or its successor, provided Employee or the Company files a
written demand for arbitration at a regional office of the Association within 30
calendar days following the date the Employee notifies the Company that he
disputes the accuracy of the assertion of Permanent Disability or Cause, or the
Company notifies Employee that it disputes the accuracy of the assertion of Good
Reason. In the event the Arbitrator finds that the termination by the Company
was not for Permanent Disability or not for Cause or that the termination by the
Employee was for Good Reason, Employee shall not be entitled to reinstatement,
but shall be entitled to the benefits of paragraphs 8 and 9 hereof (in the case
of termination by the Company) and paragraph 10 hereof (in the case of
termination by the
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Employee) and, in either case, payment of his reasonable legal expenses in such
arbitration. In the event the Company shall elect to insure all or part of its
liability for providing health and long-term disability benefits under this
paragraph, Employee shall submit to such reasonable physical examination as the
Company may request.
Should Employee at any time bring suit against the Company for breach of
this Agreement (not including any matter required to be submitted to arbitration
pursuant to the foregoing provisions of this paragraph 12) and obtain judgment
in his favor, the Company shall pay his reasonable legal expenses and costs of
suit.
13. BENEFIT AND BINDING EFFECT
This Agreement shall inure to the benefit of and be binding upon the
Company, its successors and assigns, including but not limited to any
corporation, person or other entity which may acquire all or substantially all
of the assets and business of the Company or any corporation with or into which
the Company may be consolidated or merged and Employee, his heirs, executors,
administrators and legal representatives, provided that the obligations of
Employee hereunder may not be delegated.
14. OTHER AGREEMENTS OF EMPLOYEE
Employee represents that the execution and performance of this Agreement
will not result in a breach of any of the terms and conditions of any employment
or other agreement between the Employee and any third party.
15. NOTICES
All notices hereunder shall be in writing and delivered personally or sent
by registered or certified mail, postage prepaid:
If to the Company, to: Southwest Gas Corporation
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X.X. Xxx 00000
Xxx Xxxxx, Xxxxxx 00000-0000
Attn: General Counsel
If to the Employee, to: [Employee's Name]
[Address]
[City, State Zip Code]
Either party may change the address to which notices are to be sent to it by
giving 10 days' written notice of such change of address to the other party in
the manner above provided for giving notice. Notices will be considered
delivered on the date of personal delivery or on the date of deposit in the
United States mail in the manner provided for giving notice by mail.
16. PARACHUTE PAYMENTS
If any "payment" (as defined below) hereunder constitutes a "parachute
payment" (as defined in Section 280G(b)(2)(A) of the Internal Revenue Code of
1986, as amended (herein the "Code") or the Treasury Regulations thereunder),
then the maximum amount of all such "payments" to be made under this Agreement
to or for the benefit of Employee shall not be limited by the amount the Company
is entitled to deduct under the Code, but the Employee shall pay any excise tax
which is imposed upon the amount by which such "payments" exceed three times the
Employee's "base amount" (as defined in Section 280G(b)(3)(A) of the Code and
the Regulations thereunder). For purposes of this section, to the extent
required by the Code, the term "payment" shall include any transfer of property
(including, without limitation, the acceleration of vesting of stock options
under Section 8(b) hereof, and the lapse of all restrictions on Common Stock
held by Employee under the Company's Restricted Stock Plans pursuant to Section
8(b) hereof),
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with all such property transfers being taken into account at their fair market
value in accordance with the provisions of Section 280G(d)(3)(B) of the Code and
the Regulations thereunder. If Employee elects to litigate any characterization
by the Internal Revenue Service of a payment as a "parachute payment", the
Company will join Employee in such litigation if the Company's General Counsel
determines in good faith that Employee's position has substantial merit and that
the issues should be litigated from the standpoint of the Company's best
interest.
17. ENTIRE AGREEMENT
The entire understanding and agreement between the parties has been
incorporated into this Agreement, and this Agreement supersedes all other
agreements and understandings between Employee and the Company with respect to
the employment of Employee by the Company.
18. GOVERNING LAW
This Agreement shall be governed by and interpreted in accordance with the
laws of the State of Nevada.
19. CAPTIONS
The captions included herein are for convenience and shall not constitute
a part of this Agreement.
20. FUNDING OF SEVERANCE BENEFITS PAYABLE UNDER PARAGRAPH 10
The method of providing funding for the amounts payable under paragraph 10
shall be by way of a Rabbi Trust. Such trust shall be established by the Company
with either (i) a major bank located in a major city of the United States or
(ii) any other party located in a major city of the United States that may be
granted corporate trustee powers under state law, in favor of Employee. Such
trust shall not be revocable and shall continue until such trust is terminated
in accordance with the termination provisions set forth
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in the Trust Agreement described in paragraph 10.
IN WITNESS WHEREOF, the Employment Agreement has been executed by the
parties hereto in counterparts, each of which shall be deemed an original, as of
the date first above written.
ATTEST: SOUTHWEST GAS CORPORATION
____________________ By:________________________________
Xxxxxx X. Xxxxxxx Xxxxxxx X. Xxxxxx
Corporate Secretary President and Chief Executive Officer
For COMPANY
___________________________________
[EMPLOYEE]
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