RETENTION AGREEMENT
Exhibit
10.22
This
RETENTION AGREEMENT (“Agreement”)
is made and entered into as of the 24th day of September, 2007, by and
among The Laclede Group, Inc., a Missouri corporation (“Laclede”), its
wholly-owned subsidiary, SM&P Utility Resources, Inc., an Indiana
corporation (“SM&P”) and Xxxxxx X. Xxxxxxx (“Employee”).
WITNESSETH
THAT:
WHEREAS,
Laclede and SM&P
(collectively, the “Company”) desire to explore the possible sale of SM&P
(“Transaction”);
WHEREAS,
Employee is employed by
SM&P and possesses skills and experience which the Company believes are of
substantial value and importance to the success of the current operations
of
SM&P;
WHEREAS,
the Company believes that the
skill and experience of Employee are also of substantial value and importance
to
the sale process and to potential buyers of SM&P in the Transaction
(“Buyers” or “Buyer”);
WHEREAS,
the sale process may require
additional time and effort on the part of the Employee;
WHEREAS,
the Company desires that
Employee remain actively employed with SM&P through
the day of closing of the Transaction as the term “Closing” is defined in any
agreement evidencing the Transaction (“Closing”) and for at least a limited
period of time following the Closing; and
WHEREAS,
Employee desires to render
services to SM&P on the terms hereinafter set forth through the period
indicated;
NOW,
THEREFORE, in consideration of the
promises and of the covenants and agreements hereinafter set forth, it is
covenanted and agreed as follows:
1. Retention
Payment. Subject to the terms and conditions hereof, Company will pay
Employee a retention payment (“Retention Payment”) in the amount specified on
Exhibit A. Such payment shall be subject to applicable payroll
tax withholding requirements.
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(a)
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First
Payment. Company will pay one-half of the Retention Payment to
Employee promptly following the day of Closing, provided the Employee
has
not breached any provision of this
Agreement.
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1
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(b)
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Second
Payment. Promptly following the thirtieth (30th)
day after
Closing, Employee shall deliver a letter to Laclede in the form
attached
to this Agreement as Exhibit B certifying that the Employee has
not
breached any provision of this Agreement following
Closing. Upon receipt of Employee’s letter, and provided the
Employee has not breached any provision of this Agreement prior
to
Closing, Company will pay promptly the remaining one-half of the
Retention
Payment to Employee.
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(c)
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Resignation/Termination.
If, prior to Closing, Employee either (i) resigns without good
reason or
(ii) is terminated for cause, Employee shall forfeit all rights
to the
Retention Payment. If, after Closing and through the thirtieth
(30th) day following Closing, Employee either (i) resigns without
good
reason or (ii) is terminated for cause, Employee shall forfeit
all rights
to the second half of the Retention
Payment.
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(1)
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The
phrase “good reason” shall mean: (i) a change in the reporting location of
greater than fifty (50) miles from where Employee is currently
performing
his or her job duties; or (ii) a reduction in the base salary,
position,
level of responsibilities, or conditions of the job which Employee
currently performs.
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(2)
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The
phrase “for cause” shall mean: (i) gross neglect of any of Employee’s
duties; (ii) willful violation of any of the Company’s policies, standards
or practices; (iii) fraud, dishonesty, or any other act of negligent,
reckless or willful misconduct; and (iv) breach of any provision
of this
Agreement.
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(3)
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For
purposes of this section, if Employee is terminated for reasons
other than
for cause and otherwise has complied with all of the terms of this
Agreement, then Employee will be entitled to receive the Retention
Payment.
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(d)
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Stock
Awards. Employee has previously been awarded shares
of Performance Contingent Restricted Stock under Laclede’s Equity
Incentive Plan (“Plan”). Employee acknowledges that the terms
of the Plan and such awards provide that (i) Employee will forfeit
and otherwise lose all rights to such shares of restricted stock
as a
result of no longer being employed by a Laclede affiliate, and
(ii)
Laclede will have no obligation or liability to Employee under
such Plan
or such awards following Closing.
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2. Performance
Contingent Payment. Subject to the terms and conditions hereof,
provided that each of the conditions listed in Section 2(a) below is met
in the
sole discretion of Laclede, and Employee has not breached any provision of
this
Agreement prior to Closing, Company will pay Employee a performance contingent
payment (“Performance Payment”) in the amount specified on Exhibit
A. Such payment shall be subject to applicable payroll tax
withholding requirements.
(a) Conditions.
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(1)
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Earnings. Company
meets or exceeds its financial targets for those portions of fiscal
2007
and fiscal 2008 that occur within the term of this
Agreement. For purposes of this section, the phrase “financial
targets” shall mean the rolling estimate for earnings for fiscal 2007 and
the targets for earnings for fiscal 2008 provided by Company to
Laclede at
its August 2007 Strategic
Workshop.
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2
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(2)
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Customers. Company
retains all of its significant customers on terms and pricing
substantially similar to the terms and pricing effective for each
such
customer on the date of this
Agreement.
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(b)
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Payment
of Performance Payment. Subject to Sections 2(b)(1) and
2(b)(2) below, if Company determines that Employee is entitled
to the
Performance Payment, Company will pay Employee the Performance
Payment, if
applicable, on the Second Payment
Date.
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(1)
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If
on or before the thirtieth (30th) day following Closing, Employee
either
(i) resigns without good reason or (ii) is terminated for cause,
Employee shall forfeit all rights to the Performance
Payment.
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(2)
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If
Employee is terminated for reasons other than for cause and otherwise
has
complied with all of the terms of this Agreement, then Employee
will be
entitled to receive the Performance
Payment.
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3. Employee
Covenants. Employee covenants and agrees as follows:
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(a)
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Through
the thirtieth (30th)
day
following Closing, Employee will use his or her best efforts to
perform
the responsibilities of his or her current position, and to maintain
and
grow the value of SM&P and its
business.
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(b)
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Until
Closing, Employee will use his or her best efforts to facilitate
the
Transaction, including without limitation the following, as requested
by
Company, (i) being available when and where reasonably necessary
for due
diligence purposes or otherwise, (ii) collection of due diligence
information, (iii) preparation of analyses of SM&P and its business,
(iv) timely review and accurate verification of proposed representations
and warranties, (v) being positive and supportive of the Transaction
to
employees, customers and potential buyers, and (vi) communicating
directly
or indirectly with any potential Buyer or its representatives only
through, or in the presence of, a Laclede representative designated
by
Laclede for such purpose, or with the express authorization of
an officer
of Laclede.
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(c)
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From
the date of Closing through the thirtieth (30th)
day
following Closing, Employee will use his or her best efforts to
aid the
Buyer in the transition of ownership from Laclede to
Buyer.
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(d)
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Until
the earlier of (i) thirty (30) days following Closing, or (ii)
termination pursuant to Section 4 of this Agreement, Employee will
not
disclose to anyone, including without limitation, customers, employees,
competitors, media and potential Buyers, the existence of the pending
Transaction, the agreements, terms, conditions, negotiation or
status
thereof, the existence, terms or conditions of this Agreement or
any other
confidential information of the Company, including without limitation,
pricing, strategic plans, customer information, marketing strategies
or
similar core information, except as expressly authorized by the
Company. This provision shall not apply to confidential
information that becomes generally available to the public other
than as a
result of a disclosure by Employee. Further, nothing in this
provision will preclude Employee from consulting with his or her
personal
attorney for legal advice regarding the terms and conditions of
this
Agreement.
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3
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(e)
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Employee
acknowledges that nothing in this Agreement supersedes or amends
in any
way any confidentiality obligation that Employee owes to SM&P,
including without limitation, any obligations existing pursuant
to the
Employee Confidentiality Agreement between SM&P and
Employee.
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(f)
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Employee
will not, directly or indirectly, perform any of the following
for a
period extending until thirty (30) days after the earlier of (i)
Closing,
or (ii) termination of this
Agreement:
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(1)
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solicit
or hire or assist anyone else to solicit or hire any employee of
SM&P,
or seek to persuade or assist anyone else to persuade any such
employee to
discontinue employment with SM&P;
or
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(2)
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participate
in, engage in, assist in, consult with, serve as an employee of
or partner
in, encourage or provide financial resources to any activity which
competes with SM&P in any territories in which SM&P has conducted
business, including without limitation solicitation of customers
of
SM&P for a competitor of SM&P. In the event that
Employee has forfeited his or her rights to the Retention Payment
pursuant
to Section 1(c) of this Agreement for reasons other than due to
a breach
of this Agreement, then this Section 3(f)(2) shall no longer apply
and
will not have force and effect subsequent to Employee’s employment with
SM&P.
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4. Term. This
Agreement is effective as of the date first written above and will terminate
automatically and without notice on June 30, 2008 (“Termination Date”), unless
unilaterally extended by Laclede, and all the obligations set forth in this
Agreement shall terminate and be of no further force and effect; provided
that
termination of this Agreement will not terminate liability for any breaches
prior to the Termination Date. It is expressly understood and agreed
that if this Agreement terminates without a sale of SM&P, or if Laclede
decides not to sell SM&P, Employee will be placed in the same employment
position he or she would have been had no sale process taken
place. If prior to June 30, 2008 the Company has entered into a
definitive agreement for the Transaction, then the Termination Date shall
be
extended (i) until thirty (30) days following the Closing or (ii) until such
definitive agreement is terminated without Closing.
5. Arbitration. Employee
agrees that any dispute between Employee and the Company arising out of this
Agreement will be resolved through arbitration. Any party may demand
arbitration by providing notice to the other parties. The parties
shall agree upon an arbitrator, who shall be registered and in good standing
with an arbitration association, or, if they cannot agree within 20 days
of
demand, the demanding party shall request the American Arbitration Association
or National Arbitration Forum provide an arbitrator. Any arbitrator
shall apply substantive law consistent with the Federal Arbitration Act,
9
U.S.C. Sections 1 -16. Each party shall bear their own expenses
resulting from the arbitration, and shall split the joint costs of such
arbitration proceeding fifty percent between Employee, on the one hand, and
Company, on the other. The foregoing does not preclude Laclede from
seeking injunctive or other relief from a court of law or equity to enjoin
any
breach by Employee and pursuing consequential damages for any such breach
in the
same forum. Any arbitration or litigation shall be held in St. Louis
County, Missouri.
4
6. Miscellaneous.This
Agreement is not an agreement of employment and does not in any way impact
Employee’s status as an at-will employee. This Agreement shall be interpreted in
accordance with and governed by the laws of the State of Missouri without
regard
to the principles of conflicts of law which might otherwise apply. No
modification, amendment or waiver of any provision of this Agreement shall
be
effective unless in writing specifically referring hereto and signed by the
parties hereto. Captions in this Agreement are for reference purposes
only. Any notice to be given by any party hereunder shall be in
writing and shall be deemed to have been duly given if delivered or mailed,
certified or registered mail, postage prepaid, as follows:
TO
COMPANY:
The
Laclede Group, Inc.
000
Xxxxx
Xxxxxx
Xx.
Xxxxx, XX 00000
Attn:
Xxxx X. Xxxxxxx, General
Counsel
and
to
Employee at his or her address as it appears on the payroll records of SM&P,
or to such other address as may have been furnished by any party to the other
parties by written notice.
7. Severability. If
any provision of this Agreement shall for any reason be held excessively
broad
or unreasonable as to time, matter or interest to be protected, the court
is
hereby empowered and requested to construe such provision by narrowing it
so as
to make it reasonable and enforceable to the extent allowed by
law. The covenants and agreements contained in this Agreement are
separate and severable, and in the event any portion or portions of such
paragraphs are declared invalid or unenforceable, the validity of the remaining
paragraphs of this Agreement will not be affected.
[signature
page follows]
5
IN
WITNESS WHEREOF, the parties hereto
have caused this Agreement to be executed as of the date and year first above
written.
THIS
CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY
THE
PARTIES.
THE
LACLEDE GROUP, INC.
By:
/s/
Xxxxxxx X.
Xxxxxx
Xxxxxxx
X. Xxxxxx
Chairman,
President and
CEO
SM&P
UTILITY RESOURCES,
INC.
By:
/s/
Xxxxxxx X.
Xxxxxx
Xxxxxxx
X. Xxxxxx
Chief
Executive Officer
EMPLOYEE
/s/
Xxxxxx X.
Xxxxxxx
Xxxxxx
X. Xxxxxxx
6
Exhibit
A
Retention
Payment
Retention
Payment Amount = $285,000
Performance
Payment Amount = $57,000
7
Exhibit
B
Sample
Form Certification Letter
Xxxx
X.
Xxxxxxx
General
Counsel
The
Laclede Group, Inc.
000
Xxxxx
Xxxxxx, Xxxxx 0000
Xxxxx
Xxxxx, Xxxxxxxx 00000
Re: Employee
Certification in Accordance with Retention Agreement
Dear
Xxxx:
In
accordance with Section 1(b) of the
September __, 2007 Retention Agreement with The Laclede Group, Inc.
and SM&P Utility Resources, Inc. (“Retention Agreement”), I hereby certify
that since the Closing of the Transaction as defined in the Retention Agreement,
I have not breached any of the terms of the Retention Agreement.
Sincerely,
______________________________
Employee
