EMPLOYMENT AGREEMENT
EXHIBIT
10.37
THIS
AGREEMENT ( the “Agreement”)
is made as of the 26th
day of
January,
2004, between
The United Illuminating Company, a Connecticut Corporation (the “Company”) and
Xxxxxxx X. Xxxxxxxx (the “Executive”),
WITNESSETH
THAT
WHEREAS,
the Executive previously has
been employed by the Company as its President and Chief Operating Officer,
and
is covered by the terms of a certain employment agreement with the Company
dated
as of March 1, 1997; and
WHEREAS,
the Company desires to
continue to employ the Executive as the President and Chief Operating Officer
of
the Company, and the Executive desires to be so employed by the Company, and
the
parties desire to be bound by the terms of this revised employment Agreement
(the “Agreement”), which shall supersede and replace all provisions of the prior
employment agreement;
NOW
THEREFORE, in consideration of the
foregoing and the respective covenants and agreements of the parties herein
contained, and the services to be rendered to the Company pursuant hereto,
the
parties hereby agree as follows:
(1) EMPLOYMENT;
TERM
(a) The
Company hereby agrees to employ the Executive, and the Executive hereby agrees
to serve the Company, at the pleasure of the Board of Directors of the Company
(the “Company Board”) and the Board of Directors of UIL Holdings Corporation
(the “UIL Board”), all upon the terms and conditions set forth
herein.
(b) The
term
of this Agreement shall be for a period commencing on the date hereof and ending
on the second anniversary of the date hereof, unless this Agreement is earlier
terminated as provided in Section 4 (the “Initial Term”). Unless the
Company has provided the Executive with at least ninety (90) days prior written
notice of its decision not to renew this Agreement after the Initial Term or
any
subsequent term, this Agreement shall be automatically renewed for a successive
one year term (the Initial Term and any renewal term being referred to as the
“Term”). For
purposes of this Agreement, a non-renewal at the election of the Company at
the
end of a Term shall constitute a termination of this Agreement without cause,
and shall be governed by the provisions of Section 6(c). In no event shall
the
Company give notice of a non-renewal from the time that an impending Change
in
Control (as hereinafter defined) is announced through the date of the
consummation of such Change in Control.
(2)
POSITION AND DUTIES
(a)
The Executive shall be employed by
the Company as its President and Chief Operating Officer, or in such other
equivalent or higher officership position as the UIL Board may determine. The
Executive shall:
(i)
accept such employment and perform
and discharge, faithfully, diligently and to the best of the Executive's
abilities, the duties and obligations of the Executive's office and such other
duties as may from time to time be assigned to the Executive by, or at the
direction of, the Company Board and UIL Board; and
(ii) devote
substantially
all of the Executive's working time and efforts to the business and affairs
of
the Company.
(b)
Prior to a Change in Control, in
the event that the Executive is named by the UIL Board to a officer position
higher in rank or compensation than that applicable at the commencement of
the
Initial Term, nothing in this Agreement shall obligate the Company to continue
such Executive in such higher position; and the Company shall not be deemed
in
“Breach” of the Agreement (as defined in Section 5(d)) for failure to continue
the Executive in such higher officership.
(c)
If the Executive is a participant
in the UIL Holdings Corporation Change in Control Severance Plan (the “UIL CIC
Plan II”) as of a Change in Control as therein defined, then for the twenty-four
month period after such Change in Control, the Company’s employment of the
Executive shall be without diminishment in the Executive's management
responsibilities, duties or powers. In the event that the Executive’s employment
is not so continued, the Executive may claim to have suffered a Constructive
Termination, in accordance with the terms of the UIL CIC Plan II.
(3)
PLACE OF PERFORMANCE
In
his employment by the Company, the
Executive shall be based within a fifty (50)-mile radius of the current
executive offices of the Company in New Haven, Connecticut..
(4)
COMPENSATION
(a)
Base
Salary. During the Initial Term of the Executive's employment
hereunder, the Executive shall receive a base salary (“Base Salary”) at an
annual rate of Two Hundred Ninety Five Thousand Two Hundred Dollars
($295,200.00), payable in accordance with the then customary payroll practices
of the Company. The Executive's performance and Base Salary shall be
reviewed by the UIL Board at least annually, and may be revised upward as a
result of any such review. The Executive’s Base Salary may be revised
downward by the UIL Board contemporaneously with any general reduction of the
salary rates of the Company’s other officers.
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(b)
Incentive
Compensation. During the Term of the Executive’s employment
hereunder, the Executive shall be eligible to be designated by the Company
Board, or by the UIL Board in the event that the plan is a UIL plan, as a
participant in each annual short-term incentive compensation program, and any
long-term incentive program, maintained for management employees of the Company;
provided, however, that entitlement to participation, and continued
participation, in any long-term equity incentive program shall be conditioned
upon the Executive fully complying with any stock ownership and retention
guidelines from time to time established and promulgated by the UIL
Board.
For
purposes of this Agreement, the Executive’s “Accrued Incentive
Compensation” shall mean the amount of any annual short-term incentive
compensation earned with respect to the calendar year ended prior to the Date
of
Termination (as defined in Section 5) but not yet paid as of the Executive’s
Date of Termination.
The
Executive’s “Stub-Period
Incentive Compensation” shall mean the annual short-term incentive
compensation being earned in the year in which the Executive terminates
employment, pro-rated for the year in which he terminates service, and shall
be
equal to that short-term annual incentive compensation payment to which the
Executive would be entitled, if any, under the terms of the Company’s executive
incentive compensation plan, calculated as if he had been employed by the
Company on the last day of the year including his Date of Termination, and
had
achieved personal goals ‘at target’, but based on actual performance with
respect to the achievement of UIL and Company financial goals (collectively
referred to as “Company goals”), multiplied by a fraction, the numerator of
which is the number of days which have elapsed in such year through the Date
of
Termination and the denominator of which is 365. UIL shall determine
in its discretion the composition of the Executive’s scorecard, and what
constitutes a ‘personal goal’ and ‘Company goal’; provided generally that an
Executive’s ‘personal goals’ shall include, for example, his strategic
opportunities, leadership, and balance scorecard goals, other than business
unit
and UIL total financial goals, and Company goals shall include, for example,
UIL
and business unit financial goals based on earnings per share, cash flow, and
all other goals not defined as personal goals. In the event that the
‘gate’, if any, is not achieved with respect to Company goals, then no
Stub-Period Incentive Compensation will be paid. Any Stub-Period
Incentive Compensation payable upon termination of the Executive shall be paid
in accordance with Section 6(e) of this Agreement.
(c)
Change
in
Control Severance Plan. The Executive
shall be
designated by the UIL Board as an individual covered by the UIL Holdings
Corporation Change in Control Severance Plan II (the “UIL CIC Plan II”), subject
to all of the terms and provisions of the UIL CIC Plan II as it may be amended
from time to time. For purposes of this Agreement, “Change in
Control” shall have the meaning set forth in the UIL CIC Plan II. Nothing in this
subsection, however, shall entitle the Executive to continued participation
in
such Plan should the UIL Board determine otherwise in accordance with the terms
of that Plan. In no event shall the Executive be entitled to participate in
the
UIL CIC Plan II if he is still a participant under the terms of the UIL Change
in Control Severance Plan (restated effective October 24, 2003), and in no
event
shall he be entitled to benefits under both plans. By signing this Agreement,
the Executive hereby relinquishes any claim he might have under the CIC Plan
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now or in the future.
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(d)
Business
Expenses. During the Term, the Executive shall be entitled to
receive prompt reimbursement for all reasonable employment- related business
expenses incurred by the Executive, in accordance with the policies and
procedures established by the Company Board from time to time for all of the
Company's officers, provided that the Executive properly accounts
therefor.
(e)
Benefit
Programs. During the Term of the Executive's employment
hereunder and to the extent he meets the applicable eligibility requirements,
the Executive shall be entitled to participate in and receive benefits under
all
of the Company's employee benefit plans, programs and arrangements for its
similarly situated officers on the same terms and conditions that apply to
such
officers, including, without limitation, any plan or program of an affiliated
company in which the Company is a participating employer, but only for so long
as the Company remains a participating employer. Except as otherwise
expressly provided, nothing paid to the Executive under any such plan, program
or arrangement presently in effect or made available by the Company in the
future shall be deemed to be in lieu of compensation to the Executive under
any
other Section of this Agreement. Nothing in this Agreement shall require the
Company to maintain a particular benefit plan or program, or preclude the
Company from amending or terminating any such plans, programs or arrangements,
including its participation therein, or eliminating, reducing or otherwise
changing any benefit provided thereunder, so long as such change similarly
affects all similarly situated employees of the Company and is in compliance
with applicable law.
(f)
Vacations
and Holidays. The Executive shall be entitled to that number
of weeks of paid vacation in each calendar year determined by the Company Board
from time to time to be available to similarly situated Company officers, and
shall also be entitled to all paid holidays afforded by the Company to its
management employees.
(g) Supplemental
Executive Retirement Benefit. Upon termination of the Executive's
employment with the Company and all affiliates other than for Cause (as defined
in Section 5(b) of this Agreement), a supplemental retirement benefit shall
be
payable in accordance with the provisions of this Section (4)(g). The
annual supplemental retirement benefit, expressed in the form of a single life
annuity beginning at the Executive's Normal Retirement Date as defined in The
United Illuminating Company Pension Plan (the “Company's Pension Plan”), shall
be the excess, if any, of (A) less (B), where (A) is 2.0% (.020) of the
Executive's highest three-year average Total Compensation times his number
of
years of service as an employee of the Company (including any deemed service
credited under this Agreement or the CIC Plan II) at termination (not to exceed
thirty), and (B) is the benefit payable under the Company's Pension Plan
expressed as a single life annuity commencing as of the Executive’s Normal
Retirement Date. For purposes of this Section, Total Compensation
shall mean the Executive’s Base Salary, and any amount payable to the Executive
as short-term incentive compensation pursuant to the Company’s annual executive
incentive compensation plan. Subject to the requirements of Section
6(f), distribution of the supplemental retirement benefit shall be made in
the
month of January following the Executive’s termination of service with the
Company and its affiliates, and shall be made in an actuarially equivalent
lump
sum, unless the Executive shall have elected at least 12 months in advance
of
such distribution date to commence distributions in one of the other actuarially
equivalent forms of benefits permitted under the
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Company’s
Pension Plan, in which case the supplemental executive retirement benefit
provided under this Section 4(g) shall be deferred, except in the case of
termination due to death or disability, for a period of at least five years
from
the date on which such distribution otherwise would have been made. The
provisions of this subsection are intended to comply with all laws applicable
to
the taxation of non-qualified deferred compensation, and the Company and
Executive agree to revise this subsection as necessary or advisable from time
to
time in order to comply with changes in such laws. The benefits payable under
this Section 4(g) shall be calculated using the same definitions of actuarial
equivalence, and the same early retirement reduction factors that are specified
in the Pension Plan in the event that the Executive becomes entitled to payment
of the supplemental retirement benefit prior to what would have been his Normal
Retirement Date, except that, in the event that the Executive is credited with
deemed years of service, the reductions shall be based on the Executive's
service deemed as an employee of the Company. If the form of payment
provides for a death benefit, such benefit shall be payable to the Executive's
estate, unless another beneficiary has been designated by the
Executive. If the Executive dies prior to the commencement of benefit
payments, then the pre-retirement death benefit provisions of the Pension Plan
shall apply to the supplemental retirement benefit payable pursuant to this
Section (4)(g).
(5)
TERMINATION
(a)
Death
or
Disability. The Executive's employment hereunder shall terminate upon the
Executive's death or termination due to disability (as described in Section
6(a)
of this Agreement).
(b)
Termination
by Company for Cause. The Company may at any time by written notice to
the Executive terminate the Executive’s employment for Cause in accordance with
the following provisions:
(i)
Termination
for Cause Prior to a Change in Control. Prior to the date of a Change in
Control, the Company shall be deemed to have “Cause” to terminate the
Executive’s employment hereunder only upon the Executive’s:
(1)
failure to comply with any material term of this Agreement, or to perform and
discharge the duties or obligations of the Executive’s office, or such other
duties as may from time to time be assigned to the Executive by, or at the
direction of, the UIL Board, faithfully, diligently, and competently, in the
opinion of a majority of the members of the UIL Board, unless any such failure
is cured in all material respects to the reasonable satisfaction of the UIL
Board within sixty (60) days after the Executive receives written notice of
such
failure; or
(2)
failure to devote substantially all of his working time and efforts to the
business and affairs of the Company unless any such failure is cured in all
material respects to the reasonable satisfaction of the UIL Board within sixty
(60) days after the Executive receives written notice of such failure; or
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(3)
misconduct that is demonstrably injurious to the interests of the Company or
its
Affiliates (as that term is defined in Section 10) unless such misconduct is
rectified in all material respects to the reasonable satisfaction of the UIL
Board within thirty (30) days after the Executive receives written notice of
such misconduct; or
(4)
commission of a serious crime, such as an act of fraud, misappropriation of
funds, embezzlement, or a crime involving personal dishonesty or moral
turpitude.
(ii)
Termination
for Cause After a Change in Control. During
the period that commences on a Change in Control and for twenty-four (24) months
thereafter (the “Change in Control Protective Period”), and subject to the same
notice and cure provisions specified above, the Company (or its successor or
other entity employing the Executive following such Change in Control) shall
be
deemed to have Cause to terminate the Executive’s employment hereunder only upon
the Executive’s:
(1)
commission of a serious crime, such as an act of fraud, misappropriation of
funds, embezzlement, or a crime involving personal dishonesty or moral
turpitude; or
(2) misconduct
that is demonstrably injurious to the interests of the Company or its
Affiliates; or
(3)
willful failure of the Executive to substantially perform his or her duties
(other than by reason of incapacity due to physical or mental illness or
injury).
(c) Termination
by Company without Cause. The Company may terminate the
Executive’s employment at any time, without cause, upon ninety (90) days prior
written notice to the Executive.
(d) Termination
by Executive.
(i) If
the
Executive is not in default of any of the Executive’s obligations under Sections
(2), (10), (11) or (12) hereof, the Executive may terminate employment hereunder
upon at least thirty (30) days’ prior notice, for failure of the Company to
observe and perform one or more of its obligations under Sections (2), (3)
and/or (4) hereof, which failure the Company fails to remedy within such notice
period (a “Breach by the Company”).
(ii) If
the
Executive is not in default of any of the Executive’s obligations under Sections
(2), (10), (11) or (12) hereof, the Executive may terminate employment hereunder
in the absence of a Breach by the Company, effective upon at least ninety (90)
days prior written notice.
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(e) Date
of Termination.
For purposes of this Agreement, the “Date of Termination” is defined as (i) the
Executive’s date of death, in the event of his death; or the date of his
termination due to disability, in the case of disability, or (ii) the date
specified in the notice of termination, in the case of the Executive’s
termination pursuant to Sections (5)(b), (5)(c), 5(d) hereof.
(6)
CONSEQUENCES OF TERMINATION OR NON-RENEWAL.
(a)
Termination
on Death or Disability; or by the Executive in the Absence of a Breach by the
Company. If
the Executive’s employment terminates by reason of the Executive’s death, or in
the event that the Executive’s employment is terminated due to total or partial
physical or mental disability such that the Executive becomes entitled to
long-term disability benefits under the Company’s long-term disability plan, or
if the Executive terminates employment hereunder in the absence of a Breach
by
the Company upon ninety (90) days prior written notice, the Company shall pay
to
the Executive or, in the event of death or disability, the Executive’s personal
representative and/or spouse:
(i)
the Executive’s Base Salary and
Accrued Incentive Compensation (as defined in Section 4(b));
(ii)
Stub-Period Incentive Compensation
(as defined in Section 4(b)) earned, but unpaid, as of the Date of Termination,
but only in the case of the Executive’s death or termination due to disability,
and not in case of his voluntary termination; plus
(iii)
any amounts payable pursuant to
(4)(d) (unreimbursed business expenses), (4)(e) (employee benefits due and
owing), 4(f) (accrued, but unpaid vacation or holidays), and (4)(g)
(supplemental executive retirement benefits), plus
(iv)
any benefits or amounts payable,
on account of the Executive’s (A) exercise of his then exercisable rights under
any long-term incentive compensation plan or arrangement, and (B) participation
in any deferred compensation plan in which he was a participant as of his
termination of service.
Pending
a
determination that the Executive is entitled to long-term disability benefits,
the Executive’s short-term disability benefits shall be extended, as necessary
at 50% of Base Salary, if his length of employment with the Company is of such
short duration that his short term disability benefits would otherwise expire
before his entitlement to long-term disability benefits is determined.
Upon
payment of these amounts, the Company shall have no further obligation to the
Executive, the Executive’s personal representative and/or spouse under this
Agreement or on account of, or arising out of, the termination of the
Executive’s employment.
(b)
Upon
Termination for Cause; or by the Executive on fewer than 90 days
notice. If the Company terminates the Executive’s employment
for Cause, or the Executive terminates employment hereunder in the absence
of a
Breach by the Company and upon fewer than ninety (90) days prior written notice,
the Company shall pay to the Executive:
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(i)
the Executive’s Base Salary earned,
but unpaid, as of the Date of Termination; plus
(ii)
any amounts payable pursuant to
Sections (4)(d), (4)(e), and 4(f) hereof, and
(iii)
any benefits payable under any
elective non-qualified deferred compensation plan in which the Executive had
been a participant, other than any SERP benefit under Section 4(g) or any
supplemental executive retirement plan of the Company or an Affiliate,
whereupon
the Company shall have no further obligation to the Executive under this
Agreement or on account of, or arising out of, the termination of the
Executive’s employment.
(c)
Upon
Termination Without Cause, or Upon Breach by the Company, not on account of
a
Change in Control. If
the
Company terminates the Executive's employment hereunder without Cause (including
by non-renewal of
this Agreement at the election of the Company at the end of a Term), or
if the Executive terminates the Executive's employment hereunder on account
of a
Breach by the Company, and in either case the termination is not upon a Change
in Control or within the Change in Control Protective Period, the Company shall
pay or provide (as applicable) to the Executive, the following:
(i)
the Executive’s Base Salary,
Accrued Incentive Compensation and Stub-Period Incentive Compensation earned,
but unpaid, as of the Date of Termination; plus
(ii)
any amounts payable pursuant to
Sections 4(d), 4(e), 4(f) and 4(g) hereof; plus
(iii)
any benefits or amounts payable,
on account of the Executive’s (A) exercise of his then exercisable rights under
any long-term incentive compensation plan or arrangement, and (B) participation
in any deferred compensation plan in which he was a participant as of his
termination of service; plus
(iv)
lump sum severance equal to two
(2) times the sum
of:
(1) the
Executive’s annual Base Salary rate in effect immediately prior to the
Executive’s Date of Termination, as determined by the UIL Board’s most recent
review of salary rates pursuant to Section 4(a); and
(2) the
short-term annual incentive compensation payment to which the Executive would
be
entitled, calculated as if he had been employed by the Company on the last
day
of the year of his Termination, as if the Executive had achieved personal goals
‘at target’, and based on actual performance with respect to the achievement of
Company goals, without pro-ration for the fact that the Executive was employed
only a portion of such year. In the event that the ‘gate’, if any, is not
reached with respect to Company goals, then no short-term incentive compensation
will be included in the calculation of severance. Personal and Company goals
shall be defined and determined as set forth in Section 4(b) of this
Agreement.
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(v)
for the period ending on the
second anniversary
of the date of the Executive’s Date of Termination, continued participation in
the medical and dental plan(s) in which he was a participant as of his Date
of
Termination on the same basis as if he remained an active employee, provided
that such participation is possible under the terms and provisions of such
plans
and programs and applicable law. Such period of continued participation shall
run concurrently with, and reduce day- for-day, any obligation that the Company
or any Affiliate would have to provide “COBRA” continuation coverage with
respect to the Executive’s termination of employment. If the Executive’s
participation in any such plan or program is barred as a result of the
Executive’s termination, the Company shall arrange to provide the Executive with
benefits substantially similar on an after-tax basis to those that the Executive
would have been entitled to receive under such plan or program, provided that
with respect to any benefit to be provided on an insured basis, the value of
such coverage shall be based on the present value of the premiums expected
to be
paid for such coverage, and with respect to other benefits, such value shall
be
the present value of the expected cost to the Company of providing such
benefits.
(d)
Upon
Non-renewal of Agreement at end of Term. If the Executive’s
employment hereunder is terminated due to non-renewal of this Agreement, the
Company shall pay or provide (as applicable) to the Executive the same payments
and benefits to which the Executive would have been entitled had he been
terminated without cause in accordance with Section 6(c) of this
Agreement.
(e) Timing
of
Payment. Any cash amount
that is due and owing to the Executive upon his termination of service pursuant
to Section 6 will be paid as soon as administratively feasible following the
effective date (including any revocation period) of the Release provided for
in
Section 6(f); provided, however, that (i) any Stub-Period Incentive
Compensation, and (ii) that portion of any severance payment that is based
on
annual short-term incentive compensation shall be paid following the close
of
the year in which the Date of Termination occurs, at the same time that
incentive compensation generally would be payable upon authorization of the
UIL
Board to all other employees.
(f)
Release. All
payments and
obligations of the Company under Section (6) and (7) shall be conditioned upon
the execution and delivery by Executive to the Company of a full and effective
release by Executive of any liability by the Company to Executive in form and
substance reasonably satisfactory to the Company.
(7)
CHANGE IN CONTROL
(a)
If on, or within twenty-four (24)
months following a Change in Control, the Company (or its successor or other
entity employing the Executive following such Change in Control) either
terminates the Executive's employment hereunder without Cause or fails to renew
this Agreement on substantially identical terms, or if the Executive terminates
the Executive's employment on account of a Constructive Termination (as defined
in the UIL CIC Plan II), then the Executive shall be entitled to the
following:
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(i)
the Executive’s Base Salary,
Accrued Incentive Compensation and Stub-Period Incentive Compensation earned
prior to the Date of Termination; plus
(ii)
any amounts payable pursuant to
Sections 4(d), 4(e), 4(f) and 4(g) hereof; plus
(iii)
any benefits or amounts payable,
on account of the Executive’s (A) exercise of his then exercisable rights under
any long-term incentive compensation plan or arrangement, and (B) participation
in any deferred compensation plan in which he was a participant as of his
termination of service; plus
(iv)
those payments, and benefits, if
any, to which the Executive is entitled by reason of having been designated
a
Participant in the UIL CIC Plan II. The severance payments, pension supplements
and other benefit provisions under such Plan (the “Total UIL CIC Plan Package”)
shall be controlling and shall supplant the payments and benefits to which
the
Executive would be entitled on account of a termination of employment without
Cause pursuant to the terms of this Agreement, including without limitation
any
severance benefits, supplemental retirement benefits, short-term incentive
compensation and other compensation and benefits (other than long term incentive
compensation) under this Agreement (the “Employment Agreement Termination
Package”); expressly provided, however, that in the event that the Employment
Agreement Termination Package exceeds the value of the Total UIL CIC Plan
Package, then the Executive shall be entitled to select one or the other
Package, but shall not be entitled to both, and shall not be entitled to select
among compensation elements in each Package.
(b)
For purposes of this Agreement,
Change in Control shall mean “Change in Control” as defined with
respect to the Company employing the Executive in the UIL CIC Plan II, as
amended from time to time.
(c)
Payment of benefits under this
Section 7 shall be subject to, and conditioned upon, the provisions of Section
6(e) and (f) hereof.
(8)
ADDITIONAL CONSEQUENCES OF A CHANGE
IN CONTROL.
(a)
Payments
to Executive. In the event that a Change in Control has been
approved by all necessary shareholder, creditor and regulatory actions, then,
the Company will pay to the Trustee of the UIL Holdings Corporation Supplemental
Retirement Benefit Rabbi Trust, as the same may be amended or superseded, for
the benefit of the Executive, cash equal to that amount, calculated by the
Company’s independent certified public accountants, to be reasonably sufficient
to pay and discharge the Company’s future obligations, if any, to the Executive
and/or his personal representative and/or spouse, under Section 7 hereof, but
only if (i) the Executive’s employment has been terminated or will be terminated
prior to the date of the Change in Control and (ii) the Company does not make
such payment directly to the Executive.
In
the event that the Executive’s
employment has not been terminated prior to the date of the Change in Control,
but subsequently is terminated other than for Cause during the Change in Control
Protective Period, then as of the date that notice of Date of Termination
is
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given
to
the Executive (or that it is finally determined that there is a Constructive
Termination, in the case of termination by the Executive), the Company’s
Successor (as defined in the UIL CIC Plan) shall deposit a sum, calculated
by
such Successor’s independent certified public accountants, reasonably sufficient
to pay and discharge such Successor’s obligations to the Executive under Section
7 hereof.
(b)
Reduction
of Salary. During the Change in Control Protective Period, the
Executive’s Base Salary may not be reduced to an annual rate less than the Base
Salary rate fixed by the UIL Board as a result of its most recent review of
salary rates, unless such reduction is part of, and consistent with, a general
reduction of the compensation rates of all employees of the Company, its
successor, or purchaser of assets, as the case may be.
(9)
TAX SAVINGS PROVISION
If
any portion of the payments which
the Executive has the right to receive from the Company, or any affiliated
entity, hereunder would constitute "excess parachute payments" (as defined
in
Section 280G of the Internal Revenue Code, and not governed by the terms defined
in this Agreement) subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code, such excess parachute payments shall be reduced to the
largest amount that will result in no portion of such excess parachute payments
being subject to the excise tax imposed by Section 4999 of the Internal Revenue
Code.
(10)
CONFIDENTIAL INFORMATION
The
Executive recognizes that the
Executive’s employment by the Company is one of highest trust and confidence by
reason of his access to certain trade secrets, confidential business practices,
and proprietary information concerning the Company or any person or entity
that
directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, the Company (an “Affiliate”),
including, without limitation, the Company’s methods of doing business,
marketing and strategic business plans, employees’ compensation and contract
terms, customer lists and customer characteristics (collectively referred to
as
“Proprietary Information”). The Executive agrees and covenants to
exercise utmost diligence to protect and safeguard the trade secrets,
confidential business practices and Proprietary Information concerning the
Company and any Affiliate. The Executive further agrees and covenants
that, except with the prior written consent of the Company, he will not, either
during the Term hereof or thereafter, directly or indirectly, use for his own
benefit or for the benefit of any other person or organization, or disclose,
disseminate or distribute to any other person or organization, any of the
Proprietary Information (whether or not acquired, learned, obtained or developed
by the Executive alone or in conjunction with another), unless and until such
Proprietary Information has become a matter of public knowledge through no
action or fault of the Executive or unless otherwise required by court order
to
comply with legal process. All memoranda, notes, records, drawings,
documents or other writings whatsoever made, compiled, acquired or received
by
the Executive during the Term hereof arising out of, in connection with,
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or
related to any activity or business of the Company are and shall continue to
be
the sole and exclusive property of the Company, and shall, together with all
copies thereof, be returned and delivered to the Company by the Executive
immediately, when he ceases to be employed by the Company, or at any other
time
upon the Company’s demand.
(11) NON–COMPETITION
The
Executive agrees and covenants that, during the Term of this Agreement and
for a
period of twelve (12) months following the month during which the Executive
ceases to be employed by the Company, the Executive will not, in any capacity,
directly or indirectly, whether as a
consultant,
employee, officer, director, partner, member, principal, shareholder, or
otherwise:
(a)
compete with the Company in the
regional marketing of energy services related to the delivery or use, at retail,
of electricity in Connecticut; or
(b)
directly or indirectly divert or
attempt to divert from the Company or any Affiliate any business in which such
entity has been actively engaged during the Term hereof, or in any way interfere
with the relationships that the Company or any Affiliate has with its sources
of
supply or customers; or
(c)
directly or indirectly interfere or
attempt to interfere with the relationship between the Company or any Affiliate
and any of such entity’s employees,
unless
the Company has granted prior written approval which may be withheld for any
reason.
For
purposes of this Section “Affiliate” means any entity that directly or
indirectly controls, is controlled by, or is under common control with the
Company.
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(12)
DISCLOSURE AND ASSIGNMENT OF INVENTIONS AND DISCOVERIES.
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(a)
Disclosure
of Inventions. The Executive agrees to make prompt and complete
disclosure to the Company of all inventions and discoveries made or conceived
by
him, alone or with others, while this Agreement is in effect, or within a
reasonable time thereafter, which arise out of or relate to the services
rendered pursuant to this Agreement. The Executive also agrees to keep necessary
records, including notes, sketches, drawings, models and data supporting
all such inventions
and discoveries made by him, alone or with others, during the course of
performing the services pursuant to this Agreement, and the Executive agrees
to
furnish the Company, upon request, all such records.
(b) Assignment
of Inventions and Discoveries. The Executive also agrees that
he will assign to the Company all inventions and discoveries made by him which
arise out of and pertain to the services rendered pursuant to this Agreement,
together with all domestic and foreign patents as may be obtained on these
inventions and discoveries. The Executive further agrees that, upon request
of
the Company, he will execute all necessary papers and cooperate in the fullest
degree with the Company in securing, maintaining and enforcing any such
patents
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which
arise out of his services under this Agreement. It is understood, however,
that
these obligations undertaken by Executive will be at no expense to him.
(13)
MISCELLANEOUS.
(a)
Equitable
Remedies. The Executive
acknowledges
that the restrictions provided for in Sections (10) through (12) are reasonable
and necessary in order to protect the legitimate interests of the Company and
its Affiliates, and that any violation thereof would result in serious damage
and irreparable injury to the Company and its Affiliates. Further, the
Executive acknowledges that the services to be rendered by him are of such
unique and extraordinary nature, and the resulting injury to the Company from
a
breach of Sections (10) through (12), inclusive, by the Executive would be
of
such a nature, that an action at law for the collection of damages would not
provide adequate relief to the Company for the enforcement of its rights in
the
event of an actual or threatened violation by the Executive of his commitments
and obligations under Sections (10) through (12). The Executive agrees that
upon
the actual or threatened breach or violation
of
any of the commitments under Section (10) through (12), the Company shall be
entitled to both preliminary and permanent injunctive relief, in any action
or
proceeding brought in an appropriate court having jurisdiction over the
Executive, to restrain him from committing any violation of any such commitments
and obligations.
(b)
Effect
Of
Breach. All payments and other benefits payable but not yet
distributed to Executive under Sections (6), (7) or (8) shall be forfeited
and
discontinued in the event that the Executive violates Sections (10) through
(12)
of this Agreement, or willfully engages in conduct which is materially injurious
to the Company, monetarily or otherwise, all as determined in the sole
discretion of the Company.
(c)
Successors;
Binding Agreement; Assignment.
(i)
The Company will require the
acquirer of all or substantially all of the business or assets of the Company
(whether directly or indirectly, by purchase of stock or assets, merger,
consolidation or otherwise), by agreement in form and substance reasonably
satisfactory to the Executive, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would
be
required to perform it if no such succession had taken place. If the Company
fails to obtain such agreement prior to the effective date of any such
succession, the Executive may terminate his or her employment with in thirty
(30) days of such succession and treat such termination as a Breach by the
Company and termination without cause on account of a Change in Control
entitling the Executive to payments and benefits under Section 7 of this
Agreement. For purposes of implementing the foregoing, the date on which any
such succession becomes effective shall be deemed the Date of
Termination.
(ii) This
Agreement, and the
Executive’s rights and obligations hereunder, may not be assigned by the
Executive. Any attempted assignment of this Agreement by the
Executive shall be void and of no force or effect. This Agreement and
all rights of the Executive hereunder shall inure to the benefit of and be
enforceable by the Executive’s personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
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As
used
in this Section, the term the “Company” shall include The United Illuminating
Company, UIL Holdings Corporation, and any successor to, or acquirer of, the
business or assets of the Company that executes and delivers the agreement
provided for in this Section (13)(c) or which otherwise becomes bound by all
the
terms and provisions of this Agreement by operation of law.
(d)
Notices. For
the purpose of this Agreement, notices and all other communications to either
party hereunder provided for in the Agreement shall be in writing and shall
be
deemed to have been duly given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed, in the case of the Company, to the Secretary of the Company at 000
Xxxxxx Xxxxxx, Xxx Xxxxx, Xxxxxxxxxxx 00000, or, in the case of the Executive,
to the Executive at his residence, or to such other address as either party
shall designate by giving written notice of such change to the other
party.
(e)
Waiver;
Amendment. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is approved
by the UIL Board and agreed to in a writing signed by the Executive and the
Company. No waiver by either party hereto at any time of any breach
by the other party hereto of, or compliance with, any condition or provision
of
this Agreement to be performed by such other party shall be deemed a waiver
of
any similar or dissimilar provisions or conditions at the same or at any prior
or subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party that are not set forth expressly in this
Agreement.
(f)
Governing
Law; Severability. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the State
of
Connecticut. The validity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability
of
any other provision of this Agreement, which shall remain in full force and
effect. In the event one or more of the provisions of this Agreement should,
for
any reason, be held to be invalid, illegal or unenforceable in any respect,
the
parties agree that such provisions shall be legally enforceable to the extent
permitted by applicable law, and that any court of competent jurisdiction shall
so enforce such provision, or shall have the authority hereunder to modify
it to
make it enforceable to the greatest extent permitted by law.
(g)
No
Conflict. The Executive hereby represents and warrants to the
Company that neither the execution nor the delivery of this Agreement, nor
the
employment of the Executive by the Company will result in the breach of any
agreement to which the Executive is a party.
(h)
Survival. The
provisions of this Agreement shall not survive the termination of this Agreement
or of the Executive’s employment hereunder, except that the provisions of
Sections (6) through (13) hereof shall survive such termination and shall be
binding upon the Executive, the Executive’s personal representative and/or
spouse, the Company, and the Company’s successors and assigns.
(i)
Counterparts;
Facsimile Execution. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
together shall
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constitute
one and the same instrument. Facsimile execution and delivery of this
Agreement is legal, valid and binding execution and delivery for all
purposes.
IN
WITNESS WHEREOF, the parties hereto
have executed this Agreement as of the day and year first above written.
THE
UNITED ILLUMINATING COMPANY
Attest:
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/s/
Xxxxx X. Xxxxx
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By:
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/s/
Xxxxxxxxx X. Xxxxxxx
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Its
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/s/
Xxxxxxx X.
Xxxxxxxx
1/26/04
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Xxxxxxx
X. Xxxxxxxx
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