SEVERANCE COMPENSATION AGREEMENT
This Agreement is effective as of the date it is signed by
both UTILICORP UNITED INC., a Delaware corporation (the
"Company"), and _________________________________________________
("Executive").
WHEREAS, the Company's Board of Directors has determined
that it is appropriate to reinforce and encourage the continued
attention and dedication of members of the Company's management,
including the Executive, to their assigned duties without
distraction in potentially disturbing circumstances arising from
the possibility of a Change in Control (as defined in Section 2
below) of the Company or a Spin-Off affecting Executive (as
defined in Section 3 below) of a business unit of the Company;
and
WHEREAS, this Agreement sets forth the severance
compensation to which the Executive will be entitled upon certain
conditions if the Executive's employment with the Company or a
Spin-Off Purchaser (as defined in Section 3) terminates following
a Change in Control or a Spin-Off.
1. TERM. This Agreement shall terminate, except to the
extent that any obligation of the Company hereunder remains
unpaid as of such time, upon the earliest of (a) three years from
the date hereof if a Change in Control or a Spin-Off affecting
Executive has not occurred within such three-year period;
provided that the term of this Agreement shall be automatically
extended for an additional year upon each anniversary of the date
hereof until a party provides notice to the other party that such
automatic extention shall cease, in which case this Agreement
shall terminate at the end of the then existing three-year term;
(b) the termination of the Executive's employment prior to a
Change in Control or a Spin-Off affecting Executive by the
Company or the Executive for any reason, with or without Cause
(as defined in Section 4(c) below); (c) the Executive's death;
(d) the termination of the Executive's employment following a
Change in Control or a Spin-Off affecting Executive by the
Company, or the Spin-Off Purchaser, as the case may be, for
Cause, or as a result of the Executive's Disability (as defined
in Section 4(a) below), or Retirement (as defined in Section 4(b)
below); (e) the termination of the Executive's employment
following a Change in Control or a Spin-Off affecting Executive
by the Executive for any reason other than for Good Reason (as
defined in Section 4(d) below; or (f) three years from the date
of a Change in Control of the Company or one year from the date
of a Spin-Off affecting Executive.
2. CHANGE IN CONTROL. For purposes of this Agreement, a
"Change in Control" shall be deemed to have occurred if (i) there
shall be consummated (x) any reorganization, consolidation or
merger of the Company in which the Company is not the continuing
or surviving corporation or pursuant to which shares of the
Company's Voting Securities (as defined below) would be converted
into cash, securities or other property, other than a
reorganization, consolidation or merger of the Company in which
the holders of the Company's Voting Securities immediately prior
to the reorganization, consolidation or merger own at least 66
2/3% of the Voting Securities of the surviving corporation
immediately after the reorganization, consolidation or merger, or
(y) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or
substantially all, of the assets of the Company; (ii) the holders
of the Voting Securities of the Company approve any plan or
proposal for the liquidation or dissolution of the Company; (iii)
any person (as such term is used in Section 13(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")), shall become the beneficial owner (within the meaning of
Rule 13d-3 under the Exchange Act) of 20% or more of the
Company's outstanding Voting Securities (other than as a result
of an acquisition directly from the Company); provided, that no
acquisition by the Company, its affiliates, or any employee
benefit plan of the Company or its affiliates shall be deemed to
constitute a Change in Control; (iv) at the time that individuals
who, as of the date hereof, constitute the board of directors of
the Company (as of the date hereof, the "Incumbent Board") cease
for any reason to constitute at least a majority of the Board,
provided that any person becoming a director subsequent to the
date hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board
(other than an election or nomination of an individual whose
initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the
directors of the Company, as such terms are used in Rule 14a-11
of Regulation 14A promulgated under the Exchange Act) shall be,
for purposes of this Agreement, considered as though such person
were a member of the Incumbent Board; or (v) the occurrence of
any other event which the Incumbent Board in its sole discretion
determines constitutes a Change in Control. For purposes of this
Agreement, "Voting Securities" of a person means equity
securities or equity interests having a general right to vote for
election of the members of the board of directors or managers of
such person.
3. SPIN-OFF AFFECTING EXECUTIVE.
(a) A Spin-Off affecting Executive shall be deemed to have
occurred if (i) there shall be consummated by the Company any
Disposition (as defined below) of any Business Unit (as defined
below): and (ii) as a result of such Disposition the Executive's
employment with the Company is terminated.
(b) "Business Unit" means any direct or indirect subsidiary
of the Company (of which the Company holds directly or indirectly
at least 50% of the Voting Securities), or any unincorporated
unit of the Company, which subsidiary or unincorporated unit is
operated as a unit within the Company and which is determined by
the Incumbent Board in its sole discretion to be a separate
business unit at the time of the Disposition.
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(c) "Disposition" means any of the following: (i) there
shall be consummated (x) any reorganization, consolidation or
merger of the Business Unit following which the Company owns,
directly and indirectly, less than 50% of the Voting Securities
of the Business Unit (if the Business Unit was prior to such
transaction a subsidiary of the Company), or (y) any sale, lease,
exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets
of the Business Unit; (ii) the holders of the Voting Securities
of the Business Unit approve any plan or proposal for the
liquidation or dissolution of the Business Unit (unless such
Business Unit continues to function as an unincorporated Business
Unit within the Company, as determined by the Incumbent Board in
its sole discretion); or (iii) the occurrence of any other event
which the Incumbent Board in its sole discretion determines
constitutes a Spin-Off affecting Executive.
(d) For purposes of this Agreement, "Spin-Off Purchaser"
shall mean (i) in the case of a reorganization, consolidation or
merger involving a Business Unit which is a direct or indirect
subsidiary of the Company, the surviving corporation of the
merger or consolidation; (ii) in the case of the sale, lease or
exchange of all or substantially all of the assets of a Business
Unit, the person acquiring control of such assets; and (iii) in
any other case, the person whom the Incumbent Board in its
reasonable discretion determines is the Spin-Off Purchaser.
4. OTHER DEFINITIONS.
(a) DISABILITY. The term "Disability" as used in this
Agreement shall mean the Executive's incapacity due to physical
or mental illness which shall have caused the Executive to have
been absent from his or her duties with the Company or the Spin-
Off Purchaser, as the case may be, on a full-time basis for six
months and the Executive shall not have returned to the full-time
performance of the Executive's duties within 30 days after
written Notice of Termination (as defined in paragraph 4(e)
below) has been given by the Company or the Spin-Off Purchaser,
as the case may be.
(b) RETIREMENT. The term "Retirement" as used in this
Agreement shall mean termination by the Company or the Executive
of the Executive's employment based on the Executive's having
retired pursuant to the then existing retirement plan of the
Company or the Spin-Off Purchaser, as the case may be, at or
after age 65 or by any agreement between the Company or the Spin-
Off Purchaser, as the case may be, and the Executive, or by any
generally applicable retirement policy of the Company or the
Spin-Off Purchaser, as the case may be.
(c) CAUSE. The term "Cause" as used in this Agreement
shall mean (i) the willful and continued failure by the Executive
to substantially perform his or her duties of employment with
Company or the Spin-Off Purchaser, as the case may be (other than
any such failure resulting from the Executive's incapacity due to
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physical or mental illness), unless the Executive uses reasonable
efforts to correct such failure within a reasonable time after
demand for substantial performance is delivered by the Company or
the Spin-Off Purchaser, as the case may be, that specifically
identifies the manner in which the Company or the Spin-Off
Purchaser, as the case may be, believes the Executive has not
substantially performed his or her duties, (ii) the willful
misconduct by the Executive which materially injures the Company
or the Spin-Off Purchaser, as the case may be, monetarily or
otherwise, or (iii) conviction of, or entry of a plea of NOLO
CONTENDERE with regard to, any felony or any crime involving
moral turpitude or dishonesty of or by the Executive. For
purposes of this paragraph, no act, or failure to act, on the
Executive's part shall be considered "willful" unless done, or
omitted to be done, by him or her not in good faith and without
reasonable belief that his or her action or omission was in, or
not opposed to, the best interests of the Company or the Spin-Off
Purchaser, as the case may be.
(d) GOOD REASON.
(i) For purposes of this Agreement "Good Reason" shall
mean any of the following if the same shall occur, without the
Executive's express written consent, within three years after a
Change of Control:
(A) the assignment to the Executive of duties
materially inconsistent with the Executive's position,
duties, responsibilities and status with the Company
immediately prior to the Change in Control, or a material
adverse change in the Executive's titles or reporting
relationships as in effect immediately prior to the Change
in Control, or any removal of the Executive from or any
failure to reelect the Executive to any of such positions;
(B) a reduction in the Executive's base salary as
in effect on the date hereof or as the same may be increased
from time to time during the term of this Agreement, or the
Company's failure to increase (within 12 months of the
Executive's last increase in base salary) the Executive's
base salary after such Change in Control in an amount which
at least equals, on a percentage basis, the average
percentage increase in base salary for the Executive during
the three-year period immediately preceding the Change in
Control;
(C) any failure by the Company to continue in
effect any benefit plan or arrangement such as health, life
and disability insurance in which the Executive was
participating at the time of the Change in Control, or other
material fringe benefits (such as SERPs, deferred
compensation plans, or 401(k) plans) enjoyed by the
Executive at the time of the Change in Control (or plans or
arrangements or other benefits providing him or her with
substantially similar or better benefits, taken in the
aggregate) (hereinafter referred to as "Benefit Plans"), or
the taking of any action by the Company which would
adversely affect the Executive's participation in or
materially reduce the Executive's benefits under any such
Benefit Plans, taken in the aggregate;
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(D) any failure by the Company to continue in
effect any incentive plan or arrangement, such as bonus or
performance plans, in which the Executive was participating
at the time of the Change in Control (or plans or
arrangements providing him or her with substantially similar
or better benefits, taken in the aggregate) (hereinafter
referred to as "Incentive Plans"), or the taking of any
action by the Company which would adversely affect the
Executive's participation in any such Incentive Plan or
reduce the Executive's benefits under any such Incentive
Plan, expressed as a percentage of his or her base salary,
by more than 10 percentage points in any fiscal year as
compared to the immediately preceding fiscal year;
(E) any failure by the Company to continue in
effect any plan or arrangement to receive securities of the
Company (including, without limitation, the Company's Stock
Incentive Plan and any other plan or arrangement to receive
and exercise stock options, stock appreciation rights,
restricted stock or grants thereof) in which the Executive
was participating at the time of the Change in Control (or
plans or arrangements providing him or her with
substantially similar or better benefits, taken in the
aggregate) (hereinafter referred to as "Securities Plans")
or the taking of any action by the Company which would
adversely affect the Executive's participation in or
materially reduce the Executive's benefits under any such
Securities Plan;
(F) Any requirement that the Executive relocate
to any place outside of the metropolitan area in which the
Executive performed the Executive's duties prior to the
Change in Control, except for required travel by the
Executive on the Company's business to an extent
substantially consistent with the Executive's business
travel obligations at the time of the Change in Control;
(G) any reduction in the number of paid vacation
days per year to which the Executive was entitled
immediately preceding the Change in Control;
(H) any material breach by the Company of any
provision of this Agreement;
(I) any failure by the Company to obtain the
assumption of this Agreement by any successor or assign of
the Company; or
(J) any purported termination of the Executive's
employment which is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 4(e), and
for purposes of this Agreement, no such purported
termination shall be effective.
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(ii) For purposes of this Agreement "Good Reason" shall
mean any of the following if the same shall occur, without the
Executive's express written consent, within one year after a
Spin-Off affecting Executive (within the meaning of Section 3)
where the Executive has accepted employment with the Spin-Off
Purchaser or an affiliate of the Spin-Off Purchaser:
(A) the assignment to the Executive of duties
with respect to the Business Unit materially inconsistent
with the Executive's position, duties, responsibilities and
status with respect to the Business Unit immediately prior
to the Spin-Off, or a material adverse change in the
Executive's titles or reporting relationships with respect
to the Business Unit as in effect immediately prior to the
Spin-Off, or any removal of the Executive from or any
failure to reelect the Executive to any of such positions;
(B) a reduction in the Executive's base salary as
in effect on the date hereof or as the same may be increased
from time to time during the term of this Agreement, or the
failure to increase (within 12 months of the Executive's
last increase in base salary prior to the Spin-Off) the
Executive's base salary after such Spin-Off in an amount
which at least equals, on a percentage basis, the average
percentage increase in base salary for the Executive during
the three-year period immediately preceding the Spin-Off;
(C) any failure to have in effect Benefit Plans
providing Executive with benefits substantially similar to
or better than the benefits, taken in the aggregate,
available to Executive under the Benefit Plans in which the
Executive was participating at the time of the Spin-Off, or
the taking of any action by the Spin-Off Purchaser which
would adversely affect the Executive's participation in or
materially reduce the Executive's benefits under any such
Benefit Plan, taken in the aggregate;
(D) any failure to have in effect Incentive Plans
providing Executive with benefits substantially similar to
or better than the benefits, taken in the aggregate,
available to Executive under the Incentive Plans in which
the Executive was participating at the time of the Spin-Off,
or the taking of any action by the Spin-Off Purchaser which
would adversely affect the Executive's participation in any
such Incentive Plan or reduce the Executive's benefits under
any such Incentive Plan, expressed as a percentage of his or
her base salary, by more than 10 percentage points in any
fiscal year as compared to the immediately preceding fiscal
year;
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(E) any requirement that the Executive relocate
to any place outside of the metropolitan area in which the
Executive performed the Executive's duties prior to the
Spin-Off, except for required travel by the Executive on the
Company's business to an extent substantially consistent
with the Executive's business travel obligations at the time
of the Spin-Off;
(F) any reduction in the number of paid vacation
days per year to which the Executive was entitled
immediately preceding the Spin-Off;
(G) any material breach by the Company or the
Spin-Off Purchaser of any provision of this Agreement;
(H) any failure by the Company to obtain the
assumption of this Agreement by the Spin-Off Purchaser; or
(I) any purported termination of the Executive's
employment which is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 4(e), and
for purposes of this Agreement, no such purported
termination shall be effective.
(e) NOTICE OF TERMINATION. Any termination of the
Executive's employment due to the Executive's Disability or
Retirement, or for Cause, shall be effected pursuant to a Notice
of Termination conforming to the requirements of this section.
For purposes of this Agreement, a "Notice of Termination" shall
mean a written notice which shall indicate those specific
termination provisions in this Agreement relied upon and which
sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's
employment. For purposes of this Agreement, no such purported
termination shall be effective without such Notice of
Termination.
(f) DATE OF TERMINATION. "Date of Termination" shall mean
(i) if this Agreement is terminated by the Executive for Good
Reason, the date Executive delivers notice of such termination to
the Company or the Spin-Off Purchaser, as the case may be; (ii)
if Executive's employment is terminated by the Company or the
Spin-Off Purchaser, as the case may be, for Disability, 30 days
after Notice of Termination is given to the Executive (provided
that the Executive shall not have offered to return and is able
to return to the performance of the Executive's duties on a full-
time basis during such 30-day period) or (iii) if the Executive's
employment is terminated by the Company or the Spin-Off
Purchaser, as the case may be, for any other reason, the date on
which a Notice of Termination is given.
5. SEVERANCE COMPENSATION UPON TERMINATION OF EMPLOYMENT.
The Executive shall be entitled to payments and other benefits as
set forth in Sections 5(a) and 5(b) upon the occurrence of any of
the following: (x) within three years following a Change in
Control, the Company shall terminate the Executive's employment
other than for Disability, Retirement, or Cause, or, within such
three-year period, the Executive shall terminate his or her
employment for Good Reason; (y) in connection with a Spin-Off
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affecting Executive where the Executive does not become employed
by the Spin-Off Purchaser, the Company shall, at or within one
year following such Spin-Off, terminate the Executive's
employment other than for Disability, Retirement, or Cause, or
the Executive shall terminate his or her employment for any of
the grounds defined as "Good Reason" in Section 4(d)(i) (other
than the grounds set forth in Section 4(d)(i)(A)); provided that
the Company shall have no liability to Executive in the event
that the Spin-Off Purchaser shall have offered employment to
Executive on terms which would not give Executive grounds to
terminate his or her employment for Good Reason pursuant to
Section 4(d)(ii) (any such termination by the Company, where the
Executive does not receive such an offer from the Spin-Off
Purchaser, shall be referred to herein as a "Spin-Off
Termination"); or (z) within one year following a Spin-Off
affecting the Executive, the Spin-Off Purchaser shall terminate
the Executive's employment other than for Disability, Retirement,
or Cause, or within such one-year period, the Executive shall
terminate his or her employment for Good Reason. Except as
specifically provided in this Section 5, the Executive shall have
no right to receive compensation under this Agreement.
Termination of employment due to death shall not give rise to any
rights to compensation under this Agreement. In the case of (x)
and (y) above, the Company shall be liable to make such payments
and provide such benefits, and in the case of (z) above, the
Spin-Off Purchaser shall be liable to make such payments and
provide such benefits (except that in the case of (z) above the
Company shall be bound by the provisions of Section 5(b)(ii)(A)).
(a) SEVERANCE PAY. The Company, or the Spin-Off Purchaser,
as the case may be, shall pay as severance pay in a lump sum, in
cash, on the fifth business day following the Date of
Termination, an amount equal to:
(i) In the event that such termination follows a
Change in Control, 2.99 times the average of the aggregate
annual compensation includable for Federal income tax
purposes as gross income paid to the Executive by the
Company and any of its subsidiaries during the five calendar
years ending immediately before the Change in Control (the
"Executive's Average Annual Compensation") (provided, that
if the Executive was not employed by the Company or any of
its subsidiaries for the entire duration of such five-year
period, the "Executive's Average Annual Compensation" shall
be the annualized average of the Executive's aggregate
compensation includable for Federal income tax purposes as
gross income paid by the Company and any of its subsidiaries
during the portion of such five-year period during which the
Executive was employed by the Company or any of its
subsidiaries); and
(ii) In the event that such termination is in
connection with or follows a Spin-Off, 1.0 times the
Executive's Average Annual Compensation.
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(b) OTHER BENEFITS. In addition to compensation set forth
in Section 5(a) hereof, subject to the provisions and limitations
set forth below, the Executive shall be entitled to the following
benefits from the Company or the Spin-Off Purchaser, as the case
may be:
(i) In the event of termination of Executive's employment
following a Change in Control, or in the event of a Spin-Off
Termination of Executive, the following benefits shall be
provided to Executive:
(A) Commencing on the Date of Termination and for a
period of three months thereafter, the Executive may
exercise all stock options granted to the Executive pursuant
to the Company's Stock Incentive Plan or any such other
stock plan. Such stock options shall be exercisable whether
or not: (i) a period of one year has elapsed from the date
of grant to the date of exercise; or (ii) any installment
exercise terms as stipulated by the Committee in any
agreement issued under the Plan have been satisfied.
However, in no event shall the Executive exercise any stock
option after the expiration of the option period as
stipulated in an agreement issued under such Plan;
(B) Effective as of the Date of Termination, any
restrictions relating to stock awards under the Company's
Stock Incentive Plan shall lapse;
(C) Effective as of the Date of Termination, any
compensation which has been deferred will be paid upon
termination; and
(D) Effective as of the Date of Termination, the
Executive will be immediately vested in any long term
incentive compensation under any long term incentive plan of
the Company.
(ii) In the event of termination of Executive's employment
by the Spin-Off Purchaser following a Spin-Off, the
following benefits shall be provided to Executive:
(A) If Executive's employment by the Spin-Off
Purchaser is terminated within three months after the
termination of Executive's employment by the Company,
commencing on the Date of Termination and for the remainder
of the period of three months following the termination of
Executive's employment by the Company, the Executive may
exercise all stock options granted to the Executive pursuant
to the Company's Stock Incentive Plan or any such other
stock plan. Such stock options shall be exercisable whether
or not: (i) a period of one year has elapsed from the date
of grant to the date of exercise; or (ii) any installment
exercise terms as stipulated by the Committee in any
agreement issued under the Plan have been satisfied.
However, in no event shall the Executive exercise any stock
option after the expiration of the option period as
stipulated in an agreement issued under such Plan];
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(B) If Executive's employment by the Spin-Off
Purchaser is terminated more than three months after the
termination of Executive's employment by the Company, the
Spin-Off Purchaser shall pay to the Executive, in cash, the
amount determined by multiplying (x) the number of stock
options granted to the Executive pursuant to the Company's
Stock Incentive Plan or any such other stock plan which
Executive did not have the right to exercise upon the
termination of his or her employment by the Company (other
than stock options with respect to which the option period
as stipulated in an agreement issued under said Plan had
expired), by (y) the difference between (A) the closing
price for the Company's stock on the New York Stock Exchange
on the day of the termination of Employee's Employment by
the Company and (B) the average exercise price of such
options;
(C) The Spin-Off Purchaser shall pay to the Executive,
in cash, the amount determined by multiplying (x) the number
of shares of stock which had been awarded to the Executive
pursuant to the Company's Stock Incentive Plan, but which
were restricted and which Executive forfeited due to the
termination of his or her employment with the Company, by
(y) the closing price for the Company's stock on the New
York Stock Exchange on the day of the termination of
Employee's employment by the Company;
(D) The Spin-Off Purchaser shall pay to the Executive,
in cash, the amount of any deferred compensation forfeited
by the Executive due to the termination of his or her
employment with the Company; and
(E) The Spin-Off Purchaser shall pay to the Executive,
in cash, the amount of any long term incentive compensation
under any long term incentive plan of the Company forfeited
by the Executive due to the termination of his or her
employment with the Company.
(iii) Effective as of the Date of Termination, the
Company (in the case of a termination following a Change in
Control or a Spin-Off Termination, or the Spin-Off
Purchaser, in the case of termination of the Executive
following employment by the Spin-Off Purchaser) will provide
a benefit under the Consolidated Omnibus Budget
Reconciliation Act of 1986 ("COBRA") and Section 4980 of the
Code, as follows: the Company or the Spin-Off Purchaser, as
the case may be, shall pay the percentage of the cost of
COBRA coverage with respect to the Executive's coverage
status (e.g., individual or family coverage) in effect
immediately prior to the Date of Termination for the maximum
period of continuation coverage then required or permitted
under COBRA, which percentage shall be the fraction
(expressed as a percentage), the numerator of which shall be
the difference between (x) the monthly cost of COBRA
coverage for the Executive's coverage status in effect
immediately prior to the Date of Termination and (y) the
Executive's monthly contribution toward the Executive's
coverage in effect immediately prior to the Date of
Termination, and the denominator of which shall be the
monthly cost of COBRA coverage for the Executive's coverage
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status in effect immediately prior the Date of Termination.
All of such amounts shall be determined as of the day
immediately preceding the Date of Termination. The
insurance continuation benefits paid for hereunder shall be
deemed to be a part of the Executive's COBRA coverage. In
addition, in the event of termination following a Change in
Control, the Company shall, beginning at the expiration of
the Executive's COBRA continuation coverage under this
paragraph and continuing until three (3) years after the
Date of Termination, provide the Executive with health
insurance coverage at the same cost to the Executive and at
the same level of coverage for the Executive as the COBRA
continuation coverage in effect immediately prior to the
expiration of the Executive's COBRA continuation coverage.
The Company shall, at the Executive's option, contribute
amounts it is required to contribute on behalf of Executive
pursuant to this Section 5(b) (iii) either to: (A) plans
maintained for the Company's employees; or (B) a private
medical plan of the Executive's choice if the Executive
chooses not to participate in the plans referred to in (A).
All such benefits shall be in addition to any other benefits
relating to health or medical care benefits that are
available under the Company's policies to the Executive
following termination of employment.
(iv) An additional cash payment shall be made as follows:
(A) In the event of termination of Executive's
employment following a Change in Control, the Company will
pay to the Executive, in cash, at the time the Company makes
the payments required under Section 5(a), an amount equal to
the sum of the annual incentive paid to the Executive in
each of the immediately preceding two calendar years; or
(B) The Company, in the event of a Spin-Off
Termination of Executive, or the Spin-Off Purchaser, in the
event of termination of Executive's employment by the Spin-
Off Purchaser following a Spin-Off, will pay to the
Executive, in cash, at the time the Company or the Spin-Off
Purchaser, as the case may be, makes the payments required
under Section 5(a), an amount equal to the sum of the annual
incentive paid to the Executive in the immediately preceding
calendar year.
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(c) REDUCTION OF PAYMENTS.
(i) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that
any payment or distribution by the Company to or for the
benefit of the Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this
Agreement or otherwise) (a "Payment") would be nondeductible
by the Company for Federal income tax purposes because of
Section 280G of the Code, then the aggregate present value
of amounts payable or distributable as severance benefits
hereunder shall be reduced to the Reduced Amount. The
"Reduced Amount" shall be an amount expressed in present
value which maximizes the aggregate present value of such
severance benefits without causing any Payment to be
nondeductible by the Company because of Section 280G of the
Code. Anything to the contrary notwithstanding, if the
Reduced Amount is zero and it is determined further that any
Payment which is not part of the severance benefits payable
hereunder would nevertheless be nondeductible by the Company
for Federal income tax purposes because of Section 280G of
the Code, then the aggregate present value of Payments which
are not severance benefits under this Agreement shall also
be reduced (but not below zero) to an amount expressed in
present value which maximizes the aggregate present value of
Payments without causing any payment to be nondeductible by
the Company because of Section 280G of the Code. For
purposes of this paragraph 5, present value shall be
determined in accordance with Section 280G(d)(4) of the
Code.
(ii) All determinations required to be made under this
paragraph 5 shall be made by an accounting firm jointly
selected by the Executive and the Company (the "Accounting
Firm") and paid by the Company; provided that the Company
shall have the right to appoint the Company's independent
auditors to make such determinations, and such appointment
shall be final. The Accounting Firm shall provide detailed
supporting calculations both to the Company and the
Executive within 15 business days of the Date of Termination
or such earlier time as is requested by the Company and an
opinion to the Executive that he or she has substantial
authority not to report any excise tax on his Federal income
tax return with respect to any Payments. Any such
determination by the Accounting Firm shall be binding upon
the Company and the Executive. The Executive shall
determine which and how much of the Payments, shall be
eliminated or reduced consistent with the requirements of
this paragraph 5, provided that, if the Executive does not
make such determination within ten business days of the
receipt of the calculations made by the Accounting Firm, the
Company shall elect which and how much of the Payments shall
be eliminated or reduced consistent with the requirements of
this paragraph 5 and shall notify the Executive promptly of
such election; and provided further that any Payments which
do not constitute gross income to the Executive shall not be
reduced or eliminated unless all other Payments have first
been eliminated. Within five business days thereafter, the
Company shall pay to or distribute to or for the benefit of
the Executive such amounts as are then due to the Executive
under this Agreement.
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(iii) As a result of the uncertainty in the
application of Section 280G of the Code at the time of the
initial determination by the Accounting Firm hereunder, it
is possible that Payments will have been made by the Company
which should not have been made ("Overpayment") or that
Payments will not have been made by the Company which could
have been made ("Underpayment"), in each case, consistent
with the calculations required to be made hereunder. In the
event that the Accounting Firm, based upon the assertion of
a deficiency by the Internal Revenue Service against the
Executive or the Company which the Accounting Firm believes
has a high probability of success, determines that an
Overpayment has been made, any such Overpayment paid or
distributed by the Company to or for the benefit of the
Executive shall be treated for all purposes as a loan AB
INITIO to the Executive which the Executive shall repay to
the Company together with interest at the applicable federal
rate provided for in Section 7872(f)(2) of the Code;
PROVIDED, HOWEVER, that no such loan shall be deemed to have
been made and no amount shall be payable to the Company if
and to the extent such deemed loan and payment would not
either reduce the amount on which the Executive is subject
to tax under Section 1 and Section 4999 of the Code or
generate a refund of such taxes. In the event that the
Accounting Firm, based upon controlling precedent or other
substantial authority, determines that an Underpayment has
occurred, any such Underpayment shall be promptly paid by
the Company to or for the benefit of the Executive together
with interest at 120% of the applicable federal rate
provided for in Section 7872(f)(2) of the Code, compounded
semiannually.
(iv) In the event that a reduction of benefits and payments
is required pursuant to this section (c), the Company shall,
to the extent practicable and permitted without causing any
Overpayment, permit the Executive to select which payments
and benefits provided for hereunder will be paid as provided
by the Company to the Executive.
6. NO OBLIGATION TO MITIGATE DAMAGES; NO EFFECT ON OTHER
CONTRACTUAL RIGHTS.
(a) The Executive shall not be required to mitigate damages
or the amount of any payment provided for under this Agreement by
seeking other employment or otherwise, nor shall the amount of
any payment provided for under this Agreement be reduced by any
compensation earned by the Executive as the result of employment
by another employer after the Date of Termination, or otherwise.
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(b) The provisions of this Agreement, and any payment
provided for hereunder, shall not reduce any amounts otherwise
payable, or in any way diminish the Executive's existing rights,
or rights which would accrue solely as a result of the passage of
time, under any Benefit Plan, Incentive Plan or Securities Plan,
employment agreement or other contract, plan or arrangement.
7. SUCCESSOR TO THE COMPANY.
(a) The Company will require any successor or assign
(whether direct or indirect, by purchase, merger, consolidation
or otherwise) to all or substantially all of the business and/or
assets of the Company or in the event of a Spin-Off that may
affect the Executive's employment with the Company, by agreement
in form and substance reasonably satisfactory to the Executive,
expressly, absolutely and unconditionally to 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 or assignment had taken place. Any failure of the
Company to obtain such agreement prior to the effectiveness of
any such succession or assignment shall be a material breach of
this Agreement and shall entitle the Executive to terminate the
Executive's employment for Good Reason. As used in this
Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor or assign to its business and/or assets
as aforesaid which executes and delivers the agreement provided
for in this Section 8 or which otherwise becomes bound by all the
terms and provisions of this Agreement by operation of law. If
at any time during the term of this Agreement the Executive is
employed by any corporation, a majority of the Voting Securities
of which is then owned by the Company, or other entity of which a
majority of the Voting Securities is owned by the Company,
"Company" as used in Sections 4, 5, 13 and 14 hereof shall in
addition include such employer. In such event, the Company
agrees that it shall pay or shall cause such employer to pay any
amounts owed to the Executive pursuant to Section 5 hereof.
(b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal and legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive should die
while any amounts are still payable to him or her hereunder, all
such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to the Executive's
devisee, legatee, or other designee, or if there be no such
designee, to the Executive's estate. The services to be provided
by the Executive to the Company under this Agreement are personal
and are not delegable or assignable.
8. NOTICE. For purposes of this Agreement, notices and
all other communications 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, as follows:
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If to the Company:
UtiliCorp United Inc.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, Xxxxxxxx 00000
ATTN: Corporate Secretary
If to the Executive to the address of
the Executive on the books of the Company.
Another address may be used if a party has furnished a
different address to the other party in writing in accordance
herewith, except that notices of change of address shall be
effective only upon receipt.
9. SOLE AGREEMENT. This Agreement represents the entire
agreement between the parties with respect to the matters
contemplated herein. Any earlier agreement relating to severance
compensation between the parties or between the Executive and any
affiliate of the Company is hereby terminated and superseded, and
all obligations by either party thereunder shall cease
immediately preceding the commencement of the term of this
Agreement and are hereby agreed to be satisfied in full. 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 set forth expressly in this
Agreement.
10. VALIDITY. The invalidity or unenforceability of any
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.
11. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and the
same instrument.
12. LEGAL FEES AND EXPENSES. The Company, or, in the event
of a Spin-Off affecting Executive in which the Spin-Off Purchaser
employs the Executive, the Spin-Off Purchaser, shall pay all
legal fees and expenses which the Executive reasonably may incur
as a result of the Company's or the Spin-Off Purchaser's (as the
case may be) contesting the validity, enforceability or the
Executive's interpretation of, or determinations under, this
Agreement.
13. CONFIDENTIAL INFORMATION. The Executive agrees not to
disclose during the term hereof or thereafter any of the
Company's confidential or trade secret information, except as
required by law. The Executive recognizes that the Executive
shall be employed in a sensitive position in which, as a result
of a relationship of trust and confidence, the Executive will
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have access to trade secrets and other highly confidential and
sensitive information. The Executive further recognizes that the
knowledge and informed acquired by the Executive concerning the
Company's materials regarding employer/employee contracts,
customers, pricing schedules, advertising and interviewing
techniques, manuals, systems, procedures and forms represent the
most vital part of the Company's business and constitute by their
very nature, trade secrets and confidential knowledge and
information. The Executive hereby stipulates and agrees that all
such information and materials shall be considered trade secrets
and confidential information. If it is at any time determined
that any of the information or materials identified in this
paragraph 14 are, in whole or in part, not entitled to protection
as trade secrets, they shall nevertheless be considered and
treated as confidential information in the same manner as trade
secrets, to the maximum extent permitted by law. The Executive
further agrees that all such trade secrets or other confidential
information, and any copy, extract or summary thereof, whether
originated or prepared by or for the Executive or otherwise
coming into the Executive's knowledge, possession, custody, or
control, shall be and remain the exclusive property of the
Company.
14. WITHHOLDING. The Company or the Spin-Off Purchaser, as
the case may be, may withhold from any benefits payable under
this Agreement all federal, state, city or other taxes as shall
be required pursuant to any law or governmental regulation or
ruling.
15. ARBITRATION. Any claim or controversy arising out of
or relating to this Agreement or any breach thereof shall be
settled by arbitration. Any such arbitration shall take place in
Kansas City, Missouri, in accordance with the rules of the
American Arbitration Association. Any award rendered shall be
final and conclusive upon the parties and judgment therein may be
entered in the highest court of the forum, state or federal,
having jurisdiction.
16. ATTACHMENT. Except as required by law, the right to
receive payments under this Agreement shall not be subject to
anticipation, sale, encumbrance, charge, levy, or similar process
or assignment by operation of law.
17. WAIVERS. Any waiver by a party or any breach of this
Agreement by another party shall not be construed as a continuing
waiver or as a consent to any subsequent breach by the other
party. Except as otherwise expressly set forth herein, no
failure on the part of any party hereto to exercise and no delay
in exercising any right, power or remedy hereunder shall operate
s a waiver thereof, nor shall any single or partial exercise of
any right, power or remedy hereunder preclude any other or
further exercise thereof or the exercise of any other right,
power or remedy.
18. HEADINGS. The headings of the sections of this
Agreement have been inserted for convenience of reference only
and shall in no way restrict or modify any of the terms or
provisions hereof.
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19. GOVERNING LAW. This Agreement shall be governed and
construed and the legal relationships of the parties determined
in accordance with the laws of the State of Missouri.
THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY
BE ENFORCED BY THE PARTIES.
UTILICORP UNITED INC.
By
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Title:
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Date:
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EXECUTIVE
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Date:
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