EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made and entered into as of the 6th day of November,
1996, by and between UTILICORP UNITED INC. (the "Company"), a Delaware
corporation, and Xxxxxxx X. Xxxxx, Xx. (the "Executive");
WHEREAS, the Executive is currently serving as Chairman and Chief
Executive Officer of the Company, and the Company desires to secure the
continued employment of the Executive in accordance herewith;
WHEREAS, the Executive is willing to commit himself to be employed by the
Company on the terms and conditions herein set forth and thus to forego
opportunities elsewhere; and
WHEREAS, the parties desire to enter into this Agreement, as of the
Effective Date, as hereinafter defined, setting forth the terms and
conditions for the employment relationship of the Executive with the Company
during the Employment Period (as hereinafter defined).
NOW, THEREFORE, IN CONSIDERATION of the mutual premises, covenants and
agreements set forth below, it is hereby agreed as follows:
1. EMPLOYMENT AND TERM.
(a) EMPLOYMENT. The Company agrees to employ the Executive, and
the Executive agrees to be employed by the Company, in accordance with the
terms and provisions of this Agreement during the term hereof (as described
below).
(b) TERM. The term of this Agreement shall commence as of the date
hereof (the "Effective Date") and shall continue until the date that is the
third anniversary of the Effective Date (such term being referred to
hereinafter as the "Employment Period"); provided, however, that the
Employment Period shall automatically be extended for one additional day on
each day this Agreement is effective beginning with the day after the
Effective Date, unless the Company, with the approval of the Board of
Directors of the Company (the "Board"), or the Executive shall have given
notice that this Agreement shall not be extended, in which case the
Employment Period shall terminate on the date that is three years following
receipt of such notice by the party to whom it is directed.
2. DUTIES AND POWERS OF EXECUTIVE.
(a) POSITION; LOCATION. During the Employment Period, the
Executive shall serve as Chairman of the Board and Chief Executive Officer of
the Company and perform such duties and services appertaining to such
positions as reasonably directed by the Company. The Executive's services
shall be performed primarily at the Company's headquarters which shall be
located in the Kansas City metropolitan area.
(b) BOARD MEMBERSHIP. The Executive shall be a member of the Board
on the first day of the Employment Period, and the Board shall propose the
Executive for re-election to the Board throughout the Employment Period.
(c) ATTENTION. During the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive is entitled, the
Executive shall devote reasonable attention and time during normal business
hours to the business and affairs of the Company and, to the extent necessary
to discharge the responsibilities assigned to the Executive under this
Agreement, shall use his reasonable best efforts to carry out such
responsibilities faithfully and efficiently. It shall not be considered a
violation of the foregoing for the Executive to serve on corporate, industry,
civic or charitable boards or committees, so long as such activities do not
significantly interfere with the performance of the Executive's
responsibilities as an employee of the Company in accordance with this
Agreement.
3. COMPENSATION. The Executive shall receive the following
compensation for his services hereunder to the Company:
(a) SALARY. During the Employment Period, the Executive's annual
base salary (the "Annual Base Salary"), payable in accordance with the
Company's general payroll practices, in effect from time to time, shall be at
the annual rate established by the Board, but in no event less than $630,000
which is the Executive's annual base salary with the Company in effect as of
the day before the Effective Date. The Board may from time to time direct
such upward adjustments in Annual Base Salary as the Board deems to be
necessary or desirable, including, without limitation, adjustments in order
to reflect increases in the cost of living. The Annual Base Salary shall not
be reduced after any increase thereof. Any increase in the Annual Base
Salary shall not serve to limit or reduce any other obligation of the Company
under this Agreement.
(b) INCENTIVE COMPENSATION. During the Employment Period, the
Executive shall participate in short-term incentive compensation plans and
long-term incentive compensation plans (the latter to consist of plans
offering stock options, restricted stock and other long-term incentive
compensation) providing him with the opportunity to earn, on a year-by-year
basis, short-term and long-term incentive compensation (the "Incentive
Compensation") at least equal to the greater of (i) the amounts that he had
the opportunity to earn under the comparable plans of the Company as in
effect immediately before the Effective Time, or (ii) the amounts that any
other senior executive officer of the Company has the opportunity to earn
under the plans of the Company and its subsidiaries for that year.
(c) RETIREMENT, INCENTIVE AND WELFARE BENEFIT PLANS. In addition
to the benefits available under Section 3(b), during the Employment Period
and so long as the Executive is employed by the Company, he shall be eligible
to participate in all other incentive, stock option, restricted stock,
performance unit, savings, retirement and welfare plans, practices, policies
and programs applicable generally to employees and/or senior executive
officers of the Company and its subsidiaries, except with respect to any
benefits under any plan, practice, policy or program to which the Executive
has waived his rights in writing.
(d) INSURANCE. During the Employment Period, the Company shall
provide the Executive with life insurance coverage providing a death benefit
to such beneficiary or beneficiaries as the Executive may designate of not
less than three times his Annual Base Salary.
(e) EXPENSES. The Company shall reimburse the Executive for all
expenses, including those for travel and entertainment, properly incurred by
him in the performance of his duties hereunder, subject to any reasonable
policies established from time to time by the Board.
(f) FRINGE BENEFITS. During the Employment Period and so long as
the Executive is employed by the Company, he shall be entitled to receive
fringe benefits in accordance with the plans, practices, programs and
policies of the Company from time to time in effect, commensurate with his
position, which benefits shall be at least the same as those received by any
senior executive officer of the Company.
4. TERMINATION OF EMPLOYMENT.
(a) DEATH. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period.
(b) BY THE COMPANY FOR CAUSE. The Company may terminate the
Executive's employment during the Employment Period for Cause. For purposes
of this Agreement, "Cause" shall mean (i) conduct which is not authorized by
the Board, is materially detrimental to the Company, is a willful breach of
this Agreement, and fails to fulfill substantially all of Executive's
necessary duties; or (ii) the conviction of the Executive for the commission
of a felony which, at the time of such commission, has a materially adverse
effect on the Company.
(c) BY THE COMPANY WITHOUT CAUSE. Notwithstanding any other
provision of this Agreement, the Company may terminate the Executive's
employment for any reason other than for Cause during the Employment Period,
but only upon the affirmative vote of two-thirds of the membership of the
Board.
(d) BY THE EXECUTIVE FOR GOOD REASON. The Executive may terminate
his employment during the Employment Period for Good Reason. For purposes of
this Agreement, "Good Reason" shall mean:
(i) the reduction in the Executive's Annual Base Salary as
specified in Section 3(a) of this Agreement, the Executive's Incentive
Compensation benefit as specified in Section 3(b) of this Agreement,
or any other benefit or payment described in Section 3 of this
Agreement;
(ii) the change without the Executive's consent of the
Executive's title, authority, duties or responsibilities as specified
in Section 2(a) of this Agreement;
(iii) the Company's requiring the Executive without his
consent to be based at any office or location other than the Company's
headquarters which shall be located in the Kansas City metropolitan
area; or
(iv) any breach by the Company of any other material provision of
this Agreement.
(e) NOTICE OF TERMINATION. Any termination of Executive's
employment during the Employment Period by the Company for any reason, or by
the Executive for Good Reason, shall be communicated by Notice of Termination
to the other party hereto given in accordance with Section 11(b) of this
Agreement. For purposes of this Agreement, a "Notice of Termination" means a
written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated,
and (iii) if the Date of Termination (as defined in Section 4(f)) is other
than the date of receipt of such notice, specifies the termination date
(which date shall not be more than 30 days after the giving of such notice).
The failure by the Executive or the Company to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing of Good
Reason or Cause shall not waive any right of the Executive or the Company
hereunder or preclude the Executive or the Company from asserting such fact
or circumstance in enforcing the Executive's or the Company's rights
hereunder.
(f) DATE OF TERMINATION. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination
or any later date specified therein, as the case may be, (ii) if the
Executive's employment is terminated by the Company other than for Cause, the
Date of Termination shall be the date on which the Company notifies the
Executive of such termination and (iii) if the Executive's employment is
terminated by reason of death, the Date of Termination shall be the date of
death.
5. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(a) TERMINATION OTHER THAN FOR CAUSE. If, during the Employment
Period, the Company shall terminate the Executive's employment (other than in
the case of a termination for Cause), the Executive shall terminate his
employment for Good Reason or the Executive's employment shall terminate by
reason of death or Executive becoming eligible for long-term disability
benefits under Company sponsored disability plan(s) (which circumstance
shall hereinafter be referred to as "disability") (termination in any such
case being referred to as a "Termination"):
(i) the Company shall pay to the Executive a lump sum amount in
cash equal to the sum of (A) the Executive's Annual Base Salary
through the Date of Termination to the extent not theretofore paid,
(B) an amount equal to the maximum Incentive Compensation benefit
described in Section 3(b) of this Agreement for the fiscal year of the
Company that includes the Date of Termination multiplied by a fraction
the numerator of which shall be the number of days from the beginning
of such fiscal year to and including the Date of Termination and the
denominator of which shall be 365, which calculation shall be based on
the assumption that all target performance goals in effect on the Date
of Termination will be exceeded to the maximum extent possible, and
(C) any compensation previously deferred by the Executive (together
with any accrued interest or earnings thereon) and any accrued
vacation pay, in each case to the extent not theretofore paid. (The
amounts specified in clauses (A), (B) and (C) shall be hereinafter
referred to as the "Accrued Obligations".) The amounts specified in
this Section 5(a)(i) shall be paid within 30 days after the Date of
Termination; and
(ii) in the event of Termination other than by reason of the
Executive's death or disability, then the Company shall pay to the
Executive (A) continued salary at the minimum annual base salary rate
required by this Agreement for three years following the Date of
Termination (the "Continuation Period"); (B) a lump sum amount, in
cash, equal to three times the maximum Incentive Compensation benefit
described in Section 3(b) of this Agreement that would be paid to
Executive for the year during which termination occurs, if all target
performance goals in effect on the Date of Termination were exceeded
to the maximum extent possible for such year, such amount to be paid
within 30 days of such Date of Termination; (C) except with respect to
the benefits provided pursuant to clause (E) below, the Company shall
pay to the Executive the value of all benefits to which the Executive
would have been entitled under Sections 3(d) and (f) had he remained
in employment with the Company until the end of the Continuation
Period; (D) the Company shall pay the value of all deferred
compensation amounts (together with any accrued interest or earnings
thereon) and all executive life insurance benefits whether or not then
vested or payable; and (E) the Company shall continue medical and
welfare benefits to the Executive and/or the Executive's family at
least equal to those which would have been provided had the Executive
remained in employment to the end of the Continuation Period
(excluding benefits to which the Executive has waived his rights in
writing), such benefits to be in accordance with the most favorable
medical and welfare benefit plans, practices, programs or policies
(the "M&W Plans") of the Company as in effect and applicable to any
senior executive officer of the Company and his or her family during
the 90-day period immediately preceding the Date of Termination or, if
more favorable to the Executive, as in effect at any time thereafter
with respect to any senior executive officer of the Company (but on a
prospective basis only unless and then only to the extent, such more
favorable M&W Plans are by their terms retroactive); provided,
however, that if the Executive becomes employed with another employer
and is eligible to receive medical or other welfare benefits under
another employer-provided plan, the benefits under the M&W Plans shall
be secondary to those provided under such other plan during such
applicable period of eligibility.
(b) TERMINATION BY THE COMPANY FOR CAUSE OR BY THE EXECUTIVE OTHER
THAN FOR GOOD REASON. Subject to the provisions of Section 6 of this
Agreement, if the Executive's employment shall be terminated for Cause during
the Employment Period, or if the Executive terminates employment during the
Employment Period other than a termination for Good Reason, the Company shall
have no further obligations to the Executive under this Agreement other than
the obligation to pay to the Executive the Annual Base Salary through the
Date of Termination plus the amount of any compensation previously deferred
by the Executive (together with any accrued interest or earnings thereon), in
each case to the extent theretofore unpaid, plus any other benefits to which
Executive is entitled under any other agreements or policies with or of the
Company.
(c) PAYMENTS IN THE EVENT OF APPLICATION OF AN EXCISE TAX. It is
the intention of the parties that any payments under this Agreement shall not
be contingent upon a change in control of the Company. Nevertheless, in the
event that any payments under this Agreement or any other compensation,
benefit or other amount from the Company for the benefit of Executive are
subject to the tax imposed by Section 4999 of the Internal Revenue Code of
1986, as amended (the "Code") (including any applicable interest and
penalties, the "Excise Tax"), no such payment ("Parachute Payment") shall be
reduced (except for required tax withholdings) and the Company shall pay to
Executive by the earlier of the date such Excise Tax is withheld from
payments made to Executive or the date such Excise Tax becomes due and
payable by Executive, an additional amount (the "Gross-Up Payment") such that
the net amount retained by Executive, after deduction of any Excise Tax on
the Parachute Payments, taxes based upon the Tax Rate and Excise Tax upon the
payment provided for by this Section 5(c), shall be equal to the amount the
Executive would have received if no Excise Tax had been imposed. The Company
shall determine in good faith whether any of the Parachute Payments are
subject to the Excise Tax and the amount of any Excise Tax and shall notify
Executive of its determination. The Company and Executive shall file all tax
returns and reports regarding such Parachute Payments in a manner consistent
with the Company's reasonable good faith determination. For purposes of
determining the amount of the Gross-Up Payment, Executive shall be deemed to
pay taxes at the Tax Rate applicable at the time of the Gross-Up Payment. In
the event that the Excise Tax is subsequently determined to be less than the
amount taken into account hereunder at the time a Parachute Payment is made,
Executive shall repay to the Company at the time that the amount of such
reduction in Excise Tax is finally determined the portion of the Gross-Up
Payment attributable to such reduction plus interest on the amount of such
repayment at the rate provided in Section 1274(d)(1) of the Code or other
applicable provision of the Code but only to the extent that such interest is
paid to Executive. In the event that the Excise Tax is determined to exceed
the amount taken into account hereunder at the time a Parachute Payment is
made
(including by reason of any payment the existence or amount of which cannot
be determined at the time of the Gross-Up Payment), the Company shall make an
additional gross-up payment in respect of such excess (plus any interest or
penalties payable in respect of such excess) at the time that the amount of
such excess is finally determined. The Company shall reimburse Executive for
all reasonable fees, expenses, and costs related to determining the
reasonableness of any Company position in connection with this paragraph,
preparation of any tax return or other filing that is affected by any matter
addressed in this paragraph and any audit, litigation or other proceeding
that is affected by any matter addressed in this paragraph. For the purposes
of the foregoing, "Tax Rate" means Executive's effective tax rate based upon
the combined federal and state and local income, earnings, Medicare and any
other tax rates applicable to Executive, net of the reduction in federal
income taxes which could be obtained by deduction of such state and local
taxes.
6. NONEXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent
or limit the Executive's continuing or future participation in any benefit,
plan, program, policy or practice provided by the Company and for which the
Executive may qualify (except with respect to any benefit to which the
Executive has waived his rights in writing), nor shall anything herein limit
or otherwise affect such rights as the Executive may have under any other
contract or agreement entered into after the Effective Date with the Company.
Amounts which are vested benefits or which the Executive is otherwise
entitled to receive under any benefit, plan, policy, practice or program of,
or any contract or agreement entered into with, the Company shall be payable
in accordance with such benefit, plan, policy, practice or program or
contract or agreement except as explicitly modified by this Agreement.
7. FULL SETTLEMENT; MITIGATION. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Company may
have against the Executive or others. In no event shall the Executive be
obligated to seek other employment or take any other action by way of
mitigation of the amounts (including amounts for damages for breach) payable
to the Executive under any of the provisions of this Agreement and, except as
provided in Section 5(a)(ii)(D), such amounts shall not be reduced whether or
not the Executive obtains other employment. If there occurs a dispute
between the Executive and the Company as to the interpretation, terms,
validity or enforceability of (including any dispute about the amount of any
payment pursuant to this Agreement) this Agreement, the Company agrees to pay
all legal fees and expenses which the Executive may reasonably incur as a
result of any such dispute.
8. CONFIDENTIAL INFORMATION. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret, confidential information,
knowledge or data relating to the Company or any of its affiliated companies,
and their respective businesses, which shall have been obtained by the
Executive during the Executive's employment by UCU and the Company or any of
their affiliated companies and that shall not have been or now or hereafter
have become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). During the
Employment Period, the Executive shall not, without the prior written consent
of the Company or as may otherwise be required by law or legal process,
communicate or divulge any such information, knowledge or data to anyone
other than the Company and those designated by it.
9. NON-COMPETITION. Executive acknowledges that he will forfeit all
rights under this Agreement if, during the Employment Period, and for a
period of two years thereafter, Executive directly or indirectly, owns,
manages, operates, controls, is employed by, performs services for, consults
with, solicits business for, participates in, or is connected with the
ownership, management, operation, or control of any business that is either
directly or indirectly competitive with the products or services of the
Company.
10. SUCCESSORS.
(a) ASSIGNMENT BY EXECUTIVE. This Agreement is personal to the
Executive and without the prior written consent of the Company shall not be
assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal representatives.
(b) SUCCESSORS AND ASSIGNS OF COMPANY. This Agreement shall inure
to the benefit of and be binding upon the Company, its successors and assigns.
(c) ASSUMPTION. The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of the business and/or assets of the Company to assume
expressly 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. As used in this Agreement, "Company" shall mean
the Company as hereinbefore defined and any successor to its businesses
and/or assets as aforesaid that assumes and agrees to perform this Agreement
by operation of law, or otherwise.
11. MISCELLANEOUS.
(a) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Missouri, without
reference to its principles of conflict of laws. The captions of this
Agreement are not part of the provisions hereof and shall have no force or
effect. This Agreement may not be amended, modified, repealed, waived,
extended or discharged except by an agreement in writing signed by the party
against whom enforcement of such amendment, modification, repeal, waiver,
extension or discharge is sought. No person, other than pursuant to a
resolution of the Board or a committee thereof, shall have authority on
behalf of the Company to agree to amend, modify, repeal, waive, extend or
discharge any provision of this Agreement or anything in reference thereto.
(b) NOTICES. All notices and other communications hereunder shall
be in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return-receipt requested, postage prepaid,
addressed, in either case, at the Company's headquarters or to such other
address as either party shall have furnished to the other in writing in
accordance herewith. Notices and communications shall be effective when
actually received by the addressee.
(c) SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement.
(d) WITHHOLDING. The Company may withhold from any amounts payable
under this Agreement such federal, state or local taxes as shall be required
to be withheld pursuant to any applicable law or regulation.
(e) NO WAIVER. The Executive's or the Company's failure to insist
upon strict compliance with any provision hereof or any other provision of
this Agreement or the failure to assert any right the Executive or the
Company may have hereunder, including, without limitation, the right of the
Executive to terminate employment for Good Reason pursuant to Section 4(d) of
this Agreement, or the right of the Company to terminate the Executive's
employment for Cause pursuant to Section 4(b) of this Agreement shall not be
deemed to be a waiver of such provision or right or any other provision or
right of this Agreement.
(f) ENTIRE AGREEMENT. This instrument contains the entire agreement
of the Executive, the Company or any predecessor or subsidiary thereof with
respect to the subject matter hereof, and may be modified only by a writing
signed by the parties hereto. All promises, representations, understandings,
arrangements and prior agreements, including the severance agreement entered
into on October 17, 1995, between the Executive and the Company, are merged
herein and superseded hereby.
IN WITNESS WHEREOF, the Executive and, pursuant to due authorization from
its Board of Directors, the Company have caused this Agreement to be executed
as of the day and year first above written.
UtiliCorp United Inc.
/s/ X. Xxxxxx Xxxxx
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Name: X. Xxxxxx Xxxxx
Title: Chairman Compensation Committee
/s/ Xxxxxxx X. Xxxxx, Xx.
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Xxxxxxx X. Xxxxx, Xx.
