KEY EXECUTIVE EMPLOYMENT AND SEVERANCE AGREEMENT By and Between INTEGRYS ENERGY GROUP, INC. And As Amended and Restated Effective May 1, 2010
Exhibit 10.1
KEY
EXECUTIVE EMPLOYMENT
AND
SEVERANCE AGREEMENT
By
and Between
And
_____________________________
As
Amended and Restated Effective May 1, 2010
| TABLE OF CONTENTS | ||
| Section | Page | |
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1.
|
Definitions
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2
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(a)
Act
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2
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(b)
Affiliate and Associate
|
2
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(c)
Beneficial Owner
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2
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(d)
Cause
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3
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(e)
Change in Control of the Company
|
3
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(f)
Code
|
4
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(g)
Continuing Director
|
4
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(h)
Covered Termination
|
4
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(i)
Employment Period
|
4
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(j)
Good Reason
|
5
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(k)
Normal Retirement Date
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5
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(l)
Person
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5
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(m)
Separation from Service
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5
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(n)
Termination of Employment
|
6
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(o)
Termination Date
|
6
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2.
|
Term of
Agreement and Certain Terminations Prior to Change in Control of the
Company
|
8
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3.
|
Employment
Period
|
9
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4.
|
Duties
|
9
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5.
|
Compensation
|
10
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6.
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Annual
Compensation Adjustments
|
11
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7.
|
Termination
For Cause or Without Good Reason
|
11
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8.
|
Termination
Giving Rise to a Termination Payment
|
12
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9.
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Payments Upon
Termination
|
13
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|
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(a)
Accrued Benefits
|
13
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(b)
Termination Payment
|
14
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10.
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Death
|
17
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11.
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Retirement
|
17
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12.
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Termination
for Disability
|
18
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13.
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Termination
Notice and Procedure
|
18
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14.
|
Further
Obligations of the Executive
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19
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(a)
Competition
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19
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(b)
Confidentiality
|
19
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(c)
Nonsolicitation.
|
19
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(d) No
Disparagement.
|
20
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15.
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Expenses and
Xxxxxxxx
|
00
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|
00.
|
Payment
Obligations Absolute
|
20
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17.
|
Successors
|
20
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18.
|
Severability
|
21
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19.
|
Amendment
|
21
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20.
|
Withholding
|
21
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21.
|
Certain Rules
of Construction
|
22
|
i
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22.
|
Governing
Law; Resolution of Disputes
|
22
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23.
|
Notice
|
22
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24.
|
No
Waiver
|
22
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25.
|
Headings
|
22
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26.
|
Code Section
409A Compliance
|
23
|
ii
THIS AGREEMENT,
made and entered into the _____ day of _______________, 2010, by and between
Integrys Energy Group, Inc., a Wisconsin corporation (hereinafter referred to as
the “Company”), and _________________
(hereinafter referred to as “Executive”).
W I T N E S S E T
H
WHEREAS, the
Executive and the Company are parties to a Key Executive Employment and
Severance Agreement that was originally effective as of May 2, 1997 and
that was most recently amended and restated effective January 1,
2009;
WHEREAS, the
Executive is employed by the Company and/or a subsidiary of the Company (the
“Employer”) in a key executive capacity
and the Executive’s
services are valuable to the conduct of the business of the
Company;
WHEREAS, the
Executive possesses intimate knowledge of the business and affairs of the
Company and has acquired certain confidential information and data with respect
to the Company;
WHEREAS, the
Company desires to insure, insofar as possible, that it will continue to have
the benefit of the Executive’s services and to protect its
confidential information and goodwill;
WHEREAS, the
Company recognizes that circumstances may arise in which a change in control of
the Company occurs, through acquisition or otherwise, thereby causing current
uncertainty about the Executive’s future employment with the
Employer without regard to the Executive’s competence or past
contributions, which uncertainty may result in the loss of valuable services of
the Executive to the detriment of the Company and its shareholders, even if such
a change in control never does in fact occur, and the Company and the Executive
wish to provide reasonable security to the Executive against changes in the
Executive’s relationship
with the Company in the event of certain changes in control;
WHEREAS, the
Company and the Executive are desirous that any proposal for a change in control
or acquisition of the Company will be considered by the Executive objectively
and with reference only to the best interests of the Company and its
shareholders;
WHEREAS, the
Executive will be in a better position to consider the Company’s best interests if the
Executive is afforded reasonable security, as provided in this Agreement,
against altered conditions of employment which could result from any such change
in control or acquisition; and
WHEREAS, it is
desirable to again amend and restate the Key Executive Employment and Severance
Agreement between the Executive and the Company;
NOW, THEREFORE, in
consideration of the foregoing, the Company’s willingness to continue to extend
a change in control agreement to the Executive (which the
Company is not
required to do), the Executive’s willingness to continue in employment with the
Company (or the Employer), the Executive’s commitments under Section 14, and the
other mutual covenants and agreements hereinafter set forth, the parties hereto
mutually covenant and agree as follows, which shall supersede and replace all
Key Executive Employment and Severance Agreements presently or heretofore in
effect between the Executive and the Company:
1. Definitions.
(a) Act. For
purposes of this Agreement, the term “Act” means the Securities Exchange
Act of 1934, as amended.
(b) Affiliate and
Associate. An
“Affiliate” of, or a person “affiliated” with, a specified person, is a
person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the person
specified and the term “Associate” used to indicate a
relationship with any person, means:
(i) any corporation or
organization (other than the registrant or a majority-owned subsidiary of the
registrant) of which such person is an officer or partner or is, directly or
indirectly, the beneficial owner of ten percent (10%) or more of any class of
equity securities,
(ii) any trust or other
estate in which such person has a substantial beneficial interest or as to which
such person serves as trustee or in a similar fiduciary capacity,
and
(iii) any relative or
spouse of such person, or any relative of such spouse, who has the same home as
such person or who is a director or officer of the registrant or any of its
parents or subsidiaries.
(c) Beneficial
Owner. For
purposes of this Agreement, a Person shall be deemed to be the “Beneficial Owner” of any
securities:
(i) which such Person
or any of such Person’s
Affiliates or Associates has the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding, or upon the exercise of conversion
rights, exchange rights, rights, warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, (A) securities tendered pursuant to a tender or exchange offer
made by or on behalf of such Person or any of such Person’s Affiliates or Associates
until such tendered securities are accepted for purchase or (B) securities
issuable upon exercise of any rights agreement that the Company may have in
effect at a time before the issuance of such securities;
(ii) which such Person
or any of such Person’s
Affiliates or Associates, directly or indirectly, has the right to vote or
dispose of or has “beneficial ownership” of (as determined pursuant to
Rule 13d-3 of the General Rules and Regulations under the Act), including
pursuant to any agreement, arrangement or understanding; provided, however, that
a Person shall not be deemed the Beneficial Owner of, or to beneficially own,
any security under this subparagraph (ii) as a result of an agreement,
arrangement or
2
understanding to
vote such security if the agreement, arrangement or
understanding: (A) arises solely from a revocable proxy or consent
given to such Person in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and regulations under
the Act and (B) is not also then reportable on a Schedule 13D under the Act (or
any comparable or successor report); or
(iii) which are
beneficially owned, directly or indirectly, by any other Person with which such
Person or any of such Person’s Affiliates or Associates has
any agreement, arrangement or understanding for the purpose of acquiring,
holding, voting (except pursuant to a revocable proxy as described in Subsection
1(c)(ii) above) or disposing of any voting securities of the
Company.
(d) Cause. “Cause” for termination by the Company
of the Executive’s
employment in connection with or following a Change in Control of the Company
shall, for purposes of this Agreement, be limited to any of the
following:
(i) the engaging by the
Executive in intentional conduct not taken in good faith which has caused
demonstrable and serious financial injury to the Company, as evidenced by a
determination in a binding and final judgment, order or decree of a court or
administrative agency of competent jurisdiction, in effect after exhaustion or
lapse of all rights of appeal, in an action, suit or proceeding, whether civil,
criminal, administrative or investigative;
(ii) conviction of a
felony (as evidenced by binding and final judgment, order or decree of a court
of competent jurisdiction, in effect after exhaustion of all rights of appeal)
which substantially impairs the Executive’s ability to perform the
Executive’s duties or responsibilities;
(iii) continuing willful
and unreasonable refusal by the Executive to perform the Executive’s duties or responsibilities
(unless significantly changed without the Executive’s consent); or
(iv) a material
violation of the Company’s Code of Conduct.
(e) Change in Control of the
Company. For
purposes of this Agreement, a Change in Control of the Company shall be deemed
to have occurred if:
(i) any Person (other
than any employee benefit plan of the Company or of any subsidiary of the
Company, any Person organized, appointed or established pursuant to the terms of
any such benefit plan or any trustee, administrator or fiduciary of such a plan)
is or becomes the Beneficial Owner of securities of the Company representing at
least thirty percent (30%) of the combined voting power of the Company’s then outstanding
securities;
(ii) one-half or more of
the members of the Board of Directors of the Company are not Continuing
Directors;
3
(iii) there shall be
consummated any merger, consolidation, or reorganization of the Company with any
other corporation as a result of which less than fifty percent (50%) of the
outstanding voting securities of the surviving or resulting entity are owned by
the former shareholders of the Company other than a shareholder who is an
Affiliate or Associate of any party to such consolidation or
merger;
(iv) there shall be
consummated any merger of the Company or share exchange involving the Company in
which the Company is not the continuing or surviving corporation other than a
merger of the Company in which each of the holders of the Company’s Common Stock immediately
prior to the merger have the same proportionate ownership of common stock of the
surviving corporation immediately after the merger;
(v) there shall be
consummated 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 to a Person which is not a wholly owned subsidiary of the Company;
or
(vi) the shareholders of
the Company approve any plan or proposal for the liquidation or dissolution of
the Company.
(f) Code. For
purposes of this Agreement, the term “Code” means the Internal Revenue
Code of 1986, including any amendments thereto or successor tax codes
thereof.
(g) Continuing
Director. For
purposes of this Agreement, the term “Continuing Director” means:
(i) any member of the
Board of Directors of the Company who was a member of such Board on the date of
this Agreement;
(ii) any successor of a
Continuing Director who is recommended to succeed a Continuing Director by a
majority of the Continuing Directors then on such Board; and
(iii) additional
directors elected or recommended for membership by a majority of the Continuing
Directors then on such Board.
(h) Covered
Termination. Except
as provided in Section 2(c), for purposes of this Agreement, the term “Covered Termination” means any Termination of
Employment where the Termination Date is any date on or after the date on which
a Change in Control of the Company has occurred and prior to the end of the
Employment Period.
(i) Employment
Period. For
purposes of this Agreement, the term “Employment Period” means a period commencing on
the date of a Change in Control of the Company, and ending at 11:59 p.m. Central
Time on the earlier of the second anniversary of such date or the Executive’s Normal Retirement
Date.
4
(j) Good
Reason. For
purposes of this Agreement, the Executive shall have a “Good Reason” for termination of employment
in connection with a Change in Control of the Company in the event
of:
(i) any breach of this
Agreement by the Company, including specifically any breach by the Company of
its agreements contained in Sections 4, 5, or 6 hereof;
(ii) the removal of the
Executive from, or any failure to reelect or reappoint the Executive to, any of
the positions held with the Company or the Employer on the date of the Change in
Control of the Company or any other positions with the Company or the Employer
to which the Executive shall thereafter be elected, appointed or assigned,
except in the event that such removal or failure to reelect or reappoint relates
to the termination by the Company of the Executive’s employment for Cause or by
reason of disability pursuant to Section 12 hereof;
(iii) a good faith
determination by the Executive that there has been a significant adverse change,
without the Executive’s
written consent, in the Executive’s working conditions or status
with the Company or the Employer from such working conditions or status in
effect at any time during the one hundred eighty (180) day period immediately
prior to the Change in Control of the Company, including but not limited to a
significant change in the nature or scope of the Executive’s authority, powers, functions,
duties or responsibilities; or
(iv) failure by the
Company to obtain the agreement referred to in Section 17(a) hereof as provided
therein.
(k) Normal Retirement
Date. For
purposes of this Agreement, the term “Normal Retirement Date” means the earlier
of:
(i) “Normal Retirement Date” as defined in Part A of
the Integrys Energy Group Retirement Plan, or any successor plan, as in effect
on the date of the Change in Control of the Company (whether or not the
Executive is a participant in such plan); or
(ii) such earlier
retirement date chosen by the Executive prior to the commencement of the
Employment Period.
(l) Person. For
purposes of this Agreement, the term “Person” shall mean any individual,
firm, partnership, corporation or other entity, including any successor (by
merger or otherwise) of such entity, or a group of any of the foregoing acting
in concert; provided that in the case of a merger, consolidation or
reorganization of the Company with any other corporation or a share exchange
involving the Company, the shareholders of the other corporation that is a party
to the merger, consolidation, reorganization or share exchange shall not be
considered to be acting in concert for purposes of applying Section
1(e)(i).
(m) Separation from
Service. For
purposes of this Agreement, the term “Separation from Service” means the date on
which the Executive has a Termination of Employment or if later, separates from
service (within the meaning of Code Section 409A) from the Company and each
other corporation, trade or business that, with the Company, constitutes a
5
controlled group of
corporations or group of trades or businesses under common control within the
meaning of Code Sections 414(b) or (c). For this purpose, Code
Sections 414(b) and (c) shall be applied by substituting “at least 50 percent”
for “at least 80 percent” each place it appears. Specifically, if
Executive continues to provide services to the Company or an affiliate in a
capacity other than as an employee, such shift in status is not automatically a
Separation from Service.
(n) Termination of
Employment. For
purposes of this Agreement, the Executive’s “Termination of Employment” shall
occur when the Company and Executive reasonably anticipate that no further
services will be performed by the Executive for the Company after a certain date
or that the level of bona fide services the Executive will perform after such
date as an employee of the Company will permanently decrease to no more than
twenty percent (20%) of the average level of bona fide services performed by the
Executive (whether as an employee or independent contractor) for the Company
over the immediately preceding thirty-six (36) month period (or such lesser
period of services). For purposes of this definition, the term
Company includes each other corporation, trade or business that, with the
Company, constitutes a controlled group of corporations or group of trades or
businesses under common control within the meaning of Code Sections 414(b) or
(c). For this purpose, Code Sections 414(b) and (c) shall be applied
by substituting “at least 50 percent” for “at least 80 percent” each place it
appears. An Executive is not considered to have a Termination of
Employment if the Executive is absent from active employment due to military
leave, sick leave or other bona fide leave of absence if the period of such
leave does not exceed the greater of (i) six (6) months, or (ii) the period
during which the Executive’s right to reemployment by the Company or controlled
group member is provided either by statute or by contract; provided that if the
leave of absence is due to a medically determinable physical or mental
impairment that can be expected to result in death or last for a continuous
period of not less than six (6) months, where such impairment causes the
Executive to be unable to perform the duties of the Executive’s position of
employment or any substantially similar position of employment, the leave may be
extended for up to twenty-nine (29) months without causing a Termination of
Employment. Further, for purposes of determining whether the
Executive has incurred a Termination of Employment, if the Executive is not
actively at work during the period that there exists a dispute pursuant to
Section 1(o)(v)(B) or (C), the Executive shall be considered to be on a bona
fide leave of absence for which the Executive’s right to reemployment is
guaranteed during the period that begins on the date on which the Executive last
performs active services and ends on the Termination Date that ultimately is
established pursuant to Section 1(o)(v)(B) or (C).
(o) Termination
Date. For
purposes of this Agreement, except as otherwise provided in Section 2(c),
Section 10(b) and Section 17(a) hereof, the term “Termination Date” means:
(i) if the
Executive’s employment is
terminated by the Executive’s death, the date of
death;
(ii) if the
Executive’s employment is
terminated by reason of voluntary early retirement, as agreed in writing by the
Company and the Executive, the date of such early retirement which is set forth
in such written agreement;
6
(iii) if the
Executive’s employment is
terminated for purposes of this Agreement by reason of disability pursuant to
Section 12 hereof, the earlier of thirty (30) days after the Notice of
Termination is given or one day prior to the end of the Employment
Period;
(iv) if the
Executive’s employment is
terminated by the Executive voluntarily (other than for Good Reason), the date
the Notice of Termination is given; or
(v) if the
Executive’s employment is
terminated by the Company (other than by reason of disability pursuant to
Section 12 hereof) or by the Executive for Good Reason, the earlier of thirty
(30) days after the Notice of Termination is given or one day prior to the end
of the Employment Period. Notwithstanding the foregoing,
(A) If termination is
for Cause pursuant to Section 1(d)(iii) of this Agreement and if the Executive
has cured the conduct constituting such Cause as described by the Company in its
Notice of Termination within such thirty day or shorter period, then the
Executive’s employment
hereunder shall continue as if the Company had not delivered its Notice of
Termination.
(B) If the Company (or
the Employer) shall give a Notice of Termination for Cause or by reason of
disability and the Executive in good faith notifies the Company that a dispute
exists concerning the termination within the fifteen (15) day period following
receipt thereof, then the Executive may elect to continue employment during such
dispute, and the Termination Date shall be determined under this
paragraph. If the Executive so elects and it is thereafter determined
that Cause or disability (as the case may be) did exist, the Termination Date
shall be the earlier of (1) the date on which the dispute is finally determined,
either (x) by mutual written agreement of the parties or (y) in accordance with
Section 22 hereof, (2) the date of the Executive’s death, or (3) one day prior
to the end of the Employment Period. If the Executive so elects and
it is thereafter determined that Cause or disability (as the case may be) did
not exist, then the employment of the Executive hereunder shall continue after
such determination as if the Company (or the Employer) had not delivered its
Notice of Termination and there shall be no Termination Date arising out of such
Notice. In either case, this Agreement continues, until the
Termination Date, if any, as if the Company (or the Employer) had not delivered
the Notice of Termination except that, if it is finally determined that the
Company (or the Employer) properly terminated the Executive for the reason
asserted in the Notice of Termination, the Executive shall in no case be
entitled to a Termination Payment (as hereinafter defined) arising out of events
occurring after the Company delivered its Notice of Termination.
(C) If the Executive
shall in good faith give a Notice of Termination for Good Reason and the Company
(or the Employer) notifies the Executive that a dispute exists concerning the
termination within the fifteen (15) day period following receipt thereof, then
the Executive may elect to continue employment during such dispute and the
Termination Date shall be determined under this paragraph. If the
Executive so elects and it is thereafter determined that Good Reason did exist,
the Termination Date shall be the earliest of (1) the date on which the dispute
is finally determined, either (x)
7
by mutual written
agreement of the parties or (y) in accordance with Section 22 hereof, (2) the
date of the Executive’s
death or (3) one day prior to the end of the Employment Period. If
the Executive so elects and it is thereafter determined that Good Reason did not
exist, then the employment of the Executive hereunder shall continue after such
determination as if the Executive had not delivered the Notice of Termination
asserting Good Reason and there shall be no Termination Date arising out of such
Notice. In either case, this Agreement continues, until the
Termination Date, if any, as if the Executive had not delivered the Notice of
Termination except that, if it is finally determined that Good Reason did exist,
the Executive shall in no case be denied the benefits described in Sections 8(b)
and 9 hereof (including a Termination Payment) based on events occurring after
the Executive delivered the Notice of Termination.
(D) Except as provided
in Paragraph (B) and (C) above, if the party receiving the Notice of Termination
notifies the other party that a dispute exists concerning the termination within
the appropriate period following receipt thereof and it is finally determined
that the reason asserted in such Notice of Termination did not exist, then (1)
if such Notice was delivered by the Executive, the Executive will be deemed to
have voluntarily terminated employment and the Termination Date shall be the
earlier of the date fifteen (15) days after the Notice of Termination is given
or one day prior to the end of the Employment Period and (2) if delivered by the
Company, the Company will be deemed to have terminated the Executive other than
by reason of death, disability or Cause.
2. Term of Agreement and
Certain Terminations Prior to Change in Control of the
Company.
(a) Subject to
Subsections 2(b) and 2(c) hereof:
(i) This Agreement
shall be for an initial term that commences on May 1, 2010 and continues through
December 31, 2010; and
(ii) On December 31 of
each calendar year beginning with December 31, 2010 (each, a “Renewal Date”), if
the Executive is still employed by the Company or the Employer on such date, the
term of the Agreement shall be extended through December 31 of the following
calendar year unless the Company, on or before the November 1 that immediately
precedes the Renewal Date, has provided written notice to the Executive that the
term of the Agreement shall not be extended such that the Agreement will
terminate at the conclusion of the then-current term; provided, that if a Change
in Control of the Company shall have occurred either (A) while this Agreement is
in effect or (B) within the one hundred eighty (180) day period immediately
following expiration of this Agreement, then this Agreement shall remain in
effect (or shall be retroactively reinstated as if the Agreement had never
terminated), the term of the Agreement shall expire one day following the end of
the Employment Period, and any notice by the Company of its intent to not extend
the term of the Agreement shall be disregarded.
(b) Subject to
Subsection 2(c) hereof, the Company (or the Employer) and the Executive shall
each retain the right to terminate the employment of the Executive at any time
8
prior to a Change
in Control of the Company. Subject to Subsection 2(c) hereof, in the
event the Executive’s
employment is terminated by the Company (or the Employer) prior to a Change in
Control of the Company, this Agreement shall be terminated and cancelled and of
no further force and effect, and any and all rights and obligations of the
parties hereunder shall cease. In the event the Executive’s employment is terminated by
the Executive prior to a Change in Control of the Company, except for
obligations of the Executive in Section 14 hereof which shall survive such
termination, this Agreement shall be terminated and cancelled and of no further
force and effect and any and all rights and obligations of the parties except
those in Section 14 shall cease.
(c) Anything in this
Agreement to the contrary notwithstanding, if (i) a Change in Control of the
Company shall occur, and (ii) the Executive’s employment with the Company
or the Employer shall have been terminated by the Company or the Employer (other
than a termination due to the Executive’s death or as a result of the
Executive’s disability)
during the period of one hundred eighty (180) days prior to the date on which
the Change in Control of the Company shall occur, and (iii) this Agreement was
in effect immediately prior to the date on which the Executive’s employment with
the Company or the Employer shall have been terminated by the Company or the
Employer, then for all purposes of this Agreement such termination of employment
shall be deemed a “Covered
Termination” (and the
Executive’s Termination Date shall be the date of such termination of
employment) unless it shall be reasonably demonstrated by the Company that
either (i) similar agreements between the Company and other executives have been
terminated and were not in effect on the date of the Change in Control of the
Company, or (ii) it shall be reasonably demonstrated by the Company that such
termination of employment:
(i) shall not have been
at the request of a third party who had taken steps reasonably calculated to
effect a Change in Control of the Company; or
(ii) shall not otherwise
have arisen in connection with or in anticipation of a Change in Control of the
Company.
3. Employment
Period. If a
Change in Control of the Company occurs when the Executive is employed by the
Company or the Employer, the Company will, or will cause the Employer to,
continue thereafter to employ the Executive during the Employment Period, and
the Executive will remain in the employ of the Company or the Employer in
accordance with and subject to the terms and provisions of this
Agreement. Any termination of the Executive’s employment during the
Employment Period, whether by the Company or the Employer, shall be deemed a
termination by the Company for purposes of this Agreement.
4. Duties. While
employed during the Employment Period, the Executive shall, in the same
capacities and positions held by the Executive at the time of the Change in
Control of the Company or in such other capacities and positions as may be
agreed to by the Company and the Executive in writing, devote the Executive’s best efforts and all of the
Executive’s business time,
attention and skill to the business and affairs of the Employer, as such
business and affairs now exist and as they may hereafter be
conducted. The services which are to be performed by the Executive
hereunder are to be rendered within a seventy-five (75) mile radius of the
location at which the Executive was employed during the one hundred eighty (180)
9
day period prior to
the time of such Change in Control of the Company, or in such other place or
places as shall be mutually agreed upon in writing by the Executive and the
Company from time to time. Without the Executive’s consent the Executive shall
not be required to be absent from the Executive’s primary work location to a
significantly greater extent than was required or expected in connection with
the Executive’s performance of duties during the one hundred eighty (180) day
period prior to the time of the Change in Control of the Company.
5. Compensation. While
employed during the Employment Period, the Executive shall be compensated as
follows:
(a) The Executive shall
receive, at reasonable intervals (but not less often than monthly) and in
accordance with such standard policies as may be in effect immediately prior to
the Change in Control of the Company, an annual base salary in cash equivalent
at a rate not less than the Executive’s highest annual base salary
rate as in effect during the one hundred eighty (180) day period immediately
prior to the Change in Control of the Company, subject to any deferral election
then in effect and subject to adjustment as hereinafter provided.
(b) The Executive shall
be included, to the extent eligible thereunder (which eligibility shall not be
conditioned on the Executive’s salary grade or on any other
requirement which excludes persons of comparable status to the Executive unless
such exclusion was in effect for such plan or an equivalent plan immediately
prior to the Change in Control of the Company), in any and all plans providing
benefits for the Employer’s salaried employees in
general, including but not limited to retirement, savings, group life insurance,
hospitalization, medical, dental, profit sharing and stock bonus
plans.
(c) The Executive shall
annually be entitled to not less than the amount of paid vacation and not fewer
than the number of paid holidays to which the Executive was entitled annually at
any time during the one hundred eighty (180) day period immediately prior to the
Change in Control of the Company or such greater amount of paid vacation and
number of paid holidays as may be made available annually to other executives of
the Company (or the Employer) of comparable status and position to the
Executive.
(d) The Executive shall
be included in all plans providing additional benefits to executives of the
Company of comparable status and position to the Executive, including but not
limited to deferred compensation, split-dollar life insurance, supplemental
retirement, pension restoration, stock option, stock appreciation, restricted
stock unit, performance stock, stock bonus and similar or comparable plans;
provided, that, in no event shall the aggregate level of benefits under such
plans be less than the aggregate level of benefits under plans of the Company of
the type referred to in this Section 5(d) in which the Executive was
participating at any time during the one hundred eighty (180) day period
immediately prior to the Change in Control of the Company; and provided,
further, that the Company’s obligation to include the
Executive in bonus or incentive compensation plans shall be determined by
Subsection 5(e) hereof.
(e) To assure that the
Executive will have an opportunity to earn incentive compensation after a Change
in Control of the Company, the Executive shall be included in any annual or
long-term incentive or other incentive or bonus plan of the Company or the
Employer,
10
which shall satisfy
the standards described below (such plan, the “Bonus Plan”) if the Executive was
participating in an incentive or bonus plan or plans of the Company or the
Employer in effect at any time during the one hundred eighty (180) day period
immediately prior to the Change in Control of the Company. Bonuses or
incentive payments under any such Bonus Plan shall be payable with respect to
achieving such financial or other goals reasonably related to the business of
the Company or the Employer as the Company or the Employer shall establish (the
“Goals”), all of which Goals shall be
attainable with approximately the same degree of probability as the goals under
any incentive or bonus plan or plans of the Company or the Employer as in effect
at any time during the one hundred eighty (180) day period immediately prior to
the Change in Control of the Company and in view of the Company’s or the Employer’s existing and projected
financial and business circumstances applicable at the time. The
percentage of the Executive’s annual base salary rate that the Executive is
eligible to earn as a target award (or, in the case of a Bonus Plan that
provides for equity awards, the value of the target award that the Executive is
eligible to earn) under any such Bonus Plan shall be no less than the percentage
of the annual base salary rate (or, in the case of an equity award, the value of
the target award) that similarly situated executives of the Company or the
Employer are eligible to earn under such Bonus Plan, and in the event the Goals
are not achieved such that the entire target award is not payable, any such
Bonus Plan shall provide for a payment of a Bonus Amount equal to a portion of
the target award reasonably related to that portion of the Goals which were
achieved. For purposes of determining the value of the Executive’s
target award that the Executive is eligible to earn under any Bonus Plan that
provides for equity awards, valuation will be based on the financial accounting
expense (under FASB ASC Topic 718 - Stock Compensation, or any successor
thereto) of the bonus opportunity, assuming target levels of
performance. Except as provided in Sections 8(a) and 14, payment of
the Bonus Amount (to the extent otherwise earned) shall not be affected by any
circumstance occurring subsequent to the end of the Employment Period, including
termination of the Executive’s employment.
6. Annual Compensation
Adjustments. While
the Executive is employed during the Employment Period, the Board of Directors
of the Company or the Employer (or an appropriate committee thereof) will
consider and appraise, at least annually, the contributions of the Executive to
the Company, and in accordance with the Company’s or the Employer’s practice prior to the Change
in Control of the Company, due consideration shall be given to the upward
adjustment of the Executive’s annual base salary rate, at
least annually:
(i) commensurate with
increases generally given to other executives of the Company or the Employer of
comparable status and position to the Executive, and
(ii) as the scope of the
Company’s or the
Employer’s operations or
the Executive’s duties
expand.
7. Termination For Cause or
Without Good Reason. If
there is a Covered Termination for Cause or due to the Executive’s voluntarily terminating
employment other than for Good Reason (any such terminations to be subject to
the procedures set forth in Section 13 hereof), then the Executive shall be
entitled to receive only Accrued Benefits pursuant to Section 9(a)
hereof.
11
8. Termination Giving Rise to a
Termination Payment.
(a) If
there is a Covered Termination by the Executive for Good Reason, or by the
Company (or the Employer) other than by reason of:
(i) death,
(ii) disability pursuant
to Section 12 hereof, or
(iii) Cause (any such
terminations to be subject to the procedures set forth in Section 13
hereof),
then the Executive
shall be entitled to receive, and the Company shall promptly pay, all Accrued
Benefits and, in lieu of further base salary for periods following the
Termination Date, as liquidated damages and additional severance pay, the
Termination Payment pursuant to Section 9(b) hereof. Notwithstanding
anything in this Agreement to the contrary, (A) if the Executive breaches any of
the covenants set forth in Section 14 hereof, the Executive shall not be
entitled to any of the additional benefits pursuant to Section 8(b) that have
not yet been paid or the Termination Payment pursuant to Section 9(b) hereof
and, if the Termination Payment has already been paid to the Executive, the
Executive shall return the Termination Payment to the Company, and (B) the
Executive will be entitled to the additional benefits pursuant to Section 8(b)
and the Termination Payment pursuant to Section 9(b) only if the Executive,
within forty-five (45) days following such Executive’s Termination Date,
executes a release of claims in the form required by the Company and such
release of claims becomes effective and is not revoked by the Executive during
any applicable revocation period.
(b) If there is a
Covered Termination and the Executive is entitled to Accrued Benefits and the
Termination Payment, then the Executive shall be entitled to the following
additional benefits:
(i) The Executive shall
receive, at the expense of the Company, outplacement services, on an
individualized basis at a level of service commensurate with the Executive’s status with the Company
immediately prior to the Change in Control of the Company (or, if higher,
immediately prior to the termination of the Executive’s employment), provided by a
nationally recognized executive placement firm selected by the Company; provided
that the availability of outplacement services shall not extend beyond December
31 of the second calendar year following the calendar year in which occurs the
Executive’s Separation from Service; and provided further, that the cost to the
Company of such services shall not exceed fifteen percent (15%) of the
Executive’s annual base salary rate in effect immediately prior to the Change in
Control of the Company.
(ii) If the Executive
was participating in an annual incentive program for the year in which occurs
the Executive’s Termination of Employment, the Executive will be entitled to the
greater of (A) the annual incentive amount (if any) to which the Executive is
entitled to receive for the year in which the Executive’s Termination of
Employment occurs as determined pursuant to the terms of the annual incentive
plan, or (B) an amount equal to the product of (1) the annual incentive payment
to which the Executive would
12
have been entitled
under such annual incentive program for the year in which the Executive’s
Termination of Employment occurs assuming continued employment and target level
of performance, and (2) a fraction, the numerator of which is the portion of the
annual incentive period that precedes the Executive’s Termination Date, and the
denominator of which is the complete annual performance
period. Payment shall be made at the same time as payment is made
under the annual incentive plan, which shall occur no earlier than January 1 and
no later than March 15 following the end of the performance period.
(iii) Until the earlier
of the end of the Employment Period or such time as the Executive has obtained
new employment and is covered by benefits which in the aggregate are at least
equal in value to the following benefits, the Executive shall continue to be
covered, at the expense of the Company, under either (i) the group
hospitalization, medical, dental and vision plans of the Company or a subsidiary
of the Company in which the Executive (and, if applicable, the Executive’s
family) was participating immediately prior to the Executive’s Covered
Termination, or (ii) such group hospitalization, medical, dental and vision
plans as they are subsequently modified for the Company’s (or the Employer’s)
salaried employees; provided that if the coverage that would otherwise be
provided to the Executive (and, if applicable, the Executive’s family) is
coverage under an insured product that is not available to the Executive
following the Executive’s Termination of Employment, the Company shall provide
coverage under an alternate plan that is available through the Company or a
subsidiary of the Company. Following the end of the COBRA
continuation period, if such hospitalization, medical or dental coverage is
provided under a health plan that is subject to Section 105(h) of the Code,
benefits payable under such health plan shall comply with the requirements of
Treasury regulation section 1.409A-3(i)(1)(iv)(A) and (B) and, if necessary, the
Company shall amend such health plan to comply therewith.
9. Payments Upon
Termination.
(a) Accrued
Benefits. For
purposes of this Agreement, the Executive’s “Accrued Benefits” shall include the following
amounts, payable as described herein:
(i) all base salary for
the time period ending with the Termination Date;
(ii) reimbursement for
any and all monies paid by the Executive in connection with the Executive’s employment for reasonable and
necessary expenses incurred by the Executive on behalf of the Company for the
time period ending with the Termination Date;
(iii) any and all other
cash or other benefits earned through the Termination Date and deferred at the
election of the Executive or pursuant to any deferred compensation plan then in
effect;
(iv) any bonus or
incentive compensation otherwise payable to the Executive with respect to the
year in which termination occurs, or for any prior year or incentive period to
the extent that such bonus or incentive compensation is otherwise payable to the
13
Executive but has
not been previously paid, under any bonus or incentive compensation plan or
plans in which the Executive is a participant; provided that the foregoing shall
not duplicate any payment to which the Executive is entitled under Section
8(b)(ii) with respect to the same period of service; and
(v) all other payments
and benefits to which the Executive (or in the event of the Executive’s death, the Executive’s surviving spouse or other
beneficiary) may be entitled as compensatory fringe benefits or under the terms
of any benefit plan of the Company, other than severance payments under the
Company’s (or the
Employer’s) severance
policies or practices, in the form most favorable to the Executive which were in
effect at any time during the one hundred eighty (180) day period immediately
prior to the Change in Control of the Company or during the Employment
Period.
(vi) Payment of Accrued
Benefits shall be made promptly in accordance with the Company’s prevailing practice with
respect to Subsections (i) and (ii) or, with respect to Subsections (iii), (iv)
and (v), pursuant to the terms of the benefit plan or practice establishing such
benefits. Termination of the Executive’s employment does not affect
deferral or distribution elections that the Executive may have in place with
respect to the payment of any of the Accrued Benefits that are subject to Code
Section 409A, and payment of such amounts will be made pursuant to the terms of
the benefit plan or practice under which the deferral or distribution election
was made.
(b) Termination
Payment.
(i) Subject to the
limits set forth in Subsection 9(b)(ii) hereof, the Termination Payment shall be
an amount equal to (A) the Executive’s annual base salary rate, at
the highest rate in effect at any time during the one hundred eighty (180) day
period immediately prior to the Change in Control of the Company, as adjusted
upward, from time to time, pursuant to Section 6 hereof, plus (B) the amount of
the Executive’s target annual (but not long-term) cash annual incentive award
for the year in which occurs the Covered Termination or if higher, the
Executive’s target annual (but not long-term) cash annual incentive award for
the year in which occurs the Change in Control of the Company (the aggregate
amount set forth in (A) and (B) hereof shall hereafter be referred to as “Annual Cash Compensation”), times (C)
2.99. Long-term incentive awards are not considered for this
purpose. The Termination Payment shall be paid to the Executive in
cash equivalent on the last business day of the seventh month following the
month in which occurs the Executive’s Separation from Service. Such
lump sum payment shall not be reduced by any present value or similar factor,
and the Executive shall not be required to mitigate the amount of the
Termination Payment by securing other employment or otherwise, nor will such
Termination Payment be reduced by reason of the Executive securing other
employment or for any other reason. The Termination Payment shall be
in lieu of, and acceptance by the Executive of the Termination Payment shall
constitute the Executive’s
release of any rights of Executive to, any other severance payments under any
Company (or Employer) severance policy, practice or agreement. The
Company shall bear up to $10,000 in the aggregate of fees and expenses of
consultants and/or legal or accounting advisors engaged by the Executive to
advise the
14
Executive as to
matters relating to the computation of benefits due and payable under this
Subsection 9(b).
(ii) (A) Notwithstanding
any other provision of this Agreement, if any portion of the Termination Payment
or any other payment under this Agreement, or under any other agreement with or
plan of the Company or its affiliates (in its aggregate, “Total Payments”), would constitute an “excess parachute payment” that is subject to the tax
(the “Excise Tax”) imposed by Section 4999 of
the Internal Revenue Code of 1986, as amended (the “Code”), or any successor provision,
then the Total Payments to be made to the Executive shall be reduced such that
the value of the aggregate Total Payments that the Executive is entitled to
receive shall be One Dollar ($1) less than the maximum amount which the
Executive may receive without becoming subject to the tax imposed by Section
4999 of the Code (or any successor provision); provided that the foregoing
reduction in the amount of Total Payments shall not apply if the after-tax value
to the Executive of the Total Payments prior to reduction in accordance with
Subsection 9(b)(ii)(A) is greater than the after-tax value to the Executive if
Total Payments are reduced in accordance with Subsection
9(b)(ii)(A).
(B) For purposes of
this Agreement, the terms “excess parachute payment” and “parachute payments” shall have the meanings
assigned to them in Section 280G of the Code (or any successor provision), and
such “parachute
payments” shall be valued
as provided therein. The term “Base Period Income” means an amount equal to the
Executive’s “annualized includible
compensation for the base period” as defined in Section
280G(d)(1) of the Code (or any successor provision). Present value
shall be calculated in accordance with Section 280G(d)(4) of the Code (or any
successor provision). Within forty (40) days following the delivery
of the Notice of Termination or notice by the Company to the Executive of its
belief that there is a payment or benefit due the Executive which will result in
an excess parachute payment as defined in Section 280G of the Code (or any
successor provision), or in the case the Executive is deemed to have incurred a
Covered Termination pursuant to Section 2(c), within forty (40) days following
the date of the Change in Control of the Company, the Executive and the Company,
at the Company’s expense,
shall obtain the opinion (which need not be unqualified) of nationally
recognized tax counsel (“National Tax Counsel”) selected by the Company’s independent auditors and
acceptable to the Executive in the Executive’s sole discretion (which may be
regular outside counsel to the Company), which opinion sets forth:
(1) the amount of the
Base Period Income,
(2) the amount and
present value of Total Payments,
(3) the amount and
present value of any excess parachute payments determined without regard to the
limitations of this Subsection 9(b)(ii),
(4) the after-tax value
of the Total Payments if the reduction in Total Payments contemplated under
Subsection 9(b)(ii)(A) did not apply, and
15
(5) the after-tax value
of the Total Payments taking into account the reduction in Total Payments
contemplated under Subsection 9(b)(ii)(A).
For purposes of
such opinion, the value of any noncash benefits or any deferred payment or
benefit shall be determined by the Company’s independent auditors in
accordance with the principles of Sections 280G(d)(3) and (4) of the Code (or
any successor provisions), which determination shall be evidenced in a
certificate of such auditors addressed to the Company and the
Executive. For purposes of determining the after-tax value of Total
Payments, the Executive shall be deemed to pay federal income taxes and
employment taxes at the highest marginal rate of federal income and employment
taxation in the calendar year in which the Termination Payment is to be made and
state and local income taxes at the highest marginal rates of taxation in the
state and locality of the Executive’s domicile for income tax
purposes on the date the Termination Payment is made, net of the maximum
reduction in federal income taxes that may be obtained from deduction of such
state and local taxes. The opinion of National Tax Counsel shall be
dated as of the Termination Date and addressed to the Company and the Executive
and shall be binding upon the Company and the Executive. If such
opinion determines that there would be an excess parachute payment and that the
after-tax value of the Total Payments taking into account the reduction
contemplated under Subsection 9(b)(ii)(A) is greater than the after-tax value of
the Total Payments if the reduction in Total Payments contemplated under
Subsection 9(b)(ii)(A) did not apply, then the Termination Payment hereunder or
any other payment or benefit determined by such counsel to be includible in
Total Payments shall be reduced or eliminated so that under the basis of
calculation set forth in such opinion there will be no excess parachute
payment. Such reduction will be achieved by reducing or eliminating
payments or benefits in the manner that produces the highest economic value to
the Executive; provided that in the event it is determined that the foregoing
methodology for reduction would violate Code Section 409A, the reduction shall
be made pro rata among the benefits and/or payments (on the basis of the
relative present value of the parachute payments). If such National
Tax Counsel so requests in connection with the opinion required by this
Subsection 9(b)(ii), the Executive and the Company shall obtain, at the
Company’s expense, and the
National Tax Counsel may rely on in providing the opinion, the advice of a firm
of recognized executive compensation consultants as to the reasonableness of any
item of compensation to be received by the Executive. If the
provisions of Sections 280G and 4999 of the Code (or any successor provisions)
are repealed without succession, then this Section 9(b)(ii) shall be of no
further force or effect.
(C) If, notwithstanding
the provisions of Subsection 9(b)(ii)(A), but subject to Subsection 9(b)(ii)(D),
it is ultimately determined by a court or pursuant to a final determination by
the Internal Revenue Service that any portion of Total Payments is subject to
the Excise Tax even though the reduction contemplated under Subsection
9(b)(ii)(A) was applied in order to avoid application of the Excise Tax, the
Company shall reimburse the Executive for the Excise Tax and any interest
charges or penalties incurred by the Executive in respect of the imposition of
such Excise Tax, and for any federal, state or local income tax or employment
tax or further Excise Tax incurred by the Executive with respect to any
reimbursement under this provision. Such reimbursement shall be made
as soon as practicable after the date on which the Executive pays the tax
16
and provides notice
to the Company of the payment of tax, but no later than the end of the
Executive’s taxable year following the taxable year in which the taxes are
remitted.
(D) If legislation is
enacted or if regulations or rulings are promulgated that would require the
Company’s shareholders to
approve this Agreement, prior to a Change in Control of the Company, due solely
to the provision contained in Subsection 9(b)(ii)(C), then
(1) from and after such
time as shareholder approval would be required, until shareholder approval is
obtained as required by such legislation, Subsection 9(b)(ii)(C) shall be of no
force and effect;
(2) the Company and the
Executive shall use their best efforts to consider and agree in writing upon an
amendment to this Subsection 9(b)(ii) such that, as amended, this Subsection
would provide the Executive with the benefits intended to be afforded to the
Executive by Subsection 9(b)(ii)(C) without requiring shareholder approval;
and
(3) at the reasonable
request of the Executive, the Company shall seek shareholder approval of this
Agreement at the next annual meeting of shareholders of the
Company.
10. Death. (a) Except
as provided in Section 10(b) hereof, in the event of a Covered Termination due
to the Executive’s death,
the Executive’s estate,
heirs and beneficiaries shall receive all the Executive’s Accrued Benefits through the
Termination Date.
(b) In the event the
Executive dies after a Notice of Termination is given:
(i) by the Company;
or
(ii) by the Executive
for Good Reason,
the Executive’s estate, heirs and
beneficiaries shall be entitled, to the extent not previously paid, to the
benefits described in Section 10(a) hereof and, subject to the provisions of
this Agreement, to such Termination Payment as the Executive would have been
entitled to had the Executive lived; provided that the distribution will be made
as soon as practicable (and within ninety (90) days following) the Executive’s
death and the requirement that payment be deferred until the last business day
of the seventh month following the month in which occurs the Executive’s
Separation from Service will not apply. For purposes of this
Subsection 10(b), the Termination Date shall be the earlier of thirty (30) days
following the giving of the Notice of Termination, subject to extension pursuant
to Section 1(o) hereof, or one day prior to the end of the Employment
Period.
11. Retirement. If,
during the Employment Period, the Executive and the Company shall execute an
agreement providing for the early retirement of the Executive from the Company,
or the Executive shall otherwise give notice that he is voluntarily choosing to
retire early from the Company, the Executive shall receive Accrued Benefits
through the Termination Date; provided, that if the Executive’s employment is terminated by
the Executive for Good Reason or by the Company other than by reason of death,
disability or Cause and the
17
Executive also, in
connection with such termination, elects voluntary early retirement, the
Executive shall also be entitled to receive a Termination Payment pursuant to
Section 8(a) hereof.
12. Termination for
Disability. If,
during the Employment Period, as a result of the Executive’s disability due to physical or
mental illness or injury (regardless of whether such illness or injury is
job-related), the Executive shall have been absent from the Executive’s duties hereunder on a
full-time basis for a period of six (6) consecutive months and, within thirty
(30) days after the Company notifies the Executive in writing that it intends to
terminate the Executive’s
employment (which notice shall not constitute the Notice of Termination
contemplated below), the Executive shall not have returned to the performance of
the Executive’s duties
hereunder on a full-time basis, the Company may terminate the Executive’s employment for purposes of
this Agreement pursuant to a Notice of Termination given in accordance with
Section 13 hereof. If the Executive’s employment is terminated on
account of the Executive’s
disability in accordance with this Section, the Executive shall receive Accrued
Benefits in accordance with Section 9(a) hereof and shall remain eligible for
all benefits provided by any long term disability programs of the Company in
effect at the time of such termination.
13. Termination Notice and
Procedure. Any
Covered Termination by the Company or the Executive (other than a termination of
the Executive’s employment
that is a Covered Termination by virtue of Section 2(c) hereof) shall be
communicated by written Notice of Termination to the Executive, if such Notice
is given by the Company, and to the Company, if such Notice is given by the
Executive, all in accordance with the following procedures and those set forth
in Section 23 hereof:
(a) If such termination
is for disability, Cause or Good Reason, the Notice of Termination shall
indicate in reasonable detail the facts and circumstances alleged to provide a
basis for such termination.
(b) Any Notice of
Termination by the Company shall have been approved, prior to the giving thereof
to the Executive, by a resolution duly adopted by a majority of the directors of
the Company (or any successor corporation) then in office.
(c) If the Notice is
given by the Executive for Good Reason, the Executive may cease performing the
Executive’s duties hereunder on or after the date fifteen (15) days after the
delivery of Notice of Termination and shall in any event cease employment on the
Termination Date. If the Notice is given by the Company, then the
Executive may cease performing the Executive’s duties hereunder on the date of
receipt of the Notice of Termination, subject to the Executive’s rights
hereunder.
(d) The Executive shall
have thirty (30) days, or such longer period as the Company may determine to be
appropriate, to cure any conduct or act, if curable, alleged to provide grounds
for termination of the Executive’s employment for Cause under
this Agreement pursuant to Subsection 1(d)(iii) hereof.
18
(e) The recipient of
any Notice of Termination shall personally deliver or mail in accordance with
Section 23 hereof written notice of any dispute relating to such Notice of
Termination to the party giving such Notice within fifteen (15) days after
receipt thereof; provided, however, that if the Executive’s conduct or act alleged to
provide grounds for termination by the Company for Cause is curable, then such
period shall be thirty (30) days. After the expiration of such
period, the contents of the Notice of Termination shall become final and not
subject to dispute.
14. Further Obligations of the
Executive.
(a) Competition. The
Executive agrees that, in the event of any Covered Termination where the
Executive is entitled to Accrued Benefits and the Termination Payment, the
Executive will not, for a period expiring one year after the Termination Date,
without the prior written approval of the Company’s Board of Directors,
participate in the management of, be employed by or own any business enterprise
at a location within the United States that engages in substantial competition
with the Company or its subsidiaries, where the operating revenues of the
Company from activities in competition with such entity amount to ten percent
(10%) or more of the total operating net revenues of the Company for its most
recently completed fiscal year; provided, however, that nothing in this Section
14(a) shall prohibit the Executive from owning stock or other securities of a
competitor amounting to less than five percent (5%) of the outstanding capital
stock of such competitor.
(b) Confidentiality. During
and following the Executive’s employment by the Company or
the Employer, the Executive agrees that the Executive will hold in confidence
and not directly or indirectly disclose or use or copy or make lists of any
confidential information or proprietary data of the Company (including that of
the Employer), except to the extent authorized in writing by the Board of
Directors of the Company or required by any court or administrative agency,
other than to an employee of the Company or a person to whom disclosure is
reasonably necessary or appropriate in connection with the performance by the
Executive of duties as an executive of the Company. Confidential
information shall not include any information known generally to the public or
any information of a type not otherwise considered confidential by persons
engaged in the same business or a business similar to that of the
Company. All records, files, documents and materials, or copies
thereof, relating to the business of the Company (or the Employer) which the
Executive shall prepare, or use, or come into contact with, shall be and remain
the sole property of the Company (or the Employer) and shall be promptly
returned to the Company upon termination of employment with the Company (or the
Employer).
(c) Nonsolicitation. During
the Executive’s employment and for a period of one year following the
Executive’s Termination Date, the Executive agrees that the Executive will not
directly or indirectly without the express written approval of the Board of
Directors of the Company, solicit any customer of the Company or a subsidiary of
the Company, or any person or entity who is reasonably expected to become a
customer, or any employee of the Company or a subsidiary of the Company, for any
commercial pursuit that is or will be in substantial competition with the
Company or a subsidiary of the Company. Similarly, during the
Executive’s employment and for a period of one year following the Executive’s
Termination Date, the Executive shall not directly or indirectly solicit or
induce, or attempt to induce, any
19
employees of the
Company or a subsidiary of the Company to leave the employ of the Company or a
subsidiary of the Company, or to do anything for which the Executive is
restricted by doing directly, nor shall the Executive, directly or indirectly,
offer or aid others to offer employment to or interfere or attempt to interfere
with any employees of the Company or a subsidiary of the Company.
(d) No
Disparagement. During
and following the Executive’s employment with the Company or the Employer, the
Executive agrees that the Executive will not, in any public forum, or in any
communication with the press or in any other media (including electronic) or
with any customer or prospective customer of the Company or a subsidiary of the
Company, criticize or otherwise make any statement which disparages or is
derogatory of the Company or the subsidiaries of the Company or any of their
respective officers, employees or directors.
15. Expenses and
Interest. If,
after a Change in Control of the Company, (i) a dispute arises with respect to
the enforcement of the Executive’s rights under this Agreement
or (ii) any legal or arbitration proceeding shall be brought to enforce or
interpret any provision contained herein or to recover damages for breach
hereof, in either case so long as the Executive is not acting in bad faith, the
Executive shall recover from the Company any reasonable attorneys’ fees and necessary costs and
disbursements incurred as a result of such dispute, legal or arbitration
proceeding (“Expenses”), and prejudgment interest on
any money judgment or arbitration award obtained by the Executive calculated at
the rate of interest announced by US Bank Milwaukee, National Association,
Milwaukee, Wisconsin, or any successor thereto, from time to time as its prime
or base lending rate from the date that payments to the Executive should have
been made under this Agreement. Within ten (10) days after the
Executive’s written
request therefore (but in no event later than the end of the calendar year
following the calendar year in which such Expense is incurred), the Company
shall reimburse the Executive, or such other person or entity as the Executive
may designate in writing to the Company, the Executive’s reasonable
Expenses.
16. Payment Obligations
Absolute. The
Company’s obligation
during and after the Employment Period to pay the Executive the amounts and to
make the benefit and other arrangements provided herein shall be absolute and
unconditional and shall not be affected by any circumstances, including, without
limitation, any setoff, counterclaim, recoupment, defense or other right which
the Company may have against the Executive or anyone else. Except as
provided in Section 15 of this Agreement, all amounts payable by the Company
hereunder shall be paid without notice or demand. Each and every
payment made hereunder by the Company shall be final, and the Company will not
seek to recover all or any part of such payment from the Executive, or from
whomsoever may be entitled thereto, for any reason whatsoever.
17. Successors. (a) If
the Company sells, assigns or transfers all or substantially all of its business
and assets to any Person or if the Company merges into or consolidates or
otherwise combines (where the Company does not survive such combination) with
any Person (any such event, a “Sale of Business”), then the Company shall
assign all of its right, title and interest in this Agreement as of the date of
such event to such Person, and the Company shall cause such Person, by written
agreement in form and substance reasonably satisfactory to the Executive, to
expressly assume and agree to perform from and after the date of
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such assignment all
of the terms, conditions and provisions imposed by this Agreement upon the
Company. Failure of the Company to obtain such agreement prior to the
effective date of such Sale of Business shall be a breach of this Agreement
constituting “Good
Reason” hereunder, except
that for purposes of implementing the foregoing the date upon which such Sale of
Business becomes effective shall be deemed the Termination Date. In
case of such assignment by the Company and of assumption and agreement by such
Person, as used in this Agreement, “Company” shall thereafter mean such
Person which executes and delivers the agreement provided for in this Section 17
or which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law, and this Agreement shall inure to the benefit of,
and be enforceable by, such Person. The Executive shall, in the
Executive’s discretion, be entitled to proceed against any or all of such
Persons, any Person which theretofore was such a successor to the Company (as
defined in the first paragraph of this Agreement) and the Company (as so
defined) in any action to enforce any rights of the Executive
hereunder. Except as provided in this Subsection, this Agreement
shall not be assignable by the Company. This Agreement shall not be
terminated by the voluntary or involuntary dissolution of the
Company.
(b) This Agreement and
all rights of the Executive shall inure to the benefit of and be enforceable by
the Executive’s personal
or legal representatives, executors, administrators, heirs and
beneficiaries. All amounts payable to the Executive under Sections 7,
8, 9, 10, 11, 12 and 15 hereof if the Executive had lived shall be paid, in the
event of the Executive’s
death, to the Executive’s
estate, heirs and representatives; provided, however, that the foregoing shall
not be construed to modify any terms of any benefit plan of the Company, as such
terms are in effect on the date of the Change in Control of the Company, that
expressly govern benefits under such plan in the event of the Executive’s death.
18. Severability. The
provisions of this Agreement shall be regarded as divisible, and if any of said
provisions or any part hereof are declared invalid or unenforceable by a court
of competent jurisdiction, the validity and enforceability of the remainder of
such provisions or parts hereof and the applicability thereof shall not be
affected thereby.
19. Amendment. This
Agreement may be amended at any time by a written instrument executed by the
Company and the Executive. In addition, the Company may amend the
Agreement effective on the first day of the any calendar year by delivering
written notice (and a copy of the amendment) to the Executive no later than the
November 1 that immediately precedes the January 1 effective date of the
amendment; provided, that if a Change in Control of the Company shall have
occurred either (A) prior to the effective date of the amendment or (B) within
the one hundred eighty (180) day period immediately following the effective date
of the amendment, then the amendment shall be disregarded.
20. Withholding. The
Company shall be entitled to withhold from amounts to be paid to the Executive
hereunder any federal, state or local withholding or other taxes or charges
which it is from time to time required to withhold; provided, that the amount so
withheld shall not exceed the minimum amount required to be withheld by
law. In addition, if prior to the date of payment of the Termination
Payment hereunder, the Federal Insurance Contributions Act (FICA) tax imposed
under Sections 3101, 3121(a) and 3121(v)(2), where applicable, becomes due, the
Company may provide for an immediate payment of the amount needed to pay the
Executive’s portion of such tax (plus an amount equal to the taxes that will be
due on such
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amount) and the
Executive’s Termination Payment shall be reduced accordingly. The
Company shall be entitled to rely on an opinion of nationally recognized tax
counsel if any question as to the amount or requirement of any such withholding
shall arise.
21. Certain Rules of
Construction. No
party shall be considered as being responsible for the drafting of this
Agreement for the purpose of applying any rule construing ambiguities against
the drafter or otherwise. No draft of this Agreement shall be taken
into account in construing this Agreement. Any provision of this
Agreement which requires an agreement in writing shall be deemed to require that
the writing in question be signed by the Executive and an authorized
representative of the Company.
22. Governing Law; Resolution of
Disputes. This
Agreement and the rights and obligations hereunder shall be governed by and
construed in accordance with the laws of the State of Wisconsin without regard
to conflict of law principles. Any dispute arising out of this
Agreement shall, at the Executive’s election, be determined by
arbitration under the rules of the American Arbitration Association then in
effect (in which case both parties shall be bound by the arbitration award) or
by litigation. Whether the dispute is to be settled by arbitration or
litigation, the venue for the arbitration or litigation shall be Green Bay,
Wisconsin or, at the Executive’s election, if the Executive is
not residing or working in the Green Bay, Wisconsin metropolitan area, in the
judicial district encompassing the city in which the Executive resides;
provided, that, if the Executive is not then residing in the United States, the
election of the Executive with respect to such venue shall be either Green Bay,
Wisconsin or in the judicial district encompassing that city in the United
States among the thirty (30) cities having the largest population (as determined
by the most recent United States Census data available at the Termination Date)
which is closest to the Executive’s residence. The
parties consent to personal jurisdiction in each trial court in the selected
venue having subject matter jurisdiction notwithstanding their residence or
situs, and each party irrevocably consents to service of process in the manner
provided hereunder for the giving of notices.
23. Notice. Notices
given pursuant to this Agreement shall be in writing and, except as otherwise
provided by Section 13(c) hereof, shall be deemed given when actually received
by the Executive or actually received by the Company’s Secretary or any officer of
the Company other than the Executive. If mailed, such notices shall
be mailed by United States registered or certified mail, return receipt
requested, addressee only, postage prepaid, if to the Company, to Integrys
Energy Group, Inc., Attention: Secretary (or President, if the
Executive is the Secretary), 000 Xxxxx Xxxxx Xxxxxx, P.O. Box 19001, Xxxxx Xxx,
Xxxxxxxxx 00000, or if to the Executive, at the address set forth below the
Executive’s signature to
this Agreement, or to such other address as the party to be notified shall have
theretofore given to the other party in writing.
24. No Waiver. No
waiver by either party at any time of any breach by the other party of, or
compliance with, any condition or provision of this Agreement to be performed by
the other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same time or any prior or subsequent time.
25. Headings. The
headings herein contained are for reference only and shall not affect the
meaning or interpretation of any provision of this Agreement.
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26. Code Section 409A
Compliance. The
Company and the Executive agree that to the extent Code Section 409A applies to
this Agreement, the Agreement shall be interpreted and administered in
accordance with the requirements of Code Section 409A so that there will not be
a plan failure under Code Section 409A(a)(1), and all amounts payable hereunder
shall be distributed only in compliance with the requirements of Code Section
409A, including by way of example and without limitation, Code Section
409A(2)(A)(i), which prohibits the distribution of certain compensation subject
to Code Section 409A to a “specified employee” of a publicly traded company, in
the case of a distribution that occurs by reason of the employee’s separation of
service other than death, from occurring any earlier than six (6) months after
the date of such separation of service. The Executive acknowledges
that to avoid an additional tax on payments that may be payable or benefits that
may be provided under this Agreement and that constitute deferred compensation
that is not exempt from Section 409A of the Code, the Executive must make a
reasonable, good faith effort to collect any payment or benefit to which the
Executive believes the Executive is entitled hereunder no later than ninety (90)
days after the latest date upon which the payment could have been made or
benefit provided under this Agreement, and if not paid or provided, must take
further enforcement measures within one hundred eighty (180) days after such
latest date.
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the day and year
first above written.
By:
Title:
Attest:
Title:
EXECUTIVE:
By:
Title:
EXECUTIVE
ADDRESS:
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