Nicor Inc.
Form 10-K
Exhibit 10.31
CHANGE-IN-CONTROL AGREEMENT
THIS AGREEMENT dated as of December 20, 2000 (the "Agreement
Date") is made by and among Nicor Inc. (the "Company"), an
Illinois corporation, and Xxxx X. Xxxxxxx (the "Executive").
ARTICLE I
PURPOSES
The Board of Directors of the Company (the "Board") has determined that it
is in the best interests of the Company and its shareholders to assure that the
Company and Nicor Gas will have the continued services of the Executive, despite
the possibility or occurrence of a Change in Control of the Company. The Board
believes it is imperative to reduce the distraction of the Executive that would
result from the personal uncertainties caused by a pending or threatened Change
in Control, to encourage the Executive's full attention and dedication to the
Company and Nicor Gas, and to provide the Executive with compensation and
benefits arrangements upon a Change in Control which are competitive with those
of similarly-situated corporations. This Agreement is intended to accomplish
these objectives.
ARTICLE II
CERTAIN DEFINITIONS
When used in this Agreement, the terms specified below shall have the
following meanings:
2.1 The "Agreement Term" shall begin on the Agreement Date and shall
continue through December 31, 2001. As of December 31, 2001, and on each
December 31 thereafter, the Agreement Term shall automatically be extended for
one additional year unless, not later than the preceding June 30, either party
shall have given notice that such party does not wish to extend the Agreement
Term. If a Change in Control shall have occurred during the Agreement Term (as
it may be extended from time to time), the Agreement Term shall continue for a
period ending on the two-year anniversary of the date of the Change in Control,
but if the Termination Date (as defined below) occurs during that two-year
period, then the Agreement Term shall continue until the end of the Severance
Period (as defined below). Unless the Termination Date occurs during the
two-year period after a Change in Control so that the Agreement Term is extended
to include the Severance Period, as provided in the immediately preceding
sentence, the Agreement Term shall not extend beyond the two-year anniversary of
the Change in Control.
2.2 "Effective Date" means the first date during the Agreement Term on
which a Change in Control occurs.
2.3 "Change in Control" means:
2.3.1The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of any shares of Common Stock of the Company or any voting securities
of the Company entitled to vote generally in the election of directors if,
as a result of such acquisition, such person owns 20% or more of either
(i) the outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock"), or (ii) the combined voting power of
the outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company Voting
Securities"); provided, however, that for purposes of this subsection
2.3.1, the following acquisitions shall not constitute a Change in
Control: (A) any acquisition by the Company, (B) any acquisition by an
employee benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company (a "Company Plan"),
or (C) any acquisition by any corporation pursuant to a transaction which
complies with subsections 2.3.3.1, 2.3.3.2 and 2.3.3.3 of this definition;
provided further, that for purposes of clause (A), if any Person (other
than the Company or any Company Plan) shall become the beneficial owner of
20% or more of the Outstanding Company Common Stock or 20% or more of the
Outstanding Company Voting Securities by reason of an acquisition by the
Company, and such Person shall, after such acquisition by the Company,
become the beneficial owner of any additional shares of the Outstanding
Company Common Stock or any additional Outstanding Company Voting
Securities (other than pursuant to any dividend reinvestment plan or
arrangement maintained by the Company) and such beneficial ownership is
publicly announced, such additional beneficial ownership shall constitute
a Change in Control; or
2.3.2Individuals who, as of the date hereof, constitute the Board of
Directors of the Company (for purposes of this Section 2.3, the "Incumbent
Board") cease for any reason to constitute at least a majority of the
Incumbent Board; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or nomination for
election by the Company shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or publicly
threatened election contest (as such terms are used in Rule 14a-11
promulgated under the Exchange Act) or other actual or publicly threatened
solicitation of proxies or consents by or on behalf of a Person other than
the Board of Directors of the Company; or
2.3.3Consummation, including receipt of any necessary regulatory
approval, of (i) a reorganization, merger, consolidation or other business
combination involving the Company or (ii) the sale or other disposition of
more than 50% of the operating assets of the Company (determined on a
consolidated basis), other than in connection with a sale-leaseback or
other arrangement resulting in the continued utilization of such assets
(or the operating products of such assets) by the Company (any transaction
described in part (i) or (ii) being referred to as a "Corporate
Transaction"); excluding, however, a Corporate Transaction pursuant to
which:
2.3.3.1 all or substantially all of the individuals and entities
who are the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities
immediately prior to such Corporate Transaction beneficially own,
directly or indirectly, more than 60% of, respectively, the then
outstanding shares of common stock and the combined voting power of
the then outstanding voting securities entitled to vote generally in
the election of directors, as the case may be, of the ultimate parent
entity resulting from such Corporate Transaction (including, without
limitation, an entity which, as a result of such transaction, owns
the Company or all or substantially all of the assets of the Company
either directly or through one or more subsidiaries) in substantially
the same proportions as their ownership, immediately prior to such
Corporate Transaction of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be;
2.3.3.2 no Person (other than the Company, any Company Plan or
related trust, the corporation resulting from such Corporate
Transaction, and any Person which beneficially owned, immediately
prior to such Corporate Transaction, directly or indirectly, 20% or
more of the Outstanding Company Common Stock or the Outstanding
Company Voting Securities, as the case may be) will beneficially own,
directly or indirectly, 20% or more of, respectively, the then
outstanding common stock of the ultimate parent entity resulting from
such Corporate Transaction or the combined voting power of the then
outstanding voting securities of such entity; and
2.3.3.3 individuals who were members of the Incumbent Board will
constitute at least a majority of the members of the board of
directors of the ultimate parent entity resulting from such Corporate
Transaction; or
2.3.4A tender offer (for which a filing has been made with the
Securities and Exchange Commission (the "SEC") which purports to comply
with the requirements of Section 14(d) of the Exchange Act and the
corresponding SEC rules) is made for the stock of the Company, which has
not been negotiated and approved by the Board, provided that in case of a
tender offer described in this subsection 2.3.4, the Change in Control
will be deemed to have occurred at the first time during the offer period
when the Person (as defined in subsection 2.3.1, above) making the offer
beneficially owns or has accepted for payment stock of the Company with
20% or more of the combined voting power of the then Outstanding Company
Voting Securities; or
2.3.5Approval by the shareholders of the Company of a
plan of complete liquidation or dissolution of the Company.
2.3.6For purposes of this Section 2.3, (i) the term
"Company" shall mean Nicor Inc. and shall include any
Successor to Nicor Inc.; and (ii) the term "Successor to
Nicor Inc." shall mean any corporation, partnership, joint
venture or other entity that succeeds to the interests of
Nicor Inc. by means of a merger, consolidation, or other
restructuring that does not constitute a Change in Control
under paragraphs 2.3.1, 2.3.3 or 2.3.4 above.
2.3.7By entering into this Agreement, the Executive irrevocably
consents to the modification of the definition of "Change in Control"
(including "change in control") in all Employee Benefit Arrangements (as
defined below), by substituting for such definition in each such Employee
Benefit Arrangement the definition of "Change in Control" set forth above,
with such substitution to be effective on the first date this Agreement
has been signed by both the Company and the Executive. For purposes of the
preceding sentence, the term "Employee Benefit Arrangement" shall mean
each agreement with the Executive to which the Company or any Subsidiary
is a party, and each plan or arrangement maintained by the Company or any
Subsidiary, and including any awards outstanding under any such agreement,
plan, or arrangement, to the extent that such award, agreement, plan, or
arrangement contains a definition of "Change in Control"" However, to the
extent that the Employee Benefit Arrangement provides for an award based
on common stock of the Company (including, without limitation, an award of
stock options or shares of restricted stock), and such Employee Benefit
Arrangement provides that vesting or exercisability of such award will
occur at the time of the Change in Control (rather than the occurrence of
a subsequent event, such as termination of employment), the definition of
"Change in Control" that is substituted for the definition in such
Employee Benefit Arrangement shall be the definition of "Change in
Control" set forth above, except that Section 2.3.4 shall be modified by
adding, at the end of such Section, immediately prior to the word "or,"
the following: "provided, however, that the Change in Control shall occur
three (3) business days before such tender offer is to terminate, unless
the offer is withdrawn first, if the Person making the offer could own, by
the terms of the offer plus any shares beneficially owned by that Person,
stock with 50% or more of the combined voting power of the then
Outstanding Company Voting Securities when the offer (and any subsequent
offering period) terminates;"
2.3.8By entering into this Agreement, the Executive irrevocably
consents to the amendment of the Nicor Inc. Stock Deferral Plan to provide
for distribution, as soon as practicable following a Change in Control, of
any amounts which may then be deferred for the Executive under such plan.
2.4 "Code" means the Internal Revenue Code of 1986, as
amended.
2.5 "Employment Period" means the period commencing on the Effective Date
and ending on the two-year anniversary of that date.
2.6 "Incentive Plan" shall have the meaning set forth in
Section 3.2.2.
2.7 "Notice of Termination" means a written notice given in accordance
with Section 11.8 which sets forth (a) the specific termination provision in
this Agreement relied upon by the party giving such notice, (b) in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under such termination provision, and (c) if the
Termination Date is other than the date of receipt of such Notice of
Termination, the Termination Date.
2.8 "Plans" shall have the meaning set forth in
Section 3.2.3.
2.9 A "Potential Change in Control" shall exist during any period in which
the circumstances described in Sections 2.9.1, 2.9.2, or 2.9.3 exist (provided,
however, that a Potential Change in Control shall cease to exist not later than
the occurrence of a Change in Control):
2.9.1The Company enters into an agreement, the consummation of which
would result in the occurrence of a Change in Control, provided that a
Potential Change in Control described in this Section 2.9.1 shall cease to
exist upon the expiration or other termination of all such agreements.
2.9.2Any person (including the Company) publicly announces an
intention to take or to consider taking actions the consummation of which
would constitute a Change in Control; provided that a Potential Change in
Control described in this Section 2.9.2 shall cease to exist upon the
withdrawal of such intention, or upon a reasonable determination by the
Board that there is no reasonable chance that such actions would be
consummated.
2.9.3The Board adopts a resolution to the effect that, for purposes
of this Agreement, a Potential Change in Control exists; provided that a
Potential Change in Control described in this Section 2.9.3 shall cease to
exist upon a reasonable determination by the Board that the reasons that
gave rise to the resolution providing for the existence of a Potential
Change in Control have expired or no longer exist.
2.10 "Severance Incentive" means the greater of (i) the target annual
incentive under an Incentive Plan applicable to the Executive for the
Performance Period in which the Termination Date occurs, or (ii) the average of
the actual annual incentives paid (or payable, to the extent not previously
paid) to the Executive under the applicable Incentive Plan for each of the two
calendar years preceding the calendar year in which the Termination Date occurs.
2.11 "Severance Period" means the period beginning on the Executive's
Termination Date and ending on the third anniversary thereof; provided, however,
that no Severance Period will occur unless the Executive's Termination Date
occurs under circumstances described in Section 5.1 (relating to termination by
the Executive for Good Reason or by the Company and Nicor Gas other than for
Cause or Permanent Disability).
2.12 "Subsidiary" shall mean any corporation, partnership, joint venture
or other entity during any period in which at least a fifty percent interest in
such entity is owned, directly or indirectly, by the Company (or a successor to
the Company).
2.13 "Termination Date" means the first day on or after which the
Executive is not employed by the Company or Nicor Gas; provided, however, that
(a) if the Company and Nicor Gas terminate the Executive's employment other than
for Cause or Disability (as defined in Section 4.1.2), then the Termination Date
shall be the date of receipt of the Notice of Termination and (b) if the
Executive's employment is terminated by reason of death or Disability, then the
Termination Date shall be the date of death of the Executive or the Disability
Effective Date (as defined in Section 4.1.1), as the case may be.
2.14 "Welfare Plans" shall have the meaning set forth in
Section 3.2.4.
ARTICLE III
TERMS OF EMPLOYMENT
3.1 Position and Duties.
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3.1.1The Company hereby agrees to cause the Company and/or Nicor Gas
to continue the Executive's employment during the Employment Period and,
subject to Article IV of this Agreement, the Executive agrees to remain in
the employ of the Company and Nicor Gas, as applicable, subject to the
terms and conditions hereof. During the Employment Period, (i) the
Executive's position (including status, offices, titles and reporting
requirements), authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of those
held, exercised and assigned to the Executive at any time during the
90-day period immediately preceding the Effective Date, and (ii) the
Executive's services shall be performed at the location where the
Executive was employed immediately preceding the Effective Date or any
office or location less than 25 miles from such location.
3.1.2During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive
agrees to devote reasonable attention and time during normal business
hours to the business and affairs of the Company and Nicor Gas, as
applicable, and, to the extent necessary to discharge the responsibilities
assigned to the Executive hereunder, to use the Executive's reasonable
best efforts to perform faithfully and efficiently such responsibilities.
During the Employment Period it shall not be a violation of this Agreement
for the Executive (i) to serve on corporate, civic or charitable boards or
committees, (ii) to deliver lectures, fulfill speaking engagements or
teach at educational institutions and (iii) to manage personal
investments, to the extent that such other activities do not, in the
reasonable judgment of the Chief Executive Officer of the Company (the
"CEO"), inhibit or prohibit the performance of the Executive's duties
under this Agreement, or conflict in any material way with the business of
the Company or any Subsidiary; provided, however, that the Executive shall
not serve on the board of any business, or hold any other position with
any business, without the consent of the CEO.
3.2 Compensation.
3.2.1Base Salary. During the Employment Period, the Executive shall
receive an annual base salary ("Annual Base Salary"), which shall be paid
at an annual rate at least equal to twelve times the highest monthly base
salary paid or payable, including any base salary which has been earned
but deferred, to the Executive by the Company in respect of the
twelve-month period immediately preceding the month in which the Effective
Date occurs. During the Employment Period, the Annual Base Salary shall be
reviewed no more than twelve months after the last salary increase awarded
to the Executive prior to the Effective Date and, thereafter, at least
annually, and shall be increased at any time and from time to time as
shall be substantially consistent with increases in base salary awarded to
other senior executives of the Company. Annual Base Salary shall not be
reduced after any such increase unless such reduction is part of a policy,
program or arrangement applicable to senior executives of the Company and
of any successor entity, and the term Annual Base Salary as used in this
Agreement shall refer to Annual Base Salary as so increased. Any increase
in Annual Base Salary shall not limit or reduce any other obligation of
the Company to the Executive under this Agreement.
3.2.2Annual Incentive. In addition to Annual Base Salary, the Company
shall pay or cause to be paid to the Executive an incentive award (the
"Annual Incentive") for each Performance Period or portion thereof which
falls within the Employment Period. "Performance Period" means each period
of time designated in accordance with any annual incentive award
arrangement ("Incentive Plan") which is based upon performance and
approved by the Board or any committee of the Board, or in the absence of
any Incentive Plan or any such designated period of time, Performance
Period shall mean each calendar year. The Executive's target and maximum
Annual Incentive with respect to any Performance Period shall not be less
than the target and maximum annual incentive award payable with respect to
the Executive under the Company's annual incentive program as in effect
immediately preceding the Effective Date.
3.2.3Incentive, Savings and Retirement Plans. During the Employment
Period, the Executive shall be entitled to participate in all incentive,
savings and retirement plans, practices, policies and programs ("Plans")
applicable generally to other senior executives of the Company, but in no
event shall such Plans provide the Executive with incentive opportunities
(measured with respect to long-term and special incentives, to the extent,
if any, that such distinctions are applicable) or savings and retirement
benefits which are less favorable, in the aggregate, than the greater of
(i) those provided by the Company for the Executive under such Plans as in
effect at any time during the 90-day period immediately preceding the
Effective Date, or (ii) those provided generally at any time after the
Effective Date to other senior executives of the Company.
3.2.4Welfare Benefit Plans. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be
eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs ("Welfare Plans") provided
by the Company (including, without limitation, medical, prescription,
dental, disability, salary continuance, employee life, group life,
accidental death and travel accident insurance benefits), but in no event
shall such Welfare Plans provide the Executive with benefits which are
less favorable, in the aggregate, than the greater of (i) those provided
by the Company for the Executive under such Welfare Plans as were in
effect at any time during the 90-day period immediately preceding the
Effective Date, or (ii) those provided generally at any time after the
Effective Date to other senior executives of the Company.
3.2.5Other Employee Benefits. During the Employment Period, the
Executive shall be entitled to other employee benefits and perquisites in
accordance with the most favorable plans, practices, programs and policies
of the Company, as in effect with respect to the Executive at any time
during the 90-day period immediately preceding the Effective Date, or if
more favorable, as in effect generally with respect to other senior
executives of the Company.
3.2.6Expenses. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in accordance with the policies, practices and
procedures of the Company as in effect with respect to the Executive at
any time during the 90-day period immediately preceding the Effective
Date, or if more favorable, as in effect generally with respect to other
senior executives of the Company.
3.2.7Office and Support Staff. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive personal secretarial
and other assistance, as in effect with respect to the Executive at any
time during the 90-day period immediately preceding the Effective Date, or
if more favorable, as provided generally with respect to other senior
executives of the Company.
3.2.8Paid Time Off. During the Employment Period, the Executive shall
be entitled to paid time off in accordance with the plans, policies,
programs and practices of the Company as in effect with respect to the
Executive at any time during the 90-day period immediately preceding the
Effective Date, or if more favorable, as provided generally with respect
to other senior executives of the Company.
3.2.9Subsidiaries. To the extent that immediately prior to the
Effective Date, the Executive has been on the payroll of, and participated
in the incentive or employee benefit plans of, a Subsidiary of the
Company, the references to the Company contained in Sections 3.2.1 through
3.2.8 and the other sections of this Agreement referring to benefits to
which the Executive may be entitled shall be read to refer to such
Subsidiary.
ARTICLE IV
TERMINATION OF EMPLOYMENT
4.1 Disability.
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4.1.1During the Agreement Term, the Company and Nicor Gas may
terminate the Executive's employment upon the Executive's Permanent
Disability (as defined in Section 4.1.2) by giving the Executive or his
legal representative, as applicable, (1) written notice in accordance with
Section 11.8 of the Company's or Nicor Gas', as applicable, intention to
terminate the Executive's employment pursuant to this section, and (2) a
certification of the Executive's Permanent Disability by a physician
selected by the Company or Nicor Gas or its insurers and reasonably
acceptable to the Executive or the Executive's legal representative. The
Executive's employment shall terminate effective on the 30th day (the
"Permanent Disability Effective Date") after the Executive's receipt of
such notice unless, before the Permanent Disability Effective Date, the
Executive shall have resumed the full-time performance of the Executive's
duties. During the period in which the Executive has a Disability, the
Company or Nicor Gas, as applicable, may appoint a temporary replacement
to assume the Executive's responsibilities.
4.1.2The Executive shall be considered to have a "Permanent
Disability" during any period in which he has a Disability (as defined
below); provided, however, that the Executive shall not be considered to
have "Permanent Disability" until (i) for a period of 180 consecutive
days, the Executive, as a result of a Disability, is incapable, after
reasonable accommodation, of performing his duties under this Agreement on
a full-time basis; (ii) such Disability is reasonably expected to continue
for at least another 90 days; and (iii) at the Executive's Termination
Date, he is eligible for income replacement benefits under the Company's
or Nicor Gas' long-term disability plan. The Executive shall be considered
to have a "Disability" during any period in which he has a physical or
mental disability which renders him incapable, after reasonable
accommodation, of performing his duties under this Agreement.
4.2 Death. The Executive's employment shall terminate automatically upon
the Executive's death during the Agreement Term.
4.3 Cause. The Company or Nicor Gas, as applicable, may terminate the
Executive's employment during the Employment Period for Cause. For purposes of
this Agreement, "Cause" means:
4.3.1the Executive's willful commission of acts or omissions which
have, have had, or are likely to have a material adverse effect on the
business, operations, financial condition or reputation of the Company or
Nicor Gas;
4.3.2the Executive's conviction (including a plea of guilty or nolo
contendere) of a felony or any crime of fraud, theft, dishonesty or moral
turpitude; or
4.3.3the Executive's material violation of any statutory or common
law duty of loyalty to the Company or Nicor Gas.
For purposes of this Agreement, no act, or failure to act, on the part of
the Executive shall be considered "willful" unless it is done, or omitted
to be done, by the Executive in bad faith or without reasonable belief
that the Executive's action or omission was in the best interests of the
Company or Nicor Gas. Any act, or failure to act, pursuant to direction
provided by the person to whom the Executive reports, or provided by a
resolution duly adopted by the Board, or pursuant to advice of counsel for
the Company or Nicor Gas, shall be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in the best
interests of the Company or Nicor Gas. The cessation of employment of the
Executive shall not be deemed to be for Cause unless and until there shall
have been delivered to the Executive a copy of a resolution duly adopted
by the affirmative vote of not less than 60% of the entire membership of
the Board at a meeting of such Board called and held for such purpose
(after reasonable notice is provided to the Executive and the Executive is
given an opportunity, together with counsel, to be heard before the
Board), finding that, in the good faith opinion of the Board, the
Executive has engaged in conduct described in this Section 4.3 and
specifying the particulars thereof in detail.
4.4 Good Reason. During the Employment Period, the Executive's employment
may be terminated by the Executive for Good Reason. For purposes of this
Agreement, "Good Reason" means any material breach of this Agreement by the
Company or Nicor Gas, including:
4.4.1the failure to maintain the Executive in the office or position,
or in a substantially equivalent office or position, held by the Executive
immediately prior to the Change in Control;
4.4.2a material adverse alteration in the nature or
scope of the Executive's position, duties, functions,
responsibilities or authority;
4.4.3a material reduction of the Executive's salary,
incentive compensation or benefits;
4.4.4the failure of any successor to the Company to
assume this Agreement, or a material breach of the Agreement
by the Company or its successor;
4.4.5a relocation of more than 25 miles of (i) the Executive's
principal workplace, or (ii) the principal offices of the Company or Nicor
Gas, as applicable, (if such offices are the Executive's principal
workplace), in each case without the consent of the Executive;
4.4.6the Company or Nicor Gas, as applicable, requiring the Executive
to engage in travel that is materially greater than the Executive's travel
obligations during the one-year period immediately prior to the Change in
Control; or
4.4.7any failure by the Company or Nicor Gas, as applicable, to
comply with any of the provisions of Section 3.2 of this Agreement, other
than an isolated, insubstantial and inadvertent failure not occurring in
bad faith and which is remedied by the Company or Nicor Gas, as
applicable, promptly after receipt of notice thereof given by the
Executive;
provided, however, that an act or omission of the Company or Nicor Gas, as
applicable, shall not constitute Good Reason: (i) unless the Executive gives the
Company or Nicor Gas, as applicable, written notice of such act or omission and
the Company or Nicor Gas, as applicable, fails to cure such act or omission
within the 30-day period after such notice, or (ii) if the Executive first
acquired knowledge of such act or omission more than 6 months before the
Executive gives the Company or Nicor Gas, as applicable, such notice, or (iii)
if the Executive has consented in writing to such act or omission in a document
that makes specific reference to this Section 4.4.
4.5 Without Cause During a Potential Change in Control. If the Executive's
employment is terminated by the Company and Nicor Gas, as applicable, without
Cause during a Potential Change in Control, and such date of termination occurs
not more than 180 days prior to the occurrence of a Change in Control and the
Executive establishes by reasonable evidence that such termination of employment
was materially connected with and in anticipation of the Change in Control, then
the Executive shall be entitled to receive the benefits that would have been
provided under Section 5.1, determined as though:
4.5.1the Executive were rehired by the Company and Nicor Gas, as
applicable, immediately prior to the Change in Control at the salary rate
equal to the Executive's highest salary rate during the one-year period
prior to the date of the Change in Control, and with other Company and
Nicor Gas compensation and benefit arrangements comparable to those
provided to comparable executives of the Company and Nicor Gas;
4.5.2the Executive's employment were terminated by the Company and
Nicor Gas without Cause immediately after the Change in Control; and
4.5.3this Agreement were in full force and effect at the time of the
Change in Control, and at the time of the Executive's deemed termination
of employment.
4.6 Right of Resignation and Termination. This Agreement does not
constitute a guarantee of continued employment at any time, but instead provides
for certain rights and benefits for the Executive during his employment
following the occurrence of a Change in Control, and in the event his employment
with the Company and Nicor Gas, as applicable, terminates under the
circumstances described herein. The Company and Nicor Gas, as applicable, may
terminate the employment of the Executive at any time for any reason, without
breach of this Agreement, subject to its obligations set forth in Article V and
elsewhere in this Agreement. The Executive may resign from the Company and Nicor
Gas, as applicable, for Good Reason, or for any other reason, without breach of
this Agreement, subject to the Executive's obligations set forth in this
Agreement; provided that, in the event of a resignation without Good Reason, the
Executive shall provide at least four weeks advance notice of such resignation
to the Company and Nicor Gas, as applicable. Notwithstanding the foregoing
provisions in this Section 4.6, the Company and Nicor Gas, as applicable, may
suspend the Executive from performing his duties under this Agreement following
the delivery of a Notice of Termination by the Executive without Good Reason;
provided, however, that during the period of suspension (which shall end on the
Termination Date), the Executive shall continue to be treated as employed by the
Company and Nicor Gas, as applicable, for other purposes, and his rights to
compensation or benefits shall not be reduced by reason of the suspension.
ARTICLE V
OBLIGATIONS OF THE COMPANY UPON TERMINATION
5.1 If by the Executive for Good Reason or by the Company and Nicor Gas,
as Applicable, Other Than for Cause or Permanent Disability. If, during the
Employment Period, the Company and Nicor Gas, as applicable, shall terminate the
Executive's employment other than for Cause or Permanent Disability, or if the
Executive shall terminate employment for Good Reason, the Company's and Nicor
Gas' obligations to the Executive shall be as set forth in this Section 5.1. As
a precondition to fulfilling such obligations, the Company shall require the
Executive to execute and deliver a release prepared by the Company and providing
for the Executive's release of any and all claims against the Company and its
Subsidiaries (and those acting on behalf of them) that may have arisen on or
before the date of the release, which release shall contain such other
reasonable and customary terms as are specified by the Company. Notwithstanding
any other provision of this section to the contrary, to the extent any portion
of such release is subject to the seven-day revocation period prescribed by the
Age Discrimination in Employment Act, as amended, or to any similar revocation
period in effect on the Termination Date, no payment shall be due under this
Section 5.1 until such revocation period has expired without such revocation
occurring.
5.1.1The Company shall, within five business days of such termination
of employment, pay the Executive a cash payment equal to the sum of the
following amounts:
5.1.1.1 to the extent not previously paid, the
Annual Base Salary and any accrued paid time off
through the Termination Date;
5.1.1.2 an amount equal to the product of (i) the Annual
Incentive (as defined in Section 3.2.2) at target for any Performance
Period in which the Termination Date occurs multiplied by (ii) a
fraction, the numerator of which is the number of days the Executive
was actually employed by the Company during such Performance Period,
and the denominator of which is the number of days in the Performance
Period; or, if greater, the amount of any Annual Incentive otherwise
payable to the Executive with respect to a Performance Period in
which the Termination Date occurs, which payment shall be in full
settlement of Annual Incentive amounts due with respect to any such
Performance Period; and
5.1.1.3 all amounts previously deferred by or accrued to the
benefit of the Executive under any nonqualified deferred compensation
plan sponsored by the Company (including, without limitation, any
vested amounts deferred under incentive plans), together with any
accrued earnings thereon, and not yet paid by the Company; and
5.1.1.4 an amount equal to the product of (A) three (3)
multiplied by (B) the sum of (i) the Executive's Annual Base Salary,
and (ii) the Severance Incentive.
5.1.2For purposes of each of the Executive's stock options granted
under the Company's Long Term Incentive Plan (the "LTIP"), any successor
plan, or otherwise, that is or becomes exercisable on the Termination
Date, the Executive's termination of employment shall be disregarded, and
each such option shall continue to be exercisable as though the
Executive's employment had continued through the last day on which such
option would be exercisable in the absence of such employment termination
(such earlier date being referred to herein as the "Applicable Expiration
Date"). This Section 5.1.2 shall be applicable notwithstanding any term of
any plan, arrangement, or agreement providing for early expiration of the
option because of the Executive's termination of employment, except for an
amendment adopted in accordance with Section 11.7 of this Agreement and
that by its specific terms amends this Agreement.
5.1.3On the Termination Date (i) the Executive shall become fully
vested in, and may thereupon and until the Applicable Expiration Date of
such stock incentive awards exercise in whole or in part, any and all
stock incentive awards granted to the Executive under the LTIP, any
successor plan or otherwise which have not become exercisable as of the
Termination Date; (ii) all dividend performance units previously awarded
to the Executive shall become fully vested, and a prorated calculation of
the target value of all such units shall be done as of the Termination
Date and full payment of such prorated target value shall be made by the
Company within 30 days after the Termination Date; and (iii) the Executive
shall become fully vested at the prorated target level in any other cash
incentive awards granted for the performance period in which the
Termination Date occurs under the LTIP, a successor plan or otherwise
which have not, as of the Termination Date, become fully vested.
5.1.4All forfeiture conditions that as of the Termination Date are
applicable to any deferred stock unit, restricted stock or restricted
share units awarded to the Executive by the Company pursuant to the LTIP,
a successor plan or otherwise shall lapse immediately (to the extent such
awards are outstanding immediately prior to the Termination Date).
5.1.5During the Severance Period (or until such later date as any
Welfare Plan of the Company may specify), the Company shall continue to
provide to the Executive and the Executive's family welfare benefits
(including, without limitation, medical, prescription, dental, disability,
individual life and group life insurance benefits) which are at least as
favorable as those provided under the most favorable Welfare Plans of the
Company applicable (i) with respect to the Executive and his family during
the 90-day period immediately preceding the Termination Date, or (ii) with
respect to other senior executives and their families during the Severance
Period. In determining benefits under such Welfare Plans, the Executive's
annual compensation attributable to base salary and incentives for any
plan year or calendar year, as applicable, shall be deemed to be not less
than the Executive's Annual Base Salary and Target Annual Incentive. The
cost of the welfare benefits provided under this Section 5.1.5 shall not
exceed the cost of such benefits to the Executive immediately before the
Termination Date or, if less, the Effective Date. Notwithstanding the
foregoing, if the Executive obtains comparable coverage under any Welfare
Plans sponsored by another employer, then the amount of coverage required
to be provided by the Company hereunder shall be reduced by the amount of
coverage provided by such other employer's Welfare Plans. The Executive's
rights under this Section shall be in addition to and not in lieu of any
post-termination continuation coverage or conversion rights the Executive
may have pursuant to applicable law, including, without limitation,
continuation coverage required by Section 4980B of the Code. For purposes
of determining eligibility for (but not the time of commencement of)
retiree benefits under any Welfare Plans of the Company, the Executive
shall be considered (i) to have remained employed until the last day of
the Severance Period and to have retired on the last day of such period,
and (ii) to have attained the age the Executive would have attained on the
last day of the Severance Period.
5.1.6If the Executive participates in the Company's nonqualified
supplemental executive retirement plan ("SERP"), the amount payable under
subsection 5.1.1.4 of this Agreement shall be taken into account for
purposes of determining the amount of benefits to which the Executive is
entitled under the SERP; provided that such amount shall be taken into
account as though it was earned equally over the Severance Period, and
further provided that the Executive shall be deemed to have attained the
age he or she would have attained as of the last day of the Severance
Period, and completed the number of years of service he or she would have
completed as of the last day of the Severance Period. The Severance Period
shall be taken into account for purposes of determining the amount of and
eligibility to begin to receive benefits under the SERP.
5.1.7On the Termination Date (i) the Executive shall become fully
vested in all contributions made by the Company on behalf of the Executive
under the Company's Savings Investment Plan (the "SIP") or any
supplemental or successor plan, if applicable, and (ii) the Company shall
immediately make an additional contribution to the SIP (or, if such
contribution is not permitted under the terms of the SIP, to a
non-qualified plan providing benefits comparable to the benefits provided
under the SIP) or any supplemental or successor plan, if applicable, equal
to the aggregate maximum matching contributions which the Company would
have made on behalf of the Executive to the SIP or any supplemental or
successor plan, if applicable, for the Severance Period, calculated as if
the amount payable under subsection 5.1.1.4 of this Agreement had been
earned equally over the Severance Period and the Executive had made the
maximum allowable voluntary contributions to the SIP or any supplemental
or successor plan, if applicable. In addition, if the Executive is not
eligible to participate in the Company's defined benefit retirement plan,
the Company shall also contribute to the SIP or any supplemental or
successor plan, if applicable, on the Termination Date an amount equal to
the aggregate additional "retirement growth" contributions which the
Company would have made on behalf of the Executive for the Severance
Period if the amount payable under subsection 5.1.1.4 of this Agreement
had been earned equally over the Severance Period.
5.1.8The Company shall, at its sole expense, as incurred, pay on
behalf of the Executive all fees and costs charged by a nationally
recognized outplacement firm selected by the Company (subject to approval
by the Executive, which shall not be withheld unreasonably) to provide
outplacement service.
5.2 If by the Company and Nicor Gas for Cause. If the Company and Nicor
Gas, as applicable, terminates the Executive's employment for Cause during the
Employment Period, this Agreement shall terminate without further obligation by
the Company and Nicor Gas, as applicable, to the Executive, other than the
obligation immediately to pay the Executive in cash the Executive's Annual Base
Salary through the Termination Date, plus any accrued paid time off, in each
case to the extent not previously paid.
5.3 If by the Executive Other Than for Good Reason. If the Executive
terminates employment during the Employment Period other than for Good Reason
(including, but not by way of limitation, voluntary retirement other than for
Good Reason), and other than for Disability or death, this Agreement shall
terminate without further obligation by the Executive or by the Company, other
than the obligation of the Company immediately to pay the Executive in cash the
Executive's Annual Base Salary through the Termination Date, plus any accrued
paid time off, in each case to the extent not previously paid.
5.4 If by the Company and Nicor Gas, as applicable, for Permanent
Disability. If the Company and Nicor Gas, as applicable, and Nicor Gas, as
applicable, terminates the Executive's employment by reason of the Executive's
Permanent Disability during the Employment Period, this Agreement shall
terminate without further obligation to the Executive, other than:
5.4.1the Company's obligation immediately to pay the Executive in
cash all amounts specified in Sections 5.1.1.1, 5.1.1.2 and 5.1.1.3, in
each case, to the extent unpaid as of the Termination Date (such amounts
collectively, the "Accrued Obligations"), and
5.4.2the Executive's right after the Permanent Disability Effective
Date to receive disability and other benefits at least equal to the
greater of (i) those provided under the most favorable disability Plans
applicable to disabled senior executives of the Company in effect
immediately before the Termination Date, or (ii) those provided under the
most favorable disability Plans of the Company in effect at any time
during the 90-day period immediately before the Effective Date.
5.5 If upon Death. If the Executive's employment is terminated by reason
of the Executive's death during the Employment Period, this Agreement shall
terminate without further obligation to the Executive's legal representatives
under this Agreement, other than the obligation immediately to pay the
Executive's estate or beneficiary in cash all Accrued Obligations.
Notwithstanding anything in this Agreement to the contrary, the Executive's
family shall be entitled to receive benefits at least equal to the most
favorable benefits provided under Plans of the Company to the surviving families
of senior executives of the Company, but in no event shall such Plans provide
benefits which in each case are less favorable, in the aggregate, than the most
favorable of those provided by the Company to the Executive under such Plans in
effect at any time during the 90-day period immediately before the Effective
Date.
ARTICLE VI
CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY
6.1 Gross-up for Certain Taxes.
--------------------------
6.1.1If it is determined by the Company's independent auditors that
any benefit received or deemed received by the Executive from the Company
pursuant to this Agreement or otherwise, whether or not in connection with
a Change in Control (such monetary or other benefits collectively, the
"Potential Parachute Payments") is or will become subject to any excise
tax under Section 4999 of the Code or any similar tax payable under any
United States federal, state, local or other law (such excise tax and all
such similar taxes collectively, "Excise Taxes"), then the Company shall,
subject to Sections 6.6 and 6.7, within five business days after such
determination, pay the Executive an amount (the "Gross-up Payment") equal
to the product of:
(a) the amount of such Excise Taxes multiplied by
(b) the Gross-up Multiple (as defined in Section 6.4). The
Gross-up Payment is intended to compensate the Executive
for all Excise Taxes payable by the Executive with respect
to the Potential Parachute Payments and any federal, state,
local or other income or other taxes or Excise Taxes
payable by the Executive with respect to the Gross-up
Payment.
6.1.2The determination of the Company's independent auditors
described in Section 6.1.1, including the detailed calculations of the
amounts of the Potential Parachute Payments, Excise Taxes and Gross-up
Payment and the assumptions relating thereto, shall be set forth in a
written certificate of such auditors (the "Company Certificate") delivered
to the Executive. The Executive or the Company may at any time request the
preparation and delivery to the Executive of a Company Certificate. The
Company shall cause the Company Certificate to be delivered to the
Executive as soon as reasonably possible after such request.
6.2 Determination by the Executive.
------------------------------
6.2.1If (i) the Company shall fail to deliver a Company Certificate
to the Executive within 30 days after its receipt of his written request
therefor, or (ii) at any time after the Executive's receipt of a Company
Certificate, the Executive disputes either (x) the amount of the Gross-up
Payment set forth therein, or (y) the determination set forth therein to
the effect that no Gross-up Payment is due (whether by reason of Section
6.7 or otherwise), then the Executive may elect to require the Company to
pay a Gross-up Payment in the amount determined by the Executive as set
forth in an Executive Counsel Opinion (as defined in Section 6.5). Any
such demand by the Executive shall be made by delivery to the Company of a
written notice which specifies the Gross-up Payment determined by the
Executive (together with the detailed calculations of the amounts of
Potential Parachute Payments, Excise Taxes and Gross-up Payment and the
assumptions relating thereto) and an Executive Counsel Opinion regarding
such Gross-up Payment (such written notice and opinion collectively, the
"Executive's Determination"). Within 30 days after delivery of an
Executive's Determination to the Company, the Company shall either (i) pay
the Executive the Gross-up Payment set forth in Executive's Determination
(less the portion thereof, if any, previously paid to Executive by the
Company) or (ii) deliver to the Executive a Company Certificate and a
Company Counsel Opinion (as defined in Section 6.5), and pay the Executive
the Gross-up Payment specified in such Company Certificate. If for any
reason the Company fails to comply with the preceding sentence, the
Gross-up Payment specified in the Executive's Determination shall be
controlling for all purposes.
6.2.2If the Executive does not request a Company Certificate, and the
Company does not deliver a Company Certificate to the Executive, then (i)
the Company shall, for purposes of Section 6.7, be deemed to have
determined that no Gross-up Payment is due, and (ii) the Executive shall
not pay any Excise Taxes in respect of Potential Parachute Payments,
except in accordance with Sections 6.6.1 or 6.6.4.
6.3 Additional Gross-up Amounts. If for any reason it is later determined
(whether pursuant to the subsequently-enacted provisions of the Code, final
regulations or published rulings of the IRS, a final judgment of a court of
competent jurisdiction, a determination of the Company's independent auditors
set forth in a Company Certificate or, subject to the last two sentences of
Section 6.2.1, an Executive's Determination) that the amount of Excise Taxes
payable by the Executive is greater than the amount determined by the Company or
the Executive pursuant to Section 6.1 or 6.2, as applicable, then the Company
shall, subject to Sections 6.6 and 6.7, pay the Executive an amount (which shall
also be deemed a Gross-up Payment) equal to the product of:
(a) the sum of (1) such additional Excise Taxes and (2) any
interest, fines, penalties, expenses or other costs incurred by
the Executive as a result of having taken a position in
accordance with determination made pursuant to Section 6.1 or
6.2, as applicable,
multiplied by
(b) the Gross-up Multiple.
6.4 Gross-up Multiple. The Gross-up Multiple shall equal a fraction, the
numerator of which is one (1.0), and the denominator of which is one (1.0) minus
the lesser of (i) the sum, expressed as a decimal fraction, of the effective
marginal tax rates of all federal, state, local and other income and other taxes
and any Excise Taxes applicable to the Gross-up Payment; or (ii) 0.80, it being
intended that the Gross-up Multiple shall in no event exceed five (5.0). (If
different rates of tax are applicable to various portions of a Gross-up Payment,
the weighted average of such rates shall be used.)
6.5 Opinion of Counsel. "Executive Counsel Opinion" means an opinion of
nationally-recognized executive compensation counsel to the effect (i) that the
amount of the Gross-up Payment determined by the Executive pursuant to Section
6.2 is the amount that a court of competent jurisdiction, based on a final
judgment not subject to further appeal, is most likely to decide to have been
calculated in accordance with this Article and applicable law and (ii) if the
Company has previously delivered a Company Certificate to the Executive, that
there is no reasonable basis or no substantial authority for the calculation of
the Gross-up Payment set forth in the Company Certificate. "Company Counsel
Opinion" means an opinion of nationally-recognized executive compensation
counsel to the effect that (i) the amount of the Gross-up Payment set forth in
the Company Certificate is the amount that a court of competent jurisdiction,
based on a final judgment not subject to further appeal, is most likely to
decide to have been calculated in accordance with this Article and applicable
law and (ii) for purposes of Section 6662 of the Code, the Executive has
substantial authority to report on his federal income tax return the amount of
Excise Taxes set forth in the Company Certificate.
6.6 Amount Increased or Contested.
-----------------------------
6.6.1The Executive shall notify the Company in writing (an
"Executive's Notice") of any claim by the IRS or other taxing authority
(an "IRS Claim") that, if successful, would require the payment by the
Executive of Excise Taxes in respect of Potential Parachute Payments in an
amount in excess of the amount of such Excise Taxes determined in
accordance with Section 6.1 or 6.2, as applicable. Such Executive's Notice
shall include the nature and amount of such IRS Claim, the date on which
such IRS Claim is due to be paid (the "IRS Claim Deadline"), and a copy of
all notices and other documents or correspondence received by the
Executive in respect of such IRS Claim. The Executive shall give the
Executive's Notice as soon as practicable, but no later than the earlier
of (i) ten business days after the Executive first obtains actual
knowledge of such IRS Claim or (ii) five business days after the IRS Claim
Deadline; provided, however, that the Executive's failure to give such
notice shall affect the Company's obligations under this Article only to
the extent that the Company is actually prejudiced by such failure. If at
least one business day before the IRS Claim Deadline the Company shall:
6.6.1.1 deliver to the Executive a Company Certificate to the
effect that the IRS Claim has been reviewed by the Company's
independent auditors and, notwithstanding the IRS Claim, the amount
of Excise Taxes, interest and penalties payable by the Executive is
either zero or an amount less than the amount specified in the IRS
Claim,
6.6.1.2 pay to the Executive an amount (which shall also be
deemed a Gross-up Payment) equal to the positive difference between
(x) the product of the amount of Excise Taxes, interest and penalties
specified in the Company Certificate, if any, multiplied by the
Gross-up Multiple, and (y) the portion of such product, if any,
previously paid to the Executive by the Company, and
6.6.1.3 direct the Executive pursuant to Section 6.6.4 to
contest the balance of the IRS Claim, then the Executive shall pay
only the amount, if any, of Excise Taxes, interest and penalties
specified in the Company Certificate. In no event shall the Executive
pay an IRS Claim earlier than 30 days after having given an
Executive's Notice to the Company (or, if sooner, the IRS Claim
Deadline).
6.6.2At any time after the payment by the Executive of any amount of
Excise Taxes or related interest or penalties in respect of Potential
Parachute Payments (whether or not such amount was based upon a Company
Certificate or an Executive's Determination), the Company may in its
discretion require the Executive to pursue a claim for a refund (a "Refund
Claim") of all or any portion of such Excise Taxes, interest or penalties
as the Company may specify by written notice to the Executive.
6.6.3If the Company notifies the Executive in writing that the
Company desires the Executive to contest an IRS Claim or to pursue a
Refund Claim, the Executive shall:
6.6.3.1 give the Company all information that it reasonably
requests in writing from time to time relating to such IRS Claim or
Refund Claim, as applicable,
6.6.3.2 take such action in connection with such IRS Claim or
Refund Claim, as applicable, as the Company reasonably requests in
writing from time to time, including accepting legal representation
with respect thereto by an attorney selected by the Company, subject
to the approval of the Executive (which approval shall not be
unreasonably withheld or delayed),
6.6.3.3 cooperate with the Company in good faith to contest such
IRS Claim or pursue such Refund Claim, as applicable,
6.6.3.4 permit the Company to participate in any
proceedings relating to such IRS Claim or Refund Claim,
as applicable, and
6.6.3.5 contest such IRS Claim or prosecute such Refund Claim,
as applicable, to a determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more appellate
courts, as the Company may from time to time determine in its
discretion.
The Company shall control all proceedings in connection with such IRS
Claim or Refund Claim, as applicable, and in its discretion may cause
the Executive to pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the IRS or other taxing
authority in respect of such IRS Claim or Refund Claim, as
applicable; provided that (i) any extension of the statute of
limitations relating to payment of taxes for the taxable year of the
Executive relating to the IRS Claim is limited solely to such IRS
Claim, (ii) the Company's control of the IRS Claim or Refund Claim,
as applicable, shall be limited to issues with respect to which a
Gross-up Payment would be payable, and (iii) the Executive shall be
entitled to settle or contest, as the case may be, any other issue
raised by the IRS or other taxing authority.
6.6.4The Company may at any time in its discretion direct the
Executive to (i) contest the IRS Claim in any lawful manner or (ii) pay
the amount specified in an IRS Claim and pursue a Refund Claim; provided,
however, that if the Company directs the Executive to pay an IRS Claim and
pursue a Refund Claim, the Company shall advance the amount of such
payment to the Executive on an interest-free basis and shall indemnify the
Executive, on an after-tax basis, for any income or other applicable taxes
or Excise Tax, and any related interest or penalties imposed with respect
to such advance.
6.6.5The Company shall pay directly all legal, accounting and other
costs and expenses (including additional interest and penalties) incurred
by the Company or the Executive in connection with any IRS Claim or Refund
Claim, as applicable, and shall indemnify the Executive, on an after-tax
basis, for any income or other applicable taxes, Excise Tax and related
interest and penalties imposed on the Executive as a result of such
payment of costs and expenses.
6.7 Refunds. If, after the receipt by the Executive of any payment or
advance of Excise Taxes advanced by the Company pursuant to Section 6.6, the
Executive receives any refund with respect to such claim, the Executive shall
(subject to the Company's complying with the requirements of Section 6.6)
promptly pay the Company the amount of such refund (together with any interest
paid or credited thereon after taxes applicable thereto). If, after the receipt
by the Executive of an amount advanced by the Company pursuant to Section 6.6, a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such determination within 30 days after the
Company receives written notice of such determination, then such advance shall
be forgiven and shall not be required to be repaid and the amount of such
advance shall offset, to the extent thereof, the amount of Gross-up Payment
required to be paid. Any contest of a denial of refund shall be controlled by
Section 6.6.
ARTICLE VII
EXPENSES AND INTEREST
7.1 Legal Fees and Other Expenses.
-----------------------------
7.1.1If the Executive incurs legal fees or other expenses in an
effort to secure, preserve, establish entitlement to, or obtain benefits
under this Agreement (including, without limitation, the fees and other
expenses of the Executive's legal counsel in connection with the delivery
of the Executive Counsel opinion referred to in Section 6.5), the Company
shall, regardless of the outcome of such effort, promptly reimburse the
Executive on a current basis for such fees and expenses following the
Executive's written submission of a request for reimbursement together
with evidence that such fees and expenses were incurred.
7.1.2If the Executive does not prevail (after exhaustion of all
available judicial remedies) in respect of a claim by the Executive or by
the Company hereunder, and the Company establishes before a court of
competent jurisdiction, by clear and convincing evidence, that the
Executive had no reasonable basis for his claim hereunder, or for his
response to the Company's claim hereunder, and acted in bad faith, no
further reimbursement for legal fees and expenses shall be due to the
Executive in respect of such claim and the Executive shall refund any
amounts previously reimbursed hereunder with respect to such claim.
7.2 Interest. If the Company and Nicor Gas, as applicable, does not pay
any amount due to the Executive under this Agreement within three days after
such amount became due and owing, interest shall accrue on such amount from the
date it became due and owing until the date of payment at an annual rate equal
to 200 basis points above the base commercial lending rate published in The Wall
Street Journal in effect from time to time during the period of such nonpayment.
ARTICLE VIII
NO SET-OFF OR MITIGATION
8.1 No Set-off by Company. The Executive's right to receive when due the
payments and other benefits provided for under this Agreement is absolute,
unconditional and subject to no set-off, counterclaim or legal or equitable
defense. Any claim which the Company may have against the Executive, whether for
a breach of this Agreement or otherwise, shall be brought in a separate action
or proceeding and not as part of any action or proceeding brought by the
Executive to enforce any rights against the Company under this Agreement.
8.2 No Mitigation. The Executive shall not have any duty to mitigate the
amounts payable by the Company and Nicor Gas, as applicable, under this
Agreement by seeking new employment following termination. Except as
specifically otherwise provided in this Agreement, all amounts payable pursuant
to this Agreement shall be paid without reduction regardless of any amounts of
salary, compensation or other amounts which may be paid or payable to the
Executive as the result of the Executive's employment by another employer.
ARTICLE IX
NON-EXCLUSIVITY OF RIGHTS
9.1 Waiver of Other Severance Rights. Except as may be otherwise
specifically provided in an amendment of this Section 9.1 adopted in accordance
with Section 11.7 of this Agreement, the Executive's rights under Section 5.1 of
this Agreement shall be in lieu of any benefits that may be otherwise payable to
or on behalf of the Executive pursuant to the terms of any severance pay
arrangement of the Company or any Subsidiary or any other, similar arrangement
of the Company or any Subsidiary providing benefits upon involuntary termination
of employment and shall also be in lieu of any benefits under the Nicor Inc.
Executive/Key Employee Severance Benefits Program (notwithstanding any provision
of that program to the contrary); provided, however, that this Section 9.1 shall
not affect the Executive's rights to receive any benefits with respect to a
termination of employment that occurs outside of the Employment Period.
9.2 Other Rights. Except as provided in Section 9.1, this Agreement shall
not prevent or limit the Executive's continuing or future participation in any
benefit, bonus, incentive or other plans provided by the Company or any of its
Subsidiaries and for which the Executive may qualify, nor shall this Agreement
limit or otherwise affect such rights as the Executive may have under any other
agreements with the Company or any of its Subsidiaries. Amounts which are vested
benefits or which the Executive is otherwise entitled to receive under any plan
of the Company or any of its Subsidiaries and any other payment or benefit
required by law at or after the Termination Date shall be payable in accordance
with such Plan or applicable law except as expressly modified by this Agreement.
ARTICLE X
CONFIDENTIALITY
10.1 Confidentiality. The Executive acknowledges that it is the policy of
the Company and its Subsidiaries to maintain as secret and confidential all
valuable and unique information and techniques acquired, developed or used by
the Company and its Subsidiaries relating to their business, operations,
employees and customers, which gives the Company and its Subsidiaries a
competitive advantage in the transmission, distribution, marketing, or sale of
natural gas or in the energy services industry and other businesses in which the
Company and its Subsidiaries are engaged ("Confidential Information"). The
Executive recognizes that all such Confidential Information is the sole and
exclusive property of the Company and its Subsidiaries, and that disclosure of
Confidential Information would cause damage to the Company and its Subsidiaries.
The Executive agrees that, except as required by the duties of his employment
with the Company or its Subsidiaries and except in connection with enforcing the
Executive's rights under this Agreement or if compelled by a court or
governmental agency, he will not, without the consent of the Company,
disseminate or otherwise disclose any Confidential Information obtained during
his employment with the Company or its Subsidiaries until such time as such
information has been disclosed publicly by the Company or one of its
Subsidiaries, or with its consent, or is otherwise a matter of public knowledge
(unless the Executive has reason to know that such information became a matter
of public knowledge through an unauthorized disclosure).
10.2 Remedy. The Executive and the Company specifically agree that, in the
event that the Executive shall breach his obligations under this Article X, the
Company and its Subsidiaries will suffer irreparable injury and shall be
entitled to injunctive relief therefor, and shall not be precluded from pursuing
any and all remedies it may have at law or in equity for breach of such
obligations; provided, however, that such breach shall not in any manner or
degree whatsoever limit, reduce or otherwise affect the obligations of the
Company or Nicor Gas, as applicable, under this Agreement, and in no event shall
an asserted breach of the Executive's obligations under this Article X
constitute a basis for deferring or withholding any amounts otherwise payable to
the Executive under this Agreement.
ARTICLE XI
MISCELLANEOUS
11.1 No Assignability. 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.
11.2 Successors. Before or upon the consummation of any Change in Control,
the Company shall obtain from each individual, group or entity, if any, that
becomes a successor of the Company by reason of the Change in Control, the
unconditional written agreement of such individual, group or entity to assume
this Agreement and to perform all of the obligations of the Company hereunder.
11.3 Payments to Beneficiary. If the Executive dies before receiving
amounts to which the Executive is entitled under this Agreement, such amounts
shall be paid in a lump sum to the beneficiary designated in writing by the
Executive, or if none is so designated, to the Executive's estate.
11.4 Nonalienation of Benefits. Benefits payable under this Agreement
shall not be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, charge, garnishment, execution or levy of any
kind, either voluntary or involuntary, before actually being received by the
Executive, and any such attempt to dispose of any right to benefits payable
under this Agreement shall be void.
11.5 Severability. If any one or more articles, sections or other portions
of this Agreement are declared by any court or governmental authority to be
unlawful or invalid, such unlawfulness or invalidity shall not serve to
invalidate any article, section or other portion not so declared to be unlawful
or invalid. Any article, section or other portion so declared to be unlawful or
invalid shall be construed so as to effectuate the terms of such article,
section or other portion to the fullest extent possible while remaining lawful
and valid.
11.6 Arbitration. Any and all disputes between the parties hereto arising
out of this Agreement (other than disputes related to Article VI or to an
alleged breach of the covenant contained in Article X) shall be settled by
arbitration before an impartial arbitrator pursuant to the rules and regulations
of the American Arbitration Association (AAA) pertaining to the arbitration of
commercial disputes. Either party may invoke the right to arbitration. The
arbitrator shall be selected by means of the parties striking alternatively from
a panel of seven arbitrators supplied by the Chicago office of AAA. The
Arbitrator shall have the authority to interpret and apply the provisions of
this Agreement, consistent with Section 11.10 below. The decision of the
arbitrator shall be final and binding upon the parties. Judgment may be entered
on the award in any court of competent jurisdiction. The arbitrator's fees and
expenses shall be borne by the Company.
11.7 Amendments. This Agreement shall not be altered, amended or modified
except by written instrument executed by the Company and the Executive.
11.8 Notices. All notices and other communications under this Agreement
shall be in writing and delivered by hand, by a nationally-recognized commercial
delivery service, or by first-class registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive:
Xxxx X. Xxxxxxx
00 Xxxxxxx Xxxx
Xxxxxxxx, XX 00000
If to the Company:
Nicor Inc.
0000 Xxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Attn:Xxxxxxx X. Xxxxxxxxx
or to such other address as either party shall have furnished to the other in
writing. Notice and communications shall be effective when actually received by
the addressee.
11.9 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.10Governing Law. This Agreement is intended to be interpreted and
construed in accordance with the laws of the State of Illinois, without regard
to its choice of law principles.
11.11Captions. The captions of this Agreement are not a
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part of the provisions hereof and shall have no force or effect.
11.12Number and Gender. Wherever from the context it appears appropriate,
each term stated in either the singular or plural shall include the singular and
the plural, and pronouns stated in either the masculine, the feminine or the
neuter gender shall include the masculine, feminine and neuter genders.
11.13Tax Withholding. The Company or Nicor Gas, as applicable, may
withhold from any amounts payable under this Agreement any federal, state or
local taxes that are required to be withheld pursuant to any applicable law or
regulation.
11.14No Waiver. A waiver of any provision of this Agreement shall not be
deemed a waiver of any other provision, and any waiver of any default as to any
such provision shall not be deemed a waiver of any later default as to that or
any other provision.
11.15Entire Agreement. This Agreement contains the entire understanding of
the Company, Nicor Gas and the Executive with respect to its subject matter.
IN WITNESS WHEREOF, the Executive and the Company have executed this
Agreement as of the date first above written.
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Xxxx X. Xxxxxxx
Nicor Inc.
By:
Chairman, President and CEO
