CHANGE OF CONTROL AGREEMENT
Exhibit
10.52
AGREEMENT
by and between Puget Sound Energy, Inc., a Washington corporation (the
"Company"), and XXXX
X. XXXXXXX (the
"Executive"), dated as of the 7th day of May 2003.
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 ensure that the Company will
have the continued dedication of the Executive, notwithstanding the possibility,
threat or occurrence of a Change of Control (as defined in Section 2) of
the Company. The Board believes that it is imperative to diminish the inevitable
distraction of the Executive by virtue of the personal uncertainties and risks
created by a pending or threatened Change of Control and to encourage the
Executive's full attention and dedication to the Company currently and in the
event of any threatened or pending Change of Control, and to provide the
Executive with compensation and benefits arrangements upon a Change of Control
which ensure that the compensation and benefits expectations of the Executive
will be satisfied, which are competitive with those of other corporations and
which align the Executive's interests with those of the Company's shareholders.
Therefore, in order to accomplish these objectives, the Board has caused the
Company to enter into this Agreement.
NOW,
THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
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1. |
Certain
Definitions |
(a) "Accrued
Obligations" is defined in Section 6(a)(i).
(b) "Affiliated
Company" means any company controlled by, controlling or under common control
with the Company.
(c) "Annual
Base Salary" means an annual base salary at least equal to 12 times the highest
monthly base salary paid or payable to the Executive by the Company and its
affiliated companies in respect to the 12-month period immediately preceding the
month in which the Effective Date occurs.
(d) "Annual
Bonus" is defined in Section 4(b)(ii).
(e) "Business
Combination" means (i) a reorganization, exchange of securities, merger or
consolidation of the Company or (ii) the sale or other disposition of all or
substantially all the assets of the Company.
(f) "Change
of Control" is defined in Section 2.
(g) The
"Change of Control Period" means the period commencing on the date hereof and
ending on the third anniversary of the date hereof; provided, however, that
commencing on the first anniversary of the date hereof and on each successive
anniversary (each a “Renewal Date”), the Change of Control Period shall be
automatically extended so as to terminate three years from such Renewal Date,
unless at least 60 days prior to the Renewal Date the Company gives notice to
the Executive that the Change of Control Period shall not be so
extended.
(h) "Code"
means the Internal Revenue Code of 1986, as amended.
(i) "Date of
Termination" is defined in Section 5(f).
(j) "Disability"
is defined in Section 5(a).
(k) "Disability
Effective Date" is defined in Section 5(a).
(l) "Effective
Date" means the first date during the Change of Control Period on which a Change
of Control occurs. Anything in this Agreement to the contrary notwithstanding,
if a Change of Control occurs and if the Executive's employment with the Company
is terminated prior to the date on which the Change of Control occurs, and if it
is reasonably demonstrated by the Executive that such termination of employment
(i) was at the request of a third party who has taken steps reasonably
calculated to effect the Change of Control or (ii) otherwise arose in
connection with or anticipation of the Change of Control, then for all purposes
of this Agreement the "Effective Date" shall mean the date immediately prior to
the date of such termination of employment.
(m) "Employment
Period" is defined in Section 3.
(n) "Exchange
Act" means the Securities Exchange Act of 1934, as amended.
(o) "Good
Reason" is defined in Section 5(d).
(p) "Incentive
Plan" means the Company's 1995 Long-Term Incentive Compensation Plan or any
successor plan.
(q) "Incumbent
Director" means a member of the Board who has been either (i) nominated by
a majority of the directors of the Company then in office or (ii) appointed
by directors so nominated, but excluding, for this purpose, any such individual
whose initial assumption of office occurs as a result of either an actual or
threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Board.
(r) "Notice
of Termination" is defined in Section 5(e).
(s) "Other
Benefits" is defined in Section 6(a)(iv).
(t) "Outstanding
Company Common Stock" means the shares of Common Stock of the Company ("Common
Stock") outstanding at the time of the determination.
(u) "Outstanding
Company Voting Securities" means the combined voting power of the outstanding
voting securities of the Company entitled to vote generally in the election of
directors at the time of the determination.
(v) "Person"
means any individual, entity or group (within the meaning of Section 13(d)(3) or
14(d) of the Exchange Act).
(w) "Retirement
Plan" means the Company's qualified pension plan or any successor plan
thereto.
(x) "SERP"
means the Company's Supplemental Executive Retirement Plan or any other
supplemental and/or excess retirement plan or agreement of the Company and its
affiliated companies providing benefits for the Executive.
(y) "Welfare
Benefit Continuation" is defined in Section 6(a)(ii).
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2. |
Change
of Control |
For the
purpose of this Agreement, a "Change of Control" means:
(a) The
acquisition by any Person of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of (i) 20% or more of
either (A) the Outstanding Company Common Stock or (B) the Outstanding
Company Voting Securities; provided, however, that the following acquisitions of
beneficial ownership shall not constitute a Change of Control: (x) any
acquisition by the Company, (y) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company, or (z) any acquisition by any
corporation pursuant to a Business Combination, if, following such Business
Combination, the conditions described in clauses (i), (ii) and (iii) of
subsection (c) of this Section 2 are satisfied; or
(b) A "Board
Change" which, for purposes of this Agreement, shall have occurred if a majority
of the seats (other than vacant seats) on the Board are occupied by individuals
who were neither (i) nominated by a majority of the Incumbent Directors nor
(ii) appointed by directors so nominated; or
(c) Approval
by applicable regulatory agencies of a Business Combination unless immediately
following such Business Combination, (i) more than 60% of the then
outstanding shares of common stock of the corporation resulting from or
effecting such Business Combination and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or indirectly, by
all or substantially all the individuals and entities who were the beneficial
owners of the Outstanding Company Common Stock and Outstanding Company Voting
Securities, respectively, immediately prior to such Business Combination in
substantially the same proportion as their ownership, immediately prior to such
Business Combination, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, as the case may be, (ii) no Person (excluding
the Company, any employee benefit plan (or related trust) of the Company or the
corporation resulting from or effecting such Business Combination and any Person
beneficially owning, immediately prior to such Business Combination, directly or
indirectly, 20% or more of the Outstanding Company Common Stock or Outstanding
Company Voting Securities, as the case may be) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then outstanding shares of common
stock of the corporation resulting from or effecting such Business Combination
or the combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors, and
(iii) at least a majority of the members of the board of directors of the
corporation resulting from or effecting such Business Combination were Incumbent
Directors at the time of the execution of the initial agreement or action of the
Board providing for such Business Combination.
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3. |
Employment
Period |
The
Company hereby agrees to continue the Executive in its employ, and the Executive
hereby agrees to remain in the employ of the Company, in accordance with the
terms and provisions of this Agreement, for the period commencing on the
Effective Date and ending on the second anniversary of such date (the
"Employment Period"), in the executive capacity of Senior Vice President Energy
Resources and Planning, or a substantially comparable position of the Company,
responsible for, among other things, determining near term and long term energy
resource needs and acquiring resources to meet those needs; planning,
organizing, directing and controlling the long term operations, maintenance,
protection and improvement of power production facilities and acquisition,
storage and transportation of natural gas supply; supply contract evaluation,
negotiation and performance monitoring; and, subject to the general supervision
of the Board as required by the Washington Business Corporation Act, such other
duties and responsibilities as are not inconsistent with the express terms of
this Agreement. The Company agrees that it will not take any action, or make any
demands on the Executive, that may be deemed to arbitrarily, unreasonably or
unnecessarily interfere with the performance of the services to be rendered by
the Executive hereunder.
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4. |
Terms
of Employment |
(a) Position
and Duties.
(i) During
the Employment Period, (A) the Executive's position (including status,
offices, titles and reporting requirements), authority, duties and
responsibilities shall be in accordance with Section 3 and (B) the
Executive's services shall be performed within the Seattle/Bellevue metropolitan
area, except for required travel in the Company's business to the extent
consistent with the Executive's duties in Section 3.
(ii) During
the Employment Period, and excluding any periods of paid time off 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, 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 to
(A) serve on corporate, civic or charitable boards or committees,
(B) deliver lectures, fulfill speaking engagements or teach at educational
institutions, or (C) manage personal investments, so long as such
activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance with
this Agreement. It is expressly understood and agreed that to the extent that
any such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company.
(b) Compensation.
(i) Base
Salary. During
the Employment Period, the Executive shall receive an annual base salary
("Annual Base Salary"), which shall be paid in equal installments on a monthly
basis, at least equal to 12 times the highest monthly base salary paid or
payable to the Executive by the Company and its affiliated companies in respect
of the 12-month period immediately preceding the month in which the Effective
Date occurs. For purposes of this Agreement, Annual Base Salary shall not
include any payments by the Company on the Executive's behalf pursuant to any
incentive, savings or retirement plans, any welfare benefit plans or any fringe
benefit plans, in each case, of the Company or any affiliated company, of the
type identified in paragraphs (iii) through (vii) of this Section 4(b), or
any reimbursement of expenses by the Company or any affiliated company in
accordance with paragraph (v) of this Section 4(b). During the
Employment Period, the Annual Base Salary shall be reviewed 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 generally awarded in the
ordinary course of business to other peer executives of the Company and its
affiliated companies. Any increase in Annual Base Salary shall not serve to
limit or reduce any other obligation to the Executive under this Agreement.
Annual Base Salary shall not be reduced after any such increase, and the term
Annual Base Salary as utilized in this Agreement shall refer to Annual Base
Salary as so increased.
(ii) Annual
Bonus. In
addition to Annual Base
Salary, the Executive shall be eligible to receive, for each fiscal year ending
during the Employment Period, a target annual bonus (the “Annual Bonus”) in cash
at least equal to the greater of (A) the Executive’s target annual bonus in
effect on the Effective Date and (B) the average (annualized for any fiscal year
in which the Executive has been employed by the Company for less than 12 full
months) target bonus for which the Executive was eligible in the three fiscal
years immediately preceding the fiscal year in which the Effective Date occurs.
Each such Annual Bonus earned shall be paid no later than the end of the third
month of the fiscal year next following the fiscal year for which the Annual
Bonus is earned unless the Executive shall elect to defer the receipt of such
Annual Bonus.
(iii) Incentive,
Savings and Retirement Plans.
(A) During
the Employment Period, the Executive shall be entitled to participate in all
incentive, savings and retirement plans, practices, policies and programs
applicable generally to other peer executives of the Company and its affiliated
companies (including, without limitation, the plans in effect on the date of
this Agreement or any successor plans), but in no event shall such plans,
practices, policies and programs provide the Executive with incentive
opportunities (measured with respect to both regular and special incentive
opportunities, to the extent, if any, that such distinction is applicable),
savings opportunities and retirement benefit opportunities, in each case, that
are less favorable, in the aggregate, than the most favorable of those provided
by the Company and its affiliated companies for the Executive under such plans,
practices, policies and programs as in effect at any time during the 90-day
period immediately preceding the Effective Date or, if more favorable to the
Executive, those provided generally at any time after the Effective Date to
other executives of the Company and its affiliated companies.
(B) Upon the
Effective Date the Executive shall become vested under the Company's
Supplemental Executive Retirement Plan ("SERP") so that the Executive shall be
entitled to receive a Retirement Benefit (as defined in the SERP) at age 62 or,
at the election of the Executive, at any age between 55 and 62 a Retirement
Benefit reduced one-third percent (1/3%) for each month that benefits commence
prior to the beginning of the month coincident with or next following the date
the Executive would attain age 62.
(iv) Equity
Incentive Plans.
(A) Any
outstanding stock options or stock appreciation rights issued to the Executive
under the Company's existing plans or any successor plan shall become fully
vested and exercisable on the Effective Date. All restrictions on shares of
restricted stock issued to the Executive shall lapse.
(B) with
respect to all performance awards granted to the Executive pursuant to the
Incentive Plan or any successor plan that are outstanding immediately prior to
the Effective Date, the Company shall issue to the Executive within 30 days
after the Effective Date:
(i) if the
Change of Control is not being accounted for as a pooling of interests, cash
equal to the higher of (1) the average of the last sale prices of the
Company's (or its successor's) Common Stock on the New York Stock Exchange in
each of the twenty business days preceding the Effective Date or (2) the
highest price per share actually paid for any of the Company Common Stock in
connection with the Change in Control, multiplied by an aggregate number of
shares of the Company's Common Stock (or, if the event that triggered the
Effective Date is a Business Combination, the equivalent number of shares of the
then outstanding common stock of the corporation resulting from or effecting
such Business Combination into which such shares of Common Stock have been
converted) equal to the greater of (x) the total number of the shares payable at
the target award level upon full vesting of each such performance award and (y)
such higher number of shares payable upon full vesting of each such award if the
Company achieved for each four-year award cycle the percentile ranking against
the comparable universe of EEI companies which the Company had achieved for the
applicable cycle during the period commencing upon the starting year of such
cycle and ending with the fiscal quarter immediately preceding the Effective
Date; or
(ii) if the
Change of Control is being accounted for as a pooling of interests, an aggregate
number of shares of the Company's Common Stock (or, if the event that triggered
the Effective Date is a Business Combination, the equivalent number of shares of
the then outstanding common stock of the corporation resulting from or effecting
such Business Combination into which such shares of Common Stock have been
converted) equal to the greater of (x) the total number of the shares payable at
the target award level upon full vesting of each such performance award and (y)
such higher number of shares payable upon full vesting of each such award if the
Company achieved for each four-year award cycle the percentile ranking against
the comparable universe of EEI companies which the Company had achieved for the
applicable cycle during the period commencing upon the starting year of such
cycle and ending with the fiscal quarter immediately preceding the Effective
Date; and
(iii) cash
equal to the amount of the dividend equivalents associated with the number of
shares determined under subparagraph (i) or (ii) above, in accordance with the
Incentive Plan.
(v) Welfare
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 provided by the
Company and its affiliated companies (including, without limitation, medical,
dental, disability, salary continuance, life, group life, accidental death and
travel accident insurance plans and programs) to the extent applicable generally
to other peer executives of the Company and its affiliated companies, but in no
event shall such plans, practices, policies and programs provide the Executive
with benefits that are less favorable, in the aggregate, than the most favorable
of such plans, practices, policies and programs in effect for the Executive at
any time during the 90-day period immediately preceding the Effective Date or,
if more favorable to the Executive, those provided generally at any time after
the Effective Date to other peer executives of the Company and its affiliated
companies.
(vi) Expenses. During
the Employment Period, the Executive shall be entitled to receive prompt
reimbursement for all reasonable business expenses incurred by the Executive in
accordance with the most favorable policies, practices and procedures of the
Company and its affiliated companies in effect for the Executive at any time
during the 90-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its affiliated
companies.
(vii) Fringe
Benefits. During
the Employment Period, the Executive shall be entitled to fringe benefits in
accordance with the most favorable plans, practices, programs and policies of
the Company and its affiliated companies in effect for the Executive at any time
during the 90-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its affiliated
companies.
(viii) Office
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 personal
secretarial and other assistance, at least equal to the most favorable of the
foregoing provided to the Executive by the Company and its affiliated companies
at any time during the 90-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as provided generally at any time
thereafter with respect to other peer executives of the Company and its
affiliated companies.
(ix) Vacation. During
the Employment Period, the Executive shall be entitled to paid vacation in
accordance with the most favorable plans, policies, programs and practices of
the Company and its affiliated companies as in effect for the Executive at any
time during the 90-day period immediately preceding the Effective Date or, if
more favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies.
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5. |
Termination
of Employment |
(a) Death
or Disability. The
Executive's employment shall terminate automatically upon the Executive's death
during the Employment Period. If the Company determines in good faith that the
Disability of the Executive has occurred during the Employment Period (pursuant
to the definition of Disability set forth below), it may give to the Executive
written notice in accordance with Section 12(b) of its intention to
terminate the Executive's employment. In such event, the Executive's employment
with the Company shall terminate effective on the 30th day
after receipt of such notice by the Executive (the "Disability Effective Date"),
provided that, within the 30 days after such receipt, the Executive shall not
have returned to full-time performance of the Executive's duties. For purposes
of this Agreement, "Disability" shall mean the absence of the Executive from the
Executive's duties with the Company on a full-time basis for 120 consecutive
business days as a result of incapacity due to mental or physical illness which
is determined to be total and permanent by a physician selected by the Company
or its insurers and acceptable to the Executive or the Executive's legal
representative (such agreement as to acceptability not to be unreasonably
withheld).
(b) Cause. The
Company may terminate the Executive's employment during the Employment Period
for Cause. For purposes of this Agreement, "Cause" shall mean (i) the
willful and continued failure by Employee to substantially perform his duties
with the Company (other than any such failure resulting from incapacity due to
physical or mental illness), for a period of 30 days after written notice of
demand for substantial performance has been delivered to Employee by the Board
of Directors which specifically identifies the manner in which the Board
believes that Employee has not substantially performed his duties, or
(ii) the willful engaging by Employee in gross misconduct materially and
demonstrably injurious to the Company, as determined by the Board of Directors
after notice to Employee and an opportunity for a hearing. No act, nor failure
to act, on Employee's part shall be considered "willful" unless he has acted or
failed to act with an absence of good faith and without a reasonable belief that
his action or failure to act was in the best interests of the
Company.
(c) Without
Cause. The
Company may terminate the Executive's employment at any time during the
Employment Period without Cause.
(d) Good
Reason. The
Executive's employment may be terminated during the Employment Period by the
Executive for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean
(i) the
assignment to the Executive of any duties inconsistent with the Executive's
position (including status, offices, titles and reporting requirements),
authority, duties or responsibility as contemplated by Sections 3 and 4(a)
or any other action by the Company which results in a diminution in such
position, authority, duties or responsibilities, excluding for this purpose an
isolated, insubstantial and inadvertent action not taken in bad faith and which
is remedied by the Company promptly after receipt of notice thereof given by the
Executive;
(ii) any
failure by the Company to comply with any of the provisions of Section 4(b),
other than an isolated, insubstantial and inadvertent failure not taken in bad
faith and which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(iii) the
Company's requiring to be based at any location other than that described in
Section 4(a)(i)(B);
(iv) any
purported termination by the Company of the Executive's employment otherwise
than as expressly permitted by this Agreement; or
(v) any
failure by the Company to comply with and satisfy Section 11(c), provided
that such successor has received at least ten days' prior written notice from
the Company or the Executive of the requirements of
Section 11(c).
For
purposes of this Section 5(c), any good faith determination of Good Reason
made by the Executive shall be conclusive.
(e) Notice
of Termination. Any
termination by the Company for Cause or without Cause or by the Employee for
Good Reason shall be communicated by Notice of Termination to the other party
hereto given in accordance with Section 12(b). For purposes of this
Agreement, a "Notice of Termination" means a written notice which
(i) indicates the specific termination provision in this Agreement relied
upon, (ii) to the extent applicable, sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than
15 days after the giving of such notice). The failure by the Executive or
the Company to set forth in the Notice of Termination any fact or circumstance
which contributes to a showing of Good Reason or Cause shall not waive any right
of the Executive or the Company hereunder or preclude the Executive or the
Company from asserting such fact or circumstance in enforcing the Executive's or
the Company's rights hereunder.
(f) Date
of Termination. "Date
of Termination" means (i) if the Executive's employment is terminated by
the Company, whether for Cause or without Cause, or by the Executive for Good
Reason, the date of receipt of the Notice of Termination or any later date
specified therein, as the case may be, and (ii) if the Executive's
employment is terminated by reason of death or Disability, the Date of
Termination shall be the date of death of the Executive or the Disability
Effective Date, as the case may be.
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6. |
Obligations
of the Company Upon Termination |
(a) Good
Reason; Without Cause; Death or Disability. If,
during the Employment Period, the Company shall terminate the Executive's
employment without Cause or for Death or Disability or the Executive shall
terminate employment for Good Reason:
(i) the
Company shall pay to the Executive in a lump sum in cash within 30 days
after the Date of Termination the aggregate of the following
amounts:
(A) the sum
of (1) the Executive's Annual Base Salary through the Date of Termination,
(2) a pro rata portion of the Executive’s Annual Bonus for the year in which the
Date of Termination occurs, based on the number of days of employment that year
up to the Date of Termination divided by 365 days,) and (3) any accrued paid
time off pay, in each case to the extent not theretofore paid (the sum of the
amounts described in clauses (1), (2) and (3) shall be hereinafter referred
to as the "Accrued Obligations"); and
(B) the
amount equal to the sum of (x) Annual Base Salary and (y) the Annual Bonus for
which the Executive was eligible for the year in which the Date of Termination
occurs; and
(C) if
Executive executes a release of in the form set forth in Exhibit I attached
hereto, and said release of claims becomes effective by its terms, the
additional amount equal to two times the sum of (x) Annual Base Salary and (y)
the Annual Bonus for which the Executive was eligible for the year in which the
Date of Termination occurs; and
(D) a
separate lump-sum supplemental retirement benefit equal to the difference
between (1) the actuarial equivalent (utilizing for this purpose the
actuarial assumptions utilized with respect to the Retirement Plan during the
90-day period immediately preceding the Effective Date) of the benefit payable
under the Retirement Plan and any SERP providing benefits for the Executive that
the Executive would receive if the Executive's employment continued at the
compensation level provided for in Sections 4(b)(i) and (ii) for the
remainder of the Employment Period, assuming for this purpose that all accrued
normal and early retirement benefits are fully vested and that benefit accrual
formulas are no less advantageous to the Executive than those in effect during
the 90-day period immediately preceding the Effective Date, and (2) the
actuarial equivalent (utilizing for this purpose the actuarial assumptions
utilized with respect to the Retirement Plan during the 90-day period
immediately preceding the Effective Date) of the Executive's actual benefit
(paid or payable), if any, under the Retirement Plan and the SERP;
and
(ii) for the
remainder of the Employment Period, or such longer period as any plan, program,
practice or policy may provide, the Company shall continue benefits to the
Executive and/or the Executive's family at least equal to those that would have
been provided to them in accordance with the plans, programs, practices and
policies described in Sections 4(b)(v) and 4(b)(vii) if the Executive's
employment had not been terminated in accordance with the most favorable plans,
practices, programs or policies of the Company and its affiliated companies as
in effect and applicable generally to other executives and their families during
the 90-day period immediately preceding the Effective Date or, if more favorable
to the Executive, as in effect generally at any time thereafter with respect to
other peer executives of the Company and its affiliated companies and their
families; provided, however, that if the Executive becomes re-employed with
another employer and is eligible to receive medical or other welfare benefits
under another employer-provided plan, the medical and other welfare benefits
described herein shall be secondary to those provided under such other plan
during such applicable period of eligibility (such continuation of such benefits
for the applicable period herein set forth shall be hereinafter referred to as
"Welfare Benefit Continuation") and the Executive shall no longer be entitled to
receive fringe benefits from the Company. For purposes of determining
eligibility of the Executive for retiree benefits pursuant to such plans,
practices, programs and policies, the Executive shall be considered to have
remained employed until the end of the Employment Period and to have retired on
the last day of such period; provided, however, that the Executive shall be
entitled to the more favorable of the retiree benefits in effect on the Date of
Termination or the retiree benefits in effect on the date that would have been
the last date of the Employment Period if the Executive had remained employed;
and
(iii) to the
extent not theretofore paid or provided, the Company shall timely pay or provide
to the Executive and/or the Executive's family any other amounts or benefits
required to be paid or provided or which the Executive and/or the Executive's
family is eligible to receive pursuant to this Agreement and under any plan,
program, policy or practice or contract or agreement of the Company and its
affiliated companies as in effect and applicable generally to other peer
executives and their families during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect generally
thereafter with respect to other peer executives of the Company and its
affiliated companies and their families (such other amounts and benefits shall
be hereinafter referred to as the "Other Benefits"); and
(iv) if the
Executive is age 55 or older, in lieu of receiving monthly benefits under the
SERP the Executive may elect, by giving at least 120 days written notice to
the Company, to receive the Actuarial Equivalent (as defined in the SERP) lump
sum value of the normal form of payment of SERP benefits based upon the
retirement benefit payable under the SERP at Executive's age upon the Date of
Termination, or to have such Actuarial Equivalent lump sum value transferred to
the Company's Deferred Compensation Plan or any successor deferred compensation
plan. If the Executive is younger than the minimum age for eligibility for
payment of SERP benefits, the Executive may elect to receive the discounted
present value, using a seven percent discount rate, of the Actuarial Equivalent
lump sum value of the SERP benefits to which the Executive would be entitled at
the minimum age.
(b) 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
obligations to the Executive's legal representatives under this Agreement, other
than for payment of Accrued Obligations (which shall be paid to Executive's
estate or beneficiary, as applicable, in a lump sum in cash within 30 days
of the Date of Termination) and the timely payment or provision of the Welfare
Benefit Continuation and Other Benefits.
(c) Disability. If the
Executive's employment is terminated by reason of the Executive's Disability
during the Employment Period, this Agreement shall terminate without further
obligations to the Executive, other than for payment of Accrued Obligations
(which shall be paid to Executive in a lump sum in cash within 30 days of
the Date of Termination) and the timely payment or provision of the Welfare
Benefit Continuation and Other Benefits.
(d) Cause;
Other Than for Good Reason. If the
Executive's employment shall be terminated for Cause during the Employment
Period, this Agreement shall terminate without further obligations to the
Executive other than the obligation to pay the Executive's Annual Base Salary
through the Date of Termination, plus the amount of any compensation previously
deferred by the Executive, in each case to the extent theretofore unpaid. If the
Executive terminates employment during the Employment Period other than for Good
Reason, this Agreement shall terminate without further obligations to the
Executive other than for Accrued Obligations and the timely payment or provision
of Other Benefits. In such case all Accrued Obligations shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of
Termination.
|
7. |
Nonexclusivity
of Rights |
Nothing
in this Agreement shall prevent or limit the Executive's continuing or future
participation in any written plan provided by the Company or any of its
affiliated companies for executives generally and for which the Executive may
qualify, nor shall anything herein limit or otherwise affect such rights as the
Executive may have under any written contract with the Company or any of its
affiliated companies. Amounts that are vested benefits or that the Executive is
otherwise entitled to receive under any such plan or contract with the Company
or any of its affiliated companies at or subsequent to the Date of Termination
shall be payable in accordance with such plan or contract or agreement except as
explicitly modified by this Agreement.
|
8. |
Full
Settlement; Resolution of
Disputes |
(a) The
Company's obligation to make the payments provided for in this Agreement and
otherwise to perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or action that
the Company may have against the Executive or others. In no event shall the
Executive be obligated to seek other employment or take any other action by way
of mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement, and, except as provided in Section 6(b), such
amounts shall not be reduced whether or not the Executive obtains other
employment. The Company agrees to pay promptly upon invoice, to the full extent
permitted by law, all legal fees and expenses that the Executive may incur as a
result of any contest (regardless of the outcome thereof) by the Company, the
Executive or others of the validity or enforceability of, or liability under,
any provision of this Agreement or any guarantee of performance thereof
(including as a result of any contest by the Executive about the amount of any
payment pursuant to this Agreement).
(b) If there
shall be any dispute between the Company and the Executive (i) in the event
of any termination of the Executive's employment by the Company, whether such
termination was (A) in connection with or in anticipation of a Change of
Control under clauses (i) or (ii) of Section 1(l), or (B) for Cause,
or (ii) in the event of any termination of employment by the Executive,
whether Good Reason existed, then, unless and until there is a final,
nonappealable judgment by a court of competent jurisdiction declaring that such
termination was not in connection with or in anticipation of a Change of Control
or for Cause or that the determination by the Executive of the existence of Good
Reason was not made in good faith, the Company shall pay all amounts, and
provide all benefits, to the Executive and/or the Executive's family or other
beneficiaries, as the case may be, that the Company would be required to pay or
provide pursuant to Section 6(a) as though such termination were by the
Company without Cause or by the Executive with Good Reason; provided, however,
that the Company shall not be required to pay any disputed amounts pursuant to
this paragraph except upon receipt of an undertaking by or on behalf of the
Executive to repay all such amounts to which the Executive is ultimately
adjudged by such court not to be entitled.
|
9. |
Excise
Taxes |
Notwithstanding
any other provisions of this Agreement, if any payments or distributions in the
nature of compensation are made to or for the benefit of the Executive, whether
paid or payable pursuant to this Agreement or otherwise (including the vesting
of stock options, the lapse of restrictions on restricted stock and any other
events that result in a "payment in the nature of compensation" within the
meaning of Section 280G of the Code) are characterized as Excess Parachute
Payments within the meaning of Section 280G of the Code or any successor
provision, then the Company shall pay to the Executive an additional amount
equal to the excise taxes imposed by Section 4999 of the Code or any
successor provision on the Executive's Excess Parachute Payments, plus an amount
equal to the federal and (if applicable) state income and excise taxes,
including without limitation FICA and Medicare taxes or other taxes which will
be payable by Employee as a result of this additional payment.
|
10. |
Confidential
Information |
The
Executive shall hold in a fiduciary capacity for the benefit of the Company all
secret or confidential information, knowledge or data relating to the Company or
any of its affiliated companies, and their respective businesses, that shall
have been obtained by the Executive during the Executive's employment by the
Company or any of its affiliated companies and that shall not be or become
public knowledge (other than by acts by the Executive or representatives of the
Executive in violation of this Agreement). After termination of the Executive's
employment with the Company, the Executive shall not, without the prior written
consent of the Company or as may otherwise be required by law or legal process,
communicate or divulge any such information, knowledge or data to anyone other
than the Company and those designated by it. In no event shall an asserted
violation of the provisions of this Section 10 constitute a basis for
deferring or withholding any amounts otherwise payable to the Executive under
this Agreement.
|
11. |
Successors |
(a) This
Agreement is personal to the Executive and without the prior written consent of
the Company shall not be assignable by the Executive otherwise than by will or
the laws of descent and distribution. This Agreement shall inure to the benefit
of and be enforceable by the Executive's legal representatives.
(b) This
Agreement shall inure to the benefit of and be binding on the Company and its
successors and assigns.
(c) The
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all the business
and/or assets of the Company to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. As used in this
Agreement, Company shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid that assumes and agrees to
perform this Agreement by operation of law, or otherwise.
|
12. |
Miscellaneous |
(a) This
Agreement shall be governed by and construed in accordance with the laws of the
state of Washington, without reference to principles of conflict of laws. The
captions of this Agreement are not part of the provisions hereof and shall have
no force or effect. This Agreement may not be amended or modified otherwise than
by a written agreement executed by the parties hereto or their respective
successors and legal representatives.
(b) All
notices and other communications hereunder shall be in writing and shall be
given by hand delivered to the other party or by registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:
If to the
Executive:
Xxxx X.
Xxxxxxx
Senior
Vice President Energy Resources and Planning
Puget
Sound Energy, Inc.
P. X. Xxx
00000
Xxxxxxxx,
XX 00000-0000
If to the
Company:
Puget
Sound Energy, Inc.
P. X. Xxx
00000,
Xxxxxxxx,
XX 00000-0000
or to
such other address as either party shall have furnished to the other in writing
in accordance herewith. Notice and communications shall be effective when
actually received by the addressee.
(c) The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this
Agreement.
(d) The
Company may withhold from any amounts payable under this Agreement such federal,
state or local taxes as shall be required to be withheld pursuant to any
applicable law or regulation.
(e) The
Executive's or the Company's failure to insist on strict compliance with any
provision hereof or any other provision of this Agreement or the failure to
assert any right the Executive or the Company may have hereunder, including
without limitation the right of the Executive to terminate employment for Good
Reason pursuant to Section 5(c)(i)-(v), shall not be deemed to be a waiver
of such provision or right or any other provision or right of this
Agreement.
(f) The
Executive and the Company acknowledge that, except as may otherwise be provided
under any other written agreement between the Executive and the Company, the
employment of the Executive by the Company is "at will" and, prior to the
Effective Date, may be terminated by either the Executive or the Company at any
time. Moreover, if prior to the Effective Date, the Executive's employment with
the Company terminates, then the Executive shall have no further rights under
this Agreement.
(g) This
Agreement may be executed in counterparts, each of which counterparts shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
IN
WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and,
pursuant to authorization from the Board, the Company has caused this Agreement
to be executed in its name and on its behalf, all as of the day and year first
above written.
|
PUGET
SOUND ENERGY, INC. | |
|
By:
Xxxxxxx X. Xxxxxxxx
Its
President and Chief Executive Officer | |
|
Xxxx
X. Xxxxxxx |
