CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS
AGREEMENT is entered into as of ______, 2008 by and between Southern Union
Company, a Delaware corporation (the “COMPANY”), and ____________
(“EXECUTIVE”).
W I T N E
S S E T H
WHEREAS,
the Company considers the establishment and maintenance of a sound and vital
management to be essential to protecting and enhancing the best interests of the
Company and its stockholders; and
WHEREAS,
the Company recognizes that, as is the case with many publicly held
corporations, the possibility of a change in control may arise and that such
possibility may result in the departure or distraction of management personnel
to the detriment of the Company and its stockholders; and
WHEREAS,
the Compensation Committee of the Board (as defined in Section 1) has
determined that it is in the best interests of the Company and its stockholders
to secure Executive’s continued services and to ensure Executive’s continued
dedication to his duties in the event of any threat or occurrence of a Change in
Control (as defined in Section 1) of the Company; and
WHEREAS,
the Compensation Committee of the Board has authorized the Company to enter into
this Agreement.
NOW,
THEREFORE, for and in consideration of the premises and the mutual covenants and
agreements herein contained, the Company and Executive hereby agree as
follows:
1. Definitions. As
used in this Agreement, the following terms shall have the respective meanings
set forth below:
(a) “BASE
SALARY” means the Executive’s highest annual rate of base salary during the
36-month period immediately prior to the Date of Termination.
(b) “BOARD”
means the Board of Directors of the Company and, after a Change in Control, the
“board of directors” of the Parent Corporation or Surviving Corporation, as the
case may be, as defined for purposes of Section 1(e).
(c) “BONUS
AMOUNT” means the higher of (i) Executive’s target annual bonus for the year in
which the Date of Termination occurs or (ii) the average annual bonus paid to
the Executive by the Company (or its affiliates) pursuant to the annual bonus
plan that the Company (or its affiliates) may have in place from time to time,
including any portion of the annual bonus deferred into a deferred compensation
plan, during the last three (3) completed fiscal years of the Company (or such
shorter period of time during which the Executive was employed by the Company)
immediately preceding the Date of Termination (annualized in the event that the
Executive was not employed by the Company (or its affiliates) for the whole of
any such fiscal year).
(d) “CAUSE”
means (i) the willful and continued failure of the Executive to perform
substantially his duties with the Company (other than any such failure resulting
from the Executive’s incapacity due to physical or mental illness or any such
failure subsequent to the Executive being delivered a notice of termination
without Cause by the Company or delivering a notice of termination for Good
Reason to the Company) after a written demand for substantial performance is
delivered to the Executive by or on behalf of the Board which specifically
identifies the manner in which the Board believes that the Executive has not
substantially performed his duties, (ii) the willful engaging by the
Executive in illegal conduct or gross misconduct which is demonstrably and
materially injurious to the Company or its affiliates or (iii) the
conviction of a felony by the Executive. For purposes of this
paragraph (d), no act or failure to act by the Executive shall be considered
“willful” unless done or omitted to be done by the Executive in bad faith and
without reasonable belief that the Executive’s action or omission was in the
best interests of the Company or its affiliates. Any act, or failure
to act, in accordance with authority duly given by the Board, based upon the
advice of counsel for the Company (including counsel employed by the Company)
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. Cause shall not exist unless and until the Company has
delivered to the Executive a copy of a resolution duly adopted by three-quarters
of the entire Board (excluding the Executive from both the numerator and
denominator if the Executive is a Board member) at a meeting of the Board called
and held for such purpose (after reasonable notice to the Executive and an
opportunity for the Executive, together with counsel, to be heard before the
Board), that an event set forth in clause (i), (ii) or (iii) has occurred
and specifying the particulars thereof in detail. If the Company does
not deliver to the Executive a Notice of Termination (as defined in Section
9(b)) within ninety (90) days after the Chairman of the Board (or, if the
Executive is the Chairman, the head of the Compensation Committee) has knowledge
that an event constituting Cause has occurred, the event will no longer
constitute Cause.
(e) “CHANGE
IN CONTROL” means the occurrence of any one of the following
events:
(i) individuals
who, on the effective date of the Agreement, constitute the Board (the
“INCUMBENT DIRECTORS”) cease for any reason to constitute at least a majority of
the Board, provided
that any person becoming a director subsequent to the effective date of the
Agreement whose election or nomination for election was approved by a vote of at
least two-thirds of the Incumbent Directors then on the Board (either by a
specific vote or by approval of the proxy statement of the Company in which such
person is named as a nominee for director, without written objection to such
nomination) shall be an Incumbent Director; provided, however, that no individual
initially elected or nominated as a director of the Company as a result of an
actual or threatened election contest with respect to directors or as a result
of any other actual or threatened solicitation of proxies or consents by or on
behalf of any person other than the Board shall be deemed to be an Incumbent
Director;
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(ii) any
“person” (as such term is defined in Section 3(a)(9) of the Securities
Exchange Act of 1934, as amended (the “EXCHANGE ACT”) and as used in Sections
13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a “beneficial owner”
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 20% or more of the combined voting power
of the Company’s then outstanding securities eligible to vote generally in the
election of directors (the “COMPANY VOTING SECURITIES”); provided, however, that the event
described in this paragraph (ii) shall not be deemed to be a Change in
Control by virtue of any of the following acquisitions: (A) by
the Company or any Subsidiary, (B) by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any Subsidiary, (C) by any
underwriter temporarily holding securities pursuant to an offering of such
securities, (D) pursuant to a Non-Qualifying Transaction (as defined in
paragraph (iii)), (E) pursuant to any acquisition by the Executive or
any group of persons including the Executive (or any entity controlled by the
Executive or any group of persons including the Executive) or (F) by Xxxxxx X.
Xxxxxxxxx, his spouse, descendants and trusts for their benefit and any person
that is and remains a controlled affiliate of Xxxxxx X. Xxxxxxxxx or his spouse
(individually and collectively, the “XXXXXXXXX FAMILY”);
(iii) the
consummation of a merger, consolidation, statutory share exchange,
reorganization, sale of all or substantially all the Company’s assets or similar
form of corporate transaction involving the Company or any of its Subsidiaries
that requires the approval of the Company’s stockholders, whether for such
transaction or the issuance of securities in the transaction (a “BUSINESS
COMBINATION”), unless immediately following such Business
Combination: (A) over 50% of the total voting power of
(x) the corporation resulting from such Business Combination (the
“SURVIVING CORPORATION”), or (y) if applicable, the ultimate parent
corporation that directly or indirectly has beneficial ownership of at least 95%
of the voting securities eligible to elect directors of the Surviving
Corporation (the “PARENT CORPORATION”), is represented by Company Voting
Securities that were outstanding immediately prior to such Business Combination
(or, if applicable, is represented by shares into which such Company Voting
Securities were converted pursuant to such Business Combination), and such
voting power among the holders thereof is in substantially the same proportion
as the voting power of such Company Voting Securities among the holders thereof
immediately prior to the Business Combination, (B) no person (other than
any employee benefit plan (or related trust) sponsored or maintained by the
Surviving Corporation or the Parent Corporation or the Xxxxxxxxx Family), is or
becomes the beneficial owner, directly or indirectly, of 20% or more of the
total voting power of the outstanding voting securities eligible to elect
directors of the Parent Corporation (or, if there is no Parent Corporation, the
Surviving Corporation) and (C) at least a majority of the members of the
board of directors of the Parent Corporation (or, if there is no Parent
Corporation, the Surviving Corporation) following the consummation of the
Business Combination were Incumbent Directors at the time of the Board’s
approval of the execution of the initial agreement providing for such Business
Combination (any Business Combination which satisfies all of the criteria
specified in (A), (B) and (C) above shall be deemed to be a “NON-QUALIFYING
TRANSACTION” and any Business Combination which does not satisfy all of the
criteria specified in (A), (B) and (C) shall be deemed a “QUALIFYING
TRANSACTION”); or
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(iv) the
stockholders of the Company approve a plan of complete liquidation or
dissolution of the Company.
Notwithstanding
the foregoing, a Change in Control shall not be deemed to occur solely because
any person acquires beneficial ownership of more than 20% of the Company Voting
Securities as a result of the acquisition of Company Voting Securities by the
Company or its affiliates which reduces the number of Company Voting Securities
outstanding; provided,
that if after the consummation of such acquisition by the Company such person
becomes the beneficial owner of additional Company Voting Securities that
increases the percentage of outstanding Company Voting Securities beneficially
owned by such person, a Change in Control of the Company shall then
occur. For purposes of this Change in Control definition,
“corporation” shall include any limited liability company, partnership,
association, business trust and similar organization, “board of directors” shall
refer to the ultimate governing body of such organization and “director” shall
refer to any member of such governing body.
(f) “DATE OF
TERMINATION” means (i) the effective date on which the Executive’s
employment by the Company terminates as specified in a prior written notice by
the Company or the Executive, as the case may be, to the other, delivered
pursuant to Section 9 or (ii) if the Executive’s employment by the
Company terminates by reason of death, the date of death of the
Executive.
(g) “DISABILITY”
shall mean long-term disability under the terms of Company’s long-term
disability plan, as then in effect.
(h) “EQUITY
INCENTIVE COMPENSATION” means all equity-based compensation awards (including
stock options, restricted stock, stock appreciation rights and cash restricted
units) granted under the Company’s stock and incentive plans, as in effect from
time to time.
(i) “GOOD
REASON” means the occurrence of one or more of the following circumstances,
without the Executive’s express written consent, and which circumstance(s) are
not remedied by the Company within thirty (30) days of receipt of a written
notice from the Executive describing in reasonable detail the Good Reason event
that has occurred (which notice must be provided within ninety (90) days of the
Executive’s obtaining knowledge of the event), provided that the Executive must
terminate employment within the two (2) years following the Executive’s
obtaining knowledge of the event:
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(i) any
material change in the duties, responsibilities or authority (including
reporting responsibilities) of the Executive that is inconsistent in any
material and adverse respect with the Executive’s position(s), duties,
responsibilities or status with the Company immediately prior to such Change in
Control (including any material and adverse diminution of such duties or
responsibilities);
(ii) any
material and adverse change in the Executive’s titles or offices (including, if
applicable, membership on the Board) with the Company as in effect immediately
prior to such Change in Control;
(iii) a more
than 10% reduction by the Company in the Executive’s rate of annual base salary
as in effect immediately prior to such Change in Control;
(iv) a more
than 10% reduction by the Company in the Executive’s annual bonus opportunity as
in effect immediately prior to such Change in Control (including any material
and adverse change in the formula for such bonus);
(v) any
requirement of the Company that the Executive (A) be based anywhere more than
fifty (50) miles from the office where the Executive is located at the time of
the Change in Control or (B) travel on Company business to an extent
substantially greater than the travel obligations of the Executive immediately
prior to such Change in Control; or
(vi) the
failure of the Company to obtain the assumption of the Company’s obligations
hereunder from any successor as contemplated in Section 8(b).
The
Executive’s right to terminate employment for Good Reason shall not be affected
by the Executive’s incapacities due to mental or physical illness and the
Executive’s continued employment shall not constitute consent to, or a waiver of
rights with respect to, any event or condition constituting Good
Reason.
(j) “QUALIFYING
TERMINATION” means a termination of the Executive’s employment (i) by the
Company other than for Cause or (ii) by the Executive for Good
Reason. Termination of the Executive’s employment on account of death
or Disability shall not be treated as a Qualifying
Termination. Notwithstanding the preceding sentence, the death of the
Executive after notice of termination for Good Reason or without Cause has been
validly provided shall be deemed to be a Qualifying Termination.
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(k) “SUBSIDIARY”
means any corporation or other entity in which the Company has a direct or
indirect ownership interest of 50% or more of the total combined voting power of
the then outstanding securities or interests of such corporation or other entity
entitled to vote generally in the election of directors (or members of any
similar governing body) or in which the Company has the right to receive 50% or
more of the distribution of profits or 50% of the assets or liquidation or
dissolution.
(l) “TERMINATION
PERIOD” means the period of time beginning with a Change in Control and ending
two (2) years following such Change in Control. Notwithstanding
anything in this Agreement to the contrary, if (i) the Executive’s
employment is terminated prior to a Change in Control for reasons that would
have constituted a Qualifying Termination if they had occurred following a
Change in Control; (ii) the Executive reasonably demonstrates that such
termination (or Good Reason event) was at the request of a third party who had
indicated an intention or taken steps reasonably calculated to effect a Change
in Control; and (iii) a Change in Control involving such third party (or a party
competing with such third party to effectuate a Change in Control) does occur
within twelve (12) months from the date of such termination, then for
purposes of this Agreement, the date immediately prior to the date of such
termination of employment or event constituting Good Reason shall be treated as
a Change in Control. For purposes of determining the timing of
payments and benefits to the Executive under Section 3, the date of the actual
Change in Control shall be treated as the Date of Termination under
Section 1(f), and for purposes of determining the amount of payments and
benefits owed to the Executive under Section 3, the date the Executive’s
employment is actually terminated shall be treated as the Date of Termination
under Section 1(f).
2. Term of
Agreement. This Agreement shall be effective on the date
hereof and shall continue in effect until the Company shall have given three (3)
years’ written notice of cancellation; provided, that, notwithstanding
the delivery of any such notice, this Agreement shall continue in effect for a
period of two (2) years after a Change in Control, if such Change in Control
shall have occurred during the term of this
Agreement. Notwithstanding anything in this Section to the contrary,
this Agreement shall terminate if Executive or the Company terminates
Executive’s employment prior to a Change in Control except as provided in
Section 1(l).
3. Payments Upon Termination of
Employment. If during the Termination Period the employment of
the Executive is terminated pursuant to a Qualifying Termination, then the
Company shall provide to the Executive:
(a) a
lump-sum cash payment equal to the result of multiplying (i) the sum of
(A) the Executive’s Base Salary, plus (B) the Executive’s Bonus Amount
by (ii) [one
(1)] [one and a half
(1.5)];
(b) a
lump-sum cash payment equal to the Executive’s base salary through the Date of
Termination and any bonus amounts for completed fiscal years, to the extent not
theretofore paid or deferred;
(c) a
lump-sum cash payment equal to the Executive’s target annual bonus for the
fiscal year in which the Date of Termination occurs, multiplied by a fraction
the numerator of which shall be the number of days the Executive was employed by
the Company during the fiscal year in which the Date of Termination occurred and
the denominator of which is 365;
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(d) a
lump-sum cash payment equal to the after-tax value (based on the highest Federal
and State tax rates) of the Company-provided annual health care for the
Executive and/or the Executive’s family at the Date of Termination, multiplied
by [one (1)] [one and a half (1.5)];
(e) for a
period of one (1) year following the Date of Termination, the Company shall
make outplacement services available to the Executive in accordance with its
outplacement policy in effect immediately before the Change in Control (or if no
such policy is in effect, the Executive may choose a provider of outplacement
services, provided that
the total cost of such outplacement services for the Executive shall not exceed
$20,000);
(f) to the
extent not theretofore paid or provided, any other amounts or benefits required
to be paid or provided or which the Executive is eligible to receive under any
plan, program, policy or practice or other contract or agreement of the Company
and its affiliated companies through the Date of Termination; and
(g) full
vesting of all Executive’s outstanding Equity Incentive Compensation awards (for
the avoidance of doubt, the vesting provided in this Section 3(g) shall be in
addition to, and not in lieu of, the change in control vesting provided under
the Company’s stock and incentive plans or award agreements issued
thereunder).
The
Company shall not be required to make the payments and provide the benefits
specified in this Section 3 unless the Executive executes and delivers to the
Company an agreement releasing the Company, its affiliates and its officers,
directors and employees from all liability (other than the payments and benefits
under this Agreement) in the form attached hereto as Exhibit A (the “RELEASE”).
The Release shall be provided to the Executive no later than two (2) days after
the Date of Termination, must be executed by the Executive and become effective
and not be revoked by the Executive by the 55th day
following the Date of Termination.
Subject
to the Release becoming effective as provided above, the payments and benefits
provided in Section 3 shall be paid within sixty (60) days of the Date of
Termination.
4. Limitation on Payments by
the Company.
(a) Anything
in this Agreement to the contrary notwithstanding, in the event it shall be
determined that (i) any payment, award, benefit or distribution (or any
acceleration of any payment, award, benefit or distribution) by the Company (or
any of its affiliated entities) or any entity which effectuates a Change in
Control (or any of its affiliated entities) to or for the benefit of Executive
(whether pursuant to the terms of this Agreement or otherwise) (the “PAYMENTS”)
would be subject to the excise tax imposed by Section 4999 of the Internal
Revenue Code (the “EXCISE TAX”), and (ii) the reduction of the amounts payable
to Executive under this Agreement to the maximum amount that could be paid to
Executive without giving rise to the Excise Tax (the “SAFE HARBOR CAP”) would
provide the Executive with a greater after tax amount than if such amounts were
not reduced, then the amounts payable to Executive under this Agreement shall be
reduced (but not below zero) to the Safe Harbor Cap. The reduction of
the amounts payable hereunder, if applicable, shall be made by reducing first
the benefits under Section 3(e), then reducing the cash payments under Section
3(a), (b), (c) and (d), and then reducing the accelerated vesting under Section
3(g) (first by not vesting equity awards that are not Section 409A “deferred
compensation” and then by not vesting equity awards that are Section 409A
“deferred compensation”). For purposes of reducing the Payments to
the Safe Harbor Cap, only amounts payable under this Agreement (and no other
Payments) shall be reduced. If the reduction of the amounts payable
hereunder would not result in a greater after tax result to Executive, no
amounts payable under this Agreement shall be reduced pursuant to this
provision.
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(b) All
determinations required to be made under this Section 4 shall be made by the
public accounting firm that is retained by the Company as of the date
immediately prior to the Change in Control (the “ACCOUNTING FIRM”) which shall
provide detailed supporting calculations both to the Company and Executive
within fifteen (15) business days of the receipt of notice from the Company or
the Executive that there has been a Payment, or such earlier time as is
requested by the Company. Notwithstanding the foregoing, in the event
(i) the Board shall determine prior to the Change in Control that the Accounting
Firm is precluded from performing such services under applicable auditor
independence rules or (ii) the Audit Committee of the Board determines that it
does not want the Accounting Firm to perform such services because of auditor
independence concerns or (iii) the Accounting Firm is serving as accountant or
auditor for the individual, entity or group effecting the Change in Control, the
Board shall appoint another nationally recognized public accounting firm to make
the determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). If payments are
reduced to the Safe Harbor Cap, the Accounting Firm shall provide a reasonable
opinion to Executive that he or she is not required to report any Excise Tax on
his or her federal income tax return. All fees, costs and expenses
(including, but not limited to, the costs of retaining experts) of the
Accounting Firm shall be borne by the Company. If the Accounting Firm
determines that no Excise Tax is payable by Executive, it shall furnish
Executive with a written opinion to such effect, and to the effect that failure
to report the Excise Tax, if any, on Executive’s applicable federal income tax
return will not result in the imposition of a negligence or similar
penalty. In the event the Accounting Firm determines that the
Payments shall be reduced to the Safe Harbor Cap, it shall furnish Executive
with a written opinion to such effect. The determination by the
Accounting Firm shall be binding upon the Company and Executive (except as
provided in paragraph (c) below).
(c) If it is
established pursuant to a final determination of a court or the Internal Revenue
Service (the “IRS”) proceeding which has been finally and conclusively resolved,
that Payments have been made to, or provided for the benefit of, Executive by
the Company, which are in excess of the limitations provided in this Section 4
(hereinafter referred to as an “EXCESS PAYMENT”), such Excess Payment shall be
deemed for all purposes to be a loan to Executive made on the date Executive
received the Excess Payment and Executive shall repay the Excess Payment to the
Company on demand, together with interest on the Excess Payment at the
applicable federal rate (as defined in Section 1274(d) of the Code) from the
date of Executive’s receipt of such Excess Payment until the date of such
repayment. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the determination, it is possible that
Payments which will not have been made by the Company should have been made (an
“UNDERPAYMENT”), consistent with the calculations required to be made under this
Section 4. In the event that it is determined (i) by the Accounting
Firm, the Company (which shall include the position taken by the Company, or
together with its consolidated group, on its federal income tax return) or the
IRS or (ii) pursuant to a determination by a court, that an Underpayment has
occurred, the Company shall pay an amount equal to such Underpayment to
Executive within ten (10) days of such determination together with interest on
such amount at the applicable federal rate from the date such amount would have
been paid to Executive until the date of payment. Executive shall
cooperate, to the extent his or her expenses are reimbursed by the Company, with
any reasonable requests by the Company in connection with any contests or
disputes with the Internal Revenue Service in connection with the Excise Tax or
the determination of the Excess Payment. Notwithstanding the
foregoing, in the event that amounts payable under this Agreement were reduced
pursuant to Section 4(a) and the value of stock options is subsequently
redetermined by the Accounting Firm (as defined below) within the context of
Treasury Regulation §1.280G-1 Q/A 33 that reduces the value of the Payments
attributable to such options, the Company shall promptly pay to Executive any
amounts payable under this Agreement that were not previously paid solely as a
result of Section 4(a) up to the Safe Harbor Cap.
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5. Withholding
Taxes. The Company may withhold from all payments due to the
Executive (or his beneficiary or estate) hereunder all taxes which, by
applicable federal, state, local or other law, the Company is required to
withhold therefrom.
6. Reimbursement of
Expenses. If any contest or dispute shall arise under this
Agreement involving termination of a Executive’s employment with the Company or
involving the failure or refusal of the Company to perform fully in accordance
with the terms hereof, the Company shall reimburse the Executive on a current
basis (as incurred) for all reasonable expenses, including reasonable attorney’s
fees, the Executive incurs as a result of any controversy or claim between the
Executive and the Company relating to this Agreement regardless of the result
thereof; provided,
however, that the
Executive shall be required to repay immediately any such amounts to the Company
to the extent that a court issues a final and non-appealable order setting forth
the determination that the position taken by the Executive was frivolous or
advanced by the Executive in bad faith.
7. Scope of
Agreement. Nothing in this Agreement shall be deemed to
entitle the Executive to continued employment with the Company or its
Subsidiaries, and if a Executive’s employment with the Company shall terminate
prior to a Change in Control, the Executive shall have no further rights under
this Agreement (except as otherwise provided hereunder); provided, however, that any termination
of a Executive’s employment during the Termination Period shall be subject to
all of the provisions of this Agreement.
8. Successors; Binding
Agreement.
(a) This
Agreement shall not be terminated by any Business Combination. In the
event of any Business Combination, the provisions of this Agreement shall be
binding upon the Surviving Corporation, and such Surviving Corporation shall be
treated as the Company hereunder.
(b) The
Company agrees that in connection with any Business Combination, it will cause
any successor entity to the Company unconditionally 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. Failure of the Company to obtain such assumption prior to the
effectiveness of any such Business Combination that constitutes a Change in
Control, shall be a breach of this Agreement and shall constitute Good Reason
hereunder and shall entitle the Executive to compensation and other benefits
from the Company in the same amount and on the same terms as the Executive would
be entitled hereunder if the Executive’s employment were terminated following a
Change in Control by reason of a Qualifying Termination. For purposes
of implementing the foregoing, the date on which any such Business Combination
becomes effective shall be deemed the date Good Reason occurs, and shall be the
Date of Termination if requested by an Executive.
(c) 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 personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive shall die while any amounts
would be payable to the Executive hereunder had the Executive continued to live,
all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to such person or persons appointed in writing
by the Executive to receive such amounts or, if no person is so appointed, to
the Executive’s estate.
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9. Notice. (a) For
purposes of this Agreement, all notices and other communications required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given when delivered or five (5) days after deposit in the United States
mail, certified and return receipt requested, postage prepaid, addressed as
follows:
If to the
Executive: the address listed as the Executive’s address in the
Company’s personnel files.
If to the
Company:
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Southern Union Company
|
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Attention: Secretary
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0000 Xxxxxxxxxx Xxxx
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Xxxxxxx,
XX 00000-0000
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or to
such other address as either party may have furnished to the other in writing in
accordance herewith, except that notices of change of address shall be effective
only upon receipt.
(b) A written
notice of the Date of Termination by the Company or the Executive (“NOTICE OF
TERMINATION”), as the case may be, to the other, shall (i) indicate the
specific termination provision in this Agreement relied upon, (ii) to the
extent applicable, set 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) specify the termination date (which
date shall be not less than fifteen (15) nor more than sixty (60) days
after the giving of such notice). The failure by the Executive or the
Company to set forth in such notice 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.
10. Full
Settlement. The Company’s obligation to make any payments
provided for in this Agreement and otherwise to perform its obligations
hereunder (i) shall be in lieu of and in full settlement of all other severance
payments to the Executive under any other severance or employment agreement
between the Executive and the Company, and any severance plan of the Company,
provided, however, this Agreement shall
not waive any other rights or benefits provided by the Company to the Executive
as of the date hereof, including without limitation, the change in control
vesting provided under the Company’s stock and incentive plans or award
agreements issued thereunder, and (ii) shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action which the
Company may have against the Executive or others. In no event shall
the Executive be obligated to seek other employment or take other action by way
of mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement and such amounts shall not be reduced whether or
not the Executive obtains other employment.
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11. Employment with
Subsidiaries. Employment with the Company for purposes of this
Agreement shall include employment with any Subsidiary.
12. Survival. The
respective obligations and benefits afforded to the Company and the Executive as
provided in Sections 3 (to the extent that payments or benefits are owed as
a result of a termination of employment that occurs during the term of this
Agreement), 4, 5, 6, 8(c) and 10 shall survive the termination of this
Agreement.
13. GOVERNING LAW;
VALIDITY. THE INTERPRETATION, CONSTRUCTION AND PERFORMANCE OF
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO THE PRINCIPLE OF
CONFLICTS OF LAWS, AND APPLICABLE FEDERAL LAWS. THE INVALIDITY OR
UNENFORCEABILITY OF ANY PROVISION OF THIS AGREEMENT SHALL NOT AFFECT THE
VALIDITY OR ENFORCEABILITY OF ANY OTHER PROVISION OF THIS AGREEMENT, WHICH OTHER
PROVISIONS SHALL REMAIN IN FULL FORCE AND EFFECT.
14. Jurisdiction and Choice of
Forum. The Executive and the Company irrevocably submit to the exclusive
jurisdiction of any state or federal court located in Houston, Texas (Xxxxxx
County) over any dispute or controversy involving this
Agreement. Both the Executive and the Company (i) acknowledge
that the forum stated in this Section 14 has a reasonable relation to this
Agreement and to the relationship between the Executive and the Company and that
the submission to the forum will apply even if the forum chooses to apply
non-forum law, (ii) waive, to the extent permitted by law, any objection to
personal jurisdiction or to the laying of venue of any action or proceeding
covered by this Section 14 in the forum stated in this Section 14,
(iii) agree not to commence any such action or proceeding in any forum
other than the forum stated in this Section 14 and (iv) agree that, to
the extent permitted by law, a final and non-appealable judgment in any such
action or proceeding in any such court will be conclusive and binding on the
Executive and the Company. However, nothing in this Agreement
precludes the Executive or the Company from bringing any action or proceeding in
any court for the purpose of enforcing the provisions of this
Section 14.
15. Counterparts. This
Agreement may be executed in counterparts, each of which shall be deemed to be
an original and all of which together shall constitute one and the same
instrument.
16. Miscellaneous. No
provision of this Agreement may be modified or waived unless such modification
or waiver is agreed to in writing and signed by Executive and by a duly
authorized officer of the Company. No waiver by either party hereto
at any time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. Failure by Executive or
the Company to insist upon strict compliance with any 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 (subject to the limitation in the lead in
of Section 1(i)) or the Company’s right to terminate the Executive for Cause
(subject to the limitation in the last sentence of Section 1(d)), shall not be
deemed to be a waiver of such provision or right or any other provision or right
of this Agreement. Except as otherwise specifically provided herein,
the rights of, and benefits payable to, Executive, his estate or his
beneficiaries pursuant to this Agreement are in addition to any rights of, or
benefits payable to, Executive, his estate or his beneficiaries under any other
employee benefit plan or compensation program of the Company.
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17. Section
409A.
(a) To extent
the Executive would otherwise be entitled to any payment that under this
Agreement, or any plan or arrangement of the Company or its affiliates,
constitutes “deferred compensation” subject to Section 409A of the Code
(“SECTION 409A”) and that if paid during the six months beginning on the
Date of Termination would be subject to the Section 409A additional tax because
the Executive is a “specified employee” (within the meaning of Section 409A and
as determined by the Company), the payment will be paid to the Executive on the
earlier of the six-month anniversary of the Date of Termination or Executive’s
death. Similarly, to the extent the Executive would otherwise be
entitled to any benefit (other than a payment) during the six months beginning
on the Date of Termination that would be subject to the Section 409A additional
tax, the benefit will be delayed and will begin being provided on the earlier of
the six-month anniversary of the Date of Termination or the Executive’s
death. In addition, any payment or benefit due upon the Date of
Termination that represents a “deferral of compensation” within the meaning of
Section 409A shall be paid or provided to the Executive only upon a “separation
from service” as defined in Treas. Reg. § 1.409A-1(h). Each
severance payment made under this Agreement shall be deemed to be separate
payments, amounts payable under Section 3 of this Agreement shall be deemed not
to be a “deferral of compensation” subject to Section 409A to the extent
provided in the exceptions in Treasury Regulations Section 1.409A-1(b)(4)
(“short-term deferrals”) and (b)(9) (“separation pay plans,” including the
exception under subparagraph (iii)) and other applicable provisions of
Treasury Regulations Sections 1.409A-1 through A-6.
(b) Notwithstanding
anything to the contrary in this Agreement or elsewhere, any payment or benefit
under this Agreement or otherwise that is exempt from Section 409A pursuant to
Final Treasury Regulations Section 1.409A-1(b)(9)(v)(A) or (C) (certain
“reimbursements”) shall be paid or provided to the Executive only to the extent
that the expenses are not incurred, or the benefits are not provided, beyond the
last day of the Executive’s second taxable year following the Executive’s
taxable year in which the “separation from service” occurs; and provided further
that such expenses are reimbursed no later than the last day of the Executive’s
third taxable year following the taxable year in which the Executive’s
“separation from service” occurs. Except as otherwise expressly
provided herein, to the extent any expense reimbursement or the provision of any
in-kind benefit under this Agreement is determined to be subject to Section 409A
of the Code, the amount of any such expenses eligible for reimbursement, or the
provision of any in-kind benefit, in one calendar year shall not affect the
expenses eligible for reimbursement in any other taxable year (except for any
life-time or other aggregate limitation applicable to medical expenses), in no
event shall any expenses be reimbursed after the last day of the calendar year
following the calendar year in which the Executive incurred such expenses, and
in no event shall any right to reimbursement or the provision of any in-kind
benefit be subject to liquidation or exchange for another benefit.
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IN
WITNESS WHEREOF, the Company has caused this Agreement to be executed by a duly
authorized officer of the Company and Executive has executed this Agreement as
of the day and year first above written.
Southern
Union Company
_________________________________
Name:____________________________
Title:_____________________________
_________________________________
[EXECUTIVE]
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