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AGREEMENT EXHIBIT 10.118
THIS AGREEMENT ("Agreement") is made and entered into as of the __ day
of October, 1996 between PUGET SOUND POWER & LIGHT COMPANY, a Washington
corporation (the "Company"), and XXXXXXX X. XXXXXX ("Employee"). The term
"Parties" refers to the Company and the Employee.
RECITALS
A. Employee is currently serving as Executive Vice President and Chief
Financial Officer of the Company.
B. Pursuant to an Agreement and Plan of Merger, dated as of October
18, 1995 (the "Merger Agreement"), Washington Energy Company and Washington
Natural Gas Company have agreed to merge with and into the Company (the
"Merger").
C. Employee's position and job responsibilities within the Company
have changed and will continue to change as a result of the Merger Agreement
and the Merger. Consequently, Employee has advised the Company's President
and Chief Executive Officer that he wishes to tender his resignation.
D. The Company desires to retain the services of Employee and
accordingly hasagreed to provide incentives for Employee to remain employed
with the Company.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and for other good and valuable consideration, the Parties
agree as follows:
1. Incentive Payments
The Company agrees to provide to Employee the following benefits if
Employee does not voluntarily terminate his employment with the Company
prior to the consummation of the Merger pursuant to the terms of the Merger
Agreement (the "Effective Date") and his employment thereafter terminates
for any reason other than retirement at the Normal Retirement Date, as
defined in the Company's Supplemental Retirement Plan for Officers as
amended to the date of this Agreement (the "SERP").
(a) Employee's full base salary earned through the termination
date, plus payment for all accrued vacation and any deferred compensation to
which Employee is entitled for the fiscal year most recently ended prior to
Employee's termination, and Employee's pro rata share of any compensation
under any Company plan which has accrued through the date of termination,
regardless of whether or not pursuant to the terms of the plan such amounts
are vested or are payable in the year of termination; plus
(b) An amount equal to three times the greater of (i) the sum of
Employee's annual base salary in 1996 plus the bonus paid to Employee in
1996 plus the phantom stock payment made to Employee in 1996 or (ii) the sum
of Employee's annual base salary at the rate in effect as of the date of
termination, plus the amount of any additional compensation awarded to
Employee, including any sums paid under phantom stock awards, for the
calendar year most recently ended. However, if Employee's Normal Retirement
Date is less than three years after the date of termination, the multiplier
in the preceding sentence shall be reduced from three to that fraction of
three representing the number of months remaining to the Normal Retirement
Date divided by 36 (e.g., if 18 months remain to the Normal Retirement Date,
the multiplier would be 18/36 x three = 1.5).
(c) The Company shall maintain in full force and effect for the
three years following the date of termination (or, if less, until the
Employee's Normal Retirement Date) all employee benefit plans, programs and
policies, including any life or health insurance plans, in which Employee
was entitled to participate immediately prior to termination, provided that
Employee is qualified to participate under the general terms and provisions
of such plans, programs and policies. In the event that Employee's
continued participation in any such plan, program or policy is not possible
under its terms and conditions, the Company shall at its option either
arrange for Employee to receive benefits substantially similar to those
which Employee would have been entitled to receive under each plan, program
or policy, or pay to employee an amount equal to the premiums that the
Company would pay on Employee's behalf for participation in such plan,
program or policy. At the end of the period of coverage, Employee will have
the option to receive an assignment at no cost, and with no apportionment of
prepaid premiums, of any assignable insurance policies owned by the Company
and relating to Employee, and to take advantage of any conversion privileges
pertinent to the benefits available under Company policies.
(d) In addition to the regular payment of benefits to which
Employee is entitled under the retirement plans or programs in effect on the
date of Employee's termination, which shall not be affected by such
termination, the Company shall pay to Employee in cash at the Normal
Retirement Date or at such earlier retirement date as Employee may elect
pursuant to the plans, an amount equal to the actuarial equivalent of the
additional retirement compensation to which Employee would have been
entitled under the terms of such retirement plans or programs (without
regard to vesting) had Employee continued in the employ of the Company for
an additional three years at Employee's base salary rate as of the date of
termination. If Employee's Normal Retirement Date would occur during that
three period, then the amount of such additional compensation shall be
calculated on the basis that Employee's employment continued to that date.
For purposes of this calculation, the actuarial equivalent shall be
determined by assuming survival to age 80.
(e) Employee shall waive all rights to receive shares of common
stock of the Company issuable upon exercise of options or similar rights, if
any, granted to Employee under the Company's stock option or similar equity
plans. In return for that waiver, Employee shall be entitled to receive,
within 30 days following the date of termination, a payment equal to the
difference between the exercise price of all options or similar rights held
by Employee, whether or not then fully exercisable, and the higher of (i)
the closing price of the common stock on the New York Stock Exchange on the
date of termination or (ii) the highest price per share actually paid in
connection with any change of control of the Company.
(f) Notwithstanding any other provisions of this Agreement, if any
payments or benefits under this Agreement, together with any other Parachute
Payments (as defined under Internal Revenue Code Section 280(G)(b)(2)) made
by the Company to Employee, if any, are characterized as Excess Parachute
Payments (as defined in Internal Revenue Code, Section 280(G)(b)(1)), then
the Company shall pay to Employee, in addition to the payments to be
received under this Section, an amount equal to the excise taxes imposed by
Section 4999 of the Code on Employee's Excess Parachute Payments, plus an
amount equal to the federal and, if applicable, state income taxes which
will be payable by Employee as a result of this additional payment.
(g) In addition, if Employee does not voluntarily terminate his
employment with the Company prior to the date which is six months after the
Effective Date of the Merger and his employment thereafter terminates for
any reason other than retirement at the Normal Retirement Date, the Company
agrees that the benefits payable to Employee under the SERP shall be based
upon Employee's average Compensation (as defined in the SERP, which
Compensation includes amounts paid in respect of phantom stock awards) for
his highest consecutive twenty-four months of service, rather the highest
sixty consecutive months of service as now provided in Section 3.1 of the
SERP. No amendment or termination of the SERP subsequent to the date of
this Agreement shall diminish such benefits.
Employee shall not be required to mitigate the amount of any payment due
hereunder by seeking other employment and, except as provided in the next
sentence, the payments due hereunder shall not be affected by any other
employment which Employee may obtain. If Employee accepts a position with
another employer during the period for payment of employee benefits under
Section 1c, then the Company's obligation to pay such employee benefits will
cease as of the date of Employee's new employment, provided, however, that
the Company will continue such benefits for the full period to the extent
that they exceed the comparable benefits from such other employment.
2. Termination for Cause
Notwithstanding Section 1 of this Agreement, if prior to the Effective
Date of the Merger the Board of Directors of the Company terminates
Employee's employment for "Cause," then the Company shall be obligated to
pay to Employee under this Agreement only his current base salary plus
accrued vacation and any other compensation actually accrued through the
date of termination. If the Company terminates Employee's employment at any
time without Cause, the Company shall be obligated to provide to Employee
the benefits set forth in Section 1 of this Agreement. For the purposes of
this Agreement, "Cause" shall mean (a) 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 (b)
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.
3. Indemnification
The Company shall defend, indemnify and hold Employee harmless from any
and all liabilities, obligations, claims or expenses which arise in
connection with or as a result of Employee's service as an officer, employee
or director of the Company and/or any of its affiliates and subsidiaries to
the fullest extent allowed by law. The Company shall assure that Employee
remains covered by the Company's policies of directors' and officers'
liability insurance for six years following the date of termination.
4. Payments and Disputes
For purposes of this Agreement, the date of termination will be the
date written notice of termination is given by Employee or the Company. The
amounts specified in Sections 1(a) and 1(b) will be paid no more than ten
business days after the date of termination. In the event that any payments
due hereunder shall be delayed for any reason for more than ten business
days from the date due, the amounts due shall bear interest at the rate of
12% per annum until paid.
Any dispute between the Parties hereto with respect to any of the
matters set forth herein shall be submitted to binding arbitration in city
of Seattle, state of Washington. Either Party may commence the arbitration
by delivery of a written notice to the other, describing the issue in
dispute and its position with regard to the issue. If the Parties are
unable to agree on an arbitrator within 30 days following delivery of such
notice, the arbitrator shall be selected by a Judge of the Superior Court of
the State of Washington for King County upon three days' notice. Discovery
shall be allowed in connection with any such arbitration to the same extent
permitted by the Washington Rules of Civil Procedure but either Party may
petition the arbitrator to limit the scope of such discovery, in which event
the arbitrator shall determine the extent of discovery allowable in
connection with the dispute in question. Except as otherwise provided
herein, the arbitration shall be conducted in accordance with the rules of
the American Arbitration Association then in effect for expedited
proceedings. The award of the arbitrator shall be final and binding, and
judgment upon an award may be entered in any court of competent
jurisdiction. The arbitrator shall hold a hearing, at which the Parties may
present evidence and argument, within 30 days of his or her appointment, and
shall issue an award within 15 days of the close of the hearing. The
Company will pay all fees and expenses, including attorneys' fees and the
cost of the arbitrator, incurred by Employee in good faith in contesting or
disputing any termination for Cause or in seeking to obtain or enforce any
right or benefit provided by this Agreement.
5. Notices
All notices or other communications required or permitted by this
Agreement shall be in writing and shall be sufficiently given if personally
delivered or if sent by certified mail, postage prepaid, addressed as
follows:
If to Employee, to:
Xxxxxxx X. Xxxxxx
00 Xxxx Xxxxxxx, #00
Xxxxxxx, XX 00000
If to the Company:
Puget Sound Power & Light Company
X.X. Xxx 00000
Xxxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
Any such mailed notice or communication shall be deemed to have been
given three days after the date mailed. Any address may be changed by
giving written notice of such change in the manner provided herein for
giving notice.
6. Entire Agreement
This Agreement contains the entire understanding of the Parties with
regard to the subject matter of this Agreement and may only be changed by
written agreement signed by both Parties. Any and all prior discussions,
negotiations, commitments and understandings related thereto are merged
herein.
7. Binding Effect
This Agreement shall be binding upon and inure to the benefit of the
Parties, and their successors, legal representatives and heirs, including
any successor to the Company's business or assets by merger, consolidation,
sale of assets or otherwise.
8. Governing Law
This Agreement shall be governed by, construed and enforced in
accordance with the laws of the state of Washington, without giving effect
to principles and provisions thereof relating to conflict or choice of laws
and irrespective of the fact that any one of the Parties is now or may
become a resident of a different state.
9. Validity
In case any term of this Agreement shall be invalid, illegal or
unenforceable, in whole or in part, the validity of any of the other terms
of this Agreement shall not in any way be affected thereby.
10. Counterparts
This Agreement may be executed in counterparts, each of which shall be
deemed to be an original.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first written above.
PUGET SOUND POWER & LIGHT COMPANY
By /s/ Xxxxxxx X. Xxxxxxxxx
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/s/ Xxxxxxx X. Xxxxxx
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XXXXXXX X. XXXXXX
