SEVERANCE AND RELEASE AGREEMENT
EXHIBIT
10.1
SEVERANCE
AND RELEASE AGREEMENT
This
Severance and Release Agreement ("Severance Agreement") is made and entered
into
as of April
10, 2006
by and
between XXXXX X. XXXXXX ("Xx. Xxxxxx") and UIL Holdings Corporation (the
“Company”).
WHEREAS,
Xx. Xxxxxx was formerly employed as the Executive Vice President and Chief
Financial Officer of the Company pursuant to an Employment Agreement with
the
Company dated November 8, 2004 (the “Employment Agreement”); and
WHEREAS,
pursuant to the Company’s plans for a finance reorganization, Xx. Xxxxxx’x
employment with the Company is being terminated without cause; and
WHEREAS,
for purposes of this Separation Agreement, Xx. Xxxxxx’x termination date is
considered to be March 31, 2006 (the “Termination Date”); and
WHEREAS,
the Employment Agreement provides for certain severance payments and benefits
to
Xx. Xxxxxx in the event of a termination without Cause, the payment of which
are
conditioned upon Xx. Xxxxxx executing a release of all claims arising out
of the
termination of his employment; and
WHEREAS,
after discussions between the parties, the parties now desire to define with
greater specificity the severance payments and benefits to be provided to
Xx.
Xxxxxx, to substitute the provisions of this Severance Agreement for those
related provisions in the Employment Agreement as of the Termination Date,
and
to compromise and settle any and all issues, obligations and liabilities
that
may exist among Xx. Xxxxxx and the Company (together with all Affiliates
of the
Company as defined herein) in connection with any employment relationship,
fiduciary relationship, contractual relationship, or any other relationship
or
interest of whatsoever nature.
1
NOW
THEREFORE, in consideration of the mutual promises of the parties and other
valuable and sufficient consideration, including but not limited to the
obligations of the Company set forth below, and intending to compromise and
settle any and all disputes between Xx. Xxxxxx and the Company (and their
Affiliates), the parties hereto agree as follows:
1. Payments
and Benefits.
The
following payments and benefits are in full and final satisfaction of all
amounts due and owing to Xx. Xxxxxx under the Employment Agreement, including
without limitation Section 4(g) and Section 6 of the Employment
Agreement.
(a)
Base
Salary; Business Expense Reimbursement.
The
parties acknowledge that the Company have paid to Xx. Xxxxxx (i) all of his
Base
Salary (as defined in Section 4(a) of the Employment Agreement and as approved
by the Board of Directors of the Company at the time of the most recent review
of the salary rates of all of the Company’ officers earned prior to the
Termination Date; and (ii) all reasonable business expenses incurred by Xx.
Xxxxxx prior to the Termination Date.
(b)
Accumulated
Unused Vacation.
Subject
to applicable withholding requirements, the Company shall pay Xx. Xxxxxx
for all
accumulated but unused vacation due to Xx. Xxxxxx in accordance with the
Company’s existing vacation pay policies and practices, which amount the parties
agree to be $12,920.78, representing 11 days of accrued but unused
vacation.
(c)
Supplemental
Retirement Lump Sum Benefit.
Notwithstanding anything in his Employment Agreement to the contrary, on
or
before December 31, 2005, the Company paid to Xx. Xxxxxx a lump sum payment
in
the amount of $62,890, which amount the parties agreed, and still agree,
to be
equal to the present lump sum value of the supplemental retirement benefit
(“SERP”) payable to Xx. Xxxxxx as of December 31, 2004 under Section 4(g) of the
Employment Agreement and upon termination of his SERP arrangement in accordance
with Q&A 20(b) of
2
IRS
Notice 2005-1. The parties agree that Xx. Xxxxxx is entitled to no further
accrual of SERP benefits through his Termination Date.
(d)
Severance
Benefit.
Effective as of the first day of the 7th
month
following Xx. Xxxxxx’x Termination Date, and subject to all applicable
withholding requirements and Section 6(c)(iv) of the Employment Agreement,
the
Company will commence to pay to Xx. Xxxxxx the sum of Nine Hundred Sixteen
Thousand Two Hundred Dollars ($916,200.00), with one half of that sum being
paid
in a lump sum, and the other half being paid ratably over the twelve month
period commencing with such month as consideration for the covenant not to
compete that restricts Xx. Xxxxxx for such twelve month period under Section
11
of the Employment Agreement.
(e)
Cash
Recognition Bonus.
No later
than 2 ½ months following Xx. Xxxxxx’x Termination Date (the ‘vesting date’),
and subject to all applicable withholding requirements, the Company shall
pay to
Xx. Xxxxxx a cash bonus in a gross amount equal to $328,351.10.
(f)
Options.
Xx.
Xxxxxx shall be entitled to exercise his non-qualified stock options that
are
vested and exercisable as of his termination of employment, for a five (5)
month
period following his termination of employment from the Company. Xx. Xxxxxx
understands and agrees that he shall forfeit any options or other equity
awards
not yet vested as of his termination of employment, and shall receive no
value
for his underwater options whether or not vested.
(g)
Performance
Shares.
Xx.
Xxxxxx shall not be considered to be vested in, and consequently shall forfeit,
any entitlement to payment under the terms of the UIL Holdings Corporation
Performance Share Agreement for Annual Performance Shares and TSR Performance
Shares.
(h)
Incentive
Compensation.
No
later than 2 ½ months following the financial closing (the ‘vesting date’) of
the transaction(s) forming the basis for the 2005 and 2006 performance based
short-term incentive programs approved by the Compensation and Executive
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Development
Committee at its March 28, 2005 and January 18, 2006 meetings, respectively,
the
Company shall pay to Xx. Xxxxxx the Incentive Compensation, if any, to which
he
would be entitled, calculated in accordance with the terms of such program
subject to all applicable withholding requirements. The parties hereby agree
that the gross Incentive Compensation amount with respect to both transactions
is $975,000. Xx. Xxxxxx and the Company agree that this incentive shall be
in
lieu of any other short-term incentive and further agree that said incentive
program is hereby amended to specify the payment date provided in the first
sentence of this subsection (h).
(i)
Discharge
of All Obligations.
Except
as specifically provided in this Severance Agreement and except for such
retirement benefits to which Xx. Xxxxxx is eligible under The United
Illuminating Company 401(k)/ Employee Stock Ownership Plan, Xx. Xxxxxx
acknowledges and agrees that the Company does not owe him any wages, salary,
commissions, bonuses, vacation or severance payments, buyouts, fringe benefits
or any other payments of any kind, including any payments under any current
or
former executive incentive compensation plan applicable to Xx. Xxxxxx. Xx.
Xxxxxx acknowledges and agrees that the payments set forth in Paragraphs
1 and 2
of this Agreement are in full satisfaction of any and all wages, salary,
benefits and compensation of any nature owed to him by the Company under
the
Employment Agreement or otherwise.
(j)
Tax
withholding Requirements.
All
payments under Paragraph 1 of this Severance Agreement shall be subject to
withholding for all state or federal taxes.
2. Post-Termination
Group Health Insurance.
From
and
after the Termination Date, and for a two year period thereafter, Xx. Xxxxxx
shall be entitled to continued participation for himself and any eligible
dependents in the medical and dental plan(s) in which he was a participant
as of
his Termination Date on the same basis as if he remained an active employee,
provided that such participation is possible under the terms
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and
conditions of such plans and applicable law. Such period of continued
participation shall run concurrently with, and reduce day-for-day, any
obligation that the Company or any Affiliate would have to provide “COBRA”
continuation coverage with respect to Xx. Xxxxxx’x termination of employment. In
the event that Xx. Xxxxxx becomes covered by the group health plan of another
employer, he shall promptly notify the Company of such coverage, such group
health coverage shall become primary to the coverage offered pursuant to
this
Paragraph, and the coverage offered hereunder shall pay on a secondary basis
so
long as Xx. Xxxxxx timely pays the applicable premiums. If Xx. Xxxxxx’x
continued participation is barred due to his termination of employment, the
Company shall instead provide Xx. Xxxxxx with the discounted present value
of
the expected cost of family premium coverage for such two year period, which
amount shall ‘grossed up’ to take into account the impact of federal and state
income taxes on such amount, and shall be payable in a single sum. The
determination of such grossed up amount shall be made by the Company’s
independent accountants in good faith, and shall be binding on the parties
to
this Agreement. Nothing in the foregoing shall be construed to prevent the
Company or its Affiliates from modifying or terminating any of their employee
benefit plans at any time.
3. Communications.
(a) Disclosure
of Severance Agreement.
From
the date this Severance Agreement has been signed by all parties, the Company
and Xx. Xxxxxx mutually agree that neither party shall disclose the financial
or
other terms of this Severance Agreement except for disclosure to Xx. Xxxxxx’x
immediate family members and financial and legal advisors, and except as
necessary to comply and obtain compliance with this Severance Agreement and
except as otherwise provided in this Severance Agreement.
(b) Compulsory
Disclosure.
The
proscriptions contained in (a) above Severance Agreement shall not be construed
to limit any person's duty to testify under oath as directed by a valid subpoena
or similar compulsory process or to provide information in filings with
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governmental
agencies or officials or to make public filings as may by legislative enactment
or administrative regulation, rule or order be required to be so disclosed,
provided that the person required to testify or who is otherwise legally
compelled to provide information shall have made every reasonable effort
to
notify the person whose information may be disclosed in time to afford him
or it
an opportunity to contest the subpoena, other process or other governmental
requirements giving rise to the duty to testify or to otherwise provide such
information. The aforementioned notice requirement shall not apply to SEC
and
other regulatory filings.
4. Release
and Covenant Not to Xxx.
(a)
In
exchange
for
the
severance payment and benefits described above,
and
consistent with Section 6 of the Employment Agreement, Xx.
Xxxxxx waives any claim for a specific period of termination notice, and
waives,
and releases the Company from, any and all claims or charges or suits
of
whatever nature which Xx.
Xxxxxx has
or
may have against the Company, whether or
not
now
known, including
any
claims arising out of or in connection
with Xx. Xxxxxx'x employment
with the Company or the termination of Xx. Xxxxxx'x employment; provided,
however,
that by
this Paragraph 4(a) Xx. Xxxxxx does not waive any claim he may have for
indemnification from the Company for acts performed within the scope of his
employment by the Company.
(b)
To
the
fullest extent
permitted by law, Xx. Xxxxxx further agrees not to commence
any action or proceeding against the Company in any state or federal court,
or
with
any
administrative agency, for the purpose of recovering individual damages or
other
monetary
or personal relief
for
any
claim based on any act or event
that occurred prior to the date of this Severance Agreement. Xx.
Xxxxxx further
waives and relinquishes any right to benefit financially from any charge
of
discrimination, or from any other claim of any nature, filed by him or on
his
behalf. If
Xx.
Xxxxxx violates this Paragraph, all consideration described
in
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Paragraphs
1 and 2 of this Severance Agreement shall be immediately recoverable by
the
Company.
(c) The
release and covenant not to xxx contained in subparagraph (a) and
(b)
above includes, but is not limited to, any claim of discrimination on the
basis
of race, color, sex,
religion, marital status, sexual preference, national origin, ancestry, handicap
or disability, age, or veteran status; any other claim based on a statutory
prohibition; any claim for breach of an
express or implied contract, or of any covenant of good faith and fair
dealing;
any tort claims; any claim for
wrongful
discharge or retaliation; or any other claim growing out of any legal
restriction on Company’s right to terminate the employment of an employee, and
further including, without limitation, any claim for back pay, front pay,
incentive pay, bonuses, commissions, expenses, vacation, severance pay,
liquidated damages, punitive damages, compensatory damages, court costs or
attorneys’ fees.
(d) Xx.
Xxxxxx further agrees not to seek redress under any internal
complaint procedure available to him under any policies of the
Company.
(e) Xx.
Xxxxxx represents that he understands the foregoing release,
that rights and claims under the Age
Discrimination
in Employment Act of 1967,
Title
VII of the Civil Rights Act, Executive Order 11246, ERISA, the Americans
with
Disabilities
Act , the Connecticut Fair Employment Practice Act, Title VII of the Civil
Rights Act of 1964, as amended, the Civil Rights Act of 1866, the Equal Pay
Act
of 1963, the Connecticut Family and Medical Leave Act, the federal Family
and
Medical Leave Act, and the Workers’ Compensation Act as it relates to
discrimination (i.e., C.G.S. Sec. 31-290a) are among the rights and claims
which
Xx.
Xxxxxx is releasing, and that Xx.
Xxxxxx is not releasing any rights or claims arising after the effective
date of
the Severance
Agreement.
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(f) This
release and covenant not to xxx shall apply to the Company and its
Affiliates, and to
all of
their current and former officers, directors, employees, agents, fiduciaries,
representatives, successors and assigns,
or any
person acting on behalf of
the
Company and its Affiliates and shall be
binding upon Xx. Xxxxxx, and Xx. Xxxxxx'x executors, administrators, and
heirs.
For purposes of this Severance Agreement, the term Affiliate includes
The
United Illuminating Company, United Resources, Inc., and all other direct
and
indirect subsidiaries of UIL.
(h) This
release and covenant not to xxx is not intended to waive any workers'
compensation claims Xx. Xxxxxx may have
or
any payment or benefits to which Xx.
Xxxxxx may
be
entitled
under The United Illuminating Company Pension Plan and The
United Illuminating Company 401(k)/ Employee Stock Ownership Plan.
5. Property
of the Company.
By his
signature on this Severance Agreement, Xx. Xxxxxx confirms that he has delivered
to the Company any and all property and equipment of the Company previously
in
his possession, including without limitation his beeper, mobile phone, credit
card, keys, laptop or other computers, together with all memoranda, notes,
records, drawings documents and other writings referenced in Section 10 of
the
Employment Agreement. The Company agree to keep Xx. Xxxxxx’x Company voice mail
account active until Xx. Xxxxxx secures permanent employment. In addition,
the
Company will arrange for email addressed to Xx. Xxxxxx’x Company email address
(Xxxxx.Xxxxxx@xxxxx.xxx) to be forwarded automatically to Xx. Xxxxxx’x home
email address, until Xx. Xxxxxx secures permanent employment.
6. Miscellaneous
Provisions.
(a) Non
Admission.
This
Severance Agreement does not and shall not be construed to constitute an
admission of liability or wrongdoing on any matter by Xx. Xxxxxx, the Company
or
any Affiliate, or any present or former director, officer, employee, agent,
or
representative thereof.
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(b) Voluntariness.
Xx.
Xxxxxx represents and acknowledges that he has completely read and completely
understands this Severance Agreement and that he has entered into this Severance
Agreement voluntarily. Xx. Xxxxxx also acknowledges and agrees that by receipt
of a draft of this Severance Agreement he has been advised in writing to,
and
has been given the opportunity to, consult with an attorney of his choice
prior
to executing this Severance Agreement. The parties mutually acknowledge the
adequacy of consideration for this Severance Agreement.
(c) Entire
Agreement.
The
parties agree that this Severance Agreement contains the entire agreement
and
understanding of the parties with respect to employment, cessation of
employment, and any other rights of Xx. Xxxxxx in and to the assets of the
Company and its Affiliates, that this Severance Agreement supercedes and
replaces all provisions of the Employment Agreement except for Sections 10,
11
and 12 which shall survive the termination of the Xx. Xxxxxx’x employment, and
that all other provisions of the Employment Agreement shall be of no further
force and effect. The parties acknowledge that the only consideration for
their
signing this Severance Agreement is as stated in this Severance Agreement,
and
that no promise, commitment or addition has been made to either of them that
is
not set forth in this Severance Agreement. No amendment or supplementation
of
this Severance Agreement shall be effective unless it is reduced to writing
and
signed by Xx. Xxxxxx and the Company by their authorized representative.
(d) Persons
Bound.
This
Severance Agreement shall be binding upon and inure to the benefit of Xx.
Xxxxxx'x personal representatives, heirs, executors, administrators and
dependents. This Severance Agreement shall also bind and be enforceable against
the Company and any successor to or assignee of the Company. Neither this
Severance Agreement nor any rights, benefits, duties or obligations hereunder
shall be assignable by either party hereto without the written consent of
the
other party. Any consent may be withheld for any reason or for no
reason.
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(e) Governing
Law.
The
performance of this Severance Agreement is intended to occur primarily within
the State of Connecticut. The laws of Connecticut exclusively shall govern
the
interpretation and enforcement of this Severance Agreement, but without regard
to any Connecticut law that may rely upon or refer to the laws of any other
jurisdiction foreign to that state.
(f) Validity.
The
validity or unenforceability of any provision or provisions of this Severance
Agreement shall not affect the validity or enforceability of any other provision
of this Severance Agreement, which shall remain in full force and
effect.
(f) Further
Acts.
All
parties hereto shall perform any and all acts and shall execute any and all
documents which may be reasonably necessary and desirable to carry out the
terms
and intent of this Severance Agreement. The parties recognize that certain
provisions of this Agreement may be affected by Section 409A of the Internal
Revenue Code and guidance issued thereunder, and it is understood and agreed
that Xx. Xxxxxx is responsible for consulting with his tax advisor regarding
the
potential impact of Section 409A on his benefits hereunder. The parties agree
to
negotiate in good faith to amend this Agreement or to take such other actions
as
may be necessary or advisable in the future to comply with Section 409A with
respect to this Agreement.
(g) Duplicate
Copies.
Multiple copies of this Severance Agreement shall be executed, each of which
shall be used as an original.
(h)
Acknowledgement.
Xx.
Xxxxxx acknowledges that he has a period of more than 21 days from the receipt
of this Severance Agreement in which to consider the terms of this Severance
Agreement. If Xx. Xxxxxx elects to sign this Severance Agreement, he shall
have
a period of seven days following the execution of this Severance Agreement
to
revoke the Severance Agreement and this Severance Agreement shall not become
effective and enforceable until this seven day period expires.
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IN
WITNESS WHEREOF, the parties hereto have executed this Severance Agreement
in a
number of counterparts on the dates set forth below.
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/s/
Xxxxx X. Xxxxxx
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XXXXX
X. XXXXXX
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Date:
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April
10, 2006
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UIL
HOLDINGS CORPORATION.
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/s/
Xxxxxxxxx X. Xxxxxxx
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/s/
Xxxxx X. Xxxxx
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By
Xxxxxxxxx X. Xxxxxxx
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Witness
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Its
Chairman and Chief Executive Officer
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Date:
4/10/06
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