As Executed Exhibit 10.1
EARLY RETIREMENT AGREEMENT BETWEEN
INTERSTATE ENERGY CORPORATION ET AL. AND XXXXXXX X. XXXXX
This Agreement is entered into between Interstate Energy Corporation,
on behalf of itself, its subsidiary Interstate Power Company, and any of their
affiliates (collectively referred to herein as the "Company") and Xxxxxxx X.
Xxxxx ("Employee"), this 7th day of October, 1998 (the "Agreement Date").
In consideration of this mutual Agreement, Employee and the Company
hereby agree as follows:
1. Retirement. Employee hereby retires and resigns, as an employee and
officer, from the service of the Company effective January 1, 1999 (the
"Retirement Date"). Employee acknowledges and agrees that he will, between the
Agreement Date and his Retirement Date, actively assist in the transition of his
duties to his successor, assist the Company to the fullest extent with the
governmental investigation of the Dubuque plant, perform any appropriate public
functions with the Iowa Utilities Association, and perform, as time permits,
additional transitional assistance and special projects as requested by the
Chief Executive Officer of the Company. Employee agrees to provide written
resignations from any ancillary positions as the Company deems necessary.
2. Financial and Benefit Matters.
a. Employee shall continue to be paid his base pay in the amount
of Twenty Thousand Dollars ($20,000) per month for the remainder of 1998, will
continue to be provided senior executive welfare benefits and continue to
participate in all retirement plans and supplemental retirement plans on the
same basis as other senior executives during this period, and will be paid his
target Management Incentive Compensation Program bonus for his final year of
service to the Company. These payments and benefits are the continuing
employment obligations of the Company. This Agreement does not affect in any way
the entitlement of Employee to pension and welfare benefits while an employee,
post-retirement welfare benefits, Supplemental Executive Retirement Plan
("SERP") benefits, or qualified retirement plan benefits that are provided to
Employee on account of his prior service with the Company and which are not
financial accommodations pertaining to his retirement. As of Employee's
Retirement Date, Employee shall be eligible to receive benefits under all of the
Company's retiree welfare benefit plans available to retired senior executives
of the Company as in effect on September 4, 1998. Any changes in welfare benefit
plans available for retired senior executives of the Company retiring on or
before January 1, 1999, that are adopted after September 4, 1998, and are
generally applicable to senior executives retiring on or before January 1, 1999,
shall apply to the Employee. It is understood that the Employee has selected the
Interstate Power Company's Supplemental Executive Retirement Program as his SERP
program and that, effective commencing on the Retirement Date, the Employee
shall be entitled to the full benefits available to him under this SERP,
including the right to select the date he begins to receive any benefits. The
term "Compensation" for purposes of calculating the benefits under this SERP
shall mean Two Hundred Forty Thousand Dollars ($240,000). All calculations under
this SERP shall be made in accordance with its terms as it was interpreted in
1998 prior to September 4, 1998.
b. In consideration for the release provided in Section 6 below
and for the agreements in Section 4 below, the Company shall make the payment to
Employee described in this subparagraph as a replacement for and to approximate
the biweekly payments that the Company would make under the Employment
Agreement. Provided the Employee is living on January 1, 1999, the Company shall
make a lump sum payment of Two Hundred Fifty-five Thousand Dollars ($255,000),
less applicable federal and state income tax withholding and payroll tax
amounts, to Employee within fifteen
(15) business days after January 1, 1999. Provided the Employee is living on
January 1, 2000, the Company shall make a lump sum payment of Two Hundred Ten
Thousand Seven Hundred Fifty Dollars ($210,750), less applicable federal and
state income tax withholding and payroll tax amounts, to Employee within fifteen
(15) business days after January 1, 2000.
c. It is mutually agreed that the common stock options to purchase
shares of Interstate Energy Corporation issued to Employee on July 1, 1998,
under the Company's Long Term Equity Incentive Plan should be canceled effective
on the Retirement Date and that no additional common stock options shall be
issued by the Company to the Employee after the Agreement Date. Employee
acknowledges that the considerations contained in this Agreement fully
incorporate all considerations and accruals of such Long Term Equity Incentive
Plan.
d. Employee recognizes that consideration provided under this
Agreement may result in taxable income to the Employee and that the Company will
report such taxable income to the appropriate taxing authorities.
3. Tax Adjustment. If it is ultimately determined by a court or
pursuant to a final determination by the Internal Revenue service that any
portion of the payments hereunder is subject to the tax (the "Excise Tax")
imposed by Section 4999 of the Code (or any successor provision), the Company
shall pay to the Employee an additional amount (the "Gross-up Payment") such
that the net amount retained by the Employee after deduction of any Excise Tax
and any interest charges or penalties in respect of the imposition of such
Excise Tax (but not any federal, state or local income tax) on the payments
hereunder, and any federal, state, and local income tax and Excise Tax upon the
payment provided for by this Section 3, shall be equal to the payments
hereunder. For purposes of determining the amount of the Gross-up Payment, the
Employee shall be deemed to pay federal income taxes at the highest marginal
rate of federal income taxation in the calendar year in which the Gross-up
Payment is to be made and state and local income taxes at the highest marginal
rates of taxation in the state and locality of the Executive's domicile for
income tax purposes on the date the Gross-up Payment is made, net of the maximum
reduction in federal income taxes which could be obtained from deduction of such
state and local taxes.
4. Certain Agreements. It is mutually agreed that the Employment
Agreement entered into between the Employee and Interstate Power Company, dated
April 21, 1998, is canceled and replaced by this Agreement; the Severance
Agreement referenced in Section 12(f) of such Employment Agreement (i.e., an
agreement dated November 8, 1995, between Employee and Interstate Power Company)
is null and void and of no further effect; and the letter agreement dated March
3, 1998, between Employee and Interstate Energy Corporation is null and void and
of no further effect. The following agreements, however, apply to this
Agreement:
a. Non-exclusivity of Rights. Nothing in this Agreement shall
prevent or limit the Employee's continuing or future participation in any plan,
program, policy or practice provided by the Company for which the Employee may
qualify, nor shall anything in this Agreement limit or otherwise affect such
rights as the Employee may have under any contract or agreement with the Company
or any of its affiliates relating to such subject matter other than that
specifically addressed herein. Vested benefits and other amounts that the
Employee is otherwise entitled to receive under any plan, policy, practice, or
program of, or any contract or agreement with, the Company or any of its
affiliates on or after the Retirement Date shall be payable in accordance with
the terms of each such plan, policy, practice, program, contract or agreement,
as the case may be, except as specifically modified by this Agreement.
b. Full Settlement. The Company's obligation to make the payments
provided for in, and otherwise to perform its obligations under, this Agreement
shall not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action that the Company may have against the Employee or others.
In no event shall the Employee be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Employee under
any of the provisions of
this Agreement. The amounts payable by the Company under this Agreement shall
not be offset or reduced by any amounts otherwise receivable or received by the
Employee form any source.
c. Confidential Information and Noncompetition. The Noncompetition
and Nondisclosure Agreement between employee and the Company dated November 26,
1997, is incorporated herein by this reference and remains fully effective
according to its terms. Furthermore, the Employee 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 the Employee obtains during the Employee's
employment by the Company or any of its affiliated companies and that is not
public knowledge (other than as a result of the Employee's violation of this
subsection ("Confidential Information"). The Employee shall not communicate,
divulge or disseminate Confidential Information at any time during or for not
less than five (5) years after the Employee's employment with the Company,
except with the prior written consent of the Company or as otherwise required by
law or legal process. In no event shall any asserted violation of the provisions
of this subsection constitute a basis for deferring or withholding any amounts
otherwise payable to the Employee under this Agreement. Any provision of any
other agreement between the Employee and Interstate Energy Corporation or
Interstate Power Company relating to noncompetition and nondisclosure of
information is null and void and of no further effect.
5. Attorney's Fees. The Company agrees to pay, as incurred, to the
fullest extent permitted by law, all legal fees and expenses that the Employee
may reasonably incur as a result of any contest (regardless of the outcome) by
the Company, the Employee, or others of the validity or enforceability of or
liability under, or otherwise involving, any provision of this Agreement arising
after the Agreement Date, together with interest on any delayed payment at the
applicable federal rate provided for in Code Section 7972(f)(2)(A) of the Code.
In addition, the Company shall reimburse Employee up to Fifteen Thousand Dollars
($15,000) for the Employee's cost of legal services incurred by Employee for the
negotiation and review of this Agreement prior to the Agreement Date. The
Employee shall submit a request for such reimbursement in accordance with
established Company procedures for the reimbursement of business expenses.
6. Release and Covenants.
a. Employee, on behalf of himself, his spouse, heirs, executors,
administrators, agents, successors, assigns and representatives of any kind
(hereinafter collectively referred to as the "Releasors") confirm that Releasors
have released the Interstate Energy Corporation and each of its subsidiaries and
affiliates, the employees, successors, assigns, executors, trustees, directors,
advisors, agents and representatives of Interstate Energy Corporation and each
subsidiary or affiliate, and all their respective predecessors and successors
(hereinafter collectively referred to as the "Releasees"), from any and all
actions, causes of action, charges, debts, liabilities, accounts, demands,
damages and claims of any kind whatsoever including, but not limited to, those
arising out of the changes in the terms and conditions of Employee's
relationship with the Company described in this Agreement and those arising
under any labor, employment discrimination (including, without limitation, the
Age Discrimination in Employment Act of 1967, as amended, Title VII of the Civil
Rights of Act of 1964, as amended, applicable State fair employment
legislation), contract or tort laws, equity or public policy, or negligence
standard, whether known or unknown, certain or speculative, which against any of
the Releasees, any of the Releasors ever had, now has, or hereafter shall have
or can have. Employee further covenants that he will not initiate any action,
claim or proceeding against any of the Releasees for any of the foregoing, will
not participate, assist, or cooperate in any such action, claim, or proceeding
unless required to do so by law, and will not apply for employment with the
Company at any time. Employee acknowledges that the considerations contained in
this Agreement fully compensate him for the release provided in this Section.
b. Notwithstanding the foregoing, this Agreement does not waive
rights, if any, Employee or his successors and assigns may have under or
pursuant to, or release any member of Releasees from obligations, if any, it may
have to Employee or to Employee's successors and assigns on
claims arising out of, related to or asserted under or pursuant to, this
Agreement or any indemnity agreement or obligation contained in or adopted or
acquired pursuant to any provision of the charter or by-laws of Interstate
Energy Corporation, a Wisconsin corporation, or Interstate Power Company, a
Delaware corporation, or in any applicable insurance policy carried by the
Company or its affiliates for any matter which has arisen, including the
environmental investigation that the Company launched in April 1998 and related
proceedings, or which arises or which may arise in the future in connection with
Employee's employment with the Company.
c. In accordance with the requirements of Title II of the Older
Workers Benefit Protection Act (P. L. 101-433, 10/16/90), Employee hereby
acknowledges that he has at least twenty-one (21) days to review this Agreement
from the date he first received it and he has been advised to review it with an
attorney of his choice. Employee further understands that the twenty-one (21)
day review period ends when Employee signs this Agreement. Employee also has
seven (7) days after signing this Agreement to revoke by so notifying the
Company in writing. Any revocation by Employee under this Section 6(c), however,
does not revoke the resignations provided under Section 1 and Employee's
resignation from employment with the Company shall remain in effect as set forth
therein. Employee further acknowledges that he has carefully read this
Agreement, knows and understands the contents thereof and its binding legal
effect. Employee signs the same of his own free will and act, and it is his
intention that he be legally bound thereby.
d. Employee agrees to keep this Agreement confidential and not to
reveal its contents to anyone other than his attorney, financial consultant,
immediate family members, and representatives of any governmental tax agency.
The provisions of this Section 6(d) shall not apply to any truthful statement
required to be made by Employee in any legal proceeding or government or
regulatory investigation; provided, however, that prior to making such statement
(other than to tax authorities), Employee will give the Company reasonable
notice and, to the extent he is legally entitled to do so, afford the Company
the ability to seek a confidentiality order.
7. Severability. In the event any one or more of the terms of this
Agreement shall for any reason be held to be invalid, illegal or unenforceable,
the remaining terms of this Agreement shall be unimpaired, and the invalid,
illegal or unenforceable term shall be replaced by a term, which, being valid,
legal and enforceable, comes closest to the intention of the parties underlying
the invalid, illegal or unenforceable terms. However, in the event that any such
term of this Agreement is adjudged by a court of competent jurisdiction to be
invalid, illegal or unenforceable, but that the other terms are adjudged to be
valid, legal and enforceable if such invalid, illegal or unenforceable term were
deleted or modified, then this Agreement shall apply with only such deletions or
modifications, or both, as the case may be, as are necessary to permit the
remaining separate terms to be valid, legal and enforceable.
8. Company Property. Employee shall, not later than the Agreement Date,
deliver to the Company the original and all copies of all documents, records,
electronic files, and property of any nature whatsoever which are in Employee's
possession or control and which are the property of the Company or which relate
to the business activities, facilities, or customers of the Company, its
subsidiaries, or its affiliates, including any records, documents or property
created by Employee and, where such records may be maintained on hard disk files
on computers owned by Employee, such files shall be purged and eliminated;
provided, however, Employee shall be provided access to information and material
appropriate to fulfillment of his duties as described in Section 1, above. To
the extent Company property is in possession or control of the Employee on his
Retirement Date it shall then be similarly returned or purged, as described
above. Notwithstanding the foregoing, the Employee may temporarily retain copies
of documents pertaining to any Company-initiated investigations of business
matters pertaining to the Employee while such investigations continue or remain
subject to review; provided, however, the Employee must, upon request by the
Company, disclose the contents of all such documents and must, upon final
conclusion of the investigations or reviews, return all such copies to the
Company.
9. Other Agreements. This Agreement does not limit or restrict in any
way Employee's rights under the Company's employee benefit plans. All the terms
of agreement relating to Employee's early retirement from employment with the
Company are embodied in this Agreement. This Agreement fully supersedes any and
all prior agreements or understandings between Employee and the Company
regarding the Employee's termination of employment with the Company.
10. Governing Law and Dispute Resolution. Except with regard to
subsection (b) of Section 6, this Agreement shall be governed by the substantive
laws of the State of Iowa without regard to its conflict of laws provisions. The
parties agree that any proceeding to resolve any dispute arising hereunder will
be brought only in the courts of the State of Iowa or in the courts of the
United States of America for the District of Iowa, and that each party
irrevocably submits to such jurisdiction, and hereby waives any and all
objections as to venue, inconvenient forum and the like. It is the intention of
the parties hereto, however, that to the extent practicable, the parties will
endeavor to settle any dispute arising hereunder first through the process of
non-binding mediation to be conducted in Madison, Wisconsin. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective heirs, legal representatives, successors and assigns. Section 6(b)
shall be governed by the laws of the State of Delaware, as to Interstate Power
Company, and the State of Wisconsin, as to Interstate Energy Corporation.
11. Successors. This Agreement is personal to the Employee and shall
not be assignable by the Employee. This Agreement shall inure to the benefit of
and be enforceable by the Employee's legal representatives. This Agreement shall
inure to the benefit of and be binding upon the Company and its successors and
assigns. The Company shall require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company expressly to assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
have been required to perform it if no such succession had taken place. As used
in this Agreement, "Company" shall mean both the Company as defined above and
any such successor that assumes and agrees to perform this Agreement, by
operation of law or otherwise.
Dated this 7th day of October, 1998.
INTERSTATE ENERGY CORPORATION
/s/ Xxxxxx X. Xxxxx, Xx.
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Xxxxxx X. Xxxxx, Xx., President and CEO
/s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx, Employee
