EMPLOYMENT AGREEMENT
EXHIBIT
10.1
THIS
AGREEMENT ( the “Agreement”) is
made
as of the 23rd day of January, 2006, between UIL
Holdings Corporation,
a
Connecticut Corporation (the “Company”) and Xxxxx
X. Xxxxxxxxx
(the
“Executive”),
WITNESSETH
THAT
WHEREAS,
the Company desires to employ the Executive as the President of the Company,
and
the Executive desires to be so employed by the Company;
NOW
THEREFORE, in consideration of the foregoing and the respective covenants
and
agreements of the parties herein contained, and the services to be rendered
to
the Company pursuant hereto, the parties hereby agree as follows:
(1) EMPLOYMENT;
TERM
(a) The
Company hereby agrees to employ the Executive, and the Executive hereby agrees
to serve the Company, at the pleasure of the Board of Directors of UIL Holdings
Corporation (the “ UIL Board”), all upon the terms and conditions set forth
herein.
(b) The
term
of this Agreement shall be for a period commencing on the date hereof and
ending
on December 31, 2007, unless this Agreement is earlier terminated as provided
in
Section 5 (the “Initial Term”). Unless the Company has provided the Executive
with at least ninety (90) days prior written notice of its decision not to
renew
this Agreement after the Initial Term or any subsequent term, this Agreement
shall be automatically renewed for a successive one (1) year term (the Initial
Term and any renewal term being referred to as the “Term”). For
purposes of this Agreement, a non-renewal at the election of the Company
at the
end of a Term shall not constitute a termination of employment without Cause,
but shall be governed by the provisions of Section 6(d). In no event shall
the
Company give notice of a non-renewal from the time that an impending Change
in
Control (as hereinafter defined) is announced through the date of the
consummation of such Change in Control.
(2) POSITION
AND DUTIES
(a)
The
Executive shall be employed by the Company as its President, or in such other
equivalent or higher position as the UIL Board may determine. The Executive
shall:
(i)
accept such employment and perform and discharge, faithfully, diligently
and to
the best of the Executive's abilities, the duties and obligations of the
Executive's office and such other duties as may from time to time be assigned
to
the Executive by, or at the direction of, the UIL Board; and
(ii)
devote substantially all of the Executive's working time and efforts to the
business and affairs of the Company.
(b)
Prior
to a Change in Control, in the event that the Executive is named by the UIL
Board to a position higher in rank or compensation than that applicable at
the
commencement of the Initial Term, nothing in this Agreement shall obligate
the
Company to continue such Executive in such higher position; and the Company
shall not be deemed in “Breach” of the Agreement (as defined in Section 5(d))
for failure to continue the Executive in such higher position.
(3) PLACE
OF PERFORMANCE
In
his
employment by the Company, the Executive shall be based within a fifty (50)-mile
radius of the current executive offices of the Company in New Haven,
Connecticut.
(4) COMPENSATION
(a)
Base
Salary.
During
the Initial Term of the Executive's employment hereunder, the Executive shall
receive a base salary (“Base Salary”) at an annual rate of Five
Hundred Twenty Five Thousand Dollars ($525,000.00), payable in accordance
with
the then customary payroll practices of the Company. The Executive's performance
and Base Salary shall be reviewed by the UIL Board at least annually, and
may be
adjusted as a result of any such review, with the first adjustment scheduled
to
be effective as of April 1, 2007.
(b)
Incentive
Compensation.
During
the Term of the Executive’s employment hereunder, the Executive shall be
eligible to be designated, by the Compensation and Executive Development
Committee of the UIL Board (the “CEDC”), as a participant in each annual
short-term incentive compensation program, and any long-term incentive program,
maintained for management employees of the Company, with grants under such
programs being made to the Executive at the same time as they are made with
respect to other participating executives; provided, however, that entitlement
to participation, and continued participation, in any long-term equity incentive
program shall be conditioned upon the Executive fully complying with any
stock
ownership and retention guidelines from time to time established and promulgated
by the UIL Board. Pursuant to such guidelines, the position of President
requires that the Executive own a minimum of 30,000 shares of Company common
stock by December 31, 2010, acquired ratably during 2006-2010.
(i)
Initial
Short-term Incentive.
With
respect to the Executive’s first year of participation in the Company’s
short-term incentive plan, he will be provided with an opportunity to earn
to a
short-term incentive equal to 60% of his Base Salary for performance ‘at
target’, and 90% of Base Salary (i.e., 150% of target) for ‘maximum’
performance, with the incentive payment being pro-rated for employment of
less
than a full calendar year during the performance period. Performance criteria
for the short-term incentive award will be established
by
the
CEDC in the 2006 annual incentive program during the first quarter of 2006.
Short-term incentive compensation shall be calculated following the close
of the
calendar year in which such incentive is earned in accordance with the terms
of
the applicable plan, and shall be paid at the same time as such incentives
are
payable to other executives, but in no event later than March 15 of the year
following the end of the calendar year to which such incentive relates.
(ii)
Initial
Long-term Incentive.
As an
initial long-term performance incentive, the Executive will be provided with
an
opportunity to earn a long-term incentive equal to 90% of Base Salary in
2006
for performance at ‘target’, and 135% of Base Salary (i.e., 150% of target) for
‘maximum performance’. Performance criteria for the long-term incentive award
will be based on the 2006 financial goals established by the CEDC in the
2006
annual incentive program during the first quarter of 2006. The value of the
Executive’s long-term performance award will be determined by the CEDC during
the first two months of 2007, based on the attainment of such 2006 performance
goals, and such value will be converted into shares of restricted stock,
which
will vest over a two-year period, with 50% vesting on December 31, 2007 and
50%
vesting on December 31, 2008. All vested shares shall be paid by no later
than
March 15 of the year following the end of each vesting period. Any such shares
of restricted stock that are unvested as of the Executive’s termination of
employment shall be forfeited in the event that the Executive terminates
employment for any reason other than death, disability, retirement or a
termination by the Company without cause.
During
each year in the Term of the Agreement, the Executive shall also be entitled
to
an annual grant of restricted stock (awarded by the CEDC in the month of
March
each year) equal to that number of shares which results from dividing 15%
of
Base Salary (determined at the commencement of employment) by the fair market
value of UIL stock on the date of the grant, but limited to no more than
2,000
shares per year. Each annual grant will vest ratably over a five (5) year
period. All
vested shares shall be paid by no later than March 15 of the year following
the
end of each vesting period. Any such shares of restricted stock that are
unvested as of the Executive’s termination of employment shall be forfeited in
the event that the Executive terminates employment for any reason other than
death, disability, retirement or a termination by the Company without
cause.
For
purposes of this Agreement, the Executive’s “Accrued
Incentive Compensation”
shall
mean the amount of any annual short-term incentive compensation earned with
respect to the calendar year ended prior to the Date of Termination (as defined
in Section 5) but not yet paid as of the Executive’s Date of
Termination.
The
Executive’s “Stub-Period
Incentive Compensation”
shall
mean the annual short-term incentive compensation being earned in the year
in
which the Executive terminates employment, pro-rated for the year in which
he
terminates service, and shall be equal to that short-term annual incentive
compensation payment to which the Executive would be entitled, if any, under
the
terms of the Company’s executive incentive compensation plan, calculated as if
he had been employed by the Company on the last day of the year including
his
Date of Termination, and had achieved personal goals ‘at target’, but based on
actual performance with respect to the achievement of UIL and Company financial
goals (collectively referred to as “Company goals”), multiplied by a fraction,
the numerator of which is the number of days which have elapsed
in
such
year
through the Date of Termination (less any days prior to the commencement
of
employment in that year) and the denominator of which is 365. The UIL Board
shall determine in its discretion the composition of the Executive’s scorecard,
and what constitutes a ‘personal goal’ and ‘Company goal’; provided that in the
event that the ‘gate’, if any, is not achieved with respect to Company goals,
then no Stub-Period Incentive Compensation will be paid. Any Stub-Period
Incentive Compensation payable upon termination of the Executive shall be
paid
in accordance with Section 6(d) of this Agreement.
(c)
Change
in Control Severance Plan.
The
Executive shall be designated by the UIL Board as an individual covered by
the
UIL Holdings Corporation Change in Control Severance Plan II of the Company
(the
“UIL CIC Plan II”), provided that the Executive’s CIC Plan II benefit shall be
equal to three (3) times his then Base Salary, plus one year of continued
employee benefit plan participation. For purposes of this Agreement, “Change in
Control” shall have the meaning set forth in the UIL CIC Plan II.
Nothing
in this subsection, however, shall entitle the Executive to continued
participation in such Plan should the UIL Board determine otherwise in
accordance with the terms of that Plan.
(d)
Business
Expenses.
During
the Term, the Executive shall be entitled to receive prompt reimbursement
for
all reasonable employment- related business expenses incurred by the Executive,
in accordance with the policies and procedures established by the Company
Board
from time to time for all of the Company's executives, provided that the
Executive properly accounts therefor.
(e)
Benefit
Programs.
During
the Term of the Executive's employment hereunder and to the extent he meets
the
applicable eligibility requirements, the Executive shall be entitled to
participate in and receive benefits under all of the Company's employee benefit
plans, programs and arrangements for its similarly situated executives on
the
same terms and conditions that apply to such executives, including, without
limitation, any plan or program of an affiliated company in which the Company
is
a participating employer, but only for so long as the Company remains a
participating employer. Notwithstanding the foregoing, the Executive shall
not
be entitled to participate in the UI Pension Plan, or in any supplemental
executive retirement plan. Nothing
in this Agreement shall require the Company to maintain a particular benefit
plan or program, or preclude the Company from amending or terminating any
such
plans, programs or arrangements, including its participation therein, or
eliminating, reducing or otherwise changing any benefit provided thereunder,
so
long as such change similarly affects all similarly situated employees of
the
Company and is in compliance with applicable law.
(f)
Vacations
and Holidays.
The
Executive shall be entitled to five (5) weeks of paid vacation in each calendar
year, and shall also be entitled to all paid holidays afforded by the Company
to
its management employees, all in accordance with applicable Company
policies.
(g)
One-Time
Equity Grant.
In
recognition of the forfeiture by the Executive of certain SERP and long-term
incentive amounts resulting from termination of employment with his former
employer, the Executive will be entitled to a one-time grant, made on or
about
January 30, 2006, of 10,000 shares of restricted stock, which will vest ratably
over a five (5) year period, commencing with the date of the grant. All vested
shares shall be paid by no later than
March
15
of the year following the end of each vesting period. Any such shares of
restricted stock that are unvested as of the Executive’s termination of
employment shall be forfeited in the event that the Executive terminates
employment for any reason other than death, disability, retirement or a
termination by the Company without cause.
(h)
Relocation
Assistance. The
Company will pay for the reasonable moving costs (2 estimates required),
commissions and closing costs associated with the sale of the Executive’s
principal residence in Indiana, so long as the Executive submits such costs
for
approval in advance of incurring the costs, and in accordance with the Company’s
usual procedures for documentation and reimbursement of business expenses.
In
the event that the Executive is unable to sell such principal residence,
UIL
will arrange for a third party to sell the same, using independent appraisals
to
benchmark the selling price. UIL will also reimburse the Executive for coach
airfare, meals, and hotel expenses reasonably incurred for up to two house
hunting visits to New Haven for the Executive and his spouse. UIL will also
pay
for up to two months of temporary housing in the New Haven area at a mutually
agreed upon location.
In
the
event that the Executive either voluntarily terminates employment with the
Company within three (3) years from the date first written above, or is
terminated by the Company for Cause (as defined in paragraph 5(b) of this
Agreement, the Executive must repay to the Company all costs incurred or
reimbursed by the Company under this Section 4(h), except that each completed
year of employment shall reduce the payback amount by one-third.
(5) TERMINATION
(a)
Death
or Disability.
The
Executive's employment hereunder shall terminate upon the Executive's death
or
termination due to disability (as described in Section 6(a) of this
Agreement).
(b)
Termination
by Company for Cause.
The
Company may at any time by written notice to the Executive terminate the
Executive’s employment for Cause in accordance with the following provisions:
(i)
Termination
for Cause Prior to a Change in Control.
Prior
to the date of a Change in Control, the Company shall be deemed to have “Cause”
to terminate the Executive’s employment hereunder only upon the Executive’s:
(1)
failure to comply with any material term of this Agreement, or to perform
and
discharge the duties or obligations of the Executive’s office, or such other
duties as may from time to time be assigned to the Executive by, or at the
direction of, the UIL Board, faithfully, diligently, and competently, in
the
opinion of a majority of the members of the UIL Board,
unless
any such failure is cured in all material respects to the reasonable
satisfaction of the UIL Board within sixty (60) days after the Executive
receives written notice of such failure; or
(2)
failure to devote substantially all of his working time and efforts to the
business and affairs of the Company unless any such failure is cured in
all
material
respects to the reasonable satisfaction of the UIL Board within sixty (60)
days
after the Executive receives written notice of such failure; or
(3)
misconduct that is demonstrably injurious to the interests of the Company
or its
Affiliates (as that term is defined in Section 9, unless such misconduct
is
rectified in all material respects to the reasonable satisfaction of the
UIL
Board within thirty (30) days after the Executive receives written notice
of
such misconduct; or
(4)
commission of a serious crime, such as an act of fraud, misappropriation
of
funds, embezzlement, or a crime involving personal dishonesty or moral
turpitude.
(ii)
Termination
for Cause After a Change in Control.
During
the period that commences on a Change in Control and for twenty-four (24)
months
thereafter (the “Change in Control Protective Period”), and subject to the same
notice and cure provisions specified above, the Company (or its successor
or
other entity employing the Executive following such Change in Control) shall
be
deemed to have Cause to terminate the Executive’s employment hereunder only upon
the Executive’s:
(1)
commission of a serious crime, such as an act of fraud, misappropriation
of
funds, embezzlement, or a crime involving personal dishonesty or moral
turpitude; or
(2)
misconduct that is demonstrably injurious to the interests of the Company
or its
Affiliates; or
(3)
willful failure of the Executive to substantially perform his duties (other
than
by reason of incapacity due to physical or mental illness or
injury).
(c) Termination
by Company without Cause.
The
Company may terminate the Executive’s employment at any time, without cause,
upon ninety (90) days prior written notice to the Executive.
(d) Termination
by Executive.
(i) If
the
Executive is not in default of any of the Executive’s obligations under Sections
(2), (9), (10), or (11) hereof, the Executive may terminate employment hereunder
upon at least thirty (30) days’ prior notice, for failure of the Company to
observe and perform one or more of its obligations under Sections (2), (3)
and/or (4) hereof, which failure the Company fails to remedy within such
notice
period (a “Breach by the Company”).
(ii) If
the
Executive is not in default of any of the Executive’s obligations under Sections
(2), (9), (10), or (11) hereof, the Executive may terminate
employment
hereunder in the absence of a Breach by the Company, effective upon at least
ninety
(90) days prior
written notice.
(e) Date
of Termination.
For
purposes of this Agreement, the “Date of Termination” is defined as (i) the
Executive’s date of death, in the event of his death; or the date of his
termination due to disability, in the case of disability, or (ii) the date
specified in the notice of termination, in the case of the Executive’s
termination pursuant to Sections (5)(b), (5)(c), 5(d) hereof.
(6) CONSEQUENCES
OF TERMINATION OR NON-RENEWAL.
(a)
Termination
on Death or Disability or Retirement; or by the Executive in the Absence
of a
Breach by the Company upon Adequate Notice.
If the
Executive’s employment terminates by reason of the Executive’s death, his total
or partial physical or mental disability such
that
the Executive becomes entitled to long-term disability benefits under the
Company’s long-term disability plan,
or if
the Executive retires on or after reaching age 55 and completing ten years
of
service, or terminates employment hereunder in the absence of a Breach by
the
Company upon ninety (90) days prior written notice, the Company shall pay
to the
Executive or, in the event of death or disability, the Executive’s personal
representative and/or spouse:
(i)
the
Executive’s Base Salary earned but unpaid as of the Date of Termination, and
Accrued Incentive Compensation (as defined in Section 4(b)) earned, but unpaid
as of the Date of Termination;
(ii)
Stub-Period Incentive Compensation (as defined in Section 4(b)) earned, but
unpaid, as of the Date of Termination, but only in the case of the Executive’s
death, termination due to disability or retirement (as hereinbefore defined),
and not in case of his voluntary termination other than on account of such
retirement; plus
(iii)
any
amounts payable pursuant to (4)(d) (unreimbursed business expenses), (4)(e)
(employee benefits due and owing), (4)(f) (accrued, but unpaid vacation or
holidays), (4)(g) and 4(b)(ii) (payment of restricted stock, to the extent
then
vested), and 4(h) (reimbursement of relocation expenses, to the extent then
owed
and unreimbursed); plus
(iv)
any
benefits or amounts payable, on account of the Executive’s (A) participation in
any long-term incentive compensation plan and equity compensation plan or
arrangement, and (B) participation in any elective deferred compensation
plan in
which he was a participant as of his termination of service, all as determined
in accordance with the terms and conditions of such plans and arrangements.
Pending
a
determination that the Executive is entitled to long-term disability benefits,
the Executive’s short-term disability benefits shall be extended, as necessary
at 50% of Base Salary, if his length of employment with the Company is of
such
short duration that his short term disability benefits would otherwise expire
before his entitlement to long-term disability benefits is
determined.
Upon
payment of these amounts, the Company shall have no further obligation to
the
Executive, the Executive’s personal representative and/or spouse under this
Agreement or on account of, or arising out of, the termination of the
Executive’s employment.
In
the
event that the Executive voluntarily terminates employment during the first
three (3) years of his employment with the Company, he shall be obligated
to
repay that portion of relocation assistance provided to him as determined
in
accordance with the last paragraph of Section 4(h) of this
Agreement.
(b)
Upon
Termination for Cause; or by the Executive on fewer than 90 days
notice.
If the
Company terminates the Executive’s employment for Cause, or the Executive
terminates employment hereunder in the absence of a Breach by the Company
and
upon fewer than ninety
(90) days prior
written notice, the Company shall pay to the Executive:
(i)
the
Executive’s Base Salary earned, but unpaid, as of the Date of Termination;
plus
(ii)
any
amounts payable pursuant to Sections (4)(d), (4)(e), 4(f) and (4)(g) and
4(b)(ii) (payment of restricted stock, to the extent then vested), and 4(h)
(reimbursement of relocation expenses, to the extent then owed and unreimbursed)
hereof, and
(iii)
any
benefits or amounts payable under any elective non-qualified deferred
compensation plan in which the Executive had been a participant,
whereupon
the Company shall have no further obligation to the Executive under this
Agreement or on account of, or arising out of, the termination of the
Executive’s employment.
In
the
event that the Executive voluntarily terminates employment during the first
three (3) years of his employment with the Company, or is terminated by the
Company for “Cause”, he shall be obligated to repay that portion of relocation
assistance provided to him as determined in accordance with the last paragraph
of Section 4(h) of this Agreement.
(c)
Upon
Termination Without Cause, or Upon Breach by the Company, not on account
of a
Change in Control.
If the
Company terminates the Executive's employment hereunder without Cause, or
if the
Executive terminates the Executive's employment hereunder on account of a
Breach
by the Company, and in either case the termination is not upon a Change in
Control or within the Change in Control Protective Period, the Company shall
pay
or provide (as applicable) to the Executive, the following:
(i)
the
Executive’s Base Salary earned but unpaid as of the Date of Termination, Accrued
Incentive Compensation (as defined in Section 4(b)) earned, but unpaid as
of the
Date of Termination and Stub-Period Incentive Compensation earned, but unpaid,
as of the Date of Termination; plus
(ii)
any
amounts payable pursuant to (4)(d) (unreimbursed business expenses), (4)(e)
(employee benefits due and owing), (4)(f) (accrued, but unpaid vacation or
holidays),
(4)(g)
and 4(b)(ii) (payment of restricted stock, to the extent then vested), and
4(h)
(reimbursement of relocation expenses, to the extent then owed and
unreimbursed); plus
(iii)
any
benefits or amounts payable, on account of the Executive’s (A) participation in
any long-term incentive compensation plan and equity compensation plan or
arrangement, and (B) participation in any elective deferred compensation
plan in
which he was a participant as of his termination of service, all as determined
in accordance with the terms and conditions of such plans and arrangements;
plus
(iv)
lump
sum severance, payable on the first day of the seventh (7th)
month
following the Executive’s termination of service, equal to one (1)
times the
sum
of:
(1)
the
Executive’s annual Base Salary rate in effect immediately prior to the
Executive’s Date of Termination, as determined by the UIL Board’s most recent
review of salary rates pursuant to Section 4(a); and
(2)
the
short-term annual incentive compensation payment to which the Executive would
be
entitled, calculated as if he had been employed by the Company on the last
day
of the year of his Termination, and as if both personal goals and Company
goals
had been achieved ‘at target’ without pro-ration for the fact that the Executive
was employed only a portion of such year.
(v)
for
the period ending on the first anniversary
of the date of the Executive’s Date of Termination, continued participation in
the medical and dental plan(s) in which he was a participant as of his Date
of
Termination on the same basis as if he remained an active employee, provided
that such participation is possible under the terms and provisions of such
plans
and programs 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 the Executive’s termination of employment. If the Executive’s
participation in any such plan or program is barred as a result of the
Executive’s termination, the Company shall arrange to provide the Executive with
benefits substantially similar on an after-tax basis to those that the Executive
would have been entitled to receive under such plan or program, provided
that
with respect to any benefit to be provided on an insured basis, the value
of
such coverage shall be based on the present value of the premiums expected
to be
paid for such coverage, and with respect to other benefits, such value shall
be
the present value of the expected cost to the Company of providing such
benefits.
(d)
Upon
Non-renewal of Agreement at end of Term.
If the
Executive’s employment hereunder is terminated due to non-renewal of this
Agreement, the Company shall pay or provide (as applicable) to the Executive,
the following:
(i)
the
Executive’s Base Salary earned but unpaid as of the Date of Termination, Accrued
Incentive Compensation (as defined in Section 4(b)) earned, but unpaid as
of the
Date of Termination and Stub-Period Incentive Compensation earned, but unpaid,
as of the Date of Termination; plus
(ii)
any
amounts payable pursuant to (4)(d) (unreimbursed business expenses), (4)(e)
(employee benefits due and owing), (4)(f) (accrued, but unpaid vacation or
holidays), (4)(g) and 4(b)(ii) (payment of restricted stock, to the extent
then
vested), and 4(h) (reimbursement of relocation expenses, to the extent then
owed
and unreimbursed)); plus
(iii)
any
benefits or amounts payable, on account of the Executive’s (A) exercise of his
then exercisable rights under any long-term incentive compensation plan or
arrangement, and (B) participation in any deferred compensation plan in which
he
was a participant as of his termination of service; plus
(iv)
lump
sum severance equal to six (6) months of the
Executive’s annual Base Salary rate in effect immediately prior to the
Executive’s Date of Termination, which amount shall be payable as of the first
day of the seventh (7th)
month
following the Executive’s termination of service.
(e)
Timing
of Payment.
Any
cash
amount that is due and owing to the Executive upon his termination of service
pursuant to Section 6 or Section 7 will be paid as soon as administratively
feasible following the effective date (including any revocation period) of
the
Release provided for in Section 6(f); provided, however, that (i) any
Stub-Period Incentive Compensation shall be calculated following the close
of
the calendar year to which such incentive relates in accordance with the
terms
of the applicable plan, and shall be paid at the same time as such incentives
are payable to other executives, but in no event later than March 15 of the
year
following the end of the calendar year to which such incentive relates, (ii)
any
long-term incentive compensation shall be paid by March 15 of the calendar
year
following the end of the performance period to which such compensation relates,
(iii) any severance payment (or other payment subject to Section 409A of
the
Internal Revenue Code) shall be paid as of the first day of the seventh
(7th)
month
following the Date of Termination; and (iv) any elective deferred compensation
shall be paid in accordance with the terms of the deferred compensation plan,
subject to the requirements under Section 409A of the Internal Revenue Code
for
a six month delay in the case of distributions to ‘key’ employees.
(f)
Release.
All
payments and obligations of the Company under Section (6) and (7) shall
be
conditioned upon the execution and delivery by Executive to the Company of
a
full and effective release by Executive of any liability by the Company to
Executive in form and substance reasonably satisfactory to the Company.
(7) CHANGE
IN CONTROL
(a)
If
on, or
within twenty-four (24) months following, a Change in Control, the Company
(or
its successor or other entity employing the Executive following such Change
in
Control) either terminates the Executive's employment hereunder without Cause
or
fails to renew this Agreement on substantially identical terms, or if the
Executive terminates the Executive's employment on account of a Constructive
Termination (as defined in the UIL CIC Plan II), then the Executive shall
be
entitled to the following:
(i)
the
Executive’s Base Salary earned but unpaid as of the Date of Termination, Accrued
Incentive Compensation (as defined in Section 4(b)) earned, but unpaid as
of the
Date of Termination and Stub-Period Incentive Compensation earned, but unpaid,
as of the Date of Termination; plus
(ii)
any
amounts payable pursuant to (4)(d) (unreimbursed business expenses), (4)(e)
(employee benefits due and owing), (4)(f) (accrued, but unpaid vacation or
holidays), (4)(g) and 4(b)(ii) (payment of restricted stock, to the extent
then
vested), and 4(h) (reimbursement of relocation expenses, to the extent then
owed
and unreimbursed); plus
(iii)
any
benefits or amounts payable, on account of the Executive’s (A) participation in
any long-term incentive compensation plan and equity compensation plan or
arrangement, and (B) participation in any deferred compensation plan in which
he
was a participant as of his termination of service, all as determined in
accordance with the terms and conditions of such plans and arrangements;
plus
(iv)
those payments, and benefits, if any, to which the Executive is entitled
by
reason of having been designated a Participant in the UIL CIC Plan II, as
described in Section 4(c) of this Agreement. The severance payments, and
other
benefit provisions under such Plan (the “Total UIL CIC Plan Package”) shall be
controlling and shall supplant the payments and benefits to which the Executive
would be entitled assuming the Executive were terminated without Cause pursuant
to the terms of this Agreement, including without limitation any severance
benefits, short-term incentive compensation and other compensation and benefits
(other than long term incentive compensation) under this Agreement (the
“Employment Agreement Termination Package”); expressly provided, however, that
in the event that the Employment Agreement Termination Package exceeds the
value
of the Total UIL CIC Plan II Package, then the Executive shall be entitled
to
select one or the other Package, but shall not be entitled to both, and shall
not be entitled to select among compensation elements in each
Package.
(b)
For
purposes of this Agreement, Change in Control shall mean “Change in Control” as
defined with respect to the Company employing the Executive in the UIL CIC
Plan
II, as amended from time to time.
(c)
Payment of benefits under this Section 7 shall be subject to, and conditioned
upon, the provisions of Section 6(e) and (f) hereof.
(8)
GROSS
UP FOR EXCISE TAX.
(a)
Anything in this Agreement to the contrary notwithstanding, in the event
that it
shall be determined that any payment made and benefits provided by the Company
to or for the Executive, whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise, would constitute an
“excess parachute payment” within the meaning of Section 280G of the Internal
Revenue Code of 1986 subject to an excise tax under Section 4999 of the Internal
Revenue Code of 1986 as amended (the “Code”) or any successor provision (the
“Excise Tax”), the Executive shall be paid an additional amount (the “Gross-Up
Payment”) such that the net amount retained by Executive after deduction of any
Excise Tax, and any federal,
state
and
local income and employment tax (including any Excise Tax imposed upon the
Gross-Up Payment itself) shall be equal to the total amount of all payments
and
benefits to which the Executive would be entitled pursuant to this Agreement
absent the Excise Tax, but net of all applicable federal, state and local
taxes.
For purposes of determining the amount of the Gross-Up Payment, Executive
shall
be deemed to pay federal income tax and employment taxes at the highest marginal
rate of federal income and employment 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 rate of taxation in the state and locality of Executive’s residence in
the calendar year in which the Gross-Up Payment is to be made, net of the
maximum reduction in federal income taxes that may be obtained from the
deduction of state and local taxes.
(b)
The
Gross-Up Payment, if any, shall be paid to the Executive or, at the discretion
of the Company, directly to governmental authorities through tax withholding
on
the Executive’s behalf, as soon as practicable following the payment of the
excess parachute payment, but in any event not later than 30 business days
immediately following such payment; provided that any Gross-up Payment under
this Section 8, including Section 8(d) shall be conditioned upon the Executive
providing the release called for in Section 6(f) and complying with the
confidentiality and non-compete provisions of this Agreement.
(c)
Subject to the provisions of Section 8(d), all determinations required to
be
made under this Section 8, including whether and when a Gross-Up Payment
is
required and the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by tax counsel
appointed by the Company (the "Tax Counsel"), which shall provide its
determinations and any supporting calculations both to the Company and Executive
within 10 business days of having made such determination. The Tax Counsel
shall
consult with the Company’s benefit consultants and counsel in determining which
payments to, or for the benefit of, the Executive are to be deemed to be
‘parachute payments’ within the meaning of Section 280G(b)(2) of the
Code. Any
such
determination by the Tax Counsel shall be final and binding upon the Company
and
Executive. All fees and expenses of the Tax Counsel (and, if applicable benefits
consultants or other counsel) shall be borne solely by the Company. As a
result
of the uncertainty in the application of Section 4999 of the Code at the
time of
the initial determination by the Tax Counsel hereunder, it is possible that
Gross-Up Payments, which will not have been made by the Company, should have
been made ("Underpayment"). In the event that it is ultimately determined
in
accordance with the procedures set forth in Section 8(d) that the Executive
is
required to make a payment of Excise Tax, the Tax Counsel shall determine
the
amount of the Underpayment that has occurred, and any such Underpayment shall
be
promptly paid by the Company to or for the benefit of the
Executive.
(d)
The
Executive shall notify the Company in writing of any claims by the Internal
Revenue Service that, if successful, would require the payment by the Company
of
any, or any additional, Gross-Up Payment. Such notification shall be given
as
soon as practicable but no later than 30 days after the Executive actually
receives notice in writing of such claim and shall apprise the Company of
the
nature of such claim and the date on which such claim is requested to be
paid.
The Executive shall not pay such claim prior to the expiration of the 30-day
period following the date on which he gives such notice to the Company (or
such
shorter period ending on the date that any payment of taxes with respect
to such
claim is due). If the
Company
notifies the Executive in writing prior to the expiration of such period
that it
desires to contest such claim, the Executive shall:
(1)
give
the Company any information reasonably requested by the Company relating
to such
claim;
(2)
take
such action in connection with contesting such claim as the Company shall
reasonably request in writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by an attorney
selected by the Company and reasonably acceptable to the Executive;
(3)
cooperate with the Company in good faith in order to contest such claim
effectively; and
(4)
if
the Company elects not to assume and control the defense of such claim, permit
the Company to participate in any proceedings relating to such
claim;
provided,
however, that the Company shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with
such
contest and shall indemnify and hold the Executive harmless, on an after-tax
basis, for any Excise Tax (including interest and penalties with respect
thereto) imposed as a result of such representation and payment of costs
and
expenses. Without limitation on the foregoing provisions of this Section
8(d),
the Company shall have the right, at its sole option, to assume the defense
of
and control all proceedings in connection with such contest, in which case
it
may pursue or forego any and all administrative appeals, proceedings, hearings
and conferences with the taxing authority in respect of such claim and may
either direct the Executive to pay the tax claimed and xxx for a refund or
contest the claim in any permissible manner, and the Executive agrees to
prosecute such contest to a determination before any administrative tribunal,
in
a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company directs the
Executive to pay such claim and xxx for a refund, the Company shall advance
the
amount of such payment to the Executive, on an interest-free basis, and shall
indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax (including interest or penalties with respect thereto) imposed
with
respect to such advance or with respect to any imputed income with respect
to
such advance; and further provided, that any extension of the statute of
limitations relating to payment of taxes for the taxable year of the Executive
with respect to which such contested amount is claimed to be due is limited
solely to such contested amount. Furthermore, the Company's right to assume
the
defense of and control the contest shall be limited to issues with respect
to
which a Gross-Up Payment would be payable hereunder, and the Executive shall
be
entitled to settle or contest, as the case may be, any other issue raised
by the
Internal Revenue Service or any other taxing authority.
(e)
If,
after the receipt by the Executive of an amount advanced by the Company pursuant
to Section 8(d), the Executive becomes entitled to receive any refund with
respect to such claim, the Executive shall (subject to the Company's complying
with the requirements of Section 8(d)) promptly pay to the Company the amount
of
such refund (together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by
the
Executive of an amount advanced by the Company pursuant to Section 8(d),
a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim, and the Company does not notify the Executive
in
writing of its intent to contest such denial of refund prior to the expiration
of 30 days after such determination, then such advance shall be forgiven
and
shall not be required to be repaid, and the amount of such advance shall
offset,
to the extent thereof, the amount of Gross-Up Payment required to be
paid.
(9)
CONFIDENTIAL INFORMATION
The
Executive recognizes that the Executive’s employment by the Company is one of
highest trust and confidence by reason of his access to certain trade secrets,
confidential business practices, and proprietary information concerning the
Company or any person or entity that directly, or indirectly through one
or more
intermediaries, controls or is controlled by, or is under common control
with,
the Company (an “Affiliate”), including, without limitation, the Company’s
methods of doing business, marketing and strategic business plans, employees’
compensation and contract terms, customer lists and customer characteristics
(collectively referred to as “Proprietary Information”). The Executive agrees
and covenants to exercise utmost diligence to protect and safeguard the trade
secrets, confidential business practices and Proprietary Information concerning
the Company and any Affiliate. The Executive further agrees and covenants
that,
except with the prior written consent of the Company, he will not, either
during
the Term hereof or thereafter, directly or indirectly, use for his own benefit
or for the benefit of any other person or organization, or disclose, disseminate
or distribute to any other person or organization, any of the Proprietary
Information (whether or not acquired, learned, obtained or developed by the
Executive alone or in conjunction with another), unless and until such
Proprietary Information has become a matter of public knowledge through no
action or fault of the Executive or unless otherwise required by court order
to
comply with legal process. All memoranda, notes, records, drawings, documents
or
other writings whatsoever made, compiled, acquired or received by the Executive
during the Term hereof arising out of, in connection with, or related to
any
activity or business of the Company are and shall continue to be the sole
and
exclusive property of the Company, and shall, together with all copies thereof,
be returned and delivered to the Company by the Executive immediately, when
he
ceases to be employed by the Company, or at any other time upon the Company’s
demand.
(10)
NON-COMPETITION.
The
Executive agrees and covenants that, during the Term of this Agreement and
for a
period of twelve (12) months following the month during which the Executive
ceases to be employed by the Company and its Affiliates (the “time in
question”), the Executive will not, in any capacity, directly or
indirectly,
whether
as a consultant, employee, officer, director, partner, member, principal,
shareholder, or otherwise:
(a)
become employed by, enter into a consulting arrangement with, or otherwise
perform services for, manage, acquire an ownership in, or participate in
the
management or ownership of, a Competitor; or
(b)
directly or indirectly divert or attempt to divert from the Company or any
Affiliate any business in which the Company or any Affiliate has been actively
engaged during the Term hereof, or in any way interfere with the relationships
that the Corporation or any Affiliate has with its sources of supply or
customers; or
(c)
directly or indirectly interfere or attempt to interfere with the relationship
between the Company or any Affiliate and any of such entity’s employees;
unless
the Company has granted prior written approval which may be withheld for
any
reason.
For
purposes of this Section “Competitor” means any person or entity (a ‘business’)
that sells goods or services that are directly competitive with those goods
or
services sold or provided by the Company or any Affiliate, in a geographic
area
in which the Company or Affiliate is doing business and such Competitor is
also
doing business at the time in question, and such goods or services were being
sold or provided at the Date of Termination, and, for the Company’s most
recently completed fiscal year ending with, or immediately prior to, the
Date of
Termination, contributed more than 10% of the revenue of the Company and
its
Affiliates. Notwithstanding anything to the contrary in this Section, a business
shall not be deemed to be a Competitor with the Company if the Executive
is
employed by, or otherwise associated with such business, and that business
has a
unit that is in competition with the Company or an Affiliate, but the Executive
does not have direct or indirect responsibilities for the services or goods
involved in the competition.
Nothing
in this Section shall be construed to prohibit the ownership by the Executive
of
less than five percent (5%) of any class of securities of any entity that
is
engaged in any of the foregoing businesses having a class of securities
registered pursuant to the Securities Exchange Act of 1934 (the “Exchange Act”),
provided that such ownership represents a passive investment and that neither
the Executive, nor any group of persons including the Executive, in any way,
directly or indirectly, manages or exercises control of such entity, guarantees
any of its financial obligations, or otherwise takes any part in its business,
other than through exercising the Executive’s rights as a
shareholder.
For
purposes of this Section “Affiliate” means any entity that directly or
indirectly controls, is controlled by, or is under common control with the
Company.
As
used
in Sections 9-11, the term the “Company” shall mean UIL Holdings Corporation,
and any successor to, or acquirer of, the business or assets of the
Company.
(11)
DISCLOSURE AND ASSIGNMENT OF INVENTIONS AND DISCOVERIES.
(a)
Disclosure
of Inventions.
The
Executive agrees to make prompt and complete disclosure to the Company of
all
inventions and discoveries made or conceived by him, alone or with others,
while
this Agreement is in effect, or within a reasonable time thereafter, which
arise
out of or relate to the services rendered pursuant to this Agreement. The
Executive also agrees to keep necessary records, including notes, sketches,
drawings, models and data supporting all such
inventions
and discoveries made by him, alone or with others, during the course of
performing the services pursuant to this Agreement, and the Executive agrees
to
furnish the Company, upon request, all such records.
(b)
Assignment
of Inventions and Discoveries.
The
Executive also agrees that he will assign to the Company all inventions and
discoveries made by him which arise out of and pertain to the services rendered
pursuant to this Agreement, together with all domestic and foreign patents
as
may be obtained on these inventions and discoveries. The Executive further
agrees that, upon request of the Company, he will execute all necessary papers
and cooperate in the fullest degree with the Company in securing, maintaining
and enforcing any such patents which arise out of his services under this
Agreement. It is understood, however, that these obligations undertaken by
Executive will be at no expense to him.
(12)
MISCELLANEOUS.
(a)
Equitable
Remedies.
The
Executive acknowledges that the restrictions provided for in Sections (9)
through (11) are reasonable and necessary in order to protect the legitimate
interests of the Company and its Affiliates, and that any violation thereof
would result in serious damage and irreparable injury to the Company and
its
Affiliates. Further, the
Executive acknowledges that the services to be rendered by him are of such
unique and extraordinary nature, and the resulting injury to the Company
from a
breach of Sections (9) through (11), inclusive, by the Executive would be
of
such a nature, that an action at law for the collection of damages would
not
provide adequate relief to the Company for the enforcement of its rights
in the
event of an actual or threatened violation by the Executive of his commitments
and obligations under Sections (9) through (11). The Executive agrees that
upon
the actual or threatened breach
or
violation of any of the commitments under Section (9) through (11), the Company
shall be entitled to both preliminary and permanent injunctive relief, in
any
action or proceeding brought in an appropriate court having jurisdiction
over
the Executive, to restrain him from committing any violation of any such
commitments and obligations.
(b)
Effect
Of Breach.
All
payments and other benefits payable but not yet distributed to Executive
under
Sections (6), (7) or (8) shall be forfeited and discontinued in the event
that
the Executive violates Sections (9) through (11) of this Agreement, or willfully
engages in conduct which is materially injurious to the Company, monetarily
or
otherwise, all as determined in the sole discretion of the Company.
(c)
Successors;
Binding Agreement; Assignment.
(i)
The
Company will require the acquirer of all or substantially all of the business
or
assets of the Company (whether directly or indirectly, by purchase of stock
or
assets, merger, consolidation or otherwise), by agreement in form and substance
reasonably satisfactory to the Executive, to expressly assume 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.
If the Company fails to obtain such agreement prior to the effective date
of any
such succession, the Executive may terminate his employment within thirty
(30)
days of such succession and treat such termination as a Breach by the Company
and termination without cause on account of a Change in Control entitling
the
Executive to payments and benefits under
Section
7
of this Agreement. For purposes of implementing the foregoing, the date on
which
any such succession becomes effective shall be deemed the Date of
Termination.
(ii) This
Agreement, and the Executive’s rights and obligations hereunder, may not be
assigned by the Executive. Any attempted assignment of this Agreement by
the
Executive shall be void and of no force or effect. This
Agreement and all rights of the Executive hereunder 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.
As
used
in this Section, the term the “Company” shall include The
United Illuminating Company, UIL Holdings Corporation, and any successor
to, or
acquirer of, the business or assets of the Company that executes and delivers
the agreement provided for in this Section (12)(c) or which otherwise becomes
bound by all the terms and provisions of this Agreement by operation of
law.
(d) Notices.
For the
purpose of this Agreement, notices and all other communications to either
party
hereunder provided for in the Agreement shall be in writing and shall be
deemed
to have been duly given when delivered or mailed by United States certified
or
registered mail, return receipt requested, postage prepaid, addressed, in
the
case of the Company, to the Secretary of the Company at 000 Xxxxxx Xxxxxx,
Xxx
Xxxxx, Xxxxxxxxxxx 00000, or, in the case of the Executive, to the Executive
at
his residence, or to such other address as either party shall designate by
giving written notice of such change to the other party.
(e) Waiver;
Amendment.
Except
to the extent that the CEDC possesses the power to modify or amend this
Agreement pursuant to its charter, no provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge
is
approved by the UIL Board and agreed to in a writing signed by the Executive
and
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
any
similar or dissimilar provisions or conditions at the same or at any prior
or
subsequent time. No agreements or representations, oral or otherwise, express
or
implied, with respect to the subject matter hereof have been made by either
party that are not set forth expressly in this Agreement. The parties hereto
recognize that certain provisions of this Agreement may be affected by Section
409A of the Internal Revenue Code and guidance issued thereunder, and agree
to
amend this Agreement, or take such other action as may be necessary or
advisable, to comply with Section 409A.
(f)
Governing
Law; Severability.
The
validity, interpretation, construction and performance of this Agreement
shall
be governed by the laws of the State of Connecticut. The validity or
unenforceability of any provision or provisions of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect. In the event one or more of
the
provisions of this Agreement should, for any reason, be held to be invalid,
illegal or unenforceable in any respect, the parties agree that such provisions
shall be legally enforceable to the extent permitted by applicable law, and
that
any court of competent jurisdiction shall so enforce such provision, or shall
have the authority hereunder to modify it to make it enforceable to the greatest
extent permitted by law.
(g) No
Conflict.
The
Executive hereby represents and warrants to the Company that neither the
execution nor the delivery of this Agreement, nor the employment of the
Executive by the Company will result in the breach of any agreement to which
the
Executive is a party.
(h) Survival.
The
provisions of this Agreement shall not survive the termination of this Agreement
or of the Executive’s employment hereunder, except that the provisions of
Sections (6) through (12) hereof shall survive such termination and shall
be
binding upon the Executive, the Executive’s personal representative and/or
spouse, the Company, and the Company’s successors and assigns.
(i) Counterparts;
Facsimile Execution.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original but all of which together shall constitute one and the
same
instrument. Facsimile execution and delivery of this Agreement is legal,
valid
and binding execution and delivery for all purposes.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day
and year first above written.
UIL
HOLDINGS CORPORATION
Attest:
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/s/Xxxxx
X. Xxxxx
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By:
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/s/Xxxxxxxxx
X. Xxxxxxx
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Xxxxx
X. Xxxxx
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Xxxxxxxxx
X. Xxxxxxx, Chairman and Chief
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Executive
Officer
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1.10.06
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/s/Xxxxxxx
Xxxxxx
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/s/Xxxxx
X. Xxxxxxxxx
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Xxxxxxx
Xxxxxx
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Xxxxx
X. Xxxxxxxxx
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