EXHIBIT 10.23
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made as of the 1st day of January, 1988, and amended as
of July 23, 1990, June 1, 1995 and March 1, 1997, between THE UNITED
ILLUMINATING COMPANY, a Connecticut corporation (the Company) and XXXXXX X.
XXXXXX, an individual (the Executive),
WITNESSETH THAT
WHEREAS, the Executive has been in the employ of the Company for a
substantial period of time; and
WHEREAS, the Company desires to continue to employ the Executive as
President and Chief Financial Officer, and the Executive desires to continue to
be employed by the Company as its President and Chief Financial Officer; and
WHEREAS, the Company and the Executive desire to enter into a written
agreement confirming certain of the rights and benefits which the Executive has
heretofore enjoyed and certain of the duties and obligations which the Executive
has heretofore assumed, and conferring upon the Executive certain rights and
benefits which he has not heretofore enjoyed and imposing upon the Executive
certain duties and obligations to which he has not heretofore been subject,
NOW THEREFORE, in consideration of the foregoing and the respective
covenants and agreements of the parties herein contained, and the services
heretofore rendered by the Executive to the Company and to be rendered to the
Company pursuant hereto hereafter, and in order to provide an incentive to the
Executive to remain in the employ of the Company hereafter and, in particular,
in the event of any Change in Control (as herein defined) of the Company,
thereby establishing and preserving continuity of management, the Parties hereby
agree as follows:
(1) EMPLOYMENT
(a) The Company hereby agrees to employ the Executive, and the
Executive hereby agrees to serve the Company all upon the terms and conditions
set forth herein.
(b) Unless and until terminated pursuant to Section (5)(a),
Section (5)(b)(i) or Section (5)(c)(i) hereof, the employment of the Executive
by the Company shall be for a term expiring on the date specified in a Notice of
Termination pursuant to Section (5)(d) hereof.
(2) POSITION AND DUTIES
The Executive shall be employed by the Company as President and Chief
Financial Officer, or in such other equivalent or
higher senior executive position as the Company's Board of Directors may
determine, without diminishment in his officership status, privileges or working
conditions. The Executive shall accept such employment and shall perform and
discharge, faithfully, diligently and to the best of his abilities, the duties
and obligations of his office and such other duties as may from time to time be
assigned to him by the Chief Executive Officer, or by the Board of Directors, of
the Company, and shall devote substantially all his working time and efforts to
the business and affairs of the Company; provided, however, that, to an extent
consistent with the needs of the Company, the Executive shall be entitled to
expend a reasonable amount of time on civic and philanthropic activities and the
management of his own and his family's business investments and activities.
Although a Change in Control of the Company shall not affect the obligations of
the Company and the Executive as set forth in the two preceding sentences, at
and after the date of any Change in Control the Company's employment of the
Executive shall also be without diminishment in his management responsibilities,
duties or powers.
(3) PLACE OF PERFORMANCE
In his employment by the Company, the Executive shall be based at the
executive offices of the Company situated within the Company's statutory service
area.
(4) COMPENSATION
(a) Base Salary. During the term of his employment hereunder,
the Executive shall receive a base salary (Base Salary) at an annual rate of Two
Hundred Eighteen Thousand Four Hundred Dollars ($218,400). The Executive's Base
Salary rate shall be reviewed by the Board of Directors of the Company
contemporaneously with each review of the salary rates of the Company's other
officers by said Board of Directors, and may be revised upwards as a result of
any such review. The Executive's Base Salary may be revised downwards by said
Board of Directors contemporaneously with any general reduction of the salary
rates of the Company's other officers.
(b) Incentive Compensation. During the term of his employment
hereunder, the Executive shall be entitled to participate in each incentive
compensation program established for officers of the Company.
For purposes of this Agreement, Total Compensation is defined
as the sum of the Executive's Base Salary and any amount paid or payable
pursuant to this Section (4)(b).
(c) Business Expenses. During the term of his employment
hereunder, the Executive shall be entitled to receive prompt reimbursement for
all reasonable expenses incurred by him (in accordance with the policies and
procedures established by
- 2 -
the Board of Directors of the Company from time to time for the Company's senior
executive officers) in performing services hereunder, provided that the
Executive properly accounts therefor.
(d) Fringe Benefits. During the term of his employment
hereunder, the Executive shall be entitled to participate in and receive full
benefits under all of the Company's employee benefit plans, programs and
arrangements for its officers, including, without limitation, its Pension Plan.
Nothing paid to the Executive under any such plan, program or arrangement
presently in effect or made available by the Company in the future shall be
deemed to be in lieu of compensation to the Executive under any other Section of
this Agreement.
(e) Vacations. During the term of his employment hereunder,
the Executive shall be entitled to the number of paid vacation days in each
calendar year determined by the Board of Directors of the Company from time to
time for the Company's senior executive officers, and shall also be entitled to
all paid holidays given by the Company to its employees.
(f) Supplemental Retirement. Upon termination of the
Executive's employment, a supplemental retirement benefit shall be payable to
him or his beneficiary in accordance with the provisions of this Section (4)(f).
The annual supplemental retirement benefit, expressed in the form of a single
life annuity beginning at the Executive's Normal Retirement Date (as defined in
the Company's Pension Plan), shall be the excess, if any, of (A) less (B), where
(A) is 2.2% (.022) of the Executive's highest three-year average Total
Compensation times the number of years at termination (not to exceed thirty) of
the Executive's service deemed as an employee of the Company, and (B) is the
benefit payable under the Company's Pension Plan. For purposes of this
Agreement, the Executive's service deemed as an employee of the Company
commenced on July 1, 1959. Payment of the supplemental retirement benefit shall
begin at the same time as the Executive's Pension Plan benefit payments and
shall be subject to the same reductions for early commencement, except that the
reductions shall be based on the Executive's service deemed as an employee of
the Company. The supplemental retirement benefit may be paid in any form
available under the Pension Plan, as elected by the Executive prior to benefit
payment commencement. The conversion factors between forms of benefits used for
purposes of the Pension Plan shall be used for purposes of the supplemental
retirement benefit. The form of payment of the supplemental retirement benefit
may be the same or different from the form of payment of the Executive's
benefits under the Pension Plan. If the form of payment provides for a death
benefit, such benefit shall be payable to the Executive's estate, unless another
beneficiary has been designated by the Executive. If the Executive dies prior to
the commencement of benefit payments, the death benefit provisions of the
Pension Plan shall apply, mutatis mutandis, to the supplemental
- 3 -
retirement benefit payable pursuant to this Section (4)(f).
(5) TERMINATION
(a) The Executive's employment hereunder shall terminate upon
his death.
(b) Termination by the Company.
(i) The Company may terminate the Executive's
employment hereunder for Cause. 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 (A) continued failure to perform and
discharge the duties or obligations of his office, or such other duties as may
from time to time be assigned to him by the Chief Executive Officer or by the
Board of Directors, faithfully, diligently, to the best of his abilities, and in
accordance with standards accepted in the electric utility industry, after
written notice by the Board of Directors of the Company specifying the alleged
failure in reasonably detailed terms and including in said notice the opinion of
a majority of the entire membership of said Board of Directors that there has
been such failure, or (B) willful misconduct that is materially and demonstrably
injurious to the Company, or (C) conviction of a felony involving the personal
dishonesty or moral turpitude of the Executive (unless such conviction is
reversed in any final appeal therefrom), or (D) total and permanent physical or
mental disability, or (E) absence from work on a full-time basis, due to
physical or mental illness, for an uninterrupted 365-day period. On and after
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 (F)
conviction of a felony involving the personal dishonesty or moral turpitude of
the Executive (unless such conviction is reversed in any final appeal
therefrom), or (G) total and permanent physical or mental disability, or (H)
absence from work on a full-time basis, due to physical or mental illness, for
an uninterrupted 365-day period. Notwithstanding the foregoing, the Executive
shall not be deemed to have been terminated for Cause unless and until there
shall have been delivered to the Executive (I) a copy of a resolution, duly
adopted by the affirmative vote of not less than a majority of the entire
membership of the Board of Directors of the Company, at a meeting of said Board
of Directors called and held for the purpose (after reasonable notice to the
Executive and an opportunity for him, together with his counsel, to be heard
before said Board of Directors), finding that, in the good faith opinion of such
majority of said Board of Directors, the Executive was guilty of conduct
described in an applicable clause of this Section (5)(b)(i), and specifying the
particulars thereof, or that the events described in an applicable clause of
this Section (5)(b)(i) have occurred, and (II) an affidavit of the Secretary or
an Assistant Secretary of the Company stating that such resolution was in fact
adopted by the affirmative vote
- 4 -
of not less than a majority of the entire membership of the Board of Directors
of the Company; and (III) delivery of a Notice of Termination pursuant to
Section (5)(d) hereof.
(ii) Without Cause. The Company may terminate the
Executive's employment without Cause, effective upon at least three (3) years'
prior Notice of Termination delivered to the Executive pursuant to Section
(5)(d) hereof.
(c) Termination by the Executive.
(i) Upon Breach by the Company. The Executive may
terminate his employment hereunder, upon thirty (30) days' prior Notice of
Termination delivered to the Company pursuant to Section (5)(d) hereof, for
failure of the Company to observe and perform one or more of its obligations
under Sections (1), (2), (3) and/or (4) hereof (a Breach by the Company) at a
time when the Executive is not in default of any of his obligations under
Sections (1) and/or (2) hereof.
(ii) Absent Breach by the Company. The Executive may
terminate his employment hereunder in the absence of a Breach by the Company,
effective upon at least six (6) months' prior Notice of Termination delivered to
the Company pursuant to Section (5)(d) hereof.
(d) Notice of Termination. Any termination of employment, by
the Company or by the Executive, shall be communicated by delivery of a written
Notice of Termination to the other party.
(e) Date of Termination. For purposes of this Agreement, the
Date of Termination is defined as the earlier of (i) if the Executive's
employment is terminated pursuant to Section (5)(b)(ii) hereof, the date
specified in the Notice of Termination, or (ii) if the Executive's employment is
terminated (A) by his death, the date of his death, (B) pursuant to Section
(5)(b)(i) or Section (5)(c) hereof, the date specified in the Notice of
Termination, or (C) in any other event, the date on which a Notice of
Termination is delivered.
(6) CONSEQUENCES OF TERMINATION
(a) If the Executive's employment terminates pursuant to
Section (5)(a) hereof, the Company shall pay to the personal representative
and/or spouse of the Executive his Total Compensation earned prior to the Date
of Termination, any amounts payable pursuant to Sections (4)(c), (4)(d), (4)(e)
and (4)(f) hereof and any benefits or amounts payable under any deferred
compensation plan in which the Executive had been a participant, and the Company
shall have no further obligation under this Agreement.
- 5 -
(b) If the Executive's employment terminates pursuant to
Section (5)(b)(ii) or Section (5)(c)(ii) hereof, the Company shall pay to the
Executive and/or his personal representative and/or spouse his Total
Compensation earned prior to the Date of Termination, any amounts payable
pursuant to Sections (4)(c), (4)(d), (4)(e) and (4)(f) hereof and any benefits
or amounts payable under any deferred compensation plan in which the Executive
had been a participant, and the Company shall have no further obligation to the
Executive and/or his personal representative and/or spouse under this Agreement
or on account of, or arising out of, the termination of the Executive's
employment. The Executive may petition the Board of Directors of the Company for
an immediate lump sum payment, in lieu of any amounts payable pursuant to
Section (4)(f) hereof on account of the Executive's termination of employment
pursuant to Section (5)(b)(ii) or Section (5)(c)(ii) hereof, in an amount equal
to the actuarial present value of a supplemental retirement benefit, expressed
in the form of a single life annuity beginning at Executive's termination of
employment equal to the excess if any of (A) less (B) where (A) is 2.2% (.022)
of the Executive's highest three-year average Total Compensation times the
number of years at termination (not to exceed thirty) of the Executive's service
deemed as an employee of the Company, and (B) is the benefit payable under the
Company's Pension Plan at the Executive's termination of employment. The
actuarial present value of such supplemental retirement benefit shall be
calculated on the basis of the annual yield on thirty-year United States
Treasury bonds on the final business day of he month preceding the termination
of his employment and the 1983 Group Annuity table. The Board of Directors of
the Company may grant or deny any such petition by the Executive in its sole
discretion.
(c) If the Executive's employment is terminated pursuant to
Section (5)(b)(i) hereof, or if the Executive terminates his employment in the
absence of a Breach by the Company and not in accordance with Section (5)(c)(ii)
hereof, the Company shall pay to the Executive his full Base Salary earned prior
to the Date of Termination, any amounts payable pursuant to Sections (4)(c),
(4)(d), and (4)(e) hereof and any benefits or amounts payable under any deferred
compensation plan in which the Executive had been a participant, and, provided
that the Company is not in default of any of its obligations hereunder, 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.
(d) If the Executive's employment is terminated pursuant to
Section (5)(c)(i) hereof, or if the Company terminates the Executive's
employment without Cause and not in accordance with Section (5)(b)(ii) hereof:
(i) The Company shall pay to the Executive his Total
Compensation earned prior to the Date of Termination, any amounts payable
pursuant to Sections (4)(c), (4)(d) and (4)(e) hereof and any benefits or
amounts payable under any deferred
- 6 -
compensation plan in which the Executive had been a participant; and if the
Notice of Termination is delivered on or after the date of, and in connection
with, a Change in Control, the Company shall afford the Executive the severance
benefits set forth on Schedule C attached hereto.
(ii) In lieu of any amounts payable pursuant to
Section (4)(f) hereof on account of the Executive's termination of employment,
the Company shall pay to the Executive an immediate lump sum amount equal to the
actuarial present value of a supplemental retirement benefit, expressed in the
form of a single life annuity beginning at Executive's termination of
employment, equal to the excess if any of (A) less (B), where (A) is 2.2% (.022)
of the Executive's highest three-year average Total Compensation times the
number of years at termination (not to exceed thirty) of the Executive's service
deemed as an employee of the Company, and (B) is the benefit payable under the
Company's Pension Plan at the Executive's termination of employment. The
actuarial present value of such supplemental retirement benefit shall be
calculated on the basis of the annual yield on thirty-year United States
Treasury bonds on the final business day of the month preceding the termination
of his employment and the 1983 Group Annuity table.
(iii) The Company shall maintain in full force and
effect, for the continued benefit of the Executive for the period ending on the
third anniversary of the Date of Termination, all employee benefit plans and
programs in which the Executive was entitled to participate immediately prior to
the Date of Termination, provided that the Executive's continued participation
is possible under the general terms and provisions of such plans and programs.
If the Executive's participation in any such plan or program is barred as a
result of such termination, the Company shall arrange to provide the Executive
with benefits substantially similar on an after-tax basis to those which the
Executive was entitled to receive under such plan or program.
(iv) The Company shall pay to the Executive and/or
his personal representative his full Base Salary, during the period commencing
on the date following the Date of Termination and ending on the third
anniversary of the Date of Termination, at the rate in effect at the time the
Notice of Termination is delivered; provided, however, that if the Notice of
Termination is delivered on or after the date of, and in connection with, a
Change in Control the Company shall pay to the Executive, in lieu of the
payments prescribed by the foregoing clause, an immediate lump sum amount equal
to the aggregate sum of all of said payments.
(v) The Executive shall not be required to mitigate
the amount of any payment provided for in this Section (6)(d) by seeking
employment or otherwise. The benefits payable under this Section (6)(d) shall
not be reduced by reason of the
- 7 -
Executive's securing other employment or for any other reason, unless the Notice
of Termination is delivered on or after, and in connection with, a Change in
Control, in which event the provisions of the following three sentences shall
apply. If, prior to the third anniversary of the Date of Termination, the
Executive obtains employment, the Executive shall refund to the Company a
portion of the lump sum payment provided for in Section (6)(d)(iv) equal to the
amounts earned by the Executive from his subsequent employer prior to said
anniversary date, but in no event more than the amount of said lump sum payment
prorated over the number of months in the period commencing on the date
following his Date of Termination and ending on the third anniversary of the
Date of Termination, multiplied by the number of months remaining between the
Executive's date-of-hire in his new employment and the third anniversary of his
Date of Termination. The Executive shall refund to the Company any amount
required by the preceding sentence within one hundred and eighty (180) days
after the date-of-hire in his new employment. The employee benefit plans and
programs to be provided by the Company pursuant to Section (6)(d)(iii) shall be
reduced as and to the extent that such benefits are provided to the Executive by
a subsequent employer during the period covered by said Section (6)(d)(iii).
(vi) The payment to, and acceptance by, the Executive
of any sum of money or benefit prescribed in this Section (6)(d) shall effect
and evidence a release by the Executive of any and all claims against the
Company on account of, or arising out of, the termination of the Executive's
employment, except as prescribed in this Section (6)(d).
(7) CHANGE IN CONTROL
For purposes of this Agreement, Change in Control shall mean any of the
following events:
(a) any merger or consolidation of the Company with any
corporate shareholder or group of corporate shareholders holding twenty-five
percent (.25) or more of the Common Stock of the Company or with any other
corporation or group of corporations which is, or after such merger or
consolidation would be, or be affiliated with, a shareholder owning at least
twenty-five percent (.25) of the Common Stock of the Company; or
(b) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition to or with any shareholder or group of shareholders holding
twenty-five percent (.25) or more of the Common Stock of the Company, or any
affiliate of such shareholder or group of shareholders, of any assets of the
Company having an aggregate fair market value of $50 million or more; or
(c) the issuance or sale by the Company of any securities of
the Company to any shareholder or group of shareholders holding twenty-five
percent (.25) or more of the
- 8 -
Common Stock of the Company, or to any affiliate of such shareholder or group of
shareholders, in exchange for cash, securities or other consideration having an
aggregate fair market value of $50 million or more; or
(d) the implementation of any plan or proposal for the
liquidation or dissolution of the Company proposed by or on behalf of any
shareholder or group of shareholders owning at least twenty-five percent (.25)
of the Common Stock of the Company, or any affiliate of such shareholder or
group of shareholders; or
(e) any reclassification of securities (including a reverse
stock split), or recapitalization of the Company or any other transaction which
has the effect, directly or indirectly, of increasing the proportionate share of
outstanding shares of any class of equity securities, or securities convertible
into any equity securities, of the Company, which is directly or indirectly
owned by a shareholder or group of shareholders owning at least twenty-five
percent (.25) of the Common Stock of the Company, or any affiliate of such
shareholder or group of shareholders.
The Board of Directors of the Company may, from time to time, by the
affirmative vote of not less than a majority of the entire membership of said
Board of Directors, at a meeting of said Board of Directors called and held for
the purpose, modify the phrase "twenty-five percent (.25)" in one or more of the
foregoing Sections (7)(a), (7)(b), (7)(c), (7)(d) and/or (7)(e) to a lesser
percentage, but not less than twenty percent (.20).
(8) ADDITIONAL CONSEQUENCES OF A CHANGE IN CONTROL
(a) In the event that a Change in Control has been approved by
all necessary shareholder, creditor and regulatory actions, the earning of
Performance Shares by the Executive under the Company's Long-Term Incentive
Program will be accelerated to the day prior to the date of the Change in
Control, and the Executive will be deemed to have earned all of the Contingent
Performance Shares outstanding with respect to him, payable to him on said day
prior to the date of the Change in Control, at his option, either (i) in
authorized but unissued shares of the Company's Common Stock, or (ii) in cash,
based upon the market value of the Company's Common Stock at the end of the
business day next preceding said day prior to the date of the Change in Control.
(b) In the event that a Change in Control has been approved by
all necessary shareholder, creditor and regulatory actions, the Company will,
not later than the day prior to the date of the Change in Control, pay to the
Trustee of The United Illuminating Company Supplemental Retirement Benefit Trust
established pursuant to the Agreement, made as of the 1st day of June, 1995
between the Company and State Street Bank and Trust
- 9 -
Company, as Trustee, cash in an amount equal to: (A) In the event that the
Executive's employment has been terminated or will be terminated prior to the
date of the Change in Control, a sum, calculated by the Company's independent
certified public accountants, reasonably sufficient to pay and discharge the
Company's future obligations, if any, to the Executive and/or his personal
representative and/or spouse, under Section (6)(a), Section (6)(b) or Section
(6)(d) hereof; or (B) in the event that the Executive employment has not been
terminated and will not be terminated prior to the date of the Change in
Control, a sum, calculated by the Company's independent certified public
accountants, reasonably sufficient to pay and discharge the Company's
obligations to the Executive under Section (6)(d) hereof assuming, for purposes
of such calculation, that the Executive's employment is terminated under said
Section (6)(d) by a Notice of Termination delivered on the date of the Change in
Control and specifying an immediate Date of Termination.
(c) On and after the date of the Change in Control, the
Executive's Base Salary may not be reduced by the Board of Directors to an
annual rate less than the rate fixed by the Board of Directors of the Company as
a result of its most recent review of salary rates, pursuant to Section (4)(a)
hereof, prior to the date of the Change in Control.
(9) TAX SAVINGS PROVISION
If any portion of the payments which the Executive has the right to
receive from the Company, or any affiliated entity, hereunder would constitute
"excess parachute payments" (as defined in Section 280G of the Internal Revenue
Code, and not governed by the terms defined in this Agreement) subject to the
excise tax imposed by Section 4999 of the Internal Revenue Code, such excess
parachute payments shall be reduced to the largest amount that will result in no
portion of such excess parachute payments being subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code.
(10) SUCCESSORS; BINDING AGREEMENT
(a) The Company shall pay to the Executive and/or his personal
representative and/or spouse all legal fees and expenses and court costs, if
any, incurred by the Executive and/or such representative and/or spouse in
successful litigation to enforce his rights under this Agreement.
(b) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company, 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. Failure of the Company to obtain
- 10 -
such agreement by the effectiveness of any such succession shall be a breach of
this Agreement and shall entitle the Executive to compensation from the Company
in the same amount and upon the same terms as he would be entitled to hereunder
if he terminated his employment upon Breach by the Company, except that, for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination. As used in this
Agreement, the term "the Company" shall include The United Illuminating Company,
any parent and any successor to the business or assets of either as aforesaid
which executes and delivers the agreement provided for in this Section (10) or
which otherwise becomes bound by all the terms and provisions of this Agreement
by operation of law.
(c) 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. If the Executive should die while any
amounts would still be payable to him hereunder if he had continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to the Executive's devisee, legatee or other
designee or, if there be no such designee, to the Executive's estate.
(11) NOTICE
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 United Illuminating Company, 000
Xxxxxx Xxxxxx, Xxx Xxxxx, Xxxxxxxxxxx, Attention: Secretary, or, in the case of
the Executive, to him at 000 Xxxxxx Xxxxxx, Xxx Xxxxx Connecticut, or to such
other address as either party shall designate by giving written notice of such
change to the other party.
(12) MISCELLANEOUS
(a) No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is approved by the
Board of Directors of the Company and agreed to in a writing signed by the
Executive and such officer as may be specifically authorized by the Board of
Directors of the Company. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are
- 11 -
not set forth expressly in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of Connecticut.
(b) Exhibits A-1 and A-2 attached hereto, showing calculations
of supplemental retirement benefits under Section (4)(f), and Exhibit B attached
hereto, showing a calculation of a lump sum payment under Section (6)(d)(ii),
are incorporated herein by reference and set forth, by example, the parties'
intended interpretation and application of such Sections.
(13) VALIDITY
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.
(14) SURVIVAL
The provisions of this Agreement shall not survive the termination of
this Agreement or of employment hereunder, except that the provisions of
Sections (4), (6), (8), (9), (10), and (11) hereof shall survive such
termination and shall be binding upon the Company's successors and assigns.
(15) COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
- 12 -
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date and year first above written.
Attest: THE UNITED ILLUMINATING COMPANY
/s/ Xxxx Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxx
------------------- -----------------------------------
Secretary Chairman of the Board of
Directors and Chief Executive Officer
/s/ Xxxxxx X. Xxxxxx
-----------------------------------
Xxxxxx X. Xxxxxx
- 13 -
EXHIBIT A-1
TO
EMPLOYMENT AGREEMENT
BETWEEN
THE UNITED ILLUMINATING COMPANY
AND
XX. XXXXXX X. XXXXXX
--------------------
Sample calculation of supplemental retirement benefits under Section (4)(f).
Assume the Executive retires at the Expiration of the Agreement and immediately
commences his Pension Plan benefits under the following facts:
(1) Retirement Age 55 (July 1,1992)
---------------------------
(2) Actual Service with the Company 19 years 11 months (7/1/92)
---------------------------
(3) Deemed Service with the Company 33 years (7/1/92)
---------------------------
(4) Average Total Compensation See Calculations Below
---------------------------
Total Compensation at age 54 $185,000
Total Compensation at age 53 $180,000
Total Compensation at age 52 $175,000 3 year average = $180,000
deemed to be 3 highest years'
compensation, for purposes of
this example)
(A) Target Benefit at Age 55
1. 2.2% of 3 year average Total Compensation times
Deemed Service (up to 30 years)
(.022) x ($180,000) x (30) $118,800
2. Early Retirement Reduction Factor (based on Deemed Service) .561
-------
3. Target Benefit at Age 55: 1 times 2 66,647
(B) Pension Benefit at Age 55
1. Quantity A (estimated) $ 10,000
2. Quantity B 170,000
3. Quantity C (average of 3 highest years' compensation) 180,000
4. 1% of Quantity A plus 2% of Quantity B: 3,500
5. Actual Service with the Company (up to 25 years) 19.917
6. 4 times 5 69,710
7. 1/2% of Quantity C (up to $25,000, effective
with 1995 Union Contract) 125
8. Actual Service with the Company in excess of 25 years 0
9. 7 times 8 0
10. Pension unreduced at age 55: 6 plus 9 69,710
11. Early Retirement Reduction Factor (based on actual service) .427
12. Pension payable at age 55: 10 times 11 29,766
13. Supplemental Pension: A3 - B12 36,881
EXHIBIT A-2
TO
EMPLOYMENT AGREEMENT
BETWEEN
THE UNITED ILLUMINATING COMPANY
AND
XX. XXXXXX X. XXXXXX
--------------------
Sample calculation of supplemental retirement benefits under Section (4)(f).
Assume the Agreement terminates at an Expiration Date but the Executive
continues to be employed by the Company for 2 years after the expiration of the
Agreement before retiring and commencing his Pension Plan benefits under the
following facts:
(1) Retirement Age 57 (July 1, 1994)
---------------------------
(2) Actual Service with the Company
(a) Before Expiration of Agreement
(b) After Expiration of Agreement
(c) Total 21 years 11 months (7/1/94)
---------------------------
(3) Deemed Service with the Company
(a) Before Expiration of Agreement
(b) After Expiration of Agreement
(c) Total 35 years (7/1/94)
---------------------------
(4) Average Total Compensation See Calculations Below
---------------------------
Total Compensation at age 56 $185,000
Total Compensation at age 55 $180,000
Total Compensation at age 54 $175,000 (3 year average = $180,000
deemed to be 3 highest years'
compensation, for purposes of
this example)
(A) Target Benefit at Age 57
1. 2.2% of 3 year average Total Compensation times
Deemed Service (up to 30 years)
(.022) x ($180,000) x (30) $118,800
2. Early Retirement Reduction Factor (based on Deemed Service) .655
-------
3. Target Benefit at Age 57: 1 times 2 77,814
(B) Pension Benefit at Age 57
1. Quantity A (estimated) $ 10,000
2. Quantity B 170,000
3. Quantity C (average of 3 highest years' compensation) 180,000
4. 1% of Quantity A plus 2% of Quantity B: 3,500
5. Actual Service with the Company (up to 25 years) 21.917
6. 4 times 5 76,710
7. 1/2% of Quantity C (up to $25,000 effective with
1995 Union Contract) 125
8. Actual Service with the Company in excess of 25 years 0
9. 7 times 8 0
10. Pension unreduced at age 57: 6 plus 9 76,710
11. Early Retirement Reduction Factor (based on actual service) .498
12. Pension payable at age 57: 10 times 11 38,202
13. Supplemental Pension: A3 - B12 39,612
EXHIBIT B
TO
EMPLOYMENT AGREEMENT
BETWEEN
THE UNITED ILLUMINATING COMPANY
AND
XX. XXXXXX X. XXXXXX
--------------------
Sample calculation of lump-sum payment in lieu of supplemental retirement
benefits under Section (6)(d)(iii). Assume the Executive's employment terminates
and Section (6)(d) applies under the following facts:
(1) Age of Executive at Termination 51 (May 31, 1988)
----------------------------
(2) Actual Service with the Company 15 years 10 months (5/31/88)
----------------------------
(3) Deemed Service with the Company 28 years 11 months (5/31/88)
----------------------------
(4) Average Total Compensation See Calculations Below
----------------------------
Total Compensation at age 53 $185,000
Total Compensation at age 52 $180,000
Total Compensation at age 51 $175,000 (3 year average = $180,000
deemed to be 3 highest years'
compensation, for purposes of
this example)
(A) Target Benefit at Age 51
1. 2.2% of 3 year average Total Compensation times
Deemed Service (up to 30 years)
(.022) x ($180,000) x (28.917) $114,511
2. Early Retirement Reduction Factor (based on Deemed Service) 1.000
-------
3. Target Benefit at Age 51: 1 times 2 114,511
(B) Pension Benefit at Age 55
1. Quantity A (estimated) $ 10,000
2. Quantity B 170,000
3. Quantity C (average of 3 highest years' compensation) 180,000
4. 1% of Quantity A plus 2% of Quantity B: 3,500
5. Actual Service with the Company (up to 25 years) 15.833
6. 4 times 5 55,416
7. 1/2% of Quantity C (up to $25,000, effective with
1995 Union Contract) 125
8. Actual Service with the Company in excess of 25 years 0
9. 7 times 8 0
10. Pension unreduced at age 55: 6 plus 9 55,416
11. Early Retirement Reduction Factor (based on actual service) .427
12. Pension payable at age 55: 10 times 11 23,663
13. Supplemental Pension: A3 - B12 90,848
14. Annuity Factor for determining Lump-Sum Value at age 55 10.3880
--
15. Lump-Sum Value at age 55: 13 times 14 943,729
--
16. Interest discount factor from age 55 to age 51 (based on 7-1/2%) .7488
-- --
17. Lump-Sum Value at age 55 discounted to age 51: 15 times 16 706,664
-- --
SCHEDULE C
Severance Benefits
------------------
At the option of the Officer, exercised by written notice to the Company, the
benefits of either (A) or (B) below will be afforded the Officer:
(A) a lump sum payment in an amount equal to the product of (X) multiplied
by (Y), where:
(X) is the sum of one-twelfth of the Officer's annual salary
rate approved by the Board of Directors of the Company at
the time of its most recent review of the salary rates of
all of the Company's officers, plus one-twelfth of the cash
award(s) that the Officer would earn under the short-term
incentive compensation program(s) in which the Officer is a
participant on the date of the termination of the Officer's
employment, assuming that all of the Officer's program goals
for the performance period are achieved at the target level;
and
(Y) is the number of whole and partial years (not to be less
than 12 nor more than 24) of the Officer's service deemed as
an employee of the Company on the date of termination of the
Officer's employment.
(B) The Officer's choice of the addition of six years of age, or six years
of service deemed as an employee of the Company, or any combination
(not to exceed 6) of whole and partial years of age and whole and
partial years of service deemed as an employee of the Company, in the
calculation of the benefits payable to the Officer under the Company's
retiree medical benefit plan(s) and in the calculation of the benefits
payable to the Officer as a supplemental retirement benefit under his
Employment Agreement.
