SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
X THE SECURITIES EXCHANGE ACT OF 1934
-----
For the quarterly period ended June 30, 1994
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
----- THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 0-337
WISCONSIN POWER AND LIGHT COMPANY
(Exact name of registrant as specified in its charter)
Wisconsin 39-0714890
(State or other jurisdiction (I.R.S. Employer Identification
of incorporation or organization) No.)
222 West Washington Avenue, Madison, Wisconsin 53703
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 608-252-3311
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
YES X NO
------ ------
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common Stock outstanding at June 30, 1994: 13,236,601 shares
<PAGE>
CONTENTS
PAGE
PART I. Financial Information:
Consolidated Financial Statements of Wisconsin Power
and Light Company:
Consolidated Balance Sheets as of June 30, 1994
and 1993 and December 31, 1993 . . . . . . . . . . . . . . . . . 2
Consolidated Statements of Income for the Three and
Six Months Ended June 30, 1994 and 1993 . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows - Six
Months Ended June 30, 1994 and 1993 . . . . . . . . . . . . . . . 5
Notes to Consolidated Financial Statements . . . . . . . . . . . . 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . 7
PART II. Other Information . . . . . . . . . . . . . . . . . . . . . . 13
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
<PAGE>
<TABLE>
WISCONSIN POWER AND LIGHT COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
<CAPTION>
June 30, June 30, December 31,
1994 1993 1993
(Thousands of dollars)
<S> <C> <C> <C>
ASSETS
UTILITY PLANT:
Plant in service--
Electric........................................................ $ 1,531,411 $ 1,476,864 $ 1,518,701
Gas............................................................. 195,233 184,625 194,283
Water........................................................... 20,945 19,834 20,437
Common.......................................................... 110,565 98,864 106,803
--------- --------- ---------
1,858,154 1,780,187 1,840,224
Dedicated decommissioning funds................................... 50,970 41,796 49,803
--------- --------- ---------
1,909,124 1,821,983 1,890,027
Less: Accumulated provision for depreciation...................... 780,514 743,510 763,027
--------- --------- ---------
1,128,610 1,078,473 1,127,000
Construction work in progress....................................... 76,540 57,267 75,732
Nuclear fuel, net................................................. 15,558 15,021 18,000
--------- --------- ---------
Total utility plant............................................. 1,220,708 1,150,761 1,220,732
--------- --------- ---------
OTHER PROPERTY AND EQUIPMENT, net................................... 646 634 652
--------- --------- ---------
INVESTMENTS, at cost................................................ 12,514 13,673 12,537
--------- --------- ---------
CURRENT ASSETS:
Cash and equivalents.............................................. 3,504 1,964 5,930
Net accounts receivable and unbilled revenue,
less allowance for doubtful accounts of $159,
$266, and $259, respectively.................................... 18,943 16,117 30,572
Accounts receivable from parent for income taxes.................. - - 2,117
Coal, at average cost............................................. 12,772 18,097 16,042
Materials and supplies, at average cost........................... 22,310 23,620 21,679
Gas in storage, at average cost................................... 4,610 5,072 8,754
Prepayments and other............................................. 20,448 16,894 21,677
--------- --------- ---------
Total current assets............................................ 82,587 81,764 106,771
--------- --------- ---------
ENVIRONMENTAL REMEDIATION COSTS..................................... 82,280 82,475 82,380
--------- --------- ---------
DEFFERRED CHARGES AND OTHER......................................... 123,177 109,733 127,585
--------- --------- ---------
TOTAL ASSETS........................................................ $ 1,521,912 $ 1,439,040 $ 1,550,657
========= ========= =========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
<TABLE>
WISCONSIN POWER AND LIGHT COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
June 30, June 30, December 31,
1994 1993 1993
(Thousands of dollars)
CAPITALIZATION AND LIABILITIES
<S> <C> <C> <C>
COMMON SHAREOWNER'S INVESTMENT:
Common stock, $5 par value, authorized--
18,000,000 shares; issued and
outstanding--13,236,601 shares.................................. $ 66,183 $ 66,183 $ 66,183
Premium on capital stock and capital surplus...................... 197,982 177,961 189,520
Reinvested earnings............................................... 276,817 261,452 267,000
------- -------- --------
540,982 505,596 522,703
PREFERRED STOCK WITHOUT MANDATORY
REDEMPTION:
Cumulative, without par value, authorized
3,750,000 shares, maximum aggregate stated
value $150,000,000
Cumulative, without par value, $100
stated value; 449,765, 599,630, and 449,765 shares,
respectively, outstanding....................................... 44,977 59,963 44,977
Cumulative, without par value, $25 stated value, 599,460,
0 and 599,460 shares, respectively, outstanding................. 14,986 - 14,986
------- ------- -------
Total preferred stock........................................... 59,963 59,963 59,963
FIRST MORTGAGE BONDS, NET........................................... 336,507 336,447 336,477
------- ------- -------
Total capitalization............................................ 937,452 902,006 919,143
------- ------- -------
CURRENT LIABILITIES:
Variable rate demand bonds........................................ 56,975 57,075 56,975
Short-term debt................................................... 24,500 14,000 59,000
Accounts payable.................................................. 50,330 47,521 72,430
Accrued payroll and vacation...................................... 12,185 13,479 12,092
Accrued taxes..................................................... 4,791 (3,610) 804
Accrued interest.................................................. 7,618 7,907 7,695
Other............................................................. 23,416 21,767 16,431
------- ------- -------
Total current liabilities....................................... 179,815 158,139 225,427
------- ------- -------
OTHER CREDITS:
Accumulated deferred income taxes ................................ 216,612 207,118 210,762
Accumulated deferred investment tax credits....................... 41,721 43,668 42,684
Accrued environmental remediation costs........................... 80,244 81,272 80,973
Other............................................................. 66,068 46,837 71,668
------- ------- -------
Total other credits............................................. 404,645 378,895 406,087
--------- --------- ---------
TOTAL CAPITALIZATION AND LIABILITIES................................ $ 1,521,912 $ 1,439,040 $ 1,550,657
========= ========= ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
<TABLE>
WISCONSIN POWER AND LIGHT COMPANY AND SUBSIDIARIES
Consolidated Statements of Income
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1994 1993 1994 1993
(Thousands of Dollars)
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Electric.............................................. $ 125,271 $ 116,817 $ 262,468 $ 242,428
Gas................................................... 22,130 23,281 85,265 78,781
Water................................................. 1,024 951 2,001 1,864
-------- -------- ------- -------
148,425 141,049 349,734 323,073
-------- -------- ------- -------
OPERATING EXPENSES:
Electric production fuels............................. 32,646 27,235 64,932 59,789
Purchased power....................................... 8,440 7,764 17,927 13,747
Purchased gas......................................... 12,861 15,675 54,606 53,014
Other operation....................................... 34,830 35,905 69,440 72,565
Maintenance........................................... 12,387 11,747 21,759 22,618
Depreciation.......................................... 17,519 15,261 37,015 31,006
Taxes --
Current federal income.............................. 3,814 3,939 15,341 10,665
Deferred income taxes............................... 2,782 192 4,563 1,456
Investment tax credit (restored).................... (481) (496) (963) (984)
Current state income................................ 748 947 3,535 2,991
Property, payroll & other........................... 7,041 5,944 14,056 12,866
-------- -------- ------- -------
132,587 124,113 302,211 279,733
-------- -------- ------- -------
NET OPERATING INCOME.................................... 15,838 16,936 47,523 43,340
-------- -------- ------- -------
OTHER INCOME AND (DEDUCTIONS):
Allowance for equity funds used during
construction........................................ 681 398 1,130 646
Other, net............................................ 4,140 402 9,415 1,009
Current income tax.................................... 693 96 (1,791) 259
Deferred income tax................................... (1,968) (753) (1,866) (1,296)
-------- -------- ------- -------
3,546 143 6,888 618
-------- -------- ------- -------
INCOME BEFORE INTEREST EXPENSE.......................... 19,384 17,079 54,411 43,958
-------- -------- ------- -------
INTEREST EXPENSE:
Interest on bonds..................................... 7,142 7,164 14,316 14,282
Allowance for borrowed funds used during
construction (credit)............................... (245) (252) (434) (409)
Other................................................. 429 977 1,009 2,202
-------- -------- ------- -------
7,326 7,889 14,891 16,075
-------- -------- ------- -------
NET INCOME.............................................. 12,058 9,190 39,520 27,883
PREFERRED STOCK DIVIDENDS............................... 827 953 1,655 1,906
-------- -------- ------- -------
NET INCOME AFTER PREFERRED STOCK DIVIDENDS............... $ 11,231 $ 8,237 $ 37,865 $ 25,977
======== ======== ======= =======
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
<TABLE>
WISCONSIN POWER AND LIGHT COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
Six Months Ended
June 30,
1994 1993
(Thousands of Dollars)
<S> <C> <C>
Cash flows from (used for) operating activities:
Net income...................................................... $ 39,520 $ 27,883
Adjustments to reconcile net income to net cash
from operating activities:
Depreciation.................................................. 37,015 31,006
Amortization of nuclear fuel.................................. 2,749 2,933
Investment tax credit restored................................ (963) (983)
Allowance for equity funds used during construction........... (1,130) (646)
Deferred income taxes......................................... 6,429 3,536
Changes in assets and liabilities:
Net accounts receivable and unbilled revenues................. 13,746 21,137
Coal.......................................................... 521 888
Materials and supplies........................................ (631) (6,822)
Gas in storage................................................ 4,144 4,094
Prepayments and other......................................... 1,229 4,400
Accounts payable and accruals................................. (22,007) (19,375)
Accrued taxes................................................. 3,987 (4,952)
Other......................................................... 6,894 9,996
------ ------
Net cash generated from (used for) operating activities..... 91,503 73,095
------ ------
Cash flows generated from (used for) financing activities:
Common stock cash dividends..................................... (28,696) (26,757)
Preferred stock dividends....................................... (1,655) (1,906)
Preferred stock issuance expense................................ 648 -
Net change in short term debt................................... (34,500) (37,000)
Equity contribution from parent................................. 8,462 49,840
------ ------
Net cash generated from (used for)
financing activities...................................... (55,741) (15,823)
------ ------
Cash flows from (used for) investing activities:
Additions to utility plant, excluding AFUDC..................... (36,616) (52,477)
Allowance for borrowed funds used during construction........... (434) (408)
Dedicated decommissioning funds................................. (1,167) (1,419)
Other........................................................... 29 (1,385)
------ ------
Net cash (used for) investing activities...................... (38,188) (55,689)
------ ------
Net increase (decrease) in cash and equivalents................... (2,426) 1,583
Cash and equivalents at beginning of period....................... 5,930 381
------ ------
Cash and equivalents at end of period............................. $ 3,504 $ 1,964
====== =====
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest - debt............................................... $ 8,427 $ 16,241
Income taxes.................................................. $ 14,971 $ 15,506
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The consolidated financial statements included herein have been
prepared by Wisconsin Power and Light Company ("WPL" or the
"Company"), without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. Accordingly, certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. The consolidated
financial statements include the Company and its consolidated
subsidiaries. The Company is a wholly-owned subsidiary of WPL
Holdings, Inc. These financial statements should be read in
conjunction with the financial statements and the notes thereto
included in the Company's latest annual report on Form 10-K.
In the opinion of the Company, the consolidated interim financial
statements reflect all adjustments necessary to fairly state the
results of operations for the interim periods presented. However,
because of the seasonal nature of the Company's operations, the
results shown for portions of a year are not indicative of annual
results.
2. In November 1989, the Public Service Commission of Wisconsin ("PSCW")
concluded that the Company did not properly administer a coal
contract, resulting in an assessment to compensate ratepayers for
excess fuel costs having been incurred. As a result, the Company
recorded a reserve in 1989 which had an after-tax affect of reducing
1989 net income by $4.9 million. This reserve included a portion
payable to the Company's ratepayers and portions payable to Wisconsin
Public Service Corporation and Madison Gas and Electric Company for
their joint ownership in the generating station served by the
contract. In 1990, the Company refunded $2.0 million of the reserve,
after tax, to its own ratepayers.
The PSCW decision was found to represent unlawful retroactive
ratemaking by both the Dane County Circuit Court and the Wisconsin
Court of Appeals. The case was then appealed to the Wisconsin
Supreme Court. In February 1994, the Wisconsin Supreme Court
affirmed the decisions of the Dane County Circuit Court and Wisconsin
Court of Appeals. In management's judgement, all avenues for appeal
regarding this case have been exercised.
As a result, in March 1994, the Company reversed the unrefunded
portion of the assessment of amounts due to Wisconsin Public Service
Corporation and Madison Gas and Electric Company. This action
increased net income by $2.9 million in the first quarter of 1994.
For the portion of the assessment which was refunded to the Company's
ratepayers, a proposed plan for recollection was submitted to the
PSCW on February 15, 1994 and was approved on May 11, 1994. With
this approval, the Company recorded an additional after-tax increase
to net income to account for the remaining $2.0 million in June,
1994.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1994 VS. JUNE 30, 1993:
OVERVIEW
The Company reported consolidated second-quarter net income of $12.1
million compared to $9.2 million for the same period in 1993. The
principal factors leading to increased earnings include favorable early
summer weather which yielded higher electric margins ($1.4 million), the
benefits from decreased other operation expense due to the Company's cost
management efforts ($.5 million) and a change in the mix of gas sales from
lower margin to higher margin customer classes ($1.0 million). Also,
second-quarter 1994 net income increased $2.0 million through the approval
to recollect a previously refunded penalty assessed by the PSCW relating
to the Company's administration of a coal contract.
Offsetting the above was an increase in depreciation expense which
was attributable to increased investment in plant and increased
decommissioning costs which reduced net income by $1.3 million.
<TABLE>
Electric Operations
<CAPTION>
Revenues and
Costs Per kWh
% kWhs Sold, Generated % Sold Generated Customers at End of
Revenues and Costs Change and Purchased Change and Purchased Quarter
1994 1993 1994 1993 1994 1993 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Residential and
Farm $42,801 $40,109 7% 602,761 602,421 0% .071 .067 322,202 315,326
Industrial 35,777 32,786 9% 955,781 878,476 9% .037 .037 755 698
Commercial 24,055 22,464 7% 393,496 382,857 3% .061 .059 43,437 42,467
Wholesale and
Class A 20,877 18,588 12% 606,255 524,416 16% .034 .035 40 38
Other 1,761 2,870 39% 12,203 13,487 -10% .144 .213 1,471 1,419
------- ----- --- ------ ------ --- --- --- ----- -----
Total 125,271 116,817 7% 2,570,496 2,401,657 7% .049 .049 367,905 359,948
======= ======= === ========= ========= === === === ======= =======
Elec production
fuels 32,646 27,235 20% 2,353,828 2,027,581 16% .014 .013
Purchased Power 8,440 7,764 9% 325,804 450,839 -28% .026 .017
------- ----- ---
Margin 84,185 81,818 3%
======= ======
</TABLE>
WPL's electric sales benefitted from June's hot weather, however, low
sales in April and May resulted in relatively flat volumes for the second
quarter of 1994 compared to 1993. Additionally, the Company experienced
strong growth in the commercial and industrial customer classes from
favorable economic conditions in the service territory.
<TABLE>
Gas Operations
<CAPTION>
Revenues and Costs % Therms Sold and % Change Revenues and Costs Customers at End of
(In Thousands) Change Purchased (In per Therms Sold and Quarter
Thousands) Purchased
1994 1993 1994 1993 1994 1993 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Residential $10,337 $11,853 -13% 18,154 18,207 0% $.569 $.651 122,476 117,721
Firm 5,930 6,720 -12% 13,022 13,404 -3% .455 .501 15,298 14,701
Interruptible 1,463 1,509 -3% 4,768 3,923 22% .307 .385 233 209
Transportation 3,384 3,088 10% 17,870 19,074 -6% .189 .162 87 74
Other 1,016 111 815% 3,740 242 1,445% .272 .459 93 90
----- ---- ---- ----- ---- ----- ---- ---- ------- -------
Total 22,130 23,281 -5% 57,554 54,850 5% .385 .424 138,187 132,795
===== ====== ==== ====== ====== ==== ==== ===== ======= =======
Purchased gas 12,942 15,675 -17% 37,794 37,386 1% .239 .363
------ ------
Margin 9,188 7,606 12%
===== =====
</TABLE>
Gas margin increased during the second quarter of 1994 compared to
the second quarter of 1993 due primarily to a change in the mix of sales
from lower margin to higher margin customer classes. Additionally, growth
among all customer classes remained strong from the solid economic
conditions in the Company's service territory.
Other Operation Expense
Other operation expense decreased as a result of the Company's cost
management efforts.
Depreciation
Depreciation expense increased, principally reflecting increased
property additions, and increased decommissioning costs.
Other, Net
Other, net increased for the second-quarter of 1994 compared with
the same period in 1993 due to the coal contract reversal of $2.0 million
discussed in Note 2 of the Notes to Consolidated Financial Statements.
Income Taxes
Income taxes increased between second quarters, primarily due to
higher taxable income.
<PAGE>
SIX MONTHS ENDED JUNE 30, 1994 VS. JUNE 30, 1993:
OVERVIEW
The Company reported consolidated net income of $39.5 million for the
six months ended June 30, 1994 compared to $27.9 million for the same
period in 1993. A principal factor which resulted in increased earnings
was the favorable weather conditions in the first six months of 1994 which
yielded higher electric and gas margins ($9.3 million). Also, net income
for the six months ended June 30, 1994 increased $4.9 million due to the
reversal of a PSCW penalty relating to the Company's administration of a
coal contract.
Offsetting the above was an increase in depreciation expense which was
attributable to increased investment in plant and increased
decommissioning costs which reduced net income by $3.6 million.
<TABLE>
Electric Operations
<CAPTION>
Revenutes and
Costs Per kWh
% kWhs Sold, Generated % Sold Generated Customers at End
Revenues and Costs Change and Purchased Change and Purchased of Quarter
1994 1993 1994 1993 1994 1993 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Residential and
Farm $97,356 $88,811 10% 1,389,627 1,345,225 3% .070 .066 322,202 315,326
Industrial 67,989 63,874 6% 1,822,824 1,700,873 7% .037 .038 755 698
Commercial 49,605 46,064 8% 821,480 783,911 5% .060 .059 43,437 42,467
Wholesale and
Class A 43,239 37,661 15% 1,312,372 1,109,965 18% .033 .034 40 38
Other 4,279 6,018 -29% 28,986 27,338 6% .148 .220 1,471 1,419
------- ------ ---- -------- --------- ---- ---- ---- ------- -------
Total 262,468 242,428 8% 5,375,289 4,967,312 8% .049 .049 367,905 359,948
======= ======= ==== ========= ========= ==== ==== ==== ======= =======
Elec production
fuels 64,932 59,788 9% 4,806,837 4,308,778 12% .014 .014
Purchased Power 17,927 13,747 30% 767,945 801,313 -4% .023 .017
------- -------
Margin 179,609 168,893 6%
======= =======
</TABLE>
WPL's electric sales benefitted from June's hot weather, however, low
sales in April and May resulted in relatively flat volumes for the second
quarter of 1994 compared to 1993. Additionally, the Company experienced
growth in the commercial and industrial customer classes from favorable
economic conditions.
<TABLE>
Gas Operations
<CAPTION>
Revenues and Costs % Therms Sold and % Revenues and Customers at End of
(In Thousands) Change Purchased (In Change Costs per Quarter
Thousands) Therms Sold
and Purchased
1994 1993 1994 1993 1994 1993 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Residential 45,090 42,642 6% 78,399 73,434 7% .575 .581 122,476 117,721
Firm 26,060 24,035 8% 57,089 52,031 10% .456 .462 15,298 14,701
Interruptible 4,308 6,371 -32% 11,762 14,620 -20% .366 .436 233 209
Transportation 8,345 6,022 39% 42,934 42,977 0% .194 .140 87 74
Other 1,462 -290 -604% 4,898 721 579% .298 -.402 93 90
----- ------ ---- ------ ------ ---- ---- ----- ------- -------
Total 85,265 78,780 8% 195,082 183,783 6% .437 .429 138,187 132,795
====== ====== === ====== ======= === ==== ==== ======= =======
Purchased gas 54,710 53,014 3% 143,661 161,892 21% .279 .327
Margin 30,555 25,766 5%
</TABLE>
Gas margin increased for the six months ended June 30, 1994 compared
to the same period in 1993 due primarily to favorable winter weather
conditions. Also contributing to the margin increase was a change in the
mix of sales from lower margin to higher margin customer classes.
Additionally, growth among all customer classes remained strong due to
favorable economic conditions in the Company's service territory.
Other Operation Expense
Other operation expense decreased as a result of the Company's cost
management efforts.
Depreciation
Depreciation expense increased, principally reflecting increased
property additions, and increased decommissioning costs.
Other, Net
Other, net increased for the second-quarter of 1994 compared with
the same period in 1993, due to the coal contract reversal of $2.0 million
discussed in Note 2 of the Notes to Consolidated Financial Statements.
Income Taxes
Income taxes increased between second quarters, primarily due to
higher taxable income.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Rates and Regulatory Matters
See Part II -- Other Information, Item 1. Legal Proceedings.
Financing and Capital Structure
The level of short-term borrowing fluctuates based primarily on
seasonal corporate needs, the timing of long-term financings and capital
market conditions. To maintain flexibility in its capital structure and
to take advantage of favorable short-term rates, the Company also uses
proceeds from the sales of accounts receivable and unbilled revenues to
finance a portion of its long-term cash needs.
The Company's capitalization at June 30, 1994, including the current
maturities of long-term debt, variable rate demand bonds and short-term
debt, consisted of 53 percent common equity, 6 percent preferred stock and
41 percent debt. Common equity at June 30, 1994 increased from 50.5
percent at December 31, 1993 due to increased earnings and the receipt of
$3.7 million of capital contributions from WPL Holdings, Inc. during the
first quarter of 1994.
In addition, the PSCW ordered that no dividend payments in excess of
those forecasted in the projected test year ($56.8 million) may be paid
prior to the end of the test year (July 31, 1994). At the end of the test
year, dividends may be paid in excess of forecasted dividends if the
additional payment does not reduce the average test year common equity
ratio below 50.31 percent.
Capital Expenditures
The Company's liquidity is primarily determined by the level of cash
generated from operations and the funding requirements of its ongoing
construction and maintenance programs. Cash flows from operating
activities, after dividends paid, provided approximately $91,503 million
and $73,095 million for the six months ended June 30, 1994 and 1993,
respectively. The Company finances its construction expenditures through
internally generated funds supplemented, when required, by outside
financing including equity investments from the Company's parent, WPL
Holdings, Inc.
The estimated construction expenditures for the remainder of 1994
are $82 million. The Company forecasts to finance approximately 68
percent of these expenditures through internally generated funds.
The expenditures for the decommissioning of the Kewaunee Nuclear
Power Plant are estimated to begin in 2014. It is anticipated that
expenditures related to the actual decommissioning of the plant will occur
between 2014 and 2021 of which the Company's share approximates $581
million. A remaining $435 million relates to the storage of spent nuclear
fuel on site and other maintenance of the site that will likely occur from
2022 to 2050. By 2013, the Company currently expects to have the cost
collected through electric rates and funded in an external trust.
Therefore, such expenditures will not have a direct impact on liquidity or
the availability of capital resources.
<PAGE>
PART II--OTHER INFORMATION
Item 1. Legal Proceedings
On February 4, 1994, the Company filed its annual retail rate
application with the PSCW requesting no change in electric rates and a
slight increase in natural gas and water rates. The application filed
with the PSCW requests an overall increase of $3.6 million, or 2.7 percent
for natural gas and a nominal water rate increase. Subsequent to this
filing, the PSCW staff completed its audit and conducted hearings.
Currently, PSCW staff is recommending a decrease in electric rates of
$16.1 million or 3.7 percent, an increase in gas rates of $1.1 million or
.8 percent and no change in water rates. A final decision is not expected
until the fourth quarter of 1994 with final rates becoming effective
January 1, 1995.
Item 4. Submission of Matters to a Vote of Security Holders.
At the Company's annual meeting of shareowners held on May 18, 1994,
(a) Arnold M. Nemirow and Judith D. Pyle were elected as directors of the
Company for terms expiring in 1995, (b) Rockne G. Flowers was elected as a
director of the Company for a term expiring in 1996, and (c) Les Aspin,
Erroll B. Davis, Jr., Milton E. Neshek and Carol T. Toussaint were elected
as directors of the Company for terms expiring in 1997. The following
table sets forth certain information with respect to the election of
directors at the annual meeting:
Shares Withholding
Name of Nominee Shares Voted For Authority
Arnold M. Nemirow 13,757,091 4,263
Judith D. Pyle 13,757,208 4,146
Rockne G. Flowers 13,756,840 4,514
Les Aspin 13,746,696 14,658
Erroll B. Davis, Jr. 13,757,077 4,277
Milton E. Neshek 13,757,163 4,191
Carol T. Toussaint 13,753,037 8,317
The following table sets forth the other directors of the Company
whose terms of office continued after the 1994 meeting:
Year in Which
Name of Director Term Expires
L. David Carley 1995
Donald R. Haldeman 1995
Katharine C. Lyall 1996
Henry C. Prange 1996
Henry F. Scheig 1996
In addition, at the annual meeting, shareowners approved the
appointment of Arthur Andersen & Co. as the Company's independent auditors
for the 1994 calendar year. With respect to such matter, the number of
shares voted for and against were 13,743,678 and 3,251, respectively. The
number of shares abstaining and the number of shares subject to broker
non-votes were 14,425 and 0 , respectively. At the annual meeting,
shareowners also approved amendments of the Company's Restated Articles of
Organization, which, among other things, authorize the Company to issue
preferred stock with a variable or floating dividend rate. With respect
to such matter, the holders of the Company's preferred stock and the
holder of the Company's common stock each voted separately as a class.
The number of preferred stock votes for and against the amendments were
410,842 and 14,632, respectively. The number of preferred stock votes
abstaining and the number of votes subject to broker non-votes were
48,362 and 50,917, respectively. All of the outstanding shares of the
Company's common stock (13,236,601 shares), which shares are owned by
WPL Holdings, Inc., were voted for the amendments.
Item 6. Exhibits and Reports on Form 8-K
1. Exhibits:
3.1 Restated Articles of Organization, as amended, of
Wisconsin Power and Light Company
4.1 WPL Holdings, Inc. Long-Term Equity Incentive Plan
4.2 Key Executive Employment and Severance Agreement by
and between WPL Holdings, Inc. and E.B. Davis, Jr.
4.3 Form of Key Executive Employment and Severance Agreement
by and between WPL Holdings, Inc. and each of W.D. Harvey,
E.G. Protsch and A.J. Amato
4.4 Form of Key Executive Employment and Severance Agreement
by and between WPL Holdings, Inc. and each of E.M. Gleason,
B.J. Swan, D.A. Doyle, N.E. Boys, D.E. Ellestad, P.J. Wegner
and K.K. Zuhlke
2. Reports on Form 8-K: None
<PAGE> SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WISCONSIN POWER AND LIGHT
COMPANY
Date 08/12/94 By: /s/ Daniel A. Doyle
---------------------------
Daniel A. Doyle, Controller and
Treasurer, Wisconsin Power and
Light (principal accounting
officer and officer authorized
to sign on behalf of the
registrant.)
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description
3.1 Restated Articles of Organization, as amended,
of Wisconsin Power and Light Company
4.1 WPL Holdings, Inc. Long-Term Equity Incentive
Plan
4.2 Key Executive Employment and Severance Agreement
by and between WPL Holdings, Inc. and E.B.
Davis, Jr.
4.3 Form of Key Executive Employment and Severance
Agreement by and between WPL Holdings, Inc. and
each of W.D. Harvey, E.G. Protsch and A.J. Amato
4.4 Form of Key Executive Employment and Severance
Agreement by and between WPL Holdings, Inc. and
each of E.M. Gleason, B.J. Swan, D.A. Doyle,
N.E. Boys, D.E. Ellestad, P.J. Wegner and K.K.
Zuhlke
RESTATED ARTICLES OF ORGANIZATION
OF
WISCONSIN POWER AND LIGHT COMPANY
These Restated Articles of Organization supersede and take the
place of the existing Articles of Organization and all prior amendments
thereto.
ARTICLE I
The undersigned have associated and do hereby associate
themselves together for the purpose of forming a Corporation under Chapter
86 of the Wisconsin Statutes of 1898 and the acts amendatory thereof and
supplementary thereto, the business and purposes of which Corporation
shall be (a) to manufacture, generate, produce, buy, transmit, distribute
and sell electricity, gas and artificial energy for light, heat and power
purposes; (b) to distribute and sell water; (c) to operate motor bus
lines; (d) to distribute and sell heat produced by means of steam or
water; (e) to buy, sell and deal in articles of merchandise; and (f) to
acquire, construct, own, operate, manage and/or control through direct
ownership or by leasing or through the ownership of stock of other
corporations any plant or property useful for the above business and
purposes and to transact any and all business incidental to the above
business and purposes.
ARTICLE II
The name of the Corporation shall be Wisconsin Power and Light
Company. At the time of adoption of these Restated Articles of
Organization the address of the registered office of the Corporation is
222 West Washington Avenue, P.O. Box 192, Madison, Wisconsin 53701, and
the name of the Corporation's registered agent at said address is
Martin W. Freck.
ARTICLE III
(1) The authorized capital stock of the Corporation is Two
Hundred Forty Million Dollars ($240,000,000) and is divided into Three
Million Seven Hundred Fifty Thousand (3,750,000) shares of Preferred Stock
without par value, provided that the aggregate stated value thereof shall
not exceed $150,000,000 at any time, and Eighteen Million (18,000,000)
shares of Common Stock of the par value of $5 per share. All shares of
the authorized Preferred Stock at any time having the status of authorized
and unissued shares may be issued in one or more series, with such stated
values, with such designation or designations and with such terms and
conditions as to redemption (but the redemption price shall be not less
than the stated value), as to rate of dividend (which may be fixed or
variable) and frequency of dividend payment, and as to sinking fund
provisions (if any) for the redemption or purchase of shares, applicable
to the shares of each series as may be determined by the Board of
Directors of the Corporation in the resolution authorizing the issue of
such shares. Shares of any series of Preferred Stock may not be issued
for a consideration less than the stated value thereof.
(2) The holders of the Preferred Stock from time to time
outstanding shall be entitled to receive, in respect of each share held,
dividends upon the stated value thereof at the rate specified for such
share, payable quarter-yearly in the case of a share of Preferred Stock
with a fixed rate of dividend or payable as specified by the Board of
Directors of the Corporation in the resolution authorizing the issue of
such shares in the case of a share of Preferred Stock with a variable rate
of dividend, in either case when and as declared by the Board of
Directors, out of the surplus or net profits of the Corporation. Such
dividends shall be cumulative from and including the first day of the
dividend period in which such share shall have been originally issued; and
shall for any completed dividend period be paid, or declared and set apart
for payment, before any dividends shall be declared or paid on or set
apart for the Common Stock, so that if for any completed dividend period
dividends on the Preferred Stock shall not have been paid, or declared and
set apart for payment, the deficiency shall be fully paid or declared and
funds set apart for the payment thereof before any dividends shall be
declared or paid on or set apart for the Common Stock. The holders of
shares of any series of Preferred Stock shall not be entitled to receive
any dividends thereon except dividends at the rate provided by the Board
of Directors in the resolution authorizing the issue of such shares. The
term "dividend period", as used herein, refers to either each period of
three consecutive calendar months ending, respectively, February 28,
May 31, August 31 and November 30 in each year in the case of a series of
Preferred Stock having a fixed rate of dividend or, in the case of a
series of Preferred Stock having a variable rate of dividend, such period
as shall either be specified by the Board of Directors of the Corporation
in the resolution authorizing the issue of shares of such series or
determined in accordance with the authority granted in said resolution.
All shares of Preferred Stock, regardless of designation, shall constitute
one class of stock and, excepting only as to the stated values thereof,
the dividend rates (whether fixed or variable) and the frequency of
dividend payments thereon, the price at which, and the terms and
conditions on which, shares may be redeemed and sinking fund provisions
for the redemption or purchase of shares, shall be of equal rank and
confer equal rights upon the holders thereof. No dividend shall be paid
on any series of Preferred Stock for a dividend period at the conclusion
of such period unless at that time all cumulative dividends upon the
Preferred Stock of all series then outstanding for all completed dividend
periods shall have been paid or declared and set apart for payment. When
full cumulative dividends as aforesaid upon the Preferred Stock of all
series then outstanding for all completed dividend periods shall have been
paid or declared and set apart for payment, the Board of Directors may
declare dividends on the Common Stock of the Corporation, subject to the
restrictions hereinafter contained.
(3) In the event of the liquidation, dissolution or winding up,
whether voluntary or involuntary, of the Corporation, the holders of the
Preferred Stock shall be entitled to be paid in full, out of the net
assets of the Corporation, the stated value of their shares and, to the
extent that there may be profits properly applicable thereto (whether
capitalized or not), the unpaid dividends accrued thereon before any
amount shall be paid out of such assets to the holders of the Common
Stock. After such payment in full to the holders of the Preferred Stock,
the remaining assets shall be divided among and paid to the holders of the
Common Stock.
(4) The Corporation, on the sole authority of its Board of
Directors, shall have the right (subject to the specific terms of any
series of Preferred Stock as fixed by the Board of Directors) at any time
or from time to time to redeem and retire all or part of the Preferred
Stock or all or part of the shares of one or more series of Preferred
Stock upon and by the payment to the holders of the shares to be redeemed,
or upon or by setting aside, as hereinafter provided, for the benefit of
such holders, the stated value of each share to be redeemed, together with
all unpaid accrued dividends thereon, and, in addition thereto, the
premium (if any) fixed for the shares of such series; provided, however,
that not less than thirty (30) days previous to the date fixed for
redemption, notice of the intention of the Corporation to redeem such
stock, specifying the stock to be redeemed and the date and place of
redemption, (i) shall be published in a newspaper of general circulation
published in the City of Madison, Wisconsin, and also in a newspaper of
general circulation published in the City of Chicago, Illinois, and in a
newspaper of general circulation published in the City of New York, New
York, and (ii) shall be deposited in a United States post office or mail
box at any place in the United States addressed to each holder of record
of the shares to be redeemed at his address as the same appears upon the
records of the Corporation; but in mailing such notice unintentional
omissions or errors in names or addresses shall not impair the validity of
the notice of redemption. In every case of the redemption of less than
all of the outstanding shares of any one series of Preferred Stock, the
shares of such series to be redeemed shall be chosen by lot or in such
other manner as may be prescribed by resolution of the Board of Directors.
The Corporation may deposit, with a bank or trust company, which shall be
named in the notice of redemption, shall be located in the City of
Milwaukee, Wisconsin, or in Chicago, Illinois, or in New York, New York,
and shall then have capital, surplus and undivided profits of at least
$1,000,000, the aggregate redemption price of the shares to be redeemed,
in trust for the payment on or before the redemption date to or upon the
order of the holders of such shares, upon surrender of the certificates
for such shares. Such deposit in trust may, at the option of the
Corporation, be upon terms whereby in case the holder of any shares of
Preferred Stock called for redemption shall not, within ten years after
the date fixed for redemption of such shares, claim the amount on deposit
with any bank or trust company for the payment of the redemption price of
said shares, such bank or trust company shall on demand pay to or upon the
written order of the Corporation or its successor the amount so deposited
and thereupon such bank or trust company shall be released from any and
all further liability with respect to the payment of such redemption price
and the holder of said shares shall be entitled to look only to the
Corporation or its successor for the payment thereof. Upon the giving of
notice of redemption and upon the deposit of the redemption price, as
aforesaid, or, if no such deposit is made, upon the redemption date
(unless the Corporation defaults in making payment of the redemption price
as set forth in such notice), such holders shall cease to be stockholders
with respect to said shares, and from and after the making of said deposit
and the giving of said notice, or, if no such deposit is made, after the
redemption date (the Corporation not having defaulted in making payment of
the redemption price as set forth in such notice), said shares shall no
longer be transferable on the books of the Corporation, and the said
holders shall have no interest in or claim against the Corporation with
respect to said shares, but shall be entitled only to receive said moneys
on the date fixed for redemption as aforesaid from said bank or trust
company, or from the Corporation, without interest thereon, upon surrender
of the certificates as aforesaid.
The term "accrued dividends" shall be deemed to mean, in respect
of any share of the Preferred Stock as of any given date, the amount of
dividends payable on such share, computed, at the dividend rate (which may
be fixed or variable) for such share, from the date on which dividends
thereon became cumulative to and including such given date, less the
aggregate amount of all dividends which have been paid or which have been
declared and set apart for payment on such share. Accumulations of
dividends shall not bear interest.
Nothing herein contained shall limit any legal right of the
Corporation to purchase any shares of the Preferred Stock.
Any shares of any series of Preferred Stock which shall at any
time have been redeemed or otherwise reacquired by the Corporation shall,
after such redemption or reacquisition, have the status of authorized but
unissued shares of Preferred Stock of the Corporation, without designation
as to series, until such shares are once more designated as part of a
particular series by the Board of Directors of the Corporation.
(5) So long as any shares of Preferred Stock of any series are
outstanding, the Corporation shall not, without the affirmative vote of
the record holders of shares of Preferred Stock of all series at the time
outstanding, voting separately as one class, having in the aggregate a
number of votes, calculated as provided in Paragraph (8)(a) hereof, at
least equal to two-thirds of the total number of votes, as so calculated,
possessed by all such holders:
(a) Amend the provisions of the Restated Articles of
Organization so as to create or authorize any stock ranking prior in
any respect to the Preferred Stock; or issue any such stock; or
(b) Change, by amendment to the Restated Articles of
Organization, or otherwise, the terms and provisions of the Preferred
Stock so as to affect adversely the rights and preferences of the
holders thereof; provided, however, that if any such change will
affect adversely the holders of one or more, but less than all, of
the series of Preferred Stock at the time outstanding, there shall be
required the vote only of the holders of the series so adversely
affected at the time outstanding having in the aggregate a number of
votes, calculated as provided in Paragraph (8)(a) hereof, at least
equal to two-thirds of the total number of votes, as so calculated,
possessed by all such holders of such series; or
(c) Issue any shares of the Preferred Stock or shares of
any stock ranking on a parity with the Preferred Stock, other than in
exchange for, or for the purpose of effecting the redemption or other
retirement of, shares of Preferred Stock, or shares of any stock
ranking on a parity therewith, at the time outstanding, having an
aggregate amount of par value and/or stated value of not less than
the aggregate amount of par value or stated value of the shares to be
issued, unless:
(A) The gross income (determined in accordance with
accepted accounting principles) of the Corporation available for
the payment of interest charges shall, for a period of twelve
consecutive calendar months within the fifteen calendar months
next preceding the issue of such shares, have been at least one
and one-half (1-1/2) times the sum of (i) the interest for one year
on all funded indebtedness, and notes payable of the Corporation
maturing more than twelve months after the date of issue of such
shares, which shall be outstanding at the date of the issue of
said shares, and (ii) an amount equal to the dividend
requirement for one year on all shares of the Preferred Stock of
all series and on all other shares of stock, if any, ranking
prior to or on a parity with the Preferred Stock, which shall be
outstanding after the issue of the shares proposed to be issued,
provided that, in the case of any shares of Preferred Stock
which do not have a fixed rate of dividend, the dividend
requirement for one year shall be calculated by using the rate
of dividend in effect with respect to such shares at the time of
such determination; and
(B) The capital represented by the Common Stock and
the surplus accounts of the Corporation shall be not less than
the aggregate amount payable on the involuntary dissolution,
liquidation or winding up of the Corporation, in respect of all
shares of Preferred Stock and all shares of stock, if any,
ranking prior thereto, or on a parity therewith, which shall be
outstanding after the issue of the shares proposed to be issued.
No consent of the holders of Preferred Stock shall be required
in respect of any transaction enumerated in this Paragraph (5) if at or
prior to the time when such transaction is to take effect provision is
made for the redemption or other retirement of all shares of Preferred
Stock at the time outstanding, the consent of which would otherwise be
required hereunder.
(6) So long as any shares of the Preferred Stock are
outstanding, the Corporation shall not, without the affirmative vote of
the record holders of shares of Preferred Stock of all series then
outstanding having in the aggregate a number of votes, calculated as
provided in Paragraph (8)(a) hereof, at least equal to a majority of the
total number of votes, as so calculated, possessed by all such holders,
(a) Issue or assume any unsecured indebtedness (as
hereinafter defined) for any purpose other than the refunding of
secured or unsecured indebtedness, theretofore created or assumed by
the Corporation and then outstanding, or the retiring, by redemption
or otherwise, of shares of the Preferred Stock or shares of any stock
ranking prior thereto or on a parity therewith, if immediately after
such issue or assumption the total principal amount of all unsecured
indebtedness issued or assumed by the Corporation and then
outstanding would exceed twenty per centum (20%) of the aggregate of
(i) the total principal amount of all bonds or other securities
representing secured indebtedness issued or assumed by the
Corporation and then outstanding, and (ii) the total of the capital
and surplus of the Corporation, as then recorded on its books; or
(b) Merge or consolidate with any other corporation or
corporations or sell all or substantially all of the assets of the
Corporation unless such merger, consolidation or sale or the issue or
assumption of all securities to be issued or assumed in connection
therewith shall have been ordered, approved or permitted by the
Securities and Exchange Commission under the Public Utility Holding
Company Act of 1935, or by any successor commission or regulatory
authority of the United States of America then having jurisdiction in
the premises.
No consent of the holders of the Preferred Stock shall be
required, however, if at or prior to the issue of any unsecured
indebtedness, or such consolidation, merger or sale, provision is made for
the redemption or other retirement of all shares of Preferred Stock then
outstanding.
"Unsecured indebtedness" as that term is used in this Paragraph
(6) shall mean all unsecured notes, debentures or other securities
representing unsecured indebtedness (whether having a single maturity,
serial maturities or sinking fund or other similar periodic principal or
debt retirement payment provisions) which has a final maturity date,
determined as of the date of issuance or assumption by the Corporation, of
less than three years.
No provision contained in this Paragraph (6), or in Paragraph
(5) of this Article III, is intended or shall be construed to relieve the
Corporation from compliance with any applicable statutory provision
requiring the vote or consent of a greater number of the holders of the
outstanding shares of the Preferred Stock.
(7) So long as any shares of the Preferred Stock are
outstanding, the Corporation shall not pay any dividends on its Common
Stock (other than dividends payable in Common Stock) or make any
distribution on or purchase or otherwise acquire for value any of its
Common Stock (each such payment, distribution, purchase and/or acquisition
being herein referred to as a "common stock dividend"), except to the
extent permitted by the following provisions of this Paragraph (7):
(a) No common stock dividend shall be declared or paid in
an amount which, together with all other common stock dividends
declared in the year ending with (and including) the date of the
declaration of such common stock dividend, would in the aggregate
exceed fifty per centum (50%) of the net income of the Corporation
available for dividends on its Common Stock for the twelve
consecutive calendar months ending on the last day of the calendar
month next preceding the declaration of such common stock dividend,
if at the end of such calendar month (next preceding the date of the
declaration of such common stock dividend) the ratio (herein referred
to as the "capitalization ratio") of the Common Stock Equity (as
hereinafter defined) of the Corporation, to the total capital (as
hereinafter defined) of the Corporation shall be less than twenty per
centum (20%).
(b) If such capitalization ratio, determined as aforesaid,
shall be twenty per centum (20%) or more, but less than twenty-five
per centum (25%), no common stock dividend shall be declared or paid
in an amount which, together with all other common stock dividends
declared in the year ending on (and including) the date of the
declaration of such common stock dividend, would exceed seventy-five
per centum (75%) of the net income of the Corporation available for
dividends on its Common Stock for the twelve consecutive calendar
months ending on the last day of the calendar month next preceding
the declaration of such common stock dividend.
(c) If such capitalization ratio, determined as aforesaid,
shall be in excess of twenty-five per centum (25%), no common stock
dividend shall be declared or paid which would reduce such
capitalization ratio to less than twenty-five per centum (25%) except
to the extent permitted by the next preceding paragraphs (a) and (b)
hereof.
"Common Stock Equity" as that term is used in this Paragraph (7)
shall consist of the sum of (1) the capital represented by the issued and
outstanding shares of Common Stock (including premiums on common stock)
and (2) the surplus accounts of the Corporation, less (i) any known, or
estimated if not known, excess of the value, as recorded on the
Corporation's books, over the original cost, of used and useful utility
plant and other property, unless such excess is being amortized, or
provided for by reserves, and (ii) any excess of the aggregate amount
payable on the involuntary dissolution, liquidation or winding up of the
Corporation, in respect of all its outstanding shares of preferred stock
over the aggregate par value of, or stated value represented by, such
preferred shares unless such excess is being amortized, or provided for by
reserves, and (iii) any items such as debt discount, premium and expense,
capital stock discount and expense and similar items, classified as assets
on the balance sheet of the Corporation, unless such items are being
amortized, or provided for by reserves. The "total capital of the
Corporation" shall consist of the sum of (i) the principal amount of all
outstanding indebtedness of the Corporation maturing one year or more
after the date of the issue thereof and (ii) the par or stated value of
all outstanding capital stock (including premiums on capital stock) of all
classes of the Corporation, and (iii) the surplus accounts of the
Corporation. All indebtedness and capital stock owned by the Corporation
shall be excluded in determining total capital. Surplus accounts used in
computing capitalization ratios shall be adjusted to eliminate all
amounts, if any, restricted by the provisions of any indenture, or
supplements thereto, securing bonds of the Corporation and to reflect
payment of the proposed Common Stock dividend. In computing, for the
purposes of this Paragraph (7), the "net income of the Corporation
available for dividends on its Common Stock" for any period of twelve
consecutive calendar months, there shall be deducted from such net income
an amount equal to the annual charge made by the Corporation in such
period for the amortization of Plant Acquisition Adjustments Account.
Purchases or other acquisitions of Common Stock shall be deemed, for the
purposes of this Paragraph (7), to have been declared as of the date on
which such purchases or acquisitions are consummated.
(8) (a) Every record holder of outstanding shares of Common
Stock and every record holder of outstanding shares of Preferred
Stock shall be entitled to vote in respect of the election of
directors and upon all other matters, except as otherwise provided in
this Paragraph (8) and except as otherwise provided in Paragraphs (5)
and (6) of this Article III. Every holder of Common Stock at any
time entitled to vote shall have one vote for each share held by him.
Every holder of Preferred Stock at any time entitled to vote shall
have, for each share of Preferred Stock held by him, that number of
votes (including any fractional vote) determined by dividing the
stated value of such share by 100.
(b) If and when dividends, payable on the Preferred Stock,
shall be in default in an amount equivalent to the dividend
requirement for one year on all shares of Preferred Stock then
outstanding (provided that, in the case of any shares of Preferred
Stock which do not have a fixed rate of dividend, the dividend
requirement for one year shall be calculated by using the rate of
dividend in effect with respect to such shares at the time of such
determination) and until all dividends then in default on the
Preferred Stock shall have been paid, the record holders of the
shares of Preferred Stock, voting separately as one class, shall be
entitled, at each meeting of the shareholders at which directors are
elected, to elect the smallest number of directors necessary to
constitute a majority of the full Board of Directors, and the record
holders of the shares of Common Stock, voting separately as a class,
shall be entitled at any such meeting to elect the remaining
directors of the Corporation. The term of office of each director of
the Corporation shall terminate upon the election of his successor.
At each election of directors by a class vote pursuant to the
provisions of this paragraph, the class first electing the directors
which it is entitled to elect shall name the directors who are to be
succeeded by the directors then elected by such class, whereupon the
term of office of the directors so named shall terminate. The term
of office of the directors not so named shall terminate upon the
election by the other class of the directors which it is entitled to
elect.
(c) If and when all dividends then in default on the
Preferred Stock then outstanding shall be paid, the holders of the
shares of the Preferred Stock shall thereupon be divested of the
special right with respect to the election of directors provided in
subparagraph (b) of this Paragraph (8), and the voting power of
holders of shares of the Preferred Stock and the Common Stock shall
revert to the status existing before the occurrence of such default,
but always subject to the same provisions for vesting such special
right in the Preferred Stock in case of further like default or
defaults in dividends thereon. Dividends shall be deemed to have
been paid, as that term is used in subparagraph (c) of this Paragraph
(8), whenever such dividends shall have been declared and paid, or
declared and provision made for the payment thereof, or whenever
there shall be surplus and net profits of the Corporation legally
available for the payment thereof which shall have accrued since the
date of the default giving rise to such special voting right.
(d) In case of any vacancy in the Board of Directors
occurring among the directors elected by the holders of the shares of
the Preferred Stock, as a class, pursuant to subparagraph (b) of this
Paragraph (8), the holders of the shares of the Preferred Stock then
outstanding and entitled to vote may elect a successor to hold office
for the unexpired term of the director whose place shall be vacant.
In case of a vacancy in the Board of Directors occurring among the
directors elected by the holders of the shares of the Common Stock,
as a class, pursuant to subparagraph (b) of this Paragraph (8), the
holders of the shares of the Common Stock then outstanding and
entitled to vote may elect a successor to hold office for the
unexpired term of the director whose place shall be vacant. In all
other cases, any vacancy occurring among the directors shall be
filled in the manner provided in Article IV of these Restated
Articles of Organization.
(e) Whenever the holders of the shares of the Preferred
Stock, as a class, become entitled to elect directors of the
Corporation pursuant to subparagraph (b) or (d) of this Paragraph
(8), or whenever the holders of the shares of the Common Stock, as a
class, become entitled to elect directors of the Corporation pursuant
to subparagraph (b) or (d) of this Paragraph (8), a special meeting
of the holders of the shares of the Preferred Stock or of the holders
of the shares of the Common Stock, as the case may be, for the
election of such directors, shall be held at any time thereafter upon
call by the holders of not less than 1,000 shares of the Common Stock
or by the holders of shares of the Preferred Stock having an
aggregate stated value of not less than $100,000, as the case may be,
or upon call by the Secretary of the Corporation at the request in
writing of any stockholder addressed to him at the principal office
of the Corporation. If no such special meeting be called or be
requested to be called, the election of the directors to be elected
by the holders of the shares of the Preferred Stock, voting as a
class, and of those to be elected by the holders of the shares of the
Common Stock, voting as a class, shall take place at the next annual
meeting of the stockholders of the Corporation next succeeding the
accrual of such special voting right. At all meetings of
stockholders at which directors are elected during such times as the
holders of shares of the Preferred Stock shall have the special
right, voting separately as one class, to elect directors pursuant to
subparagraph (b) of this Paragraph (8), the presence in person or by
proxy of the holders of a majority of the outstanding shares of the
Common Stock shall be required to constitute a quorum of such class
for the election of directors, and the presence in person or by proxy
of the holders of that number of the outstanding shares of all series
of the Preferred Stock having a majority of the total number of votes
possessed by all holders of Preferred Stock entitled to vote at such
meeting shall be required to constitute a quorum of such class for
the election of directors; provided, however, that the absence of a
quorum of the holders of stock of either such class shall not prevent
the election at any such meeting or adjournment thereof of directors
by the other such class if the necessary quorum of the holders of
stock of such class is present in person or by proxy at such meeting;
and provided further that in the absence of a quorum of the holders
of stock of either such class, the holders of the stock of such class
who are present in person or by proxy shall have power upon the
majority vote of those votes represented at the meeting to adjourn
the election of the directors to be elected by such class from time
to time without notice other than announcement at the meeting until
the requisite number of votes of such class shall be represented by
stockholders present in person or by proxy.
(f) Except when some mandatory provision of law shall be
controlling, no particular series of the Preferred Stock shall be
entitled to vote as a separate series or class on any matter and all
shares of the Preferred Stock of all series shall be deemed to
constitute but one class for any purpose for which a vote of the
stockholders of the Corporation by classes may now or hereafter be
required.
(9) Upon the completion of any necessary filings relating to a
resolution adopted by the Board of Directors of the Corporation
authorizing the issue of shares of a new series of Preferred Stock
pursuant to Paragraph (1) hereof, the terms of the new series as adopted
therein, which shall constitute an amendment of these Restated Articles of
Organization, shall be deemed to be an additional subparagraph to this
Paragraph (9), and may be so certified by any officer of the Corporation
or by any public official whose duty it may be to certify copies of these
Restated Articles of Organization or amendments thereto.
(a) 4-1/2% Preferred Stock
(A) Designation and Amount. The Corporation is
authorized to issue a series of Preferred Stock, which is hereby
designated as "4-1/2% Preferred Stock". The number of shares of
4-1/2% Preferred Stock shall be limited to 100,000. The stated
value of the 4-1/2% Preferred Stock shall be $100 per share.
(B) Rate of Dividend. The rate of dividend
applicable to each of the shares of 4-1/2% Preferred Stock shall be
4-1/2% per annum on the stated value thereof.
(C) Redemption. The shares of 4-1/2% Preferred Stock
shall be subject to redemption at the option of the Board of
Directors of the Corporation, in whole at any time or in part
from time to time, upon the notice and in the manner and with
the effect provided in these Restated Articles of Organization
at the stated value per share, together with unpaid accrued
dividends to the date of redemption, and, in addition thereto, a
premium of $7 per share. All shares of 4-1/2% Preferred Stock
which shall at any time have been redeemed or otherwise
reacquired by the Corporation shall, after such redemption or
reacquisition, have the status of authorized but unissued shares
of Preferred Stock of the Corporation, without designation as to
series, until such shares are once more designated as part of a
particular series by the Board of Directors of the Corporation.
(D) No Sinking Fund. Shares of 4-1/2% Preferred Stock
shall not be entitled to any sinking fund.
(E) Other Terms. Shares of 4-1/2% Preferred Stock shall
be subject to the other terms, provisions and restrictions set
forth in these Restated Articles of Organization with respect to
the shares of Preferred Stock of the Corporation.
(b) 4.80% Preferred Stock
(A) Designation and Amount. The Corporation is
authorized to issue a series of Preferred Stock, which is hereby
designated as "4.80% Preferred Stock". The number of shares of
4.80% Preferred Stock shall be limited to 75,000. The stated
value of the 4.80% Preferred Stock shall be $100 per share.
(B) Rate of Dividend. The rate of dividend
applicable to each of the shares of 4.80% Preferred Stock shall
be 4.80% per annum on the stated value thereof.
(C) Redemption. The shares of 4.80% Preferred Stock
shall be subject to redemption at the option of the Board of
Directors of the Corporation, in whole at any time or in part
from time to time, upon the notice and in the manner and with
the effect provided in these Restated Articles of Organization
at the stated value per share, together with unpaid accrued
dividends to the date of redemption, and, in addition thereto, a
premium of $1 per share. All shares of 4.80% Preferred Stock
which shall at any time have been redeemed or otherwise
reacquired by the Corporation shall, after such redemption or
reacquisition, have the status of authorized but unissued shares
of Preferred Stock of the Corporation, without designation as to
series, until such shares are once more designated as part of a
particular series by the Board of Directors of the Corporation.
(D) No Sinking Fund. Shares of 4.80% Preferred Stock
shall not be entitled to any sinking fund.
(E) Other Terms. Shares of 4.80% Preferred Stock
shall be subject to the other terms, provisions and restrictions
set forth in these Restated Articles of Organization with
respect to the shares of Preferred Stock of the Corporation.
(c) 4.96% Preferred Stock
(A) Designation and Amount. The Corporation is
authorized to issue a series of Preferred Stock, which is hereby
designated as "4.96% Preferred Stock". The number of shares of
4.96% Preferred Stock shall be limited to 65,000. The stated
value of the 4.96% Preferred Stock shall be $100 per share.
(B) Rate of Dividend. The rate of dividend
applicable to each of the shares of 4.96% Preferred Stock shall
be 4.96% per annum on the stated value thereof.
(C) Redemption. The shares of 4.96% Preferred Stock
shall be subject to redemption at the option of the Board of
Directors of the Corporation, in whole at any time or in part
from time to time, upon the notice and in the manner and with
the effect provided in these Restated Articles of Organization
at the stated value per share, together with unpaid accrued
dividends to the date of redemption, and, in addition thereto, a
premium of $1 per share. All shares of 4.96% Preferred Stock
which shall at any time have been redeemed or otherwise
reacquired by the Corporation shall, after such redemption or
reacquisition, have the status of authorized but unissued shares
of Preferred Stock of the Corporation, without designation as to
series, until such shares are once more designated as part of a
particular series by the Board of Directors of the Corporation.
(D) No Sinking Fund. Shares of 4.96% Preferred Stock
shall not be entitled to any sinking fund.
(E) Other Terms. Shares of 4.96% Preferred Stock
shall be subject to the other terms, provisions and restrictions
set forth in these Restated Articles of Organization with
respect to the shares of Preferred Stock of the Corporation.
(d) 4.40% Preferred Stock
(A) Designation and Amount. The Corporation is
authorized to issue a series of Preferred Stock, which is hereby
designated as "4.40% Preferred Stock". The number of shares of
4.40% Preferred Stock shall be limited to 30,000. The stated
value of the 4.40% Preferred Stock shall be $100 per share.
(B) Rate of Dividend. The rate of dividend
applicable to each of the shares of 4.40% Preferred Stock shall
be 4.40% per annum on the stated value thereof.
(C) Redemption. The shares of 4.40% Preferred Stock
shall be subject to redemption at the option of the Board of
Directors of the Corporation, in whole at any time or in part
from time to time, upon the notice and in the manner and with
the effect provided in these Restated Articles of Organization
at the stated value per share, together with unpaid accrued
dividends to the date of redemption, and, in addition thereto, a
premium of $4.50 per share. All shares of 4.40% Preferred Stock
which shall at any time have been redeemed or otherwise
reacquired by the Corporation shall, after such redemption or
reacquisition, have the status of authorized but unissued shares
of Preferred Stock of the Corporation, without designation as to
series, until such shares are once more designated as part of a
particular series by the Board of Directors of the Corporation.
(D) No Sinking Fund. Shares of 4.40% Preferred Stock
shall not be entitled to any sinking fund.
(E) Other Terms. Shares of 4.40% Preferred Stock
shall be subject to the other terms, provisions and restrictions
set forth in these Restated Articles of Organization with
respect to the shares of Preferred Stock of the Corporation.
(e) 4.76% Preferred Stock
(A) Designation and Amount. The Corporation is
authorized to issue a series of Preferred Stock, which is hereby
designated as "4.76% Preferred Stock". The number of shares of
4.76% Preferred Stock shall be limited to 30,000. The stated
value of the 4.76% Preferred Stock shall be $100 per share.
(B) Rate of Dividend. The rate of dividend
applicable to each of the shares of 4.76% Preferred Stock shall
be 4.76% per annum on the stated value thereof.
(C) Redemption. The shares of 4.76% Preferred Stock
shall be subject to redemption at the option of the Board of
Directors of the Corporation, in whole at any time or in part
from time to time, upon the notice and in the manner and with
the effect provided in these Restated Articles of Organization
at the stated value per share, together with unpaid accrued
dividends to the date of redemption, and, in addition thereto, a
premium of $1 per share. All shares of 4.76% Preferred Stock
which shall at any time have been redeemed or otherwise
reacquired by the Corporation shall, after such redemption or
reacquisition, have the status of authorized but unissued shares
of Preferred Stock of the Corporation, without designation as to
series, until such shares are once more designated as part of a
particular series by the Board of Directors of the Corporation.
(D) No Sinking Fund. Shares of 4.76% Preferred Stock
shall not be entitled to any sinking fund.
(E) Other Terms. Shares of 4.76% Preferred Stock
shall be subject to the other terms, provisions and restrictions
set forth in these Restated Articles of Organization with
respect to the shares of Preferred Stock of the Corporation.
(f) 6.20% Preferred Stock
(A) Designation and Amount. The Corporation is
authorized to issue a series of Preferred Stock, which is hereby
designated as "6.20% Preferred Stock". The number of shares of
6.20% Preferred Stock shall be limited to 150,000. The stated
value of the 6.20% Preferred Stock shall be $100 per share.
(B) Rate of Dividend. The rate of dividend
applicable to each of the shares of 6.20% Preferred Stock shall
be 6.20% per annum on the stated value thereof, and such
dividends shall be cumulative from and including September 1,
1993.
(C) Redemption. The 6.20% Preferred Stock shall not
be redeemable prior to October 15, 2003. On and after
October 15, 2003, the shares of 6.20% Preferred Stock shall be
subject to redemption at the option of the Board of Directors of
the Corporation, in whole at any time or in part from time to
time, upon the notice and in the manner and with the effect
provided in these Restated Articles of Organization at the
stated value per share, together with unpaid accrued dividends
to the date of redemption, and, in addition thereto, the
following premium:
If Redeemed During the If Redeemed During the
Twelve Month Period Twelve Month Period
Beginning October 15 Premium Beginning October 15 Premium
2003 . . . . . . . . . $3.10 2008 . . . . . . . . $1.55
2004 . . . . . . . . . 2.79 2009 . . . . . . . . 1.24
2005 . . . . . . . . . 2.48 2010 . . . . . . . . 0.93
2006 . . . . . . . . . 2.17 2011 . . . . . . . . 0.62
2007 . . . . . . . . . 1.86 2012 . . . . . . . . 0.31
Thereafter . . . . . 0.00
All shares of 6.20% Preferred Stock which shall at any
time have been redeemed or otherwise reacquired by the
Corporation shall, after such redemption or reacquisition, have
the status of authorized but unissued shares of Preferred Stock
of the Corporation, without designation as to series, until such
shares are once more designated as part of a particular series
by the Board of Directors of the Corporation.
(D) No Sinking Fund. Shares of 6.20% Preferred Stock
shall not be entitled to any sinking fund.
(E) Other Terms. Shares of 6.20% Preferred Stock
shall be subject to the other terms, provisions and restrictions
set forth in these Restated Articles of Organization with
respect to the shares of Preferred Stock of the Corporation.
(g) 6.50% Preferred Stock
(A) Designation and Amount. The Corporation is
authorized to issue a series of Preferred Stock, which is hereby
designated as "6.50% Preferred Stock". The number of shares of
6.50% Preferred Stock shall be limited to 599,460. The stated
value of the 6.50% Preferred Stock shall be $25 per share.
(B) Rate of Dividend. The rate of dividend
applicable to each of the shares of 6.50% Preferred Stock shall
be 6.50% per annum on the stated value thereof, and such
dividends shall be cumulative from and including September 1,
1993.
(C) Redemption. The 6.50% Preferred Stock shall not
be redeemable prior to November 1, 1998. On and after
November 1, 1998, the shares of 6.50% Preferred Stock shall be
subject to redemption at the option of the Board of Directors of
the Corporation, in whole at any time or in part from time to
time, upon the notice and in the manner and with the effect
provided in these Restated Articles of Organization at the
stated value per share, together with unpaid accrued dividends
to the date of redemption. All shares of 6.50% Preferred Stock
which shall at any time have been redeemed or otherwise
reacquired by the Corporation shall, after such redemption or
reacquisition, have the status of authorized but unissued shares
of Preferred Stock of the Corporation, without designation as to
series, until such shares are once more designated as part of a
particular series by the Board of Directors of the Corporation.
(D) No Sinking Fund. Shares of 6.50% Preferred Stock
shall not be entitled to any sinking fund.
(E) Other Terms. Shares of 6.50% Preferred Stock
shall be subject to the other terms, provisions and restrictions
set forth in these Restated Articles of Organization with
respect to the shares of Preferred Stock of the Corporation.
(10) No share of stock or evidence of indebtedness shall be
deemed to be "outstanding", as that term is used in these Restated
Articles of Organization if, prior to or concurrently with the event in
reference to which a determination as to the amount thereof outstanding is
to be made, the requisite funds for the redemption thereof shall be
deposited in trust for that purpose and the requisite notice for the
redemption thereof shall be given or the depositary of such funds shall be
irrevocably authorized and directed to give or complete such notice of
redemption.
(11) No holder of capital stock of the Corporation shall have
any preemptive right to purchase, acquire or subscribe to any capital
stock or other securities issued or sold by the Corporation, including any
such capital stock or other securities now or hereafter authorized.
(12) The Corporation reserves the right to increase or decrease
its authorized capital stock, or any class or series thereof, or to
reclassify the same, and to amend, alter, change or repeal any provision
contained in these Restated Articles of Organization, or in any amendment
thereto, in the manner now or hereafter prescribed by law, but subject to
such conditions and limitations as are hereinbefore prescribed, and all
rights conferred upon stockholders in these Restated Articles of
Organization, or any amendment thereto, are granted subject to this
reservation.
ARTICLE IV
The stock, property, affairs and business of the Corporation
shall be under the care of and managed by a Board of Directors. The
number of directors constituting the Board of Directors shall be as fixed
from time to time by the By-laws, but shall not be less than seven (7).
At the 1978 annual meeting of stockholders the directors shall
be divided into three classes as nearly equal in number as possible, the
term of office of directors of the first class to expire at the first
annual meeting of stockholders after their election, that of the second
class to expire at the second annual meeting of stockholders after their
election and that of the third class to expire at the third annual meeting
of stockholders after their election, or in each case until their
respective successors are duly elected and qualified. At each annual
meeting after the 1978 annual meeting of stockholders, the successors of
the class of directors whose term shall then expire shall be elected to
hold office for a term expiring at the third annual meeting of
stockholders after their election or until their respective successors are
duly elected and qualified. If, at any annual meeting following the 1978
annual meeting of stockholders, directors of more than one class are to be
elected, each class of directors to be elected at such meeting shall be
nominated and voted for in a separate election. Any vacancy occurring in
the Board of Directors, including a vacancy created by an increase in the
number of directors, shall be filled until the next succeeding annual
meeting of stockholders by the majority vote of the directors then in
office, even if less than a quorum. The provisions of this paragraph
shall not be applied in derogation of any special voting rights arising
pursuant to Paragraph (8) of Article III of the Restated Articles of
Organization.
ARTICLE V
The general officers of the Corporation shall be provided for by
the By-laws and shall include the officers required by law. The Board of
Directors may by resolution authorize and appoint additional officers.
Officers shall be elected and vacancies shall be filled by a
majority vote of the Board of Directors.
The duties and powers of the officers of the Corporation shall
be provided by the By-laws or by resolution of the Board of Directors
pursuant to the By-laws.
ARTICLE VI
The registered holders of the certificates of stock of the
Corporation shall be members of the Corporation and shall be entitled to
vote at all meetings of stockholders in person or by proxy as provided in
these Restated Articles of Organization or as may be provided by law.
ARTICLE VII
Subject to compliance with any applicable provision of Paragraph
(5) of Article III of these Restated Articles of Organization, these
Restated Articles of Organization may be amended from time to time in the
manner and in any and as many respects as may be authorized from time to
time by law at the time of amendment, upon the affirmative vote of the
holders of shares of stock of the Corporation entitled to vote having in
the aggregate a number of votes, calculated as provided in Paragraph
(8)(a) of Article III hereof, at least equal to a majority of the total
number of votes, as so calculated, possessed by all such holders entitled
to vote; and, if required, upon the affirmative vote of the holders of
shares of stock of the Corporation of each class or series entitled by law
to vote as a class having in the aggregate a number of votes, as so
calculated, at least equal to a majority of the total number of votes, as
so calculated, possessed by all such holders of such class or series
entitled by law to vote as a class.
* * *
WPL HOLDINGS, INC.
LONG-TERM EQUITY INCENTIVE PLAN
Article 1. Establishment, Purpose, and Duration
1.1 Establishment of the Plan. WPL Holdings, Inc., a Wisconsin
corporation (hereinafter referred to as the "Company"), hereby establishes
an incentive compensation plan to be known as the "WPL Holdings, Inc.
Long-Term Equity Incentive Plan" (hereinafter referred to as the "Plan"),
as set forth in this document. The Plan permits the grant of Nonqualified
Stock Options, Incentive Stock Options, Restricted Stock, Performance
Units, and Performance Shares. Subject to ratification by an affirmative
vote of a majority of Shares, the Plan shall become effective as of
January 23, 1994 (the "Effective Date"), and shall remain in effect as
provided in Section 1.3 herein.
1.2 Purpose of the Plan. The purpose of the Plan is to promote
the success and enhance the value of the Company by linking the personal
interests of Participants to those of Company shareowners, and by
providing Participants with an incentive for outstanding performance. The
Plan is further intended to provide flexibility to the Company in its
ability to motivate, attract, and retain the services of Participants upon
whose judgment, interest, and special effort the successful conduct of its
operation largely is dependent.
1.3 Duration of the Plan. The Plan shall commence on the
Effective Date, as described in Section 1.1 herein, and shall remain in
effect, subject to the right of the Board of Directors to terminate the
Plan at any time pursuant to Article 13 herein, until all Shares subject
to it shall have been purchased or acquired according to the Plan's
provisions. However, in no event may an Award be granted under the Plan on
or after January 22, 2004.
Article 2. Definitions
Whenever used in the Plan, the following terms shall have the
meanings set forth below and, when the meaning is intended, the initial
letter of the word is capitalized:
(a) "Award" means, individually or collectively, a grant under
this Plan of Nonqualified Stock Options, Incentive Stock
Options, Restricted Stock, Performance Units, or
Performance Shares.
(b) "Award Agreement" means an agreement entered into by each
Participant and the Company setting forth the terms and
provisions applicable to Awards granted to Participants
under this Plan.
(c) "Beneficial Owner" shall have the meaning ascribed to such
term in Rule 13d-3 of the General Rules and Regulations
under the Exchange Act.
(d) "Board" or "Board of Directors" means the Board of
Directors of the Company.
(e) "Cause" means the admission by or the conviction of the
Participant of an act of fraud, embezzlement, theft, or
other criminal act constituting a felony under U.S. laws
involving moral turpitude. The Board of Directors, by
majority vote, shall make the determination of whether
Cause exists.
(f) "Change in Control" shall have the meaning ascribed to such
term in the Rights Agreement dated February 22, 1989 with
Morgan Shareholder Services Trust Company.
(g) "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
(h) "Committee" means the committee, as specified in Article 3,
appointed by the Board to administer the Plan.
(i) "Company" means WPL Holdings, Inc., a Wisconsin
corporation, or any successor thereto as provided in
Article 16 herein.
(j) "Director" means any individual who is a member of the
Board of Directors of the Company.
(k) "Disability" shall have the meaning ascribed to such term
in the Wisconsin Power and Light Company Retirement Plan A
Plan of the Company.
(l) "Dividend Equivalent" means a contingent right to be paid
dividends declared with respect to outstanding Option
grants, pursuant to the terms of Section 6.5 herein.
(m) "Employee" means any full-time, nonunion employee of the
Company or of the Company's Subsidiaries. Directors who are
not otherwise employed by the Company shall not be
considered Employees under this Plan.
(n) "Exchange Act" means the Securities Exchange Act of 1934,
as amended from time to time, or any successor Act thereto.
(o) "Fair Market Value" means the Fair Market Value of the
Shares determined by such methods or procedures as shall be
established from time to time by the Committee; provided,
however, that so long as the Shares are traded in a public
market, Fair Market Value means the average of the high and
low prices of a Share in the principal market for the
Shares on the specified date (or, if no sales occurred on
such date, the last preceding date on which sales
occurred).
(p) "Incentive Stock Option" or "ISO" means an option to
purchase Shares, granted under Article 6 herein, which is
designated as an Incentive Stock Option and is intended to
meet the requirements of Section 422 of the Code, or any
successor provision thereto.
(q) "Insider" shall mean an Employee who is, on the relevant
date, an officer, director, or ten percent (10%) beneficial
owner of the Company, as defined under Section 16 of the
Exchange Act.
(r) "Named Executive Officer" means a Participant who, as of
the date of vesting and/or payout of an Award is one of the
group of "covered employees," as defined in the Regulations
promulgated under Code Section 162(m), or any successor
statute.
(s) "Nonqualified Stock Option" or "NQSO" means an option to
purchase Shares, granted under Article 6 herein, which is
not intended to be an Incentive Stock Option.
(t) "Option" means an Incentive Stock Option or a Nonqualified
Stock Option.
(u) "Option Price" means the price at which a Share may be
purchased by a Participant pursuant to an Option, as
determined by the Committee.
(v) "Participant" means an Employee of the Company who has
outstanding an Award granted under the Plan.
(w) "Performance Unit" means an Award granted to an Employee,
as described in Article 8 herein.
(x) "Performance Share" means an Award granted to an Employee,
as described in Article 8 herein.
(y) "Period of Restriction" means the period during which the
transfer of Shares of Restricted Stock is limited in some
way (based on the passage of time, the achievement of
performance goals, or upon the occurrence of other events
as determined by the Committee, at its discretion), and the
Shares are subject to a substantial risk of forfeiture, as
provided in Article 7 herein.
(z) "Person" shall have the meaning ascribed to such term in
Section 3(a)(9) of the Exchange Act and used in Sections
13(d) and 14(d) thereof, including a "group" as defined in
Section 13(d).
(aa) "Restricted Stock" means an Award granted to a Participant
pursuant to Article 7 herein.
(ab) "Retirement" shall have the meaning ascribed to such term
in the Wisconsin Power and Light Company Retirement Plan A
Plan of the Company.
(ac) "Shares" means the Shares of common stock of the Company.
(ad) "Subsidiary" means any corporation, partnership, venture,
or other entity in which the Company, directly or
indirectly, has at least an eighty percent (80%) ownership
interest.
(ae) "Window Period" means the period beginning on the third
business day following the date of public release of the
Company's quarterly sales and earnings information, and
ending on the twelfth business day following such date.
Article 3. Administration
3.1 The Committee. The Plan shall be administered by the
Compensation and Personnel Committee of the Board or by any other
Committee appointed by the Board consisting of not less than two (2)
Directors. The members of the Committee shall be appointed from time to
time by, and shall serve at the discretion of, the Board of Directors. The
Committee shall be comprised solely of Directors who are eligible to
administer the Plan pursuant to Rule 16b-3(c)(2) under the Exchange Act.
3.2 Authority of the Committee. The Committee shall have full
power except as limited by law or by the Articles of Incorporation or
Bylaws of the Company, and subject to the provisions herein, to designate
employees to be Participants in the Plan; to determine the size and types
of Awards; to determine the terms and conditions of such Awards in a
manner consistent with the Plan; to determine whether, to what extent, and
under what circumstances, Awards granted to Participants may be settled or
exercised in cash, Shares or other property; to construe and interpret the
Plan and any agreement or instrument entered into under the Plan; to
establish, amend, or waive rules and regulations for the Plan's
administration; and (subject to the provisions of Article 13 herein) to
amend the terms and conditions of any outstanding Award to the extent such
terms and conditions are within the discretion of the Committee as
provided in the Plan. Further, the Committee shall make all other
determinations which may be necessary or advisable for the administration
of the Plan. As permitted by law, the Committee may delegate its
authorities as identified hereunder.
3.3 Decisions Binding. All determinations and decisions made
by the Committee pursuant to the provisions of the Plan and all related
orders or resolutions of the Board shall be final, conclusive, and binding
on all persons, including the Company, its shareowners, Employees,
Participants, and their estates and beneficiaries.
Article 4. Shares Subject to the Plan
4.1 Number of Shares. Subject to adjustment as provided in
Section 4.3 herein, the total number of Shares available for grant under
the Plan shall be 1,000,000. Of this number, up to 300,000 Shares may be
granted as Restricted Stock. These Shares may be either authorized but
unissued or reacquired Shares. The following rules will apply for purposes
of the determination of the number of Shares available for grant under the
Plan:
(a) While an Award is outstanding, it shall be counted against
the authorized pool of Shares, regardless of its vested
status.
(b) The grant of an Option or Restricted Stock shall reduce the
Shares available for grant under the Plan by the number of
Shares subject to such Award.
(c) The Committee shall in each case determine the appropriate
number of Shares to deduct from the authorized pool in
connection with the grant of Performance Units and/or
Performance Shares.
(d) Unless otherwise determined by the Committee, the grant of
an award opportunity under Article 8 of this Plan shall not
reduce the authorized pool; provided, however, that payout
of such opportunity in the form of Shares shall reduce the
authorized pool by such number of Shares.
(e) To the extent that an Award is settled in cash rather than
in Shares, the authorized Share pool shall be credited with
the appropriate number of Shares represented by the cash
settlement of the Award, as determined at the sole
discretion of the Committee (subject to the limitation set
forth in Section 4.2 herein).
4.2 Lapsed Awards. If any Award granted under this Plan is
canceled, terminates, expires, or lapses for any reason, any Shares
subject to such Award again shall be available for the grant of an Award
under the Plan. However, in the event that prior to the Award's
cancellation, termination, expiration, or lapse, the holder of the Award
at any time received one or more "benefits of ownership" pursuant to such
Award (as defined by the Securities and Exchange Commission, pursuant to
any rule or interpretation promulgated under Section 16 of the Exchange
Act), the Shares subject to such Award shall not be made available for
regrant under the Plan.
4.3 Adjustments in Authorized Shares. In the event of any
merger, reorganization, consolidation, recapitalization, separation,
liquidation, stock dividend, split-up, Share combination, or other change
in the corporate structure of the Company affecting the Shares, such
adjustment shall be made in the number and class of Shares which may be
delivered under the Plan, and in the number and class of and/or price of
Shares subject to outstanding Awards granted under the Plan, as may be
determined to be appropriate and equitable by the Committee, in its sole
discretion, to prevent dilution or enlargement of rights; and provided
that the number of Shares subject to any Award shall always be a whole
number.
Article 5. Eligibility and Participation
5.1 Eligibility. Persons eligible to participate in this Plan
include all active Employees of the Company and its Subsidiaries, as
determined by the Committee, including Employees who are members of the
Board, but excluding Directors who are not Employees.
5.2 Actual Participation. Subject to the provisions of the
Plan, the Committee may, from time to time, select from all eligible
Employees, those to whom Awards shall be granted and shall determine the
nature and amount of each Award.
Article 6. Stock Options
6.1 Grant of Options. Subject to the terms and provisions of
the Plan, Options may be granted to Employees at any time and from time to
time as shall be determined by the Committee. The Committee shall have
discretion in determining the number of Shares subject to Options granted
to each Participant; provided, however, that the maximum number of Shares
subject to Options which may be granted to any single Participant during
the term of the Plan is 150,000. The Committee may grant ISOs, NQSOs, or a
combination thereof.
6.2 Award Agreement. Each Option grant shall be evidenced by
an Award Agreement that shall specify the Option Price, the duration of
the Option, the number of Shares to which the Option pertains, and such
other provisions as the Committee shall determine. The Award Agreement
also shall specify whether the Option is intended to be an ISO within the
meaning of Section 422 of the Code, or a NQSO whose grant is intended not
to fall under the Code provisions of Section 422.
6.3 Option Price. The Option Price for each grant of an Option
under this Section 6.3 shall be at least equal to one hundred percent
(100%) of the Fair Market Value of a Share on the date the Option is
granted. In addition, the Committee may grant Options which have Option
Prices that increase over time, upon such terms as the Committee, in its
sole discretion, deems appropriate.
6.4 Duration of Options. Each Option shall expire at such time
as the Committee shall determine at the time of grant; provided, however,
that no Option shall be exercisable later than the tenth (10th)
anniversary date of its grant.
6.5 Dividend Equivalents. Simultaneous with the grant of an
Option, the Participant receiving the Option may be granted, at no
additional cost, Dividend Equivalents. Each Dividend Equivalent shall
entitle the Participant to receive a contingent right to be paid an amount
equal to the dividends declared on a Share on all record dates occurring
during the period between the grant date of an Option and the date the
Option is exercised. The underlying value of each Dividend Equivalent
shall accrue as a book entry in the name of each Participant holding the
Dividend Equivalent. Payout of the accrued value of a Dividend Equivalent
shall occur only in the event the Option issued in tandem with the
Dividend Equivalent is "in the money" (i.e., the Fair Market Value of
Shares underlying the Option as of the exercise date exceeds the Option
Price) as of the exercise date. Payout of Dividend Equivalents shall be
made in cash, in one lump sum, within thirty (30) days following the
exercise of the corresponding Option.
6.6 Exercise of Options. Options granted under the Plan shall
be exercisable at such times and be subject to such restrictions and
conditions as the Committee shall in each instance approve, which need not
be the same for each grant or for each Participant. However, in no event
may any Option granted under this Plan become exercisable prior to six (6)
months following the date of its grant.
6.7 Payment. Options shall be exercised by the delivery of a
written notice of exercise to the Company, setting forth the number of
Shares with respect to which the Option is to be exercised, accompanied by
full payment for the Shares. The Option Price upon exercise of any Option
shall be payable to the Company in full either: (a) in cash or its
equivalent, or (b) by tendering previously acquired Shares having an
aggregate Fair Market Value at the time of exercise equal to the total
Option Price (provided that the Shares which are tendered must have been
held by the Participant for at least six (6) months prior to their tender
to satisfy the Option Price), or (c) by a combination of (a) and (b).
Notwithstanding the foregoing, the Committee also may allow
cashless exercises as permitted under Federal Reserve Board's Regulation
T, subject to such procedures as the Committee may deem appropriate,
including without limitations the establishment of such procedures as may
be necessary to satisfy the requirements of Rule 16b-3, or by any other
means which the Committee determines to be consistent with the Plan's
purpose and applicable law.
As soon as practicable after receipt of a written notification
of exercise and full payment, the Company shall deliver to the
Participant, in the Participant's name, Share certificates in an
appropriate amount based upon the number of Shares purchased under the
Option(s).
6.8 Termination of Employment Due to Death, Disability, or
Retirement.
(a) Termination by Death. In the event the employment of a
Participant is terminated by reason of death, all
outstanding Options granted to that Participant shall
immediately vest one hundred percent (100%), and shall
remain exercisable at any time prior to their expiration
date, or for one (1) year after the date of death,
whichever period is shorter, by such person or persons as
shall have been named as the Participant's beneficiary, or
by such persons that have acquired the Participant's rights
under the Option by will or by the laws of descent and
distribution.
(b) Termination by Disability. In the event the employment of
a Participant is terminated by reason of Disability, all
outstanding Options granted to that Participant shall
immediately vest one hundred percent (100%) as of the date
the Committee determines the definition of Disability to
have been satisfied, and shall remain exercisable at any
time prior to their expiration date, or for one (1) year
after the date that the Committee determines the definition
of Disability to have been satisfied, whichever period is
shorter.
(c) Termination by Retirement. In the event the employment of
a Participant is terminated by reason of Retirement, all
outstanding Options granted to that Participant shall
immediately vest one hundred percent (100%), and shall
remain exercisable at any time prior to their expiration
date, or for three (3) years after the effective date of
Retirement, whichever period is shorter.
(d) Employment Termination Followed by Death. In the event
that a Participant's employment terminates by reason of
Disability or Retirement, and within the exercise period
following such termination the Participant dies, then the
remaining exercise period under outstanding Options shall
equal the longer of: (i) one (1) year following death; or
(ii) the remaining portion of the exercise period which was
triggered by the employment termination. Such Options shall
be exercisable by such person or persons who shall have
been named as the Participant's beneficiary, or by such
persons who have acquired the Participant's rights under
the Option by will or by the laws of descent and
distribution.
(e) Exercise Limitations on ISOs. In the case of ISOs, the tax
treatment prescribed under Section 422 of the Internal
Revenue Code of 1986, as amended, may not be available if
the Options are not exercised within the Section 422
prescribed time periods after each of the various types of
employment termination.
6.9 Termination of Employment for Other Reasons. If the
employment of a Participant shall terminate for any reason other than the
reasons set forth in Section 6.8 (and other than for Cause), all Options
held by the Participant which are not vested as of the effective date of
employment termination immediately shall be forfeited to the Company (and
shall once again become available for grant under the Plan). However, the
Committee, in its sole discretion, shall have the right to immediately
vest all or any portion of such Options, subject to such terms as the
Committee, in its sole discretion, deems appropriate.
Options which are vested as of the effective date of employment
termination may be exercised by the Participant within the period
beginning on the effective date of employment termination, and ending
three (3) months after such date.
If the employment of a Participant shall be terminated by the
Company for Cause, all outstanding Options held by the Participant
immediately shall be forfeited to the Company and no additional exercise
period shall be allowed, regardless of the vested status of the Options.
6.10 Nontransferability of Options. No Option granted under the
Plan may be sold, transferred, pledged, assigned, or otherwise alienated
or hypothecated, other than by will or by the laws of descent and
distribution. Further, all Options granted to a Participant under the Plan
shall be exercisable during his or her lifetime only by such Participant,
or, if permissible under applicable law, by such Participant's guardian or
legal representative.
Article 7. Restricted Stock
7.1 Grant of Restricted Stock. Subject to the terms and
provisions of the Plan, the Committee, at any time and from time to time,
may grant Shares of Restricted Stock to eligible Employees in such amounts
as the Committee shall determine.
7.2 Restricted Stock Agreement. Each Restricted Stock grant
shall be evidenced by a Restricted Stock Agreement that shall specify the
Period of Restriction, or Periods, the number of Restricted Stock Shares
granted, and such other provisions as the Committee shall determine.
7.3 Transferability. Except as provided in this Article 7, the
Shares of Restricted Stock granted herein may not be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated until the end of
the applicable Period of Restriction established by the Committee and
specified in the Restricted Stock Agreement, or upon earlier satisfaction
of any other conditions, as specified by the Committee in its sole
discretion and set forth in the Restricted Stock Agreement. However, in no
event may any Restricted Stock granted under the Plan become vested in a
Participant prior to six (6) months following the date of its grant,
except in case of death. All rights with respect to the Restricted Stock
granted to a Participant under the Plan shall be available during his or
her lifetime only to such Participant.
7.4 Other Restrictions. The Committee shall impose such other
conditions and/or restrictions on any Shares of Restricted Stock granted
pursuant to the Plan as it may deem advisable including, without
limitation, a requirement that Participants pay a stipulated purchase
price for each Share of Restricted Stock, restrictions based upon the
achievement of specific performance goals (Company-wide, divisional,
and/or individual), and/or restrictions under applicable Federal or state
securities laws; and may legend the certificates representing Restricted
Stock to give appropriate notice of such restrictions.
7.5 Certificate Legend. In addition to any legends placed on
certificates pursuant to Section 7.4 herein, each certificate representing
Shares of Restricted Stock granted pursuant to the Plan may bear the
following legend:
"The sale or other transfer of the Shares of stock
represented by this certificate, whether voluntary,
involuntary, or by operation of law, is subject to certain
restrictions on transfer as set forth in the WPL Holdings,
Inc. Equity Incentive Plan, and in a Restricted Stock
Agreement. A copy of the Plan and such Restricted Stock
Agreement may be obtained from WPL Holdings, Inc."
The Company shall have the right to retain the certificates
representing Shares of Restricted Stock in the Company's possession until
such time as all conditions and/or restrictions applicable to such Shares
have been satisfied.
7.6 Removal of Restrictions. Except as otherwise provided in
this Article 7, Shares of Restricted Stock covered by each Restricted
Stock grant made under the Plan shall become freely transferable by the
Participant after the last day of the Period of Restriction. Once the
Shares are released from the restrictions, the Participant shall be
entitled to have the legend required by Section 7.5 removed from his or
her Share certificate.
7.7 Voting Rights. During the Period of Restriction,
Participants holding Shares of Restricted Stock granted hereunder may
exercise full voting rights with respect to those Shares.
7.8 Dividends and Other Distributions. During the Period of
Restriction, Participants holding Shares of Restricted Stock granted
hereunder may be credited with all regular cash dividends paid with
respect to all Shares while they are so held. Except as provided in the
succeeding sentence, all other cash dividends and other distributions paid
with respect to Shares of Restricted Stock may be credited to Participants
subject to the same restrictions on transferability and forfeitability as
the Shares of Restricted Stock with respect to which they were paid. If
any such dividends or distributions are paid in Shares, the Shares shall
be subject to the same restrictions on transferability and forfeitability
as the Shares of Restricted Stock with respect to which they were paid.
Subject to the succeeding paragraph, all dividends credited to a
Participant shall be paid to the Participant within forty-five (45) days
following the full vesting of the Shares of Restricted Stock with respect
to which such dividends were earned.
In the event that any dividend constitutes a "derivative
security" or an "equity security" pursuant to Rule 16(a) under the
Exchange Act, such dividend shall be subject to a vesting period equal to
the longer of: (i) the remaining vesting period of the Shares of
Restricted Stock with respect to which the dividend is paid; or (ii) six
months. The Committee shall establish procedures for the application of
this provision.
7.9 Termination of Employment Due to Death, Disability, or
Retirement. In the event the employment of a Participant is terminated by
reason of death, Disability, or Retirement, all outstanding Shares of
Restricted Stock shall immediately vest one hundred percent (100%) as of
the date of employment termination (in the case of Disability, the date
employment terminates shall be deemed to be the date that the Committee
designates as the date the definition of Disability has been satisfied).
The holder of the certificates of Restricted Stock shall be entitled to
have any nontransferability legends required under Sections 7.4 and 7.5 of
this Plan removed from the Share certificates.
7.10 Termination of Employment for Other Reasons. If the
employment of a Participant shall terminate for any reason other than
those specifically set forth in Section 7.9 herein, during the applicable
Period of Restriction, all Shares of Restricted Stock still subject to
restriction as of the effective date of employment termination immediately
shall be forfeited and returned to the Company; provided, however, that
the Committee may waive in whole or in part any or all remaining
restrictions with respect to such Shares, upon such terms as the
Committee, in its sole discretion, deems appropriate.
Article 8. Performance Units and Performance Shares
8.1 Grant of Performance Units/Shares. Subject to the terms of
the Plan, Performance Units and Performance Shares may be granted to
eligible Employees at any time and from time to time, as shall be
determined by the Committee. The Committee shall have complete discretion
in determining the number of Performance Units and Performance Shares
granted to each Participant; provided, however, that unless and until the
Committee determines that a grant of Performance Units and/or Shares shall
not be designed to qualify for the "performance-based" exemption under
Code Section 162(m), the maximum payout to any Named Executive Officer
with respect to Performance Units and/or Performance Shares granted in any
one fiscal year of the Company shall be four hundred thousand dollars
($400,000).
8.2 Value of Performance Units/Shares. Each Performance Unit
shall have an initial value that is established by the Committee at the
time of grant. Each Performance Share shall have an initial value equal to
the Fair Market Value of a Share on the date of grant. The Committee shall
set performance goals in its discretion which, depending on the extent to
which they are met, will determine the number and/or value of Performance
Units/Shares that will be paid out to the Participants. The time period
during which the performance goals must be met shall be called a
"Performance Period." Performance Periods shall, in all cases, exceed six
(6) months in length. Unless and until the Committee proposes for
shareowner vote a change in the general performance measures, the
attainment of which shall determine the number and/or value of Performance
Units and/or Performance Shares granted under the Plan, the Company or
Subsidiary performance measure to be used for purposes of grants to Named
Executive Officers shall be chosen from among the following alternatives:
(a) Return on equity;
(b) Total shareowner return (share price appreciation plus
dividends);
(c) Net income;
(d) Earnings per share; and/or
(e) Cash flow.
The Committee shall have sole discretion to alter the governing
performance measures, subject to shareowner approval, to the extent
required in order to comply with Section 162(m) of the Code and Rule 16b-3
under the Exchange Act. Notwithstanding the foregoing, in the event the
Committee determines it is advisable to grant Performance Units and/or
Performance Shares which shall not qualify for the "performance-based"
exemption under Code Section 162(m), the Committee may make such grants
without satisfying the requirements of Code Section 162(m).
8.3 Earning of Performance Units/Shares. After the applicable
Performance Period has ended, the holder of Performance Units/Shares shall
be entitled to receive payout on the number and value of Performance
Units/Shares earned by the Participant over the Performance Period, to be
determined as a function of the extent to which the corresponding
performance goals have been achieved.
8.4 Form and Timing of Payment of Performance Units/Shares.
Payment of earned Performance Units/Shares shall be made in a single lump
sum, within seventy-five (75) calendar days following the close of the
applicable Performance Period. The Committee, in its sole discretion, may
pay earned Performance Units/Shares in the form of cash or in Shares (or
in a combination thereof), which have an aggregate Fair Market Value equal
to the value of the earned Performance Units/Shares at the close of the
applicable Performance Period. Such Shares may be granted subject to any
restrictions deemed appropriate by the Committee.
Participants shall be entitled to receive any dividends declared
with respect to Shares which have been earned in connection with grants of
Performance Units and/or Performance Shares which have been earned, but
not yet distributed to Participants. (Such dividends shall be subject to
the same accrual, forfeiture, and payout restrictions as apply to
dividends earned with respect to Shares of Restricted Stock, as set forth
in Section 7.8 herein.) In addition, Participants may, at the discretion
of the Committee, be entitled to exercise their voting rights with respect
to such Shares.
8.5 Termination of Employment Due to Death, Disability,
Retirement, or Involuntary Termination Without Cause. In the event the
employment of a Participant is terminated by reason of death, Disability,
Retirement, or involuntary termination without Cause during a Performance
Period, the Participant shall receive a prorated payout of the Performance
Units/Shares. The prorated payout shall be determined by the Committee, in
its sole discretion, and shall be based upon the length of time that the
Participant held the Performance Units/Shares during the Performance
Period, and shall further be adjusted based on the achievement of the
preestablished performance goals.
Payment of earned Performance Units/Shares shall be made at the
same time payments are made to Participants who did not terminate
employment during the applicable Performance Period.
8.6 Termination of Employment for Other Reasons. In the event
that a Participant's employment terminates for any reason other than those
reasons set forth in Section 8.5 herein, all Performance Units/Shares
shall be forfeited by the Participant to the Company.
8.7 Nontransferability. Performance Units/Shares may not be
sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and
distribution. Further, a Participant's rights under the Plan shall be
exercisable during the Participant's lifetime only by the Participant or
the Participant's legal representative.
Article 9. Beneficiary Designation
Each Participant under the Plan may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or
successively) to whom any benefit under the Plan is to be paid in case of
his or her death before he or she receives any or all of such benefit.
Each such designation shall revoke all prior designations by the same
Participant, shall be in a form prescribed by the Company, and will be
effective only when filed by the Participant in writing with the Company
during the Participant's lifetime. In the absence of any such designation,
benefits remaining unpaid at the Participant's death shall be paid to the
Participant's estate. The spouse of a married Participant domiciled in a
community property jurisdiction shall join in any designation of
beneficiary or beneficiaries other than the spouse.
Article 10. Deferrals
The Committee may permit a Participant to defer such
Participant's receipt of the payment of cash or the delivery of Shares
that would otherwise be due to such Participant by virtue of the exercise
of an Option or the lapse or waiver of restrictions with respect to
Restricted Stock, or the satisfaction of any requirements or goals with
respect to Performance Units/Shares. If any such deferral election is
required or permitted, the Committee shall, in its sole discretion,
establish rules and procedures for such payment deferrals.
Article 11. Rights of Employees
11.1 Employment. Nothing in the Plan shall interfere with or
limit in any way the right of the Company to terminate any Participant's
employment at any time, nor confer upon any Participant any right to
continue in the employ of the Company. For purposes of the Plan, transfer
of employment of a Participant between the Company and any one of its
Subsidiaries, or vice versa, (or between Subsidiaries) shall not be deemed
a termination of employment.
11.2 Participation. No Employee shall have the right to be
selected to receive an Award under this Plan, or, having been so selected,
to be selected to receive a future Award.
Article 12. Change in Control
Upon the occurrence of a Change in Control, unless otherwise
specifically prohibited by the terms of Section 17 herein:
(a) Any and all Options granted hereunder shall become
immediately exercisable;
(b) Any Period of Restriction and restrictions imposed on
Restricted Shares shall lapse;
(c) The target payout opportunity attainable under all
outstanding Performance Units and Performance Shares shall
be deemed to have been fully earned for the entire
Performance Period(s) as of the effective date of the
Change in Control, and there shall be paid out in cash to
Participants within thirty (30) days following the
effective date of the Change in Control a pro rata portion
of such target payout opportunity based on the number of
complete and partial calendar months within the Performance
Period which had elapsed as of such effective date;
provided, however, that there shall not be an accelerated
payout with respect to Performance Units or Performance
Shares which were granted less than six (6) months prior to
the effective date of the Change in Control;
(d) Subject to Article 13 herein, the Committee shall have the
authority to make any modifications to the Awards as
determined by the Committee to be appropriate before the
effective date of the Change in Control.
Article 13. Amendment, Modification, and Termination
13.1 Amendment, Modification, and Termination. The Board may,
at any time and from time to time, alter, amend, suspend or terminate the
Plan in whole or in part; provided, that no amendment which requires
shareowner approval in order for the Plan to continue to comply with Rule
16b-3 under the Exchange Act, including any successor to such Rule, shall
be effective unless such amendment shall be approved by the requisite vote
of shareowners of the Company entitled to vote thereon.
The Committee shall not have the authority to cancel outstanding
Awards and issue substitute Awards in replacement thereof.
13.2 Awards Previously Granted. No termination, amendment, or
modification of the Plan shall adversely affect in any material way any
Award previously granted under the Plan, without the written consent of
the Participant holding such Award.
Article 14. Withholding
14.1 Tax Withholding. The Company shall have the power and the
right to deduct or withhold, or require a Participant to remit to the
Company, an amount sufficient to satisfy Federal, state, and local taxes
(including the Participant's FICA obligation) required by law to be
withheld with respect to any taxable event arising or as a result of any
Awards to Participants under this Plan.
14.2 Share Withholding. With respect to withholding required
upon the exercise of Options, upon the lapse of restrictions on Restricted
Stock, or upon any other taxable event arising as a result of Awards
granted hereunder, Participants may elect, subject to the approval of the
Committee, to satisfy the withholding requirement, in whole or in part, by
having the Company withhold Shares having a Fair Market Value on the date
the tax is to be determined equal to the minimum statutory total tax which
could be imposed on the transaction. The Committee may establish such
procedures as it deems appropriate for the settling of withholding
obligations with Shares, including, without limitation, the establishment
of such procedures as may be necessary to comply with the requirements of
Rule 16b-3, unless otherwise determined by the Committee.
(a) Awards Having Exercise Timing Within Participants'
Discretion. The Insider must either:
(i) Deliver written notice of the stock withholding
election to the Committee at least six (6) months
prior to the date specified by the Insider on which
the exercise of the Award is to occur; or
(ii) Make the stock withholding election in connection with
an exercise of an Award which occurs during a Window
Period.
(b) Awards Having a Fixed Exercise/Payout Schedule Which is
Outside Insider's Control. The Insider must either:
(i) Deliver written notice of the stock withholding
election to the Committee at least six (6) months
prior to the date on which the taxable event (e.g.,
exercise or payout) relating to the Award is scheduled
to occur; or
(ii) Make the stock withholding election during a Window
Period which occurs prior to the scheduled taxable
event relating to the Award (for this purpose, an
election may be made prior to such a Window Period,
provided that it becomes effective during a Window
Period occurring prior to the applicable taxable
event).
Article 15. Indemnification
Each person who is or shall have been a member of the Committee,
or of the Board, shall be indemnified and held harmless by the Company
against and from any loss, cost, liability, or expense that may be imposed
upon or reasonably incurred by him or her in connection with or resulting
from any claim, action, suit, or proceeding to which he or she may be a
party or in which he or she may be involved by reason of any action taken
or failure to act under the Plan and against and from any and all amounts
paid by him or her in settlement thereof, with the Company's approval, or
paid by him or her in satisfaction of any judgment in any such action,
suit, or proceeding against him or her, provided he or she shall give the
Company an opportunity, at its own expense, to handle and defend the same
before he or she undertakes to handle and defend it on his or her own
behalf.
The foregoing right of indemnification shall not be exclusive of
any other rights of indemnification to which such persons may be entitled
under the Company's Articles of Incorporation or Bylaws, as a matter of
law, or otherwise, or any power that the Company may have to indemnify
them or hold them harmless.
Article 16. Successors
All obligations of the Company under the Plan, with respect to
Awards granted hereunder, shall be binding on any successor to the
Company, whether the existence of such successor is the result of a direct
or indirect purchase, merger, consolidation, or otherwise, of all or
substantially all of the business and/or assets of the Company.
Article 17. Restrictions on Share Transferability
In addition to any restrictions imposed pursuant to the Plan,
all certificates for Shares delivered under the Plan pursuant to any Award
or the exercise thereof shall be subject to such stop transfer orders and
other restrictions as the Committee may deem advisable under the Plan or
the rules, regulations, and other requirements of the Securities and
Exchange Commission, any stock exchange or market upon which such Shares
are then listed or traded, any applicable Federal or state securities
laws, and the Committee may cause a legend or legends to be put on any
such certificates to make appropriate reference to such restrictions.
Article 18. Legal Construction
18.1 Gender and Number. Except where otherwise indicated by the
context, any masculine term used herein also shall include the feminine;
the plural shall include the singular and the singular shall include the
plural.
18.2 Severability. In the event any provision of the Plan shall
be held illegal or invalid for any reason, the illegality or invalidity
shall not affect the remaining parts of the Plan, and the Plan shall be
construed and enforced as if the illegal or invalid provision had not been
included.
18.3 Requirements of Law. The granting of Awards and the
issuance of Shares under the Plan shall be subject to all applicable laws,
rules, and regulations, and to such approvals by any governmental agencies
or national securities exchanges as may be required.
Notwithstanding any other provision set forth in the Plan, if
required to comply with the then-current rules promulgated under Section
16 of the Exchange Act, any "equity security" offered pursuant to the Plan
to any Insider may not be sold or transferred for at least six (6) months
after the date of grant, except in the case of death. The terms "equity
security" and "derivative security" shall have the meanings ascribed to
them in the then-current Rule 16(a) under the Exchange Act.
18.4 Securities Law Compliance. With respect to Insiders,
transactions under this Plan are intended to comply with all applicable
conditions or Rule 16b-3 or its successors under the 1934 Act. To the
extent any provision of the Plan or action by the Committee fails to so
comply, it shall be deemed null and void, to the extent permitted by law
and deemed advisable by the Committee.
18.5 Governing Law. To the extent not preempted by Federal law,
the Plan, and all agreements hereunder, shall be construed in accordance
with and governed by the laws of the State of Wisconsin.
KEY EXECUTIVE EMPLOYMENT AND SEVERANCE AGREEMENT
THIS AGREEMENT, made and entered into as of the 25th day of
June, 1994, by and between WPL Holdings, Inc., a Wisconsin corporation
(hereinafter referred to as the "Company"), and Erroll B. Davis, Jr.
(hereinafter referred to as "Executive").
W I T N E S S E T H
WHEREAS, the Executive is employed by the Company and/or a
subsidiary of the Company (the "Employer") in a key executive capacity and
the Executive's services are valuable to the conduct of the business of
the Company;
WHEREAS, the Executive possesses intimate knowledge of the
business and affairs of the Company and has acquired certain confidential
information and data with respect to the Company;
WHEREAS, the Company desires to insure, insofar as possible,
that it will continue to have the benefit of the Executive's services and
to protect its confidential information and goodwill;
WHEREAS, the Company recognizes that circumstances may arise in
which a change in control of the Company occurs, through acquisition or
otherwise, thereby causing uncertainty about the Executive's future
employment with the Employer without regard to the Executive's competence
or past contributions which uncertainty may result in the loss of valuable
services of the Executive to the detriment of the Company and its
shareholders, and the Company and the Executive wish to provide reasonable
security to the Executive against changes in the Executive's relationship
with the Company in the event of any such change in control;
WHEREAS, the Company and the Executive are desirous that any
proposal for a change in control or acquisition of the Company will be
considered by the Executive objectively and with reference only to the
best interests of the Company and its shareholders; and
WHEREAS, the Executive will be in a better position to consider
the Company's best interests if the Executive is afforded reasonable
security, as provided in this Agreement, against altered conditions of
employment which could result from any such change in control or
acquisition.
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants and agreements hereinafter set forth, the parties hereto
mutually covenant and agree as follows:
1. Definitions.
(a) Act. For purposes of this Agreement, the term "Act" means
the Securities Exchange Act of 1934, as amended.
(b) Affiliate and Associate. For purposes of this Agreement,
the terms "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule l2b-2 of the General Rules and Regulations
of the Act.
(c) Beneficial Owner. For purposes of this Agreement, a Person
shall be deemed to be the "Beneficial Owner" of any securities:
(i) which such Person or any of such Person's Affiliates
or Associates has the right to acquire (whether such right is
exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding, or upon
the exercise of conversion rights, exchange rights, rights,
warrants or options, or otherwise; provided, however, that a
Person shall not be deemed the Beneficial Owner of, or to
beneficially own, (A) securities tendered pursuant to a tender
or exchange offer made by or on behalf of such Person or any of
such Person's Affiliates or Associates until such tendered
securities are accepted for purchase, or (B) securities issuable
upon exercise of Rights issued pursuant to the terms of the
Company's Rights Agreement with Morgan Shareholder Services
Trust Company, dated as of February 22, 1989, as amended from
time to time (or any successor to such Rights Agreement), at any
time before the issuance of such securities;
(ii) which such Person or any of such Person's Affiliates
or Associates, directly or indirectly, has the right to vote or
dispose of or has "beneficial ownership" of (as determined
pursuant to Rule l3d-3 of the General Rules and Regulations
under the Act), including pursuant to any agreement, arrangement
or understanding; provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, any
security under this subparagraph (ii) as a result of an
agreement, arrangement or understanding to vote such security if
the agreement, arrangement or understanding: (A) arises solely
from a revocable proxy or consent given to such Person in
response to a public proxy or consent solicitation made pursuant
to, and in accordance with, the applicable rules and regulations
under the Act and (B) is not also then reportable on a Schedule
l3D under the Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly,
by any other Person with which such Person or any of such
Person's Affiliates or Associates has any agreement, arrangement
or understanding for the purpose of acquiring, holding, voting
(except pursuant to a revocable proxy as described in Subsection
1(c) (ii) above) or disposing of any voting securities of the
Company.
(d) Cause. "Cause" for termination by the Company of the
Executive's employment in connection with a Change of Control of the
Company shall, for purposes of this Agreement, be limited to (i) the
engaging by the Executive in intentional conduct not taken in good faith
which has caused demonstrable and serious financial injury to the Company,
as evidenced by a determination in a binding and final judgment, order or
decree of a court or administrative agency of competent jurisdiction, in
effect after exhaustion or lapse of all rights of appeal, in an action,
suit or proceeding, whether civil, criminal, administrative or
investigative; (ii) conviction of a felony (as evidenced by binding and
final judgment, order or decree of a court of competent jurisdiction, in
effect after exhaustion of all rights of appeal) which substantially
impairs the Executive's ability to perform his duties or responsibilities;
and (iii) continuing willful and unreasonable refusal by the Executive to
perform the Executive's duties or responsibilities (unless significantly
changed without the Executive's consent).
(e) Change in Control of the Company. For purposes of this
Agreement, a "Change in Control of the Company" shall mean a change in
control of a nature that would be required to be reported in response to
Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Act.
Without limiting the inclusiveness of the definition in the preceding
sentence, a Change in Control of the Company shall be deemed to have
occurred if:
(i) any Person (other than any employee benefit plan of the
Company or of any subsidiary of the Company, any Person
organized, appointed or established pursuant to the terms of any
such benefit plan or any trustee, administrator or fiduciary of
such a plan) is or becomes the Beneficial Owner of securities of
the Company representing at least 30% of the combined voting
power of the Company's then outstanding securities,
(ii) one-half or more of the members of the Board are not
Continuing Directors;
(iii) there shall be consummated (x) any merger of the
Company or share exchange involving the Company in which the
Company is not the continuing or surviving corporation or
pursuant to which shares of the Company's Common Stock would be
converted into cash, securities or other property, other than a
merger of the Company in which each of the holders of the
Company's Common Stock immediately prior to the merger have the
same proportionate ownership of common stock of the surviving
corporation immediately after the merger, or (y) any sale,
lease, exchange or other transfer (in one transaction or a
series of related transactions) of all, or substantially all, of
the assets of the Company, or
(iv) the shareholders of the Company approve any plan or
proposal for the liquidation or dissolution of the Company.
(f) Code. For purposes of this Agreement, the term "Code"
means the Internal Revenue Code of 1986, including any amendments thereto
or successor tax codes thereof.
(g) Continuing Director. For purposes of this Agreement, the
term "Continuing Director" means any member of the Board of Directors of
the Company who was a member of such Board on February 1, 1994, and any
successor of a Continuing Director who is recommended to succeed a
Continuing Director by a majority of the Continuing Directors then on such
Board.
(h) Covered Termination. Subject to Section 2(b) hereof, for
purposes of this Agreement, the term "Covered Termination" means any
termination of the Executive's employment where the Termination Date is
any date prior to the end of the Employment Period.
(i) Employment Period. For purposes of this Agreement, the
term "Employment Period" means a period commencing on the date of a Change
in Control of the Company, and ending at 11:59 p.m. Central Time on the
earlier of the fifth anniversary of such date or the Executive's Normal
Retirement Date.
(j) Good Reason. For purposes of this Agreement, the Executive
shall have a "Good Reason" for termination of employment in connection
with a Change in Control of the Company in the event of:
(i) any breach of this Agreement by the Company, including
specifically any breach by the Company of its agreements
contained in Sections 4, 5 or 6 hereof;
(ii) the removal of the Executive from, or any failure to
reelect or reappoint the Executive to, any of the positions held
with the Company or the Employer on the date of the Change in
Control of the Company or any other positions with the Company
or the Employer to which the Executive shall thereafter be
elected, appointed or assigned, except in the event that such
removal or failure to reelect or reappoint relates to the
termination by the Company of the Executive's employment for
Cause or by reason of disability pursuant to Section 12 hereof;
(iii) a good faith determination by the Executive that
there has been a significant adverse change, without the
Executive's written consent, in the Executive's working
conditions or status with the Company or the Employer from such
working conditions or status in effect immediately prior to the
Change in Control of the Company, including but not limited to
(A) a significant change in the nature or scope of the
Executive's authority, powers, functions, duties or
responsibilities, or (B) a significant reduction in the level of
support services, staff, secretarial and other assistance,
office space and accoutrements; or
(iv) failure by the Company to obtain the Agreement
referred to in Section 17(a) hereof as provided therein; or
(v) any voluntary termination of employment by the
Executive where the Notice of Termination is delivered during
the 30 days following the first anniversary of the Change in
Control of the Company.
(k) Normal Retirement Date. For purposes of this Agreement,
the term "Normal Retirement Date" means "Normal Retirement Date" as
defined in the Wisconsin Power and Light Company Retirement Plan, or any
successor plan, as in effect on the date of the Change in Control of the
Company.
(l) Person. For purposes of this Agreement, the term "Person"
shall mean any individual, firm, partnership, corporation or other entity,
including any successor (by merger or otherwise) of such entity, or a
group of any of the foregoing acting in concert.
(m) Termination Date. For purposes of this Agreement, except
as otherwise provided in Section 10(b) and Section 17(a) hereof, the term
"Termination Date" means (i) if the Executive's employment is terminated
by the Executive's death, the date of death; (ii) if the Executive's
employment is terminated by reason of voluntary early retirement, as
agreed in writing by the Company and the Executive, the date of such early
retirement which is set forth in such written agreement; (iii) if the
Executive's employment is terminated for purposes of this Agreement by
reason of disability pursuant to Section 12 hereof, the earlier of thirty
days after the Notice of Termination is given or one day prior to the end
of the Employment Period; (iv) if the Executive's employment is terminated
by the Executive voluntarily (other than for Good Reason), the date the
Notice of Termination is given; and (v) if the Executive's employment is
terminated by the Company (other than by reason of disability pursuant to
Section 12 hereof) or by the Executive for Good Reason, the earlier of
thirty days after the Notice of Termination is given or one day prior to
the end of the Employment Period. Notwithstanding the foregoing,
(A) If termination is for Cause pursuant to Section 1(d)(iii)
of this Agreement and if the Executive has cured the conduct constituting
such Cause as described by the Company in its Notice of Termination within
such thirty day or shorter period, then the Executive's employment
hereunder shall continue as if the Company had not delivered its Notice of
Termination.
(B) If the Executive shall in good faith give a Notice of
Termination for Good Reason and the Company notifies the Executive that a
dispute exists concerning the termination within the fifteen day period
following receipt thereof, then the Executive may elect to continue his
employment during such dispute and the Termination Date shall be
determined under this paragraph. If the Executive so elects and it is
thereafter determined that Good Reason did exist, the Termination Date
shall be the earliest of (l) the date on which the dispute is finally
determined, either (x) by mutual written agreement of the parties or (y)
in accordance with Section 22 hereof, (2) the date of the Executive's
death or (3) one day prior to the end of the Employment Period. If the
Executive so elects and it is thereafter determined that Good Reason did
not exist, then the employment of the Executive hereunder shall continue
after such determination as if the Executive had not delivered the Notice
of Termination asserting Good Reason and there shall be no Termination
Date arising out of such Notice. In either case, this Agreement
continues, until the Termination Date, if any, as if the Executive had not
delivered the Notice of Termination except that, if it is finally
determined that Good Reason did exist, the Executive shall in no case be
denied the benefits described in Sections 8(b) and 9 hereof (including a
Termination Payment) based on events occurring after the Executive
delivered his Notice of Termination.
(C) If an opinion is required to be delivered pursuant to
Section 9(b)(ii) hereof and such opinion shall not have been delivered,
the Termination Date shall be the earlier of the date on which such
opinion is delivered or one day prior to the end of the Employment Period.
(D) Except as provided in Paragraph (B) above, if the party
receiving the Notice of Termination notifies the other party that a
dispute exists concerning the termination within the appropriate period
following receipt thereof and it is finally determined that the reason
asserted in such Notice of Termination did not exist, then (1) if such
Notice was delivered by the Executive, the Executive will be deemed to
have voluntarily terminated his employment and the Termination Date shall
be the earlier of the date fifteen days after the Notice of Termination is
given or one day prior to the end of the Employment Period and (2) if
delivered by the Company, the Company will be deemed to have terminated
the Executive other than by reason of death, disability or Cause.
2. Termination or Cancellation Prior to Change in Control.
(a) Subject to Subsection 2(b) hereof, the Company (and the
Employer) and the Executive shall each retain the right to terminate the
employment of the Executive at any time prior to a Change in Control of
the Company. Subject to Subsection 2(b) hereof, in the event the
Executive's employment is terminated prior to a Change in Control of the
Company, this Agreement shall be terminated and cancelled and of no
further force and effect, and any and all rights and obligations of the
parties hereunder shall cease.
(b) Anything in this Agreement to the contrary notwithstanding,
if a Change in Control of the Company occurs and if the Executive's
employment with the Company or a subsidiary of the Company is terminated
(other than a termination due to the Executive's death or as a result of
the Executive's disability) during the period of 180 days prior to the
date on which the Change in Control of the Company occurs, and if it is
reasonably demonstrated by the Executive that such termination of
employment (i) was at the request of a third party who has taken steps
reasonably calculated to effect a Change in Control of the Company or (ii)
otherwise arose in connection with or in anticipation of a Change in
Control of the Company, then for all purposes of this Agreement such
termination of employment shall be deemed a "Covered Termination."
3. Employment Period. If a Change in Control of the Company
occurs when the Executive is employed by the Company or a subsidiary of
the Company, the Company will, or will cause the Employer to, continue
thereafter to employ the Executive during the Employment Period, and the
Executive will remain in the employ of the Employer in accordance with and
subject to the terms and provisions of this Agreement. Any termination of
the Executive's employment during the Employment Period, whether by the
Company or the Employer, shall be deemed a termination by the Company for
purposes of this Agreement.
4. Duties. During the Employment Period, the Executive shall,
in the same capacities and positions held by the Executive at the time of
the Change in Control of the Company or in such other capacities and
positions as may be agreed to by the Company and the Executive in writing,
devote the Executive's best efforts and all of the Executive's business
time, attention and skill to the business and affairs of the Employer, as
such business and affairs now exist and as they may hereafter be
conducted. The services which are to be performed by the Executive
hereunder are to be rendered in the same metropolitan area in which the
Executive was employed at the time of such Change in Control of the
Company, or in such other place or places as shall be mutually agreed upon
in writing by the Executive and the Company from time to time. Without
the Executive's consent the Executive shall not be required to be absent
from such metropolitan area more than 45 days in any fiscal year of the
Company.
5. Compensation. During the Employment Period, the Executive
shall be compensated as follows:
(a) The Executive shall receive, at reasonable intervals (but
not less often than monthly) and in accordance with such standard policies
as may be in effect immediately prior to the Change in Control of the
Company, an annual base salary in cash equivalent of not less than the
Executive's annual base salary as in effect immediately prior to the
Change in Control of the Company (which base salary shall, unless
otherwise agreed in writing by the Executive, include the current receipt
by the Executive of any amounts which, prior to the Change in Control of
the Company, the Executive had elected to defer, whether such compensation
is deferred under Section 401(k) of the Code or otherwise), subject to
adjustment as hereinafter provided.
(b) The Executive shall receive fringe benefits at least equal
in value to those provided for the Executive immediately prior to the
Change in Control of the Company, and shall be reimbursed, at such
intervals and in accordance with such standard policies as may be in
effect immediately prior to the Change in Control of the Company, for any
and all monies advanced in connection with the Executive's employment for
reasonable and necessary expenses incurred by the Executive on behalf of
the Company, including travel expenses.
(c) The Executive shall be included, to the extent eligible
thereunder (which eligibility shall not be conditioned on the Executive's
salary grade or on any other requirement which excludes persons of
comparable status to the Executive unless such exclusion was in effect for
such plan or an equivalent plan immediately prior to the Change in Control
of the Company), in any and all plans providing benefits for the
Employer's salaried employees in general, including but not limited to
group life insurance, hospitalization, medical, dental, profit sharing and
stock bonus plans; provided, that, in no event shall the aggregate level
of benefits under such plans in which the Executive is included be less
than the aggregate level of benefits under plans of the Company of the
type referred to in this Section 5(c) in which the Executive was
participating immediately prior to the Change in Control of the Company.
(d) The Executive shall annually be entitled to not less than
the amount of paid vacation and not fewer than the number of paid holidays
to which the Executive was entitled annually immediately prior to the
Change in Control of the Company or such greater amount of paid vacation
and number of paid holidays as may be made available annually to other
executives of the Company of comparable status and position to the
Executive.
(e) The Executive shall be included in all plans providing
additional benefits to executives of the Company of comparable status and
position to the Executive, including but not limited to deferred
compensation, split-dollar life insurance, supplemental retirement, stock
option, stock appreciation, stock bonus and similar or comparable plans;
provided, that, in no event shall the aggregate level of benefits under
such plans be less than the aggregate level of benefits under plans of the
Company of the type referred to in this Section 5(e) in which the
Executive was participating immediately prior to the Change in Control of
the Company; and provided, further, that the Company's obligation to
include the Executive in bonus or incentive compensation plans shall be
determined by Subsection 5(f) hereof.
(f) To assure that the Executive will have an opportunity to
earn incentive compensation after a Change in Control of the Company, the
Executive shall be included in a bonus plan of the Company which shall
satisfy the standards described below (such plan, the "Bonus Plan").
Bonuses under the Bonus Plan shall be payable with respect to achieving
such financial or other goals reasonably related to the business of the
Company and the Employer as the Company shall establish (the "Goals"), all
of which Goals shall be attainable, prior to the end of the Employment
Period, with approximately the same degree of probability as the goals
under the Company's bonus plan or plans as in effect immediately prior to
the Change in Control of the Company (whether one or more, the "Company
Bonus Plan") and in view of the Company's existing and projected financial
and business circumstances applicable at the time. The amount of the
bonus (the "Bonus Amount") that the Executive is eligible to earn under
the Bonus Plan shall be no less than the amount of the Executive's maximum
award provided in such Company Bonus Plan (such bonus amount herein
referred to as the "Targeted Bonus"), and in the event the Goals are not
achieved such that the entire Targeted Bonus is not payable, the Bonus
Plan shall provide for a payment of a Bonus Amount equal to a portion of
the Targeted Bonus reasonably related to that portion of the Goals which
were achieved. Payment of the Bonus Amount shall not be affected by any
circumstance occurring subsequent to the end of the Employment Period,
including termination of the Executive's employment.
6. Annual Compensation Adjustments. During the Employment
Period, the Board of Directors of the Company (or an appropriate committee
thereof) will consider and appraise, at least annually, the contributions
of the Executive to the Company, and in accordance with the Company's
practice prior to the Change in Control of the Company, due consideration
shall be given to the upward adjustment of the Executive's base
compensation rate, at least annually, (i) commensurate with increases
generally given to other executives of the Company of comparable status
and position to the Executive, and (ii) as the scope of the Company's
operations or the Executive's duties expand.
7. Termination For Cause or Without Good Reason. If there is
a Covered Termination for Cause or due to the Executive's voluntarily
terminating his employment other than for Good Reason (any such
terminations to be subject to the procedures set forth in Section 13
hereof), then the Executive shall be entitled to receive only Accrued
Benefits pursuant to Section 9(a) hereof.
8. Termination Giving Rise to a Termination Payment. (a) If
there is a Covered Termination by the Executive for Good Reason, or by the
Company other than by reason of (i) death, (ii) disability pursuant to
Section 12 hereof, or (iii) Cause (any such terminations to be subject to
the procedures set forth in Section 13 hereof), then the Executive shall
be entitled to receive, and the Company shall promptly pay, Accrued
Benefits and, in lieu of further base salary for periods following the
Termination Date, as liquidated damages and additional severance pay and
in consideration of the covenant of the Executive set forth in Section
14(a) hereof, the Termination Payment pursuant to Section 9(b) hereof.
(b) If there is a Covered Termination and the Executive is
entitled to Accrued Benefits and the Termination Payment, then the
Executive shall be entitled to the following additional benefits:
(i) The Executive shall receive, at the expense of the
Company, outplacement services, on an individualized basis at a
level of service commensurate with the Executive's status with
the Company immediately prior to the Change in Control of the
Company (or, if higher, immediately prior to the termination of
the Executive's employment), provided by a nationally recognized
executive placement firm selected by the Company; provided that
the cost to the Company of such services shall not exceed 15% of
the Executive's annual base salary in effect immediately prior
to the Change in Control of the Company.
(ii) Until the earlier of the end of the Employment Period
or such time as the Executive has obtained new employment and is
covered by benefits which in the aggregate are at least equal in
value to the following benefits, the Executive shall continue to
be covered, at the expense of the Company, by the same or
equivalent life insurance, hospitalization, medical and dental
coverage as was required hereunder with respect to the Executive
immediately prior to the date the Notice of Termination is
given.
9. Payments Upon Termination.
(a) Accrued Benefits. For purposes of this Agreement, the
Executive's "Accrued Benefits" shall include the following amounts,
payable as described herein: (i) all base salary for the time period
ending with the Termination Date; (ii) reimbursement for any and all
monies advanced in connection with the Executive's employment for
reasonable and necessary expenses incurred by the Executive on behalf of
the Company for the time period ending with the Termination Date; (iii)
any and all other cash earned through the Termination Date and deferred at
the election of the Executive or pursuant to any deferred compensation
plan then in effect; (iv) a lump sum payment of the bonus or incentive
compensation otherwise payable to the Executive with respect to the year
in which termination occurs under all bonus or incentive compensation plan
or plans in which the Executive is a participant; and (v) all other
payments and benefits to which the Executive (or in the event of the
Executive's death, the Executive's surviving spouse or other beneficiary)
may be entitled as compensatory fringe benefits or under the terms of any
benefit plan of the Company, excluding severance payments under any
Company severance policy, practice or agreement in effect immediately
prior to the Change in Control of the Company. Payment of Accrued
Benefits shall be made promptly in accordance with the Company's
prevailing practice with respect to Subsections (i) and (ii) or, with
respect to Subsections (iii), (iv) and (v), pursuant to the terms of the
benefit plan or practice establishing such benefits.
(b) Termination Payment.
(i) Subject to the limits set forth in Subsection 9(b)(ii)
hereof, the Termination Payment shall be an amount equal to (A) the
Executive's annual base salary, as in effect immediately prior to the
Change in Control of the Company, as adjusted upward, from time to time,
pursuant to Section 6 hereof, plus (B) the amount of the average annual
bonus award (determined on an annualized basis for any bonus award paid
for a period of less than one year and excluding any year for which the
Executive did not participate in any bonus plan) paid to the Executive
with respect to the three complete fiscal years preceding the Termination
Date (the aggregate amount set forth in (A) and (B) hereof shall hereafter
be referred to as "Annual Cash Compensation"), times (C) the lesser of (1)
three and (2) the number of years or fractional portion thereof remaining
in the Employment Period determined as of the Termination Date; provided,
however, that such amount shall not be less than the greater of (i) the
amount of the Executive's Annual Cash Compensation or (ii) the severance
benefits to which the Executive would have been entitled under the
Company's severance policies and practices in effect immediately prior to
the Change in Control of the Company. The Termination Payment shall be
paid to the Executive in cash equivalent ten business days after the
Termination Date. Such lump sum payment shall not be reduced by any
present value or similar factor, and the Executive shall not be required
to mitigate the amount of the Termination Payment by securing other
employment or otherwise, nor will such Termination Payment be reduced by
reason of the Executive securing other employment or for any other reason.
The Termination Payment shall be in lieu of, and acceptance by the
Executive of the Termination Payment shall constitute the Executive's
release of any rights of Executive to, any other severance payments under
any Company severance policy, practice or agreement. The Company shall
bear up to $10,000 in the aggregate of fees and expenses of consultants
and/or legal or accounting advisors engaged by the Executive to advise the
Executive as to matters relating to the computation of benefits due and
payable under this Subsection 9(b).
(ii) Notwithstanding any other provision of this Agreement, if any
portion of the Termination Payment or any other payment under this
Agreement, or under any other agreement with or plan of the Company (in
the aggregate, "Total Payments"), would constitute an "excess parachute
payment," then the Total Payments to be made to the Executive shall be
reduced such that the value of the aggregate Total Payments that the
Executive is entitled to receive shall be One Dollar ($1) less than the
maximum amount which the Executive may receive without becoming subject to
the tax imposed by Section 4999 of the Code (or any successor provision)
or which the Company may pay without loss of deduction under Section
280G(a) of the Code (or any successor provision). For purposes of this
Agreement, the terms "excess parachute payment" and "parachute payments"
shall have the meanings assigned to them in Section 280G of the Code (or
any successor provision), and such "parachute payments" shall be valued as
provided therein. Present value for purposes of this Agreement shall be
calculated in accordance with Section 1274(b) (2) of the Code (or any
successor provision). Within forty days following delivery of the Notice
of Termination or notice by the Company to the Executive of its belief
that there is a payment or benefit due the Executive which will result in
an excess parachute payment as defined in Section 280G of the Code (or any
successor provision), the Executive and the Company, at the Company's
expense, shall obtain the opinion (which need not be unqualified) of
nationally recognized tax counsel selected by the Company's independent
auditors and acceptable to the Executive in his sole discretion (which may
be regular outside counsel to the Company), which opinion sets forth (A)
the amount of the Base Period Income, (B) the amount and present value of
Total Payments and (C) the amount and present value of any excess
parachute payments determined without regard to the limitations of this
Subsection 9(b)(ii). As used in this Subsection 9(b)(ii), the term "Base
Period Income" means an amount equal to the Executive's "annualized
includible compensation for the base period" as defined in Section
280G(d)(l) of the Code (or any successor provision). For purposes of such
opinion, the value of any noncash benefits or any deferred payment or
benefit shall be determined by the Company's independent auditors in
accordance with the principles of Sections 280G(d)(3) and (4) of the Code
(or any successor provisions), which determination shall be evidenced in a
certificate of such auditors addressed to the Company and the Executive.
Such opinion shall be dated as of the Termination Date and addressed to
the Company and the Executive and shall be binding upon the Company and
the Executive. If such opinion determines that there would be an excess
parachute payment, the Termination Payment hereunder or any other payment
or benefit determined by such counsel to be includible in Total Payments
shall be reduced or eliminated as specified by the Executive in writing
delivered to the Company within thirty days of his receipt of such opinion
or, if the Executive fails to so notify the Company, then as the Company
shall reasonably determine, so that under the bases of calculations set
forth in such opinion there will be no excess parachute payment. If such
legal counsel so requests in connection with the opinion required by this
Section, the Executive and the Company shall obtain, at the Company's
expense, and the legal counsel may rely on in providing the opinion, the
advice of a firm of recognized executive compensation consultants as to
the reasonableness of any item of compensation to be received by the
Executive. If the provisions of Sections 280G and 4999 of the Code (or
any successor provisions) are repealed without succession, then this
Section 9(b) (ii) shall be of no further force or effect.
(iii) (A) If, notwithstanding the provisions of Subsection (ii) of
this Section 9(b), but subject to paragraph (B), it is ultimately
determined by a court or pursuant to a final determination by the Internal
Revenue Service that any portion of Total Payments is subject to the tax
(the "Excise Tax") imposed by Section 4999 of the Code (or any successor
provision), the Company shall pay to the Executive an additional amount
(the "Gross-Up Payment") such that the net amount retained by the
Executive after deduction of any Excise Tax and any interest charges or
penalties in respect of the imposition of such Excise Tax (but not any
federal, state or local income tax) on the Total Payments, and any
federal, state and local income tax and Excise Tax upon the payment
provided for by this Subsection (iii), shall be equal to the Total
Payments. For purposes of determining the amount of the Gross-Up Payment,
the Executive shall be deemed to pay federal income taxes at the highest
marginal rate of federal income taxation in the calendar year in which the
Gross-Up Payment is to be made and state and local income taxes at the
highest marginal rates of taxation in the state and locality of the
Executive's domicile for income tax purposes on the date the Gross-Up
Payment is made, net of the maximum reduction in federal income taxes
which could be obtained from deduction of such state and local taxes.
(B) If legislation is enacted that would require the Company's
shareholders to approve this Agreement, prior to a Change in Control of
the Company, due solely to the provision contained in paragraph (A) of
this Subsection 9(b)(iii), then
(1) from and after such time as shareholder approval would
be required, until shareholder approval is obtained as required
by such legislation, paragraph (A) shall be of no force and
effect;
(2) the Company and the Executive shall use their best
efforts to consider and agree in writing upon an amendment to
this Subsection 9(b) (iii) such that, as amended, this
Subsection would provide the Executive with the benefits
intended to be afforded to the Executive by paragraph (A)
without requiring shareholder approval; and
(3) at the reasonable request of the Executive, the
Company shall seek shareholder approval of this Agreement at the
next annual meeting of shareholders of the Company.
10. Death. (a) Except as provided in Section 10(b) hereof, in
the event of a Covered Termination due to the Executive's death, the
Executive's estate, heirs and beneficiaries shall receive all the
Executive's Accrued Benefits through the Termination Date.
(b) In the event the Executive dies after a Notice of
Termination is given (i) by the Company or (ii) by the Executive for Good
Reason, the Executive's estate, heirs and beneficiaries shall be entitled
to the benefits described in Section 10(a) hereof and, subject to the
provisions of this Agreement, to such Termination Payment as the Executive
would have been entitled to had the Executive lived. For purposes of this
Subsection 10(b), the Termination Date shall be the earlier of thirty days
following the giving of the Notice of Termination, subject to extension
pursuant to Section 1(m) hereof, or one day prior to the end of the
Employment Period.
11. Retirement. If, during the Employment Period, the
Executive and the Company shall execute an agreement providing for the
early retirement of the Executive from the Company, or the Executive shall
otherwise give notice that he is voluntarily choosing to retire early from
the Company, the Executive shall receive Accrued Benefits through the
Termination Date; provided, that if the Executive's employment is
terminated by the Executive for Good Reason or by the Company other than
by reason of death, disability or Cause and the Executive also, in
connection with such termination, elects voluntary early retirement, the
Executive shall also be entitled to receive a Termination Payment pursuant
to Section 8(a) hereof.
12. Termination for Disability. If, during the Employment
Period, as a result of the Executive's disability due to physical or
mental illness or injury (regardless of whether such illness or injury is
job-related), the Executive shall have been absent from the Executive's
duties hereunder on a full-time basis for a period of six consecutive
months and, within thirty days after the Company notifies the Executive in
writing that it intends to terminate the Executive's employment (which
notice shall not constitute the Notice of Termination contemplated below),
the Executive shall not have returned to the performance of the
Executive's duties hereunder on a full-time basis, the Company may
terminate the Executive's employment for purposes of this Agreement
pursuant to a Notice of Termination given in accordance with Section 13
hereof. If the Executive's employment is terminated on account of the
Executive's disability in accordance with this Section, the Executive
shall receive Accrued Benefits in accordance with Section 9(a) hereof and
shall remain eligible for all benefits provided by any long term
disability programs of the Company in effect at the time of such
termination.
13. Termination Notice and Procedure. Any Covered Termination
by the Company or the Executive (other than a termination of the
Executive's employment that is a Covered Termination by virtue of Section
2(b) hereof) shall be communicated by written Notice of Termination to the
Executive, if such Notice is given by the Company, and to the Company, if
such Notice is given by the Executive, all in accordance with the
following procedures and those set forth in Section 23 hereof:
(a) If such termination is for disability, Cause or Good
Reason, the Notice of Termination shall indicate in reasonable detail the
facts and circumstances alleged to provide a basis for such termination.
(b) Any Notice of Termination by the Company shall have been
approved, prior to the giving thereof to the Executive, by a resolution
duly adopted by a majority of the directors of the Company (or any
successor corporation) then in office.
(c) If the Notice is given by the Executive for Good Reason,
the Executive may cease performing his duties hereunder on or after the
date fifteen days after the delivery of Notice of Termination and shall in
any event cease employment on the Termination Date. If the Notice is
given by the Company, then the Executive may cease performing his duties
hereunder on the date of receipt of the Notice of Termination, subject to
the Executive's rights hereunder.
(d) The Executive shall have thirty days, or such longer period
as the Company may determine to be appropriate, to cure any conduct or
act, if curable, alleged to provide grounds for termination of the
Executive's employment for Cause under this Agreement pursuant to
Subsection 1(d) (iii) hereof.
(e) The recipient of any Notice of Termination shall personally
deliver or mail in accordance with Section 23 hereof written notice of any
dispute relating to such Notice of Termination to the party giving such
Notice within fifteen days after receipt thereof; provided, however, that
if the Executive's conduct or act alleged to provide grounds for
termination by the Company for Cause is curable, then such period shall be
thirty days. After the expiration of such period, the contents of the
Notice of Termination shall become final and not subject to dispute.
14. Further Obligations of the Executive.
(a) Competition. The Executive agrees that, in the event of
any Covered Termination where the Executive is entitled to Accrued
Benefits and the Termination Payment, the Executive shall not, for a
period expiring one year after the Termination Date, without the prior
written approval of the Company's Board of Directors, participate in the
management of, be employed by or own any business enterprise at a location
within the United States that engages in substantial competition with the
Company or its subsidiaries, where such enterprise's revenues from any
competitive activities amount to 10% or more of such enterprise's net
revenues and sales for its most recently completed fiscal year; provided,
however, that nothing in this Section 14(a) shall prohibit the Executive
from owning stock or other securities of a competitor amounting to less
than five percent of the outstanding capital stock of such competitor.
(b) Confidentiality. During and following the Executive's
employment by the Company, the Executive shall hold in confidence and not
directly or indirectly disclose or use or copy or make lists of any
confidential information or proprietary data of the Company (including
that of the Employer), except to the extent authorized in writing by the
Board of Directors of the Company or required by any court or
administrative agency, other than to an employee of the Company or a
person to whom disclosure is reasonably necessary or appropriate in
connection with the performance by the Executive of duties as an executive
of the Company. Confidential information shall not include any
information known generally to the public or any information of a type not
otherwise considered confidential by persons engaged in the same business
or a business similar to that of the Company. All records, files,
documents and materials, or copies thereof, relating to the business of
the Company which the Executive shall prepare, or use, or come into
contact with, shall be and remain the sole property of the Company and
shall be promptly returned to the Company upon termination of employment
with the Company.
15. Expenses and Interest. If, after a Change in Control of
the Company, (i) a dispute arises with respect to the enforcement of the
Executive's rights under this Agreement or (ii) any legal or arbitration
proceeding shall be brought to enforce or interpret any provision
contained herein or to recover damages for breach hereof, in either case
so long as the Executive is not acting in bad faith, the Executive shall
recover from the Company any reasonable attorneys' fees and necessary
costs and disbursements incurred as a result of such dispute, legal or
arbitration proceeding ("Expenses"), and prejudgment interest on any money
judgment or arbitration award obtained by the Executive calculated at the
rate of interest announced by Firstar Bank Milwaukee, National
Association, Milwaukee, Wisconsin, from time to time as its prime or base
lending rate from the date that payments to him should have been made
under this Agreement. Within ten days after the Executive's written
request therefor, the Company shall pay to the Executive, or such other
person or entity as the Executive may designate in writing to the Company,
the Executive's reasonable Expenses in advance of the final disposition or
conclusion of any such dispute, legal or arbitration proceeding.
16. Payment Obligations Absolute. The Company's obligation
during and after the Employment Period to pay the Executive the amounts
and to make the benefit and other arrangements provided herein shall be
absolute and unconditional and shall not be affected by any circumstances,
including, without limitation, any setoff, counterclaim, recoupment,
defense or other right which the Company may have against him or anyone
else. Except as provided in Section 15 of this Agreement, all amounts
payable by the Company hereunder shall be paid without notice or demand.
Each and every payment made hereunder by the Company shall be final, and
the Company will not seek to recover all or any part of such payment from
the Executive, or from whomsoever may be entitled thereto, for any reason
whatsoever.
17. Successors. (a) If the Company sells, assigns or transfers
all or substantially all of its business and assets to any Person or if
the Company merges into or consolidates or otherwise combines (where the
Company does not survive such combination) with any Person (any such
event, a "Sale of Business"), then the Company shall assign all of its
right, title and interest in this Agreement as of the date of such event
to such Person, and the Company shall cause such Person, by written
agreement in form and substance reasonably satisfactory to the Executive,
to expressly assume and agree to perform from and after the date of such
assignment all of the terms, conditions and provisions imposed by this
Agreement upon the Company. Failure of the Company to obtain such
agreement prior to the effective date of such Sale of Business shall be a
breach of this Agreement constituting "Good Reason" hereunder, except that
for purposes of implementing the foregoing the date upon which such Sale
of Business becomes effective shall be deemed the Termination Date. In
case of such assignment by the Company and of assumption and agreement by
such Person, as used in this Agreement, "Company" shall thereafter mean
such Person which executes and delivers the agreement provided for in this
Section 18 or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law, and this Agreement shall
inure to the benefit of, and be enforceable by, such Person. The
Executive shall, in his discretion, be entitled to proceed against any or
all of such Persons, any Person which theretofore was such a successor to
the Company (as defined in the first paragraph of this Agreement) and the
Company (as so defined) in any action to enforce any rights of the
Executive hereunder. Except as provided in this Subsection, this
Agreement shall not be assignable by the Company. This Agreement shall
not be terminated by the voluntary or involuntary dissolution of the
Company.
(b) This Agreement and all rights of the Executive shall inure
to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, heirs and beneficiaries. All
amounts payable to the Executive under Sections 7, 8, 9, 10, 11, 12 and 15
hereof if the Executive had lived shall be paid, in the event of the
Executive's death, to the Executive's estate, heirs and representatives;
provided, however, that the foregoing shall not be construed to modify any
terms of any benefit plan of the Company, as such terms are in effect on
the date of the Change in Control of the Company, that expressly govern
benefits under such plan in the event of the Executive's death.
18. Severability. The provisions of this Agreement shall be
regarded as divisible, and if any of said provisions or any part hereof
are declared invalid or unenforceable by a court of competent
jurisdiction, the validity and enforceability of the remainder of such
provisions or parts hereof and the applicability thereof shall not be
affected thereby.
19. Amendment. This Agreement may not be amended or modified
at any time except by written instrument executed by the Company and the
Executive.
20. Withholding. The Company shall be entitled to withhold
from amounts to be paid to the Executive hereunder any federal, state or
local withholding or other taxes or charges which it is from time to time
required to withhold; provided, that the amount so withheld shall not
exceed the minimum amount required to be withheld by law. The Company
shall be entitled to rely on an opinion of nationally recognized tax
counsel if any question as to the amount or requirement of any such
withholding shall arise.
21. Certain Rules of Construction. No party shall be
considered as being responsible for the drafting of this Agreement for the
purpose of applying any rule construing ambiguities against the drafter or
otherwise. No draft of this Agreement shall be taken into account in
construing this Agreement. Any provision of this Agreement which requires
an agreement in writing shall be deemed to require that the writing in
question be signed by the Executive and an authorized representative of
the Company.
22. Governing Law; Resolution of Disputes. This Agreement and
the rights and obligations hereunder shall be governed by and construed in
accordance with the laws of the State of Wisconsin. Any dispute arising
out of this Agreement shall, at the Executive's election, be determined by
arbitration under the rules of the American Arbitration Association then
in effect (in which case both parties shall be bound by the arbitration
award) or by litigation. Whether the dispute is to be settled by
arbitration or litigation, the venue for the arbitration or litigation
shall be Madison, Wisconsin or, at the Executive's election, if the
Executive is no longer residing or working in the Madison, Wisconsin
metropolitan area, in the judicial district encompassing the city in which
the Executive resides; provided, that, if the Executive is not then
residing in the United States, the election of the Executive with respect
to such venue shall be either Madison, Wisconsin or in the judicial
district encompassing that city in the United States among the thirty
cities having the largest population (as determined by the most recent
United States Census data available at the Termination Date) which is
closest to the Executive's residence. The parties consent to personal
jurisdiction in each trial court in the selected venue having subject
matter jurisdiction notwithstanding their residence or situs, and each
party irrevocably consents to service of process in the manner provided
hereunder for the giving of notices.
23. Notice. Notices given pursuant to this Agreement shall be
in writing and, except as otherwise provided by Section 13(d) hereof,
shall be deemed given when actually received by the Executive or actually
received by the Company's Secretary or any officer of the Company other
than the Executive. If mailed, such notices shall be mailed by United
States registered or certified mail, return receipt requested, addressee
only, postage prepaid, if to the Company, to WPL Holdings, Inc.,
Attention: Secretary (or President, if the Executive is then Secretary),
222 West Washington Avenue, P.O. Box 2568, Madison, Wisconsin 53701-2568,
or if to the Executive, at the address set forth below the Executive's
signature to this Agreement, or to such other address as the party to be
notified shall have theretofore given to the other party in writing.
24. No Waiver. No waiver by either party at any time of any
breach by the other party of, or compliance with, any condition or
provision of this Agreement to be performed by the other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the
same time or any prior or subsequent time.
25. Headings. The headings herein contained are for reference
only and shall not affect the meaning or interpretation of any provision
of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the day and year first above written.
WPL HOLDINGS, INC.
By: /s/ Edward M. Gleason
Its: Vice President, Treasurer and
Corporate Secretary
Attest: /s/ Steven F. Price
Its: Assistant Corporate Secretary
and Assistant Treasurer
EXECUTIVE:
/s/ Erroll B. Davis, Jr. (SEAL)
Erroll B. Davis, Jr.
Address: 7829 Noll Valley Road
Verona, Wisconsin 53593
KEY EXECUTIVE EMPLOYMENT AND SEVERANCE AGREEMENT
THIS AGREEMENT, made and entered into as of the ____ day of
___________, by and between WPL Holdings, Inc., a Wisconsin corporation
(hereinafter referred to as the "Company"), and _____________________
(hereinafter referred to as "Executive").
W I T N E S S E T H
WHEREAS, the Executive is employed by the Company and/or a
subsidiary of the Company (the "Employer") in a key executive capacity and
the Executive's services are valuable to the conduct of the business of
the Company;
WHEREAS, the Executive possesses intimate knowledge of the
business and affairs of the Company and has acquired certain confidential
information and data with respect to the Company;
WHEREAS, the Company desires to insure, insofar as possible,
that it will continue to have the benefit of the Executive's services and
to protect its confidential information and goodwill;
WHEREAS, the Company recognizes that circumstances may arise in
which a change in control of the Company occurs, through acquisition or
otherwise, thereby causing uncertainty about the Executive's future
employment with the Employer without regard to the Executive's competence
or past contributions which uncertainty may result in the loss of valuable
services of the Executive to the detriment of the Company and its
shareholders, and the Company and the Executive wish to provide reasonable
security to the Executive against changes in the Executive's relationship
with the Company in the event of any such change in control;
WHEREAS, the Company and the Executive are desirous that any
proposal for a change in control or acquisition of the Company will be
considered by the Executive objectively and with reference only to the
best interests of the Company and its shareholders; and
WHEREAS, the Executive will be in a better position to consider
the Company's best interests if the Executive is afforded reasonable
security, as provided in this Agreement, against altered conditions of
employment which could result from any such change in control or
acquisition.
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants and agreements hereinafter set forth, the parties hereto
mutually covenant and agree as follows:
1. Definitions.
(a) Act. For purposes of this Agreement, the term "Act" means
the Securities Exchange Act of 1934, as amended.
(b) Affiliate and Associate. For purposes of this Agreement,
the terms "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule l2b-2 of the General Rules and Regulations
of the Act.
(c) Beneficial Owner. For purposes of this Agreement, a Person
shall be deemed to be the "Beneficial Owner" of any securities:
(i) which such Person or any of such Person's Affiliates
or Associates has the right to acquire (whether such right is
exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding, or upon
the exercise of conversion rights, exchange rights, rights,
warrants or options, or otherwise; provided, however, that a
Person shall not be deemed the Beneficial Owner of, or to
beneficially own, (A) securities tendered pursuant to a tender
or exchange offer made by or on behalf of such Person or any of
such Person's Affiliates or Associates until such tendered
securities are accepted for purchase, or (B) securities issuable
upon exercise of Rights issued pursuant to the terms of the
Company's Rights Agreement with Morgan Shareholder Services
Trust Company, dated as of February 22, 1989, as amended from
time to time (or any successor to such Rights Agreement), at any
time before the issuance of such securities;
(ii) which such Person or any of such Person's Affiliates
or Associates, directly or indirectly, has the right to vote or
dispose of or has "beneficial ownership" of (as determined
pursuant to Rule l3d-3 of the General Rules and Regulations
under the Act), including pursuant to any agreement, arrangement
or understanding; provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, any
security under this subparagraph (ii) as a result of an
agreement, arrangement or understanding to vote such security if
the agreement, arrangement or understanding: (A) arises solely
from a revocable proxy or consent given to such Person in
response to a public proxy or consent solicitation made pursuant
to, and in accordance with, the applicable rules and regulations
under the Act and (B) is not also then reportable on a Schedule
l3D under the Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly,
by any other Person with which such Person or any of such
Person's Affiliates or Associates has any agreement, arrangement
or understanding for the purpose of acquiring, holding, voting
(except pursuant to a revocable proxy as described in Subsection
1(c) (ii) above) or disposing of any voting securities of the
Company.
(d) Cause. "Cause" for termination by the Company of the
Executive's employment in connection with a Change of Control of the
Company shall, for purposes of this Agreement, be limited to (i) the
engaging by the Executive in intentional conduct not taken in good faith
which has caused demonstrable and serious financial injury to the Company,
as evidenced by a determination in a binding and final judgment, order or
decree of a court or administrative agency of competent jurisdiction, in
effect after exhaustion or lapse of all rights of appeal, in an action,
suit or proceeding, whether civil, criminal, administrative or
investigative; (ii) conviction of a felony (as evidenced by binding and
final judgment, order or decree of a court of competent jurisdiction, in
effect after exhaustion of all rights of appeal) which substantially
impairs the Executive's ability to perform his duties or responsibilities;
and (iii) continuing willful and unreasonable refusal by the Executive to
perform the Executive's duties or responsibilities (unless significantly
changed without the Executive's consent).
(e) Change in Control of the Company. For purposes of this
Agreement, a "Change in Control of the Company" shall mean a change in
control of a nature that would be required to be reported in response to
Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Act.
Without limiting the inclusiveness of the definition in the preceding
sentence, a Change in Control of the Company shall be deemed to have
occurred if:
(i) any Person (other than any employee benefit plan of the
Company or of any subsidiary of the Company, any Person
organized, appointed or established pursuant to the terms of any
such benefit plan or any trustee, administrator or fiduciary of
such a plan) is or becomes the Beneficial Owner of securities of
the Company representing at least 30% of the combined voting
power of the Company's then outstanding securities,
(ii) one-half or more of the members of the Board are not
Continuing Directors;
(iii) there shall be consummated (x) any merger of the
Company or share exchange involving the Company in which the
Company is not the continuing or surviving corporation or
pursuant to which shares of the Company's Common Stock would be
converted into cash, securities or other property, other than a
merger of the Company in which each of the holders of the
Company's Common Stock immediately prior to the merger have the
same proportionate ownership of common stock of the surviving
corporation immediately after the merger, or (y) any sale,
lease, exchange or other transfer (in one transaction or a
series of related transactions) of all, or substantially all, of
the assets of the Company, or
(iv) the shareholders of the Company approve any plan or
proposal for the liquidation or dissolution of the Company.
(f) Code. For purposes of this Agreement, the term "Code"
means the Internal Revenue Code of 1986, including any amendments thereto
or successor tax codes thereof.
(g) Continuing Director. For purposes of this Agreement, the
term "Continuing Director" means any member of the Board of Directors of
the Company who was a member of such Board on February 1, 1994, and any
successor of a Continuing Director who is recommended to succeed a
Continuing Director by a majority of the Continuing Directors then on such
Board.
(h) Covered Termination. Subject to Section 2(b) hereof, for
purposes of this Agreement, the term "Covered Termination" means any
termination of the Executive's employment where the Termination Date is
any date prior to the end of the Employment Period.
(i) Employment Period. For purposes of this Agreement, the
term "Employment Period" means a period commencing on the date of a Change
in Control of the Company, and ending at 11:59 p.m. Central Time on the
earlier of the fifth anniversary of such date or the Executive's Normal
Retirement Date.
(j) Good Reason. For purposes of this Agreement, the Executive
shall have a "Good Reason" for termination of employment in connection
with a Change in Control of the Company in the event of:
(i) any breach of this Agreement by the Company, including
specifically any breach by the Company of its agreements
contained in Sections 4, 5 or 6 hereof;
(ii) the removal of the Executive from, or any failure to
reelect or reappoint the Executive to, any of the positions held
with the Company or the Employer on the date of the Change in
Control of the Company or any other positions with the Company
or the Employer to which the Executive shall thereafter be
elected, appointed or assigned, except in the event that such
removal or failure to reelect or reappoint relates to the
termination by the Company of the Executive's employment for
Cause or by reason of disability pursuant to Section 12 hereof;
(iii) a good faith determination by the Executive that
there has been a significant adverse change, without the
Executive's written consent, in the Executive's working
conditions or status with the Company or the Employer from such
working conditions or status in effect immediately prior to the
Change in Control of the Company, including but not limited to
(A) a significant change in the nature or scope of the
Executive's authority, powers, functions, duties or
responsibilities, or (B) a significant reduction in the level of
support services, staff, secretarial and other assistance,
office space and accoutrements; or
(iv) failure by the Company to obtain the Agreement
referred to in Section 17(a) hereof as provided therein.
(k) Normal Retirement Date. For purposes of this Agreement,
the term "Normal Retirement Date" means "Normal Retirement Date" as
defined in the Wisconsin Power and Light Company Retirement Plan, or any
successor plan, as in effect on the date of the Change in Control of the
Company.
(l) Person. For purposes of this Agreement, the term "Person"
shall mean any individual, firm, partnership, corporation or other entity,
including any successor (by merger or otherwise) of such entity, or a
group of any of the foregoing acting in concert.
(m) Termination Date. For purposes of this Agreement, except
as otherwise provided in Section 10(b) and Section 17(a) hereof, the term
"Termination Date" means (i) if the Executive's employment is terminated
by the Executive's death, the date of death; (ii) if the Executive's
employment is terminated by reason of voluntary early retirement, as
agreed in writing by the Company and the Executive, the date of such early
retirement which is set forth in such written agreement; (iii) if the
Executive's employment is terminated for purposes of this Agreement by
reason of disability pursuant to Section 12 hereof, the earlier of thirty
days after the Notice of Termination is given or one day prior to the end
of the Employment Period; (iv) if the Executive's employment is terminated
by the Executive voluntarily (other than for Good Reason), the date the
Notice of Termination is given; and (v) if the Executive's employment is
terminated by the Company (other than by reason of disability pursuant to
Section 12 hereof) or by the Executive for Good Reason, the earlier of
thirty days after the Notice of Termination is given or one day prior to
the end of the Employment Period. Notwithstanding the foregoing,
(A) If termination is for Cause pursuant to Section 1(d)(iii)
of this Agreement and if the Executive has cured the conduct constituting
such Cause as described by the Company in its Notice of Termination within
such thirty day or shorter period, then the Executive's employment
hereunder shall continue as if the Company had not delivered its Notice of
Termination.
(B) If the Executive shall in good faith give a Notice of
Termination for Good Reason and the Company notifies the Executive that a
dispute exists concerning the termination within the fifteen day period
following receipt thereof, then the Executive may elect to continue his
employment during such dispute and the Termination Date shall be
determined under this paragraph. If the Executive so elects and it is
thereafter determined that Good Reason did exist, the Termination Date
shall be the earliest of (l) the date on which the dispute is finally
determined, either (x) by mutual written agreement of the parties or (y)
in accordance with Section 22 hereof, (2) the date of the Executive's
death or (3) one day prior to the end of the Employment Period. If the
Executive so elects and it is thereafter determined that Good Reason did
not exist, then the employment of the Executive hereunder shall continue
after such determination as if the Executive had not delivered the Notice
of Termination asserting Good Reason and there shall be no Termination
Date arising out of such Notice. In either case, this Agreement
continues, until the Termination Date, if any, as if the Executive had not
delivered the Notice of Termination except that, if it is finally
determined that Good Reason did exist, the Executive shall in no case be
denied the benefits described in Sections 8(b) and 9 hereof (including a
Termination Payment) based on events occurring after the Executive
delivered his Notice of Termination.
(C) If an opinion is required to be delivered pursuant to
Section 9(b)(ii) hereof and such opinion shall not have been delivered,
the Termination Date shall be the earlier of the date on which such
opinion is delivered or one day prior to the end of the Employment Period.
(D) Except as provided in Paragraph (B) above, if the party
receiving the Notice of Termination notifies the other party that a
dispute exists concerning the termination within the appropriate period
following receipt thereof and it is finally determined that the reason
asserted in such Notice of Termination did not exist, then (1) if such
Notice was delivered by the Executive, the Executive will be deemed to
have voluntarily terminated his employment and the Termination Date shall
be the earlier of the date fifteen days after the Notice of Termination is
given or one day prior to the end of the Employment Period and (2) if
delivered by the Company, the Company will be deemed to have terminated
the Executive other than by reason of death, disability or Cause.
2. Termination or Cancellation Prior to Change in Control.
(a) Subject to Subsection 2(b) hereof, the Company (and the
Employer) and the Executive shall each retain the right to terminate the
employment of the Executive at any time prior to a Change in Control of
the Company. Subject to Subsection 2(b) hereof, in the event the
Executive's employment is terminated prior to a Change in Control of the
Company, this Agreement shall be terminated and cancelled and of no
further force and effect, and any and all rights and obligations of the
parties hereunder shall cease.
(b) Anything in this Agreement to the contrary notwithstanding,
if a Change in Control of the Company occurs and if the Executive's
employment with the Company or a subsidiary of the Company is terminated
(other than a termination due to the Executive's death or as a result of
the Executive's disability) during the period of 180 days prior to the
date on which the Change in Control of the Company occurs, and if it is
reasonably demonstrated by the Executive that such termination of
employment (i) was at the request of a third party who has taken steps
reasonably calculated to effect a Change in Control of the Company or (ii)
otherwise arose in connection with or in anticipation of a Change in
Control of the Company, then for all purposes of this Agreement such
termination of employment shall be deemed a "Covered Termination."
3. Employment Period. If a Change in Control of the Company
occurs when the Executive is employed by the Company or a subsidiary of
the Company, the Company will, or will cause the Employer to, continue
thereafter to employ the Executive during the Employment Period, and the
Executive will remain in the employ of the Employer in accordance with and
subject to the terms and provisions of this Agreement. Any termination of
the Executive's employment during the Employment Period, whether by the
Company or the Employer, shall be deemed a termination by the Company for
purposes of this Agreement.
4. Duties. During the Employment Period, the Executive shall,
in the same capacities and positions held by the Executive at the time of
the Change in Control of the Company or in such other capacities and
positions as may be agreed to by the Company and the Executive in writing,
devote the Executive's best efforts and all of the Executive's business
time, attention and skill to the business and affairs of the Employer, as
such business and affairs now exist and as they may hereafter be
conducted. The services which are to be performed by the Executive
hereunder are to be rendered in the same metropolitan area in which the
Executive was employed at the time of such Change in Control of the
Company, or in such other place or places as shall be mutually agreed upon
in writing by the Executive and the Company from time to time. Without
the Executive's consent the Executive shall not be required to be absent
from such metropolitan area more than 45 days in any fiscal year of the
Company.
5. Compensation. During the Employment Period, the Executive
shall be compensated as follows:
(a) The Executive shall receive, at reasonable intervals (but
not less often than monthly) and in accordance with such standard policies
as may be in effect immediately prior to the Change in Control of the
Company, an annual base salary in cash equivalent of not less than the
Executive's annual base salary as in effect immediately prior to the
Change in Control of the Company (which base salary shall, unless
otherwise agreed in writing by the Executive, include the current receipt
by the Executive of any amounts which, prior to the Change in Control of
the Company, the Executive had elected to defer, whether such compensation
is deferred under Section 401(k) of the Code or otherwise), subject to
adjustment as hereinafter provided.
(b) The Executive shall receive fringe benefits at least equal
in value to those provided for the Executive immediately prior to the
Change in Control of the Company, and shall be reimbursed, at such
intervals and in accordance with such standard policies as may be in
effect immediately prior to the Change in Control of the Company, for any
and all monies advanced in connection with the Executive's employment for
reasonable and necessary expenses incurred by the Executive on behalf of
the Company, including travel expenses.
(c) The Executive shall be included, to the extent eligible
thereunder (which eligibility shall not be conditioned on the Executive's
salary grade or on any other requirement which excludes persons of
comparable status to the Executive unless such exclusion was in effect for
such plan or an equivalent plan immediately prior to the Change in Control
of the Company), in any and all plans providing benefits for the
Employer's salaried employees in general, including but not limited to
group life insurance, hospitalization, medical, dental, profit sharing and
stock bonus plans; provided, that, in no event shall the aggregate level
of benefits under such plans in which the Executive is included be less
than the aggregate level of benefits under plans of the Company of the
type referred to in this Section 5(c) in which the Executive was
participating immediately prior to the Change in Control of the Company.
(d) The Executive shall annually be entitled to not less than
the amount of paid vacation and not fewer than the number of paid holidays
to which the Executive was entitled annually immediately prior to the
Change in Control of the Company or such greater amount of paid vacation
and number of paid holidays as may be made available annually to other
executives of the Company of comparable status and position to the
Executive.
(e) The Executive shall be included in all plans providing
additional benefits to executives of the Company of comparable status and
position to the Executive, including but not limited to deferred
compensation, split-dollar life insurance, supplemental retirement, stock
option, stock appreciation, stock bonus and similar or comparable plans;
provided, that, in no event shall the aggregate level of benefits under
such plans be less than the aggregate level of benefits under plans of the
Company of the type referred to in this Section 5(e) in which the
Executive was participating immediately prior to the Change in Control of
the Company; and provided, further, that the Company's obligation to
include the Executive in bonus or incentive compensation plans shall be
determined by Subsection 5(f) hereof.
(f) To assure that the Executive will have an opportunity to
earn incentive compensation after a Change in Control of the Company, the
Executive shall be included in a bonus plan of the Company which shall
satisfy the standards described below (such plan, the "Bonus Plan").
Bonuses under the Bonus Plan shall be payable with respect to achieving
such financial or other goals reasonably related to the business of the
Company and the Employer as the Company shall establish (the "Goals"), all
of which Goals shall be attainable, prior to the end of the Employment
Period, with approximately the same degree of probability as the goals
under the Company's bonus plan or plans as in effect immediately prior to
the Change in Control of the Company (whether one or more, the "Company
Bonus Plan") and in view of the Company's existing and projected financial
and business circumstances applicable at the time. The amount of the
bonus (the "Bonus Amount") that the Executive is eligible to earn under
the Bonus Plan shall be no less than the amount of the Executive's maximum
award provided in such Company Bonus Plan (such bonus amount herein
referred to as the "Targeted Bonus"), and in the event the Goals are not
achieved such that the entire Targeted Bonus is not payable, the Bonus
Plan shall provide for a payment of a Bonus Amount equal to a portion of
the Targeted Bonus reasonably related to that portion of the Goals which
were achieved. Payment of the Bonus Amount shall not be affected by any
circumstance occurring subsequent to the end of the Employment Period,
including termination of the Executive's employment.
6. Annual Compensation Adjustments. During the Employment
Period, the Board of Directors of the Company (or an appropriate committee
thereof) will consider and appraise, at least annually, the contributions
of the Executive to the Company, and in accordance with the Company's
practice prior to the Change in Control of the Company, due consideration
shall be given to the upward adjustment of the Executive's base
compensation rate, at least annually, (i) commensurate with increases
generally given to other executives of the Company of comparable status
and position to the Executive, and (ii) as the scope of the Company's
operations or the Executive's duties expand.
7. Termination For Cause or Without Good Reason. If there is
a Covered Termination for Cause or due to the Executive's voluntarily
terminating his employment other than for Good Reason (any such
terminations to be subject to the procedures set forth in Section 13
hereof), then the Executive shall be entitled to receive only Accrued
Benefits pursuant to Section 9(a) hereof.
8. Termination Giving Rise to a Termination Payment. (a) If
there is a Covered Termination by the Executive for Good Reason, or by the
Company other than by reason of (i) death, (ii) disability pursuant to
Section 12 hereof, or (iii) Cause (any such terminations to be subject to
the procedures set forth in Section 13 hereof), then the Executive shall
be entitled to receive, and the Company shall promptly pay, Accrued
Benefits and, in lieu of further base salary for periods following the
Termination Date, as liquidated damages and additional severance pay and
in consideration of the covenant of the Executive set forth in Section
14(a) hereof, the Termination Payment pursuant to Section 9(b) hereof.
(b) If there is a Covered Termination and the Executive is
entitled to Accrued Benefits and the Termination Payment, then the
Executive shall be entitled to the following additional benefits:
(i) The Executive shall receive, at the expense of the
Company, outplacement services, on an individualized basis at a
level of service commensurate with the Executive's status with
the Company immediately prior to the Change in Control of the
Company (or, if higher, immediately prior to the termination of
the Executive's employment), provided by a nationally recognized
executive placement firm selected by the Company; provided that
the cost to the Company of such services shall not exceed 15% of
the Executive's annual base salary in effect immediately prior
to the Change in Control of the Company.
(ii) Until the earlier of the end of the Employment Period
or such time as the Executive has obtained new employment and is
covered by benefits which in the aggregate are at least equal in
value to the following benefits, the Executive shall continue to
be covered, at the expense of the Company, by the same or
equivalent life insurance, hospitalization, medical and dental
coverage as was required hereunder with respect to the Executive
immediately prior to the date the Notice of Termination is
given.
9. Payments Upon Termination.
(a) Accrued Benefits. For purposes of this Agreement, the
Executive's "Accrued Benefits" shall include the following amounts,
payable as described herein: (i) all base salary for the time period
ending with the Termination Date; (ii) reimbursement for any and all
monies advanced in connection with the Executive's employment for
reasonable and necessary expenses incurred by the Executive on behalf of
the Company for the time period ending with the Termination Date; (iii)
any and all other cash earned through the Termination Date and deferred at
the election of the Executive or pursuant to any deferred compensation
plan then in effect; (iv) a lump sum payment of the bonus or incentive
compensation otherwise payable to the Executive with respect to the year
in which termination occurs under all bonus or incentive compensation plan
or plans in which the Executive is a participant; and (v) all other
payments and benefits to which the Executive (or in the event of the
Executive's death, the Executive's surviving spouse or other beneficiary)
may be entitled as compensatory fringe benefits or under the terms of any
benefit plan of the Company, excluding severance payments under any
Company severance policy, practice or agreement in effect immediately
prior to the Change in Control of the Company. Payment of Accrued
Benefits shall be made promptly in accordance with the Company's
prevailing practice with respect to Subsections (i) and (ii) or, with
respect to Subsections (iii), (iv) and (v), pursuant to the terms of the
benefit plan or practice establishing such benefits.
(b) Termination Payment.
(i) Subject to the limits set forth in Subsection 9(b)(ii)
hereof, the Termination Payment shall be an amount equal to (A) the
Executive's annual base salary, as in effect immediately prior to the
Change in Control of the Company, as adjusted upward, from time to time,
pursuant to Section 6 hereof, plus (B) the amount of the average annual
bonus award (determined on an annualized basis for any bonus award paid
for a period of less than one year and excluding any year for which the
Executive did not participate in any bonus plan) paid to the Executive
with respect to the three complete fiscal years preceding the Termination
Date (the aggregate amount set forth in (A) and (B) hereof shall hereafter
be referred to as "Annual Cash Compensation"), times (C) the lesser of (1)
three and (2) the number of years or fractional portion thereof remaining
in the Employment Period determined as of the Termination Date; provided,
however, that such amount shall not be less than the greater of (i) the
amount of the Executive's Annual Cash Compensation or (ii) the severance
benefits to which the Executive would have been entitled under the
Company's severance policies and practices in effect immediately prior to
the Change in Control of the Company. The Termination Payment shall be
paid to the Executive in cash equivalent ten business days after the
Termination Date. Such lump sum payment shall not be reduced by any
present value or similar factor, and the Executive shall not be required
to mitigate the amount of the Termination Payment by securing other
employment or otherwise, nor will such Termination Payment be reduced by
reason of the Executive securing other employment or for any other reason.
The Termination Payment shall be in lieu of, and acceptance by the
Executive of the Termination Payment shall constitute the Executive's
release of any rights of Executive to, any other severance payments under
any Company severance policy, practice or agreement. The Company shall
bear up to $10,000 in the aggregate of fees and expenses of consultants
and/or legal or accounting advisors engaged by the Executive to advise the
Executive as to matters relating to the computation of benefits due and
payable under this Subsection 9(b).
(ii) Notwithstanding any other provision of this Agreement, if any
portion of the Termination Payment or any other payment under this
Agreement, or under any other agreement with or plan of the Company (in
the aggregate, "Total Payments"), would constitute an "excess parachute
payment," then the Total Payments to be made to the Executive shall be
reduced such that the value of the aggregate Total Payments that the
Executive is entitled to receive shall be One Dollar ($1) less than the
maximum amount which the Executive may receive without becoming subject to
the tax imposed by Section 4999 of the Code (or any successor provision)
or which the Company may pay without loss of deduction under Section
280G(a) of the Code (or any successor provision). For purposes of this
Agreement, the terms "excess parachute payment" and "parachute payments"
shall have the meanings assigned to them in Section 280G of the Code (or
any successor provision), and such "parachute payments" shall be valued as
provided therein. Present value for purposes of this Agreement shall be
calculated in accordance with Section 1274(b) (2) of the Code (or any
successor provision). Within forty days following delivery of the Notice
of Termination or notice by the Company to the Executive of its belief
that there is a payment or benefit due the Executive which will result in
an excess parachute payment as defined in Section 280G of the Code (or any
successor provision), the Executive and the Company, at the Company's
expense, shall obtain the opinion (which need not be unqualified) of
nationally recognized tax counsel selected by the Company's independent
auditors and acceptable to the Executive in his sole discretion (which may
be regular outside counsel to the Company), which opinion sets forth (A)
the amount of the Base Period Income, (B) the amount and present value of
Total Payments and (C) the amount and present value of any excess
parachute payments determined without regard to the limitations of this
Subsection 9(b)(ii). As used in this Subsection 9(b)(ii), the term "Base
Period Income" means an amount equal to the Executive's "annualized
includible compensation for the base period" as defined in Section
280G(d)(l) of the Code (or any successor provision). For purposes of such
opinion, the value of any noncash benefits or any deferred payment or
benefit shall be determined by the Company's independent auditors in
accordance with the principles of Sections 280G(d)(3) and (4) of the Code
(or any successor provisions), which determination shall be evidenced in a
certificate of such auditors addressed to the Company and the Executive.
Such opinion shall be dated as of the Termination Date and addressed to
the Company and the Executive and shall be binding upon the Company and
the Executive. If such opinion determines that there would be an excess
parachute payment, the Termination Payment hereunder or any other payment
or benefit determined by such counsel to be includible in Total Payments
shall be reduced or eliminated as specified by the Executive in writing
delivered to the Company within thirty days of his receipt of such opinion
or, if the Executive fails to so notify the Company, then as the Company
shall reasonably determine, so that under the bases of calculations set
forth in such opinion there will be no excess parachute payment. If such
legal counsel so requests in connection with the opinion required by this
Section, the Executive and the Company shall obtain, at the Company's
expense, and the legal counsel may rely on in providing the opinion, the
advice of a firm of recognized executive compensation consultants as to
the reasonableness of any item of compensation to be received by the
Executive. If the provisions of Sections 280G and 4999 of the Code (or
any successor provisions) are repealed without succession, then this
Section 9(b) (ii) shall be of no further force or effect.
(iii) (A) If, notwithstanding the provisions of Subsection (ii) of
this Section 9(b), but subject to paragraph (B), it is ultimately
determined by a court or pursuant to a final determination by the Internal
Revenue Service that any portion of Total Payments is subject to the tax
(the "Excise Tax") imposed by Section 4999 of the Code (or any successor
provision), the Company shall pay to the Executive an additional amount
(the "Gross-Up Payment") such that the net amount retained by the
Executive after deduction of any Excise Tax and any interest charges or
penalties in respect of the imposition of such Excise Tax (but not any
federal, state or local income tax) on the Total Payments, and any
federal, state and local income tax and Excise Tax upon the payment
provided for by this Subsection (iii), shall be equal to the Total
Payments. For purposes of determining the amount of the Gross-Up Payment,
the Executive shall be deemed to pay federal income taxes at the highest
marginal rate of federal income taxation in the calendar year in which the
Gross-Up Payment is to be made and state and local income taxes at the
highest marginal rates of taxation in the state and locality of the
Executive's domicile for income tax purposes on the date the Gross-Up
Payment is made, net of the maximum reduction in federal income taxes
which could be obtained from deduction of such state and local taxes.
(B) If legislation is enacted that would require the Company's
shareholders to approve this Agreement, prior to a Change in Control of
the Company, due solely to the provision contained in paragraph (A) of
this Subsection 9(b)(iii), then
(1) from and after such time as shareholder approval would
be required, until shareholder approval is obtained as required
by such legislation, paragraph (A) shall be of no force and
effect;
(2) the Company and the Executive shall use their best
efforts to consider and agree in writing upon an amendment to
this Subsection 9(b) (iii) such that, as amended, this
Subsection would provide the Executive with the benefits
intended to be afforded to the Executive by paragraph (A)
without requiring shareholder approval; and
(3) at the reasonable request of the Executive, the
Company shall seek shareholder approval of this Agreement at the
next annual meeting of shareholders of the Company.
10. Death. (a) Except as provided in Section 10(b) hereof, in
the event of a Covered Termination due to the Executive's death, the
Executive's estate, heirs and beneficiaries shall receive all the
Executive's Accrued Benefits through the Termination Date.
(b) In the event the Executive dies after a Notice of
Termination is given (i) by the Company or (ii) by the Executive for Good
Reason, the Executive's estate, heirs and beneficiaries shall be entitled
to the benefits described in Section 10(a) hereof and, subject to the
provisions of this Agreement, to such Termination Payment as the Executive
would have been entitled to had the Executive lived. For purposes of this
Subsection 10(b), the Termination Date shall be the earlier of thirty days
following the giving of the Notice of Termination, subject to extension
pursuant to Section 1(m) hereof, or one day prior to the end of the
Employment Period.
11. Retirement. If, during the Employment Period, the
Executive and the Company shall execute an agreement providing for the
early retirement of the Executive from the Company, or the Executive shall
otherwise give notice that he is voluntarily choosing to retire early from
the Company, the Executive shall receive Accrued Benefits through the
Termination Date; provided, that if the Executive's employment is
terminated by the Executive for Good Reason or by the Company other than
by reason of death, disability or Cause and the Executive also, in
connection with such termination, elects voluntary early retirement, the
Executive shall also be entitled to receive a Termination Payment pursuant
to Section 8(a) hereof.
12. Termination for Disability. If, during the Employment
Period, as a result of the Executive's disability due to physical or
mental illness or injury (regardless of whether such illness or injury is
job-related), the Executive shall have been absent from the Executive's
duties hereunder on a full-time basis for a period of six consecutive
months and, within thirty days after the Company notifies the Executive in
writing that it intends to terminate the Executive's employment (which
notice shall not constitute the Notice of Termination contemplated below),
the Executive shall not have returned to the performance of the
Executive's duties hereunder on a full-time basis, the Company may
terminate the Executive's employment for purposes of this Agreement
pursuant to a Notice of Termination given in accordance with Section 13
hereof. If the Executive's employment is terminated on account of the
Executive's disability in accordance with this Section, the Executive
shall receive Accrued Benefits in accordance with Section 9(a) hereof and
shall remain eligible for all benefits provided by any long term
disability programs of the Company in effect at the time of such
termination.
13. Termination Notice and Procedure. Any Covered Termination
by the Company or the Executive (other than a termination of the
Executive's employment that is a Covered Termination by virtue of Section
2(b) hereof) shall be communicated by written Notice of Termination to the
Executive, if such Notice is given by the Company, and to the Company, if
such Notice is given by the Executive, all in accordance with the
following procedures and those set forth in Section 23 hereof:
(a) If such termination is for disability, Cause or Good
Reason, the Notice of Termination shall indicate in reasonable detail the
facts and circumstances alleged to provide a basis for such termination.
(b) Any Notice of Termination by the Company shall have been
approved, prior to the giving thereof to the Executive, by a resolution
duly adopted by a majority of the directors of the Company (or any
successor corporation) then in office.
(c) If the Notice is given by the Executive for Good Reason,
the Executive may cease performing his duties hereunder on or after the
date fifteen days after the delivery of Notice of Termination and shall in
any event cease employment on the Termination Date. If the Notice is
given by the Company, then the Executive may cease performing his duties
hereunder on the date of receipt of the Notice of Termination, subject to
the Executive's rights hereunder.
(d) The Executive shall have thirty days, or such longer period
as the Company may determine to be appropriate, to cure any conduct or
act, if curable, alleged to provide grounds for termination of the
Executive's employment for Cause under this Agreement pursuant to
Subsection 1(d) (iii) hereof.
(e) The recipient of any Notice of Termination shall personally
deliver or mail in accordance with Section 23 hereof written notice of any
dispute relating to such Notice of Termination to the party giving such
Notice within fifteen days after receipt thereof; provided, however, that
if the Executive's conduct or act alleged to provide grounds for
termination by the Company for Cause is curable, then such period shall be
thirty days. After the expiration of such period, the contents of the
Notice of Termination shall become final and not subject to dispute.
14. Further Obligations of the Executive.
(a) Competition. The Executive agrees that, in the event of
any Covered Termination where the Executive is entitled to Accrued
Benefits and the Termination Payment, the Executive shall not, for a
period expiring one year after the Termination Date, without the prior
written approval of the Company's Board of Directors, participate in the
management of, be employed by or own any business enterprise at a location
within the United States that engages in substantial competition with the
Company or its subsidiaries, where such enterprise's revenues from any
competitive activities amount to 10% or more of such enterprise's net
revenues and sales for its most recently completed fiscal year; provided,
however, that nothing in this Section 14(a) shall prohibit the Executive
from owning stock or other securities of a competitor amounting to less
than five percent of the outstanding capital stock of such competitor.
(b) Confidentiality. During and following the Executive's
employment by the Company, the Executive shall hold in confidence and not
directly or indirectly disclose or use or copy or make lists of any
confidential information or proprietary data of the Company (including
that of the Employer), except to the extent authorized in writing by the
Board of Directors of the Company or required by any court or
administrative agency, other than to an employee of the Company or a
person to whom disclosure is reasonably necessary or appropriate in
connection with the performance by the Executive of duties as an executive
of the Company. Confidential information shall not include any
information known generally to the public or any information of a type not
otherwise considered confidential by persons engaged in the same business
or a business similar to that of the Company. All records, files,
documents and materials, or copies thereof, relating to the business of
the Company which the Executive shall prepare, or use, or come into
contact with, shall be and remain the sole property of the Company and
shall be promptly returned to the Company upon termination of employment
with the Company.
15. Expenses and Interest. If, after a Change in Control of
the Company, (i) a dispute arises with respect to the enforcement of the
Executive's rights under this Agreement or (ii) any legal or arbitration
proceeding shall be brought to enforce or interpret any provision
contained herein or to recover damages for breach hereof, in either case
so long as the Executive is not acting in bad faith, the Executive shall
recover from the Company any reasonable attorneys' fees and necessary
costs and disbursements incurred as a result of such dispute, legal or
arbitration proceeding ("Expenses"), and prejudgment interest on any money
judgment or arbitration award obtained by the Executive calculated at the
rate of interest announced by Firstar Bank Milwaukee, National
Association, Milwaukee, Wisconsin, from time to time as its prime or base
lending rate from the date that payments to him should have been made
under this Agreement. Within ten days after the Executive's written
request therefor, the Company shall pay to the Executive, or such other
person or entity as the Executive may designate in writing to the Company,
the Executive's reasonable Expenses in advance of the final disposition or
conclusion of any such dispute, legal or arbitration proceeding.
16. Payment Obligations Absolute. The Company's obligation
during and after the Employment Period to pay the Executive the amounts
and to make the benefit and other arrangements provided herein shall be
absolute and unconditional and shall not be affected by any circumstances,
including, without limitation, any setoff, counterclaim, recoupment,
defense or other right which the Company may have against him or anyone
else. Except as provided in Section 15 of this Agreement, all amounts
payable by the Company hereunder shall be paid without notice or demand.
Each and every payment made hereunder by the Company shall be final, and
the Company will not seek to recover all or any part of such payment from
the Executive, or from whomsoever may be entitled thereto, for any reason
whatsoever.
17. Successors. (a) If the Company sells, assigns or transfers
all or substantially all of its business and assets to any Person or if
the Company merges into or consolidates or otherwise combines (where the
Company does not survive such combination) with any Person (any such
event, a "Sale of Business"), then the Company shall assign all of its
right, title and interest in this Agreement as of the date of such event
to such Person, and the Company shall cause such Person, by written
agreement in form and substance reasonably satisfactory to the Executive,
to expressly assume and agree to perform from and after the date of such
assignment all of the terms, conditions and provisions imposed by this
Agreement upon the Company. Failure of the Company to obtain such
agreement prior to the effective date of such Sale of Business shall be a
breach of this Agreement constituting "Good Reason" hereunder, except that
for purposes of implementing the foregoing the date upon which such Sale
of Business becomes effective shall be deemed the Termination Date. In
case of such assignment by the Company and of assumption and agreement by
such Person, as used in this Agreement, "Company" shall thereafter mean
such Person which executes and delivers the agreement provided for in this
Section 18 or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law, and this Agreement shall
inure to the benefit of, and be enforceable by, such Person. The
Executive shall, in his discretion, be entitled to proceed against any or
all of such Persons, any Person which theretofore was such a successor to
the Company (as defined in the first paragraph of this Agreement) and the
Company (as so defined) in any action to enforce any rights of the
Executive hereunder. Except as provided in this Subsection, this
Agreement shall not be assignable by the Company. This Agreement shall
not be terminated by the voluntary or involuntary dissolution of the
Company.
(b) This Agreement and all rights of the Executive shall inure
to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, heirs and beneficiaries. All
amounts payable to the Executive under Sections 7, 8, 9, 10, 11, 12 and 15
hereof if the Executive had lived shall be paid, in the event of the
Executive's death, to the Executive's estate, heirs and representatives;
provided, however, that the foregoing shall not be construed to modify any
terms of any benefit plan of the Company, as such terms are in effect on
the date of the Change in Control of the Company, that expressly govern
benefits under such plan in the event of the Executive's death.
18. Severability. The provisions of this Agreement shall be
regarded as divisible, and if any of said provisions or any part hereof
are declared invalid or unenforceable by a court of competent
jurisdiction, the validity and enforceability of the remainder of such
provisions or parts hereof and the applicability thereof shall not be
affected thereby.
19. Amendment. This Agreement may not be amended or modified
at any time except by written instrument executed by the Company and the
Executive.
20. Withholding. The Company shall be entitled to withhold
from amounts to be paid to the Executive hereunder any federal, state or
local withholding or other taxes or charges which it is from time to time
required to withhold; provided, that the amount so withheld shall not
exceed the minimum amount required to be withheld by law. The Company
shall be entitled to rely on an opinion of nationally recognized tax
counsel if any question as to the amount or requirement of any such
withholding shall arise.
21. Certain Rules of Construction. No party shall be
considered as being responsible for the drafting of this Agreement for the
purpose of applying any rule construing ambiguities against the drafter or
otherwise. No draft of this Agreement shall be taken into account in
construing this Agreement. Any provision of this Agreement which requires
an agreement in writing shall be deemed to require that the writing in
question be signed by the Executive and an authorized representative of
the Company.
22. Governing Law; Resolution of Disputes. This Agreement and
the rights and obligations hereunder shall be governed by and construed in
accordance with the laws of the State of Wisconsin. Any dispute arising
out of this Agreement shall, at the Executive's election, be determined by
arbitration under the rules of the American Arbitration Association then
in effect (in which case both parties shall be bound by the arbitration
award) or by litigation. Whether the dispute is to be settled by
arbitration or litigation, the venue for the arbitration or litigation
shall be Madison, Wisconsin or, at the Executive's election, if the
Executive is no longer residing or working in the Madison, Wisconsin
metropolitan area, in the judicial district encompassing the city in which
the Executive resides; provided, that, if the Executive is not then
residing in the United States, the election of the Executive with respect
to such venue shall be either Madison, Wisconsin or in the judicial
district encompassing that city in the United States among the thirty
cities having the largest population (as determined by the most recent
United States Census data available at the Termination Date) which is
closest to the Executive's residence. The parties consent to personal
jurisdiction in each trial court in the selected venue having subject
matter jurisdiction notwithstanding their residence or situs, and each
party irrevocably consents to service of process in the manner provided
hereunder for the giving of notices.
23. Notice. Notices given pursuant to this Agreement shall be
in writing and, except as otherwise provided by Section 13(d) hereof,
shall be deemed given when actually received by the Executive or actually
received by the Company's Secretary or any officer of the Company other
than the Executive. If mailed, such notices shall be mailed by United
States registered or certified mail, return receipt requested, addressee
only, postage prepaid, if to the Company, to WPL Holdings, Inc.,
Attention: Secretary (or President, if the Executive is then Secretary),
222 West Washington Avenue, P.O. Box 2568, Madison, Wisconsin 53701-2568,
or if to the Executive, at the address set forth below the Executive's
signature to this Agreement, or to such other address as the party to be
notified shall have theretofore given to the other party in writing.
24. No Waiver. No waiver by either party at any time of any
breach by the other party of, or compliance with, any condition or
provision of this Agreement to be performed by the other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the
same time or any prior or subsequent time.
25. Headings. The headings herein contained are for reference
only and shall not affect the meaning or interpretation of any provision
of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the day and year first above written.
WPL HOLDINGS, INC.
By: _____________________________________
Its: _____________________________________
Attest: ________________________________
Its: _____________________________________
EXECUTIVE:
_____________________________________(SEAL)
Address:
KEY EXECUTIVE EMPLOYMENT AND SEVERANCE AGREEMENT
THIS AGREEMENT, made and entered into as of the ____ day of
___________, by and between WPL Holdings, Inc., a Wisconsin corporation
(hereinafter referred to as the "Company"), and _____________________
(hereinafter referred to as "Executive").
W I T N E S S E T H
WHEREAS, the Executive is employed by the Company and/or a
subsidiary of the Company (the "Employer") in a key executive capacity and
the Executive's services are valuable to the conduct of the business of
the Company;
WHEREAS, the Executive possesses intimate knowledge of the
business and affairs of the Company and has acquired certain confidential
information and data with respect to the Company;
WHEREAS, the Company desires to insure, insofar as possible,
that it will continue to have the benefit of the Executive's services and
to protect its confidential information and goodwill;
WHEREAS, the Company recognizes that circumstances may arise in
which a change in control of the Company occurs, through acquisition or
otherwise, thereby causing uncertainty about the Executive's future
employment with the Employer without regard to the Executive's competence
or past contributions which uncertainty may result in the loss of valuable
services of the Executive to the detriment of the Company and its
shareholders, and the Company and the Executive wish to provide reasonable
security to the Executive against changes in the Executive's relationship
with the Company in the event of any such change in control;
WHEREAS, the Company and the Executive are desirous that any
proposal for a change in control or acquisition of the Company will be
considered by the Executive objectively and with reference only to the
best interests of the Company and its shareholders; and
WHEREAS, the Executive will be in a better position to consider
the Company's best interests if the Executive is afforded reasonable
security, as provided in this Agreement, against altered conditions of
employment which could result from any such change in control or
acquisition.
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants and agreements hereinafter set forth, the parties hereto
mutually covenant and agree as follows:
1. Definitions.
(a) Act. For purposes of this Agreement, the term "Act" means
the Securities Exchange Act of 1934, as amended.
(b) Affiliate and Associate. For purposes of this Agreement,
the terms "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule l2b-2 of the General Rules and Regulations
of the Act.
(c) Beneficial Owner. For purposes of this Agreement, a Person
shall be deemed to be the "Beneficial Owner" of any securities:
(i) which such Person or any of such Person's Affiliates
or Associates has the right to acquire (whether such right is
exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding, or upon
the exercise of conversion rights, exchange rights, rights,
warrants or options, or otherwise; provided, however, that a
Person shall not be deemed the Beneficial Owner of, or to
beneficially own, (A) securities tendered pursuant to a tender
or exchange offer made by or on behalf of such Person or any of
such Person's Affiliates or Associates until such tendered
securities are accepted for purchase, or (B) securities issuable
upon exercise of Rights issued pursuant to the terms of the
Company's Rights Agreement with Morgan Shareholder Services
Trust Company, dated as of February 22, 1989, as amended from
time to time (or any successor to such Rights Agreement), at any
time before the issuance of such securities;
(ii) which such Person or any of such Person's Affiliates
or Associates, directly or indirectly, has the right to vote or
dispose of or has "beneficial ownership" of (as determined
pursuant to Rule l3d-3 of the General Rules and Regulations
under the Act), including pursuant to any agreement, arrangement
or understanding; provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, any
security under this subparagraph (ii) as a result of an
agreement, arrangement or understanding to vote such security if
the agreement, arrangement or understanding: (A) arises solely
from a revocable proxy or consent given to such Person in
response to a public proxy or consent solicitation made pursuant
to, and in accordance with, the applicable rules and regulations
under the Act and (B) is not also then reportable on a Schedule
l3D under the Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly,
by any other Person with which such Person or any of such
Person's Affiliates or Associates has any agreement, arrangement
or understanding for the purpose of acquiring, holding, voting
(except pursuant to a revocable proxy as described in Subsection
1(c) (ii) above) or disposing of any voting securities of the
Company.
(d) Cause. "Cause" for termination by the Company of the
Executive's employment in connection with a Change of Control of the
Company shall, for purposes of this Agreement, be limited to (i) the
engaging by the Executive in intentional conduct not taken in good faith
which has caused demonstrable and serious financial injury to the Company,
as evidenced by a determination in a binding and final judgment, order or
decree of a court or administrative agency of competent jurisdiction, in
effect after exhaustion or lapse of all rights of appeal, in an action,
suit or proceeding, whether civil, criminal, administrative or
investigative; (ii) conviction of a felony (as evidenced by binding and
final judgment, order or decree of a court of competent jurisdiction, in
effect after exhaustion of all rights of appeal) which substantially
impairs the Executive's ability to perform his duties or responsibilities;
and (iii) continuing willful and unreasonable refusal by the Executive to
perform the Executive's duties or responsibilities (unless significantly
changed without the Executive's consent).
(e) Change in Control of the Company. For purposes of this
Agreement, a "Change in Control of the Company" shall mean a change in
control of a nature that would be required to be reported in response to
Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Act.
Without limiting the inclusiveness of the definition in the preceding
sentence, a Change in Control of the Company shall be deemed to have
occurred if:
(i) any Person (other than any employee benefit plan of the
Company or of any subsidiary of the Company, any Person
organized, appointed or established pursuant to the terms of any
such benefit plan or any trustee, administrator or fiduciary of
such a plan) is or becomes the Beneficial Owner of securities of
the Company representing at least 30% of the combined voting
power of the Company's then outstanding securities,
(ii) one-half or more of the members of the Board are not
Continuing Directors;
(iii) there shall be consummated (x) any merger of the
Company or share exchange involving the Company in which the
Company is not the continuing or surviving corporation or
pursuant to which shares of the Company's Common Stock would be
converted into cash, securities or other property, other than a
merger of the Company in which each of the holders of the
Company's Common Stock immediately prior to the merger have the
same proportionate ownership of common stock of the surviving
corporation immediately after the merger, or (y) any sale,
lease, exchange or other transfer (in one transaction or a
series of related transactions) of all, or substantially all, of
the assets of the Company, or
(iv) the shareholders of the Company approve any plan or
proposal for the liquidation or dissolution of the Company.
(f) Code. For purposes of this Agreement, the term "Code"
means the Internal Revenue Code of 1986, including any amendments thereto
or successor tax codes thereof.
(g) Continuing Director. For purposes of this Agreement, the
term "Continuing Director" means any member of the Board of Directors of
the Company who was a member of such Board on February 1, 1994, and any
successor of a Continuing Director who is recommended to succeed a
Continuing Director by a majority of the Continuing Directors then on such
Board.
(h) Covered Termination. Subject to Section 2(b) hereof, for
purposes of this Agreement, the term "Covered Termination" means any
termination of the Executive's employment where the Termination Date is
any date prior to the end of the Employment Period.
(i) Employment Period. For purposes of this Agreement, the
term "Employment Period" means a period commencing on the date of a Change
in Control of the Company, and ending at 11:59 p.m. Central Time on the
earlier of the fifth anniversary of such date or the Executive's Normal
Retirement Date.
(j) Good Reason. For purposes of this Agreement, the Executive
shall have a "Good Reason" for termination of employment in connection
with a Change in Control of the Company in the event of:
(i) any breach of this Agreement by the Company, including
specifically any breach by the Company of its agreements
contained in Sections 4, 5 or 6 hereof;
(ii) the removal of the Executive from, or any failure to
reelect or reappoint the Executive to, any of the positions held
with the Company or the Employer on the date of the Change in
Control of the Company or any other positions with the Company
or the Employer to which the Executive shall thereafter be
elected, appointed or assigned, except in the event that such
removal or failure to reelect or reappoint relates to the
termination by the Company of the Executive's employment for
Cause or by reason of disability pursuant to Section 12 hereof;
(iii) a good faith determination by the Executive that
there has been a significant adverse change, without the
Executive's written consent, in the Executive's working
conditions or status with the Company or the Employer from such
working conditions or status in effect immediately prior to the
Change in Control of the Company, including but not limited to
(A) a significant change in the nature or scope of the
Executive's authority, powers, functions, duties or
responsibilities, or (B) a significant reduction in the level of
support services, staff, secretarial and other assistance,
office space and accoutrements; or
(iv) failure by the Company to obtain the Agreement
referred to in Section 17(a) hereof as provided therein.
(k) Normal Retirement Date. For purposes of this Agreement,
the term "Normal Retirement Date" means "Normal Retirement Date" as
defined in the Wisconsin Power and Light Company Retirement Plan, or any
successor plan, as in effect on the date of the Change in Control of the
Company.
(l) Person. For purposes of this Agreement, the term "Person"
shall mean any individual, firm, partnership, corporation or other entity,
including any successor (by merger or otherwise) of such entity, or a
group of any of the foregoing acting in concert.
(m) Termination Date. For purposes of this Agreement, except
as otherwise provided in Section 10(b) and Section 17(a) hereof, the term
"Termination Date" means (i) if the Executive's employment is terminated
by the Executive's death, the date of death; (ii) if the Executive's
employment is terminated by reason of voluntary early retirement, as
agreed in writing by the Company and the Executive, the date of such early
retirement which is set forth in such written agreement; (iii) if the
Executive's employment is terminated for purposes of this Agreement by
reason of disability pursuant to Section 12 hereof, the earlier of thirty
days after the Notice of Termination is given or one day prior to the end
of the Employment Period; (iv) if the Executive's employment is terminated
by the Executive voluntarily (other than for Good Reason), the date the
Notice of Termination is given; and (v) if the Executive's employment is
terminated by the Company (other than by reason of disability pursuant to
Section 12 hereof) or by the Executive for Good Reason, the earlier of
thirty days after the Notice of Termination is given or one day prior to
the end of the Employment Period. Notwithstanding the foregoing,
(A) If termination is for Cause pursuant to Section 1(d)(iii)
of this Agreement and if the Executive has cured the conduct constituting
such Cause as described by the Company in its Notice of Termination within
such thirty day or shorter period, then the Executive's employment
hereunder shall continue as if the Company had not delivered its Notice of
Termination.
(B) If the Executive shall in good faith give a Notice of
Termination for Good Reason and the Company notifies the Executive that a
dispute exists concerning the termination within the fifteen day period
following receipt thereof, then the Executive may elect to continue his
employment during such dispute and the Termination Date shall be
determined under this paragraph. If the Executive so elects and it is
thereafter determined that Good Reason did exist, the Termination Date
shall be the earliest of (l) the date on which the dispute is finally
determined, either (x) by mutual written agreement of the parties or (y)
in accordance with Section 22 hereof, (2) the date of the Executive's
death or (3) one day prior to the end of the Employment Period. If the
Executive so elects and it is thereafter determined that Good Reason did
not exist, then the employment of the Executive hereunder shall continue
after such determination as if the Executive had not delivered the Notice
of Termination asserting Good Reason and there shall be no Termination
Date arising out of such Notice. In either case, this Agreement
continues, until the Termination Date, if any, as if the Executive had not
delivered the Notice of Termination except that, if it is finally
determined that Good Reason did exist, the Executive shall in no case be
denied the benefits described in Sections 8(b) and 9 hereof (including a
Termination Payment) based on events occurring after the Executive
delivered his Notice of Termination.
(C) If an opinion is required to be delivered pursuant to
Section 9(b)(ii) hereof and such opinion shall not have been delivered,
the Termination Date shall be the earlier of the date on which such
opinion is delivered or one day prior to the end of the Employment Period.
(D) Except as provided in Paragraph (B) above, if the party
receiving the Notice of Termination notifies the other party that a
dispute exists concerning the termination within the appropriate period
following receipt thereof and it is finally determined that the reason
asserted in such Notice of Termination did not exist, then (1) if such
Notice was delivered by the Executive, the Executive will be deemed to
have voluntarily terminated his employment and the Termination Date shall
be the earlier of the date fifteen days after the Notice of Termination is
given or one day prior to the end of the Employment Period and (2) if
delivered by the Company, the Company will be deemed to have terminated
the Executive other than by reason of death, disability or Cause.
2. Termination or Cancellation Prior to Change in Control.
(a) Subject to Subsection 2(b) hereof, the Company (and the
Employer) and the Executive shall each retain the right to terminate the
employment of the Executive at any time prior to a Change in Control of
the Company. Subject to Subsection 2(b) hereof, in the event the
Executive's employment is terminated prior to a Change in Control of the
Company, this Agreement shall be terminated and cancelled and of no
further force and effect, and any and all rights and obligations of the
parties hereunder shall cease.
(b) Anything in this Agreement to the contrary notwithstanding,
if a Change in Control of the Company occurs and if the Executive's
employment with the Company or a subsidiary of the Company is terminated
(other than a termination due to the Executive's death or as a result of
the Executive's disability) during the period of 180 days prior to the
date on which the Change in Control of the Company occurs, and if it is
reasonably demonstrated by the Executive that such termination of
employment (i) was at the request of a third party who has taken steps
reasonably calculated to effect a Change in Control of the Company or (ii)
otherwise arose in connection with or in anticipation of a Change in
Control of the Company, then for all purposes of this Agreement such
termination of employment shall be deemed a "Covered Termination."
3. Employment Period. If a Change in Control of the Company
occurs when the Executive is employed by the Company or a subsidiary of
the Company, the Company will, or will cause the Employer to, continue
thereafter to employ the Executive during the Employment Period, and the
Executive will remain in the employ of the Employer in accordance with and
subject to the terms and provisions of this Agreement. Any termination of
the Executive's employment during the Employment Period, whether by the
Company or the Employer, shall be deemed a termination by the Company for
purposes of this Agreement.
4. Duties. During the Employment Period, the Executive shall,
in the same capacities and positions held by the Executive at the time of
the Change in Control of the Company or in such other capacities and
positions as may be agreed to by the Company and the Executive in writing,
devote the Executive's best efforts and all of the Executive's business
time, attention and skill to the business and affairs of the Employer, as
such business and affairs now exist and as they may hereafter be
conducted. The services which are to be performed by the Executive
hereunder are to be rendered in the same metropolitan area in which the
Executive was employed at the time of such Change in Control of the
Company, or in such other place or places as shall be mutually agreed upon
in writing by the Executive and the Company from time to time. Without
the Executive's consent the Executive shall not be required to be absent
from such metropolitan area more than 45 days in any fiscal year of the
Company.
5. Compensation. During the Employment Period, the Executive
shall be compensated as follows:
(a) The Executive shall receive, at reasonable intervals (but
not less often than monthly) and in accordance with such standard policies
as may be in effect immediately prior to the Change in Control of the
Company, an annual base salary in cash equivalent of not less than the
Executive's annual base salary as in effect immediately prior to the
Change in Control of the Company (which base salary shall, unless
otherwise agreed in writing by the Executive, include the current receipt
by the Executive of any amounts which, prior to the Change in Control of
the Company, the Executive had elected to defer, whether such compensation
is deferred under Section 401(k) of the Code or otherwise), subject to
adjustment as hereinafter provided.
(b) The Executive shall receive fringe benefits at least equal
in value to those provided for the Executive immediately prior to the
Change in Control of the Company, and shall be reimbursed, at such
intervals and in accordance with such standard policies as may be in
effect immediately prior to the Change in Control of the Company, for any
and all monies advanced in connection with the Executive's employment for
reasonable and necessary expenses incurred by the Executive on behalf of
the Company, including travel expenses.
(c) The Executive shall be included, to the extent eligible
thereunder (which eligibility shall not be conditioned on the Executive's
salary grade or on any other requirement which excludes persons of
comparable status to the Executive unless such exclusion was in effect for
such plan or an equivalent plan immediately prior to the Change in Control
of the Company), in any and all plans providing benefits for the
Employer's salaried employees in general, including but not limited to
group life insurance, hospitalization, medical, dental, profit sharing and
stock bonus plans; provided, that, in no event shall the aggregate level
of benefits under such plans in which the Executive is included be less
than the aggregate level of benefits under plans of the Company of the
type referred to in this Section 5(c) in which the Executive was
participating immediately prior to the Change in Control of the Company.
(d) The Executive shall annually be entitled to not less than
the amount of paid vacation and not fewer than the number of paid holidays
to which the Executive was entitled annually immediately prior to the
Change in Control of the Company or such greater amount of paid vacation
and number of paid holidays as may be made available annually to other
executives of the Company of comparable status and position to the
Executive.
(e) The Executive shall be included in all plans providing
additional benefits to executives of the Company of comparable status and
position to the Executive, including but not limited to deferred
compensation, split-dollar life insurance, supplemental retirement, stock
option, stock appreciation, stock bonus and similar or comparable plans;
provided, that, in no event shall the aggregate level of benefits under
such plans be less than the aggregate level of benefits under plans of the
Company of the type referred to in this Section 5(e) in which the
Executive was participating immediately prior to the Change in Control of
the Company; and provided, further, that the Company's obligation to
include the Executive in bonus or incentive compensation plans shall be
determined by Subsection 5(f) hereof.
(f) To assure that the Executive will have an opportunity to
earn incentive compensation after a Change in Control of the Company, the
Executive shall be included in a bonus plan of the Company which shall
satisfy the standards described below (such plan, the "Bonus Plan").
Bonuses under the Bonus Plan shall be payable with respect to achieving
such financial or other goals reasonably related to the business of the
Company and the Employer as the Company shall establish (the "Goals"), all
of which Goals shall be attainable, prior to the end of the Employment
Period, with approximately the same degree of probability as the goals
under the Company's bonus plan or plans as in effect immediately prior to
the Change in Control of the Company (whether one or more, the "Company
Bonus Plan") and in view of the Company's existing and projected financial
and business circumstances applicable at the time. The amount of the
bonus (the "Bonus Amount") that the Executive is eligible to earn under
the Bonus Plan shall be no less than the amount of the Executive's maximum
award provided in such Company Bonus Plan (such bonus amount herein
referred to as the "Targeted Bonus"), and in the event the Goals are not
achieved such that the entire Targeted Bonus is not payable, the Bonus
Plan shall provide for a payment of a Bonus Amount equal to a portion of
the Targeted Bonus reasonably related to that portion of the Goals which
were achieved. Payment of the Bonus Amount shall not be affected by any
circumstance occurring subsequent to the end of the Employment Period,
including termination of the Executive's employment.
6. Annual Compensation Adjustments. During the Employment
Period, the Board of Directors of the Company (or an appropriate committee
thereof) will consider and appraise, at least annually, the contributions
of the Executive to the Company, and in accordance with the Company's
practice prior to the Change in Control of the Company, due consideration
shall be given to the upward adjustment of the Executive's base
compensation rate, at least annually, (i) commensurate with increases
generally given to other executives of the Company of comparable status
and position to the Executive, and (ii) as the scope of the Company's
operations or the Executive's duties expand.
7. Termination For Cause or Without Good Reason. If there is
a Covered Termination for Cause or due to the Executive's voluntarily
terminating his employment other than for Good Reason (any such
terminations to be subject to the procedures set forth in Section 13
hereof), then the Executive shall be entitled to receive only Accrued
Benefits pursuant to Section 9(a) hereof.
8. Termination Giving Rise to a Termination Payment. (a) If
there is a Covered Termination by the Executive for Good Reason, or by the
Company other than by reason of (i) death, (ii) disability pursuant to
Section 12 hereof, or (iii) Cause (any such terminations to be subject to
the procedures set forth in Section 13 hereof), then the Executive shall
be entitled to receive, and the Company shall promptly pay, Accrued
Benefits and, in lieu of further base salary for periods following the
Termination Date, as liquidated damages and additional severance pay and
in consideration of the covenant of the Executive set forth in Section
14(a) hereof, the Termination Payment pursuant to Section 9(b) hereof.
(b) If there is a Covered Termination and the Executive is
entitled to Accrued Benefits and the Termination Payment, then the
Executive shall be entitled to the following additional benefits:
(i) The Executive shall receive, at the expense of the
Company, outplacement services, on an individualized basis at a
level of service commensurate with the Executive's status with
the Company immediately prior to the Change in Control of the
Company (or, if higher, immediately prior to the termination of
the Executive's employment), provided by a nationally recognized
executive placement firm selected by the Company; provided that
the cost to the Company of such services shall not exceed 15% of
the Executive's annual base salary in effect immediately prior
to the Change in Control of the Company.
(ii) Until the earlier of the end of the Employment Period
or such time as the Executive has obtained new employment and is
covered by benefits which in the aggregate are at least equal in
value to the following benefits, the Executive shall continue to
be covered, at the expense of the Company, by the same or
equivalent life insurance, hospitalization, medical and dental
coverage as was required hereunder with respect to the Executive
immediately prior to the date the Notice of Termination is
given.
9. Payments Upon Termination.
(a) Accrued Benefits. For purposes of this Agreement, the
Executive's "Accrued Benefits" shall include the following amounts,
payable as described herein: (i) all base salary for the time period
ending with the Termination Date; (ii) reimbursement for any and all
monies advanced in connection with the Executive's employment for
reasonable and necessary expenses incurred by the Executive on behalf of
the Company for the time period ending with the Termination Date; (iii)
any and all other cash earned through the Termination Date and deferred at
the election of the Executive or pursuant to any deferred compensation
plan then in effect; (iv) a lump sum payment of the bonus or incentive
compensation otherwise payable to the Executive with respect to the year
in which termination occurs under all bonus or incentive compensation plan
or plans in which the Executive is a participant; and (v) all other
payments and benefits to which the Executive (or in the event of the
Executive's death, the Executive's surviving spouse or other beneficiary)
may be entitled as compensatory fringe benefits or under the terms of any
benefit plan of the Company, excluding severance payments under any
Company severance policy, practice or agreement in effect immediately
prior to the Change in Control of the Company. Payment of Accrued
Benefits shall be made promptly in accordance with the Company's
prevailing practice with respect to Subsections (i) and (ii) or, with
respect to Subsections (iii), (iv) and (v), pursuant to the terms of the
benefit plan or practice establishing such benefits.
(b) Termination Payment.
(i) Subject to the limits set forth in Subsection 9(b)(ii)
hereof, the Termination Payment shall be an amount equal to (A) the
Executive's annual base salary, as in effect immediately prior to the
Change in Control of the Company, as adjusted upward, from time to time,
pursuant to Section 6 hereof, plus (B) the amount of the average annual
bonus award (determined on an annualized basis for any bonus award paid
for a period of less than one year and excluding any year for which the
Executive did not participate in any bonus plan) paid to the Executive
with respect to the three complete fiscal years preceding the Termination
Date (the aggregate amount set forth in (A) and (B) hereof shall hereafter
be referred to as "Annual Cash Compensation"), times (C) the lesser of (1)
two and (2) the number of years or fractional portion thereof remaining in
the Employment Period determined as of the Termination Date; provided,
however, that such amount shall not be less than the greater of (i) the
amount of the Executive's Annual Cash Compensation or (ii) the severance
benefits to which the Executive would have been entitled under the
Company's severance policies and practices in effect immediately prior to
the Change in Control of the Company. The Termination Payment shall be
paid to the Executive in cash equivalent ten business days after the
Termination Date. Such lump sum payment shall not be reduced by any
present value or similar factor, and the Executive shall not be required
to mitigate the amount of the Termination Payment by securing other
employment or otherwise, nor will such Termination Payment be reduced by
reason of the Executive securing other employment or for any other reason.
The Termination Payment shall be in lieu of, and acceptance by the
Executive of the Termination Payment shall constitute the Executive's
release of any rights of Executive to, any other severance payments under
any Company severance policy, practice or agreement. The Company shall
bear up to $10,000 in the aggregate of fees and expenses of consultants
and/or legal or accounting advisors engaged by the Executive to advise the
Executive as to matters relating to the computation of benefits due and
payable under this Subsection 9(b).
(ii) Notwithstanding any other provision of this Agreement, if any
portion of the Termination Payment or any other payment under this
Agreement, or under any other agreement with or plan of the Company (in
the aggregate, "Total Payments"), would constitute an "excess parachute
payment," then the Total Payments to be made to the Executive shall be
reduced such that the value of the aggregate Total Payments that the
Executive is entitled to receive shall be One Dollar ($1) less than the
maximum amount which the Executive may receive without becoming subject to
the tax imposed by Section 4999 of the Code (or any successor provision)
or which the Company may pay without loss of deduction under Section
280G(a) of the Code (or any successor provision). For purposes of this
Agreement, the terms "excess parachute payment" and "parachute payments"
shall have the meanings assigned to them in Section 280G of the Code (or
any successor provision), and such "parachute payments" shall be valued as
provided therein. Present value for purposes of this Agreement shall be
calculated in accordance with Section 1274(b) (2) of the Code (or any
successor provision). Within forty days following delivery of the Notice
of Termination or notice by the Company to the Executive of its belief
that there is a payment or benefit due the Executive which will result in
an excess parachute payment as defined in Section 280G of the Code (or any
successor provision), the Executive and the Company, at the Company's
expense, shall obtain the opinion (which need not be unqualified) of
nationally recognized tax counsel selected by the Company's independent
auditors and acceptable to the Executive in his sole discretion (which may
be regular outside counsel to the Company), which opinion sets forth (A)
the amount of the Base Period Income, (B) the amount and present value of
Total Payments and (C) the amount and present value of any excess
parachute payments determined without regard to the limitations of this
Subsection 9(b)(ii). As used in this Subsection 9(b)(ii), the term "Base
Period Income" means an amount equal to the Executive's "annualized
includible compensation for the base period" as defined in Section
280G(d)(l) of the Code (or any successor provision). For purposes of such
opinion, the value of any noncash benefits or any deferred payment or
benefit shall be determined by the Company's independent auditors in
accordance with the principles of Sections 280G(d)(3) and (4) of the Code
(or any successor provisions), which determination shall be evidenced in a
certificate of such auditors addressed to the Company and the Executive.
Such opinion shall be dated as of the Termination Date and addressed to
the Company and the Executive and shall be binding upon the Company and
the Executive. If such opinion determines that there would be an excess
parachute payment, the Termination Payment hereunder or any other payment
or benefit determined by such counsel to be includible in Total Payments
shall be reduced or eliminated as specified by the Executive in writing
delivered to the Company within thirty days of his receipt of such opinion
or, if the Executive fails to so notify the Company, then as the Company
shall reasonably determine, so that under the bases of calculations set
forth in such opinion there will be no excess parachute payment. If such
legal counsel so requests in connection with the opinion required by this
Section, the Executive and the Company shall obtain, at the Company's
expense, and the legal counsel may rely on in providing the opinion, the
advice of a firm of recognized executive compensation consultants as to
the reasonableness of any item of compensation to be received by the
Executive. If the provisions of Sections 280G and 4999 of the Code (or
any successor provisions) are repealed without succession, then this
Section 9(b) (ii) shall be of no further force or effect.
(iii) (A) If, notwithstanding the provisions of Subsection (ii) of
this Section 9(b), but subject to paragraph (B), it is ultimately
determined by a court or pursuant to a final determination by the Internal
Revenue Service that any portion of Total Payments is subject to the tax
(the "Excise Tax") imposed by Section 4999 of the Code (or any successor
provision), the Company shall pay to the Executive an additional amount
(the "Gross-Up Payment") such that the net amount retained by the
Executive after deduction of any Excise Tax and any interest charges or
penalties in respect of the imposition of such Excise Tax (but not any
federal, state or local income tax) on the Total Payments, and any
federal, state and local income tax and Excise Tax upon the payment
provided for by this Subsection (iii), shall be equal to the Total
Payments. For purposes of determining the amount of the Gross-Up Payment,
the Executive shall be deemed to pay federal income taxes at the highest
marginal rate of federal income taxation in the calendar year in which the
Gross-Up Payment is to be made and state and local income taxes at the
highest marginal rates of taxation in the state and locality of the
Executive's domicile for income tax purposes on the date the Gross-Up
Payment is made, net of the maximum reduction in federal income taxes
which could be obtained from deduction of such state and local taxes.
(B) If legislation is enacted that would require the Company's
shareholders to approve this Agreement, prior to a Change in Control of
the Company, due solely to the provision contained in paragraph (A) of
this Subsection 9(b)(iii), then
(1) from and after such time as shareholder approval would
be required, until shareholder approval is obtained as required
by such legislation, paragraph (A) shall be of no force and
effect;
(2) the Company and the Executive shall use their best
efforts to consider and agree in writing upon an amendment to
this Subsection 9(b) (iii) such that, as amended, this
Subsection would provide the Executive with the benefits
intended to be afforded to the Executive by paragraph (A)
without requiring shareholder approval; and
(3) at the reasonable request of the Executive, the
Company shall seek shareholder approval of this Agreement at the
next annual meeting of shareholders of the Company.
10. Death. (a) Except as provided in Section 10(b) hereof, in
the event of a Covered Termination due to the Executive's death, the
Executive's estate, heirs and beneficiaries shall receive all the
Executive's Accrued Benefits through the Termination Date.
(b) In the event the Executive dies after a Notice of
Termination is given (i) by the Company or (ii) by the Executive for Good
Reason, the Executive's estate, heirs and beneficiaries shall be entitled
to the benefits described in Section 10(a) hereof and, subject to the
provisions of this Agreement, to such Termination Payment as the Executive
would have been entitled to had the Executive lived. For purposes of this
Subsection 10(b), the Termination Date shall be the earlier of thirty days
following the giving of the Notice of Termination, subject to extension
pursuant to Section 1(m) hereof, or one day prior to the end of the
Employment Period.
11. Retirement. If, during the Employment Period, the
Executive and the Company shall execute an agreement providing for the
early retirement of the Executive from the Company, or the Executive shall
otherwise give notice that he is voluntarily choosing to retire early from
the Company, the Executive shall receive Accrued Benefits through the
Termination Date; provided, that if the Executive's employment is
terminated by the Executive for Good Reason or by the Company other than
by reason of death, disability or Cause and the Executive also, in
connection with such termination, elects voluntary early retirement, the
Executive shall also be entitled to receive a Termination Payment pursuant
to Section 8(a) hereof.
12. Termination for Disability. If, during the Employment
Period, as a result of the Executive's disability due to physical or
mental illness or injury (regardless of whether such illness or injury is
job-related), the Executive shall have been absent from the Executive's
duties hereunder on a full-time basis for a period of six consecutive
months and, within thirty days after the Company notifies the Executive in
writing that it intends to terminate the Executive's employment (which
notice shall not constitute the Notice of Termination contemplated below),
the Executive shall not have returned to the performance of the
Executive's duties hereunder on a full-time basis, the Company may
terminate the Executive's employment for purposes of this Agreement
pursuant to a Notice of Termination given in accordance with Section 13
hereof. If the Executive's employment is terminated on account of the
Executive's disability in accordance with this Section, the Executive
shall receive Accrued Benefits in accordance with Section 9(a) hereof and
shall remain eligible for all benefits provided by any long term
disability programs of the Company in effect at the time of such
termination.
13. Termination Notice and Procedure. Any Covered Termination
by the Company or the Executive (other than a termination of the
Executive's employment that is a Covered Termination by virtue of Section
2(b) hereof) shall be communicated by written Notice of Termination to the
Executive, if such Notice is given by the Company, and to the Company, if
such Notice is given by the Executive, all in accordance with the
following procedures and those set forth in Section 23 hereof:
(a) If such termination is for disability, Cause or Good
Reason, the Notice of Termination shall indicate in reasonable detail the
facts and circumstances alleged to provide a basis for such termination.
(b) Any Notice of Termination by the Company shall have been
approved, prior to the giving thereof to the Executive, by a resolution
duly adopted by a majority of the directors of the Company (or any
successor corporation) then in office.
(c) If the Notice is given by the Executive for Good Reason,
the Executive may cease performing his duties hereunder on or after the
date fifteen days after the delivery of Notice of Termination and shall in
any event cease employment on the Termination Date. If the Notice is
given by the Company, then the Executive may cease performing his duties
hereunder on the date of receipt of the Notice of Termination, subject to
the Executive's rights hereunder.
(d) The Executive shall have thirty days, or such longer period
as the Company may determine to be appropriate, to cure any conduct or
act, if curable, alleged to provide grounds for termination of the
Executive's employment for Cause under this Agreement pursuant to
Subsection 1(d) (iii) hereof.
(e) The recipient of any Notice of Termination shall personally
deliver or mail in accordance with Section 23 hereof written notice of any
dispute relating to such Notice of Termination to the party giving such
Notice within fifteen days after receipt thereof; provided, however, that
if the Executive's conduct or act alleged to provide grounds for
termination by the Company for Cause is curable, then such period shall be
thirty days. After the expiration of such period, the contents of the
Notice of Termination shall become final and not subject to dispute.
14. Further Obligations of the Executive.
(a) Competition. The Executive agrees that, in the event of
any Covered Termination where the Executive is entitled to Accrued
Benefits and the Termination Payment, the Executive shall not, for a
period expiring one year after the Termination Date, without the prior
written approval of the Company's Board of Directors, participate in the
management of, be employed by or own any business enterprise at a location
within the United States that engages in substantial competition with the
Company or its subsidiaries, where such enterprise's revenues from any
competitive activities amount to 10% or more of such enterprise's net
revenues and sales for its most recently completed fiscal year; provided,
however, that nothing in this Section 14(a) shall prohibit the Executive
from owning stock or other securities of a competitor amounting to less
than five percent of the outstanding capital stock of such competitor.
(b) Confidentiality. During and following the Executive's
employment by the Company, the Executive shall hold in confidence and not
directly or indirectly disclose or use or copy or make lists of any
confidential information or proprietary data of the Company (including
that of the Employer), except to the extent authorized in writing by the
Board of Directors of the Company or required by any court or
administrative agency, other than to an employee of the Company or a
person to whom disclosure is reasonably necessary or appropriate in
connection with the performance by the Executive of duties as an executive
of the Company. Confidential information shall not include any
information known generally to the public or any information of a type not
otherwise considered confidential by persons engaged in the same business
or a business similar to that of the Company. All records, files,
documents and materials, or copies thereof, relating to the business of
the Company which the Executive shall prepare, or use, or come into
contact with, shall be and remain the sole property of the Company and
shall be promptly returned to the Company upon termination of employment
with the Company.
15. Expenses and Interest. If, after a Change in Control of
the Company, (i) a dispute arises with respect to the enforcement of the
Executive's rights under this Agreement or (ii) any legal or arbitration
proceeding shall be brought to enforce or interpret any provision
contained herein or to recover damages for breach hereof, in either case
so long as the Executive is not acting in bad faith, the Executive shall
recover from the Company any reasonable attorneys' fees and necessary
costs and disbursements incurred as a result of such dispute, legal or
arbitration proceeding ("Expenses"), and prejudgment interest on any money
judgment or arbitration award obtained by the Executive calculated at the
rate of interest announced by Firstar Bank Milwaukee, National
Association, Milwaukee, Wisconsin, from time to time as its prime or base
lending rate from the date that payments to him should have been made
under this Agreement. Within ten days after the Executive's written
request therefor, the Company shall pay to the Executive, or such other
person or entity as the Executive may designate in writing to the Company,
the Executive's reasonable Expenses in advance of the final disposition or
conclusion of any such dispute, legal or arbitration proceeding.
16. Payment Obligations Absolute. The Company's obligation
during and after the Employment Period to pay the Executive the amounts
and to make the benefit and other arrangements provided herein shall be
absolute and unconditional and shall not be affected by any circumstances,
including, without limitation, any setoff, counterclaim, recoupment,
defense or other right which the Company may have against him or anyone
else. Except as provided in Section 15 of this Agreement, all amounts
payable by the Company hereunder shall be paid without notice or demand.
Each and every payment made hereunder by the Company shall be final, and
the Company will not seek to recover all or any part of such payment from
the Executive, or from whomsoever may be entitled thereto, for any reason
whatsoever.
17. Successors. (a) If the Company sells, assigns or transfers
all or substantially all of its business and assets to any Person or if
the Company merges into or consolidates or otherwise combines (where the
Company does not survive such combination) with any Person (any such
event, a "Sale of Business"), then the Company shall assign all of its
right, title and interest in this Agreement as of the date of such event
to such Person, and the Company shall cause such Person, by written
agreement in form and substance reasonably satisfactory to the Executive,
to expressly assume and agree to perform from and after the date of such
assignment all of the terms, conditions and provisions imposed by this
Agreement upon the Company. Failure of the Company to obtain such
agreement prior to the effective date of such Sale of Business shall be a
breach of this Agreement constituting "Good Reason" hereunder, except that
for purposes of implementing the foregoing the date upon which such Sale
of Business becomes effective shall be deemed the Termination Date. In
case of such assignment by the Company and of assumption and agreement by
such Person, as used in this Agreement, "Company" shall thereafter mean
such Person which executes and delivers the agreement provided for in this
Section 18 or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law, and this Agreement shall
inure to the benefit of, and be enforceable by, such Person. The
Executive shall, in his discretion, be entitled to proceed against any or
all of such Persons, any Person which theretofore was such a successor to
the Company (as defined in the first paragraph of this Agreement) and the
Company (as so defined) in any action to enforce any rights of the
Executive hereunder. Except as provided in this Subsection, this
Agreement shall not be assignable by the Company. This Agreement shall
not be terminated by the voluntary or involuntary dissolution of the
Company.
(b) This Agreement and all rights of the Executive shall inure
to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, heirs and beneficiaries. All
amounts payable to the Executive under Sections 7, 8, 9, 10, 11, 12 and 15
hereof if the Executive had lived shall be paid, in the event of the
Executive's death, to the Executive's estate, heirs and representatives;
provided, however, that the foregoing shall not be construed to modify any
terms of any benefit plan of the Company, as such terms are in effect on
the date of the Change in Control of the Company, that expressly govern
benefits under such plan in the event of the Executive's death.
18. Severability. The provisions of this Agreement shall be
regarded as divisible, and if any of said provisions or any part hereof
are declared invalid or unenforceable by a court of competent
jurisdiction, the validity and enforceability of the remainder of such
provisions or parts hereof and the applicability thereof shall not be
affected thereby.
19. Amendment. This Agreement may not be amended or modified
at any time except by written instrument executed by the Company and the
Executive.
20. Withholding. The Company shall be entitled to withhold
from amounts to be paid to the Executive hereunder any federal, state or
local withholding or other taxes or charges which it is from time to time
required to withhold; provided, that the amount so withheld shall not
exceed the minimum amount required to be withheld by law. The Company
shall be entitled to rely on an opinion of nationally recognized tax
counsel if any question as to the amount or requirement of any such
withholding shall arise.
21. Certain Rules of Construction. No party shall be
considered as being responsible for the drafting of this Agreement for the
purpose of applying any rule construing ambiguities against the drafter or
otherwise. No draft of this Agreement shall be taken into account in
construing this Agreement. Any provision of this Agreement which requires
an agreement in writing shall be deemed to require that the writing in
question be signed by the Executive and an authorized representative of
the Company.
22. Governing Law; Resolution of Disputes. This Agreement and
the rights and obligations hereunder shall be governed by and construed in
accordance with the laws of the State of Wisconsin. Any dispute arising
out of this Agreement shall, at the Executive's election, be determined by
arbitration under the rules of the American Arbitration Association then
in effect (in which case both parties shall be bound by the arbitration
award) or by litigation. Whether the dispute is to be settled by
arbitration or litigation, the venue for the arbitration or litigation
shall be Madison, Wisconsin or, at the Executive's election, if the
Executive is no longer residing or working in the Madison, Wisconsin
metropolitan area, in the judicial district encompassing the city in which
the Executive resides; provided, that, if the Executive is not then
residing in the United States, the election of the Executive with respect
to such venue shall be either Madison, Wisconsin or in the judicial
district encompassing that city in the United States among the thirty
cities having the largest population (as determined by the most recent
United States Census data available at the Termination Date) which is
closest to the Executive's residence. The parties consent to personal
jurisdiction in each trial court in the selected venue having subject
matter jurisdiction notwithstanding their residence or situs, and each
party irrevocably consents to service of process in the manner provided
hereunder for the giving of notices.
23. Notice. Notices given pursuant to this Agreement shall be
in writing and, except as otherwise provided by Section 13(d) hereof,
shall be deemed given when actually received by the Executive or actually
received by the Company's Secretary or any officer of the Company other
than the Executive. If mailed, such notices shall be mailed by United
States registered or certified mail, return receipt requested, addressee
only, postage prepaid, if to the Company, to WPL Holdings, Inc.,
Attention: Secretary (or President, if the Executive is then Secretary),
222 West Washington Avenue, P.O. Box 2568, Madison, Wisconsin 53701-2568,
or if to the Executive, at the address set forth below the Executive's
signature to this Agreement, or to such other address as the party to be
notified shall have theretofore given to the other party in writing.
24. No Waiver. No waiver by either party at any time of any
breach by the other party of, or compliance with, any condition or
provision of this Agreement to be performed by the other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the
same time or any prior or subsequent time.
25. Headings. The headings herein contained are for reference
only and shall not affect the meaning or interpretation of any provision
of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the day and year first above written.
WPL HOLDINGS, INC.
By: _____________________________________
Its: _____________________________________
Attest: ________________________________
Its: _____________________________________
EXECUTIVE:
_____________________________________(SEAL)
Address:
