UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
<TABLE><CAPTION>
Exact name of Registrants as specified
Commission in their charters, address of principal IRS Employer
File Number executive offices and Registrants' telephone number Identification Number
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
1-8841 FPL GROUP, INC. 59-2449419
1-3545 FLORIDA POWER & LIGHT COMPANY 59-0247775
700 Universe Boulevard
Juno Beach, Florida 33408
(561) 694-4000
</TABLE>
State or other jurisdiction of incorporation or organization: Florida
Indicate by check mark whether the registrants (1) have 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 and (2) have been subject to such
filing requirements for the past 90 days. Yes X No ___
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares outstanding of each class of FPL Group, Inc. common
stock, as of the latest practicable date: Common Stock, $.01 par value,
outstanding at September 30, 1999: 179,141,435 shares.
As of September 30, 1999, there were issued and outstanding 1,000 shares of
Florida Power & Light Company's common stock, without par value, all of
which were held, beneficially and of record, by FPL Group, Inc.
______________________________
This combined Form 10-Q represents separate filings by FPL Group, Inc. and
Florida Power & Light Company. Information contained herein relating to an
individual registrant is filed by that registrant on its own behalf. Florida
Power & Light Company makes no representations as to the information relating
to FPL Group, Inc.'s other operations.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
In connection with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 (Reform Act), FPL Group, Inc. (FPL Group) and
Florida Power & Light Company (FPL) (collectively, the Company) are hereby
filing cautionary statements identifying important factors that could cause
the Company's actual results to differ materially from those projected in
forward-looking statements (as such term is defined in the Reform Act) made
by or on behalf of the Company which are made in this combined Form 10-Q, in
presentations, in response to questions or otherwise. Any statements that
express, or involve discussions as to expectations, beliefs, plans,
objectives, assumptions or future events or performance (often, but not
always, through the use of words or phrases such as will likely result, are
expected to, will continue, is anticipated, estimated, projection, outlook)
are not statements of historical facts and may be forward-looking. Forward-
looking statements involve estimates, assumptions and uncertainties that
could cause actual results to differ materially from those expressed in the
forward-looking statements. Accordingly, any such statements are qualified
in their entirety by reference to, and are accompanied by, the following
important factors that could cause the Company's actual results to differ
materially from those contained in forward-looking statements made by or on
behalf of the Company.
Any forward-looking statement speaks only as of the date on which such
statement is made, and the Company undertakes no obligation to update any
forward-looking statement to reflect events or circumstances after the date
on which such statement is made or to reflect the occurrence of unanticipated
events. New factors emerge from time to time and it is not possible for
management to predict all of such factors, nor can it assess the impact of
each such factor on the business or the extent to which any factor, or
combination of factors, may cause actual results to differ materially from
those contained in any forward-looking statement.
Some important factors that could cause actual results or outcomes to differ
materially from those discussed in the forward-looking statements include
changing governmental policies and regulatory actions, including those of the
Federal Energy Regulatory Commission (FERC), the Florida Public Service
Commission (FPSC) and the Nuclear Regulatory Commission (NRC), with respect
to allowed rates of return including but not limited to return on common
equity (ROE) and equity ratio limits, industry and rate structure, operation
of nuclear power facilities, acquisition, disposal, depreciation and
amortization of assets and facilities, operation and construction of plant
facilities, recovery of fuel and purchased power costs, decommissioning
costs, and present or prospective wholesale and retail competition (including
but not limited to retail wheeling and transmission costs).
The business and profitability of the Company are also influenced by economic
and geographic factors including political and economic risks, changes in and
compliance with environmental and safety laws and policies, weather
conditions (including natural disasters such as hurricanes), population
growth rates and demographic patterns, competition for retail and wholesale
customers, pricing and transportation of commodities, market demand for
energy from plants or facilities, changes in tax rates or policies or in
rates of inflation, unanticipated delays or changes in costs for capital
projects, unanticipated changes in operating expenses and capital
expenditures, capital market conditions, competition for new energy
development opportunities, legal and administrative proceedings (whether
civil, such as environmental, or criminal) and settlements, and any
unanticipated impact of the year 2000, including delays or changes in costs
of year 2000 readiness, or the failure of major suppliers, customers and
others with whom the Company does business to resolve their own year 2000
issues on a timely basis.
All such factors are difficult to predict, contain uncertainties which may
materially affect actual results, and are beyond the control of the Company.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
FPL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
OPERATING REVENUES ............................................... $1,892 $1,999 $4,918 $5,030
OPERATING EXPENSES:
Fuel, purchased power and interchange .......................... 693 659 1,788 1,652
Other operations and maintenance................................ 309 327 910 945
Depreciation and amortization .................................. 245 314 768 911
Impairment loss on Maine assets ................................ - - 176 -
Taxes other than income taxes .................................. 175 171 462 457
Total operating expenses ..................................... 1,422 1,471 4,104 3,965
OPERATING INCOME ................................................. 470 528 814 1,065
OTHER INCOME (DEDUCTIONS):
Interest charges ............................................... (58) (101) (163) (228)
Preferred stock dividends - FPL ................................ (4) (4) (11) (11)
Gain on sale of Adelphia Communications Corporation stock ...... - - 149 -
Other - net .................................................... 39 21 79 42
Total other income (deductions) - net ........................ (23) (84) 54 (197)
INCOME BEFORE INCOME TAXES ....................................... 447 444 868 868
INCOME TAXES ..................................................... 156 157 291 297
NET INCOME ....................................................... $ 291 $ 287 $ 577 $ 571
Earnings per share of common stock (basic and assuming dilution).. $ 1.70 $ 1.66 $ 3.36 $ 3.31
Dividends per share of common stock .............................. $ 0.52 $ 0.50 $ 1.56 $ 1.50
Average number of common shares outstanding ...................... 171 172 171 173
</TABLE>
This report should be read in conjunction with the Notes to Condensed
Consolidated Financial Statements on pages 9 through 13 herein and the Notes
to Consolidated Financial Statements appearing in the combined Annual Report
on Form 10-K for the fiscal year ended December 31, 1998 (1998 Form 10-K) for
FPL Group and FPL.
FPL GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Millions of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
<S> <C> <C>
PROPERTY, PLANT AND EQUIPMENT:
Electric utility plant in service and other property,
including nuclear fuel and construction work in progress ....................... $19,171 $17,952
Less accumulated depreciation and amortization ................................... (10,029) (9,397)
Total property, plant and equipment - net ...................................... 9,142 8,555
CURRENT ASSETS:
Cash and cash equivalents ........................................................ 370 187
Customer receivables, net of allowance of $8 for both periods .................... 658 559
Materials, supplies and fossil fuel inventory - at average cost .................. 308 282
Other ............................................................................ 282 238
Total current assets ........................................................... 1,618 1,266
OTHER ASSETS:
Special use funds of FPL ......................................................... 1,336 1,206
Other investments ................................................................ 578 391
Other ............................................................................ 846 611
Total other assets ............................................................. 2,760 2,208
TOTAL ASSETS ....................................................................... $13,520 $12,029
CAPITALIZATION:
Common stock ..................................................................... $ 2 $ 2
Additional paid-in capital........................................................ 2,923 3,000
Retained earnings................................................................. 2,433 2,123
Accumulated other comprehensive income............................................ - 1
Total common shareholders' equity............................................... 5,358 5,126
Preferred stock of FPL without sinking fund requirements ......................... 226 226
Long-term debt ................................................................... 3,091 2,347
Total capitalization ........................................................... 8,675 7,699
CURRENT LIABILITIES:
Debt due within one year ......................................................... 519 469
Accounts payable ................................................................. 462 338
Accrued interest, taxes and other ................................................ 1,276 834
Total current liabilities ...................................................... 2,257 1,641
OTHER LIABILITIES AND DEFERRED CREDITS:
Accumulated deferred income taxes ................................................ 1,112 1,255
Unamortized regulatory and investment tax credits ................................ 322 353
Other ............................................................................ 1,154 1,081
Total other liabilities and deferred credits ................................... 2,588 2,689
COMMITMENTS AND CONTINGENCIES
TOTAL CAPITALIZATION AND LIABILITIES ............................................... $13,520 $12,029
</TABLE>
This report should be read in conjunction with the Notes to Condensed
Consolidated Financial Statements on pages 9 through 13 herein and the Notes
to Consolidated Financial Statements appearing in the 1998 Form 10-K for FPL
Group and FPL.
FPL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Millions of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1999 1998
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES ............................................. $1,518 $1,532
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures of FPL ......................................................... (607) (474)
Independent power investments ....................................................... (1,448) (425)
Distributions and loan repayments from partnerships and joint ventures .............. 99 280
Other - net ......................................................................... 61 (58)
Net cash used in investing activities ........................................... (1,895) (677)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of long-term debt .......................................................... 1,216 343
Retirement of long-term debt ........................................................ (584) (398)
Increase (decrease) in short-term debt .............................................. 284 (96)
Repurchase of common stock .......................................................... (89) (52)
Dividends on common stock ........................................................... (267) (259)
Net cash provided by (used in) financing activities ............................. 560 (462)
Net increase in cash and cash equivalents ............................................. 183 393
Cash and cash equivalents at beginning of period ...................................... 187 54
Cash and cash equivalents at end of period ............................................ $ 370 $ 447
Supplemental disclosures of cash flow information:
Cash paid for interest .............................................................. $ 161 $ 217
Cash paid for income taxes .......................................................... $ 323 $ 238
Supplemental schedule of noncash investing and financing activities:
Additions to capital lease obligations .............................................. $ 56 $ 29
</TABLE>
This report should be read in conjunction with the Notes to Condensed
Consolidated Financial Statements on pages 9 through 13 herein and the Notes
to Consolidated Financial Statements appearing in the 1998 Form 10-K for FPL
Group and FPL.
FLORIDA POWER & LIGHT COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Millions of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
OPERATING REVENUES ................................................. $1,769 $1,878 $4,638 $4,807
OPERATING EXPENSES:
Fuel, purchased power and interchange ............................ 646 637 1,679 1,614
Other operations and maintenance ................................. 258 293 791 846
Depreciation and amortization .................................... 234 306 743 891
Income taxes ..................................................... 156 157 306 311
Taxes other than income taxes .................................... 172 171 460 456
Total operating expenses ....................................... 1,466 1,564 3,979 4,118
OPERATING INCOME ................................................... 303 314 659 689
OTHER INCOME (DEDUCTIONS):
Interest charges ................................................. (39) (50) (125) (149)
Other - net ...................................................... 4 3 8 -
Total other deductions - net ................................... (35) (47) (117) (149)
NET INCOME ......................................................... 268 267 542 540
PREFERRED STOCK DIVIDENDS .......................................... 4 4 11 11
NET INCOME AVAILABLE TO FPL GROUP .................................. $ 264 $ 263 $ 531 $ 529
</TABLE>
This report should be read in conjunction with the Notes to Condensed
Consolidated Financial Statements on pages 9 through 13 herein and the Notes
to Consolidated Financial Statements appearing in the 1998 Form 10-K for FPL
Group and FPL.
FLORIDA POWER & LIGHT COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Millions of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
<S> <C> <C>
ELECTRIC UTILITY PLANT:
Plant in service, including nuclear fuel and construction work in progress ....... $17,872 $17,464
Less accumulated depreciation and amortization ................................... (9,928) (9,317)
Electric utility plant - net ................................................... 7,944 8,147
CURRENT ASSETS:
Cash and cash equivalents ........................................................ 283 152
Customer receivables, net of allowance of $8 for both periods .................... 590 521
Materials, supplies and fossil fuel inventory - at average cost .................. 264 239
Other ............................................................................ 260 204
Total current assets ........................................................... 1,397 1,116
OTHER ASSETS:
Special use funds ................................................................ 1,336 1,206
Other ............................................................................ 370 279
Total other assets ............................................................. 1,706 1,485
TOTAL ASSETS ....................................................................... $11,047 $10,748
CAPITALIZATION:
Common shareholder's equity ...................................................... $ 4,876 $ 4,803
Preferred stock without sinking fund requirements ................................ 226 226
Long-term debt ................................................................... 2,079 2,191
Total capitalization ........................................................... 7,181 7,220
CURRENT LIABILITIES:
Debt due within one year ......................................................... 125 230
Accounts payable ................................................................. 445 321
Accrued interest, taxes and other ................................................ 1,145 800
Total current liabilities ...................................................... 1,715 1,351
OTHER LIABILITIES AND DEFERRED CREDITS:
Accumulated deferred income taxes ................................................ 834 887
Unamortized regulatory and investment tax credits ................................ 322 353
Other ............................................................................ 995 937
Total other liabilities and deferred credits ................................... 2,151 2,177
COMMITMENTS AND CONTINGENCIES
TOTAL CAPITALIZATION AND LIABILITIES ............................................... $11,047 $10,748
</TABLE>
This report should be read in conjunction with the Notes to Condensed
Consolidated Financial Statements on pages 9 through 13 herein and the Notes
to Consolidated Financial Statements appearing in the 1998 Form 10-K for FPL
Group and FPL.
FLORIDA POWER & LIGHT COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Millions of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1999 1998
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES ............................................. $1,494 $1,479
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ................................................................ (607) (474)
Other - net ......................................................................... (55) (64)
Net cash used in investing activities ........................................... (662) (538)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of long-term debt .......................................................... 224 197
Retirement of long-term debt ........................................................ (455) (389)
Decrease in commercial paper ........................................................ - (40)
Dividends ........................................................................... (470) (475)
Net cash used in financing activities ............................................. (701) (707)
Net increase in cash and cash equivalents ............................................. 131 234
Cash and cash equivalents at beginning of period ...................................... 152 3
Cash and cash equivalents at end of period ............................................ $ 283 $ 237
Supplemental disclosures of cash flow information:
Cash paid for interest .............................................................. $ 126 $ 142
Cash paid for income taxes .......................................................... $ 268 $ 277
Supplemental schedule of noncash investing and financing activities:
Additions to capital lease obligations .............................................. $ 56 $ 29
</TABLE>
This report should be read in conjunction with the Notes to Condensed
Consolidated Financial Statements on pages 9 through 13 herein and the Notes
to Consolidated Financial Statements appearing in the 1998 Form 10-K for FPL
Group and FPL.
FPL GROUP, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The accompanying condensed consolidated financial statements should be read
in conjunction with the combined 1998 Form
10-K for FPL Group and FPL. In the opinion of FPL Group and FPL management,
all adjustments (consisting of normal recurring accruals) considered
necessary for fair financial statement presentation have been made. Certain
amounts included in the prior year's consolidated financial statements have
been reclassified to conform to the current year's presentation. The results
of operations for an interim period may not give a true indication of results
for the year.
1. Summary of Significant Accounting and Reporting Policies
Regulation - In March 1999, the FPSC approved an agreement between FPL, the
State of Florida's Office of Public Counsel (Public Counsel), The Florida
Industrial Power Users Group (FIPUG) and The Coalition for Equitable Rates
(Coalition) regarding FPL's retail base rates, authorized regulatory ROE,
capital structure and other matters. As a result of the approval of this
agreement, all matters raised in Public Counsel's petition to the FPSC to
conduct a full rate proceeding were resolved. The three-year agreement
became effective April 15, 1999.
The agreement provides for a $350 million reduction in annual revenue from
retail base operations allocated to all customers on a cents-per-kilowatt-
hour basis. Additionally, the rate reduction agreement sets forth a
revenue sharing mechanism for each of the three years covered by the
agreement, whereby revenue from retail base operations in excess of a
stated threshold will be shared with retail customers on the basis of two-
thirds refunded to retail customers and one-third retained by FPL. Revenue
from retail base operations in excess of a second threshold will be
refunded 100% to retail customers.
The thresholds are as follows:
Twelve Months Ended
April 14,
2000 2001 2002
(Millions of Dollars)
Threshold to refund 66 2/3% to customers ..... $3,400 $3,450 $3,500
Threshold to refund 100% to customers ........ $3,556 $3,606 $3,656
Offsetting the annual revenue reduction will be lower special depreciation.
The rate reduction agreement allows for special depreciation of up to $100
million, at FPL's discretion, in each year of the three-year agreement
period to be applied to nuclear and/or fossil generating assets. This new
depreciation program replaced the previous program whereby $378 million of
special amortization was recorded in 1998. For the three and nine months
ended September 30, 1999, FPL recorded approximately $21 million and $103
million under these special depreciation/amortization programs compared to
approximately $90 million and $238 million for the three and nine months
ended September 30, 1998, respectively.
In addition, the agreement lowered FPL's authorized regulatory ROE range to
10% - 12%. During the term of the agreement, the achieved ROE may, from
time to time, be outside the authorized range and the revenue sharing
mechanism described above is intended to be the appropriate and exclusive
mechanism to address that circumstance. The agreement establishes a cap on
FPL's adjusted equity ratio of 55.83%. The adjusted equity ratio reflects
a discounted amount for off-balance sheet obligations under certain long-
term purchase power contracts. Finally, included in the agreement are
provisions which limit depreciation rates and accruals for nuclear
decommissioning and fossil dismantlement costs to currently approved levels
and limit amounts recoverable under the environmental cost recovery clause
during the three-year term of the agreement.
The agreement states that Public Counsel, FIPUG and Coalition will neither
seek nor support any additional base rate reductions during the three-year
term of the agreement unless such reduction is initiated by FPL. Further,
FPL agreed to not petition for any base rate increases that would take
effect during the three-year term of the agreement.
Electric Plant, Depreciation and Amortization - In April 1999, the FPSC
granted final approval on FPL's most recent depreciation studies, which
were effective beginning in 1998.
2. Acquisition of Maine Assets
During the second quarter of 1999, FPL Energy, Inc. completed the purchase
of Central Maine Power Company's (CMP) non-nuclear generating assets,
primarily fossil and hydro power plants, for $866 million. The purchase
price was based on an agreement, subject to regulatory approvals, reached
with CMP in January 1998. In October 1998, the FERC struck down
transmission rules that had been in effect in New England since the 1970s.
FPL Energy, Inc. filed a lawsuit in November 1998 requesting a declaratory
judgment that CMP could not meet the essential terms of the purchase
agreement and, as a result, FPL Energy, Inc. should not be required to
complete the transaction. FPL Energy, Inc. believed these FERC rulings
regarding transmission constituted a material adverse effect under the
purchase agreement because of the significant decline in the value of the
assets caused by the rulings. The request for declaratory judgment was
denied in March 1999, and the acquisition was completed on April 7,1999.
The acquisition was accounted for under the purchase method of accounting
and the results of operating the Maine plants have been included in the
condensed consolidated financial statements since the acquisition date.
The FERC rulings regarding transmission, as well as the announcement of new
entrants into the market and changes in fuel prices since January 1998,
resulted in FPL Energy, Inc. recording a $176 million pre-tax impairment
loss related to the fossil assets. The fossil assets are now reflected at
their fair value, which was determined based on a discounted cash flow
analysis. The impairment loss reduced FPL Group's year-to-date 1999
results of operations and earnings per share by $104 million and $0.61 per
share, respectively.
Most of the remainder of the purchase price was allocated to the hydro
operations. The hydro plants and related goodwill are being amortized on a
straight-line basis over the 40-year term of the hydro plant operating
licenses.
3. Capitalization
FPL Group Common Stock - During the three and nine months ended September 30,
1999, FPL Group repurchased 100,000 shares and 1,570,000 shares of common
stock, respectively, under its share repurchase program. A total of
approximately 3.3 million shares have been repurchased under the share
repurchase program that began in April 1997.
Long-Term Debt - In January 1999, FPL Group Capital Inc (FPL Group Capital)
redeemed $125 million principal amount of 7 5/8% debentures, maturing in
2013. This redemption resulted in a loss on reacquired debt of approximately
$8 million, which is included in other-net in FPL Group's condensed
consolidated statements of income for the nine months ended September 30,
1999. In April 1999, FPL sold $225 million principal amount of first
mortgage bonds maturing in 2009, with an interest rate of 5 7/8%. The
proceeds were used in May 1999 to redeem approximately $216 million principal
amount of first mortgage bonds, maturing in 2013, bearing interest at 7 7/8%.
In June 1999, FPL Group Capital sold $175 million principal amount of 6 7/8%
debentures, maturing in 2004 and $225 million principal amount of 7 3/8%
debentures, maturing in 2009. In September 1999, FPL Group Capital sold $600
million principal amount of 7 5/8% debentures, maturing in 2006.
Long-Term Incentive Plan - Performance shares granted to date under FPL
Group's long-term incentive plan resulted in assumed incremental shares of
common stock outstanding for purposes of computing both basic and diluted
earnings per share for the three and nine months ended September 30, 1999 and
1998. These incremental shares were not material in the periods presented
and did not cause diluted earnings per share to differ from basic earnings
per share.
Other - Comprehensive income of FPL Group, totaling $290 million and $288
million for the three months ended September 30, 1999 and 1998 and $575
million and $572 million for the nine months ended September 30, 1999 and
1998, respectively, includes net income and changes in unrealized gains
(losses) on securities and foreign currency translation adjustments.
Accumulated other comprehensive income is separately displayed in the
condensed consolidated balance sheets of FPL Group.
4. Commitments and Contingencies
Commitments - FPL has made commitments in connection with a portion of its
projected capital expenditures. Capital expenditures for the construction or
acquisition of additional facilities and equipment to meet customer demand
are estimated to be approximately $3.0 billion for 1999 through 2001.
Included in this three-year forecast are capital expenditures for 1999 of
approximately $900 million, of which $610 million had been spent through
September 30, 1999. As of September 30, 1999, FPL Energy, LLC (FPL Energy),
formerly FPL Energy, Inc. (see Part II - Item 5), has made commitments in
connection with the development of an independent power project totaling $146
million. FPL Group and its subsidiaries, other than FPL, have guaranteed
approximately $689 million of purchase power agreement obligations, debt
service payments and other payments subject to certain contingencies.
Insurance - Liability for accidents at nuclear power plants is governed by
the Price-Anderson Act, which limits the liability of nuclear reactor
owners to the amount of the insurance available from private sources and
under an industry retrospective payment plan. In accordance with this Act,
FPL maintains $200 million of private liability insurance, which is the
maximum obtainable, and participates in a secondary financial protection
system under which it is subject to retrospective assessments of up to $363
million per incident at any nuclear utility reactor in the United States,
payable at a rate not to exceed $43 million per incident per year.
FPL participates in nuclear insurance mutual companies that provide $2.75
billion of limited insurance coverage for property damage, decontamination
and premature decommissioning risks at its nuclear plants. The proceeds
from such insurance, however, must first be used for reactor stabilization
and site decontamination before they can be used for plant repair. FPL
also participates in an insurance program that provides limited coverage
for replacement power costs if a nuclear plant is out of service because of
an accident. In the event of an accident at one of FPL's or another
participating insured's nuclear plants, FPL could be assessed up to $50
million in retrospective premiums.
In the event of a catastrophic loss at one of FPL's nuclear plants, the
amount of insurance available may not be adequate to cover property damage
and other expenses incurred. Uninsured losses, to the extent not recovered
through rates, would be borne by FPL and could have a material adverse
effect on FPL Group's and FPL's financial condition.
FPL self-insures the majority of its transmission and distribution (T&D)
property due to the high cost and limited coverage available from third-
party insurers. As approved by the FPSC, FPL maintains a funded storm and
property insurance reserve, which totaled approximately $278 million at
September 30, 1999, for T&D property storm damage or assessments under the
nuclear insurance program. Recovery from customers of any losses in excess
of the storm and property insurance reserve will require the approval of
the FPSC. FPL's available lines of credit include $300 million to provide
additional liquidity in the event of a T&D property loss.
Contracts - FPL has entered into long-term purchased power and fuel
contracts. Take-or-pay purchased power contracts with the Jacksonville
Electric Authority (JEA) and with subsidiaries of The Southern Company
(Southern Companies) provide approximately 1,300 megawatts (mw) of power
through mid-2010 and 383 mw thereafter through 2021. FPL also has various
firm pay-for-performance contracts to purchase approximately 1,000 mw from
certain cogenerators and small power producers (qualifying facilities) with
expiration dates ranging from 2002 through 2026. The purchased power
contracts provide for capacity and energy payments. Energy payments are
based on the actual power taken under these contracts. Capacity payments
for the pay-for-performance contracts are subject to the qualifying
facilities meeting certain contract conditions. Fuel contracts provide for
the transportation and supply of natural gas and coal. FPL Energy has
long-term contracts for the transportation and storage of natural gas with
expiration dates ranging from 2005 through 2017, and a 24-month contract
commencing in mid-2000 for the supply of natural gas.
The required capacity and minimum payments through 2003 under these
contracts are estimated to be as follows:
<TABLE><CAPTION>
1999 2000 2001 2002 2003
(Millions of Dollars)
<S> <C> <C> <C> <C> <C>
FPL:
Capacity payments:
JEA and Southern Companies ............................................ $210 $210 $210 $210 $200
Qualifying facilities (a) ............................................. $360 $370 $380 $400 $410
Minimum payments, at projected prices:
Natural gas, including transportation ................................. $340 $210 $240 $260 $260
Coal .................................................................. $ 40 $ 40 $ 30 $ 30 $ 15
FPL Energy:
Natural gas, including transportation and storage ..................... $ 15 $ 17 $ 20 $ 18 $ 16
_______________
(a) Includes approximately $38 million, $42 million, $44 million, $47 million and $49 million, respectively, for
capacity payments associated with two contracts that are currently in dispute. These capacity payments are subject
to the outcome of the related litigation. See Litigation.
</TABLE>
Charges under these contracts were as follows
<TABLE><CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
1999 Charges 1998 Charges 1999 Charges 1998 Charges
---------------------------------------- ---------------------------------------
Energy/ Energy/ Energy/ Energy/
Capacity Fuel Capacity Fuel Capacity Fuel Capacity Fuel
-------- ------- -------- ------- -------- ------- -------- -------
(Millions of Dollars)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FPL:
JEA and Southern Companies .. $46(b) $ 40(a) $42(b) $38(a) $146(b) $ 94(a) $147(b) $104(a)
Qualifying facilities........ $76(c) $ 35(a) $75(c) $31(a) $227(c) $ 83(a) $224(c) $ 85(a)
Natural gas, including
transportation ............ $ - $104(a) $ - $77(a) $ - $290(a) $ - $215(a)
Coal ........................ $ - $ 10(a) $ - $12(a) $ - $ 32(a) $ - $ 37(a)
FPL Energy:
Natural gas transportation
and storage ............... $ - $ 4 $ - $ 5 $ - $ 12 $ - $ 14
_______________
(a) Recovered through the fuel and purchased power cost recovery clause.
(b) Recovered through base rates and the capacity cost recovery clause (capacity clause).
(c) Recovered through the capacity clause.
</TABLE>
Litigation - In 1997, FPL filed a complaint against the owners of two
qualifying facilities (plant owners) seeking an order declaring that FPL's
obligations under the power purchase agreements with the qualifying
facilities were rendered of no force and effect because the power plants
failed to accomplish commercial operation before January 1, 1997, as
required by the agreements. In 1997, the plant owners filed for bankruptcy
under Chapter XI of the U.S. Bankruptcy Code, ceased all attempts to
operate the power plants and entered into an agreement with the holders of
more than 70% of the bonds that partially financed the construction of the
plants. This agreement gives the holders of a majority of the principal
amount of the bonds (the majority bondholders) the right to control, fund
and manage any litigation against FPL and the right to settle with FPL on
any terms such majority bondholders approve, provided that certain
agreements are not affected and certain conditions are met. In January
1998, the plant owners (through the attorneys for the majority bondholders)
filed an answer denying the allegations in FPL's complaint and asserting
counterclaims for approximately $2 billion, consisting of all capacity
payments that could have been made over the 30-year term of the power
purchase agreements and three times their actual damages for alleged
violations of Florida antitrust laws, plus attorneys' fees. In October
1998, the court dismissed all of the plant owners' antitrust claims against
FPL. In June 1999, the plant owners' motion for summary judgment was
denied. FPL believes that it has meritorious defenses to this litigation
and is vigorously defending the suit. Accordingly, the liabilities, if
any, arising from this proceeding are not anticipated to have a material
adverse effect on its financial statements.
Accounting for Derivative Instruments and Hedging Activities - In June 1998,
the Financial Accounting Standards Board (FASB) issued Financial Accounting
Standards No. (FAS) 133, "Accounting for Derivative Instruments and Hedging
Activities." The statement establishes accounting and reporting standards
requiring that every derivative instrument (including certain derivative
instruments embedded in other contracts) be recorded in the balance sheet as
either an asset or liability measured at its fair value. The statement
requires that changes in the derivative's fair value be recognized currently
in earnings unless specific hedge accounting criteria are met. FPL Group and
FPL are currently assessing the effect, if any, on their financial statements
of implementing FAS 133. In June 1999, the FASB issued FAS 137, "Accounting
for Derivative Instruments and Hedging Activities - Deferral of the Effective
Date of FASB Statement No. 133," which delayed the adoption of FAS 133 for
one year. As a result of FAS 137, FPL Group and FPL will not be required to
adopt FAS 133 until 2001.
5. Segment Information
FPL Group's reportable segments include FPL, a regulated utility, and FPL
Energy, an unregulated energy generating subsidiary. FPL Group's segment
information is as follows
<TABLE><CAPTION>
Three Months Ended September 30,
1999 1998
----------------------------------------- ------------------------------------------
FPL Corporate FPL Corporate
FPL Energy & Other Total FPL Energy(a) & Other(a) Total
(Millions of Dollars)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating revenues ..... $1,769 $ 103 $ 20 $ 1,892 $ 1,878 $ 107 $ 14 $ 1,999
Net income ............. $ 264 $ 27 $ - $ 291 $ 263 $ 18 $ 6 $ 287
</TABLE>
<TABLE><CAPTION>
Nine Months Ended September 30,
1999 1998
----------------------------------------- ------------------------------------------
FPL Corporate FPL Corporate
FPL Energy & Other Total FPL Energy(a) & Other(a) Total
(Millions of Dollars)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating revenues ..... $ 4,638 $ 238 $ 42 $ 4,918 $ 4,807 $ 172 $ 51 $ 5,030
Net income ............. $ 531 $ (50)(b) $ 96(c) $ 577 $ 529 $ 29 $ 13 $ 571
</TABLE>
<TABLE><CAPTION>
September 30, 1999 December 31, 1998
----------------------------------------- ------------------------------------------
FPL Corporate FPL Corporate
FPL Energy & Other Total FPL Energy & Other Total
(Millions of Dollars)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total assets ........... $11,047 $2,220 $253 $13,520 $10,748 $1,092 $189 $12,029
</TABLE>
(a) FPL Energy began imputing interest in the second quarter of 1999 based
on an assumed capital structure of 50% debt for operating projects and 100%
debt for projects under construction. For comparability, 1998 amounts
have been restated.
(b) Includes effect of $104 million after-tax impairment loss. See Note 2
and Management's Discussion and Analysis of Financial Condition and
Results of Operations - Results of Operations - FPL Energy.
(c) Includes effect of $96 million after-tax gain on the sale of an
investment in Adelphia Communications Corporation (Adelphia) common
stock. See Management's Discussion and Analysis of Financial Condition
and Results of Operations - Results of Operations - Corporate and Other.
6. Summarized Financial Information of FPL Group Capital
FPL Group Capital provides funding for and holds ownership interest in FPL
Group's operating subsidiaries other than FPL. FPL Group Capital's
debentures are guaranteed by FPL Group and included in FPL Group's
condensed consolidated balance sheets. Summarized financial information of
FPL Group Capital is as follows:
<TABLE><CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
1999 1998 1999 1998
(Millions of Dollars)
<S> <C> <C> <C> <C>
Operating revenues ..................... $123 $122 $280 $223
Operating expenses ..................... $112 $ 65 $432(a) $160
Net income ............................. $ 33 $ 29 $ 63(a)(b) $ 58
</TABLE>
<TABLE><CAPTION>
September 30, 1999 December 31, 1998
(Millions of Dollars)
<S> <C> <C>
Current assets ......................... $ 419 $ 317
Noncurrent assets ...................... $2,544 $1,445
Current liabilities .................... $ 680 $ 310
Noncurrent liabilities ................. $1,472 $ 703
</TABLE>
(a) Includes effect of $104 million after-tax impairment loss. See Note 2
and Management's Discussion and Analysis of Financial Condition and
Results of Operations - Results of Operations - FPL Energy.
(b) Includes effect of $96 million after-tax gain on the sale of an
investment in Adelphia common stock. See Management's Discussion and
Analysis of Financial Condition and Results of Operations - Results of
Operations - Corporate and Other.
Management has not presented separate financial statements and other
disclosures concerning FPL Group Capital because management has determined
that such information is not material to holders of the FPL Group Capital
debentures.
7. Subsequent Events
Redemption of Interest in Cable Limited Partnership - In October 1999, an FPL
Group Capital subsidiary had its one-third ownership interest in a cable
limited partnership redeemed, which had been accounted for on the equity
method, resulting in an after-tax gain of approximately $66 million.
Settlement of Litigation - In October 1999, FPL and the Florida Municipal
Power Agency (FMPA) entered into a settlement agreement pursuant to which FPL
agreed to pay FMPA a cash settlement; FPL agreed to reduce the demand charge
on an existing power purchase agreement; and FPL and FMPA agreed to enter
into a new power purchase agreement giving FMPA the right to purchase limited
amounts of power in the future at a specified price. FMPA agreed to dismiss
the lawsuit with prejudice, and both parties agreed to exchange mutual
releases. The settlement will reduce FPL's fourth quarter 1999 net income by
approximately $42 million.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
This discussion should be read in conjunction with the Notes to Condensed
Consolidated Financial Statements contained herein and Management's
Discussion and Analysis of Financial Condition and Results of Operations
appearing in the 1998 Form 10-K for FPL Group and FPL. The results of
operations for an interim period may not give a true indication of results
for the year. In the following discussion, all comparisons are with the
corresponding items in the prior year.
RESULTS OF OPERATIONS
While the majority of FPL Group's earnings continue to come from FPL, the
growth in quarterly earnings is primarily the result of growth and improved
results at FPL Energy. Year-to-date 1999 earnings reflect a $149 million
($96 million after-tax) gain recorded in the first quarter by FPL Group
Capital on the sale on an investment in Adelphia common stock and a $176
million ($104 million after-tax) impairment loss recorded in the second
quarter by FPL Energy related to the fossil assets purchased from CMP.
Excluding these items, FPL Group's year-to-date earnings growth is also
primarily the result of FPL Energy's growth and improved results.
FPL - FPL's net income was up slightly for the three and nine months ended
September 30, 1999. FPL's revenue from retail base operations for the
three and nine months ended September 30, 1999, were $1.0 billion and $2.7
billion, respectively, and $1.1 billion and $2.9 billion for the same
periods in 1998. Lower revenues from retail base operations resulted
mainly from the rate reduction agreement, which became effective in April
1999, as well as a decline in energy usage per retail customer. Usage per
retail customer was down 0.3% and 1.4% for the three and nine months ended
September 30, 1999, respectively, mainly as a result of warmer weather in
the summer of 1998. The number of customer accounts, however, increased
2.1% and 2.0% for the same periods.
The rate reduction agreement provides for a $350 million reduction in
annual revenue from retail base operations allocated to all customers on a
cents-per-kilowatt-hour basis. Additionally, the rate reduction agreement
sets forth a revenue sharing mechanism for each of the three years covered
by the agreement, whereby revenue from retail base operations in excess of
a stated threshold will be shared with retail customers on the basis of
two-thirds refunded to retail customers and one-third retained by FPL.
Revenues from retail base operations in excess of a second threshold will
be refunded 100% to retail customers. The thresholds for the twelve months
ended April 14, 2000, are $3.4 billion and $3.556 billion, respectively.
Offsetting the annual revenue reduction will be lower special depreciation.
The rate reduction agreement allows for special depreciation of up to $100
million, at FPL's discretion, in each year of the three-year agreement
period to be applied to nuclear and/or fossil generating assets. This new
depreciation program replaced the previous program whereby $378 million of
special amortization was recorded in 1998. See Note 1 - Regulation.
FPL's other operations and maintenance expense decreased for both the three
and nine months ended September 30, 1999, primarily reflecting successful
cost control efforts as well as the timing of expenditures. Depreciation
and amortization expense also decreased for those periods as a result of
lower special depreciation. For the three and nine months ended September
30, 1999, FPL recorded approximately $21 million and $103 million of
special depreciation/amortization compared to approximately $90 million and
$238 million for the three and nine months ended September 30, 1998,
respectively. Lower interest expense for the three and nine months ended
September 30, 1999 is the result of lower average debt balances and the
full amortization in 1998 of deferred costs associated with reacquired
debt.
In October 1999, FPL and FMPA entered into a settlement agreement pursuant to
which FPL agreed to pay FMPA a cash settlement; FPL agreed to reduce the
demand charge on an existing power purchase agreement; and FPL and FMPA
agreed to enter into a new power purchase agreement giving FMPA the right to
purchase limited amounts of power in the future at a specified price. FMPA
agreed to dismiss the lawsuit with prejudice, and both parties agreed to
exchange mutual releases. The settlement will reduce FPL's fourth quarter
1999 net income by approximately $42 million. See Note 7 - Settlement of
Litigation.
FPL Energy - FPL Energy's net income for the three and nine months ended
September 30, 1999 benefited from improved results from its natural gas
operations in the eastern United States, as well as the addition of the
Maine generating assets and new and repowered wind projects. FPL Energy's
net income for the nine months ended September 30, 1999 includes the effect
of a $176 million ($104 million after-tax) impairment loss recorded in the
second quarter of 1999. Earnings in all periods include the effect of
imputed interest expense on an assumed capital structure of 50% debt for
operating projects and 100% debt for projects under construction.
Corporate and Other - Net income for the three and nine months ended
September 30, 1999 for the corporate and other segment reflects a $149
million ($96 million after-tax) gain recorded by FPL Group Capital on the
sale of an investment in Adelphia common stock in the first quarter of
1999.
In October 1999, an FPL Group Capital subsidiary redeemed its one-third
ownership interest in a cable limited partnership, which had been accounted
for on the equity method, resulting in an after-tax gain of approximately $66
million. See Note 7 - Redemption of Interest in Cable Limited Partnership.
Year 2000 - FPL Group is essentially complete with its plan to address the
potential impact of the year 2000 on its technology systems. FPL Group has
prepared its year 2000 contingency plans, which are based upon certain
hypothetical year 2000 scenarios at the operating level (such as
generation, transmission and distribution), as well as at the business
level (such as customer service, procurement and accounting). These plans
are intended to mitigate both internal risks and potential risks in FPL
Group's supply chain. During the remainder of 1999, FPL Group will
continue to conduct training and drills, as well as evaluate and update its
contingency plans. In addition, FPL Group has retained independent
engineering and hardware/software remediation firms to validate and verify
mission critical and other important aspects of its year 2000 program. The
estimated cost of addressing year 2000 issues is expected to be
approximately $40 million, of which approximately 83% had been spent
through September 30, 1999. The remainder is a cost estimate for
verification, mitigation, training and rollover staffing. FPL Group
believes that the most reasonably likely worst case scenarios relating to
the year 2000 could include a temporary disruption of service to customers,
caused by a potential disruption in fuel supply, water supply and
telecommunications, as well as transmission grid disruptions caused by
other companies whose electrical systems are interconnected with FPL.
LIQUIDITY AND CAPITAL RESOURCES
See Note 3 - Long-Term Debt for financing activity during the nine months
ended September 30, 1999. In addition, approximately $230 million
principal amount of FPL's 5 1/2% first mortgage bonds matured in July 1999.
During the three and nine months ended September 30, 1999, FPL Group
repurchased 100,000 and 1,570,000 shares of common stock, respectively. As
of September 30, 1999, available bank lines of credit, which support the
commercial paper program, aggregated approximately $2.5 billion ($900
million for FPL).
For information concerning capital commitments see Note 4 - Commitments.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Reference is made to Item 3. Legal Proceedings in the 1998 Form 10-K
for FPL Group and FPL.
In October 1999, FPL and FMPA entered into a settlement agreement
pursuant to which FPL agreed to pay FMPA a cash settlement; FPL
agreed to reduce the demand charge on an existing power purchase
agreement; and FPL and FMPA agreed to enter into a new power
purchase agreement giving FMPA the right to purchase limited amounts
of power in the future at a specified price. FMPA agreed to dismiss
the lawsuit with prejudice, and both parties agreed to exchange
mutual releases. The settlement will reduce FPL's fourth quarter
1999 net income by approximately $42 million.
Item 5. Other Information
Reference is made to Item 1. Business - Other FPL Group Operations -
FPL Energy in the 1998 Form 10-K for FPL Group and FPL.
Effective September 30, 1999, FPL Energy, Inc. was converted from a
corporation to a limited liability company. The new name is FPL
Energy, LLC.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit
<TABLE><CAPTION>
Exhibit FPL
Number Description Group FPL
<S> <C> <C> <C>
4 Officer's Certificate of FPL Group Capital dated September 7, 1999,
creating the 7 5/8% Debentures, series due September 15, 2006 x
10(a) Employment Agreement between FPL Group and James L. Broadhead, amended
and restated as of May 10, 1999 x
10(b) Employment Agreement between FPL Group and Dennis P. Coyle, amended
and restated as of May 10, 1999 x
10(c) Employment Agreement between FPL Group and Paul J. Evanson, amended
and restated as of May 10, 1999 x
10(d) Employment Agreement between FPL Group and Lewis Hay III, dated as
of September 13, 1999 x
10(e) Employment Agreement between FPL Group and Lawrence J. Kelleher, amended
and restated as of May 10, 1999 x
10(f) Employment Agreement between FPL Group and Thomas F. Plunkett, amended
and restated as of May 10, 1999 x
10(g) Employment Agreement between FPL Group and Michael W. Yackira, amended
and restated as of May 10, 1999 x
12(a) Computation of Ratio of Earnings to Fixed Charges x
12(b) Computation of Ratios x
27 Financial Data Schedule x x
</TABLE>
(b) Reports on Form 8-K
A Current Report on Form 8-K was filed with the Securities and
Exchange Commission on July 20, 1999 by FPL Group filing exhibits
under Item 7. Financial Statements and Exhibits.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this report to be signed on their behalf by the
undersigned thereunto duly authorized.
FPL GROUP, INC.
FLORIDA POWER & LIGHT COMPANY
(Registrants)
Date: November 10,1999 K. MICHAEL DAVIS
----------------
K. Michael Davis
Controller and Chief Accounting Officer of FPL Group, Inc.
Vice President, Accounting, Controller and
Chief Accounting Officer of Florida Power & Light Company
(Chief Accounting Officer of the Registrants)
EXHIBIT 12(a)
FPL GROUP, INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
Nine Months
Ended
September 30, Years Ended December 31,
1999 1998 1997 1996 1995 1994
(Millions of Dollars)
<S> <C> <C> <C> <C> <C> <C>
Earnings, as defined:
Net income ............................................ $ 577 $ 664 $ 618 $ 579 $ 553 $ 519
Income taxes .......................................... 291 279 304 294 329 307
Fixed charges, included in the determination of
net income, as below ................................ 170 335 304 283 308 337
Distributed income of independent power investments.... 46 68 47 38 39 28
Less: Equity in earnings of independent power
investments ......................................... 54 39 14 5 6 (3)
Total earnings, as defined ........................ $1,030 $1,307 $1,259 $1,189 $1,223 $1,194
Fixed charges, as defined:
Interest charges ...................................... $ 163 $ 322 $ 291 $ 267 $ 291 $ 319
Rental interest factor ................................ 3 4 4 5 6 7
Fixed charges included in nuclear fuel cost ........... 4 9 9 11 11 11
Fixed charges, included in the determination of net
income .............................................. 170 335 304 283 308 337
Capitalized interest .................................. 5 2 4 - - -
Total fixed charges, as defined ................... $ 175 $ 337 $ 308 $ 283 $ 308 $ 337
Ratio of earnings to fixed charges ...................... 5.89 3.88 4.09 4.20 3.97 3.54
</TABLE>
EXHIBIT 12(b)
FLORIDA POWER & LIGHT COMPANY
COMPUTATION OF RATIO
<TABLE>
<CAPTION>
Nine Months Ended
September 30, 1999
(Millions of Dollars)
RATIO OF EARNINGS TO FIXED CHARGES
<S> <C>
Earnings, as defined:
Net income .............................................................................. $542
Income taxes ............................................................................ 306
Fixed charges, as below ................................................................. 134
Total earnings, as defined ............................................................ $982
Fixed charges, as defined:
Interest charges ........................................................................ $125
Rental interest factor .................................................................. 3
Fixed charges included in nuclear fuel cost ............................................. 6
Total fixed charges, as defined ....................................................... $134
Ratio of earnings to fixed charges ........................................................ 7.33
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
Earnings, as defined:
Net income .............................................................................. $542
Income taxes ............................................................................ 306
Fixed charges, as below ................................................................. 134
Total earnings, as defined ............................................................ $982
Fixed charges, as defined:
Interest charges ........................................................................ $125
Rental interest factor .................................................................. 3
Fixed charges included in nuclear fuel cost ............................................. 6
Total fixed charges, as defined ....................................................... 134
Non-tax deductible preferred stock dividends .............................................. 11
Ratio of income before income taxes to net income ......................................... 1.56
Preferred stock dividends before income taxes ............................................. 17
Combined fixed charges and preferred stock dividends ...................................... $151
Ratio of earnings to combined fixed charges and preferred stock dividends ................. 6.50
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from FPL Group's and FPL's condensed consolidated balance
sheet as of September 30, 1999 and condensed consolidated statements of income and cash flows for the nine months ended
September 30, 1999 and is qualified in its entirety by reference to such financial statements.
<CIK> 0000753308
<NAME> FPL Group, Inc.
<MULTIPLIER> 1,000,000
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1999
<PERIOD-TYPE> 9-MOS
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> $7,947
<OTHER-PROPERTY-AND-INVEST> $3,109
<TOTAL-CURRENT-ASSETS> $1,618
<TOTAL-DEFERRED-CHARGES> $0
<OTHER-ASSETS> $846
<TOTAL-ASSETS> $13,520
<COMMON> $2
<CAPITAL-SURPLUS-PAID-IN> $2,923
<RETAINED-EARNINGS> $2,433
<TOTAL-COMMON-STOCKHOLDERS-EQ> $5,358
$0
$226
<LONG-TERM-DEBT-NET> $3,091
<SHORT-TERM-NOTES> $0
<LONG-TERM-NOTES-PAYABLE> $0
<COMMERCIAL-PAPER-OBLIGATIONS> $0
<LONG-TERM-DEBT-CURRENT-PORT> $519
$0
<CAPITAL-LEASE-OBLIGATIONS> $0
<LEASES-CURRENT> $0
<OTHER-ITEMS-CAPITAL-AND-LIAB> $4,326
<TOT-CAPITALIZATION-AND-LIAB> $13,520
<GROSS-OPERATING-REVENUE> $4,918
<INCOME-TAX-EXPENSE> $291
<OTHER-OPERATING-EXPENSES> $4,104
<TOTAL-OPERATING-EXPENSES> $4,104
<OPERATING-INCOME-LOSS> $814
<OTHER-INCOME-NET> $79
<INCOME-BEFORE-INTEREST-EXPEN> $740
<TOTAL-INTEREST-EXPENSE> $163
<NET-INCOME> $577
$11
<EARNINGS-AVAILABLE-FOR-COMM> $577
<COMMON-STOCK-DIVIDENDS> $267
<TOTAL-INTEREST-ON-BONDS> $0
<CASH-FLOW-OPERATIONS> $1,518
<EPS-BASIC> $3.36
<EPS-DILUTED> $3.36
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from FPL's condensed consolidated balance sheet as of
September 30, 1999 and condensed consolidated statements of income and cash flows for the nine months ended September 30,
1999 and is qualified in its entirety by reference to such financial statements.
<CIK> 0000037634
<NAME> Florida Power & Light Company
<MULTIPLIER> 1,000,000
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1999
<PERIOD-TYPE> 9-MOS
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> $7,944
<OTHER-PROPERTY-AND-INVEST> $1,336
<TOTAL-CURRENT-ASSETS> $1,397
<TOTAL-DEFERRED-CHARGES> $0
<OTHER-ASSETS> $370
<TOTAL-ASSETS> $11,047
<COMMON> $0
<CAPITAL-SURPLUS-PAID-IN> $0
<RETAINED-EARNINGS> $0
<TOTAL-COMMON-STOCKHOLDERS-EQ> $4,876
$0
$226
<LONG-TERM-DEBT-NET> $2,079
<SHORT-TERM-NOTES> $0
<LONG-TERM-NOTES-PAYABLE> $0
<COMMERCIAL-PAPER-OBLIGATIONS> $0
<LONG-TERM-DEBT-CURRENT-PORT> $125
$0
<CAPITAL-LEASE-OBLIGATIONS> $0
<LEASES-CURRENT> $0
<OTHER-ITEMS-CAPITAL-AND-LIAB> $3,741
<TOT-CAPITALIZATION-AND-LIAB> $11,047
<GROSS-OPERATING-REVENUE> $4,638
<INCOME-TAX-EXPENSE> $306
<OTHER-OPERATING-EXPENSES> $3,673
<TOTAL-OPERATING-EXPENSES> $3,979
<OPERATING-INCOME-LOSS> $659
<OTHER-INCOME-NET> $8
<INCOME-BEFORE-INTEREST-EXPEN> $667
<TOTAL-INTEREST-EXPENSE> $125
<NET-INCOME> $542
$11
<EARNINGS-AVAILABLE-FOR-COMM> $531
<COMMON-STOCK-DIVIDENDS> $0
<TOTAL-INTEREST-ON-BONDS> $0
<CASH-FLOW-OPERATIONS> $1,494
<EPS-BASIC> $0
<EPS-DILUTED> $0
</TABLE>
FPL GROUP CAPITAL INC
OFFICER'S CERTIFICATE
Creating the 7 5/8% Debentures, Series due September 15, 2006
Paul I. Cutler, the Assistant Treasurer and Assistant Secretary of FPL
Group Capital Inc (the "Company"), pursuant to the authority granted in the
accompanying Board Resolutions (all capitalized terms used herein which are
not defined herein but are defined in the Indenture referred to below,
shall have the meanings specified in the Indenture), and Sections 201 and
301 of the Indenture, does hereby certify to The Bank of New York (the
"Trustee"), as Trustee under the Indenture of the Company (For Unsecured
Debt Securities) dated as of June 1, 1999 (the "Indenture") that:
1. The securities of the third series to be issued under the
Indenture shall be designated "7 5/8% Debentures, Series due September 15,
2006" (the "Debentures of the Third Series"), and shall be issued in
substantially the form set forth in Exhibit A hereto;
2. The Debentures of the Third Series shall mature and the principal
shall be due and payable together with all accrued and unpaid interest
thereon on September 15, 2006;
3. The Debentures of the Third Series shall bear interest as provided
in the form thereof set forth in Exhibit A hereto;
4. Each installment of interest on a Debenture of the Third Series
shall be payable as provided in the form thereof set forth as Exhibit A
hereto;
5. Registration and registration of transfers and exchanges in
respect of the Debentures of the Third Series may be effected at the office
or agency of the Company in The City of New York. Notices and demands to
or upon the Company in respect of the Debentures of the Third Series may be
served at the office or agency of the Company in The City of New York. The
Corporate Trust Office of the Trustee will initially be the agency of the
Company for such payment, registration and registration of transfers and
exchanges and service of notices and demands and the Company hereby
appoints the Trustee as its agent for all such purposes; provided, however,
that the Company reserves the right to change, by one or more Officer's
Certificates, any such office or agency and such agent. The Trustee will
be the Security Registrar and the Paying Agent for the Debentures of the
Third Series;
6. The Regular Record Date for the interest payable on any given
Interest Payment Date with respect to the Debentures of the Third Series
shall be the 15th day prior to such Interest Payment Date;
7. The Debentures of the Third Series shall be redeemable, at the
option of the Company, in whole at any time or in part from time to time,
on any date prior to maturity (each a "Redemption Date"). The Company
shall give notice of its intent to redeem Debentures of the Third Series at
least 30 days prior to a Redemption Date. If the Company redeems all or
any part of the Debentures of the Third Series, it will pay a redemption
price for such Debentures of the Third Series ("Redemption Price") equal to
the sum of (1) 100% of the principal amount of the Debentures of the Third
Series being redeemed plus (2) accrued and unpaid interest thereon, if any,
to the Redemption Date plus (3) any applicable "make-whole premium." The
Redemption Price for a Debenture shall never be less than 100% of the
principal amount of the Debenture plus accrued and unpaid interest thereon
to the Redemption Date.
The amount of the make-whole premium with respect to any Debentures of the
Third Series to be redeemed shall be equal to the excess, if any, of:
(1) the sum of the present values, calculated as of the Redemption
Date, of:
(a) each interest payment that, but for such redemption, would have
been payable on the Debentures of the Third Series being redeemed on each
interest payment date occurring after the Redemption Date (excluding any
accrued interest for the period prior to the Redemption Date); and
(b) the principal amount that, but for such redemption, would have
been payable at the final maturity of the Debentures of the Third Series
being redeemed; over
(2) the principal amount of the Debentures of the Third Series being
redeemed.
The present values of interest and principal payments referred to in clause
(1) above shall be determined in accordance with generally accepted
principles of financial analysis. Such present values shall be calculated
by discounting the amount of each payment of interest or principal from the
date that each such payment would have been payable, but for the
redemption, to the Redemption Date at a discount rate equal to the Treasury
Yield (as defined below) plus 25 basis points.
The Company shall appoint an independent investment banking institution of
national standing to calculate the make-whole premium; provided that Lehman
Brothers Inc. will make such calculation if (1) the Company fails to make
such appointment at least 30 calendar days prior to the Redemption Date, or
(2) the institution so appointed is unwilling or unable to make such
calculation. If Lehman Brothers Inc. is to make such calculation but is
unwilling or unable to do so, then the Trustee shall appoint an independent
investment banking institution of national standing to make such
calculation. In any case, the institution making such calculation is
referred to herein as an "Independent Investment Banker."
For purposes of determining the make-whole premium, "Treasury Yield" shall
mean a rate of interest per annum equal to the weekly average yield to
maturity of United States Treasury Notes that have a constant maturity that
corresponds to the remaining term to maturity of the Debentures of the
Third Series, calculated to the nearest 1/12th of a year (the "Remaining
Term"). The Independent Investment Banker shall determine the Treasury
Yield as of the third business day immediately preceding the applicable
Redemption Date.
The Independent Investment Banker shall determine the weekly average yields
of United States Treasury Notes by reference to the most recent statistical
release published by the Federal Reserve Bank of New York and designated
"H.15(519) Selected Interest Rates" or any successor release (the "H.15
Statistical Release"). If the H.15 Statistical Release sets forth a weekly
average yield for United States Treasury Notes having a constant maturity
that is the same as the Remaining Term, then the Treasury Yield shall be
equal to such weekly average yield. In all other cases, the Independent
Investment Banker shall calculate the Treasury Yield by interpolation, on a
straight-line basis, between the weekly average yields on the United States
Treasury Notes that have a constant maturity closest to and greater than
the Remaining Term and the United States Treasury Notes that have a
constant maturity closest to and less than the Remaining Term (in each case
as set forth in the H.15 Statistical Release). The Independent Investment
Banker shall round any weekly average yields so calculated to the nearest
1/100th of 1%, and shall round upward for any figure of 1/200th of 1% or
above. If weekly average yields for United States Treasury Notes are not
available in the H.15 Statistical Release or otherwise, then the
Independent Investment Banker shall select comparable rates and calculate
the Treasury Yield by reference to those rates;
8. No service charge shall be made for the registration of transfer
or exchange of the Debentures of the Third Series; provided, however, that
the Company may require payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection with the
exchange or transfer;
9. If the Company shall make any deposit of money and/or Eligible
Obligations with respect to any Debentures of the Third Series, or any
portion of the principal amount thereof, as contemplated by Section 701 of
the Indenture, the Company shall not deliver an Officer's Certificate
described in clause (z) in the first paragraph of said Section 701 unless
the Company shall also deliver to the Trustee, together with such Officer's
Certificate, either:
(A) an instrument wherein the Company, notwithstanding the satisfaction
and discharge of its indebtedness in respect of the Debentures of the Third
Series, shall assume the obligation (which shall be absolute and
unconditional) to irrevocably deposit with the Trustee or Paying Agent such
additional sums of money, if any, or additional Eligible Obligations
(meeting the requirements of Section 701), if any, or any combination
thereof, at such time or times, as shall be necessary, together with the
money and/or Eligible Obligations theretofore so deposited, to pay when due
the principal of and premium, if any, and interest due and to become due on
such Debentures of the Third Series or portions thereof, all in accordance
with and subject to the provisions of said Section 701; provided, however,
that such instrument may state that the obligation of the Company to make
additional deposits as aforesaid shall be subject to the delivery to the
Company by the Trustee of a notice asserting the deficiency accompanied by
an opinion of an independent public accountant of nationally recognized
standing, selected by the Trustee, showing the calculation thereof; or
(B) an Opinion of Counsel to the effect that, as a result of a change in
law occurring after the date of this certificate, the Holders of such
Debentures of the Third Series, or portions of the principal amount
thereof, will not recognize income, gain or loss for United States federal
income tax purposes as a result of the satisfaction and discharge of the
Company's indebtedness in respect thereof and will be subject to United
States federal income tax on the same amounts, at the same times and in the
same manner as if such satisfaction and discharge had not been effected;
10. The Debentures of the Third Series will be absolutely, irrevocably
and unconditionally guaranteed as to payment of principal, interest and
premium by FPL Group, Inc., as Guarantor (the "Guarantor"), pursuant to a
Guarantee Agreement, dated as of June 1, 1999, between the Guarantor and
The Bank of New York (as Guarantee Trustee) (the "Guarantee Agreement").
The following shall constitute "Guarantor Events" with respect to the
Debentures of the Third Series:
(A) the failure of the Guarantee Agreement to be in full force and
effect;
(B) the entry by a court having jurisdiction in the premises of (i) a
decree or order for relief in respect of the Guarantor in an involuntary
case or proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or (ii) a decree or order
adjudging the Guarantor a bankrupt or insolvent, or approving as properly
filed a petition by one or more entities other than the Guarantor seeking
reorganization, arrangement, adjustment or composition of or in respect of
the Guarantor under any applicable Federal or State law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official for the Guarantor or for any substantial part of its
property, or ordering the winding up or liquidation of its affairs, and any
such decree or order for relief or any such other decree or order shall
have remained unstayed and in effect for a period of 90 consecutive days;
or
(C) the commencement by the Guarantor of a voluntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to
be adjudicated a bankrupt or insolvent, or the consent by it to the entry
of a decree or order for relief in respect of the Guarantor in a case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any
bankruptcy or insolvency case or proceeding against it, or the filing by it
of a petition or answer or consent seeking reorganization or relief under
any applicable Federal or State law, or the consent by it to the filing of
such petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or similar official
of the Guarantor or of any substantial part of its property, or the making
by it of an assignment for the benefit of creditors, or the admission by it
in writing of its inability to pay its debts generally as they become due,
or the authorization of such action by the Board of Directors of the
Guarantor.
Notwithstanding anything to the contrary contained in the Debentures of the
Third Series, this certificate or in the Indenture, the Company shall, if a
Guarantor Event shall occur and be continuing, redeem all of the
Outstanding Debentures of the Third Series within 60 days after the
occurrence of such Guarantor Event at a redemption price equal to the
principal amount thereof plus accrued interest to the date of redemption
unless, within 30 days after the occurrence of such Guarantor Event,
Standard & Poor's Ratings Group and Moody's Investors Service (if the
Debentures of the Third Series are then rated by those rating agencies, or,
if the Debentures of the Third Series are not then rated by those rating
agencies but are then rated by one or more other nationally recognized
rating agencies, then at least one of those other nationally recognized
rating agencies) shall have reaffirmed in writing that, after giving effect
to such Guarantor Event, the credit rating on the Debentures of the Third
Series shall be investment grade (i.e. in one of the four highest
categories, without regard to subcategories within such rating categories,
of such rating agency);
11. With respect to the Debentures of the Third Series, each of the
following events shall be an additional Event of Default under the
Indenture:
(A) the consolidation of the Guarantor with or merger of the Guarantor
into any other Person, or the conveyance or other transfer or lease by the
Guarantor of its properties and assets substantially as an entirety to any
Person, unless
(a) the Person formed by such consolidation or into which the Guarantor is
merged or the Person which acquires by conveyance or transfer, or which
leases, the properties and assets of the Guarantor substantially as an
entirety shall be a Person organized and existing under the laws of the
United States, any State thereof or the District of Columbia, and shall
expressly assume the obligations of the Guarantor under the Guarantee
Agreement; and
(b) immediately after giving effect to such transaction, no Event of
Default (as defined in the Guarantee Agreement) and no event which, after
notice or lapse of time or both, would become an Event of Default (as
defined in the Guarantee Agreement), shall have occurred and be continuing;
and
(B) the failure of the Company to redeem the Outstanding Debentures of the
Third Series as required by paragraph 10 hereof;
12. If a Guarantor Event occurs and the Company is not required to
redeem the Debentures of the Third Series pursuant to paragraph 10 hereof,
the Company will provide to the Trustee and the Holders of the Debentures
of the Third Series annual and quarterly reports containing the information
that the Company would be required to file with the Securities and Exchange
Commission under Section 13 or Section 15(d) of the Securities Exchange Act
of 1934 if it were subject to the reporting requirements of those Sections.
If the Company is, at that time, subject to the reporting requirements of
those Sections, the filing of annual and quarterly reports with the
Securities and Exchange Commission pursuant to those Sections will satisfy
this requirement.
13. The Debentures of the Third Series will be initially issued in
global form registered in the name of Cede & Co. (as nominee for The
Depository Trust Company, New York, New York). The Debentures of the Third
Series in global form shall bear the depository legend in substantially the
form set forth in Exhibit A hereto. The Debentures of the Third Series in
global form will contain restrictions on transfer, substantially as
described in the form set forth in Exhibit A hereto.
14. The Debentures of the Third Series shall have such other terms and
provisions as are provided in the form set forth in Exhibit A hereto;
15. The undersigned has read all of the covenants and conditions
contained in the Indenture relating to the issuance of the Debentures of
the Third Series and the definitions in the Indenture relating thereto and
in respect of which this certificate is made;
16. The statements contained in this certificate are based upon the
familiarity of the undersigned with the Indenture, the documents
accompanying this certificate, and upon discussions by the undersigned with
officers and employees of the Company familiar with the matters set forth
herein;
17. In the opinion of the undersigned, he or she has made such
examination or investigation as is necessary to enable him or her to
express an informed opinion whether or not such covenants and conditions
have been complied with; and
18. In the opinion of the undersigned, such conditions and covenants
and conditions precedent, if any (including any covenants compliance with
which constitutes a condition precedent) to the authentication and delivery
of the Debentures of the Third Series requested in the accompanying Company
Order No. 2 have been complied with.
IN WITNESS WHEREOF, I have executed this Officer's Certificate this 7th day
of September, 1999 in New York, New York.
/s/ Paul I. Cutler
Paul I. Cutler
Assistant Treasurer and
Assistant Secretary
Exhibit A
[Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to FPL Group
Capital Inc or its agent for registration of transfer, exchange, or
payment, and any certificate issued is registered in the name of Cede &
Co. or in such other name as is requested by an authorized representative
of DTC (and any payment is made to Cede & Co. or to such other entity as
is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an
interest herein.]
No._______________ Cusip No.__________
[FORM OF FACE OF DEBENTURE]
FPL GROUP CAPITAL INC
7 5/8% DEBENTURES, SERIES DUE SEPTEMBER 15, 2006
FPL GROUP CAPITAL INC, a corporation duly organized and existing under the
laws of the State of Florida (herein referred to as the "Company", which
term includes any successor Person under the Indenture), for value
received, hereby promises to pay to
or registered assigns, the principal sum of ____________________ Dollars on
September 15, 2006, and to pay interest on said principal sum semi-annually
on March 15 and September 15 of each year commencing March 15, 2000 (each
an "Interest Payment Date") at the rate of 7 5/8% per annum until the
principal hereof is paid or made available for payment. Interest on the
Securities of this series will accrue from and including September 7, 1999,
to and excluding the first Interest Payment Date, and thereafter will
accrue from and including the last Interest Payment Date to which interest
has been paid or duly provided for. No interest will accrue on the
Securities with respect to the day on which the Securities mature. In the
event that any Interest Payment Date is not a Business Day, then payment of
interest payable on such date will be made on the next succeeding day which
is a Business Day (and without any interest or other payment in respect of
such delay) with the same force and effect as if made on the Interest
Payment Date. The interest so payable, and punctually paid or duly provided
for, on any Interest Payment Date will, as provided in such Indenture, be
paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on the 15th day
preceding such Interest Payment Date (the "Regular Record Date"). Any such
interest not so punctually paid or duly provided for will forthwith cease
to be payable to the Holder on such Regular Record Date and may either be
paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on a Special Record Date
for the payment of such Defaulted Interest to be fixed by the Trustee,
notice whereof shall be given to Holders of Securities of this series not
less than 10 days prior to such Special Record Date, or be paid at any time
in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities of this series may be listed,
and upon such notice as may be required by such exchange, all as more fully
provided in the Indenture referred to on the reverse hereof.
Payment of the principal of (and premium, if any) and interest on this
Security will be made at the office or agency of the Company maintained for
that purpose in The City of New York, the State of New York in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts, provided, however, that, at
the option of the Company, interest on this Security may be paid by check
mailed to the address of the person entitled thereto, as such address shall
appear on the Security Register.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this
Security shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed in New York, New York.
FPL GROUP CAPITAL INC
By:_______________________________________
[FORM OF CERTIFICATE OF AUTHENTICATION]
CERTIFICATE OF AUTHENTICATION
Dated:
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
The Bank of New York, as Trustee
By:_______________________________________
Authorized Signatory
[FORM OF REVERSE OF DEBENTURE]
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or
more series under an Indenture (for Unsecured Debt Securities), dated as of
June 1, 1999 (herein, together with any amendments thereto, called the
"Indenture", which term shall have the meaning assigned to it in such
instrument), between the Company and The Bank of New York, as Trustee
(herein called the "Trustee", which term includes any successor trustee
under the Indenture), and reference is hereby made to the Indenture,
including the Board Resolutions and Officer's Certificate filed with the
Trustee on September 7, 1999 creating the series designated on the face
hereof, for a statement of the respective rights, limitations of rights,
duties and immunities thereunder of the Company, the Trustee and the
Holders of the Securities and of the terms upon which the Securities are,
and are to be, authenticated and delivered. This Security is one of the
series designated on the face hereof.
This Security shall be redeemable either at the option of the Company or
pursuant to the requirements of the Indenture in whole at any time, or in
part from time to time, prior to maturity, upon notice (which may be made
subject to receipt of the redemption moneys by the Trustee before the date
fixed for redemption) mailed at least thirty (30) days prior to the date
fixed for redemption (the "Redemption Date"), at a price equal to 100% of
the principal amount thereof plus accrued and unpaid interest, if any, to
the Redemption Date plus any applicable make-whole premium (the "Redemption
Price"). In no event will the Redemption Price be less than 100% of the
principal amount of the Securities being redeemed plus accrued and unpaid
interest, if any, to the Redemption Date.
The make-whole premium will be calculated by an independent investment
banking institution of national standing appointed by the Company or the
Trustee, all as described in the Officer's Certificate dated September 7,
1999, establishing the Securities.
The Securities will be absolutely, irrevocably and unconditionally
guaranteed as to payment of principal, interest and premium by FPL Group,
Inc., as Guarantor (the "Guarantor"), pursuant to a Guarantee Agreement,
dated as of June 1, 1999, between the Guarantor and The Bank of New York
(as Guarantee Trustee) (the "Guarantee Agreement"). The following shall
constitute "Guarantor Events" with respect to the Securities:
(A) the failure of the Guarantee Agreement to be in full force and effect;
(B) the entry by a court having jurisdiction in the premises of (i) a
decree or order for relief in respect of the Guarantor in an involuntary
case or proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or (ii) a decree or order
adjudging the Guarantor a bankrupt or insolvent, or approving as properly
filed a petition by one or more entities other than the Guarantor seeking
reorganization, arrangement, adjustment or composition of or in respect of
the Guarantor under any applicable Federal or State law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official for the Guarantor or for any substantial part of its
property, or ordering the winding up or liquidation of its affairs, and any
such decree or order for relief or any such other decree or order shall
have remained unstayed and in effect for a period of 90 consecutive days;
or
(C) the commencement by the Guarantor of a voluntary case or proceeding
under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to
be adjudicated a bankrupt or insolvent, or the consent by it to the entry
of a decree or order for relief in respect of the Guarantor in a case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any
bankruptcy or insolvency case or proceeding against it, or the filing by it
of a petition or answer or consent seeking reorganization or relief under
any applicable Federal or State law, or the consent by it to the filing of
such petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or similar official
of the Guarantor or of any substantial part of its property, or the making
by it of an assignment for the benefit of creditors, or the admission by it
in writing of its inability to pay its debts generally as they become due,
or the authorization of such action by the Board of Directors of the
Guarantor.
Notwithstanding anything to the contrary contained in the Securities, the
Officer's Certificate dated September 7, 1999, establishing the Securities,
or in the Indenture, the Company shall, if a Guarantor Event shall occur
and be continuing, redeem all of the Outstanding Securities within 60 days
after the occurrence of such Guarantor Event at a redemption price equal to
the principal amount thereof plus accrued interest to the date of
redemption unless, within 30 days after the occurrence of such Guarantor
Event, Standard & Poor's Ratings Group and Moody's Investors Service (if
the Securities are then rated by those rating agencies, or, if the
Securities are not then rated by those rating agencies but are then rated
by one or more other nationally recognized rating agencies, then at least
one of those other nationally recognized rating agencies) shall have
reaffirmed in writing that, after giving effect to such Guarantor Event,
the credit rating on the Securities shall be investment grade (i.e. in one
of the four highest categories, without regard to subcategories within such
rating categories, of such rating agency).
If a Guarantor Event occurs and the Company is not required to redeem the
Securities pursuant to the preceding paragraph, the Company will provide to
the Trustee and the Holders of the Securities annual and quarterly reports
containing the information that the Company would be required to file with
the Securities and Exchange Commission under Section 13 or Section 15(d) of
the Securities Exchange Act of 1934 if it were subject to the reporting
requirements of those Sections. If the Company is, at that time, subject
to the reporting requirements of those Sections, the filing of annual and
quarterly reports with the Securities and Exchange Commission pursuant to
those Sections will satisfy the requirements of this paragraph.
The Indenture contains provisions for defeasance at any time of the entire
indebtedness of this Security upon compliance with certain conditions set
forth in the Indenture.
If an Event of Default with respect to Securities of this series shall
occur and be continuing, the principal of the Securities of this series may
be declared due and payable in the manner and with the effect provided in
the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to
be affected under the Indenture at any time by the Company and the Trustee
with the consent of the Holders of a majority in principal amount of the
Securities at the time Outstanding of all series to be affected. The
Indenture also contains provisions permitting the Holders of specified
percentages in principal amount of the Securities of each series at the
time Outstanding, on behalf of the Holders of all Securities of such
series, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this Security
shall be conclusive and binding upon such Holder and upon all future
Holders of this Security and of any Security issued upon the registration
of transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, the Holder
of this Security shall not have the right to institute any proceeding with
respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously
given the Trustee written notice of a continuing Event of Default with
respect to the Securities of this series, the Holders of a majority in
aggregate principal amount of the Securities of all series at the time
Outstanding in respect of which an Event of Default shall have occurred and
be continuing shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default as Trustee and offered the
Trustee reasonable indemnity, and the Trustee shall not have received from
the Holders of a majority in aggregate principal amount of Securities of
all series at the time Outstanding in respect of which an Event of Default
shall have occurred and be continuing a direction inconsistent with such
request, and shall have failed to institute any such proceeding, for 60
days after receipt of such notice, request and offer of indemnity. The
foregoing shall not apply to any suit instituted by the Holder of this
Security for the enforcement of any payment of principal hereof or any
premium or interest hereon on or after the respective due dates expressed
herein.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and any premium and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
The Securities of this series are issuable only in registered form without
coupons in denominations of $1,000 and integral multiples thereof. As
provided in the Indenture and subject to certain limitations therein set
forth, Securities of this series are exchangeable for a like aggregate
principal amount of Securities of this series and of like tenor and of
authorized denominations, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
The Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name this Security is registered as the absolute
owner hereof for all purposes, whether or not this Security be overdue, and
neither the Company, the Trustee nor any such agent shall be affected by
notice to the contrary.
Notwithstanding any provision in the Support Agreement, dated as of
December 18, 1985, between the Company and FPL Group, Inc., as from time to
time in effect (the "Support Agreement"), no Holder of this Security shall
be entitled to enforce the covenants and agreements contained in the
Support Agreement with respect to this Security and no Holder of this
Security shall have any rights to consent or object to any amendment,
modification, waiver, forbearance or termination of the Support Agreement.
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
EMPLOYMENT AGREEMENT
Employment Agreement between FPL GROUP, INC., a Florida
corporation (the "Company"), and James L. Broadhead (the "Executive"),
dated as of October 1, 1994, amended and restated as of May 10, 1999.
The Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company and its
shareholders to assure that the Company and its affiliated companies will
have the continued dedication of the Executive, notwithstanding the
possibility, threat or occurrence of a Change of Control (as defined below)
of the Company. The Board believes it is imperative to diminish the
inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of
Control and to encourage the Executive's full attention and dedication to
the Company and its affiliated companies currently and in the event of any
threatened or pending Change of Control, and to provide the Executive with
compensation and benefits arrangements upon a Change of Control which
ensure that the compensation and benefits expectations of the Executive
will be satisfied and which are competitive with those of other
corporations. Therefore, in order to accomplish these objectives, the
Board has caused the Company to enter into this Employment Agreement (the
"Agreement").
Therefore, the Company and the Executive agree as follows:
1. Effective Date. The effective date of this Agreement
shall be the date on which a Change of Control occurs (the "Effective
Date"). Anything in this Agreement to the contrary notwithstanding, if a
Change of Control occurs and if the Executive's employment with the Company
or its affiliated companies is terminated or the Executive's position
(including status, offices, titles, and reporting requirements), authority,
duties, and responsibilities with the Company or its affiliated companies
is not commensurate in all material respects with the most significant of
those held, exercised and assigned prior to the date on which the Change of
Control occurs, and if it is reasonably demonstrated by the Executive that
such termination of employment or diminution in position, authority,
duties, or responsibilities (i) was at the request of a third party who has
taken steps reasonably calculated to effect the Change of Control or (ii)
otherwise arose in connection with or anticipation of the Change of
Control, then for all purposes of this Agreement the "Effective Date" shall
mean the date immediately prior to the date of such termination of
employment or diminution in position, authority, duties or
responsibilities. As used in this Agreement, the term "affiliated
companies" shall include any corporation or other entity controlled by,
controlling or under common control with the Company.
2. Change of Control. For the purposes of this Agreement, a
"Change of Control" shall mean:
(a) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")) of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or
more of either (i) the then outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock") or (ii) the combined
voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the "Outstanding
Company Voting Securities"); provided, however, that the following
acquisitions shall not constitute a Change of Control: (i) any acquisition
by the Company or any or its subsidiaries, (ii) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the
Company or any of its subsidiaries or (iii) any acquisition by any
corporation with respect to which, following such acquisition, more than
75% of, respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election
of directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such acquisition
in substantially the same proportions as their ownership, immediately prior
to such acquisition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be; or
(b) Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board, provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at least
a majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of either an actual or threatened
solicitation to which Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act applies or other actual or threatened solicitation of proxies
or consents; or
(c) Approval by the shareholders of the Company of a
reorganization, merger or consolidation, in each case, with respect to
which all or substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common Stock
and Outstanding Company Voting Securities immediately prior to such
reorganization, merger or consolidation do not, following such
reorganization, merger or consolidation, beneficially own, directly or
indirectly, more than 75% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the
case may be, of the corporation resulting from such reorganization, merger
or consolidation in substantially the same proportions as their ownership,
immediately prior to such reorganization, merger or consolidation of the
Outstanding Company Common Stock and Outstanding Company Voting Securities,
as the case may be; or
(d) Approval by the shareholders of the Company of (i) a
complete liquidation or dissolution of the Company or (ii) the sale or
other disposition of all or substantially all of the assets of the Company,
other than to a corporation, with respect to which following such sale or
other disposition, more than 75% of, respectively, the then outstanding
shares of common stock of such corporation and the combined voting power of
the then outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned, directly
or indirectly, by all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities immediately prior to
such sale or other disposition in substantially the same proportion as
their ownership, immediately prior to such sale or other disposition, of
the Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be.
The term "the sale or disposition by the Company of all or
substantially all of the assets of the Company" shall mean a sale or other
disposition transaction or series of related transactions involving assets
of the Company or of any direct or indirect subsidiary of the Company
(including the stock of any direct or indirect subsidiary of the Company)
in which the value of the assets or stock being sold or otherwise disposed
of (as measured by the purchase price being paid therefor or by such other
method as the Board determines is appropriate in a case where there is no
readily ascertainable purchase price) constitutes more than two-thirds of
the fair market value of the Company (as hereinafter defined). The "fair
market value of the Company" shall be the aggregate market value of the
then Outstanding Company Common Stock (on a fully diluted basis) plus the
aggregate market value of the Company's other outstanding equity
securities. The aggregate market value of the shares of Outstanding
Company Common Stock shall be determined by multiplying the number of
shares of Outstanding Company Common Stock (on a fully diluted basis)
outstanding on the date of the execution and delivery of a definitive
agreement with respect to the transaction or series of related transactions
(the "Transaction Date") by the average closing price of the shares of
Outstanding Company Common Stock for the ten trading days immediately
preceding the Transaction Date. The aggregate market value of any other
equity securities of the Company shall be determined in a manner similar to
that prescribed in the immediately preceding sentence for determining the
aggregate market value of the shares of Outstanding Company Common Stock or
by such other method as the Board shall determine is appropriate.
3. Employment Period. The Company hereby agrees to continue
the Executive in its or its affiliated companies' employ, or both, as the
case may be, and the Executive hereby agrees to remain in the employ of the
Company, or its affiliated companies, or both, as the case may be, for a
period commencing on the Effective Date and ending on the 5th anniversary
of such date (the "Employment Period").
4. Position and Duties. During the Employment Period, the
Executive's position (including status, offices, titles, and reporting
requirements), authority, duties, and responsibilities with the Company or
its affiliated companies or both, as the case may be, shall be in every
respect at least commensurate with the most significant of those held,
exercised, and assigned at any time during the 90-day period immediately
preceding the Effective Date. The Executive's services shall be performed
at the location where the Executive was employed immediately preceding the
Effective Date or any location less than 20 miles from such location,
although the Executive understands and agrees that he may be required to
travel from time to time for business purposes.
During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive
agrees to devote substantially all of his time and attention during normal
business hours to the business and affairs of the Company and its
affiliated companies and to use his reasonable best efforts to perform
faithfully and efficiently the duties and responsibilities assigned to him
hereunder. During the Employment Period it shall not be a violation of
this Agreement for the Executive to serve on corporate, civic or charitable
boards or committees, deliver lectures, fulfill speaking engagements or
teach at educational institutions and devote reasonable amounts of time to
the management of his and his family's personal investments and affairs, so
long as such activities do not significantly interfere with the performance
of the Executive's responsibilities as an employee of the Company or its
affiliated companies in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities have been
conducted by the Executive prior to the Effective Date, the reinstatement
or continued conduct of such activities (or the reinstatement or conduct of
activities similar in nature and scope thereto) subsequent to the Effective
Date shall not thereafter be deemed to interfere with the performance of
the Executive's responsibilities to the Company and its affiliated
companies.
5. Compensation. During the Employment Period, the Executive
shall be compensated as follows:
(a) Annual Base Salary. The Executive shall be paid an annual
base salary ("Annual Base Salary"), in equal biweekly installments, at
least equal to the annual base salary being paid to the Executive by the
Company and its affiliated companies with respect to the year in which the
Effective Date occurs. The Annual Base Salary shall be reviewed at least
annually and shall be increased substantially consistent with increases in
base salary generally awarded to other peer executives of the Company and
its affiliated companies. Such increases shall in no event be less than
the increases in the U.S. Department of Labor Consumer Price Index - U.S.
City Average Index. Any increase in Annual Base Salary shall not serve to
limit or reduce any other obligation to the Executive under this Agreement.
Annual Base Salary shall not be reduced after any such increase and the
term "Annual Base Salary" as utilized in this Agreement shall refer to
Annual Base Salary as so increased.
(b) Annual Bonus. In addition to Annual Base Salary, the
Executive shall be awarded, for each fiscal year ending during the
Employment Period, an annual bonus (the "Annual Bonus") in cash at least
equal to the highest annual incentive compensation (annualized for any
fiscal year consisting of less than twelve full months or with respect to
which the Executive has been employed by the Company for less than twelve
full months) paid or payable, including by reason of any deferral, to the
Executive by the Company and its affiliated companies in respect of the
three fiscal years immediately preceding the fiscal year in which the
Effective Date occurs (the "Highest Recent Bonus"). The greater of (i) the
Highest Recent Bonus or (ii) the highest Annual Bonus awarded by the
Company and its affiliated companies after the Effective Date (target or
actual, whichever is greater) is herein called the "Highest Annual Bonus".
Each such Annual Bonus shall be paid no later than the end of the third
month of the fiscal year next following the fiscal year for which the
Annual Bonus is awarded, unless the Executive otherwise elects to defer the
receipt of such Annual Bonus.
(c) Long Term Incentive Compensation. During the Employment
Period, the Executive shall be entitled to participate in all incentive
compensation plans, practices, policies, and programs applicable generally
to other peer executives of the Company and its affiliated companies, but
in no event shall such plans, practices, policies, and programs provide the
Executive with incentive opportunities and potential benefits, both as to
amount and percentage of compensation, less favorable, in the aggregate,
than those provided by the Company and its affiliated companies for the
Executive under the FPL Group Long Term Incentive Plan (including, without
limitation, performance share grants and awards) as in effect at any time
during the 90-day period immediately preceding the Effective Date or; if
more favorable to the Executive, those provided generally at any time after
the Effective Date to other peer executives of the Company and its
affiliated companies.
In addition, on the Effective Date (i) the maximum performance
criteria of all outstanding performance awards, performance-based
restricted stock, and other stock-based awards granted to the Executive
shall be deemed fully achieved and all such awards shall be fully earned
and vested; (ii) any option, stock appreciation right, and other award in
the nature of a right that may be exercised that was granted to the
Executive and which was not previously exercisable and vested shall become
fully exercisable and vested; (iii) the restrictions, deferral limitations,
and forfeiture conditions applicable to any outstanding award granted to
the Executive under an incentive compensation plan, practice, policy or
program shall lapse and such awards shall be deemed fully vested; and (iv)
all outstanding awards shall be canceled and the Executive shall be paid in
cash for such awards on the basis of the change of control price as of the
date of the occurrence of the Change of Control (or such other date
applicable to awards granted to other peer executives under the applicable
incentive compensation plan, practice, policy or program) to the extent
such cancellation of and payment for an award would not cause the Executive
to incur actual short-swing profits liability under Section 16(b) of the
Exchange Act. For purposes of this paragraph, the term "change of control
price" means the highest price per share paid in any transaction reported
on the securities exchange or trading system on which the shares of common
stock of the Company are then primarily listed or traded, or paid or
offered in any transaction related to the Change of Control at any time
during the preceding 60-day period, except that in the case of incentive
stock options (within the meaning of Section 422(b) of the Internal Revenue
Code of 1986, as amended (the "Code")) and stock appreciation rights
relating thereto, such price shall be based only on transactions reported
for the date such awards are cashed out.
(d) Savings and Retirement Plans. During the Employment
Period, the Executive shall be entitled to participate in all savings and
retirement plans, practices, policies, and programs applicable generally to
other peer executives of the Company and its affiliated companies, but in
no event shall such plans, practices, policies, and programs provide the
Executive with savings opportunities and retirement benefit opportunities,
in each case, less favorable, in the aggregate, than the most favorable of
those provided by the Company and its affiliated companies for the
Executive under such plans, practices, policies, and programs as in effect
at any time during the 90-day period immediately preceding the Effective
Date or, if more favorable to the Executive, those provided generally at
any time after the Effective Date to other peer executives of the Company
and its affiliated companies.
In addition, during the Employment Period the Executive shall be
entitled under this Agreement to the supplemental retirement benefit
described in Annex A attached hereto and made a part hereof by this
reference. The payment and vesting of such supplemental retirement benefit
shall be determined in accordance with Section 7 of this Agreement.
(e) Benefit Plans. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be
eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies, and programs provided by the Company
and its affiliated companies (including, without limitation, medical,
executive medical, annual executive physical, prescription, dental, vision,
short-term disability, long-term disability, executive long-term
disability, salary continuance, employee life, group life, benefits
pursuant to split dollar arrangements, accidental death and dismemberment,
and travel accident insurance plans and programs) to the extent applicable
generally to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies, and
programs provide the Executive with benefits which are less favorable, in
the aggregate, than the most favorable of such plans, practices, policies,
and programs in effect for the Executive at any time during the 90-day
period immediately preceding the Effective Date or, if more favorable to
the Executive, those provided generally at any time after the Effective
Date to other peer executives of the Company and its affiliated companies.
(f) Expenses. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Executive in accordance with the most favorable
policies, practices, and procedures of the Company and its affiliated
companies in effect for the Executive at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to
other peer executives of the Company and its affiliated companies.
(g) Fringe Benefits. During the Employment Period, the
Executive shall be entitled to fringe benefits, including but not limited
to those described in Section 7(a)(iii), in accordance with the most
favorable plans, practices, programs, and policies of the Company and its
affiliated companies in effect for the Executive at any time during the
90-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies.
(h) Office and Support Staff. During the Employment Period,
the Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive personal secretarial
and other assistance, at least equal to the most favorable of the foregoing
provided to the Executive by the Company and its affiliated companies at
any time during the 90-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as provided generally at any time
thereafter with respect to other peer executives of the Company and its
affiliated companies.
(i) Vacation. During the Employment Period, the Executive
shall be entitled to paid vacation in accordance with the most favorable
plans, policies, programs, and practices of the Company and its affiliated
companies as in effect for the Executive at any time during the 90-day
period immediately preceding the Effective Date or, if more favorable to
the Executive, as in effect generally at any time thereafter with respect
to other peer incentives of the Company and its affiliated companies.
6. Termination of Employment.
(a) Disability. If the Company determines in good faith that
the Disability of the Executive has occurred during the Employment Period
(pursuant to the definition of Disability set forth below), it may give to
the Executive written notice in accordance with Section 14(b) of this
Agreement of its intention to terminate the Executive's employment. In such
event, the Executive's employment with the Company shall terminate
effective on the 30th day after receipt of such notice by the Executive
(the "Disability Effective Date"), provided that, within the 30 days after
such receipt, the Executive shall not have returned to perform his duties
in accordance with Section 4. For purposes of this Agreement, "Disability"
shall mean the absence of the Executive from the Executive's duties with
the Company for 180 consecutive business days as a result of incapacity due
to mental or physical illness which is determined to be total and permanent
by a physician selected by the Company or its insurers and acceptable to
the Executive or the Executive's legal representative (such agreement as to
acceptability not to be withheld unreasonably).
(b) Cause. The Company may terminate the Executive's
employment during the Employment Period for Cause. For purposes of this
Agreement, "Cause" shall mean (i) repeated violations by the Executive of
the Executive's obligations under Section 4 of this Agreement (other than
as a result of incapacity due to physical or mental illness) which are
demonstrably willful and deliberate on the Executive's part, which are
committed in bad faith or without reasonable belief that such violations
are in the best interests of the Company and which are not remedied in a
reasonable period of time after receipt of written notice from the Company
specifying such violations or (ii) the conviction of the Executive of a
felony involving an act of dishonesty intended to result in substantial
personal enrichment at the expense of the Company or its affiliated
companies.
(c) Good Reason. The Executive's employment may be terminated
during the Employment Period by the Executive for Good Reason.
For purposes of this Agreement, "Good Reason" shall mean:
(i) any failure by the Company to comply in every respect with
the provisions of Section 4 of this Agreement, including without
limitation, the assignment to the Executive of any duties inconsistent in
any respect with the Executive's position (including, without limitation,
status, offices, titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 4, or any other action or
inaction by the Company which results in a diminution in such position,
authority, duties or responsibilities, excluding for this purpose an
isolated, insubstantial and inadvertent action not taken in bad faith and
which is remedied by the Company promptly after receipt of notice thereof
given by the Executive;
(ii) any failure by the Company to comply with any of the
provisions of Section 5 of this Agreement, other than isolated,
insubstantial and inadvertent failure not occurring in bad faith and which
is remedied by the Company promptly after receipt of notice thereof given
by the Executive;
(iii) the Company's requiring the Executive to be based at any
office or location other than that described in Section 4 hereof;
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this
Agreement; or
(v) any failure by the Company to comply with and satisfy
Section 13(c) of this Agreement, provided that such successor has received
at least ten days prior written notice from the Company or the Executive of
the requirements of Section 13(c) of the Agreement.
For purposes of this Section 6(c), any good faith determination of
"Good Reason" made by the Executive shall be conclusive.
(d) Notice of Termination. Any termination by the Company for
Cause, or by the Executive for Good Reason, shall be communicated by Notice
of Termination to the other party hereto given in accordance with Section
14(b) of this Agreement. For purposes of this Agreement, a "Notice of
Termination" means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) to the extent
applicable, sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment
under the provision so indicated and (iii) if the Date of Termination (as
defined below) is other than the date of receipt of such notice, specifies
the termination date (which date shall be not more than fifteen days after
the giving of such notice). The failure by the Executive or the Company to
set forth in the Notice of Termination any fact or circumstances which
contributes to a showing of Good Reason or Cause shall not waive any right
of the Executive or the Company hereunder or preclude the Executive or the
Company from asserting such fact or circumstance in enforcing the
Executive's or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means (i) if
the Executive's employment is terminated by the Company for Cause, or by
the Executive for Good Reason, the date of receipt of the Notice of
Termination or any later date specified therein, as the case may be, (ii)
if the Executive's employment is terminated by the Company other than for
Cause or Disability, the Date of Termination shall be the date on which the
Company notifies the Executive of such termination and (iii) if the
Executive's employment is terminated by reason of Disability, the Date of
Termination shall be the Disability Effective Date.
7. Obligations of the Company upon Termination.
(a) Good Reason; Other Than for Cause or Disability. If,
during the Employment Period, the Company terminates the Executive's
employment other than for Cause or Disability or the Executive terminates
employment for Good Reason:
(i) the Company shall pay to the Executive in a lump sum in
cash within 30 days after the Date of Termination the aggregate of the
following amounts (such aggregate being hereinafter referred to as the
"Special Termination Amount"):
A. the sum of (1) the Executive's Annual Base Salary through
the Date of Termination to the extent not theretofore paid, (2) the product
of (x) the Highest Annual Bonus and (y) a fraction, the numerator of which
is the number of days in the current fiscal year through the Date of
Termination, and the denominator of which is 365 and (3) any compensation
previously deferred by the Executive (together with any accrued interest or
earnings thereon) (including, without limitation, compensation, bonus,
incentive compensation or awards deferred under the FPL Group, Inc.
Deferred Compensation Plan or incentive compensation or awards deferred
under the FPL Group, Inc. Long-Term Incentive Plan of 1985, the FPL Group,
Inc. Long Term Incentive Plan of 1994, or pursuant to an individual
deferral agreement) and any accrued vacation pay, in each case to the
extent not theretofore paid (the sum of the amounts described in clauses
(1), (2), and (3) being herein called the "Accrued Obligations"); and
B. the amount equal to the product of (1) the greater of two
or the number of years (with any partial year expressed as a fraction)
remaining in the Employment Period, and (2) the sum of (x) the Executive's
Annual Base Salary and (y) the Highest Annual Bonus; provided, however,
that such amount shall be paid in lieu of, and the Executive hereby waives
the right to receive, any other amount of severance relating to salary or
bonus continuation to be received by the Executive upon termination of
employment of the Executive under any severance plan, policy or arrangement
of the Company; and
C. the maximum amount payable under all performance share
grants and all other long term incentive compensation grants to the
Executive that have not been paid in accordance with the terms of the grant
or Section 5(c) hereof, calculated as though the Executive had remained
employed by the Company for the remainder of the Employment Period and on
the basis of actual achievement of performance measures through the end of
the fiscal year preceding the fiscal year in which the Date of Termination
occurs and thereafter assuming maximum achievement of all performance
measures (e.g., currently 160%) through the end of the Employment Period;
and
D. a separate lump-sum supplemental retirement benefit equal
to the greater of (i) the supplemental pension benefit described in
Paragraph 1(b) of Annex A that the Executive would have been entitled had
his employment continued at the compensation level provided for in Sections
5(a) and 5(b) of this Agreement for the greater of two years or the
remainder of the Employment Period and based upon his Projected Years of
Service (as defined in Paragraph 2(a) of Annex A) and his Projected Age (as
defined in Paragraph 2(b) of Annex A), or (ii) the difference between (1)
the actuarial equivalent (utilizing for this purpose the actuarial
assumptions utilized with respect to the FPL Group Employee Pension Plan
(or any successor plan thereto) (the "Retirement Plan") during the 90-day
period immediately preceding the Effective Date) of the benefit payable
under the Retirement Plan and all supplemental and/or excess retirement
plans providing benefits for the Executive (other than the supplemental
retirement benefit described in Annex A) (the "SERP") (including, but not
limited to the Supplemental Pension Benefit (as defined in the FPL Group,
Inc. Supplemental Executive Retirement Plan)) which the Executive would
receive if the Executive's employment continued at the compensation level
provided for in Sections 5(a) and 5(b) of this Agreement for, and his age
increased by, the greater of two years or the remainder of the Employment
Period, assuming for this purpose that all accrued benefits are fully
vested and that benefit accrual formulas are no less advantageous to the
Executive than those in effect during the 90-day period immediately
preceding the Effective Date, or, if more favorable to the Executive, as in
effect generally at any time thereafter during the Employment Period with
respect to other peer executives of the Company and its affiliated
companies, and (2) the actuarial equivalent (utilizing for this purpose the
actuarial assumptions utilized with respect to the Retirement Plan during
the 90-day period immediately preceding the Effective Date) of the
Executive's actual benefits (paid or payable), if any, under the Retirement
Plan and the SERP; and
E. a separate lump-sum supplemental retirement benefit equal
to the greater of (i) the supplemental matching contributions account
described in Paragraph 1(c) of Annex A that the Executive would have been
entitled had his employment continued at the compensation level provided
for in Sections 5(a) and 5(b) of this Agreement for the greater of two
years or the remainder of the Employment Period and assuming that the
Executive made After Tax Member Basic Contributions (within the meaning of
the FPL Group Employee Thrift Plan or any successor plan thereto (the
"Thrift Plan")) and Tax Saver Member Basic Contributions (within the
meaning of the Thrift Plan) to the Thrift Plan at the highest permissible
rate (disregarding any limitations imposed by the Code) following the Date
of Termination, or (ii) the difference between (1) the value of the Company
Account (as defined in the Thrift Plan) and any other matching contribution
accounts (including, but not limited to the Supplemental Matching
Contribution Account (as defined in the FPL Group, Inc. Supplemental
Executive Retirement Plan)) under a SERP (other than the supplemental
retirement benefit described in Annex A) which the Executive would receive
if (i) the Executive's employment continued at the compensation level
provided for in Sections 5(a) and 5(b) of this Agreement for the greater of
two years or the remainder of the Employment Period, (ii) the Executive
made pre- and after-tax contributions at the highest permissible rate
(disregarding any limitations imposed by the Code, which may or may not be
set forth in the Thrift Plan) for the greater of two years or each year
remaining in the Employment Period, (iii) the Company Account and the
matching contribution accounts are fully vested, and (iv) the matching
contribution formulas are no less advantageous to the Executive than those
in effect during the 90-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as in effect generally at any time
during the remainder of the Employment Period with respect to other peer
executives of the Company and its affiliated companies, and (2) the actual
value of the Executive's Company Account and matching contribution accounts
(paid or payable), if any, under the Thrift Plan and the SERP; and
(ii) for the remainder of the Employment Period, or such longer
period as any plan, program, practice or policy may provide, the Company
shall continue benefits to the Executive and/or the Executive's family at
least equal to those which would have been provided to them in accordance
with the plans, programs, practices and policies described in Sections 5(e)
and 5(g) of this Agreement if the Executive's employment had not been
terminated, in accordance with the most favorable plans, practices,
programs or policies of the Company and its affiliated companies applicable
generally to other peer executives and their families during the 90-day
period immediately preceding the Effective Date or, if more favorable to
the Executive, as in effect generally at any time thereafter with respect
to other peer executives of the Company and its affiliated companies and
their families provided, however, that if the Executive becomes reemployed
with another employer and is eligible to receive medical or other welfare
benefits under another employer provided plan, the medical and other
welfare benefits described herein shall be secondary to those provided
under such other plan during such applicable period of eligibility. For
purposes of determining eligibility of the Executive for retiree benefits
pursuant to such plans, practices, programs and policies, the Executive
shall be considered to have remained employed until the end of the
Employment Period and to have retired on the last day of such period;
(iii) for the remainder of the Employment Period and to the
extent previously paid for or provided by the Company, the Company shall
continue to provide the following:
A. social and business club memberships to the Executive (as
in effect immediately prior to the Date of Termination);
B. use, maintenance, insurance, and repair of the company car
that is in the possession of the Executive, until the earlier of the end of
the lease term or the end of the Employment Period, at which time the
Executive may purchase such car. The Company shall replace the company car
in the Executive's possession on the Effective Date with a new company car
at such time(s) as provided under the Company car policy applicable to
other peer executives, but in no case less frequently than the Company car
policy in effect during the 90-day period immediately preceding the
Effective Date;
C. up to $15,000 annually for personal financial planning,
accounting and legal advice;
D. communication equipment such as a car and/or cellular
phone, and home or laptop computer until the end of the Employment Period,
at which time the Executive may purchase such equipment;
E. security system at the Executive's residence and the
related monitoring and maintenance fees; and
F. up to $800 annually for personal excess liability
insurance coverage;
In lieu of continuing these benefits for the remainder of the Employment
Period, the Executive, in his sole discretion, may elect to receive a lump
sum payment equal to the present value of the amount projected to be paid
by the Company to provide these benefits. In determining the present
value, a six percent interest assumption shall be utilized. The Executive
shall make any such election by giving the Company written notice in
accordance with Section 14(b).
(iv) to the extent not theretofore paid or provided, the
Company shall timely pay or provide to the Executive any other amounts or
benefits required to be paid or provided or which the Executive is eligible
to receive pursuant to this Agreement or otherwise under any plan, program,
policy or practice or contract or agreement of the Company and its
affiliated companies, but excluding solely for purposes of this Section
7(a)(iv) amounts waived by the Executive pursuant to Section 7(a)(i)(B);
and
(v) the Company shall provide the Executive with the following
benefits in the event of his termination under this Section 7(a):
A. If the Executive is required to move his primary residence
in order to pursue other business opportunities during the Employment
Period, the Company shall reimburse the Executive for all such relocation
expenses incurred during the Employment Period (not in excess of $10,000)
that are not reimbursed by another employer, including, without limitation,
assistance in selling the Executive's home and all other assistance and
benefits that were customarily provided by the Company to transferred
executives prior to the Change of Control;
B. If the Executive retains counsel or an accounting firm in
connection with the taxation of payments made pursuant to Section 10 of
this Agreement, the Company shall reimburse the Executive for such
reasonable legal and/or accounting fees and disbursements (not in excess of
$15,000);
C. The Company shall continue to pay the Executive's Annual
Base Salary during the pendency of a dispute over his termination. Amounts
paid under this subsection are in addition to all other amounts due under
this Agreement (other than those due under Section 5(a) hereof) and shall
not be offset against or reduce any other amounts due under this Agreement;
and
D. The Company shall provide the Executive with outplacement
services commensurate with those provided to terminated executives of
comparable level made available through and at the facilities of a
reputable and experienced vendor; and
(vi) any outstanding options, stock appreciation rights, and
other awards in the nature of a right that may be exercised granted to the
Executive shall become fully exercisable and vested; any restrictions,
deferral limitations, and forfeiture conditions applicable to any
outstanding award granted to the Executive shall lapse and such awards
shall be deemed fully vested; and the Executive shall have for the
remainder of the Employment Period (but in no event past the expiration of
the term of the award) to exercise any and all rights granted under such
awards then exercisable or which become exercisable pursuant to this
Section 7(a)(vi), except that with respect to incentive stock options
(within the meaning of Section 422(b) of the Code) and stock appreciation
rights relating thereto, the Executive may exercise such awards during the
period of exercise provided for in the agreements granting such options.
(b) Death. Upon the Executive's death during the Employment
Period, this Agreement shall terminate without further obligations to the
Executive's legal representatives under this Agreement, other than for
payment of Accrued Obligations, the supplemental retirement benefit
described in Annex A, and the timely payment or provision of the benefits
described in Section 7(a)(ii) and (iv) (the "Other Benefits"). All Accrued
Obligations shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date of
Termination. The supplemental retirement benefit shall be paid to the
Executive's Beneficiary (within the meaning of the FPL Group, Inc.
Supplemental Executive Retirement Plan) at his option in a lump sum
distribution to be made not later than three months after the occurrence of
his death or in the same manner as the Executive's benefits under the
Retirement Plan or Thrift Plan to which his benefits under Annex A of this
Agreement relates. The term "Other Benefits" as utilized in this Section
7(b) shall include, without limitation, and the Executive's family shall be
entitled to receive, benefits at least equal to the most favorable benefits
provided by the Company and any of its affiliated companies to surviving
families of peer executives of the Company and such affiliated companies
under such plans, programs, practices and policies relating to family death
benefits, if any, as in effect with respect to other peer executives and
their families at any time during the 90-day period immediately preceding
the Effective Date or, if more favorable to the Executive and/or the
Executive's family, as in effect on the date of the Executive's death with
respect to other peer executives of the Company and its affiliated
companies and their families.
(c) Disability. If the Executive's employment is terminated
by reason of the Executive's Disability during the Employment Period, this
Agreement shall terminate without further obligations to the Executive,
other than for payment of Accrued Obligations, the supplemental retirement
benefit described in Annex A, and the timely payment or provision of Other
Benefits. All Accrued Obligations shall be paid to the Executive in a lump
sum in cash within 30 days of the Date of Termination. The supplemental
retirement benefit shall be paid to the Participant or his Beneficiary
(within the meaning of the FPL Group, Inc. Supplemental Executive
Retirement Plan), as the case may be, at the option of the Executive or if
the Executive is deceased, at the option of such Beneficiary, in a lump sum
distribution to be made not later than three months after the occurrence of
such event or in the same manner as the Executive's benefits under the
Retirement Plan or Thrift Plan to which his benefits under Annex A of this
Agreement relates. The term "Other Benefits" as utilized in this Section
7(c) shall include, and the Executive shall be entitled after the
Disability Effective Date to receive, disability and other benefits at
least equal to the most favorable of those generally provided by the
Company and its affiliated companies to disabled executives and/or their
families in accordance with such plans, programs, practices and policies
relating to disability, if any, as in effect generally with respect to
other peer executives and their families at any time during the 90-day
period immediately preceding the Effective Date or, if more favorable to
the Executive and/or the Executive's family, as in effect at any time
thereafter generally with respect to other peer executives of the Company
and its affiliated companies and their families.
(d) Cause; Other Than for Good Reason. If the Executive's
employment shall be terminated for Cause during the Employment Period, this
Agreement shall terminate without further obligations to the Executive
other than the obligation to pay to the Executive Annual Base Salary
through the Date of Termination plus the amount of any compensation
previously deferred by the Executive, in each case to the extent
theretofore unpaid. If the Executive terminates employment during the
Employment Period, excluding a termination for Good Reason, this Agreement
shall terminate without further obligations to the Executive, other than
for Accrued Obligations, the supplemental retirement benefit described in
Annex A to the extent the Executive is vested in his benefit under the
Retirement Plan, and the timely payment or provision of Other Benefits. In
such case, all Accrued Obligations shall be paid to the Executive in a lump
sum in cash within 30 days of the Date of Termination. The supplemental
retirement benefit shall be paid to the Executive or his Beneficiary
(within the meaning of the FPL Group, Inc. Supplemental Executive
Retirement Plan), as the case may be, at the option of the Executive or if
the Executive is deceased, at the option of such Beneficiary, in a lump sum
distribution to be made not later than three months after the occurrence of
such event or in the same manner as the Executive's benefits under the
Retirement Plan or Thrift Plan to which his benefits under Annex A of this
Agreement relates.
8. Non-exclusivity of Rights. Except as otherwise expressly
provided for in this Agreement, nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company or any of its
affiliated companies and for which the Executive may qualify, nor shall
anything herein limit or otherwise affect such rights as the Executive may
have under any contract or agreement with the Company or any of its
affiliated companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, policy, practice
or program of or any contract or agreement with the Company or any of its
affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or
contract or agreement except as explicitly modified by this Agreement.
9. Full Settlement. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Company may
have against the Executive or others. In no event shall the Executive be
obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement and, except as otherwise expressly provided
for in this Agreement, such amounts shall not be reduced whether or not the
Executive obtains other employment. The Company agrees to pay, to the
fullest extent permitted by law, all legal fees and expenses which the
Executive may reasonably incur at all stages of proceedings, including,
without limitation, preparation and appellate review, as a result of any
contest (regardless of whether formal legal proceedings are ever commenced
and regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any
provision of this Agreement or any guarantee of performance thereof
(including as a result of any contest by the Executive about the amount of
any payment pursuant to this Agreement), plus in each case interest on any
delayed payment at the applicable Federal rate provided for in Section
7872(f)(2)(A) of the Code.
10. Certain Additional Payments by the Company. Anything in
this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by the Company to or for the
benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this
Section 10) (a "Payment") would be subject to the excise tax imposed by
Section 4999 of the Code or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to
as the "Excise Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that after
payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any
income or employment taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the
Executive retains an amount of Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
In the event that Federal or state legislation is enacted by
imposing additional excise or supplementary income taxes on amounts payable
or benefits provided to the Executive (other than a mere change in marginal
income tax rates), the Company agrees to review the Agreement with the
Executive and to consider in good faith any changes hereto that may be
required to preserve the full amount of all Payments and the economic
purposes of the foregoing provisions of this Section 10.
11. Confidential Information. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company or any
of its affiliated companies, and their respective businesses, which shall
have been obtained by the Executive during the Executive's employment by
the Company or any of its affiliated companies and which shall not be or
become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive's employment with the Company, the Executive
shall not, without the prior written consent of the Company or as may
otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and
those designated by it. In no event shall an asserted violation of the
provisions of this Section 11 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this
Agreement.
12. Indemnification. The Company will, to the fullest extent
permitted by law, indemnify and hold the Executive harmless from any and
all liability arising from the Executive's service as an employee, officer
or director of the Company and its affiliated companies. To the fullest
extent permitted by law, the Company will advance legal fees and expenses
to the Executive for counsel selected by the Executive in connection with
any litigation or proceeding related to the Executive's service as an
employee, officer or director of the Company and its affiliates. The terms
of this indemnification provision shall survive the expiration of this
Agreement.
13. Successors.
(a) This Agreement is personal to the Executive and without
the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution.
This Agreement shall inure to the benefit of and be enforceable by the
Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(c) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall
mean the Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
14. Miscellaneous.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida, without reference to
principles of conflict of laws. The captions of this Agreement are not
part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written
agreement executed by the parties hereto or their respective successors and
legal representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive:
James L. Broadhead
If to the Company:
FPL Group, Inc.
700 Universe Boulevard
Juno Beach, Florida 33408
Attention: Vice President, Human Resources
or such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be
effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Company may withhold from any amounts payable under
this Agreement such Federal, state or local taxes as shall be required to
be withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon
strict compliance with any provision hereof or any other provision of this
Agreement or the failure to assert any right the Executive or the Company
may hereunder, including, without limitation, the right of the Executive to
terminate employment for Good Reason pursuant to Section 6(c)(i)-(v) of
this Agreement, shall not be deemed to be a waiver of such provision or
right or any other provision or right of this Agreement.
(f) The Executive and the Company acknowledge that, except as
may otherwise be provided under any other written agreement between the
Executive and the Company, the employment of the Executive by the Company
is "at will" and, prior to the Effective Date, may be terminated by either
the Executive or the Company at any time. Moreover, except as provided in
Section 1, if prior to the Effective Date, (i) the Executive's employment
with the Company terminates, or (ii) there is a diminution in the
Executive's position (including status, offices, titles, and reporting
requirements), authority, duties, and responsibilities with the Company or
its affiliated companies, then the Executive shall have no further rights
under this Agreement.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's
hand and, pursuant to the authorization from the Board of Directors, the
Company has caused these presents to be executed in its name on its behalf,
all as of the day and year first above written.
JAMES L. BROADHEAD
James L. Broadhead
FPL GROUP, INC.
By LAWRENCE J. KELLEHER
Lawrence J. Kelleher
Vice President, Human Resources
ANNEX A
TO THE
EMPLOYMENT AGREEMENT
SUPPLEMENTAL RETIREMENT BENEFIT
1. Supplement Retirement Benefit.
(a) In General. The supplemental retirement benefit
to which the Executive shall be entitled under this Agreement shall be (i)
the supplemental pension benefit described in Paragraph 1(b) of this Annex
A, and (ii) the supplemental matching contribution account described in
Paragraph 1(c) of this Annex A.
(b) Supplemental Pension Benefit. The "supplemental
pension benefit" shall be the greater of (i) the supplement cash balance
accrued benefit described in Paragraph 1(b)(1) of this Annex A, or (ii) the
supplement unit credit accrued benefit described in Paragraph 1(b)(2) of
this Annex A.
(1) The "supplement cash balance accrued benefit" is
the difference, if any, between (A) and (B) where:
(A) is the benefit to which the Executive would be
entitled under the Retirement Plan as in effect immediately prior to the
Change of Control or, if more favorable to the Executive, as in effect
generally at any time thereafter during the Employment Period with respect
to other peer executives of the Company and its affiliated companies,
expressed in the normal form of benefit, if such benefit was computed (i)
as if benefits under such plan were based upon the Executive's Bonus
Compensation (within the meaning of the FPL Group, Inc. Supplemental
Executive Retirement Plan as in effect immediately prior to the Change of
Control), (ii) without the annual compensation limitation imposed by
Section 401(a)(17) of the Code, and (iii) without the restrictions or the
limitations imposed by Sections 415(b) or 415(e) of the Code; and
(B) is the sum of the benefits payable to the
Executive under the Retirement Plan and the SERP, expressed in the normal
form of benefit.
(2) The "supplement unit credit accrued benefit" is
the difference, if any, between (A) and (B) where:
(A) is the benefit to which the Executive would be
entitled under the Prior Pension Plan (within the meaning of the FPL Group,
Inc. Supplemental Executive Retirement Plan as in effect immediately prior
to the Change of Control), expressed in the normal form of benefit, if such
benefit was computed (i) as if benefits under such plan were based upon the
Executive's Bonus Compensation, (ii) without the annual compensation
limitation imposed by Section 401(a)(17) of the Code, and (iii) without the
restrictions or the limitations imposed by Sections 415(b) or 415(e) of the
Code; and
(B) is the sum of the benefits payable to the
Executive under the Retirement Plan and the SERP, expressed in the normal
form of benefit.
(c) Supplemental Matching Contribution Account. The
"supplemental matching contribution account" shall be an account that is
credited annually with (i) supplemental matching contributions described in
Paragraph 1(c)(1) of this Annex A, and (ii) theoretical earnings described
in Paragraph 1(c)(2) of this Annex A.
(1) "Supplemental matching contributions" shall be
for each year ending on or prior to the Effective Date in which the
Executive participated in the SERP and for each year ending after the
Effective Date in which the Executive performs services for the Company or
its affiliated companies the difference, if any, between (A) and (B) where:
(A) is the matching contribution allocation for such
year to which the Executive would be entitled under the Thrift Plan as in
effect immediately prior to the Change of Control or, if more favorable to
the Executive, as in effect generally at any time thereafter during the
Employment Period with respect to other peer executives of the Company and
its affiliated companies if such allocation were computed (i) as if the
matching contribution allocation under such plan was based upon the
Executive's Bonus Compensation, (ii) without the annual compensation
limitation imposed by Section 401(a)(17) of the Code, (iii) without the
restrictions or the limitations imposed by Sections 415(c) or 415(e) of the
Code, and (iv) as if he made After Tax Member Basic Contributions (within
the meaning of the Thrift Plan) and Tax Saver Member Basic Contributions
(within the meaning of the Thrift Plan) at the same percentage of Bonus
Compensation as he made such contributions to the Thrift Plan for such
years; and
(B) is the sum of the matching contributions
allocated or credited to the Executive under the Thrift Plan and the SERP
for such year.
(2) "Theoretical earnings" shall be the income, gains
and losses which would have been credited on the Executive's supplemental
matching contribution account balance if such account were invested in the
Company Stock Fund (within the meaning of the Thrift Plan) offered as a
part of the Thrift Plan.
2. Construction and Definitions. Unless defined below or
otherwise in this Annex A, all of the capitalized terms used in this Annex
A shall have the meanings assigned to them in this Agreement:
(a) "Projected Years of Service" shall mean the
Executive's Years of Service (within the meaning of the FPL Group, Inc.
Supplemental Executive Retirement Plan as in effective immediately prior to
the Change of Control), plus the Years of Service he would have otherwise
been credited had his employment terminated on the later of the second
anniversary of his Date of Termination or the last day of the Employment
Period.
(b) "Projected Age" shall mean the age that the
Executive will have attained on the later of the second anniversary of his
Date of Termination or the last day of the Employment Period.
EMPLOYMENT AGREEMENT
Employment Agreement between FPL Group, Inc., a Florida
corporation (the "Company"), and Dennis P. Coyle (the "Executive"), dated
as of December 11, 1995, amended and restated as of May 10, 1999.
The Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company and its
shareholders to assure that the Company and its affiliated companies will
have the continued dedication of the Executive, notwithstanding the
possibility, threat or occurrence of a Change of Control (as defined below)
of the Company. The Board believes it is imperative to diminish the
inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of
Control and to encourage the Executive's full attention and dedication to
the Company and its affiliated companies currently and in the event of any
threatened or pending Change of Control, and to provide the Executive with
compensation and benefits arrangements upon a Change of Control which
ensure that the compensation and benefits expectations of the Executive
will be satisfied and which are competitive with those of other
corporations. Therefore, in order to accomplish these objectives, the Board
has caused the Company to enter into this Employment Agreement (the
"Agreement").
Therefore, the Company and the Executive agree as follows:
1. Effective Date. The effective date of this Agreement
shall be the date on which a Change of Control occurs (the "Effective
Date"). Anything in this Agreement to the contrary notwithstanding, if a
Change of Control occurs and if the Executive's employment with the Company
or its affiliated companies is terminated or the Executive's position
(including status, offices, titles, and reporting requirements), authority,
duties, and responsibilities with the Company or its affiliated companies
is not commensurate in all material respects with the most significant of
those held, exercised, and assigned prior to the date on which the Change
of Control occurs, and if it is reasonably demonstrated by the Executive
that such termination of employment or diminution in position, authority,
duties, or responsibilities (i) was at the request of a third party who has
taken steps reasonably calculated to effect the Change of Control or (ii)
otherwise arose in connection with or anticipation of the Change of
Control, then for all purposes of this Agreement the "Effective Date" shall
mean the date immediately prior to the date of such termination of
employment or diminution in position, authority, duties or
responsibilities. As used in this Agreement, the term "affiliated
companies" shall include any corporation or other entity controlled by,
controlling or under common control with the Company.
2. Change of Control. For the purposes of this Agreement, a
"Change of Control" shall mean:
(a) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of 20% or more of either (i) the then outstanding shares of common
stock of the Company (the "Outstanding Company Common Stock") or (ii) the
combined voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that the
following acquisitions shall not constitute a Change of Control: (i) any
acquisition by the Company or any or its subsidiaries, (ii) any acquisition
by any employee benefit plan (or related trust) sponsored or maintained by
the Company or any of its subsidiaries or (iii) any acquisition by any
corporation with respect to which, following such acquisition, more than
75% of, respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election
of directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such acquisition
in substantially the same proportions as their ownership, immediately prior
to such acquisition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be; or
(b) Individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of either
an actual or threatened solicitation to which Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act applies or other actual or
threatened solicitation of proxies or consents; or
(c) Approval by the shareholders of the Company of a
reorganization, merger or consolidation, in each case, with respect to
which all or substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common Stock
and Outstanding Company Voting Securities immediately prior to such
reorganization, merger or consolidation do not, following such
reorganization, merger or consolidation, beneficially own, directly or
indirectly, more than 75% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the
case may be, of the corporation resulting from such reorganization, merger
or consolidation in substantially the same proportions as their ownership,
immediately prior to such reorganization, merger or consolidation of the
Outstanding Company Common Stock and Outstanding Company Voting Securities,
as the case may be; or
(d) Approval by the shareholders of the Company of
(i) a complete liquidation or dissolution of the Company or (ii) the sale
or other disposition of all or substantially all of the assets of the
Company, other than to a corporation, with respect to which following such
sale or other disposition, more than 75% of, respectively, the then
outstanding shares of common stock of such corporation and the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of
the individuals and entities who were the beneficial owners, respectively,
of the Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately prior to
such sale or other disposition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be.
The term "the sale or disposition by the Company of all or
substantially all of the assets of the Company" shall mean a sale or other
disposition transaction or series of related transactions involving assets
of the Company or of any direct or indirect subsidiary of the Company
(including the stock of any direct or indirect subsidiary of the Company)
in which the value of the assets or stock being sold or otherwise disposed
of (as measured by the purchase price being paid therefor or by such other
method as the Board determines is appropriate in a case where there is no
readily ascertainable purchase price) constitutes more than two-thirds of
the fair market value of the Company (as hereinafter defined). The "fair
market value of the Company" shall be the aggregate market value of the
then Outstanding Company Common Stock (on a fully diluted basis) plus the
aggregate market value of the Company's other outstanding equity
securities. The aggregate market value of the shares of Outstanding
Company Common Stock shall be determined by multiplying the number of
shares of Outstanding Company Common Stock (on a fully diluted basis)
outstanding on the date of the execution and delivery of a definitive
agreement with respect to the transaction or series of related transactions
(the "Transaction Date") by the average closing price of the shares of
Outstanding Company Common Stock for the ten trading days immediately
preceding the Transaction Date. The aggregate market value of any other
equity securities of the Company shall be determined in a manner similar to
that prescribed in the immediately preceding sentence for determining the
aggregate market value of the shares of Outstanding Company Common Stock or
by such other method as the Board shall determine is appropriate.
3. Employment Period. The Company hereby agrees to continue
the Executive in its or its affiliated companies' employ, or both, as the
case may be, and the Executive hereby agrees to remain in the employ of the
Company, or its affiliated companies, or both, as the case may be, for a
period commencing on the Effective Date and ending on the 4th anniversary
of such date (the "Employment Period").
4. Position and Duties. During the Employment Period, the
Executive's position (including status, offices, titles, and reporting
requirements), authority, duties, and responsibilities with the Company or
its affiliated companies or both, as the case may be, shall be in every
respect at least commensurate with the most significant of those held,
exercised, and assigned at any time during the 90-day period immediately
preceding the Effective Date. The Executive's services shall be performed
at the location where the Executive was employed immediately preceding the
Effective Date or any location less than 20 miles from such location,
although the Executive understands and agrees that he may be required to
travel from time to time for business purposes.
During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive
agrees to devote substantially all of his time and attention during normal
business hours to the business and affairs of the Company and its
affiliated companies and to use his reasonable best efforts to perform
faithfully and efficiently the duties and responsibilities assigned to him
hereunder. During the Employment Period it shall not be a violation of
this Agreement for the Executive to serve on corporate, civic or charitable
boards or committees, deliver lectures, fulfill speaking engagements or
teach at educational institutions and devote reasonable amounts of time to
the management of his and his family's personal investments and affairs, so
long as such activities do not significantly interfere with the performance
of the Executive's responsibilities as an employee of the Company or its
affiliated companies in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities have been
conducted by the Executive prior to the Effective Date, the reinstatement
or continued conduct of such activities (or the reinstatement or conduct of
activities similar in nature and scope thereto) subsequent to the Effective
Date shall not thereafter be deemed to interfere with the performance of
the Executive's responsibilities to the Company and its affiliated
companies.
5. Compensation. During the Employment Period, the Executive
shall be compensated as follows:
(a) Annual Base Salary. The Executive shall be paid
an annual base salary ("Annual Base Salary"), in equal biweekly
installments, at least equal to the annual base salary being paid to the
Executive by the Company and its affiliated companies with respect to the
year in which the Effective Date occurs. The Annual Base Salary shall be
reviewed at least annually and shall be increased substantially consistent
with increases in base salary generally awarded to other peer executives of
the Company and its affiliated companies. Such increases shall in no
event be less than the increases in the U.S. Department of Labor Consumer
Price Index - U.S. City Average Index. Any increase in Annual Base Salary
shall not serve to limit or reduce any other obligation to the Executive
under this Agreement. Annual Base Salary shall not be reduced after any
such increase and the term "Annual Base Salary" as utilized in this
Agreement shall refer to Annual Base Salary as so increased.
(b) Annual Bonus. In addition to Annual Base Salary,
the Executive shall be awarded, for each fiscal year ending during the
Employment Period, an annual bonus (the "Annual Bonus") in cash at least
equal to the highest annual incentive compensation (annualized for any
fiscal year consisting of less than twelve full months or with respect to
which the Executive has been employed by the Company for less than twelve
full months) paid or payable, including by reason of any deferral, to the
Executive by the Company and its affiliated companies in respect of the
three fiscal years immediately preceding the fiscal year in which the
Effective Date occurs (the "Highest Recent Bonus"). The greater of (i) the
Highest Recent Bonus or (ii) the highest Annual Bonus awarded by the
Company and its affiliated companies after the Effective Date (target or
actual, whichever is greater) is herein called the "Highest Annual Bonus".
Each such Annual Bonus shall be paid no later than the end of the third
month of the fiscal year next following the fiscal year for which the
Annual Bonus is awarded, unless the Executive otherwise elects to defer
the receipt of such Annual Bonus.
(c) Long Term Incentive Compensation. During the
Employment Period, the Executive shall be entitled to participate in all
incentive compensation plans, practices, policies, and programs applicable
generally to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies, and
programs provide the Executive with incentive opportunities and potential
benefits, both as to amount and percentage of compensation, less favorable,
in the aggregate, than those provided by the Company and its affiliated
companies for the Executive under the FPL Group Long Term Incentive Plan
(including, without limitation, performance share grants and awards) as in
effect at any time during the 90-day period immediately preceding the
Effective Date or; if more favorable to the Executive, those provided
generally at any time after the Effective Date to other peer executives of
the Company and its affiliated companies.
In addition, on the Effective Date (i) the maximum performance
criteria of all outstanding performance awards, performance-based
restricted stock, and other stock-based awards granted to the Executive
shall be deemed fully achieved and all such awards shall be fully earned
and vested; (ii) any option, stock appreciation right, and other award in
the nature of a right that may be exercised that was granted to the
Executive and which was not previously exercisable and vested shall become
fully exercisable and vested; (iii) the restrictions, deferral limitations,
and forfeiture conditions applicable to any outstanding award granted to
the Executive under an incentive compensation plan, practice, policy or
program shall lapse and such awards shall be deemed fully vested; and (iv)
all outstanding awards shall be canceled and the Executive shall be paid in
cash for such awards on the basis of the change of control price as of the
date of the occurrence of the Change of Control (or such other date
applicable to awards granted to other peer executives under the applicable
incentive compensation plan, practice, policy or program) to the extent
such cancellation of and payment for an award would not cause the Executive
to incur actual short-swing profits liability under Section 16(b) of the
Exchange Act. For purposes of this paragraph, the term "change of control
price" means the highest price per share paid in any transaction reported
on the securities exchange or trading system on which the shares of common
stock of the Company are then primarily listed or traded, or paid or
offered in any transaction related to the Change of Control at any time
during the preceding 60-day period, except that in the case of incentive
stock options (within the meaning of Section 422(b) of the Internal Revenue
Code of 1986, as amended (the "Code")) and stock appreciation rights
relating thereto, such price shall be based only on transactions reported
for the date such awards are cashed out.
(d) Savings and Retirement Plans. During the
Employment Period, the Executive shall be entitled to participate in all
savings and retirement plans, practices, policies, and programs applicable
generally to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies, and
programs provide the Executive with savings opportunities and retirement
benefit opportunities, in each case, less favorable, in the aggregate, than
the most favorable of those provided by the Company and its affiliated
companies for the Executive under such plans, practices, policies, and
programs as in effect at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Executive, those
provided generally at any time after the Effective Date to other peer
executives of the Company and its affiliated companies.
In addition, during the Employment Period the Executive shall be
entitled under this Agreement to the supplemental retirement benefit
described in Annex A attached hereto and made a part hereof by this
reference. The payment and vesting of such supplemental retirement benefit
shall be determined in accordance with Section 7 of this Agreement.
(e) Benefit Plans. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be
eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies, and programs provided by the Company
and its affiliated companies (including, without limitation, medical,
executive medical, annual executive physical, prescription, dental, vision,
short-term disability, long-term disability, executive long-term
disability, salary continuance, employee life, group life, benefits
pursuant to split dollar arrangements, accidental death and dismemberment,
and travel accident insurance plans and programs) to the extent applicable
generally to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies, and
programs provide the Executive with benefits which are less favorable, in
the aggregate, than the most favorable of such plans, practices, policies,
and programs in effect for the Executive at any time during the 90-day
period immediately preceding the Effective Date or, if more favorable to
the Executive, those provided generally at any time after the Effective
Date to other peer executives of the Company and its affiliated companies.
(f) Expenses. During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in accordance with the most
favorable policies, practices, and procedures of the Company and its
affiliated companies in effect for the Executive at any time during the 90-
day period immediately preceding the Effective Date or, if more favorable
to the Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its affiliated
companies.
(g) Fringe Benefits. During the Employment Period,
the Executive shall be entitled to fringe benefits, including but not
limited to those described in Section 7(a)(iii), in accordance with the
most favorable plans, practices, programs, and policies of the Company and
its affiliated companies in effect for the Executive at any time during the
90-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies.
(h) Office and Support Staff. During the Employment
Period, the Executive shall be entitled to an office or offices of a size
and with furnishings and other appointments, and to exclusive personal
secretarial and other assistance, at least equal to the most favorable of
the foregoing provided to the Executive by the Company and its affiliated
companies at any time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as provided
generally at any time thereafter with respect to other peer executives of
the Company and its affiliated companies.
(i) Vacation. During the Employment Period, the
Executive shall be entitled to paid vacation in accordance with the most
favorable plans, policies, programs, and practices of the Company and its
affiliated companies as in effect for the Executive at any time during the
90-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer incentives of the Company and its affiliated
companies.
6. Termination of Employment.
(a) Disability. If the Company determines in good
faith that the Disability of the Executive has occurred during the
Employment Period (pursuant to the definition of Disability set forth
below), it may give to the Executive written notice in accordance with
Section 14(b) of this Agreement of its intention to terminate the
Executive's employment. In such event, the Executive's employment with the
Company shall terminate effective on the 30th day after receipt of such
notice by the Executive (the "Disability Effective Date"), provided that,
within the 30 days after such receipt, the Executive shall not have
returned to perform his duties in accordance with Section 4. For purposes
of this Agreement, "Disability" shall mean the absence of the Executive
from the Executive's duties with the Company for 180 consecutive business
days as a result of incapacity due to mental or physical illness which is
determined to be total and permanent by a physician selected by the Company
or its insurers and acceptable to the Executive or the Executive's legal
representative (such agreement as to acceptability not to be withheld
unreasonably).
(b) Cause. The Company may terminate the Executive's
employment during the Employment Period for Cause. For purposes of this
Agreement, "Cause" shall mean (i) repeated violations by the Executive of
the Executive's obligations under Section 4 of this Agreement (other than
as a result of incapacity due to physical or mental illness) which are
demonstrably willful and deliberate on the Executive's part, which are
committed in bad faith or without reasonable belief that such violations
are in the best interests of the Company and which are not remedied in a
reasonable period of time after receipt of written notice from the Company
specifying such violations or (ii) the conviction of the Executive of a
felony involving an act of dishonesty intended to result in substantial
personal enrichment at the expense of the Company or its affiliated
companies.
(c) Good Reason. The Executive's employment may be
terminated during the Employment Period by the Executive for Good Reason.
For purposes of this Agreement, "Good Reason" shall mean:
(i) any failure by the Company to comply in every
respect with the provisions of Section 4 of this Agreement, including
without limitation, the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position (including,
without limitation, status, offices, titles and reporting requirements),
authority, duties or responsibilities as contemplated by Section 4, or any
other action or inaction by the Company which results in a diminution in
such position, authority, duties or responsibilities, excluding for this
purpose an isolated, insubstantial and inadvertent action not taken in bad
faith and which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(ii) any failure by the Company to comply with any of
the provisions of Section 5 of this Agreement, other than isolated,
insubstantial and inadvertent failure not occurring in bad faith and which
is remedied by the Company promptly after receipt of notice thereof given
by the Executive;
(iii) the Company's requiring the Executive to be based
at any office or location other than that described in Section 4 hereof;
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this
Agreement; or
(v) any failure by the Company to comply with and
satisfy Section 13(c) of this Agreement, provided that such successor has
received at least ten days prior written notice from the Company or the
Executive of the requirements of Section 13(c) of the Agreement.
For purposes of this Section 6(c), any good faith determination of
"Good Reason" made by the Executive shall be conclusive.
(d) Notice of Termination. Any termination by the
Company for Cause, or by the Executive for Good Reason, shall be
communicated by Notice of Termination to the other party hereto given in
accordance with Section 14(b) of this Agreement. For purposes of this
Agreement, a "Notice of Termination" means a written notice which (i)
indicates the specific termination provision in this Agreement relied upon,
(ii) to the extent applicable, sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated, and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of
such notice, specifies the termination date (which date shall be not more
than fifteen days after the giving of such notice). The failure by the
Executive or the Company to set forth in the Notice of Termination any fact
or circumstances which contributes to a showing of Good Reason or Cause
shall not waive any right of the Executive or the Company hereunder or
preclude the Executive or the Company from asserting such fact or
circumstance in enforcing the Executive's or the Company's rights
hereunder.
(e) Date of Termination. "Date of Termination" means
(i) if the Executive's employment is terminated by the Company for Cause,
or by the Executive for Good Reason, the date of receipt of the Notice of
Termination or any later date specified therein, as the case may be, (ii)
if the Executive's employment is terminated by the Company other than for
Cause or Disability, the Date of Termination shall be the date on which the
Company notifies the Executive of such termination, and (iii) if the
Executive's employment is terminated by reason of Disability, the Date of
Termination shall be the Disability Effective Date.
7. Obligations of the Company upon Termination.
(a) Good Reason; Other Than for Cause or Disability.
If, during the Employment Period, the Company terminates the Executive's
employment other than for Cause or Disability or the Executive terminates
employment for Good Reason:
(i) the Company shall pay to the Executive in a lump
sum in cash within 30 days after the Date of Termination the aggregate of
the following amounts (such aggregate being hereinafter referred to as the
"Special Termination Amount"):
A. the sum of (1) the Executive's Annual Base Salary
through the Date of Termination to the extent not theretofore paid, (2) the
product of (x) the Highest Annual Bonus and (y) a fraction, the numerator
of which is the number of days in the current fiscal year through the Date
of Termination, and the denominator of which is 365, and (3) any
compensation previously deferred by the Executive (together with any
accrued interest or earnings thereon) (including, without limitation,
compensation, bonus, incentive compensation or awards deferred under the
FPL Group, Inc. Deferred Compensation Plan or incentive compensation or
awards deferred under the FPL Group, Inc. Long-Term Incentive Plan of 1985,
the FPL Group, Inc. Long Term Incentive Plan of 1994, or pursuant to an
individual deferral agreement) and any accrued vacation pay, in each case
to the extent not theretofore paid (the sum of the amounts described in
clauses (1), (2), and (3) being herein called the "Accrued Obligations");
and
B. the amount equal to the product of (1) the
greater of two or the number of years (with any partial year expressed as a
fraction) remaining in the Employment Period, and (2) the sum of (x) the
Executive's Annual Base Salary and (y) the Highest Annual Bonus; provided,
however, that such amount shall be paid in lieu of, and the Executive
hereby waives the right to receive, any other amount of severance relating
to salary or bonus continuation to be received by the Executive upon
termination of employment of the Executive under any severance plan, policy
or arrangement of the Company; and
C. the maximum amount payable under all performance
share grants and all other long term incentive compensation grants to the
Executive that have not been paid in accordance with the terms of the grant
or Section 5(c) hereof, calculated as though the Executive had remained
employed by the Company for the remainder of the Employment Period and on
the basis of actual achievement of performance measures through the end of
the fiscal year preceding the fiscal year in which the Date of Termination
occurs and thereafter assuming maximum achievement of all performance
measures (e.g., currently 160%) through the end of the Employment Period;
and
D. a separate lump-sum supplemental retirement
benefit equal to the greater of (i) the supplemental pension benefit
described in Paragraph 1(b) of Annex A that the Executive would have been
entitled had his employment continued at the compensation level provided
for in Sections 5(a) and 5(b) of this Agreement for the greater of two
years or the remainder of the Employment Period and based upon his
Projected Years of Service (as defined in Paragraph 2(a) of Annex A) and
his Projected Age (as defined in Paragraph 2(b) of Annex A), or (ii) the
difference between (1) the actuarial equivalent (utilizing for this purpose
the actuarial assumptions utilized with respect to the FPL Group Employee
Pension Plan (or any successor plan thereto) (the "Retirement Plan") during
the 90-day period immediately preceding the Effective Date) of the benefit
payable under the Retirement Plan and all supplemental and/or excess
retirement plans providing benefits for the Executive (other than the
supplemental retirement benefit described in Annex A) (the "SERP")
(including, but not limited to the Supplemental Pension Benefit (as defined
in the FPL Group, Inc. Supplemental Executive Retirement Plan)) which the
Executive would receive if the Executive's employment continued at the
compensation level provided for in Sections 5(a) and 5(b) of this Agreement
for, and his age increased by, the greater of two years or the remainder of
the Employment Period, assuming for this purpose that all accrued benefits
are fully vested and that benefit accrual formulas are no less advantageous
to the Executive than those in effect during the 90-day period immediately
preceding the Effective Date, or, if more favorable to the Executive, as in
effect generally at any time thereafter during the Employment Period with
respect to other peer executives of the Company and its affiliated
companies, and (2) the actuarial equivalent (utilizing for this purpose the
actuarial assumptions utilized with respect to the Retirement Plan during
the 90-day period immediately preceding the Effective Date) of the
Executive's actual benefits (paid or payable), if any, under the Retirement
Plan and the SERP; and
E. a separate lump-sum supplemental retirement
benefit equal to the greater of (i) the supplemental matching contributions
account described in Paragraph 1(c) of Annex A that the Executive would
have been entitled had his employment continued at the compensation level
provided for in Sections 5(a) and 5(b) of this Agreement for the greater of
two years or the remainder of the Employment Period and assuming that the
Executive made After Tax Member Basic Contributions (within the meaning of
the FPL Group Employee Thrift Plan or any successor plan thereto (the
"Thrift Plan")) and Tax Saver Member Basic Contributions (within the
meaning of the Thrift Plan) to the Thrift Plan at the highest permissible
rate (disregarding any limitations imposed by the Code) following the Date
of Termination, or (ii) the difference between (1) the value of the Company
Account (as defined in the Thrift Plan) and any other matching contribution
accounts (including, but not limited to the Supplemental Matching
Contribution Account (as defined in the FPL Group, Inc. Supplemental
Executive Retirement Plan)) under a SERP (other than the supplemental
retirement benefit described in Annex A) which the Executive would receive
if (i) the Executive's employment continued at the compensation level
provided for in Sections 5(a) and 5(b) of this Agreement for the greater of
two years or the remainder of the Employment Period, (ii) the Executive
made pre- and after-tax contributions at the highest permissible rate
(disregarding any limitations imposed by the Code, which may or may not be
set forth in the Thrift Plan) for the greater of two years or each year
remaining in the Employment Period, (iii) the Company Account and the
matching contribution accounts are fully vested, and (iv) the matching
contribution formulas are no less advantageous to the Executive than those
in effect during the 90-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as in effect generally at any time
during the remainder of the Employment Period with respect to other peer
executives of the Company and its affiliated companies, and (2) the actual
value of the Executive's Company Account and matching contribution accounts
(paid or payable), if any, under the Thrift Plan and the SERP; and
(ii) for the remainder of the Employment Period, or
such longer period as any plan, program, practice or policy may provide,
the Company shall continue benefits to the Executive and/or the Executive's
family at least equal to those which would have been provided to them in
accordance with the plans, programs, practices and policies described in
Sections 5(e) and 5(g) of this Agreement if the Executive's employment had
not been terminated, in accordance with the most favorable plans,
practices, programs or policies of the Company and its affiliated companies
applicable generally to other peer executives and their families during the
90-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies and their families, provided, however, that if the Executive
becomes reemployed with another employer and is eligible to receive medical
or other welfare benefits under another employer provided plan, the medical
and other welfare benefits described herein shall be secondary to those
provided under such other plan during such applicable period of
eligibility. For purposes of determining eligibility of the Executive for
retiree benefits pursuant to such plans, practices, programs and policies,
the Executive shall be considered to have remained employed until the end
of the Employment Period and to have retired on the last day of such
period;
(iii) for the remainder of the Employment Period and to
the extent previously paid for or provided by the Company, the Company
shall continue to provide the following:
A. social and business club memberships to the
Executive (as in effect immediately prior to the Date of Termination);
B. use, maintenance, insurance, and repair of the
company car that is in the possession of the Executive, until the earlier
of the end of the lease term or the end of the Employment Period, at which
time the Executive may purchase such car. The Company shall replace the
company car in the Executive's possession on the Effective Date with a new
company car at such time(s) as provided under the Company car policy
applicable to other peer executives, but in no case less frequently than
the Company car policy in effect during the 90-day period immediately
preceding the Effective Date;
C. up to $15,000 annually for personal financial
planning, accounting and legal advice;
D. communication equipment such as a car and/or
cellular phone, and home or laptop computer until the end of the Employment
Period, at which time the Executive may purchase such equipment;
E. security system at the Executive's residence, and
the related monitoring and maintenance fees; and
F. up to $800 annually for personal excess liability
insurance coverage;
In lieu of continuing these benefits for the remainder of the Employment
Period, the Executive, in his sole discretion, may elect to receive a lump
sum payment equal to the present value of the amount projected to be paid
by the Company to provide these benefits. In determining the present
value, a six percent interest assumption shall be utilized. The Executive
shall make any such election by giving the Company written notice in
accordance with Section 14(b).
(iv) to the extent not theretofore paid or provided,
the Company shall timely pay or provide to the Executive any other amounts
or benefits required to be paid or provided or which the Executive is
eligible to receive pursuant to this Agreement or otherwise under any plan,
program, policy or practice or contract or agreement of the Company and its
affiliated companies, but excluding solely for purposes of this Section
7(a)(iv) amounts waived by the Executive pursuant to Section 7(a)(i)(B);
and
(v) the Company shall provide the Executive with the
following benefits in the event of his termination under this Section 7(a):
A. If the Executive is required to move his primary
residence in order to pursue other business opportunities during the
Employment Period, the Company shall reimburse the Executive for all such
relocation expenses incurred during the Employment Period (not in excess of
$10,000) that are not reimbursed by another employer, including, without
limitation, assistance in selling the Executive's home and all other
assistance and benefits that were customarily provided by the Company to
transferred executives prior to the Change of Control;
B. If the Executive retains counsel or an accounting
firm in connection with the taxation of payments made pursuant to Section
10 of this Agreement, the Company shall reimburse the Executive for such
reasonable legal and/or accounting fees and disbursements (not in excess of
$15,000);
C. The Company shall continue to pay the Executive's
Annual Base Salary during the pendency of a dispute over his termination.
Amounts paid under this subsection are in addition to all other amounts due
under this Agreement (other than those due under Section 5(a) hereof) and
shall not be offset against or reduce any other amounts due under this
Agreement; and
D. The Company shall provide the Executive with
outplacement services commensurate with those provided to terminated
executives of comparable level made available through and at the facilities
of a reputable and experienced vendor; and
(vi) any outstanding options, stock appreciation
rights, and other awards in the nature of a right that may be exercised
granted to the Executive shall become fully exercisable and vested; any
restrictions, deferral limitations, and forfeiture conditions applicable to
any outstanding award granted to the Executive shall lapse and such awards
shall be deemed fully vested; and the Executive shall have for the
remainder of the Employment Period (but in no event past the expiration of
the term of the award) to exercise any and all rights granted under such
awards then exercisable or which become exercisable pursuant to this
Section 7(a)(vi), except that with respect to incentive stock options
(within the meaning of Section 422(b) of the Code) and stock appreciation
rights relating thereto, the Executive may exercise such awards during the
period of exercise provided for in the agreements granting such options.
(b) Death. Upon the Executive's death during the
Employment Period, this Agreement shall terminate without further
obligations to the Executive's legal representatives under this Agreement,
other than for payment of Accrued Obligations, the supplemental retirement
benefit described in Annex A, and the timely payment or provision of the
benefits described in Section 7(a)(ii) and (iv) (the "Other Benefits").
All Accrued Obligations shall be paid to the Executive's estate or
beneficiary, as applicable, in a lump sum in cash within 30 days of the
Date of Termination. The supplemental retirement benefit shall be paid to
the Executive's Beneficiary (within the meaning of the FPL Group, Inc.
Supplemental Executive Retirement Plan) at his option in a lump sum
distribution to be made not later than three months after the occurrence of
his death or in the same manner as the Executive's benefits under the
Retirement Plan or Thrift Plan to which his benefits under Annex A of this
Agreement relates. The term "Other Benefits" as utilized in this Section
7(b) shall include, without limitation, and the Executive's family shall be
entitled to receive, benefits at least equal to the most favorable benefits
provided by the Company and any of its affiliated companies to surviving
families of peer executives of the Company and such affiliated companies
under such plans, programs, practices and policies relating to family death
benefits, if any, as in effect with respect to other peer executives and
their families at any time during the 90-day period immediately preceding
the Effective Date or, if more favorable to the Executive and/or the
Executive's family, as in effect on the date of the Executive's death with
respect to other peer executives of the Company and its affiliated
companies and their families.
(c) Disability. If the Executive's employment is
terminated by reason of the Executive's Disability during the Employment
Period, this Agreement shall terminate without further obligations to the
Executive, other than for payment of Accrued Obligations, the supplemental
retirement benefit described in Annex A, and the timely payment or
provision of Other Benefits. All Accrued Obligations shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of Termination.
The supplemental retirement benefit shall be paid to the Participant or his
Beneficiary (within the meaning of the FPL Group, Inc. Supplemental
Executive Retirement Plan), as the case may be, at the option of the
Executive or if the Executive is deceased, at the option of such
Beneficiary, in a lump sum distribution to be made not later than three
months after the occurrence of such event or in the same manner as the
Executive's benefits under the Retirement Plan or Thrift Plan to which his
benefits under Annex A of this Agreement relates. The term "Other
Benefits" as utilized in this Section 7(c) shall include, and the Executive
shall be entitled after the Disability Effective Date to receive,
disability and other benefits at least equal to the most favorable of those
generally provided by the Company and its affiliated companies to disabled
executives and/or their families in accordance with such plans, programs,
practices and policies relating to disability, if any, as in effect
generally with respect to other peer executives and their families at any
time during the 90-day period immediately preceding the Effective Date or,
if more favorable to the Executive and/or the Executive's family, as in
effect at any time thereafter generally with respect to other peer
executives of the Company and its affiliated companies and their families.
(d) Cause; Other Than for Good Reason. If the
Executive's employment shall be terminated for Cause during the Employment
Period, this Agreement shall terminate without further obligations to the
Executive other than the obligation to pay to the Executive Annual Base
Salary through the Date of Termination plus the amount of any compensation
previously deferred by the Executive, in each case to the extent
theretofore unpaid. If the Executive terminates employment during the
Employment Period, excluding a termination for Good Reason, this Agreement
shall terminate without further obligations to the Executive, other than
for Accrued Obligations, the supplemental retirement benefit described in
Annex A to the extent the Executive is vested in his benefits under the
Retirement Plan, and the timely payment or provision of Other Benefits. In
such case, all Accrued Obligations shall be paid to the Executive in a lump
sum in cash within 30 days of the Date of Termination. The supplemental
retirement benefit shall be paid to the Executive or his Beneficiary
(within the meaning of the FPL Group, Inc. Supplemental Executive
Retirement Plan), as the case may be, at the option of the Executive or if
the Executive is deceased, at the option of such Beneficiary, in a lump sum
distribution to be made not later than three months after the occurrence of
such event or in the same manner as the Executive's benefits under the
Retirement Plan or Thrift Plan to which his benefits under Annex A of this
Agreement relates.
8. Non-exclusivity of Rights. Except as otherwise expressly
provided for in this Agreement, nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company or any of its
affiliated companies and for which the Executive may qualify, nor shall
anything herein limit or otherwise affect such rights as the Executive may
have under any contract or agreement with the Company or any of its
affiliated companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, policy, practice
or program of or any contract or agreement with the Company or any of its
affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or
contract or agreement except as explicitly modified by this Agreement.
9. Full Settlement. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Company may
have against the Executive or others. In no event shall the Executive be
obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement and, except as otherwise expressly provided
for in this Agreement, such amounts shall not be reduced whether or not the
Executive obtains other employment. The Company agrees to pay, to the
fullest extent permitted by law, all legal fees and expenses which the
Executive may reasonably incur at all stages of proceedings, including,
without limitation, preparation and appellate review, as a result of any
contest (regardless of whether formal legal proceedings are ever commenced
and regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any
provision of this Agreement or any guarantee of performance thereof
(including as a result of any contest by the Executive about the amount of
any payment pursuant to this Agreement), plus in each case interest on any
delayed payment at the applicable Federal rate provided for in Section
7872(f)(2)(A) of the Code.
10. Certain Additional Payments by the Company. Anything in
this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by the Company to or for the
benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this
Section 10) (a "Payment") would be subject to the excise tax imposed by
Section 4999 of the Code or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to
as the "Excise Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that after
payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any
income or employment taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the
Executive retains an amount of Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
In the event that Federal or state legislation is enacted by
imposing additional excise or supplementary income taxes on amounts payable
or benefits provided to the Executive (other than a mere change in marginal
income tax rates), the Company agrees to review the Agreement with the
Executive and to consider in good faith any changes hereto that may be
required to preserve the full amount of all Payments and the economic
purposes of the foregoing provisions of this Section 10.
11. Confidential Information. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company or any
of its affiliated companies, and their respective businesses, which shall
have been obtained by the Executive during the Executive's employment by
the Company or any of its affiliated companies and which shall not be or
become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive's employment with the Company, the Executive
shall not, without the prior written consent of the Company or as may
otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and
those designated by it. In no event shall an asserted violation of the
provisions of this Section 11 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this
Agreement.
12. Indemnification. The Company will, to the fullest extent
permitted by law, indemnify and hold the Executive harmless from any and
all liability arising from the Executive's service as an employee, officer
or director of the Company and its affiliated companies. To the fullest
extent permitted by law, the Company will advance legal fees and expenses
to the Executive for counsel selected by the Executive in connection with
any litigation or proceeding related to the Executive's service as an
employee, officer or director of the Company and its affiliates. The terms
of this indemnification provision shall survive the expiration of this
Agreement.
13. Successors.
(a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by
the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and
be binding upon the Company and its successors and assigns.
(c) The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall
mean the Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
14. Miscellaneous.
(a) This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida, without reference to
principles of conflict of laws. The captions of this Agreement are not
part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written
agreement executed by the parties hereto or their respective successors and
legal representatives.
(b) All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to the other party
or by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Executive:
Dennis P. Coyle
If to the Company:
FPL Group, Inc.
700 Universe Boulevard
Juno Beach, Florida 33408
Attention: Vice President, Human Resources
or such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be
effective when actually received by the addressee.
(c) The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement.
(d) The Company may withhold from any amounts payable
under this Agreement such Federal, state or local taxes as shall be
required to be withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to
insist upon strict compliance with any provision hereof or any other
provision of this Agreement or the failure to assert any right the
Executive or the Company may hereunder, including, without limitation, the
right of the Executive to terminate employment for Good Reason pursuant to
Section 6(c)(i)-(v) of this Agreement, shall not be deemed to be a waiver
of such provision or right or any other provision or right of this
Agreement.
(f) The Executive and the Company acknowledge that,
except as may otherwise be provided under any other written agreement
between the Executive and the Company, the employment of the Executive by
the Company is "at will" and, prior to the Effective Date, may be
terminated by either the Executive or the Company at any time. Moreover,
except as provided in Section 1, if prior to the Effective Date, (i) the
Executive's employment with the Company terminates, or (ii) there is a
diminution in the Executive's position (including status, offices, titles,
and reporting requirements), authority, duties, and responsibilities with
the Company or its affiliated companies, then the Executive shall have no
further rights under this Agreement.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's
hand and, pursuant to the authorization from the Board of Directors, the
Company has caused these presents to be executed in its name on its behalf,
all as of the day and year first above written.
DENNIS P. COYLE
Dennis P. Coyle
FPL GROUP, INC.
By LAWRENCE J. KELLEHER
Lawrence J. Kelleher
Vice President, Human Resources
ANNEX A
TO THE
EMPLOYMENT AGREEMENT
SUPPLEMENTAL RETIREMENT BENEFIT
1. Supplement Retirement Benefit.
(a) In General. The supplemental retirement benefit
to which the Executive shall be entitled under this Agreement shall be (i)
the supplemental pension benefit described in Paragraph 1(b) of this Annex
A, and (ii) the supplemental matching contribution account described in
Paragraph 1(c) of this Annex A.
(b) Supplemental Pension Benefit. The "supplemental
pension benefit" shall be the greater of (i) the supplement cash balance
accrued benefit described in Paragraph 1(b)(1) of this Annex A, or (ii) the
supplement unit credit accrued benefit described in Paragraph 1(b)(2) of
this Annex A.
(1) The "supplement cash balance accrued benefit" is
the difference, if any, between (A) and (B) where:
(A) is the benefit to which the Executive would be
entitled under the Retirement Plan as in effect immediately prior to the
Change of Control or, if more favorable to the Executive, as in effect
generally at any time thereafter during the Employment Period with respect
to other peer executives of the Company and its affiliated companies,
expressed in the normal form of benefit, if such benefit was computed (i)
as if benefits under such plan were based upon the Executive's Bonus
Compensation (within the meaning of the FPL Group, Inc. Supplemental
Executive Retirement Plan as in effect immediately prior to the Change of
Control), (ii) without the annual compensation limitation imposed by
Section 401(a)(17) of the Code, and (iii) without the restrictions or the
limitations imposed by Sections 415(b) or 415(e) of the Code; and
(B) is the sum of the benefits payable to the
Executive under the Retirement Plan, the SERP and his Supplement (as
defined in Paragraph 2(c) of this Annex A), expressed in the normal form of
benefit.
(2) The "supplement unit credit accrued benefit" is
the difference, if any, between (A) and (B) where:
(A) is the benefit to which the Executive would be
entitled under the Prior Pension Plan (within the meaning of the FPL Group,
Inc. Supplemental Executive Retirement Plan as in effect immediately prior
to the Change of Control), expressed in the normal form of benefit, if such
benefit was computed (i) as if benefits under such plan were based upon the
Executive's Bonus Compensation, (ii) without the annual compensation
limitation imposed by Section 401(a)(17) of the Code, and (iii) without the
restrictions or the limitations imposed by Sections 415(b) or 415(e) of the
Code; and
(B) is the sum of the benefits payable to the
Executive under the Retirement Plan, the SERP and his Supplement (as
defined in Paragraph 2(c) of this Annex A), expressed in the normal form of
benefit.
(c) Supplemental Matching Contribution Account. The
"supplemental matching contribution account" shall be an account that is
credited annually with (i) supplemental matching contributions described in
Paragraph 1(c)(1) of this Annex A, and (ii) theoretical earnings described
in Paragraph 1(c)(2) of this Annex A.
(1) "Supplemental matching contributions" shall be
for each year ending on or prior to the Effective Date in which the
Executive participated in the SERP and for each year ending after the
Effective Date in which the Executive performs services for the Company or
its affiliated companies the difference, if any, between (A) and (B) where:
(A) is the matching contribution allocation for such
year to which the Executive would be entitled under the Thrift Plan as in
effect immediately prior to the Change of Control or, if more favorable to
the Executive, as in effect generally at any time thereafter during the
Employment Period with respect to other peer executives of the Company and
its affiliated companies if such allocation were computed (i) as if the
matching contribution allocation under such plan was based upon the
Executive's Bonus Compensation, (ii) without the annual compensation
limitation imposed by Section 401(a)(17) of the Code, (iii) without the
restrictions or the limitations imposed by Sections 415(c) or 415(e) of the
Code, and (iv) as if he made After Tax Member Basic Contributions (within
the meaning of the Thrift Plan) and Tax Saver Member Basic Contributions
(within the meaning of the Thrift Plan) at the same percentage of Bonus
Compensation as he made such contributions to the Thrift Plan for such
years; and
(B) is the sum of the matching contributions
allocated or credited to the Executive under the Thrift Plan, the SERP and
his Supplement (as defined in Paragraph 2(c) of this Annex A) for such
year.
(2) "Theoretical earnings" shall be the income, gains
and losses which would have been credited on the Executive's supplemental
matching contribution account balance if such account were invested in the
Company Stock Fund (within the meaning of the Thrift Plan) offered as a
part of the Thrift Plan.
2. Construction and Definitions. Unless defined below or
otherwise in this Annex A, all of the capitalized terms used in this Annex
A shall have the meanings assigned to them in this Agreement:
(a) "Projected Years of Service" shall mean the Years
of Service (within the meaning of the FPL Group, Inc. Supplemental
Executive Retirement Plan as in effective immediately prior to the Change
of Control) multiplied by two (2). Notwithstanding the foregoing, in
determining the Executive's Years of Service, in addition to his actual
Years of Service he shall be treated as if his employment terminated on the
later of the second anniversary of the Date of Termination or the last day
of the Employment Period.
(b) "Projected Age" shall mean the age that the
Executive will have attained on the later of the second anniversary of the
Date of Termination or the last day of the Employment Period.
(c) "Supplement" shall mean the Supplement to the FPL
Group, Inc. Supplemental Executive Retirement Plan as it applies to the
Executive, dated as of November 15, 1993, and as it may be amended from
time to time.
EMPLOYMENT AGREEMENT
Employment Agreement between FPL Group, Inc., a Florida
corporation (the "Company"), and Paul J. Evanson (the "Executive"), dated
as of December 11, 1995, amended and restated as of May 10, 1999.
The Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company and its
shareholders to assure that the Company and its affiliated companies will
have the continued dedication of the Executive, notwithstanding the
possibility, threat or occurrence of a Change of Control (as defined below)
of the Company. The Board believes it is imperative to diminish the
inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of
Control and to encourage the Executive's full attention and dedication to
the Company and its affiliated companies currently and in the event of any
threatened or pending Change of Control, and to provide the Executive with
compensation and benefits arrangements upon a Change of Control which
ensure that the compensation and benefits expectations of the Executive
will be satisfied and which are competitive with those of other
corporations. Therefore, in order to accomplish these objectives, the Board
has caused the Company to enter into this Employment Agreement (the
"Agreement").
Therefore, the Company and the Executive agree as follows:
1. Effective Date. The effective date of this Agreement
shall be the date on which a Change of Control occurs (the "Effective
Date"). Anything in this Agreement to the contrary notwithstanding, if a
Change of Control occurs and if the Executive's employment with the Company
or its affiliated companies is terminated or the Executive's position
(including status, offices, titles, and reporting requirements), authority,
duties, and responsibilities with the Company or its affiliated companies
is not commensurate in all material respects with the most significant of
those held, exercised, and assigned prior to the date on which the Change
of Control occurs, and if it is reasonably demonstrated by the Executive
that such termination of employment or diminution in position, authority,
duties, or responsibilities (i) was at the request of a third party who has
taken steps reasonably calculated to effect the Change of Control or (ii)
otherwise arose in connection with or anticipation of the Change of
Control, then for all purposes of this Agreement the "Effective Date" shall
mean the date immediately prior to the date of such termination of
employment or diminution in position, authority, duties or
responsibilities. As used in this Agreement, the term "affiliated
companies" shall include any corporation or other entity controlled by,
controlling or under common control with the Company.
2. Change of Control. For the purposes of this Agreement, a
"Change of Control" shall mean:
(a) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of 20% or more of either (i) the then outstanding shares of common
stock of the Company (the "Outstanding Company Common Stock") or (ii) the
combined voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that the
following acquisitions shall not constitute a Change of Control: (i) any
acquisition by the Company or any or its subsidiaries, (ii) any acquisition
by any employee benefit plan (or related trust) sponsored or maintained by
the Company or any of its subsidiaries or (iii) any acquisition by any
corporation with respect to which, following such acquisition, more than
75% of, respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election
of directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such acquisition
in substantially the same proportions as their ownership, immediately prior
to such acquisition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be; or
(b) Individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of either
an actual or threatened solicitation to which Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act applies or other actual or
threatened solicitation of proxies or consents; or
(c) Approval by the shareholders of the Company of a
reorganization, merger or consolidation, in each case, with respect to
which all or substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common Stock
and Outstanding Company Voting Securities immediately prior to such
reorganization, merger or consolidation do not, following such
reorganization, merger or consolidation, beneficially own, directly or
indirectly, more than 75% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the
case may be, of the corporation resulting from such reorganization, merger
or consolidation in substantially the same proportions as their ownership,
immediately prior to such reorganization, merger or consolidation of the
Outstanding Company Common Stock and Outstanding Company Voting Securities,
as the case may be; or
(d) Approval by the shareholders of the Company of
(i) a complete liquidation or dissolution of the Company or (ii) the sale
or other disposition of all or substantially all of the assets of the
Company, other than to a corporation, with respect to which following such
sale or other disposition, more than 75% of, respectively, the then
outstanding shares of common stock of such corporation and the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of
the individuals and entities who were the beneficial owners, respectively,
of the Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately prior to
such sale or other disposition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be.
The term "the sale or disposition by the Company of all or
substantially all of the assets of the Company" shall mean a sale or other
disposition transaction or series of related transactions involving assets
of the Company or of any direct or indirect subsidiary of the Company
(including the stock of any direct or indirect subsidiary of the Company)
in which the value of the assets or stock being sold or otherwise disposed
of (as measured by the purchase price being paid therefor or by such other
method as the Board determines is appropriate in a case where there is no
readily ascertainable purchase price) constitutes more than two-thirds of
the fair market value of the Company (as hereinafter defined). The "fair
market value of the Company" shall be the aggregate market value of the
then Outstanding Company Common Stock (on a fully diluted basis) plus the
aggregate market value of the Company's other outstanding equity
securities. The aggregate market value of the shares of Outstanding
Company Common Stock shall be determined by multiplying the number of
shares of Outstanding Company Common Stock (on a fully diluted basis)
outstanding on the date of the execution and delivery of a definitive
agreement with respect to the transaction or series of related transactions
(the "Transaction Date") by the average closing price of the shares of
Outstanding Company Common Stock for the ten trading days immediately
preceding the Transaction Date. The aggregate market value of any other
equity securities of the Company shall be determined in a manner similar to
that prescribed in the immediately preceding sentence for determining the
aggregate market value of the shares of Outstanding Company Common Stock or
by such other method as the Board shall determine is appropriate.
3. Employment Period. The Company hereby agrees to continue
the Executive in its or its affiliated companies' employ, or both, as the
case may be, and the Executive hereby agrees to remain in the employ of the
Company, or its affiliated companies, or both, as the case may be, for a
period commencing on the Effective Date and ending on the 4th anniversary
of such date (the "Employment Period").
4. Position and Duties. During the Employment Period, the
Executive's position (including status, offices, titles, and reporting
requirements), authority, duties, and responsibilities with the Company or
its affiliated companies or both, as the case may be, shall be in every
respect at least commensurate with the most significant of those held,
exercised, and assigned at any time during the 90-day period immediately
preceding the Effective Date. The Executive's services shall be performed
at the location where the Executive was employed immediately preceding the
Effective Date or any location less than 20 miles from such location,
although the Executive understands and agrees that he may be required to
travel from time to time for business purposes.
During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive
agrees to devote substantially all of his time and attention during normal
business hours to the business and affairs of the Company and its
affiliated companies and to use his reasonable best efforts to perform
faithfully and efficiently the duties and responsibilities assigned to him
hereunder. During the Employment Period it shall not be a violation of
this Agreement for the Executive to serve on corporate, civic or charitable
boards or committees, deliver lectures, fulfill speaking engagements or
teach at educational institutions and devote reasonable amounts of time to
the management of his and his family's personal investments and affairs, so
long as such activities do not significantly interfere with the performance
of the Executive's responsibilities as an employee of the Company or its
affiliated companies in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities have been
conducted by the Executive prior to the Effective Date, the reinstatement
or continued conduct of such activities (or the reinstatement or conduct of
activities similar in nature and scope thereto) subsequent to the Effective
Date shall not thereafter be deemed to interfere with the performance of
the Executive's responsibilities to the Company and its affiliated
companies.
5. Compensation. During the Employment Period, the Executive
shall be compensated as follows:
(a) Annual Base Salary. The Executive shall be paid
an annual base salary ("Annual Base Salary"), in equal biweekly
installments, at least equal to the annual base salary being paid to the
Executive by the Company and its affiliated companies with respect to the
year in which the Effective Date occurs. The Annual Base Salary shall be
reviewed at least annually and shall be increased substantially consistent
with increases in base salary generally awarded to other peer executives of
the Company and its affiliated companies. Such increases shall in no
event be less than the increases in the U.S. Department of Labor Consumer
Price Index - U.S. City Average Index. Any increase in Annual Base Salary
shall not serve to limit or reduce any other obligation to the Executive
under this Agreement. Annual Base Salary shall not be reduced after any
such increase and the term "Annual Base Salary" as utilized in this
Agreement shall refer to Annual Base Salary as so increased.
(b) Annual Bonus. In addition to Annual Base Salary,
the Executive shall be awarded, for each fiscal year ending during the
Employment Period, an annual bonus (the "Annual Bonus") in cash at least
equal to the highest annual incentive compensation (annualized for any
fiscal year consisting of less than twelve full months or with respect to
which the Executive has been employed by the Company for less than twelve
full months) paid or payable, including by reason of any deferral, to the
Executive by the Company and its affiliated companies in respect of the
three fiscal years immediately preceding the fiscal year in which the
Effective Date occurs (the "Highest Recent Bonus"). The greater of (i) the
Highest Recent Bonus or (ii) the highest Annual Bonus awarded by the
Company and its affiliated companies after the Effective Date (target or
actual, whichever is greater) is herein called the "Highest Annual Bonus".
Each such Annual Bonus shall be paid no later than the end of the third
month of the fiscal year next following the fiscal year for which the
Annual Bonus is awarded, unless the Executive otherwise elects to defer
the receipt of such Annual Bonus.
(c) Long Term Incentive Compensation. During the
Employment Period, the Executive shall be entitled to participate in all
incentive compensation plans, practices, policies, and programs applicable
generally to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies, and
programs provide the Executive with incentive opportunities and potential
benefits, both as to amount and percentage of compensation, less favorable,
in the aggregate, than those provided by the Company and its affiliated
companies for the Executive under the FPL Group Long Term Incentive Plan
(including, without limitation, performance share grants and awards) as in
effect at any time during the 90-day period immediately preceding the
Effective Date or; if more favorable to the Executive, those provided
generally at any time after the Effective Date to other peer executives of
the Company and its affiliated companies.
In addition, on the Effective Date (i) the maximum performance
criteria of all outstanding performance awards, performance-based
restricted stock, and other stock-based awards granted to the Executive
shall be deemed fully achieved and all such awards shall be fully earned
and vested; (ii) any option, stock appreciation right, and other award in
the nature of a right that may be exercised that was granted to the
Executive and which was not previously exercisable and vested shall become
fully exercisable and vested; (iii) the restrictions, deferral limitations,
and forfeiture conditions applicable to any outstanding award granted to
the Executive under an incentive compensation plan, practice, policy or
program shall lapse and such award shall be deemed fully vested; and (iv)
all outstanding awards shall be canceled and the Executive shall be paid in
cash for such awards on the basis of the change of control price as of the
date of the occurrence of the Change of Control (or such other date
applicable to awards granted to other peer executives under the applicable
incentive compensation plan, practice, policy or program) to the extent
such cancellation of and payment for an award would not cause the Executive
to incur actual short-swing profits liability under Section 16(b) of the
Exchange Act. For purposes of this paragraph, the term "change of control
price" means the highest price per share paid in any transaction reported
on the securities exchange or trading system on which the shares of common
stock of the Company are then primarily listed or traded, or paid or
offered in any transaction related to the Change of Control at any time
during the preceding 60-day period, except that in the case of incentive
stock options (within the meaning of Section 422(b) of the Internal Revenue
Code of 1986, as amended (the "Code")) and stock appreciation rights
relating thereto, such price shall be based only on transactions reported
for the date such awards are cashed out.
(d) Savings and Retirement Plans. During the
Employment Period, the Executive shall be entitled to participate in all
savings and retirement plans, practices, policies, and programs applicable
generally to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies, and
programs provide the Executive with savings opportunities and retirement
benefit opportunities, in each case, less favorable, in the aggregate, than
the most favorable of those provided by the Company and its affiliated
companies for the Executive under such plans, practices, policies, and
programs as in effect at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Executive, those
provided generally at any time after the Effective Date to other peer
executives of the Company and its affiliated companies.
In addition, during the Employment Period the Executive shall be
entitled under this Agreement to the supplemental retirement benefit
described in Annex A attached hereto and made a part hereof by this
reference. The payment and vesting of such supplemental retirement benefit
shall be determined in accordance with Section 7 of this Agreement.
(e) Benefit Plans. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be
eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies, and programs provided by the Company
and its affiliated companies (including, without limitation, medical,
executive medical, annual executive physical, prescription, dental, vision,
short-term disability, long-term disability, executive long-term
disability, salary continuance, employee life, group life, benefits
pursuant to split dollar arrangements, accidental death and dismemberment,
and travel accident insurance plans and programs) to the extent applicable
generally to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies, and
programs provide the Executive with benefits which are less favorable, in
the aggregate, than the most favorable of such plans, practices, policies,
and programs in effect for the Executive at any time during the 90-day
period immediately preceding the Effective Date or, if more favorable to
the Executive, those provided generally at any time after the Effective
Date to other peer executives of the Company and its affiliated companies.
(f) Expenses. During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in accordance with the most
favorable policies, practices, and procedures of the Company and its
affiliated companies in effect for the Executive at any time during the 90-
day period immediately preceding the Effective Date or, if more favorable
to the Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its affiliated
companies.
(g) Fringe Benefits. During the Employment Period,
the Executive shall be entitled to fringe benefits, including but not
limited to those described in Section 7(a)(iii), in accordance with the
most favorable plans, practices, programs, and policies of the Company and
its affiliated companies in effect for the Executive at any time during the
90-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies.
(h) Office and Support Staff. During the Employment
Period, the Executive shall be entitled to an office or offices of a size
and with furnishings and other appointments, and to exclusive personal
secretarial and other assistance, at least equal to the most favorable of
the foregoing provided to the Executive by the Company and its affiliated
companies at any time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as provided
generally at any time thereafter with respect to other peer executives of
the Company and its affiliated companies.
(i) Vacation. During the Employment Period, the
Executive shall be entitled to paid vacation in accordance with the most
favorable plans, policies, programs, and practices of the Company and its
affiliated companies as in effect for the Executive at any time during the
90-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer incentives of the Company and its affiliated
companies.
6. Termination of Employment.
(a) Disability. If the Company determines in good
faith that the Disability of the Executive has occurred during the
Employment Period (pursuant to the definition of Disability set forth
below), it may give to the Executive written notice in accordance with
Section 14(b) of this Agreement of its intention to terminate the
Executive's employment. In such event, the Executive's employment with the
Company shall terminate effective on the 30th day after receipt of such
notice by the Executive (the "Disability Effective Date"), provided that,
within the 30 days after such receipt, the Executive shall not have
returned to perform his duties in accordance with Section 4. For purposes
of this Agreement, "Disability" shall mean the absence of the Executive
from the Executive's duties with the Company for 180 consecutive business
days as a result of incapacity due to mental or physical illness which is
determined to be total and permanent by a physician selected by the Company
or its insurers and acceptable to the Executive or the Executive's legal
representative (such agreement as to acceptability not to be withheld
unreasonably).
(b) Cause. The Company may terminate the Executive's
employment during the Employment Period for Cause. For purposes of this
Agreement, "Cause" shall mean (i) repeated violations by the Executive of
the Executive's obligations under Section 4 of this Agreement (other than
as a result of incapacity due to physical or mental illness) which are
demonstrably willful and deliberate on the Executive's part, which are
committed in bad faith or without reasonable belief that such violations
are in the best interests of the Company and which are not remedied in a
reasonable period of time after receipt of written notice from the Company
specifying such violations or (ii) the conviction of the Executive of a
felony involving an act of dishonesty intended to result in substantial
personal enrichment at the expense of the Company or its affiliated
companies.
(c) Good Reason. The Executive's employment may be
terminated during the Employment Period by the Executive for Good Reason.
For purposes of this Agreement, "Good Reason" shall mean:
(i) any failure by the Company to comply in every
respect with the provisions of Section 4 of this Agreement, including
without limitation, the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position (including,
without limitation, status, offices, titles and reporting requirements),
authority, duties or responsibilities as contemplated by Section 4, or any
other action or inaction by the Company which results in a diminution in
such position, authority, duties or responsibilities, excluding for this
purpose an isolated, insubstantial and inadvertent action not taken in bad
faith and which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(ii) any failure by the Company to comply with any of
the provisions of Section 5 of this Agreement, other than isolated,
insubstantial and inadvertent failure not occurring in bad faith and which
is remedied by the Company promptly after receipt of notice thereof given
by the Executive;
(iii) the Company's requiring the Executive to be based
at any office or location other than that described in Section 4 hereof;
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this
Agreement; or
(v) any failure by the Company to comply with and
satisfy Section 13(c) of this Agreement, provided that such successor has
received at least ten days prior written notice from the Company or the
Executive of the requirements of Section 13(c) of the Agreement.
For purposes of this Section 6(c), any good faith determination of
"Good Reason" made by the Executive shall be conclusive.
(d) Notice of Termination. Any termination by the
Company for Cause, or by the Executive for Good Reason, shall be
communicated by Notice of Termination to the other party hereto given in
accordance with Section 14(b) of this Agreement. For purposes of this
Agreement, a "Notice of Termination" means a written notice which (i)
indicates the specific termination provision in this Agreement relied upon,
(ii) to the extent applicable, sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated, and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of
such notice, specifies the termination date (which date shall be not more
than fifteen days after the giving of such notice). The failure by the
Executive or the Company to set forth in the Notice of Termination any fact
or circumstances which contributes to a showing of Good Reason or Cause
shall not waive any right of the Executive or the Company hereunder or
preclude the Executive or the Company from asserting such fact or
circumstance in enforcing the Executive's or the Company's rights
hereunder.
(e) Date of Termination. "Date of Termination" means
(i) if the Executive's employment is terminated by the Company for Cause,
or by the Executive for Good Reason, the date of receipt of the Notice of
Termination or any later date specified therein, as the case may be, (ii)
if the Executive's employment is terminated by the Company other than for
Cause or Disability, the Date of Termination shall be the date on which the
Company notifies the Executive of such termination, and (iii) if the
Executive's employment is terminated by reason of Disability, the Date of
Termination shall be the Disability Effective Date.
7. Obligations of the Company upon Termination.
(a) Good Reason; Other Than for Cause or Disability.
If, during the Employment Period, the Company terminates the Executive's
employment other than for Cause or Disability or the Executive terminates
employment for Good Reason:
(i) the Company shall pay to the Executive in a lump
sum in cash within 30 days after the Date of Termination the aggregate of
the following amounts (such aggregate being hereinafter referred to as the
"Special Termination Amount"):
A. the sum of (1) the Executive's Annual Base Salary
through the Date of Termination to the extent not theretofore paid, (2) the
product of (x) the Highest Annual Bonus and (y) a fraction, the numerator
of which is the number of days in the current fiscal year through the Date
of Termination, and the denominator of which is 365, and (3) any
compensation previously deferred by the Executive (together with any
accrued interest or earnings thereon) (including, without limitation,
compensation, bonus, incentive compensation or awards deferred under the
FPL Group, Inc. Deferred Compensation Plan or incentive compensation or
awards deferred under the FPL Group, Inc. Long-Term Incentive Plan of 1985,
the FPL Group, Inc. Long Term Incentive Plan of 1994, or pursuant to an
individual deferral agreement) and any accrued vacation pay, in each case
to the extent not theretofore paid (the sum of the amounts described in
clauses (1), (2), and (3) being herein called the "Accrued Obligations");
and
B. the amount equal to the product of (1) the
greater of two or the number of years (with any partial year expressed as a
fraction) remaining in the Employment Period, and (2) the sum of (x) the
Executive's Annual Base Salary and (y) the Highest Annual Bonus; provided,
however, that such amount shall be paid in lieu of, and the Executive
hereby waives the right to receive, any other amount of severance relating
to salary or bonus continuation to be received by the Executive upon
termination of employment of the Executive under any severance plan, policy
or arrangement of the Company; and
C. the maximum amount payable under all performance
share grants and all other long term incentive compensation grants to the
Executive that have not been paid in accordance with the terms of the grant
or Section 5(c) hereof, calculated as though the Executive had remained
employed by the Company for the remainder of the Employment Period and on
the basis of actual achievement of performance measures through the end of
the fiscal year preceding the fiscal year in which the Date of Termination
occurs and thereafter assuming maximum achievement of all performance
measures (e.g., currently 160%) through the end of the Employment Period;
and
D. a separate lump-sum supplemental retirement
benefit equal to the greater of (i) the supplemental pension benefit
described in Paragraph 1(b) of Annex A that the Executive would have been
entitled had his employment continued at the compensation level provided
for in Sections 5(a) and 5(b) of this Agreement for the greater of two
years or the remainder of the Employment Period and based upon his
Projected Years of Service (as defined in Paragraph 2(a) of Annex A) and
his Projected Age (as defined in Paragraph 2(b) of Annex A), or (ii) the
difference between (1) the actuarial equivalent (utilizing for this purpose
the actuarial assumptions utilized with respect to the FPL Group Employee
Pension Plan (or any successor plan thereto) (the "Retirement Plan") during
the 90-day period immediately preceding the Effective Date) of the benefit
payable under the Retirement Plan and all supplemental and/or excess
retirement plans providing benefits for the Executive (other than the
supplemental retirement benefit described in Annex A) (the "SERP")
(including, but not limited to the Supplemental Pension Benefit (as defined
in the FPL Group, Inc. Supplemental Executive Retirement Plan)) which the
Executive would receive if the Executive's employment continued at the
compensation level provided for in Sections 5(a) and 5(b) of this Agreement
for, and his age increased by, the greater of two years or the remainder of
the Employment Period, assuming for this purpose that all accrued benefits
are fully vested and that benefit accrual formulas are no less advantageous
to the Executive than those in effect during the 90-day period immediately
preceding the Effective Date, or, if more favorable to the Executive, as in
effect generally at any time thereafter during the Employment Period with
respect to other peer executives of the Company and its affiliated
companies, and (2) the actuarial equivalent (utilizing for this purpose the
actuarial assumptions utilized with respect to the Retirement Plan during
the 90-day period immediately preceding the Effective Date) of the
Executive's actual benefits (paid or payable), if any, under the Retirement
Plan and the SERP; and
E. a separate lump-sum supplemental retirement
benefit equal to the greater of (i) the supplemental matching contributions
account described in Paragraph 1(c) of Annex A that the Executive would
have been entitled had his employment continued at the compensation level
provided for in Sections 5(a) and 5(b) of this Agreement for the greater of
two years or the remainder of the Employment Period and assuming that the
Executive made After Tax Member Basic Contributions (within the meaning of
the FPL Group Employee Thrift Plan or any successor plan thereto (the
"Thrift Plan")) and Tax Saver Member Basic Contributions (within the
meaning of the Thrift Plan) to the Thrift Plan at the highest permissible
rate (disregarding any limitations imposed by the Code) following the Date
of Termination, or (ii) the difference between (1) the value of the Company
Account (as defined in the Thrift Plan) and any other matching contribution
accounts (including, but not limited to the Supplemental Matching
Contribution Account (as defined in the FPL Group, Inc. Supplemental
Executive Retirement Plan)) under a SERP (other than the supplemental
retirement benefit described in Annex A) which the Executive would receive
if (i) the Executive's employment continued at the compensation level
provided for in Sections 5(a) and 5(b) of this Agreement for the greater of
two years or the remainder of the Employment Period, (ii) the Executive
made pre- and after-tax contributions at the highest permissible rate
(disregarding any limitations imposed by the Code, which may or may not be
set forth in the Thrift Plan) for the greater of two years or each year
remaining in the Employment Period, (iii) the Company Account and the
matching contribution accounts are fully vested, and (iv) the matching
contribution formulas are no less advantageous to the Executive than those
in effect during the 90-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as in effect generally at any time
during the remainder of the Employment Period with respect to other peer
executives of the Company and its affiliated companies, and (2) the actual
value of the Executive's Company Account and matching contribution accounts
(paid or payable), if any, under the Thrift Plan and the SERP; and
(ii) for the remainder of the Employment Period, or
such longer period as any plan, program, practice or policy may provide,
the Company shall continue benefits to the Executive and/or the Executive's
family at least equal to those which would have been provided to them in
accordance with the plans, programs, practices and policies described in
Sections 5(e) and 5(g) of this Agreement if the Executive's employment had
not been terminated, in accordance with the most favorable plans,
practices, programs or policies of the Company and its affiliated companies
applicable generally to other peer executives and their families during the
90-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies and their families, provided, however, that if the Executive
becomes reemployed with another employer and is eligible to receive medical
or other welfare benefits under another employer provided plan, the medical
and other welfare benefits described herein shall be secondary to those
provided under such other plan during such applicable period of
eligibility. For purposes of determining eligibility of the Executive for
retiree benefits pursuant to such plans, practices, programs and policies,
the Executive shall be considered to have remained employed until the end
of the Employment Period and to have retired on the last day of such
period;
(iii) for the remainder of the Employment Period and to
the extent previously paid for or provided by the Company, the Company
shall continue to provide the following:
A. social and business club memberships to the
Executive (as in effect immediately prior to the Date of Termination);
B. use, maintenance, insurance, and repair of the
company car that is in the possession of the Executive, until the earlier
of the end of the lease term or the end of the Employment Period, at which
time the Executive may purchase such car. The Company shall replace the
company car in the Executive's possession on the Effective Date with a new
company car at such time(s) as provided under the Company car policy
applicable to other peer executives, but in no case less frequently than
the Company car policy in effect during the 90-day period immediately
preceding the Effective Date;
C. up to $15,000 annually for personal financial
planning, accounting and legal advice;
D. communication equipment such as a car and/or
cellular phone, and home or laptop computer until the end of the Employment
Period, at which time the Executive may purchase such equipment;
E. security system at the Executive's residence, and
the related monitoring and maintenance fees; and
F. up to $800 annually for personal excess liability
insurance coverage;
In lieu of continuing these benefits for the remainder of the Employment
Period, the Executive, in his sole discretion, may elect to receive a lump
sum payment equal to the present value of the amount projected to be paid
by the Company to provide these benefits. In determining the present
value, a six percent interest assumption shall be utilized. The Executive
shall make any such election by giving the Company written notice in
accordance with Section 14(b).
(iv) to the extent not theretofore paid or provided,
the Company shall timely pay or provide to the Executive any other amounts
or benefits required to be paid or provided or which the Executive is
eligible to receive pursuant to this Agreement or otherwise under any plan,
program, policy or practice or contract or agreement of the Company and its
affiliated companies, but excluding solely for purposes of this Section
7(a)(iv) amounts waived by the Executive pursuant to Section 7(a)(i)(B);
and
(v) the Company shall provide the Executive with the
following benefits in the event of his termination under this Section 7(a):
A. If the Executive is required to move his primary
residence in order to pursue other business opportunities during the
Employment Period, the Company shall reimburse the Executive for all such
relocation expenses incurred during the Employment Period (not in excess of
$10,000) that are not reimbursed by another employer, including, without
limitation, assistance in selling the Executive's home and all other
assistance and benefits that were customarily provided by the Company to
transferred executives prior to the Change of Control;
B. If the Executive retains counsel or an accounting
firm in connection with the taxation of payments made pursuant to Section
10 of this Agreement, the Company shall reimburse the Executive for such
reasonable legal and/or accounting fees and disbursements (not in excess of
$15,000);
C. The Company shall continue to pay the Executive's
Annual Base Salary during the pendency of a dispute over his termination.
Amounts paid under this subsection are in addition to all other amounts due
under this Agreement (other than those due under Section 5(a) hereof) and
shall not be offset against or reduce any other amounts due under this
Agreement; and
D. The Company shall provide the Executive with
outplacement services commensurate with those provided to terminated
executives of comparable level made available through and at the facilities
of a reputable and experienced vendor; and
(vi) any outstanding options, stock appreciation
rights, and other awards in the nature of a right that may be exercised
granted to the Executive shall become fully exercisable and vested; any
restrictions, deferral limitations, and forfeiture conditions applicable to
any outstanding award granted to the Executive shall lapse and such awards
shall be deemed fully vested; and the Executive shall have for the
remainder of the Employment Period (but in no event past the expiration of
the term of the award) to exercise any and all rights granted under such
awards then exercisable or which become exercisable pursuant to this
Section 7(a)(vi), except that with respect to incentive stock options
(within the meaning of Section 422(b) of the Code) and stock appreciation
rights relating thereto, the Executive may exercise such awards during the
period of exercise provided for in the agreements granting such options.
(b) Death. Upon the Executive's death during the
Employment Period, this Agreement shall terminate without further
obligations to the Executive's legal representatives under this Agreement,
other than for payment of Accrued Obligations, the supplemental retirement
benefit described in Annex A, and the timely payment or provision of the
benefits described in Section 7(a)(ii) and (iv) (the "Other Benefits").
All Accrued Obligations shall be paid to the Executive's estate or
beneficiary, as applicable, in a lump sum in cash within 30 days of the
Date of Termination. The supplemental retirement benefit shall be paid to
the Executive's Beneficiary (within the meaning of the FPL Group, Inc.
Supplemental Executive Retirement Plan) at his option in a lump sum
distribution to be made not later than three months after the occurrence of
his death or in the same manner as the Executive's benefits under the
Retirement Plan or Thrift Plan to which his benefits under Annex A of this
Agreement relates. The term "Other Benefits" as utilized in this Section
7(b) shall include, without limitation, and the Executive's family shall be
entitled to receive, benefits at least equal to the most favorable benefits
provided by the Company and any of its affiliated companies to surviving
families of peer executives of the Company and such affiliated companies
under such plans, programs, practices and policies relating to family death
benefits, if any, as in effect with respect to other peer executives and
their families at any time during the 90-day period immediately preceding
the Effective Date or, if more favorable to the Executive and/or the
Executive's family, as in effect on the date of the Executive's death with
respect to other peer executives of the Company and its affiliated
companies and their families.
(c) Disability. If the Executive's employment is
terminated by reason of the Executive's Disability during the Employment
Period, this Agreement shall terminate without further obligations to the
Executive, other than for payment of Accrued Obligations, the supplemental
retirement benefit described in Annex A, and the timely payment or
provision of Other Benefits. All Accrued Obligations shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of Termination.
The supplemental retirement benefit shall be paid to the Participant or his
Beneficiary (within the meaning of the FPL Group, Inc. Supplemental
Executive Retirement Plan), as the case may be, at the option of the
Executive or if the Executive is deceased, at the option of such
Beneficiary, in a lump sum distribution to be made not later than three
months after the occurrence of such event or in the same manner as the
Executive's benefits under the Retirement Plan or Thrift Plan to which his
benefits under Annex A of this Agreement relates. The term "Other
Benefits" as utilized in this Section 7(c) shall include, and the Executive
shall be entitled after the Disability Effective Date to receive,
disability and other benefits at least equal to the most favorable of those
generally provided by the Company and its affiliated companies to disabled
executives and/or their families in accordance with such plans, programs,
practices and policies relating to disability, if any, as in effect
generally with respect to other peer executives and their families at any
time during the 90-day period immediately preceding the Effective Date or,
if more favorable to the Executive and/or the Executive's family, as in
effect at any time thereafter generally with respect to other peer
executives of the Company and its affiliated companies and their families.
(d) Cause; Other Than for Good Reason. If the
Executive's employment shall be terminated for Cause during the Employment
Period, this Agreement shall terminate without further obligations to the
Executive other than the obligation to pay to the Executive Annual Base
Salary through the Date of Termination plus the amount of any compensation
previously deferred by the Executive, in each case to the extent
theretofore unpaid. If the Executive terminates employment during the
Employment Period, excluding a termination for Good Reason, this Agreement
shall terminate without further obligations to the Executive, other than
for Accrued Obligations, the supplemental retirement benefit described in
Annex A to the extent the Executive is vested in his benefits under the
Retirement Plan, and the timely payment or provision of Other Benefits. In
such case, all Accrued Obligations shall be paid to the Executive in a lump
sum in cash within 30 days of the Date of Termination. The supplemental
retirement benefit shall be paid to the Executive or his Beneficiary
(within the meaning of the FPL Group, Inc. Supplemental Executive
Retirement Plan), as the case may be, at the option of the Executive or if
the Executive is deceased, at the option of such Beneficiary, in a lump sum
distribution to be made not later than three months after the occurrence of
such event or in the same manner as the Executive's benefits under the
Retirement Plan or Thrift Plan to which his benefits under Annex A of this
Agreement relates.
8. Non-exclusivity of Rights. Except as otherwise expressly
provided for in this Agreement, nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company or any of its
affiliated companies and for which the Executive may qualify, nor shall
anything herein limit or otherwise affect such rights as the Executive may
have under any contract or agreement with the Company or any of its
affiliated companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, policy, practice
or program of or any contract or agreement with the Company or any of its
affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or
contract or agreement except as explicitly modified by this Agreement.
9. Full Settlement. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Company may
have against the Executive or others. In no event shall the Executive be
obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement and, except as otherwise expressly provided
for in this Agreement, such amounts shall not be reduced whether or not the
Executive obtains other employment. The Company agrees to pay, to the
fullest extent permitted by law, all legal fees and expenses which the
Executive may reasonably incur at all stages of proceedings, including,
without limitation, preparation and appellate review, as a result of any
contest (regardless of whether formal legal proceedings are ever commenced
and regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any
provision of this Agreement or any guarantee of performance thereof
(including as a result of any contest by the Executive about the amount of
any payment pursuant to this Agreement), plus in each case interest on any
delayed payment at the applicable Federal rate provided for in Section
7872(f)(2)(A) of the Code.
10. Certain Additional Payments by the Company. Anything in
this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by the Company to or for the
benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this
Section 10) (a "Payment") would be subject to the excise tax imposed by
Section 4999 of the Code or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to
as the "Excise Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that after
payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any
income or employment taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the
Executive retains an amount of Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
In the event that Federal or state legislation is enacted by
imposing additional excise or supplementary income taxes on amounts payable
or benefits provided to the Executive (other than a mere change in marginal
income tax rates), the Company agrees to review the Agreement with the
Executive and to consider in good faith any changes hereto that may be
required to preserve the full amount of all Payments and the economic
purposes of the foregoing provisions of this Section 10.
11. Confidential Information. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company or any
of its affiliated companies, and their respective businesses, which shall
have been obtained by the Executive during the Executive's employment by
the Company or any of its affiliated companies and which shall not be or
become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive's employment with the Company, the Executive
shall not, without the prior written consent of the Company or as may
otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and
those designated by it. In no event shall an asserted violation of the
provisions of this Section 11 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this
Agreement.
12. Indemnification. The Company will, to the fullest extent
permitted by law, indemnify and hold the Executive harmless from any and
all liability arising from the Executive's service as an employee, officer
or director of the Company and its affiliated companies. To the fullest
extent permitted by law, the Company will advance legal fees and expenses
to the Executive for counsel selected by the Executive in connection with
any litigation or proceeding related to the Executive's service as an
employee, officer or director of the Company and its affiliates. The terms
of this indemnification provision shall survive the expiration of this
Agreement.
13. Successors.
(a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by
the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and
be binding upon the Company and its successors and assigns.
(c) The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall
mean the Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
14. Miscellaneous.
(a) This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida, without reference to
principles of conflict of laws. The captions of this Agreement are not
part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written
agreement executed by the parties hereto or their respective successors and
legal representatives.
(b) All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to the other party
or by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Executive:
Paul J. Evanson
If to the Company:
FPL Group, Inc.
700 Universe Boulevard
Juno Beach, Florida 33408
Attention: Vice President, Human Resources
or such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be
effective when actually received by the addressee.
(c) The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement.
(d) The Company may withhold from any amounts payable
under this Agreement such Federal, state or local taxes as shall be
required to be withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to
insist upon strict compliance with any provision hereof or any other
provision of this Agreement or the failure to assert any right the
Executive or the Company may hereunder, including, without limitation, the
right of the Executive to terminate employment for Good Reason pursuant to
Section 6(c)(i)-(v) of this Agreement, shall not be deemed to be a waiver
of such provision or right or any other provision or right of this
Agreement.
(f) The Executive and the Company acknowledge that,
except as may otherwise be provided under any other written agreement
between the Executive and the Company, the employment of the Executive by
the Company is "at will" and, prior to the Effective Date, may be
terminated by either the Executive or the Company at any time. Moreover,
except as provided in Section 1, if prior to the Effective Date, (i) the
Executive's employment with the Company terminates, or (ii) there is a
diminution in the Executive's position (including status, offices, titles,
and reporting requirements), authority, duties, and responsibilities with
the Company or its affiliated companies, then the Executive shall have no
further rights under this Agreement.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's
hand and, pursuant to the authorization from the Board of Directors, the
Company has caused these presents to be executed in its name on its behalf,
all as of the day and year first above written.
PAUL J. EVANSON
Paul J. Evanson
FPL GROUP, INC.
By LAWRENCE J. KELLEHER
Lawrence J. Kelleher
Vice President, Human Resources
ANNEX A
TO THE
EMPLOYMENT AGREEMENT
SUPPLEMENTAL RETIREMENT BENEFIT
1. Supplement Retirement Benefit.
(a) In General. The supplemental retirement benefit
to which the Executive shall be entitled under this Agreement shall be (i)
the supplemental pension benefit described in Paragraph 1(b) of this Annex
A, and (ii) the supplemental matching contribution account described in
Paragraph 1(c) of this Annex A.
(b) Supplemental Pension Benefit. The "supplemental
pension benefit" shall be the greater of (i) the supplement cash balance
accrued benefit described in Paragraph 1(b)(1) of this Annex A, or (ii) the
supplement unit credit accrued benefit described in Paragraph 1(b)(2) of
this Annex A.
(1) The "supplement cash balance accrued benefit" is
the difference, if any, between (A) and (B) where:
(A) is the benefit to which the Executive would be
entitled under the Retirement Plan as in effect immediately prior to the
Change of Control or, if more favorable to the Executive, as in effect
generally at any time thereafter during the Employment Period with respect
to other peer executives of the Company and its affiliated companies,
expressed in the normal form of benefit, if such benefit was computed (i)
as if benefits under such plan were based upon the Executive's Bonus
Compensation (within the meaning of the FPL Group, Inc. Supplemental
Executive Retirement Plan as in effect immediately prior to the Change of
Control), (ii) without the annual compensation limitation imposed by
Section 401(a)(17) of the Code, and (iii) without the restrictions or the
limitations imposed by Sections 415(b) or 415(e) of the Code; and
(B) is the sum of the benefits payable to the
Executive under the Retirement Plan, the SERP and his Supplement (as
defined in Paragraph 2(c) of this Annex A), expressed in the normal form of
benefit.
(2) The "supplement unit credit accrued benefit" is
the difference, if any, between (A) and (B) where:
(A) is the benefit to which the Executive would be
entitled under the Prior Pension Plan (within the meaning of the FPL Group,
Inc. Supplemental Executive Retirement Plan as in effect immediately prior
to the Change of Control), expressed in the normal form of benefit, if such
benefit was computed (i) as if benefits under such plan were based upon the
Executive's Bonus Compensation, (ii) without the annual compensation
limitation imposed by Section 401(a)(17) of the Code, and (iii) without the
restrictions or the limitations imposed by Sections 415(b) or 415(e) of the
Code; and
(B) is the sum of the benefits payable to the
Executive under the Retirement Plan, the SERP and his Supplement (as
defined in Paragraph 2(c) of this Annex A), expressed in the normal form of
benefit.
(c) Supplemental Matching Contribution Account. The
"supplemental matching contribution account" shall be an account that is
credited annually with (i) supplemental matching contributions described in
Paragraph 1(c)(1) of this Annex A, and (ii) theoretical earnings described
in Paragraph 1(c)(2) of this Annex A.
(1) "Supplemental matching contributions" shall be
for each year ending on or prior to the Effective Date in which the
Executive participated in the SERP and for each year ending after the
Effective Date in which the Executive performs services for the Company or
its affiliated companies the difference, if any, between (A) and (B) where:
(A) is the matching contribution allocation for such
year to which the Executive would be entitled under the Thrift Plan as in
effect immediately prior to the Change of Control or, if more favorable to
the Executive, as in effect generally at any time thereafter during the
Employment Period with respect to other peer executives of the Company and
its affiliated companies if such allocation were computed (i) as if the
matching contribution allocation under such plan was based upon the
Executive's Bonus Compensation, (ii) without the annual compensation
limitation imposed by Section 401(a)(17) of the Code, (iii) without the
restrictions or the limitations imposed by Sections 415(c) or 415(e) of the
Code, and (iv) as if he made After Tax Member Basic Contributions (within
the meaning of the Thrift Plan) and Tax Saver Member Basic Contributions
(within the meaning of the Thrift Plan) at the same percentage of Bonus
Compensation as he made such contributions to the Thrift Plan for such
years; and
(B) is the sum of the matching contributions
allocated or credited to the Executive under the Thrift Plan, the SERP and
his Supplement (as defined in Paragraph 2(c) of this Annex A) for such
year.
(2) "Theoretical earnings" shall be the income, gains
and losses which would have been credited on the Executive's supplemental
matching contribution account balance if such account were invested in the
Company Stock Fund (within the meaning of the Thrift Plan) offered as a
part of the Thrift Plan.
2. Construction and Definitions. Unless defined below or
otherwise in this Annex A, all of the capitalized terms used in this Annex
A shall have the meanings assigned to them in this Agreement:
(a) "Projected Years of Service" shall mean the sum
of: (i) Years of Service (within the meaning of the FPL Group, Inc.
Supplemental Executive Retirement Plan as in effective immediately prior to
the Change of Control) completed as of December 5, 2006, multiplied by two
(2), and (ii) Years of Service, if any, credited after such date.
Notwithstanding the foregoing, in determining the Executive's Years of
Service, in addition to his actual Years of Service he shall be treated as
if his employment terminated on the later of the second anniversary of the
Date of Termination or the last day of the Employment Period.
(b) "Projected Age" shall mean the age that the
Executive will have attained on the later of the second anniversary of the
Date of Termination or the last day of the Employment Period.
(c) "Supplement" shall mean the Supplement to the FPL
Group, Inc. Supplemental Executive Retirement Plan as it applies to the
Executive, dated as of January 28, 1997, and as it may be amended from time
to time.
EMPLOYMENT AGREEMENT
Employment Agreement between FPL Group, Inc., a Florida
corporation (the "Company"), and Lewis Hay III (the "Executive"), dated as
of September 13, 1999.
The Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company and its
shareholders to assure that the Company and its affiliated companies will
have the continued dedication of the Executive, notwithstanding the
possibility, threat or occurrence of a Change of Control (as defined below)
of the Company. The Board believes it is imperative to diminish the
inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of
Control and to encourage the Executive's full attention and dedication to
the Company and its affiliated companies currently and in the event of any
threatened or pending Change of Control, and to provide the Executive with
compensation and benefits arrangements upon a Change of Control which
ensure that the compensation and benefits expectations of the Executive
will be satisfied and which are competitive with those of other
corporations. Therefore, in order to accomplish these objectives, the Board
has caused the Company to enter into this Employment Agreement (the
"Agreement").
Therefore, the Company and the Executive agree as follows:
1. Effective Date. The effective date of this Agreement
shall be the date on which a Change of Control occurs (the "Effective
Date"). Anything in this Agreement to the contrary notwithstanding, if a
Change of Control occurs and if the Executive's employment with the Company
or its affiliated companies is terminated or the Executive's position
(including status, offices, titles, and reporting requirements), authority,
duties, and responsibilities with the Company or its affiliated companies
is not commensurate in all material respects with the most significant of
those held, exercised, and assigned prior to the date on which the Change
of Control occurs, and if it is reasonably demonstrated by the Executive
that such termination of employment or diminution in position, authority,
duties, or responsibilities (i) was at the request of a third party who has
taken steps reasonably calculated to effect the Change of Control or (ii)
otherwise arose in connection with or anticipation of the Change of
Control, then for all purposes of this Agreement the "Effective Date" shall
mean the date immediately prior to the date of such termination of
employment or diminution in position, authority, duties or
responsibilities. As used in this Agreement, the term "affiliated
companies" shall include any corporation or other entity controlled by,
controlling or under common control with the Company.
2. Change of Control. For the purposes of this Agreement, a
"Change of Control" shall mean:
(a) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of 20% or more of either (i) the then outstanding shares of common
stock of the Company (the "Outstanding Company Common Stock") or (ii) the
combined voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that the
following acquisitions shall not constitute a Change of Control: (i) any
acquisition by the Company or any or its subsidiaries, (ii) any acquisition
by any employee benefit plan (or related trust) sponsored or maintained by
the Company or any of its subsidiaries or (iii) any acquisition by any
corporation with respect to which, following such acquisition, more than
75% of, respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election
of directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such acquisition
in substantially the same proportions as their ownership, immediately prior
to such acquisition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be; or
(b) Individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of either
an actual or threatened solicitation to which Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act applies or other actual or
threatened solicitation of proxies or consents; or
(c) Approval by the shareholders of the Company of a
reorganization, merger or consolidation, in each case, with respect to
which all or substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common Stock
and Outstanding Company Voting Securities immediately prior to such
reorganization, merger or consolidation do not, following such
reorganization, merger or consolidation, beneficially own, directly or
indirectly, more than 75% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the
case may be, of the corporation resulting from such reorganization, merger
or consolidation in substantially the same proportions as their ownership,
immediately prior to such reorganization, merger or consolidation of the
Outstanding Company Common Stock and Outstanding Company Voting Securities,
as the case may be; or
(d) Approval by the shareholders of the Company of
(i) a complete liquidation or dissolution of the Company or (ii) the sale
or other disposition of all or substantially all of the assets of the
Company, other than to a corporation, with respect to which following such
sale or other disposition, more than 75% of, respectively, the then
outstanding shares of common stock of such corporation and the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of
the individuals and entities who were the beneficial owners, respectively,
of the Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately prior to
such sale or other disposition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be.
The term "the sale or disposition by the Company of all or
substantially all of the assets of the Company" shall mean a sale or other
disposition transaction or series of related transactions involving assets
of the Company or of any direct or indirect subsidiary of the Company
(including the stock of any direct or indirect subsidiary of the Company)
in which the value of the assets or stock being sold or otherwise disposed
of (as measured by the purchase price being paid therefor or by such other
method as the Board determines is appropriate in a case where there is no
readily ascertainable purchase price) constitutes more than two-thirds of
the fair market value of the Company (as hereinafter defined). The "fair
market value of the Company" shall be the aggregate market value of the
then Outstanding Company Common Stock (on a fully diluted basis) plus the
aggregate market value of the Company's other outstanding equity
securities. The aggregate market value of the shares of Outstanding
Company Common Stock shall be determined by multiplying the number of
shares of Outstanding Company Common Stock (on a fully diluted basis)
outstanding on the date of the execution and delivery of a definitive
agreement with respect to the transaction or series of related transactions
(the "Transaction Date") by the average closing price of the shares of
Outstanding Company Common Stock for the ten trading days immediately
preceding the Transaction Date. The aggregate market value of any other
equity securities of the Company shall be determined in a manner similar to
that prescribed in the immediately preceding sentence for determining the
aggregate market value of the shares of Outstanding Company Common Stock or
by such other method as the Board shall determine is appropriate.
3. Employment Period. The Company hereby agrees to continue
the Executive in its or its affiliated companies' employ, or both, as the
case may be, and the Executive hereby agrees to remain in the employ of the
Company, or its affiliated companies, or both, as the case may be, for a
period commencing on the Effective Date and ending on the 4th anniversary
of such date (the "Employment Period").
4. Position and Duties. During the Employment Period, the
Executive's position (including status, offices, titles, and reporting
requirements), authority, duties, and responsibilities with the Company or
its affiliated companies or both, as the case may be, shall be in every
respect at least commensurate with the most significant of those held,
exercised, and assigned at any time during the 90-day period immediately
preceding the Effective Date. The Executive's services shall be performed
at the location where the Executive was employed immediately preceding the
Effective Date or any location less than 20 miles from such location,
although the Executive understands and agrees that he may be required to
travel from time to time for business purposes.
During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive
agrees to devote substantially all of his time and attention during normal
business hours to the business and affairs of the Company and its
affiliated companies and to use his reasonable best efforts to perform
faithfully and efficiently the duties and responsibilities assigned to him
hereunder. During the Employment Period it shall not be a violation of
this Agreement for the Executive to serve on corporate, civic or charitable
boards or committees, deliver lectures, fulfill speaking engagements or
teach at educational institutions and devote reasonable amounts of time to
the management of his and his family's personal investments and affairs, so
long as such activities do not significantly interfere with the performance
of the Executive's responsibilities as an employee of the Company or its
affiliated companies in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities have been
conducted by the Executive prior to the Effective Date, the reinstatement
or continued conduct of such activities (or the reinstatement or conduct of
activities similar in nature and scope thereto) subsequent to the Effective
Date shall not thereafter be deemed to interfere with the performance of
the Executive's responsibilities to the Company and its affiliated
companies.
5. Compensation. During the Employment Period, the Executive
shall be compensated as follows:
(a) Annual Base Salary. The Executive shall be paid
an annual base salary ("Annual Base Salary"), in equal biweekly
installments, at least equal to the annual base salary being paid to the
Executive by the Company and its affiliated companies with respect to the
year in which the Effective Date occurs. The Annual Base Salary shall be
reviewed at least annually and shall be increased substantially consistent
with increases in base salary generally awarded to other peer executives of
the Company and its affiliated companies. Such increases shall in no
event be less than the increases in the U.S. Department of Labor Consumer
Price Index - U.S. City Average Index. Any increase in Annual Base Salary
shall not serve to limit or reduce any other obligation to the Executive
under this Agreement. Annual Base Salary shall not be reduced after any
such increase and the term "Annual Base Salary" as utilized in this
Agreement shall refer to Annual Base Salary as so increased.
(b) Annual Bonus. In addition to Annual Base Salary,
the Executive shall be awarded, for each fiscal year ending during the
Employment Period, an annual bonus (the "Annual Bonus") in cash at least
equal to the highest annual incentive compensation (annualized for any
fiscal year consisting of less than twelve full months or with respect to
which the Executive has been employed by the Company for less than twelve
full months) paid or payable, including by reason of any deferral, to the
Executive by the Company and its affiliated companies in respect of the
three fiscal years immediately preceding the fiscal year in which the
Effective Date occurs (the "Highest Recent Bonus"). The greater of (i) the
Highest Recent Bonus or (ii) the highest Annual Bonus awarded by the
Company and its affiliated companies after the Effective Date (target or
actual, whichever is greater) is herein called the "Highest Annual Bonus".
Each such Annual Bonus shall be paid no later than the end of the third
month of the fiscal year next following the fiscal year for which the
Annual Bonus is awarded, unless the Executive otherwise elects to defer
the receipt of such Annual Bonus.
(c) Long Term Incentive Compensation. During the
Employment Period, the Executive shall be entitled to participate in all
incentive compensation plans, practices, policies, and programs applicable
generally to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies, and
programs provide the Executive with incentive opportunities and potential
benefits, both as to amount and percentage of compensation, less favorable,
in the aggregate, than those provided by the Company and its affiliated
companies for the Executive under the FPL Group Long Term Incentive Plan
(including, without limitation, performance share grants and awards) as in
effect at any time during the 90-day period immediately preceding the
Effective Date or; if more favorable to the Executive, those provided
generally at any time after the Effective Date to other peer executives of
the Company and its affiliated companies.
In addition, on the Effective Date (i) the maximum performance
criteria of all outstanding performance awards, performance-based
restricted stock, and other stock-based awards granted to the Executive
shall be deemed fully achieved and all such awards shall be fully earned
and vested; (ii) any option, stock appreciation right, and other award in
the nature of a right that may be exercised that was granted to the
Executive and which was not previously exercisable and vested shall become
fully exercisable and vested; (iii) the restrictions, deferral limitations,
and forfeiture conditions applicable to any outstanding award granted to
the Executive under an incentive compensation plan, practice, policy or
program shall lapse and such awards shall be deemed fully vested; and (iv)
all outstanding awards shall be canceled and the Executive shall be paid in
cash for such awards on the basis of the change of control price as of the
date of the occurrence of the Change of Control (or such other date
applicable to awards granted to other peer executives under the applicable
incentive compensation plan, practice, policy or program) to the extent
such cancellation of and payment for an award would not cause the Executive
to incur actual short-swing profits liability under Section 16(b) of the
Exchange Act. For purposes of this paragraph, the term "change of control
price" means the highest price per share paid in any transaction reported
on the securities exchange or trading system on which the shares of common
stock of the Company are then primarily listed or traded, or paid or
offered in any transaction related to the Change of Control at any time
during the preceding 60-day period, except that in the case of incentive
stock options (within the meaning of Section 422(b) of the Internal Revenue
Code of 1986, as amended (the "Code")) and stock appreciation rights
relating thereto, such price shall be based only on transactions reported
for the date such awards are cashed out.
(d) Savings and Retirement Plans. During the
Employment Period, the Executive shall be entitled to participate in all
savings and retirement plans, practices, policies, and programs applicable
generally to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies, and
programs provide the Executive with savings opportunities and retirement
benefit opportunities, in each case, less favorable, in the aggregate, than
the most favorable of those provided by the Company and its affiliated
companies for the Executive under such plans, practices, policies, and
programs as in effect at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Executive, those
provided generally at any time after the Effective Date to other peer
executives of the Company and its affiliated companies.
In addition, during the Employment Period the Executive shall be
entitled under this Agreement to the supplemental retirement benefit
described in Annex A attached hereto and made a part hereof by this
reference. The payment and vesting of such supplemental retirement benefit
shall be determined in accordance with Section 7 of this Agreement.
(e) Benefit Plans. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be
eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies, and programs provided by the Company
and its affiliated companies (including, without limitation, medical,
executive medical, annual executive physical, prescription, dental, vision,
short-term disability, long-term disability, executive long-term
disability, salary continuance, employee life, group life, benefits
pursuant to split dollar arrangements, accidental death and dismemberment,
and travel accident insurance plans and programs) to the extent applicable
generally to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies, and
programs provide the Executive with benefits which are less favorable, in
the aggregate, than the most favorable of such plans, practices, policies,
and programs in effect for the Executive at any time during the 90-day
period immediately preceding the Effective Date or, if more favorable to
the Executive, those provided generally at any time after the Effective
Date to other peer executives of the Company and its affiliated companies.
(f) Expenses. During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in accordance with the most
favorable policies, practices, and procedures of the Company and its
affiliated companies in effect for the Executive at any time during the 90-
day period immediately preceding the Effective Date or, if more favorable
to the Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its affiliated
companies.
(g) Fringe Benefits. During the Employment Period,
the Executive shall be entitled to fringe benefits, including but not
limited to those described in Section 7(a)(iii), in accordance with the
most favorable plans, practices, programs, and policies of the Company and
its affiliated companies in effect for the Executive at any time during the
90-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies.
(h) Office and Support Staff. During the Employment
Period, the Executive shall be entitled to an office or offices of a size
and with furnishings and other appointments, and to exclusive personal
secretarial and other assistance, at least equal to the most favorable of
the foregoing provided to the Executive by the Company and its affiliated
companies at any time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as provided
generally at any time thereafter with respect to other peer executives of
the Company and its affiliated companies.
(i) Vacation. During the Employment Period, the
Executive shall be entitled to paid vacation in accordance with the most
favorable plans, policies, programs, and practices of the Company and its
affiliated companies as in effect for the Executive at any time during the
90-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer incentives of the Company and its affiliated
companies.
6. Termination of Employment.
(a) Disability. If the Company determines in good
faith that the Disability of the Executive has occurred during the
Employment Period (pursuant to the definition of Disability set forth
below), it may give to the Executive written notice in accordance with
Section 14(b) of this Agreement of its intention to terminate the
Executive's employment. In such event, the Executive's employment with the
Company shall terminate effective on the 30th day after receipt of such
notice by the Executive (the "Disability Effective Date"), provided that,
within the 30 days after such receipt, the Executive shall not have
returned to perform his duties in accordance with Section 4. For purposes
of this Agreement, "Disability" shall mean the absence of the Executive
from the Executive's duties with the Company for 180 consecutive business
days as a result of incapacity due to mental or physical illness which is
determined to be total and permanent by a physician selected by the Company
or its insurers and acceptable to the Executive or the Executive's legal
representative (such agreement as to acceptability not to be withheld
unreasonably).
(b) Cause. The Company may terminate the Executive's
employment during the Employment Period for Cause. For purposes of this
Agreement, "Cause" shall mean (i) repeated violations by the Executive of
the Executive's obligations under Section 4 of this Agreement (other than
as a result of incapacity due to physical or mental illness) which are
demonstrably willful and deliberate on the Executive's part, which are
committed in bad faith or without reasonable belief that such violations
are in the best interests of the Company and which are not remedied in a
reasonable period of time after receipt of written notice from the Company
specifying such violations or (ii) the conviction of the Executive of a
felony involving an act of dishonesty intended to result in substantial
personal enrichment at the expense of the Company or its affiliated
companies.
(c) Good Reason. The Executive's employment may be
terminated during the Employment Period by the Executive for Good Reason.
For purposes of this Agreement, "Good Reason" shall mean:
(i) any failure by the Company to comply in every
respect with the provisions of Section 4 of this Agreement, including
without limitation, the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position (including,
without limitation, status, offices, titles and reporting requirements),
authority, duties or responsibilities as contemplated by Section 4, or any
other action or inaction by the Company which results in a diminution in
such position, authority, duties or responsibilities, excluding for this
purpose an isolated, insubstantial and inadvertent action not taken in bad
faith and which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(ii) any failure by the Company to comply with any of
the provisions of Section 5 of this Agreement, other than isolated,
insubstantial and inadvertent failure not occurring in bad faith and which
is remedied by the Company promptly after receipt of notice thereof given
by the Executive;
(iii) the Company's requiring the Executive to be based
at any office or location other than that described in Section 4 hereof;
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this
Agreement; or
(v) any failure by the Company to comply with and
satisfy Section 13(c) of this Agreement, provided that such successor has
received at least ten days prior written notice from the Company or the
Executive of the requirements of Section 13(c) of the Agreement.
For purposes of this Section 6(c), any good faith determination of
"Good Reason" made by the Executive shall be conclusive.
(d) Notice of Termination. Any termination by the
Company for Cause, or by the Executive for Good Reason, shall be
communicated by Notice of Termination to the other party hereto given in
accordance with Section 14(b) of this Agreement. For purposes of this
Agreement, a "Notice of Termination" means a written notice which (i)
indicates the specific termination provision in this Agreement relied upon,
(ii) to the extent applicable, sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated, and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of
such notice, specifies the termination date (which date shall be not more
than fifteen days after the giving of such notice). The failure by the
Executive or the Company to set forth in the Notice of Termination any fact
or circumstances which contributes to a showing of Good Reason or Cause
shall not waive any right of the Executive or the Company hereunder or
preclude the Executive or the Company from asserting such fact or
circumstance in enforcing the Executive's or the Company's rights
hereunder.
(e) Date of Termination. "Date of Termination" means
(i) if the Executive's employment is terminated by the Company for Cause,
or by the Executive for Good Reason, the date of receipt of the Notice of
Termination or any later date specified therein, as the case may be, (ii)
if the Executive's employment is terminated by the Company other than for
Cause or Disability, the Date of Termination shall be the date on which the
Company notifies the Executive of such termination, and (iii) if the
Executive's employment is terminated by reason of Disability, the Date of
Termination shall be the Disability Effective Date.
7. Obligations of the Company upon Termination.
(a) Good Reason; Other Than for Cause or Disability.
If, during the Employment Period, the Company terminates the Executive's
employment other than for Cause or Disability or the Executive terminates
employment for Good Reason:
(i) the Company shall pay to the Executive in a lump
sum in cash within 30 days after the Date of Termination the aggregate of
the following amounts (such aggregate being hereinafter referred to as the
"Special Termination Amount"):
A. the sum of (1) the Executive's Annual Base Salary
through the Date of Termination to the extent not theretofore paid, (2) the
product of (x) the Highest Annual Bonus and (y) a fraction, the numerator
of which is the number of days in the current fiscal year through the Date
of Termination, and the denominator of which is 365, and (3) any
compensation previously deferred by the Executive (together with any
accrued interest or earnings thereon) (including, without limitation,
compensation, bonus, incentive compensation or awards deferred under the
FPL Group, Inc. Deferred Compensation Plan or incentive compensation or
awards deferred under the FPL Group, Inc. Long-Term Incentive Plan of 1985,
the FPL Group, Inc. Long Term Incentive Plan of 1994, or pursuant to an
individual deferral agreement) and any accrued vacation pay, in each case
to the extent not theretofore paid (the sum of the amounts described in
clauses (1), (2), and (3) being herein called the "Accrued Obligations");
and
B. the amount equal to the product of (1) the
greater of two or the number of years (with any partial year expressed as a
fraction) remaining in the Employment Period, and (2) the sum of (x) the
Executive's Annual Base Salary and (y) the Highest Annual Bonus; provided,
however, that such amount shall be paid in lieu of, and the Executive
hereby waives the right to receive, any other amount of severance relating
to salary or bonus continuation to be received by the Executive upon
termination of employment of the Executive under any severance plan, policy
or arrangement of the Company; and
C. the maximum amount payable under all performance
share grants and all other long term incentive compensation grants to the
Executive that have not been paid in accordance with the terms of the grant
or Section 5(c) hereof, calculated as though the Executive had remained
employed by the Company for the remainder of the Employment Period and on
the basis of actual achievement of performance measures through the end of
the fiscal year preceding the fiscal year in which the Date of Termination
occurs and thereafter assuming maximum achievement of all performance
measures (e.g., currently 160%) through the end of the Employment Period;
and
D. a separate lump-sum supplemental retirement
benefit equal to the greater of (i) the supplemental pension benefit
described in Paragraph 1(b) of Annex A that the Executive would have been
entitled had his employment continued at the compensation level provided
for in Sections 5(a) and 5(b) of this Agreement for the greater of two
years or the remainder of the Employment Period and based upon his
Projected Years of Service (as defined in Paragraph 2(a) of Annex A) and
his Projected Age (as defined in Paragraph 2(b) of Annex A), or (ii) the
difference between (1) the actuarial equivalent (utilizing for this purpose
the actuarial assumptions utilized with respect to the FPL Group Employee
Pension Plan (or any successor plan thereto) (the "Retirement Plan") during
the 90-day period immediately preceding the Effective Date) of the benefit
payable under the Retirement Plan and all supplemental and/or excess
retirement plans providing benefits for the Executive (other than the
supplemental retirement benefit described in Annex A) (the "SERP")
(including, but not limited to the Supplemental Pension Benefit (as defined
in the FPL Group, Inc. Supplemental Executive Retirement Plan)) which the
Executive would receive if the Executive's employment continued at the
compensation level provided for in Sections 5(a) and 5(b) of this Agreement
for, and his age increased by, the greater of two years or the remainder of
the Employment Period, assuming for this purpose that all accrued benefits
are fully vested and that benefit accrual formulas are no less advantageous
to the Executive than those in effect during the 90-day period immediately
preceding the Effective Date, or, if more favorable to the Executive, as in
effect generally at any time thereafter during the Employment Period with
respect to other peer executives of the Company and its affiliated
companies, and (2) the actuarial equivalent (utilizing for this purpose the
actuarial assumptions utilized with respect to the Retirement Plan during
the 90-day period immediately preceding the Effective Date) of the
Executive's actual benefits (paid or payable), if any, under the Retirement
Plan and the SERP; and
E. a separate lump-sum supplemental retirement
benefit equal to the greater of (i) the supplemental matching contributions
account described in Paragraph 1(c) of Annex A that the Executive would
have been entitled had his employment continued at the compensation level
provided for in Sections 5(a) and 5(b) of this Agreement for the greater of
two years or the remainder of the Employment Period and assuming that the
Executive made After Tax Member Basic Contributions (within the meaning of
the FPL Group Employee Thrift Plan or any successor plan thereto (the
"Thrift Plan")) and Tax Saver Member Basic Contributions (within the
meaning of the Thrift Plan) to the Thrift Plan at the highest permissible
rate (disregarding any limitations imposed by the Code) following the Date
of Termination, or (ii) the difference between (1) the value of the Company
Account (as defined in the Thrift Plan) and any other matching contribution
accounts (including, but not limited to the Supplemental Matching
Contribution Account (as defined in the FPL Group, Inc. Supplemental
Executive Retirement Plan)) under a SERP (other than the supplemental
retirement benefit described in Annex A) which the Executive would receive
if (i) the Executive's employment continued at the compensation level
provided for in Sections 5(a) and 5(b) of this Agreement for the greater of
two years or the remainder of the Employment Period, (ii) the Executive
made pre- and after-tax contributions at the highest permissible rate
(disregarding any limitations imposed by the Code, which may or may not be
set forth in the Thrift Plan) for the greater of two years or each year
remaining in the Employment Period, (iii) the Company Account and the
matching contribution accounts are fully vested, and (iv) the matching
contribution formulas are no less advantageous to the Executive than those
in effect during the 90-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as in effect generally at any time
during the remainder of the Employment Period with respect to other peer
executives of the Company and its affiliated companies, and (2) the actual
value of the Executive's Company Account and matching contribution accounts
(paid or payable), if any, under the Thrift Plan and the SERP; and
(ii) for the remainder of the Employment Period, or
such longer period as any plan, program, practice or policy may provide,
the Company shall continue benefits to the Executive and/or the Executive's
family at least equal to those which would have been provided to them in
accordance with the plans, programs, practices and policies described in
Sections 5(e) and 5(g) of this Agreement if the Executive's employment had
not been terminated, in accordance with the most favorable plans,
practices, programs or policies of the Company and its affiliated companies
applicable generally to other peer executives and their families during the
90-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies and their families, provided, however, that if the Executive
becomes reemployed with another employer and is eligible to receive medical
or other welfare benefits under another employer provided plan, the medical
and other welfare benefits described herein shall be secondary to those
provided under such other plan during such applicable period of
eligibility. For purposes of determining eligibility of the Executive for
retiree benefits pursuant to such plans, practices, programs and policies,
the Executive shall be considered to have remained employed until the end
of the Employment Period and to have retired on the last day of such
period;
(iii) for the remainder of the Employment Period and to
the extent previously paid for or provided by the Company, the Company
shall continue to provide the following:
A. social and business club memberships to the
Executive (as in effect immediately prior to the Date of Termination);
B. use, maintenance, insurance, and repair of the
company car that is in the possession of the Executive, until the earlier
of the end of the lease term or the end of the Employment Period, at which
time the Executive may purchase such car. The Company shall replace the
company car in the Executive's possession on the Effective Date with a new
company car at such time(s) as provided under the Company car policy
applicable to other peer executives, but in no case less frequently than
the Company car policy in effect during the 90-day period immediately
preceding the Effective Date;
C. up to $15,000 annually for personal financial
planning, accounting and legal advice;
D. communication equipment such as a car and/or
cellular phone, and home or laptop computer until the end of the Employment
Period, at which time the Executive may purchase such equipment;
E. security system at the
Executive's residence, and the related monitoring and maintenance fees; and
F. up to $800 annually for personal excess liability
insurance coverage;
In lieu of continuing these benefits for the remainder of the Employment
Period, the Executive, in his sole discretion, may elect to receive a lump
sum payment equal to the present value of the amount projected to be paid
by the Company to provide these benefits. In determining the present
value, a six percent interest assumption shall be utilized. The Executive
shall make any such election by giving the Company written notice in
accordance with Section 14(b).
(iv) to the extent not theretofore paid or provided,
the Company shall timely pay or provide to the Executive any other amounts
or benefits required to be paid or provided or which the Executive is
eligible to receive pursuant to this Agreement or otherwise under any plan,
program, policy or practice or contract or agreement of the Company and its
affiliated companies, but excluding solely for purposes of this Section
7(a)(iv) amounts waived by the Executive pursuant to Section 7(a)(i)(B);
and
(v) the Company shall provide the Executive with the
following benefits in the event of his termination under this Section 7(a):
A. If the Executive is required to move his primary
residence in order to pursue other business opportunities during the
Employment Period, the Company shall reimburse the Executive for all such
relocation expenses incurred during the Employment Period (not in excess of
$10,000) that are not reimbursed by another employer, including, without
limitation, assistance in selling the Executive's home and all other
assistance and benefits that were customarily provided by the Company to
transferred executives prior to the Change of Control;
B. If the Executive retains counsel or an accounting
firm in connection with the taxation of payments made pursuant to Section
10 of this Agreement, the Company shall reimburse the Executive for such
reasonable legal and/or accounting fees and disbursements (not in excess of
$15,000);
C. The Company shall continue to pay the Executive's
Annual Base Salary during the pendency of a dispute over his termination.
Amounts paid under this subsection are in addition to all other amounts due
under this Agreement (other than those due under Section 5(a) hereof) and
shall not be offset against or reduce any other amounts due under this
Agreement; and
D. The Company shall provide the Executive with
outplacement services commensurate with those provided to terminated
executives of comparable level made available through and at the facilities
of a reputable and experienced vendor; and
(vi) any outstanding options, stock appreciation
rights, and other awards in the nature of a right that may be exercised
granted to the Executive shall become fully exercisable and vested; any
restrictions, deferral limitations, and forfeiture conditions applicable to
any outstanding award granted to the Executive shall lapse and such awards
shall be deemed fully vested; and the Executive shall have for the
remainder of the Employment Period (but in no event past the expiration of
the term of the award) to exercise any and all rights granted under such
awards then exercisable or which become exercisable pursuant to this
Section 7(a)(vi), except that with respect to incentive stock options
(within the meaning of Section 422(b) of the Code) and stock appreciation
rights relating thereto, the Executive may exercise such awards during the
period of exercise provided for in the agreements granting such options.
(b) Death. Upon the Executive's death during the
Employment Period, this Agreement shall terminate without further
obligations to the Executive's legal representatives under this Agreement,
other than for payment of Accrued Obligations, the supplemental retirement
benefit described in Annex A, and the timely payment or provision of the
benefits described in Section 7(a)(ii) and (iv) (the "Other Benefits").
All Accrued Obligations shall be paid to the Executive's estate or
beneficiary, as applicable, in a lump sum in cash within 30 days of the
Date of Termination. The supplemental retirement benefit shall be paid to
the Executive's Beneficiary (within the meaning of the FPL Group, Inc.
Supplemental Executive Retirement Plan) at his option in a lump sum
distribution to be made not later than three months after the occurrence of
his death or in the same manner as the Executive's benefits under the
Retirement Plan or Thrift Plan to which his benefits under Annex A of this
Agreement relates. The term "Other Benefits" as utilized in this Section
7(b) shall include, without limitation, and the Executive's family shall be
entitled to receive, benefits at least equal to the most favorable benefits
provided by the Company and any of its affiliated companies to surviving
families of peer executives of the Company and such affiliated companies
under such plans, programs, practices and policies relating to family death
benefits, if any, as in effect with respect to other peer executives and
their families at any time during the 90-day period immediately preceding
the Effective Date or, if more favorable to the Executive and/or the
Executive's family, as in effect on the date of the Executive's death with
respect to other peer executives of the Company and its affiliated
companies and their families.
(c) Disability. If the Executive's employment is
terminated by reason of the Executive's Disability during the Employment
Period, this Agreement shall terminate without further obligations to the
Executive, other than for payment of Accrued Obligations, the supplemental
retirement benefit described in Annex A, and the timely payment or
provision of Other Benefits. All Accrued Obligations shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of Termination.
The supplemental retirement benefit shall be paid to the Participant or his
Beneficiary (within the meaning of the FPL Group, Inc. Supplemental
Executive Retirement Plan), as the case may be, at the option of the
Executive or if the Executive is deceased, at the option of such
Beneficiary, in a lump sum distribution to be made not later than three
months after the occurrence of such event or in the same manner as the
Executive's benefits under the Retirement Plan or Thrift Plan to which his
benefits under Annex A of this Agreement relates. The term "Other
Benefits" as utilized in this Section 7(c) shall include, and the Executive
shall be entitled after the Disability Effective Date to receive,
disability and other benefits at least equal to the most favorable of those
generally provided by the Company and its affiliated companies to disabled
executives and/or their families in accordance with such plans, programs,
practices and policies relating to disability, if any, as in effect
generally with respect to other peer executives and their families at any
time during the 90-day period immediately preceding the Effective Date or,
if more favorable to the Executive and/or the Executive's family, as in
effect at any time thereafter generally with respect to other peer
executives of the Company and its affiliated companies and their families.
(d) Cause; Other Than for Good Reason. If the
Executive's employment shall be terminated for Cause during the Employment
Period, this Agreement shall terminate without further obligations to the
Executive other than the obligation to pay to the Executive Annual Base
Salary through the Date of Termination plus the amount of any compensation
previously deferred by the Executive, in each case to the extent
theretofore unpaid. If the Executive terminates employment during the
Employment Period, excluding a termination for Good Reason, this Agreement
shall terminate without further obligations to the Executive, other than
for Accrued Obligations, the supplemental retirement benefit described in
Annex A to the extent the Executive is vested in his benefits under the
Retirement Plan, and the timely payment or provision of Other Benefits. In
such case, all Accrued Obligations shall be paid to the Executive in a lump
sum in cash within 30 days of the Date of Termination. The supplemental
retirement benefit shall be paid to the Executive or his Beneficiary
(within the meaning of the FPL Group, Inc. Supplemental Executive
Retirement Plan), as the case may be, at the option of the Executive or if
the Executive is deceased, at the option of such Beneficiary, in a lump sum
distribution to be made not later than three months after the occurrence of
such event or in the same manner as the Executive's benefits under the
Retirement Plan or Thrift Plan to which his benefits under Annex A of this
Agreement relates.
8. Non-exclusivity of Rights. Except as otherwise expressly
provided for in this Agreement, nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company or any of its
affiliated companies and for which the Executive may qualify, nor shall
anything herein limit or otherwise affect such rights as the Executive may
have under any contract or agreement with the Company or any of its
affiliated companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, policy, practice
or program of or any contract or agreement with the Company or any of its
affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or
contract or agreement except as explicitly modified by this Agreement.
9. Full Settlement. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Company may
have against the Executive or others. In no event shall the Executive be
obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement and, except as otherwise expressly provided
for in this Agreement, such amounts shall not be reduced whether or not the
Executive obtains other employment. The Company agrees to pay, to the
fullest extent permitted by law, all legal fees and expenses which the
Executive may reasonably incur at all stages of proceedings, including,
without limitation, preparation and appellate review, as a result of any
contest (regardless of whether formal legal proceedings are ever commenced
and regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any
provision of this Agreement or any guarantee of performance thereof
(including as a result of any contest by the Executive about the amount of
any payment pursuant to this Agreement), plus in each case interest on any
delayed payment at the applicable Federal rate provided for in Section
7872(f)(2)(A) of the Code.
10. Certain Additional Payments by the Company. Anything in
this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by the Company to or for the
benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this
Section 10) (a "Payment") would be subject to the excise tax imposed by
Section 4999 of the Code or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to
as the "Excise Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that after
payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any
income or employment taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the
Executive retains an amount of Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
In the event that Federal or state legislation is enacted by
imposing additional excise or supplementary income taxes on amounts payable
or benefits provided to the Executive (other than a mere change in marginal
income tax rates), the Company agrees to review the Agreement with the
Executive and to consider in good faith any changes hereto that may be
required to preserve the full amount of all Payments and the economic
purposes of the foregoing provisions of this Section 10.
11. Confidential Information. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company or any
of its affiliated companies, and their respective businesses, which shall
have been obtained by the Executive during the Executive's employment by
the Company or any of its affiliated companies and which shall not be or
become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive's employment with the Company, the Executive
shall not, without the prior written consent of the Company or as may
otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and
those designated by it. In no event shall an asserted violation of the
provisions of this Section 11 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this
Agreement.
12. Indemnification. The Company will, to the fullest extent
permitted by law, indemnify and hold the Executive harmless from any and
all liability arising from the Executive's service as an employee, officer
or director of the Company and its affiliated companies. To the fullest
extent permitted by law, the Company will advance legal fees and expenses
to the Executive for counsel selected by the Executive in connection with
any litigation or proceeding related to the Executive's service as an
employee, officer or director of the Company and its affiliates. The terms
of this indemnification provision shall survive the expiration of this
Agreement.
13. Successors.
(a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by
the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and
be binding upon the Company and its successors and assigns.
(c) The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall
mean the Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
14. Miscellaneous.
(a) This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida, without reference to
principles of conflict of laws. The captions of this Agreement are not
part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written
agreement executed by the parties hereto or their respective successors and
legal representatives.
(b) All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to the other party
or by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Executive:
Lewis Hay III
If to the Company:
FPL Group, Inc.
700 Universe Boulevard
Juno Beach, Florida 33408
Attention: Vice President, Human Resources
or such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be
effective when actually received by the addressee.
(c) The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement.
(d) The Company may withhold from any amounts payable
under this Agreement such Federal, state or local taxes as shall be
required to be withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to
insist upon strict compliance with any provision hereof or any other
provision of this Agreement or the failure to assert any right the
Executive or the Company may hereunder, including, without limitation, the
right of the Executive to terminate employment for Good Reason pursuant to
Section 6(c)(i)-(v) of this Agreement, shall not be deemed to be a waiver
of such provision or right or any other provision or right of this
Agreement.
(f) The Executive and the Company acknowledge that,
except as may otherwise be provided under any other written agreement
between the Executive and the Company, the employment of the Executive by
the Company is "at will" and, prior to the Effective Date, may be
terminated by either the Executive or the Company at any time. Moreover,
except as provided in Section 1, if prior to the Effective Date, (i) the
Executive's employment with the Company terminates, or (ii) there is a
diminution in the Executive's position (including status, offices, titles,
and reporting requirements), authority, duties, and responsibilities with
the Company or its affiliated companies, then the Executive shall have no
further rights under this Agreement.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's
hand and, pursuant to the authorization from the Board of Directors, the
Company has caused these presents to be executed in its name on its behalf,
all as of the day and year first above written.
LEWIS HAY III
Lewis Hay III
FPL GROUP, INC.
By LAWRENCE J. KELLEHER
Lawrence J. Kelleher
Vice President, Human Resources
ANNEX A
TO THE
EMPLOYMENT AGREEMENT
SUPPLEMENTAL RETIREMENT BENEFIT
1. Supplement Retirement Benefit.
(a) In General. The supplemental retirement benefit
to which the Executive shall be entitled under this Agreement shall be (i)
the supplemental pension benefit described in Paragraph 1(b) of this Annex
A, and (ii) the supplemental matching contribution account described in
Paragraph 1(c) of this Annex A.
(b) Supplemental Pension Benefit. The "supplemental
pension benefit" shall be the greater of (i) the supplement cash balance
accrued benefit described in Paragraph 1(b)(1) of this Annex A, or (ii) the
supplement unit credit accrued benefit described in Paragraph 1(b)(2) of
this Annex A.
(1) The "supplement cash balance accrued benefit" is
the difference, if any, between (A) and (B) where:
(A) is the benefit to which the Executive would be
entitled under the Retirement Plan as in effect immediately prior to the
Change of Control or, if more favorable to the Executive, as in effect
generally at any time thereafter during the Employment Period with respect
to other peer executives of the Company and its affiliated companies,
expressed in the normal form of benefit, if such benefit was computed (i)
as if benefits under such plan were based upon the Executive's Bonus
Compensation (within the meaning of the FPL Group, Inc. Supplemental
Executive Retirement Plan as in effect immediately prior to the Change of
Control), (ii) without the annual compensation limitation imposed by
Section 401(a)(17) of the Code, and (iii) without the restrictions or the
limitations imposed by Sections 415(b) or 415(e) of the Code; and
(B) is the sum of the benefits payable to the
Executive under the Retirement Plan and the SERP, expressed in the normal
form of benefit.
(2) The "supplement unit credit accrued benefit" is
the difference, if any, between (A) and (B) where:
(A) is the benefit to which the Executive would be
entitled under the Prior Pension Plan (within the meaning of the FPL Group,
Inc. Supplemental Executive Retirement Plan as in effect immediately prior
to the Change of Control), expressed in the normal form of benefit, if such
benefit was computed (i) as if benefits under such plan were based upon the
Executive's Bonus Compensation, (ii) without the annual compensation
limitation imposed by Section 401(a)(17) of the Code, and (iii) without the
restrictions or the limitations imposed by Sections 415(b) or 415(e) of the
Code; and
(B) is the sum of the benefits payable to the
Executive under the Retirement Plan and the SERP, expressed in the normal
form of benefit.
(c) Supplemental Matching Contribution Account. The
"supplemental matching contribution account" shall be an account that is
credited annually with (i) supplemental matching contributions described in
Paragraph 1(c)(1) of this Annex A, and (ii) theoretical earnings described
in Paragraph 1(c)(2) of this Annex A.
(1) "Supplemental matching contributions" shall be
for each year ending on or prior to the Effective Date in which the
Executive participated in the SERP and for each year ending after the
Effective Date in which the Executive performs services for the Company or
its affiliated companies the difference, if any, between (A) and (B) where:
(A) is the matching contribution allocation for such
year to which the Executive would be entitled under the Thrift Plan as in
effect immediately prior to the Change of Control or, if more favorable to
the Executive, as in effect generally at any time thereafter during the
Employment Period with respect to other peer executives of the Company and
its affiliated companies if such allocation were computed (i) as if the
matching contribution allocation under such plan was based upon the
Executive's Bonus Compensation, (ii) without the annual compensation
limitation imposed by Section 401(a)(17) of the Code, (iii) without the
restrictions or the limitations imposed by Sections 415(c) or 415(e) of the
Code, and (iv) as if he made After Tax Member Basic Contributions (within
the meaning of the Thrift Plan) and Tax Saver Member Basic Contributions
(within the meaning of the Thrift Plan) at the same percentage of Bonus
Compensation as he made such contributions to the Thrift Plan for such
years; and
(B) is the sum of the matching contributions
allocated or credited to the Executive under the Thrift Plan and the SERP
for such year.
(2) "Theoretical earnings" shall be the income, gains
and losses which would have been credited on the Executive's supplemental
matching contribution account balance if such account were invested in the
Company Stock Fund (within the meaning of the Thrift Plan) offered as a
part of the Thrift Plan.
2. Construction and Definitions. Unless defined below or
otherwise in this Annex A, all of the capitalized terms used in this Annex
A shall have the meanings assigned to them in this Agreement:
(a) "Projected Years of Service" shall mean the
Executive's Years of Service (within the meaning of the FPL Group, Inc.
Supplemental Executive Retirement Plan as in effective immediately prior to
the Change of Control), plus the Years of Service he would have otherwise
been credited had his employment terminated on the later of the second
anniversary of his Date of Termination or the last day of the Employment
Period.
(b) "Projected Age" shall mean the age that the
Executive will have attained on the later of the second anniversary of his
Date of Termination or the last day of the Employment Period.
EMPLOYMENT AGREEMENT
Employment Agreement between FPL Group, Inc., a Florida
corporation (the "Company"), and Lawrence J. Kelleher (the "Executive"),
dated as of December 11, 1995, amended and restated as of May 10, 1999.
The Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company and its
shareholders to assure that the Company and its affiliated companies will
have the continued dedication of the Executive, notwithstanding the
possibility, threat or occurrence of a Change of Control (as defined below)
of the Company. The Board believes it is imperative to diminish the
inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of
Control and to encourage the Executive's full attention and dedication to
the Company and its affiliated companies currently and in the event of any
threatened or pending Change of Control, and to provide the Executive with
compensation and benefits arrangements upon a Change of Control which
ensure that the compensation and benefits expectations of the Executive
will be satisfied and which are competitive with those of other
corporations. Therefore, in order to accomplish these objectives, the Board
has caused the Company to enter into this Employment Agreement (the
"Agreement").
Therefore, the Company and the Executive agree as follows:
1. Effective Date. The effective date of this Agreement
shall be the date on which a Change of Control occurs (the "Effective
Date"). Anything in this Agreement to the contrary notwithstanding, if a
Change of Control occurs and if the Executive's employment with the Company
or its affiliated companies is terminated or the Executive's position
(including status, offices, titles, and reporting requirements), authority,
duties, and responsibilities with the Company or its affiliated companies
is not commensurate in all material respects with the most significant of
those held, exercised, and assigned prior to the date on which the Change
of Control occurs, and if it is reasonably demonstrated by the Executive
that such termination of employment or diminution in position, authority,
duties, or responsibilities (i) was at the request of a third party who has
taken steps reasonably calculated to effect the Change of Control or (ii)
otherwise arose in connection with or anticipation of the Change of
Control, then for all purposes of this Agreement the "Effective Date" shall
mean the date immediately prior to the date of such termination of
employment or diminution in position, authority, duties or
responsibilities. As used in this Agreement, the term "affiliated
companies" shall include any corporation or other entity controlled by,
controlling or under common control with the Company.
2. Change of Control. For the purposes of this Agreement, a
"Change of Control" shall mean:
(a) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of 20% or more of either (i) the then outstanding shares of common
stock of the Company (the "Outstanding Company Common Stock") or (ii) the
combined voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that the
following acquisitions shall not constitute a Change of Control: (i) any
acquisition by the Company or any or its subsidiaries, (ii) any acquisition
by any employee benefit plan (or related trust) sponsored or maintained by
the Company or any of its subsidiaries or (iii) any acquisition by any
corporation with respect to which, following such acquisition, more than
75% of, respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election
of directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such acquisition
in substantially the same proportions as their ownership, immediately prior
to such acquisition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be; or
(b) Individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of either
an actual or threatened solicitation to which Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act applies or other actual or
threatened solicitation of proxies or consents; or
(c) Approval by the shareholders of the Company of a
reorganization, merger or consolidation, in each case, with respect to
which all or substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common Stock
and Outstanding Company Voting Securities immediately prior to such
reorganization, merger or consolidation do not, following such
reorganization, merger or consolidation, beneficially own, directly or
indirectly, more than 75% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the
case may be, of the corporation resulting from such reorganization, merger
or consolidation in substantially the same proportions as their ownership,
immediately prior to such reorganization, merger or consolidation of the
Outstanding Company Common Stock and Outstanding Company Voting Securities,
as the case may be; or
(d) Approval by the shareholders of the Company of
(i) a complete liquidation or dissolution of the Company or (ii) the sale
or other disposition of all or substantially all of the assets of the
Company, other than to a corporation, with respect to which following such
sale or other disposition, more than 75% of, respectively, the then
outstanding shares of common stock of such corporation and the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of
the individuals and entities who were the beneficial owners, respectively,
of the Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately prior to
such sale or other disposition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be.
The term "the sale or disposition by the Company of all or
substantially all of the assets of the Company" shall mean a sale or other
disposition transaction or series of related transactions involving assets
of the Company or of any direct or indirect subsidiary of the Company
(including the stock of any direct or indirect subsidiary of the Company)
in which the value of the assets or stock being sold or otherwise disposed
of (as measured by the purchase price being paid therefor or by such other
method as the Board determines is appropriate in a case where there is no
readily ascertainable purchase price) constitutes more than two-thirds of
the fair market value of the Company (as hereinafter defined). The "fair
market value of the Company" shall be the aggregate market value of the
then Outstanding Company Common Stock (on a fully diluted basis) plus the
aggregate market value of the Company's other outstanding equity
securities. The aggregate market value of the shares of Outstanding
Company Common Stock shall be determined by multiplying the number of
shares of Outstanding Company Common Stock (on a fully diluted basis)
outstanding on the date of the execution and delivery of a definitive
agreement with respect to the transaction or series of related transactions
(the "Transaction Date") by the average closing price of the shares of
Outstanding Company Common Stock for the ten trading days immediately
preceding the Transaction Date. The aggregate market value of any other
equity securities of the Company shall be determined in a manner similar to
that prescribed in the immediately preceding sentence for determining the
aggregate market value of the shares of Outstanding Company Common Stock or
by such other method as the Board shall determine is appropriate.
3. Employment Period. The Company hereby agrees to continue
the Executive in its or its affiliated companies' employ, or both, as the
case may be, and the Executive hereby agrees to remain in the employ of the
Company, or its affiliated companies, or both, as the case may be, for a
period commencing on the Effective Date and ending on the 4th anniversary
of such date (the "Employment Period").
4. Position and Duties. During the Employment Period, the
Executive's position (including status, offices, titles, and reporting
requirements), authority, duties, and responsibilities with the Company or
its affiliated companies or both, as the case may be, shall be in every
respect at least commensurate with the most significant of those held,
exercised, and assigned at any time during the 90-day period immediately
preceding the Effective Date. The Executive's services shall be performed
at the location where the Executive was employed immediately preceding the
Effective Date or any location less than 20 miles from such location,
although the Executive understands and agrees that he may be required to
travel from time to time for business purposes.
During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive
agrees to devote substantially all of his time and attention during normal
business hours to the business and affairs of the Company and its
affiliated companies and to use his reasonable best efforts to perform
faithfully and efficiently the duties and responsibilities assigned to him
hereunder. During the Employment Period it shall not be a violation of
this Agreement for the Executive to serve on corporate, civic or charitable
boards or committees, deliver lectures, fulfill speaking engagements or
teach at educational institutions and devote reasonable amounts of time to
the management of his and his family's personal investments and affairs, so
long as such activities do not significantly interfere with the performance
of the Executive's responsibilities as an employee of the Company or its
affiliated companies in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities have been
conducted by the Executive prior to the Effective Date, the reinstatement
or continued conduct of such activities (or the reinstatement or conduct of
activities similar in nature and scope thereto) subsequent to the Effective
Date shall not thereafter be deemed to interfere with the performance of
the Executive's responsibilities to the Company and its affiliated
companies.
5. Compensation. During the Employment Period, the Executive
shall be compensated as follows:
(a) Annual Base Salary. The Executive shall be paid
an annual base salary ("Annual Base Salary"), in equal biweekly
installments, at least equal to the annual base salary being paid to the
Executive by the Company and its affiliated companies with respect to the
year in which the Effective Date occurs. The Annual Base Salary shall be
reviewed at least annually and shall be increased substantially consistent
with increases in base salary generally awarded to other peer executives of
the Company and its affiliated companies. Such increases shall in no
event be less than the increases in the U.S. Department of Labor Consumer
Price Index - U.S. City Average Index. Any increase in Annual Base Salary
shall not serve to limit or reduce any other obligation to the Executive
under this Agreement. Annual Base Salary shall not be reduced after any
such increase and the term "Annual Base Salary" as utilized in this
Agreement shall refer to Annual Base Salary as so increased.
(b) Annual Bonus. In addition to Annual Base Salary,
the Executive shall be awarded, for each fiscal year ending during the
Employment Period, an annual bonus (the "Annual Bonus") in cash at least
equal to the highest annual incentive compensation (annualized for any
fiscal year consisting of less than twelve full months or with respect to
which the Executive has been employed by the Company for less than twelve
full months) paid or payable, including by reason of any deferral, to the
Executive by the Company and its affiliated companies in respect of the
three fiscal years immediately preceding the fiscal year in which the
Effective Date occurs (the "Highest Recent Bonus"). The greater of (i) the
Highest Recent Bonus or (ii) the highest Annual Bonus awarded by the
Company and its affiliated companies after the Effective Date (target or
actual, whichever is greater) is herein called the "Highest Annual Bonus".
Each such Annual Bonus shall be paid no later than the end of the third
month of the fiscal year next following the fiscal year for which the
Annual Bonus is awarded, unless the Executive otherwise elects to defer
the receipt of such Annual Bonus.
(c) Long Term Incentive Compensation. During the
Employment Period, the Executive shall be entitled to participate in all
incentive compensation plans, practices, policies, and programs applicable
generally to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies, and
programs provide the Executive with incentive opportunities and potential
benefits, both as to amount and percentage of compensation, less favorable,
in the aggregate, than those provided by the Company and its affiliated
companies for the Executive under the FPL Group Long Term Incentive Plan
(including, without limitation, performance share grants and awards) as in
effect at any time during the 90-day period immediately preceding the
Effective Date or; if more favorable to the Executive, those provided
generally at any time after the Effective Date to other peer executives of
the Company and its affiliated companies.
In addition, on the Effective Date (i) the maximum performance
criteria of all outstanding performance awards, performance-based
restricted stock, and other stock-based awards granted to the Executive
shall be deemed fully achieved and all such awards shall be fully earned
and vested; (ii) any option, stock appreciation right, and other award in
the nature of a right that may be exercised that was granted to the
Executive and which was not previously exercisable and vested shall become
fully exercisable and vested; (iii) the restrictions, deferral limitations,
and forfeiture conditions applicable to any outstanding award granted to
the Executive under an incentive compensation plan, practice, policy or
program shall lapse and such awards shall be deemed fully vested; and (iv)
all outstanding awards shall be canceled and the Executive shall be paid in
cash for such awards on the basis of the change of control price as of the
date of the occurrence of the Change of Control (or such other date
applicable to awards granted to other peer executives under the applicable
incentive compensation plan, practice, policy or program) to the extent
such cancellation of and payment for an award would not cause the Executive
to incur actual short-swing profits liability under Section 16(b) of the
Exchange Act. For purposes of this paragraph, the term "change of control
price" means the highest price per share paid in any transaction reported
on the securities exchange or trading system on which the shares of common
stock of the Company are then primarily listed or traded, or paid or
offered in any transaction related to the Change of Control at any time
during the preceding 60-day period, except that in the case of incentive
stock options (within the meaning of Section 422(b) of the Internal Revenue
Code of 1986, as amended (the "Code")) and stock appreciation rights
relating thereto, such price shall be based only on transactions reported
for the date such awards are cashed out.
(d) Savings and Retirement Plans. During the
Employment Period, the Executive shall be entitled to participate in all
savings and retirement plans, practices, policies, and programs applicable
generally to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies, and
programs provide the Executive with savings opportunities and retirement
benefit opportunities, in each case, less favorable, in the aggregate, than
the most favorable of those provided by the Company and its affiliated
companies for the Executive under such plans, practices, policies, and
programs as in effect at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Executive, those
provided generally at any time after the Effective Date to other peer
executives of the Company and its affiliated companies.
In addition, during the Employment Period the Executive shall be
entitled under this Agreement to the supplemental retirement benefit
described in Annex A attached hereto and made a part hereof by this
reference. The payment and vesting of such supplemental retirement benefit
shall be determined in accordance with Section 7 of this Agreement.
(e) Benefit Plans. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be
eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies, and programs provided by the Company
and its affiliated companies (including, without limitation, medical,
executive medical, annual executive physical, prescription, dental, vision,
short-term disability, long-term disability, executive long-term
disability, salary continuance, employee life, group life, benefits
pursuant to split dollar arrangements, accidental death and dismemberment,
and travel accident insurance plans and programs) to the extent applicable
generally to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies, and
programs provide the Executive with benefits which are less favorable, in
the aggregate, than the most favorable of such plans, practices, policies,
and programs in effect for the Executive at any time during the 90-day
period immediately preceding the Effective Date or, if more favorable to
the Executive, those provided generally at any time after the Effective
Date to other peer executives of the Company and its affiliated companies.
(f) Expenses. During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in accordance with the most
favorable policies, practices, and procedures of the Company and its
affiliated companies in effect for the Executive at any time during the 90-
day period immediately preceding the Effective Date or, if more favorable
to the Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its affiliated
companies.
(g) Fringe Benefits. During the Employment Period,
the Executive shall be entitled to fringe benefits, including but not
limited to those described in Section 7(a)(iii), in accordance with the
most favorable plans, practices, programs, and policies of the Company and
its affiliated companies in effect for the Executive at any time during the
90-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies.
(h) Office and Support Staff. During the Employment
Period, the Executive shall be entitled to an office or offices of a size
and with furnishings and other appointments, and to exclusive personal
secretarial and other assistance, at least equal to the most favorable of
the foregoing provided to the Executive by the Company and its affiliated
companies at any time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as provided
generally at any time thereafter with respect to other peer executives of
the Company and its affiliated companies.
(i) Vacation. During the Employment Period, the
Executive shall be entitled to paid vacation in accordance with the most
favorable plans, policies, programs, and practices of the Company and its
affiliated companies as in effect for the Executive at any time during the
90-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer incentives of the Company and its affiliated
companies.
6. Termination of Employment.
(a) Disability. If the Company determines in good
faith that the Disability of the Executive has occurred during the
Employment Period (pursuant to the definition of Disability set forth
below), it may give to the Executive written notice in accordance with
Section 14(b) of this Agreement of its intention to terminate the
Executive's employment. In such event, the Executive's employment with the
Company shall terminate effective on the 30th day after receipt of such
notice by the Executive (the "Disability Effective Date"), provided that,
within the 30 days after such receipt, the Executive shall not have
returned to perform his duties in accordance with Section 4. For purposes
of this Agreement, "Disability" shall mean the absence of the Executive
from the Executive's duties with the Company for 180 consecutive business
days as a result of incapacity due to mental or physical illness which is
determined to be total and permanent by a physician selected by the Company
or its insurers and acceptable to the Executive or the Executive's legal
representative (such agreement as to acceptability not to be withheld
unreasonably).
(b) Cause. The Company may terminate the Executive's
employment during the Employment Period for Cause. For purposes of this
Agreement, "Cause" shall mean (i) repeated violations by the Executive of
the Executive's obligations under Section 4 of this Agreement (other than
as a result of incapacity due to physical or mental illness) which are
demonstrably willful and deliberate on the Executive's part, which are
committed in bad faith or without reasonable belief that such violations
are in the best interests of the Company and which are not remedied in a
reasonable period of time after receipt of written notice from the Company
specifying such violations or (ii) the conviction of the Executive of a
felony involving an act of dishonesty intended to result in substantial
personal enrichment at the expense of the Company or its affiliated
companies.
(c) Good Reason. The Executive's employment may be
terminated during the Employment Period by the Executive for Good Reason.
For purposes of this Agreement, "Good Reason" shall mean:
(i) any failure by the Company to comply in every
respect with the provisions of Section 4 of this Agreement, including
without limitation, the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position (including,
without limitation, status, offices, titles and reporting requirements),
authority, duties or responsibilities as contemplated by Section 4, or any
other action or inaction by the Company which results in a diminution in
such position, authority, duties or responsibilities, excluding for this
purpose an isolated, insubstantial and inadvertent action not taken in bad
faith and which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(ii) any failure by the Company to comply with any of
the provisions of Section 5 of this Agreement, other than isolated,
insubstantial and inadvertent failure not occurring in bad faith and which
is remedied by the Company promptly after receipt of notice thereof given
by the Executive;
(iii) the Company's requiring the Executive to be based
at any office or location other than that described in Section 4 hereof;
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this
Agreement; or
(v) any failure by the Company to comply with and
satisfy Section 13(c) of this Agreement, provided that such successor has
received at least ten days prior written notice from the Company or the
Executive of the requirements of Section 13(c) of the Agreement.
For purposes of this Section 6(c), any good faith determination of
"Good Reason" made by the Executive shall be conclusive.
(d) Notice of Termination. Any termination by the
Company for Cause, or by the Executive for Good Reason, shall be
communicated by Notice of Termination to the other party hereto given in
accordance with Section 14(b) of this Agreement. For purposes of this
Agreement, a "Notice of Termination" means a written notice which (i)
indicates the specific termination provision in this Agreement relied upon,
(ii) to the extent applicable, sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated, and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of
such notice, specifies the termination date (which date shall be not more
than fifteen days after the giving of such notice). The failure by the
Executive or the Company to set forth in the Notice of Termination any fact
or circumstances which contributes to a showing of Good Reason or Cause
shall not waive any right of the Executive or the Company hereunder or
preclude the Executive or the Company from asserting such fact or
circumstance in enforcing the Executive's or the Company's rights
hereunder.
(e) Date of Termination. "Date of Termination" means
(i) if the Executive's employment is terminated by the Company for Cause,
or by the Executive for Good Reason, the date of receipt of the Notice of
Termination or any later date specified therein, as the case may be, (ii)
if the Executive's employment is terminated by the Company other than for
Cause or Disability, the Date of Termination shall be the date on which the
Company notifies the Executive of such termination, and (iii) if the
Executive's employment is terminated by reason of Disability, the Date of
Termination shall be the Disability Effective Date.
7. Obligations of the Company upon Termination.
(a) Good Reason; Other Than for Cause or Disability.
If, during the Employment Period, the Company terminates the Executive's
employment other than for Cause or Disability or the Executive terminates
employment for Good Reason:
(i) the Company shall pay to the Executive in a lump
sum in cash within 30 days after the Date of Termination the aggregate of
the following amounts (such aggregate being hereinafter referred to as the
"Special Termination Amount"):
A. the sum of (1) the Executive's Annual Base Salary
through the Date of Termination to the extent not theretofore paid, (2) the
product of (x) the Highest Annual Bonus and (y) a fraction, the numerator
of which is the number of days in the current fiscal year through the Date
of Termination, and the denominator of which is 365, and (3) any
compensation previously deferred by the Executive (together with any
accrued interest or earnings thereon) (including, without limitation,
compensation, bonus, incentive compensation or awards deferred under the
FPL Group, Inc. Deferred Compensation Plan or incentive compensation or
awards deferred under the FPL Group, Inc. Long-Term Incentive Plan of 1985,
the FPL Group, Inc. Long Term Incentive Plan of 1994, or pursuant to an
individual deferral agreement) and any accrued vacation pay, in each case
to the extent not theretofore paid (the sum of the amounts described in
clauses (1), (2), and (3) being herein called the "Accrued Obligations");
and
B. the amount equal to the product of (1) the
greater of two or the number of years (with any partial year expressed as a
fraction) remaining in the Employment Period, and (2) the sum of (x) the
Executive's Annual Base Salary and (y) the Highest Annual Bonus; provided,
however, that such amount shall be paid in lieu of, and the Executive
hereby waives the right to receive, any other amount of severance relating
to salary or bonus continuation to be received by the Executive upon
termination of employment of the Executive under any severance plan, policy
or arrangement of the Company; and
C. the maximum amount payable under all performance
share grants and all other long term incentive compensation grants to the
Executive that have not been paid in accordance with the terms of the grant
or Section 5(c) hereof, calculated as though the Executive had remained
employed by the Company for the remainder of the Employment Period and on
the basis of actual achievement of performance measures through the end of
the fiscal year preceding the fiscal year in which the Date of Termination
occurs and thereafter assuming maximum achievement of all performance
measures (e.g., currently 160%) through the end of the Employment Period;
and
D. a separate lump-sum supplemental retirement
benefit equal to the greater of (i) the supplemental pension benefit
described in Paragraph 1(b) of Annex A that the Executive would have been
entitled had his employment continued at the compensation level provided
for in Sections 5(a) and 5(b) of this Agreement for the greater of two
years or the remainder of the Employment Period and based upon his
Projected Years of Service (as defined in Paragraph 2(a) of Annex A) and
his Projected Age (as defined in Paragraph 2(b) of Annex A), or (ii) the
difference between (1) the actuarial equivalent (utilizing for this purpose
the actuarial assumptions utilized with respect to the FPL Group Employee
Pension Plan (or any successor plan thereto) (the "Retirement Plan") during
the 90-day period immediately preceding the Effective Date) of the benefit
payable under the Retirement Plan and all supplemental and/or excess
retirement plans providing benefits for the Executive (other than the
supplemental retirement benefit described in Annex A) (the "SERP")
(including, but not limited to the Supplemental Pension Benefit (as defined
in the FPL Group, Inc. Supplemental Executive Retirement Plan)) which the
Executive would receive if the Executive's employment continued at the
compensation level provided for in Sections 5(a) and 5(b) of this Agreement
for, and his age increased by, the greater of two years or the remainder of
the Employment Period, assuming for this purpose that all accrued benefits
are fully vested and that benefit accrual formulas are no less advantageous
to the Executive than those in effect during the 90-day period immediately
preceding the Effective Date, or, if more favorable to the Executive, as in
effect generally at any time thereafter during the Employment Period with
respect to other peer executives of the Company and its affiliated
companies, and (2) the actuarial equivalent (utilizing for this purpose the
actuarial assumptions utilized with respect to the Retirement Plan during
the 90-day period immediately preceding the Effective Date) of the
Executive's actual benefits (paid or payable), if any, under the Retirement
Plan and the SERP; and
E. a separate lump-sum supplemental retirement
benefit equal to the greater of (i) the supplemental matching contributions
account described in Paragraph 1(c) of Annex A that the Executive would
have been entitled had his employment continued at the compensation level
provided for in Sections 5(a) and 5(b) of this Agreement for the greater of
two years or the remainder of the Employment Period and assuming that the
Executive made After Tax Member Basic Contributions (within the meaning of
the FPL Group Employee Thrift Plan or any successor plan thereto (the
"Thrift Plan")) and Tax Saver Member Basic Contributions (within the
meaning of the Thrift Plan) to the Thrift Plan at the highest permissible
rate (disregarding any limitations imposed by the Code) following the Date
of Termination, or (ii) the difference between (1) the value of the Company
Account (as defined in the Thrift Plan) and any other matching contribution
accounts (including, but not limited to the Supplemental Matching
Contribution Account (as defined in the FPL Group, Inc. Supplemental
Executive Retirement Plan)) under a SERP (other than the supplemental
retirement benefit described in Annex A) which the Executive would receive
if (i) the Executive's employment continued at the compensation level
provided for in Sections 5(a) and 5(b) of this Agreement for the greater of
two years or the remainder of the Employment Period, (ii) the Executive
made pre- and after-tax contributions at the highest permissible rate
(disregarding any limitations imposed by the Code, which may or may not be
set forth in the Thrift Plan) for the greater of two years or each year
remaining in the Employment Period, (iii) the Company Account and the
matching contribution accounts are fully vested, and (iv) the matching
contribution formulas are no less advantageous to the Executive than those
in effect during the 90-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as in effect generally at any time
during the remainder of the Employment Period with respect to other peer
executives of the Company and its affiliated companies, and (2) the actual
value of the Executive's Company Account and matching contribution accounts
(paid or payable), if any, under the Thrift Plan and the SERP; and
(ii) for the remainder of the Employment Period, or
such longer period as any plan, program, practice or policy may provide,
the Company shall continue benefits to the Executive and/or the Executive's
family at least equal to those which would have been provided to them in
accordance with the plans, programs, practices and policies described in
Sections 5(e) and 5(g) of this Agreement if the Executive's employment had
not been terminated, in accordance with the most favorable plans,
practices, programs or policies of the Company and its affiliated companies
applicable generally to other peer executives and their families during the
90-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies and their families, provided, however, that if the Executive
becomes reemployed with another employer and is eligible to receive medical
or other welfare benefits under another employer provided plan, the medical
and other welfare benefits described herein shall be secondary to those
provided under such other plan during such applicable period of
eligibility. For purposes of determining eligibility of the Executive for
retiree benefits pursuant to such plans, practices, programs and policies,
the Executive shall be considered to have remained employed until the end
of the Employment Period and to have retired on the last day of such
period;
(iii) for the remainder of the Employment Period and to
the extent previously paid for or provided by the Company, the Company
shall continue to provide the following:
A. social and business club memberships to the
Executive (as in effect immediately prior to the Date of Termination);
B. use, maintenance, insurance, and repair of the
company car that is in the possession of the Executive, until the earlier
of the end of the lease term or the end of the Employment Period, at which
time the Executive may purchase such car. The Company shall replace the
company car in the Executive's possession on the Effective Date with a new
company car at such time(s) as provided under the Company car policy
applicable to other peer executives, but in no case less frequently than
the Company car policy in effect during the 90-day period immediately
preceding the Effective Date;
C. up to $15,000 annually for personal financial
planning, accounting and legal advice;
D. communication equipment such as a car and/or
cellular phone, and home or laptop computer until the end of the Employment
Period, at which time the Executive may purchase such equipment;
E. security system at the Executive's residence, and
the related monitoring and maintenance fees; and
F. up to $800 annually for personal excess liability
insurance coverage;
In lieu of continuing these benefits for the remainder of the Employment
Period, the Executive, in his sole discretion, may elect to receive a lump
sum payment equal to the present value of the amount projected to be paid
by the Company to provide these benefits. In determining the present
value, a six percent interest assumption shall be utilized. The Executive
shall make any such election by giving the Company written notice in
accordance with Section 14(b).
(iv) to the extent not theretofore paid or provided,
the Company shall timely pay or provide to the Executive any other amounts
or benefits required to be paid or provided or which the Executive is
eligible to receive pursuant to this Agreement or otherwise under any plan,
program, policy or practice or contract or agreement of the Company and its
affiliated companies, but excluding solely for purposes of this Section
7(a)(iv) amounts waived by the Executive pursuant to Section 7(a)(i)(B);
and
(v) the Company shall provide the Executive with the
following benefits in the event of his termination under this Section 7(a):
A. If the Executive is required to move his primary
residence in order to pursue other business opportunities during the
Employment Period, the Company shall reimburse the Executive for all such
relocation expenses incurred during the Employment Period (not in excess of
$10,000) that are not reimbursed by another employer, including, without
limitation, assistance in selling the Executive's home and all other
assistance and benefits that were customarily provided by the Company to
transferred executives prior to the Change of Control;
B. If the Executive retains counsel or an accounting
firm in connection with the taxation of payments made pursuant to Section
10 of this Agreement, the Company shall reimburse the Executive for such
reasonable legal and/or accounting fees and disbursements (not in excess of
$15,000);
C. The Company shall continue to pay the Executive's
Annual Base Salary during the pendency of a dispute over his termination.
Amounts paid under this subsection are in addition to all other amounts due
under this Agreement (other than those due under Section 5(a) hereof) and
shall not be offset against or reduce any other amounts due under this
Agreement; and
D. The Company shall provide the Executive with
outplacement services commensurate with those provided to terminated
executives of comparable level made available through and at the facilities
of a reputable and experienced vendor; and
(vi) any outstanding options, stock appreciation
rights, and other awards in the nature of a right that may be exercised
granted to the Executive shall become fully exercisable and vested; any
restrictions, deferral limitations, and forfeiture conditions applicable to
any outstanding award granted to the Executive shall lapse and such awards
shall be deemed fully vested; and the Executive shall have for the
remainder of the Employment Period (but in no event past the expiration of
the term of the award) to exercise any and all rights granted under such
awards then exercisable or which become exercisable pursuant to this
Section 7(a)(vi), except that with respect to incentive stock options
(within the meaning of Section 422(b) of the Code) and stock appreciation
rights relating thereto, the Executive may exercise such awards during the
period of exercise provided for in the agreements granting such options.
(b) Death. Upon the Executive's death during the
Employment Period, this Agreement shall terminate without further
obligations to the Executive's legal representatives under this Agreement,
other than for payment of Accrued Obligations, the supplemental retirement
benefit described in Annex A, and the timely payment or provision of the
benefits described in Section 7(a)(ii) and (iv) (the "Other Benefits").
All Accrued Obligations shall be paid to the Executive's estate or
beneficiary, as applicable, in a lump sum in cash within 30 days of the
Date of Termination. The supplemental retirement benefit shall be paid to
the Executive's Beneficiary (within the meaning of the FPL Group, Inc.
Supplemental Executive Retirement Plan) at his option in a lump sum
distribution to be made not later than three months after the occurrence of
his death or in the same manner as the Executive's benefits under the
Retirement Plan or Thrift Plan to which his benefits under Annex A of this
Agreement relates. The term "Other Benefits" as utilized in this Section
7(b) shall include, without limitation, and the Executive's family shall be
entitled to receive, benefits at least equal to the most favorable benefits
provided by the Company and any of its affiliated companies to surviving
families of peer executives of the Company and such affiliated companies
under such plans, programs, practices and policies relating to family death
benefits, if any, as in effect with respect to other peer executives and
their families at any time during the 90-day period immediately preceding
the Effective Date or, if more favorable to the Executive and/or the
Executive's family, as in effect on the date of the Executive's death with
respect to other peer executives of the Company and its affiliated
companies and their families.
(c) Disability. If the Executive's employment is
terminated by reason of the Executive's Disability during the Employment
Period, this Agreement shall terminate without further obligations to the
Executive, other than for payment of Accrued Obligations, the supplemental
retirement benefit described in Annex A, and the timely payment or
provision of Other Benefits. All Accrued Obligations shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of Termination.
The supplemental retirement benefit shall be paid to the Participant or his
Beneficiary (within the meaning of the FPL Group, Inc. Supplemental
Executive Retirement Plan), as the case may be, at the option of the
Executive or if the Executive is deceased, at the option of such
Beneficiary, in a lump sum distribution to be made not later than three
months after the occurrence of such event or in the same manner as the
Executive's benefits under the Retirement Plan or Thrift Plan to which his
benefits under Annex A of this Agreement relates. The term "Other
Benefits" as utilized in this Section 7(c) shall include, and the Executive
shall be entitled after the Disability Effective Date to receive,
disability and other benefits at least equal to the most favorable of those
generally provided by the Company and its affiliated companies to disabled
executives and/or their families in accordance with such plans, programs,
practices and policies relating to disability, if any, as in effect
generally with respect to other peer executives and their families at any
time during the 90-day period immediately preceding the Effective Date or,
if more favorable to the Executive and/or the Executive's family, as in
effect at any time thereafter generally with respect to other peer
executives of the Company and its affiliated companies and their families.
(d) Cause; Other Than for Good Reason. If the
Executive's employment shall be terminated for Cause during the Employment
Period, this Agreement shall terminate without further obligations to the
Executive other than the obligation to pay to the Executive Annual Base
Salary through the Date of Termination plus the amount of any compensation
previously deferred by the Executive, in each case to the extent
theretofore unpaid. If the Executive terminates employment during the
Employment Period, excluding a termination for Good Reason, this Agreement
shall terminate without further obligations to the Executive, other than
for Accrued Obligations, the supplemental retirement benefit described in
Annex A to the extent the Executive is vested in his benefits under the
Retirement Plan, and the timely payment or provision of Other Benefits. In
such case, all Accrued Obligations shall be paid to the Executive in a lump
sum in cash within 30 days of the Date of Termination. The supplemental
retirement benefit shall be paid to the Executive or his Beneficiary
(within the meaning of the FPL Group, Inc. Supplemental Executive
Retirement Plan), as the case may be, at the option of the Executive or if
the Executive is deceased, at the option of such Beneficiary, in a lump sum
distribution to be made not later than three months after the occurrence of
such event or in the same manner as the Executive's benefits under the
Retirement Plan or Thrift Plan to which his benefits under Annex A of this
Agreement relates.
8. Non-exclusivity of Rights. Except as otherwise expressly
provided for in this Agreement, nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company or any of its
affiliated companies and for which the Executive may qualify, nor shall
anything herein limit or otherwise affect such rights as the Executive may
have under any contract or agreement with the Company or any of its
affiliated companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, policy, practice
or program of or any contract or agreement with the Company or any of its
affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or
contract or agreement except as explicitly modified by this Agreement.
9. Full Settlement. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Company may
have against the Executive or others. In no event shall the Executive be
obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement and, except as otherwise expressly provided
for in this Agreement, such amounts shall not be reduced whether or not the
Executive obtains other employment. The Company agrees to pay, to the
fullest extent permitted by law, all legal fees and expenses which the
Executive may reasonably incur at all stages of proceedings, including,
without limitation, preparation and appellate review, as a result of any
contest (regardless of whether formal legal proceedings are ever commenced
and regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any
provision of this Agreement or any guarantee of performance thereof
(including as a result of any contest by the Executive about the amount of
any payment pursuant to this Agreement), plus in each case interest on any
delayed payment at the applicable Federal rate provided for in Section
7872(f)(2)(A) of the Code.
10. Certain Additional Payments by the Company. Anything in
this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by the Company to or for the
benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this
Section 10) (a "Payment") would be subject to the excise tax imposed by
Section 4999 of the Code or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to
as the "Excise Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that after
payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any
income or employment taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the
Executive retains an amount of Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
In the event that Federal or state legislation is enacted by
imposing additional excise or supplementary income taxes on amounts payable
or benefits provided to the Executive (other than a mere change in marginal
income tax rates), the Company agrees to review the Agreement with the
Executive and to consider in good faith any changes hereto that may be
required to preserve the full amount of all Payments and the economic
purposes of the foregoing provisions of this Section 10.
11. Confidential Information. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company or any
of its affiliated companies, and their respective businesses, which shall
have been obtained by the Executive during the Executive's employment by
the Company or any of its affiliated companies and which shall not be or
become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive's employment with the Company, the Executive
shall not, without the prior written consent of the Company or as may
otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and
those designated by it. In no event shall an asserted violation of the
provisions of this Section 11 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this
Agreement.
12. Indemnification. The Company will, to the fullest extent
permitted by law, indemnify and hold the Executive harmless from any and
all liability arising from the Executive's service as an employee, officer
or director of the Company and its affiliated companies. To the fullest
extent permitted by law, the Company will advance legal fees and expenses
to the Executive for counsel selected by the Executive in connection with
any litigation or proceeding related to the Executive's service as an
employee, officer or director of the Company and its affiliates. The terms
of this indemnification provision shall survive the expiration of this
Agreement.
13. Successors.
(a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by
the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and
be binding upon the Company and its successors and assigns.
(c) The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall
mean the Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
14. Miscellaneous.
(a) This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida, without reference to
principles of conflict of laws. The captions of this Agreement are not
part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written
agreement executed by the parties hereto or their respective successors and
legal representatives.
(b) All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to the other party
or by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Executive:
Lawrence J. Kelleher
If to the Company:
FPL Group, Inc.
700 Universe Boulevard
Juno Beach, Florida 33408
Attention: Chairman of the Board
or such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be
effective when actually received by the addressee.
(c) The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement.
(d) The Company may withhold from any amounts payable
under this Agreement such Federal, state or local taxes as shall be
required to be withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to
insist upon strict compliance with any provision hereof or any other
provision of this Agreement or the failure to assert any right the
Executive or the Company may hereunder, including, without limitation, the
right of the Executive to terminate employment for Good Reason pursuant to
Section 6(c)(i)-(v) of this Agreement, shall not be deemed to be a waiver
of such provision or right or any other provision or right of this
Agreement.
(f) The Executive and the Company acknowledge that,
except as may otherwise be provided under any other written agreement
between the Executive and the Company, the employment of the Executive by
the Company is "at will" and, prior to the Effective Date, may be
terminated by either the Executive or the Company at any time. Moreover,
except as provided in Section 1, if prior to the Effective Date, (i) the
Executive's employment with the Company terminates, or (ii) there is a
diminution in the Executive's position (including status, offices, titles,
and reporting requirements), authority, duties, and responsibilities with
the Company or its affiliated companies, then the Executive shall have no
further rights under this Agreement.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's
hand and, pursuant to the authorization from the Board of Directors, the
Company has caused these presents to be executed in its name on its behalf,
all as of the day and year first above written.
LAWRENCE J. KELLEHER
Lawrence J. Kelleher
FPL GROUP, INC.
By JAMES L. BROADHEAD
James L. Broadhead
Chairman of the Board
ANNEX A
TO THE
EMPLOYMENT AGREEMENT
SUPPLEMENTAL RETIREMENT BENEFIT
1. Supplement Retirement Benefit.
(a) In General. The supplemental retirement benefit
to which the Executive shall be entitled under this Agreement shall be (i)
the supplemental pension benefit described in Paragraph 1(b) of this Annex
A, and (ii) the supplemental matching contribution account described in
Paragraph 1(c) of this Annex A.
(b) Supplemental Pension Benefit. The "supplemental
pension benefit" shall be the greater of (i) the supplement cash balance
accrued benefit described in Paragraph 1(b)(1) of this Annex A, or (ii) the
supplement unit credit accrued benefit described in Paragraph 1(b)(2) of
this Annex A.
(1) The "supplement cash balance accrued benefit" is
the difference, if any, between (A) and (B) where:
(A) is the benefit to which the Executive would be
entitled under the Retirement Plan as in effect immediately prior to the
Change of Control or, if more favorable to the Executive, as in effect
generally at any time thereafter during the Employment Period with respect
to other peer executives of the Company and its affiliated companies,
expressed in the normal form of benefit, if such benefit was computed (i)
as if benefits under such plan were based upon the Executive's Bonus
Compensation (within the meaning of the FPL Group, Inc. Supplemental
Executive Retirement Plan as in effect immediately prior to the Change of
Control), (ii) without the annual compensation limitation imposed by
Section 401(a)(17) of the Code, and (iii) without the restrictions or the
limitations imposed by Sections 415(b) or 415(e) of the Code; and
(B) is the sum of the benefits payable to the
Executive under the Retirement Plan and the SERP, expressed in the normal
form of benefit.
(2) The "supplement unit credit accrued benefit" is
the difference, if any, between (A) and (B) where:
(A) is the benefit to which the Executive would be
entitled under the Prior Pension Plan (within the meaning of the FPL Group,
Inc. Supplemental Executive Retirement Plan as in effect immediately prior
to the Change of Control), expressed in the normal form of benefit, if such
benefit was computed (i) as if benefits under such plan were based upon the
Executive's Bonus Compensation, (ii) without the annual compensation
limitation imposed by Section 401(a)(17) of the Code, and (iii) without the
restrictions or the limitations imposed by Sections 415(b) or 415(e) of the
Code; and
(B) is the sum of the benefits payable to the
Executive under the Retirement Plan and the SERP, expressed in the normal
form of benefit.
(c) Supplemental Matching Contribution Account. The
"supplemental matching contribution account" shall be an account that is
credited annually with (i) supplemental matching contributions described in
Paragraph 1(c)(1) of this Annex A, and (ii) theoretical earnings described
in Paragraph 1(c)(2) of this Annex A.
(1) "Supplemental matching contributions" shall be
for each year ending on or prior to the Effective Date in which the
Executive participated in the SERP and for each year ending after the
Effective Date in which the Executive performs services for the Company or
its affiliated companies the difference, if any, between (A) and (B) where:
(A) is the matching contribution allocation for such
year to which the Executive would be entitled under the Thrift Plan as in
effect immediately prior to the Change of Control or, if more favorable to
the Executive, as in effect generally at any time thereafter during the
Employment Period with respect to other peer executives of the Company and
its affiliated companies if such allocation were computed (i) as if the
matching contribution allocation under such plan was based upon the
Executive's Bonus Compensation, (ii) without the annual compensation
limitation imposed by Section 401(a)(17) of the Code, (iii) without the
restrictions or the limitations imposed by Sections 415(c) or 415(e) of the
Code, and (iv) as if he made After Tax Member Basic Contributions (within
the meaning of the Thrift Plan) and Tax Saver Member Basic Contributions
(within the meaning of the Thrift Plan) at the same percentage of Bonus
Compensation as he made such contributions to the Thrift Plan for such
years; and
(B) is the sum of the matching contributions
allocated or credited to the Executive under the Thrift Plan and the SERP
for such year.
(2) "Theoretical earnings" shall be the income, gains
and losses which would have been credited on the Executive's supplemental
matching contribution account balance if such account were invested in the
Company Stock Fund (within the meaning of the Thrift Plan) offered as a
part of the Thrift Plan.
2. Construction and Definitions. Unless defined below or
otherwise in this Annex A, all of the capitalized terms used in this Annex
A shall have the meanings assigned to them in this Agreement:
(a) "Projected Years of Service" shall mean the
Executive's Years of Service (within the meaning of the FPL Group, Inc.
Supplemental Executive Retirement Plan as in effective immediately prior to
the Change of Control), plus the Years of Service he would have otherwise
been credited had his employment terminated on the later of the second
anniversary of his Date of Termination or the last day of the Employment
Period.
(b) "Projected Age" shall mean the age that the
Executive will have attained on the later of the second anniversary of his
Date of Termination or the last day of the Employment Period.
EMPLOYMENT AGREEMENT
Employment Agreement between FPL Group, Inc., a Florida
corporation (the "Company"), and Thomas F. Plunkett (the "Executive"),
dated as of September 16, 1996, amended and restated as of May 10, 1999.
The Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company and its
shareholders to assure that the Company and its affiliated companies will
have the continued dedication of the Executive, notwithstanding the
possibility, threat or occurrence of a Change of Control (as defined below)
of the Company. The Board believes it is imperative to diminish the
inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of
Control and to encourage the Executive's full attention and dedication to
the Company and its affiliated companies currently and in the event of any
threatened or pending Change of Control, and to provide the Executive with
compensation and benefits arrangements upon a Change of Control which
ensure that the compensation and benefits expectations of the Executive
will be satisfied and which are competitive with those of other
corporations. Therefore, in order to accomplish these objectives, the Board
has caused the Company to enter into this Employment Agreement (the
"Agreement").
Therefore, the Company and the Executive agree as follows:
1. Effective Date. The effective date of this Agreement
shall be the date on which a Change of Control occurs (the "Effective
Date"). Anything in this Agreement to the contrary notwithstanding, if a
Change of Control occurs and if the Executive's employment with the Company
or its affiliated companies is terminated or the Executive's position
(including status, offices, titles, and reporting requirements), authority,
duties, and responsibilities with the Company or its affiliated companies
is not commensurate in all material respects with the most significant of
those held, exercised, and assigned prior to the date on which the Change
of Control occurs, and if it is reasonably demonstrated by the Executive
that such termination of employment or diminution in position, authority,
duties, or responsibilities (i) was at the request of a third party who has
taken steps reasonably calculated to effect the Change of Control or (ii)
otherwise arose in connection with or anticipation of the Change of
Control, then for all purposes of this Agreement the "Effective Date" shall
mean the date immediately prior to the date of such termination of
employment or diminution in position, authority, duties or
responsibilities. As used in this Agreement, the term "affiliated
companies" shall include any corporation or other entity controlled by,
controlling or under common control with the Company.
2. Change of Control. For the purposes of this Agreement, a
"Change of Control" shall mean:
(a) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of 20% or more of either (i) the then outstanding shares of common
stock of the Company (the "Outstanding Company Common Stock") or (ii) the
combined voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that the
following acquisitions shall not constitute a Change of Control: (i) any
acquisition by the Company or any or its subsidiaries, (ii) any acquisition
by any employee benefit plan (or related trust) sponsored or maintained by
the Company or any of its subsidiaries or (iii) any acquisition by any
corporation with respect to which, following such acquisition, more than
75% of, respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election
of directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such acquisition
in substantially the same proportions as their ownership, immediately prior
to such acquisition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be; or
(b) Individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of either
an actual or threatened solicitation to which Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act applies or other actual or
threatened solicitation of proxies or consents; or
(c) Approval by the shareholders of the Company of a
reorganization, merger or consolidation, in each case, with respect to
which all or substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common Stock
and Outstanding Company Voting Securities immediately prior to such
reorganization, merger or consolidation do not, following such
reorganization, merger or consolidation, beneficially own, directly or
indirectly, more than 75% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the
case may be, of the corporation resulting from such reorganization, merger
or consolidation in substantially the same proportions as their ownership,
immediately prior to such reorganization, merger or consolidation of the
Outstanding Company Common Stock and Outstanding Company Voting Securities,
as the case may be; or
(d) Approval by the shareholders of the Company of
(i) a complete liquidation or dissolution of the Company or (ii) the sale
or other disposition of all or substantially all of the assets of the
Company, other than to a corporation, with respect to which following such
sale or other disposition, more than 75% of, respectively, the then
outstanding shares of common stock of such corporation and the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of
the individuals and entities who were the beneficial owners, respectively,
of the Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately prior to
such sale or other disposition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be.
The term "the sale or disposition by the Company of all or
substantially all of the assets of the Company" shall mean a sale or other
disposition transaction or series of related transactions involving assets
of the Company or of any direct or indirect subsidiary of the Company
(including the stock of any direct or indirect subsidiary of the Company)
in which the value of the assets or stock being sold or otherwise disposed
of (as measured by the purchase price being paid therefor or by such other
method as the Board determines is appropriate in a case where there is no
readily ascertainable purchase price) constitutes more than two-thirds of
the fair market value of the Company (as hereinafter defined). The "fair
market value of the Company" shall be the aggregate market value of the
then Outstanding Company Common Stock (on a fully diluted basis) plus the
aggregate market value of the Company's other outstanding equity
securities. The aggregate market value of the shares of Outstanding
Company Common Stock shall be determined by multiplying the number of
shares of Outstanding Company Common Stock (on a fully diluted basis)
outstanding on the date of the execution and delivery of a definitive
agreement with respect to the transaction or series of related transactions
(the "Transaction Date") by the average closing price of the shares of
Outstanding Company Common Stock for the ten trading days immediately
preceding the Transaction Date. The aggregate market value of any other
equity securities of the Company shall be determined in a manner similar to
that prescribed in the immediately preceding sentence for determining the
aggregate market value of the shares of Outstanding Company Common Stock or
by such other method as the Board shall determine is appropriate.
3. Employment Period. The Company hereby agrees to continue
the Executive in its or its affiliated companies' employ, or both, as the
case may be, and the Executive hereby agrees to remain in the employ of the
Company, or its affiliated companies, or both, as the case may be, for a
period commencing on the Effective Date and ending on the 4th anniversary
of such date (the "Employment Period").
4. Position and Duties. During the Employment Period, the
Executive's position (including status, offices, titles, and reporting
requirements), authority, duties, and responsibilities with the Company or
its affiliated companies or both, as the case may be, shall be in every
respect at least commensurate with the most significant of those held,
exercised, and assigned at any time during the 90-day period immediately
preceding the Effective Date. The Executive's services shall be performed
at the location where the Executive was employed immediately preceding the
Effective Date or any location less than 20 miles from such location,
although the Executive understands and agrees that he may be required to
travel from time to time for business purposes.
During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive
agrees to devote substantially all of his time and attention during normal
business hours to the business and affairs of the Company and its
affiliated companies and to use his reasonable best efforts to perform
faithfully and efficiently the duties and responsibilities assigned to him
hereunder. During the Employment Period it shall not be a violation of
this Agreement for the Executive to serve on corporate, civic or charitable
boards or committees, deliver lectures, fulfill speaking engagements or
teach at educational institutions and devote reasonable amounts of time to
the management of his and his family's personal investments and affairs, so
long as such activities do not significantly interfere with the performance
of the Executive's responsibilities as an employee of the Company or its
affiliated companies in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities have been
conducted by the Executive prior to the Effective Date, the reinstatement
or continued conduct of such activities (or the reinstatement or conduct of
activities similar in nature and scope thereto) subsequent to the Effective
Date shall not thereafter be deemed to interfere with the performance of
the Executive's responsibilities to the Company and its affiliated
companies.
5. Compensation. During the Employment Period, the Executive
shall be compensated as follows:
(a) Annual Base Salary. The Executive shall be paid
an annual base salary ("Annual Base Salary"), in equal biweekly
installments, at least equal to the annual base salary being paid to the
Executive by the Company and its affiliated companies with respect to the
year in which the Effective Date occurs. The Annual Base Salary shall be
reviewed at least annually and shall be increased substantially consistent
with increases in base salary generally awarded to other peer executives of
the Company and its affiliated companies. Such increases shall in no
event be less than the increases in the U.S. Department of Labor Consumer
Price Index - U.S. City Average Index. Any increase in Annual Base Salary
shall not serve to limit or reduce any other obligation to the Executive
under this Agreement. Annual Base Salary shall not be reduced after any
such increase and the term "Annual Base Salary" as utilized in this
Agreement shall refer to Annual Base Salary as so increased.
(b) Annual Bonus. In addition to Annual Base Salary,
the Executive shall be awarded, for each fiscal year ending during the
Employment Period, an annual bonus (the "Annual Bonus") in cash at least
equal to the highest annual incentive compensation (annualized for any
fiscal year consisting of less than twelve full months or with respect to
which the Executive has been employed by the Company for less than twelve
full months) paid or payable, including by reason of any deferral, to the
Executive by the Company and its affiliated companies in respect of the
three fiscal years immediately preceding the fiscal year in which the
Effective Date occurs (the "Highest Recent Bonus"). The greater of (i) the
Highest Recent Bonus or (ii) the highest Annual Bonus awarded by the
Company and its affiliated companies after the Effective Date (target or
actual, whichever is greater) is herein called the "Highest Annual Bonus".
Each such Annual Bonus shall be paid no later than the end of the third
month of the fiscal year next following the fiscal year for which the
Annual Bonus is awarded, unless the Executive otherwise elects to defer
the receipt of such Annual Bonus.
(c) Long Term Incentive Compensation. During the
Employment Period, the Executive shall be entitled to participate in all
incentive compensation plans, practices, policies, and programs applicable
generally to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies, and
programs provide the Executive with incentive opportunities and potential
benefits, both as to amount and percentage of compensation, less favorable,
in the aggregate, than those provided by the Company and its affiliated
companies for the Executive under the FPL Group Long Term Incentive Plan
(including, without limitation, performance share grants and awards) as in
effect at any time during the 90-day period immediately preceding the
Effective Date or; if more favorable to the Executive, those provided
generally at any time after the Effective Date to other peer executives of
the Company and its affiliated companies.
In addition, on the Effective Date (i) the maximum performance
criteria of all outstanding performance awards, performance-based
restricted stock, and other stock-based awards granted to the Executive
shall be deemed fully achieved and all such awards shall be fully earned
and vested; (ii) any option, stock appreciation right, and other award in
the nature of a right that may be exercised that was granted to the
Executive and which was not previously exercisable and vested shall become
fully exercisable and vested; (iii) the restrictions, deferral limitations,
and forfeiture conditions applicable to any outstanding award granted to
the Executive under an incentive compensation plan, practice, policy or
program shall lapse and such awards shall be deemed fully vested; and (iv)
all outstanding awards shall be canceled and the Executive shall be paid in
cash for such awards on the basis of the change of control price as of the
date of the occurrence of the Change of Control (or such other date
applicable to awards granted to other peer executives under the applicable
incentive compensation plan, practice, policy or program) to the extent
such cancellation of and payment for an award would not cause the Executive
to incur actual short-swing profits liability under Section 16(b) of the
Exchange Act. For purposes of this paragraph, the term "change of control
price" means the highest price per share paid in any transaction reported
on the securities exchange or trading system on which the shares of common
stock of the Company are then primarily listed or traded, or paid or
offered in any transaction related to the Change of Control at any time
during the preceding 60-day period, except that in the case of incentive
stock options (within the meaning of Section 422(b) of the Internal Revenue
Code of 1986, as amended (the "Code")) and stock appreciation rights
relating thereto, such price shall be based only on transactions reported
for the date such awards are cashed out.
(d) Savings and Retirement Plans. During the
Employment Period, the Executive shall be entitled to participate in all
savings and retirement plans, practices, policies, and programs applicable
generally to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies, and
programs provide the Executive with savings opportunities and retirement
benefit opportunities, in each case, less favorable, in the aggregate, than
the most favorable of those provided by the Company and its affiliated
companies for the Executive under such plans, practices, policies, and
programs as in effect at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Executive, those
provided generally at any time after the Effective Date to other peer
executives of the Company and its affiliated companies.
In addition, during the Employment Period the Executive shall be
entitled under this Agreement to the supplemental retirement benefit
described in Annex A attached hereto and made a part hereof by this
reference. The payment and vesting of such supplemental retirement benefit
shall be determined in accordance with Section 7 of this Agreement.
(e) Benefit Plans. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be
eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies, and programs provided by the Company
and its affiliated companies (including, without limitation, medical,
executive medical, annual executive physical, prescription, dental, vision,
short-term disability, long-term disability, executive long-term
disability, salary continuance, employee life, group life, benefits
pursuant to split dollar arrangements, accidental death and dismemberment,
and travel accident insurance plans and programs) to the extent applicable
generally to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies, and
programs provide the Executive with benefits which are less favorable, in
the aggregate, than the most favorable of such plans, practices, policies,
and programs in effect for the Executive at any time during the 90-day
period immediately preceding the Effective Date or, if more favorable to
the Executive, those provided generally at any time after the Effective
Date to other peer executives of the Company and its affiliated companies.
(f) Expenses. During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in accordance with the most
favorable policies, practices, and procedures of the Company and its
affiliated companies in effect for the Executive at any time during the 90-
day period immediately preceding the Effective Date or, if more favorable
to the Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its affiliated
companies.
(g) Fringe Benefits. During the Employment Period,
the Executive shall be entitled to fringe benefits, including but not
limited to those described in Section 7(a)(iii), in accordance with the
most favorable plans, practices, programs, and policies of the Company and
its affiliated companies in effect for the Executive at any time during the
90-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies.
(h) Office and Support Staff. During the Employment
Period, the Executive shall be entitled to an office or offices of a size
and with furnishings and other appointments, and to exclusive personal
secretarial and other assistance, at least equal to the most favorable of
the foregoing provided to the Executive by the Company and its affiliated
companies at any time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as provided
generally at any time thereafter with respect to other peer executives of
the Company and its affiliated companies.
(i) Vacation. During the Employment Period, the
Executive shall be entitled to paid vacation in accordance with the most
favorable plans, policies, programs, and practices of the Company and its
affiliated companies as in effect for the Executive at any time during the
90-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer incentives of the Company and its affiliated
companies.
6. Termination of Employment.
(a) Disability. If the Company determines in good
faith that the Disability of the Executive has occurred during the
Employment Period (pursuant to the definition of Disability set forth
below), it may give to the Executive written notice in accordance with
Section 14(b) of this Agreement of its intention to terminate the
Executive's employment. In such event, the Executive's employment with the
Company shall terminate effective on the 30th day after receipt of such
notice by the Executive (the "Disability Effective Date"), provided that,
within the 30 days after such receipt, the Executive shall not have
returned to perform his duties in accordance with Section 4. For purposes
of this Agreement, "Disability" shall mean the absence of the Executive
from the Executive's duties with the Company for 180 consecutive business
days as a result of incapacity due to mental or physical illness which is
determined to be total and permanent by a physician selected by the Company
or its insurers and acceptable to the Executive or the Executive's legal
representative (such agreement as to acceptability not to be withheld
unreasonably).
(b) Cause. The Company may terminate the Executive's
employment during the Employment Period for Cause. For purposes of this
Agreement, "Cause" shall mean (i) repeated violations by the Executive of
the Executive's obligations under Section 4 of this Agreement (other than
as a result of incapacity due to physical or mental illness) which are
demonstrably willful and deliberate on the Executive's part, which are
committed in bad faith or without reasonable belief that such violations
are in the best interests of the Company and which are not remedied in a
reasonable period of time after receipt of written notice from the Company
specifying such violations or (ii) the conviction of the Executive of a
felony involving an act of dishonesty intended to result in substantial
personal enrichment at the expense of the Company or its affiliated
companies.
(c) Good Reason. The Executive's employment may be
terminated during the Employment Period by the Executive for Good Reason.
For purposes of this Agreement, "Good Reason" shall mean:
(i) any failure by the Company to comply in every
respect with the provisions of Section 4 of this Agreement, including
without limitation, the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position (including,
without limitation, status, offices, titles and reporting requirements),
authority, duties or responsibilities as contemplated by Section 4, or any
other action or inaction by the Company which results in a diminution in
such position, authority, duties or responsibilities, excluding for this
purpose an isolated, insubstantial and inadvertent action not taken in bad
faith and which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(ii) any failure by the Company to comply with any of
the provisions of Section 5 of this Agreement, other than isolated,
insubstantial and inadvertent failure not occurring in bad faith and which
is remedied by the Company promptly after receipt of notice thereof given
by the Executive;
(iii) the Company's requiring the Executive to be based
at any office or location other than that described in Section 4 hereof;
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this
Agreement; or
(v) any failure by the Company to comply with and
satisfy Section 13(c) of this Agreement, provided that such successor has
received at least ten days prior written notice from the Company or the
Executive of the requirements of Section 13(c) of the Agreement.
For purposes of this Section 6(c), any good faith determination of
"Good Reason" made by the Executive shall be conclusive.
(d) Notice of Termination. Any termination by the
Company for Cause, or by the Executive for Good Reason, shall be
communicated by Notice of Termination to the other party hereto given in
accordance with Section 14(b) of this Agreement. For purposes of this
Agreement, a "Notice of Termination" means a written notice which (i)
indicates the specific termination provision in this Agreement relied upon,
(ii) to the extent applicable, sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated, and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of
such notice, specifies the termination date (which date shall be not more
than fifteen days after the giving of such notice). The failure by the
Executive or the Company to set forth in the Notice of Termination any fact
or circumstances which contributes to a showing of Good Reason or Cause
shall not waive any right of the Executive or the Company hereunder or
preclude the Executive or the Company from asserting such fact or
circumstance in enforcing the Executive's or the Company's rights
hereunder.
(e) Date of Termination. "Date of Termination" means
(i) if the Executive's employment is terminated by the Company for Cause,
or by the Executive for Good Reason, the date of receipt of the Notice of
Termination or any later date specified therein, as the case may be, (ii)
if the Executive's employment is terminated by the Company other than for
Cause or Disability, the Date of Termination shall be the date on which the
Company notifies the Executive of such termination, and (iii) if the
Executive's employment is terminated by reason of Disability, the Date of
Termination shall be the Disability Effective Date.
7. Obligations of the Company upon Termination.
(a) Good Reason; Other Than for Cause or Disability.
If, during the Employment Period, the Company terminates the Executive's
employment other than for Cause or Disability or the Executive terminates
employment for Good Reason:
(i) the Company shall pay to the Executive in a lump
sum in cash within 30 days after the Date of Termination the aggregate of
the following amounts (such aggregate being hereinafter referred to as the
"Special Termination Amount"):
A. the sum of (1) the Executive's Annual Base Salary
through the Date of Termination to the extent not theretofore paid, (2) the
product of (x) the Highest Annual Bonus and (y) a fraction, the numerator
of which is the number of days in the current fiscal year through the Date
of Termination, and the denominator of which is 365, and (3) any
compensation previously deferred by the Executive (together with any
accrued interest or earnings thereon) (including, without limitation,
compensation, bonus, incentive compensation or awards deferred under the
FPL Group, Inc. Deferred Compensation Plan or incentive compensation or
awards deferred under the FPL Group, Inc. Long-Term Incentive Plan of 1985,
the FPL Group, Inc. Long Term Incentive Plan of 1994, or pursuant to an
individual deferral agreement) and any accrued vacation pay, in each case
to the extent not theretofore paid (the sum of the amounts described in
clauses (1), (2), and (3) being herein called the "Accrued Obligations");
and
B. the amount equal to the product of (1) the
greater of two or the number of years (with any partial year expressed as a
fraction) remaining in the Employment Period, and (2) the sum of (x) the
Executive's Annual Base Salary and (y) the Highest Annual Bonus; provided,
however, that such amount shall be paid in lieu of, and the Executive
hereby waives the right to receive, any other amount of severance relating
to salary or bonus continuation to be received by the Executive upon
termination of employment of the Executive under any severance plan, policy
or arrangement of the Company; and
C. the maximum amount payable under all performance
share grants and all other long term incentive compensation grants to the
Executive that have not been paid in accordance with the terms of the grant
or Section 5(c) hereof, calculated as though the Executive had remained
employed by the Company for the remainder of the Employment Period and on
the basis of actual achievement of performance measures through the end of
the fiscal year preceding the fiscal year in which the Date of Termination
occurs and thereafter assuming maximum achievement of all performance
measures (e.g., currently 160%) through the end of the Employment Period;
and
D. a separate lump-sum supplemental retirement
benefit equal to the greater of (i) the supplemental pension benefit
described in Paragraph 1(b) of Annex A that the Executive would have been
entitled had his employment continued at the compensation level provided
for in Section 5(a) of this Agreement for the greater of two years or the
remainder of the Employment Period and based upon his Projected Years of
Service (as defined in Paragraph 2(a) of Annex A) and his Projected Age (as
defined in Paragraph 2(b) of Annex A), or (ii) the difference between (1)
the actuarial equivalent (utilizing for this purpose the actuarial
assumptions utilized with respect to the FPL Group Employee Pension Plan
(or any successor plan thereto) (the "Retirement Plan") during the 90-day
period immediately preceding the Effective Date) of the benefit payable
under the Retirement Plan and all supplemental and/or excess retirement
plans providing benefits for the Executive (other than the supplemental
retirement benefit described in Annex A) (the "SERP") (including, but not
limited to the Supplemental Pension Benefit (as defined in the FPL Group,
Inc. Supplemental Executive Retirement Plan)) which the Executive would
receive if the Executive's employment continued at the compensation level
provided for in Sections 5(a) and 5(b) of this Agreement for, and his age
increased by, the greater of two years or the remainder of the Employment
Period, assuming for this purpose that all accrued benefits are fully
vested and that benefit accrual formulas are no less advantageous to the
Executive than those in effect during the 90-day period immediately
preceding the Effective Date, or, if more favorable to the Executive, as in
effect generally at any time thereafter during the Employment Period with
respect to other peer executives of the Company and its affiliated
companies, and (2) the actuarial equivalent (utilizing for this purpose the
actuarial assumptions utilized with respect to the Retirement Plan during
the 90-day period immediately preceding the Effective Date) of the
Executive's actual benefits (paid or payable), if any, under the Retirement
Plan and the SERP; and
E. a separate lump-sum supplemental retirement
benefit equal to the greater of (i) the supplemental matching contributions
account described in Paragraph 1(c) of Annex A that the Executive would
have been entitled had his employment continued at the compensation level
provided for in Section 5(a) of this Agreement for the greater of two years
or the remainder of the Employment Period and assuming that the Executive
made After Tax Member Basic Contributions (within the meaning of the FPL
Group Employee Thrift Plan or any successor plan thereto (the "Thrift
Plan")) and Tax Saver Member Basic Contributions (within the meaning of the
Thrift Plan) to the Thrift Plan at the highest permissible rate
(disregarding any limitations imposed by the Code) following the Date of
Termination, or (ii) the difference between (1) the value of the Company
Account (as defined in the Thrift Plan) and any other matching contribution
accounts (including, but not limited to the Supplemental Matching
Contribution Account (as defined in the FPL Group, Inc. Supplemental
Executive Retirement Plan)) under a SERP (other than the supplemental
retirement benefit described in Annex A) which the Executive would receive
if (i) the Executive's employment continued at the compensation level
provided for in Sections 5(a) and 5(b) of this Agreement for the greater of
two years or the remainder of the Employment Period, (ii) the Executive
made pre- and after-tax contributions at the highest permissible rate
(disregarding any limitations imposed by the Code, which may or may not be
set forth in the Thrift Plan) for the greater of two years or each year
remaining in the Employment Period, (iii) the Company Account and the
matching contribution accounts are fully vested, and (iv) the matching
contribution formulas are no less advantageous to the Executive than those
in effect during the 90-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as in effect generally at any time
during the remainder of the Employment Period with respect to other peer
executives of the Company and its affiliated companies, and (2) the actual
value of the Executive's Company Account and matching contribution accounts
(paid or payable), if any, under the Thrift Plan and the SERP; and
(ii) for the remainder of the Employment Period, or
such longer period as any plan, program, practice or policy may provide,
the Company shall continue benefits to the Executive and/or the Executive's
family at least equal to those which would have been provided to them in
accordance with the plans, programs, practices and policies described in
Sections 5(e) and 5(g) of this Agreement if the Executive's employment had
not been terminated, in accordance with the most favorable plans,
practices, programs or policies of the Company and its affiliated companies
applicable generally to other peer executives and their families during the
90-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies and their families, provided, however, that if the Executive
becomes reemployed with another employer and is eligible to receive medical
or other welfare benefits under another employer provided plan, the medical
and other welfare benefits described herein shall be secondary to those
provided under such other plan during such applicable period of
eligibility. For purposes of determining eligibility of the Executive for
retiree benefits pursuant to such plans, practices, programs and policies,
the Executive shall be considered to have remained employed until the end
of the Employment Period and to have retired on the last day of such
period;
(iii) for the remainder of the Employment Period and to
the extent previously paid for or provided by the Company, the Company
shall continue to provide the following:
A. social and business club memberships to the
Executive (as in effect immediately prior to the Date of Termination);
B. use, maintenance, insurance, and repair of the
company car that is in the possession of the Executive, until the earlier
of the end of the lease term or the end of the Employment Period, at which
time the Executive may purchase such car. The Company shall replace the
company car in the Executive's possession on the Effective Date with a new
company car at such time(s) as provided under the Company car policy
applicable to other peer executives, but in no case less frequently than
the Company car policy in effect during the 90-day period immediately
preceding the Effective Date;
C. up to $15,000 annually for personal financial
planning, accounting and legal advice;
D. communication equipment such as a car and/or
cellular phone, and home or laptop computer until the end of the Employment
Period, at which time the Executive may purchase such equipment;
E. security system at the Executive's residence, and
the related monitoring and maintenance fees; and
F. up to $800 annually for personal excess liability
insurance coverage;
In lieu of continuing these benefits for the remainder of the Employment
Period, the Executive, in his sole discretion, may elect to receive a lump
sum payment equal to the present value of the amount projected to be paid
by the Company to provide these benefits. In determining the present
value, a six percent interest assumption shall be utilized. The Executive
shall make any such election by giving the Company written notice in
accordance with Section 14(b).
(iv) to the extent not theretofore paid or provided,
the Company shall timely pay or provide to the Executive any other amounts
or benefits required to be paid or provided or which the Executive is
eligible to receive pursuant to this Agreement or otherwise under any plan,
program, policy or practice or contract or agreement of the Company and its
affiliated companies, but excluding solely for purposes of this Section
7(a)(iv) amounts waived by the Executive pursuant to Section 7(a)(i)(B);
and
(v) the Company shall provide the Executive with the
following benefits in the event of his termination under this Section 7(a):
A. If the Executive is required to move his primary
residence in order to pursue other business opportunities during the
Employment Period, the Company shall reimburse the Executive for all such
relocation expenses incurred during the Employment Period (not in excess of
$10,000) that are not reimbursed by another employer, including, without
limitation, assistance in selling the Executive's home and all other
assistance and benefits that were customarily provided by the Company to
transferred executives prior to the Change of Control;
B. If the Executive retains counsel or an accounting
firm in connection with the taxation of payments made pursuant to Section
10 of this Agreement, the Company shall reimburse the Executive for such
reasonable legal and/or accounting fees and disbursements (not in excess of
$15,000);
C. The Company shall continue to pay the Executive's
Annual Base Salary during the pendency of a dispute over his termination.
Amounts paid under this subsection are in addition to all other amounts due
under this Agreement (other than those due under Section 5(a) hereof) and
shall not be offset against or reduce any other amounts due under this
Agreement; and
D. The Company shall provide the Executive with
outplacement services commensurate with those provided to terminated
executives of comparable level made available through and at the facilities
of a reputable and experienced vendor; and
(vi) any outstanding options, stock appreciation
rights, and other awards in the nature of a right that may be exercised
granted to the Executive shall become fully exercisable and vested; any
restrictions, deferral limitations, and forfeiture conditions applicable to
any outstanding award granted to the Executive shall lapse and such awards
shall be deemed fully vested; and the Executive shall have for the
remainder of the Employment Period (but in no event past the expiration of
the term of the award) to exercise any and all rights granted under such
awards then exercisable or which become exercisable pursuant to this
Section 7(a)(vi), except that with respect to incentive stock options
(within the meaning of Section 422(b) of the Code) and stock appreciation
rights relating thereto, the Executive may exercise such awards during the
period of exercise provided for in the agreements granting such options.
(b) Death. Upon the Executive's death during the
Employment Period, this Agreement shall terminate without further
obligations to the Executive's legal representatives under this Agreement,
other than for payment of Accrued Obligations, the supplemental retirement
benefit described in Annex A, and the timely payment or provision of the
benefits described in Section 7(a)(ii) and (iv) (the "Other Benefits").
All Accrued Obligations shall be paid to the Executive's estate or
beneficiary, as applicable, in a lump sum in cash within 30 days of the
Date of Termination. The supplemental retirement benefit shall be paid to
the Executive's Beneficiary (within the meaning of the FPL Group, Inc.
Supplemental Executive Retirement Plan) at his option in a lump sum
distribution to be made not later than three months after the occurrence of
his death or in the same manner as the Executive's benefits under the
Retirement Plan or Thrift Plan to which his benefits under Annex A of this
Agreement relates. The term "Other Benefits" as utilized in this Section
7(b) shall include, without limitation, and the Executive's family shall be
entitled to receive, benefits at least equal to the most favorable benefits
provided by the Company and any of its affiliated companies to surviving
families of peer executives of the Company and such affiliated companies
under such plans, programs, practices and policies relating to family death
benefits, if any, as in effect with respect to other peer executives and
their families at any time during the 90-day period immediately preceding
the Effective Date or, if more favorable to the Executive and/or the
Executive's family, as in effect on the date of the Executive's death with
respect to other peer executives of the Company and its affiliated
companies and their families.
(c) Disability. If the Executive's employment is
terminated by reason of the Executive's Disability during the Employment
Period, this Agreement shall terminate without further obligations to the
Executive, other than for payment of Accrued Obligations, the supplemental
retirement benefit described in Annex A, and the timely payment or
provision of Other Benefits. All Accrued Obligations shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of Termination.
The supplemental retirement benefit shall be paid to the Participant or his
Beneficiary (within the meaning of the FPL Group, Inc. Supplemental
Executive Retirement Plan), as the case may be, at the option of the
Executive or if the Executive is deceased, at the option of such
Beneficiary, in a lump sum distribution to be made not later than three
months after the occurrence of such event or in the same manner as the
Executive's benefits under the Retirement Plan or Thrift Plan to which his
benefits under Annex A of this Agreement relates. The term "Other
Benefits" as utilized in this Section 7(c) shall include, and the Executive
shall be entitled after the Disability Effective Date to receive,
disability and other benefits at least equal to the most favorable of those
generally provided by the Company and its affiliated companies to disabled
executives and/or their families in accordance with such plans, programs,
practices and policies relating to disability, if any, as in effect
generally with respect to other peer executives and their families at any
time during the 90-day period immediately preceding the Effective Date or,
if more favorable to the Executive and/or the Executive's family, as in
effect at any time thereafter generally with respect to other peer
executives of the Company and its affiliated companies and their families.
(d) Cause; Other Than for Good Reason. If the
Executive's employment shall be terminated for Cause during the Employment
Period, this Agreement shall terminate without further obligations to the
Executive other than the obligation to pay to the Executive Annual Base
Salary through the Date of Termination plus the amount of any compensation
previously deferred by the Executive, in each case to the extent
theretofore unpaid. If the Executive terminates employment during the
Employment Period, excluding a termination for Good Reason, this Agreement
shall terminate without further obligations to the Executive, other than
for Accrued Obligations, the supplemental retirement benefit described in
Annex A to the extent the Executive is vested in his benefits under the
Retirement Plan, and the timely payment or provision of Other Benefits. In
such case, all Accrued Obligations shall be paid to the Executive in a lump
sum in cash within 30 days of the Date of Termination. The supplemental
retirement benefit shall be paid to the Executive or his Beneficiary
(within the meaning of the FPL Group, Inc. Supplemental Executive
Retirement Plan), as the case may be, at the option of the Executive or if
the Executive is deceased, at the option of such Beneficiary, in a lump sum
distribution to be made not later than three months after the occurrence of
such event or in the same manner as the Executive's benefits under the
Retirement Plan or Thrift Plan to which his benefits under Annex A of this
Agreement relates.
8. Non-exclusivity of Rights. Except as otherwise expressly
provided for in this Agreement, nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company or any of its
affiliated companies and for which the Executive may qualify, nor shall
anything herein limit or otherwise affect such rights as the Executive may
have under any contract or agreement with the Company or any of its
affiliated companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, policy, practice
or program of or any contract or agreement with the Company or any of its
affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or
contract or agreement except as explicitly modified by this Agreement.
9. Full Settlement. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Company may
have against the Executive or others. In no event shall the Executive be
obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement and, except as otherwise expressly provided
for in this Agreement, such amounts shall not be reduced whether or not the
Executive obtains other employment. The Company agrees to pay, to the
fullest extent permitted by law, all legal fees and expenses which the
Executive may reasonably incur at all stages of proceedings, including,
without limitation, preparation and appellate review, as a result of any
contest (regardless of whether formal legal proceedings are ever commenced
and regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any
provision of this Agreement or any guarantee of performance thereof
(including as a result of any contest by the Executive about the amount of
any payment pursuant to this Agreement), plus in each case interest on any
delayed payment at the applicable Federal rate provided for in Section
7872(f)(2)(A) of the Code.
10. Certain Additional Payments by the Company. Anything in
this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by the Company to or for the
benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this
Section 10) (a "Payment") would be subject to the excise tax imposed by
Section 4999 of the Code or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to
as the "Excise Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that after
payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any
income or employment taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the
Executive retains an amount of Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
In the event that Federal or state legislation is enacted by
imposing additional excise or supplementary income taxes on amounts payable
or benefits provided to the Executive (other than a mere change in marginal
income tax rates), the Company agrees to review the Agreement with the
Executive and to consider in good faith any changes hereto that may be
required to preserve the full amount of all Payments and the economic
purposes of the foregoing provisions of this Section 10.
11. Confidential Information. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company or any
of its affiliated companies, and their respective businesses, which shall
have been obtained by the Executive during the Executive's employment by
the Company or any of its affiliated companies and which shall not be or
become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive's employment with the Company, the Executive
shall not, without the prior written consent of the Company or as may
otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and
those designated by it. In no event shall an asserted violation of the
provisions of this Section 11 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this
Agreement.
12. Indemnification. The Company will, to the fullest extent
permitted by law, indemnify and hold the Executive harmless from any and
all liability arising from the Executive's service as an employee, officer
or director of the Company and its affiliated companies. To the fullest
extent permitted by law, the Company will advance legal fees and expenses
to the Executive for counsel selected by the Executive in connection with
any litigation or proceeding related to the Executive's service as an
employee, officer or director of the Company and its affiliates. The terms
of this indemnification provision shall survive the expiration of this
Agreement.
13. Successors.
(a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by
the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and
be binding upon the Company and its successors and assigns.
(c) The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall
mean the Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
14. Miscellaneous.
(a) This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida, without reference to
principles of conflict of laws. The captions of this Agreement are not
part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written
agreement executed by the parties hereto or their respective successors and
legal representatives.
(b) All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to the other party
or by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Executive:
Thomas F. Plunkett
If to the Company:
FPL Group, Inc.
700 Universe Boulevard
Juno Beach, Florida 33408
Attention: Vice President, Human Resources
or such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be
effective when actually received by the addressee.
(c) The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement.
(d) The Company may withhold from any amounts payable
under this Agreement such Federal, state or local taxes as shall be
required to be withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to
insist upon strict compliance with any provision hereof or any other
provision of this Agreement or the failure to assert any right the
Executive or the Company may hereunder, including, without limitation, the
right of the Executive to terminate employment for Good Reason pursuant to
Section 6(c)(i)-(v) of this Agreement, shall not be deemed to be a waiver
of such provision or right or any other provision or right of this
Agreement.
(f) The Executive and the Company acknowledge that,
except as may otherwise be provided under any other written agreement
between the Executive and the Company, the employment of the Executive by
the Company is "at will" and, prior to the Effective Date, may be
terminated by either the Executive or the Company at any time. Moreover,
except as provided in Section 1, if prior to the Effective Date, (i) the
Executive's employment with the Company terminates, or (ii) there is a
diminution in the Executive's position (including status, offices, titles,
and reporting requirements), authority, duties, and responsibilities with
the Company or its affiliated companies, then the Executive shall have no
further rights under this Agreement.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's
hand and, pursuant to the authorization from the Board of Directors, the
Company has caused these presents to be executed in its name on its behalf,
all as of the day and year first above written.
THOMAS F. PLUNKETT
Thomas F. Plunkett
FPL GROUP, INC.
By LAWRENCE J. KELLEHER
Lawrence J. Kelleher
Vice President, Human Resources
ANNEX A
TO THE
EMPLOYMENT AGREEMENT
SUPPLEMENTAL RETIREMENT BENEFIT
1. Supplement Retirement Benefit.
(a) In General. The supplemental retirement benefit
to which the Executive shall be entitled under this Agreement shall be (i)
the supplemental pension benefit described in Paragraph 1(b) of this Annex
A, and (ii) the supplemental matching contribution account described in
Paragraph 1(c) of this Annex A.
(b) Supplemental Pension Benefit. The "supplemental
pension benefit" shall be the greater of (i) the supplement cash balance
accrued benefit described in Paragraph 1(b)(1) of this Annex A, or (ii) the
supplement unit credit accrued benefit described in Paragraph 1(b)(2) of
this Annex A.
(1) The "supplement cash balance accrued benefit" is
the difference, if any, between (A) and (B) where:
(A) is the benefit to which the Executive would be
entitled under the Retirement Plan as in effect immediately prior to the
Change of Control or, if more favorable to the Executive, as in effect
generally at any time thereafter during the Employment Period with respect
to other peer executives of the Company and its affiliated companies,
expressed in the normal form of benefit, if such benefit was computed (i)
as if benefits under such plan were based upon the Executive's Base
Compensation (within the meaning of the FPL Group, Inc. Supplemental
Executive Retirement Plan as in effect immediately prior to the Change of
Control), (ii) without the annual compensation limitation imposed by
Section 401(a)(17) of the Code, and (iii) without the restrictions or the
limitations imposed by Sections 415(b) or 415(e) of the Code; and
(B) is the sum of the benefits payable to the
Executive under the Retirement Plan, the SERP and his Supplement (as
defined in Paragraph 2(c) of this Annex A), expressed in the normal form of
benefit.
(2) The "supplement unit credit accrued benefit" is
the difference, if any, between (A) and (B) where:
(A) is the benefit to which the Executive would be
entitled under the Prior Pension Plan (within the meaning of the FPL Group,
Inc. Supplemental Executive Retirement Plan as in effect immediately prior
to the Change of Control), expressed in the normal form of benefit, if such
benefit was computed (i) as if benefits under such plan were based upon the
Executive's Base Compensation, (ii) without the annual compensation
limitation imposed by Section 401(a)(17) of the Code, and (iii) without the
restrictions or the limitations imposed by Sections 415(b) or 415(e) of the
Code; and
(B) is the sum of the benefits payable to the
Executive under the Retirement Plan, the SERP and his Supplement (as
defined in Paragraph 2(c) of this Annex A), expressed in the normal form of
benefit.
(c) Supplemental Matching Contribution Account. The
"supplemental matching contribution account" shall be an account that is
credited annually with (i) supplemental matching contributions described in
Paragraph 1(c)(1) of this Annex A, and (ii) theoretical earnings described
in Paragraph 1(c)(2) of this Annex A.
(1) "Supplemental matching contributions" shall be
for each year ending on or prior to the Effective Date in which the
Executive participated in the SERP and for each year ending after the
Effective Date in which the Executive performs services for the Company or
its affiliated companies the difference, if any, between (A) and (B) where:
(A) is the matching contribution allocation for such
year to which the Executive would be entitled under the Thrift Plan as in
effect immediately prior to the Change of Control or, if more favorable to
the Executive, as in effect generally at any time thereafter during the
Employment Period with respect to other peer executives of the Company and
its affiliated companies if such allocation were computed (i) as if the
matching contribution allocation under such plan was based upon the
Executive's Base Compensation, (ii) without the annual compensation
limitation imposed by Section 401(a)(17) of the Code, (iii) without the
restrictions or the limitations imposed by Sections 415(c) or 415(e) of the
Code, and (iv) as if he made After Tax Member Basic Contributions (within
the meaning of the Thrift Plan) and Tax Saver Member Basic Contributions
(within the meaning of the Thrift Plan) at the same percentage of Base
Compensation as he made such contributions to the Thrift Plan for such
years; and
(B) is the sum of the matching contributions
allocated or credited to the Executive under the Thrift Plan, the SERP and
his Supplement (as defined in Paragraph 2(c) of this Annex A) for such
year.
(2) "Theoretical earnings" shall be the income, gains
and losses which would have been credited on the Executive's supplemental
matching contribution account balance if such account were invested in the
Company Stock Fund (within the meaning of the Thrift Plan) offered as a
part of the Thrift Plan.
2. Construction and Definitions. Unless defined below or
otherwise in this Annex A, all of the capitalized terms used in this Annex
A shall have the meanings assigned to them in this Agreement:
(a) "Projected Years of Service" shall mean the sum
of: (i) Years of Service (within the meaning of the FPL Group, Inc.
Supplemental Executive Retirement Plan as in effective immediately prior to
the Change of Control) completed as of August 26, 2004, multiplied by two
(2), and (ii) Years of Service, if any, credited after such date.
Notwithstanding the foregoing, in determining the Executive's Years of
Service, in addition to his actual Years of Service he shall be treated as
if his employment terminated on the later of the second anniversary of the
Date of Termination or the last day of the Employment Period.
(b) "Projected Age" shall mean the age that the
Executive will have attained on the later of the second anniversary of the
Date of Termination or the last day of the Employment Period.
(c) "Supplement" shall mean the Supplement to the FPL
Group, Inc. Supplemental Executive Retirement Plan as it applies to the
Executive, dated as of December 15, 1997, and as it may be amended from
time to time.
EMPLOYMENT AGREEMENT
Employment Agreement between FPL Group, Inc., a Florida
corporation (the "Company"), and Michael W. Yackira (the "Executive"),
dated as of December 11, 1995, amended and restated as of May 10, 1999.
The Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company and its
shareholders to assure that the Company and its affiliated companies will
have the continued dedication of the Executive, notwithstanding the
possibility, threat or occurrence of a Change of Control (as defined below)
of the Company. The Board believes it is imperative to diminish the
inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of
Control and to encourage the Executive's full attention and dedication to
the Company and its affiliated companies currently and in the event of any
threatened or pending Change of Control, and to provide the Executive with
compensation and benefits arrangements upon a Change of Control which
ensure that the compensation and benefits expectations of the Executive
will be satisfied and which are competitive with those of other
corporations. Therefore, in order to accomplish these objectives, the Board
has caused the Company to enter into this Employment Agreement (the
"Agreement").
Therefore, the Company and the Executive agree as follows:
1. Effective Date. The effective date of this Agreement
shall be the date on which a Change of Control occurs (the "Effective
Date"). Anything in this Agreement to the contrary notwithstanding, if a
Change of Control occurs and if the Executive's employment with the Company
or its affiliated companies is terminated or the Executive's position
(including status, offices, titles, and reporting requirements), authority,
duties, and responsibilities with the Company or its affiliated companies
is not commensurate in all material respects with the most significant of
those held, exercised, and assigned prior to the date on which the Change
of Control occurs, and if it is reasonably demonstrated by the Executive
that such termination of employment or diminution in position, authority,
duties, or responsibilities (i) was at the request of a third party who has
taken steps reasonably calculated to effect the Change of Control or (ii)
otherwise arose in connection with or anticipation of the Change of
Control, then for all purposes of this Agreement the "Effective Date" shall
mean the date immediately prior to the date of such termination of
employment or diminution in position, authority, duties or
responsibilities. As used in this Agreement, the term "affiliated
companies" shall include any corporation or other entity controlled by,
controlling or under common control with the Company.
2. Change of Control. For the purposes of this Agreement, a
"Change of Control" shall mean:
(a) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of 20% or more of either (i) the then outstanding shares of common
stock of the Company (the "Outstanding Company Common Stock") or (ii) the
combined voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that the
following acquisitions shall not constitute a Change of Control: (i) any
acquisition by the Company or any or its subsidiaries, (ii) any acquisition
by any employee benefit plan (or related trust) sponsored or maintained by
the Company or any of its subsidiaries or (iii) any acquisition by any
corporation with respect to which, following such acquisition, more than
75% of, respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election
of directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such acquisition
in substantially the same proportions as their ownership, immediately prior
to such acquisition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be; or
(b) Individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of either
an actual or threatened solicitation to which Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act applies or other actual or
threatened solicitation of proxies or consents; or
(c) Approval by the shareholders of the Company of a
reorganization, merger or consolidation, in each case, with respect to
which all or substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common Stock
and Outstanding Company Voting Securities immediately prior to such
reorganization, merger or consolidation do not, following such
reorganization, merger or consolidation, beneficially own, directly or
indirectly, more than 75% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the
case may be, of the corporation resulting from such reorganization, merger
or consolidation in substantially the same proportions as their ownership,
immediately prior to such reorganization, merger or consolidation of the
Outstanding Company Common Stock and Outstanding Company Voting Securities,
as the case may be; or
(d) Approval by the shareholders of the Company of
(i) a complete liquidation or dissolution of the Company or (ii) the sale
or other disposition of all or substantially all of the assets of the
Company, other than to a corporation, with respect to which following such
sale or other disposition, more than 75% of, respectively, the then
outstanding shares of common stock of such corporation and the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of
the individuals and entities who were the beneficial owners, respectively,
of the Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately prior to
such sale or other disposition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be.
The term "the sale or disposition by the Company of all or
substantially all of the assets of the Company" shall mean a sale or other
disposition transaction or series of related transactions involving assets
of the Company or of any direct or indirect subsidiary of the Company
(including the stock of any direct or indirect subsidiary of the Company)
in which the value of the assets or stock being sold or otherwise disposed
of (as measured by the purchase price being paid therefor or by such other
method as the Board determines is appropriate in a case where there is no
readily ascertainable purchase price) constitutes more than two-thirds of
the fair market value of the Company (as hereinafter defined). The "fair
market value of the Company" shall be the aggregate market value of the
then Outstanding Company Common Stock (on a fully diluted basis) plus the
aggregate market value of the Company's other outstanding equity
securities. The aggregate market value of the shares of Outstanding
Company Common Stock shall be determined by multiplying the number of
shares of Outstanding Company Common Stock (on a fully diluted basis)
outstanding on the date of the execution and delivery of a definitive
agreement with respect to the transaction or series of related transactions
(the "Transaction Date") by the average closing price of the shares of
Outstanding Company Common Stock for the ten trading days immediately
preceding the Transaction Date. The aggregate market value of any other
equity securities of the Company shall be determined in a manner similar to
that prescribed in the immediately preceding sentence for determining the
aggregate market value of the shares of Outstanding Company Common Stock or
by such other method as the Board shall determine is appropriate.
3. Employment Period. The Company hereby agrees to continue
the Executive in its or its affiliated companies' employ, or both, as the
case may be, and the Executive hereby agrees to remain in the employ of the
Company, or its affiliated companies, or both, as the case may be, for a
period commencing on the Effective Date and ending on the 4th anniversary
of such date (the "Employment Period").
4. Position and Duties. During the Employment Period, the
Executive's position (including status, offices, titles, and reporting
requirements), authority, duties, and responsibilities with the Company or
its affiliated companies or both, as the case may be, shall be in every
respect at least commensurate with the most significant of those held,
exercised, and assigned at any time during the 90-day period immediately
preceding the Effective Date. The Executive's services shall be performed
at the location where the Executive was employed immediately preceding the
Effective Date or any location less than 20 miles from such location,
although the Executive understands and agrees that he may be required to
travel from time to time for business purposes.
During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive
agrees to devote substantially all of his time and attention during normal
business hours to the business and affairs of the Company and its
affiliated companies and to use his reasonable best efforts to perform
faithfully and efficiently the duties and responsibilities assigned to him
hereunder. During the Employment Period it shall not be a violation of
this Agreement for the Executive to serve on corporate, civic or charitable
boards or committees, deliver lectures, fulfill speaking engagements or
teach at educational institutions and devote reasonable amounts of time to
the management of his and his family's personal investments and affairs, so
long as such activities do not significantly interfere with the performance
of the Executive's responsibilities as an employee of the Company or its
affiliated companies in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities have been
conducted by the Executive prior to the Effective Date, the reinstatement
or continued conduct of such activities (or the reinstatement or conduct of
activities similar in nature and scope thereto) subsequent to the Effective
Date shall not thereafter be deemed to interfere with the performance of
the Executive's responsibilities to the Company and its affiliated
companies.
5. Compensation. During the Employment Period, the Executive
shall be compensated as follows:
(a) Annual Base Salary. The Executive shall be paid
an annual base salary ("Annual Base Salary"), in equal biweekly
installments, at least equal to the annual base salary being paid to the
Executive by the Company and its affiliated companies with respect to the
year in which the Effective Date occurs. The Annual Base Salary shall be
reviewed at least annually and shall be increased substantially consistent
with increases in base salary generally awarded to other peer executives of
the Company and its affiliated companies. Such increases shall in no
event be less than the increases in the U.S. Department of Labor Consumer
Price Index - U.S. City Average Index. Any increase in Annual Base Salary
shall not serve to limit or reduce any other obligation to the Executive
under this Agreement. Annual Base Salary shall not be reduced after any
such increase and the term "Annual Base Salary" as utilized in this
Agreement shall refer to Annual Base Salary as so increased.
(b) Annual Bonus. In addition to Annual Base Salary,
the Executive shall be awarded, for each fiscal year ending during the
Employment Period, an annual bonus (the "Annual Bonus") in cash at least
equal to the highest annual incentive compensation (annualized for any
fiscal year consisting of less than twelve full months or with respect to
which the Executive has been employed by the Company for less than twelve
full months) paid or payable, including by reason of any deferral, to the
Executive by the Company and its affiliated companies in respect of the
three fiscal years immediately preceding the fiscal year in which the
Effective Date occurs (the "Highest Recent Bonus"). The greater of (i) the
Highest Recent Bonus or (ii) the highest Annual Bonus awarded by the
Company and its affiliated companies after the Effective Date (target or
actual, whichever is greater) is herein called the "Highest Annual Bonus".
Each such Annual Bonus shall be paid no later than the end of the third
month of the fiscal year next following the fiscal year for which the
Annual Bonus is awarded, unless the Executive otherwise elects to defer
the receipt of such Annual Bonus.
(c) Long Term Incentive Compensation. During the
Employment Period, the Executive shall be entitled to participate in all
incentive compensation plans, practices, policies, and programs applicable
generally to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies, and
programs provide the Executive with incentive opportunities and potential
benefits, both as to amount and percentage of compensation, less favorable,
in the aggregate, than those provided by the Company and its affiliated
companies for the Executive under the FPL Group Long Term Incentive Plan
(including, without limitation, performance share grants and awards) as in
effect at any time during the 90-day period immediately preceding the
Effective Date or; if more favorable to the Executive, those provided
generally at any time after the Effective Date to other peer executives of
the Company and its affiliated companies.
In addition, on the Effective Date (i) the maximum performance
criteria of all outstanding performance awards, performance-based
restricted stock, and other stock-based awards granted to the Executive
shall be deemed fully achieved and all such awards shall be fully earned
and vested; (ii) any option, stock appreciation right, and other award in
the nature of a right that may be exercised that was granted to the
Executive and which was not previously exercisable and vested shall become
fully exercisable and vested; (iii) the restrictions, deferral limitations,
and forfeiture conditions applicable to any outstanding award granted to
the Executive under an incentive compensation plan, practice, policy or
program shall lapse and such awards shall be deemed fully vested; and (iv)
all outstanding awards shall be canceled and the Executive shall be paid in
cash for such awards on the basis of the change of control price as of the
date of the occurrence of the Change of Control (or such other date
applicable to awards granted to other peer executives under the applicable
incentive compensation plan, practice, policy or program) to the extent
such cancellation of and payment for an award would not cause the Executive
to incur actual short-swing profits liability under Section 16(b) of the
Exchange Act. For purposes of this paragraph, the term "change of control
price" means the highest price per share paid in any transaction reported
on the securities exchange or trading system on which the shares of common
stock of the Company are then primarily listed or traded, or paid or
offered in any transaction related to the Change of Control at any time
during the preceding 60-day period, except that in the case of incentive
stock options (within the meaning of Section 422(b) of the Internal Revenue
Code of 1986, as amended (the "Code")) and stock appreciation rights
relating thereto, such price shall be based only on transactions reported
for the date such awards are cashed out.
(d) Savings and Retirement Plans. During the
Employment Period, the Executive shall be entitled to participate in all
savings and retirement plans, practices, policies, and programs applicable
generally to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies, and
programs provide the Executive with savings opportunities and retirement
benefit opportunities, in each case, less favorable, in the aggregate, than
the most favorable of those provided by the Company and its affiliated
companies for the Executive under such plans, practices, policies, and
programs as in effect at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Executive, those
provided generally at any time after the Effective Date to other peer
executives of the Company and its affiliated companies.
In addition, during the Employment Period the Executive shall be
entitled under this Agreement to the supplemental retirement benefit
described in Annex A attached hereto and made a part hereof by this
reference. The payment and vesting of such supplemental retirement benefit
shall be determined in accordance with Section 7 of this Agreement.
(e) Benefit Plans. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be
eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies, and programs provided by the Company
and its affiliated companies (including, without limitation, medical,
executive medical, annual executive physical, prescription, dental, vision,
short-term disability, long-term disability, executive long-term
disability, salary continuance, employee life, group life, benefits
pursuant to split dollar arrangements, accidental death and dismemberment,
and travel accident insurance plans and programs) to the extent applicable
generally to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies, and
programs provide the Executive with benefits which are less favorable, in
the aggregate, than the most favorable of such plans, practices, policies,
and programs in effect for the Executive at any time during the 90-day
period immediately preceding the Effective Date or, if more favorable to
the Executive, those provided generally at any time after the Effective
Date to other peer executives of the Company and its affiliated companies.
(f) Expenses. During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in accordance with the most
favorable policies, practices, and procedures of the Company and its
affiliated companies in effect for the Executive at any time during the 90-
day period immediately preceding the Effective Date or, if more favorable
to the Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its affiliated
companies.
(g) Fringe Benefits. During the Employment Period,
the Executive shall be entitled to fringe benefits, including but not
limited to those described in Section 7(a)(iii), in accordance with the
most favorable plans, practices, programs, and policies of the Company and
its affiliated companies in effect for the Executive at any time during the
90-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies.
(h) Office and Support Staff. During the Employment
Period, the Executive shall be entitled to an office or offices of a size
and with furnishings and other appointments, and to exclusive personal
secretarial and other assistance, at least equal to the most favorable of
the foregoing provided to the Executive by the Company and its affiliated
companies at any time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as provided
generally at any time thereafter with respect to other peer executives of
the Company and its affiliated companies.
(i) Vacation. During the Employment Period, the
Executive shall be entitled to paid vacation in accordance with the most
favorable plans, policies, programs, and practices of the Company and its
affiliated companies as in effect for the Executive at any time during the
90-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer incentives of the Company and its affiliated
companies.
6. Termination of Employment.
(a) Disability. If the Company determines in good
faith that the Disability of the Executive has occurred during the
Employment Period (pursuant to the definition of Disability set forth
below), it may give to the Executive written notice in accordance with
Section 14(b) of this Agreement of its intention to terminate the
Executive's employment. In such event, the Executive's employment with the
Company shall terminate effective on the 30th day after receipt of such
notice by the Executive (the "Disability Effective Date"), provided that,
within the 30 days after such receipt, the Executive shall not have
returned to perform his duties in accordance with Section 4. For purposes
of this Agreement, "Disability" shall mean the absence of the Executive
from the Executive's duties with the Company for 180 consecutive business
days as a result of incapacity due to mental or physical illness which is
determined to be total and permanent by a physician selected by the Company
or its insurers and acceptable to the Executive or the Executive's legal
representative (such agreement as to acceptability not to be withheld
unreasonably).
(b) Cause. The Company may terminate the Executive's
employment during the Employment Period for Cause. For purposes of this
Agreement, "Cause" shall mean (i) repeated violations by the Executive of
the Executive's obligations under Section 4 of this Agreement (other than
as a result of incapacity due to physical or mental illness) which are
demonstrably willful and deliberate on the Executive's part, which are
committed in bad faith or without reasonable belief that such violations
are in the best interests of the Company and which are not remedied in a
reasonable period of time after receipt of written notice from the Company
specifying such violations or (ii) the conviction of the Executive of a
felony involving an act of dishonesty intended to result in substantial
personal enrichment at the expense of the Company or its affiliated
companies.
(c) Good Reason. The Executive's employment may be
terminated during the Employment Period by the Executive for Good Reason.
For purposes of this Agreement, "Good Reason" shall mean:
(i) any failure by the Company to comply in every
respect with the provisions of Section 4 of this Agreement, including
without limitation, the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position (including,
without limitation, status, offices, titles and reporting requirements),
authority, duties or responsibilities as contemplated by Section 4, or any
other action or inaction by the Company which results in a diminution in
such position, authority, duties or responsibilities, excluding for this
purpose an isolated, insubstantial and inadvertent action not taken in bad
faith and which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(ii) any failure by the Company to comply with any of
the provisions of Section 5 of this Agreement, other than isolated,
insubstantial and inadvertent failure not occurring in bad faith and which
is remedied by the Company promptly after receipt of notice thereof given
by the Executive;
(iii) the Company's requiring the Executive to be based
at any office or location other than that described in Section 4 hereof;
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this
Agreement; or
(v) any failure by the Company to comply with and
satisfy Section 13(c) of this Agreement, provided that such successor has
received at least ten days prior written notice from the Company or the
Executive of the requirements of Section 13(c) of the Agreement.
For purposes of this Section 6(c), any good faith determination of
"Good Reason" made by the Executive shall be conclusive.
(d) Notice of Termination. Any termination by the
Company for Cause, or by the Executive for Good Reason, shall be
communicated by Notice of Termination to the other party hereto given in
accordance with Section 14(b) of this Agreement. For purposes of this
Agreement, a "Notice of Termination" means a written notice which (i)
indicates the specific termination provision in this Agreement relied upon,
(ii) to the extent applicable, sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated, and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of
such notice, specifies the termination date (which date shall be not more
than fifteen days after the giving of such notice). The failure by the
Executive or the Company to set forth in the Notice of Termination any fact
or circumstances which contributes to a showing of Good Reason or Cause
shall not waive any right of the Executive or the Company hereunder or
preclude the Executive or the Company from asserting such fact or
circumstance in enforcing the Executive's or the Company's rights
hereunder.
(e) Date of Termination. "Date of Termination" means
(i) if the Executive's employment is terminated by the Company for Cause,
or by the Executive for Good Reason, the date of receipt of the Notice of
Termination or any later date specified therein, as the case may be, (ii)
if the Executive's employment is terminated by the Company other than for
Cause or Disability, the Date of Termination shall be the date on which the
Company notifies the Executive of such termination, and (iii) if the
Executive's employment is terminated by reason of Disability, the Date of
Termination shall be the Disability Effective Date.
7. Obligations of the Company upon Termination.
(a) Good Reason; Other Than for Cause or Disability.
If, during the Employment Period, the Company terminates the Executive's
employment other than for Cause or Disability or the Executive terminates
employment for Good Reason:
(i) the Company shall pay to the Executive in a lump
sum in cash within 30 days after the Date of Termination the aggregate of
the following amounts (such aggregate being hereinafter referred to as the
"Special Termination Amount"):
A. the sum of (1) the Executive's Annual Base Salary
through the Date of Termination to the extent not theretofore paid, (2) the
product of (x) the Highest Annual Bonus and (y) a fraction, the numerator
of which is the number of days in the current fiscal year through the Date
of Termination, and the denominator of which is 365, and (3) any
compensation previously deferred by the Executive (together with any
accrued interest or earnings thereon) (including, without limitation,
compensation, bonus, incentive compensation or awards deferred under the
FPL Group, Inc. Deferred Compensation Plan or incentive compensation or
awards deferred under the FPL Group, Inc. Long-Term Incentive Plan of 1985,
the FPL Group, Inc. Long Term Incentive Plan of 1994, or pursuant to an
individual deferral agreement) and any accrued vacation pay, in each case
to the extent not theretofore paid (the sum of the amounts described in
clauses (1), (2), and (3) being herein called the "Accrued Obligations");
and
B. the amount equal to the product of (1) the
greater of two or the number of years (with any partial year expressed as a
fraction) remaining in the Employment Period, and (2) the sum of (x) the
Executive's Annual Base Salary and (y) the Highest Annual Bonus; provided,
however, that such amount shall be paid in lieu of, and the Executive
hereby waives the right to receive, any other amount of severance relating
to salary or bonus continuation to be received by the Executive upon
termination of employment of the Executive under any severance plan, policy
or arrangement of the Company; and
C. the maximum amount payable under all performance
share grants and all other long term incentive compensation grants to the
Executive that have not been paid in accordance with the terms of the grant
or Section 5(c) hereof, calculated as though the Executive had remained
employed by the Company for the remainder of the Employment Period and on
the basis of actual achievement of performance measures through the end of
the fiscal year preceding the fiscal year in which the Date of Termination
occurs and thereafter assuming maximum achievement of all performance
measures (e.g., currently 160%) through the end of the Employment Period;
and
D. a separate lump-sum supplemental retirement
benefit equal to the greater of (i) the supplemental pension benefit
described in Paragraph 1(b) of Annex A that the Executive would have been
entitled had his employment continued at the compensation level provided
for in Sections 5(a) and 5(b) of this Agreement for the greater of two
years or the remainder of the Employment Period and based upon his
Projected Years of Service (as defined in Paragraph 2(a) of Annex A) and
his Projected Age (as defined in Paragraph 2(b) of Annex A), or (ii) the
difference between (1) the actuarial equivalent (utilizing for this purpose
the actuarial assumptions utilized with respect to the FPL Group Employee
Pension Plan (or any successor plan thereto) (the "Retirement Plan") during
the 90-day period immediately preceding the Effective Date) of the benefit
payable under the Retirement Plan and all supplemental and/or excess
retirement plans providing benefits for the Executive (other than the
supplemental retirement benefit described in Annex A) (the "SERP")
(including, but not limited to the Supplemental Pension Benefit (as defined
in the FPL Group, Inc. Supplemental Executive Retirement Plan)) which the
Executive would receive if the Executive's employment continued at the
compensation level provided for in Sections 5(a) and 5(b) of this Agreement
for, and his age increased by, the greater of two years or the remainder of
the Employment Period, assuming for this purpose that all accrued benefits
are fully vested and that benefit accrual formulas are no less advantageous
to the Executive than those in effect during the 90-day period immediately
preceding the Effective Date, or, if more favorable to the Executive, as in
effect generally at any time thereafter during the Employment Period with
respect to other peer executives of the Company and its affiliated
companies, and (2) the actuarial equivalent (utilizing for this purpose the
actuarial assumptions utilized with respect to the Retirement Plan during
the 90-day period immediately preceding the Effective Date) of the
Executive's actual benefits (paid or payable), if any, under the Retirement
Plan and the SERP; and
E. a separate lump-sum supplemental retirement
benefit equal to the greater of (i) the supplemental matching contributions
account described in Paragraph 1(c) of Annex A that the Executive would
have been entitled had his employment continued at the compensation level
provided for in Sections 5(a) and 5(b) of this Agreement for the greater of
two years or the remainder of the Employment Period and assuming that the
Executive made After Tax Member Basic Contributions (within the meaning of
the FPL Group Employee Thrift Plan or any successor plan thereto (the
"Thrift Plan")) and Tax Saver Member Basic Contributions (within the
meaning of the Thrift Plan) to the Thrift Plan at the highest permissible
rate (disregarding any limitations imposed by the Code) following the Date
of Termination, or (ii) the difference between (1) the value of the Company
Account (as defined in the Thrift Plan) and any other matching contribution
accounts (including, but not limited to the Supplemental Matching
Contribution Account (as defined in the FPL Group, Inc. Supplemental
Executive Retirement Plan)) under a SERP (other than the supplemental
retirement benefit described in Annex A) which the Executive would receive
if (i) the Executive's employment continued at the compensation level
provided for in Sections 5(a) and 5(b) of this Agreement for the greater of
two years or the remainder of the Employment Period, (ii) the Executive
made pre- and after-tax contributions at the highest permissible rate
(disregarding any limitations imposed by the Code, which may or may not be
set forth in the Thrift Plan) for the greater of two years or each year
remaining in the Employment Period, (iii) the Company Account and the
matching contribution accounts are fully vested, and (iv) the matching
contribution formulas are no less advantageous to the Executive than those
in effect during the 90-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as in effect generally at any time
during the remainder of the Employment Period with respect to other peer
executives of the Company and its affiliated companies, and (2) the actual
value of the Executive's Company Account and matching contribution accounts
(paid or payable), if any, under the Thrift Plan and the SERP; and
(ii) for the remainder of the Employment Period, or
such longer period as any plan, program, practice or policy may provide,
the Company shall continue benefits to the Executive and/or the Executive's
family at least equal to those which would have been provided to them in
accordance with the plans, programs, practices and policies described in
Sections 5(e) and 5(g) of this Agreement if the Executive's employment had
not been terminated, in accordance with the most favorable plans,
practices, programs or policies of the Company and its affiliated companies
applicable generally to other peer executives and their families during the
90-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies and their families, provided, however, that if the Executive
becomes reemployed with another employer and is eligible to receive medical
or other welfare benefits under another employer provided plan, the medical
and other welfare benefits described herein shall be secondary to those
provided under such other plan during such applicable period of
eligibility. For purposes of determining eligibility of the Executive for
retiree benefits pursuant to such plans, practices, programs and policies,
the Executive shall be considered to have remained employed until the end
of the Employment Period and to have retired on the last day of such
period;
(iii) for the remainder of the Employment Period and to
the extent previously paid for or provided by the Company, the Company
shall continue to provide the following:
A. social and business club memberships to the
Executive (as in effect immediately prior to the Date of Termination);
B. use, maintenance, insurance, and repair of the
company car that is in the possession of the Executive, until the earlier
of the end of the lease term or the end of the Employment Period, at which
time the Executive may purchase such car. The Company shall replace the
company car in the Executive's possession on the Effective Date with a new
company car at such time(s) as provided under the Company car policy
applicable to other peer executives, but in no case less frequently than
the Company car policy in effect during the 90-day period immediately
preceding the Effective Date;
C. up to $15,000 annually for personal financial
planning, accounting and legal advice;
D. communication equipment such as a car and/or
cellular phone, and home or laptop computer until the end of the Employment
Period, at which time the Executive may purchase such equipment;
E. security system at the
Executive's residence, and the related monitoring and maintenance fees; and
F. up to $800 annually for personal excess liability
insurance coverage;
In lieu of continuing these benefits for the remainder of the Employment
Period, the Executive, in his sole discretion, may elect to receive a lump
sum payment equal to the present value of the amount projected to be paid
by the Company to provide these benefits. In determining the present
value, a six percent interest assumption shall be utilized. The Executive
shall make any such election by giving the Company written notice in
accordance with Section 14(b).
(iv) to the extent not theretofore paid or provided,
the Company shall timely pay or provide to the Executive any other amounts
or benefits required to be paid or provided or which the Executive is
eligible to receive pursuant to this Agreement or otherwise under any plan,
program, policy or practice or contract or agreement of the Company and its
affiliated companies, but excluding solely for purposes of this Section
7(a)(iv) amounts waived by the Executive pursuant to Section 7(a)(i)(B);
and
(v) the Company shall provide the Executive with the
following benefits in the event of his termination under this Section 7(a):
A. If the Executive is required to move his primary
residence in order to pursue other business opportunities during the
Employment Period, the Company shall reimburse the Executive for all such
relocation expenses incurred during the Employment Period (not in excess of
$10,000) that are not reimbursed by another employer, including, without
limitation, assistance in selling the Executive's home and all other
assistance and benefits that were customarily provided by the Company to
transferred executives prior to the Change of Control;
B. If the Executive retains counsel or an accounting
firm in connection with the taxation of payments made pursuant to Section
10 of this Agreement, the Company shall reimburse the Executive for such
reasonable legal and/or accounting fees and disbursements (not in excess of
$15,000);
C. The Company shall continue to pay the Executive's
Annual Base Salary during the pendency of a dispute over his termination.
Amounts paid under this subsection are in addition to all other amounts due
under this Agreement (other than those due under Section 5(a) hereof) and
shall not be offset against or reduce any other amounts due under this
Agreement; and
D. The Company shall provide the Executive with
outplacement services commensurate with those provided to terminated
executives of comparable level made available through and at the facilities
of a reputable and experienced vendor; and
(vi) any outstanding options, stock appreciation
rights, and other awards in the nature of a right that may be exercised
granted to the Executive shall become fully exercisable and vested; any
restrictions, deferral limitations, and forfeiture conditions applicable to
any outstanding award granted to the Executive shall lapse and such awards
shall be deemed fully vested; and the Executive shall have for the
remainder of the Employment Period (but in no event past the expiration of
the term of the award) to exercise any and all rights granted under such
awards then exercisable or which become exercisable pursuant to this
Section 7(a)(vi), except that with respect to incentive stock options
(within the meaning of Section 422(b) of the Code) and stock appreciation
rights relating thereto, the Executive may exercise such awards during the
period of exercise provided for in the agreements granting such options.
(b) Death. Upon the Executive's death during the
Employment Period, this Agreement shall terminate without further
obligations to the Executive's legal representatives under this Agreement,
other than for payment of Accrued Obligations, the supplemental retirement
benefit described in Annex A, and the timely payment or provision of the
benefits described in Section 7(a)(ii) and (iv) (the "Other Benefits").
All Accrued Obligations shall be paid to the Executive's estate or
beneficiary, as applicable, in a lump sum in cash within 30 days of the
Date of Termination. The supplemental retirement benefit shall be paid to
the Executive's Beneficiary (within the meaning of the FPL Group, Inc.
Supplemental Executive Retirement Plan) at his option in a lump sum
distribution to be made not later than three months after the occurrence of
his death or in the same manner as the Executive's benefits under the
Retirement Plan or Thrift Plan to which his benefits under Annex A of this
Agreement relates. The term "Other Benefits" as utilized in this Section
7(b) shall include, without limitation, and the Executive's family shall be
entitled to receive, benefits at least equal to the most favorable benefits
provided by the Company and any of its affiliated companies to surviving
families of peer executives of the Company and such affiliated companies
under such plans, programs, practices and policies relating to family death
benefits, if any, as in effect with respect to other peer executives and
their families at any time during the 90-day period immediately preceding
the Effective Date or, if more favorable to the Executive and/or the
Executive's family, as in effect on the date of the Executive's death with
respect to other peer executives of the Company and its affiliated
companies and their families.
(c) Disability. If the Executive's employment is
terminated by reason of the Executive's Disability during the Employment
Period, this Agreement shall terminate without further obligations to the
Executive, other than for payment of Accrued Obligations, the supplemental
retirement benefit described in Annex A, and the timely payment or
provision of Other Benefits. All Accrued Obligations shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of Termination.
The supplemental retirement benefit shall be paid to the Participant or his
Beneficiary (within the meaning of the FPL Group, Inc. Supplemental
Executive Retirement Plan), as the case may be, at the option of the
Executive or if the Executive is deceased, at the option of such
Beneficiary, in a lump sum distribution to be made not later than three
months after the occurrence of such event or in the same manner as the
Executive's benefits under the Retirement Plan or Thrift Plan to which his
benefits under Annex A of this Agreement relates. The term "Other
Benefits" as utilized in this Section 7(c) shall include, and the Executive
shall be entitled after the Disability Effective Date to receive,
disability and other benefits at least equal to the most favorable of those
generally provided by the Company and its affiliated companies to disabled
executives and/or their families in accordance with such plans, programs,
practices and policies relating to disability, if any, as in effect
generally with respect to other peer executives and their families at any
time during the 90-day period immediately preceding the Effective Date or,
if more favorable to the Executive and/or the Executive's family, as in
effect at any time thereafter generally with respect to other peer
executives of the Company and its affiliated companies and their families.
(d) Cause; Other Than for Good Reason. If the
Executive's employment shall be terminated for Cause during the Employment
Period, this Agreement shall terminate without further obligations to the
Executive other than the obligation to pay to the Executive Annual Base
Salary through the Date of Termination plus the amount of any compensation
previously deferred by the Executive, in each case to the extent
theretofore unpaid. If the Executive terminates employment during the
Employment Period, excluding a termination for Good Reason, this Agreement
shall terminate without further obligations to the Executive, other than
for Accrued Obligations, the supplemental retirement benefit described in
Annex A to the extent the Executive is vested in his benefits under the
Retirement Plan, and the timely payment or provision of Other Benefits. In
such case, all Accrued Obligations shall be paid to the Executive in a lump
sum in cash within 30 days of the Date of Termination. The supplemental
retirement benefit shall be paid to the Executive or his Beneficiary
(within the meaning of the FPL Group, Inc. Supplemental Executive
Retirement Plan), as the case may be, at the option of the Executive or if
the Executive is deceased, at the option of such Beneficiary, in a lump sum
distribution to be made not later than three months after the occurrence of
such event or in the same manner as the Executive's benefits under the
Retirement Plan or Thrift Plan to which his benefits under Annex A of this
Agreement relates.
8. Non-exclusivity of Rights. Except as otherwise expressly
provided for in this Agreement, nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company or any of its
affiliated companies and for which the Executive may qualify, nor shall
anything herein limit or otherwise affect such rights as the Executive may
have under any contract or agreement with the Company or any of its
affiliated companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, policy, practice
or program of or any contract or agreement with the Company or any of its
affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or
contract or agreement except as explicitly modified by this Agreement.
9. Full Settlement. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Company may
have against the Executive or others. In no event shall the Executive be
obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement and, except as otherwise expressly provided
for in this Agreement, such amounts shall not be reduced whether or not the
Executive obtains other employment. The Company agrees to pay, to the
fullest extent permitted by law, all legal fees and expenses which the
Executive may reasonably incur at all stages of proceedings, including,
without limitation, preparation and appellate review, as a result of any
contest (regardless of whether formal legal proceedings are ever commenced
and regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any
provision of this Agreement or any guarantee of performance thereof
(including as a result of any contest by the Executive about the amount of
any payment pursuant to this Agreement), plus in each case interest on any
delayed payment at the applicable Federal rate provided for in Section
7872(f)(2)(A) of the Code.
10. Certain Additional Payments by the Company. Anything in
this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by the Company to or for the
benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this
Section 10) (a "Payment") would be subject to the excise tax imposed by
Section 4999 of the Code or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to
as the "Excise Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that after
payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any
income or employment taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the
Executive retains an amount of Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
In the event that Federal or state legislation is enacted by
imposing additional excise or supplementary income taxes on amounts payable
or benefits provided to the Executive (other than a mere change in marginal
income tax rates), the Company agrees to review the Agreement with the
Executive and to consider in good faith any changes hereto that may be
required to preserve the full amount of all Payments and the economic
purposes of the foregoing provisions of this Section 10.
11. Confidential Information. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company or any
of its affiliated companies, and their respective businesses, which shall
have been obtained by the Executive during the Executive's employment by
the Company or any of its affiliated companies and which shall not be or
become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive's employment with the Company, the Executive
shall not, without the prior written consent of the Company or as may
otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and
those designated by it. In no event shall an asserted violation of the
provisions of this Section 11 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this
Agreement.
12. Indemnification. The Company will, to the fullest extent
permitted by law, indemnify and hold the Executive harmless from any and
all liability arising from the Executive's service as an employee, officer
or director of the Company and its affiliated companies. To the fullest
extent permitted by law, the Company will advance legal fees and expenses
to the Executive for counsel selected by the Executive in connection with
any litigation or proceeding related to the Executive's service as an
employee, officer or director of the Company and its affiliates. The terms
of this indemnification provision shall survive the expiration of this
Agreement.
13. Successors.
(a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by
the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and
be binding upon the Company and its successors and assigns.
(c) The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall
mean the Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
14. Miscellaneous.
(a) This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida, without reference to
principles of conflict of laws. The captions of this Agreement are not
part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written
agreement executed by the parties hereto or their respective successors and
legal representatives.
(b) All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to the other party
or by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Executive:
Michael W. Yackira
If to the Company:
FPL Group, Inc.
700 Universe Boulevard
Juno Beach, Florida 33408
Attention: Vice President, Human Resources
or such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be
effective when actually received by the addressee.
(c) The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement.
(d) The Company may withhold from any amounts payable
under this Agreement such Federal, state or local taxes as shall be
required to be withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to
insist upon strict compliance with any provision hereof or any other
provision of this Agreement or the failure to assert any right the
Executive or the Company may hereunder, including, without limitation, the
right of the Executive to terminate employment for Good Reason pursuant to
Section 6(c)(i)-(v) of this Agreement, shall not be deemed to be a waiver
of such provision or right or any other provision or right of this
Agreement.
(f) The Executive and the Company acknowledge that,
except as may otherwise be provided under any other written agreement
between the Executive and the Company, the employment of the Executive by
the Company is "at will" and, prior to the Effective Date, may be
terminated by either the Executive or the Company at any time. Moreover,
except as provided in Section 1, if prior to the Effective Date, (i) the
Executive's employment with the Company terminates, or (ii) there is a
diminution in the Executive's position (including status, offices, titles,
and reporting requirements), authority, duties, and responsibilities with
the Company or its affiliated companies, then the Executive shall have no
further rights under this Agreement.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's
hand and, pursuant to the authorization from the Board of Directors, the
Company has caused these presents to be executed in its name on its behalf,
all as of the day and year first above written.
MICHAEL W. YACKIRA
Michael W. Yackira
FPL GROUP, INC.
By LAWRENCE J. KELLEHER
Lawrence J. Kelleher
Vice President, Human Resources
ANNEX A
TO THE
EMPLOYMENT AGREEMENT
SUPPLEMENTAL RETIREMENT BENEFIT
1. Supplement Retirement Benefit.
(a) In General. The supplemental retirement benefit
to which the Executive shall be entitled under this Agreement shall be (i)
the supplemental pension benefit described in Paragraph 1(b) of this Annex
A, and (ii) the supplemental matching contribution account described in
Paragraph 1(c) of this Annex A.
(b) Supplemental Pension Benefit. The "supplemental
pension benefit" shall be the greater of (i) the supplement cash balance
accrued benefit described in Paragraph 1(b)(1) of this Annex A, or (ii) the
supplement unit credit accrued benefit described in Paragraph 1(b)(2) of
this Annex A.
(1) The "supplement cash balance accrued benefit" is
the difference, if any, between (A) and (B) where:
(A) is the benefit to which the Executive would be
entitled under the Retirement Plan as in effect immediately prior to the
Change of Control or, if more favorable to the Executive, as in effect
generally at any time thereafter during the Employment Period with respect
to other peer executives of the Company and its affiliated companies,
expressed in the normal form of benefit, if such benefit was computed (i)
as if benefits under such plan were based upon the Executive's Bonus
Compensation (within the meaning of the FPL Group, Inc. Supplemental
Executive Retirement Plan as in effect immediately prior to the Change of
Control), (ii) without the annual compensation limitation imposed by
Section 401(a)(17) of the Code, and (iii) without the restrictions or the
limitations imposed by Sections 415(b) or 415(e) of the Code; and
(B) is the sum of the benefits payable to the
Executive under the Retirement Plan and the SERP, expressed in the normal
form of benefit.
(2) The "supplement unit credit accrued benefit" is
the difference, if any, between (A) and (B) where:
(A) is the benefit to which the Executive would be
entitled under the Prior Pension Plan (within the meaning of the FPL Group,
Inc. Supplemental Executive Retirement Plan as in effect immediately prior
to the Change of Control), expressed in the normal form of benefit, if such
benefit was computed (i) as if benefits under such plan were based upon the
Executive's Bonus Compensation, (ii) without the annual compensation
limitation imposed by Section 401(a)(17) of the Code, and (iii) without the
restrictions or the limitations imposed by Sections 415(b) or 415(e) of the
Code; and
(B) is the sum of the benefits payable to the
Executive under the Retirement Plan and the SERP, expressed in the normal
form of benefit.
(c) Supplemental Matching Contribution Account. The
"supplemental matching contribution account" shall be an account that is
credited annually with (i) supplemental matching contributions described in
Paragraph 1(c)(1) of this Annex A, and (ii) theoretical earnings described
in Paragraph 1(c)(2) of this Annex A.
(1) "Supplemental matching contributions" shall be
for each year ending on or prior to the Effective Date in which the
Executive participated in the SERP and for each year ending after the
Effective Date in which the Executive performs services for the Company or
its affiliated companies the difference, if any, between (A) and (B) where:
(A) is the matching contribution allocation for such
year to which the Executive would be entitled under the Thrift Plan as in
effect immediately prior to the Change of Control or, if more favorable to
the Executive, as in effect generally at any time thereafter during the
Employment Period with respect to other peer executives of the Company and
its affiliated companies if such allocation were computed (i) as if the
matching contribution allocation under such plan was based upon the
Executive's Bonus Compensation, (ii) without the annual compensation
limitation imposed by Section 401(a)(17) of the Code, (iii) without the
restrictions or the limitations imposed by Sections 415(c) or 415(e) of the
Code, and (iv) as if he made After Tax Member Basic Contributions (within
the meaning of the Thrift Plan) and Tax Saver Member Basic Contributions
(within the meaning of the Thrift Plan) at the same percentage of Bonus
Compensation as he made such contributions to the Thrift Plan for such
years; and
(B) is the sum of the matching contributions
allocated or credited to the Executive under the Thrift Plan and the SERP
for such year.
(2) "Theoretical earnings" shall be the income, gains
and losses which would have been credited on the Executive's supplemental
matching contribution account balance if such account were invested in the
Company Stock Fund (within the meaning of the Thrift Plan) offered as a
part of the Thrift Plan.
2. Construction and Definitions. Unless defined below or
otherwise in this Annex A, all of the capitalized terms used in this Annex
A shall have the meanings assigned to them in this Agreement:
(a) "Projected Years of Service" shall mean the
Executive's Years of Service (within the meaning of the FPL Group, Inc.
Supplemental Executive Retirement Plan as in effective immediately prior to
the Change of Control), plus the Years of Service he would have otherwise
been credited had his employment terminated on the later of the second
anniversary of his Date of Termination or the last day of the Employment
Period.
(b) "Projected Age" shall mean the age that the
Executive will have attained on the later of the second anniversary of his
Date of Termination or the last day of the Employment Period.
