SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-3632
INTERSTATE POWER COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 42-0329500
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1000 Main Street, P.O. Box 769, Dubuque, Iowa 52004-0769
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 319-582-5421
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock.
Shares Outstanding
May 1, 1997
Common Stock Par Value $3.50 Per Share 9,712,652 Shares
INTERSTATE POWER COMPANY
Form 10-Q
Table of Contents
Part I - Financial Information
Item 1. Statements of Income - Three Months Ended 1
Balance Sheets - Assets 2
Balance Sheets - Capitalization and Liabilities 3
Statements of Cash Flows 4
Summarized Financial Information 5
Item 2. Management's Discussion and Analysis 6
Part II - Other Information
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Defaults Upon Senior Securities 10
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 11
INTERSTATE POWER COMPANY
STATEMENTS OF INCOME
(Unaudited)
Three Months
Ended March 31
1997 1996
(In Thousands)
OPERATING REVENUES:
Electric $ 64,281 $ 65,915
Gas 24,592 21,134
88,873 87,049
OPERATING EXPENSES:
Operation:
Fuel for electric generation 14,999 14,774
Power purchased 11,722 14,193
Cost of gas sold 13,391 11,473
Other operating expenses 14,569 11,712
Maintenance 3,702 3,693
Depreciation 7,852 7,577
Income taxes:
Federal currently payable 4,062 3,961
State currently payable 1,214 1,186
Deferred taxes-net 491 1,047
Investment tax credit amortization (257) (257)
Property and other taxes 4,212 4,550
Total operating expenses 75,957 73,909
OPERATING INCOME 12,916 13,140
OTHER INCOME AND DEDUCTIONS 347 478
INCOME BEFORE INTEREST CHARGES 13,263 13,618
INTEREST CHARGES:
Long-term debt 3,644 3,646
Other interest charges 301 475
Allowance for borrowed funds used during construction (14) (44)
Total interest charges 3,931 4,077
NET INCOME 9,332 9,541
PREFERRED STOCK DIVIDENDS 617 615
NET INCOME AVAILABLE FOR COMMON STOCK $ 8,715 $ 8,926
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 9,679 9,564
EARNINGS PER COMMON SHARE OUTSTANDING $ .90 $ .93
DIVIDENDS PAID PER COMMON SHARE $ .52 $ .52
The accompanying Notes to Financial Statements are an integral part of these
statements.
INTERSTATE POWER COMPANY
BALANCE SHEETS
ASSETS
(Unaudited)
Mar. 31 Dec. 31
1997 1996
(In Thousands)
UTILITY PLANT (at original cost) $927,759 $924,183
Less accumulated provision for depreciation 433,486 426,471
Utility plant - net 494,273 497,712
OTHER PROPERTY AND INVESTMENTS 518 453
CURRENT ASSETS:
Cash and cash equivalents 2,540 3,072
Accounts receivable less reserve 27,638 28,227
Inventories - at average cost:
Fuel 11,444 16,623
Materials and supplies 6,699 6,214
Prepaid pension cost 5,859 3,331
Prepaid income tax 9,957 9,483
Other prepayments and current assets 973 683
Total current assets 65,110 67,633
DEFERRED DEBITS:
Regulatory assets 9,809 10,346
Regulatory assets for deferred income taxes 26,688 26,583
Deferred energy efficiency costs 30,627 29,857
Unamortized debt expense 5,658 5,710
Other 1,876 906
Total deferred debits 74,658 73,402
TOTAL $634,559 $639,200
The accompanying Notes to Financial Statements are an integral part of these
statements.
INTERSTATE POWER COMPANY
BALANCE SHEETS
CAPITALIZATION AND LIABILITIES
(Unaudited)
Mar. 31 Dec. 31
1997 1996
(In Thousands)
CAPITALIZATION:
Common stock, par value $3.50 per share;
Authorized - 30,000,000 shares; issued
and outstanding - 9,710,249 in 1997
and 9,670,866 in 1996 $ 33,986 $ 33,848
Additional paid-in capital 106,962 105,959
Retained earnings 69,935 66,251
Total common equity 210,883 206,058
Preferred stock, par value $50 per share 34,995 34,966
Total stockholders' equity 245,878 241,024
Long-term debt 171,750 171,731
Total capitalization 417,628 412,455
CURRENT LIABILITIES:
Commercial paper payable 13,400 28,700
Long-term debt maturing within one year 17,000 17,000
Accounts payable 11,467 14,013
Payrolls accrued 3,331 3,291
Taxes accrued 20,499 16,953
Interest accrued 4,317 2,817
FERC Order 636 transition costs 1,900 2,200
Other 4,769 3,477
Total current liabilities 76,683 88,451
DEFERRED CREDITS AND OTHER NON-CURRENT LIABILITIES:
Accumulated deferred income taxes 100,506 99,303
Accumulated deferred investment tax credits 16,756 17,013
Deferred pension cost 4,999 4,999
Accrued postretirement benefit cost 2,904 1,311
Environmental clean-up costs 7,234 7,234
Other 7,849 8,134
Total deferred credits and other non-current
liabilities 140,248 137,994
TOTAL $634,559 $639,200
The accompanying Notes to Financial Statements are an integral part of these
statements.
INTERSTATE POWER COMPANY
STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months
Ended March 31
1997 1996
(In Thousands)
RECONCILIATION OF NET INCOME TO CASH FLOWS
FROM OPERATING ACTIVITIES:
Net income $ 9,332 $ 9,541
Adjustment for non-cash items:
Depreciation 7,852 7,577
Deferred income taxes 1,099 1,056
Investment tax credit amortization (257) (257)
Allowance for equity funds used during construction (6) (0)
Changes in assets and liabilities:
Accounts receivable - net 588 (1,762)
Fuel 5,183 7,397
Materials and supplies (485) (253)
Accounts payable and other current liabilities (1,866) 1,350
Accrued and prepaid taxes 3,072 4,035
Interest accrued 1,499 1,504
Other prepayments and current assets (2,918) (2,983)
Deferred energy conservation costs (770) (950)
Regulatory assets 432 (44)
Other operating activities 1,154 287
Cash flows from operating activities 23,909 26,498
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to utility plant (4,447) (4,756)
Allowance for borrowed funds used during construction (14) (44)
Other (202) (295)
Cash flows from investing activities (4,663) (5,095)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 1,152 0
Retirement of long-term debt 0 0
Dividends on common and preferred stock (5,630) (5,572)
Sale of commercial paper - net (15,300) (16,150)
Cash flows from financing activities (19,778) (21,722)
NET INCREASE(DECREASE) IN CASH AND CASH EQUIVALENTS: (532) $ (319)
CASH AND CASH EQUIVALENTS:
Beginning of period $ 3,072 $ 1,537
End of period $ 2,540 $ 1,218
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (net of amount capitalized) $ 2,354 $ 2,373
Income taxes $ 785 $ 910
The accompanying Notes to Financial Statements are an integral part of these
statements.
INTERSTATE POWER COMPANY
Summarized Financial Information
The March 31, 1997 financial statements included herein have been prepared
by the company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. The accounting policies followed by the
company are set forth in Note 1 to the company's financial statements in the
1996 Form 10-K/A. It is suggested that these financial statements be read
in conjunction with the financial statements and the notes thereto included
in the company's Form 10-K/A for the year ended December 31, 1996.
In the opinion of the company, the financial statements reflect all
adjustments, consisting only of normal recurring accruals, necessary to
fairly state the results of operations.
INTERSTATE POWER COMPANY
PART I - FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis
The company's results of operations and financial condition are affected by
numerous factors, including weather, sales, and changes in customer rates.
EARNINGS PER SHARE for the first quarter of 1997 were $0.90 compared to
$0.93 for the first quarter of 1996. Net income for the first quarter of
1997 was $9.3 million, compared to $9.5 million for the first quarter of
1996.
The ELECTRIC MARGIN (revenue less certain other costs, primarily fuel and
purchased power) for the first quarter of 1997 was $36.4 million compared to
$36.1 million for the first quarter of 1996.
Three Months Ended March 31
ELECTRIC SALES (Mwh) 1997 1996 % Change
Residential 281,260 281,350 (0.0)
Commercial 186,753 188,455 (0.9)
Industrial 782,453 774,179 1.1
Other 15,545 15,663 (0.8)
Subtotal 1,266,011 1,259,647 0.5
Interchange 7,325 37,183 N/A
Sales for Resale 27,074 61,022 (55.6)
Total Electric Sales 1,300,410 1,357,852 (4.2)
The weather-sensitive portion of sales declined due to warmer temperatures
in the first quarter of 1997 compared to the same period in 1996. The
increase in industrial sales was primarily attributable to the strength of
the economy. Sales for resale were down as a result of 7 of the company's
18 firm municipal electric wholesale customers having elected to purchase
their requirements from other utilities. In addition, two firm municipal
customers have given the company notice that they intend to purchase their
requirements from other utilities when their contracts expire later in 1997.
Three Months Ended March 31
ELECTRIC REVENUES (000's) 1997 1996 % Change
Residential $19,971 $20,052 (0.4)
Commercial 11,641 11,864 (1.9)
Industrial 28,543 28,635 (0.3)
Other 2,986 2,572 16.1
Subtotal 63,141 63,123 0.0
Interchange 188 727 N/A
Sales for Resale 952 2,065 (53.9)
Total Electric Revenues $64,281 $65,915 (2.5)
The decreased revenues for the first quarter of 1997 were primarily
attributable to reduced resale Mwh sales as discussed above. Although
interchange revenues decreased this quarter, the impact on net income was
negligible as the majority of the margin on interchange sales is returned to
customers through the fuel adjustment clause.
The GAS MARGIN (revenue less certain other costs, primarily purchased gas)
for the first quarter of 1997 was $10.9 million compared to $9.5 million for
the same period in 1996. The improved gas margin is primarily due to a
Minnesota gas rate increase in an annual amount of $2.1 million which was
implemented in September 1996.
The COST OF GAS SOLD increased $1.9 million, or 16.7%, during the first
quarter of 1997 compared to the same period in 1996 primarily due to the 32%
increase in the unit cost of gas.
Three Months Ended March 31
GAS DELIVERIES (MMcf) 1997 1996 % Change
Residential 2,400 2,484 (3.4)
Commercial 1,413 1,403 0.7
Industrial 433 387 11.9
Other 5 5 N/A
Total Gas Sales 4,251 4,279 (0.7)
Gas Transportation 7,522 6,701 12.3
Total Gas Deliveries 11,773 10,980 7.2
The decrease in residential gas sales is primarily a result of 10% warmer
temperatures during the first quarter of 1997 compared to the first quarter
of 1996. The increase in transportation volumes was mainly attributable to
greater deliveries to two major industrial customers.
Three Months Ended March 31
GAS REVENUES $ (000's) 1997 1996 % Change
Residential $14,237 $12,496 13.9
Commercial 7,647 6,441 18.7
Industrial 1,923 1,482 29.8
Other 61 49 N/A
Total Gas Sales Revenues 23,868 20,468 16.6
Gas Transportation 723 666 8.6
Total Gas Revenues $24,591 $21,134 16.4
The cost of FUEL FOR ELECTRIC GENERATION was comparable to the first quarter
of 1996, however, expenses were adjusted for the net overcollection of the
fuel clause, resulting in a reduction in net cost of $2.0 million, or 12.6%
PURCHASED POWER EXPENSE decreased $2.5 million, or 17.4%. compared to last
year. Kilowatt-hours generated and purchased by the company decreased 6.2%
compared to the first quarter of 1996, while the cost per kilowatt-hour
decreased by 10.2%. Capacity charges included in purchased power expense
were $5.8 million for both the first quarter of 1997 and the first quarter
of 1996.
OTHER OPERATING EXPENSE included an increase over last year of $0.7 million
in litigation expense to recover investigation and remediation costs for
coal tar waste clean-up at former manufactured gas sites. In addition, the
1997 operating costs included an increase of $0.3 million in transmission
costs resulting from changes in federal open access rules. Also included in
the 1997 expense was an increase of approximately $0.6 million of energy
efficiency cost recovery for the Minnesota jurisdiction. The first quarter
of 1997 included $343,000 of transmission service expenses compared to
$44,000 during the same period in 1996. These intra-pool transmission
service fees are required by the MAPP Agreement which was effective May 1,
1995. Under the MAPP Agreement, the company realized revenues of $327,000
during the first quarter of 1997 compared to $30,000 in 1996.
DEPRECIATION EXPENSE increased by $275,000 or 3.6% for the first quarter of
1997 compared to the first quarter of 1996. This was primarily due to
increased investment in utility plant and increased depreciation rates
approved by the Minnesota Public Utilities Commission. The increased rates
were implemented in September 1996 and were retroactive to January 1, 1996.
Total INCOME TAX EXPENSE was $5.7 million for the first quarter of 1997
compared to $6.3 million for the first quarter of 1996. The decrease was
mainly due to lower income before taxes. The Internal Revenue Service has
completed its audit of the federal income tax filings for the years 1992,
1993, and 1994.
OTHER INCOME included $0.5 million of supplemental income for implementing
demand side management (DSM) programs. Continued expenditures for DSM
increased the total deferred amounts to $30.6 million at March 31, 1997
compared to $24.1 million at March 31, 1996. The 1990, 1991 and 1992 DSM
costs are being recovered over a four year period beginning in October 1994.
An Iowa Utilities Board order, issued on April 7, 1997, allows the company
to recover the 1993, 1994, and 1995 DSM costs in the amount of $19.5 million
over a four year period. The company expects to begin recovery of these
costs in June 1997.
OTHER INTEREST EXPENSE decreased approximately $174,000 primarily due to
interest on short-term borrowings. Short-term interest expense was $257,000
for the first quarter of 1997 compared to $429,000 for 1996. The average
outstanding balance of short-term borrowings during the first quarter of
1997 was $18.9 million compared to $30.3 million during the first quarter of
1996. Interest rates for the first quarter of 1997 averaged 5.4% compared
to 5.6% in 1996.
AVERAGE TEMPORARY INVESTMENTS during the first quarter of 1997 were $2.6
million compared to $2.9 million in 1996. The average interest rate was
5.3% in the first quarter of 1997 compared to 5.4% in 1996.
FUEL INVENTORIES were $11.4 million at March 31, 1997, compared to $16.6
million at December 31, 1996 and $11.9 million at March 31, 1996. The
decline in inventories from December 31st is primarily due to normal
seasonal draw-down of coal supplies during the winter when the river is
closed to barge traffic, and the withdrawal of natural gas from underground
storage during the winter heating season.
CONSTRUCTION EXPENDITURES during the first quarter of 1997 totaled $4.4
million compared to $4.8 million in 1996. Work on a pipeline installation
project accounted for approximately $0.4 million of construction
expenditures during the first quarter of 1997. Construction work in
progress as of
March 31, 1997 totalled $4.0 million compared to $3.9 million at March 31,
1996. The 1997 and 1998 construction programs are estimated to be $36
million and $45 million, respectively.
OTHER ITEMS
The company does not anticipate any public offerings for new debt or new
stock in the next two years other than the purchase of newly issued shares
on behalf of the Dividend Reinvestment and Stock Purchase Plan. Current
projections of construction expenditures for the 1997 and 1998 periods do
not indicate any need for permanent financing.
In May 1995 the company filed an application with the Minnesota Public
Utilities Commission for an increase in gas rates in an annual amount of
$2.4 million. Increased interim rates in an annual amount of $1.5 million
were placed in effect in June 1995. On February 29, 1996 the Commission
issued an order allowing an increase in gas rates of $2.1 million. Rates
reflecting the increase were implemented in September 1996. The Department
of Public Service and the Office of Attorney General appealed the
Commission's decision. The appeal was denied by the Minnesota Court of
Appeals on February 18, 1997. On March 21, 1997, the Department of Public
Service and the Office of Attorney General appealed the decision of the
Court of Appeals (and the Commission) to the Minnesota Supreme Court.
The company's potential liability for coal tar waste at former manufactured
gas plant sites was discussed in the 1996 Annual Report to Stockholders.
Very little activity occurred in the first quarter of 1997 other than
additional investigative processes. Testing and soil sampling are
continuing, but the company is unable to determine what, if any, remediation
will be necessary until a later date. The company is continuing to pursue
recovery of costs from certain of its insurers. The company is unable at
this point to determine what portion, if any, of the proceeds from the
insurance companies will be refunded to its customers.
INTERSTATE POWER COMPANY
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to the 1996 Form 10-K/A Item 3 for certain
pending legal proceedings. Reference is also made to the
Management Discussion and Analysis included herein. Other than
these items, there are no material pending legal proceedings, or
proceedings known to be contemplated by governmental authorities,
other than ordinary routine litigation incidental to the business,
to which the company is a party or of which any of the company's
property is the subject.
ITEM 2. CHANGES IN SECURITIES
The rights of holders of registered securities have not been
materially modified, limited or qualified.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
No defaults upon senior securities.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) THE DATE OF THE MEETING AND WHETHER IT WAS AN ANNUAL OR SPECIAL
MEETING.
(b) IF THE MEETING INVOLVED THE ELECTION OF DIRECTORS, THE NAME OF
EACH DIRECTOR ELECTED AT THE MEETING AND THE NAME OF EACH OTHER
DIRECTOR WHOSE TERM OF OFFICE AS A DIRECTOR CONTINUED AFTER THE
MEETING.
(c) A BRIEF DESCRIPTION OF EACH OTHER MATTER VOTED UPON AT THE MEETING
AND STATE THE NUMBER OF VOTES CAST FOR, AGAINST OR WITHHELD, AS
WELL AS THE NUMBER OF ABSTENTIONS AND BROKER NON-VOTES, AS TO EACH
SUCH MATTER, INCLUDING A SEPARATE TABULATION WITH RESPECT TO EACH
NOMINEE FOR OFFICE.
No submission of matters to a vote of security holders.
ITEM 5. OTHER INFORMATION
Proposed Merger
The company, WPL Holdings, Inc. (WPLH) and IES Industries Inc.
(IES) have entered into an Agreement and Plan of Merger dated
November 10, 1995, as amended on May 22, 1996 and August 16, 1996,
(Merger Agreement) providing for: a) the company becoming a
wholly-owned subsidiary of WPLH and b) the merger of IES with and
into WPLH, which merger will result in the combination of IES and
WPLH as a single holding company. The holding company will be
named Interstate Energy Corporation (Interstate Energy). Under
terms of the Merger Agreement, the outstanding shares of WPLH's
common stock will remain unchanged and outstanding as shares of
Interstate Energy. Each outstanding share of IES common stock
will be converted to 1.14 shares of Interstate Energy's common
stock and each share of the company's common stock will be
converted to 1.11 shares of Interstate Energy's common stock. The
proposed merger, which will be accounted for as a pooling of
interests, was approved by the shareholders of each company on
September 5, 1996, and is subject to approval by several federal
and state regulatory agencies. On March 24, the Minnesota Public
Utilities Commission issued its order granting approval for the
merger with conditions. In Illinois, an administrative law judge
for the Illinois Commerce Commission also recommended approval of
the merger. The Federal Energy Regulatory Commission is holding
hearings on the merger beginning the end of April. Wisconsin's
and Iowa's public service commissions will hold hearings in June
and July, respectively. The companies expect final regulatory
approval by the latter part of 1997.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) List of Exhibits filed as a part of this report:
Exhibit
Number Description of Exhibit
10.1 Change in Control Agreement, dated November 8,
1995, by and between Interstate Power Company and
Michael R. Chase.
10.2 Change in Control Agreement, dated November 8,
1995, by and between Interstate Power Company and
Richard R. Ewers.
10.3 Change in Control Agreement, dated November 8,
1995, by and between Interstate Power Company and
Donald E. Hamill.
10.4 Change in Control Agreement, dated November 8,
1995, by and between Interstate Power Company and
Donald D. Jannette.
10.5 Change in Control Agreement, dated November 8,
1995, by and between Interstate Power Company and
Joseph C. McGowan.
10.6 Change in Control Agreement, dated November 8,
1995, by and between Interstate Power Company and
Ray P. Richards.
10.7 Change in Control Agreement, dated November 8,
1995, by and between Interstate Power Company and
William C. Troy.
10.8 Change in Control Agreement, dated November 8,
1995, by and between Interstate Power Company and
Dale R. Sharp.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (CONT'D.)
Exhibit
Number Description of Exhibit
10.9 Change in Control Agreement, dated November 8,
1995, by and between Interstate Power Company and
Wayne H. Stoppelmoor.
27 Financial Data Schedule (required for electronic
filing only in accordance with Item 601(c)(1) of
Regulation S-K).
(b) No reports were filed on Form 8-K.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Interstate Power Company
(Registrant)
Date May 12, 1997 /s/ W. C. Troy
W. C. Troy, Controller
(Duly Authorized Officer and
Principal Accounting Officer)
INDEX OF EXHIBITS FILED HEREWITH:
EX-10.1 Change in Control Agreement, dated November 8, 1995, by and
between Interstate Power Company and Michael R. Chase.
EX-10.2 Change in Control Agreement, dated November 8, 1995, by and
between Interstate Power Company and Richard R. Ewers.
EX-10.3 Change in Control Agreement, dated November 8, 1995, by and
between Interstate Power Company and Donald E. Hamill.
EX-10.4 Change in Control Agreement, dated November 8, 1995, by and
between Interstate Power Company and Donald D. Jannette.
EX-10.5 Change in Control Agreement, dated November 8, 1995, by and
between Interstate Power Company and Joseph C. McGowan.
EX-10.6 Change in Control Agreement, dated November 8, 1995, by and
between Interstate Power Company and Ray P. Richards.
EX-10.7 Change in Control Agreement, dated November 8, 1995, by and
between Interstate Power Company and William C. Troy.
EX-10.8 Change in Control Agreement, dated November 8, 1995, by and
between Interstate Power Company and Dale R. Sharp.
EX-10.9 Change in Control Agreement, dated November 8, 1995, by and
between Interstate Power Company and Wayne H. Stoppelmoor.
EX-27 Financial Data Schedule (required for electronic filing only in
accordance with Item 601(c)(1) of Regulation S-K).
EX-10.1
AGREEMENT
THIS AGREEMENT, dated as of November 8, 1995 (this "Agreement"),
is made by and between Interstate Power Company, a Delaware corporation,
having its principal offices at 1000 Main Street, Dubuque, Iowa 52004-0769
(the "Company"), and Michael R. Chase residing at 2305 Pasadena Drive #67,
Dubuque, Iowa 52001 (the "Executive").
WHEREAS, the Company considers it essential to the best
interests of its shareholders to foster the continued employment of key
executive management personnel; and
WHEREAS, the Board of Directors of the Company (the "Board")
recognizes that, as is the case with many publicly-held corporations, the
possibility of a Change in Control (as defined in Section 1.3 below) of
the Company exists from time to time and that such possibility, and the
uncertainty, instability and questions that it may raise for and among key
executive management personnel, may result in the premature departure or
significant distraction of such management personnel to the material
detriment of the Company and its shareholders; and
WHEREAS, the Board has determined that appropriate steps should
be taken to reinforce, focus and encourage the continued attention and
dedication of key members of the executive management of the Company and
its subsidiaries, including (without limitation) the Executive, to their
assigned duties without distraction in the face of potentially disturbing
or unsettling circumstances arising from the possibility of a Change in
Control of the Company;
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and the Executive hereby agree as
follows:
1. Definitions. For purposes of this Agreement, the following
terms shall have the meanings set forth below:
1.1 "Annual Base Salary" shall mean the Executive's rate of
regular basic annual compensation prior to any reduction under a salary
reduction agreement pursuant to section 401(k) or section 125 of the
Internal Revenue Code of 1986, as amended from time to time (the "Code")
or any deferred compensation arrangements, and shall not include, without
limitation, cost of living allowances, fees, retainers, reimbursements,
bonuses, incentive awards, prizes or similar payments.
1.2 "Cause" shall mean:
(i) the willful and continued failure by the Executive to
substantially perform the Executive's duties with the Company, or a
subsidiary of the Company, as such duties may reasonably be defined
from time to time by the Board (or a duly authorized committee
thereof), or to abide by the reasonable written policies of the
Company or of the Executive's primary employer (other than any such
failure resulting from the Executive's incapacity due to physical or
mental illness) after a written demand for substantial performance is
delivered to the Executive by the Board, which demand specifically
identifies the manner in which the Board believes that the Executive
has not substantially performed the Executive's duties or has not
abided by any reasonable written policies, or
(ii) the continued and willful engaging by the Executive in
conduct which is demonstrably and materially injurious to the Company
or its subsidiaries, monetarily or otherwise; or
(iii) the Executive's conviction of, or plea of no contest
to, a felony.
For purposes of clauses (i) and (ii) of this definition, no act, or
failure to act, on the Executive's part shall be deemed "willful" unless
done, or omitted to be done, by the Executive in bad faith and without
reasonable belief that the Executive's act, or failure to act, was in the
best interest of the Company or its subsidiaries. Any act, or failure to
act, based upon authority given pursuant to a resolution duly adopted by
the Board or upon the instructions of the Board (or a committee thereof),
the Company's chief executive officer or other duly authorized senior
officer of the Company (as appropriate) or based upon the advice of
counsel for the Company shall be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in the best
interests of the Company and its subsidiaries. The cessation of
employment of the Executive shall not be deemed to be for Cause unless and
until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than three-
quarters (3/4) of the entire membership of the Board at a meeting of the
Board called and held for such purpose (after reasonable notice of any
such meeting is provided to the Executive and the Executive is given an
opportunity, together with counsel, to be heard before the Board) finding
that, in the good faith opinion of the Board, the Executive has acted in a
manner described in clause (i) or (ii) above and specifying the
particulars thereof in detail.
1.3 "Change in Control" shall mean and be deemed to have
occurred if:
(i) any Person is or becomes the Beneficial Owner (as
that term is defined in Rule 13d-3 under the Securities Exchange
Act of 1934 (the "Exchange Act")), directly or indirectly, of
securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired
directly from the Company) representing twenty-five percent
(25%) or more of the combined voting power of the Company's then
outstanding securities; or
(ii) during any period of twenty-four (24)
consecutive months (not including any period prior to November
1, 1995), individuals who at the beginning of such period
constitute the Board and any new director (other than a director
designated by a Person who has entered into an agreement with
the Company to effect a transaction described in clause (i),
(iii) or (iv) of this definition or any such individual whose
initial assumption of office occurs as a result of either an
actual or threatened election contest (as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act) or other actual or threatened solicitation of proxies or
consents) whose election by the Board or nomination for election
by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of such period or whose
election or nomination for election was previously so approved,
cease for any reason to constitute a majority of the Board; or
(iii) the shareholders of the Company approve a
reorganization, merger or consolidation, other than a
reorganization, merger or consolidation with respect to which
all or substantially all of the individuals and entities who
were Beneficial Owners, immediately prior to such
reorganization, merger or consolidation, of the combined voting
power of the Company's then outstanding securities beneficially
own, directly or indirectly, immediately after such
reorganization, merger or consolidation, more then seventy-five
percent (75%) of the combined voting power of the securities of
the corporation resulting from such reorganization, merger or
consolidation in substantially the same proportions as their
respective ownership, immediately prior to such reorganization,
merger or consolidation, of the combined voting power of the
Company's securities; or
(iv) the shareholders of the Company approve (a) the
sale or disposition by the Company (other than to a subsidiary
of the Company) of all or substantially all of the assets of the
Company (or any such sale or disposition is effected through
condemnation proceedings), or (b) a complete liquidation or
dissolution of the Company.
Notwithstanding the foregoing, a Change in Control shall not include any
event, circumstance or transaction which results from the action
(excluding the Executive's employment activities with the Company or any
of its affiliates) of any Person or group of Persons which includes, is
directly affiliated with or is wholly or partly controlled by one or more
executive officers of the Company and in which the Executive actively
participates.
1.4 "Company" shall include Interstate Power Company and any
successor to its business and/or assets which assumes (either expressly,
by operation of law or otherwise) and/or agrees to perform this Agreement
by operation of law or otherwise (except in determining, under Section 1.3
hereof, whether or not any Change in Control of the Company has occurred
in connection with such succession).
1.5 "Disability" shall mean and be deemed the reason for the
termination by the Company of the Executive's employment, if, as a result
of the Executive's incapacity due to physical or mental illness, (i) the
Executive shall have been absent from the full-time performance of the
Executive's duties with the Company for a period of six (6) consecutive
months, (ii) the Company gives the Executive a Notice of Termination for
Disability, and (iii) within thirty (30) days after such Notice of
Termination is given, the Executive does not return to the full-time
performance of the Executive's duties.
1.6 "Employment Period" shall mean the period commencing on the
date of any Change in Control until the earliest to occur of (i) the date
which is thirty-six (36) months from the date of any such Change in
Control, (ii) the date of termination by the Executive of the Executive's
employment for any reason, (iii) the termination by the Company of the
Executive's employment for any reason or (iv) the Executive's attaining
age sixty-two (62).
1.7 "Good Reason" shall mean the occurrence (without the
Executive's prior express written consent) of any one of the following
acts, or failures to act, unless, in the case of any act or failure to act
described in clauses (i), (iv), (v) or (vi) below, such act or failure to
act is corrected by the Company prior to the Date of Termination specified
in the Notice of Termination given by the Executive in respect thereof not
later than six (6) months after the occurrence of the event that serves as
the basis for the Notice of Termination:
(i) the assignment to the Executive of any duties or
responsibilities inconsistent with those described in Section
3.2 below or with the Executive's position(s) or status
(including, without limitation, offices, titles, and reporting
relationships) as an executive officer of the Company and its
subsidiaries or a substantial adverse alteration in the nature
of the Executive's authority, duties, responsibilities, position
or status from those described in Section 3.2 below or
otherwise;
(ii) a reduction in the Executive's Annual Base
Salary or annual bonus opportunity as in effect on the date of
this Agreement or as the same may be increased at any time
thereafter and from time to time;
(iii) the relocation of the Company's principal
executive offices to a location more than one hundred and twenty
(120)* miles from its location on the date of this Agreement
(or, if different, more than one hundred and twenty (120)* miles
from where such offices are located immediately prior to any
Potential Change in Control) or the Company's requiring the
Executive to be based anywhere other than the Company's
principal executive offices except for required travel on the
Company's business to an extent substantially consistent with
the Executive's business travel obligations as of the date of
this Agreement;
(iv) any failure by the Company to comply with any of
the provisions of this Agreement, other than an 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;
* Thirty (30) miles if the Executive has attained age 60 at the time of
the Change in Control.
(v) the failure by the Company or a subsidiary to
continue in effect any pension benefit or incentive or deferred
compensation plan in which the Executive participates
immediately prior to any Potential Change in Control which is
material to the Executive's total compensation, unless an equitable
arrangement (embodied in an ongoing substitute or alternative plan or
arrangement) has been made with respect to such plan, or the failure
by the Company or a subsidiary to continue the Executive's
participation therein (or in such substitute or alternative plan or
arrangement) on a basis not materially less favorable, both in terms
of the amount of benefits provided and the level of the Executive's
participation relative to other participants, as existed at the time
of the Potential Change in Control;
(vi) the failure by the Company or a subsidiary to
continue to provide the Executive with health and welfare
benefits substantially similar to those enjoyed by the Executive
under any of the Company's or a subsidiary's retirement, life
insurance, medical, health and accident, or disability or
similar plans in which the Executive was participating at the
time of any Potential Change in Control, the taking of any
action by the Company or a subsidiary which would directly or
indirectly materially reduce any of such benefits or deprive the
Executive of any material fringe benefit enjoyed by the
Executive at the time of the Potential Change in Control, or the
failure by the Company or a subsidiary to provide the Executive
with the number of paid vacation days to which the Executive is
entitled in accordance with the Company's or a subsidiary's
normal vacation policy in effect at the time of the Potential
Change in Control;
(vii) any purported termination of the Executive's
employment which is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 7.1; and/or
(viii) the failure of the Company to obtain a written
agreement reasonably satisfactory to the Executive from any successor
to the Company (as described in Section 9.1) to perform this
Agreement.
1.8 "Person" shall have the meaning ascribed thereto in Section
3(a)(9) of the Exchange Act, as modified, applied and used in Sections
13(d) and 14(d) thereof; provided, however, a Person shall not include (i)
the Company or any of its subsidiaries, (ii) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any of
its subsidiaries (in its capacity as such), (iii) an underwriter
temporarily holding securities pursuant to an offering of such securities,
or (iv) a corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same character and proportions as
their ownership of stock of the Company.
1.9 "Potential Change in Control" shall mean and be deemed to
have occurred if:
(i) the Company enters into an agreement, the
consummation of which would result in the occurrence of a Change
in Control;
(ii) the Company or any Person publicly announces an
intention to take actions which, if consummated, would
constitute a Change in Control; and/or
(iii) any Person becomes the Beneficial Owner,
directly or indirectly, of securities of the Company
representing ten percent (10%) or more of the combined voting
power of the Company's then outstanding securities, or any
Person increases such Person's beneficial ownership of such
securities by five (5) percentage points or more over the
percentage so owned by such Person on November 1, 1995.
1.10 "Retirement" shall mean and be deemed the reason for the
termination by the Executive of the Executive's employment if such
employment is terminated in accordance with the Company's normal
retirement policy for those aged 62 and older, not including early
retirement or so-called "window period" retirements, generally applicable
to its officers, as in effect immediately prior to any Potential Change in
Control.
2. Term of this Agreement. This Agreement shall commence on the
date hereof and shall continue in effect through December 31, 1998;
provided, however, that commencing on January 1, 1999 and each January 1
thereafter, the term of this Agreement shall automatically be extended for
one additional year unless, not later than June 30 of the preceding year,
the Company or the Executive shall have given written notice to the other
not to extend this Agreement or a Change in Control shall have occurred
prior to any such January 1; provided, further, however, that if a Change
in Control shall have occurred during the term of this Agreement, this
Agreement shall continue in effect for a period of not less than thirty-
six (36) months beyond the month in which such Change in Control occurred
(the "Term"). Notwithstanding the foregoing provisions of this Section 2,
the Term shall terminate upon the Executive's attaining the age of
sixty-two (62) years (or the date on which the Executive would have
attained age 62 if the Executive had survived).
3. Company's Covenants.
3.1 Severance Payments. In order to induce the Executive to
remain in the employ of the Company and/or one or more of its subsidiaries
and in consideration of the Executive's covenants set forth in Section 4
below, the Company agrees, under the terms and conditions described herein
and in addition to the amounts payable to the Executive under Section 5
below, to pay the Executive the "Severance Payments" described in Section
6.1 below and the other payments and benefits described herein in the
event the Executive's employment with the Company is terminated during the
Employment Period or under the other circumstances set forth in Section
6.1 below.
3.2 Position and Duties. During the Employment Period, (a) the
Executive's position (including status, offices, titles and reporting
relationships), authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of those
held, exercised and assigned at any time during the one hundred eighty
(180) day period immediately preceding any related Potential Change in
Control, and (b) the Executive's services shall be performed at the
location where the Executive was employed immediately preceding any such
Potential Change in Control, or any office or location less than one
hundred and twenty (120)* miles from such location.
3.3 Base Salary. During the Employment Period, the Executive
shall receive Annual Base Salary at least equal to twelve (12) times the
highest monthly base salary paid or payable, including (without
limitation) any base salary which has been earned but deferred, to the
Executive by the Company and its affiliated companies in respect of the
twelve (12) month period immediately preceding the month in which any
related Potential Change in Control occurs. In addition, Annual Base
Salary shall not be reduced after the occurrence of a Potential Change in
Control. As used in this Agreement, the term "affiliated companies" shall
include any company controlled by, controlling or under common control
with the Company.
3.4 Annual Bonus. In addition to Annual Base Salary, if the
Company adopts an annual bonus program for officers during the Employment
Period (the "Annual Bonus") the Executive shall be entitled to tee in such
Annual Bonus program on a basis equivalent to other executive officers of
the Company. Each 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 shall elect to defer the
receipt of such Annual Bonus in accordance with rules established by the
Company for that purpose.
3.5 Incentive, Savings and Retirement Plans. During the
Employment Period, the Executive shall be entitled to participate in all
incentive, savings and retirement plans, practices, policies and programs
applicable generally to other peer executives of the Company and its
subsidiaries, but in no event shall such plans, practices, policies and
programs provide the Executive with incentive opportunities (measured with
respect to both regular and special incentive opportunities, to the
extent, if any, that such distinction is applicable), 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 one hundred eighty (180) day period immediately preceding any related
Potential Change in Control or if more favorable to the Executive, those
provided generally at any time thereafter to other peer executives of the
Company and its affiliated companies.
3.6 Welfare Benefit Plans. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be
entitled to participate in and shall receive all benefits under all of the
health and welfare benefit plans, practices, policies and programs
* Thirty (30) miles if the Executive has attained age 60 at the time of
the Change in Control.
provided by the Company and its affiliated companies (including, without
limitation, medical, prescription, dental, disability, employee life,
group life, accidental death and travel accident insurance plans and
programs) to the extent (and at the same cost) applicable generally to
other peer executives of the Company and its subsidiaries, but in no event
shall such plans, practices, policies and programs provide the Executive
with benefits that 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 one hundred eighty (180) day period
immediately preceding any related Potential Change in Control or, if more
favorable to the Executive, those provided generally at any time
thereafter to other peer executives of the Company and its affiliated
companies.
3.7 Expenses. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all reasonable
business 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
one hundred eighty (180) day period immediately preceding any related
Potential Change in Control 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.
3.8 Office Support; Perquisites. During the Employment Period,
the Executive shall be entitled to a private office, secretarial support
and other facilities, perquisites and programs to enable the Executive to
be able to discharge the Executive's responsibilities hereunder 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 one hundred eighty (180) day period immediately
preceding any related Potential Change in Control 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.
3.9 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 one
hundred eighty (180) day period immediately preceding any related
Potential Change in Control 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.
4. The Executive's Covenants.
4.1 Employment. The Executive agrees that, subject to the
terms and conditions of this Agreement, in the event of a Change in
Control during the Term the Executive will remain in the employ of the
Company during any related Employment Period.
4.2 Time and Attention. During the Employment Period, and
excluding any periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote reasonable attention and time
during normal business hours to the business and affairs of the Company
and to use the Executive's reasonable best efforts to perform faithfully
and efficiently the responsibilities and duties assigned to the Executive
hereunder. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (i) serve on corporate, civic or
charitable boards or committees, (ii) deliver lectures and fulfill
speaking engagements and (iii) manage personal investments, so long as
such activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company and its
subsidiaries 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 any Potential Change in Control, the
reinstatement or continued conduct of such activities (or the
reinstatement or conduct of activities similar in nature and scope
thereto) subsequent to any related Potential Change in Control shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company and its subsidiaries.
4.3. Non-interference; Confidential Information
(a) No Interference. For so long as the Executive is employed
by the Company, and for a period of two (2) years thereafter, the
Executive shall not, whether for his own account or for the account of any
other individual, partnership, firm, corporation or other business
organization (other than the Company or one of its affiliates),
intentionally solicit, endeavor to entice away from the Company (or any of
its affiliates), or otherwise interfere with the relationship of the
Company (or any of its affiliates) with, any person who is employed by or
otherwise engaged to perform services for the Company (or any of its
affiliates) including, but not limited to, any independent representatives
or organizations, or any person or entity that is a customer of the
Company (or any of its affiliates). The Executive understands and agrees
that the rights and obligations set forth in this Section 4.3(a) could
extend beyond the Term.
(b) Confidential Information. The Executive covenants and
agrees with the Company that he will not at any time, during or after
employment with the Company, except in performance of the Executive's
obligations to the Company or with the prior express written consent of
the Board of Directors, directly or indirectly, intentionally or
unintentionally, disclose any Confidential Information that he may learn
or has learned by reason of his employment or association with the
Company, or any predecessors to its business, or use any such information
for his own personal benefit or gain. The term "Confidential Information"
includes, without limitation, information not previously disclosed to the
public or to the trade by the Company's management with respect to the
products, facilities and methods, trade secrets and other intellectual
property, systems, procedures, manuals, confidential reports, fee or rate
information, customer lists, financial information (including the
revenues, costs or profits associated with any of the Company's activities
or products), business plans, prospects, opportunities or other
information of the Company or any of its affiliates. Confidential
Information shall not include information which (i) is or becomes
generally available to the public other than as a result of disclosure by
the Executive in violation of this Section 4.3(b) or (ii) the Executive is
required to disclose under any applicable laws, regulations or directives
of any government agency, tribunal or authority having jurisdiction in the
matter or under subpoena or other process of law. The Executive
understands and agrees that the rights and obligations set forth in this
Section 4.3 (b) shall extend beyond the Term.
(c) Exclusive Property. The Executive confirms that all
Confidential Information is and shall remain the exclusive property of the
Company or any of its affiliates. All business records, papers and
documents kept or made by the Executive relating to the business of the
Company (or any of its affiliates) or any Confidential Information shall
be and remain the property of the Company. Upon termination of employment
with the Company or upon the request of the Company at any time, the
Executive shall promptly deliver to the Company, and shall not without the
prior express written consent of the Company retain, any and all copies of
(i) any written materials not previously made available to the public, or
(ii) records and documents made by the Executive or coming into his
possession concerning any Confidential Information or the business or
affairs of the Company or any predecessors to its business, or any of its
affiliates. The Executive understands and agrees that the rights and
obligations set forth in this Section 4.3(c) shall extend beyond the Term.
(d) Injunctive Relief. Without intending to limit the remedies
available to the Company, the Executive acknowledges that a breach of any
of the covenants contained in this Section 4.3 may result in material
irreparable injury to the Company or its affiliates for which there is no
adequate remedy at law, that it will not be possible to measure damages
for such injuries precisely and that, in the event of such a breach or
threat thereof, the Company shall be entitled to obtain a temporary
restraining order and/or a preliminary or permanent injunction restraining
the Executive from engaging in activities prohibited by this Section 4.3
or such other relief as may be required to specifically enforce any of the
covenants in this Section 4.3.
5. Compensation Other Than Severance Payments.
5.1 Disability. Following a Potential Change in Control and
during the Term, during any period that the Executive fails to perform the
Executive's full-time duties with the Company as a result of incapacity
due to physical or mental illness, the Executive's full salary shall be
paid to the Executive by the Company at a rate no less than the rate in
effect at the commencement of any such disability period, together with
all compensation and benefits payable to the Executive under the terms of
any compensation or benefit plan, program or arrangement maintained by the
Company or its subsidiaries during such disability period, until the
Executive's employment is terminated by the Company for Disability.
5.2 Base Salary. If the Executive's employment shall be
terminated for any reason following a Potential Change in Control and
during the Term, the Executive's full salary shall be paid to the
Executive by the Company through the Date of Termination (as defined below
in Section 7.2) at the rate in effect at the time the Notice of
Termination is given, together with all compensation and benefits payable
to or with respect to the Executive through the Date of Termination under
the terms of any compensation or benefit plan, program or arrangement
maintained by the Company or its subsidiaries during such period.
5.3 Benefits. If the Executive's employment shall be
terminated for any reason following a Potential Change in Control and
during the Term, the Executive's normal post-termination compensation and
benefits shall be paid to the Executive as such payments become due. Such
post-termination compensation and benefits shall be determined under, and
paid in accordance with, the retirement, health insurance, life insurance
and other compensation or benefit plans, programs and arrangements
maintained by the Company or its affiliates.
6. Severance Payments.
6.1 Severance. The Company shall pay the Executive the
payments and benefits described in this Section 6.1 (the "Severance
Payments") upon the termination of the Executive's employment with the
Company following a Change in Control and during the Term, in addition to
the payments and benefits described in Section 5 hereof, unless such
termination is (i) by the Company for Cause, (ii) by reason of Retirement,
(iii) by the Executive without Good Reason, (iv) due to death, or (v) due
to Disability. In addition, the Executive's employment shall be deemed to
have been terminated following a Change in Control by the Company without
Cause or by the Executive with Good Reason (a) if the Executive reasonably
demonstrates that the Executive's employment was terminated prior to a
Change in Control without Cause (1) at the request of a Person who has
entered into an agreement with the Company the consummation of which will
constitute a Change in Control (or who has taken other steps reasonably
calculated to effect a Change in Control) or (2) otherwise in connection
with, as a result of or in anticipation of a Change in Control, or (b) if
the Executive terminates his employment for Good Reason prior to a Change
in Control and the Executive reasonably demonstrates that the
circumstance(s) or event(s) which constitute such Good Reason occurred (1)
at the request of such Person or (2) otherwise in connection with, as a
result of or in anticipation of a Change in Control. The Executive's
right to terminate the Executive's employment for Good Reason shall not be
affected by the Executive's incapacity due to physical or mental illness.
The Executive's continued employment shall not constitute consent to, or a
waiver of rights with respect to, any act or failure to act constituting
Good Reason hereunder. In the event of the Disability or death of the
Executive after the Date of Termination in respect of any termination
without cause or any termination for Good Reason, payments and benefits
shall be made to the Executive, or the Executive's beneficiaries or legal
representative, as the case may be.
(a) In lieu of any further salary and annual bonus
payments to the Executive for periods subsequent to the Date of
Termination, the Company shall pay to the Executive a lump sum
severance payment, in cash, equal to three (3) or, if less, the
number of years, including fractions, from the Date of
Termination until the Executive reaches the age of sixty-two
(62) years times the sum of (i) the Executive's Annual Base
Salary immediately preceding the Change in Control or, if
higher, the Executive's Annual Base Salary on the Date of
Termination, and (ii) the average annual bonus paid or payable
to the Executive with respect to the three (3) years (or portion
thereof with respect to which an annual bonus was paid) prior to
the year in which the Date of Termination occurs.
(b) For a thirty-six (36) month period after the Date
of Termination, or if sooner, until the Executive reaches the
age of sixty-two (62) years, the Company shall arrange to
provide the Executive with life, disability, accident and health
insurance benefits substantially similar (and at the same cost)
to those that the Executive is receiving immediately prior to
any related Potential Change in Control or the receipt of the
Notice of Termination (without giving effect to any reduction in
such benefits subsequent to a Change in Control which reduction
constitutes Good Reason), whichever is greater. Benefits
otherwise receivable by the Executive pursuant to this Section
6.1(b) shall be reduced to the extent comparable benefits are
actually received by or made available to the Executive without
cost during such period following the Executive's termination of
employment (and any such benefits actually received by the
Executive shall be reported to the Company by the Executive).
(c) The Executive shall receive, at the expense of the
Company, outplacement services, on an individualized basis at a level
of service commensurate with the Executive's status with the Company
immediately prior to the Change in Control (or, if higher,
immediately prior to the termination of the Executive's employment),
provided by a nationally recognized executive placement firm selected
by the Executive and reasonably satisfactory to the Company; provided
that the cost to the Company of such services shall not exceed 15% of
the Executive's Annual Base Salary in effect immediately prior to the
Change in Control.
(d) All outstanding stock options previously granted to
the Executive shall become immediately 100% vested and exercisable,
and all shares of restricted stock shall become immediately 100%
vested and all forfeiture restrictions thereon shall lapse. Such
accelerated and vested options shall be exercisable for the remainder
of the term of such option, as set forth in the Executive's related
stock option agreement (without regard to any truncation of such
period therein, or under any plan or arrangement maintained by the
Company,on account of any termination of the Executive's employment).
6.2 Code Section 280G Reduction. Notwithstanding any other
provisions of this Agreement or of any other agreement, contract,
understanding, plan or program entered into or maintained by the Company,
if any payment or benefit received or to be received by the Executive in
connection with a Change in Control or the termination of the Executive's
employment (whether pursuant to the terms of this Agreement or any other
plan, arrangement or agreement with (a) the Company or any affiliate,
parent or subsidiary of the Company, (b) any Person whose actions result
in a Change in Control, or (c) any Person affiliated with the Company)
(all such payments and/or benefits, including the payments and benefits,
if any, under this Section 6, being hereinafter referred to as the "Total
Payments") would subject the Executive to the excise tax imposed under
Section 4999 of the Code, on any successor section thereto (the "Excise
Tax"), and if the amount of such Total Payments, reduced by all federal,
state and local taxes applicable with respect thereto, including without
limitation the Excise Tax, is less than the amount of Total Payments which
would otherwise be payable to the Executive, after all such taxes, without
the imposition of the Excise Tax, then, to the extent necessary to
eliminate the imposition of the Excise Tax (after taking into account any
reduction in the Total Payments provided by reason of Section 280G of the
Code under plan, arrangement or agreement), (i) the cash and non-cash
payments and benefits payable under this Agreement shall first be reduced
(but not below zero), and (ii) all other cash and non-cash payments and
benefits shall next be reduced (but not below zero); but only if, by
reason of any such reduction, the Total Payments with any such reduction,
after all such taxes, shall exceed the Total Payments without any such
reduction, after all such taxes. For purposes of this Section 6.2, (A) no
portion of the Total Payments the receipt or enjoyment of which the
Executive shall have effectively waived in writing prior to the Date of
Termination shall be taken into account, (B) no portion of the Total
Payments shall be taken into account which in the opinion of tax counsel
selected in good faith by the Company does not constitute a "parachute
payment" within the meaning of Section 280G(b)(2) of the Code, including
(without limitation) by reason of Section 280G(b)(4)(A) of the Code, (C)
the payments and/or benefits under this Agreement shall be reduced only to
the extent necessary so that the Total Payments (other than those referred
to in clauses (A) and (B) above) in their entirety constitute reasonable
compensation for services actually rendered within the meaning of Section
280G(b)(4)(B) of the Code or are otherwise not subject to disallowance as
deductions, in the opinion of the tax counsel referred to above in clause
(B), and (D) the value of any non-cash payment or benefit or any deferred
payment or benefit included in the Total Payments shall be determined by
the Company's independent auditors in accordance with the principles of
Sections 280G(d)(3) and (4) of the Code. Except as otherwise provided
above, the foregoing calculations and determinations shall be made in good
faith by the Company and the Executive. If no agreement on the
calculations is reached, then the Executive and the Company will cooperate
and attempt to agree to the selection of an accounting firm to make the
calculations. If no agreement can be reached regarding the selection of
an accounting firm, the Company will select in good faith a prominent
national accounting firm that has no current or recent business
relationship with the Company. The Company shall pay all costs and
expenses incurred in connection with any such calculations or
determinations. Any calculations or determinations made in accordance
with this Section 6.2 shall be conclusive and binding on all parties.
6.3 Date of Payment. The payments provided for in Section
6.1.(a) and Section 6.2 hereof shall , unless deferred pursuant to the
last sentence of this Section 6.3, be made not later than the fifteenth
(15th) day following the Date of Termination; provided, however, that if
the amounts of such payments cannot be finally determined on or before
such day, the Company shall pay to the Executive (subject to the last
sentence of this Section 6.3) on such day an estimate, as determined in
good faith by the Company, of the minimum amount of such payments to which
the Executive is likely to be entitled to and shall pay the remainder of
such payments (together with interest at the rate provided in section
1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined
but in no event later than the thirtieth (30th) day after the Date of
Termination. In the event that the amount of the estimated payments
exceeds the amount subsequently determined to have been due, such excess
shall constitute a loan by the Company to the Executive, payable on the
tenth (10th) business day after demand by the Company (together with
interest at the rate provided in section 1274(b)(2)(B) of the Code). At
the time that payments are made or would have been made, disregarding for
this purpose only, any deferral effected by the Executive, under this
Section 6.3, the Company shall provide the Executive with a detailed
written statement setting forth the manner in which such payments were
calculated and the basis for such calculations including, without
limitation, any opinions or other advice the Company has received from
outside counsel, auditors or consultants (and any such opinions or advice
which are in writing shall be attached to the statement). The Executive
may irrevocably elect, in a writing delivered to the Company no later than
the last day of the calendar year preceding the calendar year in which
occurs the Change in Control, to defer the receipt of any payment to which
the Executive may become entitled to under Section 6.1 of this Agreement
for the period of time specified in such writing.
6.4 Legal Costs. The Company shall also reimburse the
Executive for reasonable legal fees and expenses incurred in good faith by
the Executive as a result of any dispute with the Company or any affiliate
of the Company regarding the payment of any benefit provided for in this
Agreement (including, but not limited to, all such fees and expenses
incurred in disputing any termination or in seeking in good faith to
obtain or enforce any benefit or right provided by this Agreement or in
connection with any tax audit or proceeding to the extent attributable to
the application of section 4999 of the Code) 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. Such payments shall, in the aggregate, not
exceed $10,000 and shall be made within ten (10) business days after
delivery of the Executive's written requests for payment accompanied by
such evidence of fees and expenses incurred as the Company reasonably may
require.
7. Termination Procedures and Compensation During Dispute.
7.1 Notice of Termination. After a Change in Control and
during the Term, any purported termination of the Executive's employment
with the Company (other than by reason of death) shall be communicated by
written Notice of Termination from one party hereto to the other party
hereto in accordance with Section 10 hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall
indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment
with the Company under the provision so indicated. Further, a Notice of
Termination for Cause is required to include a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters (3/4) of
the entire membership of the Board at a meeting of the Board which was
called and held for the purpose of considering such termination (which
meeting may be a regular meeting of the Board where prior notice of
consideration of such termination is given to members of the Board)
finding that, in the good faith opinion of the Board, the Executive
engaged in conduct set forth in clause (i) or (ii) of the definition of
Cause herein, and specifying the particulars thereof in detail. For
purposes of this Agreement, any purported termination not effected in
accordance with this Section 7.1 shall not be considered effective.
7.2 Date of Termination. "Date of Termination", with respect
to any purported termination of the Executive's employment after a Change
in Control and during the Term, shall mean (i) if the Executive's
employment is terminated for Disability, thirty (30) days after Notice of
Termination is given (provided that the Executive shall not have returned
to the full-time performance of the Executive's duties during such thirty
(30) day period), and (ii) if the Executive's employment is terminated for
any other reason, the date specified in the Notice of Termination (which,
in the case of a termination by the Company, shall not be less than thirty
(30) days (except in the case of a termination for Cause) and, in the case
of a termination by the Executive, shall not be less than fifteen (15)
days nor more than sixty (60) days, respectively, after the date such
Notice of Termination is given).
7.3 Dispute Concerning Termination. If within fifteen (15)
days after any Notice of Termination is given, or, if later, prior to the
Date of Termination (as determined without regard to this Section 7.3),
the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, the Date of Termination
shall be the date on which the dispute is finally resolved either by
mutual written agreement of the parties or by a final judgment, order or
decree of a court of competent jurisdiction (which is not appealable or
with respect to which the time for appeal therefrom has expired and no
appeal has been perfected); provided, however, that the Date of
Termination shall be extended by a notice of dispute only if the basis for
such notice is reasonable, such notice is given in good faith and the
party giving such notice pursues the resolution of such dispute with
reasonable diligence.
7.4 Compensation During Dispute. If a purported termination
occurs following a Change in Control and during the Term, and such
termination is disputed in accordance with Section 7.3 above, the Company
shall continue to pay the Executive the full compensation (including,
without limitation, Annual Base Salary and Annual Bonus) in effect at the
time of any related Potential Change in Control or when the notice giving
rise to the dispute was given (whichever is greater) and continue the
Executive as a participant in all compensation, incentive, pension and
welfare benefit and insurance plans in which the Executive was
participating at the time of any Potential Change in Control or when the
notice giving rise to the dispute was given, whichever is greater, until
the dispute is finally resolved in accordance with Section 7.3 hereof.
Amounts paid under this Section 7.4 are in addition to all other amounts
due under this Agreement (other than those due under Section 5.2 hereof)
and shall not be offset against or reduce any other amounts due under this
Agreement or any other plan, agreement or arrangement.
8. No Mitigation. The Company agrees that, if the Executive's
employment is terminated during the Term, the Executive is not required to
seek other employment or to attempt in any way to reduce any amounts
payable to the Executive by the Company pursuant to Section 6 or Section
7.4. Further, the amount of any payment or benefit provided for in
Section 6 (other than pursuant to Section 6.1.(b)) or Section 7.4 shall
not be reduced by any compensation earned by the Executive as the result
of employment by another employer, by retirement benefits, or offset
against any amount claimed to be owed by the Executive to the Company or
any of its subsidiaries, or otherwise.
9. Successors; Binding Agreement.
9.1 Successors. In addition to any obligations imposed by law
upon any successor to the Company, the Company will 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 expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. Failure of the Company
to obtain such assumption and agreement prior to the effectiveness of any
such succession shall be a breach of this Agreement and shall entitle the
Executive to compensation from the Company in the same amount and on the
same terms as the Executive would be entitled to hereunder if the
Executive were to terminate employment with the Company for Good Reason
after a Change in Control, except that, for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall
be deemed the Date of Termination.
9.2 Binding Agreement. This Agreement shall inure to the
benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive shall die while any
amount would still be payable to the Executive hereunder (other than
amounts which, by their terms, terminate upon the death of the Executive)
if the Executive had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this
Agreement to the beneficiary (or beneficiaries) designated by the
Executive from time to time in accordance with the procedures for notice
set out in Section 10; provided, however, that if there shall be no
effective designation of beneficiary by the Executive, such amounts shall
be paid to the executors, personal representatives or administrators of
the Executive's estate.
10. Notices; Other Communications. For the purpose of this
Agreement, notices and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have been duly given
when delivered or mailed by United States certified mail, return receipt
requested, postage prepaid, addressed to the respective addresses set
forth below, or to such other address as either party may have furnished
to the other in writing in accordance herewith, except that notice of
change of address shall be effective only upon actual receipt:
To the Company:
Interstate Power Company
1000 Main Street
P.O. Box 769
Dubuque, Iowa 52004-0769
Attention: Corporate Secretary
To the Executive:
Mr. Michael R. Chase
2305 Pasadena Drive #67
Dubuque, Iowa 52001
11. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge (i) is
agreed to in writing and signed by the Executive and such officer as may
be specifically designated by the Board, or (ii) is (a) approved by such
officer as may be specifically designated by the Board, (b) effective only
in respect of any Change in Control resulting from the proposed merger
transaction involving the Company, IES Industries Inc. and WPL Holdings,
Inc., and (c) applicable to all members of the senior management of the
Company who have executed an agreement substantially similar to this
Agreement. In respect of any proposed waiver, modification, or discharge
which meets the conditions specified above in Section 11(ii), the
Executive hereby irrevocably appoints the Chairman of the Board of the
Company to be the Executive's attorney-in-fact for the limited purpose of
entering into, on behalf of the Executive, any form of waiver,
modification or discharge necessary to effect any such waiver,
modification or discharge meeting the conditions of this Section 11(ii).
No waiver by either party hereto at any time of any breach by the other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior
or subsequent time.
No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement. The
validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of Iowa without regard to the
principles of conflict of laws thereof. All references to sections of the
Exchange Act or the Code (or the rules and/or regulations under either)
shall be deemed also to refer to and include any successor provisions to
such sections. Any payments provided for hereunder shall be paid net of
any applicable withholding required under federal, state or local law and
any additional withholding to which the Executive has agreed. The rights
and obligations of the Company and the Executive under this Agreement
shall survive the expiration of the Term and the Employment Period.
12. Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement, all of which shall remain in full force
and effect.
13. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
14. No Limitation. 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 other 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 as in effect from time to
time except as explicitly modified by this Agreement.
15. Other Agreements. This Agreement contains the entire agreement
between the parties concerning the subject matter hereof and supersedes
all prior agreements understandings, discussions, negotiations and
undertakings, whether written or oral, between the parties with respect
thereto.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.
INTERSTATE POWER COMPANY
By: /s/ Wayne H. Stoppelmoor
Title: Chairman, President and Chief
Executive Officer
/s/ Michael R. Chase
Michael R. Chase
EX-10.2
AGREEMENT
THIS AGREEMENT, dated as of November 8, 1995 (this "Agreement"),
is made by and between Interstate Power Company, a Delaware corporation,
having its principal offices at 1000 Main Street, Dubuque, Iowa 52004-0769
(the "Company"), and Richard R. Ewers residing at 2906 Arbor Hills Drive,
Dubuque, Iowa 52001 (the "Executive").
WHEREAS, the Company considers it essential to the best
interests of its shareholders to foster the continued employment of key
executive management personnel; and
WHEREAS, the Board of Directors of the Company (the "Board")
recognizes that, as is the case with many publicly-held corporations, the
possibility of a Change in Control (as defined in Section 1.3 below) of
the Company exists from time to time and that such possibility, and the
uncertainty, instability and questions that it may raise for and among key
executive management personnel, may result in the premature departure or
significant distraction of such management personnel to the material
detriment of the Company and its shareholders; and
WHEREAS, the Board has determined that appropriate steps should
be taken to reinforce, focus and encourage the continued attention and
dedication of key members of the executive management of the Company and
its subsidiaries, including (without limitation) the Executive, to their
assigned duties without distraction in the face of potentially disturbing
or unsettling circumstances arising from the possibility of a Change in
Control of the Company;
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and the Executive hereby agree as
follows:
1. Definitions. For purposes of this Agreement, the following
terms shall have the meanings set forth below:
1.1 "Annual Base Salary" shall mean the Executive's rate of
regular basic annual compensation prior to any reduction under a salary
reduction agreement pursuant to section 401(k) or section 125 of the
Internal Revenue Code of 1986, as amended from time to time (the "Code")
or any deferred compensation arrangements, and shall not include, without
limitation, cost of living allowances, fees, retainers, reimbursements,
bonuses, incentive awards, prizes or similar payments.
1.2 "Cause" shall mean:
(i) the willful and continued failure by the Executive to
substantially perform the Executive's duties with the Company, or a
subsidiary of the Company, as such duties may reasonably be defined
from time to time by the Board (or a duly authorized committee
thereof), or to abide by the reasonable written policies of the
Company or of the Executive's primary employer (other than any such
failure resulting from the Executive's incapacity due to physical or
mental illness) after a written demand for substantial performance is
delivered to the Executive by the Board, which demand specifically
identifies the manner in which the Board believes that the Executive
has not substantially performed the Executive's duties or has not
abided by any reasonable written policies, or
(ii) the continued and willful engaging by the Executive in
conduct which is demonstrably and materially injurious to the Company
or its subsidiaries, monetarily or otherwise; or
(iii) the Executive's conviction of, or plea of no contest
to, a felony.
For purposes of clauses (i) and (ii) of this definition, no act, or
failure to act, on the Executive's part shall be deemed "willful" unless
done, or omitted to be done, by the Executive in bad faith and without
reasonable belief that the Executive's act, or failure to act, was in the
best interest of the Company or its subsidiaries. Any act, or failure to
act, based upon authority given pursuant to a resolution duly adopted by
the Board or upon the instructions of the Board (or a committee thereof),
the Company's chief executive officer or other duly authorized senior
officer of the Company (as appropriate) or based upon the advice of
counsel for the Company shall be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in the best
interests of the Company and its subsidiaries. The cessation of
employment of the Executive shall not be deemed to be for Cause unless and
until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than three-
quarters (3/4) of the entire membership of the Board at a meeting of the
Board called and held for such purpose (after reasonable notice of any
such meeting is provided to the Executive and the Executive is given an
opportunity, together with counsel, to be heard before the Board) finding
that, in the good faith opinion of the Board, the Executive has acted in a
manner described in clause (i) or (ii) above and specifying the
particulars thereof in detail.
1.3 "Change in Control" shall mean and be deemed to have
occurred if:
(i) any Person is or becomes the Beneficial Owner (as
that term is defined in Rule 13d-3 under the Securities Exchange
Act of 1934 (the "Exchange Act")), directly or indirectly, of
securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired
directly from the Company) representing twenty-five percent
(25%) or more of the combined voting power of the Company's then
outstanding securities; or
(ii) during any period of twenty-four (24)
consecutive months (not including any period prior to November
1, 1995), individuals who at the beginning of such period
constitute the Board and any new director (other than a director
designated by a Person who has entered into an agreement with
the Company to effect a transaction described in clause (i),
(iii) or (iv) of this definition or any such individual whose
initial assumption of office occurs as a result of either an
actual or threatened election contest (as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act) or other actual or threatened solicitation of proxies or
consents) whose election by the Board or nomination for election
by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of such period or whose
election or nomination for election was previously so approved,
cease for any reason to constitute a majority of the Board; or
(iii) the shareholders of the Company approve a
reorganization, merger or consolidation, other than a
reorganization, merger or consolidation with respect to which
all or substantially all of the individuals and entities who
were Beneficial Owners, immediately prior to such
reorganization, merger or consolidation, of the combined voting
power of the Company's then outstanding securities beneficially
own, directly or indirectly, immediately after such
reorganization, merger or consolidation, more then seventy-five
percent (75%) of the combined voting power of the securities of
the corporation resulting from such reorganization, merger or
consolidation in substantially the same proportions as their
respective ownership, immediately prior to such reorganization,
merger or consolidation, of the combined voting power of the
Company's securities; or
(iv) the shareholders of the Company approve (a) the
sale or disposition by the Company (other than to a subsidiary
of the Company) of all or substantially all of the assets of the
Company (or any such sale or disposition is effected through
condemnation proceedings), or (b) a complete liquidation or
dissolution of the Company.
Notwithstanding the foregoing, a Change in Control shall not include any
event, circumstance or transaction which results from the action
(excluding the Executive's employment activities with the Company or any
of its affiliates) of any Person or group of Persons which includes, is
directly affiliated with or is wholly or partly controlled by one or more
executive officers of the Company and in which the Executive actively
participates.
1.4 "Company" shall include Interstate Power Company and any
successor to its business and/or assets which assumes (either expressly,
by operation of law or otherwise) and/or agrees to perform this Agreement
by operation of law or otherwise (except in determining, under Section 1.3
hereof, whether or not any Change in Control of the Company has occurred
in connection with such succession).
1.5 "Disability" shall mean and be deemed the reason for the
termination by the Company of the Executive's employment, if, as a result
of the Executive's incapacity due to physical or mental illness, (i) the
Executive shall have been absent from the full-time performance of the
Executive's duties with the Company for a period of six (6) consecutive
months, (ii) the Company gives the Executive a Notice of Termination for
Disability, and (iii) within thirty (30) days after such Notice of
Termination is given, the Executive does not return to the full-time
performance of the Executive's duties.
1.6 "Employment Period" shall mean the period commencing on the
date of any Change in Control until the earliest to occur of (i) the date
which is thirty-six (36) months from the date of any such Change in
Control, (ii) the date of termination by the Executive of the Executive's
employment for any reason, (iii) the termination by the Company of the
Executive's employment for any reason or (iv) the Executive's attaining
age sixty-two (62).
1.7 "Good Reason" shall mean the occurrence (without the
Executive's prior express written consent) of any one of the following
acts, or failures to act, unless, in the case of any act or failure to act
described in clauses (i), (iv), (v) or (vi) below, such act or failure to
act is corrected by the Company prior to the Date of Termination specified
in the Notice of Termination given by the Executive in respect thereof not
later than six (6) months after the occurrence of the event that serves as
the basis for the Notice of Termination:
(i) the assignment to the Executive of any duties or
responsibilities inconsistent with those described in Section
3.2 below or with the Executive's position(s) or status
(including, without limitation, offices, titles, and reporting
relationships) as an executive officer of the Company and its
subsidiaries or a substantial adverse alteration in the nature
of the Executive's authority, duties, responsibilities, position
or status from those described in Section 3.2 below or
otherwise;
(ii) a reduction in the Executive's Annual Base
Salary or annual bonus opportunity as in effect on the date of
this Agreement or as the same may be increased at any time
thereafter and from time to time;
(iii) the relocation of the Company's principal
executive offices to a location more than one hundred and twenty
(120)* miles from its location on the date of this Agreement
(or, if different, more than one hundred and twenty (120)* miles
from where such offices are located immediately prior to any
Potential Change in Control) or the Company's requiring the
Executive to be based anywhere other than the Company's
principal executive offices except for required travel on the
Company's business to an extent substantially consistent with
the Executive's business travel obligations as of the date of
this Agreement;
(iv) any failure by the Company to comply with any of
the provisions of this Agreement, other than an 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;
* Thirty (30) miles if the Executive has attained age 60 at the time of
the Change in Control.
(v) the failure by the Company or a subsidiary to
continue in effect any pension benefit or incentive or deferred
compensation plan in which the Executive participates
immediately prior to any Potential Change in Control which is
material to the Executive's total compensation, unless an
equitable arrangement (embodied in an ongoing substitute or
alternative plan or arrangement) has been made with respect to
such plan, or the failure by the Company or a subsidiary to
continue the Executive's participation therein (or in such
substitute or alternative plan or arrangement) on a basis not
materially less favorable, both in terms of the amount of
benefits provided and the level of the Executive's participation
relative to other participants, as existed at the time of the
Potential Change in Control;
(vi) the failure by the Company or a subsidiary to
continue to provide the Executive with health and welfare
benefits substantially similar to those enjoyed by the Executive
under any of the Company's or a subsidiary's retirement, life
insurance, medical, health and accident, or disability or
similar plans in which the Executive was participating at the
time of any Potential Change in Control, the taking of any
action by the Company or a subsidiary which would directly or
indirectly materially reduce any of such benefits or deprive the
Executive of any material fringe benefit enjoyed by the
Executive at the time of the Potential Change in Control, or the
failure by the Company or a subsidiary to provide the Executive
with the number of paid vacation days to which the Executive is
entitled in accordance with the Company's or a subsidiary's
normal vacation policy in effect at the time of the Potential
Change in Control;
(vii) any purported termination of the Executive's
employment which is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 7.1; and/or
(viii) the failure of the Company to obtain a written
agreement reasonably satisfactory to the Executive from any successor
to the Company (as described in Section 9.1) to perform this
Agreement.
1.8 "Person" shall have the meaning ascribed thereto in Section
3(a)(9) of the Exchange Act, as modified, applied and used in Sections
13(d) and 14(d) thereof; provided, however, a Person shall not include (i)
the Company or any of its subsidiaries, (ii) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any of
its subsidiaries (in its capacity as such), (iii) an underwriter
temporarily holding securities pursuant to an offering of such securities,
or (iv) a corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same character and proportions as
their ownership of stock of the Company.
1.9 "Potential Change in Control" shall mean and be deemed to
have occurred if:
(i) the Company enters into an agreement, the
consummation of which would result in the occurrence of a Change
in Control;
(ii) the Company or any Person publicly announces an
intention to take actions which, if consummated, would
constitute a Change in Control; and/or
(iii) any Person becomes the Beneficial Owner,
directly or indirectly, of securities of the Company
representing ten percent (10%) or more of the combined voting
power of the Company's then outstanding securities, or any
Person increases such Person's beneficial ownership of such
securities by five (5) percentage points or more over the
percentage so owned by such Person on November 1, 1995.
1.10 "Retirement" shall mean and be deemed the reason for the
termination by the Executive of the Executive's employment if such
employment is terminated in accordance with the Company's normal
retirement policy for those aged 62 and older, not including early
retirement or so-called "window period" retirements, generally applicable
to its officers, as in effect immediately prior to any Potential Change in
Control.
2. Term of this Agreement. This Agreement shall commence on the
date hereof and shall continue in effect through December 31, 1998;
provided, however, that commencing on January 1, 1999 and each January 1
thereafter, the term of this Agreement shall automatically be extended for
one additional year unless, not later than June 30 of the preceding year,
the Company or the Executive shall have given written notice to the other
not to extend this Agreement or a Change in Control shall have occurred
prior to any such January 1; provided, further, however, that if a Change
in Control shall have occurred during the term of this Agreement, this
Agreement shall continue in effect for a period of not less than thirty-
six (36) months beyond the month in which such Change in Control occurred
(the "Term"). Notwithstanding the foregoing provisions of this Section 2,
the Term shall terminate upon the Executive's attaining the age of
sixty-two (62) years (or the date on which the Executive would have
attained age 62 if the Executive had survived).
3. Company's Covenants.
3.1 Severance Payments. In order to induce the Executive to
remain in the employ of the Company and/or one or more of its subsidiaries
and in consideration of the Executive's covenants set forth in Section 4
below, the Company agrees, under the terms and conditions described herein
and in addition to the amounts payable to the Executive under Section 5
below, to pay the Executive the "Severance Payments" described in Section
6.1 below and the other payments and benefits described herein in the
event the Executive's employment with the Company is terminated during the
Employment Period or under the other circumstances set forth in Section
6.1 below.
3.2 Position and Duties. During the Employment Period, (a) the
Executive's position (including status, offices, titles and reporting
relationships), authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of those
held, exercised and assigned at any time during the one hundred eighty
(180) day period immediately preceding any related Potential Change in
Control, and (b) the Executive's services shall be performed at the
location where the Executive was employed immediately preceding any such
Potential Change in Control, or any office or location less than one
hundred and twenty (120)* miles from such location.
3.3 Base Salary. During the Employment Period, the Executive
shall receive Annual Base Salary at least equal to twelve (12) times the
highest monthly base salary paid or payable, including (without
limitation) any base salary which has been earned but deferred, to the
Executive by the Company and its affiliated companies in respect of the
twelve (12) month period immediately preceding the month in which any
related Potential Change in Control occurs. In addition, Annual Base
Salary shall not be reduced after the occurrence of a Potential Change in
Control. As used in this Agreement, the term "affiliated companies" shall
include any company controlled by, controlling or under common control
with the Company.
3.4 Annual Bonus. In addition to Annual Base Salary, if the
Company adopts an annual bonus program for officers during the Employment
Period (the "Annual Bonus") the Executive shall be entitled to tee in such
Annual Bonus program on a basis equivalent to other executive officers of
the Company. Each 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 shall elect to defer the
receipt of such Annual Bonus in accordance with rules established by the
Company for that purpose.
3.5 Incentive, Savings and Retirement Plans. During the
Employment Period, the Executive shall be entitled to participate in all
incentive, savings and retirement plans, practices, policies and programs
applicable generally to other peer executives of the Company and its
subsidiaries, but in no event shall such plans, practices, policies and
programs provide the Executive with incentive opportunities (measured with
respect to both regular and special incentive opportunities, to the
extent, if any, that such distinction is applicable), 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 one hundred eighty (180) day period immediately preceding any related
Potential Change in Control or if more favorable to the Executive, those
provided generally at any time thereafter to other peer executives of the
Company and its affiliated companies.
3.6 Welfare Benefit Plans. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be
entitled to participate in and shall receive all benefits under all of the
health and welfare benefit plans, practices, policies and programs
* Thirty (30) miles if the Executive has attained age 60 at the time of
the Change in Control.
provided by the Company and its affiliated companies (including, without
limitation, medical, prescription, dental, disability, employee life,
group life, accidental death and travel accident insurance plans and
programs) to the extent (and at the same cost) applicable generally to
other peer executives of the Company and its subsidiaries, but in no event
shall such plans, practices, policies and programs provide the Executive
with benefits that 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 one hundred eighty (180) day period
immediately preceding any related Potential Change in Control or, if more
favorable to the Executive, those provided generally at any time
thereafter to other peer executives of the Company and its affiliated
companies.
3.7 Expenses. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all reasonable
business 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
one hundred eighty (180) day period immediately preceding any related
Potential Change in Control 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.
3.8 Office Support; Perquisites. During the Employment Period,
the Executive shall be entitled to a private office, secretarial support
and other facilities, perquisites and programs to enable the Executive to
be able to discharge the Executive's responsibilities hereunder 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 one hundred eighty (180) day period immediately
preceding any related Potential Change in Control 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.
3.9 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 one
hundred eighty (180) day period immediately preceding any related
Potential Change in Control 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.
4. The Executive's Covenants.
4.1 Employment. The Executive agrees that, subject to the
terms and conditions of this Agreement, in the event of a Change in
Control during the Term the Executive will remain in the employ of the
Company during any related Employment Period.
4.2 Time and Attention. During the Employment Period, and
excluding any periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote reasonable attention and time
during normal business hours to the business and affairs of the Company
and to use the Executive's reasonable best efforts to perform faithfully
and efficiently the responsibilities and duties assigned to the Executive
hereunder. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (i) serve on corporate, civic or
charitable boards or committees, (ii) deliver lectures and fulfill
speaking engagements and (iii) manage personal investments, so long as
such activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company and its
subsidiaries 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 any Potential Change in Control, the
reinstatement or continued conduct of such activities (or the
reinstatement or conduct of activities similar in nature and scope
thereto) subsequent to any related Potential Change in Control shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company and its subsidiaries.
4.3. Non-interference; Confidential Information
(a) No Interference. For so long as the Executive is employed
by the Company, and for a period of two (2) years thereafter, the
Executive shall not, whether for his own account or for the account of any
other individual, partnership, firm, corporation or other business
organization (other than the Company or one of its affiliates),
intentionally solicit, endeavor to entice away from the Company (or any of
its affiliates), or otherwise interfere with the relationship of the
Company (or any of its affiliates) with, any person who is employed by or
otherwise engaged to perform services for the Company (or any of its
affiliates) including, but not limited to, any independent representatives
or organizations, or any person or entity that is a customer of the
Company (or any of its affiliates). The Executive understands and agrees
that the rights and obligations set forth in this Section 4.3(a) could
extend beyond the Term.
(b) Confidential Information. The Executive covenants and
agrees with the Company that he will not at any time, during or after
employment with the Company, except in performance of the Executive's
obligations to the Company or with the prior express written consent of
the Board of Directors, directly or indirectly, intentionally or
unintentionally, disclose any Confidential Information that he may learn
or has learned by reason of his employment or association with the
Company, or any predecessors to its business, or use any such information
for his own personal benefit or gain. The term "Confidential Information"
includes, without limitation, information not previously disclosed to the
public or to the trade by the Company's management with respect to the
products, facilities and methods, trade secrets and other intellectual
property, systems, procedures, manuals, confidential reports, fee or rate
information, customer lists, financial information (including the
revenues, costs or profits associated with any of the Company's activities
or products), business plans, prospects, opportunities or other
information of the Company or any of its affiliates. Confidential
Information shall not include information which (i) is or becomes
generally available to the public other than as a result of disclosure by
the Executive in violation of this Section 4.3(b) or (ii) the Executive is
required to disclose under any applicable laws, regulations or directives
of any government agency, tribunal or authority having jurisdiction in the
matter or under subpoena or other process of law. The Executive
understands and agrees that the rights and obligations set forth in this
Section 4.3 (b) shall extend beyond the Term.
(c) Exclusive Property. The Executive confirms that all
Confidential Information is and shall remain the exclusive property of the
Company or any of its affiliates. All business records, papers and
documents kept or made by the Executive relating to the business of the
Company (or any of its affiliates) or any Confidential Information shall
be and remain the property of the Company. Upon termination of employment
with the Company or upon the request of the Company at any time, the
Executive shall promptly deliver to the Company, and shall not without the
prior express written consent of the Company retain, any and all copies of
(i) any written materials not previously made available to the public, or
(ii) records and documents made by the Executive or coming into his
possession concerning any Confidential Information or the business or
affairs of the Company or any predecessors to its business, or any of its
affiliates. The Executive understands and agrees that the rights and
obligations set forth in this Section 4.3(c) shall extend beyond the Term.
(d) Injunctive Relief. Without intending to limit the remedies
available to the Company, the Executive acknowledges that a breach of any
of the covenants contained in this Section 4.3 may result in material
irreparable injury to the Company or its affiliates for which there is no
adequate remedy at law, that it will not be possible to measure damages
for such injuries precisely and that, in the event of such a breach or
threat thereof, the Company shall be entitled to obtain a temporary
restraining order and/or a preliminary or permanent injunction restraining
the Executive from engaging in activities prohibited by this Section 4.3
or such other relief as may be required to specifically enforce any of the
covenants in this Section 4.3.
5. Compensation Other Than Severance Payments.
5.1 Disability. Following a Potential Change in Control and
during the Term, during any period that the Executive fails to perform the
Executive's full-time duties with the Company as a result of incapacity
due to physical or mental illness, the Executive's full salary shall be
paid to the Executive by the Company at a rate no less than the rate in
effect at the commencement of any such disability period, together with
all compensation and benefits payable to the Executive under the terms of
any compensation or benefit plan, program or arrangement maintained by the
Company or its subsidiaries during such disability period, until the
Executive's employment is terminated by the Company for Disability.
5.2 Base Salary. If the Executive's employment shall be
terminated for any reason following a Potential Change in Control and
during the Term, the Executive's full salary shall be paid to the
Executive by the Company through the Date of Termination (as defined below
in Section 7.2) at the rate in effect at the time the Notice of
Termination is given, together with all compensation and benefits payable
to or with respect to the Executive through the Date of Termination under
the terms of any compensation or benefit plan, program or arrangement
maintained by the Company or its subsidiaries during such period.
5.3 Benefits. If the Executive's employment shall be
terminated for any reason following a Potential Change in Control and
during the Term, the Executive's normal post-termination compensation and
benefits shall be paid to the Executive as such payments become due. Such
post-termination compensation and benefits shall be determined under, and
paid in accordance with, the retirement, health insurance, life insurance
and other compensation or benefit plans, programs and arrangements
maintained by the Company or its affiliates.
6. Severance Payments.
6.1 Severance. The Company shall pay the Executive the
payments and benefits described in this Section 6.1 (the "Severance
Payments") upon the termination of the Executive's employment with the
Company following a Change in Control and during the Term, in addition to
the payments and benefits described in Section 5 hereof, unless such
termination is (i) by the Company for Cause, (ii) by reason of Retirement,
(iii) by the Executive without Good Reason, (iv) due to death, or (v) due
to Disability. In addition, the Executive's employment shall be deemed to
have been terminated following a Change in Control by the Company without
Cause or by the Executive with Good Reason (a) if the Executive reasonably
demonstrates that the Executive's employment was terminated prior to a
Change in Control without Cause (1) at the request of a Person who has
entered into an agreement with the Company the consummation of which will
constitute a Change in Control (or who has taken other steps reasonably
calculated to effect a Change in Control) or (2) otherwise in connection
with, as a result of or in anticipation of a Change in Control, or (b) if
the Executive terminates his employment for Good Reason prior to a Change
in Control and the Executive reasonably demonstrates that the
circumstance(s) or event(s) which constitute such Good Reason occurred (1)
at the request of such Person or (2) otherwise in connection with, as a
result of or in anticipation of a Change in Control. The Executive's
right to terminate the Executive's employment for Good Reason shall not be
affected by the Executive's incapacity due to physical or mental illness.
The Executive's continued employment shall not constitute consent to, or a
waiver of rights with respect to, any act or failure to act constituting
Good Reason hereunder. In the event of the Disability or death of the
Executive after the Date of Termination in respect of any termination
without cause or any termination for Good Reason, payments and benefits
shall be made to the Executive, or the Executive's beneficiaries or legal
representative, as the case may be.
(a) In lieu of any further salary and annual bonus
payments to the Executive for periods subsequent to the Date of
Termination, the Company shall pay to the Executive a lump sum
severance payment, in cash, equal to three (3) or, if less, the
number of years, including fractions, from the Date of
Termination until the Executive reaches the age of sixty-two
(62) years times the sum of (i) the Executive's Annual Base
Salary immediately preceding the Change in Control or, if
higher, the Executive's Annual Base Salary on the Date of
Termination, and (ii) the average annual bonus paid or payable
to the Executive with respect to the three (3) years (or portion
thereof with respect to which an annual bonus was paid) prior to
the year in which the Date of Termination occurs.
(b) For a thirty-six (36) month period after the Date
of Termination, or if sooner, until the Executive reaches the
age of sixty-two (62) years, the Company shall arrange to
provide the Executive with life, disability, accident and health
insurance benefits substantially similar (and at the same cost)
to those that the Executive is receiving immediately prior to
any related Potential Change in Control or the receipt of the
Notice of Termination (without giving effect to any reduction in
such benefits subsequent to a Change in Control which reduction
constitutes Good Reason), whichever is greater. Benefits
otherwise receivable by the Executive pursuant to this Section
6.1(b) shall be reduced to the extent comparable benefits are
actually received by or made available to the Executive without
cost during such period following the Executive's termination of
employment (and any such benefits actually received by the
Executive shall be reported to the Company by the Executive).
(c) The Executive shall receive, at the expense of the
Company, outplacement services, on an individualized basis at a level
of service commensurate with the Executive's status with the Company
immediately prior to the Change in Control (or, if higher,
immediately prior to the termination of the Executive's employment),
provided by a nationally recognized executive placement firm selected
by the Executive and reasonably satisfactory to the Company; provided
that the cost to the Company of such services shall not exceed 15% of
the Executive's Annual Base Salary in effect immediately prior to the
Change in Control.
(d) All outstanding stock options previously granted to
the Executive shall become immediately 100% vested and exercisable,
and all shares of restricted stock shall become immediately 100%
vested and all forfeiture restrictions thereon shall lapse. Such
accelerated and vested options shall be exercisable for the remainder
of the term of such option, as set forth in the Executive's related
stock option agreement (without regard to any truncation of such
period therein, or under any plan or arrangement maintained by the
Company,on account of any termination of the Executive's employment).
6.2 Code Section 280G Reduction. Notwithstanding any other
provisions of this Agreement or of any other agreement, contract,
understanding, plan or program entered into or maintained by the Company,
if any payment or benefit received or to be received by the Executive in
connection with a Change in Control or the termination of the Executive's
employment (whether pursuant to the terms of this Agreement or any other
plan, arrangement or agreement with (a) the Company or any affiliate,
parent or subsidiary of the Company, (b) any Person whose actions result
in a Change in Control, or (c) any Person affiliated with the Company)
(all such payments and/or benefits, including the payments and benefits,
if any, under this Section 6, being hereinafter referred to as the "Total
Payments") would subject the Executive to the excise tax imposed under
Section 4999 of the Code, on any successor section thereto (the "Excise
Tax"), and if the amount of such Total Payments, reduced by all federal,
state and local taxes applicable with respect thereto, including without
limitation the Excise Tax, is less than the amount of Total Payments which
would otherwise be payable to the Executive, after all such taxes, without
the imposition of the Excise Tax, then, to the extent necessary to
eliminate the imposition of the Excise Tax (after taking into account any
reduction in the Total Payments provided by reason of Section 280G of the
Code under plan, arrangement or agreement), (i) the cash and non-cash
payments and benefits payable under this Agreement shall first be reduced
(but not below zero), and (ii) all other cash and non-cash payments and
benefits shall next be reduced (but not below zero); but only if, by
reason of any such reduction, the Total Payments with any such reduction,
after all such taxes, shall exceed the Total Payments without any such
reduction, after all such taxes. For purposes of this Section 6.2, (A) no
portion of the Total Payments the receipt or enjoyment of which the
Executive shall have effectively waived in writing prior to the Date of
Termination shall be taken into account, (B) no portion of the Total
Payments shall be taken into account which in the opinion of tax counsel
selected in good faith by the Company does not constitute a "parachute
payment" within the meaning of Section 280G(b)(2) of the Code, including
(without limitation) by reason of Section 280G(b)(4)(A) of the Code, (C)
the payments and/or benefits under this Agreement shall be reduced only to
the extent necessary so that the Total Payments (other than those referred
to in clauses (A) and (B) above) in their entirety constitute reasonable
compensation for services actually rendered within the meaning of Section
280G(b)(4)(B) of the Code or are otherwise not subject to disallowance as
deductions, in the opinion of the tax counsel referred to above in clause
(B), and (D) the value of any non-cash payment or benefit or any deferred
payment or benefit included in the Total Payments shall be determined by
the Company's independent auditors in accordance with the principles of
Sections 280G(d)(3) and (4) of the Code. Except as otherwise provided
above, the foregoing calculations and determinations shall be made in good
faith by the Company and the Executive. If no agreement on the
calculations is reached, then the Executive and the Company will cooperate
and attempt to agree to the selection of an accounting firm to make the
calculations. If no agreement can be reached regarding the selection of
an accounting firm, the Company will select in good faith a prominent
national accounting firm that has no current or recent business
relationship with the Company. The Company shall pay all costs and
expenses incurred in connection with any such calculations or
determinations. Any calculations or determinations made in accordance
with this Section 6.2 shall be conclusive and binding on all parties.
6.3 Date of Payment. The payments provided for in Section
6.1.(a) and Section 6.2 hereof shall , unless deferred pursuant to the
last sentence of this Section 6.3, be made not later than the fifteenth
(15th) day following the Date of Termination; provided, however, that if
the amounts of such payments cannot be finally determined on or before
such day, the Company shall pay to the Executive (subject to the last
sentence of this Section 6.3) on such day an estimate, as determined in
good faith by the Company, of the minimum amount of such payments to which
the Executive is likely to be entitled to and shall pay the remainder of
such payments (together with interest at the rate provided in section
1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined
but in no event later than the thirtieth (30th) day after the Date of
Termination. In the event that the amount of the estimated payments
exceeds the amount subsequently determined to have been due, such excess
shall constitute a loan by the Company to the Executive, payable on the
tenth (10th) business day after demand by the Company (together with
interest at the rate provided in section 1274(b)(2)(B) of the Code). At
the time that payments are made or would have been made, disregarding for
this purpose only, any deferral effected by the Executive, under this
Section 6.3, the Company shall provide the Executive with a detailed
written statement setting forth the manner in which such payments were
calculated and the basis for such calculations including, without
limitation, any opinions or other advice the Company has received from
outside counsel, auditors or consultants (and any such opinions or advice
which are in writing shall be attached to the statement). The Executive
may irrevocably elect, in a writing delivered to the Company no later than
the last day of the calendar year preceding the calendar year in which
occurs the Change in Control, to defer the receipt of any payment to which
the Executive may become entitled to under Section 6.1 of this Agreement
for the period of time specified in such writing.
6.4 Legal Costs. The Company shall also reimburse the
Executive for reasonable legal fees and expenses incurred in good faith by
the Executive as a result of any dispute with the Company or any affiliate
of the Company regarding the payment of any benefit provided for in this
Agreement (including, but not limited to, all such fees and expenses
incurred in disputing any termination or in seeking in good faith to
obtain or enforce any benefit or right provided by this Agreement or in
connection with any tax audit or proceeding to the extent attributable to
the application of section 4999 of the Code) 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. Such payments shall, in the aggregate, not
exceed $10,000 and shall be made within ten (10) business days after
delivery of the Executive's written requests for payment accompanied by
such evidence of fees and expenses incurred as the Company reasonably may
require.
7. Termination Procedures and Compensation During Dispute.
7.1 Notice of Termination. After a Change in Control and
during the Term, any purported termination of the Executive's employment
with the Company (other than by reason of death) shall be communicated by
written Notice of Termination from one party hereto to the other party
hereto in accordance with Section 10 hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall
indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment
with the Company under the provision so indicated. Further, a Notice of
Termination for Cause is required to include a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters (3/4) of
the entire membership of the Board at a meeting of the Board which was
called and held for the purpose of considering such termination (which
meeting may be a regular meeting of the Board where prior notice of
consideration of such termination is given to members of the Board)
finding that, in the good faith opinion of the Board, the Executive
engaged in conduct set forth in clause (i) or (ii) of the definition of
Cause herein, and specifying the particulars thereof in detail. For
purposes of this Agreement, any purported termination not effected in
accordance with this Section 7.1 shall not be considered effective.
7.2 Date of Termination. "Date of Termination", with respect
to any purported termination of the Executive's employment after a Change
in Control and during the Term, shall mean (i) if the Executive's
employment is terminated for Disability, thirty (30) days after Notice of
Termination is given (provided that the Executive shall not have returned
to the full-time performance of the Executive's duties during such thirty
(30) day period), and (ii) if the Executive's employment is terminated for
any other reason, the date specified in the Notice of Termination (which,
in the case of a termination by the Company, shall not be less than thirty
(30) days (except in the case of a termination for Cause) and, in the case
of a termination by the Executive, shall not be less than fifteen (15)
days nor more than sixty (60) days, respectively, after the date such
Notice of Termination is given).
7.3 Dispute Concerning Termination. If within fifteen (15)
days after any Notice of Termination is given, or, if later, prior to the
Date of Termination (as determined without regard to this Section 7.3),
the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, the Date of Termination
shall be the date on which the dispute is finally resolved either by
mutual written agreement of the parties or by a final judgment, order or
decree of a court of competent jurisdiction (which is not appealable or
with respect to which the time for appeal therefrom has expired and no
appeal has been perfected); provided, however, that the Date of
Termination shall be extended by a notice of dispute only if the basis for
such notice is reasonable, such notice is given in good faith and the
party giving such notice pursues the resolution of such dispute with
reasonable diligence.
7.4 Compensation During Dispute. If a purported termination
occurs following a Change in Control and during the Term, and such
termination is disputed in accordance with Section 7.3 above, the Company
shall continue to pay the Executive the full compensation (including,
without limitation, Annual Base Salary and Annual Bonus) in effect at the
time of any related Potential Change in Control or when the notice giving
rise to the dispute was given (whichever is greater) and continue the
Executive as a participant in all compensation, incentive, pension and
welfare benefit and insurance plans in which the Executive was
participating at the time of any Potential Change in Control or when the
notice giving rise to the dispute was given, whichever is greater, until
the dispute is finally resolved in accordance with Section 7.3 hereof.
Amounts paid under this Section 7.4 are in addition to all other amounts
due under this Agreement (other than those due under Section 5.2 hereof)
and shall not be offset against or reduce any other amounts due under this
Agreement or any other plan, agreement or arrangement.
8. No Mitigation. The Company agrees that, if the Executive's
employment is terminated during the Term, the Executive is not required to
seek other employment or to attempt in any way to reduce any amounts
payable to the Executive by the Company pursuant to Section 6 or Section
7.4. Further, the amount of any payment or benefit provided for in
Section 6 (other than pursuant to Section 6.1.(b)) or Section 7.4 shall
not be reduced by any compensation earned by the Executive as the result
of employment by another employer, by retirement benefits, or offset
against any amount claimed to be owed by the Executive to the Company or
any of its subsidiaries, or otherwise.
9. Successors; Binding Agreement.
9.1 Successors. In addition to any obligations imposed by law
upon any successor to the Company, the Company will 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 expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. Failure of the Company
to obtain such assumption and agreement prior to the effectiveness of any
such succession shall be a breach of this Agreement and shall entitle the
Executive to compensation from the Company in the same amount and on the
same terms as the Executive would be entitled to hereunder if the
Executive were to terminate employment with the Company for Good Reason
after a Change in Control, except that, for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall
be deemed the Date of Termination.
9.2 Binding Agreement. This Agreement shall inure to the
benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive shall die while any
amount would still be payable to the Executive hereunder (other than
amounts which, by their terms, terminate upon the death of the Executive)
if the Executive had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this
Agreement to the beneficiary (or beneficiaries) designated by the
Executive from time to time in accordance with the procedures for notice
set out in Section 10; provided, however, that if there shall be no
effective designation of beneficiary by the Executive, such amounts shall
be paid to the executors, personal representatives or administrators of
the Executive's estate.
10. Notices; Other Communications. For the purpose of this
Agreement, notices and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have been duly given
when delivered or mailed by United States certified mail, return receipt
requested, postage prepaid, addressed to the respective addresses set
forth below, or to such other address as either party may have furnished
to the other in writing in accordance herewith, except that notice of
change of address shall be effective only upon actual receipt:
To the Company:
Interstate Power Company
1000 Main Street
P.O. Box 769
Dubuque, Iowa 52004-0769
Attention: Corporate Secretary
To the Executive:
Mr. Richard R. Ewers
2906 Arbor Hills Drive
Dubuque, Iowa 52001
11. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge (i) is
agreed to in writing and signed by the Executive and such officer as may
be specifically designated by the Board, or (ii) is (a) approved by such
officer as may be specifically designated by the Board, (b) effective only
in respect of any Change in Control resulting from the proposed merger
transaction involving the Company, IES Industries Inc. and WPL Holdings,
Inc., and (c) applicable to all members of the senior management of the
Company who have executed an agreement substantially similar to this
Agreement. In respect of any proposed waiver, modification, or discharge
which meets the conditions specified above in Section 11(ii), the
Executive hereby irrevocably appoints the Chairman of the Board of the
Company to be the Executive's attorney-in-fact for the limited purpose of
entering into, on behalf of the Executive, any form of waiver,
modification or discharge necessary to effect any such waiver,
modification or discharge meeting the conditions of this Section 11(ii).
No waiver by either party hereto at any time of any breach by the other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior
or subsequent time.
No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement. The
validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of Iowa without regard to the
principles of conflict of laws thereof. All references to sections of the
Exchange Act or the Code (or the rules and/or regulations under either)
shall be deemed also to refer to and include any successor provisions to
such sections. Any payments provided for hereunder shall be paid net of
any applicable withholding required under federal, state or local law and
any additional withholding to which the Executive has agreed. The rights
and obligations of the Company and the Executive under this Agreement
shall survive the expiration of the Term and the Employment Period.
12. Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement, all of which shall remain in full force
and effect.
13. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
14. No Limitation. 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 other 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 as in effect from time to
time except as explicitly modified by this Agreement.
15. Other Agreements. This Agreement contains the entire agreement
between the parties concerning the subject matter hereof and supersedes
all prior agreements understandings, discussions, negotiations and
undertakings, whether written or oral, between the parties with respect
thereto.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.
INTERSTATE POWER COMPANY
By: /s/ Wayne H. Stoppelmoor
Title: Chairman, President and Chief
Executive Officer
/s/ Richard R. Ewers
Richard R. Ewers
EX-10.3
AGREEMENT
THIS AGREEMENT, dated as of November 8, 1995 (this "Agreement"),
is made by and between Interstate Power Company, a Delaware corporation,
having its principal offices at 1000 Main Street, Dubuque, Iowa 52004-0769
(the "Company"), and Donald E. Hamill residing at 491 Alpine Street,
Dubuque, Iowa 52001 (the "Executive").
WHEREAS, the Company considers it essential to the best
interests of its shareholders to foster the continued employment of key
executive management personnel; and
WHEREAS, the Board of Directors of the Company (the "Board")
recognizes that, as is the case with many publicly-held corporations, the
possibility of a Change in Control (as defined in Section 1.3 below) of
the Company exists from time to time and that such possibility, and the
uncertainty, instability and questions that it may raise for and among key
executive management personnel, may result in the premature departure or
significant distraction of such management personnel to the material
detriment of the Company and its shareholders; and
WHEREAS, the Board has determined that appropriate steps should
be taken to reinforce, focus and encourage the continued attention and
dedication of key members of the executive management of the Company and
its subsidiaries, including (without limitation) the Executive, to their
assigned duties without distraction in the face of potentially disturbing
or unsettling circumstances arising from the possibility of a Change in
Control of the Company;
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and the Executive hereby agree as
follows:
1. Definitions. For purposes of this Agreement, the following
terms shall have the meanings set forth below:
1.1 "Annual Base Salary" shall mean the Executive's rate of
regular basic annual compensation prior to any reduction under a salary
reduction agreement pursuant to section 401(k) or section 125 of the
Internal Revenue Code of 1986, as amended from time to time (the "Code")
or any deferred compensation arrangements, and shall not include, without
limitation, cost of living allowances, fees, retainers, reimbursements,
bonuses, incentive awards, prizes or similar payments.
1.2 "Cause" shall mean:
(i) the willful and continued failure by the Executive to
substantially perform the Executive's duties with the Company, or a
subsidiary of the Company, as such duties may reasonably be defined
from time to time by the Board (or a duly authorized committee
thereof), or to abide by the reasonable written policies of the
Company or of the Executive's primary employer (other than any such
failure resulting from the Executive's incapacity due to physical or
mental illness) after a written demand for substantial performance is
delivered to the Executive by the Board, which demand specifically
identifies the manner in which the Board believes that the Executive
has not substantially performed the Executive's duties or has not
abided by any reasonable written policies, or
(ii) the continued and willful engaging by the Executive in
conduct which is demonstrably and materially injurious to the Company
or its subsidiaries, monetarily or otherwise; or
(iii) the Executive's conviction of, or plea of no contest
to, a felony.
For purposes of clauses (i) and (ii) of this definition, no act, or
failure to act, on the Executive's part shall be deemed "willful" unless
done, or omitted to be done, by the Executive in bad faith and without
reasonable belief that the Executive's act, or failure to act, was in the
best interest of the Company or its subsidiaries. Any act, or failure to
act, based upon authority given pursuant to a resolution duly adopted by
the Board or upon the instructions of the Board (or a committee thereof),
the Company's chief executive officer or other duly authorized senior
officer of the Company (as appropriate) or based upon the advice of
counsel for the Company shall be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in the best
interests of the Company and its subsidiaries. The cessation of
employment of the Executive shall not be deemed to be for Cause unless and
until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than three-
quarters (3/4) of the entire membership of the Board at a meeting of the
Board called and held for such purpose (after reasonable notice of any
such meeting is provided to the Executive and the Executive is given an
opportunity, together with counsel, to be heard before the Board) finding
that, in the good faith opinion of the Board, the Executive has acted in a
manner described in clause (i) or (ii) above and specifying the
particulars thereof in detail.
1.3 "Change in Control" shall mean and be deemed to have
occurred if:
(i) any Person is or becomes the Beneficial Owner (as
that term is defined in Rule 13d-3 under the Securities Exchange
Act of 1934 (the "Exchange Act")), directly or indirectly, of
securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired
directly from the Company) representing twenty-five percent
(25%) or more of the combined voting power of the Company's then
outstanding securities; or
(ii) during any period of twenty-four (24)
consecutive months (not including any period prior to November
1, 1995), individuals who at the beginning of such period
constitute the Board and any new director (other than a director
designated by a Person who has entered into an agreement with
the Company to effect a transaction described in clause (i),
(iii) or (iv) of this definition or any such individual whose
initial assumption of office occurs as a result of either an
actual or threatened election contest (as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act) or other actual or threatened solicitation of proxies or
consents) whose election by the Board or nomination for election
by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of such period or whose
election or nomination for election was previously so approved,
cease for any reason to constitute a majority of the Board; or
(iii) the shareholders of the Company approve a
reorganization, merger or consolidation, other than a
reorganization, merger or consolidation with respect to which
all or substantially all of the individuals and entities who
were Beneficial Owners, immediately prior to such
reorganization, merger or consolidation, of the combined voting
power of the Company's then outstanding securities beneficially
own, directly or indirectly, immediately after such
reorganization, merger or consolidation, more then seventy-five
percent (75%) of the combined voting power of the securities of
the corporation resulting from such reorganization, merger or
consolidation in substantially the same proportions as their
respective ownership, immediately prior to such reorganization,
merger or consolidation, of the combined voting power of the
Company's securities; or
(iv) the shareholders of the Company approve (a) the
sale or disposition by the Company (other than to a subsidiary
of the Company) of all or substantially all of the assets of the
Company (or any such sale or disposition is effected through
condemnation proceedings), or (b) a complete liquidation or
dissolution of the Company.
Notwithstanding the foregoing, a Change in Control shall not include any
event, circumstance or transaction which results from the action
(excluding the Executive's employment activities with the Company or any
of its affiliates) of any Person or group of Persons which includes, is
directly affiliated with or is wholly or partly controlled by one or more
executive officers of the Company and in which the Executive actively
participates.
1.4 "Company" shall include Interstate Power Company and any
successor to its business and/or assets which assumes (either expressly,
by operation of law or otherwise) and/or agrees to perform this Agreement
by operation of law or otherwise (except in determining, under Section 1.3
hereof, whether or not any Change in Control of the Company has occurred
in connection with such succession).
1.5 "Disability" shall mean and be deemed the reason for the
termination by the Company of the Executive's employment, if, as a result
of the Executive's incapacity due to physical or mental illness, (i) the
Executive shall have been absent from the full-time performance of the
Executive's duties with the Company for a period of six (6) consecutive
months, (ii) the Company gives the Executive a Notice of Termination for
Disability, and (iii) within thirty (30) days after such Notice of
Termination is given, the Executive does not return to the full-time
performance of the Executive's duties.
1.6 "Employment Period" shall mean the period commencing on the
date of any Change in Control until the earliest to occur of (i) the date
which is thirty-six (36) months from the date of any such Change in
Control, (ii) the date of termination by the Executive of the Executive's
employment for any reason, (iii) the termination by the Company of the
Executive's employment for any reason or (iv) the Executive's attaining
age sixty-two (62).
1.7 "Good Reason" shall mean the occurrence (without the
Executive's prior express written consent) of any one of the following
acts, or failures to act, unless, in the case of any act or failure to act
described in clauses (i), (iv), (v) or (vi) below, such act or failure to
act is corrected by the Company prior to the Date of Termination specified
in the Notice of Termination given by the Executive in respect thereof not
later than six (6) months after the occurrence of the event that serves as
the basis for the Notice of Termination:
(i) the assignment to the Executive of any duties or
responsibilities inconsistent with those described in Section
3.2 below or with the Executive's position(s) or status
(including, without limitation, offices, titles, and reporting
relationships) as an executive officer of the Company and its
subsidiaries or a substantial adverse alteration in the nature
of the Executive's authority, duties, responsibilities, position
or status from those described in Section 3.2 below or
otherwise;
(ii) a reduction in the Executive's Annual Base
Salary or annual bonus opportunity as in effect on the date of
this Agreement or as the same may be increased at any time
thereafter and from time to time;
(iii) the relocation of the Company's principal
executive offices to a location more than one hundred and twenty
(120)* miles from its location on the date of this Agreement
(or, if different, more than one hundred and twenty (120)* miles
from where such offices are located immediately prior to any
Potential Change in Control) or the Company's requiring the
Executive to be based anywhere other than the Company's
principal executive offices except for required travel on the
Company's business to an extent substantially consistent with
the Executive's business travel obligations as of the date of
this Agreement;
(iv) any failure by the Company to comply with any of
the provisions of this Agreement, other than an 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;
* Thirty (30) miles if the Executive has attained age 60 at the time of
the Change in Control.
(v) the failure by the Company or a subsidiary to
continue in effect any pension benefit or incentive or deferred
compensation plan in which the Executive participates
immediately prior to any Potential Change in Control which is
material to the Executive's total compensation, unless an equitable
arrangement (embodied in an ongoing substitute or alternative plan or
arrangement) has been made with respect to such plan, or the failure
by the Company or a subsidiary to continue the Executive's
participation therein (or in such substitute or alternative plan or
arrangement) on a basis not materially less favorable, both in terms
of the amount of benefits provided and the level of the Executive's
participation relative to other participants, as existed at the time
of the Potential Change in Control;
(vi) the failure by the Company or a subsidiary to
continue to provide the Executive with health and welfare
benefits substantially similar to those enjoyed by the Executive
under any of the Company's or a subsidiary's retirement, life
insurance, medical, health and accident, or disability or
similar plans in which the Executive was participating at the
time of any Potential Change in Control, the taking of any
action by the Company or a subsidiary which would directly or
indirectly materially reduce any of such benefits or deprive the
Executive of any material fringe benefit enjoyed by the
Executive at the time of the Potential Change in Control, or the
failure by the Company or a subsidiary to provide the Executive
with the number of paid vacation days to which the Executive is
entitled in accordance with the Company's or a subsidiary's
normal vacation policy in effect at the time of the Potential
Change in Control;
(vii) any purported termination of the Executive's
employment which is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 7.1; and/or
(viii) the failure of the Company to obtain a written
agreement reasonably satisfactory to the Executive from any successor
to the Company (as described in Section 9.1) to perform this
Agreement.
1.8 "Person" shall have the meaning ascribed thereto in Section
3(a)(9) of the Exchange Act, as modified, applied and used in Sections
13(d) and 14(d) thereof; provided, however, a Person shall not include (i)
the Company or any of its subsidiaries, (ii) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any of
its subsidiaries (in its capacity as such), (iii) an underwriter
temporarily holding securities pursuant to an offering of such securities,
or (iv) a corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same character and proportions as
their ownership of stock of the Company.
1.9 "Potential Change in Control" shall mean and be deemed to
have occurred if:
(i) the Company enters into an agreement, the
consummation of which would result in the occurrence of a Change
in Control;
(ii) the Company or any Person publicly announces an
intention to take actions which, if consummated, would
constitute a Change in Control; and/or
(iii) any Person becomes the Beneficial Owner,
directly or indirectly, of securities of the Company
representing ten percent (10%) or more of the combined voting
power of the Company's then outstanding securities, or any
Person increases such Person's beneficial ownership of such
securities by five (5) percentage points or more over the
percentage so owned by such Person on November 1, 1995.
1.10 "Retirement" shall mean and be deemed the reason for the
termination by the Executive of the Executive's employment if such
employment is terminated in accordance with the Company's normal
retirement policy for those aged 62 and older, not including early
retirement or so-called "window period" retirements, generally applicable
to its officers, as in effect immediately prior to any Potential Change in
Control.
2. Term of this Agreement. This Agreement shall commence on the
date hereof and shall continue in effect through December 31, 1998;
provided, however, that commencing on January 1, 1999 and each January 1
thereafter, the term of this Agreement shall automatically be extended for
one additional year unless, not later than June 30 of the preceding year,
the Company or the Executive shall have given written notice to the other
not to extend this Agreement or a Change in Control shall have occurred
prior to any such January 1; provided, further, however, that if a Change
in Control shall have occurred during the term of this Agreement, this
Agreement shall continue in effect for a period of not less than thirty-
six (36) months beyond the month in which such Change in Control occurred
(the "Term"). Notwithstanding the foregoing provisions of this Section 2,
the Term shall terminate upon the Executive's attaining the age of
sixty-two (62) years (or the date on which the Executive would have
attained age 62 if the Executive had survived).
3. Company's Covenants.
3.1 Severance Payments. In order to induce the Executive to
remain in the employ of the Company and/or one or more of its subsidiaries
and in consideration of the Executive's covenants set forth in Section 4
below, the Company agrees, under the terms and conditions described herein
and in addition to the amounts payable to the Executive under Section 5
below, to pay the Executive the "Severance Payments" described in Section
6.1 below and the other payments and benefits described herein in the
event the Executive's employment with the Company is terminated during the
Employment Period or under the other circumstances set forth in Section
6.1 below.
3.2 Position and Duties. During the Employment Period, (a) the
Executive's position (including status, offices, titles and reporting
relationships), authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of those
held, exercised and assigned at any time during the one hundred eighty
(180) day period immediately preceding any related Potential Change in
Control, and (b) the Executive's services shall be performed at the
location where the Executive was employed immediately preceding any such
Potential Change in Control, or any office or location less than one
hundred and twenty (120)* miles from such location.
3.3 Base Salary. During the Employment Period, the Executive
shall receive Annual Base Salary at least equal to twelve (12) times the
highest monthly base salary paid or payable, including (without
limitation) any base salary which has been earned but deferred, to the
Executive by the Company and its affiliated companies in respect of the
twelve (12) month period immediately preceding the month in which any
related Potential Change in Control occurs. In addition, Annual Base
Salary shall not be reduced after the occurrence of a Potential Change in
Control. As used in this Agreement, the term "affiliated companies" shall
include any company controlled by, controlling or under common control
with the Company.
3.4 Annual Bonus. In addition to Annual Base Salary, if the
Company adopts an annual bonus program for officers during the Employment
Period (the "Annual Bonus") the Executive shall be entitled to tee in such
Annual Bonus program on a basis equivalent to other executive officers of
the Company. Each 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 shall elect to defer the
receipt of such Annual Bonus in accordance with rules established by the
Company for that purpose.
3.5 Incentive, Savings and Retirement Plans. During the
Employment Period, the Executive shall be entitled to participate in all
incentive, savings and retirement plans, practices, policies and programs
applicable generally to other peer executives of the Company and its
subsidiaries, but in no event shall such plans, practices, policies and
programs provide the Executive with incentive opportunities (measured with
respect to both regular and special incentive opportunities, to the
extent, if any, that such distinction is applicable), 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 one hundred eighty (180) day period immediately preceding any related
Potential Change in Control or if more favorable to the Executive, those
provided generally at any time thereafter to other peer executives of the
Company and its affiliated companies.
3.6 Welfare Benefit Plans. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be
entitled to participate in and shall receive all benefits under all of the
health and welfare benefit plans, practices, policies and programs
* Thirty (30) miles if the Executive has attained age 60 at the time of
the Change in Control.
provided by the Company and its affiliated companies (including, without
limitation, medical, prescription, dental, disability, employee life,
group life, accidental death and travel accident insurance plans and
programs) to the extent (and at the same cost) applicable generally to
other peer executives of the Company and its subsidiaries, but in no event
shall such plans, practices, policies and programs provide the Executive
with benefits that 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 one hundred eighty (180) day period
immediately preceding any related Potential Change in Control or, if more
favorable to the Executive, those provided generally at any time
thereafter to other peer executives of the Company and its affiliated
companies.
3.7 Expenses. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all reasonable
business 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
one hundred eighty (180) day period immediately preceding any related
Potential Change in Control 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.
3.8 Office Support; Perquisites. During the Employment Period,
the Executive shall be entitled to a private office, secretarial support
and other facilities, perquisites and programs to enable the Executive to
be able to discharge the Executive's responsibilities hereunder 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 one hundred eighty (180) day period immediately
preceding any related Potential Change in Control 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.
3.9 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 one
hundred eighty (180) day period immediately preceding any related
Potential Change in Control 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.
4. The Executive's Covenants.
4.1 Employment. The Executive agrees that, subject to the
terms and conditions of this Agreement, in the event of a Change in
Control during the Term the Executive will remain in the employ of the
Company during any related Employment Period.
4.2 Time and Attention. During the Employment Period, and
excluding any periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote reasonable attention and time
during normal business hours to the business and affairs of the Company
and to use the Executive's reasonable best efforts to perform faithfully
and efficiently the responsibilities and duties assigned to the Executive
hereunder. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (i) serve on corporate, civic or
charitable boards or committees, (ii) deliver lectures and fulfill
speaking engagements and (iii) manage personal investments, so long as
such activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company and its
subsidiaries 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 any Potential Change in Control, the
reinstatement or continued conduct of such activities (or the
reinstatement or conduct of activities similar in nature and scope
thereto) subsequent to any related Potential Change in Control shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company and its subsidiaries.
4.3. Non-interference; Confidential Information
(a) No Interference. For so long as the Executive is employed
by the Company, and for a period of two (2) years thereafter, the
Executive shall not, whether for his own account or for the account of any
other individual, partnership, firm, corporation or other business
organization (other than the Company or one of its affiliates),
intentionally solicit, endeavor to entice away from the Company (or any of
its affiliates), or otherwise interfere with the relationship of the
Company (or any of its affiliates) with, any person who is employed by or
otherwise engaged to perform services for the Company (or any of its
affiliates) including, but not limited to, any independent representatives
or organizations, or any person or entity that is a customer of the
Company (or any of its affiliates). The Executive understands and agrees
that the rights and obligations set forth in this Section 4.3(a) could
extend beyond the Term.
(b) Confidential Information. The Executive covenants and
agrees with the Company that he will not at any time, during or after
employment with the Company, except in performance of the Executive's
obligations to the Company or with the prior express written consent of
the Board of Directors, directly or indirectly, intentionally or
unintentionally, disclose any Confidential Information that he may learn
or has learned by reason of his employment or association with the
Company, or any predecessors to its business, or use any such information
for his own personal benefit or gain. The term "Confidential Information"
includes, without limitation, information not previously disclosed to the
public or to the trade by the Company's management with respect to the
products, facilities and methods, trade secrets and other intellectual
property, systems, procedures, manuals, confidential reports, fee or rate
information, customer lists, financial information (including the
revenues, costs or profits associated with any of the Company's activities
or products), business plans, prospects, opportunities or other
information of the Company or any of its affiliates. Confidential
Information shall not include information which (i) is or becomes
generally available to the public other than as a result of disclosure by
the Executive in violation of this Section 4.3(b) or (ii) the Executive is
required to disclose under any applicable laws, regulations or directives
of any government agency, tribunal or authority having jurisdiction in the
matter or under subpoena or other process of law. The Executive
understands and agrees that the rights and obligations set forth in this
Section 4.3 (b) shall extend beyond the Term.
(c) Exclusive Property. The Executive confirms that all
Confidential Information is and shall remain the exclusive property of the
Company or any of its affiliates. All business records, papers and
documents kept or made by the Executive relating to the business of the
Company (or any of its affiliates) or any Confidential Information shall
be and remain the property of the Company. Upon termination of employment
with the Company or upon the request of the Company at any time, the
Executive shall promptly deliver to the Company, and shall not without the
prior express written consent of the Company retain, any and all copies of
(i) any written materials not previously made available to the public, or
(ii) records and documents made by the Executive or coming into his
possession concerning any Confidential Information or the business or
affairs of the Company or any predecessors to its business, or any of its
affiliates. The Executive understands and agrees that the rights and
obligations set forth in this Section 4.3(c) shall extend beyond the Term.
(d) Injunctive Relief. Without intending to limit the remedies
available to the Company, the Executive acknowledges that a breach of any
of the covenants contained in this Section 4.3 may result in material
irreparable injury to the Company or its affiliates for which there is no
adequate remedy at law, that it will not be possible to measure damages
for such injuries precisely and that, in the event of such a breach or
threat thereof, the Company shall be entitled to obtain a temporary
restraining order and/or a preliminary or permanent injunction restraining
the Executive from engaging in activities prohibited by this Section 4.3
or such other relief as may be required to specifically enforce any of the
covenants in this Section 4.3.
5. Compensation Other Than Severance Payments.
5.1 Disability. Following a Potential Change in Control and
during the Term, during any period that the Executive fails to perform the
Executive's full-time duties with the Company as a result of incapacity
due to physical or mental illness, the Executive's full salary shall be
paid to the Executive by the Company at a rate no less than the rate in
effect at the commencement of any such disability period, together with
all compensation and benefits payable to the Executive under the terms of
any compensation or benefit plan, program or arrangement maintained by the
Company or its subsidiaries during such disability period, until the
Executive's employment is terminated by the Company for Disability.
5.2 Base Salary. If the Executive's employment shall be
terminated for any reason following a Potential Change in Control and
during the Term, the Executive's full salary shall be paid to the
Executive by the Company through the Date of Termination (as defined below
in Section 7.2) at the rate in effect at the time the Notice of
Termination is given, together with all compensation and benefits payable
to or with respect to the Executive through the Date of Termination under
the terms of any compensation or benefit plan, program or arrangement
maintained by the Company or its subsidiaries during such period.
5.3 Benefits. If the Executive's employment shall be
terminated for any reason following a Potential Change in Control and
during the Term, the Executive's normal post-termination compensation and
benefits shall be paid to the Executive as such payments become due. Such
post-termination compensation and benefits shall be determined under, and
paid in accordance with, the retirement, health insurance, life insurance
and other compensation or benefit plans, programs and arrangements
maintained by the Company or its affiliates.
6. Severance Payments.
6.1 Severance. The Company shall pay the Executive the
payments and benefits described in this Section 6.1 (the "Severance
Payments") upon the termination of the Executive's employment with the
Company following a Change in Control and during the Term, in addition to
the payments and benefits described in Section 5 hereof, unless such
termination is (i) by the Company for Cause, (ii) by reason of Retirement,
(iii) by the Executive without Good Reason, (iv) due to death, or (v) due
to Disability. In addition, the Executive's employment shall be deemed to
have been terminated following a Change in Control by the Company without
Cause or by the Executive with Good Reason (a) if the Executive reasonably
demonstrates that the Executive's employment was terminated prior to a
Change in Control without Cause (1) at the request of a Person who has
entered into an agreement with the Company the consummation of which will
constitute a Change in Control (or who has taken other steps reasonably
calculated to effect a Change in Control) or (2) otherwise in connection
with, as a result of or in anticipation of a Change in Control, or (b) if
the Executive terminates his employment for Good Reason prior to a Change
in Control and the Executive reasonably demonstrates that the
circumstance(s) or event(s) which constitute such Good Reason occurred (1)
at the request of such Person or (2) otherwise in connection with, as a
result of or in anticipation of a Change in Control. The Executive's
right to terminate the Executive's employment for Good Reason shall not be
affected by the Executive's incapacity due to physical or mental illness.
The Executive's continued employment shall not constitute consent to, or a
waiver of rights with respect to, any act or failure to act constituting
Good Reason hereunder. In the event of the Disability or death of the
Executive after the Date of Termination in respect of any termination
without cause or any termination for Good Reason, payments and benefits
shall be made to the Executive, or the Executive's beneficiaries or legal
representative, as the case may be.
(a) In lieu of any further salary and annual bonus
payments to the Executive for periods subsequent to the Date of
Termination, the Company shall pay to the Executive a lump sum
severance payment, in cash, equal to three (3) or, if less, the
number of years, including fractions, from the Date of
Termination until the Executive reaches the age of sixty-two
(62) years times the sum of (i) the Executive's Annual Base
Salary immediately preceding the Change in Control or, if
higher, the Executive's Annual Base Salary on the Date of
Termination, and (ii) the average annual bonus paid or payable
to the Executive with respect to the three (3) years (or portion
thereof with respect to which an annual bonus was paid) prior to
the year in which the Date of Termination occurs.
(b) For a thirty-six (36) month period after the Date
of Termination, or if sooner, until the Executive reaches the
age of sixty-two (62) years, the Company shall arrange to
provide the Executive with life, disability, accident and health
insurance benefits substantially similar (and at the same cost)
to those that the Executive is receiving immediately prior to
any related Potential Change in Control or the receipt of the
Notice of Termination (without giving effect to any reduction in
such benefits subsequent to a Change in Control which reduction
constitutes Good Reason), whichever is greater. Benefits
otherwise receivable by the Executive pursuant to this Section
6.1(b) shall be reduced to the extent comparable benefits are
actually received by or made available to the Executive without
cost during such period following the Executive's termination of
employment (and any such benefits actually received by the
Executive shall be reported to the Company by the Executive).
(c) The Executive shall receive, at the expense of the
Company, outplacement services, on an individualized basis at a level
of service commensurate with the Executive's status with the Company
immediately prior to the Change in Control (or, if higher,
immediately prior to the termination of the Executive's employment),
provided by a nationally recognized executive placement firm selected
by the Executive and reasonably satisfactory to the Company; provided
that the cost to the Company of such services shall not exceed 15% of
the Executive's Annual Base Salary in effect immediately prior to the
Change in Control.
(d) All outstanding stock options previously granted to
the Executive shall become immediately 100% vested and exercisable,
and all shares of restricted stock shall become immediately 100%
vested and all forfeiture restrictions thereon shall lapse. Such
accelerated and vested options shall be exercisable for the remainder
of the term of such option, as set forth in the Executive's related
stock option agreement (without regard to any truncation of such
period therein, or under any plan or arrangement maintained by the
Company,on account of any termination of the Executive's employment).
6.2 Code Section 280G Reduction. Notwithstanding any other
provisions of this Agreement or of any other agreement, contract,
understanding, plan or program entered into or maintained by the Company,
if any payment or benefit received or to be received by the Executive in
connection with a Change in Control or the termination of the Executive's
employment (whether pursuant to the terms of this Agreement or any other
plan, arrangement or agreement with (a) the Company or any affiliate,
parent or subsidiary of the Company, (b) any Person whose actions result
in a Change in Control, or (c) any Person affiliated with the Company)
(all such payments and/or benefits, including the payments and benefits,
if any, under this Section 6, being hereinafter referred to as the "Total
Payments") would subject the Executive to the excise tax imposed under
Section 4999 of the Code, on any successor section thereto (the "Excise
Tax"), and if the amount of such Total Payments, reduced by all federal,
state and local taxes applicable with respect thereto, including without
limitation the Excise Tax, is less than the amount of Total Payments which
would otherwise be payable to the Executive, after all such taxes, without
the imposition of the Excise Tax, then, to the extent necessary to
eliminate the imposition of the Excise Tax (after taking into account any
reduction in the Total Payments provided by reason of Section 280G of the
Code under plan, arrangement or agreement), (i) the cash and non-cash
payments and benefits payable under this Agreement shall first be reduced
(but not below zero), and (ii) all other cash and non-cash payments and
benefits shall next be reduced (but not below zero); but only if, by
reason of any such reduction, the Total Payments with any such reduction,
after all such taxes, shall exceed the Total Payments without any such
reduction, after all such taxes. For purposes of this Section 6.2, (A) no
portion of the Total Payments the receipt or enjoyment of which the
Executive shall have effectively waived in writing prior to the Date of
Termination shall be taken into account, (B) no portion of the Total
Payments shall be taken into account which in the opinion of tax counsel
selected in good faith by the Company does not constitute a "parachute
payment" within the meaning of Section 280G(b)(2) of the Code, including
(without limitation) by reason of Section 280G(b)(4)(A) of the Code, (C)
the payments and/or benefits under this Agreement shall be reduced only to
the extent necessary so that the Total Payments (other than those referred
to in clauses (A) and (B) above) in their entirety constitute reasonable
compensation for services actually rendered within the meaning of Section
280G(b)(4)(B) of the Code or are otherwise not subject to disallowance as
deductions, in the opinion of the tax counsel referred to above in clause
(B), and (D) the value of any non-cash payment or benefit or any deferred
payment or benefit included in the Total Payments shall be determined by
the Company's independent auditors in accordance with the principles of
Sections 280G(d)(3) and (4) of the Code. Except as otherwise provided
above, the foregoing calculations and determinations shall be made in good
faith by the Company and the Executive. If no agreement on the
calculations is reached, then the Executive and the Company will cooperate
and attempt to agree to the selection of an accounting firm to make the
calculations. If no agreement can be reached regarding the selection of
an accounting firm, the Company will select in good faith a prominent
national accounting firm that has no current or recent business
relationship with the Company. The Company shall pay all costs and
expenses incurred in connection with any such calculations or
determinations. Any calculations or determinations made in accordance
with this Section 6.2 shall be conclusive and binding on all parties.
6.3 Date of Payment. The payments provided for in Section
6.1.(a) and Section 6.2 hereof shall , unless deferred pursuant to the
last sentence of this Section 6.3, be made not later than the fifteenth
(15th) day following the Date of Termination; provided, however, that if
the amounts of such payments cannot be finally determined on or before
such day, the Company shall pay to the Executive (subject to the last
sentence of this Section 6.3) on such day an estimate, as determined in
good faith by the Company, of the minimum amount of such payments to which
the Executive is likely to be entitled to and shall pay the remainder of
such payments (together with interest at the rate provided in section
1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined
but in no event later than the thirtieth (30th) day after the Date of
Termination. In the event that the amount of the estimated payments
exceeds the amount subsequently determined to have been due, such excess
shall constitute a loan by the Company to the Executive, payable on the
tenth (10th) business day after demand by the Company (together with
interest at the rate provided in section 1274(b)(2)(B) of the Code). At
the time that payments are made or would have been made, disregarding for
this purpose only, any deferral effected by the Executive, under this
Section 6.3, the Company shall provide the Executive with a detailed
written statement setting forth the manner in which such payments were
calculated and the basis for such calculations including, without
limitation, any opinions or other advice the Company has received from
outside counsel, auditors or consultants (and any such opinions or advice
which are in writing shall be attached to the statement). The Executive
may irrevocably elect, in a writing delivered to the Company no later than
the last day of the calendar year preceding the calendar year in which
occurs the Change in Control, to defer the receipt of any payment to which
the Executive may become entitled to under Section 6.1 of this Agreement
for the period of time specified in such writing.
6.4 Legal Costs. The Company shall also reimburse the
Executive for reasonable legal fees and expenses incurred in good faith by
the Executive as a result of any dispute with the Company or any affiliate
of the Company regarding the payment of any benefit provided for in this
Agreement (including, but not limited to, all such fees and expenses
incurred in disputing any termination or in seeking in good faith to
obtain or enforce any benefit or right provided by this Agreement or in
connection with any tax audit or proceeding to the extent attributable to
the application of section 4999 of the Code) 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. Such payments shall, in the aggregate, not
exceed $10,000 and shall be made within ten (10) business days after
delivery of the Executive's written requests for payment accompanied by
such evidence of fees and expenses incurred as the Company reasonably may
require.
7. Termination Procedures and Compensation During Dispute.
7.1 Notice of Termination. After a Change in Control and
during the Term, any purported termination of the Executive's employment
with the Company (other than by reason of death) shall be communicated by
written Notice of Termination from one party hereto to the other party
hereto in accordance with Section 10 hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall
indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment
with the Company under the provision so indicated. Further, a Notice of
Termination for Cause is required to include a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters (3/4) of
the entire membership of the Board at a meeting of the Board which was
called and held for the purpose of considering such termination (which
meeting may be a regular meeting of the Board where prior notice of
consideration of such termination is given to members of the Board)
finding that, in the good faith opinion of the Board, the Executive
engaged in conduct set forth in clause (i) or (ii) of the definition of
Cause herein, and specifying the particulars thereof in detail. For
purposes of this Agreement, any purported termination not effected in
accordance with this Section 7.1 shall not be considered effective.
7.2 Date of Termination. "Date of Termination", with respect
to any purported termination of the Executive's employment after a Change
in Control and during the Term, shall mean (i) if the Executive's
employment is terminated for Disability, thirty (30) days after Notice of
Termination is given (provided that the Executive shall not have returned
to the full-time performance of the Executive's duties during such thirty
(30) day period), and (ii) if the Executive's employment is terminated for
any other reason, the date specified in the Notice of Termination (which,
in the case of a termination by the Company, shall not be less than thirty
(30) days (except in the case of a termination for Cause) and, in the case
of a termination by the Executive, shall not be less than fifteen (15)
days nor more than sixty (60) days, respectively, after the date such
Notice of Termination is given).
7.3 Dispute Concerning Termination. If within fifteen (15)
days after any Notice of Termination is given, or, if later, prior to the
Date of Termination (as determined without regard to this Section 7.3),
the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, the Date of Termination
shall be the date on which the dispute is finally resolved either by
mutual written agreement of the parties or by a final judgment, order or
decree of a court of competent jurisdiction (which is not appealable or
with respect to which the time for appeal therefrom has expired and no
appeal has been perfected); provided, however, that the Date of
Termination shall be extended by a notice of dispute only if the basis for
such notice is reasonable, such notice is given in good faith and the
party giving such notice pursues the resolution of such dispute with
reasonable diligence.
7.4 Compensation During Dispute. If a purported termination
occurs following a Change in Control and during the Term, and such
termination is disputed in accordance with Section 7.3 above, the Company
shall continue to pay the Executive the full compensation (including,
without limitation, Annual Base Salary and Annual Bonus) in effect at the
time of any related Potential Change in Control or when the notice giving
rise to the dispute was given (whichever is greater) and continue the
Executive as a participant in all compensation, incentive, pension and
welfare benefit and insurance plans in which the Executive was
participating at the time of any Potential Change in Control or when the
notice giving rise to the dispute was given, whichever is greater, until
the dispute is finally resolved in accordance with Section 7.3 hereof.
Amounts paid under this Section 7.4 are in addition to all other amounts
due under this Agreement (other than those due under Section 5.2 hereof)
and shall not be offset against or reduce any other amounts due under this
Agreement or any other plan, agreement or arrangement.
8. No Mitigation. The Company agrees that, if the Executive's
employment is terminated during the Term, the Executive is not required to
seek other employment or to attempt in any way to reduce any amounts
payable to the Executive by the Company pursuant to Section 6 or Section
7.4. Further, the amount of any payment or benefit provided for in
Section 6 (other than pursuant to Section 6.1.(b)) or Section 7.4 shall
not be reduced by any compensation earned by the Executive as the result
of employment by another employer, by retirement benefits, or offset
against any amount claimed to be owed by the Executive to the Company or
any of its subsidiaries, or otherwise.
9. Successors; Binding Agreement.
9.1 Successors. In addition to any obligations imposed by law
upon any successor to the Company, the Company will 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 expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. Failure of the Company
to obtain such assumption and agreement prior to the effectiveness of any
such succession shall be a breach of this Agreement and shall entitle the
Executive to compensation from the Company in the same amount and on the
same terms as the Executive would be entitled to hereunder if the
Executive were to terminate employment with the Company for Good Reason
after a Change in Control, except that, for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall
be deemed the Date of Termination.
9.2 Binding Agreement. This Agreement shall inure to the
benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive shall die while any
amount would still be payable to the Executive hereunder (other than
amounts which, by their terms, terminate upon the death of the Executive)
if the Executive had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this
Agreement to the beneficiary (or beneficiaries) designated by the
Executive from time to time in accordance with the procedures for notice
set out in Section 10; provided, however, that if there shall be no
effective designation of beneficiary by the Executive, such amounts shall
be paid to the executors, personal representatives or administrators of
the Executive's estate.
10. Notices; Other Communications. For the purpose of this
Agreement, notices and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have been duly given
when delivered or mailed by United States certified mail, return receipt
requested, postage prepaid, addressed to the respective addresses set
forth below, or to such other address as either party may have furnished
to the other in writing in accordance herewith, except that notice of
change of address shall be effective only upon actual receipt:
To the Company:
Interstate Power Company
1000 Main Street
P.O. Box 769
Dubuque, Iowa 52004-0769
Attention: Corporate Secretary
To the Executive:
Mr. Donald E. Hamill
491 Alpine Street
Dubuque, Iowa 52001
11. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge (i) is
agreed to in writing and signed by the Executive and such officer as may
be specifically designated by the Board, or (ii) is (a) approved by such
officer as may be specifically designated by the Board, (b) effective only
in respect of any Change in Control resulting from the proposed merger
transaction involving the Company, IES Industries Inc. and WPL Holdings,
Inc., and (c) applicable to all members of the senior management of the
Company who have executed an agreement substantially similar to this
Agreement. In respect of any proposed waiver, modification, or discharge
which meets the conditions specified above in Section 11(ii), the
Executive hereby irrevocably appoints the Chairman of the Board of the
Company to be the Executive's attorney-in-fact for the limited purpose of
entering into, on behalf of the Executive, any form of waiver,
modification or discharge necessary to effect any such waiver,
modification or discharge meeting the conditions of this Section 11(ii).
No waiver by either party hereto at any time of any breach by the other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior
or subsequent time.
No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement. The
validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of Iowa without regard to the
principles of conflict of laws thereof. All references to sections of the
Exchange Act or the Code (or the rules and/or regulations under either)
shall be deemed also to refer to and include any successor provisions to
such sections. Any payments provided for hereunder shall be paid net of
any applicable withholding required under federal, state or local law and
any additional withholding to which the Executive has agreed. The rights
and obligations of the Company and the Executive under this Agreement
shall survive the expiration of the Term and the Employment Period.
12. Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement, all of which shall remain in full force
and effect.
13. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
14. No Limitation. 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 other 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 as in effect from time to
time except as explicitly modified by this Agreement.
15. Other Agreements. This Agreement contains the entire agreement
between the parties concerning the subject matter hereof and supersedes
all prior agreements understandings, discussions, negotiations and
undertakings, whether written or oral, between the parties with respect
thereto.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.
INTERSTATE POWER COMPANY
By: /s/ Wayne H. Stoppelmoor
Title: Chairman, President and Chief
Executive Officer
/s/ Donald E. Hamill
Donald E. Hamill
EX-10.4
AGREEMENT
THIS AGREEMENT, dated as of November 8, 1995 (this "Agreement"),
is made by and between Interstate Power Company, a Delaware corporation,
having its principal offices at 1000 Main Street, Dubuque, Iowa 52004-0769
(the "Company"), and Donald D. Jannette residing at 1725 Overview Court,
Dubuque, Iowa 52003 (the "Executive").
WHEREAS, the Company considers it essential to the best
interests of its shareholders to foster the continued employment of key
executive management personnel; and
WHEREAS, the Board of Directors of the Company (the "Board")
recognizes that, as is the case with many publicly-held corporations, the
possibility of a Change in Control (as defined in Section 1.3 below) of
the Company exists from time to time and that such possibility, and the
uncertainty, instability and questions that it may raise for and among key
executive management personnel, may result in the premature departure or
significant distraction of such management personnel to the material
detriment of the Company and its shareholders; and
WHEREAS, the Board has determined that appropriate steps should
be taken to reinforce, focus and encourage the continued attention and
dedication of key members of the executive management of the Company and
its subsidiaries, including (without limitation) the Executive, to their
assigned duties without distraction in the face of potentially disturbing
or unsettling circumstances arising from the possibility of a Change in
Control of the Company;
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and the Executive hereby agree as
follows:
1. Definitions. For purposes of this Agreement, the following
terms shall have the meanings set forth below:
1.1 "Annual Base Salary" shall mean the Executive's rate of
regular basic annual compensation prior to any reduction under a salary
reduction agreement pursuant to section 401(k) or section 125 of the
Internal Revenue Code of 1986, as amended from time to time (the "Code")
or any deferred compensation arrangements, and shall not include, without
limitation, cost of living allowances, fees, retainers, reimbursements,
bonuses, incentive awards, prizes or similar payments.
1.2 "Cause" shall mean:
(i) the willful and continued failure by the Executive to
substantially perform the Executive's duties with the Company, or a
subsidiary of the Company, as such duties may reasonably be defined
from time to time by the Board (or a duly authorized committee
thereof), or to abide by the reasonable written policies of the
Company or of the Executive's primary employer (other than any such
failure resulting from the Executive's incapacity due to physical or
mental illness) after a written demand for substantial performance is
delivered to the Executive by the Board, which demand specifically
identifies the manner in which the Board believes that the Executive
has not substantially performed the Executive's duties or has not
abided by any reasonable written policies, or
(ii) the continued and willful engaging by the Executive in
conduct which is demonstrably and materially injurious to the Company
or its subsidiaries, monetarily or otherwise; or
(iii) the Executive's conviction of, or plea of no contest
to, a felony.
For purposes of clauses (i) and (ii) of this definition, no act, or
failure to act, on the Executive's part shall be deemed "willful" unless
done, or omitted to be done, by the Executive in bad faith and without
reasonable belief that the Executive's act, or failure to act, was in the
best interest of the Company or its subsidiaries. Any act, or failure to
act, based upon authority given pursuant to a resolution duly adopted by
the Board or upon the instructions of the Board (or a committee thereof),
the Company's chief executive officer or other duly authorized senior
officer of the Company (as appropriate) or based upon the advice of
counsel for the Company shall be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in the best
interests of the Company and its subsidiaries. The cessation of
employment of the Executive shall not be deemed to be for Cause unless and
until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than three-
quarters (3/4) of the entire membership of the Board at a meeting of the
Board called and held for such purpose (after reasonable notice of any
such meeting is provided to the Executive and the Executive is given an
opportunity, together with counsel, to be heard before the Board) finding
that, in the good faith opinion of the Board, the Executive has acted in a
manner described in clause (i) or (ii) above and specifying the
particulars thereof in detail.
1.3 "Change in Control" shall mean and be deemed to have
occurred if:
(i) any Person is or becomes the Beneficial Owner (as
that term is defined in Rule 13d-3 under the Securities Exchange
Act of 1934 (the "Exchange Act")), directly or indirectly, of
securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired
directly from the Company) representing twenty-five percent
(25%) or more of the combined voting power of the Company's then
outstanding securities; or
(ii) during any period of twenty-four (24)
consecutive months (not including any period prior to November
1, 1995), individuals who at the beginning of such period
constitute the Board and any new director (other than a director
designated by a Person who has entered into an agreement with
the Company to effect a transaction described in clause (i),
(iii) or (iv) of this definition or any such individual whose
initial assumption of office occurs as a result of either an
actual or threatened election contest (as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act) or other actual or threatened solicitation of proxies or
consents) whose election by the Board or nomination for election
by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of such period or whose
election or nomination for election was previously so approved,
cease for any reason to constitute a majority of the Board; or
(iii) the shareholders of the Company approve a
reorganization, merger or consolidation, other than a
reorganization, merger or consolidation with respect to which
all or substantially all of the individuals and entities who
were Beneficial Owners, immediately prior to such
reorganization, merger or consolidation, of the combined voting
power of the Company's then outstanding securities beneficially
own, directly or indirectly, immediately after such
reorganization, merger or consolidation, more then seventy-five
percent (75%) of the combined voting power of the securities of
the corporation resulting from such reorganization, merger or
consolidation in substantially the same proportions as their
respective ownership, immediately prior to such reorganization,
merger or consolidation, of the combined voting power of the
Company's securities; or
(iv) the shareholders of the Company approve (a) the
sale or disposition by the Company (other than to a subsidiary
of the Company) of all or substantially all of the assets of the
Company (or any such sale or disposition is effected through
condemnation proceedings), or (b) a complete liquidation or
dissolution of the Company.
Notwithstanding the foregoing, a Change in Control shall not include any
event, circumstance or transaction which results from the action
(excluding the Executive's employment activities with the Company or any
of its affiliates) of any Person or group of Persons which includes, is
directly affiliated with or is wholly or partly controlled by one or more
executive officers of the Company and in which the Executive actively
participates.
1.4 "Company" shall include Interstate Power Company and any
successor to its business and/or assets which assumes (either expressly,
by operation of law or otherwise) and/or agrees to perform this Agreement
by operation of law or otherwise (except in determining, under Section 1.3
hereof, whether or not any Change in Control of the Company has occurred
in connection with such succession).
1.5 "Disability" shall mean and be deemed the reason for the
termination by the Company of the Executive's employment, if, as a result
of the Executive's incapacity due to physical or mental illness, (i) the
Executive shall have been absent from the full-time performance of the
Executive's duties with the Company for a period of six (6) consecutive
months, (ii) the Company gives the Executive a Notice of Termination for
Disability, and (iii) within thirty (30) days after such Notice of
Termination is given, the Executive does not return to the full-time
performance of the Executive's duties.
1.6 "Employment Period" shall mean the period commencing on the
date of any Change in Control until the earliest to occur of (i) the date
which is thirty-six (36) months from the date of any such Change in
Control, (ii) the date of termination by the Executive of the Executive's
employment for any reason, (iii) the termination by the Company of the
Executive's employment for any reason or (iv) the Executive's attaining
age sixty-two (62).
1.7 "Good Reason" shall mean the occurrence (without the
Executive's prior express written consent) of any one of the following
acts, or failures to act, unless, in the case of any act or failure to act
described in clauses (i), (iv), (v) or (vi) below, such act or failure to
act is corrected by the Company prior to the Date of Termination specified
in the Notice of Termination given by the Executive in respect thereof not
later than six (6) months after the occurrence of the event that serves as
the basis for the Notice of Termination:
(i) the assignment to the Executive of any duties or
responsibilities inconsistent with those described in Section
3.2 below or with the Executive's position(s) or status
(including, without limitation, offices, titles, and reporting
relationships) as an executive officer of the Company and its
subsidiaries or a substantial adverse alteration in the nature
of the Executive's authority, duties, responsibilities, position
or status from those described in Section 3.2 below or
otherwise;
(ii) a reduction in the Executive's Annual Base
Salary or annual bonus opportunity as in effect on the date of
this Agreement or as the same may be increased at any time
thereafter and from time to time;
(iii) the relocation of the Company's principal
executive offices to a location more than one hundred and twenty
(120)* miles from its location on the date of this Agreement
(or, if different, more than one hundred and twenty (120)* miles
from where such offices are located immediately prior to any
Potential Change in Control) or the Company's requiring the
Executive to be based anywhere other than the Company's
principal executive offices except for required travel on the
Company's business to an extent substantially consistent with
the Executive's business travel obligations as of the date of
this Agreement;
(iv) any failure by the Company to comply with any of
the provisions of this Agreement, other than an 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;
* Thirty (30) miles if the Executive has attained age 60 at the time of
the Change in Control.
(v) the failure by the Company or a subsidiary to continue in
effect any pension benefit or incentive or deferred compensation plan in
which the Executive participates immediately prior to any Potential Change
in Control which is material to the Executive's total compensation, unless
an equitable arrangement (embodied in an ongoing substitute or alternative
plan or arrangement) has been made with respect to such plan, or the
failure by the Company or a subsidiary to continue the Executive's
participation therein (or in such substitute or alternative plan or
arrangement) on a basis not materially less favorable, both in terms of
the amount of benefits provided and the level of the Executive's
participation relative to other participants, as existed at the time of
the Potential Change in Control;
(vi) the failure by the Company or a subsidiary to
continue to provide the Executive with health and welfare
benefits substantially similar to those enjoyed by the Executive
under any of the Company's or a subsidiary's retirement, life
insurance, medical, health and accident, or disability or
similar plans in which the Executive was participating at the
time of any Potential Change in Control, the taking of any
action by the Company or a subsidiary which would directly or
indirectly materially reduce any of such benefits or deprive the
Executive of any material fringe benefit enjoyed by the
Executive at the time of the Potential Change in Control, or the
failure by the Company or a subsidiary to provide the Executive
with the number of paid vacation days to which the Executive is
entitled in accordance with the Company's or a subsidiary's
normal vacation policy in effect at the time of the Potential
Change in Control;
(vii) any purported termination of the Executive's
employment which is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 7.1; and/or
(viii) the failure of the Company to obtain a written
agreement reasonably satisfactory to the Executive from any successor
to the Company (as described in Section 9.1) to perform this
Agreement.
1.8 "Person" shall have the meaning ascribed thereto in Section
3(a)(9) of the Exchange Act, as modified, applied and used in Sections
13(d) and 14(d) thereof; provided, however, a Person shall not include (i)
the Company or any of its subsidiaries, (ii) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any of
its subsidiaries (in its capacity as such), (iii) an underwriter
temporarily holding securities pursuant to an offering of such securities,
or (iv) a corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same character and proportions as
their ownership of stock of the Company.
1.9 "Potential Change in Control" shall mean and be deemed to
have occurred if:
(i) the Company enters into an agreement, the
consummation of which would result in the occurrence of a Change
in Control;
(ii) the Company or any Person publicly announces an
intention to take actions which, if consummated, would
constitute a Change in Control; and/or
(iii) any Person becomes the Beneficial Owner,
directly or indirectly, of securities of the Company
representing ten percent (10%) or more of the combined voting
power of the Company's then outstanding securities, or any
Person increases such Person's beneficial ownership of such
securities by five (5) percentage points or more over the
percentage so owned by such Person on November 1, 1995.
1.10 "Retirement" shall mean and be deemed the reason for the
termination by the Executive of the Executive's employment if such
employment is terminated in accordance with the Company's normal
retirement policy for those aged 62 and older, not including early
retirement or so-called "window period" retirements, generally applicable
to its officers, as in effect immediately prior to any Potential Change in
Control.
2. Term of this Agreement. This Agreement shall commence on the
date hereof and shall continue in effect through December 31, 1998;
provided, however, that commencing on January 1, 1999 and each January 1
thereafter, the term of this Agreement shall automatically be extended for
one additional year unless, not later than June 30 of the preceding year,
the Company or the Executive shall have given written notice to the other
not to extend this Agreement or a Change in Control shall have occurred
prior to any such January 1; provided, further, however, that if a Change
in Control shall have occurred during the term of this Agreement, this
Agreement shall continue in effect for a period of not less than thirty-
six (36) months beyond the month in which such Change in Control occurred
(the "Term"). Notwithstanding the foregoing provisions of this Section 2,
the Term shall terminate upon the Executive's attaining the age of
sixty-two (62) years (or the date on which the Executive would have
attained age 62 if the Executive had survived).
3. Company's Covenants.
3.1 Severance Payments. In order to induce the Executive to
remain in the employ of the Company and/or one or more of its subsidiaries
and in consideration of the Executive's covenants set forth in Section 4
below, the Company agrees, under the terms and conditions described herein
and in addition to the amounts payable to the Executive under Section 5
below, to pay the Executive the "Severance Payments" described in Section
6.1 below and the other payments and benefits described herein in the
event the Executive's employment with the Company is terminated during the
Employment Period or under the other circumstances set forth in Section
6.1 below.
3.2 Position and Duties. During the Employment Period, (a) the
Executive's position (including status, offices, titles and reporting
relationships), authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of those
held, exercised and assigned at any time during the one hundred eighty
(180) day period immediately preceding any related Potential Change in
Control, and (b) the Executive's services shall be performed at the
location where the Executive was employed immediately preceding any such
Potential Change in Control, or any office or location less than one
hundred and twenty (120)* miles from such location.
3.3 Base Salary. During the Employment Period, the Executive
shall receive Annual Base Salary at least equal to twelve (12) times the
highest monthly base salary paid or payable, including (without
limitation) any base salary which has been earned but deferred, to the
Executive by the Company and its affiliated companies in respect of the
twelve (12) month period immediately preceding the month in which any
related Potential Change in Control occurs. In addition, Annual Base
Salary shall not be reduced after the occurrence of a Potential Change in
Control. As used in this Agreement, the term "affiliated companies" shall
include any company controlled by, controlling or under common control
with the Company.
3.4 Annual Bonus. In addition to Annual Base Salary, if the
Company adopts an annual bonus program for officers during the Employment
Period (the "Annual Bonus") the Executive shall be entitled to tee in such
Annual Bonus program on a basis equivalent to other executive officers of
the Company. Each 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 shall elect to defer the
receipt of such Annual Bonus in accordance with rules established by the
Company for that purpose.
3.5 Incentive, Savings and Retirement Plans. During the
Employment Period, the Executive shall be entitled to participate in all
incentive, savings and retirement plans, practices, policies and programs
applicable generally to other peer executives of the Company and its
subsidiaries, but in no event shall such plans, practices, policies and
programs provide the Executive with incentive opportunities (measured with
respect to both regular and special incentive opportunities, to the
extent, if any, that such distinction is applicable), 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 one hundred eighty (180) day period immediately preceding any related
Potential Change in Control or if more favorable to the Executive, those
provided generally at any time thereafter to other peer executives of the
Company and its affiliated companies.
3.6 Welfare Benefit Plans. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be
entitled to participate in and shall receive all benefits under all of the
health and welfare benefit plans, practices, policies and programs
* Thirty (30) miles if the Executive has attained age 60 at the time of
the Change in Control.
provided by the Company and its affiliated companies (including, without
limitation, medical, prescription, dental, disability, employee life,
group life, accidental death and travel accident insurance plans and
programs) to the extent (and at the same cost) applicable generally to
other peer executives of the Company and its subsidiaries, but in no event
shall such plans, practices, policies and programs provide the Executive
with benefits that 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 one hundred eighty (180) day period
immediately preceding any related Potential Change in Control or, if more
favorable to the Executive, those provided generally at any time
thereafter to other peer executives of the Company and its affiliated
companies.
3.7 Expenses. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all reasonable
business 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
one hundred eighty (180) day period immediately preceding any related
Potential Change in Control 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.
3.8 Office Support; Perquisites. During the Employment Period,
the Executive shall be entitled to a private office, secretarial support
and other facilities, perquisites and programs to enable the Executive to
be able to discharge the Executive's responsibilities hereunder 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 one hundred eighty (180) day period immediately
preceding any related Potential Change in Control 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.
3.9 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 one
hundred eighty (180) day period immediately preceding any related
Potential Change in Control 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.
4. The Executive's Covenants.
4.1 Employment. The Executive agrees that, subject to the
terms and conditions of this Agreement, in the event of a Change in
Control during the Term the Executive will remain in the employ of the
Company during any related Employment Period.
4.2 Time and Attention. During the Employment Period, and
excluding any periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote reasonable attention and time
during normal business hours to the business and affairs of the Company
and to use the Executive's reasonable best efforts to perform faithfully
and efficiently the responsibilities and duties assigned to the Executive
hereunder. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (i) serve on corporate, civic or
charitable boards or committees, (ii) deliver lectures and fulfill
speaking engagements and (iii) manage personal investments, so long as
such activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company and its
subsidiaries 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 any Potential Change in Control, the
reinstatement or continued conduct of such activities (or the
reinstatement or conduct of activities similar in nature and scope
thereto) subsequent to any related Potential Change in Control shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company and its subsidiaries.
4.3. Non-interference; Confidential Information
(a) No Interference. For so long as the Executive is employed
by the Company, and for a period of two (2) years thereafter, the
Executive shall not, whether for his own account or for the account of any
other individual, partnership, firm, corporation or other business
organization (other than the Company or one of its affiliates),
intentionally solicit, endeavor to entice away from the Company (or any of
its affiliates), or otherwise interfere with the relationship of the
Company (or any of its affiliates) with, any person who is employed by or
otherwise engaged to perform services for the Company (or any of its
affiliates) including, but not limited to, any independent representatives
or organizations, or any person or entity that is a customer of the
Company (or any of its affiliates). The Executive understands and agrees
that the rights and obligations set forth in this Section 4.3(a) could
extend beyond the Term.
(b) Confidential Information. The Executive covenants and
agrees with the Company that he will not at any time, during or after
employment with the Company, except in performance of the Executive's
obligations to the Company or with the prior express written consent of
the Board of Directors, directly or indirectly, intentionally or
unintentionally, disclose any Confidential Information that he may learn
or has learned by reason of his employment or association with the
Company, or any predecessors to its business, or use any such information
for his own personal benefit or gain. The term "Confidential Information"
includes, without limitation, information not previously disclosed to the
public or to the trade by the Company's management with respect to the
products, facilities and methods, trade secrets and other intellectual
property, systems, procedures, manuals, confidential reports, fee or rate
information, customer lists, financial information (including the
revenues, costs or profits associated with any of the Company's activities
or products), business plans, prospects, opportunities or other
information of the Company or any of its affiliates. Confidential
Information shall not include information which (i) is or becomes
generally available to the public other than as a result of disclosure by
the Executive in violation of this Section 4.3(b) or (ii) the Executive is
required to disclose under any applicable laws, regulations or directives
of any government agency, tribunal or authority having jurisdiction in the
matter or under subpoena or other process of law. The Executive
understands and agrees that the rights and obligations set forth in this
Section 4.3 (b) shall extend beyond the Term.
(c) Exclusive Property. The Executive confirms that all
Confidential Information is and shall remain the exclusive property of the
Company or any of its affiliates. All business records, papers and
documents kept or made by the Executive relating to the business of the
Company (or any of its affiliates) or any Confidential Information shall
be and remain the property of the Company. Upon termination of employment
with the Company or upon the request of the Company at any time, the
Executive shall promptly deliver to the Company, and shall not without the
prior express written consent of the Company retain, any and all copies of
(i) any written materials not previously made available to the public, or
(ii) records and documents made by the Executive or coming into his
possession concerning any Confidential Information or the business or
affairs of the Company or any predecessors to its business, or any of its
affiliates. The Executive understands and agrees that the rights and
obligations set forth in this Section 4.3(c) shall extend beyond the Term.
(d) Injunctive Relief. Without intending to limit the remedies
available to the Company, the Executive acknowledges that a breach of any
of the covenants contained in this Section 4.3 may result in material
irreparable injury to the Company or its affiliates for which there is no
adequate remedy at law, that it will not be possible to measure damages
for such injuries precisely and that, in the event of such a breach or
threat thereof, the Company shall be entitled to obtain a temporary
restraining order and/or a preliminary or permanent injunction restraining
the Executive from engaging in activities prohibited by this Section 4.3
or such other relief as may be required to specifically enforce any of the
covenants in this Section 4.3.
5. Compensation Other Than Severance Payments.
5.1 Disability. Following a Potential Change in Control and
during the Term, during any period that the Executive fails to perform the
Executive's full-time duties with the Company as a result of incapacity
due to physical or mental illness, the Executive's full salary shall be
paid to the Executive by the Company at a rate no less than the rate in
effect at the commencement of any such disability period, together with
all compensation and benefits payable to the Executive under the terms of
any compensation or benefit plan, program or arrangement maintained by the
Company or its subsidiaries during such disability period, until the
Executive's employment is terminated by the Company for Disability.
5.2 Base Salary. If the Executive's employment shall be
terminated for any reason following a Potential Change in Control and
during the Term, the Executive's full salary shall be paid to the
Executive by the Company through the Date of Termination (as defined below
in Section 7.2) at the rate in effect at the time the Notice of
Termination is given, together with all compensation and benefits payable
to or with respect to the Executive through the Date of Termination under
the terms of any compensation or benefit plan, program or arrangement
maintained by the Company or its subsidiaries during such period.
5.3 Benefits. If the Executive's employment shall be
terminated for any reason following a Potential Change in Control and
during the Term, the Executive's normal post-termination compensation and
benefits shall be paid to the Executive as such payments become due. Such
post-termination compensation and benefits shall be determined under, and
paid in accordance with, the retirement, health insurance, life insurance
and other compensation or benefit plans, programs and arrangements
maintained by the Company or its affiliates.
6. Severance Payments.
6.1 Severance. The Company shall pay the Executive the
payments and benefits described in this Section 6.1 (the "Severance
Payments") upon the termination of the Executive's employment with the
Company following a Change in Control and during the Term, in addition to
the payments and benefits described in Section 5 hereof, unless such
termination is (i) by the Company for Cause, (ii) by reason of Retirement,
(iii) by the Executive without Good Reason, (iv) due to death, or (v) due
to Disability. In addition, the Executive's employment shall be deemed to
have been terminated following a Change in Control by the Company without
Cause or by the Executive with Good Reason (a) if the Executive reasonably
demonstrates that the Executive's employment was terminated prior to a
Change in Control without Cause (1) at the request of a Person who has
entered into an agreement with the Company the consummation of which will
constitute a Change in Control (or who has taken other steps reasonably
calculated to effect a Change in Control) or (2) otherwise in connection
with, as a result of or in anticipation of a Change in Control, or (b) if
the Executive terminates his employment for Good Reason prior to a Change
in Control and the Executive reasonably demonstrates that the
circumstance(s) or event(s) which constitute such Good Reason occurred (1)
at the request of such Person or (2) otherwise in connection with, as a
result of or in anticipation of a Change in Control. The Executive's
right to terminate the Executive's employment for Good Reason shall not be
affected by the Executive's incapacity due to physical or mental illness.
The Executive's continued employment shall not constitute consent to, or a
waiver of rights with respect to, any act or failure to act constituting
Good Reason hereunder. In the event of the Disability or death of the
Executive after the Date of Termination in respect of any termination
without cause or any termination for Good Reason, payments and benefits
shall be made to the Executive, or the Executive's beneficiaries or legal
representative, as the case may be.
(a) In lieu of any further salary and annual bonus
payments to the Executive for periods subsequent to the Date of
Termination, the Company shall pay to the Executive a lump sum
severance payment, in cash, equal to three (3) or, if less, the
number of years, including fractions, from the Date of
Termination until the Executive reaches the age of sixty-two
(62) years times the sum of (i) the Executive's Annual Base
Salary immediately preceding the Change in Control or, if
higher, the Executive's Annual Base Salary on the Date of
Termination, and (ii) the average annual bonus paid or payable
to the Executive with respect to the three (3) years (or portion
thereof with respect to which an annual bonus was paid) prior to
the year in which the Date of Termination occurs.
(b) For a thirty-six (36) month period after the Date
of Termination, or if sooner, until the Executive reaches the
age of sixty-two (62) years, the Company shall arrange to
provide the Executive with life, disability, accident and health
insurance benefits substantially similar (and at the same cost)
to those that the Executive is receiving immediately prior to
any related Potential Change in Control or the receipt of the
Notice of Termination (without giving effect to any reduction in
such benefits subsequent to a Change in Control which reduction
constitutes Good Reason), whichever is greater. Benefits
otherwise receivable by the Executive pursuant to this Section
6.1(b) shall be reduced to the extent comparable benefits are
actually received by or made available to the Executive without
cost during such period following the Executive's termination of
employment (and any such benefits actually received by the
Executive shall be reported to the Company by the Executive).
(c) The Executive shall receive, at the expense of the
Company, outplacement services, on an individualized basis at a level
of service commensurate with the Executive's status with the Company
immediately prior to the Change in Control (or, if higher,
immediately prior to the termination of the Executive's employment),
provided by a nationally recognized executive placement firm selected
by the Executive and reasonably satisfactory to the Company; provided
that the cost to the Company of such services shall not exceed 15% of
the Executive's Annual Base Salary in effect immediately prior to the
Change in Control.
(d) All outstanding stock options previously granted to
the Executive shall become immediately 100% vested and exercisable,
and all shares of restricted stock shall become immediately 100%
vested and all forfeiture restrictions thereon shall lapse. Such
accelerated and vested options shall be exercisable for the remainder
of the term of such option, as set forth in the Executive's related
stock option agreement (without regard to any truncation of such
period therein, or under any plan or arrangement maintained by the
Company,on account of any termination of the Executive's employment).
6.2 Code Section 280G Reduction. Notwithstanding any other
provisions of this Agreement or of any other agreement, contract,
understanding, plan or program entered into or maintained by the Company,
if any payment or benefit received or to be received by the Executive in
connection with a Change in Control or the termination of the Executive's
employment (whether pursuant to the terms of this Agreement or any other
plan, arrangement or agreement with (a) the Company or any affiliate,
parent or subsidiary of the Company, (b) any Person whose actions result
in a Change in Control, or (c) any Person affiliated with the Company)
(all such payments and/or benefits, including the payments and benefits,
if any, under this Section 6, being hereinafter referred to as the "Total
Payments") would subject the Executive to the excise tax imposed under
Section 4999 of the Code, on any successor section thereto (the "Excise
Tax"), and if the amount of such Total Payments, reduced by all federal,
state and local taxes applicable with respect thereto, including without
limitation the Excise Tax, is less than the amount of Total Payments which
would otherwise be payable to the Executive, after all such taxes, without
the imposition of the Excise Tax, then, to the extent necessary to
eliminate the imposition of the Excise Tax (after taking into account any
reduction in the Total Payments provided by reason of Section 280G of the
Code under plan, arrangement or agreement), (i) the cash and non-cash
payments and benefits payable under this Agreement shall first be reduced
(but not below zero), and (ii) all other cash and non-cash payments and
benefits shall next be reduced (but not below zero); but only if, by
reason of any such reduction, the Total Payments with any such reduction,
after all such taxes, shall exceed the Total Payments without any such
reduction, after all such taxes. For purposes of this Section 6.2, (A) no
portion of the Total Payments the receipt or enjoyment of which the
Executive shall have effectively waived in writing prior to the Date of
Termination shall be taken into account, (B) no portion of the Total
Payments shall be taken into account which in the opinion of tax counsel
selected in good faith by the Company does not constitute a "parachute
payment" within the meaning of Section 280G(b)(2) of the Code, including
(without limitation) by reason of Section 280G(b)(4)(A) of the Code, (C)
the payments and/or benefits under this Agreement shall be reduced only to
the extent necessary so that the Total Payments (other than those referred
to in clauses (A) and (B) above) in their entirety constitute reasonable
compensation for services actually rendered within the meaning of Section
280G(b)(4)(B) of the Code or are otherwise not subject to disallowance as
deductions, in the opinion of the tax counsel referred to above in clause
(B), and (D) the value of any non-cash payment or benefit or any deferred
payment or benefit included in the Total Payments shall be determined by
the Company's independent auditors in accordance with the principles of
Sections 280G(d)(3) and (4) of the Code. Except as otherwise provided
above, the foregoing calculations and determinations shall be made in good
faith by the Company and the Executive. If no agreement on the
calculations is reached, then the Executive and the Company will cooperate
and attempt to agree to the selection of an accounting firm to make the
calculations. If no agreement can be reached regarding the selection of
an accounting firm, the Company will select in good faith a prominent
national accounting firm that has no current or recent business
relationship with the Company. The Company shall pay all costs and
expenses incurred in connection with any such calculations or
determinations. Any calculations or determinations made in accordance
with this Section 6.2 shall be conclusive and binding on all parties.
6.3 Date of Payment. The payments provided for in Section
6.1.(a) and Section 6.2 hereof shall , unless deferred pursuant to the
last sentence of this Section 6.3, be made not later than the fifteenth
(15th) day following the Date of Termination; provided, however, that if
the amounts of such payments cannot be finally determined on or before
such day, the Company shall pay to the Executive (subject to the last
sentence of this Section 6.3) on such day an estimate, as determined in
good faith by the Company, of the minimum amount of such payments to which
the Executive is likely to be entitled to and shall pay the remainder of
such payments (together with interest at the rate provided in section
1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined
but in no event later than the thirtieth (30th) day after the Date of
Termination. In the event that the amount of the estimated payments
exceeds the amount subsequently determined to have been due, such excess
shall constitute a loan by the Company to the Executive, payable on the
tenth (10th) business day after demand by the Company (together with
interest at the rate provided in section 1274(b)(2)(B) of the Code). At
the time that payments are made or would have been made, disregarding for
this purpose only, any deferral effected by the Executive, under this
Section 6.3, the Company shall provide the Executive with a detailed
written statement setting forth the manner in which such payments were
calculated and the basis for such calculations including, without
limitation, any opinions or other advice the Company has received from
outside counsel, auditors or consultants (and any such opinions or advice
which are in writing shall be attached to the statement). The Executive
may irrevocably elect, in a writing delivered to the Company no later than
the last day of the calendar year preceding the calendar year in which
occurs the Change in Control, to defer the receipt of any payment to which
the Executive may become entitled to under Section 6.1 of this Agreement
for the period of time specified in such writing.
6.4 Legal Costs. The Company shall also reimburse the
Executive for reasonable legal fees and expenses incurred in good faith by
the Executive as a result of any dispute with the Company or any affiliate
of the Company regarding the payment of any benefit provided for in this
Agreement (including, but not limited to, all such fees and expenses
incurred in disputing any termination or in seeking in good faith to
obtain or enforce any benefit or right provided by this Agreement or in
connection with any tax audit or proceeding to the extent attributable to
the application of section 4999 of the Code) 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. Such payments shall, in the aggregate, not
exceed $10,000 and shall be made within ten (10) business days after
delivery of the Executive's written requests for payment accompanied by
such evidence of fees and expenses incurred as the Company reasonably may
require.
7. Termination Procedures and Compensation During Dispute.
7.1 Notice of Termination. After a Change in Control and
during the Term, any purported termination of the Executive's employment
with the Company (other than by reason of death) shall be communicated by
written Notice of Termination from one party hereto to the other party
hereto in accordance with Section 10 hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall
indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment
with the Company under the provision so indicated. Further, a Notice of
Termination for Cause is required to include a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters (3/4) of
the entire membership of the Board at a meeting of the Board which was
called and held for the purpose of considering such termination (which
meeting may be a regular meeting of the Board where prior notice of
consideration of such termination is given to members of the Board)
finding that, in the good faith opinion of the Board, the Executive
engaged in conduct set forth in clause (i) or (ii) of the definition of
Cause herein, and specifying the particulars thereof in detail. For
purposes of this Agreement, any purported termination not effected in
accordance with this Section 7.1 shall not be considered effective.
7.2 Date of Termination. "Date of Termination", with respect
to any purported termination of the Executive's employment after a Change
in Control and during the Term, shall mean (i) if the Executive's
employment is terminated for Disability, thirty (30) days after Notice of
Termination is given (provided that the Executive shall not have returned
to the full-time performance of the Executive's duties during such thirty
(30) day period), and (ii) if the Executive's employment is terminated for
any other reason, the date specified in the Notice of Termination (which,
in the case of a termination by the Company, shall not be less than thirty
(30) days (except in the case of a termination for Cause) and, in the case
of a termination by the Executive, shall not be less than fifteen (15)
days nor more than sixty (60) days, respectively, after the date such
Notice of Termination is given).
7.3 Dispute Concerning Termination. If within fifteen (15)
days after any Notice of Termination is given, or, if later, prior to the
Date of Termination (as determined without regard to this Section 7.3),
the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, the Date of Termination
shall be the date on which the dispute is finally resolved either by
mutual written agreement of the parties or by a final judgment, order or
decree of a court of competent jurisdiction (which is not appealable or
with respect to which the time for appeal therefrom has expired and no
appeal has been perfected); provided, however, that the Date of
Termination shall be extended by a notice of dispute only if the basis for
such notice is reasonable, such notice is given in good faith and the
party giving such notice pursues the resolution of such dispute with
reasonable diligence.
7.4 Compensation During Dispute. If a purported termination
occurs following a Change in Control and during the Term, and such
termination is disputed in accordance with Section 7.3 above, the Company
shall continue to pay the Executive the full compensation (including,
without limitation, Annual Base Salary and Annual Bonus) in effect at the
time of any related Potential Change in Control or when the notice giving
rise to the dispute was given (whichever is greater) and continue the
Executive as a participant in all compensation, incentive, pension and
welfare benefit and insurance plans in which the Executive was
participating at the time of any Potential Change in Control or when the
notice giving rise to the dispute was given, whichever is greater, until
the dispute is finally resolved in accordance with Section 7.3 hereof.
Amounts paid under this Section 7.4 are in addition to all other amounts
due under this Agreement (other than those due under Section 5.2 hereof)
and shall not be offset against or reduce any other amounts due under this
Agreement or any other plan, agreement or arrangement.
8. No Mitigation. The Company agrees that, if the Executive's
employment is terminated during the Term, the Executive is not required to
seek other employment or to attempt in any way to reduce any amounts
payable to the Executive by the Company pursuant to Section 6 or Section
7.4. Further, the amount of any payment or benefit provided for in
Section 6 (other than pursuant to Section 6.1.(b)) or Section 7.4 shall
not be reduced by any compensation earned by the Executive as the result
of employment by another employer, by retirement benefits, or offset
against any amount claimed to be owed by the Executive to the Company or
any of its subsidiaries, or otherwise.
9. Successors; Binding Agreement.
9.1 Successors. In addition to any obligations imposed by law
upon any successor to the Company, the Company will 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 expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. Failure of the Company
to obtain such assumption and agreement prior to the effectiveness of any
such succession shall be a breach of this Agreement and shall entitle the
Executive to compensation from the Company in the same amount and on the
same terms as the Executive would be entitled to hereunder if the
Executive were to terminate employment with the Company for Good Reason
after a Change in Control, except that, for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall
be deemed the Date of Termination.
9.2 Binding Agreement. This Agreement shall inure to the
benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive shall die while any
amount would still be payable to the Executive hereunder (other than
amounts which, by their terms, terminate upon the death of the Executive)
if the Executive had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this
Agreement to the beneficiary (or beneficiaries) designated by the
Executive from time to time in accordance with the procedures for notice
set out in Section 10; provided, however, that if there shall be no
effective designation of beneficiary by the Executive, such amounts shall
be paid to the executors, personal representatives or administrators of
the Executive's estate.
10. Notices; Other Communications. For the purpose of this
Agreement, notices and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have been duly given
when delivered or mailed by United States certified mail, return receipt
requested, postage prepaid, addressed to the respective addresses set
forth below, or to such other address as either party may have furnished
to the other in writing in accordance herewith, except that notice of
change of address shall be effective only upon actual receipt:
To the Company:
Interstate Power Company
1000 Main Street
P.O. Box 769
Dubuque, Iowa 52004-0769
Attention: Corporate Secretary
To the Executive:
Mr. Donald D. Jannette
1725 Overview Court
Dubuque, Iowa 52003
11. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge (i) is
agreed to in writing and signed by the Executive and such officer as may
be specifically designated by the Board, or (ii) is (a) approved by such
officer as may be specifically designated by the Board, (b) effective only
in respect of any Change in Control resulting from the proposed merger
transaction involving the Company, IES Industries Inc. and WPL Holdings,
Inc., and (c) applicable to all members of the senior management of the
Company who have executed an agreement substantially similar to this
Agreement. In respect of any proposed waiver, modification, or discharge
which meets the conditions specified above in Section 11(ii), the
Executive hereby irrevocably appoints the Chairman of the Board of the
Company to be the Executive's attorney-in-fact for the limited purpose of
entering into, on behalf of the Executive, any form of waiver,
modification or discharge necessary to effect any such waiver,
modification or discharge meeting the conditions of this Section 11(ii).
No waiver by either party hereto at any time of any breach by the other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior
or subsequent time.
No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement. The
validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of Iowa without regard to the
principles of conflict of laws thereof. All references to sections of the
Exchange Act or the Code (or the rules and/or regulations under either)
shall be deemed also to refer to and include any successor provisions to
such sections. Any payments provided for hereunder shall be paid net of
any applicable withholding required under federal, state or local law and
any additional withholding to which the Executive has agreed. The rights
and obligations of the Company and the Executive under this Agreement
shall survive the expiration of the Term and the Employment Period.
12. Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement, all of which shall remain in full force
and effect.
13. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
14. No Limitation. 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 other 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 as in effect from time to
time except as explicitly modified by this Agreement.
15. Other Agreements. This Agreement contains the entire agreement
between the parties concerning the subject matter hereof and supersedes
all prior agreements understandings, discussions, negotiations and
undertakings, whether written or oral, between the parties with respect
thereto.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.
INTERSTATE POWER COMPANY
By: /s/ Wayne H. Stoppelmoor
Title: Chairman, President and Chief
Executive Officer
/s/ Donald D. Jannette
Donald D. Jannette
EX-10.5
AGREEMENT
THIS AGREEMENT, dated as of November 8, 1995 (this "Agreement"),
is made by and between Interstate Power Company, a Delaware corporation,
having its principal offices at 1000 Main Street, Dubuque, Iowa 52004-0769
(the "Company"), and Joseph C. McGowan residing at 3007 Huntington Drive,
Dubuque, Iowa 52001 (the "Executive").
WHEREAS, the Company considers it essential to the best
interests of its shareholders to foster the continued employment of key
executive management personnel; and
WHEREAS, the Board of Directors of the Company (the "Board")
recognizes that, as is the case with many publicly-held corporations, the
possibility of a Change in Control (as defined in Section 1.3 below) of
the Company exists from time to time and that such possibility, and the
uncertainty, instability and questions that it may raise for and among key
executive management personnel, may result in the premature departure or
significant distraction of such management personnel to the material
detriment of the Company and its shareholders; and
WHEREAS, the Board has determined that appropriate steps should
be taken to reinforce, focus and encourage the continued attention and
dedication of key members of the executive management of the Company and
its subsidiaries, including (without limitation) the Executive, to their
assigned duties without distraction in the face of potentially disturbing
or unsettling circumstances arising from the possibility of a Change in
Control of the Company;
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and the Executive hereby agree as
follows:
1. Definitions. For purposes of this Agreement, the following
terms shall have the meanings set forth below:
1.1 "Annual Base Salary" shall mean the Executive's rate of
regular basic annual compensation prior to any reduction under a salary
reduction agreement pursuant to section 401(k) or section 125 of the
Internal Revenue Code of 1986, as amended from time to time (the "Code")
or any deferred compensation arrangements, and shall not include, without
limitation, cost of living allowances, fees, retainers, reimbursements,
bonuses, incentive awards, prizes or similar payments.
1.2 "Cause" shall mean:
(i) the willful and continued failure by the Executive to
substantially perform the Executive's duties with the Company, or a
subsidiary of the Company, as such duties may reasonably be defined
from time to time by the Board (or a duly authorized committee
thereof), or to abide by the reasonable written policies of the
Company or of the Executive's primary employer (other than any such
failure resulting from the Executive's incapacity due to physical or
mental illness) after a written demand for substantial performance is
delivered to the Executive by the Board, which demand specifically
identifies the manner in which the Board believes that the Executive
has not substantially performed the Executive's duties or has not
abided by any reasonable written policies, or
(ii) the continued and willful engaging by the Executive in
conduct which is demonstrably and materially injurious to the Company
or its subsidiaries, monetarily or otherwise; or
(iii) the Executive's conviction of, or plea of no contest
to, a felony.
For purposes of clauses (i) and (ii) of this definition, no act, or
failure to act, on the Executive's part shall be deemed "willful" unless
done, or omitted to be done, by the Executive in bad faith and without
reasonable belief that the Executive's act, or failure to act, was in the
best interest of the Company or its subsidiaries. Any act, or failure to
act, based upon authority given pursuant to a resolution duly adopted by
the Board or upon the instructions of the Board (or a committee thereof),
the Company's chief executive officer or other duly authorized senior
officer of the Company (as appropriate) or based upon the advice of
counsel for the Company shall be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in the best
interests of the Company and its subsidiaries. The cessation of
employment of the Executive shall not be deemed to be for Cause unless and
until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than three-
quarters (3/4) of the entire membership of the Board at a meeting of the
Board called and held for such purpose (after reasonable notice of any
such meeting is provided to the Executive and the Executive is given an
opportunity, together with counsel, to be heard before the Board) finding
that, in the good faith opinion of the Board, the Executive has acted in a
manner described in clause (i) or (ii) above and specifying the
particulars thereof in detail.
1.3 "Change in Control" shall mean and be deemed to have
occurred if:
(i) any Person is or becomes the Beneficial Owner (as
that term is defined in Rule 13d-3 under the Securities Exchange
Act of 1934 (the "Exchange Act")), directly or indirectly, of
securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired
directly from the Company) representing twenty-five percent
(25%) or more of the combined voting power of the Company's then
outstanding securities; or
(ii) during any period of twenty-four (24)
consecutive months (not including any period prior to November
1, 1995), individuals who at the beginning of such period
constitute the Board and any new director (other than a director
designated by a Person who has entered into an agreement with
the Company to effect a transaction described in clause (i),
(iii) or (iv) of this definition or any such individual whose
initial assumption of office occurs as a result of either an
actual or threatened election contest (as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act) or other actual or threatened solicitation of proxies or
consents) whose election by the Board or nomination for election
by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of such period or whose
election or nomination for election was previously so approved,
cease for any reason to constitute a majority of the Board; or
(iii) the shareholders of the Company approve a
reorganization, merger or consolidation, other than a
reorganization, merger or consolidation with respect to which
all or substantially all of the individuals and entities who
were Beneficial Owners, immediately prior to such
reorganization, merger or consolidation, of the combined voting
power of the Company's then outstanding securities beneficially
own, directly or indirectly, immediately after such
reorganization, merger or consolidation, more then seventy-five
percent (75%) of the combined voting power of the securities of
the corporation resulting from such reorganization, merger or
consolidation in substantially the same proportions as their
respective ownership, immediately prior to such reorganization,
merger or consolidation, of the combined voting power of the
Company's securities; or
(iv) the shareholders of the Company approve (a) the
sale or disposition by the Company (other than to a subsidiary
of the Company) of all or substantially all of the assets of the
Company (or any such sale or disposition is effected through
condemnation proceedings), or (b) a complete liquidation or
dissolution of the Company.
Notwithstanding the foregoing, a Change in Control shall not include any
event, circumstance or transaction which results from the action
(excluding the Executive's employment activities with the Company or any
of its affiliates) of any Person or group of Persons which includes, is
directly affiliated with or is wholly or partly controlled by one or more
executive officers of the Company and in which the Executive actively
participates.
1.4 "Company" shall include Interstate Power Company and any
successor to its business and/or assets which assumes (either expressly,
by operation of law or otherwise) and/or agrees to perform this Agreement
by operation of law or otherwise (except in determining, under Section 1.3
hereof, whether or not any Change in Control of the Company has occurred
in connection with such succession).
1.5 "Disability" shall mean and be deemed the reason for the
termination by the Company of the Executive's employment, if, as a result
of the Executive's incapacity due to physical or mental illness, (i) the
Executive shall have been absent from the full-time performance of the
Executive's duties with the Company for a period of six (6) consecutive
months, (ii) the Company gives the Executive a Notice of Termination for
Disability, and (iii) within thirty (30) days after such Notice of
Termination is given, the Executive does not return to the full-time
performance of the Executive's duties.
1.6 "Employment Period" shall mean the period commencing on the
date of any Change in Control until the earliest to occur of (i) the date
which is thirty-six (36) months from the date of any such Change in
Control, (ii) the date of termination by the Executive of the Executive's
employment for any reason, (iii) the termination by the Company of the
Executive's employment for any reason or (iv) the Executive's attaining
age sixty-two (62).
1.7 "Good Reason" shall mean the occurrence (without the
Executive's prior express written consent) of any one of the following
acts, or failures to act, unless, in the case of any act or failure to act
described in clauses (i), (iv), (v) or (vi) below, such act or failure to
act is corrected by the Company prior to the Date of Termination specified
in the Notice of Termination given by the Executive in respect thereof not
later than six (6) months after the occurrence of the event that serves as
the basis for the Notice of Termination:
(i) the assignment to the Executive of any duties or
responsibilities inconsistent with those described in Section
3.2 below or with the Executive's position(s) or status
(including, without limitation, offices, titles, and reporting
relationships) as an executive officer of the Company and its
subsidiaries or a substantial adverse alteration in the nature
of the Executive's authority, duties, responsibilities, position
or status from those described in Section 3.2 below or
otherwise;
(ii) a reduction in the Executive's Annual Base
Salary or annual bonus opportunity as in effect on the date of
this Agreement or as the same may be increased at any time
thereafter and from time to time;
(iii) the relocation of the Company's principal
executive offices to a location more than one hundred and twenty
(120)* miles from its location on the date of this Agreement
(or, if different, more than one hundred and twenty (120)* miles
from where such offices are located immediately prior to any
Potential Change in Control) or the Company's requiring the
Executive to be based anywhere other than the Company's
principal executive offices except for required travel on the
Company's business to an extent substantially consistent with
the Executive's business travel obligations as of the date of
this Agreement;
(iv) any failure by the Company to comply with any of
the provisions of this Agreement, other than an 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;
* Thirty (30) miles if the Executive has attained age 60 at the time of
the Change in Control.
(v) the failure by the Company or a subsidiary to
continue in effect any pension benefit or incentive or deferred
compensation plan in which the Executive participates
immediately prior to any Potential Change in Control which is
material to the Executive's total compensation, unless an equitable
arrangement (embodied in an ongoing substitute or alternative plan or
arrangement) has been made with respect to such plan, or the failure
by the Company or a subsidiary to continue the Executive's
participation therein (or in such substitute or alternative plan or
arrangement) on a basis not materially less favorable, both in terms
of the amount of benefits provided and the level of the Executive's
participation relative to other participants, as existed at the time
of the Potential Change in Control;
(vi) the failure by the Company or a subsidiary to
continue to provide the Executive with health and welfare
benefits substantially similar to those enjoyed by the Executive
under any of the Company's or a subsidiary's retirement, life
insurance, medical, health and accident, or disability or
similar plans in which the Executive was participating at the
time of any Potential Change in Control, the taking of any
action by the Company or a subsidiary which would directly or
indirectly materially reduce any of such benefits or deprive the
Executive of any material fringe benefit enjoyed by the
Executive at the time of the Potential Change in Control, or the
failure by the Company or a subsidiary to provide the Executive
with the number of paid vacation days to which the Executive is
entitled in accordance with the Company's or a subsidiary's
normal vacation policy in effect at the time of the Potential
Change in Control;
(vii) any purported termination of the Executive's
employment which is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 7.1; and/or
(viii) the failure of the Company to obtain a written
agreement reasonably satisfactory to the Executive from any successor
to the Company (as described in Section 9.1) to perform this
Agreement.
1.8 "Person" shall have the meaning ascribed thereto in Section
3(a)(9) of the Exchange Act, as modified, applied and used in Sections
13(d) and 14(d) thereof; provided, however, a Person shall not include (i)
the Company or any of its subsidiaries, (ii) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any of
its subsidiaries (in its capacity as such), (iii) an underwriter
temporarily holding securities pursuant to an offering of such securities,
or (iv) a corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same character and proportions as
their ownership of stock of the Company.
1.9 "Potential Change in Control" shall mean and be deemed to
have occurred if:
(i) the Company enters into an agreement, the
consummation of which would result in the occurrence of a Change
in Control;
(ii) the Company or any Person publicly announces an
intention to take actions which, if consummated, would
constitute a Change in Control; and/or
(iii) any Person becomes the Beneficial Owner,
directly or indirectly, of securities of the Company
representing ten percent (10%) or more of the combined voting
power of the Company's then outstanding securities, or any
Person increases such Person's beneficial ownership of such
securities by five (5) percentage points or more over the
percentage so owned by such Person on November 1, 1995.
1.10 "Retirement" shall mean and be deemed the reason for the
termination by the Executive of the Executive's employment if such
employment is terminated in accordance with the Company's normal
retirement policy for those aged 62 and older, not including early
retirement or so-called "window period" retirements, generally applicable
to its officers, as in effect immediately prior to any Potential Change in
Control.
2. Term of this Agreement. This Agreement shall commence on the
date hereof and shall continue in effect through December 31, 1998;
provided, however, that commencing on January 1, 1999 and each January 1
thereafter, the term of this Agreement shall automatically be extended for
one additional year unless, not later than June 30 of the preceding year,
the Company or the Executive shall have given written notice to the other
not to extend this Agreement or a Change in Control shall have occurred
prior to any such January 1; provided, further, however, that if a Change
in Control shall have occurred during the term of this Agreement, this
Agreement shall continue in effect for a period of not less than thirty-
six (36) months beyond the month in which such Change in Control occurred
(the "Term"). Notwithstanding the foregoing provisions of this Section 2,
the Term shall terminate upon the Executive's attaining the age of
sixty-two (62) years (or the date on which the Executive would have
attained age 62 if the Executive had survived).
3. Company's Covenants.
3.1 Severance Payments. In order to induce the Executive to
remain in the employ of the Company and/or one or more of its subsidiaries
and in consideration of the Executive's covenants set forth in Section 4
below, the Company agrees, under the terms and conditions described herein
and in addition to the amounts payable to the Executive under Section 5
below, to pay the Executive the "Severance Payments" described in Section
6.1 below and the other payments and benefits described herein in the
event the Executive's employment with the Company is terminated during the
Employment Period or under the other circumstances set forth in Section
6.1 below.
3.2 Position and Duties. During the Employment Period, (a) the
Executive's position (including status, offices, titles and reporting
relationships), authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of those
held, exercised and assigned at any time during the one hundred eighty
(180) day period immediately preceding any related Potential Change in
Control, and (b) the Executive's services shall be performed at the
location where the Executive was employed immediately preceding any such
Potential Change in Control, or any office or location less than one
hundred and twenty (120)* miles from such location.
3.3 Base Salary. During the Employment Period, the Executive
shall receive Annual Base Salary at least equal to twelve (12) times the
highest monthly base salary paid or payable, including (without
limitation) any base salary which has been earned but deferred, to the
Executive by the Company and its affiliated companies in respect of the
twelve (12) month period immediately preceding the month in which any
related Potential Change in Control occurs. In addition, Annual Base
Salary shall not be reduced after the occurrence of a Potential Change in
Control. As used in this Agreement, the term "affiliated companies" shall
include any company controlled by, controlling or under common control
with the Company.
3.4 Annual Bonus. In addition to Annual Base Salary, if the
Company adopts an annual bonus program for officers during the Employment
Period (the "Annual Bonus") the Executive shall be entitled to tee in such
Annual Bonus program on a basis equivalent to other executive officers of
the Company. Each 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 shall elect to defer the
receipt of such Annual Bonus in accordance with rules established by the
Company for that purpose.
3.5 Incentive, Savings and Retirement Plans. During the
Employment Period, the Executive shall be entitled to participate in all
incentive, savings and retirement plans, practices, policies and programs
applicable generally to other peer executives of the Company and its
subsidiaries, but in no event shall such plans, practices, policies and
programs provide the Executive with incentive opportunities (measured with
respect to both regular and special incentive opportunities, to the
extent, if any, that such distinction is applicable), 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 one hundred eighty (180) day period immediately preceding any related
Potential Change in Control or if more favorable to the Executive, those
provided generally at any time thereafter to other peer executives of the
Company and its affiliated companies.
3.6 Welfare Benefit Plans. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be
entitled to participate in and shall receive all benefits under all of the
health and welfare benefit plans, practices, policies and programs
* Thirty (30) miles if the Executive has attained age 60 at the time of
the Change in Control.
provided by the Company and its affiliated companies (including, without
limitation, medical, prescription, dental, disability, employee life,
group life, accidental death and travel accident insurance plans and
programs) to the extent (and at the same cost) applicable generally to
other peer executives of the Company and its subsidiaries, but in no event
shall such plans, practices, policies and programs provide the Executive
with benefits that 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 one hundred eighty (180) day period
immediately preceding any related Potential Change in Control or, if more
favorable to the Executive, those provided generally at any time
thereafter to other peer executives of the Company and its affiliated
companies.
3.7 Expenses. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all reasonable
business 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
one hundred eighty (180) day period immediately preceding any related
Potential Change in Control 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.
3.8 Office Support; Perquisites. During the Employment Period,
the Executive shall be entitled to a private office, secretarial support
and other facilities, perquisites and programs to enable the Executive to
be able to discharge the Executive's responsibilities hereunder 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 one hundred eighty (180) day period immediately
preceding any related Potential Change in Control 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.
3.9 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 one
hundred eighty (180) day period immediately preceding any related
Potential Change in Control 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.
4. The Executive's Covenants.
4.1 Employment. The Executive agrees that, subject to the
terms and conditions of this Agreement, in the event of a Change in
Control during the Term the Executive will remain in the employ of the
Company during any related Employment Period.
4.2 Time and Attention. During the Employment Period, and
excluding any periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote reasonable attention and time
during normal business hours to the business and affairs of the Company
and to use the Executive's reasonable best efforts to perform faithfully
and efficiently the responsibilities and duties assigned to the Executive
hereunder. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (i) serve on corporate, civic or
charitable boards or committees, (ii) deliver lectures and fulfill
speaking engagements and (iii) manage personal investments, so long as
such activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company and its
subsidiaries 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 any Potential Change in Control, the
reinstatement or continued conduct of such activities (or the
reinstatement or conduct of activities similar in nature and scope
thereto) subsequent to any related Potential Change in Control shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company and its subsidiaries.
4.3. Non-interference; Confidential Information
(a) No Interference. For so long as the Executive is employed
by the Company, and for a period of two (2) years thereafter, the
Executive shall not, whether for his own account or for the account of any
other individual, partnership, firm, corporation or other business
organization (other than the Company or one of its affiliates),
intentionally solicit, endeavor to entice away from the Company (or any of
its affiliates), or otherwise interfere with the relationship of the
Company (or any of its affiliates) with, any person who is employed by or
otherwise engaged to perform services for the Company (or any of its
affiliates) including, but not limited to, any independent representatives
or organizations, or any person or entity that is a customer of the
Company (or any of its affiliates). The Executive understands and agrees
that the rights and obligations set forth in this Section 4.3(a) could
extend beyond the Term.
(b) Confidential Information. The Executive covenants and
agrees with the Company that he will not at any time, during or after
employment with the Company, except in performance of the Executive's
obligations to the Company or with the prior express written consent of
the Board of Directors, directly or indirectly, intentionally or
unintentionally, disclose any Confidential Information that he may learn
or has learned by reason of his employment or association with the
Company, or any predecessors to its business, or use any such information
for his own personal benefit or gain. The term "Confidential Information"
includes, without limitation, information not previously disclosed to the
public or to the trade by the Company's management with respect to the
products, facilities and methods, trade secrets and other intellectual
property, systems, procedures, manuals, confidential reports, fee or rate
information, customer lists, financial information (including the
revenues, costs or profits associated with any of the Company's activities
or products), business plans, prospects, opportunities or other
information of the Company or any of its affiliates. Confidential
Information shall not include information which (i) is or becomes
generally available to the public other than as a result of disclosure by
the Executive in violation of this Section 4.3(b) or (ii) the Executive is
required to disclose under any applicable laws, regulations or directives
of any government agency, tribunal or authority having jurisdiction in the
matter or under subpoena or other process of law. The Executive
understands and agrees that the rights and obligations set forth in this
Section 4.3 (b) shall extend beyond the Term.
(c) Exclusive Property. The Executive confirms that all
Confidential Information is and shall remain the exclusive property of the
Company or any of its affiliates. All business records, papers and
documents kept or made by the Executive relating to the business of the
Company (or any of its affiliates) or any Confidential Information shall
be and remain the property of the Company. Upon termination of employment
with the Company or upon the request of the Company at any time, the
Executive shall promptly deliver to the Company, and shall not without the
prior express written consent of the Company retain, any and all copies of
(i) any written materials not previously made available to the public, or
(ii) records and documents made by the Executive or coming into his
possession concerning any Confidential Information or the business or
affairs of the Company or any predecessors to its business, or any of its
affiliates. The Executive understands and agrees that the rights and
obligations set forth in this Section 4.3(c) shall extend beyond the Term.
(d) Injunctive Relief. Without intending to limit the remedies
available to the Company, the Executive acknowledges that a breach of any
of the covenants contained in this Section 4.3 may result in material
irreparable injury to the Company or its affiliates for which there is no
adequate remedy at law, that it will not be possible to measure damages
for such injuries precisely and that, in the event of such a breach or
threat thereof, the Company shall be entitled to obtain a temporary
restraining order and/or a preliminary or permanent injunction restraining
the Executive from engaging in activities prohibited by this Section 4.3
or such other relief as may be required to specifically enforce any of the
covenants in this Section 4.3.
5. Compensation Other Than Severance Payments.
5.1 Disability. Following a Potential Change in Control and
during the Term, during any period that the Executive fails to perform the
Executive's full-time duties with the Company as a result of incapacity
due to physical or mental illness, the Executive's full salary shall be
paid to the Executive by the Company at a rate no less than the rate in
effect at the commencement of any such disability period, together with
all compensation and benefits payable to the Executive under the terms of
any compensation or benefit plan, program or arrangement maintained by the
Company or its subsidiaries during such disability period, until the
Executive's employment is terminated by the Company for Disability.
5.2 Base Salary. If the Executive's employment shall be
terminated for any reason following a Potential Change in Control and
during the Term, the Executive's full salary shall be paid to the
Executive by the Company through the Date of Termination (as defined below
in Section 7.2) at the rate in effect at the time the Notice of
Termination is given, together with all compensation and benefits payable
to or with respect to the Executive through the Date of Termination under
the terms of any compensation or benefit plan, program or arrangement
maintained by the Company or its subsidiaries during such period.
5.3 Benefits. If the Executive's employment shall be
terminated for any reason following a Potential Change in Control and
during the Term, the Executive's normal post-termination compensation and
benefits shall be paid to the Executive as such payments become due. Such
post-termination compensation and benefits shall be determined under, and
paid in accordance with, the retirement, health insurance, life insurance
and other compensation or benefit plans, programs and arrangements
maintained by the Company or its affiliates.
6. Severance Payments.
6.1 Severance. The Company shall pay the Executive the
payments and benefits described in this Section 6.1 (the "Severance
Payments") upon the termination of the Executive's employment with the
Company following a Change in Control and during the Term, in addition to
the payments and benefits described in Section 5 hereof, unless such
termination is (i) by the Company for Cause, (ii) by reason of Retirement,
(iii) by the Executive without Good Reason, (iv) due to death, or (v) due
to Disability. In addition, the Executive's employment shall be deemed to
have been terminated following a Change in Control by the Company without
Cause or by the Executive with Good Reason (a) if the Executive reasonably
demonstrates that the Executive's employment was terminated prior to a
Change in Control without Cause (1) at the request of a Person who has
entered into an agreement with the Company the consummation of which will
constitute a Change in Control (or who has taken other steps reasonably
calculated to effect a Change in Control) or (2) otherwise in connection
with, as a result of or in anticipation of a Change in Control, or (b) if
the Executive terminates his employment for Good Reason prior to a Change
in Control and the Executive reasonably demonstrates that the
circumstance(s) or event(s) which constitute such Good Reason occurred (1)
at the request of such Person or (2) otherwise in connection with, as a
result of or in anticipation of a Change in Control. The Executive's
right to terminate the Executive's employment for Good Reason shall not be
affected by the Executive's incapacity due to physical or mental illness.
The Executive's continued employment shall not constitute consent to, or a
waiver of rights with respect to, any act or failure to act constituting
Good Reason hereunder. In the event of the Disability or death of the
Executive after the Date of Termination in respect of any termination
without cause or any termination for Good Reason, payments and benefits
shall be made to the Executive, or the Executive's beneficiaries or legal
representative, as the case may be.
(a) In lieu of any further salary and annual bonus
payments to the Executive for periods subsequent to the Date of
Termination, the Company shall pay to the Executive a lump sum
severance payment, in cash, equal to three (3) or, if less, the
number of years, including fractions, from the Date of
Termination until the Executive reaches the age of sixty-two
(62) years times the sum of (i) the Executive's Annual Base
Salary immediately preceding the Change in Control or, if
higher, the Executive's Annual Base Salary on the Date of
Termination, and (ii) the average annual bonus paid or payable
to the Executive with respect to the three (3) years (or portion
thereof with respect to which an annual bonus was paid) prior to
the year in which the Date of Termination occurs.
(b) For a thirty-six (36) month period after the Date
of Termination, or if sooner, until the Executive reaches the
age of sixty-two (62) years, the Company shall arrange to
provide the Executive with life, disability, accident and health
insurance benefits substantially similar (and at the same cost)
to those that the Executive is receiving immediately prior to
any related Potential Change in Control or the receipt of the
Notice of Termination (without giving effect to any reduction in
such benefits subsequent to a Change in Control which reduction
constitutes Good Reason), whichever is greater. Benefits
otherwise receivable by the Executive pursuant to this Section
6.1(b) shall be reduced to the extent comparable benefits are
actually received by or made available to the Executive without
cost during such period following the Executive's termination of
employment (and any such benefits actually received by the
Executive shall be reported to the Company by the Executive).
(c) The Executive shall receive, at the expense of the
Company, outplacement services, on an individualized basis at a level
of service commensurate with the Executive's status with the Company
immediately prior to the Change in Control (or, if higher,
immediately prior to the termination of the Executive's employment),
provided by a nationally recognized executive placement firm selected
by the Executive and reasonably satisfactory to the Company; provided
that the cost to the Company of such services shall not exceed 15% of
the Executive's Annual Base Salary in effect immediately prior to the
Change in Control.
(d) All outstanding stock options previously granted to
the Executive shall become immediately 100% vested and exercisable,
and all shares of restricted stock shall become immediately 100%
vested and all forfeiture restrictions thereon shall lapse. Such
accelerated and vested options shall be exercisable for the remainder
of the term of such option, as set forth in the Executive's related
stock option agreement (without regard to any truncation of such
period therein, or under any plan or arrangement maintained by the
Company,on account of any termination of the Executive's employment).
6.2 Code Section 280G Reduction. Notwithstanding any other
provisions of this Agreement or of any other agreement, contract,
understanding, plan or program entered into or maintained by the Company,
if any payment or benefit received or to be received by the Executive in
connection with a Change in Control or the termination of the Executive's
employment (whether pursuant to the terms of this Agreement or any other
plan, arrangement or agreement with (a) the Company or any affiliate,
parent or subsidiary of the Company, (b) any Person whose actions result
in a Change in Control, or (c) any Person affiliated with the Company)
(all such payments and/or benefits, including the payments and benefits,
if any, under this Section 6, being hereinafter referred to as the "Total
Payments") would subject the Executive to the excise tax imposed under
Section 4999 of the Code, on any successor section thereto (the "Excise
Tax"), and if the amount of such Total Payments, reduced by all federal,
state and local taxes applicable with respect thereto, including without
limitation the Excise Tax, is less than the amount of Total Payments which
would otherwise be payable to the Executive, after all such taxes, without
the imposition of the Excise Tax, then, to the extent necessary to
eliminate the imposition of the Excise Tax (after taking into account any
reduction in the Total Payments provided by reason of Section 280G of the
Code under plan, arrangement or agreement), (i) the cash and non-cash
payments and benefits payable under this Agreement shall first be reduced
(but not below zero), and (ii) all other cash and non-cash payments and
benefits shall next be reduced (but not below zero); but only if, by
reason of any such reduction, the Total Payments with any such reduction,
after all such taxes, shall exceed the Total Payments without any such
reduction, after all such taxes. For purposes of this Section 6.2, (A) no
portion of the Total Payments the receipt or enjoyment of which the
Executive shall have effectively waived in writing prior to the Date of
Termination shall be taken into account, (B) no portion of the Total
Payments shall be taken into account which in the opinion of tax counsel
selected in good faith by the Company does not constitute a "parachute
payment" within the meaning of Section 280G(b)(2) of the Code, including
(without limitation) by reason of Section 280G(b)(4)(A) of the Code, (C)
the payments and/or benefits under this Agreement shall be reduced only to
the extent necessary so that the Total Payments (other than those referred
to in clauses (A) and (B) above) in their entirety constitute reasonable
compensation for services actually rendered within the meaning of Section
280G(b)(4)(B) of the Code or are otherwise not subject to disallowance as
deductions, in the opinion of the tax counsel referred to above in clause
(B), and (D) the value of any non-cash payment or benefit or any deferred
payment or benefit included in the Total Payments shall be determined by
the Company's independent auditors in accordance with the principles of
Sections 280G(d)(3) and (4) of the Code. Except as otherwise provided
above, the foregoing calculations and determinations shall be made in good
faith by the Company and the Executive. If no agreement on the
calculations is reached, then the Executive and the Company will cooperate
and attempt to agree to the selection of an accounting firm to make the
calculations. If no agreement can be reached regarding the selection of
an accounting firm, the Company will select in good faith a prominent
national accounting firm that has no current or recent business
relationship with the Company. The Company shall pay all costs and
expenses incurred in connection with any such calculations or
determinations. Any calculations or determinations made in accordance
with this Section 6.2 shall be conclusive and binding on all parties.
6.3 Date of Payment. The payments provided for in Section
6.1.(a) and Section 6.2 hereof shall , unless deferred pursuant to the
last sentence of this Section 6.3, be made not later than the fifteenth
(15th) day following the Date of Termination; provided, however, that if
the amounts of such payments cannot be finally determined on or before
such day, the Company shall pay to the Executive (subject to the last
sentence of this Section 6.3) on such day an estimate, as determined in
good faith by the Company, of the minimum amount of such payments to which
the Executive is likely to be entitled to and shall pay the remainder of
such payments (together with interest at the rate provided in section
1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined
but in no event later than the thirtieth (30th) day after the Date of
Termination. In the event that the amount of the estimated payments
exceeds the amount subsequently determined to have been due, such excess
shall constitute a loan by the Company to the Executive, payable on the
tenth (10th) business day after demand by the Company (together with
interest at the rate provided in section 1274(b)(2)(B) of the Code). At
the time that payments are made or would have been made, disregarding for
this purpose only, any deferral effected by the Executive, under this
Section 6.3, the Company shall provide the Executive with a detailed
written statement setting forth the manner in which such payments were
calculated and the basis for such calculations including, without
limitation, any opinions or other advice the Company has received from
outside counsel, auditors or consultants (and any such opinions or advice
which are in writing shall be attached to the statement). The Executive
may irrevocably elect, in a writing delivered to the Company no later than
the last day of the calendar year preceding the calendar year in which
occurs the Change in Control, to defer the receipt of any payment to which
the Executive may become entitled to under Section 6.1 of this Agreement
for the period of time specified in such writing.
6.4 Legal Costs. The Company shall also reimburse the
Executive for reasonable legal fees and expenses incurred in good faith by
the Executive as a result of any dispute with the Company or any affiliate
of the Company regarding the payment of any benefit provided for in this
Agreement (including, but not limited to, all such fees and expenses
incurred in disputing any termination or in seeking in good faith to
obtain or enforce any benefit or right provided by this Agreement or in
connection with any tax audit or proceeding to the extent attributable to
the application of section 4999 of the Code) 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. Such payments shall, in the aggregate, not
exceed $10,000 and shall be made within ten (10) business days after
delivery of the Executive's written requests for payment accompanied by
such evidence of fees and expenses incurred as the Company reasonably may
require.
7. Termination Procedures and Compensation During Dispute.
7.1 Notice of Termination. After a Change in Control and
during the Term, any purported termination of the Executive's employment
with the Company (other than by reason of death) shall be communicated by
written Notice of Termination from one party hereto to the other party
hereto in accordance with Section 10 hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall
indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment
with the Company under the provision so indicated. Further, a Notice of
Termination for Cause is required to include a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters (3/4) of
the entire membership of the Board at a meeting of the Board which was
called and held for the purpose of considering such termination (which
meeting may be a regular meeting of the Board where prior notice of
consideration of such termination is given to members of the Board)
finding that, in the good faith opinion of the Board, the Executive
engaged in conduct set forth in clause (i) or (ii) of the definition of
Cause herein, and specifying the particulars thereof in detail. For
purposes of this Agreement, any purported termination not effected in
accordance with this Section 7.1 shall not be considered effective.
7.2 Date of Termination. "Date of Termination", with respect
to any purported termination of the Executive's employment after a Change
in Control and during the Term, shall mean (i) if the Executive's
employment is terminated for Disability, thirty (30) days after Notice of
Termination is given (provided that the Executive shall not have returned
to the full-time performance of the Executive's duties during such thirty
(30) day period), and (ii) if the Executive's employment is terminated for
any other reason, the date specified in the Notice of Termination (which,
in the case of a termination by the Company, shall not be less than thirty
(30) days (except in the case of a termination for Cause) and, in the case
of a termination by the Executive, shall not be less than fifteen (15)
days nor more than sixty (60) days, respectively, after the date such
Notice of Termination is given).
7.3 Dispute Concerning Termination. If within fifteen (15)
days after any Notice of Termination is given, or, if later, prior to the
Date of Termination (as determined without regard to this Section 7.3),
the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, the Date of Termination
shall be the date on which the dispute is finally resolved either by
mutual written agreement of the parties or by a final judgment, order or
decree of a court of competent jurisdiction (which is not appealable or
with respect to which the time for appeal therefrom has expired and no
appeal has been perfected); provided, however, that the Date of
Termination shall be extended by a notice of dispute only if the basis for
such notice is reasonable, such notice is given in good faith and the
party giving such notice pursues the resolution of such dispute with
reasonable diligence.
7.4 Compensation During Dispute. If a purported termination
occurs following a Change in Control and during the Term, and such
termination is disputed in accordance with Section 7.3 above, the Company
shall continue to pay the Executive the full compensation (including,
without limitation, Annual Base Salary and Annual Bonus) in effect at the
time of any related Potential Change in Control or when the notice giving
rise to the dispute was given (whichever is greater) and continue the
Executive as a participant in all compensation, incentive, pension and
welfare benefit and insurance plans in which the Executive was
participating at the time of any Potential Change in Control or when the
notice giving rise to the dispute was given, whichever is greater, until
the dispute is finally resolved in accordance with Section 7.3 hereof.
Amounts paid under this Section 7.4 are in addition to all other amounts
due under this Agreement (other than those due under Section 5.2 hereof)
and shall not be offset against or reduce any other amounts due under this
Agreement or any other plan, agreement or arrangement.
8. No Mitigation. The Company agrees that, if the Executive's
employment is terminated during the Term, the Executive is not required to
seek other employment or to attempt in any way to reduce any amounts
payable to the Executive by the Company pursuant to Section 6 or Section
7.4. Further, the amount of any payment or benefit provided for in
Section 6 (other than pursuant to Section 6.1.(b)) or Section 7.4 shall
not be reduced by any compensation earned by the Executive as the result
of employment by another employer, by retirement benefits, or offset
against any amount claimed to be owed by the Executive to the Company or
any of its subsidiaries, or otherwise.
9. Successors; Binding Agreement.
9.1 Successors. In addition to any obligations imposed by law
upon any successor to the Company, the Company will 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 expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. Failure of the Company
to obtain such assumption and agreement prior to the effectiveness of any
such succession shall be a breach of this Agreement and shall entitle the
Executive to compensation from the Company in the same amount and on the
same terms as the Executive would be entitled to hereunder if the
Executive were to terminate employment with the Company for Good Reason
after a Change in Control, except that, for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall
be deemed the Date of Termination.
9.2 Binding Agreement. This Agreement shall inure to the
benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive shall die while any
amount would still be payable to the Executive hereunder (other than
amounts which, by their terms, terminate upon the death of the Executive)
if the Executive had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this
Agreement to the beneficiary (or beneficiaries) designated by the
Executive from time to time in accordance with the procedures for notice
set out in Section 10; provided, however, that if there shall be no
effective designation of beneficiary by the Executive, such amounts shall
be paid to the executors, personal representatives or administrators of
the Executive's estate.
10. Notices; Other Communications. For the purpose of this
Agreement, notices and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have been duly given
when delivered or mailed by United States certified mail, return receipt
requested, postage prepaid, addressed to the respective addresses set
forth below, or to such other address as either party may have furnished
to the other in writing in accordance herewith, except that notice of
change of address shall be effective only upon actual receipt:
To the Company:
Interstate Power Company
1000 Main Street
P.O. Box 769
Dubuque, Iowa 52004-0769
Attention: Corporate Secretary
To the Executive:
Mr. Joseph C. McGowan
3007 Huntington Drive
Dubuque, Iowa 52001
11. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge (i) is
agreed to in writing and signed by the Executive and such officer as may
be specifically designated by the Board, or (ii) is (a) approved by such
officer as may be specifically designated by the Board, (b) effective only
in respect of any Change in Control resulting from the proposed merger
transaction involving the Company, IES Industries Inc. and WPL Holdings,
Inc., and (c) applicable to all members of the senior management of the
Company who have executed an agreement substantially similar to this
Agreement. In respect of any proposed waiver, modification, or discharge
which meets the conditions specified above in Section 11(ii), the
Executive hereby irrevocably appoints the Chairman of the Board of the
Company to be the Executive's attorney-in-fact for the limited purpose of
entering into, on behalf of the Executive, any form of waiver,
modification or discharge necessary to effect any such waiver,
modification or discharge meeting the conditions of this Section 11(ii).
No waiver by either party hereto at any time of any breach by the other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior
or subsequent time.
No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement. The
validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of Iowa without regard to the
principles of conflict of laws thereof. All references to sections of the
Exchange Act or the Code (or the rules and/or regulations under either)
shall be deemed also to refer to and include any successor provisions to
such sections. Any payments provided for hereunder shall be paid net of
any applicable withholding required under federal, state or local law and
any additional withholding to which the Executive has agreed. The rights
and obligations of the Company and the Executive under this Agreement
shall survive the expiration of the Term and the Employment Period.
12. Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement, all of which shall remain in full force
and effect.
13. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
14. No Limitation. 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 other 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 as in effect from time to
time except as explicitly modified by this Agreement.
15. Other Agreements. This Agreement contains the entire agreement
between the parties concerning the subject matter hereof and supersedes
all prior agreements understandings, discussions, negotiations and
undertakings, whether written or oral, between the parties with respect
thereto.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.
INTERSTATE POWER COMPANY
By: /s/ Wayne H. Stoppelmoor
Title: Chairman, President and Chief
Executive Officer
/s/ Joseph C. McGowan
Joseph C. McGowan
EX-10.6
AGREEMENT
THIS AGREEMENT, dated as of November 8, 1995 (this "Agreement"),
is made by and between Interstate Power Company, a Delaware corporation,
having its principal offices at 1000 Main Street, Dubuque, Iowa 52004-0769
(the "Company"), and Ray P. Richards residing at 214 Southgate Drive,
Dubuque, Iowa 52003 (the "Executive").
WHEREAS, the Company considers it essential to the best
interests of its shareholders to foster the continued employment of key
executive management personnel; and
WHEREAS, the Board of Directors of the Company (the "Board")
recognizes that, as is the case with many publicly-held corporations, the
possibility of a Change in Control (as defined in Section 1.3 below) of
the Company exists from time to time and that such possibility, and the
uncertainty, instability and questions that it may raise for and among key
executive management personnel, may result in the premature departure or
significant distraction of such management personnel to the material
detriment of the Company and its shareholders; and
WHEREAS, the Board has determined that appropriate steps should
be taken to reinforce, focus and encourage the continued attention and
dedication of key members of the executive management of the Company and
its subsidiaries, including (without limitation) the Executive, to their
assigned duties without distraction in the face of potentially disturbing
or unsettling circumstances arising from the possibility of a Change in
Control of the Company;
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and the Executive hereby agree as
follows:
1. Definitions. For purposes of this Agreement, the following
terms shall have the meanings set forth below:
1.1 "Annual Base Salary" shall mean the Executive's rate of
regular basic annual compensation prior to any reduction under a salary
reduction agreement pursuant to section 401(k) or section 125 of the
Internal Revenue Code of 1986, as amended from time to time (the "Code")
or any deferred compensation arrangements, and shall not include, without
limitation, cost of living allowances, fees, retainers, reimbursements,
bonuses, incentive awards, prizes or similar payments.
1.2 "Cause" shall mean:
(i) the willful and continued failure by the Executive to
substantially perform the Executive's duties with the Company, or a
subsidiary of the Company, as such duties may reasonably be defined
from time to time by the Board (or a duly authorized committee
thereof), or to abide by the reasonable written policies of the
Company or of the Executive's primary employer (other than any such
failure resulting from the Executive's incapacity due to physical or
mental illness) after a written demand for substantial performance is
delivered to the Executive by the Board, which demand specifically
identifies the manner in which the Board believes that the Executive
has not substantially performed the Executive's duties or has not
abided by any reasonable written policies, or
(ii) the continued and willful engaging by the Executive in
conduct which is demonstrably and materially injurious to the Company
or its subsidiaries, monetarily or otherwise; or
(iii) the Executive's conviction of, or plea of no contest
to, a felony.
For purposes of clauses (i) and (ii) of this definition, no act, or
failure to act, on the Executive's part shall be deemed "willful" unless
done, or omitted to be done, by the Executive in bad faith and without
reasonable belief that the Executive's act, or failure to act, was in the
best interest of the Company or its subsidiaries. Any act, or failure to
act, based upon authority given pursuant to a resolution duly adopted by
the Board or upon the instructions of the Board (or a committee thereof),
the Company's chief executive officer or other duly authorized senior
officer of the Company (as appropriate) or based upon the advice of
counsel for the Company shall be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in the best
interests of the Company and its subsidiaries. The cessation of
employment of the Executive shall not be deemed to be for Cause unless and
until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than three-
quarters (3/4) of the entire membership of the Board at a meeting of the
Board called and held for such purpose (after reasonable notice of any
such meeting is provided to the Executive and the Executive is given an
opportunity, together with counsel, to be heard before the Board) finding
that, in the good faith opinion of the Board, the Executive has acted in a
manner described in clause (i) or (ii) above and specifying the
particulars thereof in detail.
1.3 "Change in Control" shall mean and be deemed to have
occurred if:
(i) any Person is or becomes the Beneficial Owner (as
that term is defined in Rule 13d-3 under the Securities Exchange
Act of 1934 (the "Exchange Act")), directly or indirectly, of
securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired
directly from the Company) representing twenty-five percent
(25%) or more of the combined voting power of the Company's then
outstanding securities; or
(ii) during any period of twenty-four (24)
consecutive months (not including any period prior to November
1, 1995), individuals who at the beginning of such period
constitute the Board and any new director (other than a director
designated by a Person who has entered into an agreement with
the Company to effect a transaction described in clause (i),
(iii) or (iv) of this definition or any such individual whose
initial assumption of office occurs as a result of either an
actual or threatened election contest (as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act) or other actual or threatened solicitation of proxies or
consents) whose election by the Board or nomination for election
by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of such period or whose
election or nomination for election was previously so approved,
cease for any reason to constitute a majority of the Board; or
(iii) the shareholders of the Company approve a
reorganization, merger or consolidation, other than a
reorganization, merger or consolidation with respect to which
all or substantially all of the individuals and entities who
were Beneficial Owners, immediately prior to such
reorganization, merger or consolidation, of the combined voting
power of the Company's then outstanding securities beneficially
own, directly or indirectly, immediately after such
reorganization, merger or consolidation, more then seventy-five
percent (75%) of the combined voting power of the securities of
the corporation resulting from such reorganization, merger or
consolidation in substantially the same proportions as their
respective ownership, immediately prior to such reorganization,
merger or consolidation, of the combined voting power of the
Company's securities; or
(iv) the shareholders of the Company approve (a) the
sale or disposition by the Company (other than to a subsidiary
of the Company) of all or substantially all of the assets of the
Company (or any such sale or disposition is effected through
condemnation proceedings), or (b) a complete liquidation or
dissolution of the Company.
Notwithstanding the foregoing, a Change in Control shall not include any
event, circumstance or transaction which results from the action
(excluding the Executive's employment activities with the Company or any
of its affiliates) of any Person or group of Persons which includes, is
directly affiliated with or is wholly or partly controlled by one or more
executive officers of the Company and in which the Executive actively
participates.
1.4 "Company" shall include Interstate Power Company and any
successor to its business and/or assets which assumes (either expressly,
by operation of law or otherwise) and/or agrees to perform this Agreement
by operation of law or otherwise (except in determining, under Section 1.3
hereof, whether or not any Change in Control of the Company has occurred
in connection with such succession).
1.5 "Disability" shall mean and be deemed the reason for the
termination by the Company of the Executive's employment, if, as a result
of the Executive's incapacity due to physical or mental illness, (i) the
Executive shall have been absent from the full-time performance of the
Executive's duties with the Company for a period of six (6) consecutive
months, (ii) the Company gives the Executive a Notice of Termination for
Disability, and (iii) within thirty (30) days after such Notice of
Termination is given, the Executive does not return to the full-time
performance of the Executive's duties.
1.6 "Employment Period" shall mean the period commencing on the
date of any Change in Control until the earliest to occur of (i) the date
which is thirty-six (36) months from the date of any such Change in
Control, (ii) the date of termination by the Executive of the Executive's
employment for any reason, (iii) the termination by the Company of the
Executive's employment for any reason or (iv) the Executive's attaining
age sixty-two (62).
1.7 "Good Reason" shall mean the occurrence (without the
Executive's prior express written consent) of any one of the following
acts, or failures to act, unless, in the case of any act or failure to act
described in clauses (i), (iv), (v) or (vi) below, such act or failure to
act is corrected by the Company prior to the Date of Termination specified
in the Notice of Termination given by the Executive in respect thereof not
later than six (6) months after the occurrence of the event that serves as
the basis for the Notice of Termination:
(i) the assignment to the Executive of any duties or
responsibilities inconsistent with those described in Section
3.2 below or with the Executive's position(s) or status
(including, without limitation, offices, titles, and reporting
relationships) as an executive officer of the Company and its
subsidiaries or a substantial adverse alteration in the nature
of the Executive's authority, duties, responsibilities, position
or status from those described in Section 3.2 below or
otherwise;
(ii) a reduction in the Executive's Annual Base
Salary or annual bonus opportunity as in effect on the date of
this Agreement or as the same may be increased at any time
thereafter and from time to time;
(iii) the relocation of the Company's principal
executive offices to a location more than one hundred and twenty
(120)* miles from its location on the date of this Agreement
(or, if different, more than one hundred and twenty (120)* miles
from where such offices are located immediately prior to any
Potential Change in Control) or the Company's requiring the
Executive to be based anywhere other than the Company's
principal executive offices except for required travel on the
Company's business to an extent substantially consistent with
the Executive's business travel obligations as of the date of
this Agreement;
(iv) any failure by the Company to comply with any of
the provisions of this Agreement, other than an 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;
* Thirty (30) miles if the Executive has attained age 60 at the time of
Change in Control.
(v) the failure by the Company or a subsidiary to
continue in effect any pension benefit or incentive or deferred
compensation plan in which the Executive participates
immediately prior to any Potential Change in Control which is
material to the Executive's total compensation, unless an
equitable arrangement (embodied in an ongoing substitute or
alternative plan or arrangement) has been made with respect to
such plan, or the failure by the Company or a subsidiary to
continue the Executive's participation therein (or in such
substitute or alternative plan or arrangement) on a basis not
materially less favorable, both in terms of the amount of
benefits provided and the level of the Executive's participation
relative to other participants, as existed at the time of the
Potential Change in Control;
(vi) the failure by the Company or a subsidiary to
continue to provide the Executive with health and welfare
benefits substantially similar to those enjoyed by the Executive
under any of the Company's or a subsidiary's retirement, life
insurance, medical, health and accident, or disability or
similar plans in which the Executive was participating at the
time of any Potential Change in Control, the taking of any
action by the Company or a subsidiary which would directly or
indirectly materially reduce any of such benefits or deprive the
Executive of any material fringe benefit enjoyed by the
Executive at the time of the Potential Change in Control, or the
failure by the Company or a subsidiary to provide the Executive
with the number of paid vacation days to which the Executive is
entitled in accordance with the Company's or a subsidiary's
normal vacation policy in effect at the time of the Potential
Change in Control;
(vii) any purported termination of the Executive's
employment which is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 7.1; and/or
(viii) the failure of the Company to obtain a written
agreement reasonably satisfactory to the Executive from any successor
to the Company (as described in Section 9.1) to perform this
Agreement.
1.8 "Person" shall have the meaning ascribed thereto in Section
3(a)(9) of the Exchange Act, as modified, applied and used in Sections
13(d) and 14(d) thereof; provided, however, a Person shall not include (i)
the Company or any of its subsidiaries, (ii) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any of
its subsidiaries (in its capacity as such), (iii) an underwriter
temporarily holding securities pursuant to an offering of such securities,
or (iv) a corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same character and proportions as
their ownership of stock of the Company.
1.9 "Potential Change in Control" shall mean and be deemed to
have occurred if:
(i) the Company enters into an agreement, the
consummation of which would result in the occurrence of a Change
in Control;
(ii) the Company or any Person publicly announces an
intention to take actions which, if consummated, would
constitute a Change in Control; and/or
(iii) any Person becomes the Beneficial Owner,
directly or indirectly, of securities of the Company
representing ten percent (10%) or more of the combined voting
power of the Company's then outstanding securities, or any
Person increases such Person's beneficial ownership of such
securities by five (5) percentage points or more over the
percentage so owned by such Person on November 1, 1995.
1.10 "Retirement" shall mean and be deemed the reason for the
termination by the Executive of the Executive's employment if such
employment is terminated in accordance with the Company's normal
retirement policy for those aged 62 and older, not including early
retirement or so-called "window period" retirements, generally applicable
to its officers, as in effect immediately prior to any Potential Change in
Control.
2. Term of this Agreement. This Agreement shall commence on the
date hereof and shall continue in effect through December 31, 1998;
provided, however, that commencing on January 1, 1999 and each January 1
thereafter, the term of this Agreement shall automatically be extended for
one additional year unless, not later than June 30 of the preceding year,
the Company or the Executive shall have given written notice to the other
not to extend this Agreement or a Change in Control shall have occurred
prior to any such January 1; provided, further, however, that if a Change
in Control shall have occurred during the term of this Agreement, this
Agreement shall continue in effect for a period of not less than thirty-
six (36) months beyond the month in which such Change in Control occurred
(the "Term"). Notwithstanding the foregoing provisions of this Section 2,
the Term shall terminate upon the Executive's attaining the age of
sixty-two (62) years (or the date on which the Executive would have
attained age 62 if the Executive had survived).
3. Company's Covenants.
3.1 Severance Payments. In order to induce the Executive to
remain in the employ of the Company and/or one or more of its subsidiaries
and in consideration of the Executive's covenants set forth in Section 4
below, the Company agrees, under the terms and conditions described herein
and in addition to the amounts payable to the Executive under Section 5
below, to pay the Executive the "Severance Payments" described in Section
6.1 below and the other payments and benefits described herein in the
event the Executive's employment with the Company is terminated during the
Employment Period or under the other circumstances set forth in Section
6.1 below.
3.2 Position and Duties. During the Employment Period, (a) the
Executive's position (including status, offices, titles and reporting
relationships), authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of those
held, exercised and assigned at any time during the one hundred eighty
(180) day period immediately preceding any related Potential Change in
Control, and (b) the Executive's services shall be performed at the
location where the Executive was employed immediately preceding any such
Potential Change in Control, or any office or location less than one
hundred and twenty (120)* miles from such location.
3.3 Base Salary. During the Employment Period, the Executive
shall receive Annual Base Salary at least equal to twelve (12) times the
highest monthly base salary paid or payable, including (without
limitation) any base salary which has been earned but deferred, to the
Executive by the Company and its affiliated companies in respect of the
twelve (12) month period immediately preceding the month in which any
related Potential Change in Control occurs. In addition, Annual Base
Salary shall not be reduced after the occurrence of a Potential Change in
Control. As used in this Agreement, the term "affiliated companies" shall
include any company controlled by, controlling or under common control
with the Company.
3.4 Annual Bonus. In addition to Annual Base Salary, if the
Company adopts an annual bonus program for officers during the Employment
Period (the "Annual Bonus") the Executive shall be entitled to tee in such
Annual Bonus program on a basis equivalent to other executive officers of
the Company. Each 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 shall elect to defer the
receipt of such Annual Bonus in accordance with rules established by the
Company for that purpose.
3.5 Incentive, Savings and Retirement Plans. During the
Employment Period, the Executive shall be entitled to participate in all
incentive, savings and retirement plans, practices, policies and programs
applicable generally to other peer executives of the Company and its
subsidiaries, but in no event shall such plans, practices, policies and
programs provide the Executive with incentive opportunities (measured with
respect to both regular and special incentive opportunities, to the
extent, if any, that such distinction is applicable), 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 one hundred eighty (180) day period immediately preceding any related
Potential Change in Control or if more favorable to the Executive, those
provided generally at any time thereafter to other peer executives of the
Company and its affiliated companies.
3.6 Welfare Benefit Plans. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be
entitled to participate in and shall receive all benefits under all of the
health and welfare benefit plans, practices, policies and programs
* Thirty (30) miles if the Executive has attained age 60 at the time of
the Change in Control.
provided by the Company and its affiliated companies (including, without
limitation, medical, prescription, dental, disability, employee life,
group life, accidental death and travel accident insurance plans and
programs) to the extent (and at the same cost) applicable generally to
other peer executives of the Company and its subsidiaries, but in no event
shall such plans, practices, policies and programs provide the Executive
with benefits that 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 one hundred eighty (180) day period
immediately preceding any related Potential Change in Control or, if more
favorable to the Executive, those provided generally at any time
thereafter to other peer executives of the Company and its affiliated
companies.
3.7 Expenses. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all reasonable
business 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
one hundred eighty (180) day period immediately preceding any related
Potential Change in Control 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.
3.8 Office Support; Perquisites. During the Employment Period,
the Executive shall be entitled to a private office, secretarial support
and other facilities, perquisites and programs to enable the Executive to
be able to discharge the Executive's responsibilities hereunder 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 one hundred eighty (180) day period immediately
preceding any related Potential Change in Control 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.
3.9 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 one
hundred eighty (180) day period immediately preceding any related
Potential Change in Control 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.
4. The Executive's Covenants.
4.1 Employment. The Executive agrees that, subject to the
terms and conditions of this Agreement, in the event of a Change in
Control during the Term the Executive will remain in the employ of the
Company during any related Employment Period.
4.2 Time and Attention. During the Employment Period, and
excluding any periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote reasonable attention and time
during normal business hours to the business and affairs of the Company
and to use the Executive's reasonable best efforts to perform faithfully
and efficiently the responsibilities and duties assigned to the Executive
hereunder. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (i) serve on corporate, civic or
charitable boards or committees, (ii) deliver lectures and fulfill
speaking engagements and (iii) manage personal investments, so long as
such activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company and its
subsidiaries 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 any Potential Change in Control, the
reinstatement or continued conduct of such activities (or the
reinstatement or conduct of activities similar in nature and scope
thereto) subsequent to any related Potential Change in Control shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company and its subsidiaries.
4.3. Non-interference; Confidential Information
(a) No Interference. For so long as the Executive is employed
by the Company, and for a period of two (2) years thereafter, the
Executive shall not, whether for his own account or for the account of any
other individual, partnership, firm, corporation or other business
organization (other than the Company or one of its affiliates),
intentionally solicit, endeavor to entice away from the Company (or any of
its affiliates), or otherwise interfere with the relationship of the
Company (or any of its affiliates) with, any person who is employed by or
otherwise engaged to perform services for the Company (or any of its
affiliates) including, but not limited to, any independent representatives
or organizations, or any person or entity that is a customer of the
Company (or any of its affiliates). The Executive understands and agrees
that the rights and obligations set forth in this Section 4.3(a) could
extend beyond the Term.
(b) Confidential Information. The Executive covenants and
agrees with the Company that he will not at any time, during or after
employment with the Company, except in performance of the Executive's
obligations to the Company or with the prior express written consent of
the Board of Directors, directly or indirectly, intentionally or
unintentionally, disclose any Confidential Information that he may learn
or has learned by reason of his employment or association with the
Company, or any predecessors to its business, or use any such information
for his own personal benefit or gain. The term "Confidential Information"
includes, without limitation, information not previously disclosed to the
public or to the trade by the Company's management with respect to the
products, facilities and methods, trade secrets and other intellectual
property, systems, procedures, manuals, confidential reports, fee or rate
information, customer lists, financial information (including the
revenues, costs or profits associated with any of the Company's activities
or products), business plans, prospects, opportunities or other
information of the Company or any of its affiliates. Confidential
Information shall not include information which (i) is or becomes
generally available to the public other than as a result of disclosure by
the Executive in violation of this Section 4.3(b) or (ii) the Executive is
required to disclose under any applicable laws, regulations or directives
of any government agency, tribunal or authority having jurisdiction in the
matter or under subpoena or other process of law. The Executive
understands and agrees that the rights and obligations set forth in this
Section 4.3 (b) shall extend beyond the Term.
(c) Exclusive Property. The Executive confirms that all
Confidential Information is and shall remain the exclusive property of the
Company or any of its affiliates. All business records, papers and
documents kept or made by the Executive relating to the business of the
Company (or any of its affiliates) or any Confidential Information shall
be and remain the property of the Company. Upon termination of employment
with the Company or upon the request of the Company at any time, the
Executive shall promptly deliver to the Company, and shall not without the
prior express written consent of the Company retain, any and all copies of
(i) any written materials not previously made available to the public, or
(ii) records and documents made by the Executive or coming into his
possession concerning any Confidential Information or the business or
affairs of the Company or any predecessors to its business, or any of its
affiliates. The Executive understands and agrees that the rights and
obligations set forth in this Section 4.3(c) shall extend beyond the Term.
(d) Injunctive Relief. Without intending to limit the remedies
available to the Company, the Executive acknowledges that a breach of any
of the covenants contained in this Section 4.3 may result in material
irreparable injury to the Company or its affiliates for which there is no
adequate remedy at law, that it will not be possible to measure damages
for such injuries precisely and that, in the event of such a breach or
threat thereof, the Company shall be entitled to obtain a temporary
restraining order and/or a preliminary or permanent injunction restraining
the Executive from engaging in activities prohibited by this Section 4.3
or such other relief as may be required to specifically enforce any of the
covenants in this Section 4.3.
5. Compensation Other Than Severance Payments.
5.1 Disability. Following a Potential Change in Control and
during the Term, during any period that the Executive fails to perform the
Executive's full-time duties with the Company as a result of incapacity
due to physical or mental illness, the Executive's full salary shall be
paid to the Executive by the Company at a rate no less than the rate in
effect at the commencement of any such disability period, together with
all compensation and benefits payable to the Executive under the terms of
any compensation or benefit plan, program or arrangement maintained by the
Company or its subsidiaries during such disability period, until the
Executive's employment is terminated by the Company for Disability.
5.2 Base Salary. If the Executive's employment shall be
terminated for any reason following a Potential Change in Control and
during the Term, the Executive's full salary shall be paid to the
Executive by the Company through the Date of Termination (as defined below
in Section 7.2) at the rate in effect at the time the Notice of
Termination is given, together with all compensation and benefits payable
to or with respect to the Executive through the Date of Termination under
the terms of any compensation or benefit plan, program or arrangement
maintained by the Company or its subsidiaries during such period.
5.3 Benefits. If the Executive's employment shall be
terminated for any reason following a Potential Change in Control and
during the Term, the Executive's normal post-termination compensation and
benefits shall be paid to the Executive as such payments become due. Such
post-termination compensation and benefits shall be determined under, and
paid in accordance with, the retirement, health insurance, life insurance
and other compensation or benefit plans, programs and arrangements
maintained by the Company or its affiliates.
6. Severance Payments.
6.1 Severance. The Company shall pay the Executive the
payments and benefits described in this Section 6.1 (the "Severance
Payments") upon the termination of the Executive's employment with the
Company following a Change in Control and during the Term, in addition to
the payments and benefits described in Section 5 hereof, unless such
termination is (i) by the Company for Cause, (ii) by reason of Retirement,
(iii) by the Executive without Good Reason, (iv) due to death, or (v) due
to Disability. In addition, the Executive's employment shall be deemed to
have been terminated following a Change in Control by the Company without
Cause or by the Executive with Good Reason (a) if the Executive reasonably
demonstrates that the Executive's employment was terminated prior to a
Change in Control without Cause (1) at the request of a Person who has
entered into an agreement with the Company the consummation of which will
constitute a Change in Control (or who has taken other steps reasonably
calculated to effect a Change in Control) or (2) otherwise in connection
with, as a result of or in anticipation of a Change in Control, or (b) if
the Executive terminates his employment for Good Reason prior to a Change
in Control and the Executive reasonably demonstrates that the
circumstance(s) or event(s) which constitute such Good Reason occurred (1)
at the request of such Person or (2) otherwise in connection with, as a
result of or in anticipation of a Change in Control. The Executive's
right to terminate the Executive's employment for Good Reason shall not be
affected by the Executive's incapacity due to physical or mental illness.
The Executive's continued employment shall not constitute consent to, or a
waiver of rights with respect to, any act or failure to act constituting
Good Reason hereunder. In the event of the Disability or death of the
Executive after the Date of Termination in respect of any termination
without cause or any termination for Good Reason, payments and benefits
shall be made to the Executive, or the Executive's beneficiaries or legal
representative, as the case may be.
(a) In lieu of any further salary and annual bonus
payments to the Executive for periods subsequent to the Date of
Termination, the Company shall pay to the Executive a lump sum
severance payment, in cash, equal to three (3) or, if less, the
number of years, including fractions, from the Date of
Termination until the Executive reaches the age of sixty-two
(62) years times the sum of (i) the Executive's Annual Base
Salary immediately preceding the Change in Control or, if
higher, the Executive's Annual Base Salary on the Date of
Termination, and (ii) the average annual bonus paid or payable
to the Executive with respect to the three (3) years (or portion
thereof with respect to which an annual bonus was paid) prior to
the year in which the Date of Termination occurs.
(b) For a thirty-six (36) month period after the Date
of Termination, or if sooner, until the Executive reaches the
age of sixty-two (62) years, the Company shall arrange to
provide the Executive with life, disability, accident and health
insurance benefits substantially similar (and at the same cost)
to those that the Executive is receiving immediately prior to
any related Potential Change in Control or the receipt of the
Notice of Termination (without giving effect to any reduction in
such benefits subsequent to a Change in Control which reduction
constitutes Good Reason), whichever is greater. Benefits
otherwise receivable by the Executive pursuant to this Section
6.1(b) shall be reduced to the extent comparable benefits are
actually received by or made available to the Executive without
cost during such period following the Executive's termination of
employment (and any such benefits actually received by the
Executive shall be reported to the Company by the Executive).
(c) The Executive shall receive, at the expense of the
Company, outplacement services, on an individualized basis at a level
of service commensurate with the Executive's status with the Company
immediately prior to the Change in Control (or, if higher,
immediately prior to the termination of the Executive's employment),
provided by a nationally recognized executive placement firm selected
by the Executive and reasonably satisfactory to the Company; provided
that the cost to the Company of such services shall not exceed 15% of
the Executive's Annual Base Salary in effect immediately prior to the
Change in Control.
(d) All outstanding stock options previously granted to
the Executive shall become immediately 100% vested and exercisable,
and all shares of restricted stock shall become immediately 100%
vested and all forfeiture restrictions thereon shall lapse. Such
accelerated and vested options shall be exercisable for the remainder
of the term of such option, as set forth in the Executive's related
stock option agreement (without regard to any truncation of such
period therein, or under any plan or arrangement maintained by the
Company,on account of any termination of the Executive's employment).
6.2 Code Section 280G Reduction. Notwithstanding any other
provisions of this Agreement or of any other agreement, contract,
understanding, plan or program entered into or maintained by the Company,
if any payment or benefit received or to be received by the Executive in
connection with a Change in Control or the termination of the Executive's
employment (whether pursuant to the terms of this Agreement or any other
plan, arrangement or agreement with (a) the Company or any affiliate,
parent or subsidiary of the Company, (b) any Person whose actions result
in a Change in Control, or (c) any Person affiliated with the Company)
(all such payments and/or benefits, including the payments and benefits,
if any, under this Section 6, being hereinafter referred to as the "Total
Payments") would subject the Executive to the excise tax imposed under
Section 4999 of the Code, on any successor section thereto (the "Excise
Tax"), and if the amount of such Total Payments, reduced by all federal,
state and local taxes applicable with respect thereto, including without
limitation the Excise Tax, is less than the amount of Total Payments which
would otherwise be payable to the Executive, after all such taxes, without
the imposition of the Excise Tax, then, to the extent necessary to
eliminate the imposition of the Excise Tax (after taking into account any
reduction in the Total Payments provided by reason of Section 280G of the
Code under plan, arrangement or agreement), (i) the cash and non-cash
payments and benefits payable under this Agreement shall first be reduced
(but not below zero), and (ii) all other cash and non-cash payments and
benefits shall next be reduced (but not below zero); but only if, by
reason of any such reduction, the Total Payments with any such reduction,
after all such taxes, shall exceed the Total Payments without any such
reduction, after all such taxes. For purposes of this Section 6.2, (A) no
portion of the Total Payments the receipt or enjoyment of which the
Executive shall have effectively waived in writing prior to the Date of
Termination shall be taken into account, (B) no portion of the Total
Payments shall be taken into account which in the opinion of tax counsel
selected in good faith by the Company does not constitute a "parachute
payment" within the meaning of Section 280G(b)(2) of the Code, including
(without limitation) by reason of Section 280G(b)(4)(A) of the Code, (C)
the payments and/or benefits under this Agreement shall be reduced only to
the extent necessary so that the Total Payments (other than those referred
to in clauses (A) and (B) above) in their entirety constitute reasonable
compensation for services actually rendered within the meaning of Section
280G(b)(4)(B) of the Code or are otherwise not subject to disallowance as
deductions, in the opinion of the tax counsel referred to above in clause
(B), and (D) the value of any non-cash payment or benefit or any deferred
payment or benefit included in the Total Payments shall be determined by
the Company's independent auditors in accordance with the principles of
Sections 280G(d)(3) and (4) of the Code. Except as otherwise provided
above, the foregoing calculations and determinations shall be made in good
faith by the Company and the Executive. If no agreement on the
calculations is reached, then the Executive and the Company will cooperate
and attempt to agree to the selection of an accounting firm to make the
calculations. If no agreement can be reached regarding the selection of
an accounting firm, the Company will select in good faith a prominent
national accounting firm that has no current or recent business
relationship with the Company. The Company shall pay all costs and
expenses incurred in connection with any such calculations or
determinations. Any calculations or determinations made in accordance
with this Section 6.2 shall be conclusive and binding on all parties.
6.3 Date of Payment. The payments provided for in Section
6.1.(a) and Section 6.2 hereof shall , unless deferred pursuant to the
last sentence of this Section 6.3, be made not later than the fifteenth
(15th) day following the Date of Termination; provided, however, that if
the amounts of such payments cannot be finally determined on or before
such day, the Company shall pay to the Executive (subject to the last
sentence of this Section 6.3) on such day an estimate, as determined in
good faith by the Company, of the minimum amount of such payments to which
the Executive is likely to be entitled to and shall pay the remainder of
such payments (together with interest at the rate provided in section
1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined
but in no event later than the thirtieth (30th) day after the Date of
Termination. In the event that the amount of the estimated payments
exceeds the amount subsequently determined to have been due, such excess
shall constitute a loan by the Company to the Executive, payable on the
tenth (10th) business day after demand by the Company (together with
interest at the rate provided in section 1274(b)(2)(B) of the Code). At
the time that payments are made or would have been made, disregarding for
this purpose only, any deferral effected by the Executive, under this
Section 6.3, the Company shall provide the Executive with a detailed
written statement setting forth the manner in which such payments were
calculated and the basis for such calculations including, without
limitation, any opinions or other advice the Company has received from
outside counsel, auditors or consultants (and any such opinions or advice
which are in writing shall be attached to the statement). The Executive
may irrevocably elect, in a writing delivered to the Company no later than
the last day of the calendar year preceding the calendar year in which
occurs the Change in Control, to defer the receipt of any payment to which
the Executive may become entitled to under Section 6.1 of this Agreement
for the period of time specified in such writing.
6.4 Legal Costs. The Company shall also reimburse the
Executive for reasonable legal fees and expenses incurred in good faith by
the Executive as a result of any dispute with the Company or any affiliate
of the Company regarding the payment of any benefit provided for in this
Agreement (including, but not limited to, all such fees and expenses
incurred in disputing any termination or in seeking in good faith to
obtain or enforce any benefit or right provided by this Agreement or in
connection with any tax audit or proceeding to the extent attributable to
the application of section 4999 of the Code) 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. Such payments shall, in the aggregate, not
exceed $10,000 and shall be made within ten (10) business days after
delivery of the Executive's written requests for payment accompanied by
such evidence of fees and expenses incurred as the Company reasonably may
require.
7. Termination Procedures and Compensation During Dispute.
7.1 Notice of Termination. After a Change in Control and
during the Term, any purported termination of the Executive's employment
with the Company (other than by reason of death) shall be communicated by
written Notice of Termination from one party hereto to the other party
hereto in accordance with Section 10 hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall
indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment
with the Company under the provision so indicated. Further, a Notice of
Termination for Cause is required to include a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters (3/4) of
the entire membership of the Board at a meeting of the Board which was
called and held for the purpose of considering such termination (which
meeting may be a regular meeting of the Board where prior notice of
consideration of such termination is given to members of the Board)
finding that, in the good faith opinion of the Board, the Executive
engaged in conduct set forth in clause (i) or (ii) of the definition of
Cause herein, and specifying the particulars thereof in detail. For
purposes of this Agreement, any purported termination not effected in
accordance with this Section 7.1 shall not be considered effective.
7.2 Date of Termination. "Date of Termination", with respect
to any purported termination of the Executive's employment after a Change
in Control and during the Term, shall mean (i) if the Executive's
employment is terminated for Disability, thirty (30) days after Notice of
Termination is given (provided that the Executive shall not have returned
to the full-time performance of the Executive's duties during such thirty
(30) day period), and (ii) if the Executive's employment is terminated for
any other reason, the date specified in the Notice of Termination (which,
in the case of a termination by the Company, shall not be less than thirty
(30) days (except in the case of a termination for Cause) and, in the case
of a termination by the Executive, shall not be less than fifteen (15)
days nor more than sixty (60) days, respectively, after the date such
Notice of Termination is given).
7.3 Dispute Concerning Termination. If within fifteen (15)
days after any Notice of Termination is given, or, if later, prior to the
Date of Termination (as determined without regard to this Section 7.3),
the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, the Date of Termination
shall be the date on which the dispute is finally resolved either by
mutual written agreement of the parties or by a final judgment, order or
decree of a court of competent jurisdiction (which is not appealable or
with respect to which the time for appeal therefrom has expired and no
appeal has been perfected); provided, however, that the Date of
Termination shall be extended by a notice of dispute only if the basis for
such notice is reasonable, such notice is given in good faith and the
party giving such notice pursues the resolution of such dispute with
reasonable diligence.
7.4 Compensation During Dispute. If a purported termination
occurs following a Change in Control and during the Term, and such
termination is disputed in accordance with Section 7.3 above, the Company
shall continue to pay the Executive the full compensation (including,
without limitation, Annual Base Salary and Annual Bonus) in effect at the
time of any related Potential Change in Control or when the notice giving
rise to the dispute was given (whichever is greater) and continue the
Executive as a participant in all compensation, incentive, pension and
welfare benefit and insurance plans in which the Executive was
participating at the time of any Potential Change in Control or when the
notice giving rise to the dispute was given, whichever is greater, until
the dispute is finally resolved in accordance with Section 7.3 hereof.
Amounts paid under this Section 7.4 are in addition to all other amounts
due under this Agreement (other than those due under Section 5.2 hereof)
and shall not be offset against or reduce any other amounts due under this
Agreement or any other plan, agreement or arrangement.
8. No Mitigation. The Company agrees that, if the Executive's
employment is terminated during the Term, the Executive is not required to
seek other employment or to attempt in any way to reduce any amounts
payable to the Executive by the Company pursuant to Section 6 or Section
7.4. Further, the amount of any payment or benefit provided for in
Section 6 (other than pursuant to Section 6.1.(b)) or Section 7.4 shall
not be reduced by any compensation earned by the Executive as the result
of employment by another employer, by retirement benefits, or offset
against any amount claimed to be owed by the Executive to the Company or
any of its subsidiaries, or otherwise.
9. Successors; Binding Agreement.
9.1 Successors. In addition to any obligations imposed by law
upon any successor to the Company, the Company will 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 expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. Failure of the Company
to obtain such assumption and agreement prior to the effectiveness of any
such succession shall be a breach of this Agreement and shall entitle the
Executive to compensation from the Company in the same amount and on the
same terms as the Executive would be entitled to hereunder if the
Executive were to terminate employment with the Company for Good Reason
after a Change in Control, except that, for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall
be deemed the Date of Termination.
9.2 Binding Agreement. This Agreement shall inure to the
benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive shall die while any
amount would still be payable to the Executive hereunder (other than
amounts which, by their terms, terminate upon the death of the Executive)
if the Executive had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this
Agreement to the beneficiary (or beneficiaries) designated by the
Executive from time to time in accordance with the procedures for notice
set out in Section 10; provided, however, that if there shall be no
effective designation of beneficiary by the Executive, such amounts shall
be paid to the executors, personal representatives or administrators of
the Executive's estate.
10. Notices; Other Communications. For the purpose of this
Agreement, notices and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have been duly given
when delivered or mailed by United States certified mail, return receipt
requested, postage prepaid, addressed to the respective addresses set
forth below, or to such other address as either party may have furnished
to the other in writing in accordance herewith, except that notice of
change of address shall be effective only upon actual receipt:
To the Company:
Interstate Power Company
1000 Main Street
P.O. Box 769
Dubuque, Iowa 52004-0769
Attention: Corporate Secretary
To the Executive:
Mr. Ray P. Richards
214 Southgate Drive
Dubuque, Iowa 52003
11. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge (i) is
agreed to in writing and signed by the Executive and such officer as may
be specifically designated by the Board, or (ii) is (a) approved by such
officer as may be specifically designated by the Board, (b) effective only
in respect of any Change in Control resulting from the proposed merger
transaction involving the Company, IES Industries Inc. and WPL Holdings,
Inc., and (c) applicable to all members of the senior management of the
Company who have executed an agreement substantially similar to this
Agreement. In respect of any proposed waiver, modification, or discharge
which meets the conditions specified above in Section 11(ii), the
Executive hereby irrevocably appoints the Chairman of the Board of the
Company to be the Executive's attorney-in-fact for the limited purpose of
entering into, on behalf of the Executive, any form of waiver,
modification or discharge necessary to effect any such waiver,
modification or discharge meeting the conditions of this Section 11(ii).
No waiver by either party hereto at any time of any breach by the other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior
or subsequent time.
No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement. The
validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of Iowa without regard to the
principles of conflict of laws thereof. All references to sections of the
Exchange Act or the Code (or the rules and/or regulations under either)
shall be deemed also to refer to and include any successor provisions to
such sections. Any payments provided for hereunder shall be paid net of
any applicable withholding required under federal, state or local law and
any additional withholding to which the Executive has agreed. The rights
and obligations of the Company and the Executive under this Agreement
shall survive the expiration of the Term and the Employment Period.
12. Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement, all of which shall remain in full force
and effect.
13. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
14. No Limitation. 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 other 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 as in effect from time to
time except as explicitly modified by this Agreement.
15. Other Agreements. This Agreement contains the entire agreement
between the parties concerning the subject matter hereof and supersedes
all prior agreements understandings, discussions, negotiations and
undertakings, whether written or oral, between the parties with respect
thereto.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.
INTERSTATE POWER COMPANY
By: /s/ Wayne H. Stoppelmoor
Title: Chairman, President and Chief
Executive Officer
/s/ Ray P. Richards
Ray P. Richards
EX-10.7
AGREEMENT
THIS AGREEMENT, dated as of November 8, 1995 (this "Agreement"),
is made by and between Interstate Power Company, a Delaware corporation,
having its principal offices at 1000 Main Street, Dubuque, Iowa 52004-0769
(the "Company"), and William C. Troy residing at 2910 Shiras Avenue,
Dubuque, Iowa 52001 (the "Executive").
WHEREAS, the Company considers it essential to the best
interests of its shareholders to foster the continued employment of key
executive management personnel; and
WHEREAS, the Board of Directors of the Company (the "Board")
recognizes that, as is the case with many publicly-held corporations, the
possibility of a Change in Control (as defined in Section 1.3 below) of
the Company exists from time to time and that such possibility, and the
uncertainty, instability and questions that it may raise for and among key
executive management personnel, may result in the premature departure or
significant distraction of such management personnel to the material
detriment of the Company and its shareholders; and
WHEREAS, the Board has determined that appropriate steps should
be taken to reinforce, focus and encourage the continued attention and
dedication of key members of the executive management of the Company and
its subsidiaries, including (without limitation) the Executive, to their
assigned duties without distraction in the face of potentially disturbing
or unsettling circumstances arising from the possibility of a Change in
Control of the Company;
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and the Executive hereby agree as
follows:
1. Definitions. For purposes of this Agreement, the following
terms shall have the meanings set forth below:
1.1 "Annual Base Salary" shall mean the Executive's rate of
regular basic annual compensation prior to any reduction under a salary
reduction agreement pursuant to section 401(k) or section 125 of the
Internal Revenue Code of 1986, as amended from time to time (the "Code")
or any deferred compensation arrangements, and shall not include, without
limitation, cost of living allowances, fees, retainers, reimbursements,
bonuses, incentive awards, prizes or similar payments.
1.2 "Cause" shall mean:
(i) the willful and continued failure by the Executive to
substantially perform the Executive's duties with the Company, or a
subsidiary of the Company, as such duties may reasonably be defined
from time to time by the Board (or a duly authorized committee
thereof), or to abide by the reasonable written policies of the
Company or of the Executive's primary employer (other than any such
failure resulting from the Executive's incapacity due to physical or
mental illness) after a written demand for substantial performance is
delivered to the Executive by the Board, which demand specifically
identifies the manner in which the Board believes that the Executive
has not substantially performed the Executive's duties or has not
abided by any reasonable written policies, or
(ii) the continued and willful engaging by the Executive in
conduct which is demonstrably and materially injurious to the Company
or its subsidiaries, monetarily or otherwise; or
(iii) the Executive's conviction of, or plea of no contest
to, a felony.
For purposes of clauses (i) and (ii) of this definition, no act, or
failure to act, on the Executive's part shall be deemed "willful" unless
done, or omitted to be done, by the Executive in bad faith and without
reasonable belief that the Executive's act, or failure to act, was in the
best interest of the Company or its subsidiaries. Any act, or failure to
act, based upon authority given pursuant to a resolution duly adopted by
the Board or upon the instructions of the Board (or a committee thereof),
the Company's chief executive officer or other duly authorized senior
officer of the Company (as appropriate) or based upon the advice of
counsel for the Company shall be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in the best
interests of the Company and its subsidiaries. The cessation of
employment of the Executive shall not be deemed to be for Cause unless and
until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than three-
quarters (3/4) of the entire membership of the Board at a meeting of the
Board called and held for such purpose (after reasonable notice of any
such meeting is provided to the Executive and the Executive is given an
opportunity, together with counsel, to be heard before the Board) finding
that, in the good faith opinion of the Board, the Executive has acted in a
manner described in clause (i) or (ii) above and specifying the
particulars thereof in detail.
1.3 "Change in Control" shall mean and be deemed to have
occurred if:
(i) any Person is or becomes the Beneficial Owner (as
that term is defined in Rule 13d-3 under the Securities Exchange
Act of 1934 (the "Exchange Act")), directly or indirectly, of
securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired
directly from the Company) representing twenty-five percent
(25%) or more of the combined voting power of the Company's then
outstanding securities; or
(ii) during any period of twenty-four (24)
consecutive months (not including any period prior to November
1, 1995), individuals who at the beginning of such period
constitute the Board and any new director (other than a director
designated by a Person who has entered into an agreement with
the Company to effect a transaction described in clause (i),
(iii) or (iv) of this definition or any such individual whose
initial assumption of office occurs as a result of either an
actual or threatened election contest (as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act) or other actual or threatened solicitation of proxies or
consents) whose election by the Board or nomination for election
by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of such period or whose
election or nomination for election was previously so approved,
cease for any reason to constitute a majority of the Board; or
(iii) the shareholders of the Company approve a
reorganization, merger or consolidation, other than a
reorganization, merger or consolidation with respect to which
all or substantially all of the individuals and entities who
were Beneficial Owners, immediately prior to such
reorganization, merger or consolidation, of the combined voting
power of the Company's then outstanding securities beneficially
own, directly or indirectly, immediately after such
reorganization, merger or consolidation, more then seventy-five
percent (75%) of the combined voting power of the securities of
the corporation resulting from such reorganization, merger or
consolidation in substantially the same proportions as their
respective ownership, immediately prior to such reorganization,
merger or consolidation, of the combined voting power of the
Company's securities; or
(iv) the shareholders of the Company approve (a) the
sale or disposition by the Company (other than to a subsidiary
of the Company) of all or substantially all of the assets of the
Company (or any such sale or disposition is effected through
condemnation proceedings), or (b) a complete liquidation or
dissolution of the Company.
Notwithstanding the foregoing, a Change in Control shall not include any
event, circumstance or transaction which results from the action
(excluding the Executive's employment activities with the Company or any
of its affiliates) of any Person or group of Persons which includes, is
directly affiliated with or is wholly or partly controlled by one or more
executive officers of the Company and in which the Executive actively
participates.
1.4 "Company" shall include Interstate Power Company and any
successor to its business and/or assets which assumes (either expressly,
by operation of law or otherwise) and/or agrees to perform this Agreement
by operation of law or otherwise (except in determining, under Section 1.3
hereof, whether or not any Change in Control of the Company has occurred
in connection with such succession).
1.5 "Disability" shall mean and be deemed the reason for the
termination by the Company of the Executive's employment, if, as a result
of the Executive's incapacity due to physical or mental illness, (i) the
Executive shall have been absent from the full-time performance of the
Executive's duties with the Company for a period of six (6) consecutive
months, (ii) the Company gives the Executive a Notice of Termination for
Disability, and (iii) within thirty (30) days after such Notice of
Termination is given, the Executive does not return to the full-time
performance of the Executive's duties.
1.6 "Employment Period" shall mean the period commencing on the
date of any Change in Control until the earliest to occur of (i) the date
which is thirty-six (36) months from the date of any such Change in
Control, (ii) the date of termination by the Executive of the Executive's
employment for any reason, (iii) the termination by the Company of the
Executive's employment for any reason or (iv) the Executive's attaining
age sixty-two (62).
1.7 "Good Reason" shall mean the occurrence (without the
Executive's prior express written consent) of any one of the following
acts, or failures to act, unless, in the case of any act or failure to act
described in clauses (i), (iv), (v) or (vi) below, such act or failure to
act is corrected by the Company prior to the Date of Termination specified
in the Notice of Termination given by the Executive in respect thereof not
later than six (6) months after the occurrence of the event that serves as
the basis for the Notice of Termination:
(i) the assignment to the Executive of any duties or
responsibilities inconsistent with those described in Section
3.2 below or with the Executive's position(s) or status
(including, without limitation, offices, titles, and reporting
relationships) as an executive officer of the Company and its
subsidiaries or a substantial adverse alteration in the nature
of the Executive's authority, duties, responsibilities, position
or status from those described in Section 3.2 below or
otherwise;
(ii) a reduction in the Executive's Annual Base
Salary or annual bonus opportunity as in effect on the date of
this Agreement or as the same may be increased at any time
thereafter and from time to time;
(iii) the relocation of the Company's principal
executive offices to a location more than one hundred and twenty
(120)* miles from its location on the date of this Agreement
(or, if different, more than one hundred and twenty (120)* miles
from where such offices are located immediately prior to any
Potential Change in Control) or the Company's requiring the
Executive to be based anywhere other than the Company's
principal executive offices except for required travel on the
Company's business to an extent substantially consistent with
the Executive's business travel obligations as of the date of
this Agreement;
(iv) any failure by the Company to comply with any of
the provisions of this Agreement, other than an 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;
* Thirty (30) miles if the Executive has attained age 60 at the time of
the Change in Control
(v) the failure by the Company or a subsidiary to
continue in effect any pension benefit or incentive or deferred
compensation plan in which the Executive participates
immediately prior to any Potential Change in Control which is
material to the Executive's total compensation, unless an
equitable arrangement (embodied in an ongoing substitute or
alternative plan or arrangement) has been made with respect to
such plan, or the failure by the Company or a subsidiary to
continue the Executive's participation therein (or in such
substitute or alternative plan or arrangement) on a basis not
materially less favorable, both in terms of the amount of
benefits provided and the level of the Executive's participation
relative to other participants, as existed at the time of the
Potential Change in Control;
(vi) the failure by the Company or a subsidiary to
continue to provide the Executive with health and welfare
benefits substantially similar to those enjoyed by the Executive
under any of the Company's or a subsidiary's retirement, life
insurance, medical, health and accident, or disability or
similar plans in which the Executive was participating at the
time of any Potential Change in Control, the taking of any
action by the Company or a subsidiary which would directly or
indirectly materially reduce any of such benefits or deprive the
Executive of any material fringe benefit enjoyed by the
Executive at the time of the Potential Change in Control, or the
failure by the Company or a subsidiary to provide the Executive
with the number of paid vacation days to which the Executive is
entitled in accordance with the Company's or a subsidiary's
normal vacation policy in effect at the time of the Potential
Change in Control;
(vii) any purported termination of the Executive's
employment which is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 7.1; and/or
(viii) the failure of the Company to obtain a written
agreement reasonably satisfactory to the Executive from any successor
to the Company (as described in Section 9.1) to perform this
Agreement.
1.8 "Person" shall have the meaning ascribed thereto in Section
3(a)(9) of the Exchange Act, as modified, applied and used in Sections
13(d) and 14(d) thereof; provided, however, a Person shall not include (i)
the Company or any of its subsidiaries, (ii) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any of
its subsidiaries (in its capacity as such), (iii) an underwriter
temporarily holding securities pursuant to an offering of such securities,
or (iv) a corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same character and proportions as
their ownership of stock of the Company.
1.9 "Potential Change in Control" shall mean and be deemed to
have occurred if:
(i) the Company enters into an agreement, the
consummation of which would result in the occurrence of a Change
in Control;
(ii) the Company or any Person publicly announces an
intention to take actions which, if consummated, would
constitute a Change in Control; and/or
(iii) any Person becomes the Beneficial Owner,
directly or indirectly, of securities of the Company
representing ten percent (10%) or more of the combined voting
power of the Company's then outstanding securities, or any
Person increases such Person's beneficial ownership of such
securities by five (5) percentage points or more over the
percentage so owned by such Person on November 1, 1995.
1.10 "Retirement" shall mean and be deemed the reason for the
termination by the Executive of the Executive's employment if such
employment is terminated in accordance with the Company's normal
retirement policy for those aged 62 and older, not including early
retirement or so-called "window period" retirements, generally applicable
to its officers, as in effect immediately prior to any Potential Change in
Control.
2. Term of this Agreement. This Agreement shall commence on the
date hereof and shall continue in effect through December 31, 1998;
provided, however, that commencing on January 1, 1999 and each January 1
thereafter, the term of this Agreement shall automatically be extended for
one additional year unless, not later than June 30 of the preceding year,
the Company or the Executive shall have given written notice to the other
not to extend this Agreement or a Change in Control shall have occurred
prior to any such January 1; provided, further, however, that if a Change
in Control shall have occurred during the term of this Agreement, this
Agreement shall continue in effect for a period of not less than thirty-
six (36) months beyond the month in which such Change in Control occurred
(the "Term"). Notwithstanding the foregoing provisions of this Section 2,
the Term shall terminate upon the Executive's attaining the age of
sixty-two (62) years (or the date on which the Executive would have
attained age 62 if the Executive had survived).
3. Company's Covenants.
3.1 Severance Payments. In order to induce the Executive to
remain in the employ of the Company and/or one or more of its subsidiaries
and in consideration of the Executive's covenants set forth in Section 4
below, the Company agrees, under the terms and conditions described herein
and in addition to the amounts payable to the Executive under Section 5
below, to pay the Executive the "Severance Payments" described in Section
6.1 below and the other payments and benefits described herein in the
event the Executive's employment with the Company is terminated during the
Employment Period or under the other circumstances set forth in Section
6.1 below.
3.2 Position and Duties. During the Employment Period, (a) the
Executive's position (including status, offices, titles and reporting
relationships), authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of those
held, exercised and assigned at any time during the one hundred eighty
(180) day period immediately preceding any related Potential Change in
Control, and (b) the Executive's services shall be performed at the
location where the Executive was employed immediately preceding any such
Potential Change in Control, or any office or location less than one
hundred and twenty (120)* miles from such location.
3.3 Base Salary. During the Employment Period, the Executive
shall receive Annual Base Salary at least equal to twelve (12) times the
highest monthly base salary paid or payable, including (without
limitation) any base salary which has been earned but deferred, to the
Executive by the Company and its affiliated companies in respect of the
twelve (12) month period immediately preceding the month in which any
related Potential Change in Control occurs. In addition, Annual Base
Salary shall not be reduced after the occurrence of a Potential Change in
Control. As used in this Agreement, the term "affiliated companies" shall
include any company controlled by, controlling or under common control
with the Company.
3.4 Annual Bonus. In addition to Annual Base Salary, if the
Company adopts an annual bonus program for officers during the Employment
Period (the "Annual Bonus") the Executive shall be entitled to tee in such
Annual Bonus program on a basis equivalent to other executive officers of
the Company. Each 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 shall elect to defer the
receipt of such Annual Bonus in accordance with rules established by the
Company for that purpose.
3.5 Incentive, Savings and Retirement Plans. During the
Employment Period, the Executive shall be entitled to participate in all
incentive, savings and retirement plans, practices, policies and programs
applicable generally to other peer executives of the Company and its
subsidiaries, but in no event shall such plans, practices, policies and
programs provide the Executive with incentive opportunities (measured with
respect to both regular and special incentive opportunities, to the
extent, if any, that such distinction is applicable), 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 one hundred eighty (180) day period immediately preceding any related
Potential Change in Control or if more favorable to the Executive, those
provided generally at any time thereafter to other peer executives of the
Company and its affiliated companies.
3.6 Welfare Benefit Plans. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be
entitled to participate in and shall receive all benefits under all of the
health and welfare benefit plans, practices, policies and programs
* Thirty (30) miles if the Executive has attained age 60 at the time of
the Change in Control.
provided by the Company and its affiliated companies (including, without
limitation, medical, prescription, dental, disability, employee life,
group life, accidental death and travel accident insurance plans and
programs) to the extent (and at the same cost) applicable generally to
other peer executives of the Company and its subsidiaries, but in no event
shall such plans, practices, policies and programs provide the Executive
with benefits that 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 one hundred eighty (180) day period
immediately preceding any related Potential Change in Control or, if more
favorable to the Executive, those provided generally at any time
thereafter to other peer executives of the Company and its affiliated
companies.
3.7 Expenses. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all reasonable
business 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
one hundred eighty (180) day period immediately preceding any related
Potential Change in Control 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.
3.8 Office Support; Perquisites. During the Employment Period,
the Executive shall be entitled to a private office, secretarial support
and other facilities, perquisites and programs to enable the Executive to
be able to discharge the Executive's responsibilities hereunder 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 one hundred eighty (180) day period immediately
preceding any related Potential Change in Control 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.
3.9 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 one
hundred eighty (180) day period immediately preceding any related
Potential Change in Control 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.
4. The Executive's Covenants.
4.1 Employment. The Executive agrees that, subject to the
terms and conditions of this Agreement, in the event of a Change in
Control during the Term the Executive will remain in the employ of the
Company during any related Employment Period.
4.2 Time and Attention. During the Employment Period, and
excluding any periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote reasonable attention and time
during normal business hours to the business and affairs of the Company
and to use the Executive's reasonable best efforts to perform faithfully
and efficiently the responsibilities and duties assigned to the Executive
hereunder. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (i) serve on corporate, civic or
charitable boards or committees, (ii) deliver lectures and fulfill
speaking engagements and (iii) manage personal investments, so long as
such activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company and its
subsidiaries 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 any Potential Change in Control, the
reinstatement or continued conduct of such activities (or the
reinstatement or conduct of activities similar in nature and scope
thereto) subsequent to any related Potential Change in Control shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company and its subsidiaries.
4.3. Non-interference; Confidential Information
(a) No Interference. For so long as the Executive is employed
by the Company, and for a period of two (2) years thereafter, the
Executive shall not, whether for his own account or for the account of any
other individual, partnership, firm, corporation or other business
organization (other than the Company or one of its affiliates),
intentionally solicit, endeavor to entice away from the Company (or any of
its affiliates), or otherwise interfere with the relationship of the
Company (or any of its affiliates) with, any person who is employed by or
otherwise engaged to perform services for the Company (or any of its
affiliates) including, but not limited to, any independent representatives
or organizations, or any person or entity that is a customer of the
Company (or any of its affiliates). The Executive understands and agrees
that the rights and obligations set forth in this Section 4.3(a) could
extend beyond the Term.
(b) Confidential Information. The Executive covenants and
agrees with the Company that he will not at any time, during or after
employment with the Company, except in performance of the Executive's
obligations to the Company or with the prior express written consent of
the Board of Directors, directly or indirectly, intentionally or
unintentionally, disclose any Confidential Information that he may learn
or has learned by reason of his employment or association with the
Company, or any predecessors to its business, or use any such information
for his own personal benefit or gain. The term "Confidential Information"
includes, without limitation, information not previously disclosed to the
public or to the trade by the Company's management with respect to the
products, facilities and methods, trade secrets and other intellectual
property, systems, procedures, manuals, confidential reports, fee or rate
information, customer lists, financial information (including the
revenues, costs or profits associated with any of the Company's activities
or products), business plans, prospects, opportunities or other
information of the Company or any of its affiliates. Confidential
Information shall not include information which (i) is or becomes
generally available to the public other than as a result of disclosure by
the Executive in violation of this Section 4.3(b) or (ii) the Executive is
required to disclose under any applicable laws, regulations or directives
of any government agency, tribunal or authority having jurisdiction in the
matter or under subpoena or other process of law. The Executive
understands and agrees that the rights and obligations set forth in this
Section 4.3 (b) shall extend beyond the Term.
(c) Exclusive Property. The Executive confirms that all
Confidential Information is and shall remain the exclusive property of the
Company or any of its affiliates. All business records, papers and
documents kept or made by the Executive relating to the business of the
Company (or any of its affiliates) or any Confidential Information shall
be and remain the property of the Company. Upon termination of employment
with the Company or upon the request of the Company at any time, the
Executive shall promptly deliver to the Company, and shall not without the
prior express written consent of the Company retain, any and all copies of
(i) any written materials not previously made available to the public, or
(ii) records and documents made by the Executive or coming into his
possession concerning any Confidential Information or the business or
affairs of the Company or any predecessors to its business, or any of its
affiliates. The Executive understands and agrees that the rights and
obligations set forth in this Section 4.3(c) shall extend beyond the Term.
(d) Injunctive Relief. Without intending to limit the remedies
available to the Company, the Executive acknowledges that a breach of any
of the covenants contained in this Section 4.3 may result in material
irreparable injury to the Company or its affiliates for which there is no
adequate remedy at law, that it will not be possible to measure damages
for such injuries precisely and that, in the event of such a breach or
threat thereof, the Company shall be entitled to obtain a temporary
restraining order and/or a preliminary or permanent injunction restraining
the Executive from engaging in activities prohibited by this Section 4.3
or such other relief as may be required to specifically enforce any of the
covenants in this Section 4.3.
5. Compensation Other Than Severance Payments.
5.1 Disability. Following a Potential Change in Control and
during the Term, during any period that the Executive fails to perform the
Executive's full-time duties with the Company as a result of incapacity
due to physical or mental illness, the Executive's full salary shall be
paid to the Executive by the Company at a rate no less than the rate in
effect at the commencement of any such disability period, together with
all compensation and benefits payable to the Executive under the terms of
any compensation or benefit plan, program or arrangement maintained by the
Company or its subsidiaries during such disability period, until the
Executive's employment is terminated by the Company for Disability.
5.2 Base Salary. If the Executive's employment shall be
terminated for any reason following a Potential Change in Control and
during the Term, the Executive's full salary shall be paid to the
Executive by the Company through the Date of Termination (as defined below
in Section 7.2) at the rate in effect at the time the Notice of
Termination is given, together with all compensation and benefits payable
to or with respect to the Executive through the Date of Termination under
the terms of any compensation or benefit plan, program or arrangement
maintained by the Company or its subsidiaries during such period.
5.3 Benefits. If the Executive's employment shall be
terminated for any reason following a Potential Change in Control and
during the Term, the Executive's normal post-termination compensation and
benefits shall be paid to the Executive as such payments become due. Such
post-termination compensation and benefits shall be determined under, and
paid in accordance with, the retirement, health insurance, life insurance
and other compensation or benefit plans, programs and arrangements
maintained by the Company or its affiliates.
6. Severance Payments.
6.1 Severance. The Company shall pay the Executive the
payments and benefits described in this Section 6.1 (the "Severance
Payments") upon the termination of the Executive's employment with the
Company following a Change in Control and during the Term, in addition to
the payments and benefits described in Section 5 hereof, unless such
termination is (i) by the Company for Cause, (ii) by reason of Retirement,
(iii) by the Executive without Good Reason, (iv) due to death, or (v) due
to Disability. In addition, the Executive's employment shall be deemed to
have been terminated following a Change in Control by the Company without
Cause or by the Executive with Good Reason (a) if the Executive reasonably
demonstrates that the Executive's employment was terminated prior to a
Change in Control without Cause (1) at the request of a Person who has
entered into an agreement with the Company the consummation of which will
constitute a Change in Control (or who has taken other steps reasonably
calculated to effect a Change in Control) or (2) otherwise in connection
with, as a result of or in anticipation of a Change in Control, or (b) if
the Executive terminates his employment for Good Reason prior to a Change
in Control and the Executive reasonably demonstrates that the
circumstance(s) or event(s) which constitute such Good Reason occurred (1)
at the request of such Person or (2) otherwise in connection with, as a
result of or in anticipation of a Change in Control. The Executive's
right to terminate the Executive's employment for Good Reason shall not be
affected by the Executive's incapacity due to physical or mental illness.
The Executive's continued employment shall not constitute consent to, or a
waiver of rights with respect to, any act or failure to act constituting
Good Reason hereunder. In the event of the Disability or death of the
Executive after the Date of Termination in respect of any termination
without cause or any termination for Good Reason, payments and benefits
shall be made to the Executive, or the Executive's beneficiaries or legal
representative, as the case may be.
(a) In lieu of any further salary and annual bonus
payments to the Executive for periods subsequent to the Date of
Termination, the Company shall pay to the Executive a lump sum
severance payment, in cash, equal to three (3) or, if less, the
number of years, including fractions, from the Date of
Termination until the Executive reaches the age of sixty-two
(62) years times the sum of (i) the Executive's Annual Base
Salary immediately preceding the Change in Control or, if
higher, the Executive's Annual Base Salary on the Date of
Termination, and (ii) the average annual bonus paid or payable
to the Executive with respect to the three (3) years (or portion
thereof with respect to which an annual bonus was paid) prior to
the year in which the Date of Termination occurs.
(b) For a thirty-six (36) month period after the Date
of Termination, or if sooner, until the Executive reaches the
age of sixty-two (62) years, the Company shall arrange to
provide the Executive with life, disability, accident and health
insurance benefits substantially similar (and at the same cost)
to those that the Executive is receiving immediately prior to
any related Potential Change in Control or the receipt of the
Notice of Termination (without giving effect to any reduction in
such benefits subsequent to a Change in Control which reduction
constitutes Good Reason), whichever is greater. Benefits
otherwise receivable by the Executive pursuant to this Section
6.1(b) shall be reduced to the extent comparable benefits are
actually received by or made available to the Executive without
cost during such period following the Executive's termination of
employment (and any such benefits actually received by the
Executive shall be reported to the Company by the Executive).
(c) The Executive shall receive, at the expense of the
Company, outplacement services, on an individualized basis at a level
of service commensurate with the Executive's status with the Company
immediately prior to the Change in Control (or, if higher,
immediately prior to the termination of the Executive's employment),
provided by a nationally recognized executive placement firm selected
by the Executive and reasonably satisfactory to the Company; provided
that the cost to the Company of such services shall not exceed 15% of
the Executive's Annual Base Salary in effect immediately prior to the
Change in Control.
(d) All outstanding stock options previously granted to
the Executive shall become immediately 100% vested and exercisable,
and all shares of restricted stock shall become immediately 100%
vested and all forfeiture restrictions thereon shall lapse. Such
accelerated and vested options shall be exercisable for the remainder
of the term of such option, as set forth in the Executive's related
stock option agreement (without regard to any truncation of such
period therein, or under any plan or arrangement maintained by the
Company,on account of any termination of the Executive's employment).
6.2 Code Section 280G Reduction. Notwithstanding any other
provisions of this Agreement or of any other agreement, contract,
understanding, plan or program entered into or maintained by the Company,
if any payment or benefit received or to be received by the Executive in
connection with a Change in Control or the termination of the Executive's
employment (whether pursuant to the terms of this Agreement or any other
plan, arrangement or agreement with (a) the Company or any affiliate,
parent or subsidiary of the Company, (b) any Person whose actions result
in a Change in Control, or (c) any Person affiliated with the Company)
(all such payments and/or benefits, including the payments and benefits,
if any, under this Section 6, being hereinafter referred to as the "Total
Payments") would subject the Executive to the excise tax imposed under
Section 4999 of the Code, on any successor section thereto (the "Excise
Tax"), and if the amount of such Total Payments, reduced by all federal,
state and local taxes applicable with respect thereto, including without
limitation the Excise Tax, is less than the amount of Total Payments which
would otherwise be payable to the Executive, after all such taxes, without
the imposition of the Excise Tax, then, to the extent necessary to
eliminate the imposition of the Excise Tax (after taking into account any
reduction in the Total Payments provided by reason of Section 280G of the
Code under plan, arrangement or agreement), (i) the cash and non-cash
payments and benefits payable under this Agreement shall first be reduced
(but not below zero), and (ii) all other cash and non-cash payments and
benefits shall next be reduced (but not below zero); but only if, by
reason of any such reduction, the Total Payments with any such reduction,
after all such taxes, shall exceed the Total Payments without any such
reduction, after all such taxes. For purposes of this Section 6.2, (A) no
portion of the Total Payments the receipt or enjoyment of which the
Executive shall have effectively waived in writing prior to the Date of
Termination shall be taken into account, (B) no portion of the Total
Payments shall be taken into account which in the opinion of tax counsel
selected in good faith by the Company does not constitute a "parachute
payment" within the meaning of Section 280G(b)(2) of the Code, including
(without limitation) by reason of Section 280G(b)(4)(A) of the Code, (C)
the payments and/or benefits under this Agreement shall be reduced only to
the extent necessary so that the Total Payments (other than those referred
to in clauses (A) and (B) above) in their entirety constitute reasonable
compensation for services actually rendered within the meaning of Section
280G(b)(4)(B) of the Code or are otherwise not subject to disallowance as
deductions, in the opinion of the tax counsel referred to above in clause
(B), and (D) the value of any non-cash payment or benefit or any deferred
payment or benefit included in the Total Payments shall be determined by
the Company's independent auditors in accordance with the principles of
Sections 280G(d)(3) and (4) of the Code. Except as otherwise provided
above, the foregoing calculations and determinations shall be made in good
faith by the Company and the Executive. If no agreement on the
calculations is reached, then the Executive and the Company will cooperate
and attempt to agree to the selection of an accounting firm to make the
calculations. If no agreement can be reached regarding the selection of
an accounting firm, the Company will select in good faith a prominent
national accounting firm that has no current or recent business
relationship with the Company. The Company shall pay all costs and
expenses incurred in connection with any such calculations or
determinations. Any calculations or determinations made in accordance
with this Section 6.2 shall be conclusive and binding on all parties.
6.3 Date of Payment. The payments provided for in Section
6.1.(a) and Section 6.2 hereof shall , unless deferred pursuant to the
last sentence of this Section 6.3, be made not later than the fifteenth
(15th) day following the Date of Termination; provided, however, that if
the amounts of such payments cannot be finally determined on or before
such day, the Company shall pay to the Executive (subject to the last
sentence of this Section 6.3) on such day an estimate, as determined in
good faith by the Company, of the minimum amount of such payments to which
the Executive is likely to be entitled to and shall pay the remainder of
such payments (together with interest at the rate provided in section
1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined
but in no event later than the thirtieth (30th) day after the Date of
Termination. In the event that the amount of the estimated payments
exceeds the amount subsequently determined to have been due, such excess
shall constitute a loan by the Company to the Executive, payable on the
tenth (10th) business day after demand by the Company (together with
interest at the rate provided in section 1274(b)(2)(B) of the Code). At
the time that payments are made or would have been made, disregarding for
this purpose only, any deferral effected by the Executive, under this
Section 6.3, the Company shall provide the Executive with a detailed
written statement setting forth the manner in which such payments were
calculated and the basis for such calculations including, without
limitation, any opinions or other advice the Company has received from
outside counsel, auditors or consultants (and any such opinions or advice
which are in writing shall be attached to the statement). The Executive
may irrevocably elect, in a writing delivered to the Company no later than
the last day of the calendar year preceding the calendar year in which
occurs the Change in Control, to defer the receipt of any payment to which
the Executive may become entitled to under Section 6.1 of this Agreement
for the period of time specified in such writing.
6.4 Legal Costs. The Company shall also reimburse the
Executive for reasonable legal fees and expenses incurred in good faith by
the Executive as a result of any dispute with the Company or any affiliate
of the Company regarding the payment of any benefit provided for in this
Agreement (including, but not limited to, all such fees and expenses
incurred in disputing any termination or in seeking in good faith to
obtain or enforce any benefit or right provided by this Agreement or in
connection with any tax audit or proceeding to the extent attributable to
the application of section 4999 of the Code) 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. Such payments shall, in the aggregate, not
exceed $10,000 and shall be made within ten (10) business days after
delivery of the Executive's written requests for payment accompanied by
such evidence of fees and expenses incurred as the Company reasonably may
require.
7. Termination Procedures and Compensation During Dispute.
7.1 Notice of Termination. After a Change in Control and
during the Term, any purported termination of the Executive's employment
with the Company (other than by reason of death) shall be communicated by
written Notice of Termination from one party hereto to the other party
hereto in accordance with Section 10 hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall
indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment
with the Company under the provision so indicated. Further, a Notice of
Termination for Cause is required to include a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters (3/4) of
the entire membership of the Board at a meeting of the Board which was
called and held for the purpose of considering such termination (which
meeting may be a regular meeting of the Board where prior notice of
consideration of such termination is given to members of the Board)
finding that, in the good faith opinion of the Board, the Executive
engaged in conduct set forth in clause (i) or (ii) of the definition of
Cause herein, and specifying the particulars thereof in detail. For
purposes of this Agreement, any purported termination not effected in
accordance with this Section 7.1 shall not be considered effective.
7.2 Date of Termination. "Date of Termination", with respect
to any purported termination of the Executive's employment after a Change
in Control and during the Term, shall mean (i) if the Executive's
employment is terminated for Disability, thirty (30) days after Notice of
Termination is given (provided that the Executive shall not have returned
to the full-time performance of the Executive's duties during such thirty
(30) day period), and (ii) if the Executive's employment is terminated for
any other reason, the date specified in the Notice of Termination (which,
in the case of a termination by the Company, shall not be less than thirty
(30) days (except in the case of a termination for Cause) and, in the case
of a termination by the Executive, shall not be less than fifteen (15)
days nor more than sixty (60) days, respectively, after the date such
Notice of Termination is given).
7.3 Dispute Concerning Termination. If within fifteen (15)
days after any Notice of Termination is given, or, if later, prior to the
Date of Termination (as determined without regard to this Section 7.3),
the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, the Date of Termination
shall be the date on which the dispute is finally resolved either by
mutual written agreement of the parties or by a final judgment, order or
decree of a court of competent jurisdiction (which is not appealable or
with respect to which the time for appeal therefrom has expired and no
appeal has been perfected); provided, however, that the Date of
Termination shall be extended by a notice of dispute only if the basis for
such notice is reasonable, such notice is given in good faith and the
party giving such notice pursues the resolution of such dispute with
reasonable diligence.
7.4 Compensation During Dispute. If a purported termination
occurs following a Change in Control and during the Term, and such
termination is disputed in accordance with Section 7.3 above, the Company
shall continue to pay the Executive the full compensation (including,
without limitation, Annual Base Salary and Annual Bonus) in effect at the
time of any related Potential Change in Control or when the notice giving
rise to the dispute was given (whichever is greater) and continue the
Executive as a participant in all compensation, incentive, pension and
welfare benefit and insurance plans in which the Executive was
participating at the time of any Potential Change in Control or when the
notice giving rise to the dispute was given, whichever is greater, until
the dispute is finally resolved in accordance with Section 7.3 hereof.
Amounts paid under this Section 7.4 are in addition to all other amounts
due under this Agreement (other than those due under Section 5.2 hereof)
and shall not be offset against or reduce any other amounts due under this
Agreement or any other plan, agreement or arrangement.
8. No Mitigation. The Company agrees that, if the Executive's
employment is terminated during the Term, the Executive is not required to
seek other employment or to attempt in any way to reduce any amounts
payable to the Executive by the Company pursuant to Section 6 or Section
7.4. Further, the amount of any payment or benefit provided for in
Section 6 (other than pursuant to Section 6.1.(b)) or Section 7.4 shall
not be reduced by any compensation earned by the Executive as the result
of employment by another employer, by retirement benefits, or offset
against any amount claimed to be owed by the Executive to the Company or
any of its subsidiaries, or otherwise.
9. Successors; Binding Agreement.
9.1 Successors. In addition to any obligations imposed by law
upon any successor to the Company, the Company will 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 expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. Failure of the Company
to obtain such assumption and agreement prior to the effectiveness of any
such succession shall be a breach of this Agreement and shall entitle the
Executive to compensation from the Company in the same amount and on the
same terms as the Executive would be entitled to hereunder if the
Executive were to terminate employment with the Company for Good Reason
after a Change in Control, except that, for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall
be deemed the Date of Termination.
9.2 Binding Agreement. This Agreement shall inure to the
benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive shall die while any
amount would still be payable to the Executive hereunder (other than
amounts which, by their terms, terminate upon the death of the Executive)
if the Executive had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this
Agreement to the beneficiary (or beneficiaries) designated by the
Executive from time to time in accordance with the procedures for notice
set out in Section 10; provided, however, that if there shall be no
effective designation of beneficiary by the Executive, such amounts shall
be paid to the executors, personal representatives or administrators of
the Executive's estate.
10. Notices; Other Communications. For the purpose of this
Agreement, notices and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have been duly given
when delivered or mailed by United States certified mail, return receipt
requested, postage prepaid, addressed to the respective addresses set
forth below, or to such other address as either party may have furnished
to the other in writing in accordance herewith, except that notice of
change of address shall be effective only upon actual receipt:
To the Company:
Interstate Power Company
1000 Main Street
P.O. Box 769
Dubuque, Iowa 52004-0769
Attention: Corporate Secretary
To the Executive:
Mr. William C. Troy
2910 Shiras Avenue
Dubuque, Iowa 52001
11. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge (i) is
agreed to in writing and signed by the Executive and such officer as may
be specifically designated by the Board, or (ii) is (a) approved by such
officer as may be specifically designated by the Board, (b) effective only
in respect of any Change in Control resulting from the proposed merger
transaction involving the Company, IES Industries Inc. and WPL Holdings,
Inc., and (c) applicable to all members of the senior management of the
Company who have executed an agreement substantially similar to this
Agreement. In respect of any proposed waiver, modification, or discharge
which meets the conditions specified above in Section 11(ii), the
Executive hereby irrevocably appoints the Chairman of the Board of the
Company to be the Executive's attorney-in-fact for the limited purpose of
entering into, on behalf of the Executive, any form of waiver,
modification or discharge necessary to effect any such waiver,
modification or discharge meeting the conditions of this Section 11(ii).
No waiver by either party hereto at any time of any breach by the other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior
or subsequent time.
No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement. The
validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of Iowa without regard to the
principles of conflict of laws thereof. All references to sections of the
Exchange Act or the Code (or the rules and/or regulations under either)
shall be deemed also to refer to and include any successor provisions to
such sections. Any payments provided for hereunder shall be paid net of
any applicable withholding required under federal, state or local law and
any additional withholding to which the Executive has agreed. The rights
and obligations of the Company and the Executive under this Agreement
shall survive the expiration of the Term and the Employment Period.
12. Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement, all of which shall remain in full force
and effect.
13. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
14. No Limitation. 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 other 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 as in effect from time to
time except as explicitly modified by this Agreement.
15. Other Agreements. This Agreement contains the entire agreement
between the parties concerning the subject matter hereof and supersedes
all prior agreements understandings, discussions, negotiations and
undertakings, whether written or oral, between the parties with respect
thereto.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.
INTERSTATE POWER COMPANY
By: /s/ Wayne H. Stoppelmoor
Title: Chairman, President and Chief
Executive Officer
/s/ William C. Troy
William C. Troy
EX-10.8
AGREEMENT
THIS AGREEMENT, dated as of November 8, 1995 (this "Agreement"),
is made by and between Interstate Power Company, a Delaware corporation,
having its principal offices at 1000 Main Street, Dubuque, Iowa 52004-0769
(the "Company"), and Dale R. Sharp residing at 3059 Spring Valley Road,
Dubuque, Iowa 52001 (the "Executive").
WHEREAS, the Company considers it essential to the best
interests of its shareholders to foster the continued employment of key
executive management personnel; and
WHEREAS, the Board of Directors of the Company (the "Board")
recognizes that, as is the case with many publicly-held corporations, the
possibility of a Change in Control (as defined in Section 1.3 below) of
the Company exists from time to time and that such possibility, and the
uncertainty, instability and questions that it may raise for and among key
executive management personnel, may result in the premature departure or
significant distraction of such management personnel to the material
detriment of the Company and its shareholders; and
WHEREAS, the Board has determined that appropriate steps should
be taken to reinforce, focus and encourage the continued attention and
dedication of key members of the executive management of the Company and
its subsidiaries, including (without limitation) the Executive, to their
assigned duties without distraction in the face of potentially disturbing
or unsettling circumstances arising from the possibility of a Change in
Control of the Company;
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and the Executive hereby agree as
follows:
1. Definitions. For purposes of this Agreement, the following
terms shall have the meanings set forth below:
1.1 "Annual Base Salary" shall mean the Executive's rate of
regular basic annual compensation prior to any reduction under a salary
reduction agreement pursuant to section 401(k) or section 125 of the
Internal Revenue Code of 1986, as amended from time to time (the "Code")
or any deferred compensation arrangements, and shall not include, without
limitation, cost of living allowances, fees, retainers, reimbursements,
bonuses, incentive awards, prizes or similar payments.
1.2 "Cause" shall mean:
(i) the willful and continued failure by the Executive to
substantially perform the Executive's duties with the Company, or a
subsidiary of the Company, as such duties may reasonably be defined
from time to time by the Board (or a duly authorized committee
thereof), or to abide by the reasonable written policies of the
Company or of the Executive's primary employer (other than any such
failure resulting from the Executive's incapacity due to physical or
mental illness) after a written demand for substantial performance is
delivered to the Executive by the Board, which demand specifically
identifies the manner in which the Board believes that the Executive
has not substantially performed the Executive's duties or has not
abided by any reasonable written policies, or
(ii) the continued and willful engaging by the Executive in
conduct which is demonstrably and materially injurious to the Company
or its subsidiaries, monetarily or otherwise; or
(iii) the Executive's conviction of, or plea of no contest
to, a felony.
For purposes of clauses (i) and (ii) of this definition, no act, or
failure to act, on the Executive's part shall be deemed "willful" unless
done, or omitted to be done, by the Executive in bad faith and without
reasonable belief that the Executive's act, or failure to act, was in the
best interest of the Company or its subsidiaries. Any act, or failure to
act, based upon authority given pursuant to a resolution duly adopted by
the Board or upon the instructions of the Board (or a committee thereof),
the Company's chief executive officer or other duly authorized senior
officer of the Company (as appropriate) or based upon the advice of
counsel for the Company shall be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in the best
interests of the Company and its subsidiaries. The cessation of
employment of the Executive shall not be deemed to be for Cause unless and
until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than three-
quarters (3/4) of the entire membership of the Board at a meeting of the
Board called and held for such purpose (after reasonable notice of any
such meeting is provided to the Executive and the Executive is given an
opportunity, together with counsel, to be heard before the Board) finding
that, in the good faith opinion of the Board, the Executive has acted in a
manner described in clause (i) or (ii) above and specifying the
particulars thereof in detail.
1.3 "Change in Control" shall mean and be deemed to have
occurred if:
(i) any Person is or becomes the Beneficial Owner (as
that term is defined in Rule 13d-3 under the Securities Exchange
Act of 1934 (the "Exchange Act")), directly or indirectly, of
securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired
directly from the Company) representing twenty-five percent
(25%) or more of the combined voting power of the Company's then
outstanding securities; or
(ii) during any period of twenty-four (24)
consecutive months (not including any period prior to November
1, 1995), individuals who at the beginning of such period
constitute the Board and any new director (other than a director
designated by a Person who has entered into an agreement with
the Company to effect a transaction described in clause (i),
(iii) or (iv) of this definition or any such individual whose
initial assumption of office occurs as a result of either an
actual or threatened election contest (as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act) or other actual or threatened solicitation of proxies or
consents) whose election by the Board or nomination for election
by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of such period or whose
election or nomination for election was previously so approved,
cease for any reason to constitute a majority of the Board; or
(iii) the shareholders of the Company approve a
reorganization, merger or consolidation, other than a
reorganization, merger or consolidation with respect to which
all or substantially all of the individuals and entities who
were Beneficial Owners, immediately prior to such
reorganization, merger or consolidation, of the combined voting
power of the Company's then outstanding securities beneficially
own, directly or indirectly, immediately after such
reorganization, merger or consolidation, more then seventy-five
percent (75%) of the combined voting power of the securities of
the corporation resulting from such reorganization, merger or
consolidation in substantially the same proportions as their
respective ownership, immediately prior to such reorganization,
merger or consolidation, of the combined voting power of the
Company's securities; or
(iv) the shareholders of the Company approve (a) the
sale or disposition by the Company (other than to a subsidiary
of the Company) of all or substantially all of the assets of the
Company (or any such sale or disposition is effected through
condemnation proceedings), or (b) a complete liquidation or
dissolution of the Company.
Notwithstanding the foregoing, a Change in Control shall not include any
event, circumstance or transaction which results from the action
(excluding the Executive's employment activities with the Company or any
of its affiliates) of any Person or group of Persons which includes, is
directly affiliated with or is wholly or partly controlled by one or more
executive officers of the Company and in which the Executive actively
participates.
1.4 "Company" shall include Interstate Power Company and any
successor to its business and/or assets which assumes (either expressly,
by operation of law or otherwise) and/or agrees to perform this Agreement
by operation of law or otherwise (except in determining, under Section 1.3
hereof, whether or not any Change in Control of the Company has occurred
in connection with such succession).
1.5 "Disability" shall mean and be deemed the reason for the
termination by the Company of the Executive's employment, if, as a result
of the Executive's incapacity due to physical or mental illness, (i) the
Executive shall have been absent from the full-time performance of the
Executive's duties with the Company for a period of six (6) consecutive
months, (ii) the Company gives the Executive a Notice of Termination for
Disability, and (iii) within thirty (30) days after such Notice of
Termination is given, the Executive does not return to the full-time
performance of the Executive's duties.
1.6 "Employment Period" shall mean the period commencing on the
date of any Change in Control until the earliest to occur of (i) the date
which is thirty-six (36) months from the date of any such Change in
Control, (ii) the date of termination by the Executive of the Executive's
employment for any reason, (iii) the termination by the Company of the
Executive's employment for any reason or (iv) the Executive's attaining
age sixty-two (62).
1.7 "Good Reason" shall mean the occurrence (without the
Executive's prior express written consent) of any one of the following
acts, or failures to act, unless, in the case of any act or failure to act
described in clauses (i), (iv), (v) or (vi) below, such act or failure to
act is corrected by the Company prior to the Date of Termination specified
in the Notice of Termination given by the Executive in respect thereof not
later than six (6) months after the occurrence of the event that serves as
the basis for the Notice of Termination:
(i) the assignment to the Executive of any duties or
responsibilities inconsistent with those described in Section
3.2 below or with the Executive's position(s) or status
(including, without limitation, offices, titles, and reporting
relationships) as an executive officer of the Company and its
subsidiaries or a substantial adverse alteration in the nature
of the Executive's authority, duties, responsibilities, position
or status from those described in Section 3.2 below or
otherwise;
(ii) a reduction in the Executive's Annual Base
Salary or annual bonus opportunity as in effect on the date of
this Agreement or as the same may be increased at any time
thereafter and from time to time;
(iii) the relocation of the Company's principal
executive offices to a location more than one hundred and twenty
(120)* miles from its location on the date of this Agreement
(or, if different, more than one hundred and twenty (120)* miles
from where such offices are located immediately prior to any
Potential Change in Control) or the Company's requiring the
Executive to be based anywhere other than the Company's
principal executive offices except for required travel on the
Company's business to an extent substantially consistent with
the Executive's business travel obligations as of the date of
this Agreement;
(iv) any failure by the Company to comply with any of
the provisions of this Agreement, other than an 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;
* Thirty (30) miles if the Executive has attained age 60 at the time of
the Change in Control.
(v) the failure by the Company or a subsidiary to
continue in effect any pension benefit or incentive or deferred
compensation plan in which the Executive participates
immediately prior to any Potential Change in Control which is
material to the Executive's total compensation, unless an
equitable arrangement (embodied in an ongoing substitute or
alternative plan or arrangement) has been made with respect to
such plan, or the failure by the Company or a subsidiary to
continue the Executive's participation therein (or in such
substitute or alternative plan or arrangement) on a basis not
materially less favorable, both in terms of the amount of
benefits provided and the level of the Executive's participation
relative to other participants, as existed at the time of the
Potential Change in Control;
(vi) the failure by the Company or a subsidiary to
continue to provide the Executive with health and welfare
benefits substantially similar to those enjoyed by the Executive
under any of the Company's or a subsidiary's retirement, life
insurance, medical, health and accident, or disability or
similar plans in which the Executive was participating at the
time of any Potential Change in Control, the taking of any
action by the Company or a subsidiary which would directly or
indirectly materially reduce any of such benefits or deprive the
Executive of any material fringe benefit enjoyed by the
Executive at the time of the Potential Change in Control, or the
failure by the Company or a subsidiary to provide the Executive
with the number of paid vacation days to which the Executive is
entitled in accordance with the Company's or a subsidiary's
normal vacation policy in effect at the time of the Potential
Change in Control;
(vii) any purported termination of the Executive's
employment which is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 7.1; and/or
(viii) the failure of the Company to obtain a written
agreement reasonably satisfactory to the Executive from any successor
to the Company (as described in Section 9.1) to perform this
Agreement.
1.8 "Person" shall have the meaning ascribed thereto in Section
3(a)(9) of the Exchange Act, as modified, applied and used in Sections
13(d) and 14(d) thereof; provided, however, a Person shall not include (i)
the Company or any of its subsidiaries, (ii) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any of
its subsidiaries (in its capacity as such), (iii) an underwriter
temporarily holding securities pursuant to an offering of such securities,
or (iv) a corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same character and proportions as
their ownership of stock of the Company.
1.9 "Potential Change in Control" shall mean and be deemed to
have occurred if:
(i) the Company enters into an agreement, the
consummation of which would result in the occurrence of a Change
in Control;
(ii) the Company or any Person publicly announces an
intention to take actions which, if consummated, would
constitute a Change in Control; and/or
(iii) any Person becomes the Beneficial Owner,
directly or indirectly, of securities of the Company
representing ten percent (10%) or more of the combined voting
power of the Company's then outstanding securities, or any
Person increases such Person's beneficial ownership of such
securities by five (5) percentage points or more over the
percentage so owned by such Person on November 1, 1995.
1.10 "Retirement" shall mean and be deemed the reason for the
termination by the Executive of the Executive's employment if such
employment is terminated in accordance with the Company's normal
retirement policy for those aged 62 and older, not including early
retirement or so-called "window period" retirements, generally applicable
to its officers, as in effect immediately prior to any Potential Change in
Control.
2. Term of this Agreement. This Agreement shall commence on the
date hereof and shall continue in effect through December 31, 1998;
provided, however, that commencing on January 1, 1999 and each January 1
thereafter, the term of this Agreement shall automatically be extended for
one additional year unless, not later than June 30 of the preceding year,
the Company or the Executive shall have given written notice to the other
not to extend this Agreement or a Change in Control shall have occurred
prior to any such January 1; provided, further, however, that if a Change
in Control shall have occurred during the term of this Agreement, this
Agreement shall continue in effect for a period of not less than thirty-
six (36) months beyond the month in which such Change in Control occurred
(the "Term"). Notwithstanding the foregoing provisions of this Section 2,
the Term shall terminate upon the Executive's attaining the age of
sixty-two (62) years (or the date on which the Executive would have
attained age 62 if the Executive had survived).
3. Company's Covenants.
3.1 Severance Payments. In order to induce the Executive to
remain in the employ of the Company and/or one or more of its subsidiaries
and in consideration of the Executive's covenants set forth in Section 4
below, the Company agrees, under the terms and conditions described herein
and in addition to the amounts payable to the Executive under Section 5
below, to pay the Executive the "Severance Payments" described in Section
6.1 below and the other payments and benefits described herein in the
event the Executive's employment with the Company is terminated during the
Employment Period or under the other circumstances set forth in Section
6.1 below.
3.2 Position and Duties. During the Employment Period, (a) the
Executive's position (including status, offices, titles and reporting
relationships), authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of those
held, exercised and assigned at any time during the one hundred eighty
(180) day period immediately preceding any related Potential Change in
Control, and (b) the Executive's services shall be performed at the
location where the Executive was employed immediately preceding any such
Potential Change in Control, or any office or location less than one
hundred and twenty (120)* miles from such location.
3.3 Base Salary. During the Employment Period, the Executive
shall receive Annual Base Salary at least equal to twelve (12) times the
highest monthly base salary paid or payable, including (without
limitation) any base salary which has been earned but deferred, to the
Executive by the Company and its affiliated companies in respect of the
twelve (12) month period immediately preceding the month in which any
related Potential Change in Control occurs. In addition, Annual Base
Salary shall not be reduced after the occurrence of a Potential Change in
Control. As used in this Agreement, the term "affiliated companies" shall
include any company controlled by, controlling or under common control
with the Company.
3.4 Annual Bonus. In addition to Annual Base Salary, if the
Company adopts an annual bonus program for officers during the Employment
Period (the "Annual Bonus") the Executive shall be entitled to tee in such
Annual Bonus program on a basis equivalent to other executive officers of
the Company. Each 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 shall elect to defer the
receipt of such Annual Bonus in accordance with rules established by the
Company for that purpose.
3.5 Incentive, Savings and Retirement Plans. During the
Employment Period, the Executive shall be entitled to participate in all
incentive, savings and retirement plans, practices, policies and programs
applicable generally to other peer executives of the Company and its
subsidiaries, but in no event shall such plans, practices, policies and
programs provide the Executive with incentive opportunities (measured with
respect to both regular and special incentive opportunities, to the
extent, if any, that such distinction is applicable), 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 one hundred eighty (180) day period immediately preceding any related
Potential Change in Control or if more favorable to the Executive, those
provided generally at any time thereafter to other peer executives of the
Company and its affiliated companies.
3.6 Welfare Benefit Plans. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be
entitled to participate in and shall receive all benefits under all of the
health and welfare benefit plans, practices, policies and programs
* Thirty (30) miles if the Executive has attained age 60 at the time
of the Change in Control.
provided by the Company and its affiliated companies (including, without
limitation, medical, prescription, dental, disability, employee life,
group life, accidental death and travel accident insurance plans and
programs) to the extent (and at the same cost) applicable generally to
other peer executives of the Company and its subsidiaries, but in no event
shall such plans, practices, policies and programs provide the Executive
with benefits that 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 one hundred eighty (180) day period
immediately preceding any related Potential Change in Control or, if more
favorable to the Executive, those provided generally at any time
thereafter to other peer executives of the Company and its affiliated
companies.
3.7 Expenses. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all reasonable
business 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
one hundred eighty (180) day period immediately preceding any related
Potential Change in Control 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.
3.8 Office Support; Perquisites. During the Employment Period,
the Executive shall be entitled to a private office, secretarial support
and other facilities, perquisites and programs to enable the Executive to
be able to discharge the Executive's responsibilities hereunder 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 one hundred eighty (180) day period immediately
preceding any related Potential Change in Control 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.
3.9 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 one
hundred eighty (180) day period immediately preceding any related
Potential Change in Control 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.
4. The Executive's Covenants.
4.1 Employment. The Executive agrees that, subject to the
terms and conditions of this Agreement, in the event of a Change in
Control during the Term the Executive will remain in the employ of the
Company during any related Employment Period.
4.2 Time and Attention. During the Employment Period, and
excluding any periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote reasonable attention and time
during normal business hours to the business and affairs of the Company
and to use the Executive's reasonable best efforts to perform faithfully
and efficiently the responsibilities and duties assigned to the Executive
hereunder. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (i) serve on corporate, civic or
charitable boards or committees, (ii) deliver lectures and fulfill
speaking engagements and (iii) manage personal investments, so long as
such activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company and its
subsidiaries 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 any Potential Change in Control, the
reinstatement or continued conduct of such activities (or the
reinstatement or conduct of activities similar in nature and scope
thereto) subsequent to any related Potential Change in Control shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company and its subsidiaries.
4.3. Non-interference; Confidential Information
(a) No Interference. For so long as the Executive is employed
by the Company, and for a period of two (2) years thereafter, the
Executive shall not, whether for his own account or for the account of any
other individual, partnership, firm, corporation or other business
organization (other than the Company or one of its affiliates),
intentionally solicit, endeavor to entice away from the Company (or any of
its affiliates), or otherwise interfere with the relationship of the
Company (or any of its affiliates) with, any person who is employed by or
otherwise engaged to perform services for the Company (or any of its
affiliates) including, but not limited to, any independent representatives
or organizations, or any person or entity that is a customer of the
Company (or any of its affiliates). The Executive understands and agrees
that the rights and obligations set forth in this Section 4.3(a) could
extend beyond the Term.
(b) Confidential Information. The Executive covenants and
agrees with the Company that he will not at any time, during or after
employment with the Company, except in performance of the Executive's
obligations to the Company or with the prior express written consent of
the Board of Directors, directly or indirectly, intentionally or
unintentionally, disclose any Confidential Information that he may learn
or has learned by reason of his employment or association with the
Company, or any predecessors to its business, or use any such information
for his own personal benefit or gain. The term "Confidential Information"
includes, without limitation, information not previously disclosed to the
public or to the trade by the Company's management with respect to the
products, facilities and methods, trade secrets and other intellectual
property, systems, procedures, manuals, confidential reports, fee or rate
information, customer lists, financial information (including the
revenues, costs or profits associated with any of the Company's activities
or products), business plans, prospects, opportunities or other
information of the Company or any of its affiliates. Confidential
Information shall not include information which (i) is or becomes
generally available to the public other than as a result of disclosure by
the Executive in violation of this Section 4.3(b) or (ii) the Executive is
required to disclose under any applicable laws, regulations or directives
of any government agency, tribunal or authority having jurisdiction in the
matter or under subpoena or other process of law. The Executive
understands and agrees that the rights and obligations set forth in this
Section 4.3 (b) shall extend beyond the Term.
(c) Exclusive Property. The Executive confirms that all
Confidential Information is and shall remain the exclusive property of the
Company or any of its affiliates. All business records, papers and
documents kept or made by the Executive relating to the business of the
Company (or any of its affiliates) or any Confidential Information shall
be and remain the property of the Company. Upon termination of employment
with the Company or upon the request of the Company at any time, the
Executive shall promptly deliver to the Company, and shall not without the
prior express written consent of the Company retain, any and all copies of
(i) any written materials not previously made available to the public, or
(ii) records and documents made by the Executive or coming into his
possession concerning any Confidential Information or the business or
affairs of the Company or any predecessors to its business, or any of its
affiliates. The Executive understands and agrees that the rights and
obligations set forth in this Section 4.3(c) shall extend beyond the Term.
(d) Injunctive Relief. Without intending to limit the remedies
available to the Company, the Executive acknowledges that a breach of any
of the covenants contained in this Section 4.3 may result in material
irreparable injury to the Company or its affiliates for which there is no
adequate remedy at law, that it will not be possible to measure damages
for such injuries precisely and that, in the event of such a breach or
threat thereof, the Company shall be entitled to obtain a temporary
restraining order and/or a preliminary or permanent injunction restraining
the Executive from engaging in activities prohibited by this Section 4.3
or such other relief as may be required to specifically enforce any of the
covenants in this Section 4.3.
5. Compensation Other Than Severance Payments.
5.1 Disability. Following a Potential Change in Control and
during the Term, during any period that the Executive fails to perform the
Executive's full-time duties with the Company as a result of incapacity
due to physical or mental illness, the Executive's full salary shall be
paid to the Executive by the Company at a rate no less than the rate in
effect at the commencement of any such disability period, together with
all compensation and benefits payable to the Executive under the terms of
any compensation or benefit plan, program or arrangement maintained by the
Company or its subsidiaries during such disability period, until the
Executive's employment is terminated by the Company for Disability.
5.2 Base Salary. If the Executive's employment shall be
terminated for any reason following a Potential Change in Control and
during the Term, the Executive's full salary shall be paid to the
Executive by the Company through the Date of Termination (as defined below
in Section 7.2) at the rate in effect at the time the Notice of
Termination is given, together with all compensation and benefits payable
to or with respect to the Executive through the Date of Termination under
the terms of any compensation or benefit plan, program or arrangement
maintained by the Company or its subsidiaries during such period.
5.3 Benefits. If the Executive's employment shall be
terminated for any reason following a Potential Change in Control and
during the Term, the Executive's normal post-termination compensation and
benefits shall be paid to the Executive as such payments become due. Such
post-termination compensation and benefits shall be determined under, and
paid in accordance with, the retirement, health insurance, life insurance
and other compensation or benefit plans, programs and arrangements
maintained by the Company or its affiliates.
6. Severance Payments.
6.1 Severance. The Company shall pay the Executive the
payments and benefits described in this Section 6.1 (the "Severance
Payments") upon the termination of the Executive's employment with the
Company following a Change in Control and during the Term, in addition to
the payments and benefits described in Section 5 hereof, unless such
termination is (i) by the Company for Cause, (ii) by reason of Retirement,
(iii) by the Executive without Good Reason, (iv) due to death, or (v) due
to Disability. In addition, the Executive's employment shall be deemed to
have been terminated following a Change in Control by the Company without
Cause or by the Executive with Good Reason (a) if the Executive reasonably
demonstrates that the Executive's employment was terminated prior to a
Change in Control without Cause (1) at the request of a Person who has
entered into an agreement with the Company the consummation of which will
constitute a Change in Control (or who has taken other steps reasonably
calculated to effect a Change in Control) or (2) otherwise in connection
with, as a result of or in anticipation of a Change in Control, or (b) if
the Executive terminates his employment for Good Reason prior to a Change
in Control and the Executive reasonably demonstrates that the
circumstance(s) or event(s) which constitute such Good Reason occurred (1)
at the request of such Person or (2) otherwise in connection with, as a
result of or in anticipation of a Change in Control. The Executive's
right to terminate the Executive's employment for Good Reason shall not be
affected by the Executive's incapacity due to physical or mental illness.
The Executive's continued employment shall not constitute consent to, or a
waiver of rights with respect to, any act or failure to act constituting
Good Reason hereunder. In the event of the Disability or death of the
Executive after the Date of Termination in respect of any termination
without cause or any termination for Good Reason, payments and benefits
shall be made to the Executive, or the Executive's beneficiaries or legal
representative, as the case may be.
(a) In lieu of any further salary and annual bonus
payments to the Executive for periods subsequent to the Date of
Termination, the Company shall pay to the Executive a lump sum
severance payment, in cash, equal to three (3) or, if less, the
number of years, including fractions, from the Date of
Termination until the Executive reaches the age of sixty-two
(62) years times the sum of (i) the Executive's Annual Base
Salary immediately preceding the Change in Control or, if
higher, the Executive's Annual Base Salary on the Date of
Termination, and (ii) the average annual bonus paid or payable
to the Executive with respect to the three (3) years (or portion
thereof with respect to which an annual bonus was paid) prior to
the year in which the Date of Termination occurs.
(b) For a thirty-six (36) month period after the Date
of Termination, or if sooner, until the Executive reaches the
age of sixty-two (62) years, the Company shall arrange to
provide the Executive with life, disability, accident and health
insurance benefits substantially similar (and at the same cost)
to those that the Executive is receiving immediately prior to
any related Potential Change in Control or the receipt of the
Notice of Termination (without giving effect to any reduction in
such benefits subsequent to a Change in Control which reduction
constitutes Good Reason), whichever is greater. Benefits
otherwise receivable by the Executive pursuant to this Section
6.1(b) shall be reduced to the extent comparable benefits are
actually received by or made available to the Executive without
cost during such period following the Executive's termination of
employment (and any such benefits actually received by the
Executive shall be reported to the Company by the Executive).
(c) The Executive shall receive, at the expense of the
Company, outplacement services, on an individualized basis at a level
of service commensurate with the Executive's status with the Company
immediately prior to the Change in Control (or, if higher,
immediately prior to the termination of the Executive's employment),
provided by a nationally recognized executive placement firm selected
by the Executive and reasonably satisfactory to the Company; provided
that the cost to the Company of such services shall not exceed 15% of
the Executive's Annual Base Salary in effect immediately prior to the
Change in Control.
(d) All outstanding stock options previously granted to
the Executive shall become immediately 100% vested and exercisable,
and all shares of restricted stock shall become immediately 100%
vested and all forfeiture restrictions thereon shall lapse. Such
accelerated and vested options shall be exercisable for the remainder
of the term of such option, as set forth in the Executive's related
stock option agreement (without regard to any truncation of such
period therein, or under any plan or arrangement maintained by the
Company,on account of any termination of the Executive's employment).
6.2 Code Section 280G Reduction. Notwithstanding any other
provisions of this Agreement or of any other agreement, contract,
understanding, plan or program entered into or maintained by the Company,
if any payment or benefit received or to be received by the Executive in
connection with a Change in Control or the termination of the Executive's
employment (whether pursuant to the terms of this Agreement or any other
plan, arrangement or agreement with (a) the Company or any affiliate,
parent or subsidiary of the Company, (b) any Person whose actions result
in a Change in Control, or (c) any Person affiliated with the Company)
(all such payments and/or benefits, including the payments and benefits,
if any, under this Section 6, being hereinafter referred to as the "Total
Payments") would subject the Executive to the excise tax imposed under
Section 4999 of the Code, on any successor section thereto (the "Excise
Tax"), and if the amount of such Total Payments, reduced by all federal,
state and local taxes applicable with respect thereto, including without
limitation the Excise Tax, is less than the amount of Total Payments which
would otherwise be payable to the Executive, after all such taxes, without
the imposition of the Excise Tax, then, to the extent necessary to
eliminate the imposition of the Excise Tax (after taking into account any
reduction in the Total Payments provided by reason of Section 280G of the
Code under plan, arrangement or agreement), (i) the cash and non-cash
payments and benefits payable under this Agreement shall first be reduced
(but not below zero), and (ii) all other cash and non-cash payments and
benefits shall next be reduced (but not below zero); but only if, by
reason of any such reduction, the Total Payments with any such reduction,
after all such taxes, shall exceed the Total Payments without any such
reduction, after all such taxes. For purposes of this Section 6.2, (A) no
portion of the Total Payments the receipt or enjoyment of which the
Executive shall have effectively waived in writing prior to the Date of
Termination shall be taken into account, (B) no portion of the Total
Payments shall be taken into account which in the opinion of tax counsel
selected in good faith by the Company does not constitute a "parachute
payment" within the meaning of Section 280G(b)(2) of the Code, including
(without limitation) by reason of Section 280G(b)(4)(A) of the Code, (C)
the payments and/or benefits under this Agreement shall be reduced only to
the extent necessary so that the Total Payments (other than those referred
to in clauses (A) and (B) above) in their entirety constitute reasonable
compensation for services actually rendered within the meaning of Section
280G(b)(4)(B) of the Code or are otherwise not subject to disallowance as
deductions, in the opinion of the tax counsel referred to above in clause
(B), and (D) the value of any non-cash payment or benefit or any deferred
payment or benefit included in the Total Payments shall be determined by
the Company's independent auditors in accordance with the principles of
Sections 280G(d)(3) and (4) of the Code. Except as otherwise provided
above, the foregoing calculations and determinations shall be made in good
faith by the Company and the Executive. If no agreement on the
calculations is reached, then the Executive and the Company will cooperate
and attempt to agree to the selection of an accounting firm to make the
calculations. If no agreement can be reached regarding the selection of
an accounting firm, the Company will select in good faith a prominent
national accounting firm that has no current or recent business
relationship with the Company. The Company shall pay all costs and
expenses incurred in connection with any such calculations or
determinations. Any calculations or determinations made in accordance
with this Section 6.2 shall be conclusive and binding on all parties.
6.3 Date of Payment. The payments provided for in Section
6.1.(a) and Section 6.2 hereof shall , unless deferred pursuant to the
last sentence of this Section 6.3, be made not later than the fifteenth
(15th) day following the Date of Termination; provided, however, that if
the amounts of such payments cannot be finally determined on or before
such day, the Company shall pay to the Executive (subject to the last
sentence of this Section 6.3) on such day an estimate, as determined in
good faith by the Company, of the minimum amount of such payments to which
the Executive is likely to be entitled to and shall pay the remainder of
such payments (together with interest at the rate provided in section
1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined
but in no event later than the thirtieth (30th) day after the Date of
Termination. In the event that the amount of the estimated payments
exceeds the amount subsequently determined to have been due, such excess
shall constitute a loan by the Company to the Executive, payable on the
tenth (10th) business day after demand by the Company (together with
interest at the rate provided in section 1274(b)(2)(B) of the Code). At
the time that payments are made or would have been made, disregarding for
this purpose only, any deferral effected by the Executive, under this
Section 6.3, the Company shall provide the Executive with a detailed
written statement setting forth the manner in which such payments were
calculated and the basis for such calculations including, without
limitation, any opinions or other advice the Company has received from
outside counsel, auditors or consultants (and any such opinions or advice
which are in writing shall be attached to the statement). The Executive
may irrevocably elect, in a writing delivered to the Company no later than
the last day of the calendar year preceding the calendar year in which
occurs the Change in Control, to defer the receipt of any payment to which
the Executive may become entitled to under Section 6.1 of this Agreement
for the period of time specified in such writing.
6.4 Legal Costs. The Company shall also reimburse the
Executive for reasonable legal fees and expenses incurred in good faith by
the Executive as a result of any dispute with the Company or any affiliate
of the Company regarding the payment of any benefit provided for in this
Agreement (including, but not limited to, all such fees and expenses
incurred in disputing any termination or in seeking in good faith to
obtain or enforce any benefit or right provided by this Agreement or in
connection with any tax audit or proceeding to the extent attributable to
the application of section 4999 of the Code) 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. Such payments shall, in the aggregate, not
exceed $10,000 and shall be made within ten (10) business days after
delivery of the Executive's written requests for payment accompanied by
such evidence of fees and expenses incurred as the Company reasonably may
require.
7. Termination Procedures and Compensation During Dispute.
7.1 Notice of Termination. After a Change in Control and
during the Term, any purported termination of the Executive's employment
with the Company (other than by reason of death) shall be communicated by
written Notice of Termination from one party hereto to the other party
hereto in accordance with Section 10 hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall
indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment
with the Company under the provision so indicated. Further, a Notice of
Termination for Cause is required to include a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters (3/4) of
the entire membership of the Board at a meeting of the Board which was
called and held for the purpose of considering such termination (which
meeting may be a regular meeting of the Board where prior notice of
consideration of such termination is given to members of the Board)
finding that, in the good faith opinion of the Board, the Executive
engaged in conduct set forth in clause (i) or (ii) of the definition of
Cause herein, and specifying the particulars thereof in detail. For
purposes of this Agreement, any purported termination not effected in
accordance with this Section 7.1 shall not be considered effective.
7.2 Date of Termination. "Date of Termination", with respect
to any purported termination of the Executive's employment after a Change
in Control and during the Term, shall mean (i) if the Executive's
employment is terminated for Disability, thirty (30) days after Notice of
Termination is given (provided that the Executive shall not have returned
to the full-time performance of the Executive's duties during such thirty
(30) day period), and (ii) if the Executive's employment is terminated for
any other reason, the date specified in the Notice of Termination (which,
in the case of a termination by the Company, shall not be less than thirty
(30) days (except in the case of a termination for Cause) and, in the case
of a termination by the Executive, shall not be less than fifteen (15)
days nor more than sixty (60) days, respectively, after the date such
Notice of Termination is given).
7.3 Dispute Concerning Termination. If within fifteen (15)
days after any Notice of Termination is given, or, if later, prior to the
Date of Termination (as determined without regard to this Section 7.3),
the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, the Date of Termination
shall be the date on which the dispute is finally resolved either by
mutual written agreement of the parties or by a final judgment, order or
decree of a court of competent jurisdiction (which is not appealable or
with respect to which the time for appeal therefrom has expired and no
appeal has been perfected); provided, however, that the Date of
Termination shall be extended by a notice of dispute only if the basis for
such notice is reasonable, such notice is given in good faith and the
party giving such notice pursues the resolution of such dispute with
reasonable diligence.
7.4 Compensation During Dispute. If a purported termination
occurs following a Change in Control and during the Term, and such
termination is disputed in accordance with Section 7.3 above, the Company
shall continue to pay the Executive the full compensation (including,
without limitation, Annual Base Salary and Annual Bonus) in effect at the
time of any related Potential Change in Control or when the notice giving
rise to the dispute was given (whichever is greater) and continue the
Executive as a participant in all compensation, incentive, pension and
welfare benefit and insurance plans in which the Executive was
participating at the time of any Potential Change in Control or when the
notice giving rise to the dispute was given, whichever is greater, until
the dispute is finally resolved in accordance with Section 7.3 hereof.
Amounts paid under this Section 7.4 are in addition to all other amounts
due under this Agreement (other than those due under Section 5.2 hereof)
and shall not be offset against or reduce any other amounts due under this
Agreement or any other plan, agreement or arrangement.
8. No Mitigation. The Company agrees that, if the Executive's
employment is terminated during the Term, the Executive is not required to
seek other employment or to attempt in any way to reduce any amounts
payable to the Executive by the Company pursuant to Section 6 or Section
7.4. Further, the amount of any payment or benefit provided for in
Section 6 (other than pursuant to Section 6.1.(b)) or Section 7.4 shall
not be reduced by any compensation earned by the Executive as the result
of employment by another employer, by retirement benefits, or offset
against any amount claimed to be owed by the Executive to the Company or
any of its subsidiaries, or otherwise.
9. Successors; Binding Agreement.
9.1 Successors. In addition to any obligations imposed by law
upon any successor to the Company, the Company will 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 expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. Failure of the Company
to obtain such assumption and agreement prior to the effectiveness of any
such succession shall be a breach of this Agreement and shall entitle the
Executive to compensation from the Company in the same amount and on the
same terms as the Executive would be entitled to hereunder if the
Executive were to terminate employment with the Company for Good Reason
after a Change in Control, except that, for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall
be deemed the Date of Termination.
9.2 Binding Agreement. This Agreement shall inure to the
benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive shall die while any
amount would still be payable to the Executive hereunder (other than
amounts which, by their terms, terminate upon the death of the Executive)
if the Executive had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this
Agreement to the beneficiary (or beneficiaries) designated by the
Executive from time to time in accordance with the procedures for notice
set out in Section 10; provided, however, that if there shall be no
effective designation of beneficiary by the Executive, such amounts shall
be paid to the executors, personal representatives or administrators of
the Executive's estate.
10. Notices; Other Communications. For the purpose of this
Agreement, notices and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have been duly given
when delivered or mailed by United States certified mail, return receipt
requested, postage prepaid, addressed to the respective addresses set
forth below, or to such other address as either party may have furnished
to the other in writing in accordance herewith, except that notice of
change of address shall be effective only upon actual receipt:
To the Company:
Interstate Power Company
1000 Main Street
P.O. Box 769
Dubuque, Iowa 52004-0769
Attention: Corporate Secretary
To the Executive:
Mr. Dale R. Sharp
3059 Spring Valley Road
Dubuque, Iowa 52001
11. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge (i) is
agreed to in writing and signed by the Executive and such officer as may
be specifically designated by the Board, or (ii) is (a) approved by such
officer as may be specifically designated by the Board, (b) effective only
in respect of any Change in Control resulting from the proposed merger
transaction involving the Company, IES Industries Inc. and WPL Holdings,
Inc., and (c) applicable to all members of the senior management of the
Company who have executed an agreement substantially similar to this
Agreement. In respect of any proposed waiver, modification, or discharge
which meets the conditions specified above in Section 11(ii), the
Executive hereby irrevocably appoints the Chairman of the Board of the
Company to be the Executive's attorney-in-fact for the limited purpose of
entering into, on behalf of the Executive, any form of waiver,
modification or discharge necessary to effect any such waiver,
modification or discharge meeting the conditions of this Section 11(ii).
No waiver by either party hereto at any time of any breach by the other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior
or subsequent time.
No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement. The
validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of Iowa without regard to the
principles of conflict of laws thereof. All references to sections of the
Exchange Act or the Code (or the rules and/or regulations under either)
shall be deemed also to refer to and include any successor provisions to
such sections. Any payments provided for hereunder shall be paid net of
any applicable withholding required under federal, state or local law and
any additional withholding to which the Executive has agreed. The rights
and obligations of the Company and the Executive under this Agreement
shall survive the expiration of the Term and the Employment Period.
12. Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement, all of which shall remain in full force
and effect.
13. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
14. No Limitation. 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 other 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 as in effect from time to
time except as explicitly modified by this Agreement.
15. Other Agreements. This Agreement contains the entire agreement
between the parties concerning the subject matter hereof and supersedes
all prior agreements understandings, discussions, negotiations and
undertakings, whether written or oral, between the parties with respect
thereto.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.
INTERSTATE POWER COMPANY
By: /s/ Wayne H. Stoppelmoor
Title: Chairman, President and Chief
Executive Officer
/s/ Dale R. Sharp
Dale R. Sharp
EX-10.9
AGREEMENT
THIS AGREEMENT, dated as of November 8, 1995 (this "Agreement"),
is made by and between Interstate Power Company, a Delaware corporation,
having its principal offices at 1000 Main Street, Dubuque, Iowa 52004-0769
(the "Company"), and Mr. Wayne H. Stoppelmoor residing at 2215 Aspen
Drive, Dubuque, Iowa 52001 (the "Executive").
WHEREAS, the Company considers it essential to the best
interests of its shareholders to foster the continued employment of key
executive management personnel; and
WHEREAS, the Board of Directors of the Company (the "Board")
recognizes that, as is the case with many publicly-held corporations, the
possibility of a Change in Control (as defined in Section 1.3 below) of
the Company exists from time to time and that such possibility, and the
uncertainty, instability and questions that it may raise for and among key
executive management personnel, may result in the premature departure or
significant distraction of such management personnel to the material
detriment of the Company and its shareholders; and
WHEREAS, the Board has determined that appropriate steps should
be taken to reinforce, focus and encourage the continued attention and
dedication of key members of the executive management of the Company and
its subsidiaries, including (without limitation) the Executive, to their
assigned duties without distraction in the face of potentially disturbing
or unsettling circumstances arising from the possibility of a Change in
Control of the Company;
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and the Executive hereby agree as
follows:
1. Definitions. For purposes of this Agreement, the following
terms shall have the meanings set forth below:
1.1 "Annual Base Salary" shall mean the Executive's rate of
regular basic annual compensation prior to any reduction under a salary
reduction agreement pursuant to section 401(k) or section 125 of the
Internal Revenue Code of 1986, as amended from time to time (the "Code")
or any deferred compensation arrangements, and shall not include, without
limitation, cost of living allowances, fees, retainers, reimbursements,
bonuses, incentive awards, prizes or similar payments.
1.2 "Cause" shall mean:
(i) the willful and continued failure by the Executive to
substantially perform the Executive's duties with the Company, or a
subsidiary of the Company, as such duties may reasonably be defined
from time to time by the Board (or a duly authorized committee
thereof), or to abide by the reasonable written policies of the
Company or of the Executive's primary employer (other than any such
failure resulting from the Executive's incapacity due to physical or
mental illness) after a written demand for substantial performance is
delivered to the Executive by the Board, which demand specifically
identifies the manner in which the Board believes that the Executive
has not substantially performed the Executive's duties or has not
abided by any reasonable written policies, or
(ii) the continued and willful engaging by the Executive in
conduct which is demonstrably and materially injurious to the Company
or its subsidiaries, monetarily or otherwise; or
(iii) the Executive's conviction of, or plea of no contest
to, a felony.
For purposes of clauses (i) and (ii) of this definition, no act, or
failure to act, on the Executive's part shall be deemed "willful" unless
done, or omitted to be done, by the Executive in bad faith and without
reasonable belief that the Executive's act, or failure to act, was in the
best interest of the Company or its subsidiaries. Any act, or failure to
act, based upon authority given pursuant to a resolution duly adopted by
the Board or upon the instructions of the Board (or a committee thereof)
or based upon the advice of counsel for the Company shall be conclusively
presumed to be done, or omitted to be done, by the Executive in good faith
and in the best interests of the Company and its subsidiaries. The
cessation of employment of the Executive shall not be deemed to be for
Cause unless and until there shall have been delivered to the Executive a
copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership of the Board at a meeting of
the Board called and held for such purpose (after reasonable notice of any
such meeting is provided to the Executive and the Executive is given an
opportunity, together with counsel, to be heard before the Board) finding
that, in the good faith opinion of the Board, the Executive has acted in a
manner described in clause (i) or (ii) above and specifying the
particulars thereof in detail.
1.3 "Change in Control" shall mean and be deemed to have
occurred if:
(i) any Person is or becomes the Beneficial Owner (as
that term is defined in Rule 13d-3 under the Securities Exchange
Act of 1934 (the "Exchange Act")), directly or indirectly, of
securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired
directly from the Company) representing twenty-five percent
(25%) or more of the combined voting power of the Company's then
outstanding securities; or
(ii) during any period of twenty-four (24)
consecutive months (not including any period prior to November
1, 1995), individuals who at the beginning of such period
constitute the Board and any new director (other than a director
designated by a Person who has entered into an agreement with
the Company to effect a transaction described in clause (i),
(iii) or (iv) of this definition or any such individual whose
initial assumption of office occurs as a result of either an
actual or threatened election contest (as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act) or other actual or threatened solicitation of proxies or
consents) whose election by the Board or nomination for election
by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of such period or whose
election or nomination for election was previously so approved,
cease for any reason to constitute a majority of the Board; or
(iii) the shareholders of the Company approve a
reorganization, merger or consolidation, other than a
reorganization, merger or consolidation with respect to which
all or substantially all of the individuals and entities who
were Beneficial Owners, immediately prior to such
reorganization, merger or consolidation, of the combined voting
power of the Company's then outstanding securities beneficially
own, directly or indirectly, immediately after such
reorganization, merger or consolidation, more then seventy-five
percent (75%) of the combined voting power of the securities of
the corporation resulting from such reorganization, merger or
consolidation in substantially the same proportions as their
respective ownership, immediately prior to such reorganization,
merger or consolidation, of the combined voting power of the
Company's securities; or
(iv) the shareholders of the Company approve (a) the
sale or disposition by the Company (other than to a subsidiary
of the Company) of all or substantially all of the assets of the
Company (or any such sale or disposition is effected through
condemnation proceedings), or (b) a complete liquidation or
dissolution of the Company.
Notwithstanding the foregoing, a Change in Control shall not include any
event, circumstance or transaction which results from the action
(excluding the Executive's employment activities with the Company or any
of its affiliates) of any Person or group of Persons which includes, is
directly affiliated with or is wholly or partly controlled by one or more
executive officers of the Company and in which the Executive actively
participates.
1.4 "Company" shall include Interstate Power Company and any
successor to its business and/or assets which assumes (either expressly,
by operation of law or otherwise) and/or agrees to perform this Agreement
by operation of law or otherwise (except in determining, under Section 1.3
hereof, whether or not any Change in Control of the Company has occurred
in connection with such succession).
1.5 "Disability" shall mean and be deemed the reason for the
termination by the Company of the Executive's employment, if, as a result
of the Executive's incapacity due to physical or mental illness, (i) the
Executive shall have been absent from the full-time performance of the
Executive's duties with the Company for a period of six (6) consecutive
months, (ii) the Company gives the Executive a Notice of Termination for
Disability, and (iii) within thirty (30) days after such Notice of
Termination is given, the Executive does not return to the full-time
performance of the Executive's duties.
1.6 "Employment Period" shall mean the period commencing on the
date of any Change in Control until the earliest to occur of (i) the date
which is thirty-six (36) months from the date of any such Change in
Control, (ii) the date of termination by the Executive of the Executive's
employment for any reason, (iii) the termination by the Company of the
Executive's employment for any reason or (iv) the Executive's attaining
age sixty-two (62).
1.7 "Good Reason" shall mean the occurrence (without the
Executive's prior express written consent) of any one of the following
acts, or failures to act, unless, in the case of any act or failure to act
described in clauses (i), (iv), (v) or (vi) below, such act or failure to
act is corrected by the Company prior to the Date of Termination specified
in the Notice of Termination given by the Executive in respect thereof not
later than six (6) months after the occurrence of the event that serves as
the basis for the Notice of Termination:
(i) the assignment to the Executive of any duties or
responsibilities inconsistent with those described in Section
3.2 below or with the Executive's position(s) or status
(including, without limitation, offices, titles, and reporting
relationships) as an executive officer of the Company and its
subsidiaries or a substantial adverse alteration in the nature
of the Executive's authority, duties, responsibilities, position
or status from those described in Section 3.2 below or
otherwise;
(ii) a reduction in the Executive's Annual Base
Salary or annual bonus opportunity as in effect on the date of
this Agreement or as the same may be increased at any time
thereafter and from time to time;
(iii) the relocation of the Company's principal
executive offices to a location more than thirty (30) miles from
its location on the date of this Agreement (or, if different,
more than thirty (30) miles from where such offices are located
immediately prior to any Potential Change in Control) or the
Company's requiring the Executive to be based anywhere other
than the Company's principal executive offices except for
required travel on the Company's business to an extent
substantially consistent with the Executive's business travel
obligations as of the date of this Agreement;
(iv) any failure by the Company to comply with any of
the provisions of this Agreement, other than an 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;
(v) the failure by the Company or a subsidiary to
continue in effect any pension benefit or incentive or deferred
compensation plan in which the Executive participates
immediately prior to any Potential Change in Control which is
material to the Executive's total compensation, unless an
equitable arrangement (embodied in an ongoing substitute or
alternative plan or arrangement) has been made with respect to
such plan, or the failure by the Company or a subsidiary to
continue the Executive's participation therein (or in such
substitute or alternative plan or arrangement) on a basis not
materially less favorable, both in terms of the amount of
benefits provided and the level of the Executive's participation
relative to other participants, as existed at the time of the
Potential Change in Control;
(vi) the failure by the Company or a subsidiary to
continue to provide the Executive with health and welfare
benefits substantially similar to those enjoyed by the Executive
under any of the Company's or a subsidiary's retirement, life
insurance, medical, health and accident, or disability or
similar plans in which the Executive was participating at the
time of any Potential Change in Control, the taking of any
action by the Company or a subsidiary which would directly or
indirectly materially reduce any of such benefits or deprive the
Executive of any material fringe benefit enjoyed by the
Executive at the time of the Potential Change in Control, or the
failure by the Company or a subsidiary to provide the Executive
with the number of paid vacation days to which the Executive is
entitled in accordance with the Company's or a subsidiary's
normal vacation policy in effect at the time of the Potential
Change in Control;
(vii) any purported termination of the Executive's
employment which is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 7.1; and/or
(viii) the failure of the Company to obtain a written
agreement reasonably satisfactory to the Executive from any successor
to the Company (as described in Section 9.1) to perform this
Agreement.
1.8 "Person" shall have the meaning ascribed thereto in Section
3(a)(9) of the Exchange Act, as modified, applied and used in Sections
13(d) and 14(d) thereof; provided, however, a Person shall not include (i)
the Company or any of its subsidiaries, (ii) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any of
its subsidiaries (in its capacity as such), (iii) an underwriter
temporarily holding securities pursuant to an offering of such securities,
or (iv) a corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same character and proportions as
their ownership of stock of the Company.
1.9 "Potential Change in Control" shall mean and be deemed to
have occurred if:
(i) the Company enters into an agreement, the
consummation of which would result in the occurrence of a Change
in Control;
(ii) the Company or any Person publicly announces an
intention to take actions which, if consummated, would
constitute a Change in Control; and/or
(iii) any Person becomes the Beneficial Owner,
directly or indirectly, of securities of the Company
representing ten percent (10%) or more of the combined voting
power of the Company's then outstanding securities, or any
Person increases such Person's beneficial ownership of such
securities by five (5) percentage points or more over the
percentage so owned by such Person on November 1, 1995.
1.10 "Retirement" shall mean and be deemed the reason for the
termination by the Executive of the Executive's employment if such
employment is terminated in accordance with the Company's normal
retirement policy for those aged 62 and older, not including early
retirement or so-called "window period" retirements, generally applicable
to its officers, as in effect immediately prior to any Potential Change in
Control.
2. Term of this Agreement. This Agreement shall commence on the
date hereof and shall continue in effect through December 31, 1998;
provided, however, that commencing on January 1, 1999 and each January 1
thereafter, the term of this Agreement shall automatically be extended for
one additional year unless, not later than June 30 of the preceding year,
the Company or the Executive shall have given written notice to the other
not to extend this Agreement or a Change in Control shall have occurred
prior to any such January 1; provided, further, however, that if a Change
in Control shall have occurred during the term of this Agreement, this
Agreement shall continue in effect for a period of not less than thirty-
six (36) months beyond the month in which such Change in Control occurred
(the "Term"). Notwithstanding the foregoing provisions of this Section 2,
the Term shall terminate upon the Executive's attaining the age of
sixty-two (62) years (or the date on which the Executive would have
attained age 62 if the Executive had survived).
3. Company's Covenants.
3.1 Severance Payments. In order to induce the Executive to
remain in the employ of the Company and/or one or more of its subsidiaries
and in consideration of the Executive's covenants set forth in Section 4
below, the Company agrees, under the terms and conditions described herein
and in addition to the amounts payable to the Executive under Section 5
below, to pay the Executive the "Severance Payments" described in Section
6.1 below and the other payments and benefits described herein in the
event the Executive's employment with the Company is terminated during the
Employment Period or under the other circumstances set forth in Section
6.1 below.
3.2 Position and Duties. During the Employment Period, (a) the
Executive's position (including status, offices, titles and reporting
relationships), authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of those
held, exercised and assigned at any time during the one hundred eighty
(180) day period immediately preceding any related Potential Change in
Control, and (b) the Executive's services shall be performed at the
location where the Executive was employed immediately preceding any such
Potential Change in Control, or any office or location less than thirty
(30) miles from such location.
3.3 Base Salary. During the Employment Period, the Executive
shall receive Annual Base Salary at least equal to twelve (12) times the
highest monthly base salary paid or payable, including (without
limitation) any base salary which has been earned but deferred, to the
Executive by the Company and its affiliated companies in respect of the
twelve (12) month period immediately preceding the month in which any
related Potential Change in Control occurs. In addition, Annual Base
Salary shall not be reduced after the occurrence of a Potential Change in
Control. As used in this Agreement, the term "affiliated companies" shall
include any company controlled by, controlling or under common control
with the Company.
3.4 Annual Bonus. In addition to Annual Base Salary, if the
Company adopts an annual bonus program for officers during the Employment
Period (the "Annual Bonus") the Executive shall be entitled to tee in such
Annual Bonus program on a basis equivalent to other executive officers of
the Company. Each 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 shall elect to defer the
receipt of such Annual Bonus in accordance with rules established by the
Company for that purpose.
3.5 Incentive, Savings and Retirement Plans. During the
Employment Period, the Executive shall be entitled to participate in all
incentive, savings and retirement plans, practices, policies and programs
applicable generally to other peer executives of the Company and its
subsidiaries, but in no event shall such plans, practices, policies and
programs provide the Executive with incentive opportunities (measured with
respect to both regular and special incentive opportunities, to the
extent, if any, that such distinction is applicable), 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 one hundred eighty (180) day period immediately preceding any related
Potential Change in Control or if more favorable to the Executive, those
provided generally at any time thereafter to other peer executives of the
Company and its affiliated companies.
3.6 Welfare Benefit Plans. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be
entitled to participate in and shall receive all benefits under all of the
health and welfare benefit plans, practices, policies and programs
provided by the Company and its affiliated companies (including, without
limitation, medical, prescription, dental, disability, employee life,
group life, accidental death and travel accident insurance plans and
programs) to the extent (and at the same cost) applicable generally to
other peer executives of the Company and its subsidiaries, but in no event
shall such plans, practices, policies and programs provide the Executive
with benefits that 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 one hundred eighty (180) day period
immediately preceding any related Potential Change in Control or, if more
favorable to the Executive, those provided generally at any time
thereafter to other peer executives of the Company and its affiliated
companies.
3.7 Expenses. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all reasonable
business 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
one hundred eighty (180) day period immediately preceding any related
Potential Change in Control 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.
3.8 Office Support; Perquisites. During the Employment Period,
the Executive shall be entitled to a private office, secretarial support
and other facilities, perquisites and programs to enable the Executive to
be able to discharge the Executive's responsibilities hereunder 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 one hundred eighty (180) day period immediately
preceding any related Potential Change in Control 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.
3.9 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 one
hundred eighty (180) day period immediately preceding any related
Potential Change in Control 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.
4. The Executive's Covenants.
4.1 Employment. The Executive agrees that, subject to the
terms and conditions of this Agreement, in the event of a Change in
Control during the Term the Executive will remain in the employ of the
Company during any related Employment Period.
4.2 Time and Attention. During the Employment Period, and
excluding any periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote reasonable attention and time
during normal business hours to the business and affairs of the Company
and to use the Executive's reasonable best efforts to perform faithfully
and efficiently the responsibilities and duties assigned to the Executive
hereunder. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (i) serve on corporate, civic or
charitable boards or committees, (ii) deliver lectures and fulfill
speaking engagements and (iii) manage personal investments, so long as
such activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company and its
subsidiaries 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 any Potential Change in Control, the
reinstatement or continued conduct of such activities (or the
reinstatement or conduct of activities similar in nature and scope
thereto) subsequent to any related Potential Change in Control shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company and its subsidiaries.
4.3. Non-interference; Confidential Information
(a) No Interference. For so long as the Executive is employed
by the Company, and for a period of two (2) years thereafter, the
Executive shall not, whether for his own account or for the account of any
other individual, partnership, firm, corporation or other business
organization (other than the Company or one of its affiliates),
intentionally solicit, endeavor to entice away from the Company (or any of
its affiliates), or otherwise interfere with the relationship of the
Company (or any of its affiliates) with, any person who is employed by or
otherwise engaged to perform services for the Company (or any of its
affiliates) including, but not limited to, any independent representatives
or organizations, or any person or entity that is a customer of the
Company (or any of its affiliates). The Executive understands and agrees
that the rights and obligations set forth in this Section 4.3(a) could
extend beyond the Term.
(b) Confidential Information. The Executive covenants and
agrees with the Company that he will not at any time, during or after
employment with the Company, except in performance of the Executive's
obligations to the Company or with the prior express written consent of
the Board of Directors, directly or indirectly, intentionally or
unintentionally, disclose any Confidential Information that he may learn
or has learned by reason of his employment or association with the
Company, or any predecessors to its business, or use any such information
for his own personal benefit or gain. The term "Confidential Information"
includes, without limitation, information not previously disclosed to the
public or to the trade by the Company's management with respect to the
products, facilities and methods, trade secrets and other intellectual
property, systems, procedures, manuals, confidential reports, fee or rate
information, customer lists, financial information (including the
revenues, costs or profits associated with any of the Company's activities
or products), business plans, prospects, opportunities or other
information of the Company or any of its affiliates. Confidential
Information shall not include information which (i) is or becomes
generally available to the public other than as a result of disclosure by
the Executive in violation of this Section 4.3(b) or (ii) the Executive is
required to disclose under any applicable laws, regulations or directives
of any government agency, tribunal or authority having jurisdiction in the
matter or under subpoena or other process of law. The Executive
understands and agrees that the rights and obligations set forth in this
Section 4.3 (b) shall extend beyond the Term.
(c) Exclusive Property. The Executive confirms that all
Confidential Information is and shall remain the exclusive property of the
Company or any of its affiliates. All business records, papers and
documents kept or made by the Executive relating to the business of the
Company (or any of its affiliates) or any Confidential Information shall
be and remain the property of the Company. Upon termination of employment
with the Company or upon the request of the Company at any time, the
Executive shall promptly deliver to the Company, and shall not without the
prior express written consent of the Company retain, any and all copies of
(i) any written materials not previously made available to the public, or
(ii) records and documents made by the Executive or coming into his
possession concerning any Confidential Information or the business or
affairs of the Company or any predecessors to its business, or any of its
affiliates. The Executive understands and agrees that the rights and
obligations set forth in this Section 4.3(c) shall extend beyond the Term.
(d) Injunctive Relief. Without intending to limit the remedies
available to the Company, the Executive acknowledges that a breach of any
of the covenants contained in this Section 4.3 may result in material
irreparable injury to the Company or its affiliates for which there is no
adequate remedy at law, that it will not be possible to measure damages
for such injuries precisely and that, in the event of such a breach or
threat thereof, the Company shall be entitled to obtain a temporary
restraining order and/or a preliminary or permanent injunction restraining
the Executive from engaging in activities prohibited by this Section 4.3
or such other relief as may be required to specifically enforce any of the
covenants in this Section 4.3.
5. Compensation Other Than Severance Payments.
5.1 Disability. Following a Potential Change in Control and
during the Term, during any period that the Executive fails to perform the
Executive's full-time duties with the Company as a result of incapacity
due to physical or mental illness, the Executive's full salary shall be
paid to the Executive by the Company at a rate no less than the rate in
effect at the commencement of any such disability period, together with
all compensation and benefits payable to the Executive under the terms of
any compensation or benefit plan, program or arrangement maintained by the
Company or its subsidiaries during such disability period, until the
Executive's employment is terminated by the Company for Disability.
5.2 Base Salary. If the Executive's employment shall be
terminated for any reason following a Potential Change in Control and
during the Term, the Executive's full salary shall be paid to the
Executive by the Company through the Date of Termination (as defined below
in Section 7.2) at the rate in effect at the time the Notice of
Termination is given, together with all compensation and benefits payable
to or with respect to the Executive through the Date of Termination under
the terms of any compensation or benefit plan, program or arrangement
maintained by the Company or its subsidiaries during such period.
5.3 Benefits. If the Executive's employment shall be
terminated for any reason following a Potential Change in Control and
during the Term, the Executive's normal post-termination compensation and
benefits shall be paid to the Executive as such payments become due. Such
post-termination compensation and benefits shall be determined under, and
paid in accordance with, the retirement, health insurance, life insurance
and other compensation or benefit plans, programs and arrangements
maintained by the Company or its affiliates.
6. Severance Payments.
6.1 Severance. The Company shall pay the Executive the
payments and benefits described in this Section 6.1 (the "Severance
Payments") upon the termination of the Executive's employment with the
Company following a Change in Control and during the Term, in addition to
the payments and benefits described in Section 5 hereof, unless such
termination is (i) by the Company for Cause, (ii) by reason of Retirement,
(iii) by the Executive without Good Reason, (iv) due to death, or (v) due
to Disability. In addition, the Executive's employment shall be deemed to
have been terminated following a Change in Control by the Company without
Cause or by the Executive with Good Reason (a) if the Executive reasonably
demonstrates that the Executive's employment was terminated prior to a
Change in Control without Cause (1) at the request of a Person who has
entered into an agreement with the Company the consummation of which will
constitute a Change in Control (or who has taken other steps reasonably
calculated to effect a Change in Control) or (2) otherwise in connection
with, as a result of or in anticipation of a Change in Control, or (b) if
the Executive terminates his employment for Good Reason prior to a Change
in Control and the Executive reasonably demonstrates that the
circumstance(s) or event(s) which constitute such Good Reason occurred (1)
at the request of such Person or (2) otherwise in connection with, as a
result of or in anticipation of a Change in Control. The Executive's
right to terminate the Executive's employment for Good Reason shall not be
affected by the Executive's incapacity due to physical or mental illness.
The Executive's continued employment shall not constitute consent to, or a
waiver of rights with respect to, any act or failure to act constituting
Good Reason hereunder. In the event of the Disability or death of the
Executive after the Date of Termination in respect of any termination
without cause or any termination for Good Reason, payments and benefits
shall be made to the Executive, or the Executive's beneficiaries or legal
representative, as the case may be.
(a) In lieu of any further salary and annual bonus
payments to the Executive for periods subsequent to the Date of
Termination, the Company shall pay to the Executive a lump sum
severance payment, in cash, equal to three (3) or, if less, the
number of years, including fractions, from the Date of
Termination until the Executive reaches the age of sixty-two
(62) years times the sum of (i) the Executive's Annual Base
Salary immediately preceding the Change in Control or, if
higher, the Executive's Annual Base Salary on the Date of
Termination, and (ii) the average annual bonus paid or payable
to the Executive with respect to the three (3) years (or portion
thereof with respect to which an annual bonus was paid) prior to
the year in which the Date of Termination occurs.
(b) For a thirty-six (36) month period after the Date
of Termination, or if sooner, until the Executive reaches the
age of sixty-two (62) years, the Company shall arrange to
provide the Executive with life, disability, accident and health
insurance benefits substantially similar (and at the same cost)
to those that the Executive is receiving immediately prior to
any related Potential Change in Control or the receipt of the
Notice of Termination (without giving effect to any reduction in
such benefits subsequent to a Change in Control which reduction
constitutes Good Reason), whichever is greater. Benefits
otherwise receivable by the Executive pursuant to this Section
6.1(b) shall be reduced to the extent comparable benefits are
actually received by or made available to the Executive without
cost during such period following the Executive's termination of
employment (and any such benefits actually received by the
Executive shall be reported to the Company by the Executive).
(c) The Executive shall receive, at the expense of the
Company, outplacement services, on an individualized basis at a level
of service commensurate with the Executive's status with the Company
immediately prior to the Change in Control (or, if higher,
immediately prior to the termination of the Executive's employment),
provided by a nationally recognized executive placement firm selected
by the Executive and reasonably satisfactory to the Company; provided
that the cost to the Company of such services shall not exceed 15% of
the Executive's Annual Base Salary in effect immediately prior to the
Change in Control.
(d) All outstanding stock options previously granted to
the Executive shall become immediately 100% vested and exercisable,
and all shares of restricted stock shall become immediately 100%
vested and all forfeiture restrictions thereon shall lapse. Such
accelerated and vested options shall be exercisable for the remainder
of the term of such option, as set forth in the Executive's related
stock option agreement (without regard to any truncation of such
period therein, or under any plan or arrangement maintained by the
Company,on account of any termination of the Executive's employment).
6.2 Code Section 280G Reduction. Notwithstanding any other
provisions of this Agreement or of any other agreement, contract,
understanding, plan or program entered into or maintained by the Company,
if any payment or benefit received or to be received by the Executive in
connection with a Change in Control or the termination of the Executive's
employment (whether pursuant to the terms of this Agreement or any other
plan, arrangement or agreement with (a) the Company or any affiliate,
parent or subsidiary of the Company, (b) any Person whose actions result
in a Change in Control, or (c) any Person affiliated with the Company)
(all such payments and/or benefits, including the payments and benefits,
if any, under this Section 6, being hereinafter referred to as the "Total
Payments") would subject the Executive to the excise tax imposed under
Section 4999 of the Code, on any successor section thereto (the "Excise
Tax"), and if the amount of such Total Payments, reduced by all federal,
state and local taxes applicable with respect thereto, including without
limitation the Excise Tax, is less than the amount of Total Payments which
would otherwise be payable to the Executive, after all such taxes, without
the imposition of the Excise Tax, then, to the extent necessary to
eliminate the imposition of the Excise Tax (after taking into account any
reduction in the Total Payments provided by reason of Section 280G of the
Code under plan, arrangement or agreement), (i) the cash and non-cash
payments and benefits payable under this Agreement shall first be reduced
(but not below zero), and (ii) all other cash and non-cash payments and
benefits shall next be reduced (but not below zero); but only if, by
reason of any such reduction, the Total Payments with any such reduction,
after all such taxes, shall exceed the Total Payments without any such
reduction, after all such taxes. For purposes of this Section 6.2, (A) no
portion of the Total Payments the receipt or enjoyment of which the
Executive shall have effectively waived in writing prior to the Date of
Termination shall be taken into account, (B) no portion of the Total
Payments shall be taken into account which in the opinion of tax counsel
selected in good faith by the Company does not constitute a "parachute
payment" within the meaning of Section 280G(b)(2) of the Code, including
(without limitation) by reason of Section 280G(b)(4)(A) of the Code, (C)
the payments and/or benefits under this Agreement shall be reduced only to
the extent necessary so that the Total Payments (other than those referred
to in clauses (A) and (B) above) in their entirety constitute reasonable
compensation for services actually rendered within the meaning of Section
280G(b)(4)(B) of the Code or are otherwise not subject to disallowance as
deductions, in the opinion of the tax counsel referred to above in clause
(B), and (D) the value of any non-cash payment or benefit or any deferred
payment or benefit included in the Total Payments shall be determined by
the Company's independent auditors in accordance with the principles of
Sections 280G(d)(3) and (4) of the Code. Except as otherwise provided
above, the foregoing calculations and determinations shall be made in good
faith by the Company and the Executive. If no agreement on the
calculations is reached, then the Executive and the Company will cooperate
and attempt to agree to the selection of an accounting firm to make the
calculations. If no agreement can be reached regarding the selection of
an accounting firm, the Company will select in good faith a prominent
national accounting firm that has no current or recent business
relationship with the Company. The Company shall pay all costs and
expenses incurred in connection with any such calculations or
determinations. Any calculations or determinations made in accordance
with this Section 6.2 shall be conclusive and binding on all parties.
6.3 Date of Payment. The payments provided for in Section
6.1.(a) and Section 6.2 hereof shall , unless deferred pursuant to the
last sentence of this Section 6.3, be made not later than the fifteenth
(15th) day following the Date of Termination; provided, however, that if
the amounts of such payments cannot be finally determined on or before
such day, the Company shall pay to the Executive (subject to the last
sentence of this Section 6.3) on such day an estimate, as determined in
good faith by the Company, of the minimum amount of such payments to which
the Executive is likely to be entitled to and shall pay the remainder of
such payments (together with interest at the rate provided in section
1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined
but in no event later than the thirtieth (30th) day after the Date of
Termination. In the event that the amount of the estimated payments
exceeds the amount subsequently determined to have been due, such excess
shall constitute a loan by the Company to the Executive, payable on the
tenth (10th) business day after demand by the Company (together with
interest at the rate provided in section 1274(b)(2)(B) of the Code). At
the time that payments are made or would have been made, disregarding for
this purpose only, any deferral effected by the Executive, under this
Section 6.3, the Company shall provide the Executive with a detailed
written statement setting forth the manner in which such payments were
calculated and the basis for such calculations including, without
limitation, any opinions or other advice the Company has received from
outside counsel, auditors or consultants (and any such opinions or advice
which are in writing shall be attached to the statement). The Executive
may irrevocably elect, in a writing delivered to the Company no later than
the last day of the calendar year preceding the calendar year in which
occurs the Change in Control, to defer the receipt of any payment to which
the Executive may become entitled to under Section 6.1 of this Agreement
for the period of time specified in such writing.
6.4 Legal Costs. The Company shall also reimburse the
Executive for reasonable legal fees and expenses incurred in good faith by
the Executive as a result of any dispute with the Company or any affiliate
of the Company regarding the payment of any benefit provided for in this
Agreement (including, but not limited to, all such fees and expenses
incurred in disputing any termination or in seeking in good faith to
obtain or enforce any benefit or right provided by this Agreement or in
connection with any tax audit or proceeding to the extent attributable to
the application of section 4999 of the Code) 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. Such payments shall, in the aggregate, not
exceed $10,000 and shall be made within ten (10) business days after
delivery of the Executive's written requests for payment accompanied by
such evidence of fees and expenses incurred as the Company reasonably may
require.
7. Termination Procedures and Compensation During Dispute.
7.1 Notice of Termination. After a Change in Control and
during the Term, any purported termination of the Executive's employment
with the Company (other than by reason of death) shall be communicated by
written Notice of Termination from one party hereto to the other party
hereto in accordance with Section 10 hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall
indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment
with the Company under the provision so indicated. Further, a Notice of
Termination for Cause is required to include a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters (3/4) of
the entire membership of the Board at a meeting of the Board which was
called and held for the purpose of considering such termination (which
meeting may be a regular meeting of the Board where prior notice of
consideration of such termination is given to members of the Board)
finding that, in the good faith opinion of the Board, the Executive
engaged in conduct set forth in clause (i) or (ii) of the definition of
Cause herein, and specifying the particulars thereof in detail. For
purposes of this Agreement, any purported termination not effected in
accordance with this Section 7.1 shall not be considered effective.
7.2 Date of Termination. "Date of Termination", with respect
to any purported termination of the Executive's employment after a Change
in Control and during the Term, shall mean (i) if the Executive's
employment is terminated for Disability, thirty (30) days after Notice of
Termination is given (provided that the Executive shall not have returned
to the full-time performance of the Executive's duties during such thirty
(30) day period), and (ii) if the Executive's employment is terminated for
any other reason, the date specified in the Notice of Termination (which,
in the case of a termination by the Company, shall not be less than thirty
(30) days (except in the case of a termination for Cause) and, in the case
of a termination by the Executive, shall not be less than fifteen (15)
days nor more than sixty (60) days, respectively, after the date such
Notice of Termination is given).
7.3 Dispute Concerning Termination. If within fifteen (15)
days after any Notice of Termination is given, or, if later, prior to the
Date of Termination (as determined without regard to this Section 7.3),
the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, the Date of Termination
shall be the date on which the dispute is finally resolved either by
mutual written agreement of the parties or by a final judgment, order or
decree of a court of competent jurisdiction (which is not appealable or
with respect to which the time for appeal therefrom has expired and no
appeal has been perfected); provided, however, that the Date of
Termination shall be extended by a notice of dispute only if the basis for
such notice is reasonable, such notice is given in good faith and the
party giving such notice pursues the resolution of such dispute with
reasonable diligence.
7.4 Compensation During Dispute. If a purported termination
occurs following a Change in Control and during the Term, and such
termination is disputed in accordance with Section 7.3 above, the Company
shall continue to pay the Executive the full compensation (including,
without limitation, Annual Base Salary and Annual Bonus) in effect at the
time of any related Potential Change in Control or when the notice giving
rise to the dispute was given (whichever is greater) and continue the
Executive as a participant in all compensation, incentive, pension and
welfare benefit and insurance plans in which the Executive was
participating at the time of any Potential Change in Control or when the
notice giving rise to the dispute was given, whichever is greater, until
the dispute is finally resolved in accordance with Section 7.3 hereof.
Amounts paid under this Section 7.4 are in addition to all other amounts
due under this Agreement (other than those due under Section 5.2 hereof)
and shall not be offset against or reduce any other amounts due under this
Agreement or any other plan, agreement or arrangement.
8. No Mitigation. The Company agrees that, if the Executive's
employment is terminated during the Term, the Executive is not required to
seek other employment or to attempt in any way to reduce any amounts
payable to the Executive by the Company pursuant to Section 6 or Section
7.4. Further, the amount of any payment or benefit provided for in
Section 6 (other than pursuant to Section 6.1.(b)) or Section 7.4 shall
not be reduced by any compensation earned by the Executive as the result
of employment by another employer, by retirement benefits, or offset
against any amount claimed to be owed by the Executive to the Company or
any of its subsidiaries, or otherwise.
9. Successors; Binding Agreement.
9.1 Successors. In addition to any obligations imposed by law
upon any successor to the Company, the Company will 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 expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. Failure of the Company
to obtain such assumption and agreement prior to the effectiveness of any
such succession shall be a breach of this Agreement and shall entitle the
Executive to compensation from the Company in the same amount and on the
same terms as the Executive would be entitled to hereunder if the
Executive were to terminate employment with the Company for Good Reason
after a Change in Control, except that, for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall
be deemed the Date of Termination.
9.2 Binding Agreement. This Agreement shall inure to the
benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive shall die while any
amount would still be payable to the Executive hereunder (other than
amounts which, by their terms, terminate upon the death of the Executive)
if the Executive had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this
Agreement to the beneficiary (or beneficiaries) designated by the
Executive from time to time in accordance with the procedures for notice
set out in Section 10; provided, however, that if there shall be no
effective designation of beneficiary by the Executive, such amounts shall
be paid to the executors, personal representatives or administrators of
the Executive's estate.
10. Notices; Other Communications. For the purpose of this
Agreement, notices and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have been duly given
when delivered or mailed by United States certified mail, return receipt
requested, postage prepaid, addressed to the respective addresses set
forth below, or to such other address as either party may have furnished
to the other in writing in accordance herewith, except that notice of
change of address shall be effective only upon actual receipt:
To the Company:
Interstate Power Company
1000 Main Street
P.O. Box 769
Dubuque, Iowa 52004-0769
Attention: Corporate Secretary
To the Executive:
Mr. Wayne H. Stoppelmoor
2215 Aspen Drive
Dubuque, Iowa 52001
11. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge (i) is
agreed to in writing and signed by the Executive and such officer as may
be specifically designated by the Board, or (ii) is (a) approved by such
officer as may be specifically designated by the Board, (b) effective only
in respect of any Change in Control resulting from the proposed merger
transaction involving the Company, IES Industries Inc. and WPL Holdings,
Inc., and (c) applicable to all members of the senior management of the
Company who have executed an agreement substantially similar to this
Agreement. In respect of any proposed waiver, modification, or discharge
which meets the conditions specified above in Section 11(ii), the
Executive hereby irrevocably appoints the Company's Secretary to be the
Executive's attorney-in-fact for the limited purpose of entering into, on
behalf of the Executive, any form of waiver, modification or discharge
necessary to effect any such waiver, modification or discharge meeting the
conditions of this Section 11(ii). No waiver by either party hereto at
any time of any breach by the other party hereto of, or compliance with,
any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.
No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement. The
validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of Iowa without regard to the
principles of conflict of laws thereof. All references to sections of the
Exchange Act or the Code (or the rules and/or regulations under either)
shall be deemed also to refer to and include any successor provisions to
such sections. Any payments provided for hereunder shall be paid net of
any applicable withholding required under federal, state or local law and
any additional withholding to which the Executive has agreed. The rights
and obligations of the Company and the Executive under this Agreement
shall survive the expiration of the Term and the Employment Period.
12. Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement, all of which shall remain in full force
and effect.
13. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
14. No Limitation. 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 other 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 as in effect from time to
time except as explicitly modified by this Agreement.
15. Other Agreements. This Agreement contains the entire agreement
between the parties concerning the subject matter hereof and supersedes
all prior agreements understandings, discussions, negotiations and
undertakings, whether written or oral, between the parties with respect
thereto.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.
INTERSTATE POWER COMPANY
By: /s/ Wayne H. Stoppelmoor
Title: Chairman, president and Chief
Executive Officer
/s/ Wayne H. Stoppelmoor
Wayne H. Stoppelmoor
<TABLE> <S> <C>
<ARTICLE> UT
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 494,273
<OTHER-PROPERTY-AND-INVEST> 518
<TOTAL-CURRENT-ASSETS> 65,110
<TOTAL-DEFERRED-CHARGES> 74,658
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 634,559
<COMMON> 33,986
<CAPITAL-SURPLUS-PAID-IN> 106,962
<RETAINED-EARNINGS> 69,935
<TOTAL-COMMON-STOCKHOLDERS-EQ> 210,883
24,176
10,819
<LONG-TERM-DEBT-NET> 171,750
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 13,400
<LONG-TERM-DEBT-CURRENT-PORT> 17,000
0
<CAPITAL-LEASE-OBLIGATIONS> 93
<LEASES-CURRENT> 14
<OTHER-ITEMS-CAPITAL-AND-LIAB> 186,424
<TOT-CAPITALIZATION-AND-LIAB> 634,559
<GROSS-OPERATING-REVENUE> 88,873
<INCOME-TAX-EXPENSE> 5,510
<OTHER-OPERATING-EXPENSES> 70,447
<TOTAL-OPERATING-EXPENSES> 75,957
<OPERATING-INCOME-LOSS> 12,916
<OTHER-INCOME-NET> 347
<INCOME-BEFORE-INTEREST-EXPEN> 13,263
<TOTAL-INTEREST-EXPENSE> 3,931
<NET-INCOME> 9,332
617
<EARNINGS-AVAILABLE-FOR-COMM> 8,715
<COMMON-STOCK-DIVIDENDS> 5,032
<TOTAL-INTEREST-ON-BONDS> 14,294
<CASH-FLOW-OPERATIONS> 23,909
<EPS-PRIMARY> $0.90
<EPS-DILUTED> $0.90
</TABLE>
