EXHIBIT (10)
Page 1 of 4
FIRST AMENDMENT TO THE EMPIRE
DISTRICT ELECTRIC COMPANY CHANGE
IN CONTROL SEVERANCE PAY PLAN
The Empire District Electric Company Change in Control
Severance Pay Plan (the "Plan") is hereby amended, effective as
of June 21, 1996, in the following respects:
1. The first sentence of Section 3.1 is amended to read in
its entirety as follows:
"In the event of the Involuntary Termination of any
Employee who is a senior officer on the date on
which the applicable Agreement is entered into (or
amended), the Company shall pay such officer an
amount equal to 36 months of Compensation."
2. The last sentence of Section 3.1 is amended to read in its
entirety as follows:
"In the case of an Employee entitled to the benefit
described in this Section 3.1, the "Incremental
Period" for purposes of this Plan shall be 36
months."
3. The first sentence of Section 3.2 is amended to read in
its entirety as follows:
"In the event of the Involuntary Termination of any
Employee who is not a senior officer on the date on
which the applicable Agreement is entered into (or
amended), the Company shall pay such Employee an
amount equal to the product of such Employee's
weekly base salary as in effect immediately prior to
the date of Involuntary Termination (or if greater,
immediately prior to the date of the Change in
Control), multiplied by the greater of (I) 17 weeks
or (ii) a number of weeks equal to two times the
Employee's number of full years of employment by the
Company or a Subsidiary."
4. Section 3.5 is amended to read in its entirety as follows:
"3.5 In the event that the employment of an
Employee who is a senior officer on the date on
which the applicable Agreement is entered into (or
amended) terminates pursuant to Section 3.1 or 3.4
hereof, and such Employee subsequently begins to
receive retirement benefits under The Empire
District Electric Company Employees' Retirement Plan
(or any successor plan) (the "Retirement Plan"), the
Company shall also commence payment to such Employee
at the same time of a monthly amount equal to the
difference between (I) the monthly retirement
benefits the Employee would have been entitled to
receive under the terms of the Retirement Plan and
The Empire District Electric Company Supplemental
Executive Retirement Plan (or any successor plan)
(the "Supplemental Plan"), as in effect on the day
on which his employment terminates, if the Employee
had accumulated additional service equal to the
"Incremental Period" applicable to such Employee and
received earnings during such Incremental Period at
the rate in effect during the year in which his
employment terminates (calculated on an annualized
basis), and (ii) the retirement benefits he is then
receiving under the Retirement Plan and Supplemental
Plan. The benefits payable pursuant to this Section
3.5 shall include all ancillary benefits under the
Retirement Plan and Supplemental Plan (such as early
retirement and survivor benefits and benefits
available at retirement), and shall be paid in the
same form as the benefits payable under the
Retirement Plan. The Employee's beneficiary for
purposes of the benefits payable pursuant to this
Section 3.5 shall be the same person or persons as
determined under the Retirement Plan."
5. Section 3 is amended by adding the following new Section
3.8 at the end thereof:
"3.8 If any payment or benefit received by or in
respect of an Employee who is a senior officer on
the date on which the applicable Agreement is
entered into (or amended) which is provided under
this Plan or any other plan, arrangement or
agreement with the Company or any of its
Subsidiaries (determined without regard to any
additional payments required under this Section 3.8
and Appendix A) (a "Payment") would be subject to
the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended (the
"Code") (or any similar tax that may hereafter be
imposed) or any interest or penalties are incurred
by such Employee with respect to such excise tax
(such excise tax, together with any such interest
and penalties, being hereinafter collectively
referred to as the "Excise Tax"), the Company shall
pay to the Employee with respect to such Payment at
the time specified in Appendix A an additional
amount (the "Gross-up Payment") such that the net
amount retained by the Employee from the Payment and
the Gross-up Payment, after reduction for any Excise
Tax upon the Payment and any Federal, state and
local income and employment tax and Excise Tax upon
the Gross-up Payment, shall be equal to the Payment.
The calculation and payment of the Gross-up Payment
shall be subject to the provisions of Appendix A.
The Gross-up Payment shall be made from the general
assets of the Company."
6. The first sentence of Section 4.2 is amended to read in
its entirety as follows:
"If the payment of any severance pay or other
benefits hereunder to an Employee who is not a
senior officer on the date on which the applicable
Agreement is entered into (or amended), either alone
or together with other payments which such Employee
has a right to receive from the Company and its
Subsidiaries, would constitute a "parachute payment"
(as defined in Section 280G of the Code), the
payments to such Employee required by this Plan
shall be reduced to the largest amount as will
result in no portion of the payment being subject to
the excise tax (the "Excise Tax") imposed by Section
4999 of the Code; but only if, by reason of such
reduction, such Employee's "net after tax benefit"
would exceed the "net after tax benefit" if such
reduction were not made."
7. The attached Appendix A is added at the end of the Plan.
Appendix A
Gross-up Payments
The following provisions shall be applicable with respect to
the Gross-up Payments described in Section 3.8:
a. For purposes of determining whether any of the Payments
will be subject to the Excise Tax and the amount of such Excise
Tax, (a) all of the Payments received or to be received shall be
treated as "parachute payments" within the meaning of Section
280G(b)(2) of the Code, and all "excess parachute payments"
within the meaning of Section 280G(b)(1) of the Code shall be
treated as subject to the Excise Tax unless, in the opinion of
tax counsel selected by the Company, the Payments (in whole or in
part) do not constitute parachute payments, including by reason
of Section 280G(b)(4)(A) of the Code, or excess parachute
payments (as determined after application of Section
280G(b)(4)(B) of the Code), and (b) the value of any non-cash
benefits or any deferred payment or benefit shall be determined
by independent auditors selected by the Company in accordance
with the principles of Sections 280G(d)(3) and (4) of the Code.
For purposes of determining the amount of the Gross-up Payment
the Employee shall be deemed to pay Federal income taxes at the
highest marginal rate of Federal income taxation in the calendar
year in which the Gross-up Payment is to be made and state and
local income taxes at the highest marginal rate of taxation to
which such payment could be subject based upon the state and
locality of the Employee's residence or employment, net of the
maximum reduction in Federal income taxes which could be obtained
from deduction of such state and local taxes. In addition, for
purposes of determining the amount of the Gross-up Payment, the
Company shall make a determination of the amount of employment
taxes required to be paid on the Gross-up Payment. In the event
that the Excise Tax is subsequently determined to be less than
the amount taken into account hereunder at the time the Gross-up
Payment is made, the Employee shall repay to the Company, at the
time that the amount of such reduction in Excise Tax is finally
determined, the portion of the Gross-up Payment attributable to
such reduction (plus the portion of the Gross-up Payment
attributable to the Excise Tax and Federal and state and local
income and employment tax imposed on the portion of the Gross-up
Payment being repaid by the Employee if such repayment results in
a reduction in Excise Tax and/or a Federal and state and local
income or employment tax deduction), plus interest on the amount
of such repayment at the Federal short-term rate as defined in
Section 1274(d)(1)(C)(i) of the Code. In the event that the
Excise Tax is determined to exceed the amount taken into account
hereunder at the time the Gross-up Payment is made (including by
reason of any payments the existence or amount of which cannot be
determined at the time of the Gross-up Payment), the Company
shall make an additional gross-up payment in respect of such
excess (plus any interest, penalties or additions payable with
respect to such excess) at the time that the amount of such
excess is finally determined. Notwithstanding the foregoing, the
Company shall withhold from any payment due to the Employee the
amount required by law to be so withheld under Federal, state or
local wage and employment tax withholding requirements or
otherwise (including without limitation Section 4999 of the
Code), and shall pay over to the appropriate government
authorities the amount so withheld.
b. The Gross-up Payment with respect to a Payment shall be
paid not later than the thirtieth day following the date of the
Payment; provided, however, that if the amount of such Gross-up
Payment or portion thereof cannot be finally determined on or
before such day, the Company shall pay to the Employee on such
date an estimate, as determined in good faith by the Company, of
the amount of such payments and shall pay the remainder of such
payments (together with interest at the Federal short-term rate
provided in Section 1274(d)(1)(C)(i) of the Code) as soon as the
amount thereof can be determined. 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 Employee, payable on the fifth day after
demand by the Company (together with interest at the Federal
short-term rate provided in Section 1274(d)(1)(C)(i) of the
Code). At the time that payments are made under Section 3.8 and
this Appendix A, the Company shall provide the Employee with a
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).