1
PAGE 108
EMPLOYMENT AGREEMENT
Between
Washington Energy Company,
Washington Natural Gas Company
and
William P. Vititoe
January 15, 1994
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made effective the 15th
day of January, 1994 (the "Effective Date"), between WASHINGTON ENERGY COMPANY,
a Washington corporation ("WECO"), Washington Natural Gas Company, a Washington
corporation, which is a wholly owned subsidiary of WECO ("WNG"), and WILLIAM P.
VITITOE ("Employee"). The term "Company" refers to WECO and WNG. The term
"Parties" refers to the Company and the Employee.
R E C I T A L S
1.1 WECO wishes to employ the Employee as Chairman and Chief
Executive Officer of WECO and WNG wishes to employ the Employee as Chairman and
Chief Executive Officer of WNG, both subject to the approval of the
shareholders of WECO, and the Employee wishes to accept such employment;
1.2 The Parties have reached agreement on the terms and conditions
of such employment, and believe that it is in their mutual best interests to
enter into a written agreement that specifies those terms and conditions;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration, the
Parties agree as follows:
1. Employment. The Company hereby agrees to employ Employee and
to perform the obligations of the Company under this Agreement. Employee
hereby accepts employment by the Company and agrees to perform the obligations
of Employee under this Agreement.
2. Term. This Agreement shall commence on the Effective Date and
shall terminate on January 14, 1998, subject to earlier termination as provided
in Section 13 (Termination Prior to The end of the Term). Employee's election
as a director of the Company and as Chairman and Chief Executive Officer of the
Company is contingent on shareholder approval at the next annual meeting of the
shareholders of WECO, which is presently set for February 25, 1994
("Shareholder Approval").
2
PAGE 109
3. Duties. From the Effective Date until the date of Shareholder
Approval, Employee shall assist the current Chairman and Chief Executive
Officer of WECO with operational matters and the anticipated transition of his
duties to Employee. From and after the date of Shareholder Approval, Employee
shall serve as the Chairman and Chief Executive Officer of WECO (and WECO shall
cause Employee to be elected Chairman and Chief Executive Officer of WNG and of
such other affiliates or subsidiaries as the Board of Directors of WECO shall
designate), and shall faithfully and diligently perform such duties and
exercise such powers as:
(i) Are set forth in the description of duties of
officers in the current Bylaws of WECO and WNG (which may be
amended by WECO and WNG from time to time);
(ii) Are customarily expected of the Chairman and
Chief Executive Officer of business organizations which are
similar to the Company; and
(iii) May from time to time be properly assigned to
him by the Board of Directors of WECO or WNG. At the request
of the Board of Directors of the Company, Employee also shall
serve as an officer or as a member of the Board of Directors
of any of the Company's subsidiaries and affiliates, without
additional compensation.
4. Extent of Services. Employee shall devote his full working
time, attention and skill to the duties and responsibilities set forth in
Section 3 ("Duties"). Employee may participate in other businesses as an
outside director or investor, provided that:
(i) Employee shall not actively participate in
the operation or management of such businesses; and
(ii) Employee shall not, without the prior
approval of the Board of Directors of the Company, make or
maintain any investment in any entity with which the Company
has a commercial relationship of any kind, including that of
lessor, partner, investor, vendor, supplier, consultant or
otherwise, or an entity which is in direct competition with
the Company.
5. Salary. In consideration for the performance of Employee's
obligations under the Agreement, the Company shall pay Employee an initial
salary of Three Hundred Twenty-Five Thousand Dollars ($325,000) per year, which
salary shall be subject to prospective adjustment from time to time by the
Board of Directors of the Company (the "Board of Directors"), in its sole
discretion, but shall not be reduced during the term of this Agreement.
Employee's salary shall be paid in installments in accordance with the
Company's payroll policy for other employees.
6. Bonus. The Company shall pay to Employee on or before
November 30, 1994 a one-time bonus ("Bonus") of One Hundred Thousand Dollars
($100,000) for his services during the Company's fiscal year ending September
30, 1994. Commencing with the Company's fiscal year beginning October 1, 1994,
Employee shall be entitled to participate in WNG's Annual Incentive Plan (the
"Annual Incentive Plan"), which may be amended from time to time. Employee is
familiar with the Annual Incentive Plan, and acknowledges that any benefits
that may be granted to Employee under the Annual Incentive Plan are subject to
the approval of the Board of Directors or the Compensation Committee appointed
by the Board of Directors, in the exercise of its sole discretion.
7. Stock Options. As an incentive to Employee to use his best
efforts to enhance the value of the Company, the Company shall grant to
Employee certain options to purchase stock of WECO in accordance with that
certain Washington Energy Company Stock Option Plan (the "Option Plan"), which
may be amended from
3
PAGE 110
time to time. The options are more particularly described in the Option Plan
and in Attachment A to this Agreement.
8. Vacation and Other Benefits. Employee shall be entitled to
five (5) weeks of paid vacation each year, in addition to the holidays observed
by the Company for its employees in general. Vacation or holiday time that is
not taken shall not be carried into the next calendar year. Employee shall be
entitled to participate in the WNG Pension Plan and the WNG Salary Investment
Plan, in accordance with their terms, each of which may be amended from time to
time. WNG shall also enter into an Executive Retirement Compensation Agreement
with Employee substantially in the form of Attachment B to this Agreement. The
Company shall provide Employee, with medical, life and disability insurance
benefits for Employee with terms and provisions substantially as favorable to
Employee, as of the Effective Date, as those provided to other executive
employees of the Company at that date. The Company may prospectively amend,
eliminate or add to the insurance and benefit programs at any time, in its sole
discretion.
9. Automobile. The Company shall provide Employee with the use
of an automobile to conduct Company business. The Company shall pay all
expenses incurred in purchasing or leasing the automobile, and shall in
addition either pay or reimburse Employee for all reasonable expenses incurred
for maintenance, service, and fuel costs for the automobile on the same basis
as for other executive employees of the Company. Employee shall maintain
adequate records to reflect any personal use of the automobile.
10. Club Dues. The Company shall pay on behalf of Employee a
reasonable number of initial membership fees for clubs to enable the Employee
to conduct Company business and represent the Company in the business
community. Monthly dues and other charges in connection with such membership
shall be handled on the same basis as for other executive employees of the
Company.
11. Housing Loan and Moving Expenses.
(a) The Company shall loan to Employee at the time of closing
of his purchase of a new residence in the Seattle, Washington area, up to One
Million Dollars ($1,000,000) on an interest-free basis, under the terms of a
promissory note substantially in the form attached hereto as Attachment C,
which loan shall be secured by a first position Deed of Trust on the residence
being acquired.
(b) Company agrees to reimburse Employee for all reasonable
moving expenses incurred by Employee in relocating from Michigan to Washington
("Moving Expenses"). Company will also pay to Employee an amount to reimburse
Employee for the federal income tax expense associated with the Moving Expenses
(the "Tax Payment"). The Tax Payment will equal:
TP = 65.56 (M-D)
Where TP = Tax Payment
M = Moving Expenses
D = Moving Expenses deductible by Employee on his federal
income tax return.
12. Expenses. The Company shall, upon receipt of adequate
supporting documentation, reimburse Employee for reasonable expenses incurred
by Employee in promoting the business of the Company, subject to the Company's
expense reimbursement policies, which may be amended from time to time.
13. Termination Prior to the End of the Term.
13.1 The Company may terminate this Agreement for
cause prior to the end of the term. The term "for cause" shall mean a
termination based on a
4
PAGE 111
determination by the Board of Directors that Employee has: committed an act of
dishonesty related to his employment; obtained any benefit of money or other
property in connection with his employment to which he was not entitled;
refused to comply with a lawful directive of the Board of Directors; or engaged
in any willful misconduct with respect to his duties or other obligations under
this Agreement. The Company shall not terminate this Agreement for cause
unless a determination has been made by majority vote of the Board of Directors
at a lawfully called meeting at which Employee shall be entitled to be told of
the reasons for the termination and given an opportunity to personally respond
to the reasons provided by the Board of Directors. In the event of termination
of this Agreement by the Company for cause, Employee shall be paid all
compensation and benefits earned through the date of termination, the Company
shall not be obligated to provide any further compensation or benefits to him
under the Agreement, and the Parties' obligations to each other under this
Agreement shall cease, with the exception of the Company's obligations under
Section 15 (Indemnification) and Employee's obligations under Section 16
(Confidentiality) and Section 17 (Noncompetition).
13.2 The Company may, at its option and at any time,
terminate this Agreement prior to the end of the term, without cause. In the
event that the Company exercises this right, Employee shall be entitled to
receive: all compensation and benefits earned through the date of termination;
and a continuation of his salary for the balance of the term of this Agreement,
at the level in effect as of the date of termination. In that event, the
Parties' obligations to each other under this Agreement shall cease, with the
exception of the Company's obligations under Section 14 (Change in Control) and
Section 15 (Indemnification) and the Employee's obligations under Section 16
(Confidentiality) and Section 17 (Noncompetition).
13.3 This Agreement shall terminate in the event Employee
dies, or is unable to perform his duties as a result of a physical or mental
disability at any time during the term of this Agreement. In the event of a
termination under this subsection, Employee or his estate shall be paid all
compensation and benefits earned through the date of such termination,
including a pro-rated Bonus under Section 6, if death or disability occurs
prior to September 30, 1994 and shall be entitled to receive benefits under any
salary continuation plan which the Company may have in effect as of the date of
such termination, the Company shall have no further obligations to provide
compensation or benefits to him or his estate under this Agreement, and the
Parties' obligations to each other under this Agreement shall cease, with the
exception of the Company's obligations under Section 15 (Indemnification) and
the Employee's obligations, if he is still living, under Section 16
(Confidentiality) and Section 17 (Noncompetition). For purposes of this
Agreement, Employee shall be deemed to be disabled when each of the following
conditions are met:
(i) The Employee shall become physically or
mentally incapable (excluding infrequent and temporary
absences due to ordinary illnesses) of properly performing the
services required of him by this Agreement;
(ii) Employee's physical or mental incapacity
shall exist or shall be reasonably expected to exist for more
than ninety (90) days in the aggregate during any period of
twelve (12) consecutive calendar months; and
(iii) Such physical or mental incapacity is
independently diagnosed by a qualified medical practitioner.
13.4 Either the Company or the Employee may, at its/his
option, terminate this Agreement in the event that Shareholder Approval is not
obtained. In the event that either the Company or Employee exercises this
right to terminate the Agreement, Employee shall be entitled to receive all
compensation and benefits
5
PAGE 112
earned through the date of termination, and the parties' obligations to each
other shall cease, with the exception of Employee's obligations under Section
16 (confidentiality).
14. Change in Control.
14.1 The provisions of this section shall survive the
expiration of the term of this Agreement, but shall not be effective in the
event of a termination of this Agreement prior to the end of the term for
cause, in accordance with subsection 13.1, or as a result of the death or
incapacity of Employee in accordance with subsection 13.3. The provisions of
this Section shall remain in effect for a period of three (3) years ("the
Extended Benefit Period") following the date either the Company or Employee
provides written notice to the other of its/his intent to terminate the
provisions of this section ("Notice of Termination of Extended Benefits"). A
Notice of Termination of Extended Benefits may be given during the term of this
Agreement, or thereafter, but the Extended Benefit Period may not end prior to
the end of the term of this Agreement. Notwithstanding any other provision of
this section, the Extended Benefit Period shall terminate when Employee reaches
the Normal Retirement Date as that term is defined in the Executive Retirement
Compensation Agreement attached hereto as Attachment B (the "Normal Retirement
Date").
14.2 The Board of Directors, in the exercise of its
responsibility to serve the best interests of the shareholders of WECO, may at
any time consider a merger or acquisition proposal that could result in a
Change of Control of WECO. In order to avoid any adverse affect on Employee's
performance under this Agreement that might be caused by uncertainties
concerning his tenure and treatment by WECO in the event of such a Change in
Control, WECO has agreed to provide certain benefits to Employee in certain
circumstances involving a Change of Control of WECO in accordance with the
provisions of this section. For purposes of this Agreement, a Change in
Control shall mean the occurrence of any one of the following actions or
events:
(i) The acquisition of any person (which, for
purposes of this Agreement, shall include a natural person,
corporation, partnership, association, joint stock company,
trust fund, or organized group of persons) of the power,
directly or indirectly, to exercise a controlling influence
over the management or policies of WECO (either alone or
pursuant to an arrangement or understanding with one or more
other persons), whether through the ownership of voting
securities through one or more intermediary persons, by
contract or otherwise; or
(ii) The acquisition by a person (whether alone or
pursuant to an arrangement or understanding with one or more
other persons) of the ownership or power to vote twenty-five
percent (25%) or more of the outstanding voting securities of
WECO; or
(iii) During a period of six (6) years after the
acquisition by any person, directly or indirectly, of the
ownership or power to vote ten percent (10%) or more of the
outstanding voting securities of WECO, the ceasing of the
individuals who prior to such acquisition were directors of
WECO ("Prior Directors") to constitute a majority of the board
of directors, unless the nomination of each new director was
approved by a vote of a majority of the Prior Directors.
14.3 In the event of a Change in Control during the term
of this Agreement, or a Change in Control following the expiration of the term,
but during the Extended Benefit Period, which in either event is followed by a
Material Adverse Change in the terms of Employee's employment, as that term is
defined in Section 14.4, which results in the termination, by Employee or WECO,
of Employee's employment by WECO, shall entitle Employee to receive the
benefits described in
6
PAGE 113
Subsection 14.5.
14.4 For purposes of this section, any of the following
shall constitute a Material Adverse Change in the terms of Employee's
employment:
(i) A material change in Employee's Duties,
without Employee's express consent;
(ii) A reduction in Employee's base salary in
effect prior to the Change in Control, unless such reduction
is applied to all officers of the Company, does not exceed the
average percentage reduction in base salary for all officers
of the Company, and is not greater than a reduction of
twenty-five percent (25%);
(iii) Failure by the Company to increase Employee's
base salary each year following a Change of Control, by an
amount which equals at least one-half of the average
percentage increase in base salary for all officers of the
Company and its subsidiaries or a parent or successor of the
Company during the prior two (2) full calendar years;
(iv) Failure by the Company to maintain any
employee benefits to which Employee is entitled prior to the
Change in Control at a level equal to or greater than those in
effect prior to the Change of Control, through the
continuation of the same or substantially similar programs and
policies or the taking of any action by the Company which
would adversely affect Employee's participation in or
materially reduce Employee's benefits under any such plans,
programs or policies, or deprive Employee of any fringe
benefits enjoyed by Employee prior to the Change of Control,
unless such a reduction in benefits is nondiscriminatory as to
Employee and is applied generally to all officers and
management employees of the Company, its subsidiaries and
affiliates and any parent or successor of the Company.
(v) The failure by the Company to provide
Employee with the number of paid vacation days to which
Employee would be entitled as a salaried employee of the
Company, its subsidiaries or affiliates or any parent or
successor of the Company on a nondiscriminatory basis;
(vi) The Requirement by the Company that Employee
relocate his residence or office anywhere outside of the
Seattle area, except for required travel on the Company's
business to the extent consistent with Employee's duties;
(vii) Any purported termination of employment by
the Company other than: for cause as defined in Section 13.1,
or death or disability as defined in Section 13.3, or prior to
Normal Retirement Date, as that term is defined in the
Executive Retirement Compensation Agreement, which is attached
hereto as Attachment B (the "Normal Retirement Date").
14.5 In the event of a termination of Employee's employment as
described in Subsection 14.4, the Company shall provide to Employee the
following benefits for the balance of the Extended Benefit Period:
(i) Employee's full base salary earned through
the termination date, plus payment for all accrued vacation
and any deferred compensation to which Employee is entitled
for the fiscal year most recently ended prior to Employee's
termination, and Employee's pro rata share of any compensation
under any Company plan which has accrued through the date of
termination, regardless of whether such amounts are vested or
are payable in the year of termination; plus
7
PAGE 114
(ii) Within thirty (30) days following the date of
termination, an amount equal to the sum of Employee's annual
base salary at the rate in effect as of the date of
termination, plus the amount of any additional compensation
awarded to Employee for the year most recently ended,
including any sums awarded under an annual wage accumulation
plan, multiplied by number of years (prorated for any partial
years) remaining between the date of termination and the end
of the Extended Benefit Period. The Company's obligation to
pay this amount shall not be affected by any alternative
employment that Employee may obtain.
(iii) The Company shall maintain in full force and
effect for the remaining term of the Extended Benefit Period
all employee benefit plans, programs and policies, including
any life or health insurance plans in which employee was
entitled to participate immediately prior to termination,
provided that Employee is qualified to participate under the
general terms and provisions of such plans, programs and
policies. In the event that Employee is not qualified to
participate in any such plan, program or policy is not
possible under its terms and conditions, the Company shall at
its option either arrange for Employee to receive benefits
substantially similar to those which Employee would have been
entitled to receive under each plan, program or policy, or pay
to employee an amount equal to the premiums which the Company
would pay on Employee's behalf for participation in such plan,
program or policy. At the end of the period of coverage,
Employee will have the option to receive an assignment at no
cost, and with no apportionment of prepaid premiums, any
assignable insurance policies owned by the Company and
relating to Employee, and to take advantage of any conversion
privileges pertinent to the benefits available under Company
policies.
(iv) In addition to the regular payment of
benefits to which Employee is entitled under the retirement
plans or programs in effect on the date of Employee's
termination, which shall not be affected by such termination,
the Company shall pay to Employee in cash at the Normal
Retirement Date, an amount equal to the actuarial equivalent
of the additional retirement compensation to which Employee
would have been entitled under the terms of such retirement
plans or programs (without regard to vesting) and Employee
continue in the employ of the Company during the balance of
the Extended Benefit Period at Employee's base salary rate as
of the date of termination, provided that payment shall not
extend beyond Employee's Normal Retirement Date. For purposes
of this calculation, the actuarial equivalent shall be
determined by assuming survival to age eighty (80).
(v) Employee shall waive all rights to receive
shares of common stock of WECO ("Company Shares") issuable
upon exercise of options ("Options"), if any, granted to
employee under WECO's stock option plans. In return for that
waiver, Employee shall be entitled to receive, within thirty
(30) days following the date of termination, a payment equal
to the difference between the exercise price of all options
held by Employee, whether or not then fully exercisable, and
the higher of (1) the average of the high and low sale prices
as reported by the New York Stock Exchange on the date of
termination (or the closing price on any other national stock
exchange on which the Company Shares may then be listed) as
reported in the Pacific Edition of the Wall Street Journal on
the date of termination); or (2) the highest price per share
actually paid for any of the Company Shares in connection with
any change in control of the Company.
(vi) Notwithstanding any other provisions of this
Agreement, if any severance benefits under Section 14 of this
Agreement, together with any other Parachute Payments (as
defined under Internal Revenue Code
8
PAGE 115
Section 280(G)(b)(2)) made by the Company to Employee, if any,
are characterized as Excess Parachute Payments (as defined in
Internal Revenue Code, Section 280(G)(b)(1)), then the Company
shall pay to Employee, in addition to the payments to be
received under this Section, an amount equal to the excise
taxes imposed by Section 4999 of the code on Employee's Excess
Parachute Payments, plus an amount equal to the federal and, if
applicable, state income taxes which will be payable to
Employee as a result of this additional payment.
15. Indemnification. The Company shall defend, indemnify and hold
Employee harmless from any and all liabilities, obligations, claims or expenses
which arise in connection with or as a result of Employee's service as an
officer or employee (or director if Employee is elected and serves as a
director) of the Company and/or any of its affiliates and subsidiaries to the
fullest extent allowed by law; provided, that the Company shall not be
obligated to defend, indemnify or hold Employee harmless from any liabilities,
obligations, claims or expenses which result from Employee having committed an
act of dishonesty, obtained any benefit of money or other property to which he
was not entitled, refused to comply with a lawful directive of the Board of
Directors, or engaged in any willful misconduct with respect to his duties or
other obligations under this Agreement.
16. Confidentiality. Employee shall not, during the term of this
Agreement or thereafter, use for his own purposes or disclose to any other
person or entity any confidential information concerning the Company, its
affiliates or subsidiaries, or any of their business operations, except as may
be consistent with his duties hereunder or as may be required by order of a
court of competent jurisdiction. Confidential information shall include,
without limitation, any information, formula, pattern, compilation, program,
device, method, technique, or process that derives independent economic value,
actual or potential, from not being generally known to, and not being readily
ascertainable by proper means by, other persons or entities.
17. Noncompetition.
17.1 During the term of his employment with the Company,
Employee shall comply with his fiduciary obligations as an officer of the
Company, shall comply with the restrictions contained in Section 4.
17.2 During the term of his employment with the Company
and for a period of two (2) years thereafter, Employee shall not participate in
or perform services, whether directly or indirectly, as a director, officer,
employee, owner, partner, agent, consultant, lessor, creditor or otherwise, for
any person, or entity which is engaged in the same or similar business as the
Company or any of the Company's affiliates or subsidiaries is engaged at any
time during the term of this Agreement and which provides products or services
of the type provided by the Company or any of its affiliates or subsidiaries to
any person or entity located in the States of Washington, Oregon or Idaho that
was a customer of the Company while Employee was employed by the Company.
17.3 During the term of his employment with the Company
and for a period of two (2) years thereafter, Employee shall not, directly or
indirectly: solicit for employment any employee of the Company; attempt to
persuade or entice any employee of the Company to terminate his or her
employment; or persuade or attempt to persuade, any person or company to
terminate, cancel, rescind, or revoke its business or contractual relationships
with the Company.
17.4 Employee agrees that damages for breach of the
covenants contained in this Section would be difficult to determine and
therefore agrees that these provisions may be enforced by temporary or
permanent injunction. The right to such injunctive relief shall be in addition
to and not in place of any other remedies to which the Company may be entitled.
Employee agrees that any profits made or benefits obtained by Employee in
violation of his obligations
9
PAGE 116
under this Section shall be held by Employee in constructive trust for, and
shall be promptly paid to, the Company.
17.5 Employee agrees that the provisions of this Section
are reasonable. However, if any court of competent jurisdiction determines
that any provision within this Section is unreasonable in any respect, the
Parties intend that this Section should be enforced to the fullest extent
allowed by such court.
18. Arbitration. Any dispute between the Parties hereto with
respect to any of the matters set forth herein shall be submitted to binding
arbitration in the City of Seattle, State of Washington. Either Party may
commence the arbitration by delivery of a written notice to the other,
describing the issue in dispute and its position with regard to the issue. If
the Parties are unable to agree on an arbitrator within thirty (30) days
following delivery of such notice, the arbitrator shall be selected by a Judge
of the Superior Court of the State of Washington for King County upon three (3)
days' notice. Discovery shall be allowed in connection with any such
arbitration to the same extent permitted by the Washington Rules of Civil
Procedure but either Party may petition the arbitrator to limit the scope of
such discovery, in which event the arbitrator shall determine the extent of
discovery allowable in connection with the dispute in question. Except as
otherwise provided herein, the arbitration shall be conducted in accordance
with the rules of the American Arbitration Association then in effect for
expedited proceedings. The award of the arbitrator shall be final and binding,
and judgment upon an award may be entered in any court of competent
jurisdiction. The arbitrator shall hold a hearing, at which the Parties may
present evidence and argument, within thirty (30) days of his or her
appointment, and shall issue an award within fifteen (15) days of the close of
the hearing. In any such arbitration, the prevailing Party shall be entitled
to recover its costs, including without limitation reasonable attorneys' fees,
and the nonprevailing Party shall pay all costs of arbitration, but if neither
Party is determined to be the prevailing Party, each Party shall bear its own
costs and attorneys' fees and one-half (1/2) of the costs of arbitration.
Nothing contained in this Section shall prevent either Party from seeking a
temporary restraining order, preliminary injunction or similar injunctive
relief from a court of competent jurisdiction to enforce the provisions of this
Agreement. In the event that either Party institutes an action in court for
such relief or to compel arbitration to or enforce an award of arbitration, the
prevailing Party shall be entitled to recover its costs, including without
limitation reasonable attorneys' fees.
19. Notices. All notices or other communications required or
permitted by this Agreement shall be in writing and shall be sufficiently given
if sent by certified mail, postage prepaid, addressed as follows:
10
PAGE 117
If to Employee, to:
William P. Vititoe
815 Mercer Street
P.O. Box 1869
Seattle, WA 98111
Facsimile: (206) 382-7875
If to Company:
Washington Energy Company
815 Mercer Street
P.O. Box 1869
Seattle, WA 98111
Attention: Corporate Secretary
Facsimile: (206) 382-7875
Any such notice or communication shall be deemed to have been given as
of the date mailed. Any address may be changed by giving written notice of
such change in the manner provided herein for giving notice.
20. Waiver of Breach. The waiver by a Party of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach.
21. Assignment. This Agreement is for personal services. Neither
Party may assign its rights or delegate its duties hereunder without the prior
written consent of the other Party.
22. Entire Agreement. This Agreement contains the entire
understanding of the Parties with regard to the subject matter of this
Agreement and may only be changed by written agreement signed by both Parties.
Any and all prior discussions, negotiations, commitments and understandings
related thereto are merged herein.
23. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the respective Parties, and their legal
representatives, successors, permitted assigns and heirs.
24. Law. This Agreement shall be governed by, construed and
enforced in accordance with the laws of the state of Washington, without giving
effect to principles and provisions thereof relating to conflict or choice of
laws and irrespective of the fact that any one of the Parties is now or may
become a resident of a different state.
25. Validity. In case any term of this Agreement shall be
invalid, illegal, or unenforceable, in whole or in part, the validity of any of
the other terms of this Agreement shall not in any way be affected thereby.
"Company"
WASHINGTON ENERGY COMPANY
By /s/ James A. Thorpe
James A. Thorpe
Its Chairman of the Board
11
PAGE 118
WASHINGTON NATURAL GAS COMPANY
By /s/ James A. Thorpe
James A. Thorpe
Its Chairman of the Board
"Employee"
/s/ William P. Vititoe
William P. Vititoe
Attachment A. Stock Option Agreement
Attachment B. Executive Retirement Compensation Agreement
Attachment C. Promissory Note Form