KEY EXECUTIVE EMPLOYMENT AND SEVERANCE AGREEMENT
THIS AGREEMENT, made and entered into as of the ____ day of
___________, by and between WPL Holdings, Inc., a Wisconsin corporation
(hereinafter referred to as the "Company"), and _____________________
(hereinafter referred to as "Executive").
W I T N E S S E T H
WHEREAS, the Executive is employed by the Company and/or a
subsidiary of the Company (the "Employer") in a key executive capacity and
the Executive's services are valuable to the conduct of the business of
the Company;
WHEREAS, the Executive possesses intimate knowledge of the
business and affairs of the Company and has acquired certain confidential
information and data with respect to the Company;
WHEREAS, the Company desires to insure, insofar as possible,
that it will continue to have the benefit of the Executive's services and
to protect its confidential information and goodwill;
WHEREAS, the Company recognizes that circumstances may arise in
which a change in control of the Company occurs, through acquisition or
otherwise, thereby causing uncertainty about the Executive's future
employment with the Employer without regard to the Executive's competence
or past contributions which uncertainty may result in the loss of valuable
services of the Executive to the detriment of the Company and its
shareholders, and the Company and the Executive wish to provide reasonable
security to the Executive against changes in the Executive's relationship
with the Company in the event of any such change in control;
WHEREAS, the Company and the Executive are desirous that any
proposal for a change in control or acquisition of the Company will be
considered by the Executive objectively and with reference only to the
best interests of the Company and its shareholders; and
WHEREAS, the Executive will be in a better position to consider
the Company's best interests if the Executive is afforded reasonable
security, as provided in this Agreement, against altered conditions of
employment which could result from any such change in control or
acquisition.
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants and agreements hereinafter set forth, the parties hereto
mutually covenant and agree as follows:
1. Definitions.
(a) Act. For purposes of this Agreement, the term "Act" means
the Securities Exchange Act of 1934, as amended.
(b) Affiliate and Associate. For purposes of this Agreement,
the terms "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule l2b-2 of the General Rules and Regulations
of the Act.
(c) Beneficial Owner. For purposes of this Agreement, a Person
shall be deemed to be the "Beneficial Owner" of any securities:
(i) which such Person or any of such Person's Affiliates
or Associates has the right to acquire (whether such right is
exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding, or upon
the exercise of conversion rights, exchange rights, rights,
warrants or options, or otherwise; provided, however, that a
Person shall not be deemed the Beneficial Owner of, or to
beneficially own, (A) securities tendered pursuant to a tender
or exchange offer made by or on behalf of such Person or any of
such Person's Affiliates or Associates until such tendered
securities are accepted for purchase, or (B) securities issuable
upon exercise of Rights issued pursuant to the terms of the
Company's Rights Agreement with Morgan Shareholder Services
Trust Company, dated as of February 22, 1989, as amended from
time to time (or any successor to such Rights Agreement), at any
time before the issuance of such securities;
(ii) which such Person or any of such Person's Affiliates
or Associates, directly or indirectly, has the right to vote or
dispose of or has "beneficial ownership" of (as determined
pursuant to Rule l3d-3 of the General Rules and Regulations
under the Act), including pursuant to any agreement, arrangement
or understanding; provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, any
security under this subparagraph (ii) as a result of an
agreement, arrangement or understanding to vote such security if
the agreement, arrangement or understanding: (A) arises solely
from a revocable proxy or consent given to such Person in
response to a public proxy or consent solicitation made pursuant
to, and in accordance with, the applicable rules and regulations
under the Act and (B) is not also then reportable on a Schedule
l3D under the Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly,
by any other Person with which such Person or any of such
Person's Affiliates or Associates has any agreement, arrangement
or understanding for the purpose of acquiring, holding, voting
(except pursuant to a revocable proxy as described in Subsection
1(c) (ii) above) or disposing of any voting securities of the
Company.
(d) Cause. "Cause" for termination by the Company of the
Executive's employment in connection with a Change of Control of the
Company shall, for purposes of this Agreement, be limited to (i) the
engaging by the Executive in intentional conduct not taken in good faith
which has caused demonstrable and serious financial injury to the Company,
as evidenced by a determination in a binding and final judgment, order or
decree of a court or administrative agency of competent jurisdiction, in
effect after exhaustion or lapse of all rights of appeal, in an action,
suit or proceeding, whether civil, criminal, administrative or
investigative; (ii) conviction of a felony (as evidenced by binding and
final judgment, order or decree of a court of competent jurisdiction, in
effect after exhaustion of all rights of appeal) which substantially
impairs the Executive's ability to perform his duties or responsibilities;
and (iii) continuing willful and unreasonable refusal by the Executive to
perform the Executive's duties or responsibilities (unless significantly
changed without the Executive's consent).
(e) Change in Control of the Company. For purposes of this
Agreement, a "Change in Control of the Company" shall mean a change in
control of a nature that would be required to be reported in response to
Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Act.
Without limiting the inclusiveness of the definition in the preceding
sentence, a Change in Control of the Company shall be deemed to have
occurred if:
(i) any Person (other than any employee benefit plan of the
Company or of any subsidiary of the Company, any Person
organized, appointed or established pursuant to the terms of any
such benefit plan or any trustee, administrator or fiduciary of
such a plan) is or becomes the Beneficial Owner of securities of
the Company representing at least 30% of the combined voting
power of the Company's then outstanding securities,
(ii) one-half or more of the members of the Board are not
Continuing Directors;
(iii) there shall be consummated (x) any merger of the
Company or share exchange involving the Company in which the
Company is not the continuing or surviving corporation or
pursuant to which shares of the Company's Common Stock would be
converted into cash, securities or other property, other than a
merger of the Company in which each of the holders of the
Company's Common Stock immediately prior to the merger have the
same proportionate ownership of common stock of the surviving
corporation immediately after the merger, or (y) any sale,
lease, exchange or other transfer (in one transaction or a
series of related transactions) of all, or substantially all, of
the assets of the Company, or
(iv) the shareholders of the Company approve any plan or
proposal for the liquidation or dissolution of the Company.
(f) Code. For purposes of this Agreement, the term "Code"
means the Internal Revenue Code of 1986, including any amendments thereto
or successor tax codes thereof.
(g) Continuing Director. For purposes of this Agreement, the
term "Continuing Director" means any member of the Board of Directors of
the Company who was a member of such Board on February 1, 1994, and any
successor of a Continuing Director who is recommended to succeed a
Continuing Director by a majority of the Continuing Directors then on such
Board.
(h) Covered Termination. Subject to Section 2(b) hereof, for
purposes of this Agreement, the term "Covered Termination" means any
termination of the Executive's employment where the Termination Date is
any date prior to the end of the Employment Period.
(i) Employment Period. For purposes of this Agreement, the
term "Employment Period" means a period commencing on the date of a Change
in Control of the Company, and ending at 11:59 p.m. Central Time on the
earlier of the fifth anniversary of such date or the Executive's Normal
Retirement Date.
(j) Good Reason. For purposes of this Agreement, the Executive
shall have a "Good Reason" for termination of employment in connection
with a Change in Control of the Company in the event of:
(i) any breach of this Agreement by the Company, including
specifically any breach by the Company of its agreements
contained in Sections 4, 5 or 6 hereof;
(ii) the removal of the Executive from, or any failure to
reelect or reappoint the Executive to, any of the positions held
with the Company or the Employer on the date of the Change in
Control of the Company or any other positions with the Company
or the Employer to which the Executive shall thereafter be
elected, appointed or assigned, except in the event that such
removal or failure to reelect or reappoint relates to the
termination by the Company of the Executive's employment for
Cause or by reason of disability pursuant to Section 12 hereof;
(iii) a good faith determination by the Executive that
there has been a significant adverse change, without the
Executive's written consent, in the Executive's working
conditions or status with the Company or the Employer from such
working conditions or status in effect immediately prior to the
Change in Control of the Company, including but not limited to
(A) a significant change in the nature or scope of the
Executive's authority, powers, functions, duties or
responsibilities, or (B) a significant reduction in the level of
support services, staff, secretarial and other assistance,
office space and accoutrements; or
(iv) failure by the Company to obtain the Agreement
referred to in Section 17(a) hereof as provided therein.
(k) Normal Retirement Date. For purposes of this Agreement,
the term "Normal Retirement Date" means "Normal Retirement Date" as
defined in the Wisconsin Power and Light Company Retirement Plan, or any
successor plan, as in effect on the date of the Change in Control of the
Company.
(l) Person. For purposes of this Agreement, the term "Person"
shall mean any individual, firm, partnership, corporation or other entity,
including any successor (by merger or otherwise) of such entity, or a
group of any of the foregoing acting in concert.
(m) Termination Date. For purposes of this Agreement, except
as otherwise provided in Section 10(b) and Section 17(a) hereof, the term
"Termination Date" means (i) if the Executive's employment is terminated
by the Executive's death, the date of death; (ii) if the Executive's
employment is terminated by reason of voluntary early retirement, as
agreed in writing by the Company and the Executive, the date of such early
retirement which is set forth in such written agreement; (iii) if the
Executive's employment is terminated for purposes of this Agreement by
reason of disability pursuant to Section 12 hereof, the earlier of thirty
days after the Notice of Termination is given or one day prior to the end
of the Employment Period; (iv) if the Executive's employment is terminated
by the Executive voluntarily (other than for Good Reason), the date the
Notice of Termination is given; and (v) if the Executive's employment is
terminated by the Company (other than by reason of disability pursuant to
Section 12 hereof) or by the Executive for Good Reason, the earlier of
thirty days after the Notice of Termination is given or one day prior to
the end of the Employment Period. Notwithstanding the foregoing,
(A) If termination is for Cause pursuant to Section 1(d)(iii)
of this Agreement and if the Executive has cured the conduct constituting
such Cause as described by the Company in its Notice of Termination within
such thirty day or shorter period, then the Executive's employment
hereunder shall continue as if the Company had not delivered its Notice of
Termination.
(B) If the Executive shall in good faith give a Notice of
Termination for Good Reason and the Company notifies the Executive that a
dispute exists concerning the termination within the fifteen day period
following receipt thereof, then the Executive may elect to continue his
employment during such dispute and the Termination Date shall be
determined under this paragraph. If the Executive so elects and it is
thereafter determined that Good Reason did exist, the Termination Date
shall be the earliest of (l) the date on which the dispute is finally
determined, either (x) by mutual written agreement of the parties or (y)
in accordance with Section 22 hereof, (2) the date of the Executive's
death or (3) one day prior to the end of the Employment Period. If the
Executive so elects and it is thereafter determined that Good Reason did
not exist, then the employment of the Executive hereunder shall continue
after such determination as if the Executive had not delivered the Notice
of Termination asserting Good Reason and there shall be no Termination
Date arising out of such Notice. In either case, this Agreement
continues, until the Termination Date, if any, as if the Executive had not
delivered the Notice of Termination except that, if it is finally
determined that Good Reason did exist, the Executive shall in no case be
denied the benefits described in Sections 8(b) and 9 hereof (including a
Termination Payment) based on events occurring after the Executive
delivered his Notice of Termination.
(C) If an opinion is required to be delivered pursuant to
Section 9(b)(ii) hereof and such opinion shall not have been delivered,
the Termination Date shall be the earlier of the date on which such
opinion is delivered or one day prior to the end of the Employment Period.
(D) Except as provided in Paragraph (B) above, if the party
receiving the Notice of Termination notifies the other party that a
dispute exists concerning the termination within the appropriate period
following receipt thereof and it is finally determined that the reason
asserted in such Notice of Termination did not exist, then (1) if such
Notice was delivered by the Executive, the Executive will be deemed to
have voluntarily terminated his employment and the Termination Date shall
be the earlier of the date fifteen days after the Notice of Termination is
given or one day prior to the end of the Employment Period and (2) if
delivered by the Company, the Company will be deemed to have terminated
the Executive other than by reason of death, disability or Cause.
2. Termination or Cancellation Prior to Change in Control.
(a) Subject to Subsection 2(b) hereof, the Company (and the
Employer) and the Executive shall each retain the right to terminate the
employment of the Executive at any time prior to a Change in Control of
the Company. Subject to Subsection 2(b) hereof, in the event the
Executive's employment is terminated prior to a Change in Control of the
Company, this Agreement shall be terminated and cancelled and of no
further force and effect, and any and all rights and obligations of the
parties hereunder shall cease.
(b) Anything in this Agreement to the contrary notwithstanding,
if a Change in Control of the Company occurs and if the Executive's
employment with the Company or a subsidiary of the Company is terminated
(other than a termination due to the Executive's death or as a result of
the Executive's disability) during the period of 180 days prior to the
date on which the Change in Control of the Company occurs, and if it is
reasonably demonstrated by the Executive that such termination of
employment (i) was at the request of a third party who has taken steps
reasonably calculated to effect a Change in Control of the Company or (ii)
otherwise arose in connection with or in anticipation of a Change in
Control of the Company, then for all purposes of this Agreement such
termination of employment shall be deemed a "Covered Termination."
3. Employment Period. If a Change in Control of the Company
occurs when the Executive is employed by the Company or a subsidiary of
the Company, the Company will, or will cause the Employer to, continue
thereafter to employ the Executive during the Employment Period, and the
Executive will remain in the employ of the Employer in accordance with and
subject to the terms and provisions of this Agreement. Any termination of
the Executive's employment during the Employment Period, whether by the
Company or the Employer, shall be deemed a termination by the Company for
purposes of this Agreement.
4. Duties. During the Employment Period, the Executive shall,
in the same capacities and positions held by the Executive at the time of
the Change in Control of the Company or in such other capacities and
positions as may be agreed to by the Company and the Executive in writing,
devote the Executive's best efforts and all of the Executive's business
time, attention and skill to the business and affairs of the Employer, as
such business and affairs now exist and as they may hereafter be
conducted. The services which are to be performed by the Executive
hereunder are to be rendered in the same metropolitan area in which the
Executive was employed at the time of such Change in Control of the
Company, or in such other place or places as shall be mutually agreed upon
in writing by the Executive and the Company from time to time. Without
the Executive's consent the Executive shall not be required to be absent
from such metropolitan area more than 45 days in any fiscal year of the
Company.
5. Compensation. During the Employment Period, the Executive
shall be compensated as follows:
(a) The Executive shall receive, at reasonable intervals (but
not less often than monthly) and in accordance with such standard policies
as may be in effect immediately prior to the Change in Control of the
Company, an annual base salary in cash equivalent of not less than the
Executive's annual base salary as in effect immediately prior to the
Change in Control of the Company (which base salary shall, unless
otherwise agreed in writing by the Executive, include the current receipt
by the Executive of any amounts which, prior to the Change in Control of
the Company, the Executive had elected to defer, whether such compensation
is deferred under Section 401(k) of the Code or otherwise), subject to
adjustment as hereinafter provided.
(b) The Executive shall receive fringe benefits at least equal
in value to those provided for the Executive immediately prior to the
Change in Control of the Company, and shall be reimbursed, at such
intervals and in accordance with such standard policies as may be in
effect immediately prior to the Change in Control of the Company, for any
and all monies advanced in connection with the Executive's employment for
reasonable and necessary expenses incurred by the Executive on behalf of
the Company, including travel expenses.
(c) The Executive shall be included, to the extent eligible
thereunder (which eligibility shall not be conditioned on the Executive's
salary grade or on any other requirement which excludes persons of
comparable status to the Executive unless such exclusion was in effect for
such plan or an equivalent plan immediately prior to the Change in Control
of the Company), in any and all plans providing benefits for the
Employer's salaried employees in general, including but not limited to
group life insurance, hospitalization, medical, dental, profit sharing and
stock bonus plans; provided, that, in no event shall the aggregate level
of benefits under such plans in which the Executive is included be less
than the aggregate level of benefits under plans of the Company of the
type referred to in this Section 5(c) in which the Executive was
participating immediately prior to the Change in Control of the Company.
(d) The Executive shall annually be entitled to not less than
the amount of paid vacation and not fewer than the number of paid holidays
to which the Executive was entitled annually immediately prior to the
Change in Control of the Company or such greater amount of paid vacation
and number of paid holidays as may be made available annually to other
executives of the Company of comparable status and position to the
Executive.
(e) The Executive shall be included in all plans providing
additional benefits to executives of the Company of comparable status and
position to the Executive, including but not limited to deferred
compensation, split-dollar life insurance, supplemental retirement, stock
option, stock appreciation, stock bonus and similar or comparable plans;
provided, that, in no event shall the aggregate level of benefits under
such plans be less than the aggregate level of benefits under plans of the
Company of the type referred to in this Section 5(e) in which the
Executive was participating immediately prior to the Change in Control of
the Company; and provided, further, that the Company's obligation to
include the Executive in bonus or incentive compensation plans shall be
determined by Subsection 5(f) hereof.
(f) To assure that the Executive will have an opportunity to
earn incentive compensation after a Change in Control of the Company, the
Executive shall be included in a bonus plan of the Company which shall
satisfy the standards described below (such plan, the "Bonus Plan").
Bonuses under the Bonus Plan shall be payable with respect to achieving
such financial or other goals reasonably related to the business of the
Company and the Employer as the Company shall establish (the "Goals"), all
of which Goals shall be attainable, prior to the end of the Employment
Period, with approximately the same degree of probability as the goals
under the Company's bonus plan or plans as in effect immediately prior to
the Change in Control of the Company (whether one or more, the "Company
Bonus Plan") and in view of the Company's existing and projected financial
and business circumstances applicable at the time. The amount of the
bonus (the "Bonus Amount") that the Executive is eligible to earn under
the Bonus Plan shall be no less than the amount of the Executive's maximum
award provided in such Company Bonus Plan (such bonus amount herein
referred to as the "Targeted Bonus"), and in the event the Goals are not
achieved such that the entire Targeted Bonus is not payable, the Bonus
Plan shall provide for a payment of a Bonus Amount equal to a portion of
the Targeted Bonus reasonably related to that portion of the Goals which
were achieved. Payment of the Bonus Amount shall not be affected by any
circumstance occurring subsequent to the end of the Employment Period,
including termination of the Executive's employment.
6. Annual Compensation Adjustments. During the Employment
Period, the Board of Directors of the Company (or an appropriate committee
thereof) will consider and appraise, at least annually, the contributions
of the Executive to the Company, and in accordance with the Company's
practice prior to the Change in Control of the Company, due consideration
shall be given to the upward adjustment of the Executive's base
compensation rate, at least annually, (i) commensurate with increases
generally given to other executives of the Company of comparable status
and position to the Executive, and (ii) as the scope of the Company's
operations or the Executive's duties expand.
7. Termination For Cause or Without Good Reason. If there is
a Covered Termination for Cause or due to the Executive's voluntarily
terminating his employment other than for Good Reason (any such
terminations to be subject to the procedures set forth in Section 13
hereof), then the Executive shall be entitled to receive only Accrued
Benefits pursuant to Section 9(a) hereof.
8. Termination Giving Rise to a Termination Payment. (a) If
there is a Covered Termination by the Executive for Good Reason, or by the
Company other than by reason of (i) death, (ii) disability pursuant to
Section 12 hereof, or (iii) Cause (any such terminations to be subject to
the procedures set forth in Section 13 hereof), then the Executive shall
be entitled to receive, and the Company shall promptly pay, Accrued
Benefits and, in lieu of further base salary for periods following the
Termination Date, as liquidated damages and additional severance pay and
in consideration of the covenant of the Executive set forth in Section
14(a) hereof, the Termination Payment pursuant to Section 9(b) hereof.
(b) If there is a Covered Termination and the Executive is
entitled to Accrued Benefits and the Termination Payment, then the
Executive shall be entitled to the following additional benefits:
(i) The Executive shall receive, at the expense of the
Company, outplacement services, on an individualized basis at a
level of service commensurate with the Executive's status with
the Company immediately prior to the Change in Control of the
Company (or, if higher, immediately prior to the termination of
the Executive's employment), provided by a nationally recognized
executive placement firm selected by the Company; provided that
the cost to the Company of such services shall not exceed 15% of
the Executive's annual base salary in effect immediately prior
to the Change in Control of the Company.
(ii) Until the earlier of the end of the Employment Period
or such time as the Executive has obtained new employment and is
covered by benefits which in the aggregate are at least equal in
value to the following benefits, the Executive shall continue to
be covered, at the expense of the Company, by the same or
equivalent life insurance, hospitalization, medical and dental
coverage as was required hereunder with respect to the Executive
immediately prior to the date the Notice of Termination is
given.
9. Payments Upon Termination.
(a) Accrued Benefits. For purposes of this Agreement, the
Executive's "Accrued Benefits" shall include the following amounts,
payable as described herein: (i) all base salary for the time period
ending with the Termination Date; (ii) reimbursement for any and all
monies advanced in connection with the Executive's employment for
reasonable and necessary expenses incurred by the Executive on behalf of
the Company for the time period ending with the Termination Date; (iii)
any and all other cash earned through the Termination Date and deferred at
the election of the Executive or pursuant to any deferred compensation
plan then in effect; (iv) a lump sum payment of the bonus or incentive
compensation otherwise payable to the Executive with respect to the year
in which termination occurs under all bonus or incentive compensation plan
or plans in which the Executive is a participant; and (v) all other
payments and benefits to which the Executive (or in the event of the
Executive's death, the Executive's surviving spouse or other beneficiary)
may be entitled as compensatory fringe benefits or under the terms of any
benefit plan of the Company, excluding severance payments under any
Company severance policy, practice or agreement in effect immediately
prior to the Change in Control of the Company. Payment of Accrued
Benefits shall be made promptly in accordance with the Company's
prevailing practice with respect to Subsections (i) and (ii) or, with
respect to Subsections (iii), (iv) and (v), pursuant to the terms of the
benefit plan or practice establishing such benefits.
(b) Termination Payment.
(i) Subject to the limits set forth in Subsection 9(b)(ii)
hereof, the Termination Payment shall be an amount equal to (A) the
Executive's annual base salary, as in effect immediately prior to the
Change in Control of the Company, as adjusted upward, from time to time,
pursuant to Section 6 hereof, plus (B) the amount of the average annual
bonus award (determined on an annualized basis for any bonus award paid
for a period of less than one year and excluding any year for which the
Executive did not participate in any bonus plan) paid to the Executive
with respect to the three complete fiscal years preceding the Termination
Date (the aggregate amount set forth in (A) and (B) hereof shall hereafter
be referred to as "Annual Cash Compensation"), times (C) the lesser of (1)
two and (2) the number of years or fractional portion thereof remaining in
the Employment Period determined as of the Termination Date; provided,
however, that such amount shall not be less than the greater of (i) the
amount of the Executive's Annual Cash Compensation or (ii) the severance
benefits to which the Executive would have been entitled under the
Company's severance policies and practices in effect immediately prior to
the Change in Control of the Company. The Termination Payment shall be
paid to the Executive in cash equivalent ten business days after the
Termination Date. Such lump sum payment shall not be reduced by any
present value or similar factor, and the Executive shall not be required
to mitigate the amount of the Termination Payment by securing other
employment or otherwise, nor will such Termination Payment be reduced by
reason of the Executive securing other employment or for any other reason.
The Termination Payment shall be in lieu of, and acceptance by the
Executive of the Termination Payment shall constitute the Executive's
release of any rights of Executive to, any other severance payments under
any Company severance policy, practice or agreement. The Company shall
bear up to $10,000 in the aggregate of fees and expenses of consultants
and/or legal or accounting advisors engaged by the Executive to advise the
Executive as to matters relating to the computation of benefits due and
payable under this Subsection 9(b).
(ii) Notwithstanding any other provision of this Agreement, if any
portion of the Termination Payment or any other payment under this
Agreement, or under any other agreement with or plan of the Company (in
the aggregate, "Total Payments"), would constitute an "excess parachute
payment," then the Total Payments to be made to the Executive shall be
reduced such that the value of the aggregate Total Payments that the
Executive is entitled to receive shall be One Dollar ($1) less than the
maximum amount which the Executive may receive without becoming subject to
the tax imposed by Section 4999 of the Code (or any successor provision)
or which the Company may pay without loss of deduction under Section
280G(a) of the Code (or any successor provision). For purposes of this
Agreement, the terms "excess parachute payment" and "parachute payments"
shall have the meanings assigned to them in Section 280G of the Code (or
any successor provision), and such "parachute payments" shall be valued as
provided therein. Present value for purposes of this Agreement shall be
calculated in accordance with Section 1274(b) (2) of the Code (or any
successor provision). Within forty days following delivery of the Notice
of Termination or notice by the Company to the Executive of its belief
that there is a payment or benefit due the Executive which will result in
an excess parachute payment as defined in Section 280G of the Code (or any
successor provision), the Executive and the Company, at the Company's
expense, shall obtain the opinion (which need not be unqualified) of
nationally recognized tax counsel selected by the Company's independent
auditors and acceptable to the Executive in his sole discretion (which may
be regular outside counsel to the Company), which opinion sets forth (A)
the amount of the Base Period Income, (B) the amount and present value of
Total Payments and (C) the amount and present value of any excess
parachute payments determined without regard to the limitations of this
Subsection 9(b)(ii). As used in this Subsection 9(b)(ii), the term "Base
Period Income" means an amount equal to the Executive's "annualized
includible compensation for the base period" as defined in Section
280G(d)(l) of the Code (or any successor provision). For purposes of such
opinion, the value of any noncash benefits or any deferred payment or
benefit shall be determined by the Company's independent auditors in
accordance with the principles of Sections 280G(d)(3) and (4) of the Code
(or any successor provisions), which determination shall be evidenced in a
certificate of such auditors addressed to the Company and the Executive.
Such opinion shall be dated as of the Termination Date and addressed to
the Company and the Executive and shall be binding upon the Company and
the Executive. If such opinion determines that there would be an excess
parachute payment, the Termination Payment hereunder or any other payment
or benefit determined by such counsel to be includible in Total Payments
shall be reduced or eliminated as specified by the Executive in writing
delivered to the Company within thirty days of his receipt of such opinion
or, if the Executive fails to so notify the Company, then as the Company
shall reasonably determine, so that under the bases of calculations set
forth in such opinion there will be no excess parachute payment. If such
legal counsel so requests in connection with the opinion required by this
Section, the Executive and the Company shall obtain, at the Company's
expense, and the legal counsel may rely on in providing the opinion, the
advice of a firm of recognized executive compensation consultants as to
the reasonableness of any item of compensation to be received by the
Executive. If the provisions of Sections 280G and 4999 of the Code (or
any successor provisions) are repealed without succession, then this
Section 9(b) (ii) shall be of no further force or effect.
(iii) (A) If, notwithstanding the provisions of Subsection (ii) of
this Section 9(b), but subject to paragraph (B), it is ultimately
determined by a court or pursuant to a final determination by the Internal
Revenue Service that any portion of Total Payments is subject to the tax
(the "Excise Tax") imposed by Section 4999 of the Code (or any successor
provision), the Company shall pay to the Executive an additional amount
(the "Gross-Up Payment") such that the net amount retained by the
Executive after deduction of any Excise Tax and any interest charges or
penalties in respect of the imposition of such Excise Tax (but not any
federal, state or local income tax) on the Total Payments, and any
federal, state and local income tax and Excise Tax upon the payment
provided for by this Subsection (iii), shall be equal to the Total
Payments. For purposes of determining the amount of the Gross-Up Payment,
the Executive shall be deemed to pay federal income taxes at the highest
marginal rate of federal income taxation in the calendar year in which the
Gross-Up Payment is to be made and state and local income taxes at the
highest marginal rates of taxation in the state and locality of the
Executive's domicile for income tax purposes on the date the Gross-Up
Payment is made, net of the maximum reduction in federal income taxes
which could be obtained from deduction of such state and local taxes.
(B) If legislation is enacted that would require the Company's
shareholders to approve this Agreement, prior to a Change in Control of
the Company, due solely to the provision contained in paragraph (A) of
this Subsection 9(b)(iii), then
(1) from and after such time as shareholder approval would
be required, until shareholder approval is obtained as required
by such legislation, paragraph (A) shall be of no force and
effect;
(2) the Company and the Executive shall use their best
efforts to consider and agree in writing upon an amendment to
this Subsection 9(b) (iii) such that, as amended, this
Subsection would provide the Executive with the benefits
intended to be afforded to the Executive by paragraph (A)
without requiring shareholder approval; and
(3) at the reasonable request of the Executive, the
Company shall seek shareholder approval of this Agreement at the
next annual meeting of shareholders of the Company.
10. Death. (a) Except as provided in Section 10(b) hereof, in
the event of a Covered Termination due to the Executive's death, the
Executive's estate, heirs and beneficiaries shall receive all the
Executive's Accrued Benefits through the Termination Date.
(b) In the event the Executive dies after a Notice of
Termination is given (i) by the Company or (ii) by the Executive for Good
Reason, the Executive's estate, heirs and beneficiaries shall be entitled
to the benefits described in Section 10(a) hereof and, subject to the
provisions of this Agreement, to such Termination Payment as the Executive
would have been entitled to had the Executive lived. For purposes of this
Subsection 10(b), the Termination Date shall be the earlier of thirty days
following the giving of the Notice of Termination, subject to extension
pursuant to Section 1(m) hereof, or one day prior to the end of the
Employment Period.
11. Retirement. If, during the Employment Period, the
Executive and the Company shall execute an agreement providing for the
early retirement of the Executive from the Company, or the Executive shall
otherwise give notice that he is voluntarily choosing to retire early from
the Company, the Executive shall receive Accrued Benefits through the
Termination Date; provided, that if the Executive's employment is
terminated by the Executive for Good Reason or by the Company other than
by reason of death, disability or Cause and the Executive also, in
connection with such termination, elects voluntary early retirement, the
Executive shall also be entitled to receive a Termination Payment pursuant
to Section 8(a) hereof.
12. Termination for Disability. If, during the Employment
Period, as a result of the Executive's disability due to physical or
mental illness or injury (regardless of whether such illness or injury is
job-related), the Executive shall have been absent from the Executive's
duties hereunder on a full-time basis for a period of six consecutive
months and, within thirty days after the Company notifies the Executive in
writing that it intends to terminate the Executive's employment (which
notice shall not constitute the Notice of Termination contemplated below),
the Executive shall not have returned to the performance of the
Executive's duties hereunder on a full-time basis, the Company may
terminate the Executive's employment for purposes of this Agreement
pursuant to a Notice of Termination given in accordance with Section 13
hereof. If the Executive's employment is terminated on account of the
Executive's disability in accordance with this Section, the Executive
shall receive Accrued Benefits in accordance with Section 9(a) hereof and
shall remain eligible for all benefits provided by any long term
disability programs of the Company in effect at the time of such
termination.
13. Termination Notice and Procedure. Any Covered Termination
by the Company or the Executive (other than a termination of the
Executive's employment that is a Covered Termination by virtue of Section
2(b) hereof) shall be communicated by written Notice of Termination to the
Executive, if such Notice is given by the Company, and to the Company, if
such Notice is given by the Executive, all in accordance with the
following procedures and those set forth in Section 23 hereof:
(a) If such termination is for disability, Cause or Good
Reason, the Notice of Termination shall indicate in reasonable detail the
facts and circumstances alleged to provide a basis for such termination.
(b) Any Notice of Termination by the Company shall have been
approved, prior to the giving thereof to the Executive, by a resolution
duly adopted by a majority of the directors of the Company (or any
successor corporation) then in office.
(c) If the Notice is given by the Executive for Good Reason,
the Executive may cease performing his duties hereunder on or after the
date fifteen days after the delivery of Notice of Termination and shall in
any event cease employment on the Termination Date. If the Notice is
given by the Company, then the Executive may cease performing his duties
hereunder on the date of receipt of the Notice of Termination, subject to
the Executive's rights hereunder.
(d) The Executive shall have thirty days, or such longer period
as the Company may determine to be appropriate, to cure any conduct or
act, if curable, alleged to provide grounds for termination of the
Executive's employment for Cause under this Agreement pursuant to
Subsection 1(d) (iii) hereof.
(e) The recipient of any Notice of Termination shall personally
deliver or mail in accordance with Section 23 hereof written notice of any
dispute relating to such Notice of Termination to the party giving such
Notice within fifteen days after receipt thereof; provided, however, that
if the Executive's conduct or act alleged to provide grounds for
termination by the Company for Cause is curable, then such period shall be
thirty days. After the expiration of such period, the contents of the
Notice of Termination shall become final and not subject to dispute.
14. Further Obligations of the Executive.
(a) Competition. The Executive agrees that, in the event of
any Covered Termination where the Executive is entitled to Accrued
Benefits and the Termination Payment, the Executive shall not, for a
period expiring one year after the Termination Date, without the prior
written approval of the Company's Board of Directors, participate in the
management of, be employed by or own any business enterprise at a location
within the United States that engages in substantial competition with the
Company or its subsidiaries, where such enterprise's revenues from any
competitive activities amount to 10% or more of such enterprise's net
revenues and sales for its most recently completed fiscal year; provided,
however, that nothing in this Section 14(a) shall prohibit the Executive
from owning stock or other securities of a competitor amounting to less
than five percent of the outstanding capital stock of such competitor.
(b) Confidentiality. During and following the Executive's
employment by the Company, the Executive shall hold in confidence and not
directly or indirectly disclose or use or copy or make lists of any
confidential information or proprietary data of the Company (including
that of the Employer), except to the extent authorized in writing by the
Board of Directors of the Company or required by any court or
administrative agency, other than to an employee of the Company or a
person to whom disclosure is reasonably necessary or appropriate in
connection with the performance by the Executive of duties as an executive
of the Company. Confidential information shall not include any
information known generally to the public or any information of a type not
otherwise considered confidential by persons engaged in the same business
or a business similar to that of the Company. All records, files,
documents and materials, or copies thereof, relating to the business of
the Company which the Executive shall prepare, or use, or come into
contact with, shall be and remain the sole property of the Company and
shall be promptly returned to the Company upon termination of employment
with the Company.
15. Expenses and Interest. If, after a Change in Control of
the Company, (i) a dispute arises with respect to the enforcement of the
Executive's rights under this Agreement or (ii) any legal or arbitration
proceeding shall be brought to enforce or interpret any provision
contained herein or to recover damages for breach hereof, in either case
so long as the Executive is not acting in bad faith, the Executive shall
recover from the Company any reasonable attorneys' fees and necessary
costs and disbursements incurred as a result of such dispute, legal or
arbitration proceeding ("Expenses"), and prejudgment interest on any money
judgment or arbitration award obtained by the Executive calculated at the
rate of interest announced by Firstar Bank Milwaukee, National
Association, Milwaukee, Wisconsin, from time to time as its prime or base
lending rate from the date that payments to him should have been made
under this Agreement. Within ten days after the Executive's written
request therefor, the Company shall pay to the Executive, or such other
person or entity as the Executive may designate in writing to the Company,
the Executive's reasonable Expenses in advance of the final disposition or
conclusion of any such dispute, legal or arbitration proceeding.
16. Payment Obligations Absolute. The Company's obligation
during and after the Employment Period to pay the Executive the amounts
and to make the benefit and other arrangements provided herein shall be
absolute and unconditional and shall not be affected by any circumstances,
including, without limitation, any setoff, counterclaim, recoupment,
defense or other right which the Company may have against him or anyone
else. Except as provided in Section 15 of this Agreement, all amounts
payable by the Company hereunder shall be paid without notice or demand.
Each and every payment made hereunder by the Company shall be final, and
the Company will not seek to recover all or any part of such payment from
the Executive, or from whomsoever may be entitled thereto, for any reason
whatsoever.
17. Successors. (a) If the Company sells, assigns or transfers
all or substantially all of its business and assets to any Person or if
the Company merges into or consolidates or otherwise combines (where the
Company does not survive such combination) with any Person (any such
event, a "Sale of Business"), then the Company shall assign all of its
right, title and interest in this Agreement as of the date of such event
to such Person, and the Company shall cause such Person, by written
agreement in form and substance reasonably satisfactory to the Executive,
to expressly assume and agree to perform from and after the date of such
assignment all of the terms, conditions and provisions imposed by this
Agreement upon the Company. Failure of the Company to obtain such
agreement prior to the effective date of such Sale of Business shall be a
breach of this Agreement constituting "Good Reason" hereunder, except that
for purposes of implementing the foregoing the date upon which such Sale
of Business becomes effective shall be deemed the Termination Date. In
case of such assignment by the Company and of assumption and agreement by
such Person, as used in this Agreement, "Company" shall thereafter mean
such Person which executes and delivers the agreement provided for in this
Section 18 or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law, and this Agreement shall
inure to the benefit of, and be enforceable by, such Person. The
Executive shall, in his discretion, be entitled to proceed against any or
all of such Persons, any Person which theretofore was such a successor to
the Company (as defined in the first paragraph of this Agreement) and the
Company (as so defined) in any action to enforce any rights of the
Executive hereunder. Except as provided in this Subsection, this
Agreement shall not be assignable by the Company. This Agreement shall
not be terminated by the voluntary or involuntary dissolution of the
Company.
(b) This Agreement and all rights of the Executive shall inure
to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, heirs and beneficiaries. All
amounts payable to the Executive under Sections 7, 8, 9, 10, 11, 12 and 15
hereof if the Executive had lived shall be paid, in the event of the
Executive's death, to the Executive's estate, heirs and representatives;
provided, however, that the foregoing shall not be construed to modify any
terms of any benefit plan of the Company, as such terms are in effect on
the date of the Change in Control of the Company, that expressly govern
benefits under such plan in the event of the Executive's death.
18. Severability. The provisions of this Agreement shall be
regarded as divisible, and if any of said provisions or any part hereof
are declared invalid or unenforceable by a court of competent
jurisdiction, the validity and enforceability of the remainder of such
provisions or parts hereof and the applicability thereof shall not be
affected thereby.
19. Amendment. This Agreement may not be amended or modified
at any time except by written instrument executed by the Company and the
Executive.
20. Withholding. The Company shall be entitled to withhold
from amounts to be paid to the Executive hereunder any federal, state or
local withholding or other taxes or charges which it is from time to time
required to withhold; provided, that the amount so withheld shall not
exceed the minimum amount required to be withheld by law. The Company
shall be entitled to rely on an opinion of nationally recognized tax
counsel if any question as to the amount or requirement of any such
withholding shall arise.
21. Certain Rules of Construction. No party shall be
considered as being responsible for the drafting of this Agreement for the
purpose of applying any rule construing ambiguities against the drafter or
otherwise. No draft of this Agreement shall be taken into account in
construing this Agreement. Any provision of this Agreement which requires
an agreement in writing shall be deemed to require that the writing in
question be signed by the Executive and an authorized representative of
the Company.
22. Governing Law; Resolution of Disputes. This Agreement and
the rights and obligations hereunder shall be governed by and construed in
accordance with the laws of the State of Wisconsin. Any dispute arising
out of this Agreement shall, at the Executive's election, be determined by
arbitration under the rules of the American Arbitration Association then
in effect (in which case both parties shall be bound by the arbitration
award) or by litigation. Whether the dispute is to be settled by
arbitration or litigation, the venue for the arbitration or litigation
shall be Madison, Wisconsin or, at the Executive's election, if the
Executive is no longer residing or working in the Madison, Wisconsin
metropolitan area, in the judicial district encompassing the city in which
the Executive resides; provided, that, if the Executive is not then
residing in the United States, the election of the Executive with respect
to such venue shall be either Madison, Wisconsin or in the judicial
district encompassing that city in the United States among the thirty
cities having the largest population (as determined by the most recent
United States Census data available at the Termination Date) which is
closest to the Executive's residence. The parties consent to personal
jurisdiction in each trial court in the selected venue having subject
matter jurisdiction notwithstanding their residence or situs, and each
party irrevocably consents to service of process in the manner provided
hereunder for the giving of notices.
23. Notice. Notices given pursuant to this Agreement shall be
in writing and, except as otherwise provided by Section 13(d) hereof,
shall be deemed given when actually received by the Executive or actually
received by the Company's Secretary or any officer of the Company other
than the Executive. If mailed, such notices shall be mailed by United
States registered or certified mail, return receipt requested, addressee
only, postage prepaid, if to the Company, to WPL Holdings, Inc.,
Attention: Secretary (or President, if the Executive is then Secretary),
222 West Washington Avenue, P.O. Box 2568, Madison, Wisconsin 53701-2568,
or if to the Executive, at the address set forth below the Executive's
signature to this Agreement, or to such other address as the party to be
notified shall have theretofore given to the other party in writing.
24. No Waiver. No waiver by either party at any time of any
breach by the other party of, or compliance with, any condition or
provision of this Agreement to be performed by the other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the
same time or any prior or subsequent time.
25. Headings. The headings herein contained are for reference
only and shall not affect the meaning or interpretation of any provision
of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the day and year first above written.
WPL HOLDINGS, INC.
By: _____________________________________
Its: _____________________________________
Attest: ________________________________
Its: _____________________________________
EXECUTIVE:
_____________________________________(SEAL)
Address: