As Executed
EMPLOYMENT AGREEMENT
THIS AGREEMENT by and between Interstate Energy Corporation, a
Wisconsin corporation (the "Company"), and Erroll B. Davis, Jr. (the
"Executive"), dated as of the 21st day of April, 1998.
W I T N E S S E T H T H A T
WHEREAS, the Company is party to an Agreement and Plan of
Merger, as amended (the "Merger Agreement"), dated November 10, 1995, by
and among the Company, IES Industries Inc., an Iowa corporation ("IES"),
Interstate Power Company, a Delaware corporation ("Interstate Power"),
WPLH Acquisition Co., a Wisconsin corporation and a wholly-owned
subsidiary of the Company, and Interstate Power Company, a Wisconsin
corporation and a wholly-owned subsidiary of Interstate; and
WHEREAS, the parties to the Merger Agreement wish to provide for
the orderly succession of management of the Company following the
Effective Time (as defined in the Merger Agreement); and
WHEREAS, the parties to the Merger Agreement further wish to
provide for the employment by the Company of the Executive, and the
Executive wishes to serve the Company and its subsidiaries, in the
capacities and on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, it is hereby agreed as follows:
1. Employment Period. The Company shall employ the Executive,
and the Executive shall serve the Company, on the terms and conditions set
forth in this Agreement, for an initial period (the "Initial Period")
commencing at the Effective Time and ending on the date immediately
preceding the fifth anniversary of the Effective Time. This Agreement
thereafter will automatically renew for successive terms of one (1) year
each, unless either party hereto has given sixty (60) days' advance
written notice of its or his intent to allow the term of this Agreement to
expire. The term during which the Executive is employed by the Company
hereunder (including without limitation the Initial Period) is hereafter
referred to as the "Employment Period." Upon the termination of the
Employment Period the Executive will have the status of a retired senior
executive officer of the Company and shall be entitled to all of the
rights, privileges and benefits provided to such retired officers.
2. Position and Duties.
(a) During the first two (2) years of the Initial Period,
the Executive shall serve as President and Chief Executive
Officer of the Company and thereafter, until the end of the
Employment Period, the Executive shall serve as Chairman of the
Board of Directors, President and Chief Executive Officer of the
Company; in each case with such duties and responsibilities as
are customarily assigned to such positions, and such other
duties and responsibilities not inconsistent therewith as may
from time to time be assigned to him by the Board of Directors
of the Company (the "Board"). The Executive also shall continue
to serve as a member of the Board following the Effective Time,
and the Board shall propose the Executive for re-election to the
Board throughout the Employment Period.
(b) In addition to the responsibilities designated in
paragraph (a) of Section 2 above, during the three-year period
following the Effective Time, the Executive shall be entitled to
serve as the Chief Executive Officer of each entity which during
such period is a subsidiary of the Company and the Company shall
cause the Executive to be appointed or elected as the Chief
Executive Officer of each such subsidiary. In his capacity as
the Chief Executive Officer of said subsidiaries, the Executive
shall have such duties and responsibilities as are customarily
assigned to such position, and such other duties and
responsibilities not inconsistent therewith as may from time to
time be assigned to him by the Board of Directors of each such
subsidiary. During the Employment Period, the Executive also
shall serve as a member of the Board of Directors of each of the
Company's subsidiaries and the Company shall cause the Executive
to be appointed, elected or re-elected as such a director.
(c) During the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive is
entitled, the Executive shall devote reasonable attention and
time during normal business hours to the business and affairs of
the Company and its affiliates and, to the extent necessary to
discharge the responsibilities assigned to the Executive under
this Agreement, use the Executive's reasonable best efforts to
carry out such responsibilities faithfully and efficiently. It
shall not be considered a violation of the foregoing for the
Executive to serve on corporate, industry, civic or charitable
boards or committees, so long as such activities do not
significantly interfere with the performance of the Executive's
responsibilities as an employee of the Company and its
affiliates in accordance with this Agreement.
(d) The Company's headquarters shall be located in
Madison, Wisconsin and the Executive shall reside in the general
area of Madison, Wisconsin. During the Employment Period, the
Company also will provide the Executive with a furnished
apartment in the Cedar Rapids, Iowa area.
3. Compensation.
(a) Base Salary. The Executive's compensation during the
Employment Period shall be determined by the Board upon the
recommendation of the Compensation and Personnel Committee (or
other appropriate committee) of the Board, subject to the next
sentence and paragraph (b) of Section 3. During the Employment
Period, the Executive shall receive an annual base salary
("Annual Base Salary") of not less than his aggregate annual
base salary from the Company and its subsidiaries as in effect
immediately before the Effective Time. The Annual Base Salary
shall be payable in accordance with the Company's regular
payroll practice for its senior executives, as in effect from
time to time. During the Employment Period, the Annual Base
Salary shall be reviewed for possible increase at least
annually. Any increase in the Annual Base Salary shall not
limit or reduce any other obligation of the Company under this
Agreement. The Annual Base Salary shall not be reduced after
any such increase, and the term "Annual Base Salary" shall
thereafter refer to the Annual Base Salary as so increased.
(b) Incentive Compensation. During the Employment Period,
the Executive shall continue to participate in short-term
incentive compensation plans and long-term incentive
compensation plans (the latter to consist of plans offering
stock options, restricted stock and other long-term incentive
compensation) offered by the Company and its present or future
affiliates which shall provide him with the opportunity to earn,
on a year-by-year basis, short-term and long-term incentive
compensation (the "Incentive Compensation") at least equal to
the amounts that he had the opportunity to earn immediately
before the Effective Time, and such compensation shall be
payable in accordance with standards (i.e., performance
criteria, performance levels, etc.) which are no less favorable
to the Executive than those applicable with respect to the
Incentive Compensation payable to the Executive immediately
before the Effective Time.
(c) Other Benefits.
(i) Retirement Plan; Supplemental Retirement Plan.
During the Employment Period, the Executive shall
participate in a retirement plan and/or supplemental
retirement plan (the "Defined Benefit Arrangement") such
that the aggregate value of the retirement benefits that he
and his spouse will receive at the end of the Employment
Period under all defined benefit plans of the Company and
its affiliates (whether qualified or not) will be not less
than the benefits he would have received (assuming his
employment through the end of the Employment Period) under
the Wisconsin Power and Light Company Retirement Plan and
the Supplemental Retirement Plan in which the Executive
participates, as in effect immediately prior to the
Effective Time.
(ii) Executive Tenure Compensation Plan. During the
Employment Period, the Executive shall continue to
participate in the Wisconsin Power and Light Company
Executive Tenure Compensation Plan.
(iii) Life Insurance. During the Employment
Period, the Company shall provide the Executive with life
insurance coverage (the "Life Insurance Coverage")
providing a death benefit to such beneficiary or
beneficiaries as the Executive may designate of not less
than three times his Annual Base Salary.
(iv) Additional Benefits. In addition, and without
limiting the generality of the foregoing, during the
Employment Period and thereafter: (A) the Executive shall
be entitled to participate in all applicable incentive,
savings and retirement plans, practices, policies and
programs of the Company and its affiliates to the same
extent as other senior executives (or, where applicable,
retired senior executives) of the Company, and (B) the
Executive and/or the Executive's family, as the case may
be, shall be eligible for immediate participation in (and
without any limitation for preexisting conditions), and
shall receive all benefits under, all applicable welfare
benefit plans, practices, policies and programs provided by
the Company and its affiliates, other than severance plans,
practices, policies and programs but including, without
limitation, medical, prescription, dental, disability,
salary continuance, employee life insurance, group life
insurance, accidental death and travel accident insurance
plans and programs, to the same extent as other senior
executives (or, where applicable, retired senior
executives) of the Company, provided, however, that the
Executive's aggregate benefits as a retired senior
executive under the plans described in this clause (B)
shall not be less than the benefits provided by the Company
and its affiliates to its retired senior executive officers
as of the date of this Agreement.
(d) Perquisites. During the Employment Period, the
Executive shall be entitled to receive such perquisites as the
Company may establish from time to time which are commensurate
with his position and at lease comparable to those received by
other senior executives at the Company.
(e) Expense Reimbursement. The Company shall reimburse
the Executive for all reasonable and documented expenses
incurred by the Executive in the performance of the Executive's
duties under this Agreement.
4. Termination of Employment.
(a) Death or Disability. The Executive's employment shall
terminate automatically upon the Executive's death during the
Employment Period. The Company shall be entitled to terminate
the Executive's employment because of the Executive's Disability
during the Employment Period. "Disability" means that (i) the
Executive has been unable, for a period of 180 consecutive
business days, to perform the Executive's duties under this
Agreement, as a result of physical or mental illness or injury,
and (ii) a physician selected by the Company or its insurers,
and acceptable to the Executive or the Executive's legal
representative, has determined that the Executive's incapacity
is total and permanent. A termination of the Executive's
employment by the Company for Disability shall be communicated
to the Executive by written notice, and shall be effective on
the 30th day after receipt of such notice by the Executive (the
"Disability Effective Date"), unless the Executive returns to
full-time performance of the Executive's duties before the
Disability Effective Date.
(b) By the Company.
(i) The Company may terminate the Executive's
employment during the Employment Period for Cause or
without Cause. "Cause" means:
A. the willful and continued failure of the
Executive substantially to perform the Executive's
duties under this Agreement (other than as a result of
physical or mental illness or injury), after the Board
delivers to the Executive a written demand for
substantial performance that specifically identifies
the manner in which the Board believes that the
Executive has not substantially performed the
Executive's duties; or
B. illegal conduct or gross misconduct by the
Executive, in either case that is willful and results
in material and demonstrable damage to the business or
reputation of the Company.
No act or failure to act on the part of the Executive shall
be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable
belief that the Executive's action or omission was in the
best interests of the Company. Any act or failure to act
that is based upon authority given pursuant to a resolution
duly adopted by the Board, or the advice of counsel for the
Company, shall be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in
the best interests of the Company.
(ii) A termination of the Executive's employment for
Cause shall be effected in accordance with the following
procedures. The Company shall give the Executive written
notice ("Notice of Termination for Cause") of its intention
to terminate the Executive's employment for Cause, setting
forth in reasonable detail the specific conduct of the
Executive that it considers to constitute Cause and the
specific provision(s) of this Agreement on which it relies,
and stating the date, time and place of the Special Board
Meeting for Cause. The "Special Board Meeting for Cause"
means a meeting of the Board called and held specifically
for the purpose of considering the Executive's termination
for Cause, that takes place not less than ten (10) and not
more than twenty (20) business days after the Executive
receives the Notice of Termination for Cause. The
Executive shall be given an opportunity, together with
counsel, to be heard at the Special Board Meeting for
Cause. The Executive's termination for Cause shall be
effective when and if a resolution is duly adopted at the
Special Board Meeting for Cause by a two-thirds vote of the
entire membership of the Board, excluding employee
directors, stating that in the good faith opinion of the
Board, the Executive is guilty of the conduct described in
the Notice of Termination for Cause, and that conduct
constitutes Cause under this Agreement.
(iii) A termination of the Executive's employment
without Cause shall be effected in accordance with the
following procedures. The Company shall give the Executive
written notice ("Notice of Termination without Cause") of
its intention to terminate the Executive's employment
without Cause, stating the date, time and place of the
Special Board Meeting without Cause. The "Special Board
Meeting without Cause" means a meeting of the Board called
and held specifically for the purpose of considering the
Executive's termination without Cause, that takes place not
less than ten (10) and not more than twenty (20) business
days after the Executive receives the Notice of Termination
without Cause. The Executive shall be given an
opportunity, together with counsel, to be heard at the
Special Board Meeting without Cause. The Executive's
termination without Cause shall be effective when and if a
resolution is duly adopted at the Special Board Meeting
without Cause by a two-thirds vote of the entire membership
of the Board, excluding employee directors, stating that
the Executive is terminated without Cause.
(c) Good Reason.
(i) The Executive may terminate employment for Good
Reason or without Good Reason. "Good Reason" means:
A. the assignment to the Executive of any
duties inconsistent in any respect with paragraphs (a)
and (b) of Section 2 of this Agreement, or any other
action by the Company that results in a diminution in
the Executive's position, authority, duties or
responsibilities, other than an isolated,
insubstantial and inadvertent action that is not taken
in bad faith and is remedied by the Company promptly
after receipt of notice thereof from the Executive;
B. any failure by the Company to comply with
any provision of Section 3 of this Agreement, other
than an isolated, insubstantial and inadvertent
failure that is not taken in bad faith and is remedied
by the Company promptly after receipt of notice
thereof from the Executive;
C. any requirement by the Company that the
Executive's services be rendered primarily at a
location or locations other than that provided for in
paragraph (d) of Section 2 of this Agreement;
D. any purported termination of the Executive's
employment by the Company for a reason or in a manner
not expressly permitted by this Agreement;
E. any failure by the Company to comply with
paragraph (c) of Section 11 of this Agreement; or
F. any other substantial breach of this
Agreement by the Company that either is not taken in
good faith or is not remedied by the Company promptly
after receipt of notice thereof from the Executive.
(ii) A termination of employment by the Executive for
Good Reason shall be effectuated by giving the Company
written notice ("Notice of Termination for Good Reason") of
the termination within six months of the event constituting
Good Reason, setting forth in reasonable detail the
specific conduct of the Company that constitutes Good
Reason and the specific provision(s) of this Agreement on
which the Executive relies. A termination of employment by
the Executive for Good Reason shall be effective on the
fifth business day following the date when the Notice of
Termination for Good Reason is given, unless the notice
sets forth a later date (which date shall in no event be
later than thirty (30) days after the notice is given).
(iii) A termination of the Executive's employment
by the Executive without Good Reason shall be effected by
giving the Company written notice of the termination.
(d) Date of Termination. The "Date of Termination" means
the date of the Executive's death, the Disability Effective
Date, the date on which the termination of the Executive's
employment by the Company for Cause or without Cause or by the
Executive for Good Reason is effective, or the date on which the
Executive gives the Company notice of a termination of
employment without Good Reason, as the case may be.
5. Obligations of the Company upon Termination.
(a) By the Company other than for Cause, Death or
Disability; by the Executive for Good Reason. If, during the
Employment Period, the Company terminates the Executive's
employment, other than for Cause, Death, or Disability, or the
Executive terminates employment for Good Reason, the Company
shall continue to provide the Executive with the compensation
and benefits set forth in paragraphs (a), (b) and (c) of Section
3 as if he had remained employed by the Company pursuant to this
Agreement through the end of the Employment Period and then
retired (at which time he will be treated as eligible for and
will be entitled to receive all retiree welfare benefits and
other benefits provided to retired senior executives, as set
forth in Section 3(c), with such benefits being calculated for
this purpose as though the Executive had retired at age 62 with
earnings on an annual basis during the years between the Date of
Termination and age 62 equal to the Executive's earnings for the
year immediately preceding the Date of Termination); provided,
that the Incentive Compensation for the period through the end
of the Employment Period shall be equal to the maximum Incentive
Compensation that the Executive would have been eligible to earn
for such period; provided, further that in lieu of stock
options, restricted stock and other stock-based awards, the
Executive shall be paid cash equal to the fair market value
(without regard to any restrictions) of the stock options,
restricted stock and other stock-based awards that would
otherwise have been granted; and provided, further that to the
extent any benefits described in paragraph (c) of Section 3
cannot be provided pursuant to the plan or program maintained by
the Company for its executives, the Company shall provide such
benefits outside such plan or program at no additional cost
(including without limitation tax cost) to the Executive and his
family; and provided, finally, that during any period when the
Executive is eligible to receive benefits of the type described
in clause (B) of paragraph (c)(iv) of Section 3 under another
employer-provided plan, the benefits provided by the Company
under this paragraph (a) of Section 5 may be made secondary to
those provided under such other plan. In addition to the
foregoing, any restricted stock outstanding on the Date of
Termination shall be fully vested as of the Date of Termination
and all options outstanding on the Date of Termination shall be
fully vested and exercisable and shall remain in effect and
exercisable through the end of their respective terms, without
regard to the termination of the Executive's employment. The
payments and benefits provided pursuant to this paragraph (a) of
Section 5 are intended as liquidated damages for a termination
of the Executive's employment by the Company other than for
Cause or Disability or for the actions of the Company leading to
a termination of the Executive's employment by the Executive for
Good Reason, and shall be the sole and exclusive remedy
therefor.
(b) Death and Disability. If the Executive's employment
is terminated by reason of the Executive's death or Disability
during the Employment Period, the Company shall pay to the
Executive or, in the case of the Executive's death, to the
Executive's designated beneficiaries (or, if there is no such
beneficiary, to the Executive's estate or legal representative),
in a lump sum in cash within thirty (30) days after the Date of
Termination, the sum of the following amounts (the "Accrued
Obligations"): (1) any portion of the Executive's Annual Base
Salary through the Date of Termination that has not yet been
paid; (2) an amount representing the Incentive Compensation for
the period that includes the Date of Termination, computed by
assuming that the amount of all such Incentive Compensation
would be equal to the maximum amount of such Incentive
Compensation that the Executive would have been eligible to earn
for such period, and multiplying that amount by a fraction, the
numerator of which is the number of days in such period through
the Date of Termination, and the denominator of which is the
total number of days in the relevant period; (3) any
compensation previously deferred by the Executive (together with
any accrued interest or earnings thereon) that has not yet been
paid; and (4) any accrued but unpaid Incentive Compensation and
vacation pay. Any deferred compensation (together with any
accrued interest or earnings thereon, if any) that has not yet
been paid, will be paid in accordance with the terms and
conditions applicable to such deferred compensation.
(c) By the Company for Cause; By the Executive Other than
for Good Reason. If the Executive's employment is terminated by
the Company for Cause during the Employment Period, the Company
shall pay the Executive the Annual Base Salary through the Date
of Termination and the amount of any compensation previously
deferred by the Executive (together with any accrued interest or
earnings thereon), in each case to the extent not yet paid, and
the Company shall have no further obligations under this
Agreement, except as specified in Section 6 below. If the
Executive voluntarily terminates employment during the
Employment Period, other than for Good Reason, the Company shall
pay the Accrued Obligations to the Executive in a lump sum in
cash within thirty (30) days of the Date of Termination, and the
Company shall have no further obligations under this Agreement,
except as specified in Section 6 below.
6. Non-exclusivity of Rights. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any
plan, program, policy or practice provided by the Company or any of its
affiliates for which the Executive may qualify, nor shall anything in this
Agreement limit or otherwise affect such rights as the Executive may have
under any contract or agreement with the Company or any of its affiliates
relating to subject matter other than that specifically addressed herein.
Vested benefits and other amounts that the Executive is otherwise entitled
to receive under the Incentive Compensation program, the Defined Benefit
Arrangement, the Life Insurance Coverage, the Executive Tenure
Compensation Plan, the Executive's Deferred Compensation Plan(s), or any
other plan, policy, practice or program of, or any contract or agreement
with, the Company or any of its affiliates on or after the Date of
Termination shall be payable in accordance with the terms of each such
plan, policy, practice, program, contract or agreement, as the case may
be, except as explicitly modified by this Agreement.
7. Full Settlement. The Company's obligation to make the
payments provided for in, and otherwise to perform its obligations under,
this Agreement shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action that the Company may
have against the Executive or others. In no event shall the Executive be
obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement. The amounts payable by the Company under
this Agreement shall not be offset or reduced by any amounts otherwise
receivable or received by the Executive from any source, except as
specifically provided in paragraph (a) of Section 5 with respect to
benefits described in clause (B) of paragraph (c)(iv) of Section 3.
8. Confidential Information. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company or any
of its affiliated companies and their respective businesses that the
Executive obtains during the Executive's employment by the Company or any
of its affiliated companies and that is not public knowledge (other than
as a result of the Executive's violation of this Section 8) ("Confidential
Information"). The Executive shall not communicate, divulge or
disseminate Confidential Information at any time during or after the
Executive's employment with the Company, except with the prior written
consent of the Company or as otherwise required by law or legal process.
In no event shall any asserted violation of the provisions of this Section
8 constitute a basis for deferring or withholding any amounts otherwise
payable to the Executive under this Agreement.
9. Limitation on Payments.
(a) Notwithstanding any other provision of this Agreement,
if any portion of any payment under this Agreement, or under any
other agreement with or plan of the Company or its affiliates
(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 (or any successor provision) of the
Internal Revenue Code of 1986, as amended (the "Code") 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 fifteen (15) days following the
Date 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 (i) the amount of the Base Period Income,
(ii) the amount and present value of Total Payments and (iii)
the amount and present value of any excess parachute payments
determined without regard to the limitations of this paragraph
(a) of Section 9. As used in this Agreement, 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)(1) 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 Date of Termination 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, any 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 (30) 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
paragraph (a) of Section 9, 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
paragraph (a) of Section 9 shall be of no further force or
effect.
(b) If, notwithstanding the provisions of paragraph (a) of
Section 9, 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
paragraph (b) of Section 9, 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.
10. Attorneys' Fees. The Company agrees to pay, as incurred,
to the fullest extent permitted by law, all legal fees and expenses that
the Executive may reasonably incur as a result of any contest (regardless
of the outcome) by the Company, the Executive or others of the validity or
enforceability of or liability under, or otherwise involving, any
provision of this Agreement, together with interest on any delayed payment
at the applicable federal rate provided for in Section 7872(f)(2)(A) of
the Code.
11. Successors.
(a) This Agreement is personal to the Executive and,
without the prior written consent of the Company, shall not be
assignable by the Executive. This Agreement shall inure to the
benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(c) The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or
assets of the Company expressly to assume and agree to perform
this Agreement in the same manner and to the same extent that
the Company would have been required to perform it if no such
succession had taken place. As used in this Agreement,
"Company" shall mean both the Company as defined above and any
such successor that assumes and agrees to perform this
Agreement, by operation of law or otherwise.
12. Miscellaneous.
(a) This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Wisconsin, without
reference to principles of conflict of laws. The captions of
this Agreement are not part of the provisions hereof and shall
have no force or effect. This Agreement may not be amended or
modified except by a written agreement executed by the parties
hereto or their respective successors and legal representatives.
(b) All notices and other communications under this
Agreement shall be in writing and shall be given by hand
delivery to the other party or by registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Erroll B. Davis, Jr.
7829 Noll Valley Road
Verona, Wisconsin 53593
If to the Company:
Interstate Energy Corporation
222 West Washington Avenue
P.O. Box 2568
Madison, Wisconsin 53701-2568
Attention: General Counsel
With a copy to:
Benjamin F. Garmer, III
c/o Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, WI 53202-5367
or to such other address as either party furnishes to the other in writing
in accordance with this paragraph (b) of Section 12. Notices and
communications shall be effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement. If any provision of
this Agreement shall be held invalid or unenforceable in part,
the remaining portion of such provision, together with all other
provisions of this Agreement, shall remain valid and enforceable
and continue in full force and effect to the fullest extent
consistent with law.
(d) Notwithstanding any other provisions of this
Agreement, the Company may withhold from amounts payable under
this Agreement all federal, state, local and foreign taxes that
are required to be withheld by applicable laws or regulations.
(e) The Executive's or the Company's failure to insist
upon strict compliance with any provisions of, or to assert any
right under, this Agreement (including, without limitation, the
right of Executive to terminate employment for Good Reason
pursuant to paragraph (c) of Section 4 of this Agreement) shall
not be deemed to be a waiver of such provision or right or of
any other provision of or right under this Agreement.
(f) The Executive and the Company acknowledge that this
Agreement supersedes any other agreement between them concerning
the subject matter hereof, excluding the agreement between the
Executive and the Company dated June 25, 1994, as in effect on
the date hereof or as hereafter amended from time to time (the
"Severance Agreement"); provided, however, that to the extent
that a payment or benefit to be provided under this Agreement is
similarly to be provided under the Severance Agreement, the
Company agrees to pay or provide to the Executive that payment
or benefit which provides the highest value to the Executive,
and the Executive agrees, in order to avoid duplication of
payments or benefits, that upon the receipt of any such highest
value payment or benefit under either this Agreement or the
Severance Agreement, as the case may be, he shall have no right
to any similar payment or benefit of lesser value under the
other agreement.
(g) The rights and benefits of the Executive under this
Agreement may not be anticipated, assigned, alienated or subject
to attachment, garnishment, levy, execution or other legal or
equitable process except as required by law. Any attempt by the
Executive to anticipate, alienate, assign, sell, transfer,
pledge, encumber or charge the same shall be void. Payments
hereunder shall not be considered assets of the Executive in the
event of insolvency or bankruptcy.
(h) This Agreement may be executed in several
counterparts, each of which shall be deemed an original, and
said counterparts shall constitute but one and the same
instrument.
13. Effectiveness of Agreement. The effectiveness of this
Agreement is subject to the consummation of the Merger (as defined in the
Merger Agreement). If for any reason the Merger is not consummated in
accordance with the terms of the Merger Agreement, this Agreement shall be
null and void, ab initio.
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization of its Board of
Directors, the Company has caused this Agreement to be executed in its
name and on its behalf, all as of the day and year first above written.
/s/ Erroll B. Davis, Jr.
Erroll B. Davis, Jr.
INTERSTATE ENERGY CORPORATION
By /s/ E. M. Gleason
Vice President