Exhibit 10.5
EMPLOYMENT AGREEMENT
THIS AGREEMENT by and between Interstate Energy Corporation, a Wisconsin
corporation (the "Company"), and Erroll B. Davis, Jr. (the "Executive"),
originally dated as of the 21st day of April, 1998, is amended and restated as
of the 29th day of March, 1999.
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, as amended and restated.
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
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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 participated,
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,
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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 least
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:
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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
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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
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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
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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 or
performance shares or units 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.
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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. Total 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 (in the aggregate "Total Payments"), would
constitute an "excess parachute payment," the Company shall pay Executive
an additional amount (the "Gross-Up Payment") such that the net amount
retained by Executive after deduction of any excise tax imposed under
Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code"), any interest charges or penalties in respect of the imposition
of such excise tax (but not any federal, state or local income tax, or
employment tax) on the Total Payments, and any federal, state and local
income tax, employment tax, and excise tax upon the payment provided for
by this paragraph (a) of Section 9, shall be equal to the Total Payments.
For purposes
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of determining the amount of the Gross-Up Payment, the Executive shall be
deemed to pay federal income tax and employment taxes at the highest
marginal rate of federal income and employment taxation in the calendar
year in which the Gross-Up Payment is to be made and state and local
income taxes at the highest marginal rate of taxation 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 that may be obtained from the deduction of such state and
local taxes. 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 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). Promptly 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, the Executive
and the Company, at the Company's expense, shall obtain the opinion
(which need not be unqualified) of nationally recognized tax counsel
("National Tax Counsel") selected by the Company's independent auditors
and reasonably acceptable to the Executive (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,
(iii) the amount and present value of any excess parachute payments, and
(iv) the amount of any Gross-Up Payment. 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. 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 Section 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. The opinion of
National Tax Counsel shall be addressed to the Company and the Executive
and shall be binding upon the Company and the Executive. If such National
Tax 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 National Tax Counsel may rely on, 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 solely with respect to its status under Section 280G of the
Code and the regulations thereunder. Within five (5) days after the
National Tax Counsel's opinion is received by the Company and the
Executive, the Company shall pay (or cause to be paid) or distribute (or
cause to be distributed) to or for the benefit of Executive such amounts
as are then due to Executive under this Agreement.
(b) In the event that upon any audit by the Internal Revenue
Service, or by a state or local taxing authority, of the Total Payments
or Gross-Up Payment, a change is finally determined to be required in the
amount of taxes paid by the Executive, appropriate adjustments shall be
made under this Agreement such that the net amount which is payable to
the Executive after taking into account the
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provisions of Section 4999 of the Code shall reflect the intent of the
parties as expressed in paragraph (a) above, in the manner determined by
the National Tax Counsel. The Company agrees to bear all costs associated
with, and to indemnify and hold harmless, the National Tax Counsel of and
from any and all claims, damages, and expenses resulting from or relating
to its determinations pursuant to this Section 9, except for claims,
damages or expenses resulting from the gross negligence or willful
misconduct of such firm.
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:
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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 Key Executive Employment and Severance Agreement
between the Executive and the Company dated March 29, 1999, as in effect
on the date hereof
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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 the original
Agreement was subject to the consummation of the Merger (as defined in the
Merger Agreement), which was consummated April 21, 1998. The effectiveness of
this amended and restated Agreement is subject to the mutual written agreement
of the parties set forth below.
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______________________________________
Name:
Title:
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