EMPLOYMENT AGREEMENT
Employment Agreement between FPL Group, Inc., a Florida
corporation (the "Company"), and Xxxxx Xxx III (the "Executive"), dated as
of September 13, 1999.
The Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company and its
shareholders to assure that the Company and its affiliated companies will
have the continued dedication of the Executive, notwithstanding the
possibility, threat or occurrence of a Change of Control (as defined below)
of the Company. The Board believes it is imperative to diminish the
inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of
Control and to encourage the Executive's full attention and dedication to
the Company and its affiliated companies currently and in the event of any
threatened or pending Change of Control, and to provide the Executive with
compensation and benefits arrangements upon a Change of Control which
ensure that the compensation and benefits expectations of the Executive
will be satisfied and which are competitive with those of other
corporations. Therefore, in order to accomplish these objectives, the Board
has caused the Company to enter into this Employment Agreement (the
"Agreement").
Therefore, the Company and the Executive agree as follows:
1. Effective Date. The effective date of this Agreement
shall be the date on which a Change of Control occurs (the "Effective
Date"). Anything in this Agreement to the contrary notwithstanding, if a
Change of Control occurs and if the Executive's employment with the Company
or its affiliated companies is terminated or the Executive's position
(including status, offices, titles, and reporting requirements), authority,
duties, and responsibilities with the Company or its affiliated companies
is not commensurate in all material respects with the most significant of
those held, exercised, and assigned prior to the date on which the Change
of Control occurs, and if it is reasonably demonstrated by the Executive
that such termination of employment or diminution in position, authority,
duties, or responsibilities (i) was at the request of a third party who has
taken steps reasonably calculated to effect the Change of Control or (ii)
otherwise arose in connection with or anticipation of the Change of
Control, then for all purposes of this Agreement the "Effective Date" shall
mean the date immediately prior to the date of such termination of
employment or diminution in position, authority, duties or
responsibilities. As used in this Agreement, the term "affiliated
companies" shall include any corporation or other entity controlled by,
controlling or under common control with the Company.
2. Change of Control. For the purposes of this Agreement, a
"Change of Control" shall mean:
(a) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of 20% or more of either (i) the then outstanding shares of common
stock of the Company (the "Outstanding Company Common Stock") or (ii) the
combined voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that the
following acquisitions shall not constitute a Change of Control: (i) any
acquisition by the Company or any or its subsidiaries, (ii) any acquisition
by any employee benefit plan (or related trust) sponsored or maintained by
the Company or any of its subsidiaries or (iii) any acquisition by any
corporation with respect to which, following such acquisition, more than
75% of, respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election
of directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such acquisition
in substantially the same proportions as their ownership, immediately prior
to such acquisition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be; or
(b) Individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of either
an actual or threatened solicitation to which Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act applies or other actual or
threatened solicitation of proxies or consents; or
(c) Approval by the shareholders of the Company of a
reorganization, merger or consolidation, in each case, with respect to
which all or substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common Stock
and Outstanding Company Voting Securities immediately prior to such
reorganization, merger or consolidation do not, following such
reorganization, merger or consolidation, beneficially own, directly or
indirectly, more than 75% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the
case may be, of the corporation resulting from such reorganization, merger
or consolidation in substantially the same proportions as their ownership,
immediately prior to such reorganization, merger or consolidation of the
Outstanding Company Common Stock and Outstanding Company Voting Securities,
as the case may be; or
(d) Approval by the shareholders of the Company of
(i) a complete liquidation or dissolution of the Company or (ii) the sale
or other disposition of all or substantially all of the assets of the
Company, other than to a corporation, with respect to which following such
sale or other disposition, more than 75% of, respectively, the then
outstanding shares of common stock of such corporation and the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of
the individuals and entities who were the beneficial owners, respectively,
of the Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately prior to
such sale or other disposition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be.
The term "the sale or disposition by the Company of all or
substantially all of the assets of the Company" shall mean a sale or other
disposition transaction or series of related transactions involving assets
of the Company or of any direct or indirect subsidiary of the Company
(including the stock of any direct or indirect subsidiary of the Company)
in which the value of the assets or stock being sold or otherwise disposed
of (as measured by the purchase price being paid therefor or by such other
method as the Board determines is appropriate in a case where there is no
readily ascertainable purchase price) constitutes more than two-thirds of
the fair market value of the Company (as hereinafter defined). The "fair
market value of the Company" shall be the aggregate market value of the
then Outstanding Company Common Stock (on a fully diluted basis) plus the
aggregate market value of the Company's other outstanding equity
securities. The aggregate market value of the shares of Outstanding
Company Common Stock shall be determined by multiplying the number of
shares of Outstanding Company Common Stock (on a fully diluted basis)
outstanding on the date of the execution and delivery of a definitive
agreement with respect to the transaction or series of related transactions
(the "Transaction Date") by the average closing price of the shares of
Outstanding Company Common Stock for the ten trading days immediately
preceding the Transaction Date. The aggregate market value of any other
equity securities of the Company shall be determined in a manner similar to
that prescribed in the immediately preceding sentence for determining the
aggregate market value of the shares of Outstanding Company Common Stock or
by such other method as the Board shall determine is appropriate.
3. Employment Period. The Company hereby agrees to continue
the Executive in its or its affiliated companies' employ, or both, as the
case may be, and the Executive hereby agrees to remain in the employ of the
Company, or its affiliated companies, or both, as the case may be, for a
period commencing on the Effective Date and ending on the 4th anniversary
of such date (the "Employment Period").
4. Position and Duties. During the Employment Period, the
Executive's position (including status, offices, titles, and reporting
requirements), authority, duties, and responsibilities with the Company or
its affiliated companies or both, as the case may be, shall be in every
respect at least commensurate with the most significant of those held,
exercised, and assigned at any time during the 90-day period immediately
preceding the Effective Date. The Executive's services shall be performed
at the location where the Executive was employed immediately preceding the
Effective Date or any location less than 20 miles from such location,
although the Executive understands and agrees that he may be required to
travel from time to time for business purposes.
During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive
agrees to devote substantially all of his time and attention during normal
business hours to the business and affairs of the Company and its
affiliated companies and to use his reasonable best efforts to perform
faithfully and efficiently the duties and responsibilities assigned to him
hereunder. During the Employment Period it shall not be a violation of
this Agreement for the Executive to serve on corporate, civic or charitable
boards or committees, deliver lectures, fulfill speaking engagements or
teach at educational institutions and devote reasonable amounts of time to
the management of his and his family's personal investments and affairs, so
long as such activities do not significantly interfere with the performance
of the Executive's responsibilities as an employee of the Company or its
affiliated companies in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities have been
conducted by the Executive prior to the Effective Date, the reinstatement
or continued conduct of such activities (or the reinstatement or conduct of
activities similar in nature and scope thereto) subsequent to the Effective
Date shall not thereafter be deemed to interfere with the performance of
the Executive's responsibilities to the Company and its affiliated
companies.
5. Compensation. During the Employment Period, the Executive
shall be compensated as follows:
(a) Annual Base Salary. The Executive shall be paid
an annual base salary ("Annual Base Salary"), in equal biweekly
installments, at least equal to the annual base salary being paid to the
Executive by the Company and its affiliated companies with respect to the
year in which the Effective Date occurs. The Annual Base Salary shall be
reviewed at least annually and shall be increased substantially consistent
with increases in base salary generally awarded to other peer executives of
the Company and its affiliated companies. Such increases shall in no
event be less than the increases in the U.S. Department of Labor Consumer
Price Index - U.S. City Average Index. Any increase in Annual Base Salary
shall not serve to limit or reduce any other obligation to the Executive
under this Agreement. Annual Base Salary shall not be reduced after any
such increase and the term "Annual Base Salary" as utilized in this
Agreement shall refer to Annual Base Salary as so increased.
(b) Annual Bonus. In addition to Annual Base Salary,
the Executive shall be awarded, for each fiscal year ending during the
Employment Period, an annual bonus (the "Annual Bonus") in cash at least
equal to the highest annual incentive compensation (annualized for any
fiscal year consisting of less than twelve full months or with respect to
which the Executive has been employed by the Company for less than twelve
full months) paid or payable, including by reason of any deferral, to the
Executive by the Company and its affiliated companies in respect of the
three fiscal years immediately preceding the fiscal year in which the
Effective Date occurs (the "Highest Recent Bonus"). The greater of (i) the
Highest Recent Bonus or (ii) the highest Annual Bonus awarded by the
Company and its affiliated companies after the Effective Date (target or
actual, whichever is greater) is herein called the "Highest Annual Bonus".
Each such Annual Bonus shall be paid no later than the end of the third
month of the fiscal year next following the fiscal year for which the
Annual Bonus is awarded, unless the Executive otherwise elects to defer
the receipt of such Annual Bonus.
(c) Long Term Incentive Compensation. During the
Employment Period, the Executive shall be entitled to participate in all
incentive compensation plans, practices, policies, and programs applicable
generally to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies, and
programs provide the Executive with incentive opportunities and potential
benefits, both as to amount and percentage of compensation, less favorable,
in the aggregate, than those provided by the Company and its affiliated
companies for the Executive under the FPL Group Long Term Incentive Plan
(including, without limitation, performance share grants and awards) as in
effect at any time during the 90-day period immediately preceding the
Effective Date or; if more favorable to the Executive, those provided
generally at any time after the Effective Date to other peer executives of
the Company and its affiliated companies.
In addition, on the Effective Date (i) the maximum performance
criteria of all outstanding performance awards, performance-based
restricted stock, and other stock-based awards granted to the Executive
shall be deemed fully achieved and all such awards shall be fully earned
and vested; (ii) any option, stock appreciation right, and other award in
the nature of a right that may be exercised that was granted to the
Executive and which was not previously exercisable and vested shall become
fully exercisable and vested; (iii) the restrictions, deferral limitations,
and forfeiture conditions applicable to any outstanding award granted to
the Executive under an incentive compensation plan, practice, policy or
program shall lapse and such awards shall be deemed fully vested; and (iv)
all outstanding awards shall be canceled and the Executive shall be paid in
cash for such awards on the basis of the change of control price as of the
date of the occurrence of the Change of Control (or such other date
applicable to awards granted to other peer executives under the applicable
incentive compensation plan, practice, policy or program) to the extent
such cancellation of and payment for an award would not cause the Executive
to incur actual short-swing profits liability under Section 16(b) of the
Exchange Act. For purposes of this paragraph, the term "change of control
price" means the highest price per share paid in any transaction reported
on the securities exchange or trading system on which the shares of common
stock of the Company are then primarily listed or traded, or paid or
offered in any transaction related to the Change of Control at any time
during the preceding 60-day period, except that in the case of incentive
stock options (within the meaning of Section 422(b) of the Internal Revenue
Code of 1986, as amended (the "Code")) and stock appreciation rights
relating thereto, such price shall be based only on transactions reported
for the date such awards are cashed out.
(d) Savings and Retirement Plans. During the
Employment Period, the Executive shall be entitled to participate in all
savings and retirement plans, practices, policies, and programs applicable
generally to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies, and
programs provide the Executive with savings opportunities and retirement
benefit opportunities, in each case, less favorable, in the aggregate, than
the most favorable of those provided by the Company and its affiliated
companies for the Executive under such plans, practices, policies, and
programs as in effect at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Executive, those
provided generally at any time after the Effective Date to other peer
executives of the Company and its affiliated companies.
In addition, during the Employment Period the Executive shall be
entitled under this Agreement to the supplemental retirement benefit
described in Annex A attached hereto and made a part hereof by this
reference. The payment and vesting of such supplemental retirement benefit
shall be determined in accordance with Section 7 of this Agreement.
(e) Benefit Plans. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be
eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies, and programs provided by the Company
and its affiliated companies (including, without limitation, medical,
executive medical, annual executive physical, prescription, dental, vision,
short-term disability, long-term disability, executive long-term
disability, salary continuance, employee life, group life, benefits
pursuant to split dollar arrangements, accidental death and dismemberment,
and travel accident insurance plans and programs) to the extent applicable
generally to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies, and
programs provide the Executive with benefits which are less favorable, in
the aggregate, than the most favorable of such plans, practices, policies,
and programs in effect for the Executive at any time during the 90-day
period immediately preceding the Effective Date or, if more favorable to
the Executive, those provided generally at any time after the Effective
Date to other peer executives of the Company and its affiliated companies.
(f) Expenses. During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in accordance with the most
favorable policies, practices, and procedures of the Company and its
affiliated companies in effect for the Executive at any time during the 90-
day period immediately preceding the Effective Date or, if more favorable
to the Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its affiliated
companies.
(g) Fringe Benefits. During the Employment Period,
the Executive shall be entitled to fringe benefits, including but not
limited to those described in Section 7(a)(iii), in accordance with the
most favorable plans, practices, programs, and policies of the Company and
its affiliated companies in effect for the Executive at any time during the
90-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies.
(h) Office and Support Staff. During the Employment
Period, the Executive shall be entitled to an office or offices of a size
and with furnishings and other appointments, and to exclusive personal
secretarial and other assistance, at least equal to the most favorable of
the foregoing provided to the Executive by the Company and its affiliated
companies at any time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as provided
generally at any time thereafter with respect to other peer executives of
the Company and its affiliated companies.
(i) Vacation. During the Employment Period, the
Executive shall be entitled to paid vacation in accordance with the most
favorable plans, policies, programs, and practices of the Company and its
affiliated companies as in effect for the Executive at any time during the
90-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer incentives of the Company and its affiliated
companies.
6. Termination of Employment.
(a) Disability. If the Company determines in good
faith that the Disability of the Executive has occurred during the
Employment Period (pursuant to the definition of Disability set forth
below), it may give to the Executive written notice in accordance with
Section 14(b) of this Agreement of its intention to terminate the
Executive's employment. In such event, the Executive's employment with the
Company shall terminate effective on the 30th day after receipt of such
notice by the Executive (the "Disability Effective Date"), provided that,
within the 30 days after such receipt, the Executive shall not have
returned to perform his duties in accordance with Section 4. For purposes
of this Agreement, "Disability" shall mean the absence of the Executive
from the Executive's duties with the Company for 180 consecutive business
days as a result of incapacity due to mental or physical illness which is
determined to be total and permanent by a physician selected by the Company
or its insurers and acceptable to the Executive or the Executive's legal
representative (such agreement as to acceptability not to be withheld
unreasonably).
(b) Cause. The Company may terminate the Executive's
employment during the Employment Period for Cause. For purposes of this
Agreement, "Cause" shall mean (i) repeated violations by the Executive of
the Executive's obligations under Section 4 of this Agreement (other than
as a result of incapacity due to physical or mental illness) which are
demonstrably willful and deliberate on the Executive's part, which are
committed in bad faith or without reasonable belief that such violations
are in the best interests of the Company and which are not remedied in a
reasonable period of time after receipt of written notice from the Company
specifying such violations or (ii) the conviction of the Executive of a
felony involving an act of dishonesty intended to result in substantial
personal enrichment at the expense of the Company or its affiliated
companies.
(c) Good Reason. The Executive's employment may be
terminated during the Employment Period by the Executive for Good Reason.
For purposes of this Agreement, "Good Reason" shall mean:
(i) any failure by the Company to comply in every
respect with the provisions of Section 4 of this Agreement, including
without limitation, the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position (including,
without limitation, status, offices, titles and reporting requirements),
authority, duties or responsibilities as contemplated by Section 4, or any
other action or inaction by the Company which results in a diminution in
such position, authority, duties or responsibilities, excluding for this
purpose an isolated, insubstantial and inadvertent action not taken in bad
faith and which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(ii) any failure by the Company to comply with any of
the provisions of Section 5 of this Agreement, other than isolated,
insubstantial and inadvertent failure not occurring in bad faith and which
is remedied by the Company promptly after receipt of notice thereof given
by the Executive;
(iii) the Company's requiring the Executive to be based
at any office or location other than that described in Section 4 hereof;
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this
Agreement; or
(v) any failure by the Company to comply with and
satisfy Section 13(c) of this Agreement, provided that such successor has
received at least ten days prior written notice from the Company or the
Executive of the requirements of Section 13(c) of the Agreement.
For purposes of this Section 6(c), any good faith determination of
"Good Reason" made by the Executive shall be conclusive.
(d) Notice of Termination. Any termination by the
Company for Cause, or by the Executive for Good Reason, shall be
communicated by Notice of Termination to the other party hereto given in
accordance with Section 14(b) of this Agreement. For purposes of this
Agreement, a "Notice of Termination" means a written notice which (i)
indicates the specific termination provision in this Agreement relied upon,
(ii) to the extent applicable, sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated, and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of
such notice, specifies the termination date (which date shall be not more
than fifteen days after the giving of such notice). The failure by the
Executive or the Company to set forth in the Notice of Termination any fact
or circumstances which contributes to a showing of Good Reason or Cause
shall not waive any right of the Executive or the Company hereunder or
preclude the Executive or the Company from asserting such fact or
circumstance in enforcing the Executive's or the Company's rights
hereunder.
(e) Date of Termination. "Date of Termination" means
(i) if the Executive's employment is terminated by the Company for Cause,
or by the Executive for Good Reason, the date of receipt of the Notice of
Termination or any later date specified therein, as the case may be, (ii)
if the Executive's employment is terminated by the Company other than for
Cause or Disability, the Date of Termination shall be the date on which the
Company notifies the Executive of such termination, and (iii) if the
Executive's employment is terminated by reason of Disability, the Date of
Termination shall be the Disability Effective Date.
7. Obligations of the Company upon Termination.
(a) Good Reason; Other Than for Cause or Disability.
If, during the Employment Period, the Company terminates the Executive's
employment other than for Cause or Disability or the Executive terminates
employment for Good Reason:
(i) the Company shall pay to the Executive in a lump
sum in cash within 30 days after the Date of Termination the aggregate of
the following amounts (such aggregate being hereinafter referred to as the
"Special Termination Amount"):
A. the sum of (1) the Executive's Annual Base Salary
through the Date of Termination to the extent not theretofore paid, (2) the
product of (x) the Highest Annual Bonus and (y) a fraction, the numerator
of which is the number of days in the current fiscal year through the Date
of Termination, and the denominator of which is 365, and (3) any
compensation previously deferred by the Executive (together with any
accrued interest or earnings thereon) (including, without limitation,
compensation, bonus, incentive compensation or awards deferred under the
FPL Group, Inc. Deferred Compensation Plan or incentive compensation or
awards deferred under the FPL Group, Inc. Long-Term Incentive Plan of 1985,
the FPL Group, Inc. Long Term Incentive Plan of 1994, or pursuant to an
individual deferral agreement) and any accrued vacation pay, in each case
to the extent not theretofore paid (the sum of the amounts described in
clauses (1), (2), and (3) being herein called the "Accrued Obligations");
and
B. the amount equal to the product of (1) the
greater of two or the number of years (with any partial year expressed as a
fraction) remaining in the Employment Period, and (2) the sum of (x) the
Executive's Annual Base Salary and (y) the Highest Annual Bonus; provided,
however, that such amount shall be paid in lieu of, and the Executive
hereby waives the right to receive, any other amount of severance relating
to salary or bonus continuation to be received by the Executive upon
termination of employment of the Executive under any severance plan, policy
or arrangement of the Company; and
C. the maximum amount payable under all performance
share grants and all other long term incentive compensation grants to the
Executive that have not been paid in accordance with the terms of the grant
or Section 5(c) hereof, calculated as though the Executive had remained
employed by the Company for the remainder of the Employment Period and on
the basis of actual achievement of performance measures through the end of
the fiscal year preceding the fiscal year in which the Date of Termination
occurs and thereafter assuming maximum achievement of all performance
measures (e.g., currently 160%) through the end of the Employment Period;
and
D. a separate lump-sum supplemental retirement
benefit equal to the greater of (i) the supplemental pension benefit
described in Paragraph 1(b) of Annex A that the Executive would have been
entitled had his employment continued at the compensation level provided
for in Sections 5(a) and 5(b) of this Agreement for the greater of two
years or the remainder of the Employment Period and based upon his
Projected Years of Service (as defined in Paragraph 2(a) of Annex A) and
his Projected Age (as defined in Paragraph 2(b) of Annex A), or (ii) the
difference between (1) the actuarial equivalent (utilizing for this purpose
the actuarial assumptions utilized with respect to the FPL Group Employee
Pension Plan (or any successor plan thereto) (the "Retirement Plan") during
the 90-day period immediately preceding the Effective Date) of the benefit
payable under the Retirement Plan and all supplemental and/or excess
retirement plans providing benefits for the Executive (other than the
supplemental retirement benefit described in Annex A) (the "SERP")
(including, but not limited to the Supplemental Pension Benefit (as defined
in the FPL Group, Inc. Supplemental Executive Retirement Plan)) which the
Executive would receive if the Executive's employment continued at the
compensation level provided for in Sections 5(a) and 5(b) of this Agreement
for, and his age increased by, the greater of two years or the remainder of
the Employment Period, assuming for this purpose that all accrued benefits
are fully vested and that benefit accrual formulas are no less advantageous
to the Executive than those in effect during the 90-day period immediately
preceding the Effective Date, or, if more favorable to the Executive, as in
effect generally at any time thereafter during the Employment Period with
respect to other peer executives of the Company and its affiliated
companies, and (2) the actuarial equivalent (utilizing for this purpose the
actuarial assumptions utilized with respect to the Retirement Plan during
the 90-day period immediately preceding the Effective Date) of the
Executive's actual benefits (paid or payable), if any, under the Retirement
Plan and the SERP; and
E. a separate lump-sum supplemental retirement
benefit equal to the greater of (i) the supplemental matching contributions
account described in Paragraph 1(c) of Annex A that the Executive would
have been entitled had his employment continued at the compensation level
provided for in Sections 5(a) and 5(b) of this Agreement for the greater of
two years or the remainder of the Employment Period and assuming that the
Executive made After Tax Member Basic Contributions (within the meaning of
the FPL Group Employee Thrift Plan or any successor plan thereto (the
"Thrift Plan")) and Tax Saver Member Basic Contributions (within the
meaning of the Thrift Plan) to the Thrift Plan at the highest permissible
rate (disregarding any limitations imposed by the Code) following the Date
of Termination, or (ii) the difference between (1) the value of the Company
Account (as defined in the Thrift Plan) and any other matching contribution
accounts (including, but not limited to the Supplemental Matching
Contribution Account (as defined in the FPL Group, Inc. Supplemental
Executive Retirement Plan)) under a SERP (other than the supplemental
retirement benefit described in Annex A) which the Executive would receive
if (i) the Executive's employment continued at the compensation level
provided for in Sections 5(a) and 5(b) of this Agreement for the greater of
two years or the remainder of the Employment Period, (ii) the Executive
made pre- and after-tax contributions at the highest permissible rate
(disregarding any limitations imposed by the Code, which may or may not be
set forth in the Thrift Plan) for the greater of two years or each year
remaining in the Employment Period, (iii) the Company Account and the
matching contribution accounts are fully vested, and (iv) the matching
contribution formulas are no less advantageous to the Executive than those
in effect during the 90-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as in effect generally at any time
during the remainder of the Employment Period with respect to other peer
executives of the Company and its affiliated companies, and (2) the actual
value of the Executive's Company Account and matching contribution accounts
(paid or payable), if any, under the Thrift Plan and the SERP; and
(ii) for the remainder of the Employment Period, or
such longer period as any plan, program, practice or policy may provide,
the Company shall continue benefits to the Executive and/or the Executive's
family at least equal to those which would have been provided to them in
accordance with the plans, programs, practices and policies described in
Sections 5(e) and 5(g) of this Agreement if the Executive's employment had
not been terminated, in accordance with the most favorable plans,
practices, programs or policies of the Company and its affiliated companies
applicable generally to other peer executives and their families during the
90-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies and their families, provided, however, that if the Executive
becomes reemployed with another employer and is eligible to receive medical
or other welfare benefits under another employer provided plan, the medical
and other welfare benefits described herein shall be secondary to those
provided under such other plan during such applicable period of
eligibility. For purposes of determining eligibility of the Executive for
retiree benefits pursuant to such plans, practices, programs and policies,
the Executive shall be considered to have remained employed until the end
of the Employment Period and to have retired on the last day of such
period;
(iii) for the remainder of the Employment Period and to
the extent previously paid for or provided by the Company, the Company
shall continue to provide the following:
A. social and business club memberships to the
Executive (as in effect immediately prior to the Date of Termination);
B. use, maintenance, insurance, and repair of the
company car that is in the possession of the Executive, until the earlier
of the end of the lease term or the end of the Employment Period, at which
time the Executive may purchase such car. The Company shall replace the
company car in the Executive's possession on the Effective Date with a new
company car at such time(s) as provided under the Company car policy
applicable to other peer executives, but in no case less frequently than
the Company car policy in effect during the 90-day period immediately
preceding the Effective Date;
C. up to $15,000 annually for personal financial
planning, accounting and legal advice;
D. communication equipment such as a car and/or
cellular phone, and home or laptop computer until the end of the Employment
Period, at which time the Executive may purchase such equipment;
E. security system at the
Executive's residence, and the related monitoring and maintenance fees; and
F. up to $800 annually for personal excess liability
insurance coverage;
In lieu of continuing these benefits for the remainder of the Employment
Period, the Executive, in his sole discretion, may elect to receive a lump
sum payment equal to the present value of the amount projected to be paid
by the Company to provide these benefits. In determining the present
value, a six percent interest assumption shall be utilized. The Executive
shall make any such election by giving the Company written notice in
accordance with Section 14(b).
(iv) to the extent not theretofore paid or provided,
the Company shall timely pay or provide to the Executive any other amounts
or benefits required to be paid or provided or which the Executive is
eligible to receive pursuant to this Agreement or otherwise under any plan,
program, policy or practice or contract or agreement of the Company and its
affiliated companies, but excluding solely for purposes of this Section
7(a)(iv) amounts waived by the Executive pursuant to Section 7(a)(i)(B);
and
(v) the Company shall provide the Executive with the
following benefits in the event of his termination under this Section 7(a):
A. If the Executive is required to move his primary
residence in order to pursue other business opportunities during the
Employment Period, the Company shall reimburse the Executive for all such
relocation expenses incurred during the Employment Period (not in excess of
$10,000) that are not reimbursed by another employer, including, without
limitation, assistance in selling the Executive's home and all other
assistance and benefits that were customarily provided by the Company to
transferred executives prior to the Change of Control;
B. If the Executive retains counsel or an accounting
firm in connection with the taxation of payments made pursuant to Section
10 of this Agreement, the Company shall reimburse the Executive for such
reasonable legal and/or accounting fees and disbursements (not in excess of
$15,000);
C. The Company shall continue to pay the Executive's
Annual Base Salary during the pendency of a dispute over his termination.
Amounts paid under this subsection are in addition to all other amounts due
under this Agreement (other than those due under Section 5(a) hereof) and
shall not be offset against or reduce any other amounts due under this
Agreement; and
D. The Company shall provide the Executive with
outplacement services commensurate with those provided to terminated
executives of comparable level made available through and at the facilities
of a reputable and experienced vendor; and
(vi) any outstanding options, stock appreciation
rights, and other awards in the nature of a right that may be exercised
granted to the Executive shall become fully exercisable and vested; any
restrictions, deferral limitations, and forfeiture conditions applicable to
any outstanding award granted to the Executive shall lapse and such awards
shall be deemed fully vested; and the Executive shall have for the
remainder of the Employment Period (but in no event past the expiration of
the term of the award) to exercise any and all rights granted under such
awards then exercisable or which become exercisable pursuant to this
Section 7(a)(vi), except that with respect to incentive stock options
(within the meaning of Section 422(b) of the Code) and stock appreciation
rights relating thereto, the Executive may exercise such awards during the
period of exercise provided for in the agreements granting such options.
(b) Death. Upon the Executive's death during the
Employment Period, this Agreement shall terminate without further
obligations to the Executive's legal representatives under this Agreement,
other than for payment of Accrued Obligations, the supplemental retirement
benefit described in Annex A, and the timely payment or provision of the
benefits described in Section 7(a)(ii) and (iv) (the "Other Benefits").
All Accrued Obligations shall be paid to the Executive's estate or
beneficiary, as applicable, in a lump sum in cash within 30 days of the
Date of Termination. The supplemental retirement benefit shall be paid to
the Executive's Beneficiary (within the meaning of the FPL Group, Inc.
Supplemental Executive Retirement Plan) at his option in a lump sum
distribution to be made not later than three months after the occurrence of
his death or in the same manner as the Executive's benefits under the
Retirement Plan or Thrift Plan to which his benefits under Annex A of this
Agreement relates. The term "Other Benefits" as utilized in this Section
7(b) shall include, without limitation, and the Executive's family shall be
entitled to receive, benefits at least equal to the most favorable benefits
provided by the Company and any of its affiliated companies to surviving
families of peer executives of the Company and such affiliated companies
under such plans, programs, practices and policies relating to family death
benefits, if any, as in effect with respect to other peer executives and
their families at any time during the 90-day period immediately preceding
the Effective Date or, if more favorable to the Executive and/or the
Executive's family, as in effect on the date of the Executive's death with
respect to other peer executives of the Company and its affiliated
companies and their families.
(c) Disability. If the Executive's employment is
terminated by reason of the Executive's Disability during the Employment
Period, this Agreement shall terminate without further obligations to the
Executive, other than for payment of Accrued Obligations, the supplemental
retirement benefit described in Annex A, and the timely payment or
provision of Other Benefits. All Accrued Obligations shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of Termination.
The supplemental retirement benefit shall be paid to the Participant or his
Beneficiary (within the meaning of the FPL Group, Inc. Supplemental
Executive Retirement Plan), as the case may be, at the option of the
Executive or if the Executive is deceased, at the option of such
Beneficiary, in a lump sum distribution to be made not later than three
months after the occurrence of such event or in the same manner as the
Executive's benefits under the Retirement Plan or Thrift Plan to which his
benefits under Annex A of this Agreement relates. The term "Other
Benefits" as utilized in this Section 7(c) shall include, and the Executive
shall be entitled after the Disability Effective Date to receive,
disability and other benefits at least equal to the most favorable of those
generally provided by the Company and its affiliated companies to disabled
executives and/or their families in accordance with such plans, programs,
practices and policies relating to disability, if any, as in effect
generally with respect to other peer executives and their families at any
time during the 90-day period immediately preceding the Effective Date or,
if more favorable to the Executive and/or the Executive's family, as in
effect at any time thereafter generally with respect to other peer
executives of the Company and its affiliated companies and their families.
(d) Cause; Other Than for Good Reason. If the
Executive's employment shall be terminated for Cause during the Employment
Period, this Agreement shall terminate without further obligations to the
Executive other than the obligation to pay to the Executive Annual Base
Salary through the Date of Termination plus the amount of any compensation
previously deferred by the Executive, in each case to the extent
theretofore unpaid. If the Executive terminates employment during the
Employment Period, excluding a termination for Good Reason, this Agreement
shall terminate without further obligations to the Executive, other than
for Accrued Obligations, the supplemental retirement benefit described in
Annex A to the extent the Executive is vested in his benefits under the
Retirement Plan, and the timely payment or provision of Other Benefits. In
such case, all Accrued Obligations shall be paid to the Executive in a lump
sum in cash within 30 days of the Date of Termination. The supplemental
retirement benefit shall be paid to the Executive or his Beneficiary
(within the meaning of the FPL Group, Inc. Supplemental Executive
Retirement Plan), as the case may be, at the option of the Executive or if
the Executive is deceased, at the option of such Beneficiary, in a lump sum
distribution to be made not later than three months after the occurrence of
such event or in the same manner as the Executive's benefits under the
Retirement Plan or Thrift Plan to which his benefits under Annex A of this
Agreement relates.
8. Non-exclusivity of Rights. Except as otherwise expressly
provided for in this Agreement, 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
affiliated companies and for which the Executive may qualify, nor shall
anything herein limit or otherwise affect such rights as the Executive may
have under any contract or agreement with the Company or any of its
affiliated companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, policy, practice
or program of or any contract or agreement with the Company or any of its
affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or
contract or agreement except as explicitly modified by this Agreement.
9. Full Settlement. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which 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 and, except as otherwise expressly provided
for in this Agreement, such amounts shall not be reduced whether or not the
Executive obtains other employment. The Company agrees to pay, to the
fullest extent permitted by law, all legal fees and expenses which the
Executive may reasonably incur at all stages of proceedings, including,
without limitation, preparation and appellate review, as a result of any
contest (regardless of whether formal legal proceedings are ever commenced
and regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any
provision of this Agreement or any guarantee of performance thereof
(including as a result of any contest by the Executive about the amount of
any payment pursuant to this Agreement), plus in each case interest on any
delayed payment at the applicable Federal rate provided for in Section
7872(f)(2)(A) of the Code.
10. Certain Additional Payments by the Company. Anything in
this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by the Company to or for the
benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this
Section 10) (a "Payment") would be subject to the excise tax imposed by
Section 4999 of the Code or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to
as the "Excise Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that after
payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any
income or employment taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the
Executive retains an amount of Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
In the event that Federal or state legislation is enacted by
imposing additional excise or supplementary income taxes on amounts payable
or benefits provided to the Executive (other than a mere change in marginal
income tax rates), the Company agrees to review the Agreement with the
Executive and to consider in good faith any changes hereto that may be
required to preserve the full amount of all Payments and the economic
purposes of the foregoing provisions of this Section 10.
11. 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, which shall
have been obtained by the Executive during the Executive's employment by
the Company or any of its affiliated companies and which shall not be or
become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive's employment with the Company, the Executive
shall not, without the prior written consent of the Company or as may
otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and
those designated by it. In no event shall an asserted violation of the
provisions of this Section 11 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this
Agreement.
12. Indemnification. The Company will, to the fullest extent
permitted by law, indemnify and hold the Executive harmless from any and
all liability arising from the Executive's service as an employee, officer
or director of the Company and its affiliated companies. To the fullest
extent permitted by law, the Company will advance legal fees and expenses
to the Executive for counsel selected by the Executive in connection with
any litigation or proceeding related to the Executive's service as an
employee, officer or director of the Company and its affiliates. The terms
of this indemnification provision shall survive the expiration of this
Agreement.
13. 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 otherwise than by will or the laws of descent and
distribution. 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 to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall
mean the Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
14. Miscellaneous.
(a) This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida, 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 otherwise than by a written
agreement executed by the parties hereto or their respective successors and
legal representatives.
(b) All notices and other communications hereunder
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:
Xxxxx Xxx III
If to the Company:
FPL Group, Inc.
000 Xxxxxxxx Xxxxxxxxx
Xxxx Xxxxx, Xxxxxxx 00000
Attention: Vice President, Human Resources
or such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice 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.
(d) The Company may withhold from any amounts payable
under this Agreement such Federal, state or local taxes as shall be
required to be withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to
insist upon strict compliance with any provision hereof or any other
provision of this Agreement or the failure to assert any right the
Executive or the Company may hereunder, including, without limitation, the
right of the Executive to terminate employment for Good Reason pursuant to
Section 6(c)(i)-(v) of this Agreement, shall not be deemed to be a waiver
of such provision or right or any other provision or right of this
Agreement.
(f) The Executive and the Company acknowledge that,
except as may otherwise be provided under any other written agreement
between the Executive and the Company, the employment of the Executive by
the Company is "at will" and, prior to the Effective Date, may be
terminated by either the Executive or the Company at any time. Moreover,
except as provided in Section 1, if prior to the Effective Date, (i) the
Executive's employment with the Company terminates, or (ii) there is a
diminution in the Executive's position (including status, offices, titles,
and reporting requirements), authority, duties, and responsibilities with
the Company or its affiliated companies, then the Executive shall have no
further rights under this Agreement.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's
hand and, pursuant to the authorization from the Board of Directors, the
Company has caused these presents to be executed in its name on its behalf,
all as of the day and year first above written.
XXXXX XXX III
Xxxxx Xxx III
FPL GROUP, INC.
By XXXXXXXX X. XXXXXXXX
Xxxxxxxx X. Xxxxxxxx
Vice President, Human Resources
ANNEX A
TO THE
EMPLOYMENT AGREEMENT
SUPPLEMENTAL RETIREMENT BENEFIT
1. Supplement Retirement Benefit.
(a) In General. The supplemental retirement benefit
to which the Executive shall be entitled under this Agreement shall be (i)
the supplemental pension benefit described in Paragraph 1(b) of this Annex
A, and (ii) the supplemental matching contribution account described in
Paragraph 1(c) of this Annex A.
(b) Supplemental Pension Benefit. The "supplemental
pension benefit" shall be the greater of (i) the supplement cash balance
accrued benefit described in Paragraph 1(b)(1) of this Annex A, or (ii) the
supplement unit credit accrued benefit described in Paragraph 1(b)(2) of
this Annex A.
(1) The "supplement cash balance accrued benefit" is
the difference, if any, between (A) and (B) where:
(A) is the benefit to which the Executive would be
entitled under the Retirement Plan as in effect immediately prior to the
Change of Control or, if more favorable to the Executive, as in effect
generally at any time thereafter during the Employment Period with respect
to other peer executives of the Company and its affiliated companies,
expressed in the normal form of benefit, if such benefit was computed (i)
as if benefits under such plan were based upon the Executive's Bonus
Compensation (within the meaning of the FPL Group, Inc. Supplemental
Executive Retirement Plan as in effect immediately prior to the Change of
Control), (ii) without the annual compensation limitation imposed by
Section 401(a)(17) of the Code, and (iii) without the restrictions or the
limitations imposed by Sections 415(b) or 415(e) of the Code; and
(B) is the sum of the benefits payable to the
Executive under the Retirement Plan and the SERP, expressed in the normal
form of benefit.
(2) The "supplement unit credit accrued benefit" is
the difference, if any, between (A) and (B) where:
(A) is the benefit to which the Executive would be
entitled under the Prior Pension Plan (within the meaning of the FPL Group,
Inc. Supplemental Executive Retirement Plan as in effect immediately prior
to the Change of Control), expressed in the normal form of benefit, if such
benefit was computed (i) as if benefits under such plan were based upon the
Executive's Bonus Compensation, (ii) without the annual compensation
limitation imposed by Section 401(a)(17) of the Code, and (iii) without the
restrictions or the limitations imposed by Sections 415(b) or 415(e) of the
Code; and
(B) is the sum of the benefits payable to the
Executive under the Retirement Plan and the SERP, expressed in the normal
form of benefit.
(c) Supplemental Matching Contribution Account. The
"supplemental matching contribution account" shall be an account that is
credited annually with (i) supplemental matching contributions described in
Paragraph 1(c)(1) of this Annex A, and (ii) theoretical earnings described
in Paragraph 1(c)(2) of this Annex A.
(1) "Supplemental matching contributions" shall be
for each year ending on or prior to the Effective Date in which the
Executive participated in the SERP and for each year ending after the
Effective Date in which the Executive performs services for the Company or
its affiliated companies the difference, if any, between (A) and (B) where:
(A) is the matching contribution allocation for such
year to which the Executive would be entitled under the Thrift Plan as in
effect immediately prior to the Change of Control or, if more favorable to
the Executive, as in effect generally at any time thereafter during the
Employment Period with respect to other peer executives of the Company and
its affiliated companies if such allocation were computed (i) as if the
matching contribution allocation under such plan was based upon the
Executive's Bonus Compensation, (ii) without the annual compensation
limitation imposed by Section 401(a)(17) of the Code, (iii) without the
restrictions or the limitations imposed by Sections 415(c) or 415(e) of the
Code, and (iv) as if he made After Tax Member Basic Contributions (within
the meaning of the Thrift Plan) and Tax Saver Member Basic Contributions
(within the meaning of the Thrift Plan) at the same percentage of Bonus
Compensation as he made such contributions to the Thrift Plan for such
years; and
(B) is the sum of the matching contributions
allocated or credited to the Executive under the Thrift Plan and the SERP
for such year.
(2) "Theoretical earnings" shall be the income, gains
and losses which would have been credited on the Executive's supplemental
matching contribution account balance if such account were invested in the
Company Stock Fund (within the meaning of the Thrift Plan) offered as a
part of the Thrift Plan.
2. Construction and Definitions. Unless defined below or
otherwise in this Annex A, all of the capitalized terms used in this Annex
A shall have the meanings assigned to them in this Agreement:
(a) "Projected Years of Service" shall mean the
Executive's Years of Service (within the meaning of the FPL Group, Inc.
Supplemental Executive Retirement Plan as in effective immediately prior to
the Change of Control), plus the Years of Service he would have otherwise
been credited had his employment terminated on the later of the second
anniversary of his Date of Termination or the last day of the Employment
Period.
(b) "Projected Age" shall mean the age that the
Executive will have attained on the later of the second anniversary of his
Date of Termination or the last day of the Employment Period.
