EXHIBIT 10.36
EXECUTIVE CASH BONUS AGREEMENT
This EXECUTIVE CASH BONUS AGREEMENT (the "Agreement") is dated as of
February 8, 2006 (the "Effective Date") by and between ITC Holdings Corp. (the
"Company"), International Transmission Company ("ITC") and Xxxxxx X. Xxxxxxx
(the "Executive").
WHEREAS, the Company and the Executive have entered into an employment
agreement, dated May 10, 2005 (such agreement, as it may be amended from time to
time, the "Employment Agreement"), embodying the terms of the Executive's
employment with the Company and ITC (collectively, the "Employer"), and
Executive is currently employed thereunder;
WHEREAS, it is in the Company's best interests to provide additional
financial incentive to Executive to remain employed by the Company and to
provide dedicated services to the Employer;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Definitions. For purposes of this Agreement, the following terms shall
have the meanings set forth below:
"Bonus Payment" shall have the meaning assigned thereto in
Section 2 of this Agreement.
"Cause" shall mean (a) Executive's continued failure
substantially to perform Executive's duties under the Employment Agreement
(other than as a result of total or partial incapacity due to physical or mental
illness) for a period of 10 days following written notice by the Employer to
Executive of such failure, (b) dishonesty in the performance of Executive's
duties under the Employment Agreement, (c) Executive's conviction of, or plea of
nolo contendere to a crime constituting (x) a felony under the laws of the
United States or any state thereof or (y) a misdemeanor involving moral
turpitude, (d) Executive's willful malfeasance or willful misconduct in
connection with Executive's duties under the Employment Agreement or any act or
omission which is injurious to the financial condition or business reputation of
the Employer or affiliates or (e) Executive's breach of the provisions of
Sections 8 or 9 of the Employment Agreement.
"Disability" shall have the meaning assigned to it from time to
time under Section 409A.
"Good Reason" shall mean (a) a greater than 10% reduction in the
total value of Executive's "Base Salary", "Target Bonus", and "Employee
Benefits" payable under the Employment Agreement (as such terms are defined
thereunder); (b) Executive's job responsibility and authority are substantially
diminished; and (c) Executive's work location is relocated to more than fifty
(50) miles from Novi, Michigan or Ann Arbor, Michigan; and provided, further,
that "Good Reason" shall cease to exist for an event on the 60th day following
the later of its occurrence or Executive's knowledge thereof, unless Executive
has given the Employer written notice thereof prior to such date.
"Section 409A" shall mean Section 409A of the Internal Revenue
Code, as amended, and the rules and regulations promulgated thereunder.
2. Bonus Payment. Except as otherwise provided in this Agreement, ITC shall
pay an annual bonus to Executive in the amount of One Hundred Twenty Thousand
Dollars ($120,000) in each of the years 2006, 2007, 2008 and 2009 (each, a
"Bonus Payment"). Each Bonus Payment shall become due and payable on August 1 of
such year and shall be paid by ITC on the first pay date under ITC's normal
payroll schedule following August 1, unless otherwise provided in this
Agreement.
3. Termination Without Cause, For Good Reason or Due to Death or
Disability.
(a) If Executive's employment is terminated by the Employer without
Cause or by Executive for Good Reason, or if Executive's employment is
terminated by either Employer or Executive by reason of death or Disability,
subject to execution by Executive, Executive's then spouse, or Executive's
estate (as the case may be) of a release of all claims against Employer as
provided in and to the extent required by the Employment Agreement, Executive
shall be entitled to receive all unpaid Bonus Payments in a lump sum within
fifteen (15) business days after the date of such termination of employment (or,
if later, such other earliest date on which such amount can be paid as may be
permitted under Section 409A).
(b) Any question as to the existence of the Disability of Executive as
to which Executive and the Employer cannot agree shall be determined in writing
by a qualified independent physician mutually acceptable to Executive and the
Employer. If Executive and the Employer cannot agree as to a qualified
independent physician, each shall appoint such a physician and those two
physicians shall select a third who shall make such determination in writing.
The determination of Disability made in writing to the Employer and Executive
shall be final and conclusive for all purposes of the Agreement.
4. Termination For Cause or Without Good Reason. If Executive's employment
is terminated by the Employer for Cause or by Executive without Good Reason
(other than by reason of death or Disability), Executive shall not be entitled
to receive any further payments under this Agreement other than for any unpaid
Bonus Payment which became due and payable prior to the date of termination of
employment pursuant to Section 2 hereof.
5. Benefits in Addition to Employment Agreement. Amounts due under this
Agreement shall be in addition to any other payments or benefits to which
Executive may be entitled under the Employment Agreement or otherwise.
6. Notice of Termination. Any purported termination of employment by the
Employer or by Executive (other than due to Executive's death) shall be
communicated by written "Notice of Termination" to the other parties hereto in
accordance with the Employment Agreement.
7. Release. Notwithstanding anything set forth in this Agreement to the
contrary, upon termination of Executive's employment for any reason, Executive
shall not receive any payments or benefits to which he may be entitled hereunder
(other than those which by law cannot be subject to the execution of a release)
(a) if Executive revokes such release or (b) until eight (8) days after the date
Executive signs such release (or until such other date as applicable law may
provide that Executive cannot revoke such release).
8. Arbitration. Any dispute arising out of or asserting breach of this
Agreement shall be exclusively resolved by binding statutory arbitration in
accordance with the Employment Dispute Resolution Rules of the American
Arbitration Association. Such arbitration process shall take place within 100
miles of the Detroit, Michigan metropolitan area. A court of competent
jurisdiction may enter judgment upon the arbitrator's award. In the event of any
such dispute, all reasonable fees and disbursements of counsel incurred by
Executive shall be reimbursed by Employer within a reasonable period of time
following receipt from Executive (or Executive's counsel) of a final xxxx
invoicing all such fees and disbursements, so long as the arbitrator does not
determine that such dispute was based on claims made by Executive that were
frivolous or in bad faith.
9. Miscellaneous.
(a) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Michigan, without regard to
conflicts of laws principles thereof.
(b) Entire Agreement/Amendments. This Agreement contains the entire
understanding of the parties with respect to the Bonus Payments. There are no
restrictions, agreements, promises, warranties, covenants or undertakings
between the parties with respect to the subject matter herein other than those
expressly set forth herein. This Agreement may not be altered, modified, or
amended except by written instrument signed by the parties hereto.
(c) No Waiver. The failure of a party to insist upon strict adherence
to any term of this Agreement on any occasion shall not be considered a waiver
of such party's rights or deprive such party of the right thereafter to insist
upon strict adherence to that term or any other term of this Agreement.
(d) Severability. In the event that any one or more of the provisions
of this Agreement shall be or become invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
of this Agreement shall not be affected thereby.
(e) Assignment. This Agreement, and all of Executive's rights and
duties hereunder, shall not be assignable or delegable by Executive. Any
purported assignment or delegation by Executive in violation of the foregoing
shall be null and void ab initio and of no force and effect. This Agreement may
be assigned by the Employer to a person or entity that is an affiliate or a
successor in interest to substantially all of the business operations of the
Employer. Upon such assignment, the rights and obligations of the Employer
hereunder shall become the rights and obligations of such affiliate or successor
person or entity.
(f) Set Off; No Mitigation. The Employer's obligation to pay Executive
the amounts provided hereunder shall be subject to set-off, counterclaim or
recoupment of amounts owed by Executive to the Employer or its affiliates.
Executive shall not be required to mitigate the amount of any payment provided
for pursuant to this Agreement by seeking other employment or otherwise and the
amount of any payment provided for pursuant to this Agreement shall not be
reduced by any compensation earned as a result of Executive's other employment
or otherwise.
(g) Successors; Binding Agreement. This Agreement shall inure to the
benefit of and be binding upon the Company, ITC and their subsidiaries, and the
Executive and any personal or legal representatives, executors, administrators,
successors, assigns, heirs, distributees, devisees and legatees.
Further, the Company and ITC will 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 or ITC, as the
case may be, to assume expressly and agree to perform this Agreement in the same
manner and to the same extent that the Company or ITC, as the case may be, would
be required to perform it if no such succession had taken place. In the event
that any successor, as described above, agrees to assume this Agreement in
accordance with the preceding sentence, as of the date such successor so assumes
this Agreement, the Company or ITC, as the case may be, shall cease to be liable
for any of the obligations contained in this Agreement.
(h) Notice. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered by hand or overnight courier or
three days after it has been mailed by United States registered mail, return
receipt requested, postage prepaid, addressed to the respective addresses set
forth below in this Agreement, or to such other address as either party may have
furnished to the other in writing in accordance herewith, except that notice of
change of address shall be effective only upon receipt.
If to the Employer:
ITC Holdings Corp.
00000 Xxxxxxx Xxxx Xxxxx
Xxxxx 000
Xxxx, Xxxxxxxx 00000
Attention: Chief Executive Officer
With a copy to:
Xxxxxx Xxxxxxx PLLC
000 Xxxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxx, Esq.
If to Executive:
To the most recent address of Executive set forth in Employer's personnel
records of the Employer.
(i) Executive Representation. Executive hereby represents to the
Employer that the execution and delivery of this Agreement by Executive and the
Employer and the performance by Executive of Executive's duties hereunder shall
not constitute a breach of, or otherwise contravene, the terms of any employment
agreement or other agreement or policy to which Executive is a party or
otherwise bound.
(j) Prior Agreements. This Agreement supersedes all prior agreements
and understandings between Executive and the Employer and/or its affiliates
regarding the terms and conditions of the Bonus Payments.
(k) Cooperation. Executive shall provide Executive's reasonable
cooperation in connection with any action or proceeding (or any appeal from any
action or proceeding) that relates to events occurring during Executive's
employment hereunder. This provision shall survive any termination of this
Agreement.
(l) Taxes.
(i) Withholding Taxes. The Employer may withhold from any amounts
payable under this Agreement such federal, state and local taxes as may be
required to be withheld pursuant to any applicable law or regulation.
(ii) 409A Penalties. Notwithstanding any other provision of this
Agreement, while Executive acknowledges that Employer may take actions hereunder
as are required to comply with or to minimize any potential interest charges
and/or additional taxes as may be imposed by Section 409A (the "409A Penalties")
with respect to any payment or benefit due to Executive under this Agreement
(including a delay in payment until six months after the date of termination of
Executive's employment hereunder, in the event Executive is a "specified
employee" within the meaning of Section 409A), the parties hereby confirm that
all such payments and benefits due to Executive will in fact be made or provided
at the earliest time at which it is determined either that no 409A Penalties are
applicable, or that such 409A Penalties will apply without exception. Further,
if at any time it is determined that any payment or benefit due to Executive
under this Agreement may be subject to any 409A Penalties, the Employer shall
(A) be permitted to modify the provision of such payment or benefit if such
modification would reasonably be expected to eliminate or minimize such 409A
Penalties, so long as such modification does not adversely affect, in any
material respect, the economic benefit to Executive of such payment or benefit,
or (B) to the extent that the course of action proposed in clause (A) cannot be
effected, within fifteen (15) days after the date of such determination (or such
other earliest date on which such amount can be paid as may be permitted under
Section 409A) pay to Executive an additional amount equal to such Section 409A
Penalties, along with such additional amount as is required to pay any income
and/or payroll taxes due on the 409A Penalties and the additional tax gross-up
payment. For purposes of making any computations hereunder: (i) the Employer's
independent accountants, at the Employer's expense, shall make such reasonable
assumptions and determinations as are consistent with Section 409A; and (ii)
Executive shall be deemed to pay income taxes at the highest applicable marginal
rates for the calendar year in which the gross-up payment is to be made. In the
event any initial determination under this provision is subsequently modified by
the Employer's accountants or the Internal Revenue Service, Executive and
Employer agree to reasonably cooperate to resolve any matter related thereto,
including modification of the gross-up payment previously received.
(m) Counterparts. This Agreement may be signed in counterparts, each
of which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
ITC HOLDINGS CORP.
INTERNATIONAL TRANSMISSION COMPANY
By: /s/ Xxxxxx Xxxxx
---------------------------------
Xxxxxx Xxxxx, President and
Chief Executive Officer
/s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
