AMENDED AND RESTATED
CHANGE IN CONTROL AGREEMENT
THIS AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT ("Agreement") made
and entered into by and among Mirant Corporation ("Mirant"), Mirant Services LLC
(the "Company") and ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("Executive") (hereinafter collectively
referred to as the "Parties") is effective as of the execution date hereof and
amends and restates that certain Change in Control Agreement, dated as of April
2, 2001, between the Parties.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Executive serves as Senior Vice President of the Company, which
serves as the employer with respect to assets held by Mirant;
NOW, THEREFORE, in consideration of the premises, and the agreements of the
parties set forth in this Agreement, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. Definitions. For purposes of this Agreement, the following terms shall
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have the following meanings:
(a) "Annual Compensation" means the sum of (i) Executive's highest
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annual base salary rate in effect during the twelve (12) month period
immediately preceding the date of the Change in Control ("Base Salary"),
plus (ii) an amount equal to the product of (A) Executive's Base Salary and
(B) the percentage equal to the average annual bonus percentage (expressed
as a percentage of base salary in such year) paid to Executive in each of
the two (2) years preceding the year in which the Change in Control
occurred.
(b) "Board" shall mean the board of directors of Mirant.
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(c) "Change in Control" shall have the meaning of such term as set
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forth in the Change in Control Benefit Plan Determination Policy. However,
any amendment to the Policy which causes the definition of "Change in
Control" to be more restrictive than such definition in effect on the
Effective Date shall not be taken into account for purposes of this
Agreement, unless approved by the Board or a compensation committee thereof
and agreed to in writing by Executive.
(d) "Change in Control Benefit Plan Determination Policy" shall mean
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the Mirant Change in Control Benefit Plan Determination Policy, as approved
by the Board, as such policy may be amended from time to time in accordance
with the provisions therein.
(e) "COBRA Coverage" shall mean any continuation coverage to which
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Executive or his dependents may be entitled pursuant to Code Section 4980B.
(f) "Code" shall mean the Internal Revenue Code of 1986, as amended.
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(g) "Company" shall mean Mirant Services LLC, its successors and
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assigns.
(h) "Effective Date" shall mean April 2, 2001, the original date of
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execution of this Agreement, unless otherwise provided herein.
(i) "Executive Outplacement Program" shall mean the program
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established by the Company from time to time for the purpose of assisting
executive officers of the Company in finding employment outside of the
Company which provides for the following services:
(i) self-assessment, career decision and goal setting;
(ii) job market research and job sources;
(iii) networking and interviewing skills;
(iv) planning and implementation strategy;
(v) resume writing, job hunting methods and salary negotiation;
and
(vi) office support and job search resources.
(j) "Good Reason" shall mean, without Executive's express written
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consent, after written notice to the Company, and after a thirty (30) day
opportunity for the Company to cure, the continuing occurrence of any of
the following events:
(i) Inconsistent Duties. A meaningful and detrimental alteration
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in Executive's position or in the nature or status of his
responsibilities from those in effect immediately prior to the Change
in Control;
(ii) Reduced Salary. A reduction of five percent (5%) or more by
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the Company in either of the following: (a) Executive's highest annual
base salary rate as in effect at any time during the twelve (12) month
period immediately preceding the date of the Change in Control ("Base
Salary") (except for a less than ten percent (10%), across-the-board
base salary rate reduction similarly affecting at least ninety-five
percent (95%) of all Executive Employees of the Company); or (b) the
sum of Executive's Base Salary plus target bonus under the Company's
short term bonus plan, as in effect immediately prior to the Change in
Control (except for a less than ten percent (10%), across-the-board
reduction of base salary plus target bonus under such short term plan
similarly affecting at least ninety-five percent (95%) of all
Executive Employees of the Company);
(iii) Pension and Compensation Plans. The failure by the Company
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to continue in effect any "pension plan or agreement" or "compensation
plan or agreement" in which Executive participates or is a party as of
the date of the Change in Control or the elimination of Executive's
participation therein (except for across-the-board plan changes or
terminations similarly affecting at least ninety-five percent (95%) of
all Executive Employees of the Company). For purposes of this
subsection (iii), a "pension plan or agreement" shall mean any written
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arrangement executed by an authorized officer of the Company which
provides for payments upon retirement; and a "compensation plan or
agreement" shall mean any written arrangement executed by an
authorized officer of the Company which provides for periodic,
non-discretionary compensatory payments to employees in the nature of
bonuses;
(iv) Relocation. A change in Executive's work location to a
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location more than fifty (50) miles from the facility where Executive
was located immediately prior to the Change in Control, unless such
new work location is within fifty (50) miles from Executive's
principal place of residence at the time of the Change in Control. The
acceptance, if any, by Executive of employment by the Company at a
work location which is outside the fifty (50) mile radius set forth in
this Section 1(j)(iv) shall not be a waiver of Executive's right to
refuse subsequent transfer by the Company to a location that is more
than fifty (50) miles from Executive's principal place of residence at
the time of the Change in Control, and such subsequent, unconsented
transfer shall be "Good Reason" under this Agreement;
(v) Benefits and Perquisites. The taking of any action by the
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Company that would directly or indirectly materially reduce the
benefits enjoyed by Executive under the Company's retirement, life
insurance, medical, health and accident, disability, deferred
compensation or savings plans in which Executive was participating
immediately prior to the Change in Control, or the failure by the
Company to provide Executive with the number of paid vacation days to
which Executive is entitled on the basis of years of service with the
Company in accordance with the Company's normal vacation policy in
effect immediately prior to the Change in Control (except for
across-the-board plan or vacation policy changes or plan terminations
similarly affecting at least ninety-five percent (95%) of all
employees of the Company); or
(vi) Expatriate Compensation. In the event that, after the Change
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in Control, Executive is intended to maintain his place of employment
in a jurisdiction outside of the United States, the taking of any
action by the Company that would directly or indirectly materially
reduce any of the following expatriate benefits and compensation
enjoyed by Executive immediately prior to the Change in Control:
housing, utilities expense, goods and services differential, foreign
service premium, location premium, driver allowance, two annual home
leave allowances (each allowance is business class air fare for
employee and spouse), reimbursement for emergency travel, tax
equalization, and full relocation back to residence in U.S. at the end
of foreign assignment.
For purposes of this Section 1(j), the term "Executive Employee" shall
mean employees of the Company whose annual base salary is $140,000 or more.
Good Reason shall not include Executive's death or Disability.
Executive's continued employment shall not constitute consent to, or a
waiver of rights with respect to, any circumstance constituting Good Reason
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hereunder. The fact that Executive may be eligible for Retirement shall not
prevent him from resigning for Good Reason provided an event of Good Reason
shall have occurred. Any dispute as to whether an event of Good Reason
shall have occurred or been cured on a timely basis shall be resolved as
provided in Section 6 hereof.
(k) "Group Health Plan" shall mean the group health plan covering
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Executive, as such plan may be amended from time to time.
(l) "Group Life Insurance Plan" shall mean the group life insurance
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program covering Executive, as such plan may be amended from time to time.
(m) "Mirant" shall mean Mirant Corporation, a Delaware corporation,
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its successors and assigns.
(n) "Mirant Subsidiary" shall mean any corporation or other entity
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Controlled by Mirant. The term "Controlled" shall have the meaning of such
term as set forth in the Change in Control Benefit Plan Determination
Policy.
(o) "Month of Service" shall mean any calendar month during which
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Executive has worked at least one (1) hour or was on approved leave of
absence while in the employ of the Company or any other Mirant Subsidiary.
(p) "Pension Plan" shall mean the Mirant Services LLC Pension Plan, or
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any successor thereto, as such plan may be amended from time to time.
(q) "Termination for Cause" or "Cause" shall mean the termination of
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Executive's employment by the Company upon the occurrence of any of the
following:
(i) The willful and continued failure by Executive substantially
to perform his duties with the Company (other than any such failure
resulting from Executive's Total Disability or from Executive's
retirement or any such actual or anticipated failure resulting from
termination by Executive for Good Reason) after a written demand for
substantial performance is delivered to him by the Board, which demand
specifically identifies the manner in which the Board believes that he
has not substantially performed his duties; or
(ii) The willful engaging by Executive in conduct that is
demonstrably and materially injurious to Mirant or the Company,
monetarily or otherwise, including, but not limited to any of the
following:
(A) any willful act involving fraud or dishonesty in the
course of Executive's employment by the Company;
(B) the willful carrying out of any activity or the making
of any statement which would materially prejudice or impair the
good name and standing of the Company, Mirant, or any Mirant
Subsidiary or would bring the Company, Mirant, or any Mirant
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Subsidiary into contempt or ridicule, or would reasonably shock
or offend any community in which the Company, Mirant or such
Mirant Subsidiary is located;
(C) attendance at work in a state of intoxication or
otherwise being found in possession at his workplace of any
prohibited drug or substance, possession of which would amount to
a criminal offense;
(D) assault or other act of violence against any person
during the course of employment; or
(E) conviction of any felony or any misdemeanor involving
moral turpitude.
No act or failure to act by Executive shall be deemed "willful" unless
done, or omitted to be done, by Executive not in good faith and without
reasonable belief that his action or omission was in the best interest of
the Company.
Notwithstanding the foregoing, Executive shall not be deemed to have
been terminated for Cause unless and until there shall have been delivered
to him a copy of a resolution duly adopted by the affirmative vote of not
less than three quarters of the entire membership of the Board at a meeting
of the Board called and held for such purpose (after reasonable notice to
Executive and an opportunity for him, together with counsel, to be heard
before the Board), finding that, in the good faith opinion of the Board,
Executive was guilty of conduct set forth above in clause (i) or (ii) of
this Section 1(q) and specifying the particulars thereof in detail.
(r) "Termination Date" shall mean the date on which Executive's
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employment with the Company is terminated.
(s) "Total Disability" shall mean Executive's total disability within
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the meaning of the Pension Plan.
(t) "Waiver and Release" shall mean the Waiver and Release Agreement
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attached hereto as Exhibit A.
(u) "Year of Service" shall mean Executive's Months of Service divided
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by twelve (12) rounded to the nearest whole year, rounding up if the
remaining number of months is seven (7) or greater and rounding down if the
remaining number of months is less than seven (7). If Executive has a break
in his service with the Company, he will receive credit under this
Agreement for service prior to the break in service only if the break in
service is less than five (5) years.
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2. Severance Benefits.
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(a) Eligibility. Except as otherwise provided in this Section 2(a), if
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Executive's employment is involuntarily terminated by the Company at any
time during the two-year period following a Change in Control for reasons
other than Cause, or if Executive voluntarily terminates his employment
with the Company for Good Reason at any time during the two-year period
following a Change in Control, Executive shall be entitled to receive the
benefits described in this Agreement upon the Company's receipt of an
effective Waiver and Release. Notwithstanding anything to the contrary
herein, Executive shall not be eligible to receive benefits under this
Agreement if Executive:
(i) voluntarily terminates his employment with the Company other
than for Good Reason;
(ii) has his employment terminated by the Company for Cause;
(iii) terminates employment by reason of his death or Total
Disability.
Any termination by the Company for Cause, or by Executive for Good
Reason, shall be communicated by written notice of termination to the other
party hereto given in accordance with Section 7(g) of this Agreement. Such
notice shall (i) indicate the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, set forth in
reasonable detail the facts and circumstances claimed to provide a basis
for termination of Executive's employment under the provision so indicated
and (iii) specify the termination date. The failure by Executive or the
Company to set forth in the notice of termination any fact or circumstance
which contributes to a showing of Good Reason or Cause shall not waive any
right of Executive or the Company, respectively, hereunder or preclude
Executive or the Company, respectively, from asserting such fact or
circumstance in enforcing Executive's or the Company's rights hereunder.
(b) Severance Benefits. If Executive meets the eligibility
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requirements of Section 2(a) hereof, he shall be entitled to a cash
severance benefit in an amount equal to three (3) times his Annual
Compensation (the "Severance Amount").
(c) Welfare Benefits. If Executive meets the eligibility requirements
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of Section 2(a) hereof and is not otherwise eligible to receive retiree
medical and life insurance benefits provided to certain retirees pursuant
to the terms of the Group Health Plan and the Group Life Insurance Plan, or
other plans providing such benefits to similarly situated employees who
retire, he shall be entitled to the benefits set forth in this Section
2(c).
(i) Executive shall be eligible to participate in the Company's
Group Health Plan for a period of six (6) months for each of
Executive's Years of Service, not to exceed a period of five (5)
years, beginning on the first day of the first month following
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Executive's Termination Date unless otherwise specifically provided
under such plan, upon payment of both the Company's and his monthly
premium under such plan. If Executive elects to receive this extended
medical coverage, he shall also be entitled to elect coverage under
the Group Health Plan for his dependents who were participating in the
Group Health Plan on Executive's Termination Date (and for such other
dependents as may be entitled to coverage under the provisions of the
Health Insurance Portability and Accountability Act of 1996) for the
duration of Executive's extended medical coverage under this Section
2(c)(i) to the extent such dependents remain eligible for dependent
coverage under the terms of the Group Health Plan.
(A) The extended medical coverage afforded to Executive
pursuant to Section 2(c)(i), as well as the premiums to be paid
by Executive in connection with such coverage shall be determined
in accordance with the terms of the Group Health Plan and shall
be subject to any changes in the terms and conditions of the
Group Health Plan as well as any future increases in premiums
under the Group Health Plan. The premiums to be paid by Executive
in connection with this extended coverage shall be due on the
first day of each month; provided, however, that if he fails to
pay his premium within thirty (30) days of its due date, such
extended coverage shall be terminated.
(B) Any Group Health Plan coverage provided under Section
2(c)(i) shall be in lieu of and not in addition to any COBRA
Coverage which Executive or his dependent may elect. Executive or
his dependents must waive COBRA coverage under the Group Health
Plan as a condition precedent to receiving extended medical
coverage pursuant to this Section 2(c). In the event that
Executive or his dependents become eligible to be covered, by
virtue of re-employment or otherwise, by any employer-sponsored
group health plan or is eligible for coverage under any
government-sponsored health plan during the above period,
coverage under the Company's Group Health Plan available to
Executive or his dependents by virtue of the provisions of
Section 2(c)(i) shall terminate, except as may otherwise be
required by law, and shall not be renewed.
(ii) Regardless of whether Executive elects the extended coverage
described in Section 2(c)(i) hereof, he shall be entitled to receive
cash in an amount equal to the Company's and Executive's cost of
premiums for three (3) years of coverage under the Group Health Plan
and Group Life Insurance Plan in accordance with the terms of such
plans as of the date of the Change in Control.
(d) Incentive Plans. If Executive meets the eligibility requirements
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of Section 2(a) hereof, he shall be entitled to the benefits under the
Company's incentive plans as provided under the Change in Control Benefit
Plan Determination Policy for "Severed Employees," in addition to any other
benefits to which he would otherwise be entitled under such Policy.
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(e) Relocation Allowance. If Executive meets the eligibility
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requirements of Section 2(a) hereof and if Executive is living outside the
United States at the Termination Date, he shall be entitled to a relocation
payment of $100,000, which amount is estimated to cover one-way
international relocation expenses.
(f) Tax Equalization. If, at the Termination Date, Executive is
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eligible to receive compensation and benefits under the Mirant Corporation
Expatriate Policy (the "Expatriate Policy"), then the benefits and amounts
paid to or for the benefit of Executive under Sections 2(b), 2(c) and 2(e)
of this Agreement shall constitute "Covered Income" as defined in the
Expatriate Policy. Consequently, in accordance with the Expatriate Policy,
Mirant shall "tax equalize" such payments and benefits such that
Executive's sole tax liability with respect to such payments and benefits
is equal to the hypothetical amount of United States Federal income taxes,
home State income taxes, medicare taxes and Social Security taxes that
Executive would have been liable to pay thereon if he had resided only in
the United States in the year in which the Termination Date occurred. In
accordance with the Expatriate Policy, Mirant will pay the cost of having
its expatriate accounting firm compute Executive's foreign tax liability,
his hypothetical U.S. tax liability, and any reconciliation of such amounts
at year end for purpose of the tax equalization. In addition, Mirant will
pay the cost of preparation of Executive's foreign tax return for the year
in which the Termination Date occurred. Nothing in this Section 2(f) shall
limit the benefits to which Executive is otherwise entitled under the
Expatriate Policy nor imply or mean that other elements of Executive's
compensation (including any of the benefits referred to in Section 2(d) of
this Agreement) shall be excluded as "Covered Income" under the Expatriate
Policy to the extent that they would otherwise be included.
(g) Payment of Benefits. The amounts due under Section 2(b), 2(c)(ii)
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and 2(e) of this Agreement shall be paid in one (1) lump sum payment as
soon as administratively practicable following the later of: (i)
Executive's Termination Date, or (ii) upon Executive's tender of an
effective Waiver and Release to the Company and the expiration of any
applicable revocation period for such waiver. In the event of a dispute
with respect to liability or amount of any benefit due hereunder, an
effective Waiver and Release shall be tendered at the time of final
resolution of any such dispute when payment is tendered by the Company. If
the Company fails or refuses to make payments under the Agreement,
Executive may have the right to obtain payment by Mirant pursuant to the
terms of the "Guarantee Agreement Concerning Mirant Services LLC
Compensation and Benefit Arrangements" entered into by the Company and
Mirant. Executive's right to payment is not increased as a result of this
Guarantee. He has the same right to payment from Mirant as he would have
from the Company. Any demand to enforce this Guarantee should be made in
writing and should reasonably and briefly specify the manner and the amount
the Company has failed to pay. Such writing given by personal delivery or
mail shall be effective upon actual receipt. Any writing given by telegram
or telecopier shall be effective upon actual receipt if received during
Mirant's normal business hours, or at the beginning of the next business
day after receipt, if not received during Mirant's normal business hours.
All arrivals by telegram or telecopier shall be confirmed promptly after
transmission in writing by certified mail or personal delivery.
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(h) Benefits in the Event of Death. In the event of Executive's death
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prior to the payment of all amounts due under this Agreement, Executive's
estate shall be entitled to receive as due any amounts not yet paid under
this Agreement upon the tender by the executor or administrator of the
estate of an effective Waiver and Release.
(i) Executive Outplacement Services. Executive shall be eligible to
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participate in the Executive Outplacement Program, which program shall not
be less than six (6) months duration measured from Executive's Termination
Date.
3. Possible Additional Payments by the Company.
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(a) Anything in this Agreement to the contrary notwithstanding and
except as set forth below, in the event it shall be determined that any
payment or distribution in the nature of compensation (within the meaning
of Section 280G(b)(2) of the Code) by the Company to or for the benefit of
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 3) (a "Payment")
would be subject to the excise tax imposed by Section 4999 of the Code or
any interest or penalties are incurred by 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
Company shall pay to Executive an additional payment (a "Gross-Up Payment")
in an amount such that, after payment by Executive of all taxes (including
any interest or penalties imposed with respect to such taxes), including,
without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up
Payment, Executive retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Payments.
Notwithstanding the foregoing provisions of this Section 3(a), if the
Parachute Value (as defined below) of all Payments does not exceed 110% of
Executive's Safe Harbor Amount (as defined below), then the Company shall
not pay Executive a Gross-Up Payment, and the Payments due under this
Agreement shall be reduced so that the Parachute Value of all Payments, in
the aggregate, equals the Safe Harbor Amount; provided, that if even after
all Payments due under this Agreement are reduced to zero, the Parachute
Value of all Payments would still exceed the Safe Harbor Amount, then no
reduction of any Payments shall be made and the Gross -Up Payment shall be
made. The reduction of the Payments due hereunder, if applicable, shall be
made by first reducing the Severance Payments under Section 2(b), unless an
alternative method of reduction is elected by Executive, and in any event
shall be made in such a manner as to maximize the economic present value of
all Payments actually made to Executive, determined by the accounting firm
serving as the Company's auditors immediately prior to the change of
control (the "Accounting Firm") as of the date of the change of control for
purposes of Section 280G of the Code using the discount rate required by
Section 280G(d)(4) of the Code. For purposes of this Section 3, the
"Parachute Value" of a Payment means the present value as of the date of
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the change of control for purposes of Section 280G of the Code of the
portion of such Payment that constitutes a "parachute payment" under
Section 280G(b)(2) of the Code, as determined by the Accounting Firm for
purposes of determining whether and to what extent the Excise Tax will
apply to such Payment. For purposes of this Section 3, Executive's "Safe
Harbor Amount" means one dollar less than three times Executive's "base
amount" within the meaning of Section 280G(b)(3) of the Code.
(b) Subject to the provisions of Section 3(c), all determinations
required to be made under this Section 3, including whether and when a
Gross-Up Payment is required and the amount of such Gross-Up Payment,
whether and in what manner any Payments are to be reduced pursuant to the
second paragraph of Section 3(a), and the assumptions to be used in
arriving at such determinations, shall be made by the Accounting Firm, and
shall be binding on the Company and Executive, except to the extent the
Internal Revenue Service or a court of competent jurisdiction makes a final
and binding determination inconsistent therewith. The Accounting Firm shall
provide detailed supporting calculations both to the Company and Executive
within 15 business days after receiving notice from Executive that there
has been a Payment, or such earlier time as is requested by the Company. In
the event that the Accounting Firm is serving as accountant or auditor for
the individual, entity or group effecting the Change in Control, Executive
shall appoint another nationally recognized accounting firm to make the
determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment
that becomes due pursuant to this Section 3 shall be paid by the Company to
Executive within the later of (i) five business days prior to the due date
for the payment of the Excise Tax or (ii) five days after the receipt of
the Accounting Firm's determination. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have
been made ("Underpayment"), consistent with the calculations required to be
made hereunder. In the event that the Accounting Firm determines that there
has been an Underpayment or the Company exhausts its remedies pursuant to
Section 3(c) and Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly
paid by the Company to or for the benefit of Executive.
(c) Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by
the Company of a Gross-Up Payment (or an additional Gross-Up Payment). Such
notification shall be given as soon as practicable but no later than ten
business days after Executive is informed in writing of such claim.
Executive shall apprise the Company of the nature of such claim and the
date on which such claim is requested to be paid. Executive shall not pay
such claim prior to the expiration of the 30-day period following the date
on which it gives such notice to the Company (or such shorter period ending
on the date that any payment of taxes with respect to such claim is due).
If the Company notifies Executive in writing prior to the expiration of
such period that it desires to contest such claim, Executive shall:
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(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold Executive
harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto) imposed as a result
of such representation and payment of costs and expenses. Without
limitation of the foregoing provisions of this Section 3(c), the Company
shall control all proceedings taken in connection with such contest and, in
its sole discretion, may pursue or forgo any and all administrative
appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, in its sole discretion, either direct
Executive to pay the tax claimed and ▇▇▇ for a refund or contest the claim
in any permissible manner, and Executive agrees to prosecute such contest
to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company
shall determine; provided, however, that if the Company directs Executive
to pay such claim and ▇▇▇ for a refund, the Company shall advance the
amount of such payment to Executive, on an interest-free basis and shall
indemnify and hold Executive harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties with respect
thereto) imposed with respect to such advance or with respect to any
imputed income with respect to such advance; and further provided that any
extension of the statute of limitations relating to payment of taxes for
the taxable year of Executive with respect to which such contested amount
is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder
and Executive shall be entitled to settle or contest, as the case may be,
any other issue raised by the Internal Revenue Service or any other taxing
authority.
(d) If, at any time after receiving a Gross-Up Payment or an advance
pursuant to Section 3(c), Executive receives any refund of the associated
Excise Tax, Executive shall (subject to the Company's having complied with
the requirements of Section 3(c), if applicable) promptly pay to the
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Company the amount of such refund (together with any interest paid or
credited thereon net of all taxes applicable thereto). If, after Executive
receives an advance by the Company pursuant to Section 3(c), a
determination is made that Executive is not entitled to any refund with
respect to such claim and the Company does not notify Executive in writing
of its intent to contest such denial of refund prior to the expiration of
30 days after such determination, then such advance shall be forgiven and
shall not be required to be repaid, and the amount of any Gross-Up Payment
owed to Executive shall be reduced (but not below zero) by the amount of
such advance.
(e) Notwithstanding any other provision of this Section 3, the Company
may, in its sole discretion, withhold and pay over to the Internal Revenue
Service or any other applicable taxing authority, for the benefit of
Executive, all or any portion of any Gross-Up Payment, and Executive hereby
consents to such withholding.
4. Transfer of Employment. In the event that Executive's employment by the
----------------------
Company is terminated during the two-year period following a Change in Control
and Executive accepts employment by Mirant, a Mirant Subsidiary, or any employer
that succeeds to all or substantially all of the assets of Mirant or any Mirant
Subsidiary, the Company shall assign this Agreement to Mirant, such Mirant
Subsidiary, or successor employer, Mirant shall accept such assignment or cause
such Mirant Subsidiary or successor employer to accept such assignment, and such
assignee shall become the "Company" for all purposes hereunder.
5. No Mitigation. If Executive is otherwise eligible to receive benefits
-------------
under Section 2 of this Agreement, he shall have no duty or obligation to seek
other employment following his Termination Date and, except as otherwise
provided in Section 2(c)(i)(B) hereof, the amounts due Executive hereunder shall
not be reduced or suspended if Executive accepts such subsequent employment.
6. Arbitration.
-----------
(a) If the Company's obligations under this Agreement have been funded
under the Mirant Corporation Deferred Compensation Trust Agreement or any
successor rabbi trust, any dispute, controversy or claim arising out of or
relating to the Company's obligations to pay severance benefits under this
Agreement, or the breach thereof, shall be settled and resolved solely by
the procedures and dispute resolution mechanisms set forth in such trust
agreement, to the extent such procedures and mechanisms are applicable to
such dispute. Otherwise, any dispute, controversy or claim arising out of
or relating to the Company's obligations to pay severance benefits under
this Agreement, or the breach thereof, shall be settled and resolved solely
by arbitration in accordance with the Commercial Arbitration Rules of the
American Arbitration Association ("AAA") except as otherwise provided
herein. The arbitration shall be the sole and exclusive forum for
resolution of any such claim for severance benefits and the arbitrators'
award shall be final and binding. Any such claim for arbitration must be
brought within one (1) year after Executive's Termination Date. The
provisions of this Section 6 are not intended to apply to any other
disputes, claims or controversies arising out of or relating to Executive's
employment by the Company or the termination thereof.
12
(b) Arbitration shall be initiated by serving a written notice of
demand for arbitration to Executive, in the case of the Company, or to the
Board, in the case of Executive.
(c) The arbitration shall be held in Atlanta, Georgia. The arbitrators
shall apply the law of the State of Georgia, to the extent not preempted by
federal law, excluding any law which would require the application of the
law of another state.
(d) The parties shall appoint arbitrators within fifteen (15) business
days following service of the demand for arbitration. The number of
arbitrators shall be three. One arbitrator shall be appointed by Executive,
one arbitrator shall be appointed by the Company, and the two arbitrators
shall appoint a third. If the arbitrators cannot agree on a third
arbitrator within thirty (30) business days after the service of demand for
arbitration, the third arbitrator shall be selected by the AAA.
(e) The arbitration filing fee shall be paid by Executive. All other
costs of arbitration shall be borne equally by Executive and the Company,
provided, however, that the Company shall reimburse Executive for such fees
and costs, plus reasonable legal fees actually incurred by Executive, in
the event any material issue in such dispute is finally resolved in
Executive's favor.
(f) The parties agree that they will faithfully observe the rules that
govern any arbitration between them, they will abide by and perform any
award rendered by the arbitrators in any such arbitration, including any
award of injunctive relief, and a judgment of a court having jurisdiction
may be entered upon an award.
(g) The parties agree that nothing in this Section 6 is intended to
preclude any court having jurisdiction from issuing and enforcing in any
lawful manner such temporary restraining orders, preliminary injunctions,
and other interim measures of relief as may be necessary to prevent harm to
a party's interests or as otherwise may be appropriate pending the
conclusion of arbitration proceedings pursuant to this Agreement regardless
of whether an arbitration proceeding under this Section 6 has begun. The
parties further agree that nothing herein shall prevent any court from
entering and enforcing in any lawful manner such judgments for permanent
equitable relief as may be necessary to prevent harm to a party's interests
or as otherwise may be appropriate following the issuance of arbitral
awards pursuant to this Agreement.
7. Miscellaneous.
-------------
(a) Funding of Benefits. The benefits payable to Executive under this
-------------------
Agreement shall be paid by the Company out of its general assets, which
assets are subject to the claims of the Company's creditors; provided that
such benefits may be funded in accordance with the Change in Control
Benefit Plan Determination Policy.
(b) Withholding. There shall be deducted from the payment of any
-----------
benefit due under this Agreement the amount of any tax required by any
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governmental authority to be withheld and paid over by the Company to such
governmental authority for the account of Executive.
(c) Assignment. Executive shall have no rights to sell, assign,
----------
transfer, encumber, or otherwise convey the right to receive the payment of
any benefit due hereunder, which payment and the rights thereto are
expressly declared to be nonassignable and nontransferable. Any attempt to
do so shall be null and void and of no effect.
(d) Amendment and Termination. The Agreement may be amended or
---------------------------
terminated only by a writing executed by the parties.
(e) Construction. This Agreement shall be construed in accordance with
------------
and governed by the laws of the State of Georgia, to the extent not
preempted by federal law, disregarding any provision of law which would
require the application of the law of another state.
(f) Pooling Accounting. Notwithstanding anything to the contrary
-------------------
herein, if, but for any provision of this Agreement, a Change in Control
transaction would otherwise be accounted for as a pooling-of-interests
under ▇▇▇ ▇▇.▇▇ ("Pooling Accounting") (after giving effect to any and all
other facts and circumstances affecting whether such Change in Control
transaction would use Pooling Accounting,), such provision or provisions of
this Agreement which would otherwise cause the Change in Control
transaction to be ineligible for Pooling Accounting shall be void and
ineffective in such a manner and to the extent that by eliminating such
provision or provisions of this Agreement, Pooling Accounting would be
available for such Change in Control transaction.
(g) Notices. All notices, requests, demands and other communications
-------
required or permitted hereunder shall be in writing and shall be deemed to
have been duly given if delivered or three days after mailing if mailed,
first class, certified mail, postage prepaid:
To the Company: Mirant Services LLC
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Chief Executive Officer
To Executive: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------
--------------------
--------------------
Any party may change the address to which notices, requests, demands and
other communications shall be delivered or mailed by giving notice thereof
to the other party in the same manner provided herein.
14
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
this 10th day of September, 2001.
MIRANT CORPORATION
By: ____________________________________
MIRANT SERVICES LLC
By: ____________________________________
EXECUTIVE
-----------------------------
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
15
Exhibit A
CHANGE IN CONTROL AGREEMENT
Waiver and Release
The attached Waiver and Release Agreement is to be executed by Executive
upon the occurrence of an event that triggers eligibility for severance benefits
under the Change in Control Agreement, as described in Section 2(a) of such
agreement.
WAIVER AND RELEASE AGREEMENT
----------------------------
This Waiver and Release Agreement (the "Waiver and Release") is entered
into by and among Mirant Corporation ("Mirant"), Mirant Services, LLC (the
"Company") and ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("Executive") this ________ day of ________,
20__.
1. General Waiver and Release: For and in consideration of the agreement of
--------------------------
Mirant and the Company to provide Executive the severance benefits described in
that certain Change in Control Agreement, dated as of April 2, 2001, among
Executive, Mirant and the Company (the "Agreement"), Executive, with the
intention of binding himself and all of his heirs, executors, administrators and
assigns, does hereby release, remise, acquit and forever discharge Mirant and
the Company, and all of their respective past and present officers, directors,
stockholders, employees, agents, parent corporations, predecessors,
subsidiaries, affiliates, estates, successors, assigns and attorneys
(hereinafter collectively referred to as "Released Parties") from any and all
claims, charges, actions, causes of action, sums of money due, suits, debts,
covenants, contracts, agreements, rights, damages, promises, demands or
liabilities (hereinafter collectively referred to as "Claims") whatsoever, in
law or in equity, whether known or unknown, suspected or unsuspected, which
Executive, individually or as a member of any class, now has, owns or holds or
has at any time heretofore ever had, owned or held against the Released Parties
including, but not by way of limitation, Claims arising out of or in any way
connected with Executive's employment with the Company or any of the Released
Parties or the termination of any such employment relationship, including, but
not by way of limitation, Claims pursuant to federal, state or local statute,
regulation, ordinance or common-law for (i) employment discrimination; (ii)
wrongful discharge; (iii) breach of contract; (iv) tort actions of any type,
including those for intentional or negligent infliction of emotional harm; and
(v) unpaid benefits, wages, compensation, commissions, bonuses or incentive
payments of any type, except as follows:
A. those obligations of the Company and its affiliates under the
Agreement, pursuant to which this Waiver and Release is being executed and
delivered; and
B. claims, if any, for Executive's accrued or vested benefits under
the retirement plans, savings plans, investment plans and employee welfare
benefit plans, if any, of the Released Parties (within the meaning of
Section 3(1) of the Employee Retirement Income Security Act of 1974
("ERISA")), as amended; provided, however, that nothing herein is intended
to or shall be construed to require the Released Parties to institute or
continue in effect any particular plan or benefit sponsored by the Released
Parties and the Company and all other Released Parties hereby reserve the
right to amend or terminate any such plan or benefit at any time; and
C. any rights to indemnification or advancement of expenses to which
Executive may otherwise be entitled pursuant to the Articles of
17
Incorporation or Bylaws of any of the Released Parties, or by contract or
applicable law, as a result of Executive's service as an officer or
director of any of the Released Parties.
Executive further understands and agrees that he has knowingly
relinquished, waived and forever released any and all remedies arising out
of the aforesaid employment relationship or the termination thereof,
including, without limitation, claims for backpay, front pay, liquidated
damages, compensatory damages, general damages, special damages, punitive
damages, exemplary damages, costs, expenses and attorneys' fees.
2. Waiver and Release of ADEA Claims: Without limiting the generality of
---------------------------------
the foregoing, and also for and in consideration of the Company's agreement to
provide Executive Severance Benefits described in Article 3 of the Agreement,
Executive specifically acknowledges and agrees that he does hereby knowingly and
voluntarily release Mirant, the Company and all other Released Parties from any
and all claims arising under the Age Discrimination in Employment Act, 29 U.S.C.
ss. 621, et seq. ("ADEA"), which Executive ever had or now has from the
beginning of time up to the date this Waiver and Release is executed, including,
but not by way of limitation, those ADEA Claims which are in any way connected
with any employment relationship or the termination of any employment
relationship which existed between the Company or any other Released Parties and
Executive. Executive also acknowledges that he has been provided with a notice,
as required by the Older Workers Benefit Protection Act of 1990, that contains
(i) information about the individuals covered under the Agreement, (ii) the
eligibility factors for participation in the Agreement, (iii) the time limits
applicable to the Agreement, (iv) the job titles and ages of the employees
designated to participate in the Agreement, (v) and the ages of the employees in
the same job classification who have not been designated to participate in the
Agreement. (See Attachment 1). Executive further acknowledges and agrees that he
has been advised to consult with an attorney prior to executing this Waiver and
Release and that he has been given forty-five (45) days to consider this Waiver
and Release prior to its execution. Executive agrees that in the event that he
executes this Waiver and Release prior to the expiration of the forty-five (45)
day period, he shall waive the balance of said period. Executive also
understands that he may revoke this Waiver and Release of ADEA Claims at any
time within seven (7) days following its execution and that, if Executive
revokes this Waiver and Release of ADEA Claims within such seven (7) day period,
it shall not be effective or enforceable and he will not receive the
above-described consideration or any payments provided for in the Agreement that
have not been paid.
3. Covenant Not to ▇▇▇: Executive acknowledges and agrees that this Waiver
-------------------
and Release may not be revoked at any time after the expiration of the seven (7)
day revocation period and that he will not institute any suit, action, or
proceeding, whether at law or equity, challenging the enforceability of this
Waiver and Release. Should Executive ever attempt to challenge the terms of this
Waiver and Release, attempt to obtain an order declaring this Waiver and Release
to be null and void, or institute litigation against any of the Released Parties
based upon a Claim other than an ADEA Claim which is covered by the terms of
this Waiver and Release, Executive will as a condition precedent to such action
18
repay all monies paid to him under the terms of this Waiver and Release.
Furthermore, if Executive does not prevail in an action to challenge this Waiver
and Release, to obtain an order declaring this Waiver and Release to be null and
void, or in any action against any of the Released Parties based upon a Claim
other than an ADEA Claim which is covered by the Waiver and Release set forth
herein, Executive shall pay to the Company and/or the appropriate Released
Parties all their costs and attorneys' fees incurred in their defense of
Executive's action.
Provided, however, that it is understood and agreed by the parties that
Executive shall not be required to repay the monies paid to him under the terms
of this Waiver and Release or pay the Company and/or the appropriate Released
Parties all their costs and attorneys' fees incurred in their defense of
Executive's action (except those attorneys' fees or costs specifically
authorized under federal law) in the event that Executive seeks to challenge his
Waiver and Release of Claims under the ADEA.
4. Denial of Liability: Executive acknowledges and agrees that neither the
-------------------
payment of Severance Benefits under the Agreement nor this Waiver and Release is
to be construed in any way as an admission of any liability whatsoever by
Mirant, the Company or any of the other Released Parties, by whom liability is
expressly denied.
5. Agreement Not to Seek Further Relief: Executive acknowledges and agrees
------------------------------------
that he has not, with respect to any transaction or state of facts existing
prior to the date of execution of this Waiver and Release, filed any complaints,
charges or lawsuits against any of the Released Parties with any governmental
agency or any court or tribunal, and that he will not do so at any time
hereafter. Executive further acknowledges and agrees that he hereby waives any
right to accept any relief or recovery, including costs and attorneys' fees,
that may arise from any charge or complaint before any federal, state or local
court or administrative agency against the Released Parties.
6. Company Property: Executive agrees that he will not retain or destroy,
-----------------
and will immediately return to the Company, any and all property of the Company
in his possession or subject to his control, including, but not limited to,
keys, credit and identification cards, personal items or equipment provided for
his use, customer files and information, all other files and documents relating
to the Company and its business, together with all written or recorded
materials, documents, computer disks, plans, records or notes or other papers
belonging to the Company. Executive further agrees not to make, distribute or
retain copies of any such information or property.
7. Confidentiality Agreement: Executive acknowledges that the terms of this
-------------------------
Waiver and Release must be kept confidential. Accordingly, Executive agrees not
to disclose or publish to any person or entity, except as required by law or as
necessary to prepare tax returns, the terms and conditions or sums being paid in
connection with this Waiver and Release.
8. Acknowledgment: Executive acknowledges that he has carefully read and
--------------
fully understands the terms of this Waiver and Release and the Agreement and
that this Waiver and Release is executed by Executive voluntarily and is not
19
based upon any representations or statements of any kind made by Mirant, the
Company or any or the other Released Parties as to the merits, legal liabilities
or value of his claims. Executive further acknowledges that he has had a full
and reasonable opportunity to consider this Waiver Release and that he has not
been pressured or in any way coerced into executing this Waiver and Release.
9. Choice of Laws: This Waiver and Release and the rights and obligations
--------------
of the parties hereto shall be governed and construed in accordance with the
laws of the State of Georgia.
10. Severability: With the exception of the waiver and releases contained
------------
in Sections 1 and 2 above, if any provision of this Waiver and Release is
unenforceable or is held to be unenforceable, such provision shall be fully
severable, and this Waiver and Release and its terms shall be construed and
enforced as if such unenforceable provision had never comprised a part hereof,
the remaining provisions hereof shall remain in full force and effect, and the
court construing the provisions shall add as a part hereof a provision as
similar in terms and effect to such unenforceable provision as may be
enforceable, in lieu of the unenforceable provision. In the event that both of
the releases contained in Sections 1 and 2 above are unenforceable or are held
to be unenforceable, the parties understand and agree that the remaining
provisions of this Waiver and Release shall be rendered null and void and that
neither party shall have any further obligation under any provision of this
Waiver and Release.
11. Entire Agreement: This document contains all terms of the Waiver and
-----------------
Release and supersedes and invalidates any previous agreements or contracts
regarding the same subject matter. No representations, inducements, promises or
agreements, oral or otherwise, which are not embodied herein shall be of any
force or effect.
IN WITNESS WHEREOF, the undersigned acknowledges that he has read this
Waiver and Release Agreement and sets his hand and seal this ____ day of
____________, 20__.
------------------------------
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Sworn to and subscribed before me this _____ day of ______________, 20__.
---------------------
Notary Public
My Commission Expires:
---------------------
20
MIRANT CORPORATION
By: ________________________
MIRANT SERVICES LLC
By: ________________________
21
