EXHIBIT 10.44
CHANGE OF CONTROL
AGREEMENT
AGREEMENT by and between Avista
Corporation, a Washington corporation (the “Company”)
and
, (the “Executive”), dated as of the
day of
, 20 .
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 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
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
Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED
AS FOLLOWS:
1. Certain Definitions .
(a) The “Effective Date” shall mean the first date
during the Change of Control Period (as defined in
Section 1(b)) on which a Change of Control (as defined in
Section 1(c)) occurs.
(b) The “Change of Control
Period” shall mean the period commencing on the date hereof
and ending on the third anniversary of the date hereof; provided,
however, that commencing on the date one year after the date
hereof, and on each annual anniversary of such date (such date and
each annual anniversary thereof shall be hereinafter referred to as
the “Renewal Date”), unless previously terminated, the
Change of Control Period shall be automatically extended so as to
terminate three (3) years from such Renewal Date, unless at
least sixty (60) days prior to the Renewal Date the Company
shall give notice to the Executive that the Change of Control
Period shall not be so extended.
(c) For the purpose of this
Agreement, a “Change of Control” shall mean:
(i) 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”)) (a
“Person”) of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of twenty
percent (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 for purposes of this
subsection (i), the following acquisitions shall not
constitute a Change of Control: (w) any acquisition directly
from the Company, (x) any acquisition by the Company,
(y) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation
controlled by the Company or (z) any acquisition by any
corporation pursuant to a transaction which complies with
clauses (x), (y) and (z) of subsection (iii) of
this Section 1; or
(ii) 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 an actual or threatened election contest with respect to
the election or removal of directors, or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person
other than the Board; or
(iii) Consummation of a
reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the
Company (a “Business Combination”), in each case,
unless, following such Business Combination, (x) 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 Business Combination beneficially own, directly or
indirectly, more than fifty percent (50%) 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 Business Combination (including,
without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the
Company’s assets either directly or through one or more
subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (y) no Person (excluding any
corporation resulting from such Business Combination or employee
benefit plan (or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially owns,
directly or indirectly, twenty percent (20%) or more of,
respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the
combined voting power of the then outstanding voting securities of
such corporation except to the extent that such ownership existed
prior to the Business Combination and (z) at least a majority
of the members of the board
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of directors of the corporation resulting from
such Business Combination were members of the Incumbent Board at
the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination;
or
(iv) Approval by the shareholders of
the Company of a complete liquidation or dissolution of the
Company.
2. Employment Period . The
Company hereby agrees to continue the Executive in its employ, and
the Executive hereby agrees to remain in the employ of the Company
subject to the terms and conditions of this Agreement, for the
period commencing on the Effective Date and ending on the third
anniversary of such date (the “Employment
Period”).
3. Terms of Employment .
(a) Position and Duties . (i) During the
Employment Period, (A) the Executive’s position
(including status, offices, titles and reporting requirements),
authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of
those held, exercised and assigned at any time during the one
hundred twenty (120) day period immediately preceding the
Effective Date and (B) the Executive’s services shall be
performed at the location where the Executive was employed
immediately preceding the Effective Date or any office or location
less than 35 miles from such location.
(ii) During the Employment Period,
and excluding any periods of vacation and sick leave to which the
Executive is entitled, the Executive agrees to devote reasonable
attention and time during normal business hours to the business and
affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Executive hereunder, to use
the Executive’s reasonable best efforts to perform faithfully
and efficiently such responsibilities. During the Employment Period
it shall not be a violation of this Agreement for the Executive to
(A) serve on corporate, civic or charitable boards or
committees, (B) deliver lectures, fulfill speaking engagements
or teach at educational institutions and (C) manage personal
investments, so long as such activities do not significantly
interfere with the performance of the Executive’s
responsibilities as an employee of the Company 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 continued conduct of
such activities (or the 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.
(b) Compensation . (i)
Base Salary . During the Employment Period, the Executive
shall receive an annual base salary (“Annual Base
Salary”), which shall be paid at a monthly rate, at least
equal to twelve times the highest monthly base salary paid or
payable, including any base salary which has been earned but
deferred, to the Executive by the Company and its affiliated
companies in respect of the twelve month
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period immediately preceding the month in which
the Effective Date occurs. During the Employment Period, the Annual
Base Salary shall be reviewed no more than 12 months after the
last salary increase awarded to the Executive prior to the
Effective Date and thereafter at least annually. 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. As used in this Agreement, the
term “affiliated companies” shall include any company
controlled by, controlling or under common control with the
Company.
(ii) 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 Executive’s highest bonus under the
Company’s Annual Incentive Plans, or any comparable bonus
under any predecessor or successor plan, for the last three
(3) full fiscal years prior to the Effective Date (annualized
in the event that the Executive was not employed by the Company for
the whole of such fiscal year) (the “Recent Annual
Bonus”). Each such Annual bonus shall be paid in a lump sum
no later than two and one-half (2 1
/
2 ) months after the end of the
fiscal year next following the fiscal year for which the Annual
Bonus is awarded, unless the Executive shall elect to defer the
receipt of such Annual Bonus pursuant to the Company’s
Investment and Employee Stock Ownership Plan (“ESOP”)
or Executive Deferral Plan (“Deferred Compensation
Plan”), as such plans may be amended from time to
time.
(iii) Incentive, Savings and
Retirement Plans . During the Employment Period, the Executive
shall be entitled to participate in all incentive, 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 incentive
opportunities (measured with respect to both regular and special
incentive opportunities, to the extent, if any, that such
distinction is applicable), 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 120-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.
(iv) Welfare 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,
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without limitation, medical, prescription,
dental, disability, employee life, group life, accidental death 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 120-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.
(v) 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 120-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.
(vi) Fringe Benefits . During
the Employment Period, the Executive shall be entitled to fringe
benefits, including, without limitation, tax and financial planning
services, payment of club dues, and, if applicable, use of an
automobile and payment of related expenses, 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 120-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.
(vii) 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 120-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.
(viii) 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 120-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.
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4. Termination of Employment
. (a) Death or Disability . The Executive’s
employment shall terminate automatically upon the Executive’s
death during the Employment Period. 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 11(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 Termination Effective Date),
provided that, within the thirty (30) days after such receipt,
the Executive shall not have returned to full-time performance of
the Executive’s duties. For purposes of this Agreement,
“Disability” shall mean that the Executive is unable to
engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a
continuous period of not less than twelve (12) months or is,
by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than twelve
(12) months, receiving income replacement benefits for a
period of not less than three (3) months under an accident and
health plan covering employees of the Company.
(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) the willful and continued
failure of the Executive to perform substantially the
Executive’s duties with the Company or one of its affiliates
(other than any such failure resulting from incapacity due to
physical or mental illness), after a written demand for substantial
performance is delivered to the Executive by the Board or the Chief
Executive Officer of the Company which specifically identifies the
manner in which the Board or Chief Executive Officer believes that
the Executive has not substantially performed the Executive’s
duties, or
(ii) the willful engaging by the
Executive in illegal conduct or gross misconduct which is
materially and demonstrably injurious to the Company.
For purposes of this provision, no
act or failure to act, on the part of the Executive, shall be
considered “willful” unless it is done, or omitted to
be done, by the Executive in bad faith or without reasonable belief
that the Executive’s action or omission was in the best
interests of the Company. Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the Board
or upon the instructions of the Chief Executive Officer or a senior
officer of the Company or based upon the advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be
done, by the Executive in good faith and in the best interests of
the Company. The cessation of employment of the Executive shall not
be deemed to be for Cause unless and until there shall have been
delivered to the Executive a copy of a resolution duly adopted by
the
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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 is
provided to the Executive and the Executive is given an
opportunity, together with counsel, to be heard before the Board),
finding that, in the good faith opinion of the Board, the Executive
is guilty of the conduct described in subparagraph (i) or
(ii) above, and specifying the particulars thereof in
detail.
(c) Good Reason . The
Executive’s employment may be terminated by the Executive for
Good Reason. For purposes of this Agreement, “Good
Reason” shall mean:
(i) the assignment to the Executive
of any duties inconsistent in any respect with the
Executive’s position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as
contemplated by Section 3(a) of this Agreement, or any other
action by the Company which results in a material diminution in
such position, authority, duties or responsibilities;
(ii) a material diminution in the
Executive’s Annual Base Salary by more than ten percent
(10%);
(iii) the Company’s requiring
the Executive to be based at any office or location other than as
provided in Section 3(a)(i)(B) hereof or the Company’s
requiring the Executive to travel on Company business to a
substantially greater extent than required immediately prior to the
Effective Date;
(iv) any material failure by the
Company to comply with and satisfy Section 10(c)
hereof.
The Executive shall provide notice
to the Company of the existence of a condition described in
(i) through (iv) above within 90 days of the initial
existence of the condition, upon the notice of which the Company
shall be provided a period of 30 days during which it may remedy
the condition. For purposes of this Section 4(c), a
determination of “Good Reason” made by the Executive
with which the Company does not agree shall be resolved pursuant to
the following dispute resolution procedure. First, the parties
shall in good faith attempt to resolve any dispute arising
hereunder. Second, if such efforts are unsuccessful, the parties
shall submit to binding arbitration with such arbitration to be
conducted in Spokane, Washington, by the American Arbitration
Association under its National Rules for the Resolution of
Employment Disputes.
(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
