Exhibit 10.02
AMENDED AND RESTATED EMPLOYMENT
AGREEMENT
AGREEMENT by and between OGE Energy Corp., an Oklahoma
corporation, and Peter B. Delaney (the
“Executive”), dated as of the 10 th day of
July 2008.
WHEREAS, the Board of Directors (the
“Board”) of the Company (as hereinafter defined)
recognizes that the possibility of a Change of Control (as
hereinafter defined) exists and that the occurrence of a Change of
Control can result in significant distractions of its key
management personnel because of the uncertainties inherent in such
a situation;
WHEREAS, the Board has determined
that it is essential and in the best interest of the Company and
its shareowners to retain the services of the Executive in the
event of a Change of Control and to ensure the Executive's
continued dedication and efforts in such event without undue
concern for the Executive's personal financial and employment
security;
WHEREAS, in order to induce the
Executive to remain in the employ of the Company or an Affiliate
(as hereinafter defined), as the case may be, particularly in the
event of a threat or the occurrence of a Change of Control, the
Board has caused the Company to enter into a Change-of-Control
Employment Agreement with the Executive, dated April 1,
2002 (the “Prior Employment Agreement”) to provide
the Executive with certain benefits in the event the
Executive’s employment is terminated as a result of, or in
connection with, a Change of Control; and
WHEREAS, the Company and the
Executive now desire to amend and restate and make certain changes
to the Prior Employment Agreement in order to, among other things,
comply with Section 409A of the Internal Revenue Code of 1986, as
amended.
NOW, THEREFORE, IT IS HEREBY
AGREED TO AMEND AND RESTATE THE PRIOR EMPLOYMENT AGEEEMENT IN ITS
ENTIRETY AS FOLLOWS:
1.
Certain Definitions.
(a) The “Effective Date”
shall mean the first date during the Change of Control Period (as
defined in Section l(b)) on which a Change of Control (as defined
in Section 2) occurs. Anything in this Agreement to the contrary
notwithstanding, if a Change of Control occurs during the Change of
Control Period and if the Executive's employment with the Employer
(as defined in Section 1(d)) is terminated prior to the date on
which the Change of Control occurs, and it is reasonably
demonstrated by the Executive that such termination of employment
(i) was at the request of a third party who has taken steps
reasonably calculated to effect a Change of Control or (ii)
otherwise arose in connection with or in anticipation of a Change
of Control, then for all purposes of this Agreement the
“Effective Date” shall mean the date immediately prior
to the date of such termination of employment.
(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 years from such
Renewal Date, unless at least 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) The
“Company” shall mean OGE Energy Corp. and any successor
to its business and/or assets which assumes and agrees to perform
this Agreement, pursuant to Section 11 herein, by operation of law,
or otherwise.
(d) “Employer”
shall mean (i) in the event the Executive is an officer of the
Company and not of any Affiliate (as defined in Section 1(e)) of
the Company immediately prior to the Effective Date, the Company;
(ii) in the event the Executive is an officer of one or more
Affiliates of the Company, but not of the Company,
immediately
prior
to the Effective Date, any such Affiliate; and (iii) in the event
the Executive is an officer of the Company and one or more
Affiliates of the Company immediately prior to the Effective Date,
any such entity of which the Executive is an officer immediately
prior to the Effective Date.
(e) “Affiliate”,
for all purposes of this Agreement other than Section 5 and Section
6(e), shall mean, with respect to any Person (as defined in Section
2(a)), any other Person that directly or indirectly through one or
more intermediaries controls, is controlled by or is under common
control with, the Person in question. As used herein, the term
“control” means the possession, direct or indirect, of
the power to direct or cause the direction of the management and
policies of a Person, whether through ownership of voting
securities, by contract or otherwise. For purposes of Sections 5
and 6(e), however, “Affiliate” shall mean any Person
which is a member of the same controlled group of corporations,
trades or businesses within the meaning of the Section 414(b) or
(c) of the Internal Revenue Code of 1986, as amended (the
“Code”), as any other Person, provided that for
purposes of Section 5 (but not for purposes of Section 6(e)) in
applying Code Section 1563(a)(1), (2), and (3) in determining a
controlled group of corporations under Code Section 414(b), the
language “at least 50 percent” shall be used instead of
“at least 80 percent” each place it appears in Code
Section 1563(a)(1), (2), and (3), and in applying Treasury Reg.
§ 1.414(c)-2 for purposes of determining trades or businesses
(whether or not incorporated) that are under common control for
purposes of Code Section 414(c), “at least 50 percent”
shall be used instead of “at least 80 percent” each
place it appears in Treasury Reg. § 1.414(c)-2.
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2.
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Change of Control.
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For the purpose of this Agreement, a
“Change of Control” shall mean:
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(a) The
acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”)) (a
“Person”) of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then-outstanding shares of common stock of the
Company (the “Outstanding Company Common Stock”) or
(ii) the combined voting power of the then-outstanding voting
securities of the Company entitled to vote generally in the
election of directors (the “Outstanding Company Voting
Securities”); provided, however, that for purposes of this
subsection (a), the following acquisitions shall not constitute a
Change of Control: (i) any acquisition directly from the Company,
(ii) any acquisition by the Company, (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by
the Company or any corporation or other Person controlled by the
Company, or (iv) any acquisition by any corporation or other Person
pursuant to a transaction which complies with clauses (i), (ii) and
(iii) of subsection (c) of this Section 2; or
(b) Individuals
who, as of the date hereof, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute
at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company's shareowners,
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
(c) Consummation
of a reorganization, merger, share exchange 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, (i) 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 60% of, respectively, the then-outstanding
shares of common stock or equity interests and the combined voting
power of the then-outstanding voting securities entitled to vote
generally in the election of directors or other controlling
persons, as the case may be, of the corporation or other Person
resulting from such Business Combination (including, without
limitation, a corporation or other Person 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, (ii) no Person (excluding any
corporation or other Person resulting from such Business
Combination or any employee benefit plan
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(or related trust) of the Company or
such corporation or other Person resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more
of, respectively, the then-outstanding shares of common stock or
equity interests of the corporation or other Person resulting from
such Business Combination, or the combined voting power of the
then-outstanding voting securities of such corporation or other
Person except to the extent that such ownership existed with
respect to the Company prior to the Business Combination and (iii)
at least a majority of the members of the board of directors or
other governing body of the corporation or other Person 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
(d) Approval
by the shareowners of the Company of a complete liquidation or
dissolution of the Company.
3.
Employment Period .The Executive shall remain in the employ
of the Employer subject to the terms and conditions of this
Agreement, for the period commencing on the Effective Date and
ending, unless earlier terminated by the occurrence of the
Executive’s Date of Termination as provided in Section 5, on
the third anniversary of such date (the “Employment
Period”).
4.
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 120-day period immediately preceding the Effective Date
and (B) the Executive's services shall be performed at the location
where the Executive performed the majority of the Executive’s
services immediately preceding the Effective Date or any office or
location less than 50 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 Employer 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 Employer 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 Employer.
(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
Affiliates in respect of the twelve-month 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.
(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 or any of its Affiliates’ Annual Incentive
Compensation Plan, or any comparable bonus under any predecessor or
successor plan of the Company or any of its Affiliates, for the
last three full fiscal years ending prior to the Effective Date
(annualized in the event that the Executive was not employed by the
Employer for the whole of such fiscal year) (the “Recent
Annual Bonus”). Each such Annual Bonus shall be paid during
the period beginning on the first day of the first month and ending
on the 15 th day of the third month of the fiscal year
next following the fiscal year for which the Annual Bonus is
awarded, unless the Executive shall elect
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to defer the receipt of such Annual
Bonus pursuant to the terms of a plan of the Company or an
Affiliate thereof permitting such deferral.
(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
Affiliates, including, but not limited to, those specified in
Exhibit A attached hereto, 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 Affiliates 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 Affiliates.
(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 Affiliates (including, without limitation,
medical, prescription, dental, vision, 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 Affiliates, 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
Affiliates.
(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 withthe most favorable policies, practices
and procedures of the Company and its Affiliates 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
Affiliates.
(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 Affiliates
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
Affiliates.
(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 personal secretarial and
other assistance, at least equal to the most favorable of the
foregoing provided to the Executive by the Company and its
Affiliates at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the
Executive, as provided generally at any time thereafter with
respect to other peer executives of the Company and its
Affiliates.
(viii) V
acation. 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 Affiliates 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
Affiliates.
5.
Termination of Employment . Subject to the provisions of
this Section 5, the Executive’s employment shall be deemed
terminated for purposes of this Agreement when the Executive incurs
a “separation from service” (as such phrase is defined
in Code Section 409A and the regulations promulgated thereunder)
with the Employer and its Affiliates because of death, retirement
or termination of employment for any other reason,
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including any reason specified in
Section 5(a), (b) or (c) below; provided, however, that no
termination shall be deemed to occur for purposes of the Agreement
while the Executive continues to perform services for the Employer
or its Affiliates in a capacity as an employee or as an independent
contractor at a level that is more than 20% of the average level of
bona fide services performed (whether as an employee or otherwise)
by the Executive during the immediately preceding 36-month period
(or, if employed less than 36 months, such lesser
period).
(a)
Death or Disability. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment
Period. If the Employer 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 12(b) of this Agreement of its intention to terminate the
Executive's employment. In such event, the Executive's employment
with the Employer shall terminate effective on the 30th day after
receipt of such notice by the Executive (the “Disability
Effective Date”), provided that, within the 30 days after
such receipt, the Executive shall not have returned to full-time
performance of the Executive's duties. For purposes of this
Agreement, “Disability” shall mean the absence of the
Executive from the Executive's duties with the Employer on a
full-time basis for 180 consecutive business days as a result of
incapacity due to mental or physical illness which is determined to
be total and permanent by a physician selected by the Employer or
its insurers and acceptable to the Executive or the Executive's
legal representative.
(b)
Cause. The Employer
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 Employer 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
Employer.
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 Employer. Any act, or failure to act, based upon authority
given pursuant to a resolution duly adopt
