Exhibit 10.01
EMPLOYMENT
AGREEMENT
AGREEMENT by and between OGE Energy Corp., an Oklahoma
corporation, and Sean Trauschke (the “Executive”),
dated as of the 5 th day of May, 2009.
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; and
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
Company desires to enter into this Employment Agreement with the
Executive 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.
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 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.
2.
Change of Control. For the purpose of this Agreement, a
“Change of Control” shall mean:
(a) The
acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”)) (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 (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 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 with the 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)
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 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, 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 Execu
