EXHIBIT
10.37
SEVERANCE
AGREEMENT
THIS AGREEMENT is
entered into as of the _____ day of _____________ by and
between Madison Gas and Electric Company, a Wisconsin corporation
(the " Company "), and
(the "
Employee "), and shall be effective as of
___________________. This Agreement supersedes any and all previous
Severance Agreements entered into by and between the Employee and
the Company, including but not limited to such agreement which was
effective
_________________
.
W I T N E S S E T
H
WHEREAS, Employee
currently serves as a key employee of the Company and the services
and knowledge of Employee are valuable to the Company in connection
with the management of the Company's business; and
WHEREAS, 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
secure Employee's continued services and to ensure Employee's
continued dedication and objectivity in the event of any threat or
occurrence of, or negotiation or other action that could lead to,
or create the possibility of, a Change in Control (as defined in
Section 1) of the Company, without concern as to whether Employee
might be hindered or distracted by personal uncertainties and risks
created by any such possible Change in Control, and to encourage
Employee's full attention and dedication to the Company, the Board
has authorized the Company to enter into this Agreement.
NOW, THEREFORE, for and
in consideration of the premises and the mutual covenants and
agreements herein contained, the Company and Employee hereby agree
as follows:
1.
Definitions . As used in this Agreement, the
following terms shall have the respective meanings set forth
below:
(a) " Cause "
means (1) a material breach by Employee of those duties and
responsibilities of Employee which do not differ in any material
respect from the duties and responsibilities of Employee during the
90-day period immediately prior to a Change in Control (other than
as a result of incapacity due to physical or mental illness) which
is demonstrably willful and deliberate on Employee's part,
committed in bad faith or without reasonable belief that such
breach is in the best interests of the Company, and is not remedied
in a reasonable period of time after receipt of written notice from
the Company specifying such breach or (2) the commission by
Employee of a felony involving moral turpitude.
(b) " Change in
Control " means the occurrence of any of the following
events:
(1) the acquisition by
any individual, entity or group (a " Person "), including
any "person" within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the " Exchange
Act "), 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 securities of the Company
entitled to vote generally in the election of directors (the "
Outstanding Company Voting Securities "); provided ,
however , that the following acquisitions shall not
constitute a Change in Control:
(A) any acquisition
directly from the Company (excluding any acquisition resulting from
the exercise of a conversion or exchange privilege in respect of
outstanding convertible or exchangeable securities),
(B) any acquisition by
the Company,
(C) any acquisition by
an employee benefit plan (or related trust) sponsored or maintained
by the Company or any corporation controlled by the
Company,
(D) any acquisition by
any corporation pursuant to a reorganization, merger or
consolidation involving the Company, if, immediately after such
reorganization, merger or consolidation, each of the Shareholder
Continuity Condition (as defined below), the Beneficial Ownership
Condition (as defined below) and the Board of Directors Continuity
Condition (as defined below) shall be satisfied;
and provided
further that, for purposes of clause (B), if any Person
(other than the Company or any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation
controlled by the Company) shall become the beneficial owner of 20%
or more of the Outstanding Company Common Stock or 20% or more of
the Outstanding Company Voting Securities by reason of an
acquisition by the Company and such Person shall, after such
acquisition by the Company, become the beneficial owner of any
additional shares of the Outstanding Company Common Stock or any
additional Outstanding Voting Securities and such beneficial
ownership is publicly announced, such additional beneficial
ownership shall constitute a Change in Control;
(2) individuals who, as
of the date hereof, constitute the Board (the " Incumbent
Board ") cease for any reason to constitute at least a majority
of such Board; provided , however , that any
individual who becomes a director of the Company subsequent to the
date hereof whose election, or nomination for election by the
Company's shareholders, was approved by the vote of at least a
majority of the directors then comprising the Incumbent Board shall
be deemed to have been a member of the Incumbent Board; and
provided further , that no individual who was
initially elected as a director of the Company as a result of an
actual or threatened election contest, as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange Act,
or any other actual or threatened solicitation of proxies or
consents by or on behalf of any Person other than the Board shall
be deemed to have been a member of the Incumbent Board;
(3) the approval by the
shareholders of the Company of a reorganization, merger or
consolidation unless, in any such case, immediately after such
reorganization, merger or consolidation each of the Shareholder
Continuity Condition, the Beneficial Ownership Condition and the
Board of Directors Continuity Condition shall be satisfied;
or
(4) approval by the
shareholders of the Company of (i) a plan of complete liquidation
or dissolution of the Company or (ii) the sale or other disposition
of all or substantially all of the assets of the Company other than
to a corporation with respect to which, immediately after such sale
or other disposition each of, the Shareholder Continuity Condition,
the Beneficial Ownership Condition and the Board of Directors
Continuity Condition shall be satisfied.
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For purposes of this
Section 1 (b), the " Shareholder Continuity Condition "
shall be satisfied in connection with a transaction if at least 60%
of the then outstanding shares of common stock of the corporation
resulting from such transaction and at least 60% of the combined
voting power of the then outstanding securities of such corporation
entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially
all of the individuals or entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities immediately prior to such
transaction and in substantially the same proportions relative to
each other as their ownership, immediately prior to such
transaction, of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities, as the case may
be.
For purposes of this
Section 1 (b), the " Beneficial Ownership Condition " shall
be satisfied in connection with a transaction if no Person (other
than the Company, any employee benefit plan (or related trust)
sponsored or maintained by the Company or the corporation resulting
from such transaction (or any corporation controlled by the
Company) and any Person which beneficially owned, immediately prior
to such transaction, directly or indirectly, 20% or more of the
Outstanding Company Common Stock or the Outstanding Company Voting
Securities, as the case may be) beneficially owns, directly or
indirectly, 20% or more of the then outstanding shares of common
stock of such corporation or 20% or more of the combined voting
power of the then outstanding securities of such corporation
entitled to vote generally in the election of directors.
For purposes of this
Section 1(b), the " Board of Directors Continuity Condition
" shall be satisfied in connection with a transaction if at least a
majority of the members of the board of directors of the
corporation resulting from such transaction were members of the
Incumbent Board at the time of the execution of the initial
agreement or action of the Board providing for such
transaction.
(c) " Date of
Separation " means the effective date on which the Employee has
experienced a Separation from Service.
(d) " Disability
" means the Employee’s inability to engage in any substantial
gainful activity by reason of any medically determinable physical
or mental impairment that can be expected to result in death or can
be expected to last for a continuous period of not less than 12
months.
(e) " Good Reason
" means, without Employee's express written consent, the occurrence
of any of the following events after a Change in
Control:
(1) any of (i) the
assignment to Employee of any duties inconsistent in any material
respect with Employee's position(s), duties, responsibilities or
status with the Company immediately prior to such Change in
Control, (ii) a change in Employee's reporting responsibilities,
titles or offices with the Company as in effect immediately prior
to such Change in Control or (iii) any removal or involuntary
termination of Employee from the Company otherwise than as
expressly permitted by this Agreement or any failure to re-elect
Employee to any position with the Company held by Employee
immediately prior to such Change in Control;
(2) a reduction by the
Company in Employee's rate of annual base salary or the failure by
the Company to increase such rate of base salary each year after
such Change in Control by an amount which at least equals, on a
percentage basis, the mean average percentage increase in the rates
of base salary for all officers (within the meaning of Rule 3b-2
promulgated under the Exchange Act) of the Company during the two
full fiscal years of the Company immediately preceding such Change
in Control;
(3) any requirement of
the Company that Employee (i) be based anywhere other than at the
offices where the Employee is based at the time of the Change in
Control or (ii) travel on Company business to an extent
substantially more burdensome than the travel obligations of
Employee immediately prior to such Change in Control;
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(4) the failure of the
Company to:
(i) continue in effect
any employee benefit plan or compensation plan in which Employee is
participating immediately prior to such Change in Control, unless
Employee is permitted to participate in other plans providing
Employee with substantially comparable benefits, or the taking of
any action by the Company which would adversely affect Employee's
participation in or materially reduce Employee's benefits under any
such plan,
(ii) provide Employee
and Employee's dependents welfare benefits (including, without
limitation, medical, prescription, dental, disability, salary
continuance, employee life, group life, accidental death and travel
accident insurance plans and programs) in accordance with the most
favorable plans, practices, programs and policies of the Company
and its affiliated companies in effect for Employee immediately
prior to such Change in Control or, if more favorable to Employee,
as in effect generally at any time thereafter with respect to other
peer executives of the Company and its affiliated
companies,
(iii) provide fringe
benefits in accordance with the most favorable plans, practices,
programs and policies of the Company and its affiliated companies
in effect for Employee immediately prior to such Change in Control
or, if more favorable to Employee, as in effect generally at any
time thereafter with respect to other peer executives of the
Company and its affiliated companies,
(iv) provide an office
or offices of a size and with furnishings and other appointments,
together with exclusive personal secretarial and other assistance,
at least equal to the most favorable of the foregoing provided to
Employee by the Company and its affiliated companies immediately
prior to such Change in Control or, if more favorable to Employee,
as provided generally at any time thereafter with respect to other
peer executives of the Company and its affiliated
companies,
(v) provide Employee
with paid vacation in accordance with the most favorable plans,
policies, programs and practices of the Company and its affiliated
companies as in effect for Employee immediately prior to such
Change in Control or, if more favorable to Employee, as in effect
generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies,
(vi) reimburse Employee
promptly for all reasonable employment expenses incurred by
Employee in accordance with the most favorable policies, practices
and procedures of the Company and its affiliated companies in
effect for Employee immediately prior to such Change in Control, or
if more favorable to Employee, as in effect generally at any time
thereafter with respect to other peer executives of the Company and
its affiliated companies, or
(vii) pay Employee
promptly Employee's base salary or bonus, if any, in accordance
with the most favorable policies, practices and procedures of the
Company and its affiliated companies in effect for Employee
immediately prior to such Change in Control, or if more favorable
to Employee, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its affiliated
companies; or
(5) the failure of the
Company to obtain the assumption agreement from any successor as
contemplated in Section 10(b).
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For purposes of this
Agreement, any good faith determination of Good Reason made by
Employee shall be conclusive; provided , however ,
that an isolated, insubstantial and inadvertent action taken in
good faith and which is remedied by the Company promptly after
receipt of notice thereof given by Employee shall not constitute
Good Reason.
(f) " Nonqualifying
Separation " means Employee's Separation from Service (1) by
the Company for Cause, (2) by Employee for any reason other than a
Good Reason, (3) as a result of Employee's death or (4) by the
Company due to Employee's absence from Employee's duties with the
Company on a full-time basis for at least 180 consecutive days as a
result of Employee's incapacity due to physical or mental illness;
provided , however , that a Separation from Service
by Employee for any reason whatsoever during the Window Period (as
hereinafter defined) shall not constitute a Nonqualifying
Separation.
(g) " Separation from
Service " means a termination of services provided by Employee
to the Company, as determined by the Company in accordance with
Treasury Regulation section 1.409A-1(h). In determining whether
Employee has experienced a Separation from Service, the following
provisions shall apply:
(1) Subject to
subsection (2) below, Employee’s Separation from Service
shall occur when Employee has experienced a termination of
employment with the Company. Employee shall be considered to have
experienced a termination of employment when the facts and
circumstances indicate that Employee and the Company reasonably
anticipate that either:
(i) no further services
will be performed for the Company after a certain date;
or
(ii) that the level of
bona fide services Employee will perform for the Company after such
date (whether as an employee or consultant) will permanently
decrease to no more than 20% of the average level of bona fide
services performed by Employee (whether as an employee or
consultant) over the immediately preceding 36-month period (or the
full period of services to the Company if Employee has been
providing services to the Company for less than 36
months).
(2) If Employee is on
military leave, sick leave, or other bona fide leave of absence,
the employment relationship between Employee and the Company shall
be treated as continuing intact, provided that the period of such
leave does not exceed six months, or if longer, so long as Employee
retains a right to reemployment with the Company under an
applicable statute or by contract. If the period of a military
leave, sick leave, or other bona fide leave of absence exceeds six
months and Employee does not retain a right to reemployment under
an applicable statute or by contract, the employment relationship
shall be considered to be terminated for purposes of this Agreement
as of the first day immediately following the end of such six-month
period. In applying the provisions of this paragraph, a leave of
absence shall be considered a bona fide leave of absence only if
the leave of absence is approved by the Company and there is a
reasonable expectation that Employee will return to perform
services for the Company.
(h) " Termination
Period " means the period of time beginning with a Change in
Control and ending on the earliest to occur of (1) Employee's 70th
birthday, (2) Employee's death, and (3) that date which is 24
months following such Change in Control.
(i) " Window
Period " means the 30-day period commencing one year after the
date of a Change in Control.
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2. Obligations of
Employee . (a) Employee agrees that in the event any person or
group attempts a Change in Control, Employee shall not voluntarily
leave the employ of the Company without Good Reason (i) until such
attempted Change in Control terminates or (ii) if a Change in
Control shall occur, until 90 days following such Change in
Control. For purposes of the foregoing subsection (i), Good Reason
shall be determined as if a Change in Control had occurred when
such attempted Change in Control became known to the
Board.
(b) Employee
acknowledges and agrees that (i) all records and other material not
released to the general public and (ii) all trade secrets,
confidential and proprietary information, unpublished data and
information, in each case relating to the operations, services and
business of the Company, whether reduced to writing or not ("
Confidential Material "), are confidential and are the sole
property of the Company. Employee agrees that Employee will not
disclose any Confidential Material to any person or entity, either
during or subsequent to Employee's employment by the Company, nor
will Employee use any Confidential Material, except in the regular
course of Employee's employment by the Company, without the
Company's written consent. Employee agrees not to make use of the
Confidential Material, except on behalf of the Company. Upon
termination of Employee's employment, Employee agrees to
sur
