Exhibit 10.1
SEVERANCE BENEFITS AGREEMENT
 
 
This Severance Benefits Agreement (the “Agreement”) is made and entered into as
of the 1st day of September, 2011 (the “Effective Date”) between The Laclede
Group, Inc., a Missouri corporation (“Laclede” or the “Company”), and Suzanne
Sitherwood (“Executive”);
 
WITNESSETH:
 
WHEREAS, Executive has been employed by Laclede; and
 
WHEREAS, Executive is willing to continue at the pleasure of Laclede, provided
she is assured of certain additional benefits should she be terminated without
Cause (as defined in Section 2(c) of this Agreement) or should she resign for
Good Reason (as defined in Section 2(b) of this Agreement) and provided further
that she receive further additional benefits should she terminate her employment
for Good Reason or be terminated without Cause following a Change in Control (as
defined in Section 2(a) of this Agreement).
 
NOW THEREFORE, to assure the Company that it will have the continued dedication
of Executive, including the availability of her advice and counsel
notwithstanding the possibility, threat, or occurrence of a Change in Control of
the Company, and to induce Executive to remain in the employ of the Company, and
for other good and valuable consideration, the Company and Executive agree as
follows:
 
1.           Establishment, Term, and Purposes.
 
(a)           This Agreement shall commence on the Effective Date and shall
continue in effect through August 31, 2014 (herein the “Term”).
 
(b)           However, in the event a Change in Control occurs during the Term,
this Agreement will remain in effect for the longer of: (i) Twenty-four (24)
months beyond the month in which such Change in Control occurred; or (ii) until
all obligations of the Company hereunder have been fulfilled, and until all
benefits required hereunder have been paid to Executive.
 
(c)           This Agreement, during its Term, shall supercede the Executive’s
participation in The Laclede Group Management Continuity Protection Plan.  The
provisions of this Agreement shall take precedence over any inconsistent
provision of any Company plan with respect to Executive or any agreement between
the Company and Executive.
 
(d)           Notwithstanding any other provision of this Agreement, either the
Company or Executive may terminate the employment of Executive at any
time.  Such termination may result in the payments and other benefits under the
terms and conditions of this Agreement.
 
2.           Change in Control, Good Reason, Cause, Affiliate, Qualifying
Termination Defined.  For the purpose of this Agreement:
 
(a)           “Change in Control” occurs if and when any “person” (as such term
is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934)
is or becomes a beneficial owner, directly or indirectly, of securities of the
Company representing more than fifty percent (50%) of the combined voting power
of the Company’s then outstanding securities or when any such person becomes a
beneficial owner, directly or indirectly, of at least thirty percent (30%) and
no more than fifty percent (50%) of such securities during any twelve month
period.  Notwithstanding the foregoing, the determination of whether a Change in
Control under this Agreement has
 
 
 
 
 
 
occurred will be made in accordance with the rules and procedures set forth
in  Code Section 409A and the rules and regulations promulgated thereunder.
(b)           “Good Reason,” with respect to the termination by the Executive of
her employment with the Company, shall mean:
 
 
 
i.
a material diminution in the Executive’s base salary compensation or Annual
Incentive Plan Performance Award target level;

 
 
ii.
a material diminution in the authority, duties or responsibilities of the
Executive;

 
 
iii.
a material change, of not less than 25 miles, in the geographic location at
which the Executive’s office is located;  

 
 
iv.
the failure by the Company or its Affiliates, as applicable, to continue to
provide the Executive with benefits substantially similar to those enjoyed by
the Executive under any of the tax-qualified, nonqualified or welfare benefit
plans of the Company or its Affiliates in which the Executive was participating
immediately prior to the Change in Control.

 
Prior to a Change in Control, if one of the events in (i) through (iv) above
that constitutes Good Reason occurs and is continuing, Executive shall have
ninety (90) days after such occurrence to terminate her employment with Laclede
for such Good Reason.  If Executive fails to terminate her employment with
Laclede during such period, Executive may not thereafter use the occurrence of
such event (but may use the occurrence of any other event subsequent thereto
that would constitute Good Reason) as a basis for a termination for Good Reason
for purposes of this Agreement.
 
(c)           “Cause” shall mean:
 
 
i.
Willful and continued failure by the Executive to perform substantially the
duties of employment assigned by the Company or any of its Affiliates (other
than any such failure resulting from incapacity due to physical or mental
illness) after a demand for substantial performance has been delivered by the
Company, which specifically identifies the manner in which it is believed that
the Executive has not substantially performed such duties; and/or

 
 
ii.
Willful engagement by the Executive in misconduct that is materially injurious
to the Company or any of its Affiliates.

 
(d)           “Affiliate” shall mean:
 

 
i.  
any person or entity that directly or indirectly controls, is controlled by or
is under common control with the applicable entity; and/or

 

 
ii.  
to the extent provided by the Company, any person or entity in which such entity
has a significant interest.

 
The term “control” (including, with correlative meaning, the terms “controlled
by” and “under common control with”), as applied to any person or entity, means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person or entity, whether
through the ownership of voting or other securities, by contract or otherwise;
provided, however, with respect to any deferrals subject to Section 409A of the
Code, the term “Affiliate” shall mean any member of the applicable entity’s
control group within the meaning of Final Treasury Regulation Section
1.409A-1(h)(3), as such may be modified or amended from time to time, by
applying the “at least 50 percent” provisions thereof.

 
 
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(e)           “Qualifying Termination” shall mean
 
 
i.
Termination without Cause by Laclede and its Affiliates of the Executive’s
employment with Laclede and its Affiliates, and

 
 
ii.
Termination with Good Reason by the Executive of her employment with Laclede and
its Affiliates;

 
provided that an event in (i) or (ii) must also be a “separation from service”
as defined under Final Treasury Regulation Section 1.409A-1(h), including the
default presumptions thereof
 
3.           (a)           Effect of Termination of Executive’s Employment Prior
to a Change in Control.  If a Qualifying Termination occurs at any time prior to
a Change in Control, Executive shall be entitled to receive the following
benefits:
 

 
i.  
Payment of an amount equal to:

 

 
A.  
One times the Executive’s then current annual base salary, such amount to be
paid in monthly installments over a twelve-month period commencing on the later
of (i) the 8th day following the date the Executive returns the Release provided
for in Section 3(d) or (ii) the first scheduled payroll date following the
Qualifying Termination (the “Payment Date”).

 

 
B.  
On the Payment Date, the target amount for the Executive’s Annual Incentive Plan
performance award for the fiscal year in which the Qualifying Termination
occurs,

 
 
ii.
Continued medical, dental and vision benefits for a period of 18 months from the
date of the Qualifying Termination.  Notwithstanding anything to the contrary
contained in this Agreement, if Executive obtains employment that provides
Executive with medical, dental and vision benefits, the benefits provided
pursuant to this Section 3(a)ii. shall terminate.

 
(b)           Effect of Termination of Executive’s Employment After a Change in
Control.  If a Qualifying Termination occurs at any time within 24 months after
a Change in Control, Executive shall be entitled to receive the following
benefits:
 
   i.           Payment of an amount equal to:
 
 
A.
a non-discounted lump sum, equal to two times Executive’s “average annual
compensation”, as such term is referred to in Treasury Regulation Section
1.280G-1 Question and Answer 34 and such other guidance promulgated under
Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”) paid
to Executive for the five-year period (or if the Executive is employed by the
Company for less than five years, such shorter period) immediately preceding
such Qualifying Termination (each a “separation from service” as shall be
determined under Section 409A of the Code, and Final Treasury Regulation
1.409A-1(h), including the default presumptions thereof) plus

 
 
B.
An amount equal to the target amount for the Executive’s Annual Incentive Plan
performance award for the fiscal year in which the Qualifying Termination
occurs,

 
 
 
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Such amounts to be paid in a lump sum on the Payment Date.
 
 
ii.
Continued medical, dental and vision benefits for a period of 18 months from the
date of the Qualifying Termination.  Notwithstanding anything to the contrary
contained in this Agreement, if Executive obtains employment that provides
Executive with medical, dental and vision benefits, the benefits provided
pursuant to this Section 3(b)ii. shall terminate.

 
(c)           Non-exclusivity of Rights.  Nothing in this Agreement shall
prevent or limit the Executive’s continuing or future participation in any
benefit, bonus, incentive, or other plan or program provided by the Company or
its Affiliates and for which the Executive may qualify, other than the
Management Continuity Protection Plan, nor shall anything herein limit or
otherwise affect such rights as the Executive may have under any other
agreements with the Company or its Affiliates, including but not limited to:

 
i.  
Any pro rata portion of an annual incentive award for the fiscal year of the
Qualifying Termination based on actual performance against the Executive’s
goals,

 
ii.  
Restricted Stock Unit Award Agreement under the 2006 Equity Incentive Plan
between the Executive and the Company dated as of September 1, 2011,

 
iii.  
Performance Contingent Restricted Stock Unit Award Agreement under the 2006
Equity Incentive Plan between the Executive and the Company dated as of
September 1, 2011, and

 
iv.  
Any other equity award agreements under the 2006 Equity Incentive Plan entered
into between the Executive and the Company.

 
Amounts that are vested benefits or that the Executive is otherwise entitled to
receive under any plan or program of the Company or its Affiliates, other than
the Management Continuity Protection Plan, shall be payable in accordance with
the terms of such plan or program.
 
(d)           Release.  Notwithstanding any other provision of this Agreement to
the contrary, Executive acknowledges and agrees that any and all payments and
benefits to which Executive is entitled under this Section 3 are conditional
upon, and subject to, Executive first executing a valid waiver and release of
all claims that Executive may have against the Company, its subsidiaries and
affiliates (and their respective officers, employees and directors) in a form
satisfactory to the Company; provided, that, if Executive fails to execute (or
revokes) such waiver and release of all claims within 21 days (or 45 days if
that is the applicable notice consideration period) days following the
Qualifying Termination, the Company shall have no obligation to provide the
payments and benefits contemplated under this Section 3.  To the extent that the
Executive’s Qualifying Termination occurs on or after November 15th of a
calendar year, the Release to the extent executed and returned in accordance
with this subparagraph shall be deemed, for purposes of the payment timing
provisions of this Section 3, to have been executed and returned to the Company
on January 1st of the calendar year succeeding the Qualifying Termination. 
 
4.           No Benefits for Voluntary Termination Without Good Reason or For
Cause.  At any time, Executive may terminate her employment with Laclede and its
Affiliates without Good Reason, but in such case Executive will not be entitled
to any payment or benefit pursuant to Section 3 of this Agreement.  Likewise,
Laclede may terminate Executive’s employment with Laclede and its Affiliates for
Cause at any time and in such case Executive will not be entitled to any payment
or benefit pursuant to Section 3 of this Agreement.
 
5.           Payment of Benefit on Death of Executive.  In the event of the
death of Executive, this Agreement shall terminate except as to any amounts
which have become payable hereunder as a result of a Qualifying Termination
before death and except as to the various benefit plans or other agreements
 
 
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 which, by their terms, continue after her death or by which her estate, heirs,
surviving spouse, personal representative, devisees, legatees and beneficiaries
are paid benefits.
 
6.           Amendment, Modification or Waiver.  No provision of this Agreement
may be amended, modified or waived, unless such amendment, modification or
waiver shall be authorized by the Board or any authorized committee of the
Board, and shall be agreed to in writing, signed by Executive and by an officer
of Laclede thereunto duly authorized.  Except as otherwise specifically provided
in this Agreement, no waiver by either party hereto of any breach by the other
party hereto of any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of a subsequent breach of such
condition or provision or a waiver of a similar or dissimilar provision or
condition at the same or any prior or subsequent time.
 
7.           Severability.  In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason, the
remaining provisions and portions of this Agreement shall be unaffected thereby
and shall remain in full force and effect to the fullest extent provided by law.
 
8.           Successors.  This Agreement shall be binding upon any successor of
Laclede and such successor shall be deemed substituted for Laclede under the
terms of this Agreement; but any such substitution shall not relieve Laclede of
any of its obligations hereunder.  As used in this Agreement, the term
“successor” shall include any person, firm, corporation or like business entity
which at any time, whether by merger, purchase or otherwise, acquires all or
substantially all of the assets or business of Laclede.
 
Laclede may require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of Laclede by agreement in form and substance satisfactory to
Executive, to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that Laclede would be required to perform if no
such succession had taken place.
 
9.           Covenant Not to Compete; Confidentiality; Non-disparagement;
Non-solicitation.
 
(a)           For as long as Executive is employed by Laclede and for a period
of eighteen (18) months after the termination of Executive’s employment with
Laclede, Executive agrees, in consideration of the benefits being provided to
Executive by Laclede pursuant to this Agreement, that Executive will not
directly or indirectly participate in the ownership, management, operation or
control of, or be employed by any entity competing with Laclede and its
affiliates (i) in the sale or delivery of natural gas within Laclede’s service
area or (ii) in the natural gas commodity service business.  This covenant is
not intended to prevent Executive from making a passive investment or
investments not to exceed five percent (5%) of the aggregate equity ownership in
any enterprise that may compete with Laclede in the defined geographic areas
during the restricted period.
 
(b)           Executive agrees not to disclose, either while in Laclede’s employ
or at any time thereafter, to any person not employed by Laclede or not engaged
to render services to Laclede any confidential information obtained by her while
in the employ of Laclede, including, without limitation, any of Laclede’s
inventions, processes, methods of distribution, customers or trade secrets;
provided, however, that this provision shall not preclude Executive from use or
disclosure of information known generally to the public or from disclosure
required by law or court order.
 
(c)           The Executive will not publicly disparage the Company, its
Affiliates, and any of its officers, directors, employees or agents, and will
refrain from any action which would reasonably be expected to cause material
adverse public relations or embarrassment to the Company or to any such persons.

 
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(d)           For as long as Executive is employed by Laclede and for a period
of eighteen (18) months after the termination of Executive’s employment with
Laclede, Executive agrees, in consideration of the benefits being provided to
Executive by Laclede pursuant to this Agreement, that Executive will not
directly or indirectly hire, solicit to hire, or attempt to induce (or assist
any third party to hire, solicit or attempt to induce) any employee of the
Company or an Affiliate (who is an employee of the Company or Affiliate as of
the time of such hire or solicitation or attempt to hire) or any former employee
of the Company or Affiliate (who was employed by the Company or Affiliate within
the 12-month period immediately preceding the date of such hire or solicitation
or attempt to hire) to leave the employment of the Company or Affiliate.
 
10.           Withholding and Limitations on Benefits Caused by Tax
Implications.  Anything to the contrary notwithstanding, all payments required
to be made by Laclede hereunder to Executive or her estate or beneficiary shall
be subject to the withholding of such amounts, if any, relating to tax and other
payroll deductions as Laclede may reasonably determine it should withhold
pursuant to any applicable law or regulation.  In lieu of withholding such
amounts, Laclede may accept other provisions to the end that it has sufficient
funds to pay all taxes required by law to be withheld in respect to any of such
payments.
 
In the event that the aggregate amount of any payments that could be considered
“parachute payments” (as defined in Section 280G of the Code) (such payments,
the “Parachute Payments”) exceeds the greatest amount of Parachute Payments that
may be paid, provided or delivered to Executive without giving rise to any
liability for the excise tax imposed by Section 4999 of the Code, together with
any interest or penalties imposed with respect to such tax (“Excise Tax”), then
the aggregate amount of Parachute Payments to which the Executive is entitled
shall be reduced to an amount equal to the amount which produces the greatest
after-tax benefit (“best net benefit”)to the Executive after taking into account
any Excise Tax to be payable by the Executive.  For the avoidance of doubt, this
provision will reduce the amount of Parachute Payments otherwise payable to
Executive, if doing so would place the Executive in a better net after-tax
economic position as compared with not doing so (taking into account the Excise
Tax payable in respect of such Parachute Payments).  The Company shall reduce or
eliminate the Parachute Payments by first reducing or eliminating the portion of
the Parachute Payments that are payable in cash and then by reducing or
eliminating the non-cash portion of the Parachute Payments, in each case, in
reverse order beginning with payments or benefits which are to be paid the
furthest in the future.  This Section 10 shall take precedence over the
provisions of any other plan, arrangement or agreement governing Executive’s
rights and entitlements to any payment.  All determinations to be made under
this Section 10 shall be made, at the Company’s expense, by a nationally
recognized certified public accounting firm selected by the Company (other than
any such firm that serves as the Company’s auditor or otherwise has a material
recurring business relationship with the Company), and written copies thereof
shall be promptly delivered to the Executive.  For the avoidance of doubt, this
Section 10 shall not be applicable to the extent that the Executive is not
subject to the Excise Tax by virtue of the Executive’s tax residence.
 
11.           Enforcement by Executive or Her Personal Representatives, Heirs,
Distributees, Devisees and Legatees.  This Agreement and all rights of Executive
hereunder shall inure to the benefit and be enforceable by Executive’s personal
and legal representatives, distributees, devisees, legatees, beneficiaries or
other designee.
 
 
 
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Any controversy or claim arising out of or relating to a Qualifying Termination
under this Agreement shall be settled by arbitration in the City of St. Louis,
State of Missouri, in accordance with the rules then in effect of the American
Arbitration Association, and judgment upon the award rendered may be entered in
any court having jurisdiction thereof.  In any such arbitration the parties will
select one arbitrator from a list of arbitrators provided by the American
Arbitration Association with each party hereto taking alternate strikes and the
remaining arbitrator hearing the dispute.  Each party will pay its respective
costs associated with the arbitration, provided, however, that if the Executive
shall prevail at arbitration on at least one material issue, as determined by
the arbitrator, the Company shall reimburse the Executive for reasonable legal
arbitration on at least one material issue, as determined by the arbitrator, the
Company shall reimburse the Executive for reasonable legalfees and expenses
relative to the arbitration.  Notwithstanding anything to the contrary in this
Section 11, either party may commence in any court having jurisdiction over the
parties hereto any action to obtain injunctive relief.
 
12.           Notices.  For the purpose of this Agreement, notices, demands or
other communications provided for herein shall be in writing and shall be deemed
to have been duly given when delivered or (unless other specified) mailed by
United States Certified Mail, return receipt requested, postage prepaid,
addressed as follows:
 
                                       to Executive:     720 Olive Street, 15th
Floor
                                                                 St. Louis,
Missouri  63101
 
                                       Cc:                    At her home
address currently
                                                                on file with
Laclede
 
                                       to Laclede:         Secretary
                                                                The Laclede
Group, Inc.
                                                                720 Olive
Street, 15th Floor
                                                                St. Louis,
Missouri  63101
 
or to such other address as any party may have furnished to the other in writing
in accordance therewith, except that notices of change of address shall be
effective only upon receipt.
 
13.           Construction With Missouri Law.  The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of Missouri.
 
14.           Entire Agreement of Parties.  This Agreement supercedes all oral
agreements and discussions with respect to the subject matter hereof.
 
15.           Code Section 409A.  It is the intent of the Company and the
Executive that this Agreement comply with Code Section 409A and the regulations
issued pursuant thereto and the provisions of this Agreement shall be
interpreted to be consistent therewith.  Notwithstanding anything in this
Agreement to the contrary, if any amount or benefits that the Company determines
would constitute non-exempt “deferred compensation” for purposes of Code Section
409A would otherwise be payable or distributable under this Agreement by reason
of the Executive’s separation from service during a period in which the
Executive is a specified employee as defined under Code Section 409A, then to
the extent necessary to comply with Code Section 409A: (a) if the payment or
distribution is payable in a lump sum, the Executive’s right to receive payment
or distribution of such non-exempt deferred compensation will be delayed until
the earlier of the Executive’s death or the first day of the seventh month
following the Executive’s separation from services, and (b) if the payment or
distribution is payable or provided over time, the amount of such non-exempt
deferred compensation that would otherwise be payable or provided during the
six-month period immediately following the Executive’s separation from service
will be accumulated, and the Executive’s right to receive payment or
distribution of such accumulated amount or benefits will be delayed until the
earlier of the Executive’s death or the first day of the seventh month
 
 
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following the Executive’s separation from services and paid or provided on the
earlier of such dates, with interest, and the normal payment or distribution
schedule for any remaining payments, distributions or benefits will
commence.  Each payment under this Agreement or otherwise (including any
installment payments) shall be treated as a separate payment for purposes of
Section 409A.

 
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
 

                   
THE LACLEDE GROUP, INC.
                   
By:
     
Name:
Arnold W. Donald
   
Title:
Chair, Compensation Committee
             
“Company”
       
ATTEST:
                     
Secretary
                                   
“Executive

 
 
 

 
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