Document:

Exhibit 10(j)

 

SUMMARY OF

THE EMPIRE DISTRICT ELECTRIC COMPANY

ANNUAL INCENTIVE PLAN

 

Our annual incentive plan is the short-term
component of our incentive compensation package. Under this plan, executive
officers can earn additional compensation based on their performance measured
against annual tactical goals.  The
specific tactical goals for each executive for each calendar year and the
weight to be attached to each goal are established at the beginning of the calendar
year and are geared to the particular executive’s responsibilities. Examples of
the performance measures utilized under the annual incentive plan for the award
with respect to 2005 (paid in early 2006) and for the award to be made with
respect to 2006 (payable in 2007) include expense control, regulatory
performance, project completion, financial performance, and customer service.
Threshold, target and maximum performance levels are set for each performance
measure. For executives to receive any incentive compensation based on any
particular performance measure, at least the threshold level of performance
must have been achieved. Greater incentive compensation is payable under the
annual incentive plan if the target or maximum performance is achieved. If the
target level objective is reached in each of the executive officer’s
performance areas, the executive officer would receive the target annual
incentive award established for that executive. In the case of the award for
2005 (paid in early 2006) and the award for 2006 (payable in early 2007), the
target annual incentive award was set at 35% of base salary for the Chief
Executive Officer and was set at 15% of base salary for all other officers. The
award under the annual incentive plan is paid in cash.Exhibit 10(k)

 

March 2, 2006

 

Name

Address 1

Address 2

 

Dear                 :

 

The Empire District Electric Company

2006 Stock Incentive Plan (the “Plan”)

 

Notice of Award of Dividend Equivalents

 

This is to advise you that
effective as of February 1, 2006 (the “Grant Date”), The Empire District
Electric Company (“the Company”) has granted to you dividend equivalents as set
forth in this Award (the “Dividend Equivalents”) subject to the conditions and
terms herein stated and the applicable terms and conditions of the Plan (copy
attached). The Dividend Equivalents covered by this Award relate to the
Non-Qualified Stock Option Award dated February 1, 2006 made to you under
the Plan (the “Related Option”) granting you the right to purchase                     
shares of Common Stock of the Company (“Stock”) subject to the terms and
conditions of that award and the applicable terms and conditions of the Plan. This
Award is intended to be a Restricted Stock Award within the meaning of the Plan
and constitutes a separate arrangement from the Related Option.

 

1.                                       Dividend Equivalents. You are hereby granted the right to
receive a number of shares of Stock on the terms and conditions hereinafter set
forth. During the period from the Grant Date to the earlier of:  (i) the Conversion Date (as hereinafter
defined) or (ii) the date on which your employment terminates for any
reason, there shall be credited to an account (“Account”) established on the
books of the Company Dividend Equivalents in an amount equal to the dividends
that would have been payable to you if you owned the number of shares of Stock
covered by the Related Option. No interest or earnings will be credited on such
Dividend Equivalents. The “Conversion Date” shall be the earlier of (i) February 1,
2009, or (ii) the date of a Change in Control of the Company. If your
employment terminates other than by reason of a Designated Termination (as
defined in Section 12 below) before the Conversion Date, you will forfeit
the entire amount credited to your Account and will have no right to any
benefits under this Award. If you either (i) continue in employment with
the Company and its Subsidiaries through the Conversion Date or (ii) terminate
employment before the Conversion Date by reason of a Designated Termination (as
defined in Section 12 below), then as of the Conversion Date, your Account
will be converted into a number of shares of
Stock determined by dividing the amount credited to your Account by the
Fair Market Value (as defined in the
Plan) of a share of Stock on the Conversion Date (disregarding fractions of a
share).

 

2.                                       Payment of Stock. In the event of the conversion of your Account into shares of
Stock pursuant to the provisions of Section 1 above, a certificate for the
shares of Stock to

 

 

which you become entitled will be delivered to you or, in the event of
your death, to the person or persons determined pursuant to Section 3
below, as of the Conversion Date.

 

3.                                       Heirs and Successors. This Award shall be
binding upon, and inure to the benefit of, the Company and its successors and
assigns, and upon any person acquiring, whether by merger, consolidation,
purchase of assets or otherwise, all or substantially all of the Company’s
assets and business. If any of the benefits distributable to you under this
Award have not been distributed at the time of your death, such benefits shall
be distributed to your Designated Beneficiary, in accordance with the
provisions of this Award and the Plan. The “Designated Beneficiary” shall be
the beneficiary or beneficiaries designated by you in a writing filed with the
Committee in such form and at such time as the Committee shall require. If
you are deceased and failed to designate a beneficiary, or if the Designated
Beneficiary does not survive you, any benefits distributable to you shall be
distributed to the legal representative of your estate. If you are deceased and
have designated a beneficiary and the Designated Beneficiary survives you but
dies before the complete distribution of benefits to the Designated Beneficiary
under this Award, then any benefits distributable to the Designated Beneficiary
shall be distributed to the legal representative of the estate of the
Designated Beneficiary.

 

4.                                       Administration. The authority to manage and
control the operation and administration of this Award shall be vested in the
Committee identified in the Plan, and the Committee shall have all of the
powers with respect to this Award that it has with respect to the Plan. Any
interpretation of the Award by the Committee and any decision made by it with
respect to the Award are final and binding on all persons.

 

5.                                       Amendment. This Award may be amended
by written agreement between you and the Company, without the consent of any
other person.

 

6.                                       Nontransferability. This Award shall not be
transferable except by will or the laws of descent and distribution or by
beneficiary designation in accordance with Section 3 above.

 

7.                                       Taxes. The Company shall be entitled to
withhold the amount of any withholding tax payable with respect to the Award
and to sell such number of shares of Stock as may be necessary to produce
the amount so required to be withheld, unless the recipient supplies to the
Company cash in the amount requested by the Company for the purpose.

 

8.                                       Employee and Shareholder Status. This Award
does not constitute a contract of continued service and does not give you the
right to be retained as an employee of the Company or any of its Subsidiaries.
This Award does not confer upon you or any other holder thereof any right as a
shareholder of the Company prior to the issuance of shares of Stock pursuant to
this Award.

 

9.                                       Plan Governs. Notwithstanding anything in
this Award to the contrary, the terms of this Award shall be subject to the
terms of the Plan.

 

10.                                 Unsecured Creditor. Your rights with
respect to the Award and the shares of Stock subject thereto prior to the
delivery of a certificate for shares of Stock pursuant to Section 2 above
are those of an unsecured general creditor of the Company. No shares of Stock
or other specific property is or will be set apart in trust or otherwise
with respect to the Award but all of your rights in the Award will be evidenced
only by entries on the books of the Company unless and until shares of Stock
are actually issued to you, your beneficiary or your estate pursuant to the
Award.

 

 

11.                                 Rules Relating to Termination of Employment. For
purposes of this Award, the date of termination of your employment shall be the
first day occurring on or after the Grant Date on which you are not employed by
the Company or any Subsidiary, regardless of the reason for the termination of
employment; provided that a termination of employment shall not be
deemed to occur by reason of a transfer of you between the Company and a
Subsidiary or between two Subsidiaries; and further provided that your
employment shall not be considered terminated while you are on a leave of
absence from the Company or a Subsidiary approved by your employer. If, as a
result of a sale or other transaction, your employer ceases to be a Subsidiary
(and your employer is or becomes an entity that is separate from the Company),
and you are not, at the end of the 30-day period following the transaction,
employed by the Company or an entity that is then a Subsidiary, then, the
occurrence of such transaction shall be treated as the date of termination of
your employment caused by you being discharged by the employer.

 

12.                                 Definitions. For purposes of this Award,
the terms used in this Award shall have the following meanings:

 

(i)                                     Cause. A termination of employment for “Cause”
means any termination of your employment by the Company or any of its
Subsidiaries for (i) serious, willful misconduct in respect of your
obligations to the Company or its Subsidiaries, which has caused demonstrable
and serious injury to the Company or any of its Subsidiaries, monetary or
otherwise, as evidenced by a determination in a binding and final judgment,
order or decree of a court or administrative agency of competent jurisdiction,
in effect after exhaustion or lapse of all rights of appeal, in an action, suit
or proceeding, whether civil, criminal, administrative or investigative; (ii) conviction
of a felony, which has caused demonstrable and serious injury to the Company or
any of its Subsidiaries, monetary or otherwise, as evidenced by a binding and
final judgment, order, or decree of a court of competent jurisdiction, in
effect after exhaustion or lapse of all rights of appeal; or (iii) your
willful and continual failure to substantially perform your duties for the
Company or any of its Subsidiaries (other than resulting from your incapacity
due to physical or mental illness) which failure continued for a period of at
least thirty (30) days after a written notice of demand for substantial
performance has been delivered to you specifying the manner in which you have
failed to substantially perform.

 

(ii)                                  Change in Control. A “Change in Control” of
the Company shall mean “a change in the ownership or effective control” of the
Company, or “in the ownership of a substantial portion of the assets” of the
Company, within the meaning of Section 409A of the Internal Revenue Code
of 1986, as amended, and Treasury regulations and Internal Revenue Service
guidance thereunder.

 

(iii)                               Designated Termination. “Designated
Termination” means the termination of your employment with the Company and its
Subsidiaries by reason of your death, Retirement, Disability, involuntary
termination by the Company and its Subsidiaries without Cause or voluntary
termination by you with the consent of the Committee.

 

(iv)                              Disability. Except as otherwise provided by
the Committee, “Disability” means the determination by the Committee, in its
sole discretion, that a permanent and total disability exists in accordance
with uniform and non-discriminatory standards adopted by the Committee
from time to time.

 

(v)                                 Retirement. “Retirement” means your
retirement on an “Early Retirement Date” or on or after your “Normal Retirement
Date,” as those terms are defined in The Empire District Electric Company
Employees’ Retirement Plan.

 

(vi)                              Plan Definitions. Except where the context
clearly implies or indicates the contrary, a word, term, or phrase used in the
Plan is similarly used in this Award.

 

 

Please acknowledge receipt of this Notice of
Award by signing and returning to the Secretary of the Company the enclosed
copy thereof, together with a completed and signed beneficiary designation
form.

 

	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Chairman of the Plan
  Committee

  

 

 

Receipt
of the foregoing Award of Dividend

Equivalents is hereby acknowledged. My

signed beneficiary designation form is attached.

 

 

	
   

  	
   

  
	
  Name

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date

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