November 20, 1998
Xxxxxxx X. Xxxxxxxxxx
0 Xxxxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Management Continuity Agreement
Dear Xx. Xxxxxxxxxx:
The Board of Directors (the "Board") of EnergyNorth,
Inc.(the "Company") recognizes that, as is the case with many
publicly held corporations, there always exists the possibility
of a change of control of the Company. This possibility and the
uncertainty it creates may result in the loss or distraction of
members of management of the Company and its subsidiaries to the
detriment of the Company and its shareholders.
The Board considers the establishment, maintenance, and
continuity of a sound and vital management to be essential to
protecting and enhancing the best interests of the Company and
its shareholders. The Board also believes that when a change of
control is perceived as imminent, or is occurring, the Board
should be able to receive and rely on disinterested advice from
management regarding the best interests of the Company and its
shareholders without concern that members of management might be
distracted or concerned by the personal uncertainties and risks
created by the perception of an imminent or occurring change of
control.
Accordingly, the Board has determined that appropriate steps
should be taken to assure the Company of the continued employment
and attention and dedication to duty of certain members of
management of the Company and to ensure the availability of their
disinterested advice, notwithstanding the possibility, threat or
occurrence of a change of control.
Therefore, in order to fulfill the above purposes, the Board
has designated you as eligible for severance benefits as set
forth below.
1. Offer: In order to induce you to remain in the employ of
the Company and to provide continued services to the Company now
and in the event that a change of control is imminent or
occurring, this letter agreement (the "Agreement") sets forth
severance benefits which the Company offers to pay to you in the
event of a termination of your employment (as described in
Section 5 below, excluding a termination for Cause, disability,
death or retirement) subsequent to a Change of Control of the
Company (as defined in Section 4 below).
2. Operation: This Agreement shall be effective immediately
upon its execution but, anything in this Agreement to the
contrary notwithstanding, neither this Agreement nor any of its
provisions shall be operative unless and until there has been a
Change of Control while you are still an employee of the Company,
nor shall this Agreement govern or affect your employment
relationship with the Company except as explicitly set forth
herein. Upon a Change of Control, if you are still employed by
the Company, this
Agreement and all of its provisions shall
become operative immediately. If your employment relationship
with the Company is terminated before a Change of Control, you
shall have no rights or obligations under this Agreement.
3. Term:
a) Term of Agreement. The term of this Agreement shall
commence immediately upon the date hereof and continue for a
period of at least twenty-four full calendar months
thereafter.
b) One-Year Evergreen Provision. This Agreement shall be
reviewed annually by the Board at its meeting held for the
review of compensation and in all events prior to December 1
of each year. At such yearly review, the Board shall
consider whether or not to extend the term of this Agreement
for an additional year. Unless the Board affirmatively
votes not to extend this Agreement, the term of this
Agreement shall be extended for a period of one year from
the previous termination date. In the event the Board votes
not to extend this Agreement, the termination date of this
Agreement shall be the later of twenty-four months from the
effective date of this Agreement or twenty-four months from
December 1st of the year in which this Agreement was last
extended.
4. Change in Control: For the purpose of this Agreement,
a "Change of Control" shall mean:
(1) 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
Rule13d-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 the following acquisitions shall not constitute a
Change of Control: (i) any acquisition directly from the Company
(excluding an acquisition by virtue of the exercise of a
conversion privilege), (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
controlled by the Company or (iv) any acquisition by any
corporation pursuant to a reorganization, merger or
consolidation, if, following such reorganization, merger or
consolidation, the conditions described in clauses (i), (ii)
and(iii) of Subparagraph (3) of this Subsection (b) are
satisfied; or
(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 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
shareholders, 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 either an actual or threatened election contest (as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the
Board; or
(3) Approval by the shareholders of the Company of a
reorganization, merger or consolidation, in each case, unless,
following such reorganization, merger or consolidation, (i) more
than 60% of, respectively, the then outstanding shares of common
stock of the corporation resulting from such reorganization,
merger or consolidation and the combined voting power of the then
outstanding voting 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 and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such
reorganization, merger or consolidation in substantially the same
proportions as their ownership, immediately prior to such
reorganization, merger or consolidation, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities,
as the case may be, (ii) no Person (excluding the Company, any
employee benefit plan (or related trust) of the Company or such
corporation resulting from such reorganization, merger or
consolidation and any Person beneficially owning, immediately
prior to such reorganization, merger or consolidation, directly
or indirectly, 20% or more of the Outstanding Company Common
Stock or Outstanding Company Voting Securities, as the case may
be) beneficially owns,
directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the
corporation resulting from such reorganization, merger or
consolidation or the combined voting power of the then
outstanding voting securities of such corporation entitled to
vote generally in the election of directors and (iii) at least a
majority of the members of the board of directors of the
corporation resulting from such reorganization, merger or
consolidation were members of the Incumbent Board at the time of
the execution of the initial agreement providing for such
reorganization, merger or
consolidation; or
(4) Approval by the shareholders of the Company of (i) a
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 following such sale or other disposition, (A) more than
60% of, respectively, the then outstanding shares of common stock
of such corporation and the combined voting power of the then
outstanding voting 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 and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such
sale or other disposition in substantially the same proportion as
their ownership, immediately prior to such sale or other
disposition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (B) no
Person (excluding the Company and any employee benefit plan (or
related
trust) of the Company or such corporation and any Person
beneficially owning, immediately prior to such sale or other
disposition, directly or indirectly, 20% or more of the
Outstanding Company Common Stock or Outstanding Company Voting
Securities, as the case may be) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then outstanding
shares of common stock of such corporation and the combined
voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of
directors and (C) at least a majority of the members of the board
of directors of such corporation were members of the Incumbent
Board at the time of the execution of the initial agreement or
action of the Board providing for such sale or other disposition
of assets of the Company.
5. Severance Benefit:
x. Xxxxxxxxx Benefits. If, within two years after a
Change of Control (as defined above) of the Company, you are
discharged without Cause or resign for Good Reason (as defined
below), the Company shall pay to you within ten business days
following the Date of Termination (as defined below) a lump sum
severance benefit equal to 2.95 multiplied by your annual salary,
including deferrals, as in effect on the Date of Termination,
plus the average of the previous three years' annual incentive
compensation award earned under the EnergyNorth, Inc. Key
Employee Performance and Equity Incentive Plan, plus interest on
any delayed payment at the rate of 150% of the Prime Rate as
posted by the Bank of Boston.
b. Good Reason. If any of the following events occurs
within two years after a
Change of Control, you may voluntarily
terminate your employment within 30 days of the occurrence of
such event and be entitled to the severance benefits set forth in
Subsection (a) above:
(1) the Company assigns any duties to you which are
inconsistent with your position, duties, offices, titles,
responsibilities, reporting requirements or status with the
Company immediately prior to a Change of Control; or
(2) the Company reduces your base salary, including
deferrals, as in effect immediately prior to a Change of Control;
or
(3) the Company discontinues any bonus or other
compensation plans or any other benefit, stock ownership plan,
stock purchase plan, stock option plan, life insurance plan,
health plan, disability plan or similar plan (as the same existed
immediately prior to the Change of Control) in which you
participated or were eligible to participate in immediately prior
to the Change of Control and in lieu thereof does not make
available plans providing at least comparable benefits; or
(4) the Company takes action which adversely affects
your participation in, or eligibility for, or materially reduces
your benefits under, any of the plans described in (3) above, or
which deprives you of any material fringe benefit enjoyed by you
immediately prior to the Change of Control, or fails to provide
you with the number of paid vacation days to which you were
entitled in accordance with normal vacation policy immediately
prior to the Change of Control; or
(5) the Company requires you to be based at any office
or location other than one
within a 50-mile radius of the
boundaries of EnergyNorth Natural Gas, Inc.'s Franchise territory
as such boundaries existed immediately prior to the Change in
Control; or
(6) the Company purports to terminate your employment
otherwise than as expressly permitted by this Agreement; or
(7) the Company fails to comply with and satisfy
Section 7, provided that such successor has received at least ten
days prior written notice from the Company or from you of the
requirements of Section 7.
You shall have the sole right to determine, in good faith,
whether any of the above events has occurred. Anything in this
Agreement to the contrary notwithstanding, a termination of
employment by you for any reason during the 30-day period
immediately following the first anniversary of a Change of
Control ("Window Period") shall be deemed to be a termination for
Good Reason for all purposes of this Agreement.
c) Cause. Cause shall mean: conviction of a felony or
crime involving an act of moral turpitude, dishonesty, or
misfeasance which substantially interferes with the orderly
business of the Company or any of its subsidiaries, action that
directly or indirectly causes the Company or its subsidiaries to
suffer substantial loss or damage, refusal to follow or material
neglect of reasonable requests of the Company made pursuant to
this Agreement, and conduct that substantially interferes with or
damages the standing or reputation of the Company or any of its
subsidiaries.
d) Notice of Termination. Any termination by the Company
for Cause, or by you for Good Reason, shall be communicated by
Notice of Termination to the other party hereto
given in accordance with Section 9. For purposes of this Agreement,
a"Notice of Termination" means a written notice which (i)
indicates the specific termination provision in this Agreement
relied upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide
a basis for termination of your employment under the provision so
indicated and (iii) if the Date of Termination (as defined below)
is other than the date of receipt of such notice, specifies the
termination date (which date shall be not more than 15 days after
the giving of such notice).
e) Date of Termination. "Date of Termination" means (A)
if your employment is terminated by the Company for Cause, or by
you for Good Reason, the date of receipt of the Notice of
Termination or any later date specified therein, as the case
maybe, (B) if your employment is terminated by the Company other
than for Cause or disability, the Date of Termination shall be
the date on which the Company notifies you of such termination
and (C) if your employment is terminated by reason of death or
disability, the Date of Termination shall be the date of your
death or the date you are determined to have a disability under
any long-term disability policy of the Company which covers you,
or, if none, as defined in the EnergyNorth, Inc. Retirement Plan
for Salaried Employees, as the case may be.
(f) Other Benefits Payable. The severance benefit
described in Subsection (a) above shall be payable in addition
to, and not in lieu of, all other accrued or vested or earned by
deferred compensation, rights, options or other benefits which
may be owed to you following discharge or resignation (and not
contingent on any Change of Control
preceding such termination),
including but not limited to accrued vacation or sick pay,
amounts or benefits payable, if any, under any bonus or other
compensation plans, stock option plan, stock ownership plan,
stock purchase plan, life insurance plan, health plan, disability
plan or similar plan.
g) Payment Obligations Absolute. Upon a Change of Control
the Company's obligations to pay the severance benefits or make
any other payments described in this Section 5 shall be absolute
and unconditional and shall not be affected by any circumstances,
including, without limitation, any set-off, counterclaim,
recoupment, defense or other right which the Company or any of
its subsidiaries may have against you or anyone else. You shall
not be required to mitigate damages, and if you do accept other
employment, any benefits or payments hereunder shall not be
reduced by any compensation earned or other benefits received as
a result of such employment.
h) Legal Fees and Expenses. Subject to and contingent
upon the occurrence of a Change of Control the Company agrees to
pay promptly as incurred, to the full extent permitted by law,
all legal fees and expenses which you may reasonably thereafter
incur as a result of any contest, litigation or arbitration
(regardless of the outcome thereof) by the Company, you or others
of the validity or enforceability of, or liability under, any
provision of this Agreement (including any contest by you about
the amount of any payment pursuant to this Agreement), plus in
each case interest on any delayed payment at the rate of 150% of
the Prime Rate posted by the Bank of Boston.
i) Retirement. If your employment is terminated due to
retirement, you shall not be
entitled to severance benefits under
this Agreement, regardless of the occurrence of a Change of
Control. A termination by retirement shall have occurred where
your termination is caused by the fact that you have reached
normal retirement age for employees in your position.
(j) Ceiling on Severance Benefits. In order to comply with
certain provisions of the Internal Revenue Code of 1986, as
amended (the "Code") severance benefits payable under this
Agreement shall be subject to the following ceiling
notwithstanding anything in this Agreement to the contrary: The
"aggregate present value" of severance benefits payable under
this Agreement and of payments to you or for your benefit which
would be "parachute payments" if their "aggregate present value"
equalled or exceeded 300% of your "base amount" shall in no event
exceed 295% of your "base amount" (within those terms' meaning
under Section 280G of the Code).
It is the intention of the parties to this Agreement that no
severance benefits hereunder will be paid to the extent that such
benefits (either alone or when aggregated with other benefits
paid to you or for your benefit) constitute "excess parachute
payments" within the meaning of Section 280G of the Code as
amended from time to time.
6. Assignability. This Agreement is binding on and is for the
benefit of the parties hereto and their respective successors,
heirs, executors, administrators and other legal representatives.
Neither this Agreement nor any right or obligation hereunder may
be assigned by the Company (except to any subsidiary or
affiliate) or by you.
7. Successor. The Company shall 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 the Company to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the
Company would be required to perform. As used in this Agreement,
"Company" shall mean the company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of law,
or otherwise.
8. Amendment: Waiver. This Agreement may be amended only by an
instrument in writing signed by the parties hereto, and any
provision hereof may be waived only by an instrument in writing
signed by the party or parties against whom or which enforcement
of such waiver is sought. The failure of either party hereto at
any time to require the performance by the other party hereto of
any provision hereof shall in no way affect the full right to
require such performance at any time thereafter, nor shall the
waiver by either party hereto of a breach of any provision hereof
be taken or held to be a waiver of any succeeding breach of such
provision or a waiver of the provision itself or a waiver of any
other provision of this Agreement.
9. Notices . All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to the
other party or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to you:
Xxxxxxx X. Xxxxxxxxxx
0 Xxxxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
If to the Company:
Vice President of Human Resources
EnergyNorth, Inc.
0000 Xxx Xxxxxx
P.O. Box 329
Manchester, NH 03105-0329
or to such other address as either party shall have furnished to
the other in writing in accordance herewith. Notice and
communications shall be effective when actually received by the
addressee.
10. Validity. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the
validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect, nor shall
the invalidity or unenforceability of a portion of any provision
of this Agreement affect the validity or enforceability of the
balance of such provision. If any provision of this Agreement,
or portion thereof is so broad, in scope or duration, as to be
unenforceable, such provision or portion thereof shall be
interpreted to be only so broad as is enforceable.
11. Arbitration. Any dispute or controversy between the parties
relating to this Agreement shall be settled by binding
arbitration in the City of Manchester, State of New Hampshire,
pursuant to the governing rules of the American Arbitration
Association and shall be subject to the provisions of New
Hampshire Revised Statutes Annotated Chapter 542. Judgment upon
the award may be entered in any court of competent jurisdiction.
12. Withholding. The Company may withhold from any amounts
payable under this
Agreement such Federal, state or local taxes
as shall be permitted to be withheld pursuant to any applicable
law or regulation. The Company may withhold such other amounts
as may be permitted by law.
13. Entire Agreement. This Agreement contains the entire
understanding of the Company and you with respect to the subject
matter hereof.
14. Applicable Law. This Agreement shall be governed by and
construed in accordance with the substantive internal law and not
the conflict of law provisions of the State of New Hampshire.
If the terms of the foregoing Agreement are acceptable to
you, please sign and return to the Company the enclosed copy of
this Agreement whereupon this Agreement shall become a valid and
legally binding contract between you and the Company.
Very truly yours,
EnergyNorth, Inc.
By: /s/ Xxxxxx X. Xxxxxxxx
Xxxxxx X.Xxxxxxxx,
President and Chief
Executive Officer
Accepted and Agreed as of
the date first above written:
/s/ Xxxxxxx X. Xxxxxxxxxx
Xxxxxxx X. Xxxxxxxxxx
