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EXHIBIT 10(j)-1
CHANGE OF CONTROL AGREEMENT
THIS CHANGE OF CONTROL AGREEMENT ("Agreement") is made and entered into
as of the 8th day of December, 1999 by and between ENERGYSOUTH, INC., an Alabama
corporation ("EnergySouth"), and _____________ ("Executive").
WHEREAS, Executive is an effective and valuable employee and officer of
EnergySouth and/or one or more of its subsidiaries;
WHEREAS, EnergySouth recognizes that the uncertainties involved in a
potential or actual change in control of EnergySouth could result in the
distraction or departure of management personnel such as Executive to the
detriment of EnergySouth and its shareholders; and
WHEREAS, EnergySouth desires to lessen the personal and economic
pressure which a potential or actual change in control may impose on Executive
and thereby facilitate Executive's ability to bargain successfully for the best
interests of EnergySouth's shareholders in the event of such a change in
control;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, EnergySouth and Executive hereby agree as follows:
Section 1. Definitions.
As used in this Agreement the following words and terms shall have the following
meanings:
1.1 "Cause". Termination of employment by Employer for "Cause" shall
mean termination based on any of the following:
1.1.1 The willful and continued failure by the Executive to
substantially perform Executive's duties with Employer (other than any
such failure resulting from Executive's incapacity due to physical or
mental illness) after a written demand for substantial performance is
delivered to Executive specifically identifying the manner in which
Executive has not substantially performed Executive's duties;
1.1.2 The engaging by Executive in willful misconduct which is
demonstrably injurious to Employer monetarily or otherwise; or
1.1.3 The conviction of Executive of a felony.
1.2 "Change in Control" means the occurrence of any one or more of the
following:
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1.2.1 The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange
Act) (a "Person") of beneficial ownership (within the meaning of Rule
13(d)-3 promulgated under the Exchange Act) of 25% or more of either
(i) the then outstanding shares of common stock of EnergySouth (the
"Outstanding Common Stock") or (ii) the combined voting power of the
then outstanding voting securities of EnergySouth entitled to vote
generally in the election of directors (the "Outstanding Voting
Securities"); provided, however, that for purposes of this subsection
(1) any acquisition by an employee benefit plan (or related trust)
sponsored or maintained by EnergySouth or any corporation controlled by
EnergySouth shall not constitute a Change in Control;
1.2.2 Individuals who, as of December 3, 1999, constitute the
Board of Directors of EnergySouth (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board of Directors of
EnergySouth (the "Board of Directors"); provided, however that any
individual becoming a director subsequent to the date hereof whose
election, or nomination for election by EnergySouth'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 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 of Directors;
1.2.3 Consummation of a reorganization, merger or
consolidation, or sale or other disposition of all or substantially all
of the assets, of EnergySouth (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 Common Stock and Outstanding Voting
Securities immediately prior to such Business Combination beneficially
own, directly or indirectly, more than 75% of, respectively, the then
outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation resulting
from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns EnergySouth or
all or substantially all of EnergySouth'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 Common Stock and Outstanding Voting Securities, as the
case may be, (ii) no Person (excluding any corporation resulting from
such Business Combination or any employee benefit plan (or related
trust) of EnergySouth or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 25% or more of,
respectively, the then outstanding shares of common stock of the
corporation resulting from such
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Business Combination or the combined voting power of the then
outstanding voting securities of such corporation except to the extent
that such ownership existed prior to the Business Combination and (iii)
at least a majority of the members of the board of directors of the
corporation 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 of Directors, providing for
such Business Combination;
1.2.4 Any transaction or series of transactions which is
expressly designated by resolution of the Board of Directors to
constitute a Change in Control for purposes of this Agreement.
1.3 "Code" means the Internal Revenue Code of 1986, as the same may be
from time to time amended.
1.4 "Compensation" means an amount equal to the sum of (A) plus (B),
where (A) is the Executive's annualized base salary in effect immediately prior
to the Change in Control, and (B) is the higher of (i) the annual bonus awarded
Executive by Employer pursuant to the EnergySouth Officers Incentive
Compensation Plan (or any successor annual cash incentive plan) ("Bonus") with
respect to the fiscal year immediately preceding the fiscal year in which the
Change in Control occurs, or (ii) the average of the Bonus awards to Executive
with respect to the three (3) fiscal years immediately preceding the fiscal year
in which the Change in Control occurs.
1.5 "Date of Termination" means the date that a termination of
Executive's employment with Employer is first effective.
1.6 "Disability" means the total and permanent disability which
entitles Executive to a disability benefit under a disability program sponsored
and/or maintained by Employer.
1.7 "Effective Period" means the period commencing with the earliest
date that a Change in Control occurs and ending on the last day of the
twenty-fourth calendar month following the calendar month during which such
Change in Control occurred. Anything in this Agreement to the contrary
notwithstanding, if a Change in Control occurs, and if the Date of Termination
with respect to Executive's employment with EnergySouth occurs prior to the date
on which the Change in Control occurs, and if it is reasonably demonstrated by
Executive that such termination of employment (i) was at the request of a third
party who has taken steps reasonably calculated to effect the Change in Control
or (ii) otherwise arose in connection with or in anticipation of the Change in
Control, then for all purposes of this Agreement the "Effective Period" shall be
deemed to have commenced on the date immediately preceding the Date of
Termination.
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1.8 "Employer" means EnergySouth and/or its Subsidiaries.
1.9 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
1.10 "Good Reason" means the occurrence during an Effective Period of
any of the following events without Executive's prior written consent:
1.10.1 The assignment to Executive by Employer of duties
inconsistent with Executive's position, authority, duties,
responsibilities and status with Employer immediately prior to a Change
in Control, or a change in Executive's titles or offices as in effect
immediately prior to a Change in Control, or any removal of Executive
from or any failure to reelect Executive to any of such positions, if
such assignment, change, or removal results in a diminution in
Executive's position, authority, duties, responsibilities or status
with Employer immediately prior to a Change in Control or any other
action by Employer that results in such a diminution in Executive's
position, authority, duties, responsibilities or status;
1.10.2 A reduction in Executive's aggregate rate of monthly
base pay from the Employer;
1.10.3 The termination or material adverse modification of the
EnergySouth Officer Incentive Compensation Plan or the Amended and
Restated Stock Option Plan of EnergySouth, Inc. (or any other short or
long-term incentive compensation plan in effect immediately prior to a
Change in Control) without substitution of new short or long-term
incentives providing comparable compensation opportunities for
Executive.
1.10.4 A failure by Employer to use its best efforts to
provide Executive with either the same fringe benefits (including
retirement benefits and paid vacations) as were provided to Executive
immediately prior to a Change in Control or a package of fringe
benefits that, though one or more of such benefits may vary from those
in effect immediately prior to the Change in Control, is substantially
comparable in all material respects to the fringe benefits (taken as a
whole) in effect prior to a Change in Control;
1.10.5 Executive's relocation by Employer to any place more
than 50 miles from the location at which Executive performed the
substantial portion of Executive's duties prior to a Change in Control,
except for required travel by Executive on Employer's business to an
extent substantially consistent with Executive's business travel
obligations immediately prior to such Change in Control;
1.10.6 Any material breach by EnergySouth of any provision of
this Agreement or any other agreement between EnergySouth and Executive
which
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breach continues for a period of thirty days following delivery by
Executive to EnergySouth of written notice of such breach.
1.11 "Notice of Termination" has the meaning set forth in Section 2.1
of this Agreement.
1.12 "Subsidiary" means any corporation or other legal entity, the
majority of the outstanding voting stock of which (or equity interests in) is
owned directly or indirectly, by EnergySouth.
1.13 "Triggering Termination" shall mean
(1) any termination by Employer of Executive's employment other
than for Cause,
(2) a termination of Executive's employment which Executive and
EnergySouth agree in writing will constitute a Triggering
Termination for purposes of this Agreement, and
(3) a voluntary termination of Executive's employment by Executive
for Good Reason.
Section 2. Notice of Termination.
During any Effective Period:
2.1 Any termination for Cause or Good Reason shall be communicated to
the other party by written notice ("Notice of Termination") referencing this
Agreement and, indicating in reasonable detail the facts and circumstances
providing a basis for such termination. The failure of Executive or Employer to
set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Cause or Good Reason shall not waive any right of
Executive or EnergySouth hereunder or preclude Executive or EnergySouth from
asserting or relying upon the omitted fact or circumstance in enforcing
Executive's or EnergySouth's rights hereunder.
2.2 Termination for Cause or Good Reason shall be effective upon
delivery of a Notice of Termination or at such later date as may be specified in
the Notice of Termination. In the event that each party delivers a Notice of
Termination, the Notice of Termination first delivered shall establish the
effective date of such Notice of Termination.
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Section 3. Severance Payment.
In the event of a Triggering Termination, then Executive shall, subject to the
provisions of Section 7 hereof, receive as severance pay an amount equal to his
Compensation multiplied by [2.97] [2.00]. Any severance payment to be made under
this Section 3 shall be paid in one payment and in full on or prior to the
thirtieth day following the Date of Termination. It is the intention of the
parties to this Agreement that no severance benefits hereunder will be paid to
the extent that such benefits constitute "excess parachute payments" within the
meaning of Section 280G of the Code as amended from time to time.
Section 4. Other Benefits.
Subject to Section 7 hereof, in the event of a Triggering Termination, for a
period of twenty-four months commencing with the Date of Termination, Executive
and the Executive's family shall continue to be covered at the expense of
EnergySouth by the same or substantially equivalent hospital, medical, dental,
vision, accident, disability and life insurance coverages as were provided to
Executive and the Executive's family by Employer immediately prior to the Change
in Control; provided, however, that if Executive becomes employed with another
employer and is eligible to receive benefits of the type described above from
such other employer, EnergySouth's obligations under this Section 4 shall be
deemed satisfied to the extent of the benefits provided by such other employer.
Section 5. No Obligation To Seek Further Employment; No Effect on Other
Benefits.
5.1 Executive shall not be required to seek other employment, nor
(except as otherwise provided under Section 4 with respect to insurance
coverages) shall the amount of any severance payment or other benefit to be made
or provided under this Agreement be reduced by any compensation or benefit
earned by Executive as the result of employment by another employer after the
Date of Termination, or otherwise.
5.2 Any severance payment or benefit to be made or provided under this
Agreement is in addition to all other benefits, if any, to which Executive may
be entitled under other agreements or plans or programs of EnergySouth.
Section 6. Continuing Obligations of Executive.
As a result of and in connection with Executive's employment by Employer,
Executive is involved in a number of matters of strategic importance and value
to Employer including various projects, proceedings, planning processes, and
negotiations. Any number of these matters may be ongoing and continuing after
the Date of Termination. In addition Employee is privy to proprietary and
confidential information of Employer, including without limitation financial
information and projections, business plans and strategies, and customer and
vendor lists and information. The Executive agrees as follows:
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6.1 For a period of two years following the Date of Termination,
Executive shall fully assist and cooperate with Employer and its representatives
(including outside auditors, counsel and consultants) with respect to any
matters with which the Executive was involved during the course of employment
with Employer, including being available upon reasonable notice for interviews,
consultation, and litigation preparation. Except as otherwise agreed by
Executive, Executive's obligation under this Section 6(a) shall not exceed 80
hours during the first year and 20 hours during the following year. Such
services shall be provided upon request of Employer but scheduled to accommodate
Executive's reasonable scheduling requirements. Executive shall receive no
additional fee for such services but shall be reimbursed all reasonable
out-of-pocket expenses.
6.2 For a period of twenty-four months following the Date of
Termination, the Executive shall not Compete (as defined below) or assist
others in Competing with Employer. For purposes of this Agreement, "Compete"
means (a) solicit in competition with Employer any person or entity which was a
customer of Employer at the Date of Termination, or (b) engage in any business
that is (i) in competition with any business carried on by Employer at the Date
of Termination and (ii) in Employer's service territory. An investment of less
than one percent of equity capital in, a person or entity which Competes with
Employer does not constitute Competition by Executive so long as Executive does
not directly participate in, assist or advise with respect to such Competition.
6.3 Executive agrees that at all times following the Date of
Termination, Executive will not, without the prior written consent of
EnergySouth, disclose to any person, firm or corporation any confidential
information of Employer which is now known to Executive or which hereafter may
become known to Executive as a result of Executive's employment or association
with Employer, unless such disclosure is required under the terms of a valid and
effective subpoena or order issued by a court or governmental body; provided,
however, that the foregoing shall not apply to confidential information which
becomes publicly disseminated by means other than a breach of this Agreement.
Section 7. Resignation from Offices.
EnergySouth shall have no obligation under Sections 3 and 4 hereof if Executive
shall not, promptly after the Date of Termination and upon receiving a written
request to do so, resign from each officer and/or director position which
Executive then holds with EnergySouth and any Subsidiary.
Section 8. Payment of Legal Fees and Expenses.
EnergySouth agrees to pay promptly as incurred, to the full extent permitted by
law, all reasonable legal fees and expenses which Executive may reasonably incur
(i) as a result of any contest (regardless of the outcome thereof) by
EnergySouth, Executive or others of the validity or enforceability of, or
liability under, any provision of this Agreement.
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Section 9. Withholding.
The Company may withhold from any amounts payable under this Agreement such
Federal, state or local taxes as may be required to be withheld pursuant to any
applicable law or regulation.
Section 10. Term.
This Agreement shall terminate (except to the extent of any unpaid or
unfulfilled obligation with respect to a prior termination of Executive's
employment) on the first to occur of (a) any termination of Executive's
employment with Employer which does not constitute a Triggering Termination or
(b) expiration of the Term. The initial term of this Agreement shall be for a
period of three years from the date hereof. On each anniversary of the date
hereof, the term shall automatically extend by one year unless at least thirty
days prior to such an anniversary EnergySouth notifies Executive that there will
be no such extension, in which event the term shall continue for two years from
such anniversary.
Section 11. Binding Effect; Successors.
11.1 This Agreement shall be binding upon and inure to the benefit of
Executive and Executive's personal representative and heirs, and EnergySouth and
its successors and assigns including any successor organization or organizations
which shall succeed to substantially all of the business and property of
EnergySouth, whether by means of merger, consolidation, acquisition of assets or
otherwise, including operation of law. EnergySouth will require any such
successor to expressly assume and agree to perform EnergySouth's obligations
under this Agreement.
11.2 Without the prior consent of EnergySouth, Executive may not assign
the Agreement, except by will or the laws of descent and distribution.
Section 12. Notice.
For purposes of this Agreement, notices and all other communications provided
for in this Agreement shall be in writing and shall be deemed to have been duly
given when delivered or mailed by United States registered mail, return receipt
requested, postage prepaid, as follows:
If to EnergySouth or Employer:
ENERGYSOUTH, INC.
0000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxx 00000
Attention: Chairman
If to Executive:
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or such other address as either party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
Section 13. Miscellaneous.
No provisions of this Agreement may be modified, waived or discharged unless
such waiver, modification or discharge is agreed to in writing signed by
Executive and EnergySouth. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement. This Agreement
shall be governed by and construed in accordance with the laws of the State of
Alabama. The invalidity or unenforceability of any 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. This Agreement may be
executed in one or more counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
ENERGYSOUTH, INC.
By
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Its
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EXECUTIVE
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