Exhibit 10.20
MEMORANDUM OF UNDERSTANDING
YANKEE ENERGY BOARD AND XXXXXX X. XXXXXX
On December 6, 1994, the Board of Directors ("Board") of
Yankee Energy System, Inc. (together with all subsidiaries,
"Yankee") and Xxxxxx X. Xxxxxx ("Ashton") reached an agreement on
the following matters:
1. Xxxxxx has agreed to resign as Chief Executive Officer of
Yankee effective March 1, 1995. Xxxxxx has submitted his letter
of resignation to the Board. The transition of Chief Executive
Officer duties to Xxxxxx will begin immediately, as of December
6, 1994.
2. Xxxxxx will stand for election to a new three-year term as a
director at the 1995 Annual Meeting of Shareholders on February
24, 1995, and (assuming he is re-elected by the shareholders)
will remain as Chairman of the Board until the Board meeting
following the 1996 Annual Meeting of Shareholders, at which time
the Board will consider whether to continue Xxxxxx as Chairman.
If the Board determines not to continue Xxxxxx as Chairman after
that meeting, the resolution adopted by the Board on May 26, 1994
regarding nomination and tenure of directors will apply and
Xxxxxx will submit his resignation to the Board no later than
March 1, 1996. From the period between the 1995 and 1996 Annual
Meeting of Shareholders, Xxxxxx will receive $25,000 annually as
Chairman of the Board and will also receive all fees paid to
directors in accordance with Xxxxxx's policy for compensating
directors. Xxxxxx's duties as Chairman will be determined by the
Board.
3. Xxxxxx agrees to retire from Yankee effective March 1, 1995.
The Board agrees that Xxxxxx's total monthly retirement plan will
be $17,310 and that a supplemental retirement plan or other
mutually acceptable document will be entered into as soon as
practicable after December 6, 1994, to assure the $17,310 monthly
retirement payment. In addition to the above monthly total
retirement payment, Xxxxxx will be entitled to any other benefits
generally available to retired persons under Xxxxxx's retirement
plans. The document establishing Xxxxxx's entitlement to the
monthly retirement payment shall include a requirement that
Xxxxxx not compete with Yankee so long as he is receiving
retirement benefits.
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4. The Board agrees that all stock grants and options held by
Xxxxxx will vest on the same vesting schedule that would have
applied if Xxxxxx were not retiring on March 1, 1995, provided
that any vesting which would occur upon Xxxxxx's retirement will
still occur upon that event. The Board agrees to examine whether
the stock option exercise date can be extended by the Board until
the expiration of 12 months after Xxxxxx reaches the age of 65;
if so, such an extension will be effected. If shareholder
approval of the stock option plan amendments, necessary to effect
such changes, will be required to preserve the current status of
the stock option plan under Federal securities law, the Board and
Xxxxxx agree to discuss in good faith alternatives to the
continued vesting and extended exercise periods.
5. The Board agrees that Xxxxxx's 1994 base annual salary shall
be set at $262,500 effective May 1, 1994. The Board also agrees
that Xxxxxx will be given an incentive compensation award of
$80,000 for 1994. This will result in a cash payment in December
of $88,400 (which includes the $8,400 lump sum salary adjustment
for May 1, 1994 to December 31, 1994 and the $80,000 bonus.) For
January and February, 1995, Xxxxxx will be paid at the annual
base salary rate of $262,500.
6. The Board has given Xxxxxx written notice on December 6,
1994 of its intent not to renew Xxxxxx's January 1, 1993
Employment Agreement, and Xxxxxx agrees that the Employment
Agreement will terminate, and he will be an employee at will,
effective at midnight on December 31, 1994.
7. The Board and Xxxxxx have agreed upon the text of a press
release announcing Xxxxxx's prospective retirement and the change
in the Chief Executive Officer position. The Board and Xxxxxx
agree that all other disclosures and reports required by law will
be made on a timely basis.
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8. This Memorandum of Understanding shall be subject to the
execution of such definitive agreements as may be necessary to
give effect thereto and the satisfaction of all applicable legal
and regulatory requirements.
Accepted:
/s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx December 12, 1994
/s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx December 12, 1994
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