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EXHIBIT 10.9
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
BETWEEN
THE CONNECTICUT WATER COMPANY
CONNECTICUT WATER SERVICE, INC.
AND
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AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of __________________, 199_, is made by and
between The Connecticut Water Company, a Connecticut corporation having its
principal place of business in Clinton, Connecticut, ("Company"), Connecticut
Water Service, Inc., a Connecticut corporation and holder of all of the
outstanding capital stock of Company ("Parent") and
___________________, a resident of ________________ ("Executive").
W I T N E S S E T H :
WHEREAS, Executive has been and continues to be employed by Company and
Parent in an executive capacity and has entered into an Employment Agreement
between Executive and Company and Parent dated as of the ____ day of
_____________, 19__ which becomes effective upon a "Change-in-Control," as
defined herein, of Company or Parent; and
WHEREAS, should Company or Parent receive a proposal from or engage in
discussions with a third person concerning a possible combination with Company
or Parent or the acquisition of substantial portion of voting securities of
Company or Parent, the Boards of Directors of Company and Parent have deemed it
imperative that they and Company and Parent be able to rely on Executive to
continue to serve in Executive's position and that the Boards of Directors and
Company and Parent be able to rely upon Executive's advice as being in the best
interests of Company and Parent and their shareholders without concern that
Executive might be distracted by the personal uncertainties and risks that such
a proposal or discussions might otherwise create; and
WHEREAS, Company and Parent desire to reward Executive for Executive's
valuable, dedicated service to Company and Parent should Executive's service be
terminated under circumstances hereinafter described: and
WHEREAS, Executive, Company and Parent are willing to enter into this
Amended and Restated Employment Agreement ("Agreement") on the terms herein set
forth;
NOW, THEREFORE, to assure Company and Parent of Executive's continued
dedication and the availability of Executive's advice and counsel in the event
of any such proposal, to induce Executive to remain in the employ of Company and
Parent and to reward Executive for Executive's valuable dedicated service to
Company and Parent should Executive's service be terminated under circumstances
hereinafter described, and for other good and valuable consideration, the
receipt and adequacy of which each party acknowledges, Company, Parent and
Executive agrees as follows:
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1. DEFINITIONS. For purposes of this Agreement, the following terms
shall have the following meanings:
(a) "Cause" shall mean Executive's serious, willful misconduct
in respect of Executive's duties under this Agreement, including conviction for
a felony or perpetration by Executive of a common law fraud upon Company or
Parent which has resulted or is likely to result in material economic damage to
Company or Parent, as determined by a vote of at least seventy-five percent
(75%) of all of the Directors (excluding Executive) of each of Company's and
Parent's Board of Directors;
(b) "Change-in-Control" shall be deemed to have occurred if
after the date hereof (i) a public announcement shall be made or a report on
Schedule 13D shall be filed with the Securities and Exchange Commission pursuant
to Section 13(d) of the Securities Exchange Act of 1934 (the "Act") disclosing
that any Person (as defined below), other than Company or Parent or any employee
benefit plan sponsored by Company or Parent, is the beneficial owner (as the
term is defined in Rule 13d-3 under the Act) directly or indirectly, of twenty
percent (20%) or more of the total voting power represented by Company's or
Parent's then outstanding voting common stock (calculated as provided in
paragraph (d) of Rule 13d-3 under the Act in the case of rights to acquire
voting common stock); or (ii) any Person, other than Company or Parent or any
employee benefit plan sponsored by Company or Parent, shall purchase shares
pursuant to a tender offer or exchange offer to acquire any voting common stock
of Company or Parent (or securities convertible into such voting common stock)
for cash, securities or any other consideration, provided that after
consummation of the offer, the Person in question is the beneficial owner
directly or indirectly, of twenty percent (20%) or more of the total voting
power represented by Company's or Parent's then outstanding voting common stock
(all as calculated under clause (i)); or (iii) the stockholders of Company or
Parent shall approve (A) any consolidation or merger of Company or Parent in
which Company or Parent is not the continuing or surviving corporation (other
than a merger of Company or Parent in which holders of the outstanding capital
stock of Company or Parent immediately prior to the merger have the same
proportionate ownership of the outstanding capital stock of the surviving
corporation immediately after the merger as immediately before), or pursuant to
which the outstanding capital stock of Company or Parent would be converted into
cash, securities or other property, or (B) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all or
substantially all the assets of Company or Parent; or (iv) there shall have been
a change in the composition of the Board of Directors of Company or Parent at
any time during any consecutive twenty-four (24) month period such that
"continuing directors" cease for any reason to constitute at least a majority of
the Board unless the election, or the nomination for election of each new
Director was approved by a vote of at least two-thirds (2/3) of the Directors
then still in office who were Directors at the beginning of such period; or (v)
the Board of Directors of Company or Parent, by a vote of a majority of all the
Directors (excluding Executive) adopts a resolution to the effect that a
"Change-in-Control" has occurred for purposes of this Agreement.
(c) "Disability" shall mean the incapacity of Executive by
illness or any other cause as determined under the long-term disability
insurance plan of Company in effect at the
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time in question, or if no such plan is in effect, then such incapacity of
Executive as prevents Executive from performing the essential functions of
Executive's position with or without reasonable accommodation for a period in
excess of two hundred forty (240) days (whether or not consecutive), or one
hundred eighty (180) days consecutively, as the case may be, during any twelve
(12) month period.
(d) "Effective Date" shall be the date on which a
Change-in-Control occurs. Anything in this Agreement to the contrary
notwithstanding, if Executive's employment is terminated prior to the date on
which a Change-in-Control occurs, and it is reasonably demonstrated that such
termination (i) was at the request of a third party who has taken steps
reasonably calculated to effect a Change-in-Control or (ii) otherwise arose in
connection with or anticipation of a Change-in-Control, then for all purposes of
this Agreement the "Effective Date" shall mean the date immediately prior to the
date of such termination.
(e) "Good Reason" shall mean the occurrence of any action
which (i) removes or changes Executive's title or reduces Executive's job
responsibilities or base salary; (ii) results in a significant worsening of
Executive's work conditions; or (iii) moves Executive's place of employment to a
location that increases Executive's commute by more than thirty (30) miles over
the length of Executive's commute from Executive's place of principal residence
at the time the move is requested. For purposes of this subparagraph (e), any
good faith determination by Executive that any such action has occurred shall be
conclusive. Notwithstanding the foregoing, at any time during the period
commencing on the Effective Date and ending on the 30th day after the first
anniversary of the Effective Date, except for purposes of Paragraph 5(g), "Good
Reason" shall mean any reason or no reason.
(f) "Person" shall mean any individual, corporation,
partnership, company or other entity, and shall include a "group" as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934.
2. EMPLOYMENT.
(a) As of the Effective Date, Company hereby agrees to
continue to employ Executive and Executive agrees to remain in the employ of
Company for the Term of this Agreement upon the terms and conditions hereinafter
set forth. Subject to the provisions of subparagraph (b) of this Paragraph 2,
and to the provisions of Paragraph 6 below, "Term" shall mean a continuously
renewing period of three (3) years commencing on the Effective Date.
(b) At any time during the Term, the Board of Directors of
Company and Parent may, by written notice to Executive, advise Executive of
their desire to modify or amend any of the terms or provisions of this Agreement
or to delete or add any terms or provisions. Any such notice ("Notice") shall
describe the proposed modifications in reasonable detail. In the event a Notice
shall be given to Executive, then Company, Parent and Executive agree to discuss
the proposed modification(s) and to attempt in good faith to reach agreement
with respect thereto and to reduce such agreement to writing in an amendment to
be executed by all the parties ("Amendment"). If a Notice is given hereunder and
an Amendment shall not have been executed
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on or before the sixtieth (60th) day following the date on which Notice is
given, then the Term shall thereupon be automatically converted to a fixed
period ending three (3) years after the expiration of such sixty (60) days.
3. DUTIES OF EMPLOYMENT.
(a) During the Term, Executive's position (including status,
offices, titles and reporting requirements), authority, duties and
responsibilities shall be at least commensurate in all material respects with
the most significant of those held, exercised and assigned at any time during
the ninety (90)-day period immediately preceding the Effective Date and
Executive's services shall be performed at such location as Executive shall
determine.
(b) During the Term, Executive will serve Company faithfully,
diligently and competently and will devote full-time to Executive's employment
and will hold, in addition to the offices held on the Effective Date, such other
executive offices of Company or Parent, or their respective subsidiaries and
affiliates, to which Executive may be elected, appointed or assigned by the
Boards of Directors of Company or Parent from time to time and will discharge
such executive duties in connection therewith. Nothing in this Agreement shall
preclude Executive, with the prior approval of the Board of Directors of
Company, from devoting reasonable periods of time required for (i) serving as a
director or member of a committee of any organization involving no conflict of
interest with Company or Parent, or (ii) engaging in charitable, religious and
community activities, provided, that such directorships, memberships or
activities do not materially interfere with the performance of Executive's
duties hereunder.
4. COMPENSATION. During the Term, Company shall pay to Executive as
compensation for the services to be rendered by Executive hereunder the
following:
(a) A base salary at a rate equal to the highest base salary
paid or payable to Executive by Company during the twelve (12)-month period
immediately preceding the month in which the Effective Date occurs, or such
larger sum as the Board of Directors of Company may from time to time determine
in connection with regular periodic performance reviews pursuant to Company's
policies and practices. Such compensation shall be payable in accordance with
the normal payroll practices of Company. Executive shall receive an annual
increase in base salary at each normal pay adjustment date during the Term, but
no later than one (1) year after the date of Executive's last increase and
annually thereafter during the Term, of not less than the percentage increase in
the cost-of-living since Executive's last pay adjustment, as measured by the
Consumer Price Index-All Urban Consumers of the U.S. Bureau of Labor Statistics.
(b) In addition, Company shall pay to Executive an annual
bonus, payable in cash or other form of compensation, in accordance with the
Company's practice or plan for annual bonuses for peer executives which is at
least equal to the target percentage of the midpoint of Executive's salary grade
under the Company's Officers Incentive Program for the year preceding the fiscal
year in which the Effective Date occurs.
5. BENEFITS. During the Term, Executive shall be entitled to the
following benefits:
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(a) Incentive, Savings and Retirement Plans. In addition to
base salary and bonus payable as hereinabove provided, Executive shall be
entitled to participate during the Term in all incentive, savings and retirement
plans, practices, policies and programs applicable to executive employees of
Company as may be in effect from time to time. Such plans, practices, policies
and programs, in the aggregate, shall provide Executive with compensation,
benefits and reward opportunities at least as favorable as the most favorable of
such compensation, benefits and reward opportunities provided by Company for
Executive under such plans, practices, policies and programs as in effect at any
time during the ninety (90)-day period immediately preceding the Effective Date
or, if more favorable to Executive, as provided at any time thereafter with
respect to other key employees of Company or Parent.
(b) Welfare Benefit Plans. During the Term, Executive and/or
Executive's family, as the case may be, shall be eligible for participation in
and shall receive all benefits under welfare benefit plans, practices, policies
and programs applicable to executive employees of Company (including, without
limitation, medical, prescription, dental, disability, salary continuance,
employee life, group life, accidental death and travel accident insurance plans
and programs) at least as favorable as the most favorable of such plans,
practices, policies and programs in effect at any time during the ninety
(90)-day period immediately preceding the Effective Date or, if more favorable
to Executive and/or Executive's family, as in effect at any time thereafter with
respect to other key employees of Company or Parent.
(c) Expenses. During the Term, Executive shall be entitled to
receive prompt reimbursement for all reasonable expenses incurred by Executive
in accordance with the most favorable policies, practices and procedures of
Company in effect at any time during the ninety (90)-day period immediately
preceding the Effective Date or, if more favorable to Executive, as in effect at
any time thereafter with respect to other key employees of Company or Parent.
(d) Fringe Benefits. During the Term, Executive shall be
entitled to fringe benefits, including use of an automobile and payment of
related expenses or payment of an allowance for automobile related expenses, in
accordance with the most favorable plans, practices, programs and policies of
Company in effect at any time during the ninety (90)-day period immediately
preceding the Effective Date or, if more favorable to Executive, as in effect at
any time thereafter with respect to other key employees of Company or Parent.
(e) Office and Support Staff. During the Term, Executive shall
be entitled to an office or offices of a size and with furnishings and other
appointments, and to secretarial and other assistance, at least equal to the
most favorable of the foregoing provided to Executive by Company at any time
during the ninety (90)-day period immediately preceding the Effective Date or,
if more favorable to Executive, as provided at any time thereafter with respect
to other key employees of Company or Parent.
(f) Vacation. During the Term, Executive shall be entitled to
paid vacation in accordance with the most favorable plans, policies, programs
and practices of Company as in effect at any time during the ninety (90)-day
period immediately preceding the Effective Date or,
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if more favorable to Executive, as in effect at any time thereafter with respect
to other key employees of Company or Parent.
(g) Stay-on Bonus. If Executive is employed on a date on which
the Board of Directors of Company or Parent approves a transaction described in
clause (iii) of Paragraph 1(b), and the shareholders of Company or Parent, as
applicable, subsequently approve such transaction, Executive shall receive a
lump sum equal to the base salary of Executive, at the rate in effect
immediately prior to such date, plus an amount equal to the target percentage of
the midpoint of Executive's salary grade under the Company's Officers Incentive
Program for the year in which such date occurs; provided Executive is employed
on the fifth day following the closing of such transaction. If Executive's
employment is terminated by Company following such approval by the applicable
Board of Directors and prior to the fifth day following the closing of such
transaction for any reason other than for Cause, or Executive's death, or
Executive's attainment of age sixty-five (65), or if Executive's employment is
terminated during such period by reason of Executive's Disability, or if
Executive shall voluntarily terminated Executive's employment during such period
for Good Reason, then, in addition to the amounts payable to Executive pursuant
to Section 7, Executive shall be paid a lump sum equal to the base salary of
Executive, at the rate in effect immediately prior to the date of termination,
plus an amount equal to the target percentage of the midpoint of Executive's
salary grade under the Company's Officers Incentive Program for the year in
which termination occurs.
6. END OF TERM AND NOTICE OF TERMINATION.
(a) End of Term. The Term shall end upon the occurrence
of any of the following events:
(i) Termination of Executive's employment by
Company for Cause.
(ii) The voluntary termination of Executive's
employment by Executive other than for Good Reason.
(iii) The death of Executive.
(iv) Executive's attainment of age sixty-five
(65).
(v) Full compliance by Company with the
provisions of Paragraph 7(e) below, if Executive's employment shall have been
terminated by Company during the Term for any reason other than Cause, or if
Executive's employment shall have been terminated by reason of Executive's
Disability, or if Executive shall have voluntarily terminated Executive's
employment during the Term for Good Reason.
(b) Notice of Termination. Any termination by Company for
Cause or by Executive for Good Reason or on account of Executive's Disability
shall be communicated by notice to the other party hereto given in accordance
with Section 16 of this Agreement. For purposes of this Agreement, a "notice"
means a written notice which (i) indicates the specific
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termination provision in this Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of Executive's 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 fifteen (15) days after the giving of such notice).
(c) Date of Termination. The date of termination means the
date of receipt of the notice of termination or any later date specified
therein, as the case may be; provided, however, that (i) if Executive's
employment is terminated by Company other than for Cause or on account of
Executive's Disability, the date of termination shall be the date on which
Company notifies Executive of such termination and (ii) if Executive's
employment is terminated by reason of death, the date of termination shall be
the date of death of Executive.
7. PAYMENT UPON TERMINATION.
(a) If Executive's employment is terminated by Company for
Cause, as defined in Paragraph 1(a), the obligations of Company under this
Agreement shall cease and Executive shall forfeit all right to receive any
compensation or other benefits under this Agreement except only compensation or
benefits accrued or earned and vested (if applicable) by Executive as of the
date of termination, including base salary through the date of termination,
benefits payable under the terms of any qualified or nonqualified retirement
plans or deferred compensation plans maintained by Company, any accrued vacation
pay as of the date of termination not yet paid by Company and any benefits
required to be paid by law such as continued health care coverage pursuant to
the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA")
(collectively, the "Accrued Obligations").
(b) If Executive shall voluntarily terminate Executive's
employment during the Term other than for Good Reason, as defined in Paragraph
1(e), the obligations of Company under this Agreement shall cease and Executive
shall forfeit all right to receive any compensation or other benefits under this
Agreement except only the Accrued Obligations.
(c) In the event of the death of Executive during the Term,
then, in addition to the Accrued Obligations and any other benefits which may be
payable by Company in respect of the death of Executive, the base salary then
payable hereunder shall continue to be paid at the then current rate for a
period of six (6) months after such death to such beneficiary as shall have been
designated in writing by Executive, or if no effective designation exists, then
to the estate of Executive.
(d) If Executive's employment is terminated by reason of
Executive's attainment of age sixty-five (65), the obligations of Company under
this Agreement shall cease and Executive shall forfeit all right to receive any
compensation or other benefits under this Agreement except only the Accrued
Obligations.
(e) If Executive's employment is terminated by Company during
the Term for any reason other than for Cause, or Executive's death, or
Executive's attainment of age sixty-
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five (65), or if Executive's employment is terminated during the Term by reason
of Executive's Disability, or if Executive shall voluntarily terminate
Executive's employment during the Term for Good Reason, Executive shall be
entitled to receive, and Company shall be obligated to pay and provide
Executive, the following amounts:
(i) An amount in consideration of the covenants by
Executive set forth in Paragraphs 8 and 9 below to be determined by a nationally
recognized independent certified public accounting firm selected and retained by
Company to be the reasonable value of said covenants as of the date of
termination of Executive's employment, but in no event shall such amount be
greater than the aggregate value of the benefits provided in subparagraphs
(e)(ii),(iii),(iv),(v),(vii),(viii),(ix) and (xi) hereinbelow. The benefits
otherwise payable to Executive pursuant to said subparagraphs shall be offset by
the amount, if any, payable to Executive in respect of the covenants by
Executive set forth in Paragraph 8 and 9 below. Notwithstanding the foregoing,
if any benefit otherwise payable to Executive pursuant to said subparagraphs
would offset by the amount payable to Executive in respect of the covenants set
forth in Paragraph 8 and 9 below, Executive may elect to receive such benefit,
but the amount payable to Executive in respect of the covenants by Executive set
forth in Paragraph 8 and 9 below shall be reduced by the value of such benefit.
Said amount paid in consideration of the covenants by Executive set forth in
Paragraphs 8 and 9 below shall be paid in cash in a lump sum in the month next
following Executive's date of termination of employment and shall be treated as
a supplemental wage payment under applicable Treasury Regulations subject to
federal tax withholding at the flat percentage rate applicable thereto.
(ii) An amount equal to three (3) times the base
salary of Executive, at the rate in effect immediately prior to the date of
termination, plus an amount equal to three (3) times the target percentage of
the midpoint of Executive's salary grade under the Company's Officers Incentive
Program for the year in which termination occurs. There shall be subtracted from
the aggregate amount determined in accordance with the immediately preceding
sentence the amount, if any, payable to Executive under any then effective
severance pay plan of Company. Such resulting amount shall be payable in equal
installments over the three (3)-year period commencing on the date of
termination of employment in accordance with the normal payroll practices of
Company or, at Company's option, the entire amount (determined without any
discount) shall be paid in cash in a lump sum in the month next following
Executive's date of termination of employment and shall be treated as a
supplemental wage payment under applicable Treasury Regulations subject to
federal tax withholding at the flat percentage rate applicable thereto.
(iii) An amount equal to the aggregate amounts that
Company would have contributed on behalf of Executive under Company's qualified
defined contribution retirement plan(s), if any such plan(s) shall be in effect
(other than amounts attributable to Executive's before-tax contributions to such
plan(s)) plus estimated earnings thereon had Executive continued in the employ
of Company for the three (3)-year period commencing on the date of termination
and made contributions under said plan(s) at a rate, as a percentage of salary,
equal to the rate at which Executive had made contributions to said plan(s) in
the plan year immediately preceding Executive's termination, to be payable in a
lump sum to Executive within
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thirty (30) days after the expiration of the non-competition period specified in
Paragraph 9(a) of this Agreement, provided that Executive shall not have
breached said non-competition provisions.
(iv) An amount equal to the difference between: (A)
benefits which would have been payable to Executive under any deferred
compensation agreement between Company and Executive, if any such agreement
shall be in effect, had Executive continued in the employ of Company for the
three (3)-year period commencing on the date of termination, received
compensation at least equal to that specified in Paragraph 4 of this Agreement
during such time, and deferred pursuant to said deferred compensation agreement
the amount of compensation specified therein; and (B) the benefits actually
payable to Executive under such deferred compensation agreement; such amount to
be payable in a lump sum to Executive within thirty (30) days after the
expiration of the non-competition period specified in Paragraph 9(a) of this
Agreement, provided that Executive shall not have breached said non-competition
provisions.
(v) Additional retirement benefits equal to the
difference between: (A) the annual pension benefits that would have been payable
to Executive under Company's qualified defined benefit retirement plan (the
"Plan") and under any nonqualified supplemental executive retirement plan
covering Executive (the "Supplemental Plan"), if any such Plan or Supplemental
Plan shall be in effect, if Executive had been continued in the employ of
Company for the three (3)-year period commencing on the date of termination and
had received compensation at least equal to that specified in Paragraph 4(a) of
this Agreement during such time and had been fully vested in the benefits
payable under any such Plan and Supplemental Plan; and (B) the annual benefits
actually payable to Executive under any such Plan and Supplemental Plan. The
discounted present value of such additional benefits, shall be payable to
Executive in a lump sum, as calculated by the independent actuary for the Plan
using the assumptions specified in the Plan, within thirty (30) days after the
expiration of the non-competition period specified in Paragraph 9(a) of this
Agreement, provided that Executive shall not have breached said non-competition
provisions.
(vi) At the date of termination of Executive's
employment, Executive shall be fully vested in any form of compensation
previously granted to Executive (other than benefits payable under a qualified
retirement plan), such as, by way of example only, restricted stock, stock
options, and performance share awards.
(vii) If Executive's employment is terminated by
reason of Executive's Disability, Executive shall be entitled to receive, in
addition to the other benefits provided under this Paragraph 7(e), disability
benefits at least equal to the most favorable of those provided by Company or
Parent to disabled employees in accordance with the most favorable plans,
programs, practices and policies of Company or Parent in effect at any time
during the ninety (90)-day period immediately preceding the Effective Date or,
if more favorable to Executive, as in effect on the date of Executive's
Disability with respect to other key employees of Company or Parent.
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(viii) During the three (3)-year period commencing
on the date of termination, or such longer period as any plan, program, practice
or policy may provide, Executive shall continue to participate in all life,
health, disability and similar welfare benefit plans and programs of Company to
the extent that such continued participation is possible under the general terms
and provisions of such plans and programs, and Executive shall be credited with
additional service attributable to the three (3)-year period commencing on the
date of termination for purposes of determining eligibility to participate in
any such plans or programs maintained by Company for retirees, with Company and
Executive paying the same portion of the cost of each such plan or program as
existed at the time of Executive's termination. In the event that Executive's
continued participation (or commencement of participation for plans or programs
for retirees) is not permitted, then in lieu thereof, Company shall acquire,
with the same cost sharing, individual insurance policies providing comparable
coverage for Executive; provided, however, that Company shall not be obligated
to pay more than three (3) times Company's current cost for comparable group
coverage. If any such individual coverage is unavailable, then Company shall pay
to Executive annually for the three (3)-year period commencing on the date of
termination an amount equal to the sum of the average annual contributions,
payments, credits, or allocations made by Company for such coverage on
Executive's behalf (or the average such contributions, payments, credits, or
allocations for retirees, in the case of retiree coverage) over the three (3)
calendar years preceding the date of termination of Executive's employment.
(ix) During the three (3)-year period commencing on
the date of termination, Executive shall continue to receive such perquisites,
other than those specified in the preceding subparagraphs above, as Executive
was receiving at the date of termination of employment with, to the extent
applicable, the same cost sharing with Company as was in effect immediately
prior to Executive's termination of employment.
(x) Company shall reimburse Executive for the amount
of any reasonable legal or accounting fees and expenses incurred by Executive to
obtain or enforce any right or benefit provided to Executive by Company
hereunder or as confirmed or acknowledged hereunder.
(xi) Company shall provide Executive with
outplacement services from a firm selected by the Company for a period of one
(1) year commencing on date of termination, or until Executive accepts other
employment, if earlier. Such outplacement services shall be reasonable and
appropriate for an employee in Executive's position.
8. CONFIDENTIAL INFORMATION. Executive understands that in the course
of Executive's employment by Company, Executive will receive or have access to
confidential information concerning the business or purposes of Company and
Parent, and which Company and Parent desire to protect. Such confidential
information shall be deemed to include, but not be limited to, Company's
customer lists and information, and employee lists, including, if known,
personnel information and data. Executive agrees that Executive will not, at any
time during the period ending two (2) years after the date of termination of
Executive's employment,
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reveal to anyone outside Company or Parent or use for Executive's own benefit
any such information without specific written authorization by Company or
Parent. Executive further agrees not to use any such confidential information or
trade secrets in competing with Company or Parent at any time during or in the
two (2) year period immediately following the date of termination of Executive's
employment with Company.
9. COVENANTS BY EXECUTIVE NOT TO COMPETE WITH COMPANY OR PARENT.
(a) Upon the date of termination of Executive's employment
with Company for any reason, Executive covenants and agrees that Executive will
not at any time during the period of two (2) years from and after such date of
termination directly or indirectly in any manner or under any circumstances or
conditions whatsoever be or become interested, as an individual, partner,
principal, agent, clerk, employee, stockholder, officer, director, trustee, or
in any other capacity whatsoever, except as a nominal owner of stock of a public
corporation, in any other business which, at the date of Executive's
termination, is a Competitor (as defined herein), either directly or indirectly,
with Company or Parent, or engage or participate in, directly or indirectly
(whether as an officer, director, employee, partner, consultant, holder of an
equity or debt investment, lender or in any other manner or capacity), or lend
Executive's name (or any part or variant thereof) to, any business which, at the
date of Executive's termination, is a Competitor, either directly or indirectly,
with Company or Parent, or as a result of Executive's engagement or
participation would become, a Competitor, either directly or indirectly, with
any aspect of the business of Company or Parent as it exists at the time of
Executive's termination, or solicit any officer, director, employee or agent of
Company or Parent or any subsidiary or affiliate of Company or Parent to become
an officer, director, employee or agent of Executive, Executive's respective
affiliates or anyone else. Ownership, in the aggregate, of less than one percent
(1%) of the outstanding shares of capital stock of any corporation with one or
more classes of its capital stock listed on a national securities exchange or
publicly traded in the over-the-counter market shall not constitute a violation
of the foregoing provision. For the purposes of this Agreement, a Competitor is
any business which is similar to the business of Company or Parent or in any way
in competition with the business of Company or Parent within any of the
then-existing water utility service areas of Company.
(b) Executive hereby acknowledges that Executive's services
are unique and extraordinary, and are not readily replaceable, and hereby
expressly agrees that Company and Parent, in enforcing the covenants contained
in Paragraphs 8 and 9 herein, in addition to any other remedies provided for
herein or otherwise available at law, shall be entitled in any court of equity
having jurisdiction to an injunction restraining Executive in the event of a
breach, actual or threatened, of the agreements and covenants contained in these
Paragraphs.
(c) The parties hereto believe that the restrictive covenants
of these Paragraphs are reasonable. However, if at any time it shall be
determined by any court of competent jurisdiction that these Paragraphs or any
portion of them as written, are unenforceable because the restrictions are
unreasonable, the parties hereto agree that such portions as shall have been
determined to be unreasonably restrictive shall thereupon be deemed so amended
as to make such restrictions reasonable in the determination of such court, and
the said covenants, as
13
so modified, shall be enforceable between the parties to the same extent as if
such amendments had been made prior to the date of any alleged breach of said
covenants.
(d) The provisions of this Paragraph 9 shall not apply if
Company and Parent shall be prohibited under Paragraph 15 below from making any
payments to Executive pursuant to Paragraph 7 above.
10. NO OBLIGATION TO MITIGATE. So long as Executive shall not be in
breach of any provision of Paragraph 8 or 9, Executive shall have no duty to
mitigate damages in the event of a termination and if Executive voluntarily
obtains other employment (including self-employment), any compensation or
profits received or accrued, directly or indirectly, from such other employment
shall not reduce or otherwise affect the obligations of Company and Parent to
make payments hereunder.
11. RESIGNATION. In the event that Executive's services hereunder are
terminated under any of the provisions of this Agreement (except by death),
Executive agrees that Executive will deliver Executive's written resignation as
an officer of Company or Parent, or their subsidiaries and affiliates, to the
Board of Directors, such resignation to become effective immediately, or, at the
option of the Board of Directors, on a later date as specified by the Board.
12. INSURANCE. Company shall have the right at its own cost and expense
to apply for and to secure in its own name, or otherwise, life, health or
accident insurance or any or all of them covering Executive, and Executive
agrees to submit to the usual and customary medical examination and otherwise to
cooperate with Company in connection with the procurement of any such insurance,
and any claims thereunder.
13. RELEASE. As a condition of receiving payments or benefits provided
for in this Agreement, at the request of Company or Parent, Executive shall
execute and deliver for the benefit of Company and Parent, and any subsidiary or
affiliate of Company or Parent, a general release in the form set forth in
Attachment A, and such release shall become effective in accordance with its
terms. The failure or refusal of Executive to sign such a release or the
revocation of such a release shall cause the termination of any and all
obligations of Company and Parent to make payments or provide benefits
hereunder, and the forfeiture of the right of Executive to receive any such
payments and benefits. Executive acknowledges that Company and Parent have
advised Executive to consult with an attorney prior to signing this Agreement
and that Executive has had an opportunity to do so.
14. BENEFITS LIMITATION. Notwithstanding any other provision of this
Agreement, in the event that any payment or benefit received or to be received
by Executive under this Agreement (a "Payment") would be subject to the excise
tax (the "Excise Tax") imposed by Section 4999 of the Internal Revenue Code of
1986, as amended (the "Code"), or any successor to such Section, as determined
by a nationally recognized independent certified public accounting firm selected
by Company (the "Tax Advisor"), then such Payment shall be reduced to the extent
necessary to avoid the application of the Excise Tax, but only if such reduction
would result in Executive's receipt of a greater Payment on an after-tax basis
than would be
14
receivable by Executive had such Excise Tax been paid. For purposes of this
limitation, (a) no portion of any payment, whether pursuant to this Agreement or
any other plan or agreement, the receipt of which Executive, in the
determination of the Tax Advisor, shall have effectively waived prior to the
date which is fifteen (15) days following the date of termination of Executive's
employment and prior to the earlier of the date of constructive receipt and the
date of payment thereof shall be taken into account; and (b) any reduction in
the Payment made pursuant to this Paragraph shall be made from the payments and
benefits to be made pursuant to clauses (i),(ii),(iii),(iv),(v),(vii),(viii),
(ix) and (xi) of Paragraph 7(e), in such order as may be determined by
Executive, except to the extent that such payments and benefits, in the
determination of the Tax Advisor, are reasonable compensation within the meaning
of Section 280G of the Code. The determination of the Tax Advisor as provided
herein shall be completed not later than forty-five (45) days following
Executive's date of termination of employment, and such determination shall be
communicated in writing to Company, with a copy to Executive, within said
forty-five (45) day period. The determination of the Tax Advisor as provided
herein shall be deemed conclusive and binding on Company and Executive. If any
Payment is made before the Tax Advisor determines that such Payment is subject
to the Excise Tax, such Payment, to the extent it exceeds the "Reduced Amount,"
as defined herein, shall be treated for all purposes as a loan to Executive
which Executive shall repay to Company together with interest at the applicable
federal rate provided for in Section 7872(f)(2) of the Code; provided, however,
that such loan shall be deemed to have been made and such amount shall be
payable by Executive to Company only if the treatment of such Payment as a loan
would result in Executive's receipt of a greater Payment on an after-tax basis
than would be receivable by Executive had such Excise Tax been paid.
Furthermore, no such loan shall be deemed to have been made if such deemed loan
would not either eliminate the amount on which Executive is subject to Excise
Tax or generate a refund of such Excise Tax. For purposes of this Paragraph 14,
"Reduced Amount" shall mean an amount expressed in present value, as determined
in accordance with Section 280G(b)(2)(A)(ii) and 280G(d)(4) of the Code, that
maximizes the aggregate present value of the Payments without causing any
Payment to be non-deductible by Company because of Section 280G of the Code.
Executive and Company agree that they shall reasonably cooperate with each other
in connection with any administrative or judicial proceedings concerning the
existence or liability for Excise Tax with respect to the Payments. Company
agrees to indemnify Executive and hold Executive harmless for any penalties,
interest or expenses Executive may be required to pay in the event it is
determined that Excise Tax is owed. Executive agrees that Executive will not
take any position on Executive's income tax return or otherwise that is
inconsistent with the positions of Company with respect to the treatment of any
Payment, which may be contended is a "parachute" payment under Section 280G of
the Code. Company shall pay the fees and other costs of the Tax Advisor
hereunder.
15. REGULATORY LIMITATION. Notwithstanding any other provision of this
Agreement, Company shall not be obligated to make, and Executive shall have no
right to receive, any payment, benefit or amount under this Agreement which
would violate any law, regulation or regulatory order applicable to Company or
Parent at the time such payment, benefit or amount is due ("Prohibited
Payment"). If and to the extent Company shall at a later date be relieved of the
restriction on its ability to make any Prohibited Payment, then at such time
Company or Parent
15
shall promptly make payment of any such amounts to Executive.
16. NOTICES. All notices under this Agreement shall be in writing and
shall be deemed effective when delivered in person to Executive or to the
Secretary of Company and Parent, or if mailed, postage prepaid, registered or
certified mail, addressed, in the case of Executive, to Executive's last known
address as carried on the personnel records of Company, and, in the case of
Company and Parent, to the corporate headquarters, attention of the Secretary,
or to such other address as the party to be notified may specify by notice to
the other party.
17. SUCCESSORS AND BINDING AGREEMENT.
(a) Company and Parent will 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 Company and/or Parent, as the
case may be, expressly to assume and agree to perform this Agreement in the same
manner and to the same extent that Company and Parent are required to perform
it. Failure of Company and Parent to obtain such assumption and agreement prior
to the effectiveness of any such succession shall be a breach of this Agreement
and shall entitle Executive to compensation and benefits from Company and Parent
in the same amount and on the same terms as Executive would be entitled
hereunder if Executive had terminated employment for Good Reason, except that
for purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the date on which Executive's
employment with Company was terminated. As used in this Agreement, "Company" and
"Parent" shall include any successor to Company's and/or Parent's, as the case
may be, business and/or assets as aforesaid which assumes and agrees to perform
this Agreement by operation of law, or otherwise.
(b) This Agreement shall inure to the benefit of, and be
enforceable by, Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
Executive dies while any amount is still payable hereunder, all such amounts
shall be paid in accordance with the terms of this Agreement to Executive's
devisee, legatee or other designee or, if there is no such designee, to
Executive's estate.
18. ARBITRATION. Any dispute which may arise between the parties hereto
may, if both parties agree, be submitted to binding arbitration in the State of
Connecticut in accordance with the Rules of the American Arbitration
Association; provided that any such dispute shall first be submitted to
Company's Board of Directors in an effort to resolve such dispute without resort
to arbitration.
19. SEVERABILITY. If any of the terms or conditions of this Agreement
shall be declared void or unenforceable by any court or administrative body of
competent jurisdiction, such term or condition shall be deemed severable from
the remainder of this Agreement, and the other terms and conditions of this
Agreement shall continue to be valid and enforceable.
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20. AMENDMENT. This Agreement may be modified or amended only by an
instrument in writing executed by the parties hereto; provided, however, that
the Board of Directors of Company and Parent may amend this Agreement without
the consent of Executive upon receipt of a written opinion of Company's
accounting firm that a provision or provisions of this Agreement would prevent
"pooling" accounting treatment in connection with any Change-in-Control and such
"pooling" accounting treatment would otherwise be available in connection with
such Change-in-Control, to the extent necessary to permit "pooling" accounting
treatment in connection with such a Change-in-Control, provided that such
amendment may not adversely affect any benefit to which Executive was entitled
under the terms of this Agreement prior to this amendment and restatement, and
must preserve the benefits to Executive under this Agreement to the maximum
extent possible consistent with obtaining such accounting treatment.
21. CONSTRUCTION. This Agreement shall supersede and replace all prior
agreements and understandings between the parties hereto on the subject matter
covered hereby. This Agreement shall be governed and construed under the laws of
the State of Connecticut. Words of the masculine gender mean and include
correlative words of the feminine gender. Paragraph headings are for convenience
only and shall not be considered a part of the terms and provisions of the
Agreement.
IN WITNESS WHEREOF, Company and Parent have caused this Agreement to be
executed by a duly authorized officer, and Executive has hereunto set
Executive's hand, this ____ day of _________________, 19__.
Connecticut Water Service, Inc.
The Connecticut Water Company
By
(Title)
Executive
17
ATTACHMENT A
RELEASE
We advise you to consult an attorney before you sign this Release. You
have until the date which is seven (7) days after the Release is signed and
returned to ____________________ ("Company") to change your mind and revoke your
Release. Your Release shall not become effective or enforceable until after that
date.
In consideration for the benefits provided under your Employment
Agreement dated _________________________ with Company and _____________________
("Parent"), and more specifically enumerated in Exhibit 1 hereto, by your
signature below you agree to accept such benefits and not to make any claims of
any kind against Company, its past and present and future parent corporations,
subsidiaries, divisions, subdivisions, affiliates and related companies or their
successors and assigns, including without limitation Parent, or any and all
past, present and future Directors, officers, fiduciaries or employees of any of
the foregoing (all parties referred to in the foregoing are hereinafter referred
to as the "Releases") before any agency, court or other forum, and you agree to
release the Releases from all claims, known or unknown, arising in any way from
any actions taken by the Releases up to the date of this Release, including,
without limiting the foregoing, any claim for wrongful discharge or breach of
contract or any claims arising under the Age Discrimination in Employment Act of
1967, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities
Act of 1990, the Employee Retirement Income Security Act of 1974, Connecticut's
Fair Employment Practices Act or any other federal, state or local statute or
regulation and any claim for attorneys' fees, expenses or costs of litigation.
THE PRECEDING PARAGRAPH MEANS THAT BY SIGNING THIS RELEASE YOU WILL
HAVE WAIVED ANY RIGHT YOU MAY HAVE TO BRING A LAWSUIT OR MAKE ANY LEGAL CLAIM
AGAINST THE RELEASEES BASED ON ANY ACTIONS TAKEN BY THE RELEASEES UP TO THE DATE
OF THIS RELEASE.
By signing this Release, you further agree as follows:
1. You have read this Release carefully and fully understand its terms;
2. You have had at least twenty-one (21) days to consider the terms of
the Release;
3. You have seven (7) days from the date you sign this Release to
revoke it by written notification to Company. After this seven (7) day period,
this Release is final and binding and may not be revoked;
4. You have been advised to seek legal counsel and have had an
opportunity to do so;
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5. You would not otherwise be entitled to the benefits provided under
your Employment Agreement with Company and Parent had you not agreed to waive
any right you have to bring a lawsuit or legal claim against the Releases; and
6. Your agreement to the terms set forth above is voluntary.
Name:
-----------------------------------
Signature: Date:
------------------------------ ---------------
Received by: Date:
---------------------------- ---------------
19
EXHIBIT 1
1.
2.
3.
4.
5.
etc.
NOTE: THIS EXHIBIT IS TO BE COMPLETED AT THE TIME OF TERMINATION TO REFLECT ALL
BENEFITS AND PAYMENTS MADE UNDER THE EMPLOYMENT AGREEMENT.
Acknowledged and Agreed:
THE CONNECTICUT WATER COMPANY EXECUTIVE
By
----------------------------- -----------------------------
Its
CONNECTICUT WATER SERVICE, INC.
By
-----------------------------
Its
