CHANGE IN CONTROL AGREEMENT EXHIBIT 10(L)
THIS AGREEMENT dated and entered into effective as of the 15th day of
May, 1997, by and between E'town Corporation, a New Jersey corporation
(together with its affiliated companies, the "Company"), and Xxxx Xxxxx
Xxxxxxxxx,(the "Executive").
W I T N E S S E T H:
WHEREAS, should the Company receive a proposal from or engage in
discussions with a third person concerning a possible business combination
with or the acquisition of a substantial portion of voting securities of the
Company, the Board of Directors of the Company (the "Board") has deemed it
imperative that it and the Company be able to rely on the Executive to
continue to serve in her position and that the Board and the Company be able
to rely upon her advice as being in the best interests of the Company and its
shareholders without concern that the Executive might be distracted by the
personal uncertainties and risks that such a proposal or discussions might
otherwise create; and
WHEREAS, the Company desires to reward the Executive for her valuable,
dedicated service to the Company should her service be terminated under
circumstances hereinafter described; and
WHEREAS, the Board therefore considers it in the best interests of the
Company and its shareholders for the Company to enter into this Change in
Control Agreement with the Executive;
NOW, THEREFORE, to assure the Company of the Executive's continued
dedication and the availability of her advice and counsel in the event of any
such proposal, to induce the Executive to remain in the employ of the Company
and to reward the Executive for her valuable, dedicated service to the
Company should her service be terminated under circumstances hereinafter
described, and for other good and valuable consideration, the receipt and
adequacy whereof each party acknowledges, the Company and the Executive agree
as follows:
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1. OPERATION, EFFECTIVE DATE, AND TERM OF AGREEMENT.
(a) This Agreement shall commence on the date hereof and continue in
effect through December 31, 1997; provided, however, that commencing on
January 1, 1998 and each succeeding January 1 thereafter, the term of this
Agreement shall be extended automatically for one additional year unless not
later than September 30 of the preceding year the Company shall have given
notice to the Executive that it does not wish to extend this Agreement.
(b) This Agreement is effective and binding on both parties hereto as
of the date hereof. Notwithstanding its present effectiveness, the
provisions of paragraphs 3 and 4 of this Agreement shall become operative
only when, as and if there has been a "Change in Control of the Company" (as
hereinafter defined). For purposes of this Agreement, a "Change in Control
of the Company" shall be deemed to have occurred if
(X) any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or a
person engaging in a transaction of the type described in clause
(Z) of this subsection but which does not constitute a change in
control under such clause, hereafter becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing more than 50%
of the combined voting power of the Company's then outstanding
securities; or
(Y) during any period of twenty-four consecutive months
during the term of this Agreement, individuals who at the beginning
of such period constitute the Board and any new director (other
than a director designated by a person who has entered into an
agreement with the Company to effect a transaction described in
clauses (X) or (Z) of this subsection) whose election by the Board,
or nomination for election by the Company shareholders, was
approved by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at the beginning of
the period or whose election or nomination for election was
previously so approved ("Continuing Members"), cease for any reason
to constitute a majority thereof; or
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(Z) the shareholders of the Company approve or, if no
shareholder approval is required or obtained, the Company completes
a merger, consolidation or similar transaction of the Company with
or into any other corporation, or a binding share exchange
involving the Company's securities, other than any such transaction
which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least 75% of the combined
voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such transaction, or
the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all the
Company's assets.
2. EMPLOYMENT OF EXECUTIVE.
Nothing herein shall affect any right which the Executive or the Company
may otherwise have to terminate the Executive's employment by the Company at
any time in any lawful manner, subject always to the Company's providing to
the Executive the payments and benefits specified in paragraphs 3 and 4 of
this Agreement to the extent hereinbelow provided.
In the event any person commences a tender or exchange offer, circulates
a proxy statement to the Company's shareholders or takes other steps designed
to effect a Change in Control of the Company as defined in paragraph 1 of
this Agreement, the Executive agrees that she will not voluntarily leave the
employ of the Company and will continue to perform her regular duties and to
render the services provided by the Executive to the Company until such
person has abandoned or terminated her efforts to effect a Change in Control
of the Company or until a Change in Control of the Company has occurred.
Should the Executive voluntarily terminate her employment before any such
effort to effect a Change in Control of the Company has commenced, or after
any such effort has been abandoned or terminated without effecting a Change
in Control of the Company and no such effort is then in process, this
Agreement shall automatically terminate and be of no further force or effect.
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3. TERMINATION FOLLOWING CHANGE IN CONTROL.
(a) If any of the events described in paragraph 1 hereof constituting a
Change in Control of the Company shall have occurred, the Executive shall be
entitled to the benefits provided in paragraph 4 hereof upon the subsequent
termination of her employment within the applicable period set forth in
paragraph 4 hereof following such Change in Control of the Company unless
such termination is (i) due to the Executive's death; or (ii) by the Company
by reason of the Executive's Disability (as hereinafter defined) or for Cause
(as hereinafter defined); or (iii) by the Executive other than for Good
Reason (as hereinafter defined).
(b) If following a Change in Control of the Company the Executive's
employment is terminated by reason of her death or Disability, the Executive
shall be entitled to death or long-term disability benefits, as the case may
be, from the Company no less favorable than the maximum benefits to which she
would have been entitled had the death or termination for Disability occurred
at any time during the six month period prior to the Change in Control of the
Company. If prior to any such termination for Disability, the Executive
fails to perform her duties as a result of incapacity due to physical or
mental illness, she shall continue to receive her Salary (as hereinafter
defined) less any benefits as may be available to her under the Company's
disability plans until her employment is terminated for Disability.
(c) If the Executive's employment shall be terminated by the Company
for Cause or by the Executive other than for Good Reason, the Company shall
pay to the Executive her full Salary through the Date of Termination at the
rate in effect at the time Notice of Termination is given, and the Company
shall have no further obligations to the Executive under this Agreement.
(d) For purposes of this Agreement:
(i) "Disability" shall mean the Executive's incapacity due to
physical or mental illness such that the Executive shall have
become qualified to receive benefits under the Company's long-term
disability plans or any equivalent coverage required to be provided
to the Executive pursuant to any other plan or agreement, whichever
is applicable.
(ii) "Cause" shall mean:
(A) the conviction of the Executive for a felony, or the
willful commission by the Executive of a criminal or other act
that in the judgment of the Board causes or will probably
cause substantial economic damage to the Company or
substantial injury to the business reputation of the Company;
(B) the commission by the Executive of an act of fraud in the
performance of such Executive's duties on behalf of the
Company that causes or will probably cause economic damage to
the Company; or
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(C) the continuing willful failure of the Executive to perform
her duties, as such duties were performed by the Executive
prior to the day of the Change of Control of the Company
(other than any such failure resulting from the Executive's
incapacity due to physical or mental illness) after written
notice thereof (specifying the particulars thereof in
reasonable detail) and a reasonable opportunity to be heard
and cure such failure are given to the Executive by the
Compensation Committee of the Board.
For purposes of this subparagraph (d)(ii), no act, or failure to
act, on the Executive's part shall be considered "willful" unless done, or
omitted to be done, by her not in good faith and without reasonable belief
that her action or omission was in the best interests of the Company.
(iii) "Good Reason" shall mean:
(A) The assignment by the Company to the Executive of duties
without the Executive's express written consent, which (i) are
materially different or require travel significantly more time
consuming or extensive than the Executive's duties or business
travel obligations immediately prior to the Change in Control
of the Company, or (ii) result in either a significant
reduction in the Executive's authority and responsibility as a
senior corporate executive of the Company when compared to the
highest level of authority and responsibility assigned to the
Executive at any time during the six (6) month period prior to
the Change in Control of the Company, or, (iii) without the
Executive's express written consent, the removal of the
Executive from, or any failure to reappoint or reelect the
Executive to, the highest title held since the date six (6)
months before the Change in Control of the Company, except in
connection with a termination of the Executive's employment by
the Company for Cause, or by reason of the Executive' death or
Disability;
(B) A reduction by the Company of the Executive's Salary, or
the failure to grant increases in the Executive's Salary on a
basis at least substantially comparable to those granted to
other executives generally of the Company of comparable title,
salary and performance ratings, made in good faith;
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(C) The relocation of the Company's principal executive
offices to a location outside the State of New Jersey, or the
Company's requiring the Executive to be based anywhere other
than the Company's principal executive offices except for
required travel on the Company's business to an extent
substantially consistent with the Executive's business travel
obligations immediately prior to the Change in Control of the
Company, or in the event of any relocation of the Executive
with the Executive's express written consent, the failure by
the Company to pay (or reimburse the Executive for) all
reasonable moving expenses by the Executive relating to a
change of principal residence in connection with such
relocation and to indemnify the Executive against any loss
realized in the sale of the Executive's principal residence in
connection with any such change of residence, all to the
effect that the Executive shall incur no loss upon such sale
on an after tax basis;
(D) The failure by the Company to continue to provide the
Executive with substantially the same welfare benefits (which
for purposes of this Agreement shall mean benefits under all
welfare plans as that term is defined in Section 3(1) of the
Employee Retirement Income Security Act of 1974, as amended),
and perquisites, including participation on a comparable basis
in any plan similar to the plan in which the Executive
participated in immediately prior to such Change in Control of
the Company, or with a package of welfare benefits and
perquisites, that is substantially comparable in all material
respects to such welfare benefits and perquisites; or
(E) The failure of the Company to obtain the express written
assumption of and agreement to perform this Agreement by any
successor as contemplated in subparagraph 5(d) hereof.
(iv) "Dispute" shall mean (i) in the case of termination of
employment of the Executive with the Company by the Company for
Disability or Cause, that the Executive challenges the existence of
Disability or Cause and (ii) in the case of termination of
employment of the Executive with the Company by the Executive for
Good Reason, that the Company challenges the existence of Good
Reason.
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(v) "Salary" shall mean the Executive's average annual
compensation reported on United States Internal Revenue Service
Form W-2 ("Form W-2").
(vi) "Incentive Compensation" in any year shall mean the amount
the Executive has elected to defer in such year and the amount
accrued, if any, under any plan, arrangement or contract providing
for the deferral of compensation between the Company and the
Executive which is not reported on Form W-2, including, without
limitation, any employer contributions by the Company on behalf of
the Executive in accordance with the terms and conditions of any
401(k) plan in which executives of the Company of comparable title
and salary participate.
(e) Any purported termination of employment by the Company by
reason of the Executive's Disability or for Cause, or by the Executive for
Good Reason shall be communicated by written Notice of Termination (as
hereinafter defined) to the other party hereto. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice given by the
Executive or the Company, as the case may be, which shall indicate the
specific basis for termination and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for determination of any
payments due under this Agreement. The Executive shall not be entitled to
give a Notice of Termination that the Executive is terminating her employment
with the Company for Good Reason more than six (6) months following the
occurrence of the event alleged to constitute Good Reason. The Executive's
actual employment by the Company shall cease on the Date of Termination (as
hereinafter defined) specified in the Notice of Termination, even though such
Date of Termination for all other purposes of this Agreement may be extended
in the manner contemplated in the second sentence of Paragraph 3(f).
(f) For purposes of this Agreement, the "Date of Termination"
shall mean the date specified in the Notice of Termination, which shall be
not more than ninety (90) days after such Notice of Termination is given, as
such date may be modified pursuant to the next sentence. If within thirty
(30) days after any Notice of Termination is given, the party who receives
such Notice of Termination notifies the other party that a Dispute exists,
the Date of Termination shall be the date on which the Dispute is finally
determined, either by mutual written agreement of the parties, or by a final
judgment, order or decree of a court of competent jurisdiction (the time for
appeal therefrom having expired and no appeal having been perfected);
provided, that the Date of Termination shall be extended by a notice of
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Dispute only if such notice is given in good faith and the party giving such
notice pursues the resolution of such Dispute with reasonable diligence and
provided further that pending the resolution of any such Dispute, the Company
shall continue to pay the Executive the same Salary and to provide the
Executive with the same or substantially comparable welfare benefits and
perquisites that the Executive was paid and provided immediately prior to the
Change in Control of the Company. Should a Dispute ultimately be determined
in favor of the Company, then all sums paid by the Company to the Executive
from the date of termination specified in the Notice of Termination until
final resolution of the Dispute pursuant to this paragraph shall be repaid
promptly by the Executive to the Company, with interest at the average prime
rate generally prevailing from time to time among major New York City banks
and all options, rights and stock awards granted to the Executive during such
period shall be cancelled or returned to the Company. The Executive shall
not be obligated to pay to the Company the cost of providing the Executive
with welfare benefits and perquisites for such period unless the final
judgment, order or decree of a court or other body resolving the Dispute
determines that the Executive acted in bad faith in giving a notice of
Dispute. Should a Dispute ultimately be determined in favor of the
Executive, then the Executive shall be entitled to retain all sums paid to
the Executive under this paragraph 3(f) pending resolution of the Dispute and
shall be entitled to receive, in addition, the payments and other benefits
provided for in paragraph 4 hereof to the extent not previously paid
hereunder.
4. PAYMENTS UPON TERMINATION.
If within three (3) years after a Change in Control of the Company,
the Company shall terminate the Executive's employment other than by reason
of the Executive's death, Disability or for Cause or if the Executive shall
terminate her employment for Good Reason then,
(a) The Company will continue to pay to the Executive, for a
period of thirty (30) months following the Date of Termination, as
compensation for services rendered by the Executive on or before
the Executive's Date of Termination, the Executive's Salary and
Incentive Compensation (subject to any applicable payroll taxes or
other taxes required to be withheld computed at the rate for
supplemental payments) at the highest rate in effect during the
twenty-four (24) month period ending on the day on which the Change
in Control of the Company occurred; and
(b) For a period of thirty (30) months following the Date of
Termination, the Company shall provide, at the Company's expense,
the Executive and the Executive's spouse and children with full
benefits under any employee benefit plan or arrangement in which
the Executive participated immediately prior to the day on which
the Change in Control of the Company occurred, including, without
limitation, any hospital, medical and dental insurance with
substantially the same coverage and benefits as were provided to
the Executive immediately prior to the day on which the Change in
Control of the Company occurred; and
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(c) The Company will pay on the date of Termination to the
Executive as compensation for services rendered on or before the
Executive's Date of Termination, in addition to the amounts set
forth in paragraph 4(a) above, a sum equal to all Incentive
Compensation and other incentive awards due to the Executive
immediately prior to the day on which the Change in Control of the
Company occurred but not yet paid; and
(d) For a period of thirty (30) months following the Date of
Termination, the Company shall provide to the Executive, at the
Company's expense, the automobile provided by the Company to the
Executive immediately prior to the day on which the Change in
Control of the Company occurred (or a comparable automobile) and
the Company shall reimburse the Executive any and all expense
incurred by the Executive in connection with the use of such
automobile during such thirty month period to the extent that the
Company reimburses generally other executives of comparable title,
salary and performance ratings; and
(e) Any restricted Stock in the Executive's account as an officer
of the Company which is not vested in the Executive as of the
Change in Control of the Company shall become vested, and all such
restrictions thereon (including, but not limited to, any
restrictions on the transferability of such Stock), and any
restrictions on any other restricted stock awarded to the Executive
through any plan or arrangement of the Company on or before the
Change in Control of the Company, shall become null and void and of
no further force and effect, immediately upon the Change in Control
of the Company; and
(f) In event that any payment or benefit received or to be
received by the Executive in connection with a Change in Control of
the Company or the termination of the Executive's employment
(whether pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with the Company) (collectively with the
payments and benefits hereunder, "Total Payments") would not be
deductible in whole or in part by the Company as the result of
Section 280G of the Internal Revenue Code of 1986, as amended and
the regulations thereunder (the "Code"), the payments and benefits
hereunder shall be reduced until no portion of the Total Payments
is not deductible by reducing to the extent necessary the payment
under paragraph 3(a) hereof. For purposes of this limitation (i)
no portion of the Total Payments the receipt or enjoyment of which
the Executive shall have effectively waived in writing prior to the
date of payment shall be taken into account, (ii) no portion of the
Total Payments shall be taken into account which, in the opinion of
tax counsel selected by the Executive and acceptable to the
Company's independent auditors, is not likely to constitute a
"parachute payment" within the meaning of Section 280G(b)(2) of the
Code, and (iii) the value of any non-cash benefit or any deferred
payment or benefit included in the Total Payments shall be
determined by the Company's independent auditors in accordance with
the principles of Sections 280G(d)(3) and (4) of the Code.
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5. GENERAL.
(a) The Executive shall retain in confidence any
proprietary or other confidential information known to her
concerning the Company and its business so long as such
information is not publicly disclosed and disclosure is not
required by an order of any governmental body or court.
Notwithstanding anything to the contrary contained herein, this
paragraph 5(a) shall survive any expiration or termination of
this Agreement for any reason whatsoever.
(b) Subject to paragraph 5(f) below, the Company's
obligation to pay the Executive the compensation and to make the
arrangements provided herein shall be absolute and unconditional
and shall not be affected by any circumstance, including, without
limitation, any setoff, counterclaim, recoupment, defense or
other right which the Company may have against the Executive or
anyone else. All amounts payable by the Company hereunder shall
be paid without notice or demand. Except as expressly provided
herein, the Company waives all rights which it may now have or
may hereafter have conferred upon it, by statute or otherwise, to
terminate, cancel or rescind this Agreement in whole or in part.
Except as provided in paragraph 5(f) herein, each and every
payment made hereunder by the Company shall be final and the
Company will not seek to recover for any reason all or any part
of such payment from the Executive or any person entitled
thereto.
(c) The Company 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 the
Company, by written agreement in form and substance satisfactory
to the Executive, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had
taken place.
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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 executes and delivers the agreement
provided for in this paragraph 5 or which otherwise becomes bound
by all the terms and provisions of this Agreement by operation of
law.
(d) This Agreement shall inure to the benefit of, and be
enforceable by, the Executive's personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devises and legatees. If the Executive should die
while any amounts would still be payable to the Executive
hereunder if she had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to the Executive's devisee, legatee or
other designee or, if there be no such designee, to the
Executive's estate. The obligations of the Executive hereunder
shall not be assignable by the Executive.
(e) Nothing in this Agreement shall be deemed to entitle
the Executive to continued employment with the Company and the
rights of the Company to terminate the employment of the
Executive shall continue as fully as though this Agreement were
not in effect.
(f) The Executive shall be required to mitigate the amount
of any payment or other benefit provided for in this Agreement by
seeking other employment of similar responsibility, salary and
benefits and, upon any such employment of the Executive, all
payments or other benefits provided for in this Agreement then or
thereafter due to the Executive shall thereupon immediately cease
and this Agreement shall be of no further force and effect.
6. NOTICE.
For the purposes of this Agreement, notices and all other
communications provided for in the 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, addressed as follows:
If to the Executive:
Xxxx Xxxxx Xxxxxxxxx
xxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxx
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If to the Company:
E'town Corporation
000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
or to 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.
7. 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 the Executive and such officer as
may be specifically designated by the Board. 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 assurances 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.
However, this Agreement is in addition to, and not in lieu of,
any other plan providing for payments to or benefits for the
Executive or any agreement now existing, or which hereafter may
be entered into, between the Company and the Executive. The
validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of New
Jersey.
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8. VALIDITY.
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. Any provision in this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective only to the extent of such
prohibition or unenforceability without invalidating or affecting
the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date set forth above.
E'TOWN CORPORATION
By:
/S/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: President
EXECUTIVE
/S/Xxxx Xxxxx Xxxxxxxxx
XXXX XXXXX XXXXXXXXX
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