Exhibit 10.13(G)
CHANGE IN CONTROL TERMINATION AGREEMENT
This Change in Control Termination Agreement (the "Agreement") is entered
into as of July 15, 2003, between Tidewater Utilities, Inc., a Delaware
corporation, with its principal place of business located at 0000 Xxxxx Xxxxxx
Xxxxx Xxxx, Xxxxx, Xxxxxxxx 00000, (the "Company"), and Xxxxxx X. Xxxxxxxx,
residing at 00 Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, (referred to as "You" in
this Agreement).
Recitals
A. The Company considers it essential to the best interests of its stockholders
to xxxxxx the continuous employment of key management personnel. In this
connection, the Board of Directors of the Company (the "Board") recognizes that,
as is the case with many publicly held Companies, the possibility of a Change In
Control may exist. This possibility, and the uncertainty and questions that it
may raise among management, may result in the departure or distraction of
management personnel to the detriment of the Company and its stockholders.
B. The Board has determined that appropriate steps should be taken to reinforce
and encourage the continued attention and dedication of members of the Company's
management, including yourself, to the assigned duties without distraction in
the face of potentially disturbing circumstances arising from the possibility of
a Change In Control of the Company.
C. To induce you to remain in the employ of the Company, and in consideration of
your agreement set forth below, the Company agrees that you shall receive the
severance benefits set forth in this Agreement in the event your employment with
the Company is terminated or "constructively terminated" as defined herein in
connection with a "Change In Control of the Company" (as defined in Section 2
below) under the circumstances described below. This Agreement is meant to
supersede any other specific written agreements that may have been entered into
between yourself and the Company concerning termination of employment.
Therefore, in consideration of your continued employment and the parties'
agreement to be bound by the terms contained in this Agreement, the parties
agree as follows:
1. Term of Agreement. This Agreement shall commence as of July 15, 2003
and shall continue in effect through December 31, 2004. However, commencing on
December 31, 2004, and each December 31 afterwards, the term of this Agreement
shall automatically be extended for 1 additional year unless, no later than the
preceding November 1, the Company shall have given notice that it
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does not wish to extend this Agreement. Notwithstanding the foregoing, if a
Change In Control of the Company shall be proposed to occur or have occurred
during the original or any extended term of this Agreement, this Agreement shall
continue in effect until your termination of employment with the Company or its
successor or when all amounts due under this Agreement following a termination
have been paid, whichever is later.
2. Change In Control. No benefits shall be payable under this Agreement
unless there shall have been a Change In Control of the Company, as set forth
below. For purposes of this Agreement, a "Change In Control" of the Company
shall be deemed to occur if Middlesex Water Company ("Middlesex") or any of its
affiliates ceases to hold beneficial ownership of 50 percent or more of the
voting shares of the Company, or if any party or group acquires beneficial
ownership of 25 percent or more of the voting shares of Middlesex; or if
shareholder approval is required for a transaction involving the acquisition of
the Company through the purchase or exchange of the stock or assets of the
Company by merger or otherwise; or if one-third or more of the Board elected in
a 12-month period or less are so elected without the approval of a majority of
the Board as constituted at the beginning of such period; or a liquidation or
dissolution of Company.
3. Termination Following Change In Control. If any of the events described
in Section 2 above constituting a Change In Control of the Company shall have
occurred, unless the termination is (A) because of your death, Disability or
Retirement, (B) by the Company for Cause, or (C) by you other than for Good
Reason, on the subsequent termination or "Constructive Termination" of your
employment during the term of this Agreement: (i) you shall be entitled to the
benefits provided in subsection 4.3 below if such termination occurs on or
before the third anniversary of the Change in Control or (ii) you shall be
entitled to the benefits provided in subsection 4.4 below if such termination
occurs after the third anniversary of the Change in Control.
3.1 Disability; Retirement. If, as a result of your incapacity due
to physical or mental illness, you shall have been absent from the full-time
performance of your duties with the Company for 6 consecutive months, and within
30 days after written notice of termination is given you shall not have returned
to the full-time performance of your duties, your employment may be terminated
for "Disability." Termination by the Company or you of your employment based on
"Retirement" shall mean termination in accordance with the Company's retirement
policy, including early retirement, generally applicable to its salaried
employees or in accordance with any retirement arrangement established with your
consent with respect to you.
3.2 Cause. Termination by the Company of your employment for "Cause"
shall mean termination on:
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3.2.1 The willful and continued failure by you to substantially
perform your duties with the Company as such employment was
performed by you prior to the Change of Control (other than any such
failure resulting from your incapacity due to physical or mental
illness or any such actual or anticipated failure after the issuance
by you of a Notice of Termination for Good Reason as defined in
Subsections 3.4 and 3.3, respectively) after a written demand for
substantial performance is delivered to you by the Board, which
demand specifically identifies the manner in which the Board
believes that you have not substantially performed your duties; or
3.2.2 The willful act by you in conduct that is demonstrably and
materially injurious to the Company, and which the Board deems to
cause or will cause substantial economic damage to the Company or
injury to the business reputation of the Company, monetarily or
otherwise. For purposes of this Subsection, no act, or failure to
act, on your part shall be deemed "willful" unless done, or omitted
to be done, by you not in good faith and without a reasonable belief
that your action or omission was in the best interest of the
Company. Notwithstanding the foregoing, you shall not be deemed to
have been terminated for Cause unless and until there shall have
been delivered to you a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire
membership of the Board at a meeting of the Board called and held
for such purpose (after reasonable notice to you and an opportunity
for you, together with your counsel, to be heard before the Board),
finding that in the good faith opinion of the Board you were guilty
of conduct set forth above in clauses 3.2.1 or 3.2.2 of the first
sentence of this Subsection and specifying the particulars in
detail.
3.3 Good Reason. You shall be entitled to terminate your employment
for Good Reason. For purposes of this Agreement, "Good Reason" shall mean,
without your express written consent, the occurrence in connection with a Change
In Control of the Company of any of the following circumstances unless, in the
case of paragraphs 3.3.1, 3.3.5, 3.3.6, 3.3.7, or 3.3.8, the circumstances are
fully corrected prior to the Date of Termination specified in the Notice of
Termination, as defined in Subsections 3.5 and 3.4, respectively, given in
respect of them. If you have Good Reason for your termination you shall be
considered to have been "Constructively Terminated" by the Company under the
following circumstances:
3.3.1 The assignment to you of any duties inconsistent with your
status and position (i) prior to the Change In Control where such
change is a direct result of any pending Change in Control; or (ii)
as such status exists immediately prior to the Change In Control of
the
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Company, or (iii) a substantial adverse alteration in the nature or
status of your responsibilities from those in effect immediately
prior to the Change In Control of the Company whichever is
applicable;
3.3.2 A reduction by the Company in your annual base salary as in
effect on this date or as the same may be increased from time to
time irrespective of future Company policies including any
across-the-board salary reductions similarly affecting all key
employees of the Company;
3.3.3 Your relocation, without your consent, to a location not
within twenty-five (25) miles of your present office or job
location, except for required travel on the Company's business to an
extent substantially consistent with your present business travel
obligations;
3.3.4 The failure by the Company, without your consent, to pay to
you any part of your current compensation, or to pay to you any part
of an installment of deferred compensation under any deferred
compensation program of the Company, within fourteen (14) days of
the date the compensation is due;
3.3.5 The failure by the Company to continue in effect any bonus to
which you were entitled, or any compensation plan in which you
participate (i) prior to the Change in Control where such change is
a direct result of any pending Change In Control, or (ii)
immediately prior to the Change In Control of the Company that is
material to your total compensation, including but not limited to
the Company's Restricted Stock Plan, 401(k) Plan, and Benefit Plans,
or any substitute plans adopted prior to the Change In Control of
the Company, unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect to the
plan, or the failure by the Company to continue your participation
in it (or in such substitute or alternative plan) on a basis not
materially less favorable, both in terms of the amount of benefits
provided and the level of your participation relative to other
participants, as existed at the time of the Change In Control;
3.3.6 The failure by the Company to continue to provide you with (i)
benefits substantially similar to those enjoyed by you under any of
the Company's life insurance, medical, health and accident, or
disability plans in which you were participating at the time of the
Change In Control of the Company was in effect for the employees of
the Company generally at the time of the Change In Control, (ii) the
failure to continue to provide you with a Company automobile or
allowance in lieu of it at the time of the Change In Control of the
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Company, (iii) the taking of any action by the Company that would
directly or indirectly materially reduce any of such benefits or
deprive you of any material fringe benefit enjoyed by you at the
time of the Change In Control of the Company, or (iv) the failure by
the Company to provide you with the number of paid vacation days to
which you are entitled on the basis of years of service with the
Company in accordance with the Company's normal vacation policy in
effect at the time of the Change In Control of the Company;
3.3.7 The failure of the Company to obtain a satisfactory agreement
from any successor to assume and agree to perform this Agreement, as
contemplated in Section 5 of this Agreement; or
3.3.8 Any purported termination of your employment that is not
effected pursuant to a Notice of Termination satisfying the
requirements of Subsection 3.4 below (and, if applicable, the
requirements of Subsection 3.2 above); for purposes of this
Agreement, no such purported termination shall be effective.
3.4 Notice of Termination. Any purported termination of your
employment by the Company or by you shall be communicated by written Notice of
Termination to the other party to this Agreement in accordance with Section 6 of
this Agreement. For purposes of this Agreement, a "Notice of Termination" shall
mean a notice that shall indicate the specific termination provision in this
Agreement relied on, and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of your employment
under the provision so indicated. Your rights to terminate your employment
pursuant to this Subsection shall not be affected by your incapacity due to
physical or mental illness. Your continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance constituting
Good Reason under this Agreement. In the event you deliver Notice of Termination
based on circumstances set forth in Paragraphs 3.3.1, 3.3.5, 3.3.6, 3.3.7, or
3.3.8 above, which are fully corrected prior to the Date of Termination set
forth in your Notice of Termination, the Notice of Termination shall be deemed
withdrawn and of no further force or effect.
3.5 Date of Termination, Etc. "Date of Termination" shall mean (A)
if your employment is terminated for Disability, 30 days after Notice of
Termination is given (provided that you shall not have returned to the full-time
performance of your duties during such 30-day period), and (B) if your
employment is terminated pursuant to Subsection 3.2 or 3.3 above or for any
other reason (other than Disability), the date specified in the Notice of
Termination (which, in the case of a termination pursuant to Subsection 3.2
above shall not be less than 30 days, and in the case of a termination pursuant
to Subsection 3.3 above shall not be less than 15 nor more than 60 days,
respectively, from the date
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the Notice of Termination is given). However, if within 15 days after any Notice
of Termination is given, or, if later, prior to the Date of Termination (as
determined without regard to this provision), the party receiving the Notice of
Termination notifies the other party that a dispute exists concerning the
termination, then the Date of Termination shall be the date on which the dispute
is finally determined, either by mutual written agreement of the parties, by a
binding arbitration award, or by a final judgment, order, or decree of a court
of competent jurisdiction (which is not appealable or with respect to which the
time for appeal has expired and no appeal has been perfected). The Date of
Termination shall be extended by a notice of dispute only if the notice is given
in good faith and the party giving the notice pursues the resolution of the
dispute with reasonable diligence. Notwithstanding the pendency of any such
dispute, the Company will continue to pay you your full compensation in effect
when the notice giving rise to the dispute was given (including, but not limited
to, base salary) and continue you as a participant in all compensation, benefit,
and insurance plans in which you were participating when the notice giving rise
to the dispute was given, until the dispute is finally resolved in accordance
with this Subsection. Amounts paid under this Subsection are in addition to all
other amounts due under this Agreement and shall not be offset against or reduce
any other amounts due under this Agreement.
4. Compensation on Termination or During Disability. Following a Change In
Control of the Company, as defined by Section 2, on termination of your
employment or during a period of disability you shall be entitled to the
following benefits:
4.1 During any period that you fail to perform your full-time duties
with the Company as a result of incapacity due to physical or mental illness,
you shall continue to receive your base salary at the rate in effect at the
commencement of any such period, together with all amounts payable to you under
any compensation plan of the Company during the period, until this Agreement is
terminated pursuant to section 3.1 above. Thereafter, or in the event your
employment shall be terminated by the Company or by you for Retirement, or by
reason of your death, your benefits shall be determined under the Company's
retirement, insurance, and other compensation programs then in effect in
accordance with the terms of those programs.
4.2 If your employment shall be terminated by the Company for Cause
or by you other than for Good Reason, Disability, death, or Retirement, the
Company shall pay you your full base salary through the Date of Termination at
the rate in effect at the time Notice of Termination is given, plus all other
amounts and benefits to which you are entitled under any compensation plan of
the Company at the time the payments are due. The Company shall have no
obligations to you under this Agreement.
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4.3 On or before the third anniversary of the Change In Control, if
your employment by the Company shall be terminated (a) by the Company other than
for Cause, Retirement or Disability, or (b) by you for Good Reason (as defined
in Section 3.3 herein), then you shall be entitled to the benefits provided
below:
4.3.1 The Company shall pay you your full salary through the Date of
Termination at the rate in effect at the time notice of Termination
is given, plus all other amounts and benefits to which you are
entitled under any compensation plan of the Company, at the time the
payments are due, except as otherwise provided below.
4.3.2 In lieu of any further salary payments to you for periods
subsequent to the Date of Termination, the Company shall pay to you,
as severance pay the following: (i) a lump sum severance payment
equal to three (3) times the average of your Compensation for the
five (5) years prior to the occurrence of the circumstance giving
rise to the notice of Termination, plus (ii) the amounts in the
forms set forth in paragraphs 4.3.3, 4.3.4 and 4.3.5 (the "Severance
Payments"). In addition to the Severance Payments, the Company shall
pay to you an additional amount equal to the amount of the Excise
Tax, if any, that is due or determined to be due under Section 4999
of the Internal Revenue Code of 1986, as amended, resulting from the
Severance Payments or any other payments under this Agreement or any
other agreement between you and the Company and an amount sufficient
to pay the taxes on any such Excise Taxes (the "Gross-up").
4.3.3 The Company shall continue coverage for you and your
dependents under any health or welfare benefit plan under which you
and your dependents were participating prior to the Change in
Control for a period ending on the earlier to occur of (i) the date
you become covered by a new employer's health and welfare benefit
plan, (ii) the date you become covered by Medicare, or (iii) the
date which is thirty-six (36) months from the date of Termination.
The coverage for your dependents shall end earlier than (i), (ii) or
(iii) if required by the health or welfare benefit plan due to age
eligibility.
4.3.4 The Company shall pay to you any deferred compensation,
including, but not limited to deferred bonuses, allocated or
credited to you or your account as of the Date of Termination.
4.3.5 Outstanding stock options or Restricted Stock grants, if any,
granted to you under the Company's Stock Plans which are not vested
on Termination shall immediately vest.
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4.3.6 Where you shall prevail in any such action, the Company shall
also pay to you all legal and accounting fees and expenses incurred
by you as a result of the termination (including all such fees and
expenses incurred by you as a result of the termination (including
all such fees and expenses, if any, incurred in contesting or
disputing any termination or in seeking to obtain or enforce any
right or benefit provided by this Agreement or in connection with
any tax audit or proceeding to the extent attributable to the
application of Code Section 4999 to any payment or benefit provided
under this Agreement) or any other agreement with the Company.
4.3.7 The amount of Severance Payments and any Gross-up due to you
under this or any other relevant agreement with the Company shall be
determined by a third party agreed to by you and the Company. If you
cannot agree on a third party, then both third parties shall
determine the amounts due under this Agreement. If the third parties
do not agree on the amount to be paid to you, then either party may
submit the calculation of the amounts which are in dispute to
Arbitration in accordance with this Agreement. The payments provided
for in Paragraphs 4.3.2, 4.3.4 and 4.3.5 above, shall be made no
later than the thirtieth (30th) day following the Date of
Termination. However, if the amounts of the payments cannot be
finally determined on or before that day, the Company shall pay to
you on that day an estimate, as determined in good faith by the
Company, of the minimum amount of such payments and shall pay the
remainder of those payments (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code) as soon as the amount
can be determined but in no event later than the 30th day after the
Date of Termination. In the event that the amount of the estimate
payments exceeds the amount subsequently determined to have been
due, the excess shall constitute a loan by the Company to you
payable on the 30th day after demand by the Company (together with
interest at the rate provided in Section 1274(b)(2)(B) of the Code).
4.4 After the third anniversary of the Change In Control, if your
employment by the Company shall be terminated (a) by the Company other than for
Cause, Retirement or Disability, or (b) by you for Good Reason (as defined in
Section 3.3 herein), then you shall be entitled to the benefits provided in
Section 4.3 above and as otherwise provided under this Agreement except that sub
paragraph 4.3.2(i) shall read: (i) a lump sum severance payment equal to one and
one half (1.5) times the average of your Compensation for the five (5) years
prior to the occurrence of the circumstance giving rise to the notice of
Termination (the "Termination Payment").
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4.5 For purposes of this Agreement, "Compensation" shall mean the
aggregate remuneration paid by the Company to you during a calendar year,
including bonuses, awards under the Company's Restricted Stock Plan, benefits
under employee benefit plans, automobile allowances or any fees paid to you as
remuneration for serving as a Director of the Company.
4.6 You shall not be required to mitigate the amount of any payment
provided for in this Section 4 by seeking other employment or otherwise, nor
shall the amount of any payment or benefit provided for in this Section 4 be
reduced by any compensation earned by you as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed to be
owed by you to the Company, or otherwise except as specifically provided in this
Section 4.
4.7 In addition to all other amounts payable to you under this
Section 4, you shall be entitled to receive all qualified benefits payable to
you under the Company's 401(k) Plan, Defined Benefit Plan and any other plan or
agreement relating to retirement benefits in accordance with the terms of those
plans.
5. Successors; Binding Agreement.
5.1 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 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. Failure of the Company to obtain the assumption and agreement
prior to the effectiveness of any succession shall be a breach of this agreement
and shall entitle you to compensation from the Company in the same amount and on
the same terms as you would have been entitled to under this Agreement if you
had terminated your employment for Good Reason following a Change In Control of
the Company, except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the Date of
Termination.
5.2 This Agreement shall inure to the benefit of and be enforceable
by your personal or legal representatives, executors, administrators, heirs,
distributees, and legatees. If you should die while any amount would still be
payable to you if you had continued to live, all such amounts, unless otherwise
provided in this Agreement, shall be paid in accordance with the terms of this
Agreement to your legatee or other designee or, if there is no such designee, to
your estate.
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6. Notice. For the purpose of this Agreement, all notices and 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 or certified mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notices to the Company shall be directed to the
attention of the Board with a copy to the Secretary of the Company, or to such
other address as either party may have furnished to the other in writing in
accordance this Agreement, except that notice of a change of address shall be
effective only on receipt.
7. Miscellaneous
7.1 No provision of this Agreement may be modified, waived, or
discharged unless the waiver, modification, or discharge is agreed to in writing
and signed by you and such officer as may be specifically designated by the
Board.
7.2 No waiver by either party to this Agreement at any time of any
breach by the other party 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.
7.3 No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter of this Agreement have been made by
either party that are not expressly set forth in this Agreement.
7.4 Nothing in this Agreement is intended to reduce any benefits
payable to you under any other agreement you may have with the Company or in any
Company plan in which you may participate.
7.5 The validity, interpretation, construction, and performance of
this Agreement shall be governed by the law of New Jersey without reference to
its conflict of laws principals.
7.6 All references to sections of the Exchange Act or the Code shall
be deemed also to refer to any successor provisions to such sections. Any
payments provided for shall be paid net of any applicable withholding or
deduction required under federal, state or local law.
7.7 The obligations of the Company under Section 4 shall survive the
expiration of the term of this Agreement.
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8. Validity. The validity or enforceability of any provision of this
Agreement shall not affect the validity or unenforceability of any other
provision of this Agreement, which shall remain in full force and effect.
9. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
10. Arbitration. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration in New Jersey in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction. However, you shall be entitled to seek specific performance of
your right to be paid until the Date of Termination during the pendency of any
dispute or controversy arising under or in connection this Agreement.
11. Entire Agreement. This Agreement sets forth the entire understanding
of the parties with respect to its subject matter and supersedes all prior
written or oral agreements or understandings with respect to the subject matter.
In witness whereof, the parties have executed this agreement as of the day
and year first above written.
TIDEWATER UTILITIES, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx
Chairman of the Board
ATTEST:
/s/ XX Xxxxxxxx
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Xxxxxx X. Xxxxxxxx
Secretary
/s/ Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx
(KJQ\Change in Control-Xxxxxxxx)
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