CHANGE IN CONTROL AGREEMENT
Exhibit 10(j)-2
THIS
CHANGE IN CONTROL AGREEMENT (this “Agreement”) is executed on the ___ day of
,
, to be effective as of the ___ day of , ___, by
and between ENERGYSOUTH, INC., a Delaware corporation (“EnergySouth”), and
(“Executive”).
WHEREAS, Executive is an effective and valuable employee and officer of EnergySouth and/or one
or more of its subsidiaries; and
WHEREAS, EnergySouth recognizes that the uncertainties involved in a potential or actual
change in control of EnergySouth could result in the distraction or departure of management
personnel such as Executive to the detriment of EnergySouth and its shareholders; and
WHEREAS, EnergySouth desires to lessen the personal and economic pressure which a potential or
actual change in control may impose on Executive and thereby facilitate Executive’s ability to
bargain successfully for the best interests of EnergySouth’s shareholders in the event of such a
change in control.
NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained,
EnergySouth and Executive hereby agree as follows:
Section 1. Definitions.
As used in this Agreement the following words and terms shall have the following meanings:
1.1 “Cause” means termination of employment by Employer based on any one or more of the
following:
1.1.1 The Executive’s conviction, plea of “guilty” or plea of “no contest” to any crime
constituting a felony in the jurisdiction in which it is committed or to any crime involving
dishonesty or willful misconduct that materially injures or is likely to materially injure
Employer;
1.1.2 Willful violation of any significant policy of Employer that materially injures
Employer and which violation Executive fails to cure after thirty (30) days written notice
to Executive of such violation;
1.1.3 Fraud;
1.1.4 Consistent gross neglect of duties or wanton negligence by the Executive in
the performance of his duties to Employer; or
1.1.5 Willful failure by the Executive to substantially perform or comply with (for
reasons other than disability) any duties reasonably assigned or appropriate to the
Executive’s position, which failure is not cured within thirty (30) days after written
notice to Executive of such failure, or the material breach by Executive of the terms of
this Agreement, which material breach is not cured within thirty (30) days after written
notice to Executive of such default.
1.2 A “Change in Control” of EnergySouth will be deemed to have occurred if and when:
1.2.1 Either of the following is consummated: (A) any consolidation or merger of
EnergySouth in which the majority of the Board of Directors are not on the continuing or
surviving Board of Directors or pursuant to which shares of EnergySouth’s common stock are
converted into cash, securities or other property, other than a consolidation or merger of
EnergySouth in which each holder of EnergySouth’s common stock immediately prior to the
merger has, upon consummation of the merger, the same proportionate ownership of common
stock of the surviving corporation as such holder had of EnergySouth’s common stock
immediately prior to the merger; or (B) any sale, lease exchange or other transfer (in one
transaction or a series of transactions contemplated or arranged by any party as a single
plan) of all or substantially all of the assets of EnergySouth; or
1.2.2 The shareholders of EnergySouth approve any plan or proposal for the liquidation
or dissolution of EnergySouth.
1.3 “Code” means the Internal Revenue Code of 1986, as the same may be from time to time
amended.
1.4 “Compensation” means an amount equal to the sum of (A) plus (B), where (A) is the
Executive’s annualized base salary in effect immediately prior to the Change in Control, and (B) is
the Executive’s target annual cash incentive award for the calendar year in which the Date of
Termination occurs.
1.5 “Date of Termination” means the date that a termination of Executive’s employment with
Employer is first effective.
1.6 A “Disability” will be deemed to have occurred if the Executive is absent from full time
performance of his duties with Employer for ninety (90) days, whether or not consecutive, during
any six (6) month period, as a result of Executive’s incapacity due to physical or mental illness.
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1.7 “Effective Period” means the period commencing with the earliest date that a Change in
Control occurs and ending on the last day of the twenty-fourth calendar months following the
calendar month during which such Change in Control occurred.
1.8 “Employer” means EnergySouth and/or its Subsidiaries.
1.9 “Good Reason” means the occurrence during an Effective Period of any of the following
events without Executive’s prior written consent:
1.9.1 The assignment to the Executive of any duties inconsistent with Executive’s
position with Employer immediately prior to a Change in Control or a substantial reduction
in the nature or status of the Executive’s responsibilities;
1.9.2 Employer requiring the Executive to be based at a location that is more than
fifty (50) miles from the current principal location of Employer without the Executive’s
consent;
1.9.3 The failure by Employer to continue to pay to or provide the Executive with the
compensation, benefits and perquisites as were provided to the Executive immediately prior
to a Change in Control; or
1.9.4 The failure of the Company to obtain a satisfactory agreement from any successor
to assume and agree to perform any agreement between Employer and the Executive.
1.10 “Notice of Termination” has the meaning set forth in Section 2.1 of this Agreement.
1.11 “Subsidiary” means any corporation or other legal entity, the majority of the outstanding
voting stock of which (or equity interests in) is owned directly or indirectly, by EnergySouth.
1.12 “Triggering Termination” shall mean
| (1) | any termination by Employer of Executive’s employment other than for Cause; | ||
| (2) | a termination of Executive’s employment which Executive and EnergySouth agree in writing will constitute a Triggering Termination for purposes of this Agreement; and | ||
| (3) | a voluntary termination of Executive’s employment by Executive for Good Reason. |
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Section 2. Notice of Termination.
During any Effective Period:
2.1 Any termination for Cause or Good Reason shall be communicated to the other party by
written notice (“Notice of Termination”) referencing this Agreement and, indicating in reasonable
detail the facts and circumstances providing a basis for such termination. The failure of Executive
or Employer to set forth in the Notice of Termination any fact or circumstance which contributes to
a showing of Cause or Good Reason shall not waive any right of Executive or EnergySouth hereunder
or preclude Executive or EnergySouth from asserting or relying upon the omitted fact or
circumstance in enforcing Executive’s or EnergySouth’s rights hereunder.
2.2 Termination for Cause or Good Reason shall be effective upon delivery of a Notice of
Termination or at such later date as may be specified in the Notice of Termination. In the event
that each party delivers a Notice of Termination, the Notice of Termination first delivered shall
establish the effective date of such Notice of Termination.
Section 3. Severance Payment.
In the event of a Triggering Termination, then Executive shall, subject to the provisions of
Section 7 hereof, receive as severance pay an amount equal to the Executive’s Compensation
multiplied by [2.97] [2.00] [1.00]. Any severance payment to be made under this Section 3 shall be
paid in one payment and in full within ninety (90) days of the Date of Termination.
Notwithstanding the preceding sentences of this paragraph, if Section 409A of the Code or the
permanent, temporary or proposed regulations thereunder so require, all amounts payable under this
Section 3 will be paid on the first day of the first month following the six (6) month anniversary
of the Date of Termination.
Section 4. Other Benefits.
Subject to Section 7 hereof, in the event of a Triggering Termination, for a period of [three]
[two] [one] years commencing with the Date of Termination, Executive and the Executive’s family
shall continue to be covered at the expense of EnergySouth by the same or substantially equivalent
hospital, medical, dental, vision, accident, disability and life insurance coverages as were
provided to Executive and the Executive’s family by Employer immediately prior to the Change in
Control; provided, however, that if Executive becomes employed with another employer and is
eligible to receive benefits of the type described above from such other employer, EnergySouth’s
obligations under this Section 4 shall be deemed satisfied to the extent of the benefits provided
by such other employer.
Section 5. No Obligation To Seek Further Employment; No Effect on Other Benefits.
5.1 Executive shall not be required to seek other employment, nor (except as otherwise
provided under Section 4 with respect to insurance coverages) shall the amount of any severance
payment or other benefit to be made or provided under this Agreement be reduced by
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any compensation or benefit earned by Executive as the result of employment by another employer
after the Date of Termination, or otherwise.
5.2 Any severance payment or benefit to be made or provided under this Agreement is in
addition to all other benefits, if any, to which Executive may be entitled under other agreements
or plans or programs of EnergySouth.
Section 6. Continuing Obligations of Executive.
As a result of and in connection with Executive’s employment by Employer, Executive is involved in
a number of matters of strategic importance and value to Employer including various projects,
proceedings, planning processes, and negotiations. Any number of these matters may be ongoing and
continuing after the Date of Termination. In addition Employee is privy to proprietary and
confidential information of Employer, including without limitation financial information and
projections, business plans and strategies, and customer and vendor lists and information. The
Executive agrees as follows:
6.1 For a period of two years following the Date of Termination, Executive shall fully assist
and cooperate with Employer and its representatives (including outside auditors, counsel and
consultants) with respect to any matters with which the Executive was involved during the course of
employment with Employer, including being available upon reasonable notice for interviews,
consultation, and litigation preparation. Except as otherwise agreed by Executive, Executive’s
obligation under this Section 6.1 shall not exceed 80 hours during the first year and 20 hours
during the following year. Such services shall be provided upon request of Employer but scheduled
to accommodate Executive’s reasonable scheduling requirements. Executive shall receive no
additional fee for such services but shall be reimbursed all reasonable out-of-pocket expenses.
6.2 Executive agrees that at all times following the Date of Termination, Executive will not,
without the prior written consent of EnergySouth, disclose to any person, firm or corporation any
confidential information of Employer which is now known to Executive or which hereafter may become
known to Executive as a result of Executive’s employment or association with Employer, unless such
disclosure is required under the terms of a valid and effective subpoena or order issued by a court
or governmental body; provided, however, that the foregoing shall not apply to confidential
information which becomes publicly disseminated by means other than a breach of this Agreement.
Section 7. Resignation from Offices.
EnergySouth shall have no obligation under Sections 3 and 4 hereof if Executive shall not, promptly
after the Date of Termination and upon receiving a written request to do so, resign from each
officer and/or director position which Executive then holds with EnergySouth and any Subsidiary.
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Section 8. Payment of Legal Fees and Expenses.
EnergySouth agrees to pay promptly as incurred, to the full extent permitted by law, all reasonable
legal fees and expenses which Executive may reasonably incur (i) as a result of any contest
(regardless of the outcome thereof) by EnergySouth, Executive or others of the validity or
enforceability of, or liability under, any provision of this Agreement.
Section 9. Withholding.
Employer may withhold from any amounts payable under this Agreement such Federal, state or local
taxes as may be required to be withheld pursuant to any applicable law or regulation.
Section 10. Term.
This Agreement shall terminate (except to the extent of any unpaid or unfulfilled obligation with
respect to a prior termination of Executive’s employment) on the first to occur of (a) any
termination of Executive’s employment with Employer which does not constitute a Triggering
Termination or (b) expiration of the Term. The initial term of this Agreement shall be for a
period of three years from the date hereof. On each anniversary of the date hereof, the term shall
automatically extend by one year unless at least thirty days prior to such an anniversary
EnergySouth notifies Executive that there will be no such extension, in which event the term shall
continue for two years from such anniversary.
Section 11. Binding Effect; Successors.
11.1 This Agreement shall be binding upon and inure to the benefit of Executive and
Executive’s personal representative and heirs, and EnergySouth and its successors and assigns
including any successor organization or organizations which shall succeed to substantially all of
the business and property of EnergySouth, whether by means of merger, consolidation, acquisition of
assets or otherwise, including operation of law. EnergySouth will require any such successor to
expressly assume and agree to perform EnergySouth’s obligations under this Agreement.
11.2 Without the prior consent of EnergySouth, Executive may not assign the Agreement, except
by will or the laws of descent and distribution.
Section 12. Notice.
For purposes of this Agreement, notices and all other communications provided for in this Agreement
shall be in writing and shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid, as follows:
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If to EnergySouth or Employer:
EnergySouth, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxx 00000
0000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxx 00000
Attention: President and
Chief Executive Officer
Chief Executive Officer
If to Executive:
or such other address as either party may have furnished to the other in writing in accordance
herewith, except that notices of change of address shall be effective only upon receipt.
Section 13. Section 409A Savings Clause.
This Agreement and all provisions hereof are intended to comply with Section 409A of the Code and
the permanent, temporary or proposed regulations issued thereunder. If any provision of this
Agreement violates or fails to comply with the Section 409A of the Code or the permanent, temporary
or proposed regulations thereunder, then such provision shall be modified, as of the effective date
of this Agreement, to the least extent necessary to comply therewith. This Section supersedes all
other provisions of this Agreement to the extent of any inconsistency.
Section 14. Miscellaneous.
No provisions of this Agreement may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing signed by Executive and EnergySouth. No waiver by
either party hereto at any time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party shall be deemed a
waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth expressly in this
Agreement. This Agreement shall be governed by and construed in accordance with the laws of the
State of Alabama. The invalidity or unenforceability of any provisions of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement, which shall remain
in full force and effect. This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together will constitute one and the same
instrument.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above
written.
| ENERGYSOUTH, INC. | ||||||||
| By | ||||||||
| Its | ||||||||
| EXECUTIVE | ||||||||
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