Exhibit 10(dd)
SEVERANCE AGREEMENT
BETWEEN
FALL RIVER GAS CONPANY
AND
XXXXXXXX X. XXXXX
THIS AGREEMENT, effective this first day of January, 1999, by and between Fall
River Gas Company, a Massachusetts Corporation (the "Company") and Xxxxxxxx X.
Xxxxx (the "Executive").
WITNESSETH:
WHEREAS, the Executive is a valuable employee of Fall River Gas
Company, an integral part of its management, and a key participant in the
decision-making process relative to short-term and long-term planning and policy
for the Company; and
WHEREAS, the Company wishes to encourage the Executive to continue the
Executive's career and services with the Company for the period during and after
an actual or threatened Change in Control; and
WHEREAS, the Board of Directors of the Company, at a meeting on
February 10, 1998, determined that it would be in the best interests of the
Company and its shareholders to better assure continuity in the management of
the Company's administration and operations in the event of a Change in Control
by entering into this Severance Agreement (the "Agreement") with the Executive;
NOW THEREFORE, it is hereby agreed by and between the parties hereto as
follows:
1. Definitions.
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Cause" shall have the same meaning as is provided in the
Executives Employment Agreement.
(c) Change in Control" shall mean:
(i) any person (as such term is used in Section 13(d) of the
Securities Exchange Act of 1934 (the "Act"), excluding a
corporation at least 90% of the ownership of which after
acquiring its interest is owned directly by the holder
of common shares of the Company immediately prior to
such acquisition ("Person"), is the beneficial owner,
directly or indirectly, of twenty (20) percent or more
of the outstanding common shares of the Company (other
than the Savings Plan) requiring the filing of a report
with the Securities and Exchange Commission under
Section 13(d) of the 1934 Act;
(ii) a purchase by any Person of shares pursuant to a tender
or exchange offer to acquire any common shares of the
Company (or securities convertible into common shares)
for cash, securities, or any other consideration
provided that, after consummation of the offer, such
Person is the beneficial owner (as defined in Rule l3d-3
under the 1934 Act), directly or indirectly, of twenty
(20) percent or more of the outstanding common shares of
the Company (calculated as provided in paragraph (d) of
Rule 13d-3 under the 1934 Act in the case of rights to
acquire common shares);
(iii) approval by the shareholders of the Company of (a) any
consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation
or
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pursuant to which common shares of the Company would
be converted into cash, securities, or other
property, other than a consolidation or merger of the
Company in which holders of its common shares
immediately prior to the consolidation or merger own
at least 90% of the common shares of the surviving
corporation immediately after the consolidation or
merger, or (b) any consolidation or merger in which
the Company is the continuing or surviving
corporation but in which the common shareholders of
the Company immediately prior to the consolidation or
merger do not hold at least 90% of the outstanding
common shares of the continuing or surviving
corporation (except where such holders of common
stock hold at least 90% of the common shares of the
corporation which owns all of the common shares of
the Company), or (c) any sale, lease, exchange, or
other transfer (in one transaction or a series of
related transactions) of all or substantially all the
assets of the Company, or (d) any merger or
consolidation of the Company where, after the merger
or consolidation, one Person owns 100% of the common
shares of the Company (except where the common
holders of the Company's common shares immediately
prior to such merger or consolidation own at least
90% of the outstanding common shares of such Person
immediately after such merger or consolidation) (upon
the Board's determination that the transaction
subject to shareholder approval hereunder will not be
consummated, a Change in Control shall not be deemed
to have occurred from such date forward and this
Agreement shall continue in effect as if no Change in
Control had occurred, except to the extent
termination requiring Severance Benefits under
paragraph 3 hereof has occurred prior to such Board's
determination); or
(iv) a change in the majority of the members of the Board
within a 24-month period unless the election or
nomination for election or nomination for election by
the Company's common shareholders of each new director
was approved by the vote of at least two-thirds of the
Directors then still in office who were in office at the
beginning of the 24-month period.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(e) "Compensation" shall mean the sum of (i) the Executive's annual
rate of base salary on the last day the Executive was an employee of the
Company (or if higher, the annual rate in effect on the date of the Change
in Control), including any elective contributions made by the Company on
behalf of the Executive that are not includible in the gross income of the
Executive under Sections 125 or 402(a)(8) of the Code or any successor
provision thereto, and (ii) the average of the annual incentive payments
paid to the Executive by the Company, if any, for the three consecutive
calendar years immediately preceding employment termination (or a lesser
period if the Executive was not eligible to receive annual incentive
payments during such three year period).
(f) "Coverage Period" means the period beginning on the Starting
Date and ending on the Ending Date.
(g) "Disability" means the Executive's incapacity due to physical or
mental illness, which incapacity causes the Executive to be absent from
his duties on a full time basis for 90 consecutive business days.
(h) "Employment Agreement" shall mean the employment agreement
between the Company and the Executive, entered into on October 7, 1991,
together with any amendments thereto.
(i) "Ending Date" means the earlier of (i) the date of the Board's
determination that the transaction which was approved by the Company's
shareholders, thus constituting a Change in Control pursuant to paragraph
1(c)(iii), will not be consummated, or (ii) the date which is 36 full
calendar months following the date on which a Change in Control occurs or,
if a Change in Control is based on shareholder approval pursuant to
paragraph 1(c)(iii) hereof, the date which is 36 full calendar months
following the date of the consummation of the transaction which was the
subject of shareholder approval.
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(j) "Good Reason" shall mean any of the following:
(i) material change by the Company of the Executive's
functions, duties or responsibilities which change would cause the
Executive's position with the Company to become of less dignity,
responsibility, importance, prestige or scope, including, without
limitation, a change from being a senior officer of a publicly held
company;
(ii) assignment or reassignment by the Company of the
Executive without the Executive's consent to another place of
employment more than 50 miles from the Executive's current place of
employment; or
(iii) a reduction which is more than de minimis in the
Executive's base pay or bonus opportunity except if such reduction
is part of a reduction for all executive officers of the Company and
any parent Company thereof.
No such event described above shall constitute Good Reason unless
the Executive gives written notice to the Company, specifying the
event relied upon for such termination and given at any time within
one year after the occurrence of such event and the Company has not
remedied such within 30 days of the notice. The Company and
Executive, upon mutual written agreement may waive any of the
foregoing provisions which would otherwise constitute a Good Reason.
(k) "Single Trigger Period" means the eighteen month period which
(i) begins on the date on which a Change in Control occurs, or if a
Change in Control is based on shareholder approval pursuant to
paragraph 1(c)(iii) hereof, the date of the consummation of the
termination which was the subject of shareholder approval, and (ii)
ends eighteen months thereafter.
(1) "Starting Date" means the date on which a Change in Control
occurs.
2. TERM. This Agreement shall be effective as of the date above
written and shall continue thereafter for 36 full calendar months
following the date of an occurrence of a Change in Control or, if the
Change in Control event is based on shareholder approval pursuant to
paragraph 1(c)(iii), 36 full calendar months following the date of the
consummation of the transaction which was the subject of shareholder
approval.
3. SEVERANCE BENEFIT. If (i) at any time during the Coverage Period,
the Executive's employment hereunder is terminated by the Company for any
reason other than Cause, death or Disability, or by the Executive for Good
Reason, or (ii) during the Single Trigger Period, the Executive terminates
his employment for any reason, then,
(a) within five business days after such termination, the
Company shall pay to the Executive (or, if the Executive
has died before receiving all payments to which the
Executive has become entitled hereunder, to the estate
of the Executive) (i) accrued but unpaid salary and
accrued but unused vacation, if any, and (ii) severance
pay in a lump sum cash amount equal to three (3) times
the Executive's Compensation;
(b) to the extent not paid or payable under such plans
and/or arrangements, the Company shall pay to the
Executive the present value of the benefits (calculated
assuming the Executive will begin receiving benefits at
the earliest retirement date under such plans and/or
arrangements, or if later, at the end of the term of
this Agreement, based on the actuarial assumptions used
for purposes of the qualified defined benefit plan) that
would have accrued, but did not accrue, under the
Company's qualified defined benefit retirement plan, the
Fall River Gas Company Survivor Benefit Deferred
Compensation Agreement, and the excess pension benefit
provision in the Employment Agreement and/or any
successor or similar plan(s) or arrangements in place
and operational on the date of termination and/or the
Change in Control, as if (for vesting, benefit accrual,
eligibility for early retirement, subsidized early
retirement factors, actuarial
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equivalence, and any other purposes) the Executive had
continued to be employed and had continued to
participate in such plans and arrangements through the
end of the term of this Agreement; it being understood
by all parties hereto that payments made under this
Agreement and the deemed additional credited service
shall not be considered for purposes of determining the
actual benefit payable under the terms of such plans and
arrangements and shall not be considered part of the
relevant payroll records for purposes of such plans and
arrangements; and
(c) to the extent not already provided under the terms of
the Employment Agreement, for a period commencing with
the month in which termination of employment, as
described in paragraph 3 hereof, shall have occurred,
and ending the later of the date of the Executive's or
the Executive's spouse's death, the Executive, his
spouse and any dependents shall continue to be entitled
to receive all health and dental care benefits under the
Company's welfare benefit plans (within the meaning of
Section 3(l) of the Employee Retirement Income Security
Act of 1974, as amended), at no cost to the Executive
and at the same level of benefits that the Executive,
his spouse and his dependents were receiving or were
entitled to receive at the time of termination of
employment or, if it would result in greater benefits,
at the date of the Change in Control (if and to the
extent that such benefits shall not be payable or
provided under any Company plan, the Company shall pay
or provide equivalent benefits on an individual basis).
4. CERTAIN ADDITIONAL PAYMENTS.
(a) If Independent Tax Counsel shall determine that the
aggregate payments made to the Executive pursuant to this
Agreement and any other payments to the Executive from the
Company which constitute "parachute payments" as defined in
Section 280G of the Code (or any successor provision thereto)
("Parachute Payments") would be subject to the excise tax
imposed by Section 4999 of the Code (the "Excise Tax"), then
the Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount (determined by
Independent Tax Counsel) such that after payment by the
Executive of all taxes (including any Excise Tax) imposed upon
the Gross-Up Payment and any interest or penalties imposed
with respect to such taxes, the Executive retains from the
Gross-Up Payment an amount equal to the Excise Tax imposed
upon the payments. For purposes of this paragraph 4(a),
"Independent Tax Counsel" shall mean a lawyer, a certified
public accountant with a nationally recognized accounting
firm, or a compensation consultant with a nationally
recognized actuarial and benefits consulting firm, with
expertise in the area of executive compensation tax law, who
shall be selected by the Executive and shall be reasonably
acceptable to the Company, and whose fees and disbursements
shall be paid by the Company.
(b) If Independent Tax Counsel shall determine that no
Excise Tax is payable by the Executive, it shall furnish the
Executive with a written opinion that the Executive has
substantial authority not to report any Excise Tax on the
Executive's Federal income tax return. If the Executive is
subsequently required to make a payment of any Excise Tax,
then the Independent Tax Counsel shall determine the amount
(the amount of such additional payments are referred herein as
"Gross-Up Underpayment") of such payment and any such Gross-Up
Underpayment shall be promptly paid by the Company to or for
the benefit of the Employee. The fees and disbursements of the
Independent Tax Counsel shall be paid by the Company.
(c) The Executive shall notify the Company in writing
within 15 days of any claim by the Internal Revenue Service
that, if successful, would require the payment by the Company
of a Gross-Up Payment. If the Company notifies the Executive
in writing that it desires to contest such claim and that it
will bear the costs and provide the indemnification as
required by this sentence, the Executive shall:
(i) give the Company any information reasonably
requested by the Company relating to such claim,
(ii) take such action in connection with
contesting such claim as the Company shall reasonably
request in writing from time to time, including, without
limitation, accepting
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legal representation with respect to such claim by an
attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in
order to effectively contest such claim, and
(iv) permit the Company to participate in any
proceedings relating to such claim; provided, however,
that the Company shall bear and pay directly all costs
and expenses (including additional interest and
penalties) incurred in connection with such contest and
shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax,
including interest and penalties with respect thereto,
imposed as a result of such representation and payment
of costs and expenses. The Company shall control all
proceedings taken in connection with such contest;
provided, however, that if the Company directs the
Executive to pay such claim and xxx for a refund, the
Company shall advance the amount of such payment to the
Executive, on an interest-free basis and shall indemnify
and hold the Executive harmless, on an after-tax basis,
from any Excise Tax or income tax, including interest or
penalties with respect thereto, imposed with respect to
such advance or with respect to any imputed income with
respect to such advance.
(d) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to paragraph 4(c)(iv), the
Executive becomes entitled to receive any refund with respect to
such claim, the Executive shall, within 10 days, pay to the Company
the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto).
5. NO MITIGATION REQUIRED. In the event of any termination of the
Executive's employment described in paragraph 3, the Executive shall be
under no obligation to seek other employment, and there shall be no offset
against amounts due the Executive under this Agreement on account of any
remuneration attributable to any subsequent employment; provided, however,
to the extent the Executive receives medical and health benefits from a
subsequent employer, medical and health benefits under paragraph 3(c)
shall be secondary to those received from the subsequent employer..
6.SOURCE OF PAYMENTS. All payments provided for in this Agreement
shall be paid in cash from the general funds of the Company; provided,
however, such payments shall be reduced by the amount of any payments made
to the Executive or the Executive's dependents, beneficiaries, or estate
from any trust or special or separate fund established by the Company to
assure such payments. The Company shall not be required to establish a
special or separate fund or other segregation of assets to assure such
payments, and, if the Company shall make any investments to aid it in
meeting its obligations hereunder, the Executive shall have no right,
title, or interest whatever in or to any such investments except as may
otherwise be expressly provided in a separate written instrument relating
to such investments. Nothing contained in this Agreement, and no action
taken pursuant to its provisions, shall create or be construed to create a
trust of any kind, or a fiduciary relationship between the Company and the
Executive or any other person. To the extent that any person acquires a
right to receive payments from the Company, such right shall be no greater
than the right of an unsecured creditor of the Company.
7. LITIGATION EXPENSES: ARBITRATION.
(a) Full Settlement, Litigation Expenses; Arbitration. The
Company's obligation to make the payments provided for
in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company may have
against the Executive or others. In no event shall the
Executive be obligated to seek other employment or take
any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of
this Agreement. The Company agrees to pay, upon written
demand therefor by the Executive, all legal fees and
expenses which the Executive may reasonably incur as a
result of any dispute or contest by or
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with the Company or others regarding the validity or
enforceability of, or liability under, any provision of
this Agreement (except to the extent it is determined by
a court of competent jurisdiction, mediator or
arbitrator, as the case may be, that the Executive's
material claim is, or claims are, frivolous or without
merit in which case the Executive shall bear all such
fees and expenses), together with interest on any
delayed payments at the applicable Federal rate provided
for in Section 7872(f)(2) of the Code. In any such
action brought by the Executive for damages or to
enforce any provisions of this Agreement, the Executive,
in his sole discretion, shall be entitled to seek both
legal and equitable relief and remedies, including,
without limitation, specific performance of the
Company's obligations hereunder. If the parties hereto
so agree in writing, any disputes under this Agreement
may be settled by arbitration. The obligation of the
Company under this paragraph 7 shall survive the
termination for any reason of this Agreement (whether
such termination is by the Company, by the Executive,
upon the expiration of this Agreement or otherwise).
(b) In the event of any dispute or difference between
the Company and the Executive with respect to the subject
matter of this Agreement and the enforcement of rights
hereunder, the Executive may, in the Executive's sole
discretion by written notice to the Company, require such
dispute or difference to be submitted to arbitration. The
arbitrator or arbitrators shall be selected by agreement of
the parties or, if they cannot agree on an arbitrator or
arbitrators within 30 days after the Executive has notified
the Company of Executive's desire to have the question settled
by arbitration, then the arbitrator or arbitrators shall be
selected by the American Arbitration Association (the "AAA")
in Boston, Massachusetts upon the application of the
Executive. The determination reached in such arbitration shall
be final and binding on both parties without any right of
appeal or further dispute. Execution of the determination by
such arbitrator may be sought in any court of competent
jurisdiction. The arbitrators shall not be bound by judicial
formalities and may abstain from following the strict rules of
evidence and shall interpret this Agreement as an honorable
engagement and not merely as a legal obligation. Unless
otherwise agreed by the parties, any such arbitration shall
take place in Boston, Massachusetts, and shall be conducted in
accordance with the Rules of the AAA.
8. INCOME TAX WITHHOLDING. The Company may withhold from any
payments made under this Agreement all federal, state, or
other taxes as shall be required pursuant to any law or
governmental regulation or ruling.
9. ENTIRE UNDERSTANDING. This Agreement contains the entire
understanding between the Company and the Executive with respect to
the subject matter hereof and supersedes any similar agreement
between the Company and the Executive, except that this Agreement
shall not affect or operate to reduce any benefit or compensation
inuring to the Executive of any kind elsewhere provided and not
expressly provided for in this Agreement including, without
limitation, any benefit or compensation under the Employment
Agreement and/or the Fall River Gas Company Survivor Benefit
Deferred Compensation Agreement.
10. SEVERABILILY. If, for any reason, any one or more of the
provisions or part of a provision contained in this Agreement
shall be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall
not affect any other provision or part of a provision of this
Agreement not held so invalid, illegal or unenforceable, and
each other provision or part of a provision shall to the full
extent consistent with law continue in full force and effect.
11. CONSOLIDATION, MERGER. OR SALE OF ASSETS. If the Company
consolidates or merges into or with, or transfers all or
substantially all of its assets to, another entity the term "the
Company" as used herein shall mean such other entity and this
Agreement shall continue in full force and effect.
12. NOTICES. All notices, requests, demands and other
communications required or permitted hereunder shall be given in
writing and shall be deemed to have been duly given if delivered or
mailed, postage prepaid, first class as follows:
a. to the Company;
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Fall River Gas Company
000 Xxxxx Xxxx Xxxxxx
Xxxx Xxxxx, Xxxxxxxxxxxxx 00000
Attention:
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b. to the Executive:
------------------------
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or to such other address as either party shall have
previously specified in writing to the other.
13. NO ATTACHMENT. Except as required by law, no right to
receive payments under this Agreement shall be subject to
anticipation, commutation, alienation, sale, assignment,
encumbrance, charge, pledge or hypothecation or to execution,
attachment, levy or similar process or assignment by operation of
law, and any attempt, voluntary or involuntary, to effect any such
action shall be null, void and of no effect.
14. BINDING AGREEMENT. This Agreement shall be binding upon,
and shall inure to the benefit of, the Executive and the Company and
their respective permitted successors and assigns.
15. MODIFICATION AND WAIVER. Prior to the date of a Change in
Control, this Agreement may be terminated, modified, amended
or terminated by action of a majority of the members of the
Board. After a Change in Control, this Agreement may not be
modified or amended except by an instrument in writing signed
by the parties hereto. No term or condition of this Agreement
shall be deemed to have been waived, nor shall there be any
estoppel against the enforcement of any provision of this
Agreement, except by written instrument signed by the party
charged with such waiver or estoppel. No such written waiver
shall be deemed a continuing waiver unless specifically stated
therein, and each such waiver shall operate only as to the
specific term or condition waived and shall not constitute a
waiver of such term or condition for the future or as to any
act other than that specifically waived.
16. HEADING OF NO EFFECT. The paragraph headings contained in
this Agreement are included solely for convenience of reference and
shall not in any way affect the meaning or interpretation of any of
the provisions of this Agreement.
17. GOVERNING LAW. This Agreement and its validity,
interpretation, performance, and enforcement shall be governed by
the laws of the Commonwealth of Massachusetts without giving effect
to the choice of law provisions in the Commonwealth of
Massachusetts.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its
officers thereunto duly authorized, and the Executive has signed this Agreement,
all effective as of the date first above written.
Witness: Fall River Gas Company:
By:
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Title:
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Witness:
By:
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Title:
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Witness: Executive:
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