Exhibit 10(j)
EXECUTIVE EMPLOYMENT AGREEMENT
between and among
UNITED WATER RESOURCES INC.
and
XXXXXXX X. XXXXXXX
TABLE OF CONTENTS
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Page
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SECTION 1: EMPLOYMENT, TERM, DUTIES AND RESPONSIBILITIES............................... 2
1.1 Employment.................................................................. 2
1.2 Period of Employment........................................................ 2
1.3 Non-Disclosure.............................................................. 3
1.4 Term of Employment.......................................................... 3
1.5 Duties and Responsibilities................................................. 4
SECTION 2: COMPENSATION AND BENEFITS................................................... 4
2.1 Base Salary................................................................. 4
2.2 Employee Benefits........................................................... 5
2.3 Executive Compensation Plans................................................ 6
SECTION 3: TERMINATION................................................................. 6
3.1 Termination by Employer Other Than for Cause or by Employee with Good
Reason...................................................................... 6
3.2 Termination by Employee or by Employer for Cause............................ 13
3.3 Expiration of Period of Employment.......................................... 13
SECTION 4: SOURCE OF PAYMENTS.......................................................... 14
SECTION 5: NON-COMPETITION............................................................. 14
SECTION 6: EXCISE TAX GROSS-UP PAYMENT................................................. 15
SECTION 7: GOVERNING LAW............................................................... 16
SECTION 8: NO ATTACHMENT............................................................... 16
SECTION 9: ARBITRATION................................................................. 17
SECTION 10: NOTICES..................................................................... 17
SECTION 11: MISCELLANEOUS............................................................... 19
AGREEMENT, dated as of January 1, 1999, by and between United Water Resources
Inc. (the "Employer"), and Xxxxxxx X. McGIynn (the "Employee").
IN CONSIDERATION OF the mutual covenants herein contained, and other good and
valuable consideration, the parties hereto agree as follows:
SECTION 1: EMPLOYMENT, TERM, DUTIES AND RESPONSIBILITIES
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1.1 Employment.
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Employer hereby agrees to employ Employee, and Employee agrees to serve as
employee of Employer during the Period of Employment, as Vice President-
General Counsel of the Employer. It is understood and agreed that the
position of Vice President-General Counsel is an Executive Officer level
position and shall be considered as such for all purposes.
1.2 Period of Employment.
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If at any time during the Period of Employment, the Employer fails, without
Employee's consent, to cause Employee to be elected or re-elected as Vice
President-General Counsel of the Employer, or removes Employee from such
offices, or if at any time during the Period of Employment, Employee shall
fail to be vested by the Board of Directors of the Employer with the power
and authority of an Executive Officer of Employer at a level equivalent to
Employee's current position, Employee shall have the right by written
notice to Employer to terminate his services hereunder, effective as of the
last day of the month after the month of
receipt by Employer of the written notice, in which event the Period of
Employment, as hereinafter defined, shall so terminate on the last day of
such month; termination under these circumstances shall be deemed pursuant
to Section 3.1 hereof as a termination by Employee with "Good Reason" (as
defined therein) with all the consequences which flow from such
termination.
1.3 Non-Disclosure.
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Employee shall not, at any time during or following the Period of
Employment, disclose, use, transfer or sell, except in the course of
employment with Employer, any confidential information or proprietary data
of Employer and the parent company and subsidiaries of Employer so long as
such information or proprietary data remains confidential and has not been
disclosed or is not otherwise in the public domain, except as required by
law or pursuant to legal process.
1.4 Term of Employment.
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The "Period of Employment" shall be the 2 year period commencing January 1,
1999 and ending on December 31, 2000; provided, however, if a Change of
Control occurs prior to December 31, 2000, such ending date shall be the
24-month anniversary of the Change of Control, as defined below (or if the
Change of Control is shareholder approval of a transaction pursuant to
paragraph (iii) of the definition of Change of Control, below, the 24-month
anniversary of the consummation of such transaction).
1.5 Duties and Responsibilities.
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Employee shall devote Employee's full business time, attention and best
efforts to the affairs of Employer and the parent company and subsidiaries
of Employer during the Period of Employment as an Executive Officer of
Employer at a level equivalent to Employee's current position, provided,
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however, that Employee may engage in other activities, such as activities
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involving professional, charitable, educational, religious and similar
types of organizations, speaking engagements, membership on the Board of
Directors of other organizations (as Employer may from time to time agree
to), and similar type activities to the extent that such other activities
do not inhibit or prohibit the performance of Employee's duties under this
Agreement, or conflict in any material way with the business of Employer
and the parent company and subsidiaries of Employer. Employer acknowledges
that Employee is currently serving as a Director of Conectiv, Inc. and
agrees to Employee's continuing to serve in that capacity during the term
of this Agreement.
SECTION 2: COMPENSATION AND BENEFITS
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2.1 Base Salary.
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Employer will pay to Employee during the Period of Employment a base annual
salary of $194,000, payable in accordance with Employer's normal payroll
policies for senior executives, subject to applicable withholding of taxes
and other applicable payroll deductions. It is agreed between the parties
that Employer shall review the base annual salary annually and in light of
such review may, in the discretion of the Board of Directors of Employer
(but shall not be obligated to), increase such base
annual salary taking into account any change in Employee's then
responsibilities, increases in the cost of living, increases in
compensation of other executives of Employer and the parent company and
subsidiaries of Employer, performance by Employee, and other pertinent
factors.
2.2 Employee Benefits.
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(a) Vacation and Sick Leave.
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Employee shall be entitled to 25 days paid vacation per year and to
reasonable sick leave as determined by the Board of Directors of
Employer (the "Board") but no less than Employer's policy at the date
of this Agreement.
(b) Regular Reimbursed Business Expenses.
------------------------------------
Employer shall reimburse Employee for all travel and other expenses
and disbursements reasonably incurred by Employee in the performance
of Employee's duties during the Period of Employment, in accordance
with Employer's established policies.
(c) Employer's Benefit Plans or Arrangements.
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Employee, subject to the provisions of this Agreement, shall be
entitled to participate in all employee benefit plans of Employer in
which other executives of Employer participate, as presently in effect
or as they may be modified or added to by Employer from time to time,
including, without limitation, plans providing retirement benefits,
medical insurance, disability insurance, and accidental death or
dismemberment insurance and shall be entitled to full credit
thereunder for all service with Employer and any
successor. Employee shall be provided with the use of a company car
with all lease, operating costs, insurance, etc. paid by Employer.
Benefits shall be at least comparable to those provided by the current
plans of Employer. In addition, Employee shall participate in a
nonqualified retirement plan established by Employer for Employee,
substantially in the form attached hereto as Exhibit A (the
"Nonqualified Retirement Plan").
2.3 Executive Compensation Plans.
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Employee, subject to the provisions of this Agreement, shall be entitled to
participate in all executive compensation plans of Employer, as presently
in effect or as they may be modified or added to by Employer from time to
time, including without limitation, management incentive plans, deferred
compensation plans, supplemental "top hat" retirement plans and stock and
stock option plans. Employee shall be entitled to benefit opportunities
and incentives at least comparable to those to which Employee is entitled
at the date of this Agreement.
SECTION 3: TERMINATION
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3.1 Termination by Employer Other Than for Cause or by Employee with Good
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Reason. If Employer should terminate the Period of Employment other than
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for Cause, as defined herein, or if Employee should terminate the Period of
Employment with Good Reason, Employer shall:
(i) within 30 days of termination of the Period of Employment, pay
Employee any base annual salary accrued and due to Employee under
Section 2.1
through his Date of Termination and any unpaid MIP payment(s) for any
previously completed calendar year(s);
(ii) (A) if the termination of the Period of Employment occurs within the
period beginning on the date of a Change of Control, as defined below,
and ending 24 months following the Change of Control, as defined below
(or, if the Change of Control, as defined below, is in connection with
shareholder approval pursuant to paragraph (iii) of the definition of
Change of Control, ending 24 months following the consummation of the
transaction which was the subject of shareholder approval), within 30
days of the termination of the Period of Employment, pay Employee an
amount equal to 200% of his base annual salary in effect as of the
termination of the Period of Employment, or (B) if the termination of
the Period of Employment does not occur within the period beginning on
the date of a Change of Control, as defined below, and ending 24
months following the Change of Control, as defined below (or, if the
Change of Control, as defined below, is in connection with shareholder
approval pursuant to paragraph (iii) of the definition of Change of
Control, ending 24 months following the consummation of the
transaction which was the subject of shareholder approval), continue
to pay Employee his base annual salary in effect as of the termination
of the Period of Employment for the 18-month period immediately
following the termination of the Period of Employment (or until such
earlier time that Employee violates the provisions of Section 5) at
the times such payments would otherwise have been made under Section
2.1;
(iii) (A) if the termination of the Period of Employment occurs within the
period beginning on the date of a Change of Control, as defined below,
and ending 24 months following the Change of Control, as defined below
(or, if the Change of Control, as defined below, is in connection with
shareholder approval pursuant to paragraph (iii) of the definition of
Change of Control, ending 24 months following the consummation of the
transaction which was the subject of shareholder approval), within
30 days of the termination of the Period of Employment, pay Employee
an amount equal to 200% of his then current "Cash Target Amount" under
the MIP, or (B) if the termination of the Period of Employment does
not occur within the period beginning on the date of a Change of
Control, as defined below, and ending 24 months following the Change
of Control, as defined below (or, if the Change of Control, as defined
below, is in connection with shareholder approval pursuant to
paragraph (iii) of the definition of Change of Control, ending 24
months following the consummation of the transaction which was the
subject of shareholder approval), pay Employee (I) 100% of his "Cash
Target Amount" under the MIP (as of the termination of the Period of
Employment) for the MIP year immediately following the termination of
the Period of Employment, and (II) 50% of his "Cash Target Amount"
under the MIP (as of the termination of the Period of Employment) for
the second MIP year immediately following the termination of the
Period of Employment (in each case unless Employee earlier violates
the provisions of Section 5), each such payment to be made at the
times such payments would otherwise have been paid under the MIP;
(iv) provide Employee for the 18-month period commencing immediately
following the termination of the Period of Employment (or until such
earlier time that Employee violates the provisions of Section 5), with
continued participation (or equivalent benefits if such participation
is not legally permissible (cash payments in the case of tax-qualified
retirement plan benefits)) in the employee benefit plans provided to
Employee pursuant to Section 2.2 as of the termination of the Period
of Employment; and
(v) solely if the termination of the Period of Employment occurs within
the period beginning on the date of a Change of Control, as defined
below, and ending 24 months following the Change of Control, as
defined below (or, if the Change of Control, as defined below, is in
connection with shareholder approval pursuant to paragraph (iii) of
the definition of Change of Control, ending 24 months following the
consummation of the transaction which was the subject of shareholder
approval), (A) Employee's Nonqualified Retirement Plan benefit shall
become fully vested and nonforfeitable, (B) if he had not attained age
55 as of the termination of the Period of Employment, he shall be
deemed to have attained age 55 for purposes of the early retirement
provisions of the Nonqualified Retirement Plan, (C) if he had not
accumulated 10 years of service under the Nonqualified Retirement Plan
as of the termination of the Period of Employment, he shall be deemed
to have 10 years of service for Nonqualified Retirement Plan benefit
accrual purposes and (D) within 30 days of the termination of the
Period of Employment, Employer shall pay to Employee an amount equal
to the present value of his accrued Nonqualified Retirement Plan
benefit (utilizing
a discount rate for calculating such present value equal to the
"discount rate," as defined in Statement of Financial Accounting
Standards No. 87 published by the Financial Accounting Standards
Board, utilized for purposes of the most recent audit disclosure
relating to Employer's tax-qualified defined benefit pension plan
preceding the Change of Control by the "enrolled actuary" (as defined
in Section 7701 (a)(35) of the Internal Revenue Code of 1986, as
amended (the "Code")), who signed the Schedule B to the most recent
Internal Revenue Service Form 5500 relating to Employer's tax-
qualified defined benefit pension plan, filed prior to the Change of
Control).
Other than the foregoing, Employer shall have no further obligations to
Employee hereunder.
For purposes of this Agreement, a "Change of Control" of Employer shall
mean the first to occur of any of the following events:
(i) any "Person" (as defined in Section 3(a)(9) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and as such term is
modified in Sections 13(d) and 14(d) of the Exchange Act), excluding
(A) Employer or any of its subsidiaries, (B) a trustee or any
fiduciary holding securities under an employee benefit plan of
Employer or any of its subsidiaries, or an underwriter temporarily
holding securities pursuant to an offering of such securities, in each
case with respect to the securities so held, or (C) a corporation or
other entity owned, directly or indirectly, by holders of voting
securities of Employer in substantially the same proportions as their
ownership of Employer, is or becomes the "Beneficial Owner" (as
defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of Employer (not including in the securities beneficially
owned by such Person any securities acquired directly from Employer or
its subsidiaries or other affiliates controlled by Employer or any
such subsidiary) representing 20% or more of the combined ordinary (in
the absence of contingencies) voting power of Employer's then
outstanding securities; provided, however, that if such "Person" shall
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be Suez Lyonnaise des Eaux or an affiliate thereof, solely for
purposes thereof the above reference to "20%" shall instead be deemed
to refer to the sum of the amount of the "Maximum Stockholder
Investment Percentage" (as defined in Section 1.1 of the Governance
Agreement between United Water Resources Inc. and Lyonnaise American
Holding, Inc., dated as of April 22, 1994) plus two percentage points;
or
(ii) during any period of not more than two consecutive calendar years
(commencing January 1, 1999), individuals who at the beginning of such
period constitute Employer's Board, together with any new director
(other than a director designated by a person who has entered into an
agreement with Employer to effect a transaction triggering the
operation of clause (i) or (iii) of this paragraph) whose election by
the Board or nomination for election by Employer's shareholders was
approved by a vote of at least two-thirds 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,
cease for any reason to constitute a majority thereof; or
(iii) the shareholders of Employer approve a merger or consolidation of
Employer with any other entity, or a plan of liquidation of Employer
or an agreement for
the sale or disposition by Employer of its assets as an entirety or
substantially as an entirety, other than (A) a transaction which would
result in the voting securities of Employer outstanding immediately
prior thereto continuing to represent (either by remaining
outstanding, by being converted into voting securities of the
surviving entity, or otherwise), in combination with the ownership by
any trustee or other fiduciary of securities under an employee benefit
plan of Employer, at least 80% of the combined voting power of the
voting securities of Employer or such surviving entity outstanding
immediately after such transaction, or (B) a transaction effected to
implement a recapitalization of Employer (or similar transaction) in
which no person acquires more than 20% of the combined voting power of
Employer's then outstanding securities (or if such person so acquiring
more than 20% of such combined voting power is Suez Lyonnaise des Eaux
or an affiliate thereof, solely for the purposes thereof the above
reference to "20%" shall instead be deemed to refer to the sum of the
Maximum Stockholder Investment Percentage plus two percentage points).
"Cause" shall mean the continued and willful failure by Employee to perform
substantially his duties with Employer (other than any such failure
resulting from incapacity due to physical or mental illness) after a notice
demanding substantial performance is delivered to Employee by Employer;
conviction of a felony; excessive absenteeism not related to illness, sick
leave or vacations, but only after written notice from Employer followed by
a repetition of such excessive
absenteeism; misconduct or dishonesty that is harmful to the interest of
Employer; or material breach by Employee of this Agreement.
Employee's termination with "Good Reason" shall mean Employee's termination
of his employment pursuant to Section 1.2 above; a reduction by Employer in
Employee's base annual salary as in effect immediately prior to such
reduction; or a material breach by Employer of its obligations under this
Agreement.
3.2 Termination by Employee or by Employer for Cause.
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(a) Employee shall have the right, upon 30 days' notice given to Employer
in accordance with Section 10 hereof, or as otherwise agreed to by
Employer, to terminate the Period of Employment.
(b) If Employee should terminate the Period of Employment pursuant to
Section 3.2(a) above or Employer should terminate the Period of
Employment for Cause, as herein defined, Employee will be entitled to
be paid the base annual salary otherwise payable to Employee under
Section 2.1 through the end of the month in which the Period of
Employment is terminated. Employee shall be entitled to all other
earned and accrued benefits to which Employee would otherwise be
entitled through the termination date.
3.3 Expiration of Period of Employment.
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On December 31, 2000, provided that this Agreement shall then still be in
effect, Employer shall make a lump sum cash payment to Employee in an
amount equal
to 6 months of Employee's base annual salary at such level as shall be in
effect immediately prior to such date.
SECTION 4: SOURCE OF PAYMENTS
------------------------------
All payments provided herein shall be paid from the general funds of Employer
unless otherwise properly payable under any contract, trust or other arrangement
maintained by Employer for purposes of such payment. Employer shall not be
required to segregate any funds, create any trust or make any special deposits
to fund any obligations under this Agreement, provided, however, that Employer,
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at its sole and absolute discretion, may take any steps it deems appropriate to
meet its obligation hereunder.
SECTION 5: NON-COMPETITION
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Without the consent in writing of the Board of Directors of Employer, during the
Period of Employment and for a period of two years after termination of
Employee's employment for any reason whatsoever, Employee will not permit his
name to be used by, or engage in, or carry on, directly or indirectly, either
for himself or as a member of a partnership or as more than a five percent (5%)
stockholder, investor, officer or director of a corporation or as an employee,
agent, associate or consultant of any person, partnership or corporation, any
business in competition with the business carried on in the United States by
Employer and the parent company and subsidiaries of Employer.
SECTION 6: EXCISE TAX GROSS-UP PAYMENT
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If any payments made and/or benefits provided to Employee by Employer, whether
or not under this Agreement ("Payments"), are subject to the tax (the "Excise
Tax") imposed by Section 4999 of the Code, Employer shall pay to Employee an
additional amount (the "Gross-Up Payment") such that the net amount retained by
Employee, after deduction of any Excise Tax on the Payments and all income taxes
and Excise Tax upon such Employer payment, shall be equal to the Payments. The
determination of whether any Payments are subject to the Excise Tax shall be
based on the opinion of tax counsel selected by Employer and reasonably
acceptable to Employee, whose fees and expenses shall be paid by Employer. For
purposes of determining the amount of the Gross-Up Payment, Employee shall be
deemed to pay federal, state and local income taxes at the highest marginal rate
of income taxation applicable to any individual residing in the jurisdiction in
which Employee resides in the calendar year in which the Gross-Up Payment is to
be made. In the event that the Excise Tax is subsequently determined to be less
than the amount taken into account hereunder at the time of termination of
Employee's employment, Employee shall repay to Employer, at the time that the
amount of such reduction in Excise Tax is finally determined, the portion of the
Gross-Up Payment attributable to such reduction (plus that portion of the Gross-
Up Payment attributable to the Excise Tax and federal, state and local income
tax imposed on the Gross-Up Payment attributable to the Excise Tax and federal,
state and local income tax imposed on the Gross-Up Payment being repaid by
Employee to the extent that such repayment results in a reduction in Excise Tax
and/or a federal, state or local income tax deduction) plus interest on the
amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the
Code. In the event that the Excise Tax is determined to exceed the amount taken
into account hereunder at the time of the termination of Employee's employment
(including by
reason of any payment the existence or amount of which cannot be determined at
the time of the Gross-Up Payment), Employer shall make an additional Gross-Up
Payment in respect of such excess (plus any interest, penalties or additions
payable by Employee with respect to such excess) at the time that the amount of
such excess is finally determined. Employee and Employer shall each reasonably
cooperate with the other in connection with any administrative or judicial
proceedings concerning the existence or amount of liability for Excise Tax with
respect to the Payments.
SECTION 7: GOVERNING LAW
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This Agreement is governed by and is to be construed and enforced in accordance
with the laws of the State of New Jersey, without reference to rules relating to
conflicts of law. If under such law, any portion of this Agreement is at any
time deemed to be in conflict with any applicable statute, rule, regulation or
ordinance, such portion shall be deemed to be modified or altered to conform
thereto or, if that is not possible, to be omitted from this Agreement; the
invalidity of any such portion shall not affect the force, effect and validity
of the remaining portion hereof.
SECTION 8: NO ATTACHMENT
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Except as required by law, no right to receive any payment or benefit 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.
SECTION 9: ARBITRATION
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Any claim, controversy or dispute arising out of or relating to this Agreement,
or the breach thereof, shall be settled by arbitration by an independent
impartial arbitrator in accordance with the rules of the American Arbitration
Association then obtaining. The decision of the arbitrator shall be final and
binding and judgment upon the award rendered may be entered in any court having
jurisdiction thereof.
In any such claim, controversy or dispute involving a request for relief by way
of injunction to prevent the disclosure or further disclosure of confidential
information belonging to Employer, the arbitrator shall be appointed by the
American Arbitration Association without submission of any such list of
prospective arbitrators to the parties, and the proceedings shall be carried out
as expeditiously as possible by the parties without undue delay.
SECTION 10: NOTICES
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All notices under this Agreement shall be in writing and shall be deemed
effective when delivered in person, or forty-eight (48) hours after deposit
thereof in the U.S. mails, postage prepaid, for delivery as registered or
certified mail B addressed, in the case of Employee, to him at his residential
address, and in the case of Employer, to its corporate
headquarters, attention of the Secretary, or to such other address as Employee
or Employer may designate in writing at any time or from time to time to the
other party.
If to the Employee:
Xxxxxxx X. XxXxxxx
00 Xxxxxxxxxx Xxxx Xxxx
Xxx Xxxxx, XX 00000
If to the Employer:
Xxxxxx X. Xxxxxxx
United Water Resources
000 Xxx Xxxx Xxxx
Xxxxxxxxxx, Xxxx, XX 00000
In lieu of personal notice by deposit in the U.S. mail, a party may give
notice by telegram, telex or telecopier.
SECTION 11: MISCELLANEOUS
--------------------------
This Agreement constitutes the entire understanding between Employer and
Employee relating to employment of Employee by Employer and supersedes and
cancels all prior written and oral agreements and understandings with respect to
the subject matter of this Agreement. This Agreement may be amended but only by
a subsequent written agreement of the parties. This Agreement shall be binding
upon and shall inure to the benefit of Employee, Employee's heirs, executors,
administrators and beneficiaries, and Employer and its successors, whether by
merger, combination sale of assets or otherwise.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
year and day first above written.
United Water Resources Inc.
By:_______________________________
Chairman
_______________________________
Xxxxxxx X. XxXxxxx
