EXHIBIT 10.1
VIRGINIA GAS COMPANY
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
June 13, 2000
Xx. Xxxxxxx X. Xxxxxxx
Virginia Gas Company
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Dear Xx. Xxxxxxx:
Reference is made to the Agreement and Plan of Reorganization, dated as
of June 13, 2000, by and among NUI Corporation, VGC Acquisition, Inc. and
Virginia Gas Company (the "Merger Agreement"). Capitalized terms used in this
Agreement and not otherwise defined herein shall have the meanings ascribed to
such terms in the Merger Agreement. Virginia Gas Company, a Delaware
corporation, shall hereinafter be referred to as "Employer" and you shall
hereinafter be referred to as "Employee."
Employer and Employee have agreed that, at the Effective Time, Employee
shall cease to be an employee of Employer and each Virginia Gas Subsidiary.
Employer and Employee also agree that at the Effective Time the Employment
Agreement, dated May 23, 1996, between Employer and Employee (the "Employment
Agreement") shall terminate and Employee hereby waives and relinquishes any and
all rights he may have under the Employment Agreement solely in exchange for the
rights and benefits provided to Employee under this Agreement and in a certain
Consulting Agreement, which is attached hereto as Exhibit A (the "Consulting
Agreement"). Employer and Employee hereby agree to execute the Consulting
Agreement at the Effective Time, and Employee hereby agrees to execute but not
date the letters of resignation attached hereto as Annex A. It is understood and
agreed that in the event that the Merger Agreement shall terminate prior to the
Effective Time, the Employment Agreement shall remain in full force and effect
in accordance with its terms.
1. PAYMENTS DUE EMPLOYEE. At the Effective Time, Employer shall pay to
Employee, in lieu of any further salary payments for periods subsequent to the
Effective Time, an amount equal to the product of (x) the sum of Employee's
annual base salary in effect immediately prior to the Effective Time, plus an
amount equal to the highest cash bonus awarded with respect to
1
Xxxxxxx X. Xxxxxxx
June 13, 2000
Page 2
any fiscal year to Employee during the five (5) fiscal years then most recently
ended, multiplied by (y) the number three.
The amounts set forth above shall be paid to Employee, at Employee's
election, either in a lump sum within ten (10) days of the Effective Time or in
substantially equal installments over a 36-month period commencing within ten
(10) days of the Effective Time.
2. WARRANT TERMINATION. Employee agrees that at the Effective Time all
outstanding warrants providing for the right to acquire shares of the Employer's
Common Stock that are owned as of the date hereof by Employee will be
surrendered to the Employer for cancellation.
3. HEALTH AND INSURANCE. In addition, the Employer shall maintain in
full force and effect, for Employee's continued benefit for two (2) years after
the Effective Time, all employee health benefit plans, programs or arrangements
in which Employee was entitled to participate immediately preceding the
Effective Time, provided Employee's continued participation is possible under
the general terms and provisions of such plans and programs. In the event that
Employee's participation in any such plan or program is prohibited by operation
of law or by the terms of such plans or programs as in effect immediately
preceding the Effective Time, the Employer shall arrange to provide Employee
with benefits substantially similar to those which Employee would have been
entitled to receive under such plans and programs. Employer shall assign to
Employee, at no cost and with no apportionment of prepaid premiums, any
assignable insurance policy owned by the Employer and relating specifically to
Employee.
Employee shall not be required to mitigate the amount of any payment or
benefit provided for in this Agreement by seeking other employment or otherwise.
The amount of any payment provided for in this Agreement shall not be reduced by
any compensation earned by Employee or any benefits provided to Employee as the
result of employment by another employer after the Effective Time or otherwise.
Notwithstanding the foregoing, if as a result of employment by another employer
Employee becomes eligible to participate in any plan, program or arrangement
that would provide Employee with substantially the same type of coverage as any
of the benefits being provided to Employee by the Employer in accordance with
this Agreement, the Employer's obligation to provide coverage of the same type
shall be correspondingly reduced (whether or not Employee actually accepts
coverage under the new employer's plan), subject to any rights that Employee may
have to continuation of medical coverage at Employee's own expense under COBRA
or any similar law.
4. TAX MATTERS. In the event that it shall be determined that any
payment or benefit received under this Agreement and/or any other plan,
arrangement or agreement (a "Payment" or, collectively, the "Payments") would be
an "excess parachute payment" (within the meaning of
2
Xxxxxxx X. Xxxxxxx
June 13, 2000
Page 3
Section 280G(b)(1) of the Code) subject to the excise tax imposed by Section
4999 of the Code (the "Excise Tax"), the present value of such Payments shall be
reduced to the "Reduced Amount." The "Reduced Amount" shall be an amount
expressed in present value that maximizes the aggregate present value of the
Payments without causing any Payment to be an excess parachute payment subject
to the Excise Tax.
For these purposes, the present value of any non-cash benefit or
benefit shall be determined in accordance with Sections 280G(d)(3) and (4) of
the Internal Revenue Code of 1986 (the "Code"). The determination whether any
Payment would be an excess parachute payment and the calculation of the Reduced
Amount shall be made by a law firm or accounting firm selected by the Employer
from among those regularly consulted by it regarding Federal income tax matters
within the 12 month period preceding the Effective Time, and reasonably
acceptable to Employee ("Tax Counsel"). Tax Counsel's opinion shall be delivered
to Employee within five (5) days after the Effective Time, and shall contain
detailed calculations supporting the determination of the Reduced Amount or of
Tax Counsel's determination that no portion of the Payments would be subject to
the Excise Tax. Upon Employee's receipt of Tax Counsel's opinion setting forth a
Reduced Amount, Employee shall determine which and how much of the Payments
shall be eliminated or reduced, provided that, if Employee does not make such
determination with ten (10) days of receipt of such opinion, the Employer shall
determine which and how much of the Payments shall be eliminated or reduced and
shall promptly give Employee written notice thereof. Within five (5) days after
Employee gives notice, or upon the expiration of ten (10) days without notice,
the Employer shall pay to or distribute to or for the Employee's benefit such
amounts as are then due to Employee under this Agreement and shall promptly pay
to or distribute to or for the Employee's benefit in the future such amounts as
become due to Employee under this Agreement.
As a result of the uncertainty of the application of Section 280G of
the Code at the time of the initial determination hereunder, it is possible that
Payments will have been made by the Employer which should not have been made
("Overpayment") or that additional payments which will not have been made by the
Employer should have been made ("Underpayment"), in each case, consistent with
the calculations required to be made hereunder. In the event it is determined
that an Overpayment has been made, Employee shall promptly repay any such
Overpayment to the Employer together with interest at the applicable Federal
rate provided for in Section 7872(f)(2) of the Code, provided that, no amount
shall be payable by Employee to the Employer (or if paid by Employee shall be
returned to Employee) if and to the extent such payment would not reduce the
amount that is subject to the Excise Tax. In the event it is determined that an
Underpayment has been made, any such Underpayment shall be promptly paid by the
Employer to or for Employee's benefit together with interest at the applicable
Federal rate provided for in Section 7872(f)(2) of the Code.
3
Xxxxxxx X. Xxxxxxx
June 13, 2000
Page 4
5. NON-COMPETITION. For a period of three (3) years following the
Effective Time, the Employee (either personally or by his agent) shall not,
directly or indirectly, with or without compensation, engage in, be employed by,
or control, advise, manage or receive any economic benefit from or have interest
(whether as a shareholder, director, officer, employee, subcontractor, partner,
consultant, proprietor, agent or otherwise) in, any business, company, firm or
other entity which is engaged in the business, or conducts activities
substantially similar to or likely to be, competitive with the business of
Employer, its subsidiaries or affiliates as such business is conducted at the
Effective Time, in the Territory (as hereinafter defined). For purposes of this
Agreement, the "Territory" shall mean the States of the United States of America
located East of the Mississippi River, other than the States of Louisiana and
Mississippi.
For a period of three (3) years following the Effective Time, the
Employee shall not either personally or by his agent or by letters, circulars or
advertisements, and whether for himself or on behalf of any other person,
company, firm or other entity:
4
Xxxxxxx X. Xxxxxxx
June 13, 2000
Page 5
(a) canvass or solicit orders for business or services similar to
those provided by Employer or any of its subsidiaries or
affiliates from any person, company, firm or other entity who
is or has, within two (2) years prior to the date of such
action, been a customer of the Employer or any of its
subsidiaries or affiliates in the Territory.
(b) seek to persuade any employee of the Employer or any of its
subsidiaries or affiliates to discontinue his or her status or
employment therewith or to become employed in the business
engaged in by the Employee or activities likely to be
competitive with the Employer's business; or
(c) hire or retain any employee of the Employer or any of its
subsidiaries or affiliates at any time within 12 months
following the date of cessation of employment of such
person with the Employer or any of its subsidiaries or
affiliates.
6. SUCCESSORS, BINDING AGREEMENT. The Employer 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
Employer to expressly, absolutely and unconditionally assume and agree to
perform this agreement in the same manner and to the same extent that the
Employer would be required to perform it if no such succession had taken place.
Failure of the Employer to obtain such agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement.
This Agreement shall inure to the benefit of and be enforceable by
Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If Employee should die
while any amounts would still be payable to Employee hereunder if Employee had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to Employee's devisees,
legatee, or other designee or, if there be no such designee, to Employee's
estate.
7. VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
8. COUNTERPARTS. 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.
9. CHANGES. The parties to this Agreement may, at any time, make
changes to any part of this Agreement by mutual consent in writing.
5
Xxxxxxx X. Xxxxxxx
June 13, 2000
Page 6
10. GOVERNING LAW AND VENUE.
(a) The laws of the Commonwealth of Virginia (without the
application of conflicts of law principles) shall
govern the validity of this Agreement, its
interpretation and performance and remedies for
contract breach or any other claim related to this
Agreement. Any action relating to this Agreement
shall be filed or instituted in the appropriate
federal or state court in Virginia, which shall be
the exclusive venue for resolution of any disputes
under this Agreement.
(b) If any provision of this Agreement is found to be
invalid or unenforceable, that provision shall be
construed and applied in a way that comes as close as
possible to expressing the intention of the provision
and that saves the validity and enforceability of the
provision. The invalidity, illegality or
unenforceability of any provision of this Agreement
shall not affect the validity, legality or
enforceability of any other provision of this
Agreement, which shall remain in full force and
effect.
11. EXTENT OF AGREEMENT AND MODIFICATION OF AGREEMENT. This Agreement
represents the entire contract between Employer and Employee and supersedes all
prior negotiations, representations or agreements, either written or oral,
relating to the subject matter of this Agreement. Modifications of this
Agreement shall not be binding unless made in writing and signed by an
authorized representative, as set forth in Paragraph 9 of this Agreement.
12. NOTICE. Any information or notices required or permitted under this
Agreement shall be deemed to have been sufficiently given if in writing and
delivered either personally, by recognized overnight mail service, by regular
mail or by telecopier (with confirmation of transmission and receipt) to the
undersigned representative or an authorized designee.
Sincerely,
VIRGINIA GAS COMPANY
By: /s/ XXXXXXX X. CLEAR
----------------------
Agreed to as of the 13th day of
June 2000.
6
Xxxxxxx X. Xxxxxxx
June 13, 2000
Page 7
/s/ XXXXXXX X. XXXXXXX
----------------------
Xxxxxxx X. Xxxxxxx
7
Xxxxxxx X. Xxxxxxx
June 13, 2000
Page 8
DISTRIBUTION ELECTION:
All amounts payable to me in accordance with Paragraph 1 of this
Agreement shall be payable as follows (initial only one item):
___________ in a single lump sum payment.
___________ in substantially equal monthly installments over 36 months.
Xxxxxxx X. Xxxxxxx
8
Exhibit A
CONSULTING AGREEMENT
THIS AGREEMENT is made and effective on this day of , 2000, between
Virginia Gas Company, a Delaware corporation, having its principal place of
business located at 000 Xxxx Xxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx (hereinafter
referred to as "COMPANY"), and Xxxxxxx X. Xxxxxxx, residing at Abingdon,
Virginia (hereinafter referred to as "CONSULTANT").
WHEREAS, prior to the date of this Agreement, the CONSULTANT held the
position of President and Chief Executive Officer of the COMPANY; and
WHEREAS, the COMPANY has requested the services of CONSULTANT in order
to assist the COMPANY in furtherance of its corporate objectives.
NOW, THEREFORE, in consideration of the mutual promises and
covenants herein contained together with the efforts and resources of COMPANY
and CONSULTANT extended to satisfy the conditions herein provided, and other
good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, COMPANY and CONSULTANT agree as follows:
ARTICLE 1 - SCOPE OF SERVICES AND TERM
(a) Subject to the terms and conditions of this Agreement,
CONSULTANT agrees to provide COMPANY with general consulting
services, including but not limited to providing advice and
counsel to management, utilizing CONSULTANT's contacts and
relationships to further the interests of COMPANY, assisting
COMPANY in its business development activities and such other
services, all as may be requested by COMPANY from time to time
("Services"). CONSULTANT shall not be obligated to provide
Services in excess of eighty (80) hours per calendar month,
nor shall CONSULTANT be required to travel extensively outside
of Abingdon, Virginia in the performance of the Services.
(b) The term of this Agreement shall be three (3) years from the
date hereof.
1
ARTICLE 2 - CONSULTING FEES AND REIMBURSEMENT OF EXPENSES
COMPANY agrees to pay CONSULTANT the amount of $161,666 per year,
payable in equal monthly installments during the term of this Agreement. COMPANY
shall also reimburse CONSULTANT for all reasonable and necessary travel and
entertainment expenses incurred by CONSULTANT in the performance of the Services
hereunder, including, but not limited to transportation expenses, lodging, meals
and communication expenses, provided that such travel and entertainment expenses
were incurred by CONSULTANT for matters requested by COMPANY and that all travel
and entertainment expenses submitted by CONSULTANT to COMPANY are supported by
appropriate documentation.
ARTICLE 3 - COPYRIGHTS AND PATENTS
CONSULTANT shall promptly disclose to COMPANY the products of
CONSULTANT's work under this Agreement, and those products will be deemed to be
a "work for hire," and COMPANY shall be considered to be the person for whom the
work was prepared under all applicable copyright laws. CONSULTANT agrees to give
COMPANY or any party designated by COMPANY all and any assistance reasonably
required to perfect the rights described in this Article 3.
ARTICLE 4 - OWNERSHIP
(a) All materials resulting from CONSULTANT's efforts in
performing the Services, including documents, calculations,
maps, photographs, drawings, computer printouts, notes,
samples, specimens and any other pertinent data shall be owned
by COMPANY. Such materials shall be delivered by CONSULTANT to
COMPANY upon expiration or termination of this Agreement.
(b) CONSULTANT agrees that all materials resulting from
CONSULTANT's efforts in performing the Services will be used
for no purpose other than the specific work referenced in this
Agreement. Information, data or other documents or materials
relating to or deriving from the Services under this Agreement
may not be released or published by CONSULTANT without the
prior written approval of COMPANY except as provided in this
Article 4.
2
(c) The provisions of this Article 4 shall survive termination of
this Agreement.
ARTICLE 5 - TERMINATION OF AGREEMENT
(a) CONSULTANT may terminate this Agreement at any time upon
thirty (30) days written notice to the COMPANY. In the event
CONSULTANT terminates this Agreement, COMPANY shall have no
obligation to pay CONSULTANT the fees provided in Article 2
from and after the effective date of CONSULTANT'S termination
of this Agreement.
(b) COMPANY may terminate this Agreement only for cause if
CONSULTANT engages in willful and wanton misconduct that
results in material financial harm to the COMPANY.
(c) Upon termination of this Agreement, the parties shall promptly
return to each other all confidential information as defined
in Article 11 of this Agreement.
ARTICLE 6 - CONTRACTUAL RELATIONSHIP
(a) In the performance of this Agreement, each party is acting
independently and is not an agent or representative of the
other party. Neither COMPANY nor CONSULTANT has any authority
to transact business in the name of or on account of the other
or otherwise obligate the other party in any manner. This
Agreement shall not constitute a partnership, joint venture or
agency.
(b) CONSULTANT acknowledges and agrees that it, its employees,
agents and representatives are not an employee or employees of
COMPANY.
(c) While on COMPANY's premises, CONSULTANT shall comply fully
with all applicable COMPANY rules, regulations, policies and
procedures.
ARTICLE 7 - ASSIGNMENTS AND SUBCONTRACTS
CONSULTANT shall not assign, subcontract or otherwise transfer any of
its rights or obligations under this Agreement without the prior written consent
of COMPANY.
ARTICLE 8 - INDEMNIFICATION
(a) CONSULTANT agrees to defend, indemnify and hold COMPANY and
its affiliates harmless from and against any occurrence,
liability, judgment, claim,
3
award, cost of defense (including attorneys' fees) expense or
other responsibility or cost of any nature whatsoever arising
(or previously having arisen) derivatively out of any
intentional act, negligence, or other act or omission of
CONSULTANT.
(b) COMPANY agrees to defend, indemnify and hold CONSULTANT
harmless from and against any occurrence, liability, judgment,
claim, award, cost of defense (including attorneys' fees)
expense or other responsibility or cost of any nature
whatsoever arising out of any intentional act, negligence or
other act or omission of COMPANY or any of its affiliates,
employees or agents in connection with the performance of
CONSULTANT's Services under this Agreement.
ARTICLE 9 - WARRANTY
(a) CONSULTANT represents and warrants that it shall perform the
Services hereunder in a professional and workmanlike manner.
Although COMPANY may review and approve various documents,
proposals and actions, COMPANY shall not accept, in any
manner, responsibility for or relieve CONSULTANT from
responsibility for the performance of the Services under this
Agreement.
(b) CONSULTANT represents and warrants that, as of the date of
this Agreement, CONSULTANT is not a party to any oral or
written contract or understanding with any third party which
(i) is inconsistent with this Agreement and/or CONSULTANT's
obligations hereunder, or (ii) will in any way limit or
conflict with CONSULTANT's ability to perform the Services
under this Agreement.
ARTICLE 10 - LAWS AND REGULATIONS
CONSULTANT shall comply with all federal, state and local laws,
ordinances, codes and regulations relating to performance of the Services under
this Agreement.
ARTICLE 11 - CONFIDENTIALITY
(a) Confidential information means all information that is
disclosed to CONSULTANT or COMPANY which relates to the other
party's business and/or
4
technical activities, including, but not limited to, past,
present, or future research, development, purchasing,
processes, inventions, financing, data processing, software,
engineering, sales and marketing and all other business
activities and information. CONSULTANT shall hold all such
confidential information in trust and confidence for COMPANY
and during the term of this Agreement or after expiration or
termination of this Agreement, CONSULTANT shall not disclose
to any person, firm or corporation, or use for its own
business or benefit any information obtained by CONSULTANT in
the performance of the Services under this Agreement.
(b) Upon termination or expiration of this Agreement, COMPANY and
CONSULTANT shall return to each other all written or
descriptive materials or any related matter of any type,
including but not limited to drawings, blueprints,
descriptions or other papers or documents which contain any
such confidential information.
(c) CONSULTANT shall not, without the prior written permission
of COMPANY, use confidential information for any purpose other
than in the performance of the Services under this Agreement.
(d) The restrictions in this Article 11 shall not apply to
confidential information which (i) is or becomes public
knowledge through no fault of CONSULTANT; (ii) is lawfully
made available to CONSULTANT by an independent third party and
such lawful availability can be properly demonstrated; (iii)
is already in CONSULTANT's possession at the time of initial
receipt from the other party and such prior possession can be
properly demonstrated; or (iv) is required by law, regulation,
rule, act or order of any governmental authority or agency to
be disclosed by CONSULTANT, PROVIDED, HOWEVER, CONSULTANT
shall give COMPANY sufficient advance written notice to permit
it to seek a protective order or other similar order with
respect to the confidential information and,
5
thereafter, CONSULTANT shall disclose only the minimum
confidential information required to be disclosed in order to
comply.
(e) COMPANY licenses the use of much of its computer software from
outside companies. COMPANY does not own this software or its
related documentation and, unless specifically authorized,
does not have the right to reproduce it. CONSULTANT agrees to
use software only in accordance with its license.
(f) CONSULTANT may be given one or more computer system passwords.
Such passwords shall not be given to anyone unless first
authorized by a director or officer of COMPANY. CONSULTANT
must immediately notify COMPANY's Information Systems
Department to facilitate the update of CONSULTANT's password
in the event CONSULTANT suspects the password is known to
anyone else.
(g) The provisions of this Article 11 shall survive termination of
this Agreement.
ARTICLE 12 - BEST INTERESTS OF COMPANY
During the term of this Agreement, CONSULTANT agrees to act at all
times in what he reasonably believes to be the best interests of the COMPANY.
ARTICLE 13 - CHANGES
The parties to this Agreement may, at any time, make changes to any
part of this Agreement by mutual consent in writing, except that COMPANY may
decrease the scope of the Services, in its sole discretion, without the written
approval of CONSULTANT.
ARTICLE 14 - GOVERNING LAW AND VENUE
(a) The laws of the Commonwealth of Virginia (without the
application of conflicts of law principles) shall govern the
validity of this Agreement, its interpretation and performance
and remedies for contract breach or any other claim related to
this Agreement. Any action relating to this Agreement shall be
filed or instituted in the appropriate federal or state court
in Virginia, which shall be the exclusive venue for resolution
of any disputes under this Agreement.
6
(b) If any provision of this Agreement is found to be invalid or
unenforceable, that provision shall be construed and applied
in a way that comes as close as possible to expressing the
intention of the provision and that saves the validity and
enforceability of the provision. The invalidity, illegality or
unenforceability of any provision of this Agreement shall not
affect the validity, legality or enforceability of any other
provision of this Agreement, which shall remain in full force
and effect.
ARTICLE 15 - EXTENT OF AGREEMENT AND MODIFICATION OF AGREEMENT
This Agreement represents the entire contract between COMPANY and
CONSULTANT and supersedes all prior negotiations, representations or agreements,
either written or oral, relating to the subject matter of this Agreement.
Modifications of this Agreement shall not be binding unless made in writing and
signed by an authorized representative, as set forth in Article 16 of this
Agreement.
ARTICLE 16 - NOTICE
Any information or notices required or permitted under this Agreement
shall be deemed to have been sufficiently given if in writing and delivered
either personally, by recognized overnight mail service, by regular mail or by
telecopier (with confirmation of transmission and receipt) to the undersigned
representative or an authorized designee.
ARTICLE 17 - EFFECT OF WAIVER
No delay or omission to exercise any right or remedy accruing to
COMPANY upon any breach or default of CONSULTANT shall impair such right or
remedy, or be construed to be a waiver of any such breach or default. Any waiver
by COMPANY of any breach or default under this Agreement must be made in writing
and executed by an authorized officer of COMPANY.
IN WITNESS WHEREOF, COMPANY and CONSULTANT have caused this Agreement
to be executed by their duly authorized representatives, set forth below.
VIRGINIA GAS COMPANY CONSULTANT
Signed by: Signed by:
---------------------- ----------------------
Name: Xxxxxxx X. Xxxxxxx
--------------------------
Title:
---------------------------
7
