Exhibit 10(ee)
SEVERANCE AGREEMENT
BETWEEN
FALL RIVER GAS COMPANY
AND
XXXXX X. XXXXXX
THIS AGREEMENT, effective this first day of January, 1999, by and between Fall
River Gas Company, a Massachusetts Corporation (the "Company") and Xxxxx X.
Xxxxxx (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: ______________
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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