CHANGE IN CONTROL TERMINATION AGREEMENT
Exhibit
10.13(c)
This
Change in Control Termination Agreement (the “Agreement”) is entered into as of
January 1, 2009, between Middlesex Water Company, a New Jersey corporation, with
its principal place of business located at 1500 Ronson Road, P.O. Box 1500,
Iselin, New Jersey 08830-0452, (the “Company”), and
Xxxxxx X.
Xxxxxxxx, residing at 00 Xxxxxxx Xxxxx, Xxxxxxx, Xxx Xxxxxx 00000 (referred to
as “You” in this Agreement).
Recitals
A. The
Company considers it essential to the best interests of its stockholders to
xxxxxx the continuous employment of key management personnel. In this
connection, the Board of Directors of the Company (the “Board”) recognizes that,
as is the case with many publicly held Companies, the possibility of a Change in
Control may exist. This possibility, and the uncertainty and
questions that it may raise among management, may result in the departure or
distraction of management personnel to the detriment of the Company and its
stockholders.
B. The
Board has determined that appropriate steps should be taken to reinforce and
encourage the continued attention and dedication of members of the Company’s
management, including You, to the assigned duties without distraction in the
face of potentially disturbing circumstances arising from the possibility of a
Change in Control of the Company.
C. To
induce You to remain in the employ of the Company, and in consideration of your
agreement set forth below, the Company agrees that You shall receive the
severance benefits set forth in this Agreement in the event your employment with
the Company is terminated by the Company, or is terminated by You for “Good
Reason” as defined herein in connection with a “Change in Control of the
Company” (as defined in Section 2 below) under the circumstances described
below. This Agreement is meant to supersede any other specific
written agreements that may have been entered into between yourself and the
Company concerning termination of employment.
Therefore,
in consideration of your continued employment and the parties’ agreement to be
bound by the terms contained in this Agreement, the parties agree as
follows:
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1.
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Term
of Agreement. This Agreement shall commence as
of
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January
1, 2009 and shall continue in effect through December 31,
2009. However, commencing on December 31, 2009, and each December 31
afterwards, the term of this Agreement shall automatically be extended for one
(1) additional year unless, no later than the preceding November 1st, the
Company shall have given notice that it does not wish to extend this Agreement.
Notwithstanding the foregoing, if a Change in Control of the Company shall be
proposed to occur or have occurred during the original or any extended term of
this Agreement, this Agreement shall continue in effect until your termination
of employment with the Company or its successor or when all amounts due under
this Agreement following a termination have been paid, whichever is
later.
2. Change In
Control. No benefits shall be payable under this Agreement
unless there shall have been a Change in Control of the Company, as set forth
herein. For purposes of this Agreement, a “Change in Control” of the
Company shall be deemed to occur if any party or group acquires beneficial
ownership of 20 percent or more of the voting shares of the Company; or if
shareholder approval is obtained for a transaction involving the acquisition of
the Company through the purchase or exchange of the stock or assets of the
Company by merger or otherwise; or if one-third or more of the Board elected in
a 12-month period or less are so elected without the approval of a majority of
the Board as constituted at the beginning of such period; or a liquidation or
dissolution of Company.
3. Termination
Following Change In Control. If any of the events described in
Section 2 above constituting a Change in Control of the Company shall have
occurred, then unless the termination is (A) because of your death, Disability
or Retirement, (B) by the Company for Cause, or (C) by You other than for Good
Reason, on the subsequent termination of your employment during the term of this
Agreement, You shall be entitled to the severance benefits provided in Section
4.3 below if such termination occurs on or before the third (3rd)
anniversary of the Change in Control date .
3.1 Disability;
Retirement. If, as a result of your incapacity due to physical
or mental illness, You shall have been absent from the full-time performance of
your duties with the Company for 6 consecutive months, and within 30 days after
written notice of termination is given You shall not have returned to the
full-time performance of your duties, your employment may be terminated for
"Disability." Termination of your employment by the Company or You
due to your "Retirement" shall mean termination in accordance with the Company's
retirement policy, including early retirement, generally applicable to its
salaried employees or in accordance with any retirement arrangement established
with your consent with respect to You.
3.2 Cause. Termination
by the Company of your employment for "Cause" shall mean termination as a result
of:
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3.2.1 The
willful and continued failure by You to substantially perform your duties with
the Company as such employment was performed by You prior to the Change in
Control (other than any such failure resulting from your Disability or any such
actual or anticipated failure after the issuance by You of a Notice of
Termination for Good Reason as defined herein) after a written demand for
substantial performance is delivered to You by the Board, which demand
specifically identifies the manner in which the Board believes that You have not
substantially performed your duties; or
3.2.2 The willful act by You
in conduct that is demonstrably and materially injurious to the Company, and
which the Board deems to cause or will cause substantial economic damage to the
Company or injury to the business reputation of the Company, monetarily or
otherwise. For purposes of this Section, no act, or failure to act,
on your part shall be deemed “willful" unless done, or omitted to be done, by
You not in good faith and without a reasonable belief that your action or
omission was in the best interest of the Company. Notwithstanding the
foregoing, You shall not be deemed to have been terminated for Cause unless and
until there shall have been delivered to You a copy of a resolution duly adopted
by the affirmative vote of not less than three-quarters of the entire membership
of the Board at a meeting of the Board called and held for such purpose (after
reasonable notice to You and an opportunity for You, together with your counsel,
to be heard before the Board), finding that in the good faith opinion of the
Board You were guilty of conduct set forth above in clauses 3.2.1 or 3.2.2 of
this Section and specifying the particulars in detail.
3.3 Good
Reason. You shall be entitled to receive severance benefits as
provided in this Agreement if You terminate your employment with the Company for
“Good Reason.” For purposes of this Agreement, "Good Reason" shall
mean, without your consent, the occurrence in connection with a Change in
Control of the Company of any of the following circumstances unless, in the case
of Sections 3.3.1, 3.3.5, 3.3.6, 3.3.7, or 3.3.8, the circumstances are fully
corrected prior to the Date of Termination specified in the Notice of
Termination, as defined in Sections 3.5 and 3.4, respectively, given in respect
of them. If You terminate your employment with the Company for Good
Reason, as provided below, your employment with the Company shall be considered
to have been involuntarily terminated by the Company:
3.3.1 The
assignment to You of any significant employment duties which are inconsistent
with your status and position (i) prior to the
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Change in
Control where such change is a direct result of any pending Change in Control;
or (ii) as such status exists immediately prior to the Change in Control of the
Company, or (iii) which are a substantial adverse alteration in the nature or
status of your responsibilities from those in effect immediately prior to the
Change in Control of the Company whichever is applicable;
3.3.2 A reduction by the
Company in your annual base salary as in effect on the initial date of this
Agreement, or as same may be increased from time to time irrespective of future
Company policies including any across-the-board salary reductions similarly
affecting all key employees of the Company;
3.3.3 Your relocation, without
your consent, to an employment location not within twenty-five (25) miles of
your present office or job location, except for required travel on the Company's
business to an extent substantially consistent with your present business travel
obligations;
3.3.4 The failure by the
Company, without your consent, to pay to You any part of your current
compensation, or to pay to You any part of an installment of deferred
compensation under any deferred compensation program of the Company, within
fourteen (14) days of the date the compensation is due;
3.3.5 The failure by the
Company to continue in effect any bonus to which You were entitled, or any
compensation plan in which You participate (i) prior to the Change in Control
where such change is a direct result of any pending Change in Control, or (ii)
immediately prior to the Change in Control of the Company that is material to
your total compensation, including but not limited to the Company's Restricted
Stock Plan, 401(k) Plan, and Benefit Plans, or any substitute plans adopted
prior to the Change in Control of the Company, unless an equitable arrangement
(embodied in an ongoing substitute or alternative plan) has been made with
respect to the plan, or the failure by the Company to continue your
participation in it (or in such substitute or alternative plan) on a basis not
materially less favorable, both in terms of the amount of benefits provided and
the level of your participation relative to other participants, as existed at
the time of the Change in Control;
3.3.6 The failure by the
Company to continue to provide You with (i) benefits substantially similar to
those enjoyed by You under any of the Company's life insurance, medical, health
and accident, or disability plans in which You were participating at the time of
the
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Change in
Control of the Company was in effect for the employees of the Company generally
at the time of the Change in Control, (ii) the failure to continue to provide
You with a Company automobile or allowance in lieu of it at the time of the
Change in Control of the Company, (iii) the taking of any action by the Company
that would directly or indirectly materially reduce any of such benefits or
deprive You of any material fringe benefit enjoyed by You at the time of the
Change in Control of the Company, or (iv) the failure by the Company to provide
You with the number of paid vacation days to which You are entitled on the basis
of years of service with the Company in accordance with the Company's normal
vacation policy in effect at the time of the Change in Control of the
Company;
3.3.7 The failure of the
Company to obtain a satisfactory agreement from any successor to assume and
agree to perform this Agreement, as contemplated in Section 5 of this Agreement;
or
3.3.8 Any purported
termination of your employment that is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 3.4 below (and, if
applicable, the requirements of Section 3.2 above); for purposes of this
Agreement, no such purported termination shall be effective.
3.4 Notice of
Termination. Any purported termination of your employment by
the Company or by You shall be communicated by written Notice of Termination to
the other party to this Agreement in accordance with Section 6 of this
Agreement. For purposes of this Agreement, a "Notice of Termination"
shall mean a notice that shall indicate the specific termination provision in
this Agreement relied on, and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of your employment
under the provision so indicated. Your rights to terminate your
employment pursuant to this Section shall not be affected by your incapacity due
to Disability. Your continued employment shall not constitute consent
to, or a waiver of rights with respect to, any circumstance constituting Good
Reason under this Agreement. In the event You deliver Notice of
Termination based on circumstances set forth in Sections 3.3.1, 3.3.5, 3.3.6,
3.3.7, or 3.3.8 above, which are fully corrected prior to the Date of
Termination set forth in your Notice of Termination, the Notice of Termination
shall be deemed withdrawn and of no further force or effect.
3.5 Date of
Termination, etc. "Date of Termination" shall mean (A) if your
employment is terminated for Disability, 30 days after Notice of Termination is
given (provided that You shall not have returned to the full-time performance of
your duties during such 30-day period), and (B) if your employment is terminated
pursuant to Section 3.2 or 3.3 above or for any other reason (other than
Disability), the date specified in the Notice of Termination (which, in the case
of a termination pursuant to Section 3.2 above shall not be less
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than 30
days, and in the case of a termination pursuant to Section 3.3 above shall not
be less than 15 nor more than 60 days, respectively, from the date the Notice of
Termination is given). However, if within 15 days after any Notice of
Termination is given, or, if later, prior to the Date of Termination (as
determined without regard to this provision), the party receiving the Notice of
Termination notifies the other party that a dispute exists concerning the
termination, then the Date of Termination shall be the date on which the dispute
is finally determined, either by mutual written agreement of the parties, by a
binding arbitration award, or by a final judgment, order, or decree of a court
of competent jurisdiction (which is not appealable or with respect to which the
time for appeal has expired and no appeal has been perfected). The
Date of Termination shall be extended by a notice of dispute only if the notice
is given in good faith and the party giving the notice pursues the resolution of
the dispute with reasonable diligence. Notwithstanding the pendency
of any such dispute, the Company will continue to pay You your full compensation
in effect when the notice giving rise to the dispute was given (including, but
not limited to, base salary) and continue You as a participant in all
compensation, benefit, and insurance plans in which You were participating when
the notice giving rise to the dispute was given, until the dispute is finally
resolved in accordance with this Section. Amounts paid under this
Section are in addition to all other amounts due under this Agreement and shall
not be offset against or reduce any other amounts due under this
Agreement.
4. Compensation
on Termination or During Disability. Following a Change in
Control of the Company, as defined by Section 2, on termination of your
employment or during a period of Disability You shall be entitled to the
following benefits:
4.1 During any period that
You fail to perform your full-time duties with the Company as a result of
incapacity due to Disability, You shall continue to receive your base salary at
the rate in effect at the commencement of any such period, together with all
amounts payable to You under any compensation plan of the Company during the
period, until this Agreement is terminated pursuant to section 3.1
above. Thereafter, or in the event your employment shall be
terminated by the Company or by You for Retirement, or by reason of your death,
your benefits shall be determined under the Company's retirement, insurance, and
other compensation programs then in effect in accordance with the terms of those
programs.
4.2 If
your employment shall be terminated by the Company for Cause or by You other
than for Good Reason, Disability, death, or Retirement, the Company shall pay
You your full base salary through the Date of Termination at the rate in effect
at the time Notice of Termination is given, plus all other amounts and benefits
to which You are entitled under any compensation plan of the Company at the time
the payments are due. The Company shall have no obligations to You
under this Agreement.
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4.3 On
or before the third anniversary of the Change in Control, if your employment by
the Company shall be terminated (a) by the Company other than for Cause,
Retirement or Disability, or (b) by You for Good Reason (as defined in Section
3.3 herein), then You shall be entitled to the benefits provided
below:
4.3.1 The
Company shall pay You your full salary through the Date of Termination at the
rate in effect at the time Notice of Termination is given, plus all other
amounts and benefits to which You are entitled under any compensation plan of
the Company, at the time the payments are due, except as otherwise provided
below.
4.3.2 In lieu of any further
salary payments to You for periods subsequent to the Date of Termination, the
Company shall pay to You, as severance pay the following: (i) a lump
sum severance payment equal to three (3) times the average of your Compensation
for the five (5) years prior to the occurrence of the circumstance giving rise
to the Notice of Termination (or if employed less than 5 years, the average
annualized compensation of the period worked to date), plus (ii) the amounts in
the forms set forth in paragraphs 4.3.3, 4.3.4 and 4.3.5 (the “Severance
Payments”). In addition to the Severance Payments, the Company shall
pay to You an additional amount equal to the amount of the Excise Tax, if
any, that is due or determined to be due under Section 4999 of the
Internal Revenue Code of 1986, as amended, resulting from the Severance Payments
or any other payments under this Agreement or any other agreement between You
and the Company and an amount sufficient to pay the taxes on any such Excise
Taxes (the “Gross-up”).
4.3.3 The Company shall
continue coverage for You and your dependents under any health or welfare
benefit plan under which You and your dependents were participating prior to the
Change in Control for a period ending on the earlier to occur of
(i) the date You become covered by a new employer’s health and welfare benefit
plan, (ii) the date You become covered by Medicare, or (iii) the date which is
thirty-six (36) months from the Date of Termination. The coverage for
your dependents shall end earlier than (i), (ii) or (iii) if required by the
health or welfare benefit plan due to age eligibility.
4.3.4 The Company shall pay to
You any deferred compensation, including, but not limited to deferred bonuses,
allocated or credited to You or your account as of the Date of
Termination.
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4.3.5 Outstanding stock
options or Restricted Stock grants, if any, granted to You under the Company's
Stock Plans which are not vested on Termination shall immediately
vest.
4.3.6 Where You shall prevail
in any action against the Company to recover benefits hereunder, the Company
shall also pay to You all reasonable legal and accounting fees and expenses
incurred by You as a result of the termination, including all such fees and
expenses incurred by You as a result of the termination, (including all such
fees and expenses, if any, incurred in contesting or disputing any termination
or in seeking to obtain or enforce any right or benefit provided by this
Agreement or in connection with any tax audit or proceeding to the extent
attributable to the application of Code Section 4999 to any payment or benefit
provided under this Agreement) or any other agreement with the
Company.
4.3.7 The amount of Severance
Payments and any Gross-up due to You under this or any other relevant agreement
with the Company shall be determined by a third party agreed to by You and the
Company. If You cannot agree on a third party, then both third
parties shall determine the amounts due under this Agreement. If the
third parties do not agree on the amount to be paid to You, then either party
may submit the calculation of the amounts which are in dispute to Arbitration in
accordance with this Agreement. The payments provided for in
Paragraphs 4.3.2, 4.3.4 and 4.3.5 above, shall be made no later than the
thirtieth (30th) day
following the Date of Termination. However, if the amounts of the
payments cannot be finally determined on or before that day, the Company shall
pay to You on that day an estimate, as determined in good faith by the Company,
of the minimum amount of such payments and shall pay the remainder of those
payments (together with interest at the rate provided in Section 1274(b)(2)(B)
of the Code) as soon as the amount can be determined but in no event later than
the 30th day after the Date of Termination. In the event that the
amount of the estimated payments exceeds the amount subsequently determined to
have been due, the excess shall constitute a loan by the Company to You payable
on the 30th day after demand by the Company (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code).
4.4 For
purposes of this Agreement, “Compensation” shall mean the gross earnings
reported on Form W-2 during a calendar year (which may include but is not
limited to the value of the personal use of an automobile, any third-party sick
pay, and any fees paid to You for serving as a Director of the Company or
its
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subsidiaries);
awards under the Company’s Restricted Stock Plan or other equity awards; and
Company contributions to your 401(k) account.
4.5 You shall not be
required to mitigate the amount of any payment provided for in this Section 4 by
seeking other employment or otherwise, nor shall the amount of any payment or
benefit provided for in this Section 4 be reduced by any compensation earned by
You as the result of employment by another employer, by retirement benefits, by
offset against any amount claimed to be owed by You to the Company, or otherwise
except as specifically provided in this Section 4.
4.6 In addition to all other
amounts payable to You under this Section 4, You shall be entitled to receive
all qualified benefits payable to You under the Company's 401(k) Plan, Defined
Benefit Plan and any other plan or agreement relating to retirement benefits in
accordance with the terms of those plans.
5. Successors;
Binding Agreement.
5.1 The Company 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
Company to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place. Failure of the Company to
obtain the assumption and agreement prior to the effectiveness of any succession
shall be a breach of this Agreement and shall entitle You to compensation from
the Company in the same amount and on the same terms as You would have been
entitled to under this Agreement if You had terminated your employment for Good
Reason following a Change in Control of the Company, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination.
5.2 This Agreement shall
inure to the benefit of and be enforceable by your personal or legal
representatives, executors, administrators, heirs, distributees, and
legatees. If You should die while any amount would still be payable
to You if You had continued to live, all such amounts, unless otherwise provided
in this Agreement, shall be paid in accordance with the terms of this Agreement
to your legatee or other designee or, if there is no such designee, to your
estate.
6. Notice. For
the purpose of this Agreement, all notices and other communications provided for
in the Agreement shall be in writing and shall be deemed to have been duly given
when delivered or mailed by United States registered or certified mail, return
receipt requested, postage prepaid, addressed to
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the
respective addresses set forth on the first page of this Agreement, provided
that all notices to the Company shall be directed to the attention of the Board
with a copy to the Secretary of the Company, or to such other address as either
party may have furnished to the other in writing in accordance this Agreement,
except that notice of a change of address shall be effective only on
receipt.
7. Miscellaneous
7.1 No provision of this
Agreement may be modified, waived, or discharged unless the waiver,
modification, or discharge is agreed to in writing and signed by You and such
officer as may be specifically designated by the Board.
7.2 No waiver by either
party to this Agreement at any time of any breach by the other party of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.
7.3 No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter of this Agreement have been made by either party that are not
expressly set forth in this Agreement.
7.4 Nothing in this
Agreement is intended to reduce any benefits payable to You under any other
agreement You may have with the Company or in any Company plan in which You may
participate.
7.5 The validity,
interpretation, construction, and performance of this Agreement shall be
governed by the law of New Jersey without reference to its conflict of laws
principles.
7.6 All references to
sections of the Exchange Act or the Code shall be deemed also to refer to any
successor provisions to such sections. Any payments provided for
shall be paid net of any applicable withholding or deduction required under
federal, state or local law.
7.7 The obligations of the
Company under Section 4 shall survive the expiration of the term of this
Agreement.
8. Validity. The
validity or enforceability of any provision of this Agreement shall not affect
the validity or unenforceability of any other provision of this Agreement, which
shall remain in full force and effect.
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9. Counterparts. This
Agreement may be executed in several counterparts, each of which shall be deemed
to be an original but all of which together will constitute one and the same
instrument.
10. Arbitration. Any
dispute or controversy arising under or in connection with this Agreement shall
be settled exclusively by arbitration in New Jersey in accordance with the rules
of the American Arbitration Association then in effect. Judgment may
be entered on the arbitrator's award in any court having
jurisdiction. However, You shall be entitled to seek specific
performance of your right to be paid until the Date of Termination during the
pendency of any dispute or controversy arising under or in connection this
Agreement.
11. Entire
Agreement. This Agreement sets forth the entire understanding
of the parties with respect to its subject matter and supersedes all prior
written or oral agreements or understandings with respect to the subject
matter.
In
witness whereof, the parties have executed this Agreement as of the day and year
first above written.
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MIDDLESEX
WATER COMPANY
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By:
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/s/ Xxxxxx X.
Xxxx
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Xxxxxx
X. Xxxx
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President
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ATTEST:
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/s/ Xxxxxxx X.
Xxxxx
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Xxxxxxx
X. Xxxxx
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Secretary
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/s/ Xxxxxx
Xxxxxxxx
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Xxxxxx
X. Xxxxxxxx
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