1
Exhibit 10.20
EMPLOYMENT AGREEMENT
AGREEMENT made as of this 5th day of May, 1998, by and between BayCorp
Holdings, Ltd., a Delaware corporation with its principal place of business
located at 000 Xxxx Xxxxxx, Xxxxx 000, Xxxxx, Xxx Xxxxxxxxx 00000 (the
"Company"), and Xxxxx X. Xxxxxx, Xx., residing at 000 Xxxxxxxx Xxxxxx,
Xxxxxxxxxx, Xxx Xxxxxxxxx 00000 ("Executive").
RECITAL
The Company and Executive are parties to an Employment Agreement dated as
of July 31, 1995, as amended (the "Prior Agreement"). The parties hereto wish to
enter into this Agreement in substitution for the Prior Agreement.
1. EMPLOYMENT.
The Company hereby employs Executive, and Executive hereby accepts
such employment, in accordance with the terms and subject to
the conditions set forth in this Agreement.
2. POSITION AND DUTIES.
a. Subject to the provisions of this Agreement, the Company shall
employ Executive, and Executive shall serve the Company, as President and Chief
Executive Officer and/or any other titles as may be designated from time to time
by the Board of Directors (the "Board") of the Company. Executive shall report
to the Board.
b. Executive shall have primary authority and responsibility for
operational, management and general business matters of the Company and shall
perform such executive duties and responsibilities on behalf of the Company and
its Affiliates (as defined below) as may be prescribed from time to time by the
Board. Executive shall devote his full-time best efforts to the business of the
Company so as to increase the profitability and shareholder value of the
Company; and Executive shall not during the term of this Agreement be engaged in
any other business activity, unless written approval is first secured from the
Board. The preceding sentence shall not be deemed to prohibit Executive's
activities relating to his ownership and management of a certain residential
apartment building located in Oneonta, New York and a certain condominium
located in Brighton, Massachusetts, provided that the ownership and management
of such building and condominium does not interfere with Executive's duties
hereunder. As used herein, "Affiliates" shall mean entities controlling,
controlled by or under common control with the Company. The Executive agrees
upon the
2
Board's request, to serve on the Board (or any Affiliates's boards of directors)
for no additional consideration. The Executive acknowledges and agrees that,
incident to a material transaction involving the Company, his title and duties
may be shared with a "Co-Chief Executive Officer" (and the same, in and of
itself, shall not constitute a "Material Adverse Change," as defined below).
3. TERM OF EMPLOYMENT. Unless sooner terminated as provided in Section 6
below, the term of this Agreement shall be approximately two (2) years,
commencing on May 5, 1998 (the "Commencement Date") and ending on July 31, 2000
(the "Expiration Date"). As used herein, the word "Term" shall refer to the
period beginning on the Commencement Date and ending on the effective date of
the termination of Executive's employment with the Company as provided in this
Agreement.
4. COMPENSATION; BENEFITS. For all services rendered by Executive pursuant
to this Agreement, the Company shall compensate Executive, during the Term of
Executive's employment hereunder, as follows:
a. ANNUAL SALARY; DISCRETIONARY BONUS. From and after the Commencement
Date, Executive shall be paid an annual base salary of $150,000 per year, which
shall be payable in equal bi-weekly installments. After the first anniversary of
the Commencement Date, such base salary shall be increased to $160,000 per year.
The Executive shall also be eligible to receive, from time to time, one or more
discretionary bonuses to be determined by the Board. All salary and bonus
payments to Executive shall be subject to payroll tax and related deductions as
required by law.
b. LOAN. The Company shall lend to Executive the sum of $25,000 (the
"Loan Amount"), which sum shall be paid to Executive promptly after the
Commencement Date, and of which at least 80% of which shall be used to purchase
common stock of the Company on the open market. One-half (1/2) of the Loan
Amount (or $12,500) shall be forgiven, and Executive shall have no obligation to
repay the Company with respect to such forgiven amount (a "Forgiven Loan
Amount"), on each anniversary of the Commencement Date. Notwithstanding the
foregoing sentence, in the event that the employment of Executive is terminated
by the Company for "Cause" (as defined in Section 6.c. below) or by Executive in
violation of the terms of this Agreement prior to the Expiration Date, Executive
shall, within thirty (30) days following such termination, repay to the Company
the Loan Amount, less any Forgiven Loan Amount (the "Adjusted Loan Amount"),
together with interest accrued on the Adjusted Loan Amount, as calculated from
the Commencement Date through the date of such termination, at the rate of six
percent (6%) per annum.
c. INSURANCE. During the Term, the Company shall continue to pay life
insurance and disability insurance premiums with respect to the Executive,
2
3
consistent with past practices and subject to the Executive's continued
eligibility for coverage at reasonable rates.
d. EXECUTIVE BENEFITS; VACATION. During the term of his employment
hereunder, Executive shall be entitled to participate in all employee pension
and welfare benefit plans and programs made available to executive employees of
the Company, as such plans or programs may be in effect from time to time and as
determined by the Board, including, without limitation, 401(K) plans and health
insurance and life insurance plans not covered above. Executive shall be
entitled to three (3) weeks of paid vacation per calendar year or a pro rata
number of vacation days for a period that is less than a complete calendar year
in accordance with the Company's vacation policy in effect from time to time.
e. REIMBURSEMENT OF EXPENSES. Executive shall be reimbursed for
reasonable business expenses incurred in connection with carrying out the
business of the Company, subject to authorization and documentation in
accordance with the Company's policies in effect from time to time.
5. CONFIDENTIAL INFORMATION; NON-COMPETITION; ANTI-RAIDING.
a. Executive agrees that all operating and/or financial data and
projections, plans, contracts, agreements, literature, manuals, brochures,
books, schedules, correspondence and other materials furnished, disclosed or
otherwise made available to Executive by the Company or its Affiliates, or
secured through the efforts of Executive, relating to the business conducted by
the Company and/or its Affiliates, are and shall remain the property of the
Company and/or its Affiliates, and Executive agrees to deliver all such
materials, including all copies or abstracts thereof, to the Company upon the
termination of Executive's employment hereunder, or at any other time at the
Company's request.
b. Executive agrees that, except in the good faith performance of his
duties and responsibilities under this Agreement or as required by order of a
court or governmental agency having jurisdiction, he will not at any time during
or after his employment with the Company use, reveal, divulge or make known to
any person or entity any confidential or proprietary knowledge or information
concerning the Company or its Affiliates, including without limitation any such
information concerning any equipment, facilities, contracts, leases, operating
and/or financial data and projections, processes, developments, schedules,
lists, plans or other matters relating to the business of the Company or its
Affiliates and will retain all knowledge and information Executive acquired
during his employment therewith relating to the business of the Company or its
Affiliates in trust in a fiduciary capacity for the sole benefit of the Company,
its Affiliates and their respective successors and assigns.
3
4
Executive's obligations under this Section 5.b. shall not apply to any
information that (i) is or becomes known to the general public under
circumstances involving no breach by Executive of this Agreement, (ii) is
generally disclosed to third parties (excluding counsel, accountants, financial
advisors, employees, agents and material creditors of the Company) by the
Company without restriction on such third parties, or (iii) is approved for
release by written authorization of the Board.
c. During the Term and for a period of one (1) year thereafter,
Executive shall not (i) enter into the employment of, or act as a consultant,
director, officer, or employee of, or render any service or advice to, any other
business, partnership, association, corporation or other entity engaged in the
"public utility" industry within one or more of the six New England States,
other than the Company or any Affiliate (a "Competing Business"), or (ii) invest
or otherwise acquire any interest, whether as a shareholder, lender, partner,
proprietor, vendor or otherwise, in any Competing Business (excluding ownership
of less than 2% of a class of securities of a publicly-traded company). "Public
utility" shall mean for the purposes of this Section 5.c. any company which
directly or indirectly owns or operates facilities used for the generation,
transmission, or distribution of electric energy for sale.
d. During the Term and for a period of two (2) years thereafter,
Executive will not, directly or indirectly, entice, induce or in any manner
influence any person who is, or shall have been during such period, in the
service of the Company, to leave such service for the purpose of engaging in a
Competing Business, or being employed or engaged by or otherwise associated with
any person or entity which is a Competing Business.
e. The provisions of this Section 5 shall survive the termination of
this Agreement and the termination of Executive's employment with the Company
and shall run to and inure to the benefit of the Company and its successors and
assigns. Executive represents, warrants and acknowledges that he has carefully
read this Section 5, that he has had an opportunity to have the provisions
contained herein explained to him by his attorney, and that he understands the
provisions contained herein. Executive further acknowledges that, by reason of
his training, skills, experience and employment hereunder, the services to be
rendered by him under the provisions of this Agreement and their value to the
Company are of a special, unique and extraordinary character and that it would
be difficult or impossible to replace such services, and he further acknowledges
that a violation by him of any of the provisions of this Section 5 could cause
continuing material and irreparable injury to the Company and that in such event
money damages would not be readily calculable and the Company would not have an
adequate remedy at law. Executive acknowledges and agrees that (i) the
restrictions under this Section 5 are reasonable and will not interfere with
Executive's ability to earn a livelihood or impose upon him any undue hardship,
and (ii) any breach
4
5
of the covenants, provisions and restrictions contained in this Section 5 shall
cause, and shall be deemed to be, a fundamental and material breach of
Executive's fiduciary and contractual obligations to Employer. Therefore,
Executive agrees that the Company shall be authorized and entitled to obtain
from any court of competent jurisdiction, interim and permanent equitable
relief, including without limitation, injunctive relief, in the event of any
such breach or threatened breach, together with payment of reasonable attorneys'
fees and disbursements and any other costs of enforcement incurred in connection
with such breach or threatened breach. These rights and remedies shall be
cumulative and shall be in addition to any other rights or remedies whatsoever
to which the Company shall otherwise be entitled hereunder, at law or otherwise,
including the right to seek damages (including any consequential damages) which
any court of competent jurisdiction may deem appropriate.
6. TERMINATION OF EMPLOYMENT. The term of employment may terminate upon the
occurrence of any of the following events:
a. TERMINATION DUE TO DEATH. Executive's employment hereunder shall
terminate upon his death. In such event his estate or his beneficiaries, as the
case may be, shall be entitled to:
(1) Salary accrued through the date of death; and
(2) The right to exercise his 125,000 stock options (the
"Options"), subject to the terms of the Stock Option
Agreements dated as of July 31, 1995 and September 17, 1996
(the "Option Agreements") and the applicable Stock Option
Plans.
b. TERMINATION DUE TO DISABILITY. The Company may terminate
Executive's employment at any time on written notice after his "Disability."
"Disability" shall mean Executive's inability by reason of illness or injury
substantially to perform his duties and responsibilities under this Agreement,
as reasonably determined by a majority of the Board based upon the report of a
reputable physician designated by the Board (whom Executive shall permit to
examine him), for a period of eighty-four (84) consecutive days or one hundred
(100) days in any twelve (12) month period. In the event Executive's employment
is terminated due to his Disability, he shall be entitled to receive the
following:
(1) The amount of any disability or retirement benefits provided
to Executive by the Company under the provisions of any
Company plan for its employees with respect to which
Executive is qualified; and
5
6
(2) Any accrued and unpaid salary through the effective date of
termination.
c. INVOLUNTARY TERMINATION FOR CAUSE. The Company may terminate
Executive's employment at any time for "Cause" on written notice. "Cause" shall
mean (i) Executive is convicted of a felony, or a misdemeanor involving moral
turpitude; or (ii) the Board determines in good faith, after reasonable notice
to Executive and an opportunity for Executive to present his views of the
relevant facts and circumstances, that Executive has (A) materially failed or
refused to perform competently his duties and responsibilities (after notice and
opportunity to cure if such material failure or refusal can be cured) as
provided in this Agreement; (B) has breached his duty of loyalty to, or
committed any act of fraud, theft or dishonesty against, the Company or any of
its Affiliates; or (C) has violated any of his material obligations under this
Agreement after written notice and a reasonable opportunity (not to be less than
ten (10) days) to cure such default. In the event of such termination for Cause,
all rights and benefits of Executive under this Agreement (including without
limitation all unexercised Options) shall immediately terminate and in no event
shall the Company be obligated to pay Executive any compensation (other than
salary and accrued and vested benefits through the date of termination) with
respect to any period before or after the date of such termination.
d. VOLUNTARY TERMINATION BY EXECUTIVE. Executive may terminate this
Agreement in a "Qualifying Termination" (as defined in Section 7.d. below).
e. OTHER TERMINATION. In the event of the termination of Executive's
employment (i) by the Company other than pursuant to the provisions of
Subsection 6.a., b. or c. above, or (ii) by Executive following a material
breach by the Company of its obligations under this Agreement which means
uncured after written notice to the Company and a reasonable opportunity (not to
be less than ten (10) days) to cure such breach:
(1) Executive shall be entitled to receive in cash an amount
equal to his annual salary (excluding loan forgiveness) from
the effective date of such termination through the
Expiration Date; PROVIDED, however, that such sum shall be
offset by the amount of any compensation earned by Executive
through our employment from the effective date of such
termination through the Expiration Date (it being understood
that Executive shall be under no obligation to mitigate his
damages in such event);
6
7
(2) The Loan Amount (to the extent not then forgiven), together
with any interest thereon, shall be immediately forgiven,
and Executive shall have no obligation to repay the same;
(3) All Options previously issued to Executive (other than the
25,000 "contingent options" awarded to the Executive in 1996
(the "Contingent Options")) shall immediately become
exercisable (as provided in the Option Agreements); and
(4) The covenants contained in Subsections 5.c. and 5.d. shall
not apply.
If this Agreement expires by its terms on the Expiration Date, the
covenant contained in Subsection 5.c. shall only remain in force (i) for (6)
months instead of one year and then only if (ii) the Company elects, in its sole
discretion, to continue paying the Executive 50% of his then-currently bi-weekly
base salary during such restricted period.
7. CHANGE OF CONTROL.
a. In the event that Executive's employment by the Company terminates
in a Qualifying Termination (as defined in Subsection 7.d. below):
(1) Executive shall be entitled to receive in cash upon the
Qualifying Termination an amount equal to the greater of (a) the
sum of his annual salary (excluding loan forgiveness) from the
date of the Qualifying Termination through the Expiration Date or
(b) twice his annual salary (excluding loan forgiveness)
immediately prior to the date of the Change in Control;
(2) The Loan Amount (to the extent not then forgiven), together with
any interest thereon, shall be immediately forgiven, and
Executive shall have no obligation to repay the same;
(3) All Options (including the Contingent Options) previously issued
to Executive shall immediately become exercisable in accordance
with the Option Agreements; and
(4) The covenants contained in Subsections 5.c. and 5.d. shall not
apply;
7
8
PROVIDED, HOWEVER, that if $500,000 exceeds the sum of (a) the amount payable to
Executive under Section 7.a(1), plus (b) the Net Value of the Options (as
defined below) exercisable under 7.a(3), the Company will also, subject to
subsection 7.b. below, make a cash payment to the Executive equal to the amount
of such excess. As used herein, the "Net Value of the Options" shall be equal to
the difference obtained by subtracting the aggregate exercise price payable by
Executive upon the exercise of the Options from the aggregate fair market value
(as of the date of Change of Control) of the Common Shares issuable upon such
exercise.
b. Payments under this Subsection 7.a. shall be made without regard to
whether the deductibility of such payments (or any other "parachute payments,"
as that term is defined in Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code"), to or for the Executive's benefit) would be limited or
precluded by Section 280G and without regard to whether such payments (or any
other "parachute payments" as so defined) would subject the Executive to the
federal excise tax levied on certain "excess parachute payments" under Section
4999 of the Code; provided that if the total of all "parachute payments" to or
for the Executive's benefit, after reduction for all federal, state and local
taxes (including the tax described in Section 4999 of the Code, if applicable)
with respect to such payments (the "Total After-Tax Payments"), would be
increased by the limitation or elimination of any payment under this Subsection
7.a., amounts payable under this Subsection 7.a. shall be reduced to the extent,
and only to the extent, necessary to maximize the Total After-Tax Payments. The
determination as to whether and to what extent payments under this Subsection
7.a. are required to be reduced in accordance with the preceding sentence shall
be made at the Company's expense by Xxxxxx Xxxxxxxx or by such other certified
public accounting or law firm as the Board may designate prior to a Change of
Control of the Company. In the event of any underpayment or overpayment under
this Subsection 7.a. as determined by Xxxxxx Xxxxxxxx (or such other firm as may
have been designated in accordance with the preceding sentence), the amount of
such underpayment or overpayment shall forthwith be paid to the Executive or
refunded to the Company, as the case may be, with interest at the applicable
federal rate provided for in Section 7872 of the Code.
c. For purposes of this Agreement, a "Change of Control" occurs upon
the occurrence prior to the Expiration Date of any event specified below:
(1) any corporation, person or other entity (other than the
Company, a majority-owned subsidiary of the Company, any
employee benefit plan maintained by the Company or any
subsidiary or one of the three largest shareholders as of
the Commencement Date (any such person, a "Permitted
Acquiror") acquires or becomes the holder of more than fifty
percent (50%) of the Company's voting equity securities, or
8
9
(2) the stockholders of the Company approve a definitive
agreement to merge or consolidate the Company with or into
another corporation (other than a subsidiary of the Company)
or to sell or otherwise dispose of all or substantially all
of its assets.
d. For purposes of this Agreement, a "Qualifying Termination" occurs
if, prior to the earlier of the Expiration Date or the second anniversary of a
Change of Control, (a) the employment of Executive is terminated other than for
Cause or (b) Executive resigns following any material impairment or material
adverse change in his working conditions, authority, autonomy, compensation or
benefits immediately prior to the Change of Control, as the same may from time
to time have been improved, or otherwise altered with the written consent of
Executive such that his position within the Company or its successor is no
longer reasonably comparable (a "Material Adverse Change"). An assignment by the
Company of all rights and obligations hereunder to an entity into or with which
the Company merges or consolidates or to which the Company transfers
substantially all of its assets shall not constitute a Material Adverse Change
in and of itself so long as such entity fully assumes the Company's obligations
under this Agreement. In the event that both Subsection 6.e. and this Subsection
7.d. are applicable, the provisions of this Section shall exclusively govern
Executive's rights and remedies.
8. MISCELLANEOUS.
a. This Agreement shall be governed by and construed and interpreted
in accordance with the laws of the State of New Hampshire without reference to
principles of conflict of laws. Any dispute, action or proceeding arising
hereunder shall be maintained in the state or federal courts located in New
Hampshire and each party hereto consents to service of process in the manner
provided in Subsection b. of this Section 8 (which shall constitute "personal
service").
b. Any notice given to a party shall be in writing and shall be deemed
to have been given when delivered personally or sent by certified or registered
mail, postage prepaid, return receipt requested, duly addressed to the party
concerned at the address indicated below or to such other address as to which
such party may subsequently give such notice:
If to the Company:
BayCorp Holdings, Ltd.
000 Xxxx Xxxxxx
Xxxxx, Xxx Xxxxxxxxx 00000
9
10
Attention: Xxxx Xxxxxxxxxxx, Chairman
If to Executive: 000 Xxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxxxxx 00000
Copies of all notices to the Company shall be sent to Xxxxxx X. Xxxxx, Esq.,
Kleinberg, Kaplan, Xxxxx & Xxxxx, P.C., 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000. Copies of all notices to Executive shall be sent to Xxxxxx X.
Xxxxxx, Esq., Peabody & Xxxxxx, 00 Xxxxx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000.
c. This Agreement is personal to Executive and shall not be assignable
by Executive, except that Executive's rights to compensation and benefits may be
transferred in the event of death or Disability by will or operation of law
(subject to the terms hereof and of the applicable plans). Subject to the
provisions of Section 7.d. above, the Company may assign (without Executive's
consent) all rights and obligations hereunder to an entity into or with which
the Company merges or consolidates or to which the Company transfers
substantially all of its assets. This Agreement shall be binding upon and inure
to the benefit of Executive's heirs and legal representatives and shall be
binding upon and inure to the benefit of the Company and its successors and
assigns.
d. Executive and the Company each represents and warrants to the other
that such party is fully authorized and empowered to enter into this Agreement
and that the entry into and performance of such party's obligations hereunder
will not violate any agreement between such party and any other person or
entity. Executive represents and warrants that he has made a thorough
investigation of and is knowledgeable about the facts and circumstances
affecting the business and prospects of the Company.
e. This Agreement contains the entire understanding and agreement
between the parties concerning the subject matter hereof and supersedes all
prior agreements, understandings, discussions, negotiations and undertakings,
whether written or oral, between the parties with respect thereto. No provision
hereof may be amended unless such amendment is agreed to in writing and signed
by Executive and an authorized officer of the Company acting at the direction of
the Board. No waiver by either party of any breach by the other party of any
condition or provision contained herein to be performed by such other party
shall be deemed a waiver of a similar or dissimilar condition or provision at
the same or any prior or subsequent time. Any waiver must be in writing and
signed by Executive or an authorized officer of the Company, as the case may be.
10
11
f. Any provision of this Agreement that may be prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions thereof. Any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by law, the parties hereby waive any
provision of law that renders any provision of this Agreement prohibited or
unenforceable in any respect. In addition, in the event of any such prohibition
or unenforceability, the parties agree that it is their intention and agreement
that any such provision, as written, in any jurisdiction shall nonetheless be in
force and binding to the fullest extent permitted by the law of such
jurisdiction as though such provision had been written in such a manner and to
such an extent as to be enforceable therein under the circumstances. Without
limitation of the foregoing, with respect to the restrictive covenant contained
herein, if it is determined that any such provision is excessive as to duration,
scope or area, it is intended that it nonetheless be enforced for such shorter
duration or with such narrower scope or area as will render it enforceable, and
the court making such determination shall have the power to modify such
duration, scope or area, or all of them, and/or to delete specific words or
phrases, and such provision shall then be applicable and enforceable in such
modified form.
g. The Prior Agreement (except with respect to Section 4.b. thereof)
is hereby terminated and of no further force or effect.
The parties hereto have signed this Employment Agreement as of the date
first written above.
BAYCORP HOLDINGS, LTD.
By: /s/ Xxxxxxx X. Leeds
------------------------------
Xxxxxxx Xxxxx, Director
/s/ Xxxxx X. Xxxxxx Xx.
---------------------------------
Xxxxx X. Xxxxxx Xx.
11
