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EMPLOYMENT AGREEMENT
THIS AGREEMENT between Essex County Gas Company, a Massachusetts corporation
(the "Corporation"), and Xxxxxxx X. Xxxxxx, (the "Executive"), dated this 7th
day of June 1995,
WITNESSETH THAT:
WHEREAS, the Corporation wishes to attract and retain well-qualified
executives and key personnel and to assure both itself and the Executive of
continuity of management in the event of any actual or threatened Change of
Control (as defined in Section 2) of the Corporation;
NOW, THEREFORE, it is hereby agreed by and between the parties as
follows:
1. Operation of Agreement. The "effective date of this Agreement" shall be
the date on which a Change of Control occurs.
2. Change of Control. For the purposes of this Agreement, a "Change of
Control" means:
(a) the acquisition by an individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or
more of the combined voting power of the then outstanding voting securties
of the Corporation entitled to vote generally in the election of directors
(the "Outstanding Corporation Voting Securities"); provided, however, that
for purposes of this subsection (a), the following acquisitions shall not
constitute a Change of Control; (i) any acquisition direction from the
Corporation, (ii) any acquisition by the Corporation; (iii) any acquisition
by any employee benefit plan (or related trust) sponsored or maintained by
the Corporation or any corporation controlled by the Corporation or (iv)
any acquisition that complies with clauses (i), (ii) and (iii) of sub-
section (c) below; or
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(b) individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of
the Board; provided, however, that any individual becoming a director sub-
sequent to the date hereof whose election, or nomination for election by
the Corporation's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board,
but excluding, for this purpose any such individual whose initial assumption
of office occurs as a result of an actual or threatened election contest
with respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person
other than the Board; or
(c) the approval by the shareholders of the Corporation of a reorganization,
merger or consolidation or sale or other disposition of all or substantially
all of the assets of the Corporation ("Business Combination") or, if con-
summation of such Business Combination is subject, at the time of such
approval by shareholders, to the consent of any government or governmental
agency, the obtaining of such consent (either explicitly or implicitly by
consummation); excluding, however, such a Business Combination pursuant to
which (i) all or substantially all of the individuals and entities who were
the beneficial owners of the outstanding Corporation Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 60% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the
case may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation that as a result of such
transaction owns the Corporation or all or substantially all of the Corpora-
tion's assets either directly or through one or more subsidiaries) in sub-
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stantially the same proportions as their ownership, immediately prior to
such Business Combination of the Outstanding Corporation Voting Securities,
(ii) no Person (excluding any employee benefit plan (or related trust) of
the Corporation or such corporation resulting from such Business Combina-
tion) beneficially owns, directly or indirectly, 20% or more of, respectively,
the then outstanding shares of common stock of the corporation resulting
from such Business Combination or the combined voting power of the then out-
standing voting securities of such corporation except to the extent that such
ownership existed prior to the Business Combination and (iii) at least a
majority of the members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent Board at the time
of the execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or
(d) approval by the shareholders of the Corporation of a complete liquidation
or dissolution of the Corporation.
3. Employment. The Corporation hereby agrees to continue the Executive in
its employ, and the Executive hereby agrees to remain in the employ of the
Corporation, for the period commencing on the effective date of this
Agreement andmending on the earlier to occur of the second anniversary of
such date or the Executive's normal retirement date under the Corporation's
retirement plans (the "employment period"), to exercise such authority and
perform such executive duties as are commensurate with the authority being
exercised and duties being performed by the Executive immediately prior to
the effective date of this Agreement, which services shall be performed at
the location where Agreement. The Executive agrees that during the
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employment period he shall devote his full business time exclusively to his
executive duties as described herein and perform such duties faithfully and
efficiently.
4. Compensation, Compensation Plans, Perquisites. During the employment
period, the Executive shall be compensated as follows:
(a) He shall receive an annual salary at a rate which is not less than his
rate of annual salary immediately prior to the effective date of this
Agreement, with the opportunity for increases, from time to time
thereafter, which are in accordance with the corporation's regular
practices.
(b) He shall be eligible to participate on a reasonable basis in bonus,
stock option, restricted stock, performance award and other incentive
compensation plans which provide opportunities to receive compensation
which are the greater of the opportunities provided by the Corporation
for executives with comparable duties or the opportunities under any
such plans under which he was participating immediately prior to the
effective date of this Agreement.
(c) He shall be entitled to receive employee benefits (including, but not
limted to, medical, insurance and split-dollar life insurance benefits)
and perquisites which are the greater of the employee benefits and
perquisites provided by the Corporation to executives with comparable
duties or the employee benefits and perquisites to which he was entitled
immediately prior to the effective date of this Agreement.
5. Termination. The term "termination" shall mean termination by the
Corporaion of the employment of the Executive with the Corporation for any
reason other than death, disability or cause (as defined below), or
resignation of the Executive upon the occurence of either of the following
events:
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(a) Any signficant change in the nature or scope of the Executive's
authorities or duties from those described in Section 3, any reduction
in total compensation from that provided in Section 4, or the breach by
the Corporation of any other provision of this Agreement; or
(b) A reasonable determination by the Executive that, as a result of a Change
of Control and a change in circumstances thereafter significantly
affecting his position, he is unable to exercise the authorities,
powers, functions or duties attached to his position and contemplated
by Section 3 of this Agreement.
The term "cause" means fraud, misappropriation or intentional material damage
to the property or business of the Corporation or commission of a felony.
A termination shall also include resignation of the Executive for any reason
during the 30-day period immediately following the first anniversary of the
effective date of this Agreement.
6. Severance Allowance. In the event of termination of the Executive during
the employment period, the Executive shall be paid a lump sum severance
allowance in an amount which is equal to the sum of the amounts determined in
accordance with the following paragraphs (a) and (b):
(a) An amount equivalent to the salary payments for the number of calendar
months during the remainder of the employment period at the rate required
by Section 4(a), as in effect immediately before the resignation as
described in Section 5(a)), plus a pro rata share of the estimated
amount of any bonus which would have been payable for the bonus period
which includes the termination date; and
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(b) An amount equivalent to the number of calendar months of bonus during the
remainder of the employment period at the xxxxxx of (i) the monthly rate
of the bonus payment for the bonus period immediately prior to his
termination date, or (ii) the estimated amount of the bonus for the
period which includes his termination date.
In addition to such amount, he shall receive continuation for the remainder of
the employment period of the employee welfare benefits (including, but not
limited to, coverage under any medical, insurance and split-dollar life
insurance arrangements or programs) to which he would have been entitled under
all employee welfare benefit plans, programs or arrangements maintained by the
Corporation if he had remained in the employ of the Corporation for the
remainder of the employment period, or, at the Company's option, a cash
payment equal to the cost to the Executive of purchasing replacement benefits,
determined and paid as soon as it is reasonably possible.
7. Limitation.
(a) Notwithstanding any other provision of this Agreement, in the event it
shall be determined that any payment or distribution by the Corporation
or to or for the benefit of the Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise) (a "Payment") would be nondeductible by the Corporation for
Federal income tax purposes because of Section 280G of the Internal
Revenue Code of 1986, as amended (the"Code"), then the aggregate present
value of amounts payable or distributable to or for the benefit of the
Executive pursuant to this Agreement (such payments or distributions
pursuant to this Agreement are hereinafter referred to as "Agreement
Payments") shall be reduced (but not below zero) to the Reduced
Amount. The "Reduced Amount" shall be an amount expressed in present
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value that maximizes the aggregate present value of Agreement Payments
without causing any Payment to be nondeductible by the Corporation
because of Section 280G of the Code. For purposes of this Section 7,
present value shall be determined in accordance with Section 280G(d)(4)
of the Code.
(b) All determinations required to be made under this Section 7 shall be made
by the accounting firm last appointed as auditors of the Corporation by
the Board of Directors before the Change of Control (the "Accounting
Firm"), which shall provide detailed supporting calculations to both the
Corporation and the Executive within 30 business days of the date of the
Change of Control or such earlier time as is required by the Corporation.
Any such determination by the Accounting Firm shall be binding upon the
Corporation and the Executive. The Executive shall determine which and
how much of the Agreement Payments (or, at the election of the Executive,
other Payments) shall be eliminated or reduced consistant with the
requirements of this Section 7, provided that, if the Executive does not
make such determination within ten business days of the receipt of the
calculations made by the Acccounting Firm, the Corporation shall elect
which and how much of the Agreement Payments shall be eliminated or
reduced consistent with the requirements of this Section 7 and shall
notify the Executive promptly of such election. Within five business
days thereafter, the Corporation shall pay to or distribute to or for
the benefit of the Executive such amounts as are then due to the
Executive under this Agreement.
(c) As a result of the uncertainty in the application of Section 280G of the
Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Agreement Payments will have been made by
the Corporation that should not have been made ("Overpayment") or that
addtional Agreement Payments that will have not been made by the
Corporation could have been made ("Underpayment"), in each case,
consistent with the calculations required to be made hereunder. In the
event that the Accounting Firm determines that an Overpayment has been
made, any such Overpayment shall be treated for all purposes asa loan to
the Executive, which the Executive shall repay to the Corporation
together with interest at the applicable Federal rate provided for in
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Section 7872(f)(2) of the Code; provided, however, that no amount shall
be payable by the Executive to the Corporation (or if paid by the
Executive to the Corporation shall be returned to the Executive) if and
to the extent such payment would not In the event that the Accounting
firm determines that an Underpayment has occurred, any such Underpayment
shall be promptly paid by the Corporation to or for the benefit of the
Executive together with interest at the applicable Federal rate provided
for in Section 7872(f)(2) of the Code.
8. Indemnification. If litigation shall be brought to enforce, interpret or
challenge any provision hereof, the Corporation hereby indemnifies the
Executive for his reasonable attorney's fees and disbursements incurred in
such litigation.
9. Notices. Any notices, requests, demands and other communications provided
for by this Agreement shall be sufficient if in writing and if sent by
registered mail to the Executive at the last address he has filed in writing
with the Corporation, or in the case of the Corporation, at its principal
executive offices.
10. Non-Alienation. The Executive shall not have any right to pledge,
hypothecate, anticipate or in any way create a lien upon any amounts provided
under this Agreement; and not benefits payable hereunder shall be assignable
in anticipation of payment either by voluntary or involuntary acts, or by
operation of law, except by will or the laws of descent and distribution.
11. Governing Law. The provisions of this Agreement shall be construed to
be in accordance with the laws of the Commonwealth of Massachusetts.
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12. Amendment. This Agreement may be amended or canceled by mutual agreement
of the parties in writing without the consent of any other person and so long
as the Executive lives, no person, other than the parties hereto, shall have
any rights under or interet in this Agreement or the subject matter hereof.
Provided, further, that in the event any law, rule or regulation hereafter
passed or promulgated shall require that this contract be submitted to the
shareholders for their consideration, then, and in that event, the parties do
hereby covenant that if they do not mutually agree to submit this contract to
the shareholders in accordance with such law, rule or regulation, they will
amend this contract so as to make submission to the shareholders unnecessary
under said law, rule or regulation.
13. Successor to the Corporation. Except as otherwise provided herein, this
Agrement shall be binding upon and inure to the benefit or the Corporation
and any sucessor of the Corporation.
14. Severability. In the event that any provision or portion of this Agree-
ment shall be determined to be invalid or unenforceable for any reason, the
remaining provisions of this Agreement shall be unaffected thereby and shall
remain in full force and effect.
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IN WITNESS WHEREOF, the Executive has hereunder set his hand and,
pursuant to the authorization from its Board of Directors, the Corporation
has caused these present to be executed in its name and behalf, all as of
the day and year first above written.
/s/ Xxxxxxx X. Xxxxxx
ESSEX COUNTY GAS COMAPNY
by: /s/ Xxxxxxx X. Xxxxxxx
Its Chairman
