Exhibit 10.1
EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT, dated as of June 29,
1999 (the "Agreement"), by and among Energy East Corporation, a New York
corporation ("Parent"), CTG Resources, Inc., a Connecticut corporation or its
successor (the "Company"), and Xxxxxx X. Xxxxxxxxx (the "Executive"), amends and
restates as of the Effective Time (as defined below) that certain Amended and
Restated Employment Agreement dated April 27, 1999, by and between the Company
and the Executive (the "Prior Agreement").
The Executive is currently serving as the President and Chief Executive
Officer of the Company, and the Company, Parent and Oak Merger Co. have entered
into a Merger Agreement (as defined below) which contemplates the merger of the
Company with and into Oak Merger Co. to be effective as of the Effective Time.
The Board of Directors of Parent (the "Board") and the Board of
Directors of the Company (the "Company Board") desire to provide for the
employment of the Executive as a member of the management of the Company,
XENERGY Enterprises, Inc. ("XENERGY") and certain of their subsidiaries and
affiliates, from and after the Effective Time, and the Executive is willing to
commit himself to serve the Company, XENERGY and their subsidiaries and
affiliates, on the terms and conditions herein provided.
In order to effect the foregoing, Parent, the Company and the Executive
wish to enter into an employment agreement on the terms and conditions set forth
below. Accordingly, in consideration of the premises and the respective
covenants and agreements of the parties herein contained, and intending to be
legally bound hereby, the parties hereto agree as follows:
1. DEFINED TERMS. The definitions of capitalized terms used in this
Agreement, unless otherwise defined herein, are provided in the last Section
hereof.
2. EMPLOYMENT. The Company hereby agrees to employ the Executive, and
the Executive hereby agrees to serve Parent, the Company, XENERGY and their
subsidiaries and affiliates, on the terms and conditions set forth herein,
during the term of this Agreement (the "Term").
3. TERM OF AGREEMENT. The Term will commence on the Effective Time of
the Merger as those terms are defined in the Agreement and Plan of Merger dated
as of June 29, 1999, by and among the Company, Parent and Oak Merger Co., a
Connecticut corporation and wholly owned subsidiary of Parent (the "Merger
Agreement"), and end on the third anniversary of the day on which the Effective
Time occurs, unless further extended as hereinafter provided. Commencing on the
first anniversary of the Effective Time and each succeeding anniversary
thereafter, the Term of this Agreement shall automatically be extended for one
(1) additional year unless Parent, the Company, or the Executive shall have
given 90 days' prior written notice not to extend this Agreement.
4. POSITION AND DUTIES. During the Term, the Executive shall serve as
President and Chief Executive Officer of the Company and a member of the Company
Board, and President and Chief Operating Officer of XENERGY and a member of the
Board of Directors of XENERGY, and shall also serve in any such executive
officer position of the Company or its subsidiaries and affiliates if so
appointed by the Board. Commencing no later than the one-year anniversary of the
Effective Time, the Executive shall also serve as the Chief Executive Officer of
XENERGY, and at that time he shall cease serving as its Chief Operating Officer
unless otherwise notified in writing by the Board. During the Term, the
Executive shall also be a member of the Board of Directors of Connecticut Energy
Corporation. The Executive shall devote substantially all his working time and
efforts to the business and affairs of Parent, the Company and their
subsidiaries and affiliates; PROVIDED, HOWEVER, that the Executive may also
serve on the boards of directors or trustees of other non-affiliated companies
and organizations, as long as such service does not substantially interfere with
the performance of his duties hereunder or violate his obligations under Section
10 hereof.
5. COMPENSATION AND RELATED MATTERS.
5.1. BASE SALARY. The Company shall pay, or cause to be paid,
to the Executive an annual base salary ("Base Salary") during the period of the
Executive's employment hereunder, which shall be at an initial rate of not less
than $425,000 per year. The Base Salary shall be paid in substantially equal
bi-weekly installments, in arrears. During the period of the Executive's
employment hereunder, the Board shall make an annual review of the Executive's
compensation for possible increase, as the Board deems appropriate in its
business judgment (and, as so increased, shall thereafter constitute "Base
Salary" hereunder). The Base Salary in effect from time to time shall not be
decreased during the Term.
Compensation of the Executive by Base Salary payments shall not be
deemed exclusive and shall not prevent the Executive from participating in any
other compensation or benefit plan of Parent, XENERGY or the Company. The Base
Salary payments (including any increased Base Salary payments) shall not in any
way limit or reduce any other obligation of Parent or the Company hereunder, and
no other compensation, benefit or payment hereunder shall in any way limit or
reduce the obligation of the Company to pay the Executive's Base Salary.
5.2. BENEFIT PLANS. The Executive shall be entitled to
participate in or receive benefits under any "employee benefit plan" (as defined
in section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended from time to time ("ERISA")) or employee benefit arrangement made
available by Parent, XENERGY or the Company during the period of the Executive's
employment hereunder to their executives and key management employees, subject
to and on a basis consistent with the terms, conditions and overall
administration of such plans and arrangements. The Executive's participation in
such employee benefit plans and arrangements shall be on an appropriate level,
but no less favorable than the level of other peer executives of Parent, XENERGY
and the Company, as determined by the Board.
5.3. INCENTIVE COMPENSATION. The Executive shall be entitled
to participate in or receive benefits under any short or long-term incentive
compensation plan made available by Parent during the period of the Executive's
employment hereunder to their executives and key
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management employees at a level appropriate for the Executive's position as
determined by the Board, but no less favorable than the level of other peer
executives of Parent, XENERGY and the Company, subject to and on a basis
consistent with the terms, conditions and overall administration of such plans
and arrangements; PROVIDED, HOWEVER, that the Executive shall not be eligible to
receive benefits from any long-term incentive compensation plan, policy or
arrangement of Parent to the extent the Executive is receiving a similar benefit
pursuant to an incentive compensation plan, policy or arrangement of the Company
or any of its subsidiaries.
5.4. FRINGE BENEFITS. The Executive shall be entitled to
receive any fringe benefits which are made available by Parent, XENERGY or the
Company during the period of the Executive's employment hereunder to their
executives and key management employees; provided, however, if not otherwise
included, Executive shall receive: (a) an automobile provided at the expense of
the Parent or a subsidiary thereof, (b) payment for luncheon club dues at a
level not less than that which the Executive was entitled to receive immediately
prior to the Effective Time, and (c) financial and tax planning services and
computer allowance of $3,500 per year.
5.5. EXPENSES. Upon presentation of reasonably adequate
documentation to Parent, the Executive shall receive prompt reimbursement from
Parent or a subsidiary thereof for all reasonable and customary business
expenses incurred by the Executive in accordance with Parent's policy in
performing services hereunder.
5.6. VACATION. The Executive shall be entitled to five (5)
weeks of vacation during each year of this Agreement, or such greater period as
the Board shall approve, without reduction in salary or other benefits.
5.7. COMPLETION BONUSES. Parent shall pay, or cause to be
paid, to the Executive in cash a bonus of $400,000 within five (5) days of the
Effective Time. Parent shall pay, or cause to be paid, to the Executive the
following completion bonuses (the "Completion Bonuses") upon completion of the
specified periods of his employment: (i) $400,000 if Executive is employed with
Parent or any subsidiary or affiliate thereof on the one (1) year anniversary of
the Effective Time; and (ii) $400,000 if Executive is employed with Parent or
any subsidiary or affiliate thereof on the two (2) year anniversary of the
Effective Time. Each Completion Bonus shall be paid within five (5) days after
the respective anniversary of the Effective Time.
5.8. SPECIAL RETIREMENT BENEFIT. If the Executive retires on
or after his 60th birthday ("Retirement"), or if the Executive's employment
hereunder is terminated within three years after the Effective Time by the
Company without Cause (other than Disability) or by the Executive for Good
Reason ("Wrongful Termination"), or for any reason (including, without
limitation, the Executive's death) thereafter during the Term, the Executive (or
in the event of his death at any time during the Term, his surviving spouse)
shall be entitled to a supplemental retirement benefit (the "Special Retirement
Benefit") as set forth herein, which shall be in addition to his pension
benefits under all qualified and nonqualified defined benefit retirement plans
of the Company and Parent and their affiliates and all of his prior employers
(the "Basic Plans"). The Special Retirement Benefit shall be payable in the form
of a monthly single life
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annuity, or, if the Executive is married at the commencement of the Special
Retirement Benefit or at the time of his death during the Term, in the form of
an actuarially equivalent joint and 66 2/3% survivor benefit with the surviving
spouse to whom he was married at the time of the commencement of the Special
Retirement Benefit or date of death, if earlier (the amount of which actuarially
equivalent benefit shall be determined based on assumptions no less favorable to
the Executive than the applicable assumptions in the Connecticut National Gas
Corporation Officers' Retirement Plan immediately prior to the Effective Time).
The Special Retirement Benefit shall be payable beginning as of (i) in the case
of the Executive's Retirement, the date of the Executive's Retirement, (ii) in
the case of the Executive's Wrongful Termination, the third anniversary of the
Date of Termination, (iii) in the case of the Executive's death during the Term,
the date of his death, and (iv) in all other cases, the later of the date of the
Executive's termination of employment or the Executive's 60th birthday. The
amount of the Special Retirement Benefit shall be such that for each month, the
aggregate of the monthly payments payable to the Executive pursuant to the
Special Retirement Benefit and the Basic Plans equals 75% of the highest annual
rate of the Executive's Base Salary in effect at any time during the Term,
divided by twelve; provided, that in determining the amounts payable pursuant to
the Basic Plans, it shall be assumed that the benefits thereunder are payable in
the same form as the Special Retirement Benefit, beginning on the earliest date
permitted by the terms of the applicable Basic Plan. If the Executive (or in the
case of the Executive's death during the Term, his surviving spouse) becomes
entitled to receive the Special Retirement Benefit, he or his surviving spouse,
as applicable, shall supply Parent and the Company with such information as they
may reasonably request relating to his benefits from retirement plans of prior
employers in order to determine the amount of the Special Retirement Benefit.
6. COMPENSATION RELATED TO DISABILITY. During the Term of this
Agreement, during any period that the Executive fails to perform the Executive's
full-time duties hereunder as a result of incapacity due to physical or mental
illness, Parent shall pay, or cause to be paid, to the Executive his Base Salary
at the rate in effect at the commencement of any such period, together with all
compensation and benefits payable to the Executive under the terms of any
compensation or benefit plan, program or arrangement maintained by Parent,
XENERGY or the Company during such period, until the Executive's employment is
terminated by Parent for Disability; PROVIDED, HOWEVER, that such payments shall
be reduced by the sum of the amounts, if any, payable to the Executive at or
prior to the time of any such payment under disability benefit plans of Parent
or the Company or under the Social Security disability insurance program, which
amounts were not previously applied to reduce any such payment.
7. TERMINATION COMPENSATION AND BENEFITS.
7.1. If the Executive's employment shall be terminated for
any reason during the Term of this Agreement, the Company shall pay the
Executive's Base Salary (to the Executive or in accordance with Section 11.2 if
the Executive's employment is terminated by his death) through the Date of
Termination at the rate in effect immediately prior to the time the Notice of
Termination is given, together with all compensation and benefits (other than
severance compensation and benefits) payable to the Executive through the Date
of Termination or thereafter under the terms of any compensation or benefit
plan, program or arrangement maintained by Parent, XENERGY or the Company during
such period, and any unreimbursed
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expenses payable pursuant to Section 5.5 of the Agreement that were incurred
before the Date of Termination.
7.2. In the event the Executive's employment is terminated
prior to the expiration of the Term of the Agreement by the Executive for Good
Reason or by Parent or the Company for reasons other than Cause (other than the
death or Disability of the Executive), the Executive shall receive, in addition
to amounts payable under Section 7.1 and 7.3, (i) a lump sum cash payment to be
made within five (5) days of the Date of Termination equal to three times the
sum of the Base Salary and incentive compensation (as described below), (ii)
continuation of the benefits provided for in Section 5.2 of this Agreement for
the remainder of the Term, and (iii) the Special Retirement Benefit (to the
extent provided for in Section 5.8 hereof). For purposes of determining
equivalent value of incentive compensation, the value of short-term incentive
compensation shall be the higher of (i) the amount of short-term compensation
payable to the Executive with respect to the fiscal year ended immediately prior
to the Date of Termination and (ii) the average of the amounts of short-term
compensation payable to the Executive with respect to each of the three most
recently completed fiscal years ended immediately prior to the Date of
Termination, and the value of long-term incentive compensation shall be the
value of long-term incentive compensation awards outstanding on the Date of
Termination for performance periods ending after the Date of Termination, such
value being determined based upon the projected target value of the applicable
long-term incentive compensation award as determined by the Company in
connection with the grant thereof.
7.3. If the Executive's employment shall be terminated for
any reason during the Term of this Agreement, the Company shall pay (i) the
Executive's normal post-termination compensation and benefits (other than
severance compensation and benefits) to the Executive as such payments become
due, and (ii) the Special Retirement Benefit as and to the extent provided for
in Section 5.8. Such normal post-termination compensation and benefits (other
than severance compensation and benefits) shall be determined under, and paid in
accordance with, Parent's or the Company's retirement, insurance and other
compensation or benefit plans, programs and arrangements (other than this
Agreement), as applicable.
7.4. (a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment, benefit,
or distribution by Parent, the Company or their affiliates 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
subject to the excise tax imposed by Section 4999 of the Code, or any interest
or penalties with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Executive shall be entitled to receive an additional
payment ("Gross-Up Payment") in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed with respect
to such taxes), including, without limitation, any income taxes and Excise Tax
imposed upon the Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 7.4(c) hereof,
all determinations required to be made under this Section 7.4, including whether
a Gross-Up
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Payment is required and the amount of such Gross-Up Payment and the assumptions
to be used in arriving at such determinations, shall be made by Parent's
principal outside accounting firm (the "Accounting Firm") which shall provide
detailed supporting calculations both to the Board and the Executive within
fifteen (15) business days of the Date of Termination and/or such earlier
date(s) as may be requested by Parent or the Executive (each such date and the
Date of Termination shall be referred to as a "Determination Date" for purposes
of this Section 7.4(b) and Section 7.5 hereof). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. The initial Gross-Up
Payment, if any, as determined pursuant to this Section 7.4(b), shall be paid by
the Company to the Executive within five (5) days of the receipt of the
Accounting Firm's determination. If the Accounting Firm determines that no
Excise Tax is payable by the Executive, it shall furnish the Executive with a
written opinion that failure to report the Excise Tax on the Executive's
applicable federal income tax return would not result in the imposition of a
negligence or similar penalty. Any determination by the Accounting Firm under
this Section 7.4(b) shall be binding upon Parent, the Company and the Executive.
As a result of the uncertainty in the application of Section 4999 of the Code at
the time of the initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by the Company
should have been made ("Underpayment") consistent with the calculations required
to be made hereunder. In the event that Parent exhausts its remedies pursuant to
Section 7.4(c) and the Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Executive.
(c) The Executive shall notify Parent in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of an Underpayment. Such notification shall be given as
soon as practicable but no later than ten (10) business days after the Executive
is informed in writing of such claim and shall apprise Parent of the nature of
such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the thirty (30)
day period following the date on which he gives such notice to Parent (or such
shorter period ending on the date that any payment of taxes with respect to such
claim is due). If Parent notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the Executive
shall:
(i) give Parent any information reasonably
requested by Parent relating to such
claim;
(ii) take such action in connection with
contesting such claim as Parent shall
reasonably request in writing from time
to time, including, without limitation,
accepting legal representation with
respect to such claim by an attorney
reasonably selected by Parent;
(iii) cooperate with Parent in good faith in
order to effectively contest such claim;
and
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(iv) permit Parent to participate in any
proceeding relating to such claim;
PROVIDED, HOWEVER, that Parent 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. Without limitation on the foregoing provisions of
this Section 7.4(c), Parent shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
the Executive to pay the tax claimed and xxx for a refund or contest the claim
in any permissible manner, and the Executive agrees to prosecute such contest to
a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as Parent shall determine;
PROVIDED, HOWEVER, that if Parent 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; and
PROVIDED, FURTHER that any extension of the statute of limitations relating to
payment of taxes for the taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, Parent's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and the
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 7.4(c) hereof, the Executive becomes
entitled to receive any refund with respect to such claim, the Executive shall
(subject to Parent's and the Company's complying with the requirements of
Section 7.4(c) hereof) promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after taxes applicable
thereto). If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 7.4(c) hereof, a determination is made that the
Executive shall not be entitled to any refund with respect to such claim and
Parent does not notify the Executive in writing of its intent to contest such
denial of refund prior to the expiration of thirty (30) days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid.
7.5. The payments provided for in Section 7.4 hereof (other
than Section 7.4(c) and (d)) shall be made not later than the fifth (5th) day
following each Determination Date; PROVIDED, HOWEVER, that if the amounts of
such payments cannot be finally determined on or before such day, the Company
shall pay to the Executive on such day an estimate, as determined by the
Executive, of the minimum amount of such payments to which the Executive is
clearly entitled and shall pay the remainder of such payments (together with
interest at the rate provided in Section 1274(b)(2)(B) of the Code) as soon as
the amount thereof can be determined but in no event later than the thirtieth
(30th) day after each Determination Date. In the event that the
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amount of the estimated payments exceeds the amount subsequently determined to
have been due, such excess shall constitute a loan by the Company to the
Executive, payable on the fifth (5th) business day after demand by the Company
(together with interest at the rate provided in Section 1274(b)(2)(B) of the
Code).
7.6. The Company also shall pay to the Executive all
reasonable legal fees and expenses incurred by the Executive as a result of a
termination which entitles the Executive to the Severance Payments (including
all such fees and expenses, if any, incurred in disputing any termination or in
seeking in good faith to obtain or enforce any benefit or right provided by this
Agreement or in connection with any tax audit or proceeding to the extent
attributable to the application of Section 4999 of the Code to any payment or
benefit provided hereunder); PROVIDED, HOWEVER, the Company shall not be
required to pay to the Executive legal fees and expenses to the extent such
legal fees and expenses were incurred in connection with a contest controlled by
Parent pursuant to Section 7.4(c) hereof in connection with which Parent
complied with its obligations under said Section 7.4(d). Such payments shall be
made within five (5) business days after delivery of the Executive's written
request for payment accompanied with such evidence of fees and expenses incurred
as Parent reasonably may require.
8. TERMINATION PROCEDURES.
8.1. NOTICE OF TERMINATION. During the Term of this
Agreement, any purported termination of the Executive's employment (other than
by reason of death) shall be communicated by written Notice of Termination from
one party hereto to the other party hereto in accordance with Section 12 hereof.
For purposes of this Agreement, a "Notice of Termination" shall mean a notice
which shall indicate the specific termination provision in this Agreement relied
upon and, in the case of a termination by the Company for Cause or by the
Executive for Good Reason, shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated. Further, a Notice of Termination
for Cause is required to include a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters (3/4) of the entire membership
of the Board at a meeting of the Board which was called and held for the purpose
of considering such termination (after reasonable notice to the Executive and an
opportunity for the Executive, together with the Executive's counsel, to be
heard before the Board) finding that, in the good faith opinion of the Board,
the Executive was guilty of conduct set forth in clause (i) or (ii) of the
definition of Cause herein, and specifying the particulars thereof in detail.
8.2. DATE OF TERMINATION. "Date of Termination", with respect
to any purported termination of the Executive's employment during the Term of
this Agreement, shall mean (i) if the Executive's employment is terminated by
his death, the date of his death, (ii) if the Executive's employment is
terminated for Disability, thirty (30) days after Notice of Termination is
given (provided that the Executive shall not have returned to the full time
performance of the Executive's duties during such thirty (30) day period),
and (iii) if the Executive's employment is terminated for any other reason,
the date specified in the Notice of Termination (which, in the case of a
termination by Parent, shall not be less than thirty (30) days (except in the
case of a termination for Cause) and, in the case of a termination by the
Executive, shall not be less than
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fifteen (15) days nor more than sixty (60) days, respectively, from the date
such Notice of Termination is given).
9. NO MITIGATION. Parent and the Company agree that, if the
Executive's employment hereunder is terminated during the Term, the Executive is
not required to seek other employment or to attempt in any way to reduce any
amounts payable to the Executive by Parent or the Company hereunder. Further,
the amount of any payment or benefit provided for hereunder (other than pursuant
to Section 7.4(d) hereof) shall not be reduced by any compensation earned by the
Executive as the result of employment by another employer, by retirement
benefits, by offset against any amount claimed to be owed by the Executive to
Parent or the Company, or otherwise.
10. CONFIDENTIALITY AND NONCOMPETITION.
10.1. The Executive will not, during or after the Term,
without the prior written consent of the Parent or as may otherwise be required
by law or legal process, disclose to any entity or person any information which
is treated as confidential by Parent or the Company or any of their subsidiaries
or affiliates (each, an "EE Entity"), and not generally known or available in
the marketplace, and to which the Executive gains access by reason of his
position as an employee or director of any EE Entity.
10.2. Except as permitted by Parent or the Company upon its
prior written consent, the Executive shall not, during the Executive's
employment with the EE Entities and for the period ending one year after the
Executive's employment with the EE Entities terminates for any reason enter,
directly or indirectly, into the employ of or render or engage in, directly or
indirectly, any services to any person, firm or corporation within the
"Restricted Territory," which is a major competitor of any EE Entity with
respect to products which any EE Entity is then producing or services which any
EE Entity is then providing (a "Competitor"). However, it shall not be a
violation of the immediately preceding sentence for the Executive to be employed
by, or render services to, a Competitor, if the Executive renders those services
only in lines of business of the Competitor which are not directly competitive
with a primary line of business of any EE Entity or are outside of the
Restricted Territory. For purposes of this Section 10.2, the "Restricted
Territory" shall be the states and/or commonwealths of Connecticut, Vermont,
Massachusetts, New Hampshire, Maine and Rhode Island.
11. SUCCESSORS; BINDING AGREEMENT.
11.1. In addition to any obligations imposed by law upon any
successor to Parent or the Company, Parent and 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 Parent
or the Company, as the case may be, to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that Parent and the
Company would be required to perform it if no such succession had taken place.
Failure of Parent or the Company to obtain such assumption and agreement prior
to the effectiveness of any such succession shall be a breach of this Agreement
and shall entitle the Executive to compensation from Parent or the Company in
the same amount and on the same terms as the Executive would be entitled to
hereunder if the Executive were to terminate the Executive's
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employment for Good Reason, except that, for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination.
11.2. This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive shall die while any amount would still be payable to the Executive
hereunder (other than amounts which, by their terms, terminate upon the death of
the Executive) if the Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the executors, personal representatives or administrators of the
Executive's estate.
11.3. Except as provided herein, at the Effective Time, the
Prior Agreement shall be terminated and no longer in effect; and the Executive
expressly waives his rights to any payments under the Prior Agreement.
Notwithstanding any other provision of this Agreement, this Agreement shall be
null and void and of no further force or effect if the Merger Agreement is
terminated without consummation of the Merger or if the Executive's employment
with the Company and/or its subsidiaries terminates for any reason before the
Effective Time.
12. NOTICES. For the purpose of this Agreement, notices and all 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 mail, return receipt requested, postage prepaid, addressed to the
respective addressees set forth below, or to such other address as either party
may have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon actual receipt:
(a) To the Company:
Energy East Corporation
Xxx Xxxxxxxxxx Xxxxx
X.X. Xxx 0000
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxxxx
Executive Vice President and General Counsel
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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with a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
(b) To the Company:
CTG Resources, Inc.
000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxxxx, Esq.
Vice President, General Counsel and Secretary
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Xxxxx, Day, Xxxxxx & Xxxxx
00 Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telephone: 000-000-0000
Telecopier: 312-782-8585
(c) To the Executive:
At the Executive's residence address as maintained by
the Company in the regular course of its business for
payroll purposes.
13. MISCELLANEOUS.
13.1. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by the Executive and such officers as may be specifically
designated by the Board. No waiver by any party hereto at any time of any breach
by any other party hereto of, or compliance with, any condition or
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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. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
any party which are not expressly set forth in this Agreement. This Agreement
sets forth the entire agreement of the parties hereto in respect of the subject
matter contained herein and supersedes all prior agreements, promises,
covenants, arrangements, communications, representations or warranties, whether
oral or written, by any officer, employee or representative of any party hereto;
and any prior agreement of the parties hereto in respect of the subject matter
contained herein is hereby terminated and canceled, except as otherwise provided
in this Agreement. The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of New York, without
giving effect to choice of law principles.
All references to sections of the Code shall be deemed also to refer to
any successor provisions to such sections. There shall be withheld from any
payments provided for hereunder any amounts required to be withheld under
federal, state or local law and any additional withholding amounts to which the
Executive has agreed. The obligations under this Agreement of Parent, the
Company or the Executive which by their nature and terms require satisfaction
after the end of the Term shall survive such event and shall remain binding upon
such party.
13.2. Notwithstanding any provision of this Agreement to the
contrary, Parent and the Company shall be jointly and severally liable to the
Executive and his personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees or legatees for all payment
obligations under this Agreement.
14. VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
15. 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.
16. SETTLEMENT OF DISPUTES; ARBITRATION. All claims by the Executive
for benefits under this Agreement shall be directed to and initially determined
by the Board and shall be in writing. Any denial by the Board of a claim for
benefits under this Agreement shall be delivered to the Executive in writing and
shall set forth the specific reasons for the denial and the specific provisions
of this Agreement relied upon. The Board shall afford a reasonable opportunity
to the Executive for a review of the decision denying a claim and shall further
allow the Executive to appeal to the Board a decision of the Board within sixty
(60) days after notification by the Board that the Executive's claim has been
denied. To the extent permitted by applicable law, any further dispute or
controversy arising under or in connection with this Agreement shall be settled
exclusively by arbitration in New York, New York in accordance with the
Commercial Arbitration Rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction.
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17. DEFINITIONS. For purposes of this Agreement, the following terms
shall have the meaning indicated below:
(a) "Base Salary" shall have the meaning stated in
Section 5.1 hereof.
(b) "Cause" for termination by Parent or the Company of
the Executive's employment, for purposes of this Agreement, shall mean (i) the
willful and continued failure by the Executive to substantially perform the
Executive's duties hereunder (other than any such failure resulting from the
Executive's incapacity due to physical or mental illness or any such actual or
anticipated failure after the issuance of a Notice of Termination for Good
Reason by the Executive pursuant to Section 8.1) after a written demand for
substantial performance is delivered to the Executive by the Board, which demand
specifically identifies the manner in which the Board believes that the
Executive has not substantially performed the Executive's duties, or (ii) the
willful engaging by the Executive in conduct which is demonstrably and
materially injurious to Parent or its subsidiaries, monetarily or otherwise. For
purposes of clauses (i) and (ii) of this definition, no act, or failure to act,
on the Executive's part shall be deemed "willful" unless done, or omitted to be
done, by the Executive not in good faith and without reasonable belief that the
Executive's act, or failure to act, was in the best interest of Parent or the
Company.
(c) "Code" shall mean the Internal Revenue Code of
1986, as amended from time to time.
(d) "Company" shall mean CTG Resources, Inc. or any
successor to its business and/or assets.
(e) "Date of Termination" shall have the meaning stated
in Section 8.2 hereof.
(f) "Disability" shall be deemed the reason for the
termination by Parent or the Company of the Executive's employment, if, as a
result of the Executive's incapacity due to physical or mental illness, the
Executive shall have been absent from the full time performance of the
Executive's duties hereunder for the maximum number of months applicable to the
Executive under the Company's Disability Policy for Salaried Employees (or any
successor policy) (but in no event for less than six (6) consecutive months),
Parent shall have given the Executive a Notice of Termination for Disability,
and, within thirty (30) days after such Notice of Termination is given, the
Executive shall not have returned to the full time performance of the
Executive's duties.
(g) "Parent" shall mean Energy East Corporation and any
successor to its business and/or assets.
(h) "Excise Tax" shall have the meaning stated in
Section 7.4(a) hereof.
(i) "Executive" shall mean the individual named in the
first paragraph of this Agreement.
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(j) "Good Reason" for termination by the Executive of
the Executive's employment shall mean the occurrence (without the Executive's
express written consent), of any one of the following acts by Parent or the
Company, or failures by Parent or the Company to act, unless, in the case of any
act or failure to act described in paragraphs (i) or (ii) below, such act or
failure to act is corrected prior to the Date of Termination specified in the
Notice of Termination given in respect thereof:
(i) the assignment to the Executive of any
duties inconsistent with the Executive's
status as an executive officer of the
Company and XENERGY or a substantial
alteration in the nature or status of the
Executive's responsibilities consistent
with the titles set forth in Section 4;
(ii) any material breach of any provision of
this Agreement by Parent or the Company;
(iii) the relocation of the Company's principal
executive offices to a location which is
not within the 25-mile radius of
Hartford, Connecticut or Parent or the
Company's requiring the Executive to be
based anywhere other than the Company's
principal executive offices except for
required travel on the business of Parent
or the Company or its affiliates; or
(iv) any purported termination of the
Executive's employment which is not
effected pursuant to a Notice of
Termination satisfying the requirements
of Section 8.1; for purposes of this
Agreement, no such purported termination
shall be effective.
The Executive's right to terminate the Executive's employment for Good
Reason shall not be affected by the Executive's incapacity due to physical or
mental illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any act or failure to act
constituting Good Reason hereunder.
(k) "Gross-Up Payment" shall have the meaning stated in
Section 7.4(a) hereof.
(l) "Notice of Termination" shall have the meaning
stated in Section 8.1 hereof.
(m) "Severance Payments" shall mean those payments
described in Section 7.2 hereof.
(n) "Term" shall have the meaning stated in Section 3
hereof.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.
ENERGY EAST CORPORATION
/s/ Xxxxxxx X. Xxxxxxxx
--------------------------------------------
By: Xxxxxxx X. Xxxxxxxx
Title: Executive Vice President and General
Counsel
CTG RESOURCES, INC.
/s/ X. X. Xxxxxxx
--------------------------------------------
By: X. X. Xxxxxxx
Title: Vice President, General Counsel and
Secretary
EXECUTIVE
/s/ Xxxxxx X. Xxxxxxxxx
--------------------------------------------
Xxxxxx X. Xxxxxxxxx
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