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December 7, 1995
Xxxxxxx X. Xxxxxx
00 Xxxxx Xxxx Xxxx
Xxxxxxxxxx, XX 00000
Management Continuity Agreement
Dear Xx. Xxxxxx:
The Board of Directors (the "Board") of EnergyNorth, Inc.
(the "Company") recognizes that, as is the case with many
publicly held corporations, there always exists the possibility
of a change of control of the Company. This possibility and the
uncertainty it creates may result in the loss or distraction of
members of management of the Company and its subsidiaries to the
detriment of the Company and its shareholders.
The Board considers the establishment, maintenance, and
continuity of a sound and vital management to be essential to
protecting and enhancing the best interests of the Company and
its shareholders. The Board also believes that when a change of
control is perceived as imminent, or is occurring, the Board
should be able to receive and rely on disinterested advice from
management regarding the best interests of the Company and its
shareholders without concern that members of management might be
distracted or concerned by the personal uncertainties and risks
created by the perception of an imminent or occurring change of
control.
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Accordingly, the Board has determined that appropriate steps
should be taken to assure the Company of the continued employment
and attention and dedication to duty of certain members of
management of the Company and to ensure the availability of their
disinterested advice, notwithstanding the possibility, threat or
occurrence of a change of control.
Therefore, in order to fulfill the above purposes, the Board
has designated you as eligible for severance benefits as set
forth below.
1. Offer: In order to induce you to remain in the employ of
the Company and to provide continued services to the Company now
and in the event that a change of control is imminent or
occurring, this letter agreement (the "Agreement") sets forth
severance benefits which the Company offers to pay to you in the
event of a termination of your employment (as described in
Section 5 below, excluding a termination for Cause, disability,
death or retirement) subsequent to a Change of Control of the
Company (as defined in Section 4 below).
2. Operation: This Agreement shall be effective immediately
upon its execution but, anything in this Agreement to the
contrary notwithstanding, neither this Agreement nor any of its
provisions shall be operative unless and until there has been a
Change of Control while you are still an employee of the Company,
nor shall this Agreement govern or affect your employment
relationship with the Company except as explicitly set forth
herein. Upon a Change of Control, if you are still employed by
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the Company, this Agreement and all of its provisions shall
become operative immediately. If your employment relationship
with the Company is terminated before a Change of Control, you
shall have no rights or obligations under this Agreement.
3. Term: The term of this Agreement shall commence immediately
upon the date hereof and continue until December 1, 1997. At the
conclusion of the initial term this Agreement shall be deemed
automatically renewed for a two-year term and, unless notice of
nonrenewal is furnished by you or by the Company as provided
below, shall be automatically renewed in like fashion at the end
of that and each succeeding two-year term. Either party hereto
may provide written notice to the other of nonrenewal of this
Agreement, to take effect at the conclusion of any term of this
Agreement but in no event shall such nonrenewal take effect less
than two years from the date on which notice is given. Such
notice shall be furnished in accordance with Section 10 of this
Agreement.
4. Change in Control: For the purpose of this Agreement, a
"Change of Control" shall mean:
(1) The acquisition by any 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
either (i) the then outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock") or (ii) the
combined voting power of the then outstanding voting securities
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of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities");
provided, however, that the following acquisitions shall not
constitute a Change of Control: (i) any acquisition directly
from the Company (excluding an acquisition by virtue of the
exercise of a conversion privilege), (ii) any acquisition by the
Company, (iii) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (iv) any acquisition by
any corporation pursuant to a reorganization, merger or
consolidation, if, following such reorganization, merger or
consolidation, the conditions described in clauses (i), (ii) and
(iii) of Subparagraph (3) of this subsection (b) are satisfied;
or
(2) 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 subsequent to the date hereof
whose election, or nomination for election by the Company'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 either an actual or threatened election contest (as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under the
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Exchange Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the
Board; or
(3) Approval by the shareholders of the Company of a
reorganization, merger or consolidation, in each case, unless,
following such reorganization, merger or consolidation, (i) more
than 60% of, respectively, the then outstanding shares of common
stock of the corporation resulting from such reorganization,
merger or consolidation and the combined voting power of the then
outstanding voting securities of such corporation entitled to
vote generally in the election of directors is then beneficially
owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such
reorganization, merger or consolidation in substantially the same
proportions as their ownership, immediately prior to such
reorganization, merger or consolidation, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities,
as the case may be, (ii) no Person (excluding the Company, any
employee benefit plan (or related trust) of the Company or such
corporation resulting from such reorganization, merger or
consolidation and any Person beneficially owning, immediately
prior to such reorganization, merger or consolidation, directly
or indirectly, 20% or more of the Outstanding Company Common
Stock or Outstanding Company Voting Securities, as the case may
be) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the
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corporation resulting from such reorganization, merger or
consolidation or the combined voting power of the then
outstanding voting securities of such corporation entitled to
vote generally in the election of directors and (iii) at least a
majority of the members of the board of directors of the
corporation resulting from such reorganization, merger or
consolidation were members of the Incumbent Board at the time of
the execution of the initial agreement providing for such
reorganization, merger or consolidation; or
(4) Approval by the shareholders of the Company of (i) a
complete liquidation or dissolution of the Company or (ii) the
sale or other disposition of all or substantially all of the
assets of the Company, other than to a corporation, with respect
to which following such sale or other disposition, (A) more than
60% of, respectively, the then outstanding shares of common stock
of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to
vote generally in the election of directors is then beneficially
owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such
sale or other disposition in substantially the same proportion as
their ownership, immediately prior to such sale or other
disposition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (B) no
Person (excluding the Company and any employee benefit plan (or
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related trust) of the Company or such corporation and any Person
beneficially owning, immediately prior to such sale or other
disposition, directly or indirectly, 20% or more of the
Outstanding Company Common Stock or Outstanding Company Voting
Securities, as the case may be) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then outstanding
shares of common stock of such corporation and the combined
voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of
directors and (C) at least a majority of the members of the board
of directors of such corporation were members of the Incumbent
Board at the time of the execution of the initial agreement or
action of the Board providing for such sale or other disposition
of assets of the Company.
5. Termination of Employment:
a. Terminations Which Give Rise to Severance Benefits
Under this Agreement.
i. Any termination of your employment by action of
the Company except for Cause (as defined below) or any
termination of your employment by you for Good Reason (as defined
below) within two years of a Change of Control shall entitle you
to the severance benefits set forth in Section 6 of this
Agreement.
ii. Good Reason. If any of the following events
occurs within two years after a Change of Control you may
voluntarily terminate your employment within 30 days of the
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occurrence of such event and be entitled to the severance
benefits set forth in Section 6 of this Agreement:
(1) the Company assigns any duties to you which
diminish your position, duties, offices, titles,
responsibilities, reporting requirements or status with the
Company from that in effect immediately prior to a Change of
Control; or
(2) the Company reduces your base salary,
including deferrals, as in effect immediately prior to a Change
of Control; or
(3) the Company discontinues any bonus or other
compensation plans or any other benefit, stock ownership plan,
stock purchase plan, stock option plan, life insurance plan,
health plan, disability plan or similar plan (as the same existed
immediately prior to the Change of Control) in which you
participated or were eligible to participate in immediately prior
to the Change of Control and in lieu thereof does not make
available plans providing at least comparable benefits; or
(4) the Company takes action which adversely
affects your participation in, or eligibility for, or materially
reduces your benefits under, any of the plans described in (3)
above, or which deprives you of any material fringe benefit
enjoyed by you immediately prior to the Change of Control, or
fails to provide you with the number of paid vacation days to
which you were entitled in accordance with normal vacation policy
immediately prior to the Change of Control; or
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(5) the Company requires you to be based at any
office or location other than one within a 50-mile radius of the
boundaries of EnergyNorth Natural Gas, Inc.'s franchise territory
as such boundaries existed immediately prior to the Change in
Control; or
(6) the Company purports to terminate your
employment otherwise than as expressly permitted by this
Agreement; or
(7) the Company fails to comply with and satisfy
Section 8, provided that such successor has received at least ten
days prior written notice from the Company or you of the
requirements of Section 8.
You shall have the sole right to determine, in good faith,
whether any of the above events has occurred. Anything in this
Agreement to the contrary notwithstanding, a termination of
employment by you for any reason during the 30-day period
immediately following the first anniversary of a Change of
Control ("Window Period") shall be deemed to be a termination for
Good Reason for all purposes of this Agreement.
iii. Notice of Termination. Any termination by the Company
for Cause, or by you without any reason during the Window Period
or for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with
Section 10. For purposes of this Agreement, a "Notice of
Termination" means a written notice which (i) indicates the
specific termination provision in this Agreement relied upon,
(ii) to the extent applicable, sets forth in reasonable detail
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the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so indicated
and (iii) if the Date of Termination (as defined below) is other
than the date of receipt of such notice, specifies the
termination date (which date shall be not more than 15 days after
the giving of such notice).
iv. Date of Termination. "Date of Termination" means
(A) if your employment is terminated by the Company for Cause, or
by you during the Window Period or for Good Reason, the date of
receipt of the Notice of Termination or any later date specified
therein, as the case may be, (B) if your employment is terminated
by the Company other than for Cause or disability, the Date of
Termination shall be the date on which the Company notifies you
of such termination and (C) if your employment is terminated by
reason of death or disability, the Date of Termination shall be
the date of your death or the date you are determined to have a
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disability as provided under Section 5(b) of this Agreement, as
the case may be.
(b) Terminations Which Do Not Give Rise to
Severance Benefits Under This Agreement. If your employment is
terminated due to Cause, disability, or retirement (as those
terms are defined below), you shall not be entitled to severance
benefits under this Agreement, regardless of the occurrence of a
Change of Control.
(i) A termination for disability shall have
occurred where you are determined to have a disability under any
long-term disability policy of the Company which covers you, or,
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if none, as defined in the EnergyNorth, Inc. Retirement Plan for
Salaried Employees.
(ii) A termination by retirement shall have
occurred where your termination is caused by the fact that you
have reached normal retirement age for employees in your
position.
(iii) A termination for Cause
shall have occurred where you are terminated because of:
conviction of a felony or crime involving an act of moral
turpitude, dishonesty, or misfeasance which substantially
interferes with the orderly business of the Company or any of its
subsidiaries, action that directly or indirectly causes the
Company or its subsidiaries to suffer substantial loss or damage,
refusal to follow or material neglect of reasonable requests of
the Company made pursuant to this Agreement, and conduct that
substantially interferes with or damages the standing or
reputation of the Company or any of its subsidiaries. In the
event of termination of employment for Cause, this Agreement and
all of the rights and obligations of the parties hereto shall
forthwith terminate, except where this Agreement expressly
provides that any provisions survive termination of this
Agreement.
6. Severance Benefits:
(a) Amount of Severance Benefits. If your employment is
terminated in circumstances described in Section 5(a) of this
Agreement, the Company shall pay you, within ten days of the date
such termination takes effect, a lump sum severance benefit in an
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amount determined with reference to the chart below in this
Subsection (a). For purposes of this Subsection, "Salary" shall
mean the amount of your salary as in effect immediately prior to
the Change of Control, including deferrals, plus the average of
the previous three years' annual incentive compensation award
earned under the EnergyNorth, Inc. Key Employee Performance and
Equity Incentive Plan. Any delayed payment shall include
interest at a rate of 150% of the Prime Rate posted by the Bank
of Boston.
Number of full years
of employment with Amount of
the Company severance benefit
One year 1.6 times Salary
Two years 1.7 times Salary
Three years 1.8 times Salary
Four years 1.9 times Salary
Five years or more The greater of: (a) 2.0 times Salary
or (b) 275% of the average aggregate
compensation paid by the Company or
any of its subsidiaries to you which was
includible in your gross income for federal
tax purposes for the five tax years ending
immediately prior to the Change of
Control.
(b) Other Benefits Payable. Except as required by
Subsection (c) below, the severance benefit described in
Subsection (a) above shall be payable in addition to, and not in
lieu of, all other accrued or vested or earned by deferred
compensation, rights, options or other benefits which may be owed
to you following termination (and not contingent on any Change of
Control preceding such termination), including but not limited to
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accrued vacation or sick pay, amounts or benefits payable under
any bonus or other compensation plans, stock option plan, stock
ownership plan, stock purchase plan, life insurance plan, health
plan, disability plan or similar plan. You may elect to have any
life insurance, health plan, disability plan or similar plan
which was in effect immediately prior to your termination
extended for a period of one year beyond when your eligibility
for such plan would otherwise have ended, provided that (i) you
so notify the Company within five days of the Date of Termination
and (ii) the cost of extending your eligibility as described
above shall be subtracted from the first payment of your
severance benefit. The "cost" for this purpose shall be deemed
to be the most recent rate charged to employees of the Company or
its subsidiaries for such benefits.
(c) Ceiling on Severance Benefits. In order to comply with
certain provisions of the Internal Revenue Code of 1986, as
amended (the "Code") severance benefits payable under this
Agreement shall be subject to the following ceiling
notwithstanding anything in this Agreement to the contrary: The
"aggregate present value" of severance benefits payable under
this Agreement and of payments to you or for your benefit which
would be "parachute payments" if their "aggregate present value"
equalled or exceeded 300% of your "base amount" shall in no event
exceed 295% of your "base amount" (within those terms' meaning
under Section 280G of the Code).
It is the intention of the parties to this Agreement that no
severance benefits hereunder will be paid to the extent that such
benefits (either alone or when aggregated with other benefits
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paid to you or for your benefit) constitute "excess parachute
payments" within the meaning of Section 280G of the Code as
amended from time to time.
(d) Payment Obligations Absolute. Except to the extent set
forth in Subsection (c) above, upon a Change of Control the
Company's obligations to pay the severance benefits or make any
other payments described in this Section 6 shall be absolute and
unconditional and shall not be affected by any circumstances,
including, without limitation, any set-off, counterclaim,
recoupment, defense or other right which the Company or any of
its subsidiaries may have against you or anyone else.
(e) Legal Fees and Expenses. The Company agrees to pay to
you promptly, as incurred, to the full extent permitted by law,
all legal fees and expenses which you may reasonably incur as a
result of any contest (regardless of the outcome thereof) by the
Company, you or others of the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee
of performance thereof (including any contest by you about the
amount of any payment pursuant to this Agreement), plus in each
case interest on any delayed payment at the rate of 10%.
7. Assignability. This Agreement is binding on and is for the
benefit of the parties hereto and their respective successors,
heirs, executors, administrators and other legal representatives.
Neither this Agreement nor any right or obligation hereunder may
be assigned by the Company (except to any subsidiary or
affiliate) or by you.
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8. Successor. The Company shall 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 assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the
Company would be required to perform. As used in this Agreement,
"Company" shall mean the company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of law,
or otherwise.
9. Amendment: Waiver. This Agreement may be amended only by an
instrument in writing signed by the parties hereto, and any
provision hereof may be waived only by an instrument in writing
signed by the party or parties against whom or which enforcement
of such waiver is sought. The failure of either party hereto at
any time to require the performance by the other party hereto of
any provision hereof shall in no way affect the full right to
require such performance at any time thereafter, nor shall the
waiver by either party hereto of a breach of any provision hereof
be taken or held to be a waiver of any succeeding breach of such
provision or a waiver of the provision itself or a waiver of any
other provision of this Agreement.
10. Notices. All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to the
other party or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
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If to you:
Xxxxxxx X. Xxxxxx
00 Xxxxx Xxxx Xxxx
Xxxxxxxxxx, XX 00000
If to the Company:
Director of Human Resources
EnergyNorth, Inc.
0000 Xxx Xxxxxx
P.O. Box 329
Manchester, NH 03105-0329
or to such other address as either party shall have furnished to
the other in writing in accordance herewith. Notice and
communications shall be effective when actually received by the
addressee.
11. Validity. The invalidity or unenforceability of any
provision or provisions 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, nor shall
the invalidity or unenforceability of a portion of any provision
of this Agreement affect the validity or enforceability of the
balance of such provision. If any provision of this Agreement,
or portion thereof is so broad, in scope or duration, as to be
unenforceable, such provision or portion thereof shall be
interpreted to be only so broad as is enforceable.
12. Arbitration. Any dispute or controversy between the parties
relating to this Agreement shall be settled by binding
arbitration in the City of Manchester, State of New Hampshire,
pursuant to the governing rules of the American Arbitration
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Association and shall be subject to the provisions of New
Hampshire Revised Statutes Annotated Chapter 542. Judgment upon
the award may be entered in any court of competent jurisdiction.
13. Withholding. The Company may withhold from any amounts
payable under this Agreement such Federal, state or local taxes
as shall be required to be withheld pursuant to any applicable
law or regulation.
14. Entire Agreement. This Agreement contains the entire
understanding of the Company and you with respect to the subject
matter hereof.
15. Applicable Law. This Agreement shall be governed by and
construed in accordance with the substantive internal law and not
the conflict of law provisions of the State of New Hampshire.
If the terms of the foregoing Agreement are acceptable to
you, please sign and return to the Company the enclosed copy of
this Agreement whereupon this Agreement shall become a valid and
legally binding contract between you and the Company.
Very truly yours,
EnergyNorth, Inc.
By:/s/ Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxx,
President and Chief
Executive Officer
Accepted and Agreed as of the
date first above written:
/s/ Xxxxxxx X. Xxxxxx
XXXXXXX X. XXXXXX
