Exhibit 10(ff)
SEVERANCE AGREEMENT
BETWEEN
FALL RIVER GAS CONPANY
AND
XXXX X. XXXXXXX
THIS AGREEMENT, effective this first day of January, 1999, by and
between Fall River Gas Company, a Massachusetts Corporation (the "Company") and
Xxxx X. Xxxxxxx (the "Executive").
WITNESSETH:
WHEREAS, the Executive is a valuable employee of Fall River Gas
Company, an integral part of its management, and a key participant in the
decision-making process relative to short-term and long-term planning and policy
for the Company; and
WHEREAS, the Company wishes to encourage the Executive to continue the
Executive's career and services with the Company for the period during and after
an actual or threatened Change in Control; and
WHEREAS, the Board of Directors of the Company, at a meeting on
February 10, 1998, determined that it would be in the best interests of the
Company and its shareholders to better assure continuity in the management of
the Company's administration and operations in the event of a Change in Control
by entering into this Severance Agreement (the "Agreement") with the Executive;
NOW THEREFORE, it is hereby agreed by and between the parties hereto as
follows:
1. Definitions.
(a) "Board" shall mean the Board of Directors of the
Company.
(b) "Cause" shall have the same meaning as is provided in
the Executives Employment Agreement.
(c) Change in Control" shall mean:
(i) any person (as such term is used in Section
13(d) of the Securities Exchange Act of 1934
(the "Act"), excluding a corporation at
least 90% of the ownership of which after
acquiring its interest is owned directly by
the holder of common shares of the Company
immediately prior to such acquisition
("Person"), is the beneficial owner,
directly or indirectly, of twenty (20)
percent or more of the outstanding common
shares of the Company (other than the
Savings Plan) requiring the filing of a
report with the Securities and Exchange
Commission under Section 13(d) of the 1934
Act;
(ii) a purchase by any Person of shares pursuant
to a tender or exchange offer to acquire any common
shares of the Company (or securities convertible into
common shares) for cash, securities, or any other
consideration provided that, after consummation of
the offer, such Person is the beneficial owner (as
defined in Rule l3d-3 under the 1934 Act), directly
or indirectly, of twenty (20) percent or more of the
outstanding common shares of the Company (calculated
as provided in paragraph (d) of Rule 13d-3 under the
1934 Act in the case of rights to acquire common
shares);
(iii) approval by the shareholders of the Company
of (a) any consolidation or merger of the
Company in which the Company is not the
continuing or surviving corporation or
pursuant to which common shares of the
Company would be converted into cash,
24
securities, or other property, other than a
consolidation or merger of the Company in
which holders of its common shares
immediately prior to the consolidation or
merger own at least 90% of the common shares
of the surviving corporation immediately
after the consolidation or merger, or (b)
any consolidation or merger in which the
Company is the continuing or surviving
corporation but in which the common
shareholders of the Company immediately
prior to the consolidation or merger do not
hold at least 90% of the outstanding common
shares of the continuing or surviving
corporation (except where such holders of
common stock hold at least 90% of the common
shares of the corporation which owns all of
the common shares of the Company), or (c)
any sale, lease, exchange, or other transfer
(in one transaction or a series of related
transactions) of all or substantially all
the assets of the Company, or (d) any merger
or consolidation of the Company where, after
the merger or consolidation, one Person owns
100% of the common shares of the Company
(except where the common holders of the
Company's common shares immediately prior to
such merger or consolidation own at least
90% of the outstanding common shares of such
Person immediately after such merger or
consolidation) (upon the Board's
determination that the transaction subject
to shareholder approval hereunder will not
be consummated, a Change in Control shall
not be deemed to have occurred from such
date forward and this Agreement shall
continue in effect as if no Change in
Control had occurred, except to the extent
termination requiring Severance Benefits
under paragraph 3 hereof has occurred prior
to such Board's determination); or
(iv) a change in the majority of the members of
the Board within a 24-month period unless
the election or nomination for election or
nomination for election by the Company's
common shareholders of each new director was
approved by the vote of at least two-thirds
of the Directors then still in office who
were in office at the beginning of the
24-month period.
(d) "Code" shall mean the Internal Revenue Code of 1986,
as amended.
(e) "Compensation" shall mean the sum of (i) the
Executive's annual rate of base salary on the last
day the Executive was an employee of the Company (or
if higher, the annual rate in effect on the date of
the Change in Control), including any elective
contributions made by the Company on behalf of the
Executive that are not includible in the gross income
of the Executive under Sections 125 or 402(a)(8) of
the Code or any successor provision thereto, and
(ii) the average of the annual incentive payments
paid to the Executive by the Company, if any, for
the three consecutive calendar years immediately
preceding employment termination (or a lesser
period if the Executive was not eligible to receive
annual incentive payments during such three year
period).
(f) "Coverage Period" means the period beginning on the
Starting Date and ending on the Ending Date.
(g) "Disability" means the Executive's incapacity due to
physical or mental illness, which incapacity causes
the Executive to be absent from his duties on a full
time basis for 90 consecutive business days.
(h) "Employment Agreement" shall mean the employment
agreement between the Company and the Executive,
entered into on October 7, 1991, together with any
amendments thereto.
(i) "Ending Date" means the earlier of (i) the date of
the Board's determination that the transaction which
was approved by the Company's shareholders, thus
constituting a Change in Control pursuant to
paragraph 1(c)(iii), will not be consummated, or
(ii) the date which is 36 full calendar months
following the date on which a Change in Control
occurs or, if a Change in Control is based on
shareholder approval pursuant to paragraph 1(c)(iii)
hereof, the date which is 36 full calendar months
following the date of the consummation of the
transaction which was the subject of shareholder
approval.
25
(j) "Good Reason" shall mean any of the following:
(i) material change by the Company of the
Executive's functions, duties or responsibilities
which change would cause the Executive's position
with the Company to become of less dignity,
responsibility, importance, prestige or scope,
including, without limitation, a change from being a
senior officer of a publicly held company;
(ii) assignment or reassignment by the Company
of the Executive without the Executive's consent to
another place of employment more than 50 miles from
the Executive's current place of employment; or
(iii) a reduction which is more than de minimis
in the Executive's base pay or bonus opportunity
except if such reduction is part of a reduction for
all executive officers of the Company and any parent
Company thereof.
No such event described above shall constitute Good
Reason unless the Executive gives written notice to
the Company, specifying the event relied upon for
such termination and given at any time within one
year after the occurrence of such event and the
Company has not remedied such within 30 days of the
notice. The Company and Executive, upon mutual
written agreement may waive any of the foregoing
provisions which would otherwise constitute a Good
Reason.
(k) "Single Trigger Period" means the eighteen month
period which (i) begins on the date on which a
Change in Control occurs, or if a Change in Control
is based on shareholder approval pursuant to
paragraph 1(c)(iii) hereof, the date of the
consummation of the termination which was the
subject of shareholder approval, and (ii) ends
eighteen months thereafter.
(1) "Starting Date" means the date on which a
Change in Control occurs.
2. TERM. This Agreement shall be effective as of the date above
written and shall continue thereafter for 36 full calendar months
following the date of an occurrence of a Change in Control or, if the
Change in Control event is based on shareholder approval pursuant to
paragraph 1(c)(iii), 36 full calendar months following the date of the
consummation of the transaction which was the subject of shareholder
approval.
3. SEVERANCE BENEFIT. If (i) at any time during the Coverage
Period, the Executive's employment hereunder is terminated by the
Company for any reason other than Cause, death or Disability, or by the
Executive for Good Reason, or (ii) during the Single Trigger Period,
the Executive terminates his employment for any reason, then,
(a) within five business days after such termination, the
Company shall pay to the Executive (or, if the
Executive has died before receiving all payments to
which the Executive has become entitled hereunder, to
the estate of the Executive) (i) accrued but unpaid
salary and accrued but unused vacation, if any, and
(ii) severance pay in a lump sum cash amount equal to
three (3) times the Executive's Compensation;
(b) to the extent not paid or payable under such plans
and/or arrangements, the Company shall pay to the
Executive the present value of the benefits
(calculated assuming the Executive will begin
receiving benefits at the earliest retirement date
under such plans and/or arrangements, or if later, at
the end of the term of this Agreement, based on the
actuarial assumptions used for purposes of the
qualified defined benefit plan) that would have
accrued, but did not accrue, under the Company's
qualified defined benefit retirement plan, the Fall
River Gas Company Survivor Benefit Deferred
Compensation Agreement, and the excess pension
benefit provision in the Employment Agreement and/or
any successor or similar plan(s) or arrangements in
place and operational on the date of termination
and/or the Change in Control, as if (for vesting,
benefit accrual, eligibility for early retirement,
subsidized early retirement factors, actuarial
equivalence, and any other purposes) the Executive
had continued to be employed and had
26
continued to participate in such plans and
arrangements through the end of the term of this
Agreement; it being understood by all parties hereto
that payments made under this Agreement and the
deemed additional credited service shall not be
considered for purposes of determining the actual
benefit payable under the terms of such plans and
arrangements and shall not be considered part of the
relevant payroll records for purposes of such plans
and arrangements; and
(c) to the extent not already provided under the terms of
the Employment Agreement, for a period commencing
with the month in which termination of employment, as
described in paragraph 3 hereof, shall have occurred,
and ending the later of the date of the Executive's
or the Executive's spouse's death, the Executive, his
spouse and any dependents shall continue to be
entitled to receive all health and dental care
benefits under the Company's welfare benefit plans
(within the meaning of Section 3(l) of the Employee
Retirement Income Security Act of 1974, as amended),
at no cost to the Executive and at the same level of
benefits that the Executive, his spouse and his
dependents were receiving or were entitled to receive
at the time of termination of employment or, if it
would result in greater benefits, at the date of the
Change in Control (if and to the extent that such
benefits shall not be payable or provided under any
Company plan, the Company shall pay or provide
equivalent benefits on an individual basis).
4. CERTAIN ADDITIONAL PAYMENTS.
(a) If Independent Tax Counsel shall determine that the
aggregate payments made to the Executive pursuant to this
Agreement and any other payments to the Executive from the
Company which constitute "parachute payments" as defined in
Section 280G of the Code (or any successor provision thereto)
("Parachute Payments") would be subject to the excise tax
imposed by Section 4999 of the Code (the "Excise Tax"), then
the Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount (determined by
Independent Tax Counsel) such that after payment by the
Executive of all taxes (including any Excise Tax) imposed upon
the Gross-Up Payment and any interest or penalties imposed
with respect to such taxes, the Executive retains from the
Gross-Up Payment an amount equal to the Excise Tax imposed
upon the payments. For purposes of this paragraph 4(a),
"Independent Tax Counsel" shall mean a lawyer, a certified
public accountant with a nationally recognized accounting
firm, or a compensation consultant with a nationally
recognized actuarial and benefits consulting firm, with
expertise in the area of executive compensation tax law, who
shall be selected by the Executive and shall be reasonably
acceptable to the Company, and whose fees and disbursements
shall be paid by the Company.
(b) If Independent Tax Counsel shall determine that no
Excise Tax is payable by the Executive, it shall furnish the
Executive with a written opinion that the Executive has
substantial authority not to report any Excise Tax on the
Executive's Federal income tax return. If the Executive is
subsequently required to make a payment of any Excise Tax,
then the Independent Tax Counsel shall determine the amount
(the amount of such additional payments are referred herein as
"Gross-Up Underpayment") of such payment and any such Gross-Up
Underpayment shall be promptly paid by the Company to or for
the benefit of the Employee. The fees and disbursements of the
Independent Tax Counsel shall be paid by the Company.
(c) The Executive shall notify the Company in writing
within 15 days of any claim by the Internal Revenue Service
that, if successful, would require the payment by the Company
of a Gross-Up Payment. If the Company notifies the Executive
in writing that it desires to contest such claim and that it
will bear the costs and provide the indemnification as
required by this sentence, the Executive shall:
(i) give the Company any information reasonably
requested by the Company relating to such claim,
(ii) take such action in connection with
contesting such claim as the Company 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
27
the Company,
(iii) cooperate with the Company in good faith
in order to effectively contest such claim, and
(iv) permit the Company to participate in any
proceedings relating to such claim; provided,
however, that the Company 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. The
Company shall control all proceedings taken in
connection with such contest; provided, however, that
if the Company 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.
(d) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to paragraph 4(c)(iv), the
Executive becomes entitled to receive any refund with respect
to such claim, the Executive shall, within 10 days, pay to the
Company the amount of such refund (together with any interest
paid or credited thereon after taxes applicable thereto).
5. NO MITIGATION REQUIRED. In the event of any termination of
the Executive's employment described in paragraph 3, the
Executive shall be under no obligation to seek other
employment, and there shall be no offset against amounts
due the Executive under this Agreement on account of any
remuneration attributable to any subsequent employment;
provided, however, to the extent the Executive receives
medical and health benefits from a subsequent employer,
medical and health benefits under paragraph 3(c) shall be
secondary to those received from the subsequent employer..
6. SOURCE OF PAYMENTS. All payments provided for in this
Agreement shall be paid in cash from the general funds of
the Company; provided, however, such payments shall be
reduced by the amount of any payments made to the
Executive or the Executive's dependents, beneficiaries,
or estate from any trust or special or separate fund
established by the Company to assure such payments. The
Company shall not be required to establish a special or
separate fund or other segregation of assets to assure
such payments, and, if the Company shall make any
investments to aid it in meeting its obligations
hereunder, the Executive shall have no right, title, or
interest whatever in or to any such investments except as
may otherwise be expressly provided in a separate written
instrument relating to such investments. Nothing
contained in this Agreement, and no action taken pursuant
to its provisions, shall create or be construed to create
a trust of any kind, or a fiduciary relationship between
the Company and the Executive or any other person. To the
extent that any person acquires a right to receive
payments from the Company, such right shall be no greater
than the right of an unsecured creditor of the Company.
7. LITIGATION EXPENSES: ARBITRATION.
(a) Full Settlement, Litigation Expenses; Arbitration.
The Company's obligation to make the payments
provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the
Company may have against the Executive or others. In
no event shall the Executive be obligated to seek
other employment or take any other action by way of
mitigation of the amounts payable to the Executive
under any of the provisions of this Agreement. The
Company agrees to pay, upon written demand therefor
by the Executive, all legal fees and expenses which
the Executive may reasonably incur as a result of any
dispute or contest by or with the Company or others
regarding the validity or enforceability of, or
liability under, any
28
provision of this Agreement (except to the extent it
is determined by a court of competent jurisdiction,
mediator or arbitrator, as the case may be, that the
Executive's material claim is, or claims are,
frivolous or without merit in which case the
Executive shall bear all such fees and expenses),
together with interest on any delayed payments at the
applicable Federal rate provided for in Section
7872(f)(2) of the Code. In any such action brought by
the Executive for damages or to enforce any
provisions of this Agreement, the Executive, in his
sole discretion, shall be entitled to seek both legal
and equitable relief and remedies, including, without
limitation, specific performance of the Company's
obligations hereunder. If the parties hereto so agree
in writing, any disputes under this Agreement may be
settled by arbitration. The obligation of the Company
under this paragraph 7 shall survive the termination
for any reason of this Agreement (whether such
termination is by the Company, by the Executive, upon
the expiration of this Agreement or otherwise).
(b) In the event of any dispute or difference between the
Company and the Executive with respect to the subject matter
of this Agreement and the enforcement of rights hereunder, the
Executive may, in the Executive's sole discretion by written
notice to the Company, require such dispute or difference to
be submitted to arbitration. The arbitrator or arbitrators
shall be selected by agreement of the parties or, if they
cannot agree on an arbitrator or arbitrators within 30 days
after the Executive has notified the Company of Executive's
desire to have the question settled by arbitration, then the
arbitrator or arbitrators shall be selected by the American
Arbitration Association (the "AAA") in Boston, Massachusetts
upon the application of the Executive. The determination
reached in such arbitration shall be final and binding on both
parties without any right of appeal or further dispute.
Execution of the determination by such arbitrator may be
sought in any court of competent jurisdiction. The arbitrators
shall not be bound by judicial formalities and may abstain
from following the strict rules of evidence and shall
interpret this Agreement as an honorable engagement and not
merely as a legal obligation. Unless otherwise agreed by the
parties, any such arbitration shall take place in Boston,
Massachusetts, and shall be conducted in accordance with the
Rules of the AAA.
8. INCOME TAX WITHHOLDING. The Company may withhold from any
payments made under this Agreement all federal, state, or
other taxes as shall be required pursuant to any law or
governmental regulation or ruling.
9. ENTIRE UNDERSTANDING. This Agreement contains the entire
understanding between the Company and the Executive with
respect to the subject matter hereof and supersedes any
similar agreement between the Company and the Executive,
except that this Agreement shall not affect or operate to
reduce any benefit or compensation inuring to the Executive of
any kind elsewhere provided and not expressly provided for in
this Agreement including, without limitation, any benefit or
compensation under the Employment Agreement and/or the Fall
River Gas Company Survivor Benefit Deferred Compensation
Agreement.
10. SEVERABILILY. If, for any reason, any one or more of the
provisions or part of a provision contained in this Agreement
shall be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall
not affect any other provision or part of a provision of this
Agreement not held so invalid, illegal or unenforceable, and
each other provision or part of a provision shall to the full
extent consistent with law continue in full force and effect.
11. CONSOLIDATION, MERGER. OR SALE OF ASSETS. If the Company
consolidates or merges into or with, or transfers all or
substantially all of its assets to, another entity the term
"the Company" as used herein shall mean such other entity and
this Agreement shall continue in full force and effect.
12. NOTICES. All notices, requests, demands and other
communications required or permitted hereunder shall be given
in writing and shall be deemed to have been duly given if
delivered or mailed, postage prepaid, first class as follows:
a. to the Company;
29
Fall River Gas Company
000 Xxxxx Xxxx Xxxxxx
Xxxx Xxxxx, Xxxxxxxxxxxxx 00000
Attention:
--------------
b. to the Executive:
-----------------------
-----------------------
-----------------------
or to such other address as either party shall
have previously specified in writing to the
other.
13. NO ATTACHMENT. Except as required by law, no right to receive
payments under this Agreement shall be subject to
anticipation, commutation, alienation, sale, assignment,
encumbrance, charge, pledge or hypothecation or to execution,
attachment, levy or similar process or assignment by operation
of law, and any attempt, voluntary or involuntary, to effect
any such action shall be null, void and of no effect.
14. BINDING AGREEMENT. This Agreement shall be binding upon, and
shall inure to the benefit of, the Executive and the Company
and their respective permitted successors and assigns.
15. MODIFICATION AND WAIVER. Prior to the date of a Change in
Control, this Agreement may be terminated, modified, amended
or terminated by action of a majority of the members of the
Board. After a Change in Control, this Agreement may not be
modified or amended except by an instrument in writing signed
by the parties hereto. No term or condition of this Agreement
shall be deemed to have been waived, nor shall there be any
estoppel against the enforcement of any provision of this
Agreement, except by written instrument signed by the party
charged with such waiver or estoppel. No such written waiver
shall be deemed a continuing waiver unless specifically stated
therein, and each such waiver shall operate only as to the
specific term or condition waived and shall not constitute a
waiver of such term or condition for the future or as to any
act other than that specifically waived.
16. HEADING OF NO EFFECT. The paragraph headings contained in this
Agreement are included solely for convenience of reference and
shall not in any way affect the meaning or interpretation of
any of the provisions of this Agreement.
17. GOVERNING LAW. This Agreement and its validity,
interpretation, performance, and enforcement shall be governed
by the laws of the Commonwealth of Massachusetts without
giving effect to the choice of law provisions in the
Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its
officers thereunto duly authorized, and the Executive has signed this Agreement,
all effective as of the date first above written.
Witness: Fall River Gas Company:
By:
--------------------------------- -----------------------------------
Title:
Witness:
By:
--------------------------------- -----------------------------------
Title:
-----------------------------------
Witness: Executive:
30
