EMPLOYMENT AGREEMENT
between
CITIZENS UTILITIES COMPANY
and
▇▇▇▇▇▇▇ ▇▇▇
As of July 1, 1990
Exhibit "A"
THIS AGREEMENT entered into on March 29, 1991, as of July 1, 1990 by and
between CITIZENS UTILITIES COMPANY, a Delaware Corporation with offices at
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Company") and ▇▇▇▇▇▇▇ ▇▇▇, an
individual residing at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the
"Executive").
W I T N E S S E T H
WHEREAS:
A. The Executive has been a member of the Board of Directors of the Company and
Chairman of the Executive Committee of the Board of Directors of the Company
since April of 1989;
B. On June 22, 1990, the Executive was elected Chairman of the Board of the
Company and designated chief executive officer of the Company effective on July
1, 1990 and is currently acting as such Chairman and chief executive officer and
is so acting to the full satisfaction of the Company;
C. The Company desires that the Executive remain and continue as its chief
executive officer and to have the benefit of the Executive's advice after his
retirement as a consultant on matters of importance to the Company;
D. The Company believes that in order to obtain, motivate and retain the
services of the Executive and of key employees generally, it is necessary that
benefits available upon retirement be equitable and that the Executive
2598A.2. 3/8/91
and other key employees be given the opportunity to acquire shares of the
Common Stock of the Company;
E. By reason of age the Executive is not eligible to participate in the
Company's pension plan and, by reason of his first being employed by the Company
as of July 1, 1990, can only participate for a limited number of years in the
Company's Senior Management Incentive Deferred Compensation Plan, and the
Company is desirous of providing benefits to the Executive which will take into
account such ineligibility and limited participation;
F. The Executive has served as Chairman of the Board of the Company since June
22, 1990 and as its chief executive officer since July 1, 1990. During the same
period of time Executive has served as Chairman of the Board and chief executive
officer of Century Communications Corp., a Delaware Corporation ("Century"). The
Company acknowledges that during this period when acting as both Chairman and
chief executive officer of the Company and of Century, the Executive has
performed his services to the Company to the full satisfaction of the Board of
Directors of the Company, and the Company is aware that the Executive may
continue to serve as Chairman of the Board and Chief Executive Officer of
Century during the full term of Executive's employment by the Company, and is
agreeable to Executive continuing to act in such capacities with Century and
various of Century's subsidiaries and affiliated Companies during his employment
by the Company; and
2598A. 3. 3/8/91
G. The Company is desirous of employing the Executive as its Chief Executive
Officer under the terms and provisions set forth herein effective July 1, 1990
and the Executive is willing to accept such employment.
NOW, THEREFORE, in consideration of the mutual
covenants herein contained and other good and valuable consideration, each to
the other in hand paid and the receipt and adequacy of which is mutually
acknowledged, the parties agree as follows:
1. Employment: Duties.
(a) The Company hereby employs the Executive and the Executive hereby accepts
such employment, for the duration of the Term (as hereafter defined) and upon
the terms and conditions hereafter provided, as chief executive of the Company.
As such chief executive, the Executive shall be in charge of and have final
authority and responsibility for all phases of the activities, operations and
business of the Company and its subsidiaries, subject only to such authority and
responsibility which under applicable law cannot be delegated and which may only
be exercised by the Board of Directors. The Executive shall be the senior
officer of the Company and report directly to the Board of Directors, and no
officer of the Company shall have authority and responsibility greater than or
senior to the Executive. All officers, employees and other personnel shall
report directly or indirectly to the Executive.
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(b) During the Term (as herein defined) the Executive shall be designated as the
Chairman of the Board of the Company and the By-Laws of the Company shall
provide that the Chairman of the Board shall be the Chief Executive Officer of
the Company. Additionally, during the Term, the Executive agrees to serve, if it
is mutually determined to be appropriate and for the period for which he is and
from time-to-time shall be elected, as an officer and director of any subsidiary
or affiliate of the Company, and if elected to such, agrees to serve and
continue to serve as a director and as a member of any committee of the Board
of Directors of the Company, for which Executive shall be entitled to be paid
and receive directors fees and fees for acting as member of one or more
committees of the Board.
(c) The Company shall use its best efforts to cause the Executive to be a member
of its Board of Directors throughout the Term, shall include him in the
management slates for election as a director at every stockholders' meeting at
which his term for director would otherwise expire and shall not take any action
to reduce the scope of the Executive's authority, position, functions, duties
and responsibilities from that which is contemplated hereby, unless he shall
otherwise consent in writing.
2. Term.
The term of the Executive's employment under this Agreement shall commence
on July 1, 1990 and expire on December 31, 1996, (the "Term").
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3. Compensation, Expenses and Benefits.
For services rendered by the Executive during the period of his employment under
this Agreement, the Executive shall be paid the compensation, benefits and
expenses provided in Sections 3(a), (b), (d) and (e). Additionally, Executive
shall also be entitled to the other payments and benefits set forth in other
sections of this Agreement.
(a) Base Salary.
The Company shall pay to the Executive a base salary ("Base Salary") as follows:
The Base Salary for the first six months of the Term shall be payable at the
rate of $495,000 per year, and the Base Salary for calendar year 1991 shall be
$800,000. For each of the remaining years of the Term the Base Salary shall be
equal to the greater of (i) 110% of the Base Salary for the immediately
preceding year, and (ii) the product obtained by multiplying the percentage
increase in the Consumer Price Index, as hereafter defined, from the first day
of the immediately preceding year to the first day of the particular applicable
year of the remaining years, by the Base Salary for the immediately preceding
year, plus the amount of the Base Salary for the immediately preceding year. The
Base Salary shall be payable currently in accordance with the customary payroll
practices of the Company but in no event less frequently than monthly and shall
be subject to such withholdings as may be required by applicable law.
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(b) Benefits and Other Plans.
(i) Participation in Plans - Generally.
In addition to his Base salary, the executive shall participate in the 401(k)
Plan of the Company, the Senior Management Incentive Deferred Compensation Plan
of the Company (as provided for in Section 3(b)(ii)) and any retirement income
or pension, profit sharing, medical, hospitalization, major medical, health,
dental and eye care plans, sick leave, life or other insurance or death benefit,
travel and accident insurance, termination pay, vacation, auto allowance, and
any other fringe or employee benefit plans, programs and practices of the
Company or its subsidiaries (collectively, "the Plans" and individually a
"Plan") for which the Esecutive is or other key executives are or shall become
eligible. Except as otherwise provided in this Agreement, in all instances where
salary is relevant, the awards to be made to the Esecutive, all contributions of
the Company and all other benefits will be determined on the basis of
Executive's then Base Salary, as provided in Section 3(a), together with any
bonus awarded pursuant to Section 4 during the immediately preceding year of the
Term (or for the first full year of the Term if same is the applicable year).
(ii) Senior Managerial Incentive Deferred
Compensation Plan ("SMIDCP").
Executive shall be eligible to and shall be selected to participate in the
SMIDCP during the Term
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with the understanding that the vested portion of the credit balance in
Executive's account as of a particular date shall be equal to the vested balance
in such account in accordance with the SMIDCP multiplied by five. The full
credit balance in Executive's account shall become vested in any year in which
Executive's employment by the Company terminates for any reason if not
previously vested, and the amount credited for the year of termination shall be
deemed vested.
(iii) Life and Accident Insurance.
A. The Company shall provide Executive
with insurance on his life in the principal sum of the greater of (i)
$3,000,000 and (ii) the amount determined under the formula applicable to
Company executives (i.e., annualized salary x 4.2, plus $18,000) in accordance
with Company policy and practice, and pay the premiums thereon (whether at
standard or other than standard rates) and otherwise keep and maintain same in
full force and effect during the Term and the Advisory Period, with companies
licensed to do business and underwrite policies of life insurance in the State
of Connecticut, and with the beneficiary or beneficiaries to be designated by
Executive. At the expiration or prior termination of the Term and the Advisory
Period (but subject to Executive's rights under Sections 8, 9 and 10), Executive
in his discretion shall have the right to purchase the policy or policies of
insurance on his life at the then interpolated terminal reserve value thereof.
Provided that in the event Executive is not insurable
2598A. 8. 3/8/91
at any premium cost therefor, the Company shall pay over the sum of $3,000,000
(the "Insurance Payment") to designated beneficiaries of Executive or
Executive's legal representatives, at his death, whether such death occurs
before or after the expiration or prior termination of the Term and the Advisory
Period.
B. Additionally, the Executive and his spouse shall each be entitled to coverage
in the amount of $1,000,000 under the Company's paid Business Travel Accident
Insurance Plan during the period of Executive's employment hereunder and
thereafter when traveling on Company matters, with the beneficiary or
beneficiaries to be designated by Executive and his spouse respectively.
(iv) Options.
The Company confirms the prior award to the Executive effective on November 1,
1990, under the Company's Management Equity Incentive Plan (the "Incentive
Plan") of (A) options, which shall be classified as incentive stock options, to
acquire 350,000 shares of the Company's Common Stock Series B, none of which
shall be classified as Deferred Stock or Restricted Stock under the Incentive
Plan, at a price per share equal to the Fair Market Value thereof, as defined in
the Incentive Plan, on November 1, 1990 and (B) Stock Appreciation Rights
("SARs") under the Incentive Plan to cover all of said shares. It is confirmed
further that said options became exercisable in their entirety on March 15, 1991
2598A. 9. 3/8/91
and may be exercised at any time thereafter up to the date which is ten years
from the date of grant (subject in the instance of termination of this Agreement
for "good cause" (as hereafter defined) by the Company or voluntarily by the
Executive without a breach by the Company, to the shorter period set forth in
the Incentive Plan), and shall grant to the Executive the right to elect to
cancel all or any portion of any option by exercising a related SAR, upon which
exercise, payment in the amount provided for in the Incentive Plan shall be made
to Executive or his legal representatives, in cash.
(v) Payments and Distributions under Compensation and Benefit Plans.
Any provision in the 401(k) Plan and the SMIDCP Plan to the contrary
notwithstanding (subject, however, to the provisions of Section 7 and provided
with respect to the 401(k) Plan that same does not result in the
disqualification of such plan as a Qualified Plan under the United States
Internal Revenue Code of 1986, as amended (the "Code")), payments will be made
to the Executive of the entire balances in his accounts under the SMIDCP and the
401(k) Plan on the date of termination of employment of the Executive for
whatever reason or as soon as practicable thereafter in the instance of the
401(k) Plan, or if the Executive shall designate a later date or later dates for
any of said payments, on such later date or dates. The amount of the Executive's
credit balance in the SMIDCP on the date of payment shall include, in addition
to all past contributions and interest and
2598A. 10. 3/8/91
the amounts referenced in Section 3(b)(ii), a contribution (which shall be made
by the Company) and interest, which shall be credited, for the first year of the
Term for the period from commencement of the Term to the end of the fiscal year
of the Company in which the Term commences and for the period from the first
day of the fiscal year of the Company in which the last day of the Term falls to
the expiration or termination of the Term.
(vi) Nonforfeitabilits.
Subject to the provisions of Section 7, the Executive's benefits under any Plan
which does not expressly provide for non-forfeitability of benefits, for any
reason, and/or under the provisions of this Agreement, shall not be subject to
forfeiture except as expressly provided for in Section 5(b), notwithstanding any
provision to the contrary in such plan for forfeiture or divestiture of benefits
or compensation.
(c) Accoutrements of Office.
Executive shall also be entitled to all accoutrements of office that are
generally made available to chief executive officers of publicly held companies
of the size of the Company, including without limitation an office, office
furnishings, secretaries, and support and other personnel and assistance,
transportation and any and all other services and facilities made available to
Executive's immediate predecessor in office.
2598A. 11. 3/8/91
(d) Expenses; Tax and Other Services.
(i) It is expected that in carrying out his duties on behalf of the Company,
Executive from time to time will incur expenses, certain of which are difficult
or impossible to itemize. Accordingly, and consistent with the Company's prior
practice with respect to the Company's two immediately preceding chief executive
officers, Executive shall be paid the sum of $50,000 for expenses in connection
with his services for which he is not required to account to the Company. In
addition, the Company will promptly pay, and if not paid, reimburse Executive
upon reasonable substantiation, for all other expenses, including without
limitation, travel and business entertainment expenses, incurred by Executive on
behalf of or in connection with the conduct of the business of the Company. The
Company shall provide Executive with the use of and shall pay all costs of
maintenance and repair of an automobile of Executive's choosing, and a driver,
in connection with the rendition and performance of Executive's services.
(ii) To enable the Executive to render the most effective services practicable
and to facilitate appropriate financial planning, and consistent with the
Company's prior practice with respect to the Company's two immediately preceding
chief executive officers, the Company shall reimburse the Executive, whether
before or after retirement, expiration or prior termination of this Agreement,
for costs incurred by him for tax, financial, investment,
2598A. 12. 3/8/91
estate planning and other professional advice and services, including legal and
accounting services, which may be rendered or incurred at any time during the
Term, up to a maximum of $25,000 per year, as same is increased by increases in
the Consumer Price Index (as provided in Section 12 from the date hereof to the
date particular requests are made in accordance with the immediately succeeding
sentence). Such payments shall be made on the Executive's requests therefore as
such costs are incurred by him, and any of the $25,000 available for any year
which is not utilized by Executive, may be carried over and shall be available
for utilization by Executive in other years of the Term.
e) Vacation.
Executive shall be entitled to a vacation of five weeks during each year of the
Term, at times mutually agreeable to Executive and the Company. All payments and
benefits to Executive shall be paid and continue during all vacation periods.
(f) Place and Time for Services.
Executive's base of operations shall be Fairfield County, CT (the "Base Area"),
although Executive, at his election, may render his services from other
locations. However, Executive shall not be required to render his services on a
permanent or other than temporary basis outside of the Base Area. Executive
agrees, nevertheless, from time-to-time, to take such trips and travel outside
said area as may reasonably be necessary in connection with his duties.
2598A.13. 3/8/91
4. Additional Payments.
Nothing in Section 3 or any other provision of this Agreement shall preclude
increases in Executive's compensation, including without limitation, increases
in Base Salary, additional benefits, bonuses, incentive awards and other
payments or benefits as the Board of Directors or appropriate committee of the
Board of Directors of the Company may approve, in its sole discretion, all of
which payments and benefits are expressly authorized.
5. Exclusivity.
(a) The Company acknowledges that Executive presently acts, performs and renders
services as chairman of the Board and chief executive officer of Century
Communications Corp., a New Jersey corporation ("Century") and as chief
executive or other officer and/or as a member of the Board of Directors of
Century's various subsidiaries and certain affiliated companies of Century.
(Such subsidiaries and affiliated companies are deemed included within the
meaning of "Century"). The Company agrees (i) that Executive may continue to
render and perform such services for Century and retain such offices,
directorships or other offices in Century and any future subsidiaries or
affiliated companies of Century and (ii) the Company shall make no claim of any
nature against Executive or his legal representatives by reason of any such
employment by or association with Century. Additionally, subject to the
provisions of Section 5(b) (with respect to Executive engaging
2598A. 14. 3/8/91
in competition materially detrimental to the Company), and without the necessity
of seeking approval of the Board of Directors of the Company, Executive may
serve as a member of the board of directors, officer, partner or stockholder, or
in any other similar position or capacity or provide services for any company,
firm, person other than the Company (which shall be deemed to include all
subsidiaries and all affiliates of the Company) and other than Century,
concurrently with and after his employment under this Agreement, and further may
engage in the management of his own affairs concurrently with his employment
hereunder and thereafter. Executive shall retain for his account any and all
compensation and other benefits payable to him with respect to services rendered
to or for Century or to or for such other entities.
(b) Additional Obligations.
All payments and benefits to the Executive under this Agreement, other than
those referenced in Sections 3(b)(i) through 3(b)(iii) and Section 6, during the
period of his employment with the Company, shall be subject to the following
provisions of this Section 5(b). Subject to the provisions of Sections 5(a) and,
without limitation, excluding any employment or association with Century, if
during the Term the Executive, without the written consent of the Company, shall
knowingly engage in competition which is materially detrimental to the Company
and its subsidiaries, the Executive's rights to such payments or other benefits
in the future shall terminate, and
2598A.15. 3/8/91
the Company's obligations to make such payments and provide such benefits shall
cease; provided, however, that the Executive shall not be deemed to have
knowingly engaged in such competition unless and until the Executive shall have
received written notice, on behalf of the Board of Directors of the Company,
from an independent consultant selected by those Directors who are not employees
of the Company, specifying the conduct alleged to constitute such competition,
and the Executive has thereafter continued to engage in such conduct after a
reasonable opportunity and a reasonable period, (but in no event less than 60 or
more than 120 days) after receipt of such notice to refrain from such conduct.
In the event of discontinuance by the Executive, he shall not be or be deemed to
be in violation of the provisions of this Section 5(b) and, without limitation,
Executive shall have the right to contest in appropriate forums the
determination of the independent consultant. In no event shall the Executive be
under any obligation to repay to the Company any amounts theretofore paid to
him. The provisions of this Section shall constitute the sole contractual
provisions between the Executive and the Company restricting the activities or
conduct of the Executive or governing any forfeiture or divesting of
entitlements or benefits. Any similar provisions in any Plan, or any other
Company benefit plan, or elsewhere, shall terminate and be unenforceable to the
extent inconsistent with or more burdensome to Executive than this Section,
subject to the limitations of Section 7 of this Agreement.
2598A.16. 3/8/91
6. Post-Termination Provisions.
(a) Retirement Benefits.
The pension plan of the Company (the "Pension Plan") provides that an employee
cannot become a Participant in the Plan if he has attained his 60th birthday
prior to the first date for which he is to be credited with Hours of Service, as
such terms are defined in the Plan. The Pension Plan provides further that
"Normal Retirement Date" as referenced in the Pension Plan is the last day of
the calendar month during which a Participant's 65th birthday occurs. Since
Executive has heretofore attained his 60th birthday the Executive is not
eligible to participate in the Pension Plan. In lieu thereof and additionally to
provide Esecutive with a retirement commensurate with his position and
compensation, the Company will provide Executive with the following retirement
benefits:
(i) Monthly Payments
The Company shall pay the Executive an annual retirement benefit, to be paid,
except as hereinafter in this Agreement provided (including without limitation,
Sections 6(a)(iii), 9 and 10) in the form of a monthly sum, equal to two-thirds
of his "Final Compensation" as hereafter defined. Final Compensation" shall
mean, for the purposes of this subsection, the amount of remuneration payable to
the Executive for the 12 (or fewer months in the event Esecutive's employment
terminates prior to his being employed for 12
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months, in which case the amount would be annualized) most highly compensated
consecutive calendar months of the Executive's employment with the Company which
end on the last day of the calendar month immediately preceding the date on
which net monthly retirement benefits are to commence. Remuneration shall
include any and all forms of taxable income received by Executive including
benefits taxed to him whether or not directly received, plus any and all amounts
contributed by the Company or otherwise credited to his account during the
period specified under the Company's SMIDCP and 401(k) Plan, plus any and all
other awards and contributions made by the Company and other benefits received
by the Executive under any other executive compensation plan or program, without
deduction for any income or compensation accrued at any time but deferred under
the 401(k) Plan or any other deferred compensation plan, program or practice of
the Company, except that taxable income recognized by Executive by reason of the
exercise of the options to purchase 350,000 shares of the Company's Common Stock
pursuant to Section 3(b)(iv) of this Agreement or other options to acquire
shares of the Company's stock hereafter awarded to Executive, shall not be
included in computing "Final Compensation". To protect the Executive's
retirement benefit against erosion due to inflation, such net monthly retirement
benefit, as same may theretofore have been adjusted from time to time pursuant
to this subsection, shall be further increased as of the first day of each month
to take into account (A) the
2598A. 18, 3/8/91
percentage increase, if any, in the Consumer Price Index for the second
preceding month over the Consumer Price Index for the third preceding month, as
well as and (B) any increases in Final Compensation resulting from the
availability of information concerning benefit or compensation plans or
programs, awards, contributions and credits, including SMIDCP awards, and from
any retroactive or other appropriate adjustments in Final Compensation. Net
monthly retirement benefits hereunder calculated as aforesaid and Executive's
rights under this Section 6(a) (and those of his spouse or legal
representatives, if applicable), shall commence as of the first day of the first
full month immediately succeeding expiration or prior termination, for any
reason, of the Term of this Agreement, and in the event termination is effected
by reason of Executive's death, then without relinquishment of any benefits
payable to Executive's spouse as set forth in subsection (ii) of this Section
6(a), such monthly payments shall be made to Executive's spouse for the period
set forth in subsection (ii).
(ii) Continuation of Payments
Such monthly retirement benefit payments shall continue until the last day of
the month in which the Executive's death occurs. Thereafter (or immediately
following termination if termination of the Term of this Agreement, is
occasioned by the death of Executive), the Company shall make monthly payments
to the Executive's surviving spouse, if any,
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equal in amount to the monthly payments which would have been made by the
Company to the Executive under this Section 6(a) had the Executive survived and
termination had not been occasioned by the death of Executive. Payment of such
surviving spouse's monthly sum shall continue until the last day of the month
during which such spouse's death occurs. If, at the time of the death of the
survivor of the Executive and his spouse, less than 120 monthly payments have
been made under this Section 6(a) after expiration or prior termination of the
Term of this Agreement, then the commuted value of the remaining monthly
payments (i.e., payments necessary to total 120 payments when combined with the
payments made after his actual retirement date), with a provision for increases
in the Consumer Price Index determined pursuant to Section 12 and 16(h) hereof,
shall be paid in a lump cash sum to the Executive's designated beneficiary or
beneficiaries or, in the absence of a valid designation or an eligible
beneficiary, to the legal representatives of the survivor.
(iii) Lump Sum or Commuted Value Payments
Notwithstanding anything in this subsection 6(a) to the contrary, the Executive
(or his surviving spouse) pursuant to an election (the "Section Six Election")
made by the Executive prior to expiration or termination of the Term of this
Agreement (or by his surviving spouse at any time after Executive's death) may
elect, effective with the dates designated in such election but in no
2598A.20. 3/8/91
event prior to the expiration or prior termination of the Term of this
Agreement, to receive the commuted value of all remaining monthly payments, or
any designated portion thereof under this Section 6(a), in a lump sum cash
payment to be paid at the effective date or dates (the "Lump Sum Determination
Date") of such elections as specified by the Executive or his surviving spouse.
After any lump sum cash payment is made for a designated portion of the
aforesaid remaining monthly payments, the Company shall thereafter include in
each monthly payment hereunder to the Executive or his surviving spouse, estate
or beneficiary all monthly amounts that would have been due because of increases
in the Consumer Price Index as if said designated portion of the remaining
monthly payments had continued to be payable monthly in accordance with this
subsection 6(a). Determinations of commuted value (the "Lump Sum Calculation")
and subsequent monthly payments, if any, under this subsection 6(a) shall be
made in accordance with Section 13, hereof. The Section Six Election shall be
made in accordance with the notice provisions of Section 16(1), provided,
however, that in the instance of monies becoming due by reason of termination
pursuant to Sections 9 or 10 no such notice of election need be given.
(b) Advisory Services.
The Executive shall render the advisory services described in this Section 6(b)
as a consultant of the Company for the period commencing immediately upon the
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scheduled expiration of the Term and continuing through the fifth anniversary
of the date thereof (the "Advisory Period"). During the Advisory Period,
the Executive will provide such advisory services concerning the business,
affairs and management of the Company as may reasonably be requested by the
Board of Directors of the Company, but shall not be required to devote more
than 30 hours each month to such services, which shall be performed at a
time and place mutually convenient to both parties and which may be
performed via telephone. The Executive may engage in other full time
employment during the Advisory Period and his advisory services shall be
required only at times and places consistent with his other employment or with
his private activities; provided that during the Advisory Period the Executive
shall not engage in full time employment that is in material detrimental
competition with the Company or any of its subsidiaries or affiliates (as
provided for in Section 5(b), it being agreed that employment by Century or the
rendition of services for Century is not and shall not be deemed in competition
with the Company or any of its subsidiaries or affiliates. During the Advisory
Period, the Executive shall be entitled to receive a base payment in an amount
per annum equal to 25% of Executive's Base Salary for the twelve-month period
of the Term immediately preceding expiration ("Advisory Base Salary").
Provided, however, that in the event this Agreement is terminated by death or
Permanent Incapacity of Executive (as hereafter defined) or without "good
2598A. 22. 3/8/91
cause", as hereafter defined, the Company shall pay to Executive or his legal
representatives (as provided in Sections 9 and 10) a lump sum payment equal to
the commuted value of the Advisory Base Salary for the balance of the Advisory
Term determined in accordance with Section 13 hereof.
(c) Other Matters.
During the Advisory Period and for such further period as may be mutually agreed
in the event there should then be a business relationship between the Company
and the Executive, the Company at its expense shall provide Executive with and
maintain in good repair and condition, a private office outside the Company's
offices at a location acceptable to the Executive, office furnishings, all
utilities, equipment, parking privileges, a secretary and personnel assistance
and other amenities and accoutrements of office (all of which are referred to
as "Advisory Support"), it being understood and agreed that such Advisory
Support is to be and is being provided for the Company's benefit, and provided,
however, that the Company shall continue to provide the Executive his present
office, secretary and assistants and all other services at the Company
headquarters until his new office is ready for occupancy. Such Advisory
Support shall be equivalent to those provided to the Executive currently at the
Company's headquarters, as same may be augmented during the term. The Company
shall be responsible for the hiring, employment by the Company and
compensation, including benefits,
2598A. 23. 3/8/91
of the Executive's secretary and other personnel and for all required moving and
relocation expenses. In lieu of the Company providing the Executive with
Advisory Support, as aforesaid at the Company's expense, the Executive at his
option may elect to make other arrangements for himself at any time during which
the Company is obligated to provide the same and to receive from the Company for
each twelve month period durinq the remaining term of the Advisory Period, a
payment of $75,000, increased by the increase in the Consumer Price Index from
the date hereof to the first day of the applicable twelve-month period, for each
twelve-month period following such election, payable in full on the date
specified in said election, and prorated in the event that the final period
within the Advisory Period is less than twelve months.
7. Waivers: Limitations of Law.
The Company shall make such waivers, amendments to Plans or consents under
Plans, or amendments and consents in connection with other benefits provided for
herein, as may be necessary to carry out the intent of Sections 3(b) and 6.
However, in no event shall the Company or any Plan take any action which would
(A) contravene applicable law; (B) bring about the disqualification of any Plan
under the United States Internal Revenue Code of 1986, as amended (the "Code")
of any Plan presently so qualified, under the Code, or (C) eliminate any
exception from liability under Section 16(b) of the Securities Exchange Act of
1934 for any director or officer
2598A. 24. 3/8/91
subject thereto. If, by reason of any matter referred to in this Section, any
action cannot be undertaken at the time at which it is expected, requested or
proposed by the Executive, it (or as much thereof as shall be permissible) shall
be undertaken at the earliest time possible thereafter, or in the case of a
request for deferred payment at the time closest to that requested, which is
permissible without contravening this Section. To the extent that benefits under
a Plan or other benefits or payments provided for herein would be lost to the
Executive permanently or for any period of time by reason of this Section, the
Company shall provide such benefits supplementarily outside such Plan or in an
alternative form.
8. Continued Availability of
Benefits after Retirement.
The payments provided under this Agreement for the Executive are not intended to
limit or eliminate any benefits to which the Executive (or, after his death, his
beneficiaries or estate) or his spouse is or may be or become entitled under any
of the Plans. After the period of his employment under this Agreement and during
the lifetime of the Executive and the lifetime of his spouse, the Executive
and/or his spouse shall be eligible to receive all benefits (or their
equivalents or counterparts) which the Executive now enjoys or for which he and
his spouse are or may become eligible (whether or not retired key employees or
their spouses would otherwise be eligible therefor) under the Plans (including
without
2598A. 25. 3/8/91
limitation the Incentive Plan) of the Company and its subsidiaries. The coverage
of the Executive and his spouse under the health, hospital, medical and similar
Plans, shall continue to be maintained, until the last covered person has died,
at no less than the benefit levels applicable on the retirement date of the
Executive. No amendment to any Plan shall be carried out which shall deprive the
Executive or his spouse from continuing to participate in and receive the
aforesaid benefits and all other benefits provided for in this Agreement, unless
the Executive or his spouse is compensated by supplemental payments outside said
Plan so that he or she is in no way prejudiced by any such Plan amendment.
Additionally, after expiration of the Term and the Advisory Period or prior
termination by reason of Executive's Permanent Incapacity or without good cause
or termination by the Executive pursuant to Section 10, the life insurance
coverage and entitlement of the Executive shall be continued at the level of
coverage set forth in Section 3(b)(iii) (whether by payment of premium or as
otherwise provided for in Section 3(b)(iii)) until his death. The Executive may
convert such insurance arrangements into new or different insurance coverages or
substitute different insurance arrangements, as he shall determine from
time-to-time, and also may extend coverage to his spouse and extend the period
to include her lifetime; provided, however, that if the Executive should elect
to make any such different arrangements, the total cost on an actuarial basis of
the
2598A.26. 3/8/91
insurance coverage which shall be borne or be expected to be borne by the
Company shall not exceed the cost to the Company on an actuarial basis of
maintaining (for the remainder of the Executive's life) the level of life
insurance coverage to which the Executive is entitled as described above. Such
costs on an actuarial basis shall be determined as provided in Section 13
hereof. The implementation of this paragraph shall be subject to the provisions
set forth in paragraph 7 hereof.
9. Termination by Company; Death.
(a) The death of the Executive shall work a
termination of the Term or the Advisory Period. Additionally, the Company shall
have the right to terminate the Term only under the following circumstances:
(i) Upon notice from Company to Executive in the event of an illness or other
disability which has incapacitated Executive from performing his duties for
twelve consecutive months
("Permanent Incapacity").
(ii) For "good cause" upon notice from Company. Termination by Company of
Executive's employment for "good cause" as used in this Agreement shall be
limited to willful malfeasance by Executive in the performance of his duties
under this Agreement which has a materially injurious effect on the Company's
business, or by reason of Executive's conviction of a felony
2598A. 27. 3/8/91
related directly to the conduct of Executive's office (which through lapse of
time or otherwise, is not subject to appeal) or knowingly engaging in and not
thereafter refraining from competition as provided for in Section 5(b);
provided, however, that such termination shall be effected only by written
notice thereof delivered by the Company to the Executive specifying in detail
the basis for termination, and shall be effective as of the date which is 30
business days after receipt of such notice by the Executive; provided further,
however, that if (i) such termination is by reason of Executive's willful
malfeasance without proper cause to perform his particular obligations as chief
executive officer under this Agreement, and (ii) within 30 days following the
date of receipt of such notice Executive shall cease his refusal and shall use
his best efforts to perform such obligations, the termination shall not be
effective. Without limitation, Executive shall have the right to contest in
appropriate forums any termination for "good cause"
(b) If this Agreement is terminated pursuant to Section 9(a) above,
Executive's rights and Company's obligations hereunder shall forthwith
terminate except as
2598A.28. 3/8/91
expressly provided in this Agreement. In the event the Company does not exercise
its right of termination under Section 9(a)(i) or 9(a)(ii), all of the payments
and benefits due or to become due to Executive, and/or his spouse and/or his
designated beneficiaries or legal representatives shall continue to be made and
accrue as if and to the same extent that Executive was fully performing his
obligations hereunder.
(c) If this Agreement is terminated by reason of death of the Executive or
pursuant to Section 9(a)(i) hereof, Executive or his designated beneficiary or
beneficiaries or legal representatives, as the case may be, shall be entitled to
receive the following:
A. The present commuted value determined pursuant to Section 13, of the
aggregate of (i) 100% of Executive's Base Salary accrued to date of termination
and for the balance of the Term, without obligation of the Executive to provide
any of the services provided for in Section 1 for said balance of the Term,
except that if such termination occurs during the last three years of the Term
the remaining balance of the Term shall be deemed to be increased by one year)
without obligation of the Executive to provide any services, (ii) 100% of
Executive's Advisory Base Salary for the full five years of the Advisory Period
without obligation of the Executive to provide any of the services set forth in
Section 6(b);
2598A. 29. 3/8/91
(iii) 100% of the amount in Executive's account in the SMIDCP together with
such additional amount that would be in such Plan for the benefit of
Executive had this Agreement not been terminated by the Company and
Executive rendered his services during the balance of 9 the Term; (iv) 100%
of all monies in Executive's account in all other Plans, and (v) a bonus for
each year or the fraction thereof for the remainder of the Term based on the
average amount of the bonuses paid immediately preceding death.
B. In the instance of termination by reason of death, the proceeds of the
policy or policies of life insurance referenced in Section 3(b)(iii),
and in the instance of termination under Section 9(a)(i), a fully paid up
policy of life insurance on Executive's life in the principal amount set
forth in Section 3(b)(iii) in the event Executive was insurable, and if not
insurable, the Company shall continue to be obligated to make the Insurance
Payment provided for in Section 3(b)(iii).
C. Continued participation for Executive and his spouse during their
respective lifetimes in all health, medical and hospital plans of the
Company made available for senior employees, with the Company paying all
premiums and charges in connection therewith; and
2598A. 30. 3/8/91
D. In the instance of termination by reason of death, the present commuted
value, in one lump sum of the monthly payments provided for in Section 6(a) and
in the instance of termination under Section 9(a)(i) continued payment of the
retirement benefit (in monthly payments or in a lump sum) as provided for in
Section 6(a).
(d) If this Agreement is terminated pursuant to Section 9(a)(ii) hereof,
Executive shall be entitled to receive the following:
A. The present commuted value determined pursuant to Section 13, as of the date
of termination of (i) 100% of the amount in Executive's account in the SMIDCP,
(ii) 100% of all monies in Executive's account in all other Plans, and (iii)
Base Salary for services rendered through the date of termination; and
B. Except in the instance of Executive's conviction of a felony related directly
to the conduct of his office, which through lapse of time or otherwise, is not
subject to appeal, the present commuted value, in one lump sum, of the monthly
payments provided for in Section 6(a).
C. A fully paid-up policy of life insurance on Executive's life in the principal
amount to set forth in Section 3(b)(iii) in the event Executive was insurable,
and if not insurable, the Company shall
2598A.31. 3/8/91
continue and shall be obligated to make the Insurance Payments, as provided for
in Section 3(b)(iii).
(e) Without limitation on his rights and remedies, Executive shall have the
right to contest any termination by the Company pursuant to Section 9(a)(i) or
9;(a)(ii) by appropriate legal action, before any court and to obtain damages
from the Company (including without limitation, legal fees and expenses) if and
to the extent that such termination is determined by final court order to have
been wrongful.
10. Termination by Executive and Wrongful Termination by the Company.
(a) The Executive shall have the right, exercisable by notice to the Company, to
terminate the Term, the Advisory Period and this Agreement (i) effective 30 days
after the giving of such notice, if, at any time during the Term or the Advisory
Period, the Company shall be in material breach of any of its obligations
hereunder, provided that the Term or the Advisory Period, or this Agreement,
shall not so terminate if within such thirty-day period the Company shall have
cured all such material breaches of its obligations hereunder; or (ii) after
this Agreement has been in effect for 24 or more months, at any time, in
Executive's option and discretion, effective 60 days after the giving of notice
of termination; or (iii) effective 30 days after the giving of such notice in
the instance of an illness or disabiltiy to
2598A. 32. 3/8/91
Executive which is not a Permanent Incapacity under Section 9(a)(i), and the
Executive's physician(s) or other medical and/or mental health
practitioner(s) advise or suggest that the continuance of
Executive in his employment with the Company would or might have an adverse
effect on Executive's physical or mental health. The parties acknowledge and
agree that a material breach for purposes of this Section 10 shall include, but
not be limited to (i) failure of Executive to be elected or retained as
Chairman of the Board, Chief Executive Officer and a director of the Company,
or the failure of the Company to cause Executive to so serve in such positions,
(ii) a reduction (other than an incidental or immaterial reduction) in the
Executive's authority, functions, duties or responsibilities provided in
Section 1 (whether or not accompanied by a change in title) which has not been
fully corrected within said 30-day period or (iii) the Company's requirement
that (or causing) all persons and personnel to report directly or indirectly to
other than Executive or the Company's failure to cause Executive be the senior
officer of the Company, or (iv) a "Change in Control" (as hereafter defined) of
the Company occurs. A "Change in Control" of the Company shall be deemed to
occur when (A) any person or group of affiliated or related persons (other than
a group of which Executive or an entity controlled by Executive is a
participant and other than an employee benefit plan of the Company) acquires,
directly or indirectly, voting securities or assets
2598A.33. 3/8/91
of the Company if, immediately after giving effect to such acquisition, such
person or group of affiliated or related persons either (i) beneficially owns 9%
or more of the total voting power of all of the Company's voting securities
outstanding at the time of such acquisition, or 9% or more than the fair market
value of the Company's issued and outstanding stock, or (ii) within the
preceding 12-month period acquired the voting power referenced in (i) above, or
(iii) within the preceding 12-month period acquired 20% or more of the assets of
the Company, or (iv) otherwise effectively controls the operations of the
Company, whether by control of its Board of Directors, by contract, or
otherwise, or (B) a majority of the members of the Board of Directors of the
Company is replaced during the preceding 12-month period by directors whose
appointment or election was not endorsed by the prior Board.
(b) In the event of termination by the Executive in accordance with the
foregoing procedures or in the event of the termination of this Agreement or the
term of employment by the Company in breach of any of its obligations under this
Agreement, the following provisions shall apply:
(i) The Executive shall have no further obligations or liabilities to the
Company whatsoever which shall survive such termination.
(ii) In the event of termination occasioned by breach by the Company, then on
the date of such termination, the Company shall pay as damages in a lump sum,
the sum of
2598A.34. 3/8/91
$1,000,000 plus the monies set forth and enumerated in Section 9(c)A, and there
shall be paid over to Executive and additionally he shall be entitled to
receive the benefits set forth in Sections 9(c) B and C and D. In this
connection, the payment and benefit pursuant to Section 9(c)B shall be the
same as the payment and benefit provided in the instance of termination
under 9(a)(i), and the payment or benefit pursuant to Section 9(c)D shall be
the same as the payment and benefit in the instance of death.
(iii) In the event of termination by Executive at his option pursuant to Section
10(a)(ii) after this Agreement has been in effect for twenty-four months, then
on the date of termination, the Company shall pay to Executive and Executive
shall be entitled to receive the payments and benefits provided for in Section
9(d), disregarding the first clause of Section 9(d)B, and provided that if such
termination becomes effective during any of the periods of time set forth below,
the commuted value of the monthly payments provided for in Section 6(a) shall be
reduced by the following corresponding percentages:
Period of Termination Reduction Percentage
--------------------- --------------------
Prior to June 30, 1993 50%
July 1, 1993 to June 30, 1994 33-1/3%
July 1, 1994 to June 30, 1995 25%
July 1, 1994 to June 30, 1995 12-1/2%
(iv) In the event of termination by the
2598A.35. 3/8/91
Executive pursuant to Section 10(a)(iii), then on the date of termination, the
Company shall pay to Executive and Executive shall be entitled to receive the
payments and benefits provided for in Section 9(c) in the instance of
termination under Section 9(a)(i).
(c) Any termination under Section 10(a) shall not affect any vested rights
which the Executive may have at the effective date of such termination pursuant
to any insurance or other death benefit plans or arrangements of the Company or
under any stock option, stock appreciation right, bonus unit, management
incentive or other plan of the Company maintained for its senior executives not
referenced in Sections 9(c) A, B, C and D and Section 10(b), all of which rights
shall remain in full force and effect (and any period shall not be deemed
shortened as a result of the Executive's termination of employment,
notwithstanding the provisions of any related plan, agreement or certificate
issued thereunder), nor shall such termination affect the obligations of the
Company to continue to provide the Executive with the other benefits, support
services, Advisory Support, and other entitlements required to be provided to
the Executive under this Agreement.
(d) Mitiqation. In the event of the termination of this Agreement by the
Executive pursuant to Section 10 or by reason of breach by the Company of any
of its obligations hereunder, or in the event of the termination of this
Agreement
2598A.36. 3/8/91
by the Company pursuant to Section 9(a)(i) or other than pursuant to Section
9(a)(ii), the Executive shall not be required to mitigate his damages hereunder
and payments and benefits to be made in event of termination under Section 10 or
Section 9(a)(i) or by reason of breach by the Company of any of its obligations
hereunder or other than by reason of Section 9(a)(ii), shall not be limited or
reduced by any amount Executive might earn or be able to earn from other
employment or ventures.
(e) The parties believe that the above payments or benefits pursuant to Section
10(b)(ii) do not constitute "Excess Parachute Payments" under Section 280G of
the Internal Revenue Code of 1986, as amended (the "Code"). Notwithstanding such
belief, if any such payment or benefit under Section 10(b)(ii) is determined by
the United States Internal Revenue Service to be an "Excess Parachute Payment"
the Company shall pay Executive additional amounts (the "Tax Payment") on a
fully reimbursed after-tax basis equal to the sum of excise tax under Section
4999 of the Code, income taxes under Subtitle A of the Code and all other taxes
under applicable state law on such Excess Parachute Payments.
(f) Remedies. The Company recognizes and agrees that because of Executive's
special talents, stature and opportunities that the provisions of this Agreement
regarding further payments of Base Salary, Advisory Base Salary and the other
payments, the benefits as provided for in
2598A.37. 3/8/91
Section 10(b)(ii), constitute fair and reasonable provisions for the
consequences of such termination and do not constitute a penalty.
11. Indemnity, Directors' and Officers' Insurance.
(a) The Company agrees to and confirms its obligations, among others, to
indemnify the Executive as an officer, director, employee and agent and its
related obligation to advance funds for expenses to the Executive as contained
in the Company's certificate of incorporation, by-laws and any other instruments
or provided for by law or otherwise. Such obligations shall be in scope the
greatest of (i) the obligations existing as of the date hereof, (ii) the
obligations as they may be amended or otherwise revised in the future, or (iii)
the maximum protection available for officers and/or directors under applicable
law. The Company agrees that it will use its best efforts to the end that the
By-laws and Certificate of Incorporation of the Company shall not be amended to
reduce any indemnity protection presently available to officers and/or
directors.
(b) The Company presently maintains Directors and Officers Insurance in limits
of $15,000,000. The Company agrees to [use its best efforts to] maintain
Directors' and Officers' Insurance (at a minimum in such limit) covering the
Company's obligation, among other things, to indemnify the Executive for loss,
liability and expense resulting from
2598A.38. 3/8/91
litigation relating to his activities as an officer or director of the Company
and insuring the Executive against such loss, liability and expense, with
coverage at least as high as the insurance now maintained by the Company, and,
following termination of employment under this Agreement, to maintain equivalent
coverage for the executive, on an "occurrence" basis (or as a named former
officer and director on a "claims made" basis) or otherwise for his activities
during the Advisory Period and additionally while he is in the service of the
Company.
12. Consumer Price Index.
(a) Whenever used herein the words "Consumer Price Index" shall mean the New
York-Northeastern New Jersey Area Consumer Price Index for Urban Wage Earners
and Clerical Workers (or if publication of that index is terminated, any
substantially equivalent successor thereto), as published by the Bureau of Labor
Statistics of the United States Department of Labor.
(b) If at any time that a computation based on an increase in the Consumer Price
Index for any specified period is required under the terms of this Agreement and
the appropriate percentage increase in the Consumer Price Index is not yet
available, the percentage increase will be assumed to have been the same as the
increase for the most recent period of the specified duration for which
information is available. If at any time a computation is required to be made
under this
2598A. 39. 3/8/91
Agreement based on the Consumer Price Index as of any date or month, the most
recent Consumer Price Index which is available on that date or at the end of
such month shall be used.
(c) In comparing Consumer Price Indexes the same lag time or procedure to
reflect a delay in the availability of information will be used for each. In the
case of any adjustment or corrections in the Consumer Price Index appropriate
payments or credits between the Company and the Executive shall be reflected in
the first monthly payment after current or corrected information becomes
available.
13. Determination of Benefits.
Whenever under this Agreement it is necessary to determine actuarially
equivalent continuing benefits, or whether one benefit, cost or payment is less
than, equal to or larger than another (whether or not such benefit, cost or
payment is provided under this Agreement), or to make any determination or
calculation specifically designated in this Agreement to be made in accordance
with this paragraph 13, or the present or commuted value of payment or payments
to be made in the future or over a period of time, or whenever either party
hereto requests that any calculation relevant to this Agreement be made or a
procedure for a calculation be established or the accuracy of a calculation be
checked, such determination, calculation or procedure shall be made by the
Company's independent consulting actuary, The ▇▇▇▇▇ Company, or by another
independent actuary acceptable to the Executive and
2598A. 40. 3/8/91
the Company, using when such information is needed the mortality tables then
currently in use for purposes of the Company's Pension Plan (assuming 100% joint
and survivor benefits), and the interest rate specified in the Company's Pension
Plan in effect at December 31, 1989 for use in determining actuarial equivalents
for employees of more than 20 years of service who were participants in the
Pension Plan on December 31, 1983.
14. Merqer, Consolidation, or Sale of Assets or Stock.
Subject to Executive's right to terminate this Agreement pursuant to Section 10
by reason of Change in Control of the Company occasioned by any
consolidation, merger or transfer hereafter referenced in this Section,
which right is expressly reserved and retained by Executive, nothing in this
Agreement shall preclude the Company from consolidating or merging into or
with, or transferring all or substantially all of its assets or capital
stock to, another corporation or business organization which assumes this
Agreement and all obligations and undertakings of the Company to the
Executive under this Agreement or any corporate instrument, by-law,
certificate of incorporation, benefit plan, program or practice, other
corporate undertaking, agreement or law. Upon such a consolidation, merger or
transfer of assets or stock and assumption, the term "Company" shall refer to
such other corporation or business organization, and this Agreement shall
continue in full force and effect, and such other corporation
2598A.41. 3/8/91
or business organization shall, ipso facto, assume this Agreement and all other
obligations of the Company contemplated by this Agreement. No such
consolidation, merger or transfer shall relieve the Company from any of the
Company's obligations under this Agreement without the written consent of the
Executive or his surviving spouse.
15. Additional Option To Acquire Shares
(a) In the event of a threatened or actual Change in Control, Executive shall
have the right and option, exercisable by Executive in Executive's discretion,
from time to time during the period set forth below, by notice to the Company
(the "Option Notice") to acquire from the Company up to 2,000,000 shares in the
aggregate, of the Series A Common Stock or Series B Common Stock, or a
combination of Series A and Series B Common Stock, as the Executive may
determine, ("Common Stock") of the Company (adjusted as set forth in Subsection
(b)) at a price per share, to be paid by Executive, equal to the Closing Price
(as hereafter defined) of said stock on the date of the giving of the Option
Notice, or if such day is a Saturday, Sunday or Holiday, on the immediately
preceding business day on which securities are generally traded (the "Applicable
Date"). The Option Notice shall be given on or before the latest of (i) the
expiration date of the Term as set forth in Section 2, (ii) the expiration date
of any renewal or extension of this Agreement or any other employment agreement
between Executive and the Company (the "New Agreement") and
2598A. 42. 3/8/91
(iii) six months following the termination of Executive's Employment with the
Company subsequent to the Term or the term of any New Agreement. The Closing
Price shall be the last such reported sales price, regular way, on the
Applicable Date, or, in case no such reported sale takes place on such
particular day, the average of the closing bid and asked prices, regular way,
for such particular day, in each case on the principal national securities
exchange or in the NASDAQ-National Market System (the "Securities Exchange") on
which the shares of Series A Common Stock and/or Series B Common Stock, as the
case may be, are listed or admitted to trading or, if not listed or admitted to
trading, the average of the closing bid and asked prices of the Common Stock in
the over-the-counter market as reported by NASDAQ or any comparable system, as
adjusted pursuant to Subsection (b). Payment shall be made by the Executive
within ten business days following the giving of the Option Notice. Without
limitation, a threatened change in control shall be deemed to have occurred when
any person or group of persons acquires such ownership of securities of the
Company that such person or group files or is required to file a Form 13-D or
otherwise files or is required to make a filing pursuant to Regulations 13D-G
under the Securities and Exchange Act of 1934, as amended.
(b) The number of shares subject to the option set forth in subsection (a)
above, shall be adjusted to reflect, after July 1, 1990 any (i) declaration or
payment of
2598A. 43. 3/8/91
dividends in the form of Series A Stock, Series B Common Stock or other common
stock of the Company, (ii) stock splits, (iii) subdivisions or combinations or
reclassifications of outstanding Series A or Series B Common Stock or (d) the
issuance to holders of Series A or Series B Common Stock of options, warrants or
rights to acquire additional shares of such respective series and any other
distribution made by its Company to holders of Series A Stock or Series B Common
Stock, as the case may be, and the Option Price shall be adjusted to reflect all
of the foregoing.
16. MISCELLANEOUS
(a) Decisions by Company
Except as otherwise expressly ▇▇▇▇▇▇▇▇.▇▇ this Agreement, any decision,
designation, consent or other action by the Company relating to this Agreement,
its operation or its termination, shall be made by the Board of Directors, or at
the direction of the Board of Directors, when so requested by the Executive.
(b) Entire Aqreement. This Agreement sets forth the entire agreement and
understanding of the parties relating to the subject matter hereof, and
supersedes all prior agreements, arrangements and understandings, written or
oral, between the parties and may not be modified except by an agreement signed
by the Executive (and/or where applicable his legal representatives and his
spouse) and the Company.
(c) Assiqnability. This Agreement, and the
2598A.44. 3/8/91
Executive's rights and obligations hereunder, may not be assigned or delegated
by the Executive; provided, however, that nothing in this subsection (d) shall
preclude (i) the Executive from designating a beneficiary to receive any benefit
payable on his death, and (ii) the legal representatives of the estate of the
Executive or his spouse from assigning any rights hereunder to the person or
persons entitled thereto under his or her will or, in case of intestacy, to the
person or persons entitled thereto under the laws of the intestacy. Except as
expressly provided for in Section 14 and subject to the Executive's rights to
terminate this Agreement under Section 10 by reason of any change in control of
the Company, this Agreement and the Company's rights and obligations hereunder,
may not be assigned or delegated by the Company.
(d) No Attachment
Except as otherwise required by law, no right to receive payments under this
Agreement shall be subject to encumbrance, charge, 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.
(e) Bindinq Aqreement
This Agreement shall be binding upon and inure of the benefit of the Executive
and the Company and their respective permitted successors and permitted assigns.
(f) No Waiver
No term or condition of this Agreement shall
2598A.45. 3/8/91
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 of
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.
(g) Expenses and Leqal Fees
The Company shall pay all legal fees (which shall include without limitation,
fees of tax advisors and tax counsel and associated expenses and disbursements)
incurred by Executive in the negotiation and execution of this Agreement.
Additionally, the Company shall pay all legal fees' of litigation, and other
expenses incurred by the Executive, his spouse, or the estate, legal
representative or other beneficiary of either ("Claimant") (i) as a result of
(A) the Company's refusal to make payments or failure to make payments when due
to which the Claimant or any benefit plan, fund or agent is or shall become
entitled under this Agreement, or otherwise, (B) the refusal or failure of the
Company to make provision for or acknowledge any employee benefit to which the
Claimant is or shall become entitled as provided for by this Agreement or
otherwise, or (C) the refusal or failure or by any benefit plan, fund or agent
established for the benefit of the
2598A.46. 3/8/91
Company's employees to make any such payments when due or (ii) as a result of
the Company's contesting the validity, enforceability or interpretation of this
Agreement or any portion thereof.
(h) Riqht to Accelerate
Without limitation of any rights of Executive to otherwise cause acceleration
of any benefits or monies due or to become due to Executive, his spouse or their
respective legal representatives, if the Company or any of the benefit plans or
funds referenced herein shall fail to make, when due, any payment referred to in
this Agreement or shall refuse to make any such payment, or shall fail or refuse
to make provision for, or to acknowledge, any employee or other benefit to which
the Claimant is entitled, the Claimant may, at his, her or its option,
accelerate and declare due, payable and performable all such payments,
provisions or entitlements. If at any time the Claimant has the right to
accelerate payments under this Section, same shall be determined in accordance
with the provisions of Section 13 but incorporating, however, in said lump sum
calculation the average annual increase in the Consumer Price Index for the most
recent 36 months preceding the date on which said accelerated payment is to be
made. The Claimant may, but shall not be required to, bring one or more legal
actions to enforce payment, or other appropriate remedy, of any and all amounts
to which the Claimant has then become, or shall at any time in the future become
entitled, whether or
2598A.47. 3/8/91
not then due, payable or performable.
(i) Severability
If for any reason any provision of this Agreement shall be held invalid, such
invalidity shall not affect any other provision of this Agreement not held
invalid, and all other such provisions shall to the full extent consistent with
law continue in full force and effect so as to carry out the intent of this
Agreement. If any such provision shall be held invalid in part, such invalidity
shall in no way affect the rest of such provision not held invalid, and the rest
of such provision, together with all other provisions of this Agreement, shall
likewise to the full extent consistent with law continue in full force and
effect so as to carry out the intent of this Agreement. In the event of any such
invalidity, the parties shall both endeavor and negotiate in, good faith, to
agree upon substitute provisions to effectuate the interest of the provisions
held to be invalid.
(j) Headinqs
The headings of Section are included solely for convenience of reference and
shall not control the meaning or interpretation of any of the provisions of
this Agreement.
(k) Governinq Law
The Company being a Delaware corporation, the validity, interpretation,
performance and enforcement of this Agreement shall be governed by the internal
laws of the
2598A.48. 3/8/91
State of Delaware app]icable to agreements made and fully to be performed
therein, without any reference to any rules of conflicts of laws.
(1) Notices. All notices and other communications hereunder shall be in writing
and shall be deemed given when delivered personally or (ii) when transmitted by
facsimile transmission to the telecopy number set forth below (during normal
business hours of the recipient or the immediate succeeding business day) or
when mailed, on the second business day immediately succeeding the mailing by
registered or certified mail (return receipt requested), postage prepaid, to the
parties at the following address (or at such other address for a party as shall
be specified by like notice; provided that notices of changes of address shall
be effective only upon receipt thereof):
(a) If to the Company at:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Board of Directors
Telecopy Number: ▇▇▇-▇▇▇-▇▇▇▇
(with copy to the same address or telecopy number but Attention: Legal
Department.
(c) If to Executive at:
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With copy to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.,
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇.
IN WITNESS WHEREOF, the parties hereto have signed
2598A.49. 3/8/91
their names, all as of the date and year first above written.
CITIZENS UTILITIES COMPANY
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------
Its /s/ President
Attest:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------
Secretary of
Citizens Utilities Company
/s/ ▇▇▇▇▇▇▇ ▇▇▇
-----------
APPROVED:
---------
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-----------------
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------
Members of the Compensation Committee of the Board of Directors of Citizens
Utilities Company.
2598A.50 3/8/91
Amendment to Employment Agreement approved on September 28, 1995 by Court of
Chancery, New Castle County, Delaware, Consolidated Civil Action No. 12992.
Amended Version of Section 6(a)
[Note: The following clause appears on page 17 of the original
employment agreement.]
6. Post-Termination Provisions
---------------------------
(a) Retirement Benefits
-------------------
The pension plan of the Company (the "Pension Plan")
provides that an employee cannot become a Participant in the Plan if he has
attained his 60th birthday prior to the first date for which he is to be
credited with Hours of Service, as such terms are defined in the Plan. The
Pension plan provides further that "Normal Retirement Date" as referenced
in the Pension Plan is the last day of the calendar month during which a
Participant's 65th birthday occurs. Since Executive has heretofore attained
his 60th birthday the Executive is not eligible to participate in the Pension
Plan. In lieu thereof and additionally to provide Executive with a retirement
commensurate with his position and compensation, the Company will in lieu of
provisions previously contained in this Section 6(a) of the employment
agreement maintain at its cost, Split-Dollar Policies, and the Executive and his
spouse will accept the Split-Dollar Policies, which have been procured by the
Company in full satisfaction of their rights under this Section 6(a) of the
employment agreement. In light of the substitution of Split-Dollar Policies
for the retirement benefits formerly called for in this Section 6(a) of the
original Employment Agreement, the references in the original Employment
Agreement to retirement benefits as provided in Sections 6(a) are of no effect.
In the event that the Executive incurs any federal or state income tax or gift
tax liability as a result of the implementation of the Split-Dollar Policies,
the Company will indemnify the Executive with respect thereto.
Amended Version of Section 10(a)
[Note: The following clause appears on page 32 of the original
employment agreement.]
10. Termination by Executive and Wrongful Termination
by the Company.
-------------------------------------------------
(a) The Executive shall have the right, exercisable by notice
to the Company, to terminate the Term, the Advisory Period and this Agreement
(i) effective 30 days after the giving of such notice, if, at any time during
the Term or the Advisory Period, the Company shall be in material breach
of any of its obligations hereunder, provided that the Term or the Advisory
Period, or this Agreement, shall not so terminate if within such thirty-day
period the Company shall have cured all such material breaches of its
obligations hereunder; or (ii) after this Agreement has been in effect of 24
or more months, at any time, in Executive's option and discretion, effective
60 days after the giving of notice of termination; or (iii) effective 30 days
after the giving of such notice in the instance of an illness or disability to
Executive which is not a Permanent Incapacity under Section 9(a)(i), and the
Executive's physician(s) or other medical and/or mental health practitioner(s)
advise or suggest that the continuance of Executive in his employment with the
Company would or might have an adverse effect on Executive's physical or mental
health. The parties acknowledge and agree that a material breach for purposes
of this Section 10
Amended Version of Section 15(a)
[Note: The following clause appears on page 42 of the original employment
agreement]
15. Additional Option to Acquire Shares
-----------------------------------
(a) In the event of a threatened or actual Change in Control,
Executive shall have the right and option, exercisable by Executive in
Executive's discretion, from time to time during the period set forth below, by
notice to the Company (the "Option Notice") to acquire from the Company up to
2,000,000 shares in the aggregate, of the Series A Common Stock or Series B
Common Stock, or a combination of Series A and Series B Common Stock, as the
Executive may determine, ("Common Stock") of the Company (adjusted as set forth
in Subsection (b)) at a price per share to be paid by Executive, equal to the
Closing Price (as hereafter defined) of said stock on the date of the giving
of the Option Notice, or if such day is a Saturday, Sunday or Holiday, on the
immediately preceding business day on which securities are generally traded
(the "Applicable Date"). The Option Notice shall be given on or before the
latest of (i) the expiration date of the Term as set forth in Section 2, (ii)
the expiration date of any renewal or extension of this Agreement or any other
employment agreement between Executive and the Company (the "New Agreement") and
Amended Version of Section 15(a)
[Note: The following clause appears on Page 42. of the original employment
agreement.]
(iii) six months following the termination of Executive's Employment with the
Company subsequent to the Term or the term of any New Agreement. The Closing
Price shall be the last such reported sales price, regular way, on the
Applicable Date, or, in case no such reported sale takes place on such
particular day, the average of the closing bid and asked price, regular way,
for such particular day, in each case on the principal national securities
exchange or in the NASDAQ-National Market System (the "Securities Exchange")
on which the shares of Series A Common Stock and/or Series B Common Stock, as
the case may be, are listed or admitted to trading or, if not listed or
admitted to trading, the average of the closing bid and asked prices of the
Common Stock in the over-the-counter market as reported by NASDAQ or any
comparable system, as adjusted pursuant to Subsection (b). Payment shall
be made by the Executive within ten business days following the giving of the
Option Notice. A "Change in Control" of the Company shall be deemed to occur
when (A) any person or group of affiliated or related persons (other than a
group of which Executive or an entity controlled by Executive is a participant
and other than an employee benefit plan of the Company) acquires, directly or
indirectly, voting securities or assets of the Company if, immediately after
giving effect to such acquisition, such person or group of affiliated or related
persons either (i) beneficially owns 9% or more of the total voting power of
all of the Company's voting securities outstanding at the time of such
acquisition, or 9% or more than the fair market value of the Company's issued
and outstanding stock, or (ii) within the preceding 12-month period acquired
the voting power referenced in (i) above, or (iii) within the preceding
12-month period acquired 20% or more of the assets of the Company, or (iv)
otherwise effectively controls the operations of the Company whether by
control of its Board of Directors, by contract, or otherwise, or (B) a majority
of the members of the Board of Directors of the Company is replaced during the
preceding 12-month period by directors whose appointment or election was not
endorsed by the prior Board. Without limitation, a threatened change in control
shall be deemed to have occurred when any person or group of persons acquires
such ownership of securities of the Company that such person or group files or
is required to file a Form 13-D or otherwise files or is required to make a
filing pursuant to Regulations 13D-G under the Securities and Exchange Act of
1934, as amended.
shall include, but not be limited to (i) failure of the Executive to be elected
or retained as Cairman of the Board and Chief Executive Officer of the Company,
or the failure of the Company to cause Executive to serve in such position, (ii)
a reduction (other than an incidental or immaterial reduction) in the
Executive's authority, functions, duties or responsibilities provided in
Section 1 (whether or not accompanied by a change in title) which has not been
fully corrected within said 30-day period or (iii) the Company's requirement
that (or causing) all persons and personnel to report directly or indirectly to
other than Executive or the Company's failure to cause Executive be the senior
officer of the Company. In light of the elimination of the agreement that a
Change of Control shall be a material breach of this Section 10, the references
in Sections 14 and 16 of the original Employment Agreement to the Executive's
right to terminate this Agreement pursuant to Section 10 by reason of a Change
in Control are of no effect.
Amended Version of Section 16(h)
[Note: The following appears on page 47. of the original employment agreement.]
(h) Right to Accelerate
-------------------
Without limitation of any rights of Executive to otherwise cause
acceleration of any benefits or monies due or to become due to Exeuctive,
his spouse or their respective legal representatives, if the Company or any of
the benefit plans or funds referenced herein shall fail to make, when due, any
payment referred to in this Agreement or shall refuse to make any such payment,
or shall fail or refuse to make provision for any employee or other benefit to
which Claimant, the Claimant may, at his, her or its option, accelerate and
declare due, payable and performable all such payments, provisions or
entitlements, provided, however, that such acceleration shall be effected only
by written notice thereof delivered by the Claimant to the Company specifying
in detail the basis for acceleration, and shall be effective as of the date
which is 30 business days after the receipt of such notice by the Company
provided further, however, that if within 30 business days following the date
of receipt of such notice, the Company shall make, when due, the payment in
question or shall agree to make any such payment when due, or shall make
provision therefor, the acceleration shall not be effective. If at any time the
Claimant has the right to accelerate payments under this Section, same shall
be
determined in accordance with the provisions of Section 13 but incorporating,
however, in said lump sum calculation the average annual increase in the
Consumer Price Index for the most recent 36 months preceding the date on
which said accelerated payment is to be made. The Claimant may, but shall not
be required to, bring one or more legal actions to enforce payment, or other
appropriate remedy, of any and all amounts to which the Claimant has then
become, or shall at any time in the future become entitled, whether or not then
due, payable or performable.