Exhibit 10(Q)
AMENDMENT TO THE CHANGE IN CONTROL AGREEMENT
Dated May 15, 1997
by and between
ANNE EVANS ESTABROOK
and
E'TOWN CORPORATION
This Amendment ("Amendment") to the Change In Control Agreement, dated
as of May 15, 1997 between ANNE EVANS ESTABROOK (the "Executive") and E'TOWN
CORPORATION (the "Company"), is made effective as of this 18th day of March,
1999 by and between the Executive and the Company.
WITNESSETH:
WHEREAS, the board of directors (the "Board") of the Company has entered
into a Change in Control Agreement with the Executive, dated as of May 15,
1997 (the "Estabrook Agreement"), which sets forth the terms and conditions
under which benefits and payments shall be made by the Company to the
Executive should the Company receive a proposal from or engage in discussions
with a third person concerning a possible business combination with the
Company or the acquisition of a substantial portion of voting securities of
the Company; and
WHEREAS, the Board, considering that it is imperative that it and the
Company be able to rely on certain of the other key executives of the Company
to continue to serve in their respective positions without concern that they
might be distracted by the personal uncertainties and risks that a proposal
or discussions concerning any such business combination or acquisition of
voting securities of the Company might otherwise create, has entered into
change in control agreements (collectively, the "Change in Control
Agreements") with such other key executives which set forth the terms and
conditions of benefits and payments to be made by the Company to such other
key executives upon any termination of their services in the event of a
change in control of the Company as defined in the Change in Control
Agreements; and
WHEREAS, the Board considers it in the best interests of the Company and
its shareholders that the Company amend, modify and supplement the Estabrook
Agreement in order to conform certain of the terms and conditions of the
Estabrook Agreement with certain of the terms and conditions of the Change in
Control Agreements, and to set forth such other terms and conditions of
benefits and payments to be made by the Company to the Executive as reward
for the valuable, dedicated service provided by the Executive to the Company
upon any termination of the Executive's services in the event of a change in
control of the Company as defined herein; and
WHEREAS, the Board has approved the execution and delivery of this
Amendment by the Company by resolution duly adopted by the Board at a meeting
of the Board held on March 18, 1999;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties, the parties
hereto, intending to be legally bound hereby, agree to amend the Estabrook
Agreement as follows:
1. Paragraph 3 is amended by replacing Paragraph 3 in its entirety
with the following:
"3. TERMINATION FOLLOWING CHANGE IN CONTROL.
(a) If any of the events described in paragraph 1 hereof
constituting a Change in Control of the Company shall have
occurred, the Executive shall be entitled to the payments and
benefits provided in paragraph 4 hereof upon the subsequent
termination of the Executive's employment within the
applicable period set forth in paragraph 4 hereof following
such Change in Control of the Company unless such termination
is (i) due to the Executive's death; or (ii) by the Company by
reason of the Executive's Disability (as hereinafter defined)
or for Cause (as hereinafter defined); or (iii) by the
Executive other than for Good Reason (as hereinafter defined).
(b) If, following a Change in Control of the Company, the
Executive's employment is terminated by reason of the
Executive's death or Disability, the Executive shall be
entitled to death or long-term disability benefits, as the
case may be, from the Company no less favorable than the
maximum benefits to which the Executive would have been
entitled had the death or termination for Disability occurred
at any time during the six month period prior to the Change in
Control of the Company. If prior to any such termination for
Disability, the Executive fails to perform the Executive's
duties as a result of physical incapacity or mental injury or
illness, the Executive shall continue to receive the
Executive's Salary (as hereinafter defined), less any benefits
as may be available to the Executive under the Company's
disability plans, until the Executive's employment is
terminated for Disability.
(c) If the Executive's employment shall be terminated by the
Company for Cause or by the Executive other than for Good
Reason, the Company shall pay to the Executive the Executive's
full Salary through the Date of Termination (as hereinafter
defined) at the rate in effect at the time Notice of
Termination is given, and the Company shall have no further
obligations to the Executive under this Agreement.
(d) For purposes of this Agreement:
(i) "Disability" shall mean the Executive's incapacity
due to physical or mental injury or illness such that the
Executive shall have become qualified to receive benefits
under the Company's long-term disability plans or any
equivalent coverage required to be provided to the Executive
pursuant to any other plan or agreement, whichever is
applicable.
(ii) "Cause" shall mean:
(A) the conviction of the Executive for a felony,
or the willful commission by the Executive of a criminal
or other act that in the judgment of the Board causes or
will probably cause substantial economic damage to the
Company or substantial injury to the business reputation
of the Company;
(B) the commission by the Executive of an act of
fraud in the performance of such Executive's duties on
behalf of the Company that causes or will probably cause
economic damage to the Company; or
(C) the continuing willful failure of the Executive
to perform the Executive's duties, as such duties were
performed by the Executive prior to the day of the Change
in Control of the Company (other than any such failure
resulting from the Executive's incapacity due to physical
or mental injury or illness) after written notice thereof
(specifying the particulars thereof in reasonable detail)
and a reasonable opportunity to be heard and cure such
failure are given to the Executive by the Compensation
Committee of the Board.
For purposes of this paragraph 3(d)(ii), no act, or
failure to act, on the Executive's part shall be considered
"willful" unless done, or omitted to be done, by the Executive
not in good faith and without reasonable belief that the
Executive's action or omission was in the best interests of
the Company.
(iii)"Good Reason" shall mean:
(A) The assignment by the Company to the Executive
of duties without the Executive's express written
consent, which (i) are materially different or require
travel significantly more time consuming or extensive
than the Executive's duties or business travel
obligations immediately prior to the Change in Control of
the Company, or (ii) result in either a significant
reduction in the Executive's authority and responsibility
as a senior corporate executive of the Company when
compared to the highest level of authority and
responsibility assigned to the Executive at any time
during the six (6) month period prior to the Change in
Control of the Company, or (iii) the removal of the
Executive from, or any failure to reappoint or reelect
the Executive to, the highest title held since the date
six (6) months before the Change in Control of the
Company, except in connection with a termination of the
Executive's employment by the Company for Cause, or by
reason of the Executive's death or Disability;
(B) A reduction by the Company of the Executive's
Salary, or the failure to grant increases in the
Executive's Salary on a basis at least equal to or better
than those granted generally to other executives of the
Company of comparable title, salary and performance
ratings, made in good faith;
(C) The relocation of the Company's principal
executive offices to a location outside the State of New
Jersey, or a requirement by the Company that the
Executive relocate (except for required travel on the
Company's business to an extent substantially consistent
with the Executive's business travel obligations
immediately prior to the Change in Control) (i) to a
location which is outside a radius of fifty (50) miles
from the Executive's place of employment with the Company
immediately prior to the Change in Control, or (ii) to a
location outside the State of New Jersey; or, in the
event the Executive expressly consents in writing to any
such relocation of the Executive outside such fifty mile
radius or the State of New Jersey, the failure by the
Company to pay (or reimburse the Executive for) all
reasonable moving expenses incurred by the Executive
relating to a change of principal residence in connection
with such relocation and to indemnify the Executive
against any loss realized in the sale of the Executive's
principal residence in connection with any such change of
residence, all to the effect that the Executive shall
incur no loss upon such sale on an after tax basis;
(D) The failure by the Company to continue to
provide the Executive with the same or better welfare
benefits (which for purposes of this Agreement shall mean
benefits under all welfare plans as that term is defined
in Section 3(1) of the Employee Retirement Income
Security Act of 1974, as amended), and perquisites,
including participation on a comparable basis in the
Company's stock option plan, incentive bonus plan and any
other plan in which executives of the Company of
comparable title and salary or subject to similar
performance criteria participate and as were provided to
the Executive immediately prior to such Change in Control
of the Company, or with a new package of welfare benefits
and perquisites that is at least equal to or better in
all material respects than the welfare benefits and
perquisites as were provided to the Executive immediately
prior to such Change in Control; or
(E) The failure of the Company to obtain the
express written assumption of and agreement to perform
this Agreement by any successor as contemplated in
paragraph 5(c) hereof.
(iv) "Dispute" shall mean (i) in the case of termination
of employment of the Executive with the Company by the Company
for Disability or Cause, that the Executive challenges the
existence of Disability or Cause and (ii) in the case of the
Executive's termination of employment with the Company by the
Executive for Good Reason, that the Company challenges the
existence of Good Reason.
(v) "Salary" shall mean the Executive's then current
annual rate of salary plus any of the following amounts which
are not included in the annual salary as reported on the
Executive's United States Internal Revenue Service Form W-2
("Form W-2"): (i) any restricted stock of the Company awarded
to the Executive, or which the Executive is entitled to
receive under any plan, arrangement or contract of the Company
or pursuant to any resolution of the Board, in lieu of base
compensation, (ii) any 401(K) compensation, and (iii) any
compensation deferred in accordance with Section 125 of the
United States Internal Revenue Code of 1986, as amended and
the regulations thereunder (the "Code").
(vi) "Incentive Compensation" in any year shall mean the
amount accrued, if any, under any plan or arrangement of the
Company in which executives of the Company of comparable title
and salary or being subject to comparable performance criteria
participate, or any under contract between the Company and the
Executive, in each case which provides for any cash bonus,
restricted stock, stock option, stock award or similar
incentive compensation in addition to base salary and which is
not reported on Form W-2.
(e) Any purported termination of the Executive's employment
by the Company by reason of the Executive's Disability or for
Cause, or by the Executive for Good Reason shall be
communicated by written Notice of Termination (as hereinafter
defined) to the other party hereto. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice given
by the Executive or the Company, as the case may be, which
shall indicate the specific basis for termination and shall
set forth in reasonable detail the facts and circumstances
claimed to provide a basis for determination of any payments
due under this Agreement. The Executive shall not be entitled
to give a Notice of Termination that the Executive is
terminating the Executive's employment with the Company for
Good Reason more than six (6) months following the occurrence
of the event alleged to constitute Good Reason. The
Executive's actual employment by the Company shall cease on
the Date of Termination, even though such Date of Termination
for all other purposes of this Agreement may be extended in
the manner contemplated in the second sentence of paragraph
3(f) below.
(f) For purposes of this Agreement, the "Date of Termination"
shall mean (i) the date specified in the Notice of
Termination, which shall be not more than ninety (90) days
after such Notice of Termination is given, as such date may be
modified pursuant to the next sentence, or (ii) in the event
that no Notice of Termination is given, on the date that the
Executive's employment with the Company is actually
terminated. If within thirty (30) days after any Notice of
Termination is given, the party who receives such Notice of
Termination notifies the other party that a Dispute exists,
the Date of Termination shall be the date on which the Dispute
is finally determined, either by mutual written agreement of
the parties or by a final judgment, order or decree of a court
of competent jurisdiction (the time for appeal therefrom
having expired and no appeal having been perfected); provided,
that the Date of Termination shall be extended by a notice of
Dispute only if such notice is given in good faith and the
party giving such notice pursues the resolution of such
Dispute with reasonable diligence and provided further that,
pending the resolution of any such Dispute, the Company shall
continue to pay the Executive the same Salary and Incentive
Compensation, and provide the Executive with the same or at
least equal or better welfare benefits and perquisites that
the Executive was paid and provided immediately prior to the
Change in Control of the Company. Should a Dispute ultimately
be determined in favor of the Company, then all sums paid by
the Company to the Executive from the date of termination
specified in the Notice of Termination until final resolution
of the Dispute pursuant to this paragraph 3(f) shall be repaid
promptly by the Executive to the Company, with interest at the
average prime rate generally prevailing from time to time
among major New York City banks and all options, rights and
stock awards granted to the Executive during such period shall
be canceled or returned to the Company. The Executive shall
not be obligated to pay to the Company the cost of providing
the Executive with welfare benefits and perquisites for such
period unless the final judgment, order or decree of a court
or other body resolving the Dispute determines that the
Executive acted in bad faith in giving a notice of Dispute.
Should a Dispute ultimately be determined in favor of the
Executive, then the Executive shall be entitled to retain all
sums paid to the Executive under this paragraph 3(f) pending
resolution of the Dispute and shall be entitled to receive, in
addition, the payments and other benefits provided for in
paragraph 4 hereof to the extent not previously paid
hereunder. In addition, should a Dispute, or any other
challenge, claim, action, proceeding or dispute brought by the
Executive against the Company with respect to this Agreement,
ultimately be determined in favor of the Executive, then the
Company shall reimburse the Executive for all costs and
expenses (including, without limitation, reasonable attorneys'
fees) incurred by the Executive in connection therewith."
2. Paragraph 4 is amended by replacing Paragraph 4 in its entirety
with the following:
"4. PAYMENTS UPON TERMINATION.
If within three (3) years after a Change in Control of
the Company, the Company shall terminate the Executive's
employment other than by reason of the Executive's death,
Disability or for Cause, or if the Executive shall terminate
the Executive's employment for Good Reason, then
(a) The Company will continue to pay to the Executive, for a
period of thirty (30) months following the Date of
Termination, as compensation for services rendered by the
Executive on or before the Executive's Date of Termination,
the Executive's Salary and Incentive Compensation (subject to
any applicable payroll taxes or other taxes required to be
withheld computed at the rate for supplemental payments) at
the highest rate in effect during the twenty-four (24) month
period ending on the date on which a Change in Control of the
Company occurred; and
(b) For a period of thirty (30) months following the Date of
Termination, the Company shall provide, at the Company's
expense, the Executive and the Executive's spouse and children
with full benefits under any employee benefit plan or
arrangement in which the Executive participated immediately
prior to the date of a Change in Control, including, without
limitation, any hospital, medical and dental insurance with at
least equal to or better coverage and benefits as were
provided to the Executive immediately prior to the date on
which a Change in Control of the Company occurred; and
(c) The Company will pay on the Date of Termination of the
Executive as compensation for services rendered on or before the
Executive's Date of Termination, in addition to the amounts set
forth in paragraph 4(a) above, an amount equal to the sum of (i)
all Incentive Compensation and other incentive awards due to the
Executive immediately prior to the date on which a Change in
Control of the Company occurred which are not yet paid and (ii) all
Incentive Compensation and other incentive awards due to the
Executive for the period between the date on which a Change in
Control of the Company occurred and the Date of Termination which
are not yet paid; and
(d) For a period of thirty (30) months following the Date of
Termination, the Company shall provide to the Executive, at
the Company's expense, the automobile (or a comparable
automobile) or automobile allowance, as the case may be,
provided by the Company to the Executive immediately prior to
the date on which a Change in Control of the Company occurred
and the Company shall reimburse the Executive any and all
expenses incurred by the Executive in connection with the use
of such automobile during such thirty month period to the
extent that the Company reimburses generally other executives
of comparable title and salary or subject to comparable
performance criteria; and
(e) Any restricted stock of the Company in the Executive's
account as an officer of the Company and any stock options
granted to the Executive on or prior to the Date of
Termination which are not vested in the Executive as of the
Date of Termination shall become immediately vested, and all
restrictions thereon (including, but not limited to, any
restrictions on the transferability of such stock), and any
restrictions on any other restricted stock or stock options
awarded to the Executive through any plan, arrangement or
contract of the Company on or before the Date of Termination,
shall be null and void and of no further force and effect and
the Company agrees to accelerate and make immediately
exercisable in full all unmatured installments of all
outstanding stock options to acquire stock of the Company
which the Executive holds as of the Date of Termination; and
(f) In event that any payment or benefit received or to be
received by the Executive in connection with a Change in Control of the
Company or the termination of the Executive's employment, whether
pursuant to the terms of this Agreement or any other plan, arrangement
or agreement with the Company (collectively, with the payments and
benefits hereunder, "Total Payments") are subject to tax imposed by
Section 4999 of the Code (the "Excise Tax"), the Company shall pay to
the Executive an additional amount (the "Gross-Up Payment") such that
the net amount retained by the Executive after deduction of any Excise
Tax on the Total Payments and all federal, state and local income taxes
and Excise Tax upon such Gross-Up Payment, shall be equal to the Total
Payments. For purposes of this paragraph 4(f) in determining the
amount of Excise Tax (A) no portion of the Total Payments, the receipt
or enjoyment of which the Executive shall have effectively waived in
writing prior to the date of payment, shall be taken into account, (B)
no portion of the Total Payments shall be taken into account which, in
the opinion of tax counsel selected by the Executive and acceptable to
the Company's independent auditors, is not likely to constitute a
"parachute payment" within the meaning of Section 280G(b)(2) of the
Code, and (C) the value of any non-cash benefit or any deferred payment
or benefit included in the Total Payments shall be determined by the
Company's independent auditors in accordance with the principles of
Sections 280G(d)(3) and (4) of the Code. For purposes of determining
the amount of the Gross-Up Payment, the Executive shall be deemed to
pay federal, state and local income taxes at the highest marginal rate
of income taxation applicable to any individual residing in the
jurisdiction in which the Executive resides in the calendar year in
which the Gross-Up Payment is to be made. The Company and the
Executive each shall reasonably cooperate with the other in connection
with any administrative or judicial proceedings concerning the
existence or amount of liability for any Excise Tax with respect to the
Total Payments. As promptly as practicable following the determination
of the Excise Tax imposed upon the Total Payments, if any, the Company
shall pay the Gross-Up Payment as is then due to the Executive under
this Agreement and shall promptly pay or distribute to or for the
benefit of the Executive in the future such payments and benefits as
they become due to the Executive under this Agreement. In the event
that the Excise Tax is subsequently determined to be less than the
amount taken into account hereunder at the time of termination of the
Executive's employment, the Executive shall repay to the Company, at
the time that the amount of such reduction in Excise Tax is finally
determined, the portion of the Gross-Up Payment attributable to such
reduction (plus that portion of the Gross-Up Payment attributable to
the Excise Tax and federal, state and local income tax imposed on the
Gross-Up Payment being repaid by the Executive to the extent that such
repayment results in a reduction in Excise Tax and/or federal, state or
local income tax deduction) plus interest on the amount of such
repayment at the rate provided in Section 1274(b)(2)(B) of the Code. In
the event that the Excise Tax is determined to exceed the amount taken
into account hereunder at the time of the termination of the
Executive's employment (including by reason of any payment the
existence or amount of which cannot be determined at the time of the
Gross-Up Payment), the Company shall make an additional Gross-Up
Payment in respect of such excess (plus any interest, penalties, or
additions payable by the Executive with respect to such excess) at the
time that the amount of such excess is finally determined. The Company
shall pay or distribute to or for the benefit of the Executive such
payments and benefits as are then due to the Executive under this
Agreement even if the Company is unable to deduct any portion of such
payment and benefits as a result of Section 280G of the Code and the
Executive shall have no liability or responsibility to reimburse the
Company for any losses incurred by the Company as a result of the
Company's inability to deduct such payment, in whole or in part, as the
result of Section 280G of the Code."
3. Paragraph 5(b) is amended by adding after the word "compensation"
in the second line thereof the following words: "and provide the benefits to
the Executive."
4. Paragraph 5(d) is amended by deleting the word "devises" in the
fourth line and by deleting the word "devisee" in the eighth line thereof.
5. Paragraph 5(f) is amended by replacing Paragraph 5(f) in its
entirety with the following:
"(f) The Executive shall not be required to mitigate damages
or the amount of any payment or other benefit provided for in
this Agreement by seeking other employment or otherwise, nor
shall the amount of any payment or other benefit provided for
in this Agreement then or thereafter due to the Executive be
reduced or modified by any compensation or other payment or
benefit earned or received by the Executive as the result of
or in connection with any employment of the Executive by
another employer after the Date of Termination, or otherwise."
6. Paragraph 6 is amended by changing the words "Short Hills" in
the address for notice to the Executive to the word "Summit".
7. A new Paragraph 9 shall be added at the end of the Estabrook
Agreement as follows:
"9. VARIANCE AMONG AGREEMENTS.
The Executive understands that the Company may enter into
agreements with other executives of the Company similar to
this Agreement that may contain terms different from those
contained in this Agreement. Despite any such different terms
in such other agreements, the Executive understands and agrees
that this Agreement alone sets forth the Executive's rights
with respect to the subject matter of this Agreement, and that
the Executive is not a third party beneficiary of any such
other agreements."
8. If any of the terms and conditions of the Estabrook Agreement are
inconsistent with the terms and conditions of this Amendment, the terms and
conditions of this Amendment shall supercede such inconsistent terms and
conditions of the Estabrook Agreement. Except to the extent changed or
modified herein, all terms and conditions of the Estabrook Agreement shall
remain unchanged and be in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of this 18th day of March, 1999.
EXECUTIVE:
ANNE EVANS ESTABROOK
E'TOWN CORPORATION
By:
Barry T. Parker
Chairman of the Executive Compensation
Committee of the Board