AGREEMENT
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This Agreement (the "Agreement") is entered into as of the 26th day of
September, 2005, by and between Dennis G. Sullivan (the "Officer") and Middlesex
Water Company (the "Company").
BACKGROUND
A. The Officer has served the Company for over 21 years including most
recently serving as its President and Chief Executive Officer.
B. In anticipation of the Officer's retirement, the Company's Board of
Directors, in early 2004, initiated a succession planning process to
identify a successor to the Officer to serve as the Company's President
and Chief Executive Officer and to facilitate a smooth transition of
leadership of the Company.
C. An Executive Vice President was appointed November 1, 2004, with the
expectation that after a period of transition the Executive Vice President
would be prepared to succeed to the Office of President and Chief
Executive Officer.
D. In connection with that planning process, the Company's Board of Directors
has determined that it is in the best interests of the Company that the
transition take place effective January 1, 2006 whereby the Executive Vice
President would succeed to the Office of President and Chief Executive
Officer on that date and that the Officer's retirement would take effect
on that date.
E. This Agreement is intended to reflect the terms related to the Officer's
retirement other than those benefits which would otherwise be available to
the Officer upon retirement.
F. This Agreement will be subject to ratification by the Board of Directors.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein the parties agree as follows:
1. The Officer will continue in his position as President and Chief Executive
Officer until December 31, 2005 and will retire effective January 1, 2006.
2. The Officer will remain a member of the Company's Board of Directors for
the remainder of his term which is to run until the Company's Annual
Meeting to be held in May, 2006. As of his retirement date, Officer shall
be entitled to receive the same amount of Board Fees as are paid to other
non-management Directors.
Agreement, Dennis G. Sullivan
Page 2 of 4
3. Upon retirement the Officer will resign from his positions as a member of
the Boards of Directors of the Company's subsidiaries.
4. Commencing January 1, 2006, and continuing up to and including March 31,
2006, the Officer shall act as a consultant to the Company for which he
will receive a fee of $80,000 as long as he is able to perform the duties
contemplated herein. During the consulting period the Officer will have
use of a Company vehicle and cell phone. Although the parties have not
specified a fixed amount of service time for such consulting services, it
is contemplated that the Officer will be available to provide information
and advice whenever reasonably requested by the Company. During the
consulting period, the Officer will be available to review correspondence,
render advice, attend meetings and, in general, perform any and all such
other services as the Company may reasonably require of the Officer as a
consultant to the Company.
5. For a two-year period following his retirement, the Officer agrees that he
will not directly, or indirectly, in any individual or representative
capacity, carry on, engage or participate in any business in the States of
New Jersey and Delaware that is in direct competition in any manner
whatsoever with the business of the Company, except as may be expressly
agreed to in writing by the Company
6. At the time of his retirement, the Officer will be the beneficial owner of
8,700 shares of Restricted Stock of the Company issued pursuant to the
company's Restricted Stock Plan and held by the Company in Escrow. The
Officer shall also be eligible to receive additional shares of such
Restricted Stock relating to performance in 2005. The amount of such award
will be determined by the Board upon recommendation by the Compensation
Committee. (Such shares that have been issued and any additional shares
that will be issued are hereinafter referred to as "Restricted Stock.")
Although the Company has the right, pursuant to the Restricted Stock Plan,
to reacquire certain of those shares in the event of early retirement, the
Company waives its right to reacquire the Restricted Stock and agrees to
release any such shares from escrow as of the effective date of the
Officer's retirement, and distribute them to the Officer. Any additional
shares to be awarded to the Officer would not be subject to any plan
restrictions or escrow agreement and would not be subject to reacquisition
by the Company.
7. The Officer is eligible to receive benefits pursuant to the Company's
Supplemental Executive Retirement Plan ("SERP"). The SERP provides that
such benefits are to be based on the Officer's "Compensation" as that term
is defined in the SERP. Such Compensation is agreed to be the Officer's
2005 actual salary of $301,600. Although the SERP contains provisions in
Section 6.2 authorizing certain retirement reductions resulting from an
Early Retirement Date as compared to a Normal Retirement Date, the Company
agrees to waive those reductions.
Agreement, Dennis G. Sullivan
Page 3 of 4
8. The benefits described herein are not intended to supercede any other
benefits to which the Officer would be entitled to receive upon his
retirement as an officer or employee of the Company. This includes, but is
not limited to, the following:
The Officer shall be entitled to participate in all health, welfare and
other benefit plans generally available to all retirees for as long as the
Officer is eligible and elects to participate. Currently, the Company will
pay 100% of all monthly premiums of these benefits (which includes
medical, dental, prescription drug and life).
9. In consideration of the agreements and conditions set forth herein, the
payments made by the Company, and the other terms of this Agreement, the
adequacy of which is hereby acknowledged, Officer for himself, his heirs,
successors and assigns, does hereby release and forever discharge the
Company of and from any and all manner of action or claim of whatsoever
nature, in law or in equity, whether known or unknown, accrued or not
accrued, including but not limited to those claims which employee may not
be aware of and those not mentioned in this Agreement, which Officer now
has or hereafter may have against the Company, arising out of any acts or
omissions of any nature whatsoever which occurred at any time before the
effective date of this Agreement with respect to the subject matter of
this Agreement.
10. This Agreement shall be binding upon and inure to the benefit of the
Company's and Officer's heirs, administrators, representatives, executors,
successors, affiliates and assigns.
11. This Agreement expresses the entire understanding of the parties with
respect to the subject matter of the Agreement and the release of the
claims as set forth herein. The Agreement supersedes any prior written or
oral representations, agreements, or understandings with respect hereto.
12. Each party acknowledges that he or it has had the opportunity to review
the provisions of this Agreement with independent advisors (financial,
legal or otherwise) prior to the execution of this Agreement by each such
party.
13. This Agreement is made and entered into in the State of New Jersey and
shall in all respects be interpreted, enforced and governed under the laws
of the State of New Jersey without regard to New Jersey law regarding
choice of law. The language of all parts of this Agreement shall in all
cases be construed as a whole, according to its fair meaning, and not
strictly for or against either of the parties.
14. Neither party may assign or otherwise transfer its rights or delegate its
duties under this Agreement without the prior written consent of the other
party, and any attempt to do so without such consent is void.
Agreement, Dennis G. Sullivan
Page 4 of 4
IN WITNESS WHEREOF, the undersigned parties have executed this Agreement
as of the date first written above.
MIDDLESEX WATER COMPANY
By: /s/J. Richard Tompkins
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J. Richard Tompkins
Chairman of the Board
/s/Dennis G. Sullivan
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Dennis G. Sullivan