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Form 10-Q/A
Amendment No. 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
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OR
(_) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________ to _____________
Commission File Number 1-8060
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AQUARION COMPANY
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(Exact name of registrant as specified in its charter)
Delaware 06-0852232
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
835 Main Street, Bridgeport, Connecticut 06604-4995
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 335-2333
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__________________________________________________________________________
(Former name, former address and former fiscal year, if changes since
last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No ______
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Indicate the number of share outstanding of each of the issuer's classes of
common stock as of August 9, 1999:
Common Stock
No Par Value (Stated Value: $1) 11,420,765
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Class Number of Shares
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AQUARION COMPANY
THE REGISTRANT HEREBY AMENDS THE FOLLOWING ITEMS, FINANCIAL STATEMENTS, EXHIBITS
OR OTHER PORTIONS OF ITS QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED
JUNE 30, 1999 (THE "FORM 10-Q") AS SET FORTH BELOW:
ITEM 6 Exhibits and reports on Form 8-K
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Item 6 of the Form 10-Q is hereby amended and restated in its entirety as
follows:
(a) Exhibits
2 Agreement and Plan of Merger dated as of May 31, 1999 among
Aquarion, Kelda Group plc (formerly named Yorkshire Water plc)
and Waterman Acquisition Corp. (incorporated by reference to
Exhibit 2 of the Current Report on Form 8-K of Aquarion, filed
June 8, 1999).
10(a) Continuity Agreement between Aquarion and Richard K. Schmidt
dated as of May 7, 1999.
10(b) Continuity Agreement between Aquarion and Janet M. Hansen dated
as of May 7, 1999.
10(c) Form of Continuity Agreement between Aquarion and each of
Charles V. Firlotte, Daniel A. Neaton and Larry L. Bingaman,
each dated as of May 7, 1999.
10(d) Continuity Agreement between Aquarion and James S. McInerney
dated as of May 7, 1999.
27 Financial Data Schedule for the quarter ended June 30, 1999
(b) On June 8, 1999, the Company filed a Current Report on Form 8-K
pursuant to the Securities Exchange Act of 1934, reporting an event
under Item 5 of such Form. No financial statements were filed
therewith.
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Exhibit Index
The Exhibit Index of the Form 10-Q is hereby amended and restated in its
entirety as follows:
10(a) Continuity Agreement between Aquarion and Richard K. Schmidt dated as of
May 7, 1999.
10(b) Continuity Agreement between Aquarion and Janet M. Hansen dated as of May
7, 1999.
10(c) Form of Continuity Agreements between Aquarion and each of Charles V.
Firlotte, Daniel A. Neaton and Larry L. Bingaman, each dated as
of May 7, 1999.
10(d) Continuity Agreement between Aquarion and James S. McInerney dated as of
May 7, 1999.
Exhibit 27 Financial Data Schedule for the quarter ended June 30, 1999
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Exhibit 10(c)
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Exhibit 10(c) to the Form 10-Q is hereby amended and restated in its entirety as
follows:
EXHIBIT 10(c)
The following agreement was entered into by each of Larry L. Bingaman, Charles
V. Firlotte and Daniel A. Neaton.
CONTINUITY AGREEMENT
This Agreement (the "Agreement") is dated as of May 7,1999 by and
between AQUARION COMPANY, a Delaware corporation (the "Company"), and
_______________ (the "Executive").
WHEREAS, the Company's Board of Directors considers the continued
services of key executives of the Company to be in the best interests of the
Company and its stockholders; and
WHEREAS, the Company's Board of Directors desires to assure, and has
determined that it is appropriate and in the best interests of the Company and
its stockholders to reinforce and encourage the continued attention and
dedication of key executives of the Company to their duties of employment
without personal distraction or conflict of interest in circumstances which
could arise from the occurrence of a change in control of the Company; and
WHEREAS, the Company's Board of Directors has authorized the Company
to enter into continuity agreements with those key executives of the Company and
any of its respective subsidiaries (all of such entities, with the Company
hereinafter referred to as an "Employer"), such agreements to set forth the
severance compensation which the Company agrees under certain circumstances to
pay such executives; and
WHEREAS, the Executive is a key executive of an Employer and has been
designated by the Committee as an executive to be offered such a continuity
compensation agreement with the Company (the "Agreement").
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Company and the Executive agree as follows:
1. Term. This Agreement shall become effective on the date hereof
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and remain in effect until the third anniversary thereof; provided, however,
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that, thereafter, this Agreement shall automatically renew on each successive
anniversary, unless an Employer provides the Executive, in writing, at least 180
days prior to the renewal date, that this Agreement shall not be renewed.
Notwithstanding the foregoing, in the event that a Change in Control occurs at
any time prior to the termination of this Agreement in accordance with the
preceding sentence, this Agreement shall not terminate until the second
anniversary of the Change in Control.
2. Change in Control. No compensation or other benefit pursuant to
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Section 4 hereof shall be payable under this Agreement unless and until either
(i) a Change in Control of the
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Company (as hereinafter defined) shall have occurred while the Executive is an
employee of an Employer and the Executive's employment by an Employer thereafter
shall have terminated in accordance with Section 3 hereof or (ii) the
Executive's employment by the Company shall have terminated in accordance with
Section 3(a)(ii) hereof prior to the occurrence of the Change in Control. For
purposes of this Agreement, a "Change in Control" shall be deemed to have
occurred when:
(a) any "person" as defined in Section 3(a)(9) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and as used in
Section 13(d) and 14(d) thereof, including a "group" as defined in Section
13(d) of the Exchange Act but excluding the Company and any subsidiary and
any employee benefit plan sponsored or maintained by the Company or any
subsidiary (including any trustee of such plan acting as trustee), directly
or indirectly, becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), of securities of the Company representing 20% or
more of the combined voting power of the Company's then outstanding
securities (other than indirectly as a result of the Company's redemption
of its securities); or
(b) the consummation of any merger or other business combination of
the Company, sale of 50% or more of the Company's assets, liquidation or
dissolution of the Company or combination of the foregoing transactions
(the "Transactions") other than a Transaction immediately following which
the shareholders of the Company and any trustee or fiduciary of any Company
employee benefit plan immediately prior to the Transaction own at least 60%
of the voting power, directly or indirectly, of (A) the surviving
corporation in any such merger or other business combination; (B) the
purchaser of or successor to the Company's assets; (C) both the surviving
corporation and the purchaser in the event of any combination of
Transactions; or (D) the parent company owning 100% of such surviving
corporation, purchaser or both the surviving corporation and the purchaser,
as the case may be; or
(c) within any twenty-four month period, the persons who were
directors immediately before the beginning of such period (the "Incumbent
Directors") shall cease (for any reason other than death) to constitute at
least a majority of the Board or the board of directors of a successor to
the Company. For this purpose, any director who was not a director at the
beginning of such period shall be deemed to be an Incumbent Director if
such director was elected to the Board by, or on the recommendation of or
with the approval of, at least two-thirds of the directors who then
qualified as Incumbent Directors (so long as such director was not
nominated by a person who commenced or threatened to commence an election
contest or proxy solicitation by or on behalf of a Person (other than the
Board) or who has entered into an agreement to effect a Change in Control
or expressed an intention to cause such a Change in Control).
3. Termination of Employment; Definitions.
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(a) Termination without Cause by the Company or for Good Reason by
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the Executive. (i) The Executive shall be entitled to the compensation
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provided for in Section 4 hereof, if within two years after a Change in
Control, the Executive's employment by an Employer shall be terminated (A)
by an Employer for any reason other than (I) the Executive's Disability or
Retirement, (II) the Executive's death or (III) for Cause, or (B) by the
Executive with Good Reason (all terms are hereinafter defined).
(ii) In addition, the Executive shall be entitled to the compensation
provided for in Section 4 hereof if, (A) in the event that an agreement is
signed which, if consummated, would result in a Change of Control and the
Executive is terminated without Cause by the Company or
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terminates employment with Good Reason prior to the Change in Control, (B)
such termination is at the direction of the acquirer or merger partner or
otherwise in connection with the anticipated Change in Control, and (C)
such Change in Control actually occurs.
(b) Disability. For purposes of this Agreement, "Disability" shall
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mean the Executive's absence from the full-time performance of the Executive's
duties (as such duties existed immediately prior to such absence) for 180
consecutive business days, when the Executive is disabled as a result of
incapacity due to physical or mental illness.
(c) Retirement. For purposes of this Agreement, "Retirement" shall
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mean the Executive's voluntary termination of employment pursuant to late,
normal or early retirement under a pension plan sponsored by an Employer, as
defined in such plan, but only if such retirement occurs prior to a termination
by an Employer without Cause or by the Executive for Good Reason.
(d) Cause. For purposes of this Agreement, "Cause" shall mean:
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(i) the willful and continued failure of the Executive to
perform substantially all of his or her duties with an Employer (other than
any such failure resulting from incapacity due to physical or mental
illness), after a written demand for substantial performance is delivered
to such Executive by the Board of Directors (the "Board") of the Company
which specifically identifies the manner in which the Board believes that
the Executive has not substantially performed his or her duties,
(ii) the willful engaging by the Executive in gross misconduct
which is materially and demonstrably injurious to the Company or any
Employer; or
(iii) the conviction of, or plea of guilty or nolo contendere
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to, a felony.
Termination of the Executive for Cause shall be made by delivery to the
Executive of a copy of a resolution duly adopted by the affirmative vote of not
less than a three-fourths majority of the non-employee Directors of the Company
or of the ultimate parent of the entity which caused the Change in Control (if
the Company has become a subsidiary) at a meeting of such Directors called and
held for such purpose, after 30 days prior written notice to the Executive
specifying the basis for such termination and the particulars thereof and a
reasonable opportunity for the Executive to cure or otherwise resolve the
behavior in question prior to such meeting, finding that in the reasonable
judgment of such Directors, the conduct or event set forth in any of clauses (i)
through (iii) above has occurred and that such occurrence warrants the
Executive's termination.
(e) Good Reason. For purposes of this Agreement, "Good Reason"
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shall mean the occurrence, within the Term of this Agreement, of any of the
following without the Executive's express written consent:
(iii) any material and adverse diminution in the Executive's
duties or responsibilities with the Company (or any affiliate thereof) from
those in effect immediately prior to the Change in Control; provided,
however, that no such diminution shall be deemed to exist solely because of
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changes in Executive's duties, responsibilities or titles as a consequence
of the Company ceasing to be a company with publicly-traded securities or
becoming a wholly-owned subsidiary of another company;
(iv) any reduction in the Executive's annual base salary or
cash bonus percentage target from the annual base salary or cash bonus
percentage target in effect
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immediately prior to the Change in Control;
(v) any requirement that Executive be based at a location more
than 35 miles from the location at which the Executive was based
immediately prior to the Change in Control (or a substantial increase in
the amount of travel Executive is required to do because of a relocation of
the executive offices); and
(vi) any failure by the Company to obtain from any successor to
the Company an agreement reasonably satisfactory to the Executive to assume
and perform this Agreement, as contemplated by Section 10(a) hereof.
Notwithstanding the foregoing, in the event Executive provides the Company with
a Notice of Termination (as defined below) referencing this Section 3(e) the
Company shall have 30 days thereafter in which to cure or resolve the behavior
otherwise constituting Good Reason. Any good faith determination by Executive
that Good Reason exists shall be presumed correct and shall be binding upon the
Company.
(f) Notice of Termination. Any purported termination of the
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Executive's employment (other than on account of Executive's death) with an
Employer shall be communicated by a Notice of Termination to the Executive, if
such termination is by an Employer, or to an Employer, if such termination is by
the Executive. For purposes of this Agreement, "Notice of Termination" shall
mean a written notice which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive's
employment under the provisions so indicated. For purposes of this Agreement, no
purported termination of Executive's employment with an Employer shall be
effective without such a Notice of Termination having been given.
4. Compensation Upon Termination After a Change in Control.
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Subject to Section 9 hereof, if within two years of a Change in
Control, the Executive's employment by an Employer shall be terminated in
accordance with Section 3(a) (the "Termination"), the Executive shall be
entitled to the following payments and benefits:
(a) Severance. The Company shall pay or cause to be paid to the
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Executive a cash severance amount equal to (i) the sum of (A) the
Executive's annual base salary on the date of the Change in Control (or, if
higher, the annual base salary in effect immediately prior to the giving of
the Notice of Termination, and (B) the average of the actual bonuses earned
by the Executive in respect of the two years prior to the year in which the
Change in Control occurs under the Company's Executive Incentive Award
Program, plus (ii) in lieu of the continuation of any of the Executive's
perquisites as provided under the Executive's employment agreement, a cash
payment equal to 12 percent of the Executive's annual base salary as in
effect on the date of the Change in Control for the year following the
Change in Control. This cash severance amount shall be payable in equal
monthly installments or, at the Company's election, in a lump sum
calculated without any discount.
(b) Additional Payments and Benefits. The Executive shall also be
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entitled to:
(i) a lump sum cash payment equal to the sum of (A) the
Executive's accrued but unpaid annual base salary through the date of
Termination, (B) the unpaid portion, if any, of bonuses previously
earned by the Executive pursuant to the Company's Executive Incentive
Award Program, plus the pro rata portion of the bonus to be paid for
the year in which the date of Termination occurs (calculated through
the
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date of Termination), and (C) an amount, if any, equal to compensation
previously deferred (excluding any qualified plan deferral) and any
accrued vacation pay, in each case, in full satisfaction of
Executive's rights thereto.
(ii) a lump sum cash payment equal to the aggregate sum of
(A) additional pension contributions in an amount equal to the
Company's contributions under the Company's Thrift and Savings Program
and Employee Stock Ownership Plan (or such other qualified and
nonqualified defined contribution pension plans as then in effect) for
the one-year period following the date of Termination (the "Separation
Period") (based on assumed rates of Executive's contributions at the
level of participation in effect as of the last date Executive was
permitted to participate); and (B) the difference between the present
value of the annual benefit the Executive would be entitled to receive
under the Retirement Program (if the Executive had continued
employment through the Separation Period) and the annual benefit
expressed as a life annuity under the Retirement Program accrued
thereunder as of the date of termination of employment, after giving
effect to one year of continued credit for age and services purposes,
as if he had been paid at the rate used to calculate the payments
under Section 4(a).
(iii) continued medical, dental, vision, and life insurance
coverage (excluding accident, death, and disability insurance) for the
Executive and the Executive's eligible dependents or, to the extent
such coverage is not commercially available, such other arrangements
reasonably acceptable to the Executive, on the same basis as in effect
prior to the Change in Control or the Executive's Termination,
whichever is deemed to provide for more substantial benefits, for a
period ending on the earlier of (A) the end of the Separation Period
or (B) the commencement of comparable coverage by the Executive with a
subsequent employer;
(iv) unless it would adversely affect the Company's ability
to use pooling of interest accounting in a Change in Control
transaction in which such accounting is intended to be used, immediate
100% vesting of all outstanding stock options, stock appreciation
rights and restricted stock granted or issued by any Employer to the
extent not previously vested on or following the Change of Control;
and
(v) all other accrued or vested benefits in accordance with
the terms of the applicable plan (with an offset for any amounts paid
under Section 4(b)(i)(C), above).
All lump sum payments under this Section 4 shall be paid within 10 business
days after Executive's date of Termination. Present value for purposes of
subsection (ii) above shall be calculated using a discount factor equal to
one percentage point below the prime rate as published in The Wall Street
Journal as of the date on which termination of employment occurred and
using the actuarial factors set forth in the Retirement Program.
(c) Outplacement. If so requested by the Executive, outplacement
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services shall be provided by a professional outplacement provider selected
by Executive; provided, however, that such outplacement services shall be
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provided the Executive at a cost to the Company of not more than ten (10)
percent of such Executive's annual base salary.
(d) Withholding. Payments and benefits provided pursuant to this
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Section 4 shall be subject to any applicable payroll and other taxes
required to be withheld.
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5. Compensation Upon Termination for Death, Disability or
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Retirement.
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If an Executive's employment is terminated by reason of Death,
Disability or Retirement prior to any other termination, Executive will receive:
(a) the sum of (i) Executive's accrued but unpaid salary through the
date of Termination, (ii) the pro rata portion of the Executive's target
bonus for the year of Executive's Death or Disability (calculated through
the date of Termination), and (iii) an amount equal to any compensation
previously deferred an any accrued vacation pay; and
(b) other accrued or vested benefits in accordance with the terms of
the applicable plan (with an offset for any amounts paid under item
(a)(iii), above.
6. Excess Parachute Excise Tax Payments.
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(a) (i) If it is determined (as hereafter provided) that any payment
or distribution by the Company or any Employer to or for the benefit of the
Executive, whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise pursuant to or by reason of any other
agreement, policy, plan, program or arrangement, including without limitation
any stock option, stock appreciation right or similar right, or the lapse or
termination of any restriction on or the vesting or exercisability of any of the
foregoing (a "Payment"), would be subject to the excise tax imposed by Section
4999 of the Code (or any successor provision thereto) by reason of being
"contingent on a change in ownership or control" of the Company, within the
meaning of Section 280G of the Code (or any successor provision thereto) or to
any similar tax imposed by state or local law, or any interest or penalties with
respect to such excise tax (such tax or taxes, together with any such interest
and penalties, are hereafter collectively referred to as the "Excise Tax"), then
the Executive shall be entitled to receive an additional payment or payments (a
"Gross-Up Payment") in an amount such that, after payment by the Executive of
all taxes (including any interest or penalties imposed with respect to such
taxes), including any Excise Tax, imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
(ii) Subject to the provisions of Section 6(a)(i) hereof, all
determinations required to be made under this Section 6, including whether an
Excise Tax is payable by the Executive and the amount of such Excise Tax and
whether a Gross-Up Payment is required and the amount of such Gross-Up Payment,
shall be made by the nationally recognized firm of certified public accountants
(the "Accounting Firm") used by the Company prior to the Change in Control (or,
if such Accounting Firm declines to serve, the Accounting Firm shall be a
nationally recognized firm of certified public accountants selected by the
Executive). The Accounting Firm shall be directed by the Company or the
Executive to submit its preliminary determination and detailed supporting
calculations to both the Company and the Executive within 15 calendar days after
the Termination Date, if applicable, and any other such time or times as may be
requested by the Company or the Executive. If the Accounting Firm determines
that any Excise Tax is payable by the Executive, the Company shall pay the
required Gross-Up Payment to, or for the benefit of, the Executive within five
business days after receipt of such determination and calculations. If the
Accounting Firm determines that no Excise Tax is payable by the Executive, it
shall, at the same time as it makes such determination, furnish the Executive
with an opinion that he has substantial authority not to report any Excise Tax
on his/her federal, state, local income or other tax return. Any determination
by the Accounting Firm as to the amount of the Gross-Up Payment shall be binding
upon the Company and the Executive absent a contrary determination by the
Internal Revenue Services or a court of competent jurisdiction; provided,
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however, that no such determination shall eliminate or reduce the Company's
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obligation to provide any Gross-Up Payment that shall be due as a result of such
contrary determination. As a result of the uncertainty in
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the application of Section 4999 of the Code (or any successor provision thereto)
and the possibility of similar uncertainty regarding state or local tax law at
the time of any determination by the Accounting Firm hereunder, it is possible
that Gross-Up Payments that will not have been made by the Company should have
been made (an "Underpayment"), consistent with the calculations required to be
made hereunder. In the event that the Company exhausts or fails to pursue its
remedies pursuant to Section 6(a) hereof and the Executive thereafter is
required to make a payment of any Excise Tax, the Executive shall direct the
Accounting Firm to determine the amount of the Underpayment that has occurred
and to submit its determination and detailed supporting calculations to both the
Company and the Executive as promptly as possible. Any such Underpayment shall
be promptly paid by the Company to, or for the benefit of, the Executive within
five business days after receipt of such determination and calculations.
(iii) The Company and the Executive shall each provide the
Accounting Firm access to and copies of any books, records and documents in the
possession of the Company or the Executive, as the case may be, reasonably
requested by the Accounting Firm, and otherwise cooperate with the Accounting
Firm in connection with the preparation and issuance of the determination
contemplated by Section 6(a) hereof.
(iv) The federal, state and local income or other tax returns
filed by the Executive (or any filing made by a consolidated tax group which
includes the Company) shall be prepared and filed on a consistent basis with the
determination of the Accounting Firm with respect to the Excise Tax payable by
the Executive. The Executive shall make proper payment of the amount of any
Excise Tax, and at the request of the Company, provide to the Company true and
correct copies (with any amendments) of his/her federal income tax return as
filed with the Internal Revenue Service and corresponding state and local tax
returns, if relevant, as filed with the applicable taxing authority, and such
other documents reasonably requested by the Company, evidencing such payment. If
prior to the filing of the Executive's federal income tax return, or
corresponding state or local tax return, if relevant, the Accounting Firm
determines that the amount of the Gross-Up Payment should be reduced, the
Executive shall within five business days pay to the Company the amount of such
reduction.
(v) The fees and expenses of the Accounting Firm for its
services in connection with the determinations and calculations contemplated by
Sections 6(a)(ii) and (iv) hereof shall be borne by the Company. If such fees
and expenses are initially advanced by the Executive, the Company shall
reimburse the Executive the full amount of such fees and expenses within five
business days after receipt from the Executive of a statement therefor and
reasonable evidence of his/her payment thereof.
(b) In the event that the Internal Revenue Service claims that any
payment or benefit received under this Agreement constitutes an "excess
parachute payment," within the meaning of Section 280G(b)(1) of the Code, the
Executive shall notify the Company in writing of such claim. Such notification
shall be given as soon as practicable but no later than 10 business days after
the Executive is informed in writing of such claim and shall apprise the Company
of the nature of such claim and the date on which such claim is requested to be
paid. The Executive shall not pay such claim prior to the expiration of the 30
day period following the date on which the Executive gives such notice to the
Company (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company notifies the Executive in
writing prior to the expiration of such period that it desires to contest such
claim, the Executive shall (i) give the Company any information reasonably
requested by the Company relating to such claim; (ii) take such action in
connection with contesting such claim as the Company shall reasonably request in
writing from time to time, including without limitation, accepting legal
representation with respect to such claim by an attorney reasonably selected by
the Company and reasonably satisfactory to the Executive; (iii) cooperate with
the Company in good faith in order to effectively contest such claim; and (iv)
permit the Company to participate in
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any proceedings relating to such claim; provided, however, that the Company
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shall bear and pay directly all costs and expenses (including, but not limited
to, additional interest and penalties and related legal, consulting or other
similar fees) incurred in connection with such contest and shall indemnify and
hold the Executive harmless, on an after-tax basis, for and against any Excise
Tax or other tax (including interest and penalties with respect thereto) imposed
as a result of such representation and payment of costs and expenses.
(c) The Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
the Executive to pay the tax claimed and sue for a refund or contest the claim
in any permissible manner, and the Executive agrees to prosecute such contest to
a determination before any administrative tribunal, in a court of initial
jurisdiction an d in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
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such claim and sue for a refund, the Company shall advance the amount of such
payment to the Executive on an interest-free basis, and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or other tax
(including interest and penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and provided, further, that if the Executive is required to extend the statute
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of limitations to enable the Company to contest such claim, the Executive may
limit this extension solely to such contested amount. The Company's control of
the contest shall be limited to issues with respect to which a corporate
deduction would be disallowed pursuant to Section 280G of the Code and the
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority. In
addition, no position may be taken nor any final resolution be agreed to by the
Company without the Executive's consent if such position or resolution could
reasonably be expected to adversely affect the Executive (including any other
tax position of the Executive unrelated to matters covered hereby).
(d) If, after the receipt by the Executive of an amount advanced by
the Company in connection with the contest of the Excise Tax claim, the
Executive becomes entitled to receive any refund with respect to such claim, the
Executive shall promptly pay to the Company the amount of such refund (together
with any interest paid or credited thereon after taxes applicable thereto);
provided, however, if the amount of that refund exceeds the amount advanced by
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the Company or it is otherwise determined for any reason that additional amounts
could be paid to the Named Executive without incurring any Excise Tax, any such
amount will be promptly paid by the Company to the named Executive. If, after
the receipt by the Executive of an amount advanced by the Company in connection
with an Excise Tax claim, a determination is made that the Executive shall not
be entitled to any refund with respect to such claim and the Company does not
notify the Executive in writing of its intent to contest the denial of such
refund prior to the expiration of 30 days after such determination, such advance
shall be forgiven and shall not be required to be repaid and shall be deemed to
be in consideration for services rendered after the date of the Termination.
7. Expenses. In addition to all other amounts payable to the
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Executive under this Agreement, the Company shall pay or reimburse the Executive
for legal fees (including without limitation, any and all court costs and
attorneys' fees and expenses) incurred by the Executive in connection with or as
a result of any claim, action or proceeding brought by the Company or the
Executive with respect to or arising out of this Agreement or any provision
hereof; provided, however, that in the case of an action brought by the
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Executive, the Company shall have no obligation for any such legal fees, if the
Company is successful in establishing with the court that the Executive's action
was frivolous or otherwise without any reasonable legal or factual basis.
8. Obligations Absolute; Non-Exclusivity of Rights; Joint Several
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Liability.
---------
<PAGE>
(a) The obligations of the Company to make the payment to the
Executive, and to make the arrangements, provided for herein shall be absolute
and unconditional and shall not be reduced by any circumstances, including
without limitation any set-off, counterclaim, recoupment, defense or other right
which the Company may have against the Executive or any third party at any time.
(b) Nothing in this Agreement shall prevent or limit the Executive's
continuing or future participation in any benefit, bonus, incentive or other
plan or program provided by the Company or any other Employer and for which the
Executive may qualify, nor shall anything herein limit or reduce such rights as
the Executive may have under any agreements with the Company or any other
Employer.
(c) Each entity included in the definition of "Employer" and any
successors or assigns shall be joint and severally liable with the Company under
this Agreement.
9. Not an Employment Agreement; Effect On Other Rights.
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(a) This Agreement is not, and nothing herein shall be deemed to
create, a contract of employment between the Executive and the Company. The
Company may terminate the employment of the Executive by the Company at any
time, subject to the terms of this Agreement and/or any employment agreement or
arrangement between the Company and the Executive that may then be in effect.
(b) With respect to the Executive's employment agreement as in effect
immediately prior to the Change in Control, nothing herein shall have any effect
on the Executive's rights thereunder; provided, however, that in the event of
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the Executive's termination of employment in accordance with Section 3 hereof,
this Agreement shall govern solely for the purpose of providing the terms of all
payments and additional benefits to which the Executive is entitled upon such
termination and any payments or benefit provided thereunder shall reduce the
corresponding type of payments or benefits hereunder. Notwithstanding the
foregoing, in the event that the Executive's employment is terminated prior to
the occurrence of a Change in Control under the circumstances provided for in
Section 3(a)(ii) and such circumstances also entitle Executive to payments and
benefits under any other employment or other agreement as in effect prior to the
Change in Control (Other Agreement), then, until the Change in Control occurs,
the Executive will receive the payments and benefits to which he/she is entitled
under such Other Agreement. Upon the occurrence of the Change in Control, the
Company will pay to the Executive in cash the amount to which he/she is entitled
to under this Agreement (reduced by the amounts already paid under the Other
Agreement) in respect of cash payments and shall provide or increase any other
noncash benefits to those provided for hereunder (after taking into Account
noncash benefits, if any, provided under such Other Agreement). Amounts which
are vested benefits or which the Executive is otherwise entitled to receive
under any plan or program of the Company or any other Employer shall be payable
in accordance with such plan or program, except as explicitly modified by this
Agreement.
10. Successors; Binding Agreement, Assignment.
-----------------------------------------
(a) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business of the Company, by agreement to expressly,
absolutely and unconditionally assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to perform
it if no such succession had taken place. Failure of the Company to obtain such
agreement prior to the effectiveness of any such succession shall be a material
breach of this Agreement and shall entitle the Executive to
<PAGE>
terminate the Executive's employment with the Company or such successor for Good
Reason immediately prior to or at any time after such succession. As used in
this Agreement, "Company" shall mean (i) the Company as hereinbefore defined,
and (ii) any successor to all the stock of the Company or to all or
substantially all of the Company's business or assets which executes and
delivers an agreement provided for in this Section 10(a) or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation of
law, including any parent or subsidiary of such a successor.
(b) This Agreement shall inure to the benefit of and be enforceable
by the Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should
die while any amount would be payable to the Executive hereunder if the
Executive had continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to the
Executive's estate or designated beneficiary. Neither this Agreement nor any
right arising hereunder may be assigned or pledged by the Executive.
11. Notice. For purpose of this Agreement, notices and all other
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communications provided for in this Agreement or contemplated hereby shall be in
writing and shall be deemed to have been duly given when personally delivered,
delivered by a nationally recognized overnight delivery service or when mailed
United States certified or registered mail, return receipt requested, postage
prepaid, and addressed, in the case of the Company, to the Company at:
Aquarion Company
835 Main Street
Bridgeport, Connecticut 06604
Attention: Chief Executive Officer
and in the case of the Executive, to the Executive at the address set forth on
the execution page at the end hereof.
Either party may designate a different address by giving notice of change
of address in the manner provided above, except that notices of change of
address shall be effective only upon receipt.
12. Confidentiality. The Executive shall retain in confidence any and
---------------
all confidential information concerning the Company and its respective business
which is now known or hereafter becomes known to the Executive, except as
otherwise required by law and except information (i) ascertainable or obtained
from public information, (ii) received by the Executive at any time after the
Executive's employment by the Company shall have terminated, from a third party
not employed by or otherwise affiliated with the Company or (iii) which is or
becomes known to the public by any means other than a breach of this Section 12.
Upon the Termination of employment, the Executive will not take or keep any
proprietary or confidential information or documentation belonging to the
Company.
13. Miscellaneous. No provision of this Agreement may be amended,
-------------
altered, modified, waived or discharged unless such amendment, alteration,
modification, waiver or discharge is agreed to in writing signed by the
Executive and such officer of the Company as shall be specifically designated by
the Committee or by the Board of Directors of the Company. No waiver by either
party, at any time, of any breach by the other party of, or of compliance by the
other party with, any condition or provision of this Agreement to be performed
or complied with by such other party shall be deemed a waiver of any similar or
dissimilar provision or condition of this Agreement or any other breach of or
failure to comply with the same condition or provision at the same time or at
any prior or subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not expressly set forth in this Agreement.
<PAGE>
14. Severability. If any one or more of the provisions of this
------------
Agreement shall be held to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions of this Agreement shall
not be affected thereby. To the extent permitted by applicable law, each party
hereto waives any provision of law which renders any provision of this Agreement
invalid, illegal or unenforceable in any respect.
15. Governing Law; Venue. The validity, interpretation, construction
--------------------
and performance of this Agreement shall be governed on a non-exclusive basis by
the laws of the State of Connecticut without giving effect to its conflict of
laws rules. For purposes of jurisdiction and venue, the Company and each
Employer hereby consents to jurisdiction and venue in any suit, action or
proceeding with respect to this Agreement in any court of competent jurisdiction
in the state in which Executive resides at the commencement of such suit, action
or proceeding and waives any objection, challenge or dispute as to such
jurisdiction or venue being proper.
16. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be an original and all of which shall be
deemed to constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
AQUARION COMPANY:
By:_____________________________________
Title:_________________________________
EXECUTIVE
________________________________________
________________________________________
________________________________________
Address
<PAGE>
SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AQUARION COMPANY
Date: August 17, 1999 By /s/ JANET M. HANSEN
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Janet M. Hansen
Executive Vice President
Chief Financial Officer and
Treasurer
