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Exhibit 10.4
AGREEMENT
Agreement made as of December 18, 2003, between The York Water
Company, a Pennsylvania corporation (the
"Company"), and Jeffrey S. Osman
("Employee").
WHEREAS, Employee is the President and Chief Executive Officer
of
the Company and devotes substantially all
of his business time and efforts to
the Company's affairs;
WHEREAS, the Company recognizes that the departure or distraction
of
key management personnel would be
detrimental to the business of the Company;
and
WHEREAS, the Board of Directors of the Company has determined
that
appropriate steps should be taken to
reinforce and encourage the continued
attention and dedication of key members of
the Company's management to their
assigned duties without distraction;
and
WHEREAS, in consideration of Employee's employment with the
Company
and his agreement not to compete with the
Company as set forth in this
Agreement, the Company agrees that Employee
shall receive the compensation set
forth in this Agreement against the adverse
financial and career impact on
Employee if his employment with the Company
is terminated under certain
circumstances;
NOW, THEREFORE, in consideration of the foregoing and the
mutual
covenants and agreements hereinafter set
forth and intending to be legally bound
hereby, the parties hereto agree as
follows:
1.
Definitions. For all purposes of this Agreement, the following
terms
shall have the meanings specified in this
Section unless the context clearly
otherwise requires:
(a) "Affiliate" and "Associate" shall have the respective
meanings
ascribed to such terms in Rule 12b-2 of the
General Rules and Regulations under
the Exchange Act.
(b) A Person shall be deemed the "Beneficial Owner" of any
securities: (i) that such Person or any of
such Person's Affiliates or
Associates, directly or indirectly, has
the
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right to acquire (whether such right is
exercisable immediately or only after
the passage of time) pursuant to any
agreement, arrangement or understanding
(whether or not in writing) or upon the
exercise of conversion rights, exchange
rights, rights, warrants or options, or
otherwise; provided, however, that a
Person shall not be deemed the "Beneficial
Owner" of securities tendered
pursuant to a tender or exchange offer made
by such Person or any of such
Person's Affiliates or Associates until
such tendered securities are accepted
for payment, purchase or exchange; (ii)
that such Person or any of such Person's
Affiliates or Associates, directly or
indirectly, has the right to vote or
dispose of or has "beneficial ownership" of
(as determined pursuant to Rule
13d-3 of the General Rules and Regulations
under the Exchange Act), including
without limitation, pursuant to any
agreement, arrangement or understanding,
whether or not in writing; provided,
however, that a Person shall not be deemed
the "Beneficial Owner" of any security
under this clause (ii) as a result of an
oral or written agreement, arrangement or
understanding to vote such security if
such agreement, arrangement or
understanding (A) arises solely from a revocable
proxy given in response to a public proxy
or consent solicitation made pursuant
to, and in accordance with, the applicable
provisions of the General Rules and
Regulations under the Exchange Act, and (B)
is not then reportable by such
Person on Schedule 13D under the Exchange
Act (or any comparable or successor
report); or (iii) that are beneficially
owned, directly or indirectly, by any
other Person (or any Affiliate or Associate
thereof) with which such Person (or
any of such Person's Affiliates or
Associates) has any agreement, arrangement or
understanding (whether or not in writing)
for the purpose of acquiring, holding,
voting (except pursuant to a revocable
proxy as described in the proviso to
clause (ii) above) or disposing of any
voting securities of the Company;
provided, however, that nothing in this
Section 1(b) shall cause a Person
engaged in business as an underwriter of
securities to be the "Beneficial Owner"
of any securities acquired through such
Person's participation in good faith in
a firm commitment underwriting until the
expiration of 40 days after the date of
such acquisition.
(c) "Board" shall mean the Board of Directors of the Company.
(d) "Business Combination" shall mean a reorganization, merger
or
consolidation of the Company.
(e) "Cause" shall mean (1) misappropriation of funds or any act
of
common law fraud, (2) habitual insobriety
or substance abuse, (3) conviction of
a felony or any crime involving moral
turpitude, (4) willful misconduct or gross
negligence by Employee in the performance
of his duties, (5) the willful failure
of Employee to perform a material function
of Employee's duties hereunder, or
(6) Employee engaging in a conflict of
interest or other breach of fiduciary
duty.
(f) "Change of Control" shall mean:
(i) Any Person (except the Employee, his Affiliates and
Associates, the Company, any Subsidiary of
the Company, any employee benefit
plan of the Company or of any Subsidiary of
the Company, or any Person or entity
organized, appointed or established by the
Company for or pursuant to the terms
of any such employee benefit plan),
together with all Affiliates and Associates
of such Person, becomes the Beneficial
Owner in the aggregate of 50 percent or
more of either (A) the Outstanding Company
Common Stock or (B) the Company
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Voting Securities, in either case unless a
majority of the members of the Board
in office immediately prior to such
acquisition determine within five business
days of the receipt of actual notice of
such acquisition that the circumstances
do not warrant the implementation of the
provisions of this Agreement;
(ii) The Incumbent Board ceases for any reason to constitute
at least a majority of the Board, provided
that any individual becoming a
director subsequent to the beginning of
such period whose election or nomination
for election by the Company's shareholders
was approved by a vote of at least a
majority of the directors then constituting
the Incumbent Board shall be
considered as though such individual were a
member of the Incumbent Board, but
excluding, for this purpose, any such
individual whose initial assumption of
office is in connection with an actual or
threatened election contest relating
to the election of the Directors of the
Company (as such terms are used in Rule
14a-11 of Regulation 14A promulgated under
the Exchange Act);
(iii) Consummation by the Company of a Business Combination,
in each case, with respect to which all or
substantially all of the individuals
and entities who were the respective
Beneficial Owners of the Outstanding
Company Common Stock and Company Voting
Securities immediately prior to such
Business Combination are not, following
such Business Combination, Beneficial
Owners, directly or indirectly, of more
than 50 percent of, respectively, the
then outstanding shares of common stock and
the combined voting power of the
then outstanding voting securities entitled
to vote generally in the election of
directors, as the case may be, of the
corporation resulting from such Business
Combination in substantially the same
proportion as their ownership immediately
prior to such Business Combination of the
Outstanding Company Common Stock and
Company Voting Securities, as the case may
be, in any such case unless a
majority of the members of the Board in
office immediately prior to such
Business Combination determines at the time
of such Business Combination that
the circumstances do not warrant the
implementation of the provisions of this
Agreement; or
(iv) (A) Consummation of a complete liquidation or dissolution
of the Company or (B) sale or other
disposition of all or substantially all of
the assets of the Company other than to a
corporation with respect to which,
following such sale or disposition,
individuals and entities that are the
Beneficial Owners of more than 50 percent
of, respectively, the Outstanding
Company Common Stock and the Company Voting
Securities are substantially the
same as the individuals and entities who
were the Beneficial Owners,
respectively, of the Outstanding Company
Common Stock and Company Voting
Securities immediately prior to such sale
or disposition in substantially the
same proportion as their ownership of the
Outstanding Company Common Stock and
Company Voting Securities, as the case may
be, immediately prior to such sale or
disposition, in any such case unless a
majority of the members of the Incumbent
Board in office immediately prior to such
sale or disposition determines at the
time of such sale or disposition that the
circumstances do not warrant the
implementation of the provisions of this
Agreement.
(g) "Company Voting Securities" shall mean the combined voting
power
of the then outstanding voting securities
of the Company entitled to vote
generally in the election of directors.
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(h) "Compensation" shall mean the sum of base compensation and
annual bonus compensation payable in cash
to the Employee during the twelve
months preceding any date of determination
under this Agreement.
(i) "Exchange Act" shall mean the Securities Exchange Act of
1934,
as amended.
(j) "Good Reason Termination " shall mean a Termination of
Employment initiated by Employee following
a Change in Control and the
occurrence of one or more of the following
events:
(A) any failure of the Company to comply with or satisfy any
of the material terms of this
Agreement;
(B) any significant reduction by the Company of the authority,
duties or responsibilities of Employee's
principal assignment with the Company
or any reduction in Employee's base
compensation or annual bonus compensation
opportunity;
(C) any removal by the Company of Employee from the employment
grade or officer positions which Employee
holds as of the effective date hereof
except in connection with promotions to
higher office; or
(D) a transfer of Employee, without his express written
consent, to a location that is more than 50
miles from his principal place of
business immediately preceding the Change
of Control.
(k) "Incumbent Board" shall mean those individuals who, as of
any
date of determination under the Agreement,
are individuals who have constituted
the Board during the preceding 12-month
period.
(l) "Outstanding Company Common Stock" shall mean the then
outstanding shares of common stock of the
Company.
(m)
"Person" shall mean any natural person, business trust,
corporation, partnership, limited liability
company, joint stock company,
proprietorship, association, trust, joint
venture, unincorporated association or
any other legal entity of whatever
nature.
(n) "Phase Out Date" shall mean earlier of (i) the first day of
the
calendar month coincident with or next
following Employee's 65th birthday or
(ii) the effective date of Employee's
voluntary retirement as set forth in a
notice to the Board.
(o) "Subsidiary" shall mean any corporation in which the
Company,
directly or indirectly, owns at least a 50
percent interest or an unincorporated
entity of which the Company, directly or
indirectly, owns at least 50 percent of
the profits or capital interests.
(p) "Termination Date" shall mean the date of receipt of the
Notice
of Termination described in Section 2
hereof or any later date specified
therein, as the case may be.
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(q) "Termination of Employment" shall mean the termination of
Employee's actual employment relationship
with the Company.
2. Notice
of Termination. Any Termination of Employment shall be
communicated by a Notice of Termination in
accordance with Section 16 hereof.
For purposes of this Agreement, a "Notice
of Termination" means a written notice
which, in the case of a Good Reason
Termination by Employee (i) indicates the
specific reasons for the termination, (ii)
briefly summarizes the facts and
circumstances deemed to provide a basis for
termination of Employee's
employment, and (iii) if the Termination
Date is other than the date of receipt
of such notice, specifies the Termination
Date (which date shall not be more
than 15 days after the giving of such
notice).
3.
Severance Compensation upon Termination; Bonus Payments upon
Certain
Circumstances.
(a) In the event of (i) an involuntary Termination of Employment
for
any reason other than Cause or (ii) a Good
Reason Termination, in either case
within two years following a Change of
Control or six months prior to a Change
of Control, the Company shall pay to
Employee, within 15 days after the later of
the Termination Date or the date of the
Change of Control, and upon the
execution of a release in form and
substance reasonably satisfactory to the
Chairman of the Board, a single sum in cash
equal to 2.99 multiplied by
Employee's Compensation (the "Severance
Payment"), subject to customary
employment taxes and statutory deductions,
of which one-half (50 percent) shall
be compensation for Employee's
non-competition covenant contained in Section 12
hereof.
(b) Notwithstanding paragraph (a) above and without regard to
the
fact that payment is to be made in a single
sum, until the earlier of the Phase
Out Date or 36 months after the Termination
Date, Employee shall be entitled to
continued coverage under the Company's
medical, dental and other welfare benefit
plans at the same level of coverage (and
required employee contributions, if
any) as Employee was receiving at the time
of his Termination Date, subject to
the Company's right to make changes to such
plans for all of its executive level
employees generally and further subject to
the Company's right to provide
Employee with cash, on a tax equivalent
basis, such that Employee is able to
purchase comparable coverage on his own;
provided, however, that this obligation
of the Company shall cease upon Employee's
obtaining new employment that
provides Employee with eligibility for
comparable medical benefits without a
pre-existing condition limitation; and,
provided, further, that such extended
coverage shall be in addition to, and not
as a substitute for, Employee's COBRA
rights which shall apply at the end of such
extended coverage. All other benefit
plan coverages, retirement benefit accruals
and fringe benefit eligibility shall
cease on the Termination Date subject to
applicable rights under ERISA and
COBRA.
(c) In the event Employee's Phase Out Date would occur prior to
36
months after the Termination Date, the
aggregate cash amount determined as set
forth in paragraph (a) above shall be
reduced to an amount equal to such
aggregate cash amount multiplied by a
fraction, the numerator of which shall be
the number of days fr
